Archives: 12/2010

President Touts Historic Education Failure… Again

He did it on the campaign trail in 2008, he did it in his first year in office, and how he’s done it again: speaking at the Forsyth Technical Community College in North Carolina yesterday, President Obama praised post-Sputnik federal education initiatives aimed at improving achievement in math and science. The trouble is, those investments—the National Defense Education Act—failed.

Having already demonstrated the decline in achievement that followed the passage of the NDEA two years ago, I won’t re-hash it here. I’m left to wonder though, what the next two years are going to be like. If the president is still recycling campaign speeches about programs that never worked in the first place, is this what we can expect for the next two years?

Perhaps, faced by the latest international test scores showing that the United States continues to languish in educational mediocrity, this administration is simply out of ideas. Perhaps it’s unable to accept that 40 years (and $1.8 trillion) of federal education intervention have failed, and unable to accept that educational freedom is the solution.

If so, that’s yet another reason for Congress to return the reins of educational power to the states and the people, where the United States Constitution so wisely left them.

No Recession in Washington

Forbes looks at new data on household income in different metro areas:

Median family incomes across the country decreased dramatically from 2008 to 2009, and no region was left untouched by the recession. But despite shrinking paychecks nearly across the board, some cities still stand out for their bigger-than-average salaries.

To find the places where Americans earn the most, we looked at median family income data for 2009, as reported by the U.S. Census Bureau. In September, as part of its annual American Community Survey, the Census released updated data for several hundred Metropolitan Statistical Areas — geographic entities defined by the U.S. government that roughly correspond to major cities.

The place with the highest median family income is the Washington, D.C., metro area, which includes the nation’s capital, as well as wealthy suburbs in Virginia and Maryland. In 2009 families in this region earned a median income of $102,340, a 0.7 percent increase from 2008. D.C. also boasts a better than average unemployment rate of 5.9 percent, far below the September’s 9.2 percent national average.

As we’ve reported here before, these trends began even before the Obama administration started concentrating job creation on the federal sector. In the middle of the Bush bubble, the Washington Post reported:

The three most prosperous large counties in the United States are in the Washington suburbs, according to census figures released yesterday, which show that the region has the second-highest income and the least poverty of any major metropolitan area in the country.

Rapidly growing Loudoun County has emerged as the wealthiest jurisdiction in the nation, with its households last year having a median income of more than $98,000. It is followed by Fairfax and Howard counties, with Montgomery County not far behind.

This of course reflects partly the high level of federal pay, as Chris Edwards and Tad DeHaven have been detailing. And it also reflects the boom in lobbying as government comes to claim and redistribute more of the wealth produced in all those other metropolitan areas.

To slightly amend a ditty I posted a few years ago,

Mamas, don’t let your babies grow up to be cowboys,

Don’t let ‘em make software and sell people trucks,

Make ‘em be bureaucrats and lobbyists and such.

The Good, the Bad, and the Ugly of the Tax Deal

Compared to ideal policy, the deal announced last night between congressional Republicans and President Obama is terrible.

Compared to what I expected to happen, the deal announced last night is pretty good.

In other words, grading this package depends on your benchmark. This is why reaction has been all over the map, featuring dour assessments from people like Pejman Yousefzadeh and cheerful analysis from folks such as Jennifer Rubin.

With apologies to Clint Eastwood, let’s review the good, the bad, and the ugly.

The Good

The good parts of the agreement is the avoidance of bad things, sort of the political version of the Hippocratic oath – do no harm. Tax rates next year are not going to increase. The main provisions of the 2001 and 2003 tax acts are extended for two years – including the lower tax rates on dividends and capital gains. This is good news for investors, entrepreneurs, small business owners, and other “rich” taxpayers who were targeted by Obama. They get a reprieve before there is a risk of higher tax rates. This probably won’t have a positive effect on economic performance since current policy will continue, but at least it delays anti-growth policy for two years.

On a lesser note, Obama’s gimmicky and ineffective make-work-pay credit, which was part of the so-called stimulus, will be replaced by a 2-percentage point reduction in the payroll tax. Tax credits generally do not result in lower marginal tax rates on productive behavior, so there is no pro-growth impact.  A lower payroll tax rate, by contrast, improves incentives to work. But don’t expect much positive effect on the economy since the lower rate only lasts for one year. People rarely make permanent decisions on creating jobs and expanding output on the basis of one-year tax breaks.

Another bit of good news is that the death tax will be 35 percent for two years, rather than 55 percent, as would have happened without an agreement, or 45 percent, which is what I thought was going to happen. Last but not least, there is a one-year provision allowing businesses to ”expense” new investment rather than have it taxed, which perversely happens to some degree under current law.

The Bad

The burden of government spending is going to increase. Unemployment benefits are extended for 13 months. And there is no effort to reduce spending elsewhere to “pay for” this new budgetary burden. A rising burden of federal spending is America’s main fiscal problem, and this agreement exacerbates that challenge.

But the fiscal cost is probably trivial compared to the human cost. Academic research is quite thorough on this issue, and it shows that paying people to remain out of work has a significantly negative impact on employment rates. This means many people will remain trapped in joblessness, with potentially horrible long-term consequences on their work histories and habits.

The agreement reinstates a death tax. For all of this year, there has not been a punitive and immoral tax imposed on people simply because they die. So even though I listed the 35 percent death tax in the deal in the “good news” section of this analysis because it could have been worse, it also belongs in the “bad news” section because there is no justification for this class-warfare levy.

The Ugly

As happens so often when politicians make decisions, the deal includes all sorts of special-interest provisions. There are various special provisions for politically powerful constituencies. As a long-time fan of a simple and non-corrupt flat tax, it is painful for me to see this kind of deal.

Moreover, the temporary nature of the package is disappointing. There will be very little economic boost from this deal. As mentioned above, people generally don’t increase output in response to short-term provisions. I worry that this will undermine the case for lower tax rates since observers may conclude that they don’t have much positive effect.

To conclude, I’m not sure if this is good, bad, or ugly, but we get to do this all over again in 2012.

Supreme Court Should Tell Courts to Stay Out of Global Warming Cases

The Supreme Court is finally starting to put some interesting non-First Amendment cases on this term’s docket.

Today, the Court agreed to review American Electric Power Co., Inc. v. Connecticut, in which eight states, some non-profits, and New York City are suing a number of energy companies and utilities for harms they allegedly caused by contributing to global warming.  This is the third major lawsuit to push global warming into the courts (another being Comer v. Murphy Oil USA, in which Cato also filed a brief).  It’s America, after all, where we sue to solve our problems – even apparently, taking to court the proverbial butterfly that caused a tsunami.

Mind you, you can sue your neighbor for leaking toxic water onto your land. Courts are well positioned to adjudicate such disputes because they involve only two parties and have limited (if any) effects on others. But it is a different case when, using the same legal theory by which Jones sues Smith for his toxic dumping (called “nuisance”), plaintiffs selectively sue a few targeted defendants for a (quite literally) global problem.  As I discussed with reference to a previous such case, global warming is the type of issue that should be decided by the political branches. The Second Circuit ruled, however, that this suit could go forward. (Justice Sotomayor was involved in the case at that stage and so will be recused going forward.)  

The Supreme Court has always recognized that not all problems can or should be solved in the courtroom. Thus, the issue in AEP v. Connecticut – which the Court will now decide – is whether the states meet the legal requirements necessary to have their suit heard in court, what lawyers call “standing.” Historically, issues of policy have been decided by the legislative and executive branches while “cases and controversies” have been decided by courts. Therefore, when litigants have asked courts determine matters of broad-ranging policy, the Court has often termed the cases “political questions” and dismissed them. The reasoning is that, not only do unelected courts lack the political authority to determine such questions, they also lack any meaningful standards by which the case could be decided (called “justiciability”).

Indeed, even if the plaintiffs can demonstrate causation, it is unconstitutional for courts to make complex policy decisions — and this is true regardless of the science regarding global warming. Just as it’s unconstitutional for a legislature to pass a statute punishing a particular person (bill of attainder), it’s unconstitutional — under the “political question doctrine” — for courts to determine wide-ranging policies in which numerous considerations must be weighed against each other in anything but a bilateral way.  

We pointed out in our brief supporting the defendants’ request for Supreme Court review – and will again in the brief we plan to file at this next stage – that resolving this case while avoiding those comprehensive and far-reaching implications is impossible and that the Constitution prohibits the judicial usurpation of roles assigned to the other, co-equal branches of government.   After all, global warming is a global problem purportedly caused by innumerable actors, ranging from cows to Camrys. This fact not only underscores the political nature of the question, but it has constitutional significance: In order to sue someone, your injury must be “fairly traceable” to the defendant’s actions. Suits based on “butterfly effect” reasoning should not be allowed to move forward.

Perhaps surprisingly, the federal government –which is involved because one of the defendants is the Tennessee Valley Authority – agrees with Cato . The administration aptly played its role in our constitutional system by asserting that global warming policy was a matter for the executive and legislative branches to resolve, not the judiciary. 

Hmmm, Cato and Obama on the same side in a global warming dispute… but I still won’t be holding my breath awaiting an invite to the White House Christmas party.

To Track or Not to Track? That’s Actually Not the Question.

A subcommittee of the House Committee on Energy and Commerce held a hearing last week to consider a proposal, floated in a recent Federal Trade Commission report, for “Do Not Track” legislation aimed at giving Web users greater control over how information about their online activities is collected and used by sites and advertisers. The name is a deliberate reference to the wildly popular “Do Not Call” list, a sort of virtual “No Tresspassing” sign for the telephone, which has spared scores of Americans the annoyance of telemarketers pitching FABULOUS DEALS! and LOW INTEREST RATES! during dinner. Subcommittee Chair Bobby Rush repeatedly invoked the Do Not Call program’s success in his opening remarks. And under the headline “Don’t Track technology is simple, experts say” USA Today declared that a “Do Not Track” policy for the Internet would be even “simpler and more powerful than Do Not Call.”

But as technology researcher Harlan Yu has argued, it’s actually a good deal less simple than it sounds—and the analogy to “Do Not Call” may obscure more than it illuminates. The experts consulted by USA Today are right that a Do Not Track policy would, in one respect, be technically simpler to implement than Do Not Call. It would not be necessary—or, indeed feasible—to have some kind of centrally administered list of people who have opted out of tracking. Instead, the idea seems to be that browsers could incorporate a “Do Not Track” mode which, when activated by users, would send a legally enforceable signal to deactivate tracking in the header of all communications, which would be automatically recognized by sites and ad networks.

What’s not so simple—as the FTC official who testified at last week’s hearing acknowledged—is determining exactly what “tracking” means, who is obligated to listen to the Do Not Track request, and what compliance with it entails. The appeal of a legally enforceable Do Not Track header is that it targets a functional class of behavior rather than any particular technological tracking mechanism, with the goal of ending the “arms race” that characterizes individual efforts by users to safeguard their privacy. So as users learn that they can delete tracking cookies, or block cookies from ad networks using their browser’s privacy settings, the advertisers turn to Flash cookies. When users figure that out, the trackers turn to system fingerprinting or history sniffing. How much simpler for users to simply be able to know they can demand not to be tracked without worrying about whether they’ve anticipated the latest clever method.

There’s the rub, though: There are many different kinds of information sites collect when interacting with users—much of which can be used for tracking, but which is also necessary for other purposes. So, for instance, IP addresses are not a particularly good way of tracking users for behavioral marketing purposes—on many networks they’re dynamically assigned and change frequently, and a single IP may actually represent many different computers and users behind a NAT firewall. Nevertheless, they often will be relatively persistently identified with a particular user—yet it would be utterly infeasible to suggest that sites be forbidden from maintaining their own server logs, including visitor IPs, for any connection that includes a Do Not Track header. Similarly, while sites can collect information about a user’s system configuration for the purpose of “fingerprinting” and tracking, there are lots of other reasons to collect that data—providing browser or OS-specific functionality or a smoother user experience, diagnosing bugs, and so on.

A browser-embedded header may be technically simpler than a government-administered “Do Not Call” list, but “Do Not Call” is conceptually much simpler: A marketer either places an unsolicited call to a particular number, or it doesn’t. When it comes to the information generated by the interaction between a user and a Website, the datastream may be binary, but the question of whether someone is being “tracked” or not is anything but. And as the “arms race” alluded to above shows, it’s not always going to be clear in advance which kinds of information will facilitate tracking. And of course, users will find it useful and convenient to permit the collection of certain types of information even as they prohibit others, making it desirable, as the FTC’s David Vladeck put it in his testimony, for Do Not Track to enable “granular control” by users, rather than a simple on-off switch. But the more types of data collection and sharing need to be controlled—including new types that become prevalent as technology evolves—the more elusive the clarity and simplicity promised by Do Not Track (relative to mechanism-specific self help) becomes.

Maybe there’s a solution to these difficulties—it would be premature to declare it hopeless a priori without seeing a proposed standard. But while the Internet is global, the reach of the FTC is confined to the United States. Even if the arms race could be halted within those borders, many users would frequently—and probably unwittingly—visit sites that are based abroad, or include content from third-party sites that are. (Expect that to increase if legislation gives those foreign ad networks a competitive advantage.) If the sense of security provided by Do Not Track therefore proves to be largely illusory, a more openly acknowledged arms race might be preferable.

The Appeal of Trusted Traveler

There is a natural appeal to “trusted traveler” programs. We all see ourselves as trustworthy, and getting into such a program might improve our experience at the airport. This video captures the notion—and some of the difficulties—entertainingly.

I would fly on a plane even knowing that Jimmy Johnson had brought a machete on board. But what level of trust should attach to a Super Bowl ring?

Dave Meggett helped the New York Giants win Super Bowl XXV. He was sentenced to 30 years in prison last month after being convicted of criminal sexual misconduct and burglary. Super Bowl MVP Ray Lewis was charged with murder in 2000, avoiding trial by agreeing to testify against others. The point is not to beat up on the NFL, but to beat up on the idea that you can trust a large-scale “trusted traveler” program.

Having some weakness is not fatal to the trusted traveler idea. A trusted traveler program might reduce costs and inconveniences without reducing risks by a greater amount. Indeed, it might make sense to trust all travelers more than the TSA does under its strip/grope policy.

In a recent, less entertaining post, I argued that the TSA shouldn’t do “trusted traveler.” Airlines should be free to implement trusted traveler systems, winning the rewards for getting it right and paying the costs for getting it wrong.

Keeping WikiLeaks in Perspective

As the WikiLeaks story unfolds, it draws forth many themes. Two such, seemingly unconnected and even at odds, are national security and privacy. Yet they are intimately connected.

Set aside issues I discussed here briefly last week – the overclassification problem, the complex prosecutorial issues concerning Julian Assange, and the government’s abysmal failure to better protect classified material – the national security issues were brought out nicely this morning by Gordon Crovitz in his Wall Street Journal column. Take it as given that the main function of government is to secure our rights: In a dangerous world, after all, we abandoned the Articles of Confederation for the Constitution precisely to better protect ourselves. To do that effectively, however, intelligence is necessary; and intelligence that is ample and useful requires confidentiality.

But as Crovitz writes, WikiLeaks will result in less intelligence – and that, he argues, is Assange’s express intention. Thus,

Mr. Assange is misunderstood in the media and among digirati as an advocate of transparency. Instead, this battening down of the information hatches by the U.S. is precisely his goal. The reason he launched WikiLeaks is not that he’s a whistleblower—there’s no wrongdoing inherent in diplomatic cables—but because he hopes to hobble the U.S., which according to his underreported philosophy can best be done if officials lose access to a free flow of information.

Drawing from a pair of essays Assange wrote in 2006, one entitled “Conspiracy as Governance,” a title sure to appeal to anarchists, Crovitz notes that Assange “sees the U.S. as an authoritarian conspiracy.” Not that there isn’t ample evidence, to be sure, for the misuse of that authority, but Assange would cripple even the government’s legitimate functions. As he wrote:

We can marginalize a conspiracy’s ability to act by decreasing total conspiratorial power until it is no longer able to understand, and hence respond effectively to its environment… . An authoritarian conspiracy that cannot think efficiently cannot act to preserve itself.

Anarchists may rejoice at that thought, but the implications, not least for privacy, were brought out nicely last week by Theodore Dalrymple, writing in the City Journal. After noting how unremarkable, and even useful, some of the revelations have been, Dalrymple writes that “WikiLeaks goes far beyond the need to expose wrongdoing, or supposed wrongdoing: it is unwittingly doing the work of totalitarianism.” And he adds:

The idea behind WikiLeaks is that life should be an open book, that everything that is said and done should be immediately revealed to everybody, that there should be no secret agreements, deeds, or conversations. In the fanatically puritanical view of WikiLeaks, no one and no organization should have anything to hide. It is scarcely worth arguing against such a childish view of life.

Yet he does, and he argues well.

The actual effect of WikiLeaks is likely to be profound and precisely the opposite of what it supposedly sets out to achieve. Far from making for a more open world, it could make for a much more closed one. Secrecy, or rather the possibility of secrecy, is not the enemy but the precondition of frankness. WikiLeaks will sow distrust and fear, indeed paranoia; people will be increasingly unwilling to express themselves openly in case what they say is taken down by their interlocutor and used in evidence against them, not necessarily by the interlocutor himself.

Indeed, alluding to life in Eastern Europe not that long ago, Dalrymple envisions that “a reign of assumed virtue would be imposed, in which people would say only what they do not think and think only what they do not say.” And he reminds us that “the dissolution of the distinction between the private and public spheres was one of the great aims of totalitarianism.”

But government is different, one hears. And it is. That’s why the presumption in the case of government, unlike in the private sphere, must be in favor of openness. That does not mean, however, that there is no place for secrecy in government, and for institutional measures to secure that secrecy. In fact, the point was well captured by Claire Berlinski at Ricochet, taking off from Dalrymple’s post:

The hypocrisy and double-standard of journalists, in particular, who fail to understand why the government must sometimes protect its sources of information is mind-blowing. Journalists, of all people, should understand this better than anyone else. Many sources would lose their jobs, their reputations, their liberty or their lives for talking to journalists on the record. If the people who spoke to us didn’t think we could keep their names out of the story, they would never open their mouths again. Would that make the world more transparent?

The only way you could argue that this logic doesn’t also apply to the US government is by assuming that all journalists only have good intentions and do only good things–all the time–and the US government only has bad intentions and does only bad things–all the time. This appears to be the justification offered by the Guardian, but I suppose that’s to be expected.

At some level, the post-WikiLeaks world was probably inevitable: as Crovitz puts it, it has “ended the era of innocent optimism about the Web.” But the world is still a dangerous place. Perhaps no one would better understand that, were he here today, than Benjamin Franklin, who in heading the Committee of Secret Correspondence during the Revolutionary War kept most of his dealings secret even from Congress. Come to think of it, even the debates of the Constitutional Convention, years later, were kept secret, and we’re doubtless the better for it.