What if the ‘Surge’ Succeeds?

Robert Kagan, a long-time senior associate at the Carnegie Endowment for International Peace, writes a monthly column for the Washington Post. On the chance that Kagan’s views were not getting enough exposure, the White House helpfully e-mailed the column to me this morning as part of their “Iraq Update: IN CASE YOU MISSED IT” series (ALL CAPS in the original).

It puzzles me that the Post and the White House would want to shine so much attention on Kagan given his long record of faulty predictions with respect to Iraq. After all, one wouldn’t expect CNBC, BusinessWeek or Money magazine to be touting financial analysts and stock pickers who were strong advocates of ENRON, WorldCom and Tyco.

And it is not like this is a passing fancy; Kagan has been bullish on war with Iraq for years. Kagan signed the infamous open letter to President Clinton in January 1998 calling for military action against Iraq ”in the near term” given that “diplomacy is clearly failing.” Less than six months later, he repeated his call for military action in an open letter to then-congressional leaders Newt Gingrich and Trent Lott.

One year after the start of the Iraq war, Kagan and frequent co-author William Kristol noted the “obvious success” of the signing of Iraq’s interim constitution and “other measures of progress” including “electricity and oil production” and signs of damage to the Baathist-led insurgency. Despite continued violence, Kagan and Kristol cautiously predicted, “We may have turned a corner in terms of security.”

Kagan and Kristol were particularly encouraged by the “hopeful signs that Iraqis of differing religious, ethnic, and political persuasions can work together.” Then they took a shot at the Iraq war skeptics, “both here and in Europe” who predicated “that a liberated Iraq would fracture into feuding clans and unleash a bloodbath.”

After compiling a list of Kagan’s greatest hits, salon.com’s Glenn Greenwald asks “Why would any rational person listen to Robert Kagan?” Of course, Kagan is free to write or opine or do whatever he likes – and the rest of us are free to ignore him. But it isn’t enough to ignore the people who got us into the war, and who now expect us to take them seriously on what to do next. As Greenwald notes, scorn is much more appropriate.

However, what if Kagan is right? What if he has finally gotten something right, after years of inaccurate predictions and fallacious reasoning? For the sake of argument, I’ll take him up on the premise of his latest article, “The ‘Surge’ Is Succeeding.” The column begins: “A front-page story in The Post last week suggested that the Bush administration has no backup plan in case the surge in Iraq doesn’t work. I wonder if The Post and other newspapers have a backup plan in case it does.”

I wonder if the American public much cares. The public realizes what Kagan does not: the costs of the Iraq war have already far exceeded any benefits that we as a nation might ultimately derive from it, even if we did not spend another dime on the venture, and even if no more soldiers are killed or wounded.

If, in fact, a miracle has happened, if a mere 8,000 or so of the expected 25,000 additional troops have succeeded where 140,000 U.S. troops have failed for the past four years, if this small number of U.S. military personnel have driven the insurgency underground, stiffened the resolve of the Iraqi government, cowed Iraq’s neighbors into cooperating, and paved the way for the eventual withdrawal of U.S. troops from Iraq, we can all be thankful for that.

But wait. Robert Kagan does not favor an eventual withdrawal of U.S. troops. Indeed, Kagan celebrates the announcement that U.S. troop levels in Iraq will remain at their current levels ”through at least the beginning of 2008” (again putting the lie to the notion of a surge, which implies a short-term increase).

Even 2008 is too soon to speak of withdrawal as far as Kagan is concerned. Any talk of drawing down forces (ever it is implied) can only give comfort to Moqtada al Sadr and al-Qaeda.

So if, by Kagan’s reasoning, the surge is succeeding, it merely paves the way for an indefinite troop presence at more or less current levels, at a cost of approximately $150 billion, perhaps 1,000 or so American troops killed, and 10 to 15 times that number wounded, each year.

That is what we get if the surge is succeeding. We shouldn’t be surprised that the public demands success of a different sort, the kind that will stop the flow of lives and money into the Iraqi quagmire that Kagan has long advocated.

So-Called Consumer Protection Law Hurts Consumers

Headline-seeking politicians like to enact laws that ostensibly protect consumers from predatory businesses. Item-pricing laws are a good example. They supposedly exist to protect consumers from being overcharged by unscrupulous grocery stores, even though research shows that stores are just as likely to make mistakes that benefit consumers. Requiring individual price tags, though, is an unambiguous negative for shoppers, raising prices by as much as 10 percent because of added labor costs. A column in the Wall Street Journal explains:

New York and several other states (California, Illinois, Massachusetts, Michigan, New Hampshire, North Dakota, Rhode Island and sometimes in Connecticut) have an “Item Pricing Law” (IPL) requiring that, for most goods in retail stores, each item have its own individual price sticker; in other states a simple price tag on the shelf is considered sufficient. …Prices in IPL stores are 20 cents to 25 cents higher per item than in non-IPL stores. …The maximum estimate of the benefit of avoiding overcharges to consumers through IPLs is less that one cent per item. …The laws are a bad deal for consumers. How significant are these price differences – about a quarter per item? The average price of the items in our sample was about $2.50, so there is a 10% difference. This implies that prices of groceries are almost 10% higher in IPL stores. Food represents about 14% of the average family’s budget. IPLs, therefore, reduce the real incomes of families by more than 1% – a nontrivial amount. In sum, our study shows that IPLs impose net costs on consumers much greater than any potential benefit. Jurisdictions without them should not pass them, and jurisdictions with them should repeal them. In New York City, where costs and so prices are already very high, consumers would greatly benefit from a 10% reduction in grocery prices.

Net Worth Climbs to Record Level

New figures from the Federal Reserve show that household wealth in America is now more than $55 trillion. This is worth noting, both because it illustrates the tremendous wealth generated by an economy when tax rates are low and the burden of government is modest (at least compared to most of our friends in Europe) and because it should relieve some of the anxiety of people who fret that Americans do not save enough. To be sure, there are many households who do not have assets, and there are many government programs and tax policies that discourage saving, but there is not a crisis of inadequate savings in America. Investors’ Business Daily offers a cheerful assessment of the economy:

In the fourth quarter of 2006, total net worth — that is, everything people own minus what they owe — jumped 7.4% to $55.63 trillion. We’ve added as much wealth in the last decade as we did in our nation’s first 220 years. … the average household in America owns about $487,095 worth of stuff, free and clear. That’s a big jump from recent years. As recently as 2001, average household wealth was $373,170. So in five years we’ve become a third richer — a truly amazing fact. … Unemployment, at just 4.5%, is way below its long-term average. Real incomes are rising strongly. Inflation remains tame. Company profits — a measure of how efficient businesses are at using scarce resources — are at all-time highs. And, in addition to being richer, we live longer, healthier lives than ever. Even people on the lowest rungs of the economic ladder have far more than they did a decade ago.

More on the Second Amendment Ruling

The Washington Post has a story today on the plaintiffs in the landmark Second Amendment lawsuit.  Among the plaintiffs interviewed is Cato’s Tom Palmer, who once had to use a firearm in self-defense.

Cato associate policy analyst, David Kopel, recently did a Second Amendment literature survey [pdf]. Take the list and go directly to Amazon!  Buy some for your friends as well.  Come to think of it, it’s the perfect graduation gift for third year law students-especially those who will be going to work as clerks on the Supreme Court next year!

For those interested in a shortcut through all the legal and historical material, I suggest you listen to this Cato briefing–featuring the key players who masterminded last week’s legal victory.

For more legal posts on last week’s ruling and the Second Amendment generally, visit Instapundit, How Appealing, and the Volokh Conspiracy.  For related Cato work, go here.

Let America Benefit from Brain Drain

In a globalized economy, it is very easy for capital to cross national borders. This provides an excellent way for the market to punish governments that over-tax, over-spend, and over-regulate since capital will flow to jurisdictions with less statism. It also is increasingly easy for skilled labor to shift from less competitive nations to those with more opportunity. The United States often is at the top of the list of desired destinations for the world’s best-and-brightest. Unfortunately, even though these skilled workers and entrepreneurs would generate more wealth for America, they often are unable to overcome restrictive immigration laws. Investors’ Business Daily explains how this policy hurts the United States:

America has it all backward. Our country’s doors are open to the low-skilled while we keep out the talent that’s crucial to our competitiveness. …The global economy is a brain game, and the nations with the best-educated work forces are the ones that win. …there’s a talent gap that can be filled only by relaxing restrictions on foreign computer scientists, software engineers and other highly trained workers who want jobs in the U.S. …Much of the work in fields such as software development might still get done offshore. But that would not produce jobs here. More critically in the long run, it would deny America a stream of capable, creative people. For many visa holders, the temporary permit is a step toward permanent residency. Allowed to stay, they may do more than just work here. They may start their own businesses and create work for others. …The issue here isn’t America’s failure to control its borders. It’s that America does too good a job of excluding some of the people it most needs.

Iceland’s Laffer Curve

The Wall Street Journal notes that corporate tax revenue has jumped dramatically in Iceland, even though the corporate tax rate has been slashed to 18 percent. That sentence actually should say that revenues jumped because of the lower tax rate. Iceland is a clear example of the Laffer Curve. As the rate fell, companies had less reason to avoid taxes. The low rate also encouraged additional economic activity. Iceland’s workers are the biggest winners, of course, since they now enjoy higher incomes and more prosperity:

The benefits of low taxes are on full display in Iceland, which provides an almost perfect demonstration of the Laffer Curve. From 1991 to 2001, as the corporate-tax rate fell gradually to 18% from 45%, tax revenues tripled to 9.1 billion kronas ($134 million in today’s exchange rate) from just above 3 billion kronas. Since 2001, revenues more than tripled again to an estimated 33 billion kronas last year. Personal income-tax rates were cut gradually as well, to a flat rate of 22.75% this year from 33% in 1995. Meanwhile, the economy averaged annual growth rates of about 4% over the past decade.

The editorial also notes that tax competition is encouraging good policy in other European jurisdictions. It is not surprising that Swiss cantons are lowering tax rates, but it is noteworthy that even the tax-loving German politicians are being forced to reduce the tax burden:

In addition to Eastern Europe’s flat-tax movement, there is healthy rivalry from Switzerland, where the individual cantons can set their rates independently. Obwalden just lowered its corporate-tax rate to 6.6%, drawing criticism from the European Union, which called it an illegal subsidy. One of the biggest critics, Germany, recently announced that it will cut its corporate-tax rate to just below 30% next year from the current rate of about 38%.

Mandatory HPV Vaccines: Who Benefits?

The lure of government mandates has turned Merck, if it wasn’t already, into an unethical company.  In principle, I have nothing against Merck publicizing its products and their benefits.  But Merck has exaggerated the benefits of its Gardasil vaccine and has shamelessly lobbied lawmakers to make a vaccine of questionable benefit mandatory.

At $360, the Gardasil vaccine against four types of human papillomavirus (HPV) is one of the most expensive vaccines on the market. On June 8th of last year the Food and Drug Administration (FDA) approved Gardasil for use in girls age nine to 26.

It is important to mention that technically “mandatory vaccination laws” are not “mandatory” because they all contain constitutionally required opt-out provisions.  Nevertheless when lawmakers, Merck, the press and everyone else call’s such laws “mandatory,” they in effect become so because the public perception is that they are.

Factual Errors.

Merck has misrepresented the facts, or is at least standing by dumb while others misrepresented them.  It is misleading to say the human papillomavirus (HPV) causes cervical cancer.  Not all HPV viruses cause cervical cancer and, while HPV is prevalent, those types (types 16 and 18) that cause cervical cancer are not nearly as prevalent. There are 37 or more types of genital HPV.  The rate of all 37 types together is high – 34% among women ages 14 to 24, but the rate for the types 16 and 18 that are responsible for 70% of cervical cancer cases in the U.S. – is only 1.5% and 0.8% respectively.  See the Journal Watch article published today.

Parts of the “Patient Product Information” link for Gardasil on the Merck website are vague at best and confusing and misleading at worst.   In light of the information above consider these two paragraphs:

What is Human Papillomavirus (HPV)?

HPV is a common virus. In 2005, the Centers for Disease Control and Prevention (CDC) estimated that 20 million people in the United States had this virus. There are many different types of HPV; some cause no harm. Others can cause diseases of the genital area. For most people the virus goes away on its own. When the virus does not go away it can develop into cervical cancer, precancerous lesions, or genital warts, depending on the HPV type. See “What other key information about GARDASIL should I know?”

Who is at risk for Human Papillomavirus?

In 2005, the CDC estimated that at least 50% of sexually active people catch HPV during their lifetime. A male or female of any age who takes part in any kind of sexual activity that involves genital contact is at risk. The U.S., unlike some other countries, has been very successful at reducing cervical cancer rates.  Both the actual number of cases of cervical cancer and the number of deaths from cervical cancer has been declining steadily for the past ten years.  (seer.cancer.gov/statfacts/html/cervix.html).  Furthermore, the effectiveness of condoms in preventing the spread of both HPV and HIV is well documented, as is the value of routine pap smears in preventing death from cervical cancer.

Policy Errors.

Merck is also clearly taking advantage of some very fallacious policy analysis.  It is very difficult to do a cost benefit analysis in public health because there are so many factors, known and unknown, that come into play, but to have the debate ignore considerations that are blatantly obvious is suspect.  While it is horrible that anyone should die of cervical cancer, it probably does not make sense to advocate mandatory vaccination for approximately 30,000,000 school aged girls with a brand new vaccine in order to prevent fewer than two percent of those girls from getting cervical cancer in the future.

Risk assessment is not easy, particularly when, as is the case with Gardasil, the long term effects of a vaccine are totally unknown.  Women who participated in the drug trials were followed for an average of less than three years.  Consider this totally hypothetical example: what if 90% of all school age girls are vaccinated within the next five years and then ten or twenty years from now it is discovered that the vaccine made them sterile or actually caused them to get a different type of cancer than what they were vaccinated against?  Or worse yet, because of the difference in sample size, once millions of  9 and 10-year olds were vaccinated instead of just a couple of hundred, one percent of the girls had side effects severe enough to cause brain damage or death?

The principle of unintended consequences suggests that, in all but the clearest cases, health risk assessments should be left up to individual families, not only because making such determinations rightly rests with families, but also because it simply does not make sense from a public policy standpoint to experiment on such a large portion of our population all at once.  Let parents choose for their girls, then there will be portions of the population that does and that doesn’t get the vaccine and others that received it later or earlier, or yet others that receive it while younger or older.  Allowing parents to make their own risk assessments is a natural way to protect the population from some negative unintended consequence of the vaccine affecting a whole demographic all at once.

To add insult to injury, not only has Merck left policy makers in the dark as to the myriad of possible downsides to mandatory vaccination for HPV, it has actively lobbied and paid large campaign contributions to politicians willing to support mandatory vaccination policies.  According to documents obtained by The Associated Press last month, Merck donated $5000 to Texas Gov. Rick Perry (R) on the same day Perry’s chief of staff met with the governor’s budget director and others for a “HPV vaccine for Children Briefing.”

Similar scenarios played out in at least seven other states.  This seems quite a bit like bribing politicians to do something for Merck, something that will bring Merck huge profits, very possibly at the expense of the general population – or at least at the expense of little girls.

Unfortunately, 20 states or more are currently considering mandatory HPV vaccination laws.