Topic: Government and Politics

National Defense, Keynesianism, or Just Pure Rent-Seeking?

Sen. Johnny Isakson (R-GA) is fighting hard to maintain production of the F-22 Raptor fighter jet, which happens to be made by Lockheed Martin in Marietta, Ga. But Isakson insists that he’s not fighting for the plane just because it’s made in Georgia. No, he tells NPR, it’s important to recognize that it’s actually made by 90,000 workers in 49 states, and you don’t want to lose those jobs at a time of high unemployment.

In a letter to President Obama, he spelled out his argument, albeit with slightly different numbers:

Over 25,000 Americans work for the 1,000+ suppliers in 44 states that manufacture the F-22. Moreover, it is estimated that another 70,000 additional Americans indirectly owe their jobs to this program. As we face one of the most trying economic times in recent history it is critical to preserve existing high paying, specialized jobs that are critical to our nation’s defense.

To be sure, Isakson does insist that the plane is vital to national security, an argument that Defense Secretary Robert Gates and Cato’s Chris Preble challenge. But it doesn’t say much for Republican arguments against President Obama’s wasteful spending when Republican senators argue that we should build a hugely expensive airplane as a jobs program.

New at Cato Unbound

This month’s Cato Unbound continues our tradition of stirring up controversy. The lead essay is by Patri Friedman, who challenges the advocates of liberty as follows:

I deeply yearn to live in an actual free society, not just to imagine a theoretical future utopia or achieve small incremental gains in freedom. For many years, I enthusiastically advocated for liberty under the vague assumption that advocacy would help our cause. However, I recently began trying to create free societies as my full-time job, and this has given me a dramatic perspective shift from my days of armchair philosophizing. My new perspective is that the advocacy approach which many libertarian individuals, groups, and think tanks follow (including me sometimes, sadly) is an utter waste of time.

Argument has refined our principles, and academic research has enlarged our understanding, but they have gotten us no closer to an actual libertarian state. Our debating springs not from calculated strategy, but from an intuitive “folk activism”: an instinct to seek political change through personal interaction, born in our hunter-gatherer days when all politics was personal. In the modern world, however, bad policies are the result of human action, not human design. To change them we must understand how they emerge from human interaction, and then alter the web of incentives that drives behavior. Attempts to directly influence people or ideas without changing incentives, such as the U.S. Libertarian Party, the Ron Paul campaign, and academic research, are thus useless for achieving real-world liberty.

Cato isn’t called out by name, but it easily could have been. Like I said, Cato Unbound tries to be controversial.

What’s needed, Friedman claims, is not more study or advocacy, but a change in the deeper institutional structures that give rise to government policies. Competition among states (and non-state agents!), new technologies, and new intentional communities may just induce old-fashioned governments to behave a whole lot better. By contrast, just recommending somewhat better policies won’t do very much, not if all we do is write about them. (Friedman seems particularly skeptical about blogs. Ahem.)

Is this just a young person’s impatience? Or has Friedman found a serious weakness in libertarian activism? One reply I might make is that Cato scholars have researched quite a few topics that Friedman would probably find worthwhile. It’s important to document these things, and much of this work directly furthers the kind of structural reform that Friedman favors.

Consider the many Cato scholars who have heralded the rise of tax competition – in which states feel increasing pressure to deliver a low-cost product when their taxpayers can move elsewhere. Or consider Bryan Caplan’s The Myth of the Rational Voter, a book whose conclusions inform Friedman’s own project. This book began with a series of discussions among public policy scholars (on a blog no less!). Cato actively promoted Caplan’s work, and we would hope that Friedman would find this an effort well-spent. An upcoming event with author James Tooley shows how the world’s poor are founding their own schools to educate themselves, admirably free from any state interference – a new, private social practice bests an incompetent government! These things matter, I’d say, and they matter even if we accept Friedman’s premises. (We’re also giving a platform to Friedman, both here and at an event on April 7.)

In any case, this a big and very important discussion for the libertarian movement, of which the Cato Institute is only a part. Cato Unbound will have a remarkable series of panelists commenting throughout this week and next, including Jason Sorens, founder of the Free State Project; Peter Thiel, co-founder of PayPal and noted philanthropist; and Brian Doherty, who has researched and written about more forms of libertarian activism than most of us can even recall. Whatever side of the debate you end up taking, be sure to stop by to catch this month’s edition of Cato Unbound.

Congressional Bonuses

The Wall Street Journal reports,

While Congress has been flaying companies for giving out bonuses while on the government dole, lawmakers have a longstanding tradition of rewarding their own employees with extra cash — also courtesy of taxpayers.

And at the very time that Congress was mishandling the financial crisis and trying to direct popular outrage at Wall Street, not Washington, the bonuses were getting bigger:

Capitol Hill bonuses in 2008 were among the highest in years, according to LegiStorm, an organization that tracks payroll data. The average House aide earned 17% more in the fourth quarter of the year, when the bonuses were paid, than in previous quarters, according to the data.

LegiStorm is a pretty scary website for congressional staff members and privacy advocates. It makes readily available not just staffers’ salaries but their financial disclosure forms, including their spouses’ sources of income, as the Washington Post reported this week. I used LegiStorm myself (or technically interns Schuyler Daum and Jonathan Slemrod did) to write about how the Republicans shoveled bonus money to their staff members before they lost control of committee budgets after the 2006 election. Now that bonuses have become a focus of outrage, maybe Congress should impose 90 percent clawbacks on the bonuses of congressional staffers — and bonuses to other federal employees. After all, they’ve mismanaged the government’s finances far worse than AIG employees mismanaged that company.

I Love You Too, America

People who don’t know me well don’t realize I’m not American.  I have no accent, am among the most patriotic people you could meet, went to college and law school here, interned for a senator, clerked for a federal judge, worked on a presidential campaign, spent time in Iraq, and speak and write about the U.S. Constitution for a living. I was born in Russia, however, and immigrated to Canada with my parents when I was little.  “We took a wrong turn at the St. Lawrence Seaway,” I like to joke.

The upshot is that, much as I’ve wanted to be American since about age eight — when I discovered that the U.S. governing ethos was “life, liberty, and the pursuit of happiness,” while Canada’s is “peace, order, and good government” — I am a Canadian citizen.  And, because of this country’s perverted immigration system, none of the time I’ve spent in the United States (my entire adult life save a 10-month masters program in London) got me any closer to the unrestricted right to live and work here (a “green card”). 

Don’t worry, I’ve always been legal, through a combination of student, training, and professional visas, but those were always tied to the school or employer, hindering the types of professional activities I could engage in hanging a sword of Damocles over my life. If I lost my job — as so many lawyers have, for example, in this economy — I would have to leave the country where about 95% of my personal and professional network is located.

When I came to Cato, the opportunity presented itself to finally be able to petition for a green card.  (I’ll spare you the overly technical and exceedingly frustrating details.)  Along the way, I even got a certificate saying that the U.S. government — or at least the Department of Homeland Security’s U.S. Citizenship and Immigration Service (what used to be the I.N.S.) — considered me an “alien of exceptional ability.”  I didn’t let this go to my head; when lawyers and bureaucrats come up with a term of art, it means less in real life than, say, one of you readers emailing me that you liked something I blogged here.

Anyhow, not expecting any action on my green card petition for at least another year (based on the processing times posted at the USCIS website), last night I came home to an unmarked envelope in my mailbox.  It was my green card! — complete with a little pamphlet welcoming me to America.

This is quite literally the key to the rest of my life in this wonderful country.  Those who know me well know how huge a deal this is for me personally, how long it has taken, and how many arbitrary and capricious obstacles our immigration non-policy places in the way of “skilled workers.”  (Three years ago I attracted media attention during the Senate immigration debate with the soundbite, “if this reform goes through, I’m giving up law and taking up gardening.”)

I’ve been very fortunate in the opportunities I’ve had and the people I’ve met — including, in significant part, through the big-tent movement for liberty — and I am eternally grateful that this day has finally arrived.  Believe me that I will never take for granted the great privilege that is permanent residence in the United States.  My sincere hope is that America remains a beacon of liberty and that shining city on a hill.

I may well blog or write more about this in the future, but for more on my personal story, see, e.g., here, here, and here.  More importantly, check out Cato’s excellent immigration work here.

Democratic Math

As President Obama institutionalizes the permanent campaign, Democrats are using his mailing list and his organization to generate support for his massive spending hikes. Yesterday they announced to the media that they were delivering 642,000 pledges of support for the Obama budget to Capitol Hill. But Washington Post writer Dana Milbank asked a couple of questions and got some interesting answers:

At Democratic National Committee headquarters yesterday morning, party workers were loading minivans with Xerox boxes, each addressed to a different congressional office. It was a classic campaign canvassing operation – except that the next election is 19 months away. “Supporters of President Obama’s Budget to Hand Deliver 642,000 Pledges Gathered from Around the Country to Capitol Hill,” announced the Democrats’ news release.

CNN and the Huffington Post dutifully reported the DNC’s claim of 642,000 pledges. Network cameras and the BBC showed up to film the operation. “We had one of the big printers downstairs smoking last night,” party spokesman Brad Woodhouse said.

In fact, the canvassing of Obama’s vaunted e-mail list of 13 million people resulted in just 114,000 pledges – a response rate of less than 1 percent. Workers gathered 100,000 more from street canvassing. The DNC got to 642,000 by making three photocopies of each pledge so that each signer’s senators and representative could get one.

So they asked 13 million Obama supporters to support Obama’s budget, and got 114,000 responses – which might suggest that even Obama supporters aren’t excited about trillion-dollar deficits farther than the eye can see. And then they counted each one they did get three times to get a good number for the press release, which some of the media bit on. I wonder – if I count each tax dollar three times, can I send in $3,000 and have them count it as $9,000? After all, my two senators and my congressman will all get to spend it.

McAuliffe-nomics

Good news for Virginia taxpayers! Turns out that gubernatorial candidate Terry McAuliffe, longtime Democratic fundraiser and former national chairman, understands the power of tax cuts. At a forum on Wednesday, he said that $1.25 million in tax cuts could generate $80 million in economic activity. I’m not sure even Art Laffer or Christina Romer would claim that much return on tax cuts. But here’s McAuliffe:

At George Mason University yesterday, McAuliffe said Virginia’s appeal to Hollywood filmmakers could improve the state’s economic picture. McAuliffe said he became familiar with the potency of the film industry while serving as chairman of the Democratic National Committee.

During a roundtable discussion with local filmmakers and producers at George Mason, he unveiled a proposal to offer additional tax incentives and other benefits to film crews making movies in Virginia. He said the state has been losing out to such states as North Carolina and Georgia, which offer greater benefits and have seen their film industries flourish.

He pointed to the HBO miniseries “John Adams,” about the nation’s second president, as an example of a film project that had benefited the state. The miniseries, filmed partly in Williamsburg and at the College of William and Mary, cost Virginia $1.25 million in tax breaks, but it boosted the local economy by $80 million and created 3,500 jobs, he said.

Unless … wait a minute. Could it be that McAuliffe only favors targeted tax cuts, tax cuts that would direct economic activity in a particular direction, tax cuts that would in fact help his Hollywood fundraising friends? Hard to say. He’s not calling for tax increases during his gubernatorial campaign, but of course he helped President Clinton raise taxes and he supports President Obama’s tax-spend-and-borrow policies. According to this liberal blogger, McAuliffe tells liberals privately that he can’t run for governor of Virginia on a tax-increase platform … if you get my drift.

But hey, if a $1.25 million tax break can generate $80 million of economic activity, what could a $125 million tax break do for Virginia?