Standards and Choice, Going Head-to-Head

Two months ago, the Manhattan Institute’s Sol Stern ignited an educational firestorm when he declared that, contrary to his past hopes, school choice cannot save American education. Only a focus on classrooms and curricula can do that, he argued, going so far as to laud a “thought experiment” that found a dictatorship with a “rich curriculum” preferable to universal school choice.

Even before Stern’s article went online the responses came fast and furious, especially from people at Cato. Afterward, it generated even more heat, pulling folks from all sides into the debate. For the most part, though, the dispute has been fought long-distance, with combatants hurling op-eds and blog entries at each other. But that is about to change…

On April 16, Cato will be hosting a policy forum putting Mr. Stern, Cato’s Andrew Coulson, Gary Huggins of the Aspen Institute’s Commission on No Child Left Behind, and University of Texas at San Antonio economics professor John Merrifield on the same stage to debate the big question: Is school choice enough to fix American education, or are government standards the key?

On April 16, the big debate comes to Cato. Sign up here to attend!

Hillary’s Experience

I wrote two months ago that I thought that Hillary Clinton “can credibly claim to be the best-prepared presidential candidate since Franklin D. Roosevelt in 1940: she spent eight years in the White House, seeing the way politics and policies work from the eye of the storm. ” But in the past couple of weeks her attempts to press this argument have not worked out very well. The Washington Post awarded her a full “four Pinocchios” for telling a real whopper about coming under sniper fire when she went to Bosnia.  David Trimble, former First Minister of Northern Ireland, scoffed at her claims to have been directly involved in peace negotiations there. And Gregory Craig, former Clinton White House counsel, also dismissed her claims to have played a leading role in any specific foreign policy issue.

Which is hardly surprising for a first lady. It was a mistake for Hillary to pick two minor foreign policy issues and claim to have been the key player, rather than to emphasize her experience in being at her husband’s side as he dealt with a whole range of issues. And that I do think is significant. It’s the kind of experience that makes Washington graybeards feel that people like Don Rumsfeld and Dick Cheney, who have been both elected officials and White House chief of staff, would be admirably prepared to be president.

First ladies typically pursue a “first lady’s agenda” and of course talk to their husbands at night in the family quarters. I do think that more than any other first lady, Hillary was in the room when decisions were being made–more like Bobby Kennedy than Jackie. She saw the pressures on a president, the ways a president balances politics and policy, the consequences of decisions made under pressure. That’s valuable experience, far more significant than visiting 79 countries to tour historical sites and deliver prepared speeches on women’s rights.

Another Washington Post article manages to undermine most of her specific claims but does include this defense from Mike McCurry, which I think finally gets it right:

Yet she lived through those episodes with a vantage point few get. “I would not say she was sitting there planning cruise missile attacks,” said former White House press secretary Michael McCurry, who supports her candidacy. “But you’re there and you see and you understand the requirements of leadership… . Having lived through it even as a spouse, you absorb a lot.”

None of this should be construed as an endorsement of Hillary Clinton. Experience – or charisma – devoted to the wrong aims is not exactly an appealing prospect. But I think it’s valuble to focus on just what kind of experience Senator Clinton can really claim.

Newseum Opens April 11th - Will it Keep Up?

The new Newseum opens April 11th, and its an impressive project in many respects.

It’s a striking but tasteful modern building, with the text of the First Amendment inscribed on its front. The location on Pennsylvania Avenue close to the Capitol has a defiant quality that I admire.

As I walked past yesterday, I observed its display along the sidewalk of current front pages from newspapers around the country and world. It’s a tribute to the importance and vibrancy of the newsgathering enterprise and free speech. Tourists were gathered along the front of the building taking in the headlines.

But I don’t read newspapers. I get my news from a wide array of sources almost entirely online. Sooner or later, I thought as I walked, some state is going to punch a hole in the Newseum’s display, as the state will no longer have a newspaper. Soon enough, most people will get their news in new formats - as I do - from sources and in media of all kinds: blogs, email, traditional news outlets’ online editions, and so on.

Will the decline of the newspaper mislead people into thinking that our vibrant tradition of newsgathering and reporting is on the wane? It’s something to think about.

The “founding partners” of the Newseum are some of the oldest of the old-school establishment media figures. (Good for them, by the way, for supporting this worthy venture.) They and the Newseum’s leadership may think that things are changing for the worse when they’re changing for the better - when news is all around us, in dozens of different formats, provided by tens of thousands of subject-matter experts and on-scene reporters with true local knowledge.

The Newseum’s planned exhibits include room for new media, but by and large they lean toward exalting the newsgathering industry. That industry has had an important role, no question, but I think it is a role that will diminish over time. I hope the Newseum will actively pursue reporting on all the news, not just the news that’s fit to print.

The Fed’s “Central Planning” Woes

Given the financial/regulatory system that we have – which is a very important pre-condition – I grant the Fed and Treasury a TEMPORARY “coordinating” role to help tide over the current crisis.  However, the initiatives and actions implemented so far appear unlikely to succeed.

I agree only with its role in the Bear buyout by JPMorgan.  It is, by nature, a one-time action that does not protect Bear’s shareholders and operators but protects the financial system from unraveling further – similar to it’s actions re: LTCM. Even if it is repeated for another investment bank, it does not raise the issue of moral hazard because no such bank wants to end up like Bear.

However, the Fed’s new and almost direct support of mortgage backed securities through its primary dealers introduces another moral-hazard potential – likely to be a huge problem down the road, and especially because of the interest rate policy it is adopting.

Interest rate cuts are being overdone. Large cuts are continuing the Fed’s past mistakes of introducing greater uncertainty in market participants’ expectations. It is using the wrong (inflation fighting) tool to achieve its goal of systemic stability which has arisen from poorer visibility of asset quality. The added uncertainty will prolong the resolution of current credit/liquidity shortages.

The longer that credit/liquidity problems last, the more likely is the introduction of PERMANENT new financial market regulations – which would hinder efficient operation – in the very function that is key to resolving current credit shortage problems – the generation of price information.

Finally, Prof. Cowen’s recent NYT oped (“It’s Hard to Thaw a Frozen Market”) compares market pricing under capitalist and socialist systems.  In brief, the argument is that socialist systems’ poor market pricing abilities appear to be reflected in the current credit-market woes of the American “capitalist” system. This comparison appears misplaced to me. The general U.S. economy may be relatively free and capitalist – but financial and credit markets are not quite so free.

Current credit market problems are not the result of pure and free market operation/competition.  We have a fiat currency whose supply and purchasing power is controlled by Fed interest rate policies. And it appears to have made serious mistakes in the process. This involves larger issues of whether asset prices should be objects for setting Fed policy and whether and how the Fed should respond to supply/oil shocks. Fundamentally, however, financial market participants naturally don’t look to “the free” market to set their expectations about the dollar’s future purchasing power. Those expectations are set by a “central planner” – the Fed.

Stupid Government Tricks

When I go to New York, I often ride the subways up and down Manhattan. Each ride costs $2. Usually I pay $10 for a MetroCard and get a $2 bonus, so you get six rides for the price of five. But on my most recent trip, to give a speech at the Manhattan Institute, I arrived at Penn Station and went to buy my $10 MetroCard–only to discover that the bonus is now $1.50 instead of $2. But what good is that? Now I get five rides for the price of five, and I have a card with $1.50 on it that won’t get me another ride. When I mentioned this discovery to one of the numerate journalists on John Stossel’s team at ABC News, he instantly pointed out that you have to buy four cards before you get your full bonus. After you buy four cards, you can get three bonus rides (instead of the four bonus rides on four cards under the old system). But meanwhile, you have to hold on to each card and trade it in for a new card, unlike the old system where you used the card up and discarded it.

It’s not the price increase that bothered me. I realize that each subway ride is heavily subsidized (less so in New York than in other cities), so I can hardly object to a price increase. It’s just the poke in the eye of promising me a bonus if I spend $10 at once, and then making that bonus extremely difficult to actually realize. And to think that some people want to turn our medical care over to such a system.

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DC’s Apathetic, Complacent Nonproducers ♥ Snow Jobs

I just came across this letter I wrote to the editor of the Washington Post.  Sadly, the editor declined to publish it.  Since the Supreme Court just heard oral arguments about the D.C. gun ban and the meaning of the Second Amendment in District of Columbia v. Heller, it remains relevant:

On January 5, we learned that District officials filed a brief with the Supreme Court [“Gun Law Prevents Harm, D.C. Argues,” Jan. 5] defending the city’s gun ban on the grounds that: the Second Amendment does not protect an individual right to keep and bear arms; the ban “does not deprive the people of reasonable means to defend themselves;” and “less restrictive approaches would not be adequate.”

Fifteen pages later, Colbert I. King [“Outfoxed In the District,” Jan. 5] wrote of the “conditions that threaten the quality of life of all who live in this city: criminals roaming the streets in search of human prey; an apathetic and complacent government workforce; nonproducers ensconced in high places; and elected leaders who fall for snow jobs.”

Draw your own conclusions.

Obama and the Cost of War

Thursday in West Virginia, Barack Obama gave a speech laying out the economic costs of the Iraq War, which he estimated as up to $3 trillion (Linda Bilmes and Joseph Stiglitz’s estimate) and $10 billion a month. He listed the many things that money could have bought. Robert Menendez made similar points in the Democrats’ weekly radio address.

Americans disagree on whether to stay in Iraq and the best use of the money we’d save by leaving, but everyone should acknowledge that this is the way to argue about the war. The questions that consume the media, whether the surge worked, whether we’re making progress, and so on, are important, but they alone cannot determine whether we ought to continue the occupation. That depends primarily on cost-benefit analysis, however uncertain. (Moral questions matter too but are not meaningful when divorced from consideration of costs and benefits.)

Since the cost of staying is enormous, the backers of continuing American participation in the war should enumerate the benefits that justify it (along with the deaths and the shifting of our constitutional design towards unbalanced executive power). War boosters seem to understand the terrible burden of their position, as evidenced by their tendency toward wild, worst-case accounts of the consequences of American departure. In my view, the war wouldn’t be worth continuing even if the surge were working, which it isn’t.

But since we’re talking opportunity costs, what about the rest of the national security budget – you know, the other 80 percent of American security spending, now approaching three quarters of a trillion dollars, which is mostly spent to defend us against a couple weak conventional enemies? Like most other Democrats, Obama not only avoids complaining about regular defense spending, but backs the ongoing plan to expand the ground forces, which will add $15-20 billion in annual defense costs in the name of better executing future occupations like Iraq. I understand the political calculus here, but let’s not give the guy too many medals for political courage.

Democrats like Obama and Menendez also argue that Iraq is a reason that we are shortchanging state-building efforts in Afghanistan. This talking point illustrates the trouble with conventional foreign policy thinking on the so-called left. By saying that Afghanistan needs the medicine Iraq is getting, Democratic foreign policy leaders are rushing to repeat a mistake they rightly condemn. As Harvey Sapolsky, Chris Preble and I have argued, this thinking shows that the hubris that brought us into Iraq is essentially intact.

Defending American interests in Afghanistan requires nothing more than the absence of haven for international terrorists and an example made of those who offer it. The latter is a lesson well taught. Should it fail, a small ground force can target terrorist camps and supporters via raids and air strikes guided by intelligence, even if Taliban militias gain power in some regions. Those missions never required that Afghanistan become a modern nation, democratic, or even stable.

Instead of this realistic approach, the next President will probably expand a second no-end-in-sight war, one meant to assert the control of a statelet in Kabul over an unruly territory offering little historic basis for the word “nation.” Afghanistan is full of arms and grievances. It lacks the basics of statehood: a road network, a national energy grid, widespread patriotism, and tax collection. The notion that a 30 or 50 percent increase of Western forces and investment can transform Afghanistan into a peaceful, centralized state shows idealism of stunning tenacity. Obama talks more sensibility about these matters than John McCain, but he should apply some cost-benefit analysis to that spending too.