July 21, 2006 5:34PM

U.S. Manufacturing Expands along with China’s Economy

Sen. Charles Schumer (D‑N.Y.) renewed his threat this week to demand a vote in the Senate on legislation that would impose steep tariffs on imports from China if the Chinese government does not move promptly to strengthen its currency.


Like many other members of Congress, Schumer believes that China has “manipulated” the value of its currency in a way that makes Chinese goods artificially cheap in the U.S. market while discouraging U.S. exports to China. One result, according to Schumer, has been serious damage to America’s manufacturing base.


Three news items this week, though, should give Congress pause before it slaps tariffs on imports from China:

  • The latest reports from Beijing confirmed that China’s economy continues to grow rapidly. China’s economy reached an annualized growth rate of 11 percent in the second quarter and more than 10 percent for the first half of 2006. 
  • But China’s growth is not coming at the expense of the U.S. economy or U.S. manufacturing. The U.S. Federal Reserve Board of Governors reported this week that U.S. manufacturing output is up 5.7 percent so far in 2006 compared to a year ago. Indeed, according to a recent Cato study, U.S. manufacturing output is up 50 percent in the past 12 years along with our expanding trade with China.
  • The number of Internet users in China has reached 123 million. That gives China the second largest group of users in the world, behind the 200 million users in the United States.

Rapid economic growth in China is not coming at the expense of the U.S. manufacturing sector. But that growth is creating a growing middle class in China that is increasingly engaged not only in the global economy but in the global sharing of ideas.America’s economic relationship with China was the topic of a lively discussion at a Cato policy forum this week. You can view or listen to the event here.

July 21, 2006 3:05PM

Subtlety Lost on Charter Schools

In Atlanta, a small charter school condemned to death yesterday by the board of education is providing one final lesson: While charters allow some of the nuanced accountability provided by the free market to work, too often it’s the wrecking ball of government that renders the final verdict.

The doomed school — the Achieve Academy in southeast Atlanta — started in 2003 as an affiliate of the Knowledge is Power Program (KIPP), a highly regarded network of schools known for their longer days, slavishly devoted teachers, strict discipline, and tremendous success at educating kids in some of the poorest areas of the country.

The KIPP name — like well regarded brand names in all kinds of industries — gave Achieve instant credibility. Over a few years, however, it became clear that Achieve was not living up to KIPP’s standards: It had enrolled too few students to fully implement the KIPP model, and it faced significant financial and leadership problems.

In December 2005, KIPP ended its affiliation with Achieve. It was essentially free-market accountability at work: By separating from Achieve, KIPP made it clear that the school was not up to the program’s high standards, while ultimately leaving it up to parents to determine whether or not they were getting the results that they wanted from the school.

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July 21, 2006 12:45PM

Political Graffiti

Yesterday, the Senate Appropriations Committee approved a bill that would name a future federal courthouse after Senate Majority Leader Bill Frist.


As National Journal reports:

The panel even named a yet‐​to‐​be‐​built courthouse after Senate Majority Leader Frist, unusual for a sitting member of Congress. That was a compromise forged after Senate Transportation‐​Treasury Appropriations Subcommittee Chairman Christopher (Kit) Bond, R‑Mo., could not spare enough funds within his limited allocation to build the Nashville courthouse that Frist requested, a committee aide said.

So it seems that appropriators are not only shamelessly slapping the names of sitting senators on federal buildings; they are also using the naming rights to encourage additional spending.


It is too early to know if this provision will remain in the final version of the spending bill, but for what it’s worth, the Rules of the House of Representatives state:

It shall not be in order to consider a bill, joint resolution, amendment, or conference report that provides for the designation or redesignation of a public work in honor of an individual then serving as a Member, Delegate, Resident Commissioner, or Senator.

Rules, however, are meant to be broken. And broken again.

July 21, 2006 12:03PM

The Big Dig

With Boston’s Big Dig highway project in the news, a brief review is in order:


As the project was getting started in 1985, government officials claimed that it would cost $2.6 billion and be completed by 1998. The cost ultimately ballooned to $14.6 billion and new problems continue to arise as the project finally nears completion. (The federal share of the project’s cost was $8.5 billion.) In 2004, hundreds of leaks were found in the project, which added millions of dollars in taxpayer costs. And in recent weeks, parts of new road tunnel ceilings have collapsed. 


Raphael Lewis and Sean Murphy wrote an excellent Boston Globe series a couple of years ago revealing how the Big Dig had been grossly mismanaged. A key problem was that Massachusetts repeatedly bailed out bungling Big Dig contractors instead of demanding accountability. Contractors were essentially rewarded for delays and overruns with added cash and guaranteed profits.


When federal money is involved, state and local profligacy and corruption are usually the result. For background on the general problem of cost overruns on federally funded projects, see my compilation of evidence here.

July 20, 2006 2:23PM

Boldly Buying Votes

Yesterday, at a news conference featuring New York Senator Hillary Clinton and Iowa Governor Tom Vilsack, the Democratic Leadership Council (DLC) unveiled “a bold new plan” for American higher education. The American Dream Initiative would “award states $150 billion over 10 years to reduce tuition and increase graduation rates”; consolidate several federal tax breaks into “a single, refundable $3,000 college tuition tax credit”; and bolster “accountability” by instituting federal price controls.


What terrific, bold ideas these are! First, plow even more government money into a system that has grown obese on taxpayer funds, then throw government “accountability” on top of it, creating a groundbreaking socialist blend of wealth redistribution and government control!


Of course, in reality there’s nothing bold or new about anything in the DLC’s proposal; politicians have been dumping huge loads of money into higher education for decades, and proposing price controls for years. No, far from being “bold,” the American Dream Initiative is just another disgusting attempt to buy American votes by politicians who believe that a big enough dollar sign, wrapped in just enough lofty rhetoric, is the key to political power.

July 20, 2006 9:49AM

If We Bomb Them, They’ll Like Us?

One hesitates to make it all Bill Kristol, all the time around here, but if he keeps offering up fodder of this quality, our hand is going to be forced.

Click here to watch Kristol defend his idea to start a war with Iran by deploying the logic that

the Iranian people dislike their regime. I think they would be — the right use of targeted military force — but especially if political pressure before we use military force — could cause them to reconsider whether they really want to have this regime in power. There are even moderates — they are not wonderful people — but people in the government itself who are probably nervous about Ahmadinejad’s recklessness.

Right, so once the bombs start dropping on Iran's nuclear facilities — some of which are buried deep beneath civilian population centers — the people of Iran will — under bombardment — overthrow the regime for us!

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