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 Rule of Waivers

David Boaz

Displaying the civility that liberal pundits have been calling for in these polarized times, Matt Yglesias tweets that "David Boaz is dumb" for suggesting that the use of waivers of existing law by three Cabinet secretaries is "the exercise of arbitrary and autocratic power" when, he notes, "Cabinet secretaries get the authority to waive legislation from congress." It's true that I didn't realize that the new Federal Aviation Administration funding bill, entirely written in the Republican House of Representatives and passed without alteration by two senators representing the Democratic Senate, included a provision (Section 406(c)) allowing the secretary of transportation to waive the small-airport subsidy cap:

,
,

Subsidy Cap- Subject to the availability of funds, the Secretary may waive, on a case-by-case basis, the subsidy-per-passenger cap established by section 332 of Public Law 106-69 (113 Stat. 1022). A waiver issued under this subsection shall remain in effect for a limited period of time, as determined by the Secretary.

,

Since that was the entire sticking point between House and Senate, it didn't occur to me that the House would have included a clause allowing the secretary to ignore it. And actually, it's not clear they did; the law says "subject to the availability of funds," but waiving the subsidy cap — i.e., allowing the subsidies to continue — is going to cost more money, not less. Still, it's at least plausible that Secretary Ray LaHood is within the law to waive the cap and continue business as usual.

But that's not the main point. The real problem, as I wrote last week, is that:

,

The rule of waivers is not 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. Secretary of Education Arne Duncan announced that he will waive the always unrealistic centerpiece requirement of the No Child Left Behind school accountability law, that 100 percent of students be proficient in math and reading by 2014. Health and Human Services Secretary Kathleen Sebelius has already granted more than 1,000 waivers from the provisions of the new health care law. 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 delegation of legislative power to the bureaucracy is an increasing problem. Until Franklin Roosevelt's New Deal, it was understood that the U.S. Constitution gave the exclusive power of lawmaking to Congress. In conformity to the rule of law, it gave the president the power to execute the laws and the judiciary the power to interpret and enforce them. In the 1930s, however, Congress started passing broad laws and leaving the details up to administrative agencies. Such agencies — the Agriculture Department, the Federal Trade Commission, the Environmental Protection Agency, and countless more — now churn out rules and regulations that clearly have the force of law but were never passed by the constitutional lawmaking authority. Sometimes Congress didn't know how to make its broad promises real, sometimes it didn't want to vote on the actual tradeoffs involved in giving some people what they wanted at the expense of other people, sometimes it just couldn't be bothered with the details. The result is tens of thousands of bureaucrats churning out laws — 80,000 pages of them in a typical year — for which Congress takes no responsibility.

Compounding the insult to the rule of law is that these agencies then interpret and enforce their own rules, deciding how they will apply in each individual case. They are legislator, prosecutor, judge, jury, and executioner, all in one agency — as clear a violation of the rule of law as one could imagine. A particular problem is the federalization and criminalization of environmental law over the past three decades. In its zeal to protect the environment, the federal government has created a web of regulations so dense that compliance with the law is essentially unachievable. Prosecutors and courts have stripped environmental criminal suspects of such traditional legal defenses as good faith, fair warning, and double jeopardy, while effectively requiring potential suspects to incriminate themselves. It is when pursuing a goal as public-spirited as environmental protection that we must remind ourselves to be most careful in following rules and abiding by constitutional protections, lest the worth of the goal lead us to erode the principles that allow us to achieve all our goals.

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 Power 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.

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.
Read more...

Posted on August 12, 2011  Posted to Cato@Liberty

David Boaz on his blog post “What Shift Right?” on FBN

Posted on August 11, 2011  Posted to Cato@Liberty

Puritans, Politicians, and Paternalism: Can We Take Back Control of Our Own Lives?

Posted on August 10, 2011  Posted to Cato@Liberty

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