David Boaz

A new Gallup Poll shows that Americans are most likely to say that Ronald Reagan was our greatest president. Reagan had many good qualities, but this is not plausible. Following Reagan in the poll was Lincoln, who despite a devastating war and a vast expansion of government, did end slavery and preserve the union. Then come Clinton and Kennedy, about whom one can only bemoan the historical illiteracy of the voters. They were actually the top two picks among Democrats, followed by Obama. Only in fifth place do we find George Washington, the man who led the revolution that created the United States and then ensured that it became an enduring republic. Washington's accomplishments are the subject of my weekly column at the Britannica blog:

Had he been a Caesar, a Cromwell, a Napoleon, we know what he would have done. A French officer who wrote a book about the new country of America told us what he in fact did: “This is the seventh year that he has commanded the army and that he has obeyed the Congress; more need not be said.” But one more thing was said: The Commander in Chief traveled to Annapolis, where the Continental Congress was meeting, returned his commission, and said, “Having now finished the work assigned me, I retire from the great theatre of Action; and bidding an Affectionate farewell to this August body under whose orders I have so long acted, I here offer my Commission, and take my leave of all the employments of public life.” And he created a new order for the ages.

It is appropriate that we still celebrate the birth of George Washington -- and in fact the actual federal holiday on the third Monday in February is Washington's Birthday.

As Scott Walker in Wisconsin and other governors try to rein in the soaring costs of government employee pay and pensions, the Cato study "Vallejo Con Dios: Why Public Sector Unionism Is a Bad Deal for Taxpayers and Representative Government" takes on new relevance. Here's the executive summary:

High rates of unionization in the public sector have led to very high labor costs in the form of generous collective bargaining contracts. Now state and local governments are under increasing financial pressure, as a worsening national economy has led to decreased revenues for states and municipalities—many of which remain locked into the generous contracts negotiated in more flush times. Thus, as businesses retrench, governments find themselves in a financial straitjacket. In addition, as government unions grow stronger relative to private-sector unions, their prevalence erodes the moderating influence of the market on the demands that unions make of employers. Now, as an economic downturn threatens state and local government revenues, officials who want to keep their fiscal situations under control would do well to look skeptically at public-sector bargaining—especially since the existing political checks on it have proven ineffective. Public officials should eschew public-sector bargaining when possible, or at the very least, seek to limit its scope. As keepers of the public purse, legislators and local council members have an obligation to protect taxpayers' interests. By granting monopoly power to labor unions over the supply of government labor, elected officials undermine their duty to taxpayers, because this puts unions in a privileged position to extract political goods in the form of high pay and benefits that are much higher than anything comparable in the private sector. This paper shows how the unionization of government employees creates a powerful, permanent constituency for bigger government— one that is motivated, well-funded, and organized. It also makes some recommendations as to how to check this constituency's growing power—an effort that promises to be an uphill struggle.

Indeed it does. The study makes another point that is worth keeping in mind during these battles. Many discussions of government unions, such as this one on Friday's Newshour, tacitly or explicitly assume that we're talking about teachers, police officers, and firefighters. But the study notes:

Of course, while these “heroic” public servants are the ones who are most visible in public disputes over collective bargaining, a large number of unionized state and local employees fall into more mundane categories such as secretaries, middle managers, engineers, administrative law judges, school custodians, and cafeteria workers.

As Scott Walker in Wisconsin and other governors try to rein in the soaring costs of government employee pay and pensions, the Cato study "Vallejo Con Dios: Why Public Sector Unionism Is a Bad Deal for Taxpayers and Representative Government" takes on new relevance. Here's the executive summary:

High rates of unionization in the public sector have led to very high labor costs in the form of generous collective bargaining contracts. Now state and local governments are under increasing financial pressure, as a worsening national economy has led to decreased revenues for states and municipalities—many of which remain locked into the generous contracts negotiated in more flush times. Thus, as businesses retrench, governments find themselves in a financial straitjacket. In addition, as government unions grow stronger relative to private-sector unions, their prevalence erodes the moderating influence of the market on the demands that unions make of employers. Now, as an economic downturn threatens state and local government revenues, officials who want to keep their fiscal situations under control would do well to look skeptically at public-sector bargaining—especially since the existing political checks on it have proven ineffective. Public officials should eschew public-sector bargaining when possible, or at the very least, seek to limit its scope. As keepers of the public purse, legislators and local council members have an obligation to protect taxpayers' interests. By granting monopoly power to labor unions over the supply of government labor, elected officials undermine their duty to taxpayers, because this puts unions in a privileged position to extract political goods in the form of high pay and benefits that are much higher than anything comparable in the private sector. This paper shows how the unionization of government employees creates a powerful, permanent constituency for bigger government— one that is motivated, well-funded, and organized. It also makes some recommendations as to how to check this constituency's growing power—an effort that promises to be an uphill struggle.

Indeed it does. The study makes another point that is worth keeping in mind during these battles. Many discussions of government unions, such as this one on Friday's Newshour, tacitly or explicitly assume that we're talking about teachers, police officers, and firefighters. But the study notes:

Of course, while these “heroic” public servants are the ones who are most visible in public disputes over collective bargaining, a large number of unionized state and local employees fall into more mundane categories such as secretaries, middle managers, engineers, administrative law judges, school custodians, and cafeteria workers.

Bill Monroe, who was moderator for NBC's Meet the Press for about 10 years, has died at 90. The Washington Post does a fine job with his long career, from his pro-civil-rights journalism in Lousiana in the 1950s to his years with NBC and Meet the Press.   I want to draw attention to his longtime advocacy of extending the First Amendment to broadcasting. Actually, I'm sure he thought that the First Amendment did cover all forms of the news media — but he knew that Congress and the courts didn't see it that way, so he wanted an explicit amendment to make that clear. Because his articles on this topic were published in the pre-Internet Dark Ages (yes, children, there are great ideas not online), I can't link to any of them.  He spoke at the Cato Institute in 1984 on the topic:

The First Amendment sets up a clear-cut independence of press from government as the journalistic principle most vital to the American people.  But the existing regulatory approach to broadcasting offers exactly the opposite formula:  government guidance and government rules to protect the American people from independent journalism. The First Amendment idea and the regulation idea are mortal enemies.

And in 2007 he briefly reprised the argument in the letters column of the Washington Post, concluding:

Broadcasters are also open to government pressure through the Federal Communications Commission, whose members are appointed by the president. Newspapers are specifically protected against government interference by the granite wall known as the First Amendment. When the present form of broadcast regulation was set up early in the previous century, nobody understood what powerful instruments of news and information would evolve from the primitive radio stations of that day. Now that we do understand it, we can repair that historic mistake. We can extend the clear, stirring language of the First Amendment to equal protection for freedom of the electronic media. The problem of allocating broadcast licenses does not have to cost the American people the benefit of free broadcasting.

R.I.P.

Newly elected Wisconsin governor Scott Walker has introduced what he calls a "budget repair" plan that would, among other things, require state employees to pay about 5.8% toward their pension (about the private sector national average) and about 12% of their healthcare benefits (about half the private sector national average) and restrict the collective bargaining powers of government-employee unions. In response, as many as 25,000 state workers and their supporters have been protesting in and around the state Capitol. Today the Washington Post reports in a banner headline,

Obama joins Wisconsin budget battle

Yes, the president of the United States is inserting himself into a medium-sized state's battle over how to balance its budget. And not just the president, but his entire political machine and its national labor union allies:

President Obama thrust himself and his political operation this week into Wisconsin's broiling budget battle, mobilizing opposition Thursday to a Republican bill that would curb public-worker benefits while planning similar action in other state capitals. Obama accused Scott Walker, the state's new Republican governor, of unleashing an "assault" on unions in pushing emergency legislation that would nullify collective-bargaining agreements that affect most public employees, including teachers. The president's political machine worked in close coordination Thursday with state and national union officials to mobilize thousands of protesters to gather in Madison and to plan similar demonstrations in other state capitals.... By the end of the day, Democratic Party officials were working to organize additional demonstrations in Ohio and Indiana, where an effort is underway to trim benefits for public workers. Some union activists predicted similar protests in Missouri, New Jersey and Pennsylvania.... The White House political operation, Organizing for America, got involved Monday, after Democratic National Committee Chairman Timothy M. Kaine, a former Virginia governor, spoke to union leaders in Madison, a party official said. The group made phone calls, distributed messages via Twitter and Facebook, and sent e-mails to its state and national lists to try to build crowds for rallies Wednesday and Thursday, a party official said.

It's always easier to organize special interests than unorganized taxpayers. It wouldn't be easy to get 25,000 taxpayers, who have lives and jobs and a variety of concerns, to rally at the state capital for budget reform. And it won't be easy for one governor and Wisconsin's Republican legislators to fight the entire national Democratic Party, the AFL-CIO and other giant unions, and the Obama machine. But maybe if other governors took up the same battle, if Gov. Chris Christie in New Jersey and Gov. Rick Scott in Florida and Gov. Brian Sandoval in Nevada and Gov. Tom Corbett in Pennsylvania -- and even Gov. Andrew Cuomo in New York and Gov. Jerry Brown in California, both of whom are smart enough to know why their states are running multi-billion-dollar deficits -- take on the government unions, then maybe the Washington-based political machines won't have the capability of responding everywhere at once. Two, three, many Wisconsins! By the way, the strikingly uncivil posters comparing Governor Walker to Hitler and Mubarak, and the classic "Don't Retreat, Reload" slogan along with Walker's picture in cross hairs, take on greater relevance with the revelation that there's so much support and organization of these protests coming from sophisticated national politicos.

In my latest weekly posting on the Britannica blog, I take a brief look at conservative resistance to civil rights, from the early days of National Review to the latest CPAC kerfuffle:

In the 1960s and 1970s conservatives were bitter opponents of the feminist movement. . . . Phyllis Schlafly organized women to Stop the Equal Rights Amendment. But in 2008 conservatives adamantly insisted that a mother of five, one of them a special-needs infant and another a pregnant teenager, could easily serve as vice president of the United States. “It’s a slam dunk. I think that people who are concerned about ‘How conservative is Mr. McCain’ are now going to say, ‘If he can make a choice of Sarah Palin, then he can be trusted with our conservative ideals,’ ” said Cathie Adams, Republican National Committeewoman-elect and president of the Texas Eagle Forum (founded by Schlafly), to the Houston Chronicle. Young conservative pundit Amanda Carpenter said it was sexist to question the ability of a busy mother to handle the White House, too. Now the battle is over gay rights . . .

The financial crisis of 2008 led to a lot of unfortunate Keynesian and corporatist policymaking, but also to a renewed interest in Austrian economics and particularly to the Austrian theory of the business cycle and the role of the Federal Reserve in creating bubbles and busts. Austrian ideas are most recently examined on BBC and in the Washington Post. Sales of F. A. Hayek's book The Road to Serfdom have soared in the past three years, actually hitting no. 1 on Amazon last summer. The New York Times complained that Tea Party activists had "reached back to dusty bookshelves for long-dormant ideas [in] once-obscure texts by dead writers" such as Hayek, even as its reporters continually urged policymakers to Read. More. Keynes. A rap video on the intellectual battle between Hayek and Keynes, created by economist Russell Roberts and filmmaker John Papola, has been viewed almost 2 million times. A YouTube cartoon video on "quantitative easing" has done even better, with more than 4 million views. And now Rep. Ron Paul's appointment as chairman of the House subcommittee on monetary policy has brought new attention to the Austrian critique of orthodox economics and economic policy. A long article on Paul's ideas and his plans for the committee by Annie Lowrey filled a full page of the Sunday Washington Post:

But Paul's adversary is not only the Federal Reserve. It is also mainstream monetary economics itself. As a devotee of the Austrian school, whose luminaries include Friedrich Hayek and Ludwig von Mises, Paul stands firmly outside policymaking and academic circles, a point he enthusiastically admits. (The Austrian economists also often quibble with other libertarians, such as those at Cato.) His beef is not with how central bankers do their jobs; it's with central banking itself. "The Fed, rightly so, criticizes Congress for spending too much - but they make the money available to us!" he said. "It buys debt, keeps interest rates low, and sticks it to the people who want to save and make money. It is so unfair. And I think it is the first time in the history of the Fed that people realize it is not their friend. It just gives us booms and busts."

The line about Cato is a little misleading. At our 28 annual monetary conferences and in our publications, we've presented the ideas of many Austrian economists, from our 1979 publication of two classic manuscripts by Hayek, A Tiger by the Tail: The Keynesian Legacy of Inflation and Unemployment and Monetary Policy: Government as Generator of the "Business Cycle" and our first monetary conference in 1982 featuring Fritz Machlup and Gottfried Haberler, to a 1999 issue of the Cato Journal featuring studies of Hayek and Ludwig von Mises, to a new Working Paper, "Has the Fed Been a Failure?" by George Selgin, William Lastrapes, and Lawrence H. White. And don't miss a recent BBC program, "Radical Economics: Yo Hayek!" Jamie Whyte spends 30 thoughtful minutes looking at Austrian views of boom and bust, with such guests as White, Papola, Steven Horwitz, Robert Higgs, and Robert Skidelsky. It took the biggest bubble and crash since 1929 to revive the interest in Austrian economics, but at least now more people are studying the real problems with central planning, government intervention, and money manipulation.

"Google is under siege in Washington like never before," Politico reports.

In an interview with POLITICO, a Google spokesman argued that a cabal of antitrust lawyers, lobbyists and public relations firms is conspiring against the Internet search giant. The mastermind? Google says it’s Microsoft. Maybe it’s irony, or maybe it’s payback. In the 1990s, Microsoft was the tech industry wunderkind that got too big for its britches — and Google CEO Eric Schmidt, then an executive at Sun Microsystems and later Novell, helped knock the software titan down a peg by providing evidence in the government’s antitrust case against it. . . . But there are also increasing calls from some Silicon Valley competitors and Washington-based public interest groups for the Justice Department to launch a sweeping antitrust probe of Google. The European Union and the state of Texas have reviews under way. Google says its rivals are fueling the attacks.

You could have read it here first. In the November-December 2010 issue (pdf) of Cato Policy Report, Adam Thierer wrote, "The high-tech policy scene within the Beltway has become a cesspool of backstabbing politics, hypocritical policy positions, shameful PR tactics, and bloated lobbying budgets." The telcos, the broadcasters, the wireless industry, the entertainment industry -- they all want the federal government to crush their competitors. And, he said, "Everybody — and I do mean everybody — wants Google dead, right now. Google currently serves as the Great Satan in this drama — taking over the role Microsoft filled a decade ago — as just about everyone views it with a combination of envy and enmity." But then:

Of course, in a sense, Google had it coming. The company has been the biggest cheerleader in the push to impose "Net neutrality" regulation on the Internet's physical infrastructure providers, which would let the FCC toss property rights out the window and regulate broadband networks to their heart's content. Meanwhile, along with Skype and others, Google wants the FCC to impose "openness" mandates on wireless networks that would allow the agency to dictate terms of service. It's no surprise, then, that the cable, telco, and wireless crowd are firing back and now hinting we need "search neutrality" to constrain the search giant's growing market power. File it under "mutually assured destruction" for the Information Age. Google had it coming in another sense, having joined the decade-long effort by myriad Silicon Valley actors to hobble Microsoft through incessant antitrust harassment.Google has hammered Microsoft in countless legal and political proceedings here and abroad.

Thierer also noted that you could have predicted all this by reading Cato publications a decade earlier, such as Cypress semiconductor CEO T. J. Rodgers's 2000 manifesto, "Why Silicon Valley Should Not Normalize Relations with Washington, D.C." (pdf). Or indeed Milton Friedman's 1999 speech on "The Business Community's Suicidal Impulse": "You will rue the day when you called in the government. From now on the computer industry, which has been very fortunate in that it has been relatively free of government intrusion, will experience a continuous increase in government regulation." You (could have) read it here first.

"Cat groomers, tattoo artists, tree trimmers and about a dozen other specialists across the country . . .  are clamoring for more rules governing small businesses," reports the Wall Street Journal in a front-page story today. "They're asking to become state-licensed professionals, which would mean anyone wanting to be, say, a music therapist or a locksmith, would have to pay fees, apply for a license and in some cases, take classes and pass exams." And despite all the talk about deregulation and encouraging entrepreneurship, "The most recent study, from 2008, found 23% of U.S. workers were required to obtain state licenses, up from just 5% in 1950," according to Morris Kleiner of the University of Minnesota. The Cato Institute has been taking on this issue for decades. In 1986 Stanley Gross of Indiana State University reviewed the economic literature on the impact of licensing on cost and quality. Kleiner wrote in Regulation in 2006:

Occupational regulation has grown because it serves the interests of those in the occupation as well as government. Members of an occupation benefit if they can increase the perception of quality and thus the demand for their services, while restricting supply simultaneously. Government officials benefit from the electoral and monetary support of the regulated as well as the support of the general public, whose members think that regulation results in quality improvement, especially when it comes to reducing substandard services.

In today's Los Angeles Times I write that social conservatives are pointing to real problems, but the only policy solutions they discuss are completely irrelevant to what they call "the high cost of  a dysfunctional society":

. . . Reducing the incidence of unwed motherhood, divorce, fatherlessness, welfare and crime would be a good thing. So why the focus on issues that would do nothing to solve the "breakdown of the basic family structure" and the resulting "high cost of a dysfunctional society"? Well, solving the problems of divorce and unwed motherhood is hard. And lots of Republican and conservative voters have been divorced. A constitutional amendment to ban divorce wouldn't go over very well, even with the social conservatives. Far better to pick on a small group, a group not perceived to be part of the Republican constituency, and blame it for social breakdown and its associated costs. That's why social conservatives point to a real problem and then offer phony solutions. But you won't find your keys on the thoroughfare if you dropped them in the alley, and you won't reduce the costs of social breakdown by keeping gays unmarried and preventing them from adopting orphans.