New Podcast: Obama’s Shock Doctrine

Naomi Klein, author of The Shock Doctrine: The Rise of Disaster Capitalism, says free-market advocates spend their careers stockpiling free-market ideas waiting for a crisis that could be used as a springboard for implementing those ideas. But, as David Boaz asks, what about Obama’s policy proposals amid recession and financial crisis?

In today’s Cato Daily Podcast, Boaz exposes Obama’s Shock Doctrine:

We know from history that, while there are a few examples of free-market or somehow right-wing programs coming about after a crisis, usually what happens in a crisis is government seizes more money and power. And you can see that in the New Deal; the Great Depression led to the New Deal. You can see it after Kennedy’s assassination led to Lyndon Johnson and his 100 days of legislation. You can see it in practically every communist government that ever came to power, was in the devastation of war….

We had a financial crisis and what happened? Did the incumbent Republican administration say, now’s our chance to implement Milton Friedman’s program and privatize and deregulate? No, they did what governments always do: they expanded their own powers at the expense of civil society, and so in that sense, Obama’s just doing the same thing that Bush did. We could call this the Bush-Obama era.

It was, after all, Rahm Emmanuel who said, “You never want a serious crisis to go to waste. This crisis provides the opportunity for us to do things that you could not do before.”


Events This Week at Cato

Wednesday, February 18

12:00 PM (Luncheon to Follow)

BOOK FORUM: Falling Behind: Explaining the Development Gap between Latin American and the United States by Francis Fukuyama (editor)

Featuring the editor Francis Fukuyama, professor of International Political Economy, School of Advanced International Studies, Johns Hopkins University; with comments by Norman Loayza, lead economist, Research Department, World Bank; moderated by Ian Vásquez, director, Center for Global Liberty and Prosperity, Cato Institute

Due to overwhelming response to this event, registration is closed, but it will be simulcast live on

Thursday, February 19

11:00 am (Luncheon to Follow)

POLICY FORUM: “Mexico’s Drug War: The Growing Crisis on Our Southern Border”

Featuring Ted Galen Carpenter, vice president for Defense and Foreign Policy Studies, Cato Institute; Ethan Nadelmann, executive director of the Drug Policy Alliance; Vanda Felbab-Brown, foreign policy fellow at the Brookings Institution; and Daniel T. Griswold, Director of the Center for Trade Policy Studies, Cato Institute.

Register to attend this free event, or watch live online.

Friday, February 20

12:00 PM (Lunch Included)

CAPITOL HILL BRIEFING: “Why Markets Are the Key to Quality, Coordinated Medical Care”

Featuring Arnold Kling, author of Crisis of Abundance, Under the Radar: Starting Your Internet Business Without Venture Capital and Learning Economics and adjunct scholar, Cato Institute.

Briefing will be held in room B-340 of the Rayburn House Office Building. Register here for this free event.

Expect the Worst

Yesterday, American Federation of Teachers’ President Randi Weingarten had an op-ed in the Washington Post calling for national academic standards. Of course, union support for national standards is itself almost reason enough to fight any such move to the death, but over at The Corner Ramesh Ponnuru asks a critical question, wondering “why we should expect federal standards to resemble the best state standards rather than the worst ones.”

As I’ve pointed out on numerous occasions, especially to the standards zealots on the right, there is no good reason to expect quality to prevail. The people who would be held to high standards, such as teachers and school administrators, have huge incentives and political power to fight rigor, and given their political heft would almost certainly prevail. Indeed, based on what’s happened with standards to date, the odds seem hugely in favor of wimpiness. As I wrote in response to Michael Petrilli of the Thomas B. Fordham Foundation a couple of years ago:

Given history and political reality, Petrilli and other like-minded conservatives have very few government standards successes to hang their hats on. Indeed, that’s why they’ve had to ask the country to play 6 percent roulette: “Of course, getting national standards and tests right is no small feat,” Petrilli acknowledges. “But McCluskey is wrong to insist that it cannot be done. After all, California, Massachusetts, and Indiana managed to develop excellent standards over the past decade. If it can happen in Sacramento or Boston, it could happen in Washington, D.C., too.”

So, because three out of fifty states have gotten standards right, we should gamble on the feds getting them right, too, and give Washington the authority to set the standards for every public school in America? That’s crazy.

Maybe if we tweak Petrilli’s statement, its insanity will be more clear: “Getting national standards and tests right is no small feat. And McCluskey is right to insist that it almost certainly can’t be done. After all, Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas – and the list goes on - haven’t managed to develop excellent standards over the past decade. If it can’t happen in Montgomery or Juneau, it probably won’t happen in D.C., either.”

I Believe in Non-Political Government Comparative-Effectiveness Research (and in the Tooth Fairy, Santa Claus…)

My colleague Michael Cannon has been writing about the folly of government-sponsored comparative effectiveness research. Now, in an article in the Journal of the American Medical Association (subscription required), John Kraemer and Lawrence Gostin add another cautionary note for those who believe that the government’s decisions will be based on science and not on politics. In particular, the authors discussed how the Connecticut Attorney General has attacked the Infectious Disease Society of America (IDSA) for recommending against the use of long-term antibiotics to treat “Chronic Lyme Disease.” Although the IDSA based its non-binding recommendation on the overwhelming scientific evidence, the International Lyme and Associated Diseases Society (ILADS), a well connected and media-savvy advocacy group for those with Lyme disease protested, taking its case to the Connecticut political establishment. As a result, Connecticut Attorney General, Richard Blumenthal sued the IDSA under the state’s anti-trust laws.

Political institutions are by definition political. A government body deciding on the comparative-effectiveness or cost-effectiveness of medical treatments will inevitably base its decisions as much on politics as on science.

The Biggest Check Ever Signed

The Obama Administration has banked a lot of political capital on the economic “stimulus” package signed into law today, and is hailing the measure as a sound-minded reaction to a dreary economic climate.  In truth, many of the programs in the bill are not only wasteful and inefficient, but have the potential to do some real long-term harm to U.S. policy.

Among them:

The economic stimulus bill is merely a nearsighted return to government spending policies which have been discredited over and over again [PDF].

For more on the package, check out Cato’s Fiscal Reality page.

Now that the So-Called Stimulus Is Enacted, the Time Has Come to Look at Policies that Actually Improve Economic Performance

The faux stimulus bill will be signed into law today by President Obama. The bad news is that making government bigger will hurt the economy. The good news is that sooner or later there will be a recovery from the current downturn. The real issue is whether long-run growth will be robust. Unfortunately, the evidence strongly suggests that an increased burden of government spending is among the policies that harm long-run economic performance. In a new video, I review the Fraser Institute’s Economic Freedom of the World and highlight the policies that expand freedom and increase prosperity: