If You’re in North Carolina …

I’ll be speaking tomorrow at the Security and Liberty Forum hosted by the Privacy and Technology Committee of the American Civil Liberties Union of North Carolina and the Department of Computer Science, UNC-Chapel Hill.

That’s Saturday, April 14, 2007 from 1-5 p.m., Chapman Hall on the UNC Campus.

Behind China’s Headline Export Numbers

China overtook the United States in the second half of 2006 to become the world’s second leading exporter of goods. That fact, contained in a new report from the World Trade Organization and trumpeted in headlines around the country this morning, is bound to further rile up skeptics of America’s growing trade with China.

Although the United States exported more goods ($1,037 billion worth) in all of 2006 than China (which exported $969 billion), figures for the second half of the year show that China has now claimed the no. 2 spot behind Germany.

For those of a mercantilist mindset, to whom trade is all about exporting more than you import and more than the other guy, this news is guaranteed to be alarming. But the real news is nothing of the sort.

First, China is bound to move up in the world rankings of trade. It represents 20 percent of the world’s population, it is surrounded by thriving, trade-oriented economies, and its increasingly open and free economy has been growing at double-digit rates for more than a decade. We should welcome the news that China is more integrated than ever in the global economy.

Second, the United States continues to be a trade and export powerhouse. U.S. exports of goods grew 14 percent between 2005 and 2006, and surpassed $1 trillion for the first time ever. When combined with the $387 billion in services Americans sold abroad last year, we remain the world’s no. 1 exporter.

Third, most of the goods that China exports are in fact designed and in large part made in other countries, including the United States. “Assembled in China” would be a more accurate label than “Made in China” for most of its exports. More than half of China’s exports are made in foreign-owned factories. The most sophisticated components in the computers and other consumer electronics exported from China are in fact made in Japan, South Korea, Taiwan, the United States, and other, more advanced economies. China has become the final link in a deepening global supply chain. (For more detail, see my 2006 study on U.S. trade with China.)

Finally, trade is about more than exports. It’s about, well, trade. We export for the purpose of getting back things of even greater value. Americans benefit at least as much from imports as we do from exports. The $2.2 trillion in goods and services we imported last year make our lives better every day.

As author P.J. O’Rourke summarized in his terrific new book, On the Wealth of Nations, “To give [Adam] Smith’s case against mercantalism in extreme concision: imports are Christmas morning; exports are January’s MasterCard bill.” 

Romney Embarrassed about His Health Plan?

Michael Cannon writes below that the health insurance time bomb that presidential candidate Mitt Romney left for Massachusetts is “becoming less universal and less affordable all the time.” It’s also becoming less visible, at least in Romney’s campaign speeches, according to two new reports. Romney often fails to mention the plan, the only real accomplishment of his four years as governor, as he campaigns for the Republican nomination.

Both stories quote the plan’s leading critic, Michael Tanner. The Washington Post notes:

“This mandate is unprecedented,” said Michael Tanner, a health expert at the Cato Institute, a conservative think tank in Washington. “It’s the first time a state has said simply because you live there you must buy a specific product. If he wants to be the Republican who embraces Hillary-care, I don’t think that’s going to go hand in hand with him trying to portray himself as Ronald Reagan’s heir.”

The Associated Press correctly identifies Cato as libertarian. AP also notes that the major supporter of the plan, the Heritage Foundation, is standing by it in a new report, which says it is “already showing progress.”

By this time next month, Heritage may be alone. Romney may well have become a leading opponent of Romneycare. After all, a man capable of reversing his views on abortion, gay rights, and gun control is surely capable of doing a 180 on a complex health care plan that rests on “abolish[ing] the laws of arithmetic.”

Over-taxed

From the Agoraphilia blog, Glen Whitman ridicules those who ridicule Americans who feel over-taxed:

Sub-headline from an article about a survey on taxes: “An MSN-Zogby poll says that many Americans think they’re paying too much in taxes even though research shows the average tax burden is light compared with other developed countries.”

Interesting. I’ve also heard that for some reason, paraplegics would like to get the use of their limbs back, even though other people are totally paralyzed from the neck down. Oh, and people who have lost an eye would like to get their 3D vision back, despite the existence of blind people. What is wrong with these people?

RomneyCare: Becoming Less Universal and Less Affordable All the Time

Yesterday, Massachusetts’ new “Connector Authority” unanimously voted to exempt 20 percent of the Bay State’s uninsured from the requirement that all residents purchase health insurance.  The Connector Authority determined that health insurance was not affordable for those folks. 

They also made RomneyCare less affordable overall.  The Connector Authority voted, again unanimously, to increase subsidies to low-income residents by $13 million, bringing the total cost of such subsidies to $483 million this year.

Santa Newt

On Wednesday, David Boaz blogged about how Newt Gingrich is dispelling the notion that he is a small-government, Reaganesque conservative.  That very day, Gingrich offered even more evidence that he is no fan of limited government.

In an op-ed for The Washington Times, Gingrich urged Congress to limit the ability of insurers to use genetic information when setting insurance premiums, calling that proposed price control a “gift” to the American people:

Protecting every American from genetic discrimination is a long overdue gift to the nation. After 12 years of debate, Congress is at last poised to deliver this gift.

Gingrich makes it sound like Congress can play Santa Claus, pulling a big, shiny windfall out of his sack.  Of course, like all subsidies, this one would be a gift to some people at the expense of others.  That is, it would reduce the premiums of those genetically predisposed to certain diseases by increasing premiums for those without such genetic markers. 

And what types of genetic discrimination would Gingrich like to prohibit?  Just DNA testing?  What about the genetic information adduced by questions like, “Does your family have a history of cancer?” The broader the definition of prohibited genetic information, the more we will drive good risks out of the health insurance market.

Are there no big-government politicians brave enough to propose explicit — rather than hidden — health care subsidies?

The Nation’s Worst-Managed Transit Agency

For years, Washington, D.C. has been considered by many students of government to have the nation’s worst city government. Similarly, the Washington area transit system, Metro, is in contention as the nation’s worst-managed transit agency.

The Metro Rail system was built with federal dollars, with the understanding that local governments would pay for its operation. But no one was prepared to pay for rail reconstruction, which is needed every 30 years or so and which costs a substantial fraction of the original construction cost. Now, some of the system is approaching 30 years of age and is breaking down with increasing frequency.

But Washington’s Metro is not the nation’s worst-managed transit agency — not by a long shot. That dishonor goes to San Jose’s Santa Clara Valley Transportation Authority (VTA).

VTA persuaded local taxpayers to raise sales taxes to construct billions of dollars worth of rail transit lines. But it failed to budget enough money to operate those lines. Even as it opened new light-rail lines in the early 2000s, VTA was forced to severely cut bus and rail service on its existing lines. The result was a 34 percent decline in transit riders.

A few weeks ago, a consultant hired by VTA released an audit blaming the system’s board of directors for its failures. “The Board has approved capital projects that were political solutions to address the needs of certain local neighborhoods at the expense of regional congestion management,” states the audit. “As a result, VTA has built transportation systems that have low ridership and are also expensive to operate and maintain.”

After the audit was published, VTA’s chief financial officer resigned. Unfortunately, none of the board members followed. Instead, they hired a temporary chief financial officer for the munificent sum of $13,600 per week for 39 weeks. That’s a total of $530,400 and more than three times the weekly pay of the previous CFO.

It gets weirder: The new CFO has no history in the transit industry. Instead, he is a former mining company executive who oversaw a shell game of companies taking over other companies. “He has a lot of experience with projects and a lot of our money is tied up in projects,” says VTA’s general manager. There are so many similarities between digging gold and sapphire mines and building transit lines — like none.

One wonders what the new CFO might do. Merge VTA with Washington Metro? Bull the stock with rumors of an untapped source of transit riders? Corner the market in light rail?

Meanwhile, everyone is trying to ignore the gorilla in the corner, which is that VTA’s board wants to spend $4.7 billion to connect the San Francisco BART system to San Jose. The agency only has enough money to build to the edge of San Jose, but even if it had all the money for construction, its general manager admits “we clearly do not have the money to operate the system.” Nevertheless, the board recently voted to spend $185 million — more than half of VTA’s annual operating budget — on preliminary engineering.

Meanwhile, VTA is still short on operating funds, so it is contemplating “eliminating or consolidating” service on more than a quarter of its remaining bus lines.

Almost every Bay Area transit group opposes the BART line. But the audit (which itself cost $500,000 — I would have done it for $5,000) barely mentions the BART line, and the Silicon Valley Leadership Group (formerly the Silicon Valley Manufacturers Group) strongly supports it.

Last June, San Jose voters angrily rejected VTA’s request for a further sales tax increase to build the BART line. VTA’s board members are hoping they can convince taxpayers that they are fiscally responsible enough to deserve a tax increase anyway. But spending $530,400 for less than one year’s work by a temporary CFO hardly seems conducive to gaining the taxpayers’ trust.