Federal Government: Too Big to Manage

One of the themes in my new study, “Why the Federal Government Fails,” is that the federal government has grown too large to manage with any reasonable level of efficiency and competence. Even if politicians worked diligently to advance the general interest, and even if federal bureaucracies focused on delivering quality services, the vast size of the government would still generate failure after failure.

Here’s an astounding fact: the federal government’s 2014 budget of $3.5 trillion was almost 100 times larger than the average state government budget of $36 billion, as shown in the figure. The largest state budget was California’s at $230 billion, but even that flood of spending was only one fifteenth the magnitude of the federal spending tsunami. Total state spending in 2014 was $1.8 trillion, which includes spending on general funds and nongeneral funds.

U.S. and NATO Fear Greek Fifth Column to Aid Russia

In the midst of bitter bailout negotiations between Greece and Europe, warnings proliferated of a possible Greek Fifth Column. The European Union and even NATO would collapse should Athens turn toward Russia. It is one of the stranger paranoid fantasies driving U.S. foreign policy.

For five years Athens has been arguing with its European neighbors over debts and reform. The issue doesn’t much concern the U.S. A European economic crisis would be bad for America, but Grexit is not likely to set off such a cataclysm.

Nevertheless, some analysts speculated that Athens might fall out of the European Union and NATO as well as the Eurozone, resulting in geopolitical catastrophe. Thus, the U.S. should insist that Europe pay off Greece. Despite an apparent bailout agreement, another crisis seems inevitable, in which case the specter of a Greek Trojan Horse likely will reemerge.

This fear betrays an overactive imagination. “You do not want Europe to have to deal with a Greece that is a member of NATO but which all of a sudden hates the West and is cozying up to Russia,” warned Sebastian Mallaby of the Council on Foreign Relations.

Free Trade Without Controversy

This is from the New York Times editorial board: 

More than 50 countries agreed on Friday to eliminate tariffs on a wide range of technology goods like medical devices, navigation equipment and advanced semiconductors in a trade agreement that should benefit American manufacturers, consumers and the global economy.

Signatories to the Information Technology Agreement, which covers 201 product categories, include the United States, the European Union, China, South Korea and other members of the World Trade Organization. International trade in those goods totals about $1.3 trillion a year, or about 7 percent of all trade. 

I worry that I’m speaking to soon, but so far at least, I have not seen any of the usual trade critics complain about this deal.  With trade negotiations such as the Trans Pacific Partnership and the Transatlantic Trade and Investment Partnership, there are lots of groups who are fired up about protesting every stage of the process.  But with this deal to eliminate tariffs on tech goods, these same folks have not had much to say.  Which perhaps suggests a way forward for negotiating future trade deals – focus on lowering tariffs and other forms of pure liberalization, and stay away from “governance” issues such as intellectual property, labor and the environment.  The benefits are greater with this approach, and the controversy appears to be lower.

More Gridlocked Than Ever

Yesterday, the Senate passed a six-year transportation bill that increases spending on highways and transit but only provides three years of funding for that increase. As the Washington Post commented, “only by Washington’s low standards could anyone confuse the Senate’s plan with ‘good government.’”

Meanwhile, House majority leader Kevin McCarthy says the House will ignore the Senate bill in favor of its own five-month extension to the existing transportation law. Since the existing law expires at the end of this week, the two houses are playing a game of chicken to see which one will swerve course first and approve the other house’s bill.

As I noted a couple of weeks ago, the source of the gridlock is Congress’ decision ten years ago to change the Highway Trust Fund from a pay-as-you-go system to one reliant on deficit spending. This led to three factions: one, mostly liberal Democrats, wants to end deficits by raising the gas tax; a second, mostly conservative Republicans, wants to end deficits by reducing spending; and the third, which includes people from both sides of the aisle, wants to keep spending without raising gas taxes.

Fleeting American Public Support for Murky Wars

Calls are mounting in Congress (and among some influential opinion groups) for escalating Washington’s military intervention against ISIS in Iraq and Syria and for possible military action against Iran if the new nuclear agreement with that country falls apart.  Caution lights should be flashing about both the extent and durability of such sentiment for military action.  As I note in a recent article in the National Interest Online, this country has an unfortunate history of launching ill-considered armed crusades, often initially with enthusiastic public support.  But that support has a tendency to evaporate and turn to bitter recriminations unless certain conditions are met.  Policymakers need to appreciate that history as they consider intensifying U.S. involvement in the Middle East’s turbulent affairs.

Because most Americans believe that the United States embodies the values of individual liberty, human rights, and government integrity, a foreign policy that seems to ignore or violate those values is almost certain to lose the public’s allegiance sooner or later. That is what happened with such missions as the Vietnam War, the Iraq War and, more recently, the counterinsurgency war in Afghanistan.  It is not merely that the ventures failed to achieve quick, decisive results, although that aspect clearly played a role.  It was also that the United States was increasingly seen as expending blood and treasure on behalf of odious clients and dubious causes that had little or nothing to do with the republic’s vital interests.  A disillusioned public turned against those missions, and that development created or intensified bitter domestic divisions.

To sustain adequate public support for military ventures, the objective must be widely perceived as both worthy and attainable.  Without those features, public support for a policy either proves insufficient from the outset or soon erodes, and either development is fatal in a democratic political system.

Preserving public support requires officials to make an honest assessment of the issues at stake.  Too often, both during the Cold War and the post–Cold War eras, U.S. policymakers have hyped threats to American interests.  The alleged dangers posed by such adversaries as North Vietnam, Serbia, Saddam Hussein, the Taliban, and Syrian dictator Bashar al-Assad bordered on being ludicrous.  At times, it appears that U.S. officials have deliberately engaged in distortions to gin-up public support for purely elective wars.  On other occasions, officials seem to have succumbed to their own propaganda.  In either case, public support dissipates rapidly when evidence mounts that the supposed security threat to America is exaggerated.

That troubling history should reinforce the need for caution as U.S. leaders consider new military interventions, especially in the Middle East.  None of the proposed missions is likely to produce quick, decisive results—much less results with modest financial outlays and minimal casualties.  Moreover, escalating America’s involvement in the region’s myriad troubles puts the United States in a close de facto partnership with Saudi Arabia and its Gulf allies—some of the most corrupt, brutal governments on the planet.  Publics in the Middle East and around the world are watching, and the potential for unpleasant blowback is extremely high.  And as we saw with the wars in Vietnam, Iraq, and Afghanistan, the reaction of the American people to associations with sleazy foreign clients can become one of profound revulsion.  The conditions are in place for new foreign-policy debacles, if U.S. officials have not learned the appropriate historical lessons.

Chinese Repression Threatens Economic Dynamism and Political Stability

BEIJING—China’s capital looks like an American big city. Tall office buildings. Large shopping malls. Squat government offices. Horrid traffic jams.

The casual summer uniform is the same: shorts, athletic shoes, skirts, t-shirts, sandals, blouses. Even an occasional baseball cap.

It is a country which the Communist revolutionaries who ruled only four decades ago would not recognize. True believers still exist. One spoke to me reverently of Mao’s rise to power and service to the Chinese people. However, she is the exception, at least among China’s younger professionals.

Indeed, younger educated Chinese could not be further from Communist cadres once determined to create a revolution. The former are socially active, desire the newest technologies, and worry about going to good schools and getting good jobs. Cynicism about corrupt and unelected leaders is pervasive.

If there is one common belief, it is hostility toward government Internet controls. Students have complained to me in class about their inability to get to many websites and readily shared virtual private networks to circumvent state barriers.

But such opinions are not held only by the young. A high school student told me that his father urged him to study in America because of Beijing’s restrictions on freedom.

While Chinese from all walks of life are comfortable telling foreigners what they think, sharing those beliefs with other Chinese is problematic. The media, of course, is closely controlled. Internet sites are blocked, deleted, and revamped. Unofficial intimidation, legal restrictions, and even prison time await those who criticize Communist officialdom on social media and blogs.

But increasingly globalized Chinese are aware of their online disadvantage compared to their peers in the West. Google, YouTube, and Twitter are verboten. Today Bloomberg and the New York Times are beyond reach.

Last week as BBC television began to detail official abuses my TV went black. A couple minutes later BBC was back, after the China report had finished.

While internet and media restrictions have not prevented rapid economic growth, barring the PRC’s best and brightest to a world of information is likely to dampen innovation and entrepreneurship. Moreover, those denied their full freedoms are more likely to leave home. Many of China’s wealthiest citizens have been departing an authoritarian system unbounded by the rule of law.

Repression also stultifies China’s political evolution to a more mature and stable political order. Democracy provides an important safety valve for popular dissent.

The Chinese Communist Party’s control may not be as firm as often presumed. The oppressive establishment which most Chinese have faced for most of their lives is Communist.

Indeed, for many if not most party members, Communism is a means of personal advancement, even enrichment. President Xi Jinping’s anti-corruption campaign is popular, but is widely seen as politically motivated.

Moreover, Xi has abrogated the well-understood “deal” of the last four decades, that rulers can retire and be immune from future prosecution. Will incumbents so readily yield power in the future?

Perhaps even more threatening for the CCP is the potential for an economic slowdown and consequent political unrest. Already protests are common against local governments, which tend to be ostentatiously rapacious. What if that antagonism shifts against the center?

A poorer PRC means a poorer world: China is a major supplier and increasingly important source of global demand. A politically unstable Beijing would have unpredictable effects on its neighbors.

As I wrote for Forbes online: “Since Mao’s death in 1976, the PRC has changed dramatically—and dramatically for the better. But this second revolution has stalled. Economic liberalization remains incomplete. Political reform never started. Individual liberty has regressed.”

The Chinese people deserve to be free. The Chinese nation would benefit from their freedom. The rest of the world would gain from a freer Chinese nation. Everyone desiring a peaceful and prosperous 21st century should hope for the successful conclusion of China’s second revolution.

Texas Regulators Bark Up the Wrong Tree

For almost 50 years, Dr. Ronald Hines has been a licensed veterinarian in Texas. After a spinal cord injury prevented him from continuing to provide in-person services, Dr. Hines started a website to provide advice on pet care. He never tried to be an animal’s primary veterinarian—he noted a disclaimer to that effect—and did not prescribe medication. 

After a decade of such practice without any complaints or problems, the Texas State Board of Veterinary Medical Examiners charged Dr. Hines with violating state law by failing to be physically present at the location of the pets before providing veterinary services. The U.S Court of Appeals for the Fifth Circuit upheld this restriction on Dr. Hines’s speech because, according to the court, any speech by a professional within the scope of his profession directed toward an individual’s circumstances isn’t protected by the First Amendment. 

Dr. Hines has asked the Supreme Court to review the case and Cato has filed a brief supporting that petition, joined by the Mackinac Center for Public Policy. 

The Fifth Circuit erroneously construed the Texas regulations as governing nonspeech conduct that only incidentally impacted speech. But everything that Dr. Hines did was speech!—there was no nonspeech conduct to regulate. Even if the regulations were content-neutral restrictions that incidentally restricted speech, the restrictions should have been reviewed under heightened scrutiny—meaning that the government would need to show a strong justification for its enforcement action. But the restrictions at issue here are explicitly content-based: Dr. Hines could’ve talked about any topic he wanted, except the topic of veterinary care. 

Under the lower court’s logic, the following people would be unknowingly violating Texas law: Dr. Sanjay Gupta provides health information online; Loveline Radio provides relationship and drug-addition advice; The Mutual Fund Show provides financial advice; in addition to radio talk shows on pet care. All these people, and many others, would be expected to know and follow the detailed regulations of every single state. 

The physical examination requirement doesn’t even make sense as a matter of basic veterinary practice. It only requires that vets visit a location, not that they actually examine a particular animal. It prevents a vet’s colleague from relying on notes and records when the primary-care vet is unavailable. Dr. Hines couldn’t even tell a client that her pet’s condition sounded serious and so the owner should, say, not let the animal drink water and bring it to him right away. 

Moreover, someone who wasn’t a licensed veterinarian could have provided the same advice as Dr. Hines without a problem; the law prohibits good information from qualified individuals while allowing unqualified individuals to give bad advice. The regulation just ends up hurting the poor, who can’t afford to travel to Dr. Hines, and practically creates geographic limitations on speech. 

The Supreme Court should take up Hines v. Alldredge and protect basic First Amendment rights in the context of occupational regulation.

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