The Federal Trade Commission has unanimously recommended that Congress should pass a law regulating “data brokers.”
Congress passed a law regulating credit bureaus forty-plus years ago, and the results aren’t particularly impressive.
The Federal Trade Commission has unanimously recommended that Congress should pass a law regulating “data brokers.”
Congress passed a law regulating credit bureaus forty-plus years ago, and the results aren’t particularly impressive.
Supporters of this election cycle’s call to raise the minimum wage have had little success so far. The country’s long-struggling economy has made federal lawmakers hesitant to increase the cost of entry-level jobs, and they’re sensibly ignoring the false claim that “there’s no solid evidence that a higher minimum wage costs jobs.”
To combat this, minwage supporters are trying a new argument: raising the federal minimum wage, they say, will boost the economy.
Harold Meyerson, for one, floats this idea in his latest Washington Post column:
By putting more money into the pockets of the working poor—a group that necessarily spends nearly all its income on such locally provided basics as rent, food, transport and child care—an adequate minimum wage increases a community’s level of sales and thereby creates more jobs.
This idea raises the question, did previous federal minimum wage increases boost the economy? Below is a list of all federal increases since the modern Fair Labor Standards Act (FLSA) minimum wage law was adopted in 1977, along with notes on what subsequently happened to the economy:
| Legislation date | Phase-in dates | Economy |
| 1977 Amendments | 1/1/1978 | Economy enters recession, 1/1980 |
| 1/1/1979 | ||
| 1/1/1980 | ||
| 1989 Amendments | 4/1/1990 | Economy enters recession, 7/1990 |
| 4/1/1991 | ||
| 1996 Amendments | 10/1/1996 | U.S. Real GDP grows 4.5% in 1997, 4.4% in 1998, and 4.8% in 1999 |
| 9/1/1997 | ||
| 2007 Amendments | 7/24/2007 | Economy enters recession, 12/2007 |
| 7/24/2008 | ||
| 7/24/2009 |
Going back further, the economy also entered recessions during the phase-ins of the two previous minimum wage increases, under the 1966 and 1974 FLSA Amendments. So, during five of the last six federal minimum wage increases, the nation fell into recession.
Now, perhaps the minwage increases did stimulate the economy in each of those years, but the stimulus was not enough to overcome the problems that brought on the recessions. Heck, perhaps the ’96–’97 increase was the chief cause of the economic boom of the late 1990s.
But probably not.
It seems far more likely that mandating a small wage increase for a small group of workers who work a small number of hours will not have much stimulatory effect on the economy. It may not even be enough to counterbalance the negative economic effects of would-be workers who can’t find—or lose—their jobs because of the mandated increase.
Two years ago, there was a flurry of excitement because MarketWatch journalist Rex Nutting crunched annual budget numbers and proclaimed that Barack Obama was the most fiscally conservative president since at least 1980.
I looked at the data and found a few mistakes, such as a failure to adjust the numbers for inflation, but Nutting’s overall premise was reasonably accurate.
As you can see from the tables I prepared back in 2012, Obama was the third most frugal president based on the growth of total inflation-adjusted spending.
And he was in first place if you looked at primary spending, which is total spending after removing net interest payments (a reasonable step since presidents can’t really be blamed for interest payments on the debt accrued by their predecessors).
So does this mean Obama is a closet conservative, as my old—but misguided—buddy Bruce Bartlett asserted?
Not exactly. A few days after that post, I did some more calculations and explained that Obama was the undeserved beneficiary of the quirky way that bailouts and related items are measured in the budget.
It turns out that Obama’s supposed frugality is largely the result of how TARP is measured in the federal budget. To put it simply, TARP pushed spending up in Bush’s final fiscal year (FY2009, which began October 1, 2008) and then repayments from the banks (which count as “negative spending”) artificially reduced spending in subsequent years.
So I removed TARP, deposit insurance, and other bailout-related items, on the assumption that such one-time costs distort the real record of various administrations.
That left me with a new set of numbers, based on primary spending minus bailouts. And on this basis, Obama’s record is not exactly praiseworthy.
Instead of being the most frugal president, he suddenly dropped way down in the rankings, beating only Lyndon Baines Johnson.
That explains why I accused him in 2012 of being a big spender—just like his predecessor.
But the analysis I did two years ago was based on Obama’s record for his first three fiscal years.
So I updated the numbers last year and looked at Obama’s record over his first four years. And it turns out that Obama did much better if you look at the average annual growth of primary spending minus bailouts. Instead of being near the bottom, he was in the middle of the pack.
Did this mean Obama moved to the right?
That’s a judgement call. For what it’s worth, I suspect his ideology didn’t change and the better numbers were the result of the Tea Party and sequestration.
But I don’t care who gets the credit. I’m just happy that spending didn’t grow as fast.
I’m giving all this background because I’ve finally crunched the mostrecent numbers. If we look at overall average spending growth for Obama’s first five years and compare that number to average spending growth for other recent presidents, he is the most frugal. Adjusted for inflation, the budget hasn’t grown at all. That’s a very admirable outcome.
What what about primary spending? By that measure, we get even better results.
There’s actually been a slight downward trend in the fiscal burden of government during the Obama years.
This doesn’t necessarily mean, to be sure, that Obama deserves credit. Maybe the recent spending restraint in Washington is because of what’s happened in Congress.
I’ve repeatedly argued, for instance, that sequestration was a great victory over the special interests. And Obama vociferously opposed those automatic budget cuts, even to the point of making himself a laughingstock.
But don’t forget that TARP-type expenses can mask important underlying trends. So now let’s look at the numbers that I think are most illuminating.
Here’s the data for average inflation-adjusted growth of primary spending minus bailouts.
As you can see, Obama no longer is in first place. But he’s jumped to third place in this category, which is an improvement over prior years and puts him ahead of every Republican other than Reagan. Given that all those other GOPers were statists, that’s not saying much, but it does highlight that party labels don’t mean much.
My Republican friends are probably getting irritated, so I’ll share one last set of numbers that may make them happy.
I cranked the numbers for average spending growth, but subtracted interest payments, bailouts, and defense outlays. What’s left is domestic spending, and here are the rankings based on those numbers:
Reagan easily did the best job of restraining overall domestic discretionary and entitlement outlays. Bill Clinton came in second place, showing that Democrats can preside over reasonably good results. And Richard Nixon came in last place, showing that Republicans can preside over horrible numbers.
Obama, meanwhile, winds up in the middle of the pack. Which is probably very disappointing for the president since he wanted to be a transformational figure who pushed the nation to the left, in the same way that Reagan was a transformational figure who pushed the nation to the right.
Instead, Obama’s two main legacies may turn out to be a failed health care plan and a tongue-in-cheek award for being a great recruiter for the cause of libertarianism.
Dip maker Sabra claims that its competitors’ hummus is not “hummus‑y” enough. To help consumers tricked by this horrible deception, Sabra has petitioned the Food and Drug Administration to regulate the definition of hummus. That definition just happens to coincide with the products that Sabra already sells.
I’m not an expert on hummus or the hummus business, but my guess is that many people like the idea of eating hummus more than they like the taste of traditional hummus. The result has been a proliferation of dips that contain some of the characteristics of hummus but otherwise appeal more to American tastes (such as Red Lentil Chipotle Hummus with Poblano Pepper & Corn Topping). Sabra wants the government to mandate what portion of a dip’s ingredients must be traditional hummus ingredients before a company can market that dip as hummus.
The move has been widely panned as a transparent attempt at regulatory protectionism.
These development in the hummus industry are eerily reminiscent of recent attempts by the U.S. olive oil industry to “protect” consumers from its European competitors. The U.S. manufacturers have been trying to portray Italian olive oil as tainted and inherently untrustworthy. The U.S. firms want the federal government to impose new labeling and testing requirements on olive oil that would insulate the U.S. market and benefit domestic producers, who currently hold less than 2% of market share.
Last year, Sallie James and I wrote a Cato policy analysis identifying some red flags that can help us identify protectionist regulations. Two of the most obvious ones are industry support of the proposed regulation and lack of a plausible theory of market failure. Basically, if a firm is asking the government to make the firm better serve its own customers for their own good, don’t believe it. The firm is looking for something else—probably to disadvantage its competition.
One of the best ways to get the government to stifle your competition is to frame your anticompetitive policy preference as advancing some altruistic public cause. The altruistic cause in the hummus case seems to be protection from tasty dips that are not made by Sabra.
Tim Cavanaugh at National Review astutely points out that Sabra, which is owned by PepsiCo and is by far the largest provider of retail hummus, is much more capable of dealing with the compliance burdens of FDA regulation than its competitors. He notes, “The claim that getting the FDA involved will promote a ‘spirit of fairness’ is a crock. And the crock is not filled with hummus.”
Hopefully, Sabra will decide to dedicate itself to making and marketing competitive products–something it apparently does well–and stop trying to regulate away its competitors.
Two years ago, a thorough, bipartisan Senate report concluded that the federally subsidized information-sharing hubs known as “fusion centers,” long billed as a “centerpiece of our counterterrorism strategy,” were in fact an expensive boondoggle. Despite being funded by the Department of Homeland Security to the tune of hundreds of millions of dollars over a decade, the centers produced no useful counterterror intelligence and often focused instead on local law enforcement matters unrelated to any legitimate national security purpose.
Confirming that judgment, the New York Times has obtained documents showing how numerous regional fusion centers circulated “threat analysis” reports related to the Occupy Wall Street movement. As the Times reports, many centers circulated memoranda “sometimes describing arrests or disruptive tactics, but often listing apparently lawful, even routine activities” including campus lectures on grassroots organizing and classes on “yoga, faith & spirituality.” One example of intelligence sharing: Officials in Boston apprised the Washington, D.C. fusion center that 15 protesters were headed for the nation’s capital via bus, though reassured them that none of the activists were “known to be troublemakers.” Other reports consisted of little more than searches for “Occupy” copied and pasted from Twitter.
To be clear: There’s nothing inherently illegitimate about a local police department keeping tabs on large upcoming public gatherings–including protests–for prosaic reasons of public safety and traffic management (though it is hard to think of a legitimate reason for them to take official notice of specific individuals speaking on political topics). What’s absurd is that the federal government is throwing “homeland security” funds at institutions that, having proven hilariously incapable of making any contribution to counterterror efforts, instead busy themselves trawling Google for information about political rallies.
Setting up local law enforecement officials to play “intelligence analyst” in a toy spy agency is, as these documents show, a recipe for the very creepiest sort of mission creep—with databases of peaceful political activities classed as “potential threats.” But even leaving aside any concerns about First Amendment–chilling effects, there’s simply no reason for the federal government to be footing any of the bill for local police functions. If, as it seems, fusion centers serve no real homeland security purpose, let’s shut them down and assume municipal cops are perfectly capable of carrying out traditional crowd control functions without help from Washington.
For as long as I can remember, conservatives have been bemoaning “moral decline” in America. The reality may be different, as I’ve noted before. And now comes P. J. O’Rourke with a similar reflection. P. J., who has moved from editing an underground newspaper in the ’60s to writing for conservative magazines to cultivating a reputation as a curmudgeon, has a new book titled The Baby Boom: How It Got That Way (And It Wasn’t My Fault) (And I’ll Never Do It Again).
Talking with P. J. about the book, Will Pavia of the Times of London notes (gated page):
I’m not sure [the baby boomers were] better or worse than the current crop of American teenagers, to judge from some of the things they post on YouTube. O’Rourke disagrees. “I would say there has been a considerable improvement in public morality. It’s probably been going on since the anti-slavery movement at the beginning of the 19th century.” He gives the example of his own son, Cliff.
“Admittedly, he goes to a little private day school. You know, a gentle place. I don’t think he’s ever been in a fight nor shown any desire to be. Nor have I seen his friends get in fights; it’s not just him. It’s definitely a less violent world, a more tolerant world.”
Less violence and more tolerance is a pretty good slice of morality. Steven Pinker, author of The Better Angels of Our Nature: Why Violence Has Declined, backs up O’Rourke’s intuition in the New York Times:
It’s easy to focus on the idiocies of the present and forget those of the past. But a century ago our greatest writers extolled the beauty and holiness of war. Heroes like Theodore Roosevelt, Winston Churchill and Woodrow Wilson avowed racist beliefs that today would make people’s flesh crawl. Women were barred from juries in rape trials because supposedly they would be embarrassed by the testimony. Homosexuality was a felony. At various times, contraception, anesthesia, vaccination, life insurance and blood transfusion were considered immoral.
TransForm, a smart-growth group in Oakland, has analyzed California’s household travel survey data and made what it thinks is an important discovery: poor people drive less than rich people. Moreover, poor people especially drive less than rich people if the poor live in a high-density development served by frequent transit (that is, a transit-oriented development or TOD).
According to TransForm’s report, poor households who live in TODs drive only half as much as poor households who live away from TODs, while rich households who live in TODs drive about two-thirds as much as rich households who don’t live near TODs (see figure 1 on page 7).
Based on this, TransForm proposes that California build lots of “affordable housing” in the TODs, then herd encourage poor people to live in the TODs. Apparently, TransForm’s thinking is that moving poor people into TODs will have the greatest effect on driving, energy consumption, and greenhouse gas emissions. Putting “more affordable homes near transit … would be a powerful and durable GHG reduction strategy,” says TransForm (emphasis in the original).
Unfortunately, TransForm’s proposal is grounded on a seriously flawed analysis and morally questionable reasoning. First, TransForm has committed a simple arithmetic error when it concludes that the best greenhouse-gas reduction strategy would be to focus on low-income people. Though the data show rich people in TODs drive only a third less than rich people away from TODs, the rich drive so much more than the poor that the greatest impact would come from herding the rich into the TODs.
According to TransForm’s data, poor households in TODs drive about 21 fewer miles per day than poor households away from TODs. But rich people in TODs drive 29 miles less than rich people away from TODs. Thus, if you believe TransForm’s numbers, the best greenhouse-gas reduction strategy would be to coerce encourage rich people to live in TODs.
However, I don’t believe TransForm’s numbers because TransForm has made the classic error of ignoring self-selection. That is, people of all incomes who want to drive less are more likely to live in TOD-like places, while people who want to drive more are more likely to live away from TOD-like places (which are typically the most congested and least auto-friendly).
Note that all of TransForm’s numbers measure miles of driving and other factors per household, not per person. Households in TODs tend to have no children, while households with children are far more likely to live away from TODs. It’s a mistake to think that, because people who want to drive less tend to live in TODs, getting people who want to drive more to live in TODs will lead them to drive much less than they do. As economist David Brownstone concludes, after taking self-selection into account, the effect of urban form on driving is “too small to be useful” in reducing greenhouse gas emissions.
TransForm’s third error is in failing to calculate the costs of its “powerful and durable GHG reduction strategy.” Developable land in the San Francisco Bay Area is very costly, and land in the city and suburban centers that make up the region’s TODs and potential TODs is the most expensive of all. Buying that land, building housing on it, and selling or renting it at “affordable” prices is going to require huge subsidies. If I believed in the TOD strategy at all, this would be one more reason to focus on the rich, rather than the poor, as any necessary subsidies would be much smaller. But I suspect that even herding the rich into TODs would end up costing thousands of dollars per ton of abated greenhouse gas emissions, while McKinsey & Company says that anything that costs more than about $50 per ton is a waste of money.
Perhaps most embarrassing, TransForm’s herd-the-poor approach to reducing greenhouse gas emissions is condescending (or worse). California’s SB 375, a law promoting TODs, imposed an affordable housing mandate that is supposed to be as strong as its greenhouse-gas-reduction mandate, so TransForm poses this idea as one that will solve both problems. But it really won’t, partly because the state simply can’t afford the billions of dollars in subsidies that would be required to build tens of thousands of “affordable” units of housing in Bay Area TODs.
Poor people are politically weak, so the idea of packing them into cramped apartments isn’t going to have as much pushback as a proposal to coerce the rich to live in TODs. While poor people themselves are politically weak, California low-income housing groups are politically powerful, and they would be only too happy to accept huge state subsidies to build low-income housing in TODs or anywhere else.
The average dwelling unit in a TOD is about half the size of an average dwelling unit in the suburbs. People who are transit-dependent are less than half as mobile as people who have cars. Cramming poor families into dense housing and limiting their mobility is prescription for keeping them poor.
If TransForm wants to advocate a policy that really would make housing affordable, it should demand that Bay Area counties abandon the urban-growth boundaries that have confined 98 percent of the people in the region to just 17 percent of the land. And if TransForm really wants to target carbon emissions, it should focus on making housing and cars more energy efficient, which is a far more efficient strategy of reducing carbon emissions than trying to get people to live in apartments and take transit.
Instead, TransForm promotes the “pack-‘em-and-stack-‘em” strategy that has obsessed urban planners for the last three or four decades. We know this strategy doesn’t work: between 1980 and 2012, the population density of the San Francisco–Oakland–San Jose urban areas grew by 55 percent, yet per capita transit ridership fell by a third and per capita driving grew by 5 percent.
Aside from the fact that this strategy doesn’t work, its moral problems seem to go right past the “progressives” who support it. It’s like a movie in which poorly educated villagers are ready to riot about some frightening event, when someone—probably the perpetrator—points at a persecuted minority and yells, “They’re the ones who did it—get ‘em!”
Sadly, the California politicians who passed SB 375 are all too likely to fall for this line of thinking.