A Head-Check on Earmark Reform

Today, President Bush called for reform of budget earmarks, the fiscal baddie de jour. Those are the budget items commonly called “pork projects.” Think of the funding for the World Toilet Summit, for instance, and the obvious jokes about fiscal incontinence.

In this morning’s Rose Garden speech, the president summed up why these projects are bad:

Washington insiders are able to get billions of dollars directed to projects, many of them pork barrel projects that have never been reviewed or voted on by the Congress … Some of the earmarks are not even included in legislation. They are stuffed into committee reports that have never been passed, and are never signed into law. Earmarks often divert precious funds from vital priorities like national defense. And each year they cost the taxpayers billions of dollars.

He closed with what was touted by his press spinners as a grand proposal to curtail earmarks:

Congress needs to adopt real reform that requires full disclosure of the sponsors, the costs, the recipients, and the justifications for every earmark. Congress needs to stop the practice of concealing earmarks in so-called report language. And Congress needs to cut the number and cost of earmarks next year by at least half.

It’s certainly nice to hear this rhetoric coming from the president. And nobody can really object to what he’s proposing. It’s hard to disagree with an attempt to shine some light on what über-lobbyist Jack Abramoff called the “favor factory.” Even Nancy Pelosi has endorsed the goal of “transparency” in earmarking by requiring members of Congress to put their names alongside the projects they sponsor.

These reforms assume that members of Congress will be shamed into stopping these sorts of projects when forced to attach their names to them. But the truth really isn’t that members of Congress don’t want their names affiliated with most of these things. It’s that so many of them do! When earmark sponsors remain anonymous, numerous congressmen could take credit for a single project. There was no way to verify who was telling the truth. Now there is. Think of it as intellectual property protection for government waste. It just might lead to more pressure to multiply the number of earmarks, not less.

Even if “earmarks” as currently defined are monitored and reduced, there are no promises that these silly projects won’t appear in other ways and other places. The congressional budget process is nothing if not a game of reinvention. You can call these spending items Happy Funtime Projects instead and sock them away in another part of the budget. They will still remain the coin of the K Street realm.

Of course, Congress could simply give a bucket of money to an agency, no strings attached. But then it’s also likely a member of the Appropriations committee would write a letter to the department head that reads something like, “Gee, wouldn’t it be nice if Project X got some of this pot of money?” Can you really blame a department head who reads a letter like that – from a member of Congress who has power over their budget and oversight of their agency – and takes it seriously? It would strike anyone in that position as similar to Tony Soprano walking into the corner grocery store you own and saying, “Damn shame if anything were to happen to this nice little place.”

Earmark transparency shouldn’t be seen as the endgame of budget reform. It is merely a beginning. Yet the goal should be to reduce the scope of government overall. As long as a culture of spending persists in Washington – fueled by a budget process that commands Uncle Sam to be all things to all people – earmarking in some form will always be with us no matter who is in power.

Market Education: Will India Lead the Way?

Much is made of the fact that some sectors of the U.S. economy face increasing competition from the developing world. India, in particular, is singled out for its proliferation of call centers and computer programmers.

But few people stop to ask how a developing country in which English is only learned as a second language has been able to become such an important international contender for skilled jobs requiring English fluency. The answer, at least in part, is that a large and increasing number of Indian children are being educated in private, fee-charging schools that must compete vigorously for the privilege of serving them. Even in some of the poorest slums and rural villages of India and Africa, majorities of students attend these schools, and are better served educationally than their peers in the government-run sector (and at a lower cost, to boot). Among other advantages – from the standpoint of meeting parental demand – the vast majority of Indian private schools teach all their lessons in English, as opposed to state schools which typically offer English instruction only as a separate course, when they offer it at all.

But despite the considerable size and rapid growth of the private education sector, there are still millions of families in developing countries who find it financially difficult or impossible to gain access to it. But what if those countries kick it up a notch?

A recent story in DNA Mumbai quotes Infosys CEO Nandan Nilekani as saying that, “There is an urgent need for the government [to] provide vouchers to parents from the economically backward section. That way they can choose to enroll their children in private schools instead of the government-run schools, which are in a pathetic state.”

Adopting a truly free market approach to education, with financial assistance to ensure universal access, would be an incredible boon to the Indian standard of living, and an excellent lesson for rich countries still languishing under the pall of calcified government school monopolies.

Attention, Legal and Political Thinkers: A New Scholarly Resource

Rediscovering Bruno Leoni

There’s a new resource from Italy’s Instituto Bruno Leoni: a scholarly web resource on the ideas and work of the great legal scholar for whom the Institute is named, “Rediscovering Bruno Leoni.” It has both Italian and English versions and includes mp3 files of some of Leoni’s lectures.

Leoni showed a deep understanding of law and its relationship to voluntary social order. His work on the evolution of law greatly influenced F. A. Hayek and other writers who outlived him. In contrast to prevailing views, he argued that law is not simply an assertion of power, as the legal positivists insist, i.e., a set of “commands of a sovereign,” but traces back to the claims made by individuals and adjudicated through a complex process of interaction. As Leoni argued in “Law as Claim of the Individual,”

The legal process always traces back in the end to individual claim. Individuals make the law, insofar as they make successful claims. They not only make previsions and predictions, but try to have these predictions succeed by their own intervention in the process. Judges, juris-consults, and, above all, legislators are just individuals who find themselves in a particular position to influence the whole process through their own intervention.

The cases we bring to court and the cases we don’t all are part of the law-making process. The role played by elected legislators is important in the creation of a legal order, but it is almost always overrated. Most of the law that governs our everyday lives resulted from relatively decentralized common law (or Roman law) processes, and not from the “commands” of sovereigns.
Additional resources on Bruno Leoni (and on many hundreds of other deep thinkers) can be found at the extensive and brilliantly organized “Online Library of Liberty.”

Other writers with a similar appreciation of law as an evolved body of rules of just conduct include Lon Fuller of Harvard Law School (especially in his classic work The Morality of Law), F. A. Hayek (notably in Law, Legislation, and Liberty, Vol. I: Rules and Order; his classic 1945 American Economic Review essay on “The Use of Knowledge in Society” is must reading for understanding complex social processes, including the evolution of law), and Randy Barnett of Georgetown University, a Cato Institute senior fellow and author of Restoring the Lost Constitution: The Presumption of Liberty and The Structure of Liberty: Justice and the Rule of Law.
So, budding law students and political scientists. Have at it!

Freedom of the Press and Venezuela

There’s a general relationship between freedom of the press and economic freedom. My research assistant prepared the graph below showing that correlation. Countries that are more economically free tend to have a freer press.

Economic Freedom and Freedom of the Press

[Click picture for larger version]

Venezuelans have been finding that out in recent years as their level of economic freedom, which has been in steady decline during the past few decades, has fallen rapidly under the government of Hugo Chávez. Venezuela now ranks 126 out of 130 countries in the Fraser Institute’s economic freedom index (in 1985 it ranked 25th out of 111 countries). When you concentrate economic power in political hands, the institutions of civil society lose their independence.

The latest casualty in Chávez’s campaign to control the media is Radio Caracas Television (RCTV), whose license the government recently announced will not be renewed. RCTV, founded in 1930, was one of only a few remaining TV stations critical of the government in a country where media outlets are practicing various degrees of self censorship. But, according to the Venezuelan communication minister, RCTV’s “irresponsible attitude hasn’t changed.” Symbolizing the government’s intolerance of dissent is a law passed last year that can land individuals for months or years in jail for expressing disrespectful words about government officials.

The model looks suspiciously similar to that of Vladimir Putin’s Russia, where television stations refrain from criticizing the Kremlin, but a few leading newspapers still do not. In both Venezuela and Russia, relatively few people read newspapers; it is the electronic media that informs the general public.

Journalist and Venezuelan-born Cato adjunct scholar Carlos Ball tells a personal anecdote about the long-term decline of freedom in Venezuela (see his op-ed in Spanish here http://www.elcato.org/node/2143 ). In May 1987, Carlos was the editor of the Diario de Caracas, a leading newspaper. The paper belonged to the business group that owned RCTV. Then-president Jaime Lusinchi conditioned the renewal of RCTV’s license on Carlos Ball’s dismissal. Carlos was fired and the station got a 20-year license. It is that license that is expiring in May. According to Carlos, the road to political and economic centralization was set decades before Chávez declared his so-called socialism of the 21st century. The treatment of RCTV is only the most recent reminder that it is no longer accurate to refer to Venezuela as a democracy.

Semi-Tough — New Ed Report Offers Right Diagnosis, Wrong Cure

An ultra-blue-ribbon report published last month by the National Center on Education and the Economy argues that America is headed for economic disaster unless we dramatically restructure our schools. True enough.  But diagnosing a problem and solving it are two different things, and it is in the solution department that the report, titled “Tough Choices or Tough Times,” disappoints.

The study correctly observes that America must produce a more knowledgeable, flexible, and creative workforce if we are to have any hope of maintaining our current standard of living. If we don’t, an ever-increasing share of U.S. jobs will be filled by better-educated, lower-wage workers in countries such as India and China.

In explaining this economic challenge, the authors (a who’s who of political, business, academic and labor leaders) make a compelling case for free markets. They show how competition, consumer choice, and the profit motive encourage businesses to hire the best and brightest workers they can find – wherever they can find them. Free from intrusive regulation of their personnel and product design decisions, businesses seek to satisfy their customers’ demands as ably and efficiently as possible. They do not do so out of charity, or because they are told to by the state, but because it serves their own interests. This is Adam Smith’s invisible hand at work – and oh how it works.

The fact that the authors understand this process so well makes their education policy recommendations all the more disappointing and incongruous. Instead of recommending that we harness these same free market forces to transform our schools, they offer what amounts to a weak charter school reform, suffocated with regulation.

The report is a central planner’s Christmas list. Teachers would continue to be certified by the state and their (dramatically increased) salaries set by the state. They would administer to students a curriculum determined by the state, and gauge students’ success using mandatory state tests. In fact, progression through the system from secondary to higher education would be dependent on students passing government examinations.

These nanny-state recommendations are, mercifully, punctuated by the occasional dose of liberty. The authors recommend, for instance, that schools should be chosen by families instead of being assigned to students by bureaucrats. This alone, they seem to imagine, would create a vibrant educational marketplace. But consumer choice is meaningless in the absence of producer freedom. If schools cannot specialize and cater to different interests and preferences – by setting their own curricula, choosing their own tests, determining their own teacher selection criteria – then the diversity and innovation that characterize free markets cannot and will not arise. And the report’s recommendations curtail all of these freedoms.

Further inhibiting market processes, the authors would preclude the ability of their charter-like schools to set their own prices or even to charge tuition. But as any first year economics student is aware, market-determined prices are an indispensable mechanism by which consumer preferences are communicated to producers, and by which producers are encouraged to offer the particular kinds of services most in demand. Eliminate market prices and you cripple the market.

How could the contributors to this report have produced recommendations so fundamentally at odds with their own astute diagnosis of the problem? By thinking very hard, inside a very small box.

Marc Tucker, vice chairman of the commission responsible for the report, told the Post’s V. Dion Haynes that they aimed to produce “the best national public school system in the world.” If you set out to build the best horse-drawn buggy, you won’t end up inventing the automobile.                 

The authors of this report assumed that the state must be at the center of our education system much as early astronomers assumed that the Earth must be at the center of our solar system – with equally unsatisfactory results.

Unaware that the planets orbit the sun, pre-Copernican astronomers tried to reproduce their trajectories with clever, intricate, but inevitably doomed geocentric models. In a similar vein, the Center struggled unsuccessfully to reproduce market incentives within their state-centric policy environment. “Both the state and the district could create a wide range of performance incentives for the schools to improve the performance of their students,” the report suggests.

But instead of trying to simulate market incentives within a centrally planned system – a venture proven futile by the failed socialist economies of the 20th century – why not actually create a free education marketplace? With a simple program of need-based financial assistance, all families could be assured access to schools of their choice.

The National Center’s report fails to even consider this market-centric solution, however, and thereby consigns itself to the status of an historical footnote – a doomed and oddly anachronistic attempt to achieve market results through government edict.

[An edited version of this post previously appeared in the New York Daily News].

 

Topics:

Is Bush Helping Africa?

On Sunday, December, 31, the Washington Post featured a banner headline reading “Bush Has Quietly Tripled Aid to Africa.” The article noted:

The president has tripled direct humanitarian and development aid to the world’s most impoverished continent since taking office and recently vowed to double that increased amount by 2010 — to nearly $9 billion.

The moves have surprised — and pleased — longtime supporters of assistance for Africa, who note that because Bush has received little support from African American voters, he has little obvious political incentive for his interest.

“I think the Bush administration deserves pretty high marks in terms of increasing aid to Africa,” said Steve Radelet, a senior fellow at the Center for Global Development.

Conservative press critics might be surprised at the positive tone of the article, which ran for 34 column inches, about a third of a page. But one could also wonder why the Post, in all that space, couldn’t find room for a single critical comment from a foreign aid skeptic. For decades, economists have argued that government-to-government aid bolsters dictatorial governments, increases dependency, and discourages local entrepreneurship and enterprise. People can hardly fail to note that Africa has been the largest recipient of economic aid for decades, and the continent remains poor and undeveloped. So will Bush’s huge increase in aid be more successful? The outlook isn’t good.

Post readers who want the full story might consult foreign aid critiques by pioneering development economist P. T. Bauer, former World Bank economist William Easterly, Ugandan journalist Andrew Mwenda, longtime aid practitioner Thomas Dichter, Cato’s Ian Vasquez, or four African economists, or this story from the BBC.

Cloned Food 101

The FDA’s Center for Veterinary Medicine recently issued three documents related to cloned foods:

  • “Animal Cloning: A Draft Risk Assessment”
  • “Animal Cloning: Proposed Risk Management Plan for Clones and Their Progeny”
  • “Guideline No. 179: Guidance for Industry Use of Edible Products from Animal Clones or Their Progeny for Human Food or Animal Feed” 

These are drafts open for comment until April 2, 2007.

The FDA concluded that, while there were little data, the data available indicated that “SCNT [somatic cell nuclear transfer, i.e., cloning] results in an increased frequency of health risks to animals involved in the cloning process, but these do not differ qualitatively from those observed in other ARTs [Assisted Reproductive Technologies] or natural breeding.” Furthermore, “[e]xtensive evaluation of the available data has not identified any food consumption risks or subtle hazards in healthy clones of cattle, swine, or goats.” 

In short, unless the comments provided within the next three months indicate otherwise, food from cloned animals will be on the market in about a year and require no additional labeling to distinguish it from food products from non-cloned animals.

Keeping the Facts Straight   Most objections to “cloned foods” stem from a misunderstanding of the technology and its ramifications:

  • First, not the food, but the animal used to produce the food is what is cloned.  Potentially, the actual clone could be used as food but, since it costs $15,000 to $20,000 to produce a clone, it is usually only the clone’s milk or offspring that are intended for the food market.
  • Cloning is not a form of genetic engineering. The DNA provided by the animal being cloned is not altered. Cloning is a form of assisted reproduction that creates an identical twin at a later time. Any accidental alteration of the DNA results in death of the clone usually in the lab, but occasionally one survives through gestation and birth, but not beyond the perinatal period. Thus, all clones that have the potential of entering the food supply or of being bred are genetically identical to the animal that was cloned.
  • Food from clones poses no more risk to the consumer than the animal being cloned. The susceptibility to disease or other conditions that may disqualify clones from food production is no greater than that of the original animal. Thus, the fact that an animal is a clone poses no unique risk to the food supply.
  • The first sheep (Dolly) was cloned in 1996. The first cow was cloned in 1998 and the first pig in 2000.
  • In 2001, the FDA decided to study the issue of food from cloned animals and asked the food industry not to introduce any food produced by clones or their progeny into the market. The FDA’s notice of publication that accompanies the afore-mentioned drafts requests that this “voluntary moratorium” continue.
  • It is possible that some cloned animals or their progeny have already entered the food supply, but there is no definitive evidence that this has happened.
  • The FDA has asked for a “voluntary” moratorium because, under current law, the agency probably doesn’t have the authority to ban foods made from clones. Unless Congress amends the Federal Food, Drug, and Cosmetic Act (FFDCA), this will continue to be the case regardless of what the FDA decides when it publishes its final rule.
  • The milk and beef from cloned cows is indistinguishable from that produced by other cows. It’s not adulterated; there are no additives. The following is an oversimplified description of federal law,  but should shed some light on why the FDA is proceeding as it is. Basically, federal law (the FFDCA) presumes that unadulterated food is safe. The FDA has the authority to regulate the use of additives and to require accuracy in labeling. Labeling may be regulated to assure that the identity of the food is correctly represented (margarine is not butter) and that potentially harmful additives or allergens are indicated on the label. Food from cloned animals simply does not differ from regular food in any manner that justifies regulation under the FFDCA.
  • It is time to give some clarification regarding the phrase “genetic engineering.” Genetically engineered animals have been genetically altered, not just reproduced. Under a broad definition of “genetic engineering”, all animal husbandry that involves changing the genetic makeup from one generation to the next involves genetic engineering. In this sense, each time a breeder chooses a mate for an animal, he is engaged in genetic engineering. This type of genetic engineering actually takes place through selective reproduction. A newer type of genetic engineering, which is what most people mean when they use the term, refers to genetic alterations made by man not through selective breeding but through selecting the actual specific genes that will be combined. This can also involve taking out or adding genetic material, including the addition of genetic materials from different breeds, species, phyla, or even kingdoms. The resulting animal or plant is called “transgenic” if foreign DNA is integrated into the genome.
  • There are over a billion acres of land, most of it in the United States, planted with strains of transgenic crops. These crops, for the most part, are corn, soybeans and cotton.
  • At this time, there is only one transgenic fish approved for sale in the United States, and it is an aquarium fish, not for human consumption. There is, however, a petition pending with the FDA to approve a transgenic salmon, and it will be labeled as such if it is approved.
  • The Center for Food Safety and several other consumer groups have filed a Citizen Petition with the FDA encouraging the agency to regulate cloned foods as new animal drugs. Under the FFDCA, drugs require pre-approval for safety and efficacy before being marketed. This is quite a stretch. The relevant part of the FFDCA definition of a “drug” according to the petition is “any articles (other than food) intended to affect the structure or any function of the body of man or other animals.” It is further worth noting that genetically modified foods, including transgenic animals, require pre-market approval by the FDA because they are considered as containing “food additives.” This actually makes some definitional sense since genetic material is added or changed to create a genetically modified plant or animal. But, this same logic does not hold for cloning.

The conclusion I draw from these facts is that the FDA should not be involved at all in regulating food from clones or their progeny. Under existing law, the FDA doesn’t have the authority to regulate food from clones even if there were a safety issue. 

Regarding labeling — that issue will take care of itself without FDA interference. If there is enough public concern that food produced from clones or their progeny is unsafe, then producers of organic foods will start specifying “Not from cloned animals” on their labels in the same way they have advertised “Not from animals treated with hormones or antibiotics.” 

The Center for Food Safety claims that “63% of Americans would not buy cloned food, even if FDA deemed the products safe.” They present these data from a 2005 poll as an argument for regulation. I think such poll results only justify purchasing stock in organic food companies that promise not to sell products from cloned animals — but not government intervention.

Ethical Considerations   The ethical concerns addressed here are primarily moral considerations that legitimately could influence actions taken by individual breeders, producers, and consumers, but not legitimately be used to argue for government intervention. Even the FDA agrees with this point. In its proposed risk management plan, the agency states: “The Draft Risk Assessment is strictly a science-based evaluation of animal health and food consumption risks, and the Proposed Risk Management Plan and Draft Guidance for Industry do not address any ethical or other non-science based concerns regarding animal cloning.”

Most ethical objections to cloning and genetic engineering in general come from a fear of the unknown consequences of such technology, a religious or moral objection to tampering with natural reproduction, and/or a concern for preventing cruelty to animals. While all these concerns hold legitimate moral sway with various portions of the population, they are not grounds for government action. We live in a pluralist society and those who disagree on religious or moral grounds with cloning should be free to speak out, boycott, or not participate in the objectionable activity, but those who do not object should be equally free to participate in producing food from clones and/or eating it.

The one legitimate concern I see with cloning is one almost as old as animal husbandry itself. By its very nature, manipulating a gene pool to create certain desired phenotypes creates a homogeneity that can put the whole group at risk. As a 25-year veteran breeder of rare breed dogs and cats, I know first-hand that breeders often attempt to ferment type at the expense of health. A lack of genetic diversity in purebred animals caused by too much inbreeding makes those animals more susceptible to disease, shorter-lived, and more prone to unhealthy offspring. Domestically bred animals loose their genetic resilience when intentional line-breeding or the overuse of certain choice animals makes it difficult to find animals that aren’t related. 

To prevent such homogeneity, some breeders feel it is their moral obligation not to flood the gene pool with one particular genotype. They do this by not breeding two animals related more closely than five generations back or by not breeding their pride stud more than four times a year. Such ethical standards are usually set by individual breeders or private breed associations. Cloning itself is not inbreeding but it can result in flooding a gene pool; for example, there are reports of a farmer who has cloned his prize bull five times already. Now an animal whose genetic material would appear in X number of offspring, will in fact appear in X6 number of offspring. In this way, cloning can over-saturate a gene pool with a particular animal’s genes, making the group more susceptible to intentional or accidental inbreeding and, in turn, genetically weaken the group as a whole. 

Like cloning, genetic engineering could be used to create consistency within a breed, but it also could be used to create diversity. Genetic engineering could help eliminate genetically linked diseases, even those in rather homogeneous groups. It could also be used to create more diversity in ways that help preserve the desired traits without creating too much homogeneity. 

Also, while individual breeds within a species become more homogeneous, genetic engineering could help the number of breeds proliferate — just look at the number of dog, cat, and bovine breeds that exist today. It certainly would be disappointing for those who like the taste of a particular kind of beef to learn that the breed of cattle that produces that beef is failing in part because of too much cloning, but that would not mean the end of all beef or all bovines. It would simply mean regenerating the breed either from a survivor, hopefully genetically engineering out the flaw that caused problems, or altering another breed to have the characteristics that were prized in the breed that failed. 

None of the ethical issues presented by cloning food-producing animals are new. Cloning and genetic engineering only provide new and more effective methods of doing what humans have been doing for millennia  — that is, manipulating the genetic makeup of plants and animals to create better food. Put another way, humans have been tampering with nature, playing God with the creation of animals, and eating their creations for thousands of years. The only thing that has changed is the technology. The goals and the ethical problems inherent in those goals remain the same. And, as is usually the case, the very technology that poses potential problems, undoubtedly also holds the solution to those problems should they arise.