Commute These Sentences, Mr. President

President Bush has pushed the envelope of every aspect of executive power, except for two that might ease the burden of government, the veto and the pardon. Now he’s threatening to protect the taxpayers with his veto pen, and he’s just discovered his power to pardon or commute the sentences of people convicted of crimes. Whether Scooter Libby was an appropriate recipient of a commutation is subject to much debate.

But there are plenty of other people who deserve presidential pardons or commutations. Families Against Mandatory Minimums has highlighted a number of good cases here:

Mandy Martinson – 15 years for helping her boyfriend count his drug-dealing money.

DeJarion Echols – 20 years for selling a small amount of crack and owning a gun, causing Reagan-appointed federal judge Walter S. Smith, Jr. to say, “This is one of those situations where I’d like to see a congressman sitting before me.”

Weldon Angelos – 55 years for minor marijuana and gun charges, causing the George W. Bush-appointed judge Paul Cassell, previously best known for pressing the courts to overturn the Miranda decision, to call the mandatory sentence in this case “unjust, cruel, and even irrational.”

Anthea Harris – 15 years when members of her husband’s drug ring received sentence reductions to testify against her, although she had not been directly involved in the business.

A compassionate conservative should also use the pardon power to head off the DEA’s war against doctors who help patients alleviate pain. He could start by pardoning Dr. Ronald McIver, sentenced to 30 years for prescribing Oxycontin and other drugs to patients in severe pain. Or Dr. William Hurwitz of Virginia, sentenced to 25 years but then granted a retrial, convicted again, and awaiting sentencing, which could still be 10 years.

Commute these sentences, Mr. President.

European Union Squanders Money on Self-Promotion and Propaganda, Including Sex Videos

A story in the UK-based Telegraph discusses a new report that exposes the European Union’s expensive propaganda campaign. With a budget of more than $7 billion, the self-promotion effort is hardly trivial:

The European Union is spending £3.8 billion a year on “propaganda” to win over its sceptical citizens… As well as publishing a plethora of pamphlets and employing an army of public relations staff, the EU has spent hundreds of millions of pounds on teaching aids, school trips and even cartoons. According to Lee Rotherham, the author of a new book which examines the EU’s spending on its image, such initiatives are an “outrageous and cynical attempt to brainwash the young”. …Let’s Explore Europe Together, an online teaching aid aimed at nine to 12-year-olds, describes the EU as a “really good plan that had never been tried before”. …In Italy, reports Mr Rotherham, children have been confronted by Camillo e l’Euro in Europa, a cartoon that champions the single currency. …Europe’s Best Successes, a 51-page pamphlet to celebrate the 50th anniversary of the EU, features lines such as “if you are lucky enough to be a citizen of the EU”, and “young people have really benefited from the development of a borderless Europe”. Mr Rotherham also details extensive spending on umbrellas, mouse mats, pencils and other items branded with the EU logo - part of a £2.4 billion budget for European Commission “projects”. He also reveals big grants to think-tanks and EU-funded trips to the European Parliament.

The U.S. government wastes money in similar ways, of course, including propaganda campaigns on behalf of the new Medicare prescription drug entitlement and the President’s no-bureaucrat-left-behind education scheme. But the Europeans seem to have more creativity when it comes to wasting taxpayer money. The UK-based Times reports that part of the European Union’s self-promotion budget was used to produce a sex video. In the understatement of the year, a bureaucrat admitted that the EU is not quite ready to compete with Paris Hilton:

The latest promotional video from Brussels shows European citizens engaged in enthusiastic congress, but it is not the sort of union the founding fathers had in mind. The film, available on the European commission’s space on YouTube, the video website, shows 18 couples having sex. The video opens with a man and woman ripping each other’s clothes off in the bedroom while bottles rattle on a shelf. In the interests of sexual equality, two of the couples are gay. …The video is part of a campaign by Margot Wallstrom, the communications commissioner, to boost interest in the workings of the EU. …The scenes were compiled by the commission’s press unit, using footage from Amélie and All About My Mother. Both films were supported by the EU. Wallstrom’s spokesman was initially unaware of the video’s presence on the site and denied it was in questionable taste. …he added: “We can’t really compete with Paris Hilton yet.” …Godfrey Bloom, a UK Independence party MEP, said: “I suppose this film is appropriate. The EU has been screwing Britain for the past 30 years.”

If You Build It, They Still Won’t Come

A report commissioned by the Maryland Stadium Authority and the Montgomery County Department of Economic Development tells the planners what they want to hear: that a new sports and entertainment arena in Montgomery County, Maryland, could generate revenue for the county and would give residents a place to hold events without having to leave the county. Based on the Washington Post story, it’s not clear just how strong the report’s argument is: by definition, building a new arena would provide a venue for events, so that’s not much of a claim; and the news story does not tell us if the revenue generated would make it economically viable.

But maybe the report did claim economic viability. Most studies commissioned by planners do. But independent studies never do. This short review of the academic literature finds that “not only are there theoretical reasons to believe that economic impact studies of large sporting events may overstate the true impact of the event, but in practice the ex ante estimates of economic benefits far exceed the ex post observed economic development of host communities following mega-events or stadium construction.”

Last year the Wall Street Journal reported

But while arenas with big-time tenants may bolster a city’s self-image and quality of life, evidence shows they have a minimal economic upside. Most operate at a loss.

In “The Economics of Sports Facilities and Their Communities,” published in 2000 in the Journal of Economic Perspectives, authors Andrew Zimbalist of Smith College and John Siegfried of Vanderbilt University argue that “independent work on the economic impact of stadiums and arenas has uniformly found that there is no statistically significant positive correlation between sports facility construction and economic development.”

The authors cite several studies, including one by sports economist Robert Baade that found “no significant difference in personal income growth from 1958 to 1987 between 36 metropolitan areas that hosted a team in one of the four premier professional sports leagues and 12 otherwise comparable areas that did not.” The authors’ conclusion: Arenas put a drag on the local economy by hurting spending on other activities in the city and boosting municipal costs such as security.

“It doesn’t make sense to build an arena for economic reasons, even if you have a team,” Mr. Zimbalist says.

Several Cato studies have reviewed the literature on stadiums and arenas, as noted here.

Tax and Regulatory Competition Make the Caymans an Ideal Home for Hedge Funds

The New York Times has a detailed story showing how good tax policy and a sensible approach to regulation have made the Cayman Islands the world’s premier domicile for hedge funds. The irritates politicians in Washington and other national capitals, but the article correctly notes that Cayman funds and American investors and managers are obeying all U.S. laws. This leaves two options for politicians. They can engage in fiscal protectionism and try to criminalize free trade in financial services, or they can improve the tax and regulatory environment in America. Sadly, it does not take a political expert to know which route is more likely:

…lucrative tax breaks and fabled financial secrecy have made this British territory a magnet for hedge fund managers. “All of the offshore jurisdictions are competing against each other to provide the most hospitable regulatory landscape, and the Caymans are really coming on strong,” Mr. Grayson says. …In as little as two weeks, and for about $35,000 in fees, hedge funds can set up shop in the Caymans — just a fraction of the time and up to one-tenth the price of incorporating a fund in drearier climes like Delaware. While speed and bargain prices are big attractions, the real draw, say analysts and Congressional investigators, are perfectly legal Caymans-based corporations and partnerships that allow major investors to avoid taxes of up to 35 percent that the Internal Revenue Service levies on unearned business income. Cayman tax laws also help American fund managers legally defer domestic taxes on their personal profits by channeling them offshore through their funds. …it is the corporate home for what the Cayman Islands Monetary Authority estimates to be three out of every four of the world’s hedge funds — more than anywhere else — thanks to its friendly tax and regulatory regimes, as well as an army of foreign bankers, tax lawyers, accountants and fund administrators who make it all work. …foreign individual investors and tax-exempt American investors — like pension plans, hospitals and university endowments — are allowed to put their money into another section of the fund that is registered offshore, in the Caymans. The American institutions have that option because, while they are tax-exempt under American tax law, a United States tax on unearned business income would apply if they invested in a domestic fund. …Some 8,500 investment funds are registered in the Cayman Islands, according to the agency — a near-tripling since 2001.

New Attack Planned Against Low-Tax Jurisdictions

The UK-based Observer reports that Norway’s socialist government is leading a new campaign against low-tax jurisdiction.

The premises are absurd, including the assumption that developing nations will prosper if they get more tax revenue. Moreover, the entire scheme is based on some very dubious “facts,” none of which are substantiated. Most importantly, the article fails to note the many benefits of tax competition, including better tax policy and the protection of human rights:

Plans have been drawn up for an international taskforce to crack down on tax haven abuses orchestrated in large part by bankers, accountants and lawyers in London. As authoritative evidence suggests that $1 trillion of illicit funds flow to secretive havens managed by financiers based in London, New York and Dubai, the Norwegian government is forming a global coalition to ‘facilitate the recovery of assets illicitly stacked away in tax havens’. Several countries are set to join, but Britain, recently classed as an offshore financial centre by the International Monetary Fund, is not among them.

…The imminent formation of an international tax haven taskforce comes as the World Bank, headed by Robert Zoellick, is coming under pressure to establish its first forensic study into the illicit cash flowing out of developing nations. …Exactly 10 times the $100bn spent on aid and debt write-offs by rich countries is siphoned out of developing countries, with corporations responsible for 60 per cent of that figure through a web of trusts, nominee accounts and the flagrant mispricing of goods to escape tax.

…Cracking down on tax havens and the evasion of taxes by some of the world’s biggest companies is seen as the ‘missing link’ in the poverty alleviation agenda. Investigators and lawyers at a conference on the Movement of Illicit Funds in Washington last Thursday confirmed it was corporations and not corrupt politicians in the developing world that accounted for most tax evasion.