Freedom in Russia

The news out of Russia the past few years has been depressing for believers in liberal democracy. Twenty years ago, it was sometimes said that Russia had put political reform before economic reform, and China had started with economic reform. Many people, following the analysis of Fareed Zakaria in The Future of Freedom: Illiberal Democracy at Home and Abroad, thought that China's path was more likely to lead to the development of a middle class, civil society, and eventually democratic capitalism. And that may yet be the case. But today, on the 20th anniversary of the attempted communist coup in Russia and Boris Yeltsin's victory for democracy, Masha Lipman has some interesting things to say in the Washington Post about the state of freedom in Russia. She says the previous hopes for democracy have been replaced by Vladimir Putin's "recentralizing power and reinstating state dominance over the people," leading to a withdrawal of most citizens from political involvement and thus to "increasing corruption, cronyism and lawlessness." But there's good news beyond the headlines:
The freedom of individual pursuit — as long as one stays away from politics — is one undoubted achievement of Russia’s post-communist development. Putin’s government reinstated the Soviet-style political monopoly and uncontested governance but did not encroach on individual rights. The constraints that existed in the USSR on entrepreneurship, artistic or academic self-fulfillment and lifestyle were not brought back. If one views the events of August 1991 as people rising in defense of freedom against a communist comeback, today’s individual freedoms should be seen as a goal fulfilled. Another post-communist achievement is the rise of a consumer society. Although a sizable number of Russians still have low incomes, never has the proportion of those who enjoy reasonable wealth and comfort been so high. During Soviet times, frustrated consumers faced chronic shortages and ubiquitous lines; after August 1991 and the adoption of a market economy, this cause of discontent was eliminated. These days in Russia, individual freedoms and the developed consumer society are taken for granted.
That's good news, 20 years after the fall of communism.

Posted on August 18, 2011  Posted to Cato@Liberty

Stossel Thursday

I'll be on "Stossel" Thursday night, along with Nick Gillespie, George Mason University economists Robin Hanson and Alex Tabarrok, and, um, Dog the Bounty Hunter. The topic is "Defending the Indefensible" (!), and we'll talk about such putatively difficult issues as insider trading, private money, bounty hunting, and gay marriage. "Stossel" is on Fox Business Network on Thursday at 10 pm ET, and again at 10 pm Pacific Time (1 a.m. ET). It is rebroadcast on Saturday and Sunday nights. But watch it Thursday night, so you won't be embarrassed when everybody's talking about it at the water cooler Friday morning. If you can't wait till Thursday night, watch me take questions on "Stossel" from the 500 students at the International Students for Liberty Conference.

Posted on August 17, 2011  Posted to Cato@Liberty

Your Tax Dollars at Work

President Obama says that we are a  "generous and compassionate" country and that "through government, we should do together what we cannot do as well for ourselves." And to fulfill that "progressive vision," he's going to work on "making government smarter, and leaner and more effective. " Today, under the rubric "Breakaway Wealth/Reaping Riches from Federal Spending," the Washington Post gives us a front-page picture of where a lot of those generous and compassionate federal dollars actually go:
Millions of dollars worth of federal contracts transformed Anita Talwar from a government accounting clerk into a wealthy woman—one who can afford a $2.8 million home in the Washington suburbs with its own elevator, wine cellar and Swarovski crystal chandeliers. Talwar, a 59-year-old immigrant from India, had no idea that she and her husband would amass a small fortune when she launched a company providing tech support to the federal government in 1987. But she shrewdly took advantage of programs for minority-owned small businesses and rode a boom in federal contracting. By the time Talwar sold Advanced Management Technology in 2004, it had grown from a one-woman shop to a company with more than 350 employees and $100 million in annual revenue—all of it from government contracts. Talwar’s success—and that of hundreds of other contractors like her—is a key factor driving the explosion of the region’s wealth over the last two decades. It also has exacerbated the gap between high- and low-wage workers, which is wider in the D.C. area than almost anywhere else in the United States. Washingtonians now enjoy the highest median household income of any metropolitan area in the country... More than $80 billion in federal contracting dollars will flow to the region this year, up from $4.2 billion in 1980.
That's my kind of smart, lean, and effective government!

Posted on August 16, 2011  Posted to Cato@Liberty

Free or Equal on PBS

In 1980 Milton Friedman made a splash with his 10-part PBS documentary, Free to Choose, which also became a bestselling book. Thirty years later Cato senior fellow Johan Norberg travels in Friedman's footsteps to see what has actually happened in those places Friedman's ideas helped transform. From Stockholm to Estonia to India, from New York to Hong Kong to Chile and Washington, D.C., Norberg examines the contemporary relevance of Friedman's ideas in the 2011 world of globalization and financial crisis. The result is a one-hour documentary, Free or Equal: A Personal View, which is now running on PBS stations across the country. Visit the Free to Choose Network page to find out more about the documentary. Click on "Carriage Grid" to find showings in your area. Note that it's arranged by size of media market, so New York is first, then Los Angeles, and so on down through 210 media markets. It's searchable. I missed the first Washington showing on Sunday, so check it out today. But note that showings will run into mid-September, so your friends will have many chances to catch the show. And for a book by Norberg on related issues, check out In Defense of Global Capitalism.

Posted on August 16, 2011  Posted to Cato@Liberty

More on Waivers and the Rule of Law

In my weekly Britannica column, I respond to the charge that I am dumb and expand the discussion of sweeping legislation, the apparently increasing use of waivers by Cabinet officials, and how that comports with the rule of law:
We’ve been reminded in the past few weeks that we live in a world where Congress passes vast, expansive laws that make grand promises and that few if any members of Congress actually read, and then inserts into them the power for the president or his appointees to waive sections of them when they become unworkable or bump up against the interests of the well connected. ... Over the past decade Congress has passed many such expansive and aspirational laws—the Patriot Act, the No Child Left Behind Act, TARP, the stimulus bill (“the Democrats’ Patriot Act“), the Patient Protection and Affordable Care Act—that put power into the hands of the bureaucracy. My colleagues at the Cato Institute and I have often warned members of Congress about the dangers of that practice, often pointing out that someday the White House will be in the hands of the other party, and they may not like what their opponents do with such sweeping powers. Appealing to conservatives in a column on the detention of Jose Padilla, Robert A. Levy wrote, “Even persons convinced that President Bush cherishes civil liberties and understands that the Constitution is not mere scrap paper, must be unsettled by the prospect that an unknown and less honorable successor could exploit some of the dangerous precedents that the Bush administration has put in place.” In a column on President Obama’s intervention into the economy, I asked Democrats, “If you still have warm feelings toward Obama and his good intentions, ask yourself this: Will you feel comfortable one day when the appointees of President Romney or President Palin are exercising unconstitutional, unauthorized, unreviewable authority to restructure the economy the way they see fit?” And that’s why I wrote in the Britannica entry on libertarianism, “A fundamental characteristic of libertarian thinking is a deep skepticism of government power.” Would that liberals and conservatives displayed the same skepticism.
Full column here.

Posted on August 15, 2011  Posted to Cato@Liberty

The Hayek Surge Continues

Seen in New York City -- not near NYU, with its longstanding program in Austrian economics, but uptown near Columbia University, at 112th Street and Broadway -- a sidewalk portrait of F. A. Hayek: Hat tip: ThinkMarkets. For more on the reviving interest in Hayek, see here and here and here.

Posted on August 14, 2011  Posted to Cato@Liberty

Is Obama Worse Than Carter and Bush?

Conservatives have become so furious with President Obama that they forget just how bad some of his predecessors were. One Jeffrey Kuhner, whose over-the-top op-eds in the Washington Times belie the sober and judicious conservatism you might expect from the president of the "Edmund Burke Institute," writes most recently:
A possible Great Depression haunts the land. Primarily one man is to blame: President Obama. Mr. Obama has racked up more than $4 trillion in debt.
Yes, he has. And that's almost as much as the $5 trillion in debt rung up by his predecessor, George W. Bush. True, on an annual basis Obama is leaving Bush in the dust. But acceleration has been the name of the game: In 190 years, 39 presidents racked up a trillion dollars in debt. The next three presidents ran the debt up to about $5.73 trillion. Then Bush 43 almost doubled the total public debt, to $10.7 trillion, in eight years. And now the 44th president has added almost $4 trillion in two years and seven months.  (Here's an online video depicting each president's debt accumulation as driving speed.) So Obama is winning the debt war, but it's not like he caused the debt crisis or the unemployment crisis all by himself. And then, trying to prove that Obama is even worse than Jimmy Carter -- even worse than Jimmy Carter! -- Kuhner makes this curious claim:
Most importantly, Mr. Carter had respect for the dignity and integrity of the presidency. He never trashed his opponents the way Mr. Obama does.
Really? Maybe Mr. Kuhner is too young to remember Carter, and didn't bother to check his claim, or maybe he just got carried away. But I can remember October 1980, when President Carter repeatedly said that the election of Ronald Reagan would be "a catastrophe" that would mean an America
separated, black from white, Jew from Christian, North from South, rural from urban.
Liberal columnist Anthony Lewis asked in the New York Times, "Has there ever been a campaign as vacuous, as negative, as whiny? Probably so -- somewhere back in the mists of the American Presidency. But it would take a good deal of research to come up with anything like Jimmy Carter's performance in the campaign of 1980." The venerable Hugh Sidey wrote in Time magazine, "The wrath that escapes Carter's lips about racism and hatred when he prays and poses as the epitome of Christian charity leads even his supporters to protest his meanness." Obama is a big spender who portrays himself as a "beyond left and right" above-the-fray president trying to work with everyone while demonizing his opponents. But let's not forget the meanness of Jimmy Carter and the spendthrift record of George W. Bush in seeking to establish Obama's uniqueness.  

Posted on August 13, 2011  Posted to Cato@Liberty

Deficits, Debt, and Debasement

The New York Times editorializes that the Federal Reserve should be "more aggressive" in pumping more money into the slow economy. A couple of weeks ago the Times was breathlessly hyping the mythical fear of "default" if the debt ceiling wasn't promptly raised. With that problem out of the way, the paper now quietly recommends a slow default on the national debt:
A more aggressive strategy would be letting inflation rise above the Fed’s comfort level of 2 percent or so to, say, 4 percent. That could help the economy by easing the repayment of debt.
"Easing the repayment of debt": that is, paying your creditors less in real terms than they had expected. That's a slow-mo default. And it's the path that Scott Beaulier and Peter Boettke warn about in the cover story of the current issue of Cato Policy Report: "Deficits, Debt, and Debasement":
Debasement is the "pretend payment" of debt that occurs when governments inflate their currency by printing money. It's a problem of nearly every government, from the "bread and circuses" of ancient times through today. In the 18th century, governments debased their currencies by trimming metal coins and recirculating them. By making a coin worth less in real terms, governments throughout Europe were able to spend beyond their means. "The honour of a state is surely very poorly provided for," Adam Smith wrote in 1776, "when in order to cover the disgrace of real bankruptcy, it has recourse to a juggling trick of this kind." Today, paper money limits governments' ability to physically trim the edges of metal coins. But by printing money to pay off debts, governments debase the currency and ultimately erode its purchasing power. Simply put, they are using a slight variation of the same "juggling trick" to achieve their ends: by pushing the debt problem into the future, they hide the full cost of repayment to the public.

Posted on August 12, 2011  Posted to Cato@Liberty

What Shift Right?

Liz Marlantes of the Christian Science Monitor joins other pundits in proclaiming "America's Big Shift Right" in politics and governance. "In Washington today, when it comes to the size of government, the debate isn't over whether to cut spending, but by how much," she writes.  That's true, but it's because the federal budget has doubled in just 10 years, with half the increase coming in the past three. Politics may be more conservative, but government is still getting bigger. Some of Marlantes's arguments are mystifying: "Instead of coming on the heels of a great liberal expansion of government, today's shift comes after three decades of the unraveling of elements of the social safety net." Really? The Congressional Budget Office reported in 2007 that three major "safety net" programs accounted for 45 percent of the federal budget. In this chart the red line represents "social safety net" programs: Marlantes quotes a distinguished historian on the same point:
"The New Deal programs have been weakened and destroyed over decades, and there are just many fewer elements in the safety net," says Alan Brinkley, a historian at Columbia University and author of "Liberalism and its Discontents."
But what is he talking about? Social Security is bigger than ever, and we've added Medicare, Medicaid, the Medicare prescription drug entitlement, and food stamps. Farm subsidies are still in business, in far different economic conditions from those that allegedly required the creation of price supports and other payments. Two years ago, in a review of two books on the rise of conservatism, Brian Doherty noted:
the right has shown an amazing ability to fool almost everyone, from average voters to academic historians like Schneider and Phillips-Fein, into believing that the conservative movement has won key victories and substantially achieved its most important goals.... And the free market? Under both Democrats and Republicans, the general direction of the U.S. government has been toward more spending, more taxing, and more federal control, even if Reagan did succeed in dramatically lowering the highest marginal tax rates. Otherwise smart observers such as Schneider and Phillips-Fein miss these facts, conflating the success of the Republican Party, as it comes and goes, with the success of conservative ideas. Phillips-Fein expresses this confusion about right-wing success most baldly, declaring out of nowhere, to buttress the significance of her topic, that “the New Deal has been turned back.” Except for court packing and the National Recovery Administration, every significant practice, and certainly every big idea, behind the New Deal has only gotten stronger in the last 60 years.
Marlantes seems to make the same mistake. She notes that the percentage of self-described conservatives has risen in the Gallup Poll. But considering how much the federal budget has increased, the increase in conservative sentiment is pretty modest. Shouldn't people who call themselves "moderates" when the federal budget is $2 trillion (about 2002) be "conservatives" now that it's approaching $4 trillion? And yet most of them don't. By the way, Marlantes does note that "generational changes are clearly pushing public opinion to the left when it comes to certain moral and cultural issues, most notably gay rights," a point that I've also made. A shift to the right? In politics, maybe. In the actual size of government, no.

Posted on August 9, 2011  Posted to Cato@Liberty

The Road to Czardom

Back in 2009 there was a lot of hysteria over the Obama administration's many "czars," and we at Cato tended to dismiss it; as Gene Healy said in the Washington Examiner, "the conservatives' current bout of czar mania elevates symbolism over substance.... Often, czars are mere figureheads, appointed to signal concern over the latest hot-button issue. " But just this week I've noticed a couple of examples of actual czardom -- the exercise of arbitrary and autocratic power -- from two of President Obama's Cabinet secretaries. Last week Sen. Harry Reid and House Speaker John Boehner made a deal under which the Senate would pass the House's bill to fund the Federal Aviation Administration through September and end the brief partial shutdown of the agency.  They agreed that Transportation Secretary Ray LaHood would waive the small-airport subsidy cuts. But where does a Cabinet secretary get the authority to waive legislation passed by Congress -- even if two members of Congress say it's OK with them? The administration can't spend money Congress hasn't appropriated, and it can't spend money in defiance of clear legislative language. LaHood is assuming the powers of a czar. And now Secretary of Education Arne Duncan has announced that he will unilaterally override the centerpiece requirement of the No Child Left Behind school accountability law, that 100 percent of students be proficient in math and reading by 2014. We've criticized that unrealistic requirement ourselves. But unrealistic or not, it's the law. According to the New York Times:
Mr. Duncan told reporters that he was acting because Congress had failed to rewrite the Bush-era law, which he called a “slow-motion train wreck.”
Again, I too think Congress should rewrite -- or repeal -- this law. But alas, it hasn't done so. Even the Times, often comfortable with the exercise of federal and executive power, notices that
The administration’s plan amounts to the most sweeping use of executive authority to rewrite federal education law since Washington expanded its involvement in education in the 1960s.
Which is a little misleading; in the 1960s Congress passed laws that extended federal power over local schools. The exercise of executive power is a different issue. Duncan's plan to waive bad provisions of a law is reminiscent of the more than 1,000 waivers from the provisions of the new health care law that Health and Human Services Secretary Kathleen Sebelius has already granted. One problem with such waivers, of course, is the suspicion that they will be granted to the politically connected or even to political supporters. Philip Hamburger of Columbia Law School says waivers raise "questions about whether we live under a government of laws. Congress can pass statutes that apply to some businesses and not others, but once a law has passed — and therefore is binding — how can the executive branch relieve some Americans of their obligation to obey it?" The rule of waivers is not the rule of law. Congress has far too often been supine in the face of executive power. In fact, it could be argued that Congress is as eager to avoid responsibility for lawmaking as presidents are to arrogate it. Duncan's argument that he was acting because Congress had not brings to mind former White House chief of staff Rahm Emanuel's statement a year ago:
“We are reviewing a list of presidential executive orders and directives to get the job done across a front of issues.”
"To get the job done" -- that is, to pass laws that the people's elected representatives have declined to pass.  That's not separation of powers, that's the road to czardom.

Posted on August 8, 2011  Posted to Cato@Liberty

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