Agony of Defeat

Oh, what a burn. My tax debate with French economist Thomas Piketty was a dead heat, 50-50, for the past four days. Then just as the contest was closing, he pulled ahead to seize victory, 51-49.

The Economist editor described the tightly fought battle:

Chris Edwards got over a strong initial disadvantage to narrow what was originally a strong lead for Mr Piketty to a dead heat, but eventually Mr Piketty has prevailed: but only just—even hours before closing, the vote was split exactly down the middle. One could not have asked for a closer contest: this has been the most closely-fought of our 21 online debates, although it began with a fairly substantial lead for the proposition.

Certainly, the debate revealed high levels of interest in taxation and relative income levels. There were more than 1,100 reader comments posted, making it the “most commented” story on the Economist site for the last 10 days or so. My thanks to all the supportive voters and commenters.

Piketty won the website voting battle, but I don’t think he’ll win the war. Global tax competition has led to large cuts in top tax rates in recent decades, and will continue to exert downward pressure for years to come. However, these are dangerous times as governments press to end financial privacy, to create international tax cartels, and to substitute competition with multinational government power in various other ways.

Private Zips Past Public

Govexec.com reports: “Private sector zips past government in Recovery Act tracking.”

If you want to find out where governments are spending the $800 billion in federal stimulus money, the story reports that you would do better to go to www.recovery.org than www.recovery.gov. The latter is the government website that stimulus-overseer, VP Joe Biden, could not remember the name of. The former is a project of the business research firm Onvia.

The private www.recovery.org does have useful data and charts. But Onvia should have paired the chart ”Estimated Jobs Created by State” with another one titled “Estimated Jobs Destroyed by State” to illustrate the financing burden of all the new spending.

Mike German on ‘Intelligence’ Reports

On the ACLU blog (“because freedom can’t blog itself”), Mike German has a great write-up that captures the depth of error in recent DHS “intelligence” reports on ideological groups.

German shows that any ideology can be targeted if the national security bureaucracy comes to use activism as a proxy or precursor for crime and terrorism:

A Texas fusion center warned about a terrorist threat from “the international far Left,” the Department of Homeland Security and a Missouri fusion center warned of threats posed by right-wing ideologues, and a Virginia fusion center saw threats from across the political spectrum and called certain colleges and religious groups “nodes of radicalization.” These are all examples of domestic security gone wrong.

“Gone wrong” means weak in theory, threatening to liberty, and not helpful to law enforcement:

If these “intelligence” reports described recent crimes and the people who perpetrated them, there would be little problem from a civil rights perspective, and it could actually be helpful to the average police officer. Instead, they have followed a “radicalization” theory popularized by the NYPD (PDF). That theory postulates that there is a “path” to terrorism that includes the adoption of certain beliefs, and political, religious, or social activism is viewed as another step toward violence. Actual empirical studies of terrorism conducted in the Netherlands and Britain refute this theory, but the idea that hard-to-find terrorists can be caught by spying on easy-to-find activists appears too hard to resist to U.S. law enforcement.

The takeaway: “Threat reports that focus on ideology instead of criminal activity are threatening to civil liberties and a wholly ineffective use of federal security resources.”

Mike German was a participant in our January conference on counterterrorism strategy.

The Chinese Currency Issue Is No Longer

In its first statutory, semi-annual report on foreign currency practices, the Obama Treasury Department refrained from designating China a “currency manipulator,” further affirming the view that an aggressive, sticks-only approach to the bilateral trade relationship advocated (mostly) by campaigning politicians is simply untenable. After serving more than 5 years as a great source of bilateral trade tension, the Chinese currency issue is dead.

Senator Obama and presidential candidate Obama both talked tough about Chinese currency practices, identifying an undervalued yuan as a source of unfairness to U.S. producers and an important cause of the bilateral trade imbalance. Treasury Secretary-designate Geithner, during his confirmation hearing in January, reiterated President Obama’s commitment to dealing with the issue before the Senate Finance Committee:

President Obama - backed by the conclusions of a broad range of economists – believes that China is manipulating its currency. President Obama has pledged as President to use aggressively all the diplomatic avenues open to him to seek change in China’s currency practices. While in the U.S. Senate he cosponsored tough legislation to overhaul the U.S. process for determining currency manipulation and authorizing new enforcement measures so countries like China cannot continue to get a free pass for undermining fair trade principles.

Those who relied on hyped-up media accounts of Geithner’s testimony, which generally homed in on the terms “aggressively,” “tough,” and “enforcement” in the above passage to imply that Obama would take action against China on this matter, are probably utterly surprised that Treasury balked yesterday. But those who read the rest of Geithner’s response to the question may have noticed this broad canvas for inaction:

The question is how and when to broach the subject in order to do more good than harm. The new economic team will forge an integrated strategy on how best to achieve currency realignment in the current economic environment.

Those last two sentences of Geithner’s response contained the answer—nearly three months beforehand—to the question of whether Treasury would label China a manipulator. And, taken in its entirety, the response is a perfect summation of the distinctions between criticizing policy as a challenger and being responsible for policy as the guy in charge. You can talk tough as a challenger because you don’t have to account for the consequences of your actions. But when you are responsible for the consequences of potentially incendiary policy changes, circumspection is a rediscovered virtue.

As President Obama knows by now, the consequences of simply labeling China a “currency manipulator” (let alone attempting to do something remedial about it) would undermine broader U.S.-China relations, invite recriminations, inspire potentially adverse policy changes in China, and would inject heaps of uncertainty into global currency and financial markets. Besides, as yesterday’s Treasury report concludes, the yuan continues to appreciate against the dollar, the government’s accumulation of foreign reserves has decelerated, and policies are in place to encourage greater domestic consumption in China and to reduce the economy’s reliance on exports.

I remain hopeful that this distinction between Obama the president and Obama the candidate will become and remain evident in U.S. trade policy more broadly.

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Duncan: “I’m a big fan of choice and competition”

How does U.S. Secretary of Education Arne Duncan live with what must be some of the most painful cognitive dissonance in the history of mankind? I mean how, fresh off of doing all he could to make even more untimely the untimely death of the D.C. voucher program – and opposing private school choice generally – could Duncan say this in a new Time interview:

I’m a big fan of choice and competition, and in our country, historically, wealthy families have had a lot of options as to where to send their children. And families that didn’t come from a lot of money had one option — and usually that option wasn’t a good one. The more options available, the more we give parents a chance to figure out what the best learning environment is for their child.

How could Duncan say all this great stuff about competition and maximizing choice right after what he’s done to private school choice – which maximizes options for the very poor who have typically had none – in the nation’s capital? It is simply impossible to reconcile the words and actions.

Unless, that is, the words don’t really mean what the words, to a normal person, really mean. And to Duncan – like lots of political creatures – they don’t. He offered those gushing words of love for choice and competition in response to a question about charter schools, and in continuing to answer the question went right into this:

To me it’s not about letting a thousand flowers bloom. You need to have a really high bar about whom you let open the charter school. [You need] a really rigorous front-end competitive process. If not, you just get mediocrity. Once you let them in, you need to have two things. You need to give those charter operators great autonomy — to really free them from the education bureaucracy. You have to couple that with very strong accountability.

And finally, it is clear how Duncan twistedly reconciles both killing school choice and competition, and loving school choice and competition: It is all about who is doing the choosing. If schools and potential schools have to compete for the approval of government – of the same smarter-than-thou, bureaucratic apparatchiks who have given us atrocious public schools for decades – then that’s competition Duncan can embrace. But compete based on the approval and demands of the people the schools are actually supposed to serve, the people most interested in schools performing to high standards? In other words, compete for the approval and business of parents, especially without the choices first being fully vetted and approved by parents’ government betters? Well, that just shouldn’t be any choice at all!

Is Rick Perry Really for Limited Government?

Conservative radio hosts are excited about a recent speech by Texas governor Rick Perry. Perry forcefully argued his theme of “unwavering support for efforts all across our country, but, most of all, here in Texas, to reaffirm the states’ rights affirmed through the Tenth Amendment to the U.S. Constitution.”

That sounds great, but does he really mean it?

In a study, I noted that Perry and the Texas state government are aggressive scavengers of federal grant dollars. The rise in federal granting is one of the central causes of the destruction of the Tenth Amendment in recent decades.

I noted that Perry’s official webpage is chock full of press releases touting his distribution of federal subsidies. These press releases are from a short time period in 2006:

  • “Perry: Texas Farmers and Ranchers to Share $780 Million in Drought Assistance.”
  • “Perry: FEMA Agrees to Reimburse Texas at Same Rate as Louisiana for Hurricanes.”
  • “Gov. Perry Announces $1.6 Million in Grants to Juvenile Offender Accountability Programs.”
  • “Perry: Homeland Security Grants to Focus on Technology Needs.”
  • “Gov. Perry: Presidential Disaster Declaration Approved for El Paso.”
  • “Gov. Perry Announces $38,098 in Victims of Crime Act Funds to El Paso County.”
  • “Gov. Perry Announces $3.6 Million in Grants to Local Law Enforcement.”

Notice how Perry takes credit for all the new spending? Politicians love spending, especially when they can foist the cost on taxpayers living in other states.

Look at these two press releases up on Perry’s website right now:

  • Apr. 9: “Gov. Perry Backs Resolution Affirming Texas’ Sovereignty Under 10th Amendment.”
  • Apr. 10: “Gov. Perry Calls on FEMA to Assist the State in Fighting Wildfires.”

Governor Perry: Do you want to revive the Tenth Amendment or do you want the FEMA money? You’re giving us whiplash out here!

I don’t think Perry’s tax policies have been particularly conservative either, as they have centralized fiscal power at the state level and thus reduced beneficial competition between local governments.

TLJ: Holder Advocates Some Constitutional Principles

I’m a long-time reader and fan of TechLawJournal. Dogged reporter David Carney produces an amazing amount of content about technology-related goings-on in Washington, D.C. and the courts. Subscription information is here.

I also appreciate his editorial style, which often betrays a dose of concern for civil liberties and healthy skepticism about power. A wonderful example follows, reprinted with permission:

Holder Advocates Some Constitutional Principles
Attorney General Eric Holder gave a lengthy speech at the United States Military Academy in West Point, New York in which he discussed the role of law in “our current struggle against international terrorism”.

It was a plea for adherence to Constitutional principles. However, it was as significant for what he said – about detention of people in places like Guantanamo Bay – as for what he did not say – about interception of communications and seizure of data.

He spoke with specificity about Guantanamo Bay, detainees, and the history of American treatment of detained soldiers and citizens.

But, he said nothing that suggested an intent to reverse, or halt, the deterioration of Constitutional protection of privacy and liberty interests in the context of new communications and information technologies.

Eric HolderHolder (at right) said, “And so it is today, at the beginning of a new presidency, as we face a world filled with danger, that we must once again chart a course rooted in the rule of law and grounded in both the powers and the limitations it prescribes.”

He said that “we will not sacrifice our values or trample on our Constitution under the false premise that it is the only way to protect our national security. Discarding the very values that have made us the greatest nation on earth will not make us stronger – it will make us weaker and tear at the very fibers of who we are. There simply is no tension between an effective fight against those who have sworn to do us harm, and a respect for the most honored civil liberties that have made us who we are.”

This statement could equally apply to government surveillance activities. But, he did not say so. Perhaps Holder intends to speak in a similar speech about surveillance at a later date. Or perhaps, he does not, and his concern for Constitution rights is selective and does not extend to surveillance.

He did make one statement that may pertain to electronic surveillance and data. He said that “many national security decisions must by necessity be made in a manner that protects our ability to gather intelligence, investigate threats and execute wars”.

He did not reference the state secrets privilege, or the government’s assertion of it in legal proceedings involving warrantless wiretaps.

On April 3, 2009, the Department of Justice (DOJ) filed a motion to dismiss and memorandum in support [36 pages in PDF] in Jewell v. NSA, a case against the NSA, DOJ, Holder and officials, arising out of the NSA’s warrantless wiretap program.

The DOJ asserts the state secrets privilege, sovereign immunity, and other arguments, to evade litigation of this case on the merits.

The Electronic Freedom Foundation (EFF) stated in a release that “These are essentially the same arguments made by the Bush administration”.

This case is Carolyn Jewell, Tash Hepting, et al. v. National Security Agency, et al., U.S. District Court for the Northern District of California, San Francisco Division, D.C. No. C:08-cv-4373-VRW.

Ed Black, head of the Computer and Communications Industry Association (CCIA), stated in a release issued in response to Holder’s speech that “It’s disturbing that instead of helping investigate the extent of spying by the Bush administration, the new administration is not just defending those policies, but taking them a step further. In its April court brief (Jewel v. NSA), the Obama DOJ argued that the government is completely immune from litigation for illegal spying and even that it can never be sued for violating federal privacy laws with surveillance techniques. Those arguments sound more like ‘1984’ than 2009.”

Black continued that “President Obama appreciates more than most people how the Internet can be used as a tool to allow greater participation in a democracy. That same tool could also be the greatest innovation for surveillance and repression in the wrong regime. Defending practices like this sets a dangerous precedent down the road and makes it easier for a government to expand the programs from surveilling terrorists to surveilling political opponents.”

“The Obama administration had the courage to change policy on the treatment of terrorism suspects and how they were treated and sometimes tortured”, said Black. “But the abuse of the privacy rights of millions of U.S. citizens is a greater long term threat to the rule of law and the Constitutional rights of all Americans. The failure to allow the full investigation of the surveillance abuse by both the government and major collaborating industry giants would be a tragic betrayal by an administration so many were looking to for greater honesty, openness, and respect for all citizens’ constitutional rights.”