New at Cato Unbound: Has Globalization Changed the Game?

Fletcher School international politics hotshot and blogger extraordinaire Dan Drezner kicked off this month’s Cato Unbound last week with an essay drawing on his recent book, All Politics Is Global: Explaining International Regulatory Regimes, which argues that big nation-states still rule the roost and globalization has changed things less than you might think. 

In her reply to Drezner, Ann Florini, director of the Centre on Asia and Globalisation at the National University of Singapore and senior fellow at the Brookings Institution, disagrees that global governance remains dominated by a few great state powers. “We’re heading for a multi-polar system where very different kinds of states, at very different levels of development, will matter,” she argues.

Jeremy Rabkin – recently moved from Cornell to the George Mason School of Law – argues that the collapse of communism and the discrediting of socialism has led to a world in which “states now are so entangled in international regimes — because so entangled in international exchange.” He agrees with Drezner that the big states tend to dominate the process,  but non-state actors now often succeed in making marginal changes to policy (which add up) while the big powers are asleep at the wheel.  

And hot off the press today, UCLA’s Kal Raustiala maintains that we can learn something important about global governance by looking to the forces affecting domestic politics over the last century: powerful lobbyists and special interests did not emerge because the state was getting weaker. “The rise of interdependence and NGOs in American society didn’t signal the end of the state; it signaled the growth of the state.”

Who can get enough of the exciting evolution of international regulatory regimes? So stay tuned as Drezner kicks off the informal blog conversation Friday with a response to his critics.        

Another Government Shakedown

Politicians are agitating for a big tax hike on the private equity industry, but the motive for this talk may involve more than just a desire to have more money to spend. Holman Jenkins of the Wall Street Journal explains that politicians threaten an industry in order to extract campaign contributions. The column suggests this is what spurred the attack on the so-called junk-bond industry in the 1980s. Another good example would be the assaults on Microsoft and Intel. This does not mean politicians are like mobsters. Mobsters, after all, don’t add insult to injury by trying to rationalize their protection rackets as being for the public good:

Being a shrewd bunch, the private equity industry presumably has gotten the message: When vast new fountains of wealth open up in the economy, Congress must receive its ransom in campaign donations. Delivering the wagged finger were none other than Max Baucus and Charles Grassley, chairman and ranking member of the Senate Finance Committee, who’ve taken to musing aloud about how the tax code’s treatment of private equity’s lately fabulous profits might be revised. The bipartisan nature of the initiative should reassure readers that there’s no philosophical issue here. It’s purely bidness. You, private equity, have been remiss in your patriotic duty. Cough up. Anyone who recalls the junk bond wars of the 1980s will notice a pattern. Then too, Congress was awash in proposals for taxing the takeover industry: by eliminating the interest deduction for junk bond interest, by imposing an excise tax on assets acquired in a hostile takeover, etc. These ideas came to naught, not least because of the fright the proposals put into the stock market. But the endless debate unlimbered a delicious flow of campaign dollars from all concerned. …the message has been received. Private equity has now set up a Washington trade group and has opened its pockets to politicians, with Barack Obama being a special heartthrob. Oh, happy day for members of the House and Senate tax committees, who lived for years off the junk bond wars and now will live for years off the private equity plutocrats.

You’re Not the Boss of Me

A headline in the Los Angeles Times reads,

GOP senators getting visit from boss on immigration

And who is the boss of 49 Republican senators? Minority Leader Mitch McConnell? 50 million voters? No, the Times is referring to President Bush. Thankfully, the suggestion that the president is the “boss” of the Senate appears only in the headline, not in the text of the article. But even headline writers should remember that Congress is created by Article I of the Constitution, and the president by Article II.

The president is not the boss of the Congress. Nor is he the commander-in-chief of the United States, as Sen. John McCain has said. Small-r republicans need to keep reminding people that what Gene Healy calls “the bipartisan romance with the imperial presidency” is not rooted in the American system.

WSJ: Consumers Having a Tough Time with HSAs

An article  in today’s Wall Street Journal will no doubt have opponents of health savings accounts (HSAs) hyperventilating about how HSAs have failed.  But the difficulties that consumers are experiencing are predictable, if not welcome, and some dissatisfaction with HSAs is no doubt a good thing.

Vanessa Fuhrmans writes [$]:

President Bush and many big employers have hailed “consumer-directed” health plans and savings accounts as an effective weapon in the battle against runaway medical costs. But several years after the plans got off to a fast start, the approach appears to be stumbling – largely because of consumers’ unease in using them…

[L]ow enrollment and low satisfaction among workers who are offered them raise the question of whether consumer-directed plans will stall before they ever hit the mainstream.

In a paper responding to common criticisms of HSAs, I argued that some of the inevitable consumer dissatisfaction is necessary, but much of it can be mitigated by expanding HSAs:

There are good reasons not to draw any firm conclusions based on current survey research…First…none of the surveys measures consumer satisfaction with HSAs alone, or at their full potential. Second, some dissatisfaction inevitably stems from unfamiliarity…This source of dissatisfaction can be expected to dissipate over time…

Finally, HSAs may be unpopular for reasons that should not sway policymakers… HSAs are designed to eliminate inefficiencies and hidden cross-subsidies. If that causes some dissatisfaction, it means that HSAs are achieving their purpose, not that they should be abandoned. If we stop robbing Peter to pay Paul, Paul’s dissatisfaction should not persuade us to change course…

Nonetheless, HSA supporters should be very concerned about the frustration HSA holders feel with (1) the lack of information to help them be cost conscious consumers and (2) the complex rules and restrictions that come with HSAs…

HSAs will have to reach a critical mass in the marketplace before they can be expected to effect a systemic change like widespread transparent price competition…The quickest and surest way to build that critical mass and a political constituency for HSAs would be to allow them to be coupled with any type of health insurance…

To open an HSA, millions of Americans would have to give up their current health insurance. HSA supporters can and should make HSAs simpler by removing that requirement.

None of the consumer satisfaction surveys tells us what we need to know most: the types of insurance and medical care consumers would choose if they controlled all their health care dollars and all their health care decisions. To find those answers requires expanding HSAs and removing all restrictions on HSA holders’ insurance choices.

It’s also worth noting that lots of people love their HSA:

A survey by the Blue Cross Blue Shield Association found that individuals with HSA-compatible insurance were consistently more satisfied with their coverage than those in traditional plans.

And many people support the HSA concept even if they’re dissatisfied with their particular HSA product.  I fit squarely in that camp.

But the most telling line in Fuhrman’s article might be this one:

Enrollment [in HSAs] is growing faster on the individual market and among sole proprietors, but that may be because the plans are often the only affordable option.

And what might that tell us?

Here’s to You, Mrs. Swedenburg

Juanita Swedenburg, the Virginia winemaker who took her battle for economic liberty to the Supreme Court and won, died June 9 at the age of 82. Clint Bolick, who argued her case as a lawyer for the Institute for Justice, discussed it in his new book David’s Hammer:

My curiosity was sparked, however, during a visit in the early 1990s to a small winery in bucolic Middleburg, Virginia.  The proprietor was a striking older woman, Juanita Swedenburg, who owned and operated the winery with her husband.  She produced several good wines, including a chardonnay with the toastiest nose I can remember.  We got to talking and Mrs. Swedenburg asked me what I did for a living.  When I told her that, among other things, I challenged regulatory barriers to entrepreneurship, she exclaimed, “Have I got a regulation for you!”          

Most states, it turned out, prohibited direct interstate shipments of wine to consumers.  So that if tourists from another state visited Mrs. Swedenburg’s winery and asked how they could obtain her wines back home, she would have to reply, “You can’t.” …

As a descendant of settlers who fought in the American Revolution, Mrs. Swedenburg was outraged that such a stupid law could exist in a nation with the greatest free-enterprise system in the world. 

Eventually, Bolick writes, the Institute for Justice took Mrs. Swedenburg’s case to the Supreme Court. He argued against a New York law, and Stanford law school dean Kathleen Sullivan (who also spoke recently at the Cato Institute) argued against a similar Michigan law. The Court ruled 5-4 that such laws “deprive citizens of their right to have access to the markets of other States on equal terms.” When Bolick launched his new book at the Cato Institute in April, Mrs. Swedenburg was sitting in the front row.

Juanita Swedenburg was the kind of citizen a free republic needs. After a career in the foreign service, she and her husband “retired” to a Virginia farm that had been in business since 1762. They set up a winery and worked seven days a week to make it a success. As the Washington Post says, “Mrs. Swedenburg did not take the Constitution for granted.” She knew that there was something wrong with a law that prevented willing customers from buying the fruits of her labors, wherever they lived. And when she found a lawyer who shared her enthusiasm for both wine and constitutional liberty, she pressed him to take the case on behalf of her and her customers.

Like John Peter Zenger, Rosa Parks, Allan Bakke, Michael Hardwick, Bill Barlow, and many others, Mrs. Swedenburg made our constitutional rights real by using them. Raise a glass to her memory.

Canadian Journalists Can’t Swallow SiCKO

Michael Moore’s new film SiCKO praises the government-run health care systems of such countries as Canada.  Moore claims the film was warmly received at Cannes by Americans from both sides of the political aisle. 

Canadian journalists, however, were a little more skeptical.  Here’s how Peter Howell, a film critic for the Toronto Star, described their response to SiCKO:

Michael Moore is handing out fake bandages to promote his new film Sicko, an exposé of the failings of the U.S. health care system.  But he may feel like applying a couple to himself after the mauling he received yesterday from several Canadian journalists – present company included – following the film’s first viewing at the Cannes Film Festival.

“You Canadians! You used to be so funny!” an exasperated Moore said at a press conference in the Palais des Festivals.  “You gave us all our best comedians. When did you turn so dark?”

We Canucks were taking issue with the large liberties Sicko takes with the facts, with its lavish praise for Canada’s government-funded medicare system compared with America’s for-profit alternative.

While justifiably demonstrating the evils of an American system where dollars are the major determinant of the quality of medicare care a person receives, and where restoring a severed finger could cost an American $60,000 compared to nothing at all for a Canadian, Sicko makes it seem as if Canada’s socialized medicine is flawless and that Canadians are satisfied with the status quo…

Other Canadian journalists spoke of the long wait times Canadians face for health care, much longer than the few minutes Moore suggests in Sicko. Moore, who has come under considerable fire for factual inaccuracies in his films, parried back with more questionable claims…

Sicko, to be released in North America on June 29, is by turns enlightening and manipulative, humorous and maudlin. It makes many valid and urgent points about the crisis of U.S. health care, but they are blunted by Moore’s habit of playing fast and loose with the facts. Whether it’s a case of the end justifying the means will ultimately be for individual viewers to decide.

On June 21 – the day after the D.C. premiere of SiCKO – the Cato Institute will help viewers decide when it hosts a screening of clips from SiCKO and short films by independent filmmakers who are more critical of Canada’s Medicare system.  Click here to pre-register.  And arrive early: seating is limited.