Archives: 12/2008

The Pope Launches Ill-Informed Attack Against Low-Tax Jurisdictions

It is troubling so see collectivists (perhaps deliberately) confuse the acts of personal compassion and charity with the coerced redistribution imposed by government. This moral bankruptcy is particularly disappointing when it comes from religious leaders. The Pope, for instance, has launched an attack against so-called tax havens. As the UK-based Guardian reports, he apparently believes that low-tax jurisdictions somehow caused the financial crisis and he argues that the developing world will grow faster if corrupt politicians get more money to spend:

The Roman Catholic Church is calling for the effective closure of secretive tax havens as a ‘necessary first step’ to restore the global economy to health. In a policy paper from the Holy See, Pope Benedict pins the blame for the international financial crisis largely on ‘offshore centres’… The Pope points to estimates that the global fiscal deficit caused by offshore activities could amount to a staggering $255bn (£175bn) which is ‘more than three times the entire sum of [global] development aid’. …the reflection paper argues that tax havens, which banks use to escape the gaze of international financial watchdogs, facilitate the transfer of wealth from poverty-stricken nations to the rich world. …Intriguingly, the Vatican Bank…makes very limited financial disclosures, but the Rev Thomas Resse in his book Inside the Vatican claimed a cardinal told him in 1994 that it had $4bn in deposits and an annual income of $40m. Many experts believe this to be a spectacular underestimate.

This is not the first time the Pope has sided with big government over people. I addressed this issue last year, but he inexplicably missed my post on this topic. I guess this means the Pope has not watched my three-part series on tax havens. The Economic Case for Tax Havens would show him how low-tax jurisdictions boost global economic performance. The Moral Case for Tax Havens would warn him of the unpleasant consequences of giving too much private information to corrupt, venal, and incompetent governments. And Tax Havens: Myths vs. Facts would explain to him why attacks against low-tax jurisdictions are empty demagoguery. If the Pope is not a fan of, he would benefit from reading Tim Ridley’s column, which was published by Cayman News Service:

Pope Benedict commands huge respect but one wonders where his advisors are getting their economic and financial advice, possibly from the German Finance Minister or the French President, since it is so misguided and wide of the mark. On the first point, there is clear and incontestable evidence where the current crisis started, but it bears repeating that its origins were in the bad lending practices and financial engineering of regulated entities in major onshore economies, not in offshore centres. On the second point, His Holiness should also look much closer to home. The Vatican has a very patchy history of transparency, fiscal accountability and rectitude. It also has no problem with its own tax free status. It cut a deal with Mussolini in 1929 that effectively made the Holy See a tax haven itself.

…to charge that small economies that are able to operate without direct taxation and have thriving financial services industries are ipso facto responsible and punishable for the evils of tax evasion and official corruption beggars belief. Those charities, politicians, bureaucrats and now it appears, the Catholic Church, that clamour for the summary conviction and elimination of these small countries (who have few international votes and limited bargaining strength) should think long and hard about the implications if they get what they wish for. Small Islands like Bermuda, the Bahamas, the British Virgin Islands and the Cayman Islands will be impoverished and consigned back to the poverty of times gone by. The despots of the world will continue to find ways to pillage their countries’ treasuries and to have the proceeds available in one form or another in onshore financial centres in Europe and elsewhere (convenient after all for Harrods and Bergdorf Goodman). Will Oxfam, Christian Aid and the Vatican then send care packages to both Zimbabwe and the Cayman Islands?

Shocked, Shocked.

Sen. Jon Kyl (R.-AZ) on the judicial filibuster, circa 2005 [.pdf]:

Republicans seek to right a wrong that has undermined 214 years of tradition – wise, carefully thought-out tradition. The fact that the Senate rules theoretically allowed the filibuster of judicial nominations but were never used to that end is an important indicator of what is right, and why the precedent of allowing up-or-down votes is so well established. It is that precedent that has been attacked and which we seek to restore….

My friends argue that Republicans may want to filibuster a future Democratic President’s
nominees. To that I say, I don’t think so, and even if true, I’m willing to give up that tool. It was never a power we thought we had in the past, and it is not one likely to be used in the future. I know some insist that we will someday want to block Democrat judges by filibuster. But I know my colleagues. I have heard them speak passionately, publicly and privately, about the injustice done to filibustered nominees. I think it highly unlikely that they will shift their views simply because the political worm has turned.

Uh, never mind:

Jon Kyl, the second-ranking Republican in the U.S. Senate, warned president-elect Barack Obama that he would filibuster U.S. Supreme Court appointments if those nominees were too liberal

For the case against the case against the judicial filibuster, check here and here. For good arguments against the JF, check here.

US Schools: Spending Leaders, Middling Performers

The latest international test results were released this morning, and the U.S. is getting favorable early coverage for scoring anywhere between the top 3rd and the top 6th of the pack, depending on the subject and the grade. But many poor nations participate in TIMSS (the Trends in International Mathematics and Science Study) giving an inflated impression of how well we actually perform compared to our economic peers.

The picture changes when we consider only those nations that are among the top-30 in terms of gross national income per capita. Limited to those nations, the U.S. places 6th out of 11 at the 8th grade in both mathematics and science. At the 4th grade, we place 7th out of 16 and 6th out of 14 in math and science, respectively. That is despite the fact that we spend more per pupil than every country that outperforms us, and indeed more than any of the 48 participating countries except Norway.

The U.S. is also getting plaudits for rising TIMSS math scores since 2003, though our performance in science seems to have stagnated. It is inevitable that advocates of the No Child Left Behind law will claim credit for the math gains, but let’s not be too hasty in going along. First of all, the PISA international test results released last year show declines in both mathematics and science scores since 2003, and the math decline is statistically significant. So TIMSS is not the only word on the issue. Moreover, the 8th grade gains in student scores that occurred on TIMSS between the late nineties and 2003 – before NCLB could have had an effect – are larger than those that have occurred since (4th grade TIMSS scores are not available for 1999). The same pattern is true of America’s own National Assessment of Educational Progress.

So we’ve thrown $100 billion or so at NCLB and, at best, performance has improved more slowly than before the law was passed. At worst, it has declined. The Obama administration should give these facts serious consideration in deciding what to do with the law.

Blagojevich: Business as Usual

Reading over the complaint against Illinois governor Rod Blagojevich (D) - which is highly entertaining, by the way - I’m struck not by the brazenness of his attempt to “sell” the Senate seat, but by how typical it is of the horse-trading done in politics.

Fawned over by lobbyists and staff, politicians tend to collapse together the public interest and their personal interests. It is the norm - not some outrageous deviation - to exchange political favors for help with attaining higher office, including campaign contributions. It’s only a small step from there to private emoluments.

Blagojevich may have crossed a legal line, and his foul language certainly sounds in corruption. (Didjya think that politicians don’t swear when they talk to their buddies?) But it’s a line politicians touch their toes to all the time.

Only if you pretend that politicians are selfless do you find Blagojevich’s horse-trading unusual.

Say No to the Auto Bailout

In a new edition of Cato Out Loud, Daniel J. Ikenson explains why the federal government should not extend a financial bailout to the auto industry. Since November, Cato analysts have appeared on more than 50 radio and television programs discussing the bailout of “The Big Three.”


The Journal vs. the Fourth Amendment

There’s an astonishing editorial in the Wall Street Journal today about the FISA amendments that were passed in July. As you might recall, that legislation granted retroactive, blanket immunity for companies that illegally participated in the government’s wiretapping programs and substantially weakened judicial oversight of government surveillance of domestic-to-foreign communications. Under the new law, the government is no longer required to obtain an individualized warrant if it wishes to spy on your communications with people overseas. Rather, it can submit a “certification” that describes the general parameters of a broad eavesdropping program. Judges are required to approve the requests without ever seeing specific information about who would be targeted. The legislation also lengthened the grace period during which the government can conduct surveillance without any judicial oversight at all. Whereas emergency warrants were previously required within three days of the start of eavesdropping, the new legislation allows the government to spy for as long as four months while the judicial branch deliberates about its legality.

With all that in mind, I’m surprised to learn that the Journal seems to believe that the new, watered-down version of FISA is still too restrictive:

The Attorney General is only allowed to pursue threats up to certain legalistic edges, which contracted under this year’s political compromise that greatly expanded the role of the courts in intelligence gathering. Commissioner Kelly is practically begging people to think about what this means in the real world.

FISA was passed before the advent of disposable cell phones, encrypted emails and high-speed fiber optic networks. Now we live in a world where terrorist communications that originate in, say, Peshawar happen to move through U.S. switching networks. The executive branch already possesses the Constitutional authority to monitor such communications, but Democrats and the political left claimed it was “illegal” under FISA.

Then the anti-antiterror bar filed multibillion-dollar lawsuits against the telecom companies whose good-faith assistance after 9/11 made such surveillance possible. The goal was to shut down the program, and the telcos made it clear they couldn’t cooperate without Congress’s blessing. Forced to choose between a Democratic deal that gave the companies legal immunity or giving up a key U.S. antiterror tool, President Bush chose the former. The price – the one Commissioner Kelly is paying – was narrowing the government’s antiterror wiretapping powers.

What Democrats have done, in essence, is to insert an unelected judiciary into the wartime chain of command. As Mr. Kelly notes, this is producing a “lack of accountability” and “the lack of transparency into the inner workings of the FISA process.” If some faceless FISA judge denies a surveillance request from Mr. Kelly and New Yorkers die as a result, that judge will answer to no one. Under current FISA rules, we won’t even know who that judge is.

If the Journal believes it’s problematic for a “faceless FISA judge” who “answers to no one” to deny surveillance requests, then its quarrel isn’t with liberals, Democrats, or trial lawyers, it’s with the Constitution itself. The whole point of the Fourth Amendment is that “unelected judges” oversee the activities of law enforcement.

Moreover, the FISA bill the Journal derides makes it crystal clear that the government can intercept purely foreign-to-foreign communications without any judicial oversight whatsoever. And if our hypothetical Peshawar terrorist is communicating with an American, the government can take advantage of the new “certification” process that involves only cursory judicial review and doesn’t require any showing that the target is involved in terrorism. Only in cases where both ends of the communication are in the United States does the government require an individual warrant.

The Journal appears to take the extreme viewpoint that there should be no judicial oversight of the government’s domestic antiterrorism activities at all. But we know what happens when the government engages in surveillance without judicial oversight. History tells us that when judicial oversight is absent, abuses are inevitable. And if we create a terrorism exception to the warrant requirement, it would steadily grow to swallow the rule. Fighting terrorism is important, but we can do it without sacrificing judicial oversight.