201207

July 31, 2012 4:57PM

You’re Destroying the Whole Tower, Stop Blaming It on the Basement

Yesterday Sen. Tom Harkin (D-IA), Chairman of the Senate Health, Education, Labor, and Pensions Committee, released his magnum opus on for-profit colleges, the culmination of two years of excoriating, browbeating, shaming, and generally demagoguing that fast-growing but relatively small sector of American higher education. His report is everything you'd expect from a crusade characterized by an almost complete unwillingness to address the central role of the federal government in creating pervasive rot not just in for-profit higher education, but the entire Ivory Tower.

The for-profit college sector is certainly raking in lots of cash and producing very little for it, with big revenues but very low completion rates. It's probably not as bad as Harkin would have us believe—I've chronicled much of the exaggeration and misrepresentation that has punctuated his attack—but there's little question that lots of students drag heaps of taxpayer dough into for-profit schools and get little of value for it.

The thing is, that happens across higher education, including the profit-taking.

As I've cited ad nauseum, completion rates throughout higher education are abominable. Looking at first-time, full-time students—an imperfect sample, yes, but the best we've got—the top completion rate is for bachelor's students at private not-for-profit schools. But that's only 65.4 percent completing within six years. The worst is at public two-year institutions—community colleges—which see only 20.4 percent finish their programs within 150 percent of normal time. That's just one-in-five!

Surprisingly, Harkin's report mentions the atrocious completion rates at community colleges. But only very briefly, and mainly to assert that "the cost of for-profit programs makes those programs more risky for students and Federal taxpayers." That proviso is technically correct, but as misleading as much of the behavior for which Harkin condemns for-profit schools. Community colleges are cheaper to students in large part because they get direct taxpayer subsidies, and while those don't come mainly from Washington they do come from taxpayers, just at the state and local level. In the 2009-10 school year, state and local appropriations to community colleges totaled $5,412 per pupil. Meanwhile, public four-year schools—with six-year graduation rates of just 56 percent—received almost $8,000 per student in federal, state, and local appropriations. And, of course, all "not-for-profit" schools get favored tax status, paying no taxes on most of their revenue and benefiting from tax deductible largess of donors.

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July 31, 2012 1:44PM

Celebrating Milton Friedman

Today is the 100th anniversary of Milton Friedman’s birth and wonderful pieces have appeared all over the Web to commemorate the occasion. I particularly like Stephen Moore’s editorial in the Wall Street Journal, and economist Bryan Caplan’s brief but thoughtful blog post.


To add to the celebration, we’ve put together a brief interview with Bob Chitester, producer of Milton’s “Free to Choose” documentary series, and provided a link to the site where you can watch the whole thing for free. I’ve also added a few thoughts of my own on Milton’s impact on the school choice movement, and the high standards he set in his life and work.

July 31, 2012 1:11PM

What We Can and Can’t Know About NSA Spying: A Reply to Prof. Cordero

Georgetown Law professor Carrie Cordero—who previously worked at the Department of Justice improving privacy procedures for monitoring under the Foreign Intelligence Surveillance Act—attended our event with Sen. Ron Wyden (D-OR) on the FISA Amendments Act last week.  Perhaps unsurprisingly, she's rather more comfortable with the surveillance authorized by the law than our speakers were, and posted some critical commentary at the Lawfare blog (which is, incidentally, required reading for national security and intelligence buffs). Marcy Wheeler has already posted her own reply, but I'd like to hit a few points as well. Here's Cordero:

Since at least the summer of 2011, [Wyden and Sen. Mark Udall] have been pushing the Intelligence Community to provide more public information about how the FAA works, and how it affects the privacy rights of Americans. In particular, they have, in a series of letters, requested that the Executive Branch provide an estimate of the number of Americans incidentally intercepted during the course of FAA surveillance. According to the exchanges of letters, the Executive Branch has repeatedly denied the request, on the basis that: i) it would be an unreasonable burden on the workforce (and, presumably, would take intelligence professionals off their national security mission); and ii) gathering the data the senators are requesting would, in and of itself, violate privacy rights of Americans.

The workforce argument, even if true, is, of course, a loser. The question of whether the data call itself would violate privacy rights is a more interesting one. Multiple oversight personnel independent of the operational and analytical wings of the Intelligence Community – including the Office of Management and Budget, the NSA Inspector General, and just last month, the Inspector General of the Intelligence Community, have all said that the data call requested by the senators is not feasible. The other members of the SSCI appear to accept this claim on its face. Meanwhile, Senator Wyden states he just finds the claim unbelievable. That there must be some way it can be done, he says, if even on a sample basis. Maintaining that position puts him in an interesting place, however: is the privacy advocate actually advocating for violating the privacy rules, to appease a Congressional request? Assuming that he would not actually want to advocate that the rules be waived at the request of a politician, a question then arises as to whether the Intelligence Community has adequately explained exactly how the data call would work and why it would conflict with existing privacy rules and protections, such as minimization procedures.

I'll grant Cordero this point: as absurd as it sounds to say "we can't tell you how many Americans we're spying on, because it would violate their privacy," this might well be a concern if those of us who follow these issues from the outside are correct in our surmises about what NSA is doing under FAA authority. The only real restriction the law places on the initial interception of communications is that the NSA use "targeting procedures" designed to capture traffic to or from overseas groups and individuals. There's an enormous amount of circumstantial evidence to suggest that initial acquisition is therefore extremely broad, with a large percentage of international communications traffic being fed into NSA databases for later querying. If that's the case, then naturally the tiny subset of communications later reviewed by a human analyst—because they match far narrower criteria for suspicion—is going to be highly unrepresentative. To get even a rough statistical sample of what's in the larger database, then, one would have to "inspect"—possibly using software—a whole lot of the innocent communications that wouldn't otherwise ever be analyzed. And possibly the rules currently in place don't make any allowance for querying the database—even to analyze metadata for the purpose of generating aggregate statistics—unless it's directly related to an intelligence purpose.

A few points about this.  First: assuming, for the moment, that  this is the case, why can't NSA and DOJ say so clearly and publicly? Because it would somehow imperil national security to characterize the surveillance program even at this highest level of generality, without any mention of particular search parameters or targets? Would it "help the terrorists" if they answered a more recent query from a bipartisan group of senators, asking whether database searches (as opposed to initial "targeting") had focused on specific American citizens?  Please.

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July 31, 2012 12:59PM

On the Perils of Single‐​Issue Politics

NPR ran a story this morning, “NRA Targets One Of Its Own In Tenn. Race,” that nicely illustrates the perils of single‐​issue politics, although you’d never learn the principle of the matter from the NPR account. It seems that the NRA has launched a $75,000 ad campaign against state Rep. Debra Maggart, a long‐​time NRA member and avid gun‐​owner who a year ago had an “A+” rating from the NRA. Her sin? She and several other Tennessee Republican officials opposed a bill that would have allowed employees to keep guns in their cars while parked in their private employers’ parking lots.


The NRA’s Chris Cox, who’s spearheading this political vendetta and, in the process, is supporting Maggart’s tea‐​party backed opponent, invokes both “our First Amendment right to assemble to petition our government” and, of course, the Second Amendment, seemingly oblivious to the fact that neither is relevant here. In fact, the issue could not be simpler: individuals, including employers, have a right to determine the conditions on which others may enter their property.


The Second Amendment prevents the government, not private parties, from infringing your right to keep and bear arms. If a private party can ban you from his property for any reason, good or bad, he can do so for carrying a gun. So too with the First Amendment: it limits what governments, not private parties, may do; government may not violate your rights of assembly and petition, none of which is happening here.


As so often happens, here again we see how single‐​issue politics, in the name of liberty, ends up undermining liberty. The tea party should know better.

July 31, 2012 10:55AM

Here’s Why the Cayman Islands Is Considering Fiscal Suicide

What Do Greece, the United States, and the Cayman Islands Have in Common?


At first, this seems like a trick question. After all, the Cayman Islands are a fiscal paradise, with no personal income tax, no corporate income tax, no capital gains tax, and no death tax.


By contrast, Greece is a bankrupt, high‐​tax welfare state, and the United States sooner or later will suffer the same fate because of misguided entitlement programs.


But even though there are some important differences, all three of these jurisdictions share a common characteristic in that they face fiscal troubles because government spending has been growing faster than economic output.

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I’ve written before that the definition of good fiscal policy is for the private sector to grow faster than the government. I’ve humbly decided to refer to this simple principle as Mitchell’s Golden Rule, and have pointed out that bad things happen when governments violate this common‐​sense guideline.


In the case of the Cayman Islands, the “bad thing” is that the government is proposing to levy an income tax, which would be akin to committing fiscal suicide.


The Cayman Islands are one of the world’s richest jurisdictions (more prosperous than the United States according to the latest World Bank data), in part because there are no tax penalties on income and production.


So why are the local politicians considering a plan to kill the goose that lays the golden eggs? For the simple reason that they have been promiscuous in spending other people’s money. This chart shows that the burden of government spending in the Cayman Islands has climbed twice as fast as economic output since 2000.

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Much of this spending has been to employ and over‐​compensate a bloated civil service (in this respect, Cayman is sort of a Caribbean version of California).


In other words, the economic problem is that there has been too much spending, and the political problem is that politicians have been trying to buy votes by padding government payrolls (a problem that also exists in America).


The right solution to this problem is to reduce the burden of government spending back to the levels in the early part of last decade. The political class in Cayman, however, hopes it can prop up its costly bureaucracy with a new tax — which euphemistically is being called a “community enhancement fee.”

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July 31, 2012 8:42AM

Mass Tragedy Boilerplate and Rebuttal

On the road last week, and allergic to getting too heavily involved in the issue de l’heure, I only today saw Holman Jenkins’ Wall Street Journal commentary: “Can Data Mining Stop the Killing?

After the Aurora theater massacre, it might be fair to ask what kinds of things the NSA has programmed its algorithms to look for. Did it, or could it have, picked up on Mr. Holmes’s activities? And if not, what exactly are we getting for the money we spend on data mining?

Other than to collect it in a great mass along with data about all of us, the NSA could not have “picked up on” Mr. Holmes’s activities. As I wrote earlier this year about data mining’s potential for averting school shootings:

“[D]ata mining doesn’t have the capacity to predict rare events like terrorism or school shootings. The precursors of such events are not consistent the way, say, credit card fraud is. Data mining for campus violence would produce many false leads while missing real events. The costs in dollars and privacy would not be rewarded by gains in security and safety.

Jeff Jonas and I wrote about this in our 2006 Cato Policy Analysis, “Effective Counterterrorism and the Limited Role of Predictive Data Mining.”


If the NSA has data about the pathetic loser, Mr. Holmes, and if it were to let us know about it, all that would do is provide lenses for some pundit’s 20/20 hindsight. Data about past events always points to the future that occurred. But there is not enough commonality among rare and sporadic mass shootings to use their characteristics as predictors of future shootings.


Jenkins doesn’t drive hard toward concluding that data mining would have helped, but his inquiry is mass tragedy boilerplate. It’s been rebutted by me and others many times.

July 30, 2012 5:03PM

Should the USPS Diversify into Nonpostal Markets?

One possible solution offered up for the struggling U.S. Postal Service is to allow it to diversify into nonpostal commercial markets (e.g., insurance, logistics, banking, etc). After all, the share of revenue generated from diversified products at foreign posts has been on the rise and in many cases now accounts for the majority of a post’s revenue.


However, a new paper from postal expert Michael Schuyler concludes that the USPS entering “new nonpostal commercial ventures would probably end badly.” Here are some of the important takeaways from Mike’s paper:

  • “When foreign posts move into nonpostal markets, they often extract large sums from postal ratepayers and the government (which ultimately means taxpayers) to cover start‐​up costs.” The USPS is bleeding red ink and thus doesn’t have money for start‐​up costs – so it doesn’t take a genius to see where the money would have to come from.
  • When it comes to nonpostal commercial ventures, the USPS has an abysmal track record. Mike cites a Government Accountability Office report that looked at new postal products introduced over a two‐​year period and notes that “Among the nonpostal products on the list were retail merchandise sales (profitable), several electronic initiatives (all money losers), and the processing of credit card payments (unprofitable).”
  • Diversified products at foreign posts usually earn lower returns compared to industry averages. “Below‐​average profits suggest that when postal operators enter nonpostal commercial markets, they displace more efficient private‐​sector businesses, leading to less productive and vibrant economies.”
  • Would the USPS and its new private sector competitors operate on a neutral playing field? That’s doubtful. As I note in an essay on postal privatization, the USPS already enjoys several privileges including exemptions from taxes and various regulatory requirements. Mike notes that “special breaks [for the USPS] would misallocate resources, raise fairness issues, and might have high costs for the overall economy.”

In sum, it’s a really bad idea. Unfortunately, policymakers in Washington have a soft spot for bad ideas.