Want to Know Why the U.K. Tory Party Is Revamping its Development Policy?

If so, just pick up a copy of James Tooley’s The Beautiful Tree: A Personal Journey into How the World’s Poorest People Are Educating Themselves.

The Tories have looked at the evidence amassed by James and his colleagues (see p. 36 of their new report) and concluded that the best way to advance education in developing countries is to encourage and support existing entrepreneurial schools that are already serving the poor. And if the polls are any guide, that will likely be official government policy in the U.K. before too long.

Congratulations to James, Pauline Dixon, and their wonderful team for bringing sanity to the development policy debate.

Barnett on the Supreme Court Confirmation Hearing

Cato senior fellow Randy Barnett has a piece in the Wall Street Journal on the Senate’s confirmation hearing for Obama’s nominee to the Supreme Court.  Excerpt:

Supreme Court confirmation hearings do not have to be about either results or nothing. They could be about clauses, not cases. Instead of asking nominees how they would decide particular cases, ask them to explain what they think the various clauses of the Constitution mean. Does the Second Amendment protect an individual right to arms? What was the original meaning of the Privileges or Immunities Clause of the 14th Amendment? (Hint: It included an individual right to arms.) Does the 14th Amendment “incorporate” the Bill of Rights and, if so, how and why? Does the Ninth Amendment protect judicially enforceable unenumerated rights? Does the Necessary and Proper Clause delegate unlimited discretion to Congress? Where in the text of the Constitution is the so-called Spending Power (by which Congress claims the power to spend tax revenue on anything it wants) and does it have any enforceable limits?

Read the whole thing.

Bernanke’s Part in the Housing Bubble

bernankeRecent weeks have seen a swirl of speculation over whether President Obama will or will not re-appoint Ben Bernanke to the Chairmanship of the Federal Reserve Board, when his current term as Chair expires in January 2010. Almost all of the debate has centered on his actions as Chairman. This narrow focus misses an important piece: his actions, and words, as a Fed governor during the build-up of the housing bubble.

What should have been Bernanke’s greatest strength as a Fed governor and later chair, his understanding of monetary theory and his knowledge of the Great Depression, has ended up being a weakness. While correct in his analysis of the role of “debt deflation” – where the deflation increases the real burden of debts and correspondingly weakens the balance sheet of both households and businesses – in the deepening of the Great Depression; his obsession with slaying the Great White Whale of Deflation provided intellectual cover for the Fed’s ignoring and contributing to the housing bubble. Like the proverbial general, he was fighting yesterday’s battle, rather than today’s.

While core inflation was moderate and increasing at a decreasing rate between 2001 and 2005, this measure ignores the dramatic up-tick in house prices during those years. First, housing makes up the single largest expense for most households, ignoring housing, especially after one subtracts out energy and food from the definition of inflation, gives a narrow and distorted picture of inflation. Even if one were to focus solely on rents, the 2000s were an era of increasing housing costs.

Separate from the impact of housing prices on inflation is the role which housing plays as the collateral for the primary piece of household debt: a mortgage. Even were the US to suffer a bout of mild deflation and the real burden of their mortgages increased, this would likely have little impact on household balance sheets in an environment of increasing home prices.

Admittedly Bernanke was then only a “governor” and not yet Chair of the Fed, but he was the Fed’s loudest voice when it came to combating deflation and arguing for lower rates. Additionally there have been zero public acknowledgements by either Bernanke or the Fed that its policy earlier this decade contributed to the housing bubble and financial crisis. Without admitting to the occasional mistake, we have no way of judging whether Bernanke has learned from any of his mistakes, and hence less likely to repeat them.

In weighing Bernanke’s record at the Fed, judgement should not solely consider his actions as Chair, but also consider his words and deeds while the housing bubble was inflating. How one responds to a impending disaster is as important as to how one helps to clean up after the disaster has struck.

Making Airline Travel as Unpleasant as Possible

The Transportation Safety Administration long has made air travel as unpleasant as possible without obvious regard to the impact on safety.  Thankfully, the TSA recently dropped the inane procedure of asking to see your boarding pass as you passed through the checkpoint – a few feet away from where you entered the security line, at which point you had shown both your boarding pass and ID. 

However, there are proposals afoot in Congress to set new carry-on luggage restrictions, to be enforced by the TSA, even though they would do nothing to enhance security.  An inch either way on the heighth or width of a bag wouldn’t help any terrorists intent on taking over an airplane.  But the proposed restrictions would inconvenience travelers and allow the airlines to fob off on government what should be their own responsibility for setting luggage standards. 

TSA also has restarted ad hoc inspections of boarding passengers.  At least flights as well as passengers are targeted randomly.  After 9/11 the TSA conducted secondary inspections for every flight.  The process suggested that the initial inspections were unreliable, delayed passengers, and led experienced flyers to game the process.  It was critical to try to hit the front of the line while the inspectors were busy bothering someone else.  There was no full-proof system, but I learned that being first or second in line was particularly dangerous.

Finally TSA dropped the practice.  And, as far as I am aware, no planes were hijacked or terrorist acts committed as a result.  But TSA recently restarted the inspections, though on a random basis.

I had to remember my old lessons last week, when I ran into the routine on my return home from a trip during which I addressed students about liberty.  Luckily I was able to get on board, rather than get stuck as TSA personnel pawed through bags already screened at the security check point.

There’s no fool-proof way to ensure security for air travel.  Unfortunately, it’s a lot easier to inconvenience passengers while only looking like one is ensuring airline security.

Half for the Government

The Democrat’s latest plan to raise money for federal health care expansion is to impose surtaxes ranging from 1 percent to 3 percent on higher-income earners.

Currently, the United States is in the middle of the pack of industrial nations when it comes to imposing punitive tax rates on higher earners. The chart shows the top statutory personal income tax rates for the 30 nations in the Organization for Economic Cooperation and Development. The current top U.S. rate is 42 percent (including state taxes), which is the same as the 30-nation average. The data is from the OECD.

With the top federal rate scheduled to jump 5 percentage points in 2011, plus the new 3-percent surtax, the top U.S. rate would hit 50 percent. Fifty percent! Half of all additional income earned by the nation’s most productive workers and entrepreneurs would be confiscated by the government. America’s 50 percent tax rate would be tied with three other nations and would be topped only by the Netherlands, Belgium, Sweden, and Denmark.

Even as America’s Troops Leave Iraq, the Waste Goes On

The U.S. government has been providing so-called foreign aid for decades, but the waste never stops.  So it is in Iraq.

Reports Stars & Stripes:

Provincial reconstruction teams in Iraq are scrambling to submit a large number of multimillion-dollar aid project proposals by July 15, something critics suggest will result in a rash of big construction projects they were never intended to run.

Further, they say, big-budget projects are being put forward too quickly, are too ambitious given the scheduled 2011 withdrawal from Iraq and are crowding out simpler schemes.

“Our goal is not necessarily to help [Iraqis] with building projects,” said Rick Gohde, an engineer with the Diwaniyah provincial reconstruction team, known as PRT. “We are supposed to be beyond that. We are supposed to be training them to sustain themselves as we are getting ready to leave.”

Capt. Doug Weaver, 28, a civil affairs soldier who acts as a liaison between the military and the Diwaniyah PRT, said Monday that close to $600 million of military aid funding was made available to the PRTs last month countrywide through the Commanders Emergency Relief Program, or CERP. The funds, made available by Congress, are only available through September 30 and the deadline for project proposals exceeding $1 million is next Wednesday, officials said.

Weaver, who studied industrial engineering before he deployed, identified numerous big projects in Diwaniyah vying for CERP funds, including new electrical substations ($1 million to $1.5 million), city sewers ($750,000 to $1.25 million), an agricultural school dormitory ($1.2 million), women’s centers to provide job training for divorcees and widows ($2 million), vocational schools ($500,000 each) and upgrades to Iraqi government communications networks.

Iraqi contractors will bid for the construction work, which is expected to employ more than 1,000 local laborers in Diwaniyah alone.

But Gohde said the PRTs are not supposed to be involved in the sort of “bricks and mortar” construction that most of the big budget projects involve.

In southern Afghanistan, construction projects supported by foreign aid, such as schools and medical clinics, stand as empty shells because Taliban militants have frightened students and patients away.

“There’s been some of that in this country,” Gohde said. “I’ve heard of schools being built with no furniture or teachers. There are projects that are constructed with the best of intentions that are not utilized in the original intent or utilized at all,” he said.

Oh, well.  It’s only money, as they say.   And with Uncle Sam running a roughly $2 trillion deficit this year, what’s a few wasted millions (or even hundreds of millions) among friends?  I’m sure next time the government will get it right!

Drivers Use Technology to Fight Snooping by Greedy Government

The Washington Examiner has an encouraging story about how citizens are using high-tech to thwart the speed cameras used by greedy politicians to generate more tax revenue. The bureaucrats assert the cameras are about saving lives, but allow a personal observation to illustrate the gross dishonesty of the government. I have been nailed twice by speed cameras in DC, once on an interstate highway where the speed limit mysteriously dropped to 45 miles-per-hour, and the other time on a major artery with three lanes each direction that inexplicably had a 25 miles-per-hour limit. Needless to say (but I’ll say it anyhow), these speed traps had nothing to do with promoting safety and everything to do with steering more cash to the political class:

Area drivers looking to outwit police speed traps and traffic cameras are using an iPhone application and other global positioning system devices that pinpoint the location of the cameras. That has irked D.C. police chief Cathy Lanier, who promised her officers would pick up their game to counteract the devices… Lanier said the technology is a “cowardly tactic” and “people who overly rely on those and break the law anyway are going to get caught” in one way or another. The greater D.C. area has 290 red-light and speed cameras – comprising nearly 10 percent of all traffic cameras in the U.S., according to estimates by a camera-tracking database called the POI Factory. …Photo radar tickets generated nearly $1 billion in revenues for D.C. during fiscal years 2005 to 2008.