David Boaz

Good reporting shouldn't go unnoticed just because it appeared during the week after Christmas, so let me draw your attention to a comprehensive article on the front page of the December 26 Washington Post by Joe Stephens and Carol Leonnig:

Meant to create jobs and cut reliance on foreign oil, Obama’s green-technology program was infused with politics at every level, The Washington Post found in an analysis of thousands of memos, company records and internal ­e-mails. Political considerations were raised repeatedly by company investors, Energy Department bureaucrats and White House officials.... The documents reviewed by The Post . . . show that as Solyndra tottered, officials discussed the political fallout from its troubles, the “optics” in Washington and the impact that the company’s failure could have on the president’s prospects for a second term. Rarely, if ever, was there discussion of the impact that Solyndra’s collapse would have on laid-off workers or on the development of clean-energy technology.

Did you know that when the president visits a factory, his aides tell the workers what to wear? Keep digging in the documents:

Like most presidential appearances, Obama’s May 2010 stop at Solyndra’s headquarters was closely managed political theater. Obama’s handlers had lengthy e-mail discussions about how solar panels should be displayed (from a robotic arm, it was decided). They cautioned the company’s chief executive against wearing a suit (he opted for an open-neck shirt and black slacks) and asked another executive to wear a hard hat and white smock. They instructed blue-collar employees to wear everyday work clothes, to preserve what they called “the construction-worker feel.”

This story has all the hallmarks of government decision making: officials spending other people’s money with little incentive to spend it prudently, political pressure to make decisions without proper vetting, the substitution of political judgment for the judgments of millions of investors, the enthusiastic embrace of fads like “green energy,” political officials ignoring warnings from civil servants, crony capitalism, close connections between politicians and the companies that benefit from government allocation of capital, the appearance—at least—of favors for political supporters, and the kind of promiscuous spending that has delivered us $15 trillion in national debt. It may end up being a case study in political economy. And if you want government to guide the economy, to pick winners, to override market investments, then this is what you want. More on Solyndra here and here.

With former senator Rick Santorum suddenly attracting attention in Iowa, it's time to dig up some of our previous reporting on Santorum. In 2006, as Santorum campaigned his way to an 18-point loss in his Senate reelection race, the New York Times reported that he…

…distributed a brochure this week as he worked a sweltering round of town hall meetings and Fourth of July parades: “Fifty Things You May Not Know About Rick Santorum.” It is filled with what he called meat and potatoes, like his work to expand colon cancer screenings for Medicare beneficiaries (No. 3), or to secure money for “America’s first ever coal to ultra-clean fuel plant” (No. 2)…. He said he wanted Pennsylvanians to think of him as a political heir to Alfonse M. D’Amato of New York, who was known as Senator Pothole for being acutely attuned to constituent needs.

So . . . the third-ranking Republican leader in the Senate wanted to be known as a porker, an earmarker, and Senator Pothole. Santorum had already dismissed limited government in theory. Promoting his book, he told NPR in 2006:

One of the criticisms I make is to what I refer to as more of a libertarianish right. You know, the left has gone so far left and the right in some respects has gone so far right that they touch each other. They come around in the circle. This whole idea of personal autonomy, well I don’t think most conservatives hold that point of view. Some do. They have this idea that people should be left alone, be able to do whatever they want to do, government should keep our taxes down and keep our regulations low, that we shouldn’t get involved in the bedroom, we shouldn’t get involved in cultural issues. You know, people should do whatever they want. Well, that is not how traditional conservatives view the world and I think most conservatives understand that individuals can’t go it alone. That there is no such society that I am aware of, where we’ve had radical individualism and that it succeeds as a culture.

He declared himself against individualism, against libertarianism, against “this whole idea of personal autonomy, . . . this idea that people should be left alone.” And in this 2005 TV interview, you can hear these classic hits: “This is the mantra of the left: I have a right to do what I want to do” and “We have a whole culture that is focused on immediate gratification and the pursuit of happiness . . . and it is harming America.” No wonder Jonathan Rauch wrote in 2005 that “America’s Anti-Reagan Isn’t Hillary Clinton. It’s Rick Santorum.” Rauch noted:

In his book he comments, seemingly with a shrug, “Some will reject what I have to say as a kind of ‘Big Government’ conservatism.” They sure will. A list of the government interventions that Santorum endorses includes national service, promotion of prison ministries, “individual development accounts,” publicly financed trust funds for children, community-investment incentives, strengthened obscenity enforcement, covenant marriage, assorted tax breaks, economic literacy programs in “every school in America” (his italics), and more. Lots more.

Rauch concluded,

With It Takes a Family, Rick Santorum has served notice. The bold new challenge to the Goldwater-Reagan tradition in American politics comes not from the Left, but from the Right.

At least Santorum is right about one thing: sometimes the left and the right meet in the center. In this case the big-spending, intrusive, mommy-AND-daddy-state center. But he’s wrong that we’ve never had a firmly individualist society where people are “left alone, able to do whatever they want to do.” It’s called America.

The New York Times reports today:

Around the time the first season of “Downton Abbey” had its premiere on the “Masterpiece” anthology series last January, PBS began taking a more strategic approach to programming. It has branded nights with clusters of shows about one subject — for example, the arts, science or the literary imports from “Masterpiece.” The anthology introduced younger and more male-skewing shows like “Sherlock,” a mystery series set in modern-day London that had its premiere in 2010, and a continuation of the popular British series “Upstairs, Downstairs.” This fall, PBS embarked on a marketing blitz to promote Ken Burns’s “Prohibition” documentary miniseries, including a joint round-table discussion with Mr. Burns and the creators of HBO’s drama “Boardwalk Empire,” which takes place during the Prohibition era. An aggressive promotional campaign helped “Downton Abbey” win six Emmy Awards, including best mini-series or movie, away from competitors on HBO and Starz. “The thinking was that they had to up their game,” said Kliff Kuehl, president and chief executive of KCPT, a public television station in Kansas City, Mo. “That’s what we’ve evolved to — trying to give people that pay-TV moment.”

So why not let people pay for it? Why are taxpayers paying for it? Let me say that I love "Downton Abbey" and would gladly pay $10 a month for a network that broadcast it -- if I weren't already paying for it on April 15. But maybe PBS is bringing "Downton Abbey" to people who can't afford premium channels. Surely that's the public-interest rationale for public broadcasting. But maybe not. The Times goes on to say that "prime-time hits like “Downton” and “Sherlock” . . . appeal largely to better-off viewers." And advertisers -- oops, program sponsors -- know it:

Viking River Cruises has signed on as “Masterpiece’s” corporate sponsor, filling a five-year void that began when Exxon Mobil withdrew its support in 2004. Viking will send mailers to customers pegged to the “Downton Abbey” Season 2 premier. A corporate message will come on right after the show’s host, Laura Linney, introduces the program. “Our demographic is affluent baby boomers, 55-plus,” said Richard Marnell, Viking’s senior vice president of marketing. “We’d been looking for a broadcast partner that reaches that group.”

PBS: your tax dollars at work, bringing upscale drama to upscale viewers.

The New York Times editorializes that if Ron Paul can't separate himself from his unsavory writings and supporters, "he will leave a lasting stain on his candidacy, on the libertarian movement and, very possibly, on the Iowa caucuses." Certainly it's a problem Paul is struggling to deal with. As for the Iowa caucuses, if they could survive strong votes for Pat Robertson and Pat Buchanan and an actual win for Mike Huckabee, I dare say they can survive Ron Paul. But should these things "stain . . . the libertarian movement"? Not in a rational world. Libertarianism is a philosophy of peace, freedom, toleration, and individual rights -- just the opposite of the collectivist racist and homophobic ideas that appeared in newsletters written under Ron Paul's signature. As I wrote in Libertarianism: A Primer, "Libertarianism is the view that each person has the right to live his life in any way he chooses so long as he respects the equal rights of others." Those ideas have played an important role throughout American history, from the American Revolution to abolitionism to the Tea Party. And now Ron Paul is attracting support for his advocacy of the ideas of small government and free enterprise. As the Times notes in a dispatch from Iowa, Paul "is drawing supporters for his libertarian and antiwar views. ...For the students, much of Mr. Paul’s appeal derives from civil libertarian views like ending the federal ban on marijuana and other drugs, as well as his desire to end foreign wars and his small-government credo." That's the message that has moved Ron Paul to the top of the polls in Iowa. Still, he did allow associates of his to write racist and homophobic screeds in "The Ron Paul Political Report" and other newsletters. And that has created a stench around his candidacy. Some people want that stench to envelop and stain the libertarian movement. Jamie Kirchick, the anti-Paul jihadi who brought the newsletters to light in 2008, asks, "Why Don’t Libertarians Care About Ron Paul’s Bigoted Newsletters?" But of course many libertarians have expressed revulsion at the newsletters. Ilya Somin noted at the Volokh Conspiracy (one of the few conspiracies not denounced in the Ron Paul newsletters) that he himself had condemned the newsletters in 2008, as had his co-blogger David Bernstein. And Virginia Postrel, the former editor of Reason, and various current writers at Reason. And a leading Austrian economist, Steven Horwitz. And Ed Crane, the founder and president of Cato. Kirchick identified Conor Friedersdorf of the Atlantic as a libertarian who supported Ron Paul despite the bigotry in the newsletters that bore his name. But in fact Friedersdorf wrote a long and tortured article acknowledging the "egregiously offensive . . . racially bigoted . . . execrable" content of the newsletters. He went on to say that there was still a good case for supporting the only candidate who has consistently opposed the Iraq War, indefinite detention, drone strikes, anti-Muslim bigotry, and the war on drugs. Other libertarians who know about the newsletters are no doubt making similar calculations. And as David Weigel of Slate notes today, many less-engaged voters -- such as American Idol winner Kelly Clarkson -- still haven't heard about the whole issue; they like Ron Paul for the issues he talks about, smaller government, budget cuts, sound money, and noninterventionism. I wrote about "Ron Paul's Ugly Newsletters" in a 2008 Cato-at-Liberty posting:

Those words are not libertarian words. Maybe they reflect “paleoconservative” ideas, though they’re not the language of Burke or even Kirk. But libertarianism is a philosophy of individualism, tolerance, and liberty. As Ayn Rand wrote, “Racism is the lowest, most crudely primitive form of collectivism.” Making sweeping, bigoted claims about all blacks, all homosexuals, or any other group is indeed a crudely primitive collectivism. Libertarians should make it clear that the people who wrote those things are not our comrades, not part of our movement, not part of the tradition of John Locke, Adam Smith, John Stuart Mill, William Lloyd Garrison, Frederick Douglass, Ludwig von Mises, F. A. Hayek, Ayn Rand, Milton Friedman, and Robert Nozick. Shame on them.

The fact is, there's a small band of self-styled "libertarians" who over the past two decades have associated the great ideas of Austrian economics and libertarianism with bigotry, reflexive anti-Americanism, and vitriol directed at everyone from the Trilateral Commission to Cato and Reason. They have very little association with the larger libertarian movement or with such libertarian-inspired movements as the Tea Party, the drug reform movement, or the school choice movement. Virtually their only point of contact with the broader constituency for smaller government is through Rep. Ron Paul, who, for whatever reasons, has unfortunately continued his association with the people who have tarred him and the causes that are drawing many voters to him. Libertarians have been fighting ignorance, superstition, privilege, and power for centuries, and we will continue to do so in the future. Libertarians reject bigotry and advocate equal rights for every individual. Ron Paul's very bad decision to outsource his writing to reprehensible characters doesn't change that.

Two Cato scholars have offered devastating critiques of the Federal Reserve in the op-ed pages of the Wall Street Journal over the last two days. This morning, in "The Fed's Mission Impossible," adjunct scholar John Cochrane takes a look at the latest list of bank regulations under Dodd-Frank. Although the proposal “opens with an eloquent ode to the evils of too-big-to-fail,” he writes, it then “spends 168 pages describing exactly how it's going to stop any large financial institution from ever failing again.” According to Cochrane, the proposal “exemplifies” the core problem withWashington’s heavy hand: “Everything under the sun gets regulated, with no attempt to measure benefits or costs.” This scenario, of course, is nothing new:

For 70 years, our government has sought to stop crises by guaranteeing more and more debts, explicitly with deposit insurance, or informally with predictable too-big-to-fail bailouts. Guaranteeing debts gives obvious incentives to gamble at taxpayer expense, so we try to limit risks with regulation. But big banks still have every incentive to avoid, evade and financial-engineer their way around the rules, and they have lots of lawyers, lobbyists and ex-politicians to pressure regulators to use their wide discretion. The government has lost this arms race time and time again.

Unfortunately, it seems to be taking this arms race across the Atlantic. Yesterday, in "The Federal Reserve's Covert Bailout of Europe," Cato senior fellow Gerald P. O’Driscoll, Jr., examined the Fed’s bailout of European banks through what is called “a temporary U.S. dollar liquidity swap arrangement”—an operation that has gone “largely unnoticed here.” O’Driscoll explains:

Simply put, the Fed trades or "swaps" dollars for euros. The Fed is compensated by payment of an interest rate (currently 50 basis points, or one-half of 1%) above the overnight index swap rate. The ECB, which guarantees to return the dollars at an exchange rate fixed at the time the original swap is made, then lends the dollars to European banks of its choosing.

Why are the two central banks doing this? O’Driscoll explains that they are engaged in this “Byzantine financial arrangement” because “each needs a fig leaf” for past transgressions:

The Fed was embarrassed by the revelations of its prior largess with foreign banks. It does not want the debt of foreign banks on its books. A currency swap with the ECB is not technically a loan. The ECB is entangled in an even bigger legal and political mess. What the heads of many European governments want is for the ECB to bail them out. The central bank and some European governments say that it cannot constitutionally do that. The ECB would also prefer not to create boatloads of new euros, since it wants to keep its reputation as an inflation-fighter intact. To mitigate its euro lending, it borrows dollars to lend them to its banks. That keeps the supply of new euros down. This lending replaces dollar funding from U.S. banks and money-market institutions that are curtailing their lending to European banks—which need the dollars to finance trade, among other activities. Meanwhile, European governments pressure the banks to purchase still more sovereign debt.

Recently Cato scholars Lawrence H. White and George Selgin asked, "Has the Fed Been a Failure?"  Read much more on the Federal Reserve and monetary policy here.

John Stossel takes a look back at 2011 tonight at 10 on Fox Business Network. Jeff Miron and I will be on, along with Nick Gillespie and Katherine Mangu-Ward of Reason, legendary MTV VJs Kurt Loder and Kennedy, and more. Many people think of politics when they think of 2011, but not John Stossel. He's a policy guy. So expect plenty of discussion of Iraq, the Arab Spring, the economy, the Fed, the debt, the nanny state, gay marriage, and more -- but nary a candidate's name. And if you don't get Fox Business, well, call a friend in a different cable monopoly jurisdiction and ask if you can come over.

Newspaper articles on government budgets virtually never tell the reader the two most important facts: What was the budget last year, and what is it this year? Instead, the typical budget article trumpets "cuts" and "austerity," and never actually mentions that the budget is going up by four percent, or six percent, or nine percent in the coming year. So two cheers to the Washington Post for its article on Virginia governor Robert McDonnell's proposed budget, which does—eventually—give you most of that information. Still, the second paragraph (and second sentence) of the article says that McDonnell "proposed saving nearly $1 billion in a variety of ways." You have to wait for the seventh paragraph, on the jump page, before you find out that the proposed budget amounts to $85 billion over two years.  And only in the 20th of 25 paragraphs do you find out that

The two-year budget, which begins July 2012, will be the largest spending plan in Virginia history, growing by about $7 billion.

So two cheers for giving the facts, even if the lead of the story might have led some readers to think that McDonnell was cutting $1 billion from the state's budget. And three cheers for Steve Contorno of the Washington Examiner, who put the basic facts clearly in the third paragraph (and third sentence) of his article:

In an hour-long address to the General Assembly's budget committees, McDonnell laid out an $85 billion spending plan through June 30, 2014, up from $79 billion in 2010-2012.

Please, reporters: when you write about a city, state, or federal budget, please tell us readers and taxpayers how much the budget actually is, and how much it will be next year. With that information, we can figure out for ourselves whether it involves cuts or not.

At the Huffington Post I write about the news that Rick Perry is currently collecting both a salary and a pension from the taxpayers, and about a worse pension claim by a former Maryland governor. But I note that the real problem for taxpayers is not a few governors' pensions but rather unfunded liabilities in the trillions facing state and local governments. And I suggest why legislators let pensions get so out-of-control:

Why do pensions get so lavish? A 2009 study by the Cato Institute argued that in negotiations between elected officials and government unions, nobody really represents the taxpayers. Elected officials are far more responsive to organized interests like unions than to the unorganized citizen-taxpayers. In effect, the principal-agent problem that analysts of the corporation worry about is far worse in government because it is very difficult for taxpayers to control their theoretical agents, the elected officials and appointed managers of government.

Whole thing here.

Vaclav Havel, the playwright who led the Velvet Revolution that ended communism in Czechoslovakia, has died at 75. At a conference in Prague in 1995, Cato research fellow Stanley Kober drew on Havel's writings to discuss civil society, the spirit of humility, and the case for limited government. He quoted Havel on the essential quality of a free government:

I am in favor of a political system based on the citizen, and recognizing all his fundamental civil and human rights in their universal validity, and equally applied. The sovereignty of the community, the region, the nation, the state--any higher sovereignty, in fact--makes sense only if it is derived from the one genuine sovereignty, that is, from human sovereignty, which finds its political expression in civic sovereignty.

Although Havel sometimes found himself at odds with his successor, Vaclav Klaus, on the extent of the market economy, Cato vice president Jim Dorn related Havel's commitment to markets at a conference in Shanghai in 1997:

Though my heart be left of centre, I have always known that the only economic system that works is a market economy, in which everything belongs to someone--which means that someone is responsible for everything. It is a system in which complete independence and plurality of economic entities exist within a legal framework, and its workings are guided chiefly by the laws of the marketplace. This is the only natural economy, the only kind that makes sense, the only one that can lead to prosperity, because it is the only one that reflects the nature of life itself.

Vaclav Havel helped Czechoslovakia make the transition from one of the most repressive Communist regimes to one of the most successful post-Communist countries. RIP.

Earlier today I posted an edited transcript of Christopher Hitchens's talk "Mayor Bloomberg's Nanny State." The only thing better than reading Hitchens is listening to him.  So here's an 8-minute excerpt from his talk: