Tag: government

One Problem with Big Government: Often Run by Crooks and Liars

Presidential candidates are proposing ideas to expand government, including a Green New Deal and Medicare for All. One flaw with such schemes is that they would give government officials large new powers to be exercised not by angels but often by very shady characters.

James Madison wrote that politicians sought office “from 3 motives. 1. ambition 2. personal interest. 3. public good. Unhappily the two first are proved by experience to be most prevalent.”

There are news stories every day that buttress Madison’s point. Here are two that caught my eye.

Catherine Pugh: “Personal Interest”–as covered by Brakkton Booker of NPR,

After weeks of growing pleas for her to step down, Baltimore Mayor Catherine Pugh has resigned, her attorney said Thursday.

… Pugh, a Democrat, is under investigation for alleged “self-dealing” in connection to the sale of thousands of copies of a self-published children’s book series. Many of those sales went to entities that she had influence over or that sought to do business with the city.

… The Baltimore Sun reported she has received roughly $800,000 over the years from the sale of the books. Some of the biggest benefactors include the University of Maryland Medical System.

UMMS is a private nonprofit for which Pugh served as a board member until mid-March, when she resigned from the position. It paid Pugh roughly $500,000 for copies of the books spread out in five payments from 2012-2018, according to the Sun.

A separate payment by health giant Kaiser Permanente of more than $100,000 for some 20,000 copies of the book between 2015 and 2018 was also reported by the Sun.

The payouts for the books came at a time when the company was seeking to provide coverage to city employees. The city’s spending panel, which Pugh sat on, eventually awarded the company a $48 million contract with the city in 2017.

Richard Holbrooke: “Ambition”–written by Adam Kushner of the Washington Post, 

The late diplomat possessed heroic talents, achieved feats of strength and rose high. But his own flaws undid him. 

… Behind all of it was a desperate, gnawing ambition that drove him to behave monstrously toward both his colleagues and the people he ostensibly loved.

… Holbrooke “was an absent husband and an indifferent father.” He cheated frequently over his three marriages and propositioned his best friend’s wife. After his son Anthony was born, he kept a lunch appointment with George Kennan before going to visit his wife and meet the baby in the hospital. Holbrooke pushed away his mother, brother and children because his third wife didn’t like them.

It was even worse inside government, where he fought constantly for status and recognition, leaked (and lied about it) to hurt rivals, kowtowed to bosses, terrorized subordinates, and elbowed his way into meetings where he wasn’t needed or wanted. “He is the most viperous character I know around this town,” Henry Kissinger, the greatest operator of them all, once said of Holbrooke.

What does government service look like when it’s so self-serving? When Holbrooke became assistant secretary of state, he told the deputies he’d inherited that their offices needed repainting — and then replaced them while they were out. … He crashed so many of Secretary of State Cyrus Vance’s meetings and motorcades that Vance’s secretary sent a memo: “You may not insert yourself as a passenger in the Secretary’s car unless this office has specifically approved your request to accompany him.”

When national security adviser Zbigniew Brzezinski wanted him fired for chatting “warmly” with the Vietnamese ambassador in Laos before Washington restored relations with Hanoi, he lied and said the report of the meeting was just an act of Soviet disinformation.

When a mentor, Averell Harriman, died, Holbrooke harangued his widow into letting him give a eulogy; then he shuffled the name cards at a meal after the service so he could “chat up the right dinner guest.”

… Holbrooke begged Pakistan’s foreign minister to tell Secretary of State Hillary Clinton what a good job he was doing. “You will have heard that he was a monstrous egotist. It’s true. It’s even worse than you’ve heard,” [Biographer] Packer summarizes.

… Packer truly shows Holbrooke’s ugliness. It is everywhere, and it’s revolting. … Holbrooke spent his career accruing enemies, and his comeuppance arrived in spurts. (“I’m going to be the next Henry Kissinger,” he said in his early 30s to a lover who actually knew Kissinger “and found him to be a pompous asshole.” She dumped him).

 

 

                                                      

What’s Killing U.S. Growth

On April 6th, the Wall Street Journal published an editorial that merits careful examination: “Jack Lew’s Political Economy”. The Journal correctly points out that the Obama administration’s meddling with regulations and red tape is killing U.S. investment and jobs. The most recent example being the Treasury’s new rules on so-called tax inversions, which burried a merger between Pfizer, Inc. and Allergan PLC.

As the Journal concluded: “This politicization has spread across most of the economy during the Obama years, as regulators rewrite longstanding interpretations of longstanding laws in order to achieve the policy goals they can’t or won’t negotiate with Congress. Telecoms, consumer finance, for-profit education, carbon energy, auto lending, auto-fuel economy, truck emissions, home mortgages, health care and so much more.”

Venezuela’s Lying Statistics

Surprise! Venezuela, the world’s most miserable country (according to my misery index) has just released an annualized inflation estimate for the quarter that ended September 2015. This is late on two counts. First, it has been nine months since the last estimate was released. Second, September 2015 is not January 2016. So, the newly released inflation estimate of 141.5% is out of date.

I estimate that the current implied annual inflation rate in Venezuela is 392%. That’s almost three times higher than the latest official estimate.

Venezuela’s notoriously incompetent central bank is producing lying statistics – just like the Soviets used to fabricate. In the Soviet days, we approximated reality by developing lie coefficients. We would apply these coefficients to the official data in an attempt to reach reality. The formula is: (official data) X (lie coefficient) = reality estimate. At present, the lie coefficient for the Central Bank of Venezuela’s official inflation estimate is 3.0.

The NYT Reportage on Government Lands Forgets a Chapter

The recent “occupation” of government-owned lands in Eastern Oregon by disgruntled ranchers’ motivated Quoctrung Bui and Margot Sanger-Katz of the New York Times (NYT) to produce an edifying essay on January 6th. It was aptly titled “Why the Government Owns So Much Land in the West.” Curiously, the NYT essay fails to mention one of the most significant, recent, and contentious attempts to “dispose” of federal public lands.

When Ronald Reagan was elected president for his first term in 1980, he received strong support from the so-called Sagebrush Rebels. The Rebels wanted lands owned by the federal government to be transferred to state governments.Their champion was James Watt, a self-proclaimed Sagebrush Rebel who became the Secretary of the U.S. Department of the Interior.

When I was operating as one of President Reagan’s economic advisers, an early assignment was to analyze the federal government’s landholdings and make recommendations about what to do with them. This was a big job. These lands are vast, covering an area six times that of France.

MENA’s Misery Indices, a Story of Economic Failure

In my misery index, I calculate a ranking for all countries where suitable data exist. The misery index — a simple sum of inflation, lending rates, and unemployment rates, minus year-on-year per capita GDP growth — is used to construct a ranking for 108 countries. The table below is a sub-index of all Middle East and North African (MENA) countries presented in the world misery index.

A higher score in the misery index means that the country, and its constituents, are more miserable. Indeed, this is a table where you do not want to be first.

Syria and Iran were the most miserable in the region. War and sanctions have taken their toll. Bahrain and Kuwait are at the other end of the spectrum, with low (read: good) misery index scores.

Two points worth noting are somewhat related. First, the majority of countries in MENA have elevated misery index scores – scores above twenty. These poor scores indicate structural problems that require serious economic reforms. The second point, as indicated in the notes to the table, is that the governments in eight MENA countries were not even capable of producing the basic data required to calculate a misery index score. This represents government failure and suggests a lack of capacity to implement structural economic reforms.

Europe: A Fiscal & Monetary Reality Check

Led by Alexis Tsipras, head of Greece’s newly-elected, left-wing coalition, some other leading political lights in Europe—Messrs. Hollande and Valls in France and Renzi in Italy—are raising a big stink about fiscal austerity. Yet they always fail to define austerity. Never mind. They don’t like it. The pols have plenty of company, too. Yes, they can trot out a host of economists—from Nobelist Paul Krugman on down—to carry their water.

But public expenditures in Greece, Italy and France are not only high, but growing as a proportion of the economy. One can only wonder where the austerity is. As the first chart shows, only five of 28 European Union countries now spend a smaller proportion of national income on government than they did before the current crisis. For example, Greece spent 47.5% of national output on government in 2007 and 58.5% in 2013, an increase of 11 percentage points. 

Government expenditures cut to the bone? You must be kidding. Even in the United States, where most agree that there is plenty of government largesse, the government (federal, plus state and local) still accounts for “only” 38.1% of GDP.

Government Gold-Plating

Sen. Tom Coburn (R-OK) released his annual Wastebook this past week. It contains a laundry list of doozies. The U.S. government’s gold-plating operations included $190,000 to study compost digested by worms, $297 million for the purchase of an unused mega blimp, and $1 million on a Virginia bus stop where only 15 people can huddle under a half-baked roof. These questionable (read: absurd) expenditures only represent the tip of the iceberg.

In addition to supporting members of Congress and civil servants, U.S. taxpayers support welfare recipients. And they support them lavishly, too. Hawaii, Massachusetts, and D.C. residents receive sizeable welfare payments (read: salaries). Indeed, the magnitude of these payments exceeds the average salary of an American teacher, as well as a soldier deployed in Afghanistan, by at least $10,000 per year.

The public can forget all the clap-trap they are hearing about austerity. Indeed, a fairly dull knife could cut billions of dollars from the U.S. government’s largess. 

Pages