Archives: 11/2009

‘The End of Privacy’ and the Surveillance-Industrial Complex

National Public Radio’s All Things Considered ran a series on “The End of Privacy” all last week that’s worth a listen. They’re primarily concerned with the ways private companies have access to vast quantities of information about individuals in the digital age—something that civil libertarians have traditionally been less concerned about than government access, for many perfectly valid reasons.  But it’s worth noting how porous that distinction can be.  A 2006 survey by the Government Accountability Office found that just four government agencies—the Justice Department, Department of Homeland Security, State Department, and Social Security Administration—spent at least $30 million annually on contracts with information resellers like Choicepoint. The vast majority of that data (91%) was used for law enforcement or counterterror purposes.  And GAO found that the resellers weren’t always in full compliance with the privacy practices that the agencies themselves are supposed to follow.

Choicepoint, coincidentally, is one of the largest clients of the consulting firm run by former Attorney General John Ashcroft. Little wonder given the amount of cash at stake: As reporter Tim Shorrock has documented, some 70 percent of our vast intelligence budget is channeled through private-sector contractors, which means that we need to understand government surveillance policy in the context of a “surveillance-industrial complex” that parallels the more familiar military-industrial complex known for bringing us $600 toilet seats and other forms of pork in camo gear. It’s worth bearing in mind that it’s not just investigatory zeal and public fear driving the expansion of the surveillance state—a lot of people are making a lot of money off it as well.

Monday Links

  • The “Karzai problem” in Afghanistan: “The U.S. has assisted and sponsored a corrupt, illegitimate and slightly autocratic regime there while purporting to advance the values of freedom and democracy.”
  • Did it work? Cato’s Jeffrey Miron debates the effectiveness of Obama’s stimulus plan.
  • The limits of American power in Afghanistan.

Health Care Bill Improves Lawyers’ Financial Health

The great thing for legislators about a nearly 2000 page bill – such as, oh, the House’s latest health care salvo – is that very few people bother to read the whole thing.  So it’s easy to bury little gifts to favored supporters.  Or big ones. 

For example, check out section 2531  – that’s pages 1431-33 for those following along at home – which has gone largely unnoticed in the major news cycle.  These three pages of the bill reward states that refrain from setting (or repeal) any caps on medical malpractice rewards – and the accompanying lawyers’ fees! – by requiring the Secretary of Health and Human Services to provide them a bribe an “incentive payment.”

As Hans von Spakovsky notes at NRO’s Corner, this “alternative medical liability law” aims to eviscerate cost-saving measures that protect doctors from frivolous lawsuits that increase the cost of health care to the consumer.  So this has nothing to do with providing better or cheaper care, covering the uninsured, or even eliminating waste and fraud.  Instead, it’s a pure sop to one of the Congressional Democrats’ key constituencies: trial lawyers.

For more information on free market health care reform alternatives, please visit Cato’s Health Care website here.

The Bell Curve Mean Business

Over the past month, Charles Murray and I have been debating the proposition that better schools can significantly improve educational outcomes – can shift the “Bell Curve” substantially to the right. Charles finds this “touchingly naïve,” while I argue that it is empirically inescapable.

Ben Chavis, founding principal of Oakland’s extremely high scoring American Indian Public Charter Schools, has invited Charles to put his skepticism to the test, and perform research to validate or refute the achievements of Ben’s inner-city students. But Charles believes he’d find only a modest (< 0.25 std. dev.) test score effect to AIPCS attendance, that would, moreover, be evanescent. Charles grants that Ben has created a very good school, he’s just convinced that even very good schools cannot have large or lasting academic effects.

The evidence simply does not support Charles’ skepticism.

I’ve already noted that there are average effect sizes for market education systems that are much greater than Charles’ threshold. Just a few months ago, it was reported that three years in private schools under DC’s voucher program raises reading achievement by two grade levels (0.42 std. dev.), and effect sizes of even 2/3ds of a std. dev. are not unheard of.

Those are average effect sizes of competitive education markets over public school monopolies. Since we agree that Ben’s school is quite special, there is every reason to expect his school’s effect size to be on the high end of the range already identified in the research.

And what of Charles’ assumption that school effects are necessarily evanescent, fading to insignificance within a few years after students leave the school? This, too, is contradicted by the evidence. Numerous studies have looked at long term effects of consuming market schooling instead of monopoly schooling – particularly on students’ eventual success in college and their earnings once they’ve entered the labor market. Economist Derek Neal has found that urban blacks attending Catholic schools are twice as likely to graduate from college as similar students attending public schools. That is a large effect several years out, and it, in turn, will have an enduring positive effect on students earnings. In fact, of 17 research findings comparing the eventual educational attainment and earnings of market school graduates to public school graduates, 11 find statistically significant positive effects, and none find significant negative effects (see Table 3 in the previously linked paper).

The evidence is clear that competitive education markets have significant, lasting, and often quite substantial positive effects over government school monopolies. So I can see no empirical basis for Charles’ skepticism.

What’s more, this should be intuitively obvious. The current mean of the bell curve of educational achievement is not some inescapable fact of nature, like the value of pi. It is a symptom of the monopoly school systems that have stifled educational efficiency and innovation for more than a century. Just as establishing the rule of law and liberating economies from the thrall of central planning have led to dramatic economic growth around the world, so would liberating education from the thrall of government school monopolies shift the bell curve to the right.

NY 23: A Return to Principle?

At today’s Politico Arena the editors ask:

NY 23 and the GOP: The road to “first principles” or to “internecine ruin?”

My response:

In important respects, the NY 23 congressional race is a microcosm of the Goldwater/Rockefeller battle of 1964 – a battle for the soul of the Republican Party.  For years during the 1950s and ’60s, “Rockefeller Republicans” were not simply ”Democrat Lite” but often to the left of Democrats, giving rise back then to the New York Conservative Party, which nominated Doug Hoffman for the NY 23 seat at stake tomorrow.  And the policies those Republicans put in place, starting with taxes, were directly responsible for the relentless decline of the Empire State.  As reported in a recent Empire Center study, “New York’s share of the nation’s population declined sharply in the second half of the 20th century, from 19 percent of all Americans in 1950 to less than 7 percent in 2000.”

Goldwater won that intra-party battle, of course, then lost an election all but foreordained by the Kennedy assassination.  And with Goldwater’s victory for the soul of the Republican Party, the parties were at last distinguished by their principles, even if a remnant of Rockefeller Republicans, like the two Bushes, remained to muddy the waters.

The NY 23 situation captures this perfectly.  Nominated not in a primary but by a few party officials, Dede Scozzafava’s indifference to Republican Party principles was no better illustrated  than by her decision, when it became clear how badly she was losing, not simply to remove herself from the race but to endorse the Democratic nominee – in an apparent back-room deal with state and national Democrats.  We’ll doubtless know in time just what promises were made for that endorsement.  But it reeks already of the lust for power over principle:  Do whatever it takes to stay in the political game.

It’s impossible to predict the outcome of this election, of course.  Some of Scozzafava’s loyalists will probably follow her, while others will be moved by a sense of betrayal to go the other way.  The larger question, however, is whether we are going to have two significantly different parties in this nation – or simply two parties vying for power, with barely a dime’s worth of difference between them.  The Obama administration’s lust for power, making Bush look like a piker, has brought the Goldwater/Reagan revolution back to life.  But the Wall Street Journal’s sober editorial this morning got it exactly right:  Whether this revival returns the GOP to first principles or leads to internecine ruin “will depend on how GOP leaders and conservative activists respond.”  Both could do worse than look to Ronald Reagan for guidance.

The World’s Best Tax Haven: In America, but Unavailable to Americans

Tax competition is an issue that arouses passion on both sides of the debate. Libertarians and other free-market advocates welcome tax competition as a way of restraining the greed of politicians. Governments have lowered tax rates in recent decades, for instance, because politicians are afraid that the geese that lay the golden eggs can fly across the border. But collectivists despise tax competition – for exactly the same reason. They want investors, entrepreneurs, and companies to passively serve as free vending machines, dispensing never-ending piles of money for politicians. So when a left-wing group puts together a ranking of the world’s “top secrecy jurisdictions” in hopes of undermining tax competition, proponents of individual freedom can use that list as a guide to world’s most investor-friendly nations. The good news is that an American state, Delaware, is number one on the list. And since being a tax haven is a magnet for investment, this is good news for U.S. competitiveness. The bad news is that American taxpayers are not allowed to benefit from many of Delaware’s “tax haven” policies. Here’s what a left-wing columnist in the United Kingdom wrote about the issue:

You’re a billionaire but you don’t want anyone, least of all the taxman, to know. What do you do? Head for a palm-fringed island paradise or a snow-covered Alpine micro-state? Wrong. The world’s most opaque jurisdictions – the ones that will best shield you and your cash from the light – are mostly in the heart of the most sophisticated and powerful global financial centres. London, Luxembourg and Zurich are in the top five most secretive jurisdictions, according the first comprehensive index of financial transparency ever compiled. Yet top of the pile, beating the British Virgin Islands, Belize or Liechtenstein as the best place to hide wealth, is Delaware. One of the smallest states in the US, it offers the best protection for anyone who does not want to disclose their identity as a beneficial owner of a company. That is one very good reason why the East Coast state hosts 50% of the US’s quoted firms and 650,000 companies – almost equivalent to one company per Delaware resident. …Delaware – the political power-base of the US vice-president, Joe Biden – offers high levels of banking secrecy and does not make details of trusts, company accounts and beneficial ownership a matter of public record. Delaware also allows companies to re-domicile within its borders with minimal disclosure, and allows the existence of privacy-enhancing “protected cell” or “segregated portfolio” companies, among many other stratagems useful for protecting the identity of those who do business there.

The Eternal Battle to Reform the D.C. Schools

“When Kathy Patterson learned about Thursday’s D.C. Council hearing, during which Chairman Vincent C. Gray and Schools Chancellor Michelle A. Rhee pelted each other with accusations of law-breaking and secret meetings, she had one immediate reaction,” reports the Washington Post.

“Here we go again,” said Patterson, a former council member and chairwoman of its education committee. It looked as if another attempt at public school reform was disintegrating in a hail of recriminations and rhetoric.

Casey Lartigue wrote about the decades-long efforts to improve the D.C. schools for Cato back in 2002.