Federal R&D Funding

The federal government spent $147 billion on research and development in 2016, including $77 billion on defense and $70 billion on nondefense. Federal R&D spending has risen in recent decades on a constant-dollar basis, but has dipped as a share of gross domestic product. The AAAS has the data here.

How much should the federal government spend on R&D? AAAS data show that 23 percent of federal spending is for “basic” research, 25 percent is for “applied” research, and 52 percent is for “development.” Most economists would support the basic part, but be more skeptical of the applied and development parts because the private sector handles those activities.

The largest portion of federal nondefense R&D is for health care. In the Wall Street Journal today, a professor emeritus at Harvard Medical School questions the value of this funding. Tom Stossel argues that the private sector makes most medical advances:

The assumption seems to be that the root of all medical innovation is university research, primarily funded by federal grants. This is mistaken. The private economy, not the government, actually discovers and develops most of the insights and products that advance health. The history of medical progress supports this conclusion.  

… In America, innovation came from physicians in universities and research institutes that were supported by philanthropy. Private industry provided chemicals used in the studies and then manufactured therapies on a mass scale.

… Since then, improvements in health have accumulated. Life expectancy has increased. Deaths from heart attack and stroke have radically decreased, and cancer mortality has declined. New drugs and devices have ameliorated the pain and immobility of diseases like arthritis. Yet the question remains: Is the government responsible for these improvements? The answer is largely no. Washington-centric research, rather, might slow progress.

… By contrast, private investment in medicine has kept pace with the aging population and is the principal engine for advancement. More than 80% of new drug approvals originate from work solely performed in private companies.

Cato’s Terence Kealey is also a skeptic of government-funded science.

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79% Want Police Misconduct Investigated by Independent Agencies

In most jurisdictions, local police departments typically conduct internal investigations of police officer shooting and misconduct complaints.[1] However, 79% of Americans would prefer that an “outside law enforcement agency take over the investigation” when an officer is suspected of criminal wrongdoing. Alternatively, 21% favor police departments conducting internal investigations of their own officers.

The proposal to have outside investigations of misconduct, rather than internal department investigations, enjoys broad public support. Overwhelming majorities across demographics and partisan groups, including majorities of blacks (82%), whites (81%), Hispanics (66%), Republicans (76%), independents (77%), and Democrats (83%), all favor outside investigations and prosecutions of officers accused of misconduct.

Find the full public opinion report here. 

For public opinion analysis sign up here to receive Cato’s upcoming digest of Public Opinion Insights and public opinion studies.

 The Cato Institute/YouGov national survey of 2000 adults was conducted June 6–22, 2016 using a sample drawn  from YouGov’s online panel, which is designed to be representative of the U.S. population. YouGov uses a method  called sample matching, and restrictions are put in place to ensure that only the people selected and contacted by  YouGov are allowed to participate. The margin of sampling error for all respondents is +/-3.19 percentage points.  The full report can be found here, toplines results can be found here, full methodological details can be found here.

 


[1] USCCR, “Revisiting Who Is Guarding the Guardians? A Report on Police Practices and Civil Rights in America,” U.S. Commission on Civil Rights, November 2000, http://www.usccr.gov/pubs/guard/main.htm.

Thou Shalt Not Covet Thy Neighbor’s “Leadership” in Syria

In December, Russia, Turkey, and Iran began high-level talks to work toward a political settlement of the brutal civil war in Syria. Much to the chagrin of Washington officials and commentators, these countries have deliberately excluded the U.S. from the negotiations.

One broad sketch of their approach to a settlement, according to some reports, is to first achieve a cease-fire on the ground, as best they can, and then negotiate a division of Syria into three separate regions in which Assad’s Damascus-based Allawite sect would share power in a federal structure. Assad himself would step down at the end of his current term. The plan is in its infancy, subject to change, and would of course require agreement from the regime and opposition forces, before ultimately seeking buy in from the Gulf states, the U.S., and the European Union.

There is no indication that this latest push is going to be any more successful than previous diplomatic efforts to resolve the Syrian civil war. Nationalism is a powerful force and, as recent history suggests, plans to simply divide war-torn states into federated systems get tossed into the trash bin pretty quickly, as happened with Iraq and with Bosnia and Herzegovina. That said, the players have clear interests at stake. Russia has real leverage with the Syrian regime and has now staked its prestige on mitigating the conflict on favorable terms. Turkey borders Syria and has not only borne the brunt of the spillover effects with regard to refugees and militancy, but also has a strong national interest in preventing the Kurds from carving out territory along the border so as to keep a lid on its own Kurdish separatist movement. And Syria is Iran’s only Shiite ally in the region and has proven a strategic asset for Iran on several fronts, not least in its proximity to Lebanon’s Hezbollah. When the stakes are high for the negotiating parties, they tend to take care in constructing a settlement.

Americans Want Police to Prioritize Fighting Violent, Property Crime, but Few Prioritize Drug War

Although Americans are divided in their perceptions of how police do their jobs, majorities across demographic and partisan groups agree on what law enforcement’s top priorities ought to be.

A newly released Cato Institute/YouGov survey of 2,000 Americans finds that when people are asked to select their top three priorities for the police they choose the following:

  1. Investigating violent crime like murder, assaults, and domestic violence (78%)
  2. Protecting individuals from violent crime (64%)
  3. Investigating property crime and robbery (58%)

Notably, only 30% think police should make enforcing drug laws a top three priority. Some may find these results surprising, given that police made more arrests for drug abuse violations (1.6 million) than they did for violent crimes (498,666) in 2014. The estimated number of violent crimes committed that year was 1.2 million.

Find the full public opinion report here.

Nineteen percent (19%) say police should make enforcing traffic laws a top priority. In other words, Americans de-prioritize the task leading to the most common interaction individuals have with the police—receiving a traffic ticket.[1]

Another 18% think police should prioritize going beyond traditional law enforcement responsibilities by “providing guidance and social services to troubled young adults.” And another 12% say police enforcing public nuisance laws is most important. 

Black, white, and Hispanic Americans, Democrats and Republicans prioritize the same top three tasks for law enforcement. However, groups differ in their intensity of support. African Americans and Hispanics (45%) and Democrats (51%) are less likely than white Americans (63%) and Republicans (63%) to prioritize the police investigating property crime and robbery. (Although this difference largely dissipates among individuals above the median income.) African Americans, Latinos, and Democrats (27%) are about twice as likely as whites (15%) and three times as likely as Republicans (9%) to say the police should prioritize “providing guidance and social services to troubled young adults.”

No racial group is more likely to prioritize the police enforcing drug laws—30% of whites, Hispanics, and blacks each say it should be a top priority. Even partisans generally de-prioritize fighting the drug war. Thirty-five percent (35%) of Republicans and 27% of Democrats say it should be a top three priority.

Despite these modest differences, Americans across partisanship and demographics agree that the police should prioritize fighting violent and property crime and protecting people from being victims of violence. 

For public opinion analysis sign up here to receive Cato’s upcoming digest of Public Opinion Insights and public opinion studies.

The Cato Institute/YouGov national survey of 2,000 adults was conducted June 6–22, 2016 using a sample drawn from YouGov’s online panel, which is designed to be representative of the U.S. population. YouGov uses a method called sample matching, and restrictions are put in place to ensure that only the people selected and contacted by YouGov are allowed to participate. The margin of sampling error for all respondents is +/-3.19 percentage points. The full report can be found here, topline results can be found here, and full methodological details can be found here.


[1] Christine Eith and Matthew R. Durose, Contacts between Police and the Public, 2008, edited by Bureau of Justice Statistics (Washington, D.C.: U.S. Department of Justice, 2011), https://www.bjs.gov/content/pub/pdf/cpp08.pdf.

Hypocrisy on Election Interference

In his press conference last month, President Barack Obama sternly voiced concern about “potential foreign influence in our election process.”

The goal may be a valid one, but it cloaks hypocrisy of staggering proportions. The United States has been assiduously intervening in foreign elections for decades—perhaps even for centuries.

The central issue in the 2016 election was with some hacked emails, published by Wikileaks, indicating that some top members of the Democratic National Committee were rooting for Hillary Clinton to win their party’s nomination for president. This seems to have been the extent of the “interference,” and there has been a concerted effort to suggest that Russian hackers were the source of the information, a contention Wikileaks has strongly and repeatedly denied.

The revelations can scarcely have come as much of a surprise to anybody following the campaign, and it seems highly unlikely that they swung many votes—my guess, erring on the high side, would be perhaps six or seven.

The American record in election interference (always, of course, with the best of intentions) is much more extensive.          

Exhibit number one is surely the Italian election of 1948 in which the CIA furnished a million dollars to congenial parties and may have published forged letters designed to discredit leaders of the Communist Party. Meanwhile, there was a concerted effort to get Italian-Americans to write home urging relatives and friends to vote the right way.

In more recent times, I remember talking with a member of the political opposition in Serbia in 2001 who expressed his appreciation for funds that had been supplied the year before by agencies of the U.S. government—“we never would have been able to launch such an extensive campaign without it.”

As a public service, Michael Brenner of the University of Pittsburgh, has, with a little help from his friends, provided a list of countries where the United States has intervened in elections (he points out that the U.S. has also participated in a number of coups, but these are not included).

Going back a few decades, his list includes Greece, Turkey, Italy, France, and Portugal. More recently there have been Macedonia, Serbia, Albania, Bosnia, Ukraine, Russia (especially Yeltsin’s 1995-96 campaign), Algeria, Lebanon, Palestine, Cyprus, Iraq, Pakistan, Afghanistan, Kyrgyzstan, Tajikistan, Yemen, Vietnam, Indonesia, Japan, South Korea, Philippines, Congo and several other countries in Africa, and, in Latin America, every country multiple times including within the last fifteen years Haiti, Dominican Republic, Honduras, Panama, Nicaragua, Venezuela, Columbia, Paraguay, Peru, Ecuador, Bolivia, Brazil, and Argentina.

Brenner’s list is an ongoing project. It does not include Canada, and just possibly there are some Canadians who might find that omission to be unjustified.

Devolving Federal Lands

The federal government owns 28 percent of the land in the United States, including about half of the land in the 11 westernmost states. Federal agencies are poor land managers in many ways, and the government’s top-down regulations on land use are frustrating to many Westerners, as I discuss in studies here and here.

Much federal land would generate more value if it were owned by the states or the private sector. Economic and environmental needs would be better balanced by local policymakers than by the unaccountable bureaucracies in faraway Washington. Increased federal control over lands does not automatically benefit the environment, as liberals seem to think. Instead, it usually creates disincentives for sound environmental management.

The good news is that the House took a step toward devolving federal lands yesterday, as reported by the Washington Post:

House Republicans on Tuesday changed the way Congress calculates the cost of transferring federal lands to the states and other entities, a move that will make it easier for members of the new Congress to cede federal control of public lands.

Many Republicans, including House Natural Resources Committee Chairman Rob Bishop (R-Utah), have been pushing to hand over large areas of federal land to state and local authorities, on the grounds that they will be more responsive to the concerns of local residents.

But…

Rep. Raul Grijalva (Ariz.), the top Democrat on the Natural Resources Committee, sent a letter Tuesday to fellow Democrats urging them to oppose the rules package on the basis of that proposal.

“The House Republican plan to give away America’s public lands for free is outrageous and absurd,” Grijalva said in a statement. “This proposed rule change would make it easier to implement this plan by allowing the Congress to give away every single piece of property we own, for free, and pretend we have lost nothing of any value.”

Rep. Grijalva gets it backwards. Devolving ownership would increase the value of federal lands to Americans, not reduce it. And far from being “outrageous and absurd,” devolution was the general policy of the government for much of the nations’ history. The federal government privatized 792 million acres of land between 1781 and 1940, and it transferred 470 million acres of land to the states.

President-elect Donald Trump and his nominee to head the Department of the Interior apparently lean against devolving federal lands. But I hope they reconsider, as there are 640 million acres of diverse lands we are talking about here. I am not saying that we should privatize Yellowstone. But what about the Bureau of Land Management’s 250 million acres, which is mainly used for cattle grazing?

Today, artificially low federal grazing fees encourage overgrazing. Federal ownership also makes ranchers insecure about their tenures, such that they have an incentive to overstock grazing lands and a disincentive to make long-term investments to improve the lands. Privatizing grazing lands would create more secure property rights, and thus encourage ranchers to improve their stewardship of the lands. That would benefit the economy and the environment.

A good first step for the Trump administration would be to create a detailed inventory of federal land holdings. Then the administration should work with Congress and the states to identify those parcels that might be better managed by state and local governments, nonprofit groups, and businesses.

 

Concerns about the”Border Adjustable” Tax Plan from the House GOP, Part II

I wrote yesterday to praise the Better Way tax plan put forth by House Republicans, but I added a very important caveat: The “destination-based” nature of the revised corporate income tax could be a poison pill for reform.

I listed five concerns about a so-called destination-based cash flow tax (DBCFT), most notably my concerns that it would undermine tax competition (folks on the left think it creates a “race to the bottom” when governments have to compete with each other) and also that it could (because of international trade treaties) be an inadvertent stepping stone for a government-expanding value-added tax.

Brian Garst of the Center for Freedom and Prosperity has just authored a new study on the DBCFT. Here’s his summary description of the tax.

The DBCFT would be a new type of corporate income tax that disallows any deductions for imports while also exempting export-related revenue from taxation. This mercantilist system is based on the same “destination” principle as European value-added taxes, which means that it is explicitly designed to preclude tax competition.

Since CF&P was created to protect and promote tax competition, you won’t be surprised to learn that the DBCFT’s anti-tax competition structure is a primary objection to this new tax.

First, the DBCFT is likely to grow government in the long-run due to its weakening of international tax competition and the loss of its disciplinary impact on political behavior. … Tax competition works because assets are mobile. This provides pressure on politicians to keep rates from climbing too high. When the tax base shifts heavily toward immobile economic activity, such competition is dramatically weakened. This is cited as a benefit of the tax by those seeking higher and more progressive rates. …Alan Auerbach, touts that the DBCFT “alleviates the pressure to reduce the corporate tax rate,” and that it would “alter fundamentally the terms of international tax competition.” This raises the obvious question—would those businesses and economists that favor the DBCFT at a 20% rate be so supportive at a higher rate?

Brian also shares my concern that the plan may morph into a VAT if the WTO ultimately decides that is violates trade rules.

Second, the DBCFT almost certainly violates World Trade Organization commitments. …Unfortunately, it is quite possible that lawmakers will try to “fix” the tax by making it into an actual value-added tax rather than something that is merely based on the same anti-tax competition principles as European-style VATs. …the close similarity of the VAT and the DBCFT is worrisome… Before VATs were widely adopted, European nations featured similar levels of government spending as the United States… Feeding at least in part off the easy revenue generate by their VATs, European nations grew much more drastically over the last half century than the United States and now feature higher burdens of government spending. The lack of a VAT-like revenue engine in the U.S. constrained efforts to put the United States on a similar trajectory as European nations.

And if you’re wondering why a VAT would be a bad idea, here’s a chart from Brian’s paper showing how the burden of government spending in Europe increased once that tax was imposed.