Minn. Taxpayers Make Gophers Golden

If you’re a fan, like I am, of a small college that tries to play big time sports, you know how tough it is for your school to compete against gargantuan state universities that have tens of thousands of students, hundreds of thousands of alums, and a seemingly endless supply of professional quality facilities.

 Well, things just got a bit tougher: On Wednesday, Minnesota governor Tim Pawlenty signed legislation authorizing the construction of a new, $248 million, on-campus football stadium for the University of Minnesota. Of course, one more academically essential football stadium at a state mega-versity only marginally hurts most smaller institutions (except for Northwestern). The people it’s really throwing for a loss are Minnesota taxpayers, who are being forced to pick up 55 percent of the tab—or more than $136 million—for the Golden Gophers’ new gridiron.

Not only do big state schools have an unfair advantage over small private colleges, it seems they have one over state taxpayers as well.

Conservatives Say: Politics Above All

The Washington Times brings news this morning that conservatives are “expressing concern and outrage” about House Speaker Denny Hastert’s strong objections to the FBI’s raid on Rep. William Jefferson’s House office.

Perhaps such “conservatives” ought to recall what the real conservative libertarian who designed the U.S. Constitution once wrote:

But the great security against a gradual concentration of the several powers in the same department consists in giving to those who administer each department the necessary constitutional means, and personal motives, to resist encroachments of the others. The provision for defence must in this, as in all other cases, be made commensurate to the danger of attack. Ambition must be made to counteract ambition. The interest of the man must be connected with the constitutional rights of the place. It may be a reflection on human nature, that such devices should be necessary to controul the abuses of government. But what is government itself but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controuls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: You must first enable the government to controul the governed; and in the next place, oblige it to controul itself. A dependence on the people is no doubt the primary controul on the government; but experience has taught mankind the necessity of auxiliary precautions.

Hastert is acting in the spirit of Federalist 51. To be sure, there are other considerations in this case, but Hastert is doing what Madison expected congressional leaders to do: stand up for his branch of the government against an encroachment from an ambitious executive. Those who are criticizing Hastert are trying to make corruption a bipartisan stain or to raise public approval of Congress by a point or two. They are ignoring the constitutional dimension of all this.

I’ll take the timeless logic of Federalist 51, thanks.

Ezra Klein, Libertarian?

Since I’ve disagreed with Ezra Klein in the past, I am pleased to report that we agree on what to do about the 7,000 Americans who die every year while waiting for transplantable organs. In a recent post, Klein notes that the shortage of organs is due to a ban on payments to organ providers. Klein advocates lifting that ban.  My favorite line:

We’ve stupidly disallowed payment for organs (if money can’t buy you life, why keep it around?)…

Klein brought to mind an observation made by Prof. Richard Epstein last week in the Wall Street Journal:

Only a bioethicist could prefer a world in which we have 1,000 altruists per annum and over 6,500 excess deaths [to] one in which we have no altruists and no excess deaths.

In Healthy Competition, Mike Tanner and I argue for repeal of Sen. Orrin Hatch’s 1984 National Organ Transplant Act, which prohibits payments to organ providers. 

In a recent issue of Cato’s Regulation magazine, Prof. Lloyd Cohen throws up his hands and issues a challenge to those opposed to such payments. Cohen has re-written his will to ensure that when he dies, his organs cannot be harvested unless his estate is paid $864.27 per organ. Why? Because that requirement will create a real-life situation where paying up will generate more transplantable organs. That will force the bioethicists to explain to four, maybe five families who have their checkbooks in hand, We’re sorry, but your loved one must die for our principles. Cohen urges others to insert similar clauses into their wills, just to get the message through the bioethicists’ heads.

Cohen and other powerful presenters will speak at a June 12 conference on organ markets at the American Enterprise Institute.

Enron Execs Go Down

The jury returned guilty verdicts against Ken Lay and Jeff Skilling today. I didn’t follow the case closely, but businesspeople who engage in fraud should obviously be punished. I do fear that the publicity surrounding this case will reinforce the misguided notion that federal prosecutors should be policing the business world. Cato’s new book, Trapped, shows that federal intervention will result in far more harm than good.

For those who would rather listen, than read, Prof. John Hasnas, author of Trapped, delivered an address here at Cato last month.

For still more background, go here.

Boxes, Foreheads, and Price Signals

Russ Roberts at Cafe Hayek has an illuminating post about how to think about jobs:

Some say that a nation should strive to acquire high-paying jobs if it wants a high standard of living. In this view of the world, jobs are boxes that workers jump in and out of. Each box has a bar code that determines how much the job pays. The goal is to get a good box with a high wage attached to it.An alternative view of the world is that the bar code is on the worker’s forehead. The worker gets scanned not the job.The wage depends not on the job title but on the skills of the worker.

Russ goes on to explain why the jobs-as-boxes view leads to error and confusion.

I’d like to add that one of the reasons unions and other forms of subsidy often hurt workers more than they help is because of certain implications of the box view. Unions generally try to get the wages and benefits attached to union boxes as high as feasibly possible.

The first effect is often to limit the number of boxes available for workers to jump into. But a perhaps deeper problem is that heavily subsidized wage and benefit packages can insulate workers from labor market price signals that are trying to tell workers to invest in other forms of human capital – to acquire a more highly valued forehead bar code.

When subsidized boxes disappear, due to mechanization, outsourcing, or plain old business failure, workers are usually dismayed to find that there is a big mismatch between their forehead and their old box, i.e., that the real market value of their skill set is surprisingly and disappointingly small. It can be a harsh blow to your self-esteem to find that the best job you can get pays only half as well as your old one. And you’ll sometimes hear laid-off low-skill workers say, “Why didn’t anybody tell me that I should be learning to do something else?” The answer is that prices were telling them – the signal was out there – but you can’t hear it from inside an insulated box.

If you’ve got to subsidize something, subsidize people’s ability to respond effectively to price signals (e.g., provide them vouchers for job training). Don’t create subsidies, like wage supports, that cut people off from the information they need so that they can invest in themselves wisely and find a good fit in a dynamic market.

Sense and Sensenbrenner

Congressional whining over the FBI raid of Rep. William Jefferson’s office has reached the point of self-parody. Rep. James Sensenbrenner has now called for rare out-of-session hearings on the raid, titled, “Reckless Justice: Did the Saturday Night Raid of Congress Trample the Constitution?”

This would be the same James Sensenbrenner who wants to give federal law enforcement the power to snoop in on your Internet browsing, and who recently introduced a bill that would send parents to prison if they learn of drug activity near their children and fail to report it to authorities within 24 hours.

“Trampling the Constitution,” indeed. Amazing how reverent politicians get for the Constitution and the rights of the accused when one of their own is under the gun.

Little Victories

…in the fight against the Nanny State: in Massachusetts, the state legislature just narrowly rejected ”primary seat belt legislation.”  In English, that’s a law that gives police the power to pull you over simply because someone in your car isn’t wearing their seatbelt (“secondary seat belt laws” allow them to ticket you for not wearing a seatbelt only if they’ve stopped you for some other infraction). 

Last summer, using night-vision equipment on loan from the National Guard, Maryland state troopers scanned passing cars, then swept out and nabbed 111 offenders for the crime of driving without a seatbelt. Scores of people who were driving along, minding their own business, had their evening ruined by an unpleasant encounter with the business end of the law. Law enforcement overreaching caused an outcry in that case, and citizen pressure in Massachusetts seems to have led several lawmakers to back away from the primary seatbelt bill.

It’s good to know that even in Massachusetts there’s still some resistance to the growing crusade to ensure healthy living through coercion. But it’s not coming from the Governor’s office. Mitt Romney, GOP presidential hopeful for 2008, had promised to sign the bill.