Fear Not, Tom Friedman

Yesterday’s New York Times op-ed page had a couple of rather interesting pieces on global warming that merit some thought. The first, by Thomas Friedman, discussed how American capitalists – motivated as much by the hunt for profit as they are by the quest so save the world – are undertaking a “distributed Manhattan project” to develop economically attractive alternatives to fossil fuels. No centralized government program is necessary, thank you very much. The second, by environmental writer Gregg Easterbrook, described why he has switched sides in warming debate, moving from skeptic to cautious activist. Both are far more sensible than the usual screeds on those subjects published by the Gray Lady.

The Friedman piece was spot-on. Thousands of rather brilliant minds and billions of private dollars are being devoted to ambitious alternative energy R&D. While government sprinkles money here and there, the real work is being done by venture capitalists and entrepreneurial visionaries. If anything emerges from that creative soup, it will be primarily due to the fact that capitalism is the most powerful engine of technological change and innovation ever created by man. Waiting for the Congress or the Department of Energy to come up with something would be a triumph of hope over experience.

Friedman worries, however, that it won’t be enough. “If we want to see these alternatives move from little start-ups to large-scale commercial ventures, ‘we need to get the price mechanism right.’ When you’re talking about oil, you can’t just say ‘Let the market work’ because there is no free market in oil: the producers have a cartel, and governments – like ours – subsidize oil so we don’t pay the full cost.” Friedman proposes a price floor for gasoline ($3.50-$4.00 per gallon) and green purchasing practices for the federal government.

Fear not, Tom Friedman. The alternative energy revolution (if one is to come) will indeed be televised. First of all, to say “there is no free market in oil” is to say “I don’t know a damn thing about oil markets.” One would be hard-pressed to find a freer market on this planet than the one that trades in oil. There are a multiplicity of buyers and sellers who are free to sign long term contracts or to buy and sell in futures markets and spot markets with little regulatory interference. Secondary markets are likewise robust. Prices in wholesale markets are established by supply and demand and the only reason they don’t translate directly to the consumer is because governments are fond of taxing the hell out of the product at the retail level.

To the extent that there is governmental interference in those markets, it has been to artificially raise oil prices above what the market would otherwise deliver. Were it not for OPEC price fixing through production quotas, world oil prices would normally float around $5.50 per barrel according to Francisco Parra, a former Secretary-General of OPEC.

Now, you may not buy that number, but the overall point is hard to argue. Production costs in the Persian Gulf are so low – and economically recoverable oil is so plentiful – that only government conspiracy prevents a torrent of this stuff from hitting the market. Subsidies to the oil sector do indeed exist, but they do not affect marginal production costs, which is to say they do not affect consumer prices.

In sum, the claim that oil prices would be higher were it not for governmental favoritism has it exactly backwards. Competitors need no further help.

Gregg Easterbrook’s piece makes the point that there are few credentialed scientists left who publish in the peer-reviewed literature who are willing to argue that industrial emissions aren’t warming the planet. Fair enough. But the bulk of the so-called “skeptics” (like MIT’s Richard Lindzen or UVA’s – and Cato’s – Pat Michaels) never argued that point in the first place. Instead, they have argued that warming will likely be modest and of no particular consequence. Easterbrook acknowledges that this might well be true, but that he would prefer to hedge his bets with some sort of emission control policy.

Again, fair enough. Particularly risk averse people are more inclined towards this sort of thing than those less worried about such things, and there is no “correct” answer to the question of how much one should hedge against risks given that our risk preferences are all different and risk preferences are subjective.

But bear in mind that, over the past several years, the market has essentially slapped a huge tax on hydrocarbons. If environmentalists were asked back in 2002 if they would declare victory and go home with the passage of a $50 per barrel tax on oil as a means to tackle global warming, I’m pretty sure the answer would have been “yes – hell yes!” Well, that’s essentially what has happened. It may well be that the market has already delivered Easterbrook’s greenhouse insurance policy.

It Doesn’t Take a Rocket Scientist to See the Problem Here

Yesterday, the latest science scores on the National Assessment of Educational Progress (NAEP) came out, and the same sad pattern we’ve seen for years repeated itself. Between 1996 and 2005 scores rose in 4th grade, remained stagnant in 8th grade, and dropped for high school seniors. In other words, it’s still the case that the longer children stay in American schools, the worse they do.

Unfortunately, something else also remained the same: the shameless compulsion among people in Washington, despite decades of failure, to claim credit for good news and to have the solutions for bad. Case in point, Secretary of Education Margaret Spellings’s reaction to the NAEP report, in which she not only dubbed the federal No Child Left Behind Act a cure for failure in subjects the law directly addresses, but even those it doesn’t:

The Science 2005 Report….provides further evidence that accountability and assessments are working to raise achievement levels, even in subjects not directly tested under the No Child Left Behind Act [NCLB]. Fourth-graders made significant improvements in science over 1996 and 2000 levels, with the lowest-performing students making the largest gains and achievement gaps narrowing. However, eighth-graders showed no significant gains. And among 12th-graders, scores declined….The results illustrate the need to introduce NCLB’s accountability principles to our nation’s high schools.

So when the same sorry pattern repeats itself, the adults in charge of American education proclaim that they must be doing something right. In light of this, is it any wonder that our children do worse and worse the longer they stay in school?  

United They Fall…

…at least in popularity, that is. The AP is reporting on the Bush-Blair summit today with the headline “Besieged Bush, Blair to talk about Iraq.” The two leaders have seen their popularity plummet as a result of the Iraq war, with the crowning acknowledgement coming from Karl Rove at AEI recently, where Rove remarked on the president’s record low poll numbers by saying, “People like this president…They’re just sour right now on the war.”

Sour indeed. And as my colleagues Chris Preble and Jonathan Clarke point out in press releases and a podcast here, unless Bush and Blair can conjure a miracle in Iraq, they’re likely going to stay in the cellar, popularity-wise.

My other colleague, electoral guru John Samples, argued here that Bush should have done much better in the ‘04 election than he did, and that the culprit was – you guessed it – Iraq.

Abusing the Idea of Free-Market Health Care Reform

At about 6 pm yesterday, I received an invitation to a Heritage Foundation event titled, “Another Step forward for Free-Market Health Care Reform.” The event was anything but.

Heritage hosted Rep. Mike Rogers (R-MI), who proposes to allow health savings accounts in Medicaid. In the book Healthy Competition and elsewhere, Cato scholars have explained that Medicaid HSAs are not a free-market health care reform and instead distract Congress from reforming Medicaid the way it reformed welfare in 1996.

In fact, Rep. Rogers proposed a number of non-free-market health reforms:

  • Expanded federal regulation of the health insurance markets (a.k.a. “association health plans”)
  • Federal health information technology reforms
  • Federal malpractice liability reform

Rep. Rogers concluded his opening remarks by saying that health care “is the one place where we know how to tinker, we know where to tinker, [and] now we just [need to] have the will to tinker.”

I demur. Free-market reforms reduce the influence of government over the economy. The proposals offered by Rep. Rogers do the opposite. Then again, I have only listened to the Heritage event. I have not seen the most recent iteration of Rep. Rogers’ legislation, which is not yet available online. I hope Rep. Rogers or someone from the Heritage Foundation will explain what makes Medicaid HSAs (or the other proposals) a free-market health care reform.

What’s the Big Idea?

I’ll be taking part tomorrow in the Hudson Institute’s 2006 Bradley Symposium. Entitled “What’s the Big Idea? True Blue versus Deep Red: The Ideas that Move American Politics,” the event features, in addition to yours truly, a who’s who of Washington intellectual heavyweights: Michael Barone, David Brooks, Francis Fukuyama, Bill Kristol, Charles Murray, and Shelby Steele, among others.

The discussion’s point of departure will be this paper by University of Virginia political scientist James Ceaser. Ceaser argues that the current red vs. blue political divisions reflect deep-seated and profoundly important differences over the sources and nature of social order.

My short take: I agree with Ceaser that such differences exist, but I disagree that it is useful to shoehorn the various alternatives into just two rival camps. Doing so allows Ceaser to cast contemporary politics as a contest between nihilism on the left and conservatism of some kind or another on the right. Ceaser thus frames the debate in a way that, in my view, unfairly favors the right.

Here’s another typology that I think is closer to the mark: one noisy minority of nihilists on the “true blue” left, another noisy minority of dogmatists on the “deep red” right, and the rest of us moping and groping around in a politically underrepresented center. From this perspective, the main problem with American politics today isn’t the unhinged left. Rather, it’s the disproportionate influence of culture warriors on the left and right alike—and the outmoded political categories that allow the cultural extremes to lord it over the center.

Toughman Contest

U.S. News has an interesting profile of David Addington, Vice-President Cheney’s chief of staff and top legal adviser—a key player in administration debates over torture, domestic detention, and NSA surveillance. One thing that stood out for me was this description of the social dynamic at work when administration lawyers crafted War on Terror policies:

Whether or not he became the de facto leader of the group, as some administration officials say, Addington’s involvement made for a formidable team. “You put Addington, Yoo, and Gonzales in a room, and there was a race to see who was tougher than the rest and how expansive they could be with respect to presidential power,” says a former Justice Department official. “If you suggested anything less, you were considered a wimp.”

For background on the legal theories that emerged from that environment, see here.

Congress’ Sudden Concern for Overly Aggressive Policing

While the leaders of Congress were wringing their hands over a corrupt colleague having his office raided by FBI agents in suits, a drug task force in Wisconsin needlessly terrorized two completely innocent people last night. From Dodgeville, Wisconsin:

Members of a drug task force burst into a Dodgeville apartment Monday night and arrested two people before officers realized that they were in the wrong apartment.

Richland-Iowa-Grant Drug Task Force members entered the apartment about 10:15 p.m. and arrested its two occupants in what police considered a “high-risk” drug bust, according to the Dodgeville Police Department. Minutes later, they realized that they were in the wrong place and released the occupants.

[…]

Task Force Director Lt. Scott Marquardt said the task force was reviewing what led to the accidental arrests. He said the task force was sorry for what happened to the innocent neighbors.

“We’re very disappointed,” Marquardt said. “We regret the stress and the inconvenience that we caused. That’s not how we do business.”

From research I’ve done for a forthcoming Cato paper, I’d estimate these types of “wrong door” raids are reported in the media 2-3 times per month in the U.S. (it’s likely that they happen and go unreported much more frequently). Most of the time, victims escape with no worse than a broken door and a fractured psyche. Many times, they end up injured. And once or twice a year, an innocent person ends up dead.

With its tireless support for the drug war, and its policy of making surplus military equipment from the Pentagon available to local police departments, Congress is responsible for an explosion of SWAT teams across the country, and a massive increase in the number of times these teams are deployed on such “no-knock” raids. Drug warrant service now comprises the overwhelming majority of SWAT team “call-outs” in America.

So before congressional leaders fret over the “unduly aggressive,” “intimidating” raid of a sitting member’s office, they ought to look into how their own policies have led to police kicking down the doors of dozens of innocent or nonviolent drug offenders in their homes each day in this country.

They could start by Googling “Alberta Spruill,” “Clayton Helriggle,” or “Alberto Sepulveda.”