If an Interest Group Says We Need to Spend More Money, Check It Out

Young journalists are told, “If your mother says she loves you, check it out.” Every day journalists follow that advice, protecting us all from reading rumors and unconfirmed stories in the morning papers (though of course the increasing pressure to be first with the news is threatening this rule).

But journalists are still too quick to take the word of special interests without seeking other viewpoints, especially in stories about things the taxpayers need to spend money on. Take this morning’s story about water infrastructure on Marketplace Radio:

Following the expensive water-main break that flooded UCLA’s campus, Los Angeles officials say they’re trying to aggressively fix the city’s aging infrastructure. 

The costs are daunting. It’s going to take the city of Los Angeles billions of dollars to fix.

“They estimate some over 20 millions of gallons of water were lost and of course it wound up on that new floor at the Pauley Pavilion Basketball Arena,” says Greg DiLoreto, former president of the American Society of Civil Engineers. “We have some 240,000 water main breaks a year in this country. And the age of our water infrastructure continues to get older and older and older.”

DiLoreto says the country needs something like $84 billion dollars in water infrastructure investments between now and 2020.

Carolyn Berndt, program director at the National League of Cities, says local governments haven’t had the access to the kind of capital they need to make these upgrades.

“The traditional method has been through the state revolving loan funds,” Berndt says. “Those numbers have been declining in recent years.”

Berndt says if cities are going fix their leaky pipes, they’ll need more financing than just a drop in the bucket.

That’s the whole story. And maybe them’s the facts, though Chris Edwards would beg to differ. But the information comes entirely from the National League of Cities, speaking for cities that want more money, and the American Society of Civil Engineers, the people who would be called on to design and build new or improved infrastructure. Journalists shouldn’t rely entirely on the oil industry for the facts on the Keystone pipeline, or the teachers union for the facts about education, and they shouldn’t rely entirely on civil engineers or asphalt manufacturers for the facts on infrastructure.

Posted on August 12, 2014  Posted to Cato@Liberty

Russia Imposes Embargo on Itself

The American economist Henry George wrote, “What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war.” In Russia, Vladimir Putin started a war and then, in response to mild American and European sanctions, retaliated by imposing greater sanctions—on his own people.

Even American journalists, whose economic acumen I have been known to question, have noted the likely effects of Putin’s sanctions. See Michael Birnbaum in the Washington Post:

Russia on Thursday banned most imports of Western food products, a sweeping escalation in an economic war that will deal a multibillion-dollar hit to affected nations but will also unreel wide-ranging consequences at home.

The measures were a signal that Russia is not backing down from a confrontation that has sent Western-Russian tensions to heights not seen since the Cold War—and that it is willing to risk barer shelves and higher food prices at home in the name of striking a blow against countries that have tried to punish it over its role in the Ukraine conflict.

Russia has suspended imports of meat, fish, fruit, vegetables and milk products from the United States, the 28-nation European Union, Norway, Canada and Australia for a year. The move came in retaliation for sanctions those countries imposed on Russia….

In Russia, the food measures promised to hit not just city centers, where the urban middle class has grown accustomed to visiting supermarkets overflowing with high-quality imported European cheeses, fish and sausages. Analysts warned that food prices also would increase and that a wide range of Russian industries, including food processing plants, shippers and retailers, would be affected….

“It will be quite sensitive,” said Yevsey Gurvich, the head of the Economic Expert Group. “Not only rich people will feel it, but literally every family will be affected.” He said he estimated that Russian consumer prices would go up 2 percent this year because of the measures.

“Alternatives to imported foods will be more costly, and, anyway, I believe they will be insufficient, and our supplies will diminish. And, hence, prices will go up,” he said.

Americans who wished for more painful sanctions on Russia than President Obama has imposed are getting their wish—thanks to Putin. 

Posted on August 8, 2014  Posted to Cato@Liberty

Justin Amash’s Victory Is a Win for Free Markets, and a Blow to Chamber Cronyism

Big business’s campaign to purge libertarians from Congress and state legislatures stumbled again last night in Michigan, where Rep. Justin Amash soundly defeated his Chamber of Commerce-backed challenger in a Republican primary.

Amash defeated Brian Ellis with 57 percent of the vote.

Organized business interests don’t seem to like Republicans who take Republican values seriously. Most Republicans say they believe in fiscal conservatism and free enterprise. The self-proclaimed “liberty Republicans” actually vote that way, even when it comes to subsidies and other government help for established businesses.

Business won an under-the-radar victory in May when the Georgia Chamber of Commerce and companies such as Delta Airlines, Georgia Power, and AT&T suddenly set up a Georgia Coalition for Job Growth and managed to defeat a Republican legislator, Rep. Charles Gregory, who was just too libertarian for them.

Organized business interests don’t seem to like Republicans who take Republican values seriously.”

Gregory, a big fan of former presidential candidate Ron Paul, wasn’t trying to legalize drugs or bring the troops home from Afghanistan. No, the ads and the special website that the Georgia Coalition set up accused him of voting against education spending and against an intrusive measure to require drug testing for food stamp applicants.

The real issue was probably that he wouldn’t go along with pork-barrel projects that benefit business, such as taxpayer funding to help the Atlanta Braves move to Cobb County.

One lobbyist involved in the business effort told the Atlanta Journal-Constitution, “We’re not going to let liberty Republicans throw business out of the Republican Party.”

It seems unlikely that a free-marketer like Gregory wanted to “throw business out.” But he did want to persuade the GOP to stop supporting subsidies and sweetheart deals for $700 million businesses like the Braves.

Business operatives ran into trouble early on in Kentucky, where they lobbied hard though unsuccessfully to persuade the head of the Northern Kentucky Chamber of Commerce to run against Rep. Thomas Massie, a frequent ally of Amash. Massie, a businessman himself, is a strong fiscal conservative, but some local business leaders don’t like what they see as his stand-off approach.

And in California’s June primary Rep. Tom McClintock, a crusader against earmarks, turned back a challenge from Washington business consultant Art Moore, who “thinks representatives should deliver for folks back home,” in the words of a local reporter. McClintock got 56 percent in a three-way primary, but he’ll have to face Moore again under California’s nonpartisan primary system.

But Amash seems to have been the number one target of establishment business interests in the Republican Party. He seems like an odd choice for business opposition — the most pro-free-enterprise and most libertarian member of Congress.

You don’t have to take my word for that, by the way. The Club for Growth rates Amash 100 percent. The National Taxpayers Union rates him second among 435 members of Congress in fiscal conservatism. He scored 100 percent on the Freedomworks Scorecard. He organized a bipartisan effort to rein in the National Security Agency that came within a few votes of passing the House. He heads the House Liberty Caucus. He told the New York Times, “I follow a set of principles, I follow the Constitution. And that’s what I base my votes on. Limited government, economic freedom and individual liberty.”

Why would the U.S. Chamber of Commerce, along with the Grand Rapids and Michigan chambers, try to unseat him?

Could it be because Amash opposes the Export-Import Bank, while the Chamber vigorously supports it? Or because Amash opposes corporate bailouts, like the $800 billion TARP, and profligate spending, such as President Obama’s $800 billion “stimulus” bill — both of which the Chamber supported?

They said they wanted a congressman who would work with others to “get things done.” Andrew Johnston, the political director of the Grand Rapids Chamber of Commerce, told the Wall Street Journal, “There is frustration among those who think his rigidity makes it difficult to move forward on legislation.” He promised that Ellis “will have access to funds that will be helpful to his campaign.” It wasn’t just local businessmen. Washington lobbyists rallied around Ellis. He also put $800,000 of his own money into his campaign — in the form of loans, which could have been paid back out of more lobbyists’ contributions if he had won the race.

Amash wasn’t without friends, of course, even in the business community. Several members of Amway’s DeVos and Van Andel families contributed to his re-election, and he was supported by Freedomworks and the Club for Growth. And a majority of the Republican voters.

This clash between politically minded businessmen and free-market libertarians is an old one. Adam Smith wrote The Wealth of Nations to denounce mercantilism, the crony capitalism of his day. Milton Friedman wrote, “There’s a common misconception that people who are in favor of a free market are also in favor of everything that big business does. Nothing could be further from the truth.”

Maybe the Chamber of Commerce should take note of the “libertarian populist” currents in today’s politics and learn to work with, not against, elected officials who actually support the free market that the Chamber professes to defend.

Posted on August 6, 2014  Posted to Cato@Liberty

Raising Big Money to Fight Big Money?

In the latest of many enthusiastic National Public Radio reports on Professor Lawrence Lessig and his efforts to remove money from politics, Lessig outlines big plans:

In 2016, we want to raise a substantially larger amount of money - could be 200 million, could be 800 million - so that we can win a Congress committed to fundamental reform in the way campaigns are funded.

Well, if spending $800 million in billionaires’ contributions to “win a Congress” won’t knock out big money, what will?

But even if he does raise this kind of money, Lessig might find himself disappointed. You can’t always get what you want, even if you’ve got a lot of money to throw around. From John Connally’s “$13 million delegate” in 1980 to Ross Perot’s $65 million campaign in 1992 to Meg Whitman, Linda McMahon, and Jeff Greene in 2010, the candidates with the most money sometimes fail badly. Or take the billion dollars that Republican groups planned to spend in 2012 to take back the Senate and the White House. 

Given the consistently low priority Americans have placed on “campaign finance reform” for decades and up to the present – the lowest priority in this 2012 Pew poll, save for global warming – even $800 million may not be enough to sway the voters.

John Samples has raised many questions about the advisability of campaign spending restrictions in articles such as this one.

Posted on July 30, 2014  Posted to Cato@Liberty

Tonight, “Penn & Teller: Fool Us”

Cato Mencken Fellows Penn Jillette and Teller launch a new hour-long show, “Penn & Teller: Fool Us,” tonight at 8 p.m. on the CW television network. Here’s an enthusiastic review from Slashfilm:

Magician duo Penn & Teller are finally set to bring one of my favorite UK TV series, Penn & Teller: Fool Us, to broadcast in the States….

One of my favorite UK television television series was a show called Penn & Teller: Fool Us. It was basically a competition series where the world’s best magicians would perform in hopes of fooling Penn & Teller. After the performance, the magic duo would try to vaguely explain how the trick was done (without fully exposing the magic). If they were fooled, the magicians would get a gig as their starting act in Vegas.

Each show would also have Penn & Teller do a trick or two for the television audience. I’m a magic geek and this is probably one of my favorite magic series to ever air. I’ve shown it to a lot of non-magic geek friends, and they all ended up loving it. 

Until 8 p.m., you can listen to Cato’s podcast with Penn Jillette recorded in 2011.

Posted on July 30, 2014  Posted to Cato@Liberty

David Boaz discusses Sen. Rand Paul’s urban outreach on FBN’s The Independents

Posted on July 28, 2014  Posted to Cato@Liberty

Was the Halbig Decision Political?

Writing in the Washington Post about the D.C. Circuit’s decision in Halbig v. Burwell, E. J. Dionne Jr. bemoans 

a conservative judiciary that will use any argument it can muster to win ideological victories that elude their side in the elected branches of our government.

There are several problems with his argument. First, of course, the argument accepted by two judges on the D.C. Circuit is pretty strong: the IRS can’t rewrite a law just because because the law isn’t working out so well.

Second, it’s not so clear that it’s conservatives who couldn’t “win ideological victories … in the elected branches of our government.” Democrats in Congress and other ACA supporters wanted states to establish exchanges, so they wrote the law with subsidies for state exchanges. (See also this original paper by Michael Cannon and Jonathan Adler, especially pp. 142ff.) But because of widespread opposition to the law, many states chose not to set up exchanges. That is, supporters of the law were unable to “win ideological victories … in the elected branches of our government,” so they turned to the unelected bureaucracy to rewrite the law, and now they want the courts to uphold their end run around the legislative process.

Third, I wonder if E. J. Dionne Jr. really wants a judiciary that rolls over for the political branches, whether legislative or executive. Does he believe that the Warren Court should not have struck down school segregation, which was clearly the will of the people’s elected representatives–and no doubt the people–in Kansas, as well as in South Carolina and Virginia, whose similar cases were combined with Brown? Does he believe that the Supreme Court was wrong to strike down Virginia’s law against interracial marriage in 1967? The Texas law outlawing sodomy in 2003? Does he regret the Supreme Court’s reining in of the Bush administration’s claimed powers in several terrorism cases? Or the court’s 2013 rulings on gay marriage?

Probably not. And that’s why we should judge judicial decisions on the basis of their adherence to the law and the Constitution, not on political grounds. Three cheers for judges who uphold the rule of law without fear or favor and without political intent.

Posted on July 24, 2014  Posted to Cato@Liberty

Is Fiscal Constraint a Bug or a Feature?

A Washington Post profile of Art Pope, political donor and now budget director of North Carolina, finds a flaw in his fiscal management:

For all of his pull, the revolution Pope helped set in motion is not going quite as planned. The tax overhaul, styled in part off ideas promoted by Pope-backed groups, has contributed to tight finances in North Carolina at a time when other states are flush with cash.

Is that bad? Fiscal conservatives such as Pope just might think that budgetary constraints are a good thing, perhaps especially when revenues would otherwise be rising, leading to profligacy. State governments have a tendency to overspend when the economy booms, and then face difficult adjustments in downturns. Limits on overspending, whether constitutional constraints or tax reductions, should be seen as a feature, not a bug, in state fiscal systems.

By the way, this Post profile of Pope, who is a contributor to the Cato Institute, is not exactly positive, but it’s nothing like Jane Mayer’s 2011 profile in the New Yorker, which I dubbed “Snidely Whiplash in North Carolina.”

Posted on July 20, 2014  Posted to Cato@Liberty

Is Fiscal Constraint a Bug or a Feature?

A Washington Post profile of Art Pope, political donor and now budget director of North Carolina, finds a flaw in his fiscal management:

For all of his pull, the revolution Pope helped set in motion is not going quite as planned. The tax overhaul, styled in part off ideas promoted by Pope-backed groups, has contributed to tight finances in North Carolina at a time when other states are flush with cash.

Is that bad? Fiscal conservatives such as Pope just might think that budgetary constraints are a good thing, perhaps especially when revenues would otherwise be rising, leading to profligacy. State governments have a tendency to overspend when the economy booms, and then face difficult adjustments in downturns. Limits on overspending, whether constitutional constraints or tax reductions, should be seen as a feature, not a bug, in state fiscal systems.

By the way, this Post profile of Pope, who is a contributor to the Cato Institute, is not exactly positive, but it’s nothing like Jane Mayer’s 2011 profile in the New Yorker, which I dubbed “Snidely Whiplash in North Carolina.”

Posted on July 20, 2014  Posted to Cato@Liberty

David Boaz discusses the free market at FreedomFest 2014 on Power Trading Radio with John Boyle

Posted on July 18, 2014  Posted to Cato@Liberty

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