Your Tax Dollars at Work

Speaking of my claim yesterday that “people spend other people’s money far less efficiently than their own,” this just in from the Associated Press:

The federal program that provides legal help to poor Americans turns away half of its applicants for lack of resources. But that hasn’t stopped its executives from lavishing expensive meals, chauffeur-driven cars and foreign trips on themselves.

Agency documents obtained by The Associated Press detail the luxuries that executives of the Legal Services Corp. have given themselves with federal money – from $14 “Death by Chocolate” desserts to $400 chauffeured rides to locations within cab distance of their offices.

The government-funded corporation also has a spacious headquarters in Washington’s tony Georgetown district – with views of the Potomac River and a rent significantly higher than other tenants in the same building.

Chuck Grassley, chairman of the Senate Finance Committee, is upset. Maybe at last he can turn his attention from oversight of private charities and universities to his actual job, oversight of federal spending.

When Dogs Are Criminalized, Only Criminals Will Own Them

Kansas City has followed the lead of Denver and Ontario, Canada in instituting a ban on pit bulls. Any pit bulls found in the city will either be turned over to shelters outside the city or, more likely, euthanized.

Breed-specific prohibitions are a bad idea for a variety of reasons, but the most glaring is that the most common target of these laws – the “pit bull” – isn’t really a breed, but a generic name given to dogs with those features we’ve come to associated with aggression. The “pit bull” very generally refers to the American Staffordshire Terrier, but can include a number of breeds with similar features, including the most recent Best in Show at the Westminster Kennel Club and, more importantly, one of my dogs. (We were repeatedly warned when she was a puppy that she might be mistaken for a pit bull, but she’s the sweetest, most harmless dog I’ve ever known, unless you happen to be a rug or a pair of shoes).

What’s more, as the New Yorker’s Malcolm Gladwell has pointed out, it’s not even clear that pit bulls deserve their reputation:

A Georgia-based group called the American Temperament Test Society has put twenty-five thousand dogs through a ten-part standardized drill designed to assess a dog’s stability, shyness, aggressiveness, and friendliness in the company of people. A handler takes a dog on a six-foot lead and judges its reaction to stimuli such as gunshots, an umbrella opening, and a weirdly dressed stranger approaching in a threatening way. Eighty-four per cent of the pit bulls that have been given the test have passed, which ranks pit bulls ahead of beagles, Airedales, bearded collies, and all but one variety of dachshund. “We have tested somewhere around a thousand pit-bull-type dogs,” Carl Herkstroeter, the president of the A.T.T.S., says. “I’ve tested half of them. And of the number I’ve tested I have disqualified one pit bull because of aggressive tendencies. They have done extremely well. They have a good temperament. They are very good with children.”

Pit bulls do boast strong jaws that can lock into place. But many breeds can deliver a nasty bite when provoked. The attention directed at pit bulls seems more due to their trendiness, not to any unique aggressiveness in their genetics. The tough guy dog du jour was once the equally powerful Rottweiler.

Which means the problem is with the owners, not the dogs. Ban pit bulls, and the riffraff that uses them for nefarious purposes will move on to another breed.

The law in Kansas City, however, is particularly dumb. Apparently, the city has instituted an “amnesty period,” during which well-intentioned owners can turn their pups over for euthanizing without facing a fine.

To see the folly in this proposal, let’s consider two hypothetical put bull owners.

Owner A is a family who had the misfortune of picking a pit bull from the pet store, breeder, or pound. They’ve raised the dog as a pet, and it lives in a happy, loving home. It’s harmless.

Owner B is a drug dealer who bought a pit bull to protect his contraband. He has trained the dog to attack. The dog, obviously, is vicious and dangerous.

Which dog owner is more likely to follow the law, and take advantage of the amnesty period? Which dog is more likely to be turned over and euthanized?

Seems to me that Kansas City has created a scenario where all of the harmless pit bulls around town will be destroyed, leaving only the dangerous ones.

Which of course will (1) reinforce stereotypes about the breed, and (2) likely give police license to shoot on sight any dog remotely resembling a pit bull without much in the way of repercussions.

Winning with Zero

Though prospects for broad reform of the U.S. antidumping law are tied to the now-moribund Doha Round of trade negotiations, curtailing antidumping abuse is still viable through other channels. Yesterday, the Appellate Body of the World Trade Organization ruled that the U.S. dumping calculation technique known as “zeroing” violates the WTO’s Antidumping Agreement.

In determining margins of dumping (which dictate the prospective antidumping duties applied to affected imports), the Department of Commerce typically compares a foreign exporter’s U.S. and home market prices. There are usually dozens or hundreds (sometimes thousands) of comparisons made, each generating a margin of dumping, which can be positive, negative or zero.

Before averaging the individual dumping margins to produce an overall antidumping duty rate, the DOC perpetrates some sleight of hand by setting all of the negative dumping margins to zero. This, of course, has the effect of seriously inflating the overall rate and dissuading subsequent importation.

Zeroing is probably the most distortive of a multitude of methodological tricks the DOC undertakes in the name of fighting unfair trade. In previous research, Brink Lindsey and I looked at 18 actual dumping cases and found that had the DOC not engaged in zeroing, the antidumping duty rates would have been, on average, 89 percent lower.

If the United States complies with yesterday’s ruling and ceases the practice in all cases prospectively, the antidumping law will remain a nuisance, but its capacity to seriously obstruct trade will be weakened considerably.

The Decider, Hard at Work

It’s no secret that President Bush doesn’t take well to criticism (or even actual non-filtered news), and doesn’t do much to break out of the groupthink bubble down on Pennsylvania Ave. But now for some reason the administration has decided to start pretending that they seek outside counsel. Back in June, the president held a much-ballyhooed “war council” at Camp David that was portrayed as a broad-minded president seeking to mix it up with a variety of opposing intellectuals. The scholars on that panel were

Frederick Kagan, AEI, full-throated neocon

Eliot Cohen, SAIS, full-throated neocon

Robert Kaplan, The Atlantic, advocate of American empire

Michael Vickers, former CIA, vocal war proponent turned tactical critic

So much for intellectual diversity at that summit. But now the White House is touting another panel of critics, held earlier this week, that is supposed to help Bush figure out what the heck’s going on in Iraq. Here’s how spinmeister Tony Snow spun the meeting:

What the president does in sessions like this is invite people to express very openly their candid views on things. They play a role in the sense that they add to the president’s knowledge and understanding of the region, they introduce new ideas, and they allow him to question closely people who spend the vast majority of their time studying issues that are of keen concern to him, and, at this point, to the country.

We do not invite in “amen choruses.’’ What you do is you invite smart people in who have different points of view… And that’s a very useful service. You don’t want people who are simply saying exactly the same thing.

Right, you wouldn’t want them to say exactly the same thing. But trouble is, it seems that The Decider didn’t even want the experts’ views. Here’s Vali Nasr, one of the participants in the recent panel, on what he did and didn’t contribute:

I didn’t give an opinion about policy. They didn’t ask if it was a good policy or not.

I wonder why.

Every Day Brings an Emergency

The U.S. Farm Bill is due to be redrafted in the first half of next year and Cato will be part of what is shaping up to be a lively debate. The recent round of WTO negotiations were one hope for reducing the costly distortions that agricultural subsidies impose, but we all know what happened there. (The WTO news release can be found here if you are not up to speed).

The 2007 Farm Bill, then, provides the next best opportunity for much needed reform. But, considering the noises coming from Congressmen, we reformers have our work cut out. Consider this recent pearl, offered by Sen. Chuck Hagel (R-Neb.):”The fact is we know there is emergency assistance required every year, whether it’s for drought, floods or whatever natural cause…” Webster’s Encyclopedic Unabridged Dictionary of the English Language defines an emergency as “a sudden, urgent, usually unforeseen occurrence or occasion requiring immediate action.” I don’t think something (a different ‘something’ all the time, according to the Senator) that happens with certainty every year fits that definition.

Senator Hagel went on to say…”Why don’t we craft a farm bill that is visionary, relevant, real and deals with the challenges we know agriculture producers deal with?” I am sure the Senator meant the question to be rhetorical, but I agree with the Senator – why don’t we craft a Farm Bill that is visionary, relevant and real. A vision of farmers making a living from markets, relevant to the fact of the significant cost of these programs, and real – as in, real different to the last farm bill (a huge step backwards from the relatively tame 1996 farm bill). As for the challenges, surely farmers, like other small (and not so small) businesses should be able to deal with challenges unassisted by government (read: taxpayer and consumer) support?

I’m an Australian so I know something about drought. I’m also an economist, so I know something about comparative advantage. Maybe if every year is a disaster year in some place, then farmers shouldn’t be farming there….

Who Is Really “Obsessed” Here?

I just fired off this letter to the editors of the Houston Chronicle:

Who Is Really “Obsessed” Here?

In an August 16 editorial (“Voucher Obsession”), you claim as fact that “vouchers would only [help] a few students.” The Netherlands has had a nationwide public and private school choice program since 1917. About three quarters of Dutch students now attend private schools. Chile introduced school choice in the 1980s, and the majority of students in that country are now enrolled in private schools.

As school choice programs allow demand to rise, the supply of private schools rises to meet it. For you to be unaware of such an elementary fact about market-based education systems does a disservice to your readers. And it begs a serious question: if you know so little about school choice, why do you oppose it so obsessively?

The Myth, and Insight, of Owens Valley

Yesterday’s Washington Post included an article on the political battle between Las Vegas and northern Nevada over access to northern Nevada’s groundwater.

Unhelpfully, the article repeated the myth of Owens Valley, the southeastern California valley that, a century ago, became part of the nation’s first major water rights agreement. Under the deal, valley residents sold their property and water rights to Los Angeles, and much of the valley’s water was carried away by aqueduct to fuel the city’s growth into a major metropolitan area.

The Post repeats the myth faithfully:

The specter of California’s Owens Valley looms over the area, as people recall the aqueducts that almost 100 years ago turned a lush agricultural community into an environmental disaster so that water could be delivered to Los Angeles.

[…]

William Mulholland, as head of the Los Angeles water department in 1904, conceived the idea of an aqueduct from the Owens Valley. “He had no interest in draining the valley, he had no interest in creating that wasteland,” [Bob Fulkerson, state director of the Progressive Leadership Alliance of Nevada] said. “He did not want that to happen, but that’s what did happen because once the siphon was started it was impossible to turn it off.”

University of Arizona professor Gary Libecap, in research he summarized in a Summer 2005 Regulation article, has effectively exploded this myth.

Far from being a “lush agricultural community,” historical data show Owens Valley contained small, relatively low-production farms with a total of only about 50,000 acres in cultivation. Much of the valley’s income came from livestock, not planting. The area featured a fairly short growing season, high elevation, alkaline soils, and poor access to markets. In short, Libecap concludes, “Those data suggest that Owens Valley farmers may have been quite anxious to sell their land to an interested buyer.”

The Los Angeles–Owens Valley deal provided that buyer. Libecap’s research shows valley landowners were offered considerably more money for their property and water rights than what their farms were worth. The payments became even more enticing after the California legislature and courts forced the city to sweeten the deals.

That may ultimately prove the solution to the Nevada problem. As Ronald Coase famously argues, original distribution of property rights will not prove an impediment to ultimate efficiency so long as transactions costs are minimal. Put more simply, Las Vegas likely needs to up its offers to northern Nevada counties in order to get the water it needs. And, given Vegas’s growth rate, that bid is likely forthcoming.