Friday, March 31, 2006

VDH on Immigration

Victor Davis Hansen:
"Yes, illegal immigration provides a valuable source of cheap labor. But such jobs are not just those Americans will never take, but comprise work that they won't seek out at such cheap wages. Where compensation rises, citizen workers will follow.

Yes, most aliens work hard, but a small minority of them do not, and find themselves involved in criminal activity. And given the large pool of illegal immigrants from Mexico, that small minority can still reach several thousands--such as the nearly 15,000 aliens currently locked up in the California penal system alone, at a cost of a half-billion public dollars a year.

Yes, immigrants contribute more than receive--but mostly when they are young, single, and hale. As they age, become ill, marry, and have children, those without education, English, and legality naturally draw on entitlements for a semblance of parity with American citizens otherwise impossible for such minimum wage earners.

So what fails and what works? Bilingual education in our schools, multicultural romance about a mythical Aztlan in our universities, guest worker programs that institutionalize helot status, salad-bowl separatism, and millions who cross the border illegally, all have contributed to the present disaster. But as we see with second- and third-generation model Mexican-American citizens, English immersion, acceptance of an American identity, integration, intermarriage and assimilation, legal and monitored immigration in the thousands from Mexico--all that guarantees immigrants success and energizes us the host.

Americans recoil at the volatile ethnic enclaves in France and the Netherlands--and can understand how such tribalism could quickly escalate to sectarian violence in Iraq, the Balkans, and Rwanda. Unless we curb the present influx, return to the melting pot, and salvage a legal remedy from the present illegal disaster, what we saw this week may only be the beginning of something far more dangerous from both sides of this avoidable crisis."

It seems to me VDH is right on target.

Thursday, March 30, 2006

Guard the Borders

George Will:
"America, the only developed nation that shares a long -- 2,000-mile -- border with a Third World nation, could seal that border. East Germany showed how: walls, barbed wire, machine gun-toting border guards in towers, mine fields, large irritable dogs. And we have modern technologies that East Germany never had -- sophisticated sensors, unmanned surveillance drones, etc.

It is a melancholy fact that many of these may have to be employed along the U.S.-Mexican border. The alternatives are dangerous and disagreeable conditions for Americans residing near the border, and vigilantism. It is, however, important that Americans feel melancholy about taking such measures to frustrate immigration that usually is an entrepreneurial act -- taking risks to get to America to do work most Americans spurn. As debate about immigration policy boils, augmented border control must not be the entire agenda, lest other thorny problems be ignored, and lest America turn a scowling face to the south and, to some extent, to many immigrants already here.

But control belongs at the top of the agenda, for four reasons. First, control of borders is an essential attribute of sovereignty. Second, current conditions along the border mock the rule of law. Third, large rallies by immigrants, many of them here illegally, protesting more stringent control of immigration reveal that many immigrants have, alas, assimilated: They have acquired the entitlement mentality spawned by America's welfare state, asserting an entitlement to exemption from the laws of the society they invited themselves into. Fourth, giving Americans a sense that borders are controlled is a prerequisite for calm consideration of what policy that control should serve."
It may be too much to expect any political debate to take on some measure of rationality, but the most fundamental purpose of government is as the protective state. To carry out this purpose government has to be attentive to enforcing our laws, and I think this means the first task with respect to illegal immigration is to make the effort necessary, whatever it is, to at least significantly suppress the flow of illegal immigration. Our elected leaders must be expected, by us, to believe there first purpose for being in Washington is to enforce law, not to pass law they will choose not to enforce.

Wednesday, March 29, 2006

Illegal Immigration & Government Failure

Senators Cornyn and Kyle:
"The U.S. Senate has begun its debate to improve border security and reform immigration laws — one of the most urgent priorities to be considered this year.

It is critical that any solution restore respect for the law and provide sufficient resources to control the border. And because there can be no amnesty, reform must not reward illegal activity.

Last summer, we introduced the Comprehensive Enforcement and Immigration Reform Act of 2005, which would dramatically bolster our border enforcement and comprehensively reform our immigration system.

The need for reform is clear. Today, there are approximately 12 million illegal aliens in the United States. Approximately 40 percent have arrived here since 9/11. This is unacceptable. U.S. national security demands that we know who is entering our country, and our sovereignty requires that we have control over our borders . . . ."
I suppose national security is at issue with respect to illegal immigration. However, I wonder if, unfortunately, there is not an even more fundamental concern. The role of government as the protective state involves the enforcement of law that protects individuals and their property from harm by others. It seems true that the number of people in our country illegally is significant, probably even overwhelming. It seems also to be the case that national, state, and local governments have been doing relatively little to enforce the relevant laws. Perhaps the more fundamental question in all this is: Just how far have the governments in our system of political economy moved away from their responsibilities as the protective state? Have governments in our country become so preoccupied with other purposes that they are failing in their most basic responsibilities as the protective state?

War & The Last Helicopter

Amir Taheri:
"Even in Iraq the sentiment that the U.S. will not remain as committed as it has been under Mr. Bush is producing strange results. While Shiite politicians are rushing to Tehran to seek a reinsurance policy, some Sunni leaders are having second thoughts about their decision to join the democratization process. 'What happens after Bush?' demands Salih al-Mutlak, a rising star of Iraqi Sunni leaders. The Iraqi Kurds have clearly decided to slow down all measures that would bind them closer to the Iraqi state. Again, they claim that they have to 'take precautions in case the Americans run away.'

There are more signs that the initial excitement created by Mr. Bush's democratization project may be on the wane. Saudi Arabia has put its national dialogue program on hold and has decided to focus on economic rather than political reform. In Bahrain, too, the political reform machine has been put into rear-gear, while in Qatar all talk of a new democratic constitution to set up a constitutional monarchy has subsided. In Jordan the security services are making a spectacular comeback, putting an end to a brief moment of hopes for reform. As for Egypt, Hosni Mubarak has decided to indefinitely postpone local elections, a clear sign that the Bush-inspired scenario is in trouble. Tunisia and Morocco, too, have joined the game by stopping much-advertised reform projects while Islamist radicals are regrouping and testing the waters at all levels.

But how valid is the assumption that Mr. Bush is an aberration and that his successor will "run away"? It was to find answers that this writer spent several days in the U.S., especially Washington and New York, meeting ordinary Americans and senior leaders, including potential presidential candidates from both parties. While Mr. Bush's approval ratings, now in free fall, and the increasingly bitter American debate on Iraq may lend some credence to the "helicopter" theory, I found no evidence that anyone in the American leadership elite supported a cut-and-run strategy.

The reason was that almost all realized that the 9/11 attacks have changed the way most Americans see the world and their own place in it. Running away from Saigon, the Iranian desert, Beirut, Safwan and Mogadishu was not hard to sell to the average American, because he was sure that the story would end there; the enemies left behind would not pursue their campaign within the U.S. itself. The enemies that America is now facing in the jihadist archipelago, however, are dedicated to the destruction of the U.S. as the world knows it today.

Those who have based their strategy on waiting Mr. Bush out may find to their cost that they have, once again, misread not only American politics but the realities of a world far more complex than it was even a decade ago. Mr. Bush may be a uniquely decisive, some might say reckless, leader. But a visitor to the U.S. soon finds out that he represents the American mood much more than the polls suggest."

It seems to me the story Mr. Taheri tells about Iran and the Middle East is very important. Read his entire piece. Personally I'm not as confident as he that politics in this country aren't beginning to favor the last helicopter scenario. I would say that both the politics of "the opposition party" as well as the first tendency of most of our news industry tends in this direction these days. Perhaps if many see the story in the way Mr. Taheri tells it my concerns at this point will prove misplaced.

Tuesday, March 28, 2006

Immigration Map

If you are interested in the immigration issue, I think you have to look at this map.

Guests or Gate Crashers?

Thomas Sowell:
"Most of the arguments for not enforcing our immigration laws are exercises in frivolous rhetoric and slippery sophistry, rather than serious arguments that will stand up under scrutiny.

How often have we heard that illegal immigrants 'take jobs that Americans will not do'? What is missing in this argument is what is crucial in any economic argument: price.

Americans will not take many jobs at their current pay levels -- and those pay levels will not rise so long as poverty-stricken immigrants are willing to take those jobs.

If Mexican journalists were flooding into the United States and taking jobs as reporters and editors at half the pay being earned by American reporters and editors, maybe people in the media would understand why the argument about 'taking jobs that Americans don't want' is such nonsense.

Another variation on the same theme is that we 'need' the millions of illegal aliens already in the United States. 'Need' is another word that blithely ignores prices.

If jet planes were on sale for a thousand dollars each, I would probably 'need' a couple of them -- an extra one to fly when the first one needed repair or maintenance. But since these planes cost millions of dollars, I don't even 'need' one."
This seems to be an economics lesson which is fundamental, yet seldom learned. DON'T FORGET THE ROLE OF PRICE in economic activity. Frequently discussion of economic activity and economic issues in the public square is senseless because price is ignored.

Sowell has lots of good stuff in this commentary.

Economics, Liberty, & Iraq

Nima Sanandaji:
"Can Middle Eastern states put oil resources to better use? Is it possible for free enterprise to thrive in the Arab world? The experience in Iraq suggests that the answer to these questions might be yes. The democratization of Iraq has meant that both foreign and domestic businesses can operate in a freer economic environment. Although media seldom report about this, the Iraqi economy is rapidly growing. According to the report 'Measuring Stability and Security in Iraq October 2005,' GDP per capita has more than doubled between 2003 and 2005. Compared to pre-war levels the increase was 31 percent. And the future looks bright. According to the Brookings Institution Iraq Index the Iraqi economy is expected to have a real GDP growth of 49 percent in the period 2006-2008. The oil sector has still not recovered to pre-war levels, partially due to the terrorist menace. Still, if Iraq continues on a path to democracy and economic progress, it is a fair assumption that its natural resources will be put to better use. Foreign investors and consumers would most likely appreciate the possibility to buy oil from a country that does not support terrorists or fundamentalist schools abroad.

Of course, Iraq still has a long way to go in order to recover from the war and the many years under Saddam's tyranny. But if the Iraqi economy can grow despite the ongoing attempts by radicals to undermine it, the same should be possible for the rest of the Arab world. Iraq could serve as a positive example in a region where policy makers have little knowledge about the benefits of free market reforms."
The entire piece is worth reading.

Monday, March 27, 2006

The Nature of the Legislative Branch

Will Wilkinson:
"Governments use coercion to make things happen. Government coercion can be legitimate, but it has to meet certain conditions. One of the traditional conditions is that a majority of the citizens who are going to be coerced, or a majority of their representatives, have to agree to it. However, if policies are structured so that we can’t see whether or how we are being coerced, then we can’t freely endorse them in the democratic process. So those policies fail the test of legitimacy."

I like this way of looking at government's coercive nature. I often talk with my students about the normative frameworks that might be used to define the legitimate use of government's coercion. I've also asked students to consider whether force is ever legitimate in their daily lives. In general, it is wrong to use force or coercion against another person (or their property). However, force is generally considered legitimate when used in self-defense. This is one way to explain the role of government as the protective state, i.e., government with the purpose of reducing the harm some people would do to the person or property of others.

I often also ask if there are normative grounds for thinking that government can legitimately use force in our lives that go beyond government as the protective state. Wilkinson describes one answer to this question. That is, if those (or their elected representatives) who are going to be coerced by government agree to that coercion. This leads him to a test of legitimacy, which is that those who would be coerced are able to see and understand the ways in which government's policy would bring force to bear on their own choices. I think this makes a good deal of sense.

However, there are at least a couple of concerns, and they may both point to the same resolution. I think even when a majority of those who would be coerced agree to the government policy, there is still the possibility of "tyranny of the majority." I don't think transparency is a principle that protects against this tyranny. Wilkinson points to the second concern, which I often describe as the inherent nature of legislatures:

"Politicians want to get re-elected. If they can subsidize interest group A at group B’s expense without group B really noticing due to the hidden transfer, then that will sound like a real winner to a politician. Which is just to say that the incentives politicians face encourage them to violate the very conditions of transparency and public justification that make their coercive powers legitimate. That sounds like a problem to me."

It sounds like a problem to me as well. It seems to me that the essence of this problem of democratic systems of political economy is one that has long been known because I think this is the problem of "factions" which James Madison explained in Federalist # 10. Here is Wilkinson's discussion of an answer to this problem:
"Politicians would have a constant incentive to try to violate and work around an explicit transfer requirement. Which is exactly why we need one. It would give anyone in the group from which resources are being appropriated standing under the Constitution to file suit in order to repeal the law licensing the hidden transfer. The whole class wouldn’t need to notice the hidden transfer, and then fight it off politically."
I think this idea is a significant aspect of dealing with the inherent rent seeking nature of legislatures. I also think our system of political economy already includes the means by which an individual can file suit to end a law that would make it legitimate to use government force to create a transfer. Historically, the Supreme Court often found such laws unconstitutional, and this was especially true during the era of "economic due process." Unfortunately, the economic due process era was replaced by a constitutional jurisprudence that often, perhaps most often, validated, rather than constrained, the rent seeking nature of legislatures.

I wrote above that my two concerns were perhaps resolved in the same way. What I have in mind here is that the specific nature of our Constitution answers both concerns. First, when we consider Congress, our Constitution says the Congress has only specifically enumerated powers. The list of enumerated powers is found in Article I, Section 8, and the ratification of this list of enumerated powers required (and changes today require) a super majority vote. The requirement of a super majority vote for putting something in the Constitution as an enumerated power is a reasonable practical way of minimizing the opportunity for "tyranny of the majority." Of course, Congress may always pass legislation that is inconsistent with the enumerated powers. If this happens, then an individual may respond by challenging the constutitionality of the statute.

The Bill of Rights includes the 9th and 10th Amendments, both of which seem to me to protect individual liberty from the rent seeking nature of the Congress. Specifically, both amendments would seem to provide the means by which an individual can challenge the constitutionality of Congressional legislation, not just on the grounds of lacking an enumerated power, but also on grounds that the legislation amounts to government force in areas of our lives we consider part of our personal realm of individual liberty. This realm seems to me to include protection against the transfers Wilkinson is concerned with, and against rent seeking more generally.

It is unfortunate that our system of political economy seems not to function in this way in general. With respect to issues that involve free speech, our system does function reasonably well in this way. But, in the realm of economic liberty, it does not function this way in general these days. Why?

It seems to me that the answer here depends on understanding that both the legislative and the executive branches of government see similar incentives with respect to rent seeking. Both branches see few, if any incentives, to be concerned about "tyranny of the majority," to be concerned not to use government's coercive power to give to some at the expense of others.

If there is to be a branch of government that sees it's role as protecting individual liberty, then there is only the judicial branch left to do this. I suggest that too many Supreme Court Justices since the "economic due process" era have lost the sense that the role of the judiciary is to protect individual liberty in all aspects. Perhaps hoping for Justices to see this as their role is rather utopian? However, this does seem to be the role Justices generally see for their work when considering matters involving free speech, as well as other "civil liberties." It is also a role many Justices accepted with respect to economic liberty prior to the end of the "economic due process" era. And, there are Justices on the Court at present who seem, on the whole, to accept their role in our system of political economy as protecting individual liberty in general, including economic liberty.

It seems to me that the Constitution as written would work well to protect liberty, but only if those in the Judicial Branch of government accept the idea that their job is to protect liberty in all aspects. If Justices do not accept this role, then I'm not sure there is a way to answer these two concerns about government's coercive nature.

Friday, March 24, 2006

Minimum wage stuff

Russell Roberts:
"Card/Kruegar was newsworthy because it's a man-bites-dog story; it reaches conclusions that are way out of line with every prior study. Over a hundred minimum wage studies are referenced and summarized here:

A few of the findings in brief:

# The minimum wage reduces employment.
Currie and Fallick (1993), Gallasch (1975), Gardner (1981), Peterson (1957), Peterson and Stewart (1969).

# The minimum wage reduces employment more among teenagers than adults.
Adie (1973); Brown, Gilroy and Kohen (1981a, 1981b); Fleisher (1981); Hammermesh (1982); Meyer and Wise (1981, 1983a); Minimum Wage Study Commission (1981); Neumark and Wascher (1992); Ragan (1977); Vandenbrink (1987); Welch (1974, 1978); Welch and Cunningham (1978).

# The minimum wage reduces employment most among black teenage males.
Al-Salam, Quester, and Welch (1981), Iden (1980), Mincer (1976), Moore (1971), Ragan (1977), Williams (1977a, 1977b).

And so on..."

Immigration economics

Alfred Tella:
" A recent study by Harvard economist George J. Borjas, probably the nation's leading authority on the economics of immigration, concluded that from 1980 to 2000 immigration reduced the average annual earnings of native-born men by $1,700, or nearly 4 percent. For the poorest tenth of the work force the reduction was much larger, 7.4 percent, traceable to Mexican immigration. Native-born African-Americans and Hispanics were also hard-hit, being in direct competition with immigrant workers. Mr. Borjas found even college graduates had their earnings lowered by an estimated 3.6 percent. "

Intrinsic Value of Freedom

Don Boudreaux comments on the following from De Tocqueville:
I also do not think that true love of liberty was ever born just from the sight of material goods that freedom produces; for this often succeeds in hiding it. It is certainly true that in the long run, freedom always brings, to those who know how to keep it, ease, well-being, and often riches; but there are times when it briefly hinders the enjoyment of such goods; there are others when only despotism can temporarily afford their enjoyment. Men who prize only these kinds of goods have never enjoyed freedom for long.

That which, in all times, has so strongly attached certain men's hearts to freedom, are its own attractions, its own peculiar charm, independent of its benefits; it is the pleasure of being able to speak, act, and breathe without constraint, under the government of God and the laws alone. Whoever seeks anything from freedom but itself is made for slavery.

Now such men and women who love freedom so dearly are easily accused, chastised, castigated as being ideologues -- as if commitment to some non-material value is shameful or evidence of simple-mindedness.

I side with de Tocqueville."
And, so do I.

Poor America

Douglas Besharov in todays WSJ ($):
"That's what makes a new data series by the Census Bureau, "The Effects of Government Taxes and Transfers on Income and Poverty: 2004," so significant. Developed after nine months of meetings between outside experts and senior government officials from the Census Bureau and other federal agencies, it allows us to get a better view of the resources available to low-income Americans.

First, the series gets a better fix on "market income" poverty -- poverty before taxes and means-tested transfers like cash welfare. (Although the Census Bureau counts it separately, Social Security, like pensions, is included as market income since it is "earned" during one's working years.) Now we can use the correct inflation adjustment, count the income of cohabitors and coresidents, and include the implicit income of home ownership. (The last mostly affects the elderly.) Finally, adding in government estimates of unreported income results in a market income poverty rate of about 7.9%, not the official rate of 12.7%. Second, as suggested by the name of the new data series, government transfer programs also reduce financial need. Taking into account welfare payments, food stamps and housing assistance (noncash benefits are presently not counted) results in a poverty rate of about 5.1% -- and even this excludes the value of Medicaid for the poor, roughly $2,000 per person.

Even with these calculations, about 15 million people are below the poverty line and millions more just above it. But the broader point must not be lost: Millions of low-income Americans are living better lives than they did before. Period."

Facts of Life

Russell Roberts:
"But I think that misses a much deeper point, a point I first saw made by Thomas Sowell but I can't remember where. The point was that people always want more than they have. Always. It has nothing to do with the material age we live in. It has nothing to do with whether the economy is working well. Inevitably, our desires outstrip our resources."
What do you think? This is certainly something I think every student in a microeconomics principles course hears.

Thursday, March 23, 2006

The Injustice of Jumping Mice

Stephen Moore:
"Here in Colorado, the hottest political issue of the day may not be the war in Iraq or the out-of-control federal budget, but rather the plight of a tiny mouse. Back in 1998, a frisky eight-inch rodent known as the Preble's meadow jumping mouse gained protective status under the 1973 Endangered Species Act (ESA). What has Coloradans hot under the collar is that some 31,000 acres of local government and privately owned land in the state and stretching into Wyoming--an area larger than the District of Columbia--was essentially quarantined from all development so as not to disrupt the mouse's natural habitat. Even the Fish and Wildlife Service concedes that the cost to these land owners could reach $183 million.

What we have here is arguably the most contentious dispute over the economic impact of the ESA since the famous early-'90s clash between the timber industry and the environmentalist lobby over the 'endangered' listing of the spotted owl in the Northwest. That dispute eventually forced the closure of nearly 200 mills and the loss of thousands of jobs. Last week the war over the fate of the Preble's mouse escalated when a coalition of enraged homeowners, developers and farmers petitioned the Department of the Interior to have the mouse immediately delisted as 'endangered' because of reliance on faulty data.

The property-rights coalition would seem to have a fairly persuasive case based on the latest research on the mouse. It turns out that not only is the mouse not endangered, but it isn't even a unique species."
Mr. Moore tells an interesting story. I haven't followed the plight and politics of the jumping mouse myself, so I won't offer an evaluation of the story he tells.

I do get nervous when I hear that government has decided to tell land owners that they cannot develop land that belongs to them, especially when the reason given for forcing such a restriction in choice involves a mouse or any other critter. I think in such cases there is a fundamental question: Who owns the critter? I think there are probably only three answers to choose from.

One would be that the owner of the property the critter is on owns the critter. Certainly if the critter, or mouse in this case, is living on the property so that we would say the property is habitat for the critter, then we have to say the property owner at least owns the critter's habitat, and it might be sensible to say the property owner therefore owns the critter. Of course, if this is the answer to the question, then the property owner can, according to the usual meaning of property rights, do with her property as she wants, including destroying her own property, which in this case would be either the critter or the critter's habitat. Now, in general, a person cannot use what they own to harm the person or property of another. But, in the case at hand, if the property owner owns the critter, then killing the critter cannot be said to harm anyone else. The critter belongs to the property owner, and not to anyone else.

A second possible answer I think many have given in such circumstances as these is that no one owns the critter. Such an answer will not save the critter from its demise. After all, if the property owner doesn't own the critter, but no one else owns the critter either, then killing the critter harms no one else. Add to this the clear observation that the property owner owns the land the critter uses for habitat, and it is even more clear that this answer to the question cannot save the critter. The property owner can develop her land, and thereby destroy the critter habitat, and no one else can claim harm. To claim harm, I believe someone else would have to be able to assert a well-defined property right that could be enforced.

A third possible answer to the question might be that government owns the critter. This has some potential for saving the critter from its demise. If government owns the critter and the property owner kills the critter, then the property owner has acted in a way that harms the person or property of another (in this case government). This would then provide the classic role for government in protecting private property from harm by the actions of others. But, there is much more to this story. We may say the government owns the critter, but clearly, the government does not own the critter's habitat. Some other property owner owns the critter's habitat. Government's critter has been gaining free "room and board"from the property owner. Since government does not own the habitat, it cannot tell the owner of the habitat how to use the property. If the property owner decides to develop the property and thus destroy the "room and board" services enjoyed by the critter, it seems to me government cannot simply declare that it will use force to stop such a decision from being carried out. Instead, if the government wants to continue to have its critter utilize the "room and board" services of the property owner's property, then it is going to have to buy or lease those services. Actually, it seems to me the government should all along have been paying for the "room and board" services enjoyed by its critter.

So, this is why I get nervous when government says it will use force to stop a property owner from using her property as she wants in order to protect a critter. Either the critter is no one's critter, and the property owner's choice to develop harms no one else. Or the critter actually belongs to the property owner, and the owner can destroy her property if she wants. Or, government owns the critter, but not the habitat. To protect government's critter then, government should either buy or lease the habitat services from the property owner. I think all three views point to the same conclusion. If government chooses to use force to stop property owners from developing, then government is trying to force a lease or purchase of habitat at zero expense. I think doing this is wrong, even unjust. And, this brings us to the Constitution.

Specifically the Takings Clause of the 5th Amendment, which probably says in this case that government can take private property because it is habitat for government's critter. I suspect that such a taking of private property would be for a public use, i.e., housing for publicly owned critters. But, such a taking is constitutional only if government also pays just compensation. If government chooses to forcibly take a lease (or outright take the habitat), then constitutionally this should only be allowed when government also pays just compensation. Therefore, it seems that government has in the past been trying to unconstitutionally gain something for nothing.

Which brings me to this final question. If government had to pay to save its jumping mouse, or more generally any of its critters, would government choose to do so? My answer is that government would simply say it could not afford to make such a choice very often. Therefore, the choice to forcibly take property without just compensation in order to protect government's critters seem a flagrant injustice.

Wednesday, March 22, 2006


Brian Whitaker:
"Remember how we 'liberated' Afghanistan and transformed it into a freedom-loving democracy before turning our attention to Iraq? Well, take a look at this.

A 41-year-old man is facing possible execution for converting to Christianity.

According to the reports, Muslim-born Abdul Rahman converted 16 years ago but it only came to light when he got into a family quarrel over custody of his children and relatives took their revenge by reporting his religious beliefs to the authorities.

The US and other countries have complained, though not very vigorously for fear they may be accused of interfering with Afghanistan's sovereignty (which they have been doing for years, of course).

In theory, the Afghan constitution guarantees freedom of religion but that doesn't count for much with the country's reactionary judges and their equally reactionary interpretations of Islamic law. We can probably expect the same in Iraq when their legal system gets up and running.

If we look at the Qur'an - the supreme scriptural authority for Muslims - it is clear that none of this should be happening. 'You have your religion, and I have mine,' the holy book says ... 'There is no compulsion in religion.'

Unfortunately quite a lot of people who regard themselves as Muslims have other ideas."

Tuesday, March 21, 2006

The Stone Age Trinity

Max Borders:
"Given the tremendous good that is brought about by self-interested market exchange, it seems we'll have to teach ourselves time-and-again the intellectual lessons of prosperity in a complex economic order. We will also have to fight turf wars with those who think the sentiments of Stone Age Trinity can be wrapped up in intellectual claptrap (like Marxism), force fed to our students in the ivory towers, sold to us on the evening news, or foisted upon us inside marble domes."
Now doesn't this sound interesting?

Monday, March 20, 2006

Congress Spends

In the WSJ ($):
"And guess what? Every Democrat in the Senate joined with eight Republicans to kill an amendment by GOP Senators Jim DeMint and Mike Crapo that would have stopped the Bonnie and Clyde budgeting. The vote was 53-46, and on the list of those voting to continue the Social Security raid is every potential 2008 Democratic Presidential aspirant in the Senate, including Hillary Clinton, John Kerry and Joe Biden. Worse, the list also includes Republicans Conrad Burns (Montana), Jim Talent (Missouri) and Gordon Smith (Oregon), who are running for re-election this year.

Apparently, these Senators want the money stored in a lock box, but only on the condition that they know how to pick the lock. The DeMint-Crapo proposal would deposit surplus payroll tax dollars in personalized bank accounts for each U.S. worker. This would in effect have created more than 100 million personalized lock boxes -- and as taxpayers' private property, well out of the reach of the politicians.

We're talking big dollars here. The payroll tax will collect some $80 billion more in taxes next year, and $436 billion more over the next five years, than Social Security will pay out to current retirees. Under today's law, Congress simply keeps that cash to spend itself. Under the DeMint-Crapo idea, the average young worker would be able to accumulate roughly $40,000 in tax-free wealth for retirement based on eight years of surplus tax payments and 30 years of interest.

And if you want to know why Members of Congress want to keep this annual spending raid going, all you have to do is look at the budget outline for Fiscal 2007 that this ostensibly Republican Senate passed last week. Gone was President Bush's proposal to reduce runaway entitlement spending by a modest $65 billion over five years. Gone, too, was the White House proposal to expand health-savings accounts, as a way to reduce the number of uninsured and reduce health-care costs. Making the 2003 tax cuts permanent? Not a chance.

Instead, the $2.8 trillion budget outline increased spending by $16 billion more than Mr. Bush requested. Some $7 billion of that was passed in an amendment by Senator Arlen Specter (R., Pa.), who has mastered the art of what are called 'advanced appropriations,' which means shifting spending items between fiscal years to evade even modest budget limits. 'It's not sort of a gimmick. It is a gimmick,' Mr. Specter was quoted in the Journal regarding this ruse. The vote on his amendment was 73-27, and a majority of Senate Republicans joined Democrats to pass it."
When it comes to the national government's budget, debate in the public square frequently points to the President as responsible for spending. This can be unfortunate because Congress actually controls the power to tax and spend.

Earmarks: Keeping On

Radio Blogger Transcript:
"HH: I appreciate your flying back from D.C. to do this show, because now finally...I can talk with Dreier about the rules, but you're on Financial Services, you're on Veterans Affairs, and you're on the floor voting on these things, not yet in the leadership. And so, I am confounded, befuddled, by what happened this week on the spending stuff, and I want you to walk our people through. What is going...why are you people spending money like drunken sailors?

JC: I think it's actually just...I'm going to give you the conclusion before we get to it. We need a spending limit, and we need a line item veto. And I'm not sure that anything else is going to stop it, just because of the way that Congress works with individual...with so many members and so many interest groups. Let me just give you a few examples. I've been in Congress now just over 90 days. Not a long time, right?

HH: Right.

JC: Brand new guy. Just came in. Had 63 requests for earmarks.

HH: No.

JC: 63 requests. And they only had 60 days to get to me.

HH: Where do they come from?

JC: Everything from a number of private contractors looking for defense money. You know, we have this thing and it's really good, and it'd be great for the national defense. The Department of Defense unfortunately doesn't recognize that. So if you can get us $3 million or $4 million dollars, we can create this thing."
Sometimes politics is downright discouraging, eh?

Wednesday, March 15, 2006

Cops Stop, Give Rewards?

Orin Kerr wonders if the following is constitutional:
"A number of towns have started experimenting recently with “good driver” traffic stop programs as a way to encourage safe driving (and perhaps improve police/community relations). The basic idea is that during a particular week or other period, police officers pull over a few good drivers who are obeying all traffic laws, commend their driving, and offer them gifts such as gift certificates or tickets to local sporting events. . . ."

I just wondering. . . . . Are you kidding me? Who would ever think of such a thing for government to do?

Economic Development

Peter Boettke:
"Tim Harford has a wonderful essay on Reason On-Line, which is adapted from his brilliant book, The Undercover Economist, on 'Why Poor Countries are Poor.' His answer is stated in a more measured and eloquent fashion, but the basic upshot is that poor countries are poor because political leaders in these countries follow economically stupid and corrupt policies which provide perverse incentives and distorted information and as a result rob their citizens of the chance for a better life. Given the stakes, this is a crime of drastic proportions against humanity, and perhaps one of the best reasons why the young and idealistic among our students must study economics seriously and correct the fallacies that exist among their peers with regard to markets, globalization and the plight of the poorest of the poor."

Monday, March 13, 2006

The 51st American State

I recently discovered an excellent blog by Michael Totten. He has been blogging from Northern Iraq, and he has been including great photos in his essays as well. Here is something from his most recent post:
What was the hardest time this village has seen?

“When the Iran/Iraq war was here,” he said. “That was the worst time. Before the war there were 800 families. Most were displaced. Mine was one of them. The Iraqi army didn’t allow us to enter the village. We had to sneak in through the orchards.”

What are you most afraid of right now?

“Islamists,” he said bluntly without a moment’s hesitation.

Did Ansar Al Islam occupy this village?

“Yes,” he said. “We didn’t want them to stay but they forced themselves on us. They were not as strong here as they were in Biara, but they were still able to impose their rules on us.”

Who belonged to Ansar Al Islam? Were they from around here?

“Indians, Kurds, Arabs, and Persians. The Iranian government supported them against us.”

What do you think of the Iranian government?

“It is not a good regime. We do visit people from there, but we don’t do it officially.”

Were you affected by the Kurdish civil war? (The PUK and the KDP fought a stupid low-level conflict in the mid 1990s.)

“No,” he said. “We were like one family. We did not allow that war to come here.”

Should Iraqi Kurdistan declare independence from Baghdad?

“We are a different people. We have our own history and culture. We will join with the Iranian Kurds, Inshallah.”

A young man who spoke perfect English pushed his way through the crowd that had gathered around. He wanted to make sure he had a chance to speak to me. He crouched down so he could look me in the eye while I sat.

What do you think? I asked him. Should Iraqi Kurdistan declare independence?

“If the West stands with us, we want independence for all the Kurds in the world. We are one people. Kurds in Turkey, Syria, and Iran, are exactly like us.”

I wanted to know: What’s the one best thing the West can do for the Kurds? He told me the same old answer that has been bouncing around in this part of the world for decades:

“We want Kurdistan to be the 51st American state.”

Friday, March 10, 2006

Wealth Inequality

Don Boudreaux writes on inequality:
"(By the way, I put “distribution” in quotation marks because, as David Henderson once reminded me, income and wealth in market economies aren’t “distributed” in any meaningful sense of that term; income and wealth are created and initially owned by those who create it. Wealth isn’t created and then distributed. The pattern of wealth's possession is determined by the process of its creation. Therefore, what we call “redistribution” of wealth is really distribution of goods confiscated mostly from their creators.)"
This is a very interesting point, and one I've pointed to before. Income and wealth are not distributed. When we speak as though it makes sense to say wealth and income are distributed, we can easily develop analysis that makes little real sense. Income and wealth "distribution" is what it is because of the choices of everyone in the economy. If such a "distribution" is to be something other than it is, then force and coercion are going to have to be used against the voluntary choices that result in the "distribution."

Here is another interesting observation:
"But within any industrial society – especially a dynamic, entrepreneurial one – a good case can be made that the greatest inequality is that which separates one generation from the next. The “distribution” of material resources consistently favors younger generations. I’m materially better off than my parents, who are materially better off than were their parents, who were materially better off than were their parents. This pattern probably holds true for about the past 200 years.

[ . . . . ]

Does this intergenerational inequality matter? Not to me. I neither fret about it nor believe it to be the consequence of any ethical breach or failure of the economy. I feel no guilt or shame for being wealthier than my parents, and I feel nothing but delight knowing that my son, over the course of his life, will almost surely be wealthier than I’ve been over the course of my life.

Americans born in 2000 generally will enjoy greater wealth over their lifetimes than will Americans born in 1960. The greater good fortune of this younger generation has nothing to do with greater merit of the younger generation. They’re simply luckier than their parents. So, does this luck differential justify “redistribution” from our kids to us?

Some such “redistribution” does take place today – largely in the form of Social Security transfers and as a consequence of government deficit spending. But even with this “redistribution,” future generations will likely be wealthier than we are for no reason other than the fact that they’re younger than us and the economy in which they will spend their lives will feature a deeper division of labor and more technological knowledge than now exists.

Now I suspect that very few people get hot’n’bothered by the unequal “distribution” of wealth across generations. If my suspicion is correct, then it’s likely true that the reason many more people are bothered by unequal “distribution” across persons at each point in time is due not to philosophical considerations of the sort offered by John Rawls but, instead, because … because…. why, exactly? The answer (to me, at least) isn’t obvious."
One of the ideas I note here is that Don Boudreaux delights in the idea that his son will experience greater wealth than he has. I join him in that delight. I venture to bet that he even delights in believing all those who come after him can be expected to experience greater wealth than he has. He asks why there are people who are bothered by unequal "distribution" today, but suggests the answer is not obvious. Could envy be something we should explore as at least some part of an answer to his question?

Thursday, March 09, 2006

Trust the Customer!

Vernon Smith explains the simple economic reasons for the "problems of rising health care costs":
"Here is a bare-bones way to think about this situation: A is the customer, B is the service provider. B informs A what A should buy from B, and a third entity, C, pays for it from a common pool of funds. Stated this way, the problem has no known economic solution because there is no equilibrium. There is no automatic balance between willingness to pay by the consumer and willingness to accept by the producer that constrains and limits the choices of each.

In the U.S., you go to see your physician, who says you need to buy X from her. You pay a part of the price, and, if you are employed, your health-insurance company reimburses the physician for the remainder. Next year all rates in the insured pool have to be increased to pay for the rising cost. In most foreign countries you wait in line for the provision of the service (surgery, an MRI scanner, etc., if they are even available), and after the service is delivered, the government reimburses the provider. Next year the government increases taxes on the pool of taxpayers."

Iowa Rain Forest Project

Michael Judge tells the story of Senator Grassley's earmark for a rain forest in Iowa. It is truly a very interesting story. One key part of the story is that a nonprofit organization is involved, and apparently outside of obtaining money and the promise of earmarked money from the federal government, no private money has yet been raised for the project.

I once again have to ask why anyone should think Congress has the constitutional power to pay for environmental education, much less for a rain forest in Iowa. Specifically, which enumerated power do such things fall under?

Tuesday, March 07, 2006


Shannon Love:
"Economically, every society needs children.

Children are the producers of the future This means that children are in a sense a necessary economic good. A society that does not produce enough children, or that cannot produce enough children who grow into economically productive adults, is doomed to poverty. Every long-term investment we make, whether in the private or public sector, is predicated on the idea that there will be a future generation which will actually produce a return. It doesn't matter what economic or political system rules the present, it will need children to secure its future. Even the most self-centered individual would eventual realize that if the next generation cannot produce, his own welfare will suffer.

So, collectively we all need children and benefit when they grow into productive adults, but the cost of raising children is increasingly being borne by fewer and fewer in the general population.

Childless adults are rapidly becoming economic free riders on the backs of parents."
What does this sound like to you? Does this mean we should think there is a role for government in correcting a market failure with respect to children due to free rider behavior? What sorts of public policy might be consistent with economic efficiency to correct such an asserted market failure?

Or, perhaps, the reasoning offered above should be seen as another example of externality abuse?

Monday, March 06, 2006

The PLAN for New Orleans

In the Washington Post:
"So what is the path to long-term recovery that all of this suggests? It's this: The governor of Louisiana, the mayor of New Orleans, parish presidents and all of their commissions must produce one single, fully fleshed-out, detailed plan. This must not be just another request for billions in federal assistance in the midst of a vague discussion of the tough local issues but a specific plan that addresses those issues head-on, including the footprint question. In other words, a denser New Orleans with a smaller footprint, but also one that can accommodate everyone who wants to return and that can be defended against future hurricanes at significant but manageable expense.

This plan should also detail bold reforms, such as replacing the failed Orleans Parish public school system with a diverse collection of charter schools and replacing the outdated Charity Hospital system with coverage that offers the needy solid preventative and other care through numerous providers.

For its part, the Bush administration must endorse this general path now to encourage bold, courageous Louisiana decisions. And this endorsement must mean that the administration will take the lead in funding a responsible plan once it is produced. The $6.2 billion in federal block grant funds approved in December is a great down payment. But additional federal dollars will be needed to buy out areas that can be converted to natural flood basins and to help rebuild others. This could be done through the Baker bill or a state version of it with federal support."

What's wrong with this picture? Doesn't this sound like a lot of government, and therefore, a lot of "forced" redevelopment of hurricane damaged New Orleans?

Is there any evidence from past experience with such a large planned redevelopment of a city that would suggest whether to expect the effort to work out well?

The Distortions of Economic Nationalism

Arnold Kling:
"If libertarians face an uphill battle in selling the notion that education is an individual responsibility, that is nothing compared to the battle we face in health care. Nearly all discussions of health care policy are framed in the rhetoric of economic nationalism. We spend too much on health care. Our system emphasizes acute care rather than preventive care. We have too many uninsured.

When we hear this litany, we should ask skeptical questions. Who spends too much on health care? If I choose to spend a lot on my health care, how does that hurt anyone else? How is the 'system' stopping me from getting preventive care? Isn't prevention my personal responsibility? Why don't the uninsured buy catastrophic health insurance? Is it because health insurers won't take them, or is it because the individuals don't really want health insurance unless someone else gives it to them?"
This is another illustration of the errors of analysis that result when we think in aggregates. On what normative grounds could someone, other than myself, say that I spend too much on my health care? I suspect there are none.

Now, what does it mean to say "we spend too much on health care?" I suppose it must mean that many people spend too much on their own health care. Yet, how can my analysis possibly come to this conclusion unless I have some normative grounds to judge when another person spends too much on his or her own health care?

Perhaps "we spend too much on health care" because we think there are negative externalities involved in people voluntarily choosing to spend on their own health care? Of course, this is why Arnold Kling suggests no one else is harmed when a person spends more on her own health care. I don't see any negative externalities associated with markets in health care.

It seems to me that collective terms, Arnold Kling's term is economic nationalism, serve to muddy analysis rather than clarify analysis. This may be a good thing if you have a political agenda, but it is not a good thing if you have an interest in the sound analysis of public policy alternatives.

Friday, March 03, 2006

Don't Kelo My House

WSJ commentary ($$):
"The latest blowback comes from South Dakota, whose Governor this month signed a law prohibiting the state from using its power of 'eminent domain' to take private property for private economic development. No exceptions. No loopholes. The bill passed by unanimous vote in the state senate and 67-1 in the house.

Two-thirds of Americans own their own homes, which is perhaps one reason few seem to share the view of the five Justices who ruled that New London, Connecticut, was justified in evicting homeowners so that private developers could put up a hotel and condominiums that would bring in more tax revenue. Some elites on the political left endorsed the ruling. But the overwhelming, immediate reaction on both the grassroots left and right was: How do I keep the government's hands off my house?

It didn't take long for the political response to get rolling. The sponsors of the South Dakota law said they started work the next day. At the time of the Kelo ruling at least nine states already had outlawed the use of eminent domain to evict homeowners for private development. Nearly every other state has since come up with some sort of anti-Kelo effort via legislation, a constitutional amendment or citizen initiative.

In Michigan, the legislature decided not to leave so important an issue to the vagaries of future legislatures and approved an amendment to the state constitution outlawing the taking of private property for private use. The vote was 106-0 in the house and 31-6 in the senate; it goes to the voters in November. Constitutional amendments are also moving forward in Georgia, New Hampshire, Florida, Oklahoma, South Carolina and Alabama." [Feb. 28, 2006]

Wow, 2 legislatures and only 7 no votes. Maybe the states should ask Congress to amend the constitution to say "The Takings Clause really does mean eminent domain only for PUBLIC USE."

India & China

Jagdish Bhagwati commentary in the WSJ ($$):
"Yet the last Indian election created the absurd presumption that the rejection of the ruling BJP was a rejection of economic reforms -- that these reforms had increased poverty and inequality. But the fact is that urban and rural poverty had finally declined. As long as India was mired in policies that produced little growth, the poor had seen few benefits and their numbers had increased, with the consequence that the poor kept voting in the ruling Congress Party because they regarded their poverty fatalistically -- a phenomenon I have called, on these pages, the 'non-revolution of falling expectations.' Once the reforms that the left likes to call 'neoliberal' -- in contrast to their prescriptions which might, in riposte, be called 'neanderthal' -- took root, poverty declined; and the poor, who had improved their incomes, began to ask for more, precipitating a 'revolution of perceived possibilities' (or a 'revolution of rising expectations').

These aspirations had little to do with inequality between rural and urban areas; it was almost entirely self-referential: If I had become less poor, then I believed that I could do even better if I elected a government that promised me more. India's democracy, with its nearly three million NGOs, opposition parties and a functioning judiciary, translated these aroused aspirations into politically effective demand, resulting in the loss of elections by nearly all incumbent state governments.

By contrast, China's greater economic success has led to increased social protests in the rural areas; we hear constantly of 'land grabs' leading to disruptive demonstrations. A concerned Chinese government has translated these protests into the erroneous view that they are primarily the result of rural-urban inequality. But, this explanation is a witless repetition of the mistaken focus on inequality as the prime mover in political reaction. In China's case, it is evident that if a commissar's cronies grab your land, a phenomenon that may reflect also the fact that increased prosperity makes land more valuable to grab, there is no redress because there are hardly any NGOs, no opposition parties, no free press and no independent judiciary. So you turn to the streets. The Chinese rulers cannot face up to the fact that their antidemocratic structures are at the heart of the problem of increasing rural unrest; they cling to the self-serving view that economic inequality is the cause."

Patriot Act: Virtues of Politics

Wall Street Journal commentary ($$):
"So what was all the fuss about anyway? After literally years of acrimonious debate, a bipartisan filibuster, two temporary extensions, and a Presidential election that turned in part on this supposed executive branch power grab, the 16 expiring provisions of the Patriot Act were renewed by the Senate yesterday by a landslide vote of 89-10.

That's nine more Senators than voted against it the first time around, but it hardly qualifies as a strong statement of dissent. Roughly the same law also passed in 2001 with huge bipartisan majorities -- 357-66 in the House and 98-1 in the Senate. In the wake of the 9/11 attacks, most Members of Congress believed that the Patriot Act provided reasonable protection of Americans' civil liberties. Its most important contribution was to tear down the 'wall' separating law enforcement from intelligence gathering.

Wisconsin Democrat Russell Feingold, the only Senator to vote against the Patriot Act in 2001, called the changes to the bill that passed yesterday cosmetic, and he's right. Section 215, the famous 'library provision,' is still there, though businesses that have their records inspected can now challenge the gag order in court after one year (and the FBI director or Attorney General can still halt disclosure). GOP Senator John Sununu of New Hampshire is advertising this as a great civil-liberties victory. Whatever."

Watch what they do, not what they say, eh?

Wednesday, March 01, 2006

At War with Ourselves

Victor Davis Hanson is perplexed that we seem to be at war with ourselves. I think his commentary today at is worth reading. I'll point to a couple of his paragraphs.
"The second-guessing of 2003 still daily obsesses us: We should have had better intelligence; we could have kept the Iraqi military intact; we would have been better off deploying more troops. Had our forefathers embraced such a suicidal and reactionary wartime mentality, Americans would have still torn each other apart over Valley Forge years later on the eve of Yorktown--or refought Pearl Harbor even as they steamed out to Okinawa."
I often find myself wanting to be a Monday morning quarterback. Even when considering the Broncos on Monday mornings, I hope to keep in mind that I wasn't responsible for the play calling, and while I have years of experience as a fan, I've never once been responsible for devising a game plan to defeat an opposing NFL team. I have far less real experience than the players and the coaches, and I have far less information about the opponent and about what is really happening during the game. When it comes to war, I hope to keep in mind not only these same observations, but also that the limited information I find presented by the news and the media is filtered through the eyes of others, is subject to political bias, and is never developed by another person with a complete view of the reality. Further, war must be an inherently complex dynamic process that is inherently unpredictable. So to must be the process of seeing a good system of political economy emerge out of years and years of brutal oppression. Perhaps the Monday morning war quarterbacks could choose to adopt critical perspectives with more humility? Or, perhaps perspectives less politically partisan?

"There is a more disturbing element to these self-serving, always evolving pronouncements of the 'my perfect war, but your disastrous peace' syndrome. Conservatives who insisted that we needed more initial troops are often the same ones who now decry that too much money has been spent in Iraq. Liberals who chant 'no blood for oil' lament that we unnecessarily ratcheted up the global price of petroleum. Progressives who charge that we are imperialists also indict us for being naively idealistic in thinking democracy could take root in post-Baathist Iraq and providing aid of a magnitude not seen since the Marshall Plan. For many, Iraq is no longer a war whose prognosis is to be judged empirically. It has instead transmogrified into a powerful symbol that apparently must serve deeply held, but preconceived, beliefs--the deceptions of Mr. Bush, the folly of a neoconservative cabal, the necessary comeuppance of the American imperium, or the greed of an oil-hungry U.S."

The inconsistencies are striking, and VDH presents the inconsistencies well. Is our thought and analysis really so inconsistent? Or do the inconsistencies reveal the shameless politics of so many of our elected leaders? It is difficult for me to reach a different conclusion. It is also difficult to avoid the conclusion that a large part of the press and media in our country are less professional and more biased in the work they offer up for our review every day. Or, perhaps there is an alternative conclusion? Which is that many in the press and the media are not competent to recognize the inconsistencies. Or, perhaps, I'm missing something?