If an Interest Group Says We Need to Spend More Money, Check It Out

Young journalists are told, “If your mother says she loves you, check it out.” Every day journalists follow that advice, protecting us all from reading rumors and unconfirmed stories in the morning papers (though of course the increasing pressure to be first with the news is threatening this rule).

But journalists are still too quick to take the word of special interests without seeking other viewpoints, especially in stories about things the taxpayers need to spend money on. Take this morning’s story about water infrastructure on Marketplace Radio:

Following the expensive water-main break that flooded UCLA’s campus, Los Angeles officials say they’re trying to aggressively fix the city’s aging infrastructure. 

The costs are daunting. It’s going to take the city of Los Angeles billions of dollars to fix.

“They estimate some over 20 millions of gallons of water were lost and of course it wound up on that new floor at the Pauley Pavilion Basketball Arena,” says Greg DiLoreto, former president of the American Society of Civil Engineers. “We have some 240,000 water main breaks a year in this country. And the age of our water infrastructure continues to get older and older and older.”

People Shouldn’t Be Able to Sue Think Tanks When They Disagree with Us

What’s worse than a public policy debate that turns bitter and impolite? Well, for one, having the courts step into the marketplace of ideas to judge which side of a debate has the best “facts.”

Yet that’s what Michael Mann has invited the D.C. court system to do. In response to some scathing criticism of his methodologies and an allegation of scientific misconduct, the author of the infamous “hockey stick” models of global warming – because they resemble the shape of a hockey stick, with temperatures rising drastically beginning in the 1900s – has taken the global climate change debate to a record low by suing the Competitive Enterprise Institute, National Review, and two individual commentators. The good Dr. Mann claims that some blogposts alleging his work to be “fraudulent” and “intellectually bogus” were libelous. (For more background on the matter, see this excellent summary by NR’s editor Rich Lowry; linking to that post is partly what led Mann to target CEI.)

The D.C. trial court rejected the defendants’ motion to dismiss this lawsuit, holding that their criticism could be taken as a provably false assertion of fact because the EPA, among other bodies, have approved of Mann’s methodologies. In essence, the court seems to cite a consensus as a means of censoring a minority view. The defendants appealed to the D.C. Court of Appeals (the highest court in the District of Columbia).

Cato has now filed a brief, joined by three other think tanks, in which we urge the court to stay out of the business of refereeing scientific debates. (And if you liked our “truthiness” brief, you’ll enjoy this one.)

Need for Short-Term Loans Is No Joke

I’m a little behind on my comedy watching, as I get a regular dose just living in Washington DC, but last week comedians John Oliver and Sarah Silverman focused an entire segment on payday lending, which are short-term advances against a future paycheck.  Matt Yglesias at Vox has posted the video, as well as making the important point “people end up at payday lenders because stuff happens.”  Yglesias is correct here: there is an undeniable need for short-term credit products. Even Dodd-Frank recognized this need by creating a government subsidized payday loan product (Section 1205 of Dodd-Frank).

The alternative to payday proposed by Oliver and Silverman?  Do anything else but payday. I’m sympathetic to such. A payday loan should never be your first choice. I hope to never have to use a payday lender. But then, I hope my car never breaks down either. Silverman goes as far as suggesting just steal instead. I’d hope she was joking but it seems so many in Washington have already taken that advice to heart.

Yglesias’s alternative is at least a little more thoughtful than stealing: he suggests allowing the postal service to offer short term loans, because apparently he believes the USPS could offer payday “without taking nearly as big a cut”.  Now “big” is subjective but scholars have examined this question. In research reported in 2012 in Regulation, UC-Davis Professor Victor Stango compared the performance of traditional payday loans to those offered by credit unions. Some of his conclusions: “there is little to suggest that credit unions can offer a payday loan with competitive terms. Existing credit union payday loans often have total borrowing costs that are quite close to those on standard payday loans.” Maybe the USPS has a better cost structure than the typical credit union, but that seems unlikely as the USPS isn’t exactly known for its efficiency.

Professor Stango also reports survey evidence that payday borrowers highly value the convenience of payday lender’s hours and locations. Yglesias doesn’t address this, but last time I went to a Post Office, the hours were about as convenient (or less so) than that of a traditional bank. And of course USPS isn’t exactly known for its consumer friendly approach.  In all, it seems highly unlikely that without a major revamp and cultural change that the USPS could be a serious competitor to payday. Perhaps as important, the USPS would likely be viewed as “too big to fail”, so that allowing USPS to make high risk payday loans could easily result in a taxpayer bailout. Getting USPS into payday makes about as much sense as getting Fannie Mae into subprime mortgages.

Oh wait, we did that.

Maybe U.S. Should Defend South Korea by Letting it Develop Nuclear Weapons

U.S. foreign and defense policy long has been brain dead.  ‘Whatever has been must ever be’ seems to be the Pentagon’s mantra.  That’s the typical response to the idea that Washington should bring home its troops and allow South Korea to defend itself.

The Republic of Korea has grown up and surged past the North. The ROK should use its abundant wealth and larger population to close the military gap.  Just as most Americans expect those on welfare to get a job to take care of themselves and their families, the ROK should step up and take care of itself.

There may be good arguments against the proposal. But I have yet to hear them. Instead, what dominates is the tyranny of the status quo. 

Perhaps the best, or at least most interesting, counter is that America must babysit the ROK lest a frightened Seoul go nuclear in response to the DPRK.  In fact, Washington’s conventional forces do nothing to forestall a North Korean nuclear bomb. 

But will the ROK believe in America’s nuclear umbrella without a conventional guarantee?  Washington has risked war on Seoul’s behalf for six decades. If that’s not enough, the problem might be the weak case for Washington to turn other nations’ nuclear wars into America’s nuclear wars. 

If Pyongyang eventually develops a miniaturized nuclear warhead and reasonably accurate ICBM, what risks would Washington take on South Korea’s behalf?  Why should the United States turn a peripheral geopolitical problem into an existential threat?

The Challenges of Being a Superpower

The foreign policy meme is fixed that President Barack Obama is weak and therefore responsible for virtually every global ill.  It’s hard for the denizens of Washington to accept that not everything in the world is about them. 

As I point out in National Interest online:  “People elsewhere have interests and ambitions.  Like the obstreperous British colonists in North America more than two centuries ago, foreigners are willing to defy major powers in order to achieve their ends.”

Government and guerrilla leaders still may worry about what Washington thinks. But they judge American threats based on a perception of U.S. interests more than abstract “credibility.” 

Little would have changed had President Obama launched military strikes in response to Syria’s use of chemical weapons. No other country would have feared military attack for different reasons.

For instance, what happens in Ukraine matters to Washington, but not enough to confront Russia, which considers the issue an essential matter of security. The United States might be willing to attack another largely helpless Middle Eastern state for peripheral stakes, but it won’t do the same against a nuclear-armed great power.

Unfortunately, top officials routinely put U.S. credibility at stake by issuing proclamations better left to second tier State Department desk officers. In the midst of the African summit, for example, the Obama administration complained that the president of the Democratic Republic of Congo, Joseph Kabila, might run for a third term. 

Bigger Bounties for Tax Tipsters

I’ve got a guest post up at Reason on how bounty-seeking informants are bypassing the Internal Revenue Service tipster-reward program in favor of selected state False Claims Acts, such as New York’s, which enable richer recoveries for disloyal employees and others who charge defendants with underpaying taxes. Excerpt:

Will the spread of a culture of informants sow distrust and disloyalty in the workplace, while encouraging dissident executives and their lawyers to shake settlements out of risk- and publicity-averse targets by seizing on doubtful, gray-area legal theories? That’s part of the game too. Lately hedge funds and litigation finance firms have moved in to bankroll the filing of likely “whistleblower” cases. …

…by getting pro-plaintiff laws through the legislature in just a few states — New York liberalized its law four years ago — advocates can set the stage for a nationwide informant push.

In Illinois, a single Chicago lawyer was reported in 2012 to have used that state’s whistleblower law to file at least 238 lawsuits against retailers, pocketing millions in settlements, over alleged failure to charge sales tax on shipping-and-handling.

Whole thing here.

 

 

Foreign Policy Solyndra

Washington’s track record over the decades of selecting honest, effective, and democratic political leaders to support in developing countries is as dismal as the government’s attempts to pick economic winners in this country.  We have endured a lengthy series of foreign policy equivalents of the notorious Solyndra scandal.  I discuss that depressing record in a new article over at the American Conservative.  

U.S. officials habitually make one of two blunders.  On some occasions, they back a foreign client who is willing to do Washington’s bidding, even if that person lacks meaningful internal political support from the very beginning.  On other occasions, the chosen client may initially have respectable domestic backing, but soon dissipates that support through pervasive corruption and brutality, often funded by U.S. tax dollars. 

Washington’s diplomatic love affair with Ahmed Chalabi, leader of the Iraqi National Congress, was a prime example of the first type of fiasco. U.S. policymakers during the administrations of Bill Clinton and George W. Bush wildly overestimated Chalabi’s popularity inside Iraq.  When the U.S-led military intervention ousted Saddam Hussein, American officials acted as though the Iraqi people would choose Chalabi as their new leader virtually by acclamation.  The actual extent of his domestic support became apparent in Iraq’s first free parliamentary elections in 2005. Chalabi’s party received a paltry 0.5 percent of the vote and failed to win a single seat.

The enthusiasm for Ferdinand Marcos in the Philippines was a typical example of the second type of embarrassment.  Marcos won his first election as president in 1966 in legitimate fashion, but he soon displayed all the usual characteristics of a tinpot dictator. Yet Washington continued to back him diplomatically and financially until his imminent overthrow in a popular revolution could no longer be ignored. More recently, Washington’s enthusiasm for Afghanistan’s Hamid Karzai and Iraq’s Nouri al-Maliki proved equally misplaced over the long term.

Those experiences (and many others) should teach U.S. officials not to fall in love with superficially attractive foreign political clients.  Instead of reflexively backing glib figures who are adept at telling American policymakers what they know those policymakers want to hear, we should approach all foreign players with caution, coldly evaluating how much popularity and staying power they are likely to command. The United States also needs to be far more skeptical about whether backing any particular client serves the best interests of the American republic.