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InsiderOnline Blog: November 2009

Apologies Have Not Quelled Anti-American Attitudes

Obama’s policy of American penance has not softened anti-American attitudes in the Middle East, writes Fouad Ajami, citing the 2009 Pew Global Attitudes Survey:

In the Palestinian territories, 15% have a favorable view of the U.S. while 82% have an unfavorable view. The Obama speech in Ankara didn’t seem to help in Turkey, where the favorables are 14% and those unreconciled, 69%. In Egypt, a country that’s reaped nearly 40 years of American aid, things stayed roughly the same: 27% have a favorable view of the U.S. while 70% do not. In Pakistan, a place of great consequence for American power, our standing has deteriorated: The unfavorables rose from 63% in 2008 to 68% this year.

Posted on 11/30/09 03:30 PM by Alex Adrianson

Who Do You Think Deserves a Milton Friedman Prize for Advancing Liberty?

The Cato Institute is looking for nominations for its next Milton Friedman Prize. Past winners of the award, given every two years, are Venezuelan activist Yon Goicoechea, who helped organize the opposition to Hugo Chavez’s attempts to create a totalitarian state; former Estonian Prime Minister Mart Laar, whose deep cuts in government helped Estonia achieve prosperity; Peruvian economist Hernando de Soto, whose work demonstrated the importance of property rights for the poor; and economist Peter Bauer whose writings helped undermine the idea that third world countries need central planning in order to achieve economic growth.

Posted on 11/25/09 10:14 AM by Alex Adrianson

Worth Checking Out: A Book on Innovation and an Innovative Book

From Poverty to Prosperity: Intangible Assets, Hidden Liabilities and the Lasting Triumph Over Scarcity by Nick Schulz and Arnold Kling describes how economics has been transformed over the past few decades to better account for the “positive forces of creativity, innovation, and advancing technology that propel economies forward.”

William Schambra will discuss the quest for community and the conservative alternative to the liberal vision of a “centralized national state as the source of community-mindedness for Americans” at the American Enterprise Institute’s December Bradley Lecture, December 8, 5:30 p.m. 7:00 p.m. 

• John Miller’s new novel The First Assassin is, says bestselling author Vince Flynn, “like The Day of the Jackal set in 1861 Washington.” It’s also a great example of how sharp a self-published book can look these days.

Tea Party: The Documentary Film follows the struggles of five grassroots individuals and their transformation from home town rally goers and rally organizers to national activists. In the process, the film reveals the source of this nationwide surge of civic engagement: a return to and respect for a constitutionally limited government, personal responsibility and fiscal restraint at the federal level. The film will be premiered at a black-tie event on December 2 at the Ronald Reagan Building and International Trade Center. And preceding the screening, Freedomworks host a panel discussion with Sen. Jim DeMint and other conservative leaders on the political implications of the Tea Party movement.

Posted on 11/25/09 10:11 AM by Alex Adrianson

Global Warming Scientists Behaving Badly

A number of important climate scientists have been cast in a very negative light by the release last week of 160 megabytes of worth of e-mails. The e-mails, posted anonymously on a Russian Web site, appear to show the scientists discussing how to hide data that do not confirm their view that global warming is a serious and continuing problem. The e-mails, confirmed as genuine by the authors, come from the Climate Research Unit at the University of East Anglia in England, which has worked closely with the United Nations Intergovernmental Panel on Climate Change.

One exchange shows Professor Phil Jones, the head of the Climate Research Unit, saying: “I’ve just completed Mike’s Nature trick of adding in the real temps to each series for the last 20 years (i.e., from 1981 onwards) and from 1961 for Keith’s to hide the decline.” The scientists involved have attempted to explain away the e-mails by claiming that they have been taken out of context. While the word “trick” might refer simply to a solution to a problem, it is hard to see why a scientist would want to “hide the decline” unless he is cooking the books.

The e-mails also show scientists discussing how to truncate a data series in order to hide a cooling trend, instructing other researchers not to disseminate results that would help critics of global warming make their case, suggesting a boycott of certain journals that publish papers by global warming skeptics, and discussing whether it would be a good idea to delete their e-mails.

See John Lott’s column at Fox News for a more detailed rundown of what is in the e-mails. The e-mails can be viewed at www.eastangliaemails.com.

Posted on 11/25/09 08:55 AM by Alex Adrianson

What Government Promises Are Worth

Cost overruns on capital projects cost British taxpayers £19 billion in 2007, or about £750 per household, according to the British Taxpayer’s Alliance. The average cost overrun for government projects was 38 percent, and that includes not just the projects that were over budget but also those that were under budget, too. So for every £1 that the politicians said a project would cost, the taxpayers actually had to pay £1.38.

One finding of the alliance’s report might have special pertinence for U.S. policymakers who are crafting a health care overhaul that they say will save money with greater use of health care information technology. According to the report, the National Health Service National Programme for IT has the largest cost overrun of any capital project. The program is £10.4 billion, or 450 percent, over budget.

Posted on 11/24/09 08:20 PM by Alex Adrianson

Medicare v. Preventive Medicine

“Nearly 50,000 adults die each year in the U.S. from one of the 10 vaccine preventable diseases identified by the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention,” notes a new report from the American Council on Science and Health. The costs to society from influenza alone, reports ACSH, top $87 billion per year.   

So why aren’t more people getting vaccinated? The reasons are several, and one of them appears to be insufficient reimbursement provided by government health care programs. The ACSH report notes:

[E]ven though upwards of 90% of Medicaid plans provide coverage of the recommended adult vaccines, physician reimbursements vary widely between the states, ranging from $2 to $18 per dose. Consequently, compensation often falls short of the total cost of the vaccine, plus back-office expenses (e.g., ordering, storage, record keeping, and administration). For seniors, although Medicare part B or D covers the recommended vaccines (influenza, hepatitis A and B, shingles, and pneumoccocus) for adults at 65 years and above, payments fail to meet the administrative costs of delivery. Medicare also does not pay for establishing or maintaining inventories, and physicians must purchase vaccines in advance.

Some private insurers also do not cover vaccinations, but private insurance is not a defacto system of price controls. Private patients can pay for non-covered services out of their own pocket. On the other hand, senior citizens who want to pay for services outside of Medicare must jump through a variety of bureaucratic hoops first. Making it hard for seniors to pay on their own helps the government maintain its bargaining power over doctors.

Expanding that system so that it applies to many more health care consumers is largely the point of the health care overhaul being crafted in Congress right now. Cramming down costs might sound like a good idea—until you can’t get the service you want.

Posted on 11/24/09 05:24 PM by Alex Adrianson

Heck, Why Not Raise the Gas Tax, Too?

Taxes would eat up more than half of top income earners paychecks if two proposed tax increases were to become law: President Obama’s proposed increase in the top federal rate from 35 percent to 39.6 percent, and a 5.4 percent surtax on incomes over $500,000 per year which is contained in the House health care bill. When combined with state and local income taxes, notes Heritage Foundation tax analyst Curtis Dubay, these increases would push the average top marginal income tax rate to over 52 percent, a higher rate than countries such Italy, Spain, and France impose.

Dubay has counted 29 different tax increases that have been proposed by either the Senate or the House of Representatives or the Obama administration to pay for a health care overhaul. They include an excise tax on medical devices such as wheelchairs, breast pumps, and syringes used by diabetics for insulin injections; an excise tax on sugar-sweetened beverages including non-diet soda and sports drinks; higher taxes on alcoholic beverages including beer, wine, and spirits; a 5 percent tax on cosmetic surgery and similar procedures such as Botox treatments, tummy tucks, and face lifts; and a tax on drug companies. For the full list of tax increases proposed, see Dubay’s paper, “Taxes Proposed to Pay for Health Care Reform,” published by The Heritage Foundation, November 20, 2009.

Most notably, however, the Senate is considering increasing the Medicare portion of the payroll tax from 2.9 percent to 3.4 percent. Medicare payroll taxes have traditionally been dedicated to funding Medicare. As Dubay observes, using a portion of them to pay for an entirely new entitlement program makes about as much sense as paying for it with an increase in the gas tax.

Posted on 11/23/09 06:34 PM by Alex Adrianson

What About Innovation?

Cramming down health care costs with government purchasing power (i.e., “the public option”) might seem like a good idea, since many other countries appear to spend on health care only about half per capita what the United States spends without significant detriment to the health of their people. (See, for instance, Ezra Klein.) But, according to Glen Whitman and Raymond Raad, that argument overlooks the fact that the United States contributes significantly to the health and well being of patients in those other countries. More medical innovation, note Whitman and Raad, comes out of the United States than any other country and in some areas the U.S. output of medical innovation exceeds the rest of the world combined. One likely reason for this disparity is that higher levels of reimbursement for health care give researchers an incentive to do their work in the United States. While the United States might benefit first from those innovations, they quickly spread and benefit other countries as well.

Whitman and Raad, in a paper for the Cato Institute, tally up some pretty impressive indicators of the U.S. performance in medical innovation. Consider: In the past 40 years, U.S. researchers have received 57 Nobel Prizes in Medicine and Physiology, while those in the rest of the world have received only 42 (these totals double-count two Nobel winners listed as from both the U.S. and another country). Twenty out of the top 27 medical innovations since 1975, as identified by a survey of 225 leading primary care physicians, were advanced by work done in the United States; only 14 of those innovations were advanced by work done in Europe, which has a combined population 50 percent larger than the United States. Of the top 10 of those innovations, work done in the United States contributed to nine of them, while work in Europe contributed to five.

The very liberal former Clinton Secretary of Labor Robert Reich warned in 2007 that “us[ing] the bargaining leverage of the federal government in terms of Medicare, Medicaid … to force drug companies and insurance companies and medical suppliers to reduce their costs … means less innovation, and that means less new products and less new drugs on the market, which means you are probably not going to live that much longer than your parents.”

Posted on 11/20/09 01:17 PM by Alex Adrianson

The Other Unemployment Rate

The real unemployment rate is 17.5 percent. That’s the so-called U-6 rate, which counts not only those who are out of work and seeking a job, but also those who’ve given up looking for work as well as part-time workers who are looking for full-time jobs. That figure is now the highest it has been since 1994, when it became an official labor statistic.

Unemployment, at 10.2 percent, is the highest it’s been since 1983, a sorry result considering the Obama administration promised that its stimulus plan would hold that figure below 8 percent. Yahoo Finance reports that if the method of calculating the broadest measure of unemployment had not been changed, today’s U-6 rate would fall just below the all-time peak achieved in 1982.

Posted on 11/20/09 10:36 AM by Alex Adrianson

Independence Institute Turns 25

Congratulations to the Independence Institute, which this week celebrates 25 years of promoting liberty and limited government in Colorado. Last week, the Denver alternative weekly Westword mercilessly lampooned the Independence Institute with a two-page cartoon spread. Surely, getting under the skin of the liberal media is a sign that you are doing something right.

Posted on 11/20/09 09:55 AM by Alex Adrianson

Worth Checking Out: A Constitution Reference for Everyone; a Stimulus-Tracking Site for Anyone

The Citizen’s Constitution: An Annotated Guide is the reference work on the Constitution that non-lawyers have been waiting for. At a length of exactly one volume, it’s the perfect size to keep handy for those extemporaneous constitutional colloquiums that so often come up out by the back fence. Seth Lipsky, former editor of the New York Sun, draws on the Founder’s writings, case law, and current events to provide over 300 annotations that illuminate the meaning of the original text of the Constitution. Lipsky describes the book: “Experience is reported and ruled upon in the opinions of the high court. These form the Himalayas of legal precedent in whose foothills we hoe the vines of liberty. This volume leavens these weighty references with a career’s worth of reading and reporting the news at home and abroad—a marbling of the constitutional cake, so to speak, with a newspaperman’s batter.”

Encounter Broadsides is a new series of pamphlets that takes a page from Thomas Paine. Designed to be read in one sitting, these short little books are a good source of intellectual ammunition for defending liberty and democratic capitalism against the resurgence of collectivist sentiment. Published by Encounter Books, the series so far numbers four pamphlets: Why Obama’s Government Takeover of Health Care Will Be a Disaster by David Gratzer, How the Obama Administration Threatens to Undermine Our Elections by John Fund, Obama’s Betrayal of Israel by Michael Ledeen, and How Barack Obama Is Bankrupting the U.S. Economy by Stephen Moore.

StimulusWatch.org has now been updated with the latest data on where and how stimulus money is being spent. The Web site combines a searchable database of stimulus projects with social media tools that let users give feedback on the projects. The first iteration of the Web site provided data on projects proposed by the U.S. Conference of Mayors. The updated data comes straight from the government’s Web site, Recovery.gov. StimulusWatch will update its information quarterly as Recovery.org gets updated. Readers may already be aware that a number of problems have surfaced with the data being reported by Recovery.gov. Jerry Brito, creator of StimulusWatch.org, tells us he’s hoping that visitors who spot such errors will note them in the wiki section that StimulusWatch provides for each project.

• Scholarships for online courses in free market economics and the philosophical foundation of capitalism are available from National University. The courses can be taken anywhere in the world, as long as the student has access to the Internet. To apply for one or more of these scholarships, send your name, official transcripts showing your cumulative GPA from your high school or university, and an essay of no more than 750 words discussing why you believe you deserve a scholarship and your future education and career plans to Dr. Brian P. Simpson at bsimpson@nu.edu or 11255 North Torrey Pines Rd.; La Jolla, CA 92037.  Please indicate the course or courses for which you are applying for a scholarship.  Note that to receive the scholarship you will have to apply to National University and enroll in the course(s). Links to course descriptions: Market Process Economics I,  Market Process Economics II, and  Economics and Philosophy.

• Hillsdale College President Larry Arnn will discuss “Self-Government or Czarist Bureaucracy?” at Hillsdale College’s next First Principles on First Friday event, December 4. The event begins at 7:30 a.m. at The Heritage Foundation. Arnn will argue that reviving liberty requires a return to the belief that government is “subservient to the laws of nature and of nature’s god.”

Posted on 11/19/09 06:10 PM by Alex Adrianson

Meese: Criminal Trials Inappropriate for Terrorists

Heritage Foundation fellow and former Attorney General Ed Meese III on the decision by current Attorney General Eric Holder to put 9/11 mastermind Khalid Sheik Mohammed and five other terrorists on trial in civilian court in New York City:

It is clear that foreign terrorists and terrorist groups have committed acts of war against the United States, and that our national security requires that we respond accordingly. This means that President Bush’s prudent actions and the military response which he led should continue as our answer to these attacks.

Congress overwhelmingly reaffirmed their commitment to military commissions in 2006, which have historically been the way that we respond to acts of war. To abandon our two centuries of tradition and to substitute some new civilian procedure as a response to such attacks endangers the security of our country and our national interest.

It was a tragic mistake to decide to abandon the prison facility at Guantanamo Bay, which was designed physically and legally to handle these types of cases. It is a further tragic mistake to now bring the detained war combatants into the United States and to employ civilian criminal procedures which were never intended for this type of situation.

The U.S. Constitution protects American citizens and visitors from the moment they are suspected of criminal wrongdoing through a potential trial. These same protections are not, have never, and should not be granted to enemy combatants in war, since it is clear that regardless of the outcome of the trial, these detainees will likely remain in the custody of the United States.

Posted on 11/19/09 12:25 PM by Alex Adrianson

We Still Hold These Truths Is #2 Washington Post Bestseller

Congratulations to our Heritage colleague Matthew Spalding, whose book We Still Hold These Truths: Rediscovering Our Principles, Reclaiming Our Future is number two in nonfiction on the Washington Post’s bestseller list this week. Spalding’s book is essential reading for anyone who wants to understand how progressive ideas have taken America off course.

Posted on 11/18/09 12:14 PM by Alex Adrianson

440 Phantom Congressional Districts Get $6.4 Billion According to Recovery.gov

The government’s Web site that is supposed to tell taxpayers how their stimulus dollars are being spent, and which spends $84 million per year to do so, shows that $6.4 billion of the stimulus has been spent in 440 congressional districts that don’t exist, according to a report by the Franklin Center, as reported by Watchdog.org.

The site, Recovery.gov, reports, for instance, that North Dakota’s 99th Congressional District has received $2 million in stimulus funding. But North Dakota has only one congressional district. The nation’s capital now contains 35 congressional districts, according to Recovery.gov.

For those keeping score at home, there are really only 435 congressional districts, so adding 440 new ones effectively doubles the size of the House of Representatives. By the way, Recovery.gov also reports that the $6.4 billion spent in those districts has created 30,000 jobs, which works out to almost $225,000 per job created. Various news reports, however, show that many of the estimates of “jobs created or saved” are bogus, so that number, too is in doubt. (See the Washington Examiner’s map and chart tracking jobs created claims.)

Posted on 11/17/09 10:39 AM by Alex Adrianson

Washington Examiner: At Least 10 Percent of Jobs Saved or Created Are Bogus

President Obama’s claim that the stimulus bill has “saved or created” 640,000 jobs is inflated by at least 75,000 jobs, according to the Washington Examiner’s compilation of news reports. The count, however, is a work in progress, so the real number of bogus jobs “saved or created” could be higher!

To see where the inflated claims are, check out the map and the chart that the Examiner has created to track them.

Posted on 11/16/09 06:00 PM by Alex Adrianson

Look to Tbilisi for a Constitution of Liberty

Lovers of liberty will find much to like in the proposed new Georgian constitution. The “Draft Liberty Act” caps government spending at 30 percent of gross domestic product, caps the public debt at 60 percent of GDP, and requires a national referendum on any new taxes. The proposal also enshrines economic liberty into the constitution by banning price controls of any kind (including controls on interest rates), banning government ownership of banks or other financial institutions, banning restrictions on currency convertibility and capital movement, and capping the growth in licensing and permitting requirements. The act also promotes the voucherization of assistance programs, so that aid funding is controlled by the beneficiaries rather than by social service bureaucracies.

Posted on 11/16/09 12:22 PM by Alex Adrianson

Stimulus Prevents Change in Education

“Primary- and secondary-school enrollments,” observe Chester Finn and Frederick Hess, “have risen by about 10 percent since 1970, but the teacher rolls grew by 61 percent during the same period — an addition of some 1.4 million instructional personnel.” They continue: “The higher-education picture is similar though less egregious, with enrollments up 64 percent since the mid-1970s while campus employment doubled.”

In other words, the education sector was largely a jobs program long before the stimulus bill bestowed another $68 billion on state education bureaucracies this year. Has education improved since the 1970s? Indeed, as Finn and Hess note, not giving states the resources to supplement their education budgets might have been helpful:

Such close analysts as Stanford economist Eric Hanushek estimate that substantial gains in pupil achievement would follow from (permanently) ridding K–12 education of the weakest 10 percent of today’s teachers — even if that means adding a few pupils to the classrooms of those who remain.

Posted on 11/13/09 11:31 AM by Alex Adrianson

Worth Checking Out: What a Canadian Thinks about Health Care, Spread the Word on Energy Taxes

Brian Lee Crowley will discuss what the United States should learn from Canada about government control of health care. Crowley, founder of the new Macdonald-Laurier Institute in Ottawa, will be joined by Grace-Marie Turner of the Galen Institute and Tevi Troy of the Hudson Institute. The event is 4 p.m. – 5:30 p.m. on Monday, November 16 at the Hudson Institute.

Reappraising the Right: The Past and Future of American Conservatism by George H. Nash “provides a bracing perspective on conservatism’s present predicament by reexamining the roots and achievements of the contemporary American Right.”

Reflections on the fall of the Berlin Wall (20 years ago this week) and related archives are available at the Web site of the Ronald Reagan Presidential Foundation and Library.

Mad About Trade: Why Main Street America Should Embrace Globalization by Cato scholar Dan Griswold shows how special interests are using trade policy to rip off the poor and middle class.

NoEnergyTax.com provides an interactive way for users to spread the word about the energy taxes in Congress’s proposed “cap and trade” global warming plan.

Posted on 11/13/09 11:01 AM by Alex Adrianson

Excellence in Promoting Liberty

This past Monday, the Atlas Economic Research Foundation recognized the winners of its Templeton Freedom Awards, given every year to think tanks that demonstrate excellence in promoting liberty. This year’s winners include India’s Centre for Civil Society for its School Choice Campaign; Georgia’s New Economic School for its work promoting pro-growth economic policies; South Africa’s Free Market Foundation for its book Jobs for the Jobless, which shows how job security regulations have led to massive unemployment; and Brazil’s Instituto Millenium for achievement by a Young Institute. For a complete list of the award winners, visit the Atlas Foundation’s Templeton Awards Web page.

Posted on 11/13/09 09:49 AM by Alex Adrianson

Slow Learners

“A recent study by the U.S. Commission on Civil Rights,” observes Thomas Sowell, “showed that, after the housing boom and bust, blacks, whites, Hispanics, Asian Americans, and American Indians all reduced their subprime-mortgage loans. Only politicians seem not to have learned anything from the economic disaster, and to persist in the reckless policies that brought it on.” [Link added to quoted materiel.]

Posted on 11/12/09 05:57 PM by Alex Adrianson

Kelo Comes a Cropper for New London

New London’s use of eminent domain for economic development has been a bust for a while, but things became even more embarrassing for the city in southeast Connecticut when Pfizer announced on Monday that it was leaving its New London facility. The move is a cost-saving measure following the company’s merger with Wyeth.

Nearly a decade ago, the city began using eminent domain to obtain properties in its Fort Trumbull neighborhood. Pfizer wanted the area redeveloped before it would commit to putting a massive new research and development plant nearby. Some residents didn’t want to move and they sued the city, arguing that the city was in effect taking property from one private party in order to give it to another, something which the Fifth Amendment does not allow. The Supreme Court gave the city a win in its infamous Kelo v. New London decision, but the city could never find a developer to put up the high-rise hotel or luxury condominium originally envisioned. And now it doesn’t even have Pfizer, though it does have an empty building that Pfizer will either rent or sell.

If New London had just left Susette Kelo and her neighbors alone, it would still have property-taxpaying citizens living in perfectly good houses where there is now only weeds and rubble.  

Posted on 11/12/09 05:36 PM by Alex Adrianson

Conditioned by Third-Party Payment

The health care entitlement mentality, as noted in Steven Malanga’s latest column:

For years Dr. Linda Halderman operated a general surgery practice in California’s San Joaquin Valley, where she treated patients ranging from those with serious, life-threatening conditions to those seeking elective, cosmetic treatments. In a recent piece in Investors Business Daily, Halderman recounted the story of a woman patient who had not had a mammogram in several years even though her family had a long history of breast cancer. “But I don’t have insurance,” the woman told Halderman when the doctor asked why she had neglected to get a test that costs $90. Yet the woman was in Halderman’s office for $400 Botox treatments that she was paying for.

In her piece Halderman recounted stories of patients who were enrolled in Medi-Cal, the state subsidized health plan for the poor in California, but paid upwards of $1,000 in cash out of their own pockets for laser hair removal procedures, and patients who sat in her waiting room entertaining themselves with expensive IPods and mini-DVD players yet balked at $5 insurance co-pays. She described patients who “considered health care a lower budget priority than decorated skin and expensive toys.” Other doctors who commented on her piece online told similar stories.

Expanding health care entitlements, as the majority on Capitol Hill proposes to do, surely won’t help this distortion of personal behavior.

Posted on 11/12/09 03:24 PM by Alex Adrianson

Is ObamaCare Really Fiscally Responsible?

Dan Mitchell: You can take it to the bank that government-run health care is a red-ink train wreck.

Posted on 11/10/09 09:24 AM by Alex Adrianson

Scenes from the Berlin Wall

The Berlin Wall and the people who jumped over it, tunneled under it, got shot trying to dash to other side, protested it, and ultimately—20 years ago today—tore it down are the subject of this inspiring montage produced by the Competitive Enterprise Institute:

Posted on 11/09/09 04:36 PM by Alex Adrianson

Twenty Years Ago Today: How the Berlin Wall Fell, What It Meant

To remember one of most important events in the history of human freedom, here are a few excerpts from the history books.

From Timothy Garton Ash’s The Magic Lantern: The Revolution of 1989 Witnessed in Warsaw, Budapest, Berlin, and Prague:

Since the late summer, the regular Monday evening ‘prayers for peace’ in Leipzig’s Church of St Nicholas had been followed by small demonstrations on the adjacent Karl-Marx-Platz. At the outset, most of the demonstrators were people who wanted to emigrate. But on 25 September there were between 5,000 and 8,000 people, with the would-be emigrants now in a minority, and on 2 October, as the emigration crisis deepened, there were perhaps 15,000 to 20,000the largest spontaneous demonstration in East Germany since the uprising of 17 June 1953. They sung the Internationale and demanded the legalization of the recently founded ‘citizens’ initiative’, New Forum. The police were baffled, and in places peacefully overwhelmed.

On Monday, 9 October, however, following the violent repressions during the fortieth anniversary celebrations two days earlier, riot police, army units, and factory ‘combat groups’ stood ready to clear the Karl-Marx-Platz, East Germany’s Tiananmen Square. An article in the local paper by the commander of one of these ‘combat groups’ said they were prepared to defend socialism ‘if need be, with weapon in hand.’ But in the event some 70,000 people came out to make their peaceful protest, and this time force was not used to disperse them. … It was claimed, by sources closest to the Politburo member responsible for internal security, Egon Krenz, that he, being in overall political control of internal security, had taken the brave, Gorbachevian decision not to use force. It was even claimed that he had personally gone to Leipzig to prevent bloodshed.

Subsequent accounts by those actually involved in Leipzig gave a quite different picture. By these accounts, the crucial action was taken by the famous Leipzig conductor, Kurt Masur, together with the well-known cabaret artist, Bernd-Lutz Lange, and a priest, Peter Zimmermann. They managed to persuade three local Party leaders to join them in a dramatic, last-minute appeal for non-violence, which was read in the churches, broadcast over loudspeakers—and relayed to the police by the acting Party chief in Leipzig. This made the difference between triumph and disaster. It was, it seems, only later in the evening that Krenz telephoned to ask what was happening. The moment was, none the less, decisive for Krenz’s bid for power. Nine days later he replaced Honecker as Party leader. But in those nine days the revolution had begun.

To say the growth of popular protest was exponential would be an understatement. It was a non-violent explosion. Those extraordinary, peaceful, determined Monday evening demonstrations in Leipzig—always starting with ‘peace prayers’ in the churches—grew week-by-week, from 70,000 to double that, to 300,000, to perhaps half a million. The whole of East Germany suddenly went into labour, an old world—to recall Marx’s image—pregnant with the new. From that time forward the people acted and the Party reacted. ‘Freedom!’ demanded the Leipzig demonstrators, and Krenz announced a new travel law. ‘Free travel!’ said the crowds, and Krenz reopened the frontier to Hugary. ‘A suggestion for May Day: let the leadership parade past the people,’ said a banner, quoted by the writer Christa Wolf in the massive, peaceful demonstration in East Berlin on 4 November. And more leaders stepped down. ‘Free elections!’ demanded the people, and the Council of Ministers resigned en masse. ‘We are the people!’ they chanted, and the party leadership opened the Wall.

The cup of bitterness was already full to the brim. The years of Wall Sickness, the lies, the stagnation, the Soviet and Hungarian examples, the rigged elections, the police violence—all added their dose. The instant that repression was lifted, the cup flowed over. And then, with amazing speed, the East Germans discovered what the Poles had discovered ten years earlier, during the Pope’s visit in 1979. They discovered their solidarity. ‘Long live the October Revolution of 1989’ proclaimed another banner on the Alexanderplatz. And so it was: the first peaceful revolution in German history.

From John Lewis Gaddis’s The Cold War: A New History:

What [Party Chairman Egon] Krenz did not expect was that one of his own subordinates, by botching a press conference, would breach the wall. After returning from Moscow Krenz consulted his colleagues, and on November 9th they decided to try to relieve the mounting tension in East Germany by relaxing—not eliminating—the rules restricting travel to the West. The hastily drafted decree was handed to Gunter Schabowski, a Politburo member who had not been at the meeting but was about to brief the press. Schabowski glanced at it, also hastily, and then announced that citizens of the G.D.R. were free to leave “through any of the border crossings.” The surprised reporters asked when the new rules went into effect. Shuffling through his papers, Schabowski replied: “[A]ccording to my information, immediately.” Were the rules valid for travel to West Berlin? Schabowski frowned, shrugged his shoulders, shuffled some more papers, and then replied: “Permanent exit can take place via all border crossings from the G.D.R. to [West Germany] and West Berlin, respectively.” The next question was: “What is going to happen to the Berlin Wall now?” Schabowski mumbled an incoherent response, and closed the press conference.

Within minutes, the word went out that the wall was open. It was not, but crowds began gathering at the crossing points and the guards had no instructions. Krenz, stuck in a Central Committee meeting, had no idea what was happening, and by the time he found out the crush of people was too large to control. At last the border guards at Bornholmer Strasse took it upon themselves to open the gates, and the ecstatic East Berliners flooded into West Berlin. Soon Germans from both sides were sitting, standing, and even dancing on top of the wall; many brought hammers and chisels to begin knocking it down. …

With the Wall breached, everything was possible. On November 10th, Todor Zhivkov, Bulgaria’s ruler since 1954, announced that he was stepping down; soon the Bulgarian Communist Party was negotiating with the opposition and promising free elections. On November 17th, demonstrations broke out in Prague and quickly spread throughout Czechoslovakia. Within weeks, a coalition government had ousted the communists, and by the end of the year Alexander Dubcek, who had presided over the 1968 “Prague spring,” was installed as chairman of the national assembly, reporting to the new president of Czechoslovakia—Vaclav Havel.

And on December 17th the Romanian dictator Nicolai Ceausescu, desperate to preserve his own regime, ordered his army to follow the Chinese example and shoot down demonstrators in Timisoara. Ninety-seven were killed, but that only fueled the unrest, leading Ceausescu to call a mass rally of what he thought would be loyal supporters in Bucharest on December 21st. They turned out not to be, began jeering him, and before it could be cut off the official television transmission caught his deer-in-the-headlights astonishment as he failed to calm the crowd. Ceausescu and his wife, Elena, fled the city by helicopter but were quickly captured, put on trial, and executed by firing squad on Christmas Day. [Internal citations omitted.]

From Steven Hayward’s The Age of Reagan: The Conservative Counterrevolution, 1980 – 1989:

ABC News reached Ronald Reagan at home in Los Angeles, and he agreed to go on ABC’s Primetime Live, where he appeared to be as astonished as everyone else. … Prompted to revisit his 1982 prediction that Communism was headed to the “ash heap of history,” Reagan ended the interview with the short observation: “People have had time in some 70-odd years since the Communist revolution to see that Communism has had its chance, and it doesn’t work.”

But it was the end of more than a twentieth-century story. Some of the East German protestors in the streets of Leipzig in early November carried banners that read 1789-1989. If the storming of the Bastille in 1789 could be said to have marked the beginning of utopian revolutionary politics, then the storming of the Berlin Wall in 1989 marked its end. As Timothy Garton Ash observed, “Nineteen eighty-nine also caused, throughout the world, a profound crisis of identity on what had been known since the French revolution of 1789 as ‘the left.’” The deep unpopularity of the Communist regimes revealed by the people’s of Eastern Europe in 1989 was an embarrassment to moderate liberals and value-free social scientists who had regarded these nations as stable and legitimate forms of governance, and it was a faith-shaking crisis for the far Left, which openly sympathized with those regimes.

Posted on 11/09/09 01:03 PM by Alex Adrianson

Can the Beast Be Starved?

Milton Friedman was wrong: “Starve the beast” doesn’t work. So says researcher Michael New in the latest issue of Cato Journal.

The real burden of government, of course, is not how much it taxes, but how much it spends. However, proponents of the “starve the beast” strategy have long held that tax cuts can help limit the fiscal burden of government: If politicians have less tax revenue, they will spend less, so the theory goes. But what sounds right in theory isn’t necessarily true. In 2006, Cato scholar William Niskanen performed a regression analysis that found statistically significant evidence that revenue reductions actually stimulate the growth of federal spending.

New has now expanded on Niskanen’s analysis to determine if “starve the beast” can be an effective strategy for that part of the federal budget that would likely be most sensitive to revenue limits: non-defense discretionary spending. In six different regression models, however, New found a statistically significant negative correlation between revenues as a percentage of gross domestic product and changes in federal spending. In other words, revenue reductions appear to promote more spending.

These findings will challenge some orthodox thinking about tax cuts, but they deserve serious consideration. If Niskanen/New are correct, then proponents of limited government should consider investing more effort in promoting constitutional (or subconstitutional) protections like a Taxpayers Bill of Rights or procedural reforms that force legislators to make tough choices about spending. Heritage fellow Brian Riedl’s “10 Elements of Comprehensive Budget Process Reform” is still good reading on this topic.

Posted on 11/06/09 12:29 PM by Alex Adrianson

Worth Checking Out: Two Revolutions Offer Answers for Today

Econoclasts: The Rebels Who Sparked the Supply-Side Revolution and Restored American Prosperity is a new history of the intellectual movement that solved America’s last great economic crisis. Author Brian Domitrovic tells the story of how the supply-side movement was formed and how it succeeded in showing America that tax cuts and stable money were the solutions to the stagflation of the 1970s. Readers will meet figures such as Robert Mundell, Arthur Laffer, Jude Wanniski, Jack Kemp, Norman Ture, and Robert Bartley. The Heritage Foundation will host a talk with the author on November 18.

We Still Hold These Truths: Rediscovering Our Principles, Reclaiming Our Future makes the case that our Founding Fathers were on to something when they created a regime of limited, constitutional government. Author and Heritage fellow Matthew Spalding shows how the Founder’s ideas bear on the problems we face today. For an excerpt, see “American Renewal: The Case for Reclaiming Our Future,” in the Summer 2009 issue of The Insider.

TheConservatives.com is a new Web site that lets users track what conservatives are saying in real time. A product of the Washington Times, the site is powered by Motion, a new platform from MovableType that aggregates content from across many different social media platforms—Facebook, Twitter, Linked-in, etc. Brian Faughnan edits the site, which also features regular contributors such as Heritage Foundation president Ed Feulner, former Reps. Newt Gingrich, Bob Barr and Ernest Istook, and talk-show host Michael Reagan.

• An upcoming event at the American Enterprise Institute asks: “Is It Possible to Re-Privatize the U.S. Financial System?” Or has the system passed the point of no return? Those who want to find out whether free markets in finance have a future should mark their calendars for November 12, 2 p.m. – 4 p.m.

Layar is a new iPhone application that offers users a view of their taxpayer bailout dollars at work. The application, which is available free from Apple’s app store, works through the iPhone’s camera to produces a HUD display of the user’s surroundings. Users with the app installed can then look up “recovery” or “sunlight” to pull up data on where stimulus dollars are being spent. Knowing what your government is up to is as easy as a walk down the street!

Posted on 11/06/09 11:06 AM by Alex Adrianson

Club California: The Service Is Poor—But the Prices Are High!

“Besides Mississippi,” observes William Voegeli, “every one of the 17 states with the lowest state and local tax levels had positive net internal migration from 2000 to 2007.” Voegeli continues: “Except for Wyoming, Maine, and Delaware, every one of the 17 highest-tax states had negative net internal migration over the same period. Conservative researchers’ technical explanation for this phenomenon is: ‘Well, duh.’”

Voegeli, writing in the latest issue of City Journal, considers California to be the prime example of what’s wrong with the high-tax, high-spend model of state government: California’s annual per capita revenues of $11,160 is the fourth highest among the 50 states, but California doesn’t actually deliver better services for that money. For instance, California spends 40 percent more per capita and 12 percent more on education per public school pupil than does Texas, yet its students are one to two years worth of learning behind Texas students, according to a report issued earlier this year by McKinsey & Company.

As Voegeli puts it, “the dues paid to Club California purchase benefits that, increasingly, are enjoyed by the staff instead of the members.” He notes, for example, that the state legislature enacted almost none of the 1,200 recommendations issued by the California Performance Review. Gov. Arnold Schwarzenegger—elected on a wave of public furor over the state’s fiscal woes—established this advisory body in 2003 to find ways to make California government smarter, cheaper, and better. Those recommendations were an opportunity to save the taxpayers $32 billion over the first five years, yet the legislature ignored the many recommendations to eliminate boards and commissions because those bodies “provide golden parachutes to politicians turned out of the state legislature by California’s strict term limits.” The legislature has also refused to rein in state employee pensions, which a 2005 Legislative Analyst’s Office report found “surpassed the other states—often significantly—at all retirement ages.” According to the California Foundation for Fiscal Responsibility, the state pays 5,115 retired managers, state administrators, public university deans, and police chiefs pensions of at least $100,000 per year.

Posted on 11/05/09 02:30 PM by Alex Adrianson

About those GDP Figures

Third-quarter growth in gross domestic product of 3.5 percent sounds pretty good. On the other hand, observes Veronique De Rugy,

… the Gross Domestic Product (GDP) numbers include government spending. So, when the government pumps thousands of billions of dollars into the economy it will look as if GDP is growing.

What’s more, the way the GDP accounts for government spending is totally biased: It assumes that if the government is spending $200,000 on a contractor to repave a road in the middle of nowhere that it will create $200,000 of genuine economic value. By contrast, GDP measures are tougher on private-sector spending. As my George Mason university colleague Garett Jones explained to me recently “So if Exxon Mobil pays an engineer $200,000 per year, that only shows up in GDP if the engineer finds an extra $200,000 of oil to sell, or builds a new machine that sells for $200,000, something like that. So our GDP measures of “government spending” are awful–and when the government is in a race to spend money as quickly as possible, these measures are going to be even worse than usual.”

… the current dollar GDP increased $150.3 billion in the third quarter. In the same time period, the government injected about $174 billion dollars into the economy in the form of personal tax cuts, unemployment assistance, student aid and nutritional assistance, and grants. In other words, the amount of cash the government injected in the economy exceeds the current GDP increase.

Liam Denning has similar thoughts—with numbers—in the Wall Street Journal:

Fully 2.2 percentage points of the third quarter’s 3.5% growth figure related to vehicle purchases and residential construction, both juiced by government support. Federal spending added 0.6%. If these GDP data were company earnings, they would be what analysts euphemistically call “low quality.”

Posted on 11/03/09 02:46 PM by Alex Adrianson

Scalia: Getting the Result You Like Is No Argument for an Evolving Constitution

Supreme Court Justices Antonin Scalia and Stephen Breyer squared off last week at the University of Arizona to debate judicial philosophies. Scalia, as usual, made an excellent case for his philosophy of originalism. You can watch the whole thing at C-Span. Here is a snippet of Scalia:

I don’t pretend that my approach—originalism—has all the answers. Some of the answers are hard. I know what I am looking for. Sometimes it’s hard to find it. Sometimes maybe you can’t find it. But I don’t have to prove that my approach is perfect.

I don’t have all the answers, but by George I have a lot of answers, especially in the most controversial areas. Right to abortion? Come on—nobody thought it violated anything in the Constitution. For 200 years it was criminal. Homosexual sodomy? The same thing. …

What answers does the other approach provide? There are no answers. He said: “Oh, equal protection. Oh, we know—it’s inclusion, right?” Well, fine. Does it include same-sex marriage? Does it include a requirement for equal pay for equal work to women? All sorts of questions. How do you decide these? You know how you decide these? You close your eyes and decide what you think is a good idea. And that is the problem with the evolutionary approach. There are no answers—zero answers. …

Now, as for Brown versus Board of Education [the landmark 1954 case that outlawed school segregation] … Justice Harlan in Plessy versus Ferguson, which is the case that Brown overruled, came out on the other side. And I would have been with him as an originalist, because you begin with the text, and it was a text that prohibited racial discrimination. And although some states continued to have schools like that, some abolished segregated schools after it [the 14th Amendment] was passed.

But regardless, don’t make up your mind on this significant question between originalism and playing it by ear on the basis of whether now and then the latter approach might give you a result you like. I’ll stipulate … that it will. … Kings can do some stuff—good stuff—that a democratic society could never do. Hitler developed a wonderful automobile. What does that prove?

I’ll stipulate that you can get some results you like with the other system. But that’s not the test. The test is: Over the long run, does it require the society to adhere to those principles contained in the Constitution or does it lead to a society that is essentially governed by nine justices’ version of what “equal protection” ought to mean; what “cruel and unusual punishment” ought to mean … Once you abandon the original understanding of the text … there is no other criteria.

(This passage, by the way, has been cited by news reports as showing that Scalia would have dissented in Brown v. Board of Education, but that is clearly not what he says.)

Posted on 11/02/09 05:51 PM by Alex Adrianson

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