Prepare to Be Shocked

ONDCP is a waste of money:

The government’s anti-drug ad campaign has not been proven to deter children from using drugs, and lawmakers should consider reducing funding for the $1.2 billion program, congressional auditors said Friday.

The Government Accountability Office based its recommendation on its review of an independent evaluation of the media campaign by Westat Inc.

The government has spent about $1.2 billion since 1998 on scores of television, print and radio ads designed to discourage drug use among youth. The ads also describe parents as the anti-drug. President Bush requested another $120 million for next year.

Westat found the ads had no “significant favorable effects” in deterring children from trying marijuana or in getting them to stop. Rather, it found that more 12 1/2- to 13-year-olds and girls were trying the drug after seeing the ads, the GAO said.

Apparently, comparing pot-smoking cancer patients to terrorist sympathizers isn’t resonating with the public. Whoda’ thunkit’?

Full report here [.pdf].

New Botched Drug Raids in NYC

Two more botched drug raids in New York (be sure to watch the video). This is the city that is supposed to have changed its ways since the death of Alberta Spruill:

Two Bronx families said the NYPD mistakenly raided their apartments Monday morning. But the department is defending its actions.

Flexton Young said he, his wife, and their four children were asleep when police broke down the door of their apartment on the fourth floor of 974 Anderson Ave.

“They ripped through my front door, they tore off my closet door, ripped both of my kids’ rooms to pieces,” Young said. “It brought me to tears, and I just didn’t want my kids to get hurt.”

Young said police made a “big mistake” believing they’d find illegal drugs and guns in his apartment.

The raid, around six Monday morning, left the family’s apartment a shambles. Belongings were pulled off shelves and out of drawers, and tossed on the floor. Officers upended a sofa and slashed out the lining, and also dumped out box after box of dry goods in the kitchen.

Upstairs, a similar raid was made on the apartment of the Pastrana family. Police turned several rooms upside down and pepper-sprayed the family dog. Family members said one officer punched a hole in a wall, grabbed an egg beater, and started to poke around inside the wall, looking for hidden drugs and guns.

Nothing was found in the Pastrana apartment, and no one was arrested.

Downstairs, Flexton Young said police gave him a summons for marijuana possession after discovering half a joint in an ashtray.

Note the “new professionalism” on display:

“I had one officer tell me that he was sorry this happened, and everybody else just looked at me and walked away,” Young said.

A spokesman for the NYPD said police had good information they would find drugs and guns in the apartments, and the raid was justified.

If you think terrorizing two families over half a joint is an appropriate use of police tactics, then I suppose the NYPD spokesman is right.

The article ends with a sentence that’s both interesting and misleading:

According to the Civilian Complaint Review Board, more than 300 allegations of improper searches of homes and businesses have been investigated and ruled on this year. Less than five-percent of the complaints were found to be “substantiated.”

This is interesting in that it means the CCRB has confirmed 15 cases of improper drug raids in New York City alone. To my knowledge, these are the first two to have received any coverage in the media. More evidence that the raid map, alarming as it is, doesn’t even begin to tell the entire story.

But it’s likely quite a bit worse than that. As I explained in Overkill, the CCRB’s jurisdiction only extends to the actions of police officers at the scene, after they’ve served the warrant. It has no power to look into the circumstances leading up to the raid. I’ve talked to the CCRB’s spokesman several times. He has confirmed to me that this is still the case today. If a botched raid took place because of a bad tip from an informant, or because someone wrote the the wrong address on the search warrant, the CCRB is powerless to do anything about it, and won’t investigate.

Which means that the CCRB’s failure to “substantiate” claims of improper searches in those 285+ other cases in no way means that the people making the complaints were wrong, or that a “wrong door” raid didn’t take place. In fact, in most wrong door raids, the problem occurs well before the police actually force entry.

Perhaps some small percentage of those 300+ complaints are people intentionally filing a false claim of a botched search. But I have a hard time believing a large number of people would go to the trouble.

I have an op-ed pending on New York City’s use of SWAT teams, but the truth is, after promising the public after the death of Spruill that they would drastically reform the way they use SWAT teams and paramilitary police tactics, city officials have since reneged on most of those promises.

And so the mistaken raids and terrorizing of innocent people continues.

Returns to Labor Belabored

In case you were born yesterday, just fell off the back of a turnip truck, and have lived in blissful ignorance of the possible abuses of economic data, let me direct your attention to yesterday’s New York Times front-pager by Steven Greenhouse and David Leonhardt, titled “Real Wages Fail to Match a Rise in Productivity,” and the blog aftermath. George Mason economics professor Russ Roberts is none too pleased.

I shouldn’t be upset when the New York Times news division writes a intellectually dishonest story that plays to the biases of its readership base. But today’s front-page above the fold story on wages depresses and surprises me anyway. Maybe it’s because one of the authors, David Leonhardt, is a good reporter with good economic intuition. (I can’t speak for the other author, Steven Greenhouse.) But I suspect the source of my dismay is simply the knowledge that this article, despite its inadequacies will be met with nods of agreement around the breakfast tables of America.

Even around the breakfast tables of famous economists! Berkeley economics professor Brad DeLong–a vociferous, self-appointed arbiter of the quality of economics journalism–gives Greenhouse and Leonhardt a total pass, excerpting their article, and simply calling them “thoughtful and reliable.”

Here’s Roberts again:

Let me repeat the key sentence [from the article]:

The median hourly wage for American workers has declined 2 percent since 2003, after factoring in inflation.

That’s a very strange sentence for many reasons:

1. Why would you use a measure of compensation that ignores benefits, an increasingly important form of compensation?

2. Why would you use 2003 as your starting point when the recession ended in November of 2001?

3. There are no government series that I know of on median earnings. Where did those data come from?

There’s a chart accompanying the article. It tells the reader that the median hourly pay data are from the Economic Policy Institute. The Economic Policy Institute has a policy agenda. Their main issue is the alleged stagnant or falling standard of living of American workers. They support a higher minimum wage and the strengthening of labor unions.

… for every year since the recession of 2001, real hourly compensation has actually increased. It’s up since 2003 as well. And this year it’s up quite dramatically…

As I have mentioned here before–the standard claims you hear about labor’s share declining come from using wages without other forms of compensation. When you include benefits, labor’s share is virtually a constant at 70% of national income and has been steady since the end of World War II …

Greenhouse and Leonhardt thoughfully and reliably rely on the Economic Policy Institute! But they could have thoughtfully asked other people, too. For instance, they could have asked David Altig, vice president and associate director of research at the Cleveland Fed Bank. Altig signs on to Roberts’ criticism, and adds his own, noting that a decrease in labor’s share of growth does not necessarily imply an increase in capital’s share, and that a lot turns on which Bureau of Labor Statistics data series you look at.

Harvard’s Greg Mankiw reinforces Roberts’ and Altig’s diagnosis of the main error: failing to recognize that total compensation–cash wages plus benefits–is the relevant measure of real wage growth. Mankiw also relates the importance of using the correct price index, and of not comparing average productivity to median wages.

I wonder if DeLong truly thinks Greenhouse and Leonhardt were adequately thoughful and reliable in this piece. If so, I wonder what, if anything, he thinks is wrong with Roberts’, Altig’s, and Mankiw’s analyses.

Cato Unbound - Migrating Toward National ID?

The current Cato Unbound, Mexicans in America, is the usual provocative and wide-ranging fare.  There’s no lack of issues - or passion - in the debate about immigration.

One item in the current discussion that piques my interest - indeed, concerns me - is the formative consensus that “internal enforcement” of the immigration laws is a good idea. 

University of Texas at Austin economics professor Stephen Trejo writes:

Given that most illegal immigrants come to the United States to work, why don’t we get serious about workplace enforcement? Retail stores are able to verify in a matter of seconds consumer credit cards used to make purchases. Why couldn’t a similar system be put in place to verify the Social Security numbers of employees before they are hired? …  I suspect that we could do much more to control illegal immigration by directing technology and other enforcement resources toward the workplace rather than toward our porous southern border.

Doug Massey, co-director of the Mexican Migration Project at the Office of Population Research, Princeton University, has interesting information and ideas for reform to which he would adjoin ”a simple employment verification program required of all employers to confirm the right to work.”

It does sound simple - until you step back and realize that the simple idea they’re talking about is giving the federal government the power to approve or reject every Americans’ job application.  Does anyone think that this power, once adopted - and the technology put in place to administer it - will be limited to immigration law enforcement?

To do this, all people - not just immigrants, all people - would have to be able to prove their identity to federal standards, likely using some kind of bullet-proof identity document (even more secure than current law requires).  That will soon be in place thanks to the REAL ID Act.  Once we’re all carrying a bullet-proof identity document, do you think that its use will be limited to proof of identity for new employees?

It’s easy to see how facile acceptance of internal immigration law enforcement adds weight to arguments for expanded government control and tracking of all citizens.  There are plenty of reasons to be concerned with internal enforcement, and the national ID almost certainly required to make that possible.  Many of them are discussed in my book, Identity Crisis: How Identification is Overused and Misunderstood.

How Well Does the Swedish Welfare State Serve Its Poor?

The American Left romanticizes the benefits of Scandinavian welfare states – to the point that one is sometimes reminded of Minnie the Moocher’s dream about the King of Sweden (“he gave her things that she was needin’…”).

Tim Worstall dispels that dream in today’s TCS Daily, pointing out that:

In the USA the poor get 39% of the US median income and in Finland (and Sweden) the poor get 38% of the US median income…. Which is really a rather revealing number don’t you think? All those punitive tax rates, all that redistribution, that blessed egalitarianism, the flatter distribution of income, leads to a change in the living standards of the poor of precisely … nothing.

Make Way, Peasant!

Remember Bill Clinton’s $200 haircut?  In 1993 the new president, who had run as a populist, kept LAX travellers waiting as stylist-for-the-stars Cristophe sculpted the presidential ‘do aboard Air Force One.  Of course, the real outrage wasn’t how much Clinton spent on the cut (who cares?) but that he and his staff thought the president getting a haircut was reason enough to keep hundreds of ordinary Americans waiting on the tarmac so AF1 could take off first.  Who do these people think they are?

But for the protests of Virginia transportation officials, Washington-area commuters might have found themselves asking a similar question last week.  Unlike the Cristophe kerfuffle, in this case the plan to inconvenience thousands of Americans came from Secret Service, not the president himself.  The Washington Post reports that on Tuesday “the Secret Service asked Virginia officials if they would be kind enough to shut down all of the HOV lanes on I-395 from 1 to 7 p.m. the next day so President Bush could get where he needed to be.”  Which was a fundraiser for Sen. George Allen.  State traffic experts described the likely results of acceding to the Secret Service request:

“There will be approximately 8,600 cars using the HOV lanes over a three hour period (4 to 7 pm). This equates to approximately 20,000 to 22,000 people. If the HOV lanes are closed, according to the District’s estimate the back up of traffic in the general purpose lanes will not be cleared until 10 p.m.” 

Even so, it apparently took them quite a while to talk the Secret Service down from the plan. 

As Melanie Scarborough discussed in a 2005 Cato Briefing Paper [.pdf], the idea of establishing a permanent corps of federal agents dedicated to protecting the president proved surprisingly controversial, even after the assassination of President McKinley in 1901:

Sen. Stephen Mallory (R. FL) said, “I would object on general principles that it is antagonistic to our traditions, to our habits of thought, and to our customs that the president should surround himself with a body of Janizarries or a sort of Praetorian guard and never go anywhere unless he is accompanied by men in uniform and men with sabers as is done by the monarchs in the continent of Europe.” The House Judiciary Committee objected to the proposal that a cabinet secretary send presidential protectors “among the people to act under secret orders. When such laws begin to operate in the Republic, the liberties of the people will take wings and fly away.”

That sort of rhetoric may seem a little anachronistic today.  Clearly, the 21st century president needs a professional personal security detail.   But when that security detail makes clear that it couldn’t care less how much it inconveniences 20,000 commuters, so long as the president gets to his fundraiser on time–and that it cares still less about Americans’ free speech rights–you might begin to think that Mallory et al. had a point.   

Not Your Father’s Auto Industry

If you’re tempted to believe the proliferating rhetoric about America’s withering automobile industry, please listen to Dan Griswold’s Cato podcast today or read the paper he and I wrote on the subject before deciding to drink the Kool-Aid.

The declining fortunes of American icons Ford and GM have inspired numerous commentaries about the demise of the U.S. automobile industry. But the top 10 selling cars and top 10 selling light trucks in the United States are all made in America. U.S. output of motor vehicles and parts was also 68 percent higher in 2005 than in 1993, which compares favorably with overall manufacturing output growth of 56 percent over the same period.

How can that be, you might ask, when Ford and GM lost a combined $16.7 billion in 2005 and together plan to eliminate more than 60,000 jobs in the next few years?

Well, this isn’t your father’s automobile industry.

The days when the “Big Three” and the U.S. auto industry were synonymous, and when seeing a foreign car on the street prompted rubbernecking are long gone. Today Honda, Toyota, and Nissan (and other Japanese, German, and Korean companies) are all important and growing players in the U.S. auto industry.

Since the early 1980s, Japanese—followed by German and Korean—automakers have been building production facilities in America. These companies, which employ American workers, pay local and federal taxes, and buy most of their parts and materials from other U.S. suppliers, are every bit as much a part of the domestic auto industry as the Big Three (or “Big Two and a Half,” now that Chrysler is just a division of Daimler-Chrysler). While the Big 2.5 still dominate U.S. production, the foreign-owned share continues to rise, approaching one-third of total domestic production today.

That’s great news for U.S. consumers, whose choices are no longer constrained by the high-priced, low-quality offerings of what was once a domestic oligopoly. Since 1993, the general price level in the United States has risen 38.2 percent, but the price level of a new vehicle has increased by only 4.1 percent.

Certainly, the shifting industry landscape has produced winners and losers within the United States. Most of the foreign nameplate plants have been built in the American South, or otherwise outside of the rust belt states (with a few notable exceptions). But none of these plants, save one (a joint venture involving GM), employ unionized workers, and their market shares have been increasing. Of course, there’s much more to this changing picture than the fact that one group is unionized and the other isn’t, but it is an interesting fact, no?

The state of Michigan has by far been the biggest loser in this transformation. The state has seen a large decline in jobs (and tax revenues), and the auto industry promises to be the marquis issue in this fall’s governor’s race. The Republican nominee, Dick DeVos, recently lambasted the Bush administration for not doing more to arrest the decline of Michigan’s auto producers. Unfortunately, that’s par for the course for Republicans of late, who increasingly seem to have never met a bailout they didn’t like.

The government has no business interfering in the marketplace—particularly one that is working so well for the vast majority of Americans. But if there is any action the Bush administration can and should take—which would incidentally help U.S. auto producers—it would be to revoke some or all of the 160 antidumping measures in place against 21 different types of steel products from 32 different countries. U.S. government intervention on behalf of the domestic steel industry has created a dangerously concentrated market, and without adequate steel imports, steel producers can and have run roughshod over their customers, including the auto producers.

Ultimately, the decisions that brought successful foreign nameplate auto producers to invest in U.S. facilities, as opposed to exporting from production platforms abroad, are based on a variety of factors that are subject to change. Market considerations like transportation costs, labor and materials costs, access to transportation, and access to materials all ultimately contribute to such investment decisions. When access to raw materials is hampered, and thus more costly (as it is with steel in the United States), the benefits of the other considerations are mitigated.

Today, U.S. prices for corrosion-resistant steel (the primary component used in auto bodies) are $100 per ton higher in the United States than in Europe, and $200 per ton higher than in China. At some point, the price differentials will render production of autos abroad for export to the United States more cost-efficient than investment in the United States. If Honda, Toyota, Nissan (and for that matter, Ford and GM) reach that conclusion, then we’ll be witnessing a genuine crisis in the U.S. automobile industry.