Regulation News Pegs!!

In the public relations racket, they’re called “news pegs” — current events that can be used to promote your research. As editor of Regulation, I sometimes get the complaint that my publication is “interesting, but it doesn’t have a lot of news pegs.”

So how about this — two Regulation news pegs in one day!

Peg 1: Should we tax nonprofit hospitals?

Decades ago, Congress awarded tax-exempt status to private nonprofit hospitals in return for the hospitals agreeing to treat indigent patients who would otherwise rely on taxpayer-provided healthcare services. But this “grand bargain” is now under Capitol Hill scrutiny following the discovery that for-profit, non–tax exempt hospitals provide roughly the same amount of free medical care to the poor. Today’s NPR program Marketplace discusses the congressional hearings.

All of this should come as no surprise to readers of Regulation. In the summer issue, Guy David of Penn and Lorens Helmchen of Illinois-Chicago lay out this very problem and ask (pdf), why is the government giving one type of tax treatment to some hospitals and another type to others?

Peg 2: Soft Paternalism

For several years I’ve believed that one of the most important intellectual challenges to libertarian ideas is behavioral economics — the empirical field of study that suggests people often do not act rationally and thus markets do not maximize public welfare.

The current issue of the New Yorker contains an article by John Cassidy on behavioral and neuroeconomics that confirms my view. In the article, Cassidy writes that “most economists agree that, left alone, people will act in their own best interest, and that the market will coordinate their actions to produce outcomes beneficial to all.  Neuroeconomics potentially challenges both parts of this argument.”

The regulatory prescriptions that follow from this research are often described as “soft” or “libertarian” paternalism.  The basic notion is that government should require certain behaviors as a default rule (for example the purchase of health insurance or particpation in 401k saving plans) but allow people to opt out if they prefer.

But government actors appear to be no more rational than economic actors — and it is quite possible that soft paternalism could be more detrimental to public welfare than the private choices studied by behavioral economics. Harvard economics professor Ed Glaeser states this case (pdf) in the summer issue of Regulation.

Shameless

On the off chance anyone may have thought there were any vestiges of limited government left in the ranks of today’s GOP:

Senate Majority Leader Bill Frist is trying use a bill authorizing U.S. military operations, including in Iraq and Afghanistan, to prohibit people from using credit cards to settle Internet gambling debts. Frist, R-Tenn., and his aides have been meeting with other lawmakers and officials in both the House and Senate to get the measure attached to a compromise Defense Department authorization bill, according to a Senate GOP leadership aide.

If this goes through, any senator who would dare suggest that the gambling ban be killed on the grounds that what people do with their own money on their own time in their own homes is none of Bill Frist’s business now risks accusations that he doesn’t support U.S. troops overseas.

What’s most aggravating about Congress’ full-throttle push to ban online game is that there’s really no call for it from the public, save for some of the fringe family-values conservatives. Some in Congress – Sen. John Kyl, and Reps. Goodlatte and Leach, for example – have been pushing this ban for years. But Frist’s sudden interest looks like little more than election year red meat.

Public opinion polls show most voters are overwhelmingly opposed to an online gambling prohibition. And to my knowledge, supporters of the bill can’t point to a single study showing that large numbers of Americans are gambling away their futures on these poker sites. Thus far, they’ve justified the bill with no more than a few anecdotes.

Of course, there’s also the naked hypocrisy of exempting state lotteries and the politically powerful horse racing industry from the ban. There actually are studies showing state lotteries to be a primary outlet for gambling addicts.

Saddam’s Supergun

An article in Sunday’s New York Times takes you to a Graveyard of Goofy Weapons south of Baghdad.  Among them, the remnants of Saddam’s Project Babylon, which, if completed, would have been the world’s biggest spud gun:

the barrel alone would have been 512 feet long and weighed 1,665 tons. As the pieces lying around in the lot in Iskandariya illustrated, the barrel was wide enough to fire projectiles “the size of industrial garbage cans,” as Mr. Lowther put it.

Estimates on the cost of two planned superguns and a smaller prototype called Baby Babylon range from $25 million to several hundred million dollars. If the big guns had operated as designed, they could have shot a 300-pound projectile 600 miles, or lifted a much larger payload into orbit if it was outfitted with a small rocket engine.

Doubtless there’s some true believer out there in the right-wing blogosphere trumpeting this story, hailing it as confirmation that Saddam was the Arab Hugo Drax, coming ever closer to having the means to kill us all.  What if he had loaded up an industrial garbage can with some of those degraded mustard gas shells, floated the whole works off our southern coastline and aimed it right at Disneyworld? 

Well, it’s never too late to be retroactively terrorized, but most of us are probably with Lt. Col. James A. Howard, quoted in the article after visiting the site: “I think a gun this big would be kind of dumb.” 

Fool Me Twice, Shame on Me

The Washington Post decided to bury a story on page A17 today on how the IAEA responded to a House Intelligence Committee report on Iran (.pdf).  The report, which came out to media fanfare a few weeks ago, was drafted by John Bolton’s hyper-hawkish lieutenant Fred Fleitz, who’s reportedly currently drafting a report on North Korea’s capabilities.

Anyway, the IAEA was none too happy with Mr. Fleitz’s handiwork, calling attention to several unsupported claims, among them that Iran is producing weapons-grade uranium at Natanz, noting that the 3.5 percent to which Iran has enriched is a far cry from the roughly 90 percent that is needed for a weapon.

The IAEA was similarly displeased with Mr. Fleitz’s accusation that Mohamed el Baradei kicked an inspector off the Iran project for worrying that Iran was deceiving inspectors.  The IAEA responded by calling this allegation “outrageous and dishonest,” pointing out that the inspector in question was still working on Iran.

More alarming by far, though, is David Albright’s* characterization of what’s been going on:

This is like prewar Iraq all over again.  You have an Iranian nuclear threat that is spun up, using bad information that’s cherry-picked and a report that trashes the inspectors.

*Albright’s outfit, the Institute for Science and International Security, really has been doing yeoman’s work on the Iran question, including its analysis (and posting) of Iran’s August 22 response to the EU3+US proposal.  If you want as dispassionate an analysis as you can get of the issue, go to ISIS.  Good stuff.

It’s Constitution Day, Charlie Brown

Note to D.C. readers: Tomorrow is Cato’s annual Constitution Day symposium, headlined by Chief Judge Danny Boggs of the Sixth Circuit, a polymath and one of the bright lights of the federal appellate bench. View the schedule and last-minute registration information here. (Bonus points: Take a version of the quiz Boggs famously asks clerkship candidates to fill out here).

Tomorrow, Cato also releases our annual Cato Supreme Court Review, now ranked among the top 20 peer-reviewed specialty law journals in terms of “impact” according to the influential Washington & Lee law review ranking system. For a sample of the 2005-2006 edition’s contents, see former Thomas clerk Peter “Bo” Rutledge’s thoughtful article analyzing the next Supreme Court term here.

New at Cato Unbound: Clark Ervin Replies to John Mueller on Terrorism

In today’s installment of Cato Unbound, Clark Kent Ervin, former Inspector General of the Department of Homeland Security and author of Open Target: Where America is Vulnerable to Attack, strongly disagrees with John Mueller’s provocative lead essay, “Some Reflections on What, if Anything, “Are We Safer” Might Mean,” in this month’s issue devoted to “9/11 Five Years After: Reassessing Homeland Security and the Terrorist Threat.”

Borrow and Spend, Spend and Elect

As chairman of the National Republican Congressional Committee, Rep. Tom Reynolds (R-NY) is charged with helping House Republicans get elected and re-elected. In this difficult year for Republicans he’s facing a tough race at home in the Buffalo area. According to the Wall Street Journal (paid reg. required), he’s using today’s standard Republican formula: promise to cut taxes and spend, spend, spend:

Mr. Reynolds, with about $3 million in campaign contributions, has run ads on local television for more than a month, earlier than in past campaigns. The first emphasized his support for low taxes and few business regulations, ending, “Tom Reynolds – Fighting to save New York jobs.” Another had two retired military officers hailing his role in saving the Niagara Falls Air Reserve Station from shutdown. The third featured a mother holding her toddler while recalling the congressman’s help in forcing Blue Cross/Blue Shield to cover surgeries for the child’s cleft palate. “Tom Reynolds has a big heart,” she says into the camera.