• Please join us this Wednesday, May 25 at 2:00 p.m. Eastern for a Policy Forum with former Minnesota governor Tim Pawlenty, “Limiting Government: What Washington Can Learn from Minnesota,” with opening remarks from Cato founder and president Edward H. Crane. Governor Pawlenty received an “A” grade on Cato’s biennial “Fiscal Policy Report Card on America’s Governors: 2010,” by Cato director of tax policy studies Chris Edwards. Complimentary registration is required of all attendees by noon Eastern tomorrow, Tuesday, May 24–seating is limited and not guaranteed. If you cannot join us in person, please join us on the web for a live video stream of the event.
• Washington’s use of tax dollars to strong-arm states into adopting national standards and tests doesn’t leave much room for state choice in education.
• Did you know Cato has a series of 60 and 90-second radio ads about the Constitution that you can download for free?
• “Unfortunately, suspicions about private property as a fundamental human right survive to this day, to the detriment of the coherence of human rights as a guiding political concept, and of fundamental freedoms and prosperity.” Read the rest of the new Cato Policy Report here.
• What will happen if we do nothing, and let Medicaid, Medicare, and Social Security continue to grow?

In the midst of difficult domestic political battles, Barack Obama begins a lengthy European trip today. He should encourage the continent to increase its defense capabilities and take on greater regional security responsibilities.

Presidential visits typically result in little of substance. President Obama’s latest trip will be no different if he reinforces the status quo. His policy mantra once was “change.” No where is “change” more necessary than in America’s foreign policy, especially towards Europe.

Despite obvious differences spanning the Atlantic, the U.S. and European relationship remains extraordinarily important. The administration should press for increased economic integration, with lower trade barriers and streamlined regulations to encourage growth.

At the same time, however, Washington should encourage development of a European-run NATO with which the U.S. can cooperate to promote shared interests to replace today’s America-dominated NATO which sacrifices American interests to defend Europe. Americans no longer can afford to defend the rest of the world. The Europeans no longer need to be defended.

Although World War II ended 66 years ago, the Europeans remain strangely dependent on America. Political integration through the European Union has halted; economic integration through the Euro is under sharp challenge; and military integration through any means is reversing.

Indeed, the purposeless war in Libya, instigated by Great Britain and France, has dramatically demonstrated Europe’s military weakness. Despite possessing a collective GDP and population greater than that of America, the continent’s largest powers are unable to dispatch a failed North African dictator.

President Barack Obama starts with visits to Ireland, the UK, and France. In the latter he will consult with the heads of the G8 nations, which include Germany and Italy.

His message should be clear: while America will remain politically and economically engaged in Europe, it will no longer take on responsibility for setting boundaries in the Balkans, policing North Africa, and otherwise defending prosperous industrial states from diminishing threats. Washington should expect the continent to become a full partner, which means promoting the security of its members and stability of its region.

The president should deliver a similar message when he continues on to Poland. Part of “New Europe,” which worries more about the possibility of revived Russian aggression, Warsaw has cause to spend more on its own defense and cooperate more closely with its similarly-minded neighbors on security issues.

In fact, Poland, Slovakia, Hungary, and the Czech Republic, members of the “Visegrad Group,” recently announced creation of a “battle group” separate from NATO command to emphasize regional defense. The president should welcome this willingness to take on added defense responsibilities.

Communitarian “guru” Amitai Etzioni debated Roger Pilon at Cato two weeks ago. Also me, 18 years ago. And last week he had two postings at the Encyclopedia Britannica blog. I offer some thoughts on individualism, communitarianism, and implausible misrepresentations of libertarianism at the Britannica today.

When I hear communitarians like Etzioni describe the libertarian view of individualism, I wonder if they’ve ever read any libertarian writing other than a Classic Comics edition of Ayn Rand.…

There’s no conflict between individualism and community. There’s a conflict between voluntary association and coerced association. And communitarians dance around that conflict.

Do you believe that “The libertarian perspective, put succinctly, begins with the assumption that individual agents are fully formed and their value preferences are in place prior to and outside of any society”? Of course not. Who would? Read the Britannica column to find out who says you do.

Three stories in today’s Washington Post help us to understand why governments around the world are facing unmanageable deficits. On the front page:

When Prime Minister Jose Luis Rodriguez Zapatero took power seven years ago, he and his Socialist Workers’ Party set out to perfect the welfare state in Spain. The goal was to equal— or even surpass — lavish social protections that have long been the rule for Spain’s Western European neighbors.

True to his Socialist principles and riding an economic boom, Zapatero raised the minimum wage and extended health insurance to cover everything from sniffles to sex changes. He made scholarships available to all. Young adults got rent subsidies called “emancipation” money. Mothers got $3,500 for the birth of a child, toddlers attended free nurseries and the elderly got stipends for nursing care.

On page 3, a story about federal pensions, which still offer federal employees

a benefit lost long ago by many workers at private companies — a guaranteed retirement check paid largely by the boss.

These traditional pensions, called defined-benefit plans, have long been an attractive feature of government work.

On the op-ed page, George Will notes that in 1975 then-governor Jerry Brown said that his plan was

To stand up to the special pleaders who are encamped, I should say, encircling the state capitol, and to see through their particular factional claims to the broad public interest.

Three years later, “Brown conferred on government employees the right to unionize and bargain collectively.” Now, from prison guards to teachers, the public employee unions press for unaffordable spending and block efforts at reform. And again-governor Jerry Brown would rather raise taxes than stand up to the unions that helped elect him.

As has been noted many times, politicians spend all the money that comes in when times are good. They don’t put anything aside for the possibility of lean years. And they make commitments, like pensions and collective bargaining agreements, that will prove to be fiscal time bombs, exploding long after the next election. It looks like the long run is here.

Now that Dominique Strauss-Kahn has resigned as head of the International Monetary Fund, the debate has turned to who will lead the lending agency as it goes through its usual non-transparent and politicized selection process. (Of course, virtually all decisions at the IMF are politicized since it is primarily a political institution, a club in which rich countries’ governments with diverse interests and political priorities typically lend money to governments with track records of mismanaging their economies.)

The IMF is a fundamentally flawed institution, a problem independent of whether the new Fund chief is French or South African. Here’s a brief reading list for anybody more interested in the scandal of IMF lending than of the scandals of IMF personalities.

• In this Cato Handbook essay I provide an overview of the IMF’s poor record at promoting growth or reform, and of the moral hazard of providing big bailouts to countries, beginning with Mexico in 1995.
• In “The IMF’s Imprudent Role as Lender of Last Resort,” Charles Calomiris describes how IMF rescue packages undermine global financial stability.
• In this Cato study, I review the evolution of the IMF, show that its lending tends to last for decades rather than be short term, and that it tends to slow rather than accelerate reforms. I argue for market solutions to debt crises.
• In “International Financial Crises: Myths and Realities,” Anna Schwartz explains that financial contagion during the Asian financial crisis—a key justification for IMF intervention—was not occurring. Only countries with flawed economic policies suffered crises.
• Here, Swami Aiyar argues that the IMF has no business lending to Greece.
• In “Asian Problems and the IMF,” Allan Meltzer criticizes the Fund’s subsidization of risk.
• Here Anna Schwartz takes on the Fund’s “dubious proposal” to turn itself into a sort of bankruptcy court for nations.
• In this study Swami Aiyar takes on another bad idea: creating an IMF currency to rival the dollar.

I’ve been trying to draw attention to the dangers that regulations like those in Indiana’s new voucher program pose for long-term educational freedom and choice.

It’s a difficult thing to do, in part because we have little freedom at all in the public school system that educates the vast majority of kids. Destroying the independence and diversity of the private education sector seems a reasonable risk to run for many if it means more choice for the majority of families. I disagree, and think that we’ll trade the possibility of a dynamic and innovative market in education for a new era of stagnant secular and religious public schools.

The other difficulty in explaining the threat of regulations like those in Indiana’s voucher law is that it is a complicated bill, linked to complicated existing state code.

In the interest of clarity and transparency, I’ve uploaded a two-page overview of the regulations, with citations and links for those who would like to take a look themselves. You can access it here: Regulations Associated with HB 1003 Indiana—2011–05-20

Let me know what you think, and whether I have missed or misinterpreted anything.

Matt Ladner replied to my concerns recently with some interesting qualifications and questions. He notes, “I haven’t seen an example yet of a voucher program in the United States swallowing up the private school sector and homogenizing them, but I agree that it is possible and a grave concern.”

The primary reason we haven’t seen this yet is that these programs have all been too small and constrained by funding caps. And that’s the problem with the Indiana plan and other plans to expand heavily regulated voucher programs; the better they are on coverage and access, the more devastating the consequences for educational freedom.

I find it horrifying to contemplate looking back 15 years from now at this moment of great opportunity and realize that, in the pursuit of choice, we imported the dysfunctions of government education and top-down control into the private sector and reduced both choice and freedom in the process.

Albert Shanker, long-time head of the American Federation of Teachers union, said back in 1989 that:

It’s time to admit that public education operates like a planned economy, a bureaucratic system in which everybody’s role is spelled out in advance and there are few incentives for innovation and productivity. It’s no surprise that our school system doesn’t improve: it more resembles the communist economy than our own market economy.

But hang on a minute! Doesn’t the following description sound a lot like the work rules in our public schools:

Promotion was determined by the Table of Ranks.… An official could hold only those posts at or below his own personal rank.… [S]tandard intervals were set for promotion: one rank every three years from ranks 14 to 8; and one every four years from ranks 8 to 5.… This meant that, barring some heinous sin, even the most average bureaucrat could expect to rise automatically with age.… The system encouraged … time-serving mediocrity

That, ladies and gentleman, is not a description of the work rules of the communist-era Russian bureaucracy. It describes the rules in the Tsarist Russian bureaucracy (see Orlando Figes, “A People’s Tragedy,” p. 36).

The funny thing is, according to Figes, “By the end of the [19th] century, however, this system of automatic advancement was falling into disuse as merit became more important than age.”

So the modern U.S. system for promoting public school teachers was discarded as inefficient and unworkable… by the Tsars.