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InsiderOnline Blog: May 2011
Billionaires David and Charles Koch get beaten up by the mainstream media for putting their money where their libertarian ideals are. The Kochs and the various free-market organizations they sponsor are engaged in a conspiracy to undermine the middle class, says the Left.
And by “conspiracy,” they really mean “competing in the marketplace of ideas.” The Left, by the way, tends not to like free markets. But the Left has its own sugar daddy. At the Business and Media Institute, Dan Gainor has a new series on billionaire George Soros and his attempts to buy influence with the mainstream media.
Of course, a bigger danger than Soros giving money to lefty journalism projects is government funding of such projects. That, too, is something Soros would like to see. Thankfully, groups like the State Policy Network and the Franklin Center have forged a new model of non-profit funding for media ventures that can serve as an alternative to government funding.
Many state think tanks now have an affiliated news outlet that does investigative reporting. There are also numerous Watchdog.org outlets in each state. These various groups all aim to put a little sunshine on the doings of state government. And in so doing, they’ve shifted the game from “criticize the media,” to “be the media.”
Read more: “Think Tank Journalism: The Future of Investigative Reporting,” by Jason Stverak, SPN News, March/April 2011; “The New Watchdogs: Franklin Center Builds Nationwide Network of Investigative Reporters,” by Robert B. Bluey, The Insider, Fall/Winter 2010.
You’ll pay more for fair trade coffee, but those higher prices don’t necessarily mean better living standards for the farmers who grow the beans. The journal Ecological Economics has just published a new survey of fair trade farmers in
Certified producers are more often found below the absolute poverty line than conventional producers. Over a period of ten years, our analysis shows that organic and organic-fairtrade farmers have become poorer relative to conventional producers. We conclude that coffee yield levels, profitability and efficiency need to be increased, because prices for certified coffee cannot compensate for low productivity, land or labor constraints. [“Profits and Poverty: Certification's Troubled Link for Nicaragua's Organic and Fairtrade Coffee Producers,” by Tina D. Beuchelt and Manfred Zeller, Ecological Economics, May 2011; (h/t: Hey … What did I miss?, May 26, 2011).]
International comparisons also place the
United States’ experience with immigrants from Mexicoand Central Americain perspective. These immigrants are the least assimilated of any major group in the , yet they lie closer to the American mainstream than many immigrant groups in other countries. The international assimilation index of 36 for Mexicans and Central Americans in the United States United Statesis considerably higher than the index for Muslim immigrants in Italyor Switzerland, or than that of Eastern European immigrants in Italy, Portugal, or . Immigrants from predominantly Muslim countries, as well as from Spain China, India, Southeast Asia, and Eastern Europe, are more assimilated in the United Statesthan they are in almost any other country in the sample—save the consistent example of , and sporadic cases where colonial ties have established a strong relationship between origin and destination country. Canada
Today, the price of a gallon of gas is $1.06 higher than it was a year ago, according to AAA. President Obama has claimed that turmoil in the
Government attempts to find the most cost-effective treatments might end up driving health care costs higher—and cost lives, too. The stimulus bill passed in 2009 included $1.1 billion for so-called comparative effectiveness research. According to research by John Vernon and Robert Goldberg, pharmaceutical companies will respond to the initiative by increasing the sizes of their clinical trials, ultimately making it more costly to develop new drugs. Higher development costs, they estimate, will reduce pharmaceutical research and development spending by $32 billion over ten years. The innovations forgone, they estimate, would have saved 34 million years of life. They conservatively peg the value of the losses at $1.7 trillion.
Some worry that comparative effectiveness research could form the basis for explicit government rationing of health care treatments. Ron Bailey summarizes
Something like Rep. Paul Ryan’s (R-Wisc.) proposal to turn Medicare into a voucher program in which seniors would purchase private health insurance would introduce competition. Ryan’s proposal would shift making health care tradeoffs from bureaucrats concerned about public budgets to consumers concerned about their own budgets. This would put downward pressure on prices and tend to rein in health care costs. Price competition might even reduce the amount invested in pharmaceutical and medical device R&D. In any case, consumers, not bureaucrats, should be the ones making comparative effectiveness decisions about health care.
(Vernon and Goldberg’s study is “Comparative Effectiveness Research: Effect on Pharmaceutical Innovation, Value of Health and Longevity,” published May 24, 2011 by the Center for Medicine in the Public Interest.)
“Union members are only 12 percent of all employees but have gotten 50.3 percent of Obamacare waivers,” reports Michael Barone. The waivers, granted by the Department of Health and Human Services, allow health plans to offer coverage that is more limited than the law otherwise allows—and thus more affordable. Barone continues: “On its website HHS pledges that the waiver process will be transparent. But it doesn’t list those whose requests for waivers have been denied.”
As Barone notes, there’s a pattern of gangster politics here: The National Labor Relations Board has announced it will try to prevent Boeing from building a $2 billion plant in
Then there is “the Internal Revenue Service’s attempt to levy a gift tax on donors to certain 501(c)(4) organizations that just happen to have spent money to elect Republicans.” Barone explains: “A gift tax is normally assessed on transfers to children and other heirs that are designed to avoid estate taxes. It has been applied to political donations ‘rarely, if ever,’ according to New York Times reporter Stephanie Strom.” (See Barone’s column, “Obama Skirts Rule of Law to Reward Pals, Punish Foes,” in the Washington Examiner, May 25, 2011.)
The administration is also planning an executive order requiring federal contractors to disclose political spending. Why would any White House want to know the political allegiances of federal contractors?
The Obama White House says “accountability” is the goal of a draft executive order that would require federal contractors to disclose political contributions. But this White House isn’t the first to ponder accountability for political activities. Consider this missive to a previous President:
This memorandum addresses the matter of how we can maximize the fact of our incumbency in dealing with persons known to be active in their opposition to our Administration. Stated a bit more bluntly -- how can we use the available federal machinery to screw our political enemies.
In case you hadn’t guessed, that is John Dean’s memorandum accompanying the original “enemies list” compiled at the direction of President Richard Nixon. Dean’s memo went on to identify “grant availability, federal contracts, litigation, prosecution, etc” as mechanisms for “proceeding to deal with the individual.” The project to “get” Nixon’s enemies eventually spawned the Watergate break-in and cover-up that led to Nixon’s resignation.
The government isn’t very good at picking technologies to invest in. But that track record hasn’t stopped some in Congress from proposing a new subsidy program for cars powered by natural gas. Time to remember two great moments in government technology policy.
In the early 1960s, an advisor told President Kennedy that failure to enter the supersonic transport market would cost the
Flash forward a decade. High gas prices induced Congress to create the Synthetic Fuels Corporation to invest in developing alternatives to imported fossil fuels. This public-private collaboration was eventually killed in 1986, but not after spending $4.5 billion of taxpayers’ money without producing any new fuels. This time falling gas prices foiled the government’s plans, as alternative fuels could not compete against cheap gas. (See “Energy Subsidies,” by Chris Edwards, DownsizingGovernment.org, February 2009.)
Government can’t predict the price of fuel—or many other factors that determine whether a particular technology will succeed. Maybe natural gas-fueled vehicles are the future. But, as Nick Loris points out, if consumers want them, private companies will figure out how to make them without government subsidies. For more on why these subsidies are a bad idea, see Loris’s paper “Natural Gas Vehicle Subsidies Hurt Consumers,” The Heritage Foundation, May 11, 2011.
The Transportation Security Administration is the latest victim of Remy’s musical wit:
Late last week The Heritage Foundation filed its first ever friend-of-the-court brief. It’s the government’s fault. In appealing the Florida District Court’s ruling that Obamacare is unconstitutional, the federal government’s lawyers cited a 21-year-old statement by a Heritage expert supporting a mandate on individuals to purchase health insurance. The Heritage brief takes exception:
If citations to policy papers were subject to the same rules as legal citations, then the Heritage position quoted by the Department of Justice would have a red flag indicating it had been reversed. Not only was the policy statement taken somewhat out of context (the author in 1989 conditioned such a mandate on tax reform and tax savings provided to families to fully or partially offset the cost of the insurance), but Heritage has stopped supporting any insurance mandate.
Heritage policy experts never supported an unqualified mandate like that in the PPACA. Their prior support for a qualified mandate was limited to catastrophic coverage (true insurance that is precisely what the PPACA forbids), coupled with tax relief for all families and other reforms that are conspicuously absent from the PPACA. Since then, a growing body of research has provided a strong basis to conclude that any government insurance mandate is not only unnecessary, but is a bad policy option. Moreover, Heritage’s legal scholars have been consistent in explaining that the type of mandate in the PPACA is unconstitutional. In short, The Heritage Foundation opposes the PPACA individual mandate as unwise policy and as unconstitutional legislation. [Internal citations omitted.]
Hybrid cars are already more expensive than gas-only cars, and the differential might get even bigger. That would be a real problem for the Environmental Protection Agency’s efforts to incentivize the purchase of hybrid vehicles through higher fuel-economy standards. If the EPA is looking for a culprit, it should look no further than … the EPA. It’s all about copper, explains the Cato Institute’s Patrick Michaels:
That hybrid car that you smugly drive contains about 100 pounds of the stuff, largely in the electrical cables and the electric motor. That’s over $400 of raw material price that is a fixed cost at current scarcity. A conventional car has only half as much.
The more electric a vehicle is, the more copper it contains (with the exception of completely impractical fuel cell cars). Part of the reason for the $41,000 sticker price of the Chevy Volt is that it contains about three times as much copper as its gas-only counterpart, the Cruze. This cost is pretty insensitive to the margins of scale or the number of Volts built …
The next biggest thing in world copper production may be something known as the Pebble Partnership near
, which is a consortium of the wonderfully named Northern Dynasty Minerals and British mining giant Anglo-American. … Iliamna, Alaska
Anticipating the upcoming environmental fight, Pebble has already poured in an astounding $114 million (that’s not a misprint) for baseline environmental studies, and the EPA is mulling a preemptive kill shot using an obscure portion of the Clean Water Act, despite the fact that Pebble hasn’t even filed for a mining permit. [“The Environmental Protection Agency Comes-a-Copper,” Forbes, May 12, 2011.]
Stephen Colbert’s attempt to set up a political action committee was supposed to be a gag on the Supreme Court for loosening limits on corporate political speech in its Citizen’s United decision, but it has instead turned into a joke about how campaign finance laws still stifle free speech. Steve Simpson and Paul Sherman of the Institute for Justice explain:
Mr. Colbert couldn’t set up his PAC because his show airs on Comedy Central, which is owned by Viacom, and corporations like Viacom cannot make contributions to PACs that give money to candidates. … Mr. Colbert’s on-air discussions of the candidates he supports might count as an illegal “in-kind” contribution from Viacom to Mr. Colbert’s
Colbert also considered setting up a so-called “Super PAC,” “a group that can raise unlimited sums of money as long as it spends it only on independent ads, without donating at all to candidates.” But
Viacom didn’t like Mr. Colbert’s plan because his on-air commentary might still amount to a contribution from Viacom to his Super PAC. It’s difficult to place a dollar value on airtime, so a reporting mistake could put both Viacom and Mr. Colbert in legal hot water. …
Last Friday, [Colbert] filed a formal request with the FEC for a “media exemption” that would allow him to publicize his Super PAC on air without creating legal headaches for Viacom.
How’s that for a punch line? Rich and successful television personality needs powerful corporate lawyers to convince the FEC to allow him to continue making fun of the Supreme Court. [“Stephen Colbert’s Free Speech Problem,” Wall Street Journal, May 19, 2011.]
There’s a lot of things the government does that it really shouldn’t be doing at all, but here’s one case of mission creep that actually makes sense: On Monday, the Centers for Disease Control published an article, written by Assistant Surgeon General Ali S. Khan, that explains the essential steps that everyone should take to prepare for a zombie apocalypse. Sure, a zombie apocalypse isn’t very likely, but at least this activity can be justified as part of the government’s constitutional duty to provide for the national defense. Bailing out zombie banks … now that’s questionable.
Seriously, the missive by Rear Admiral Khan is an attempt to draw in readers who otherwise wouldn’t bother to inform themselves what they should do in case of a major catastrophe. It turns out that preparing for a zombie apocalypse is remarkably similar to preparing for hurricanes or pandemics.
Just clever enough, and funny, too—something we should applaud because it happens so rarely in government. (See: “Preparedness 101: Zombie Apocalypse,” by Ali S. Khan, Centers for Disease Control, May 16, 2011.)
Nursing homes and home health agencies have joined the ranks of those looking for an escape hatch from Obamacare. They just can’t afford to provide their employees with health insurance, as the law requires, and are lobbying for an exemption. Robert Pear’s report elaborates:
Mark Parkinson, president of the American Health Care Association, the largest trade group for nursing homes, says the problem is that reimbursement rates for Medicaid and Medicare, set by government agencies, do not pay them enough to offer their employees medical coverage. “We do not have much ability to increase prices because we are so dependent on Medicaid and Medicare” for revenue, he said.
But Obamacare is there to help! The law expands Medicaid for those under 65 making up to 400 percent of the poverty level.
“This assistance could significantly increase coverage among direct-care workers because 80 percent of them have income less than 400 percent of the poverty level,” said Dorie K. Seavey, director of policy research at the Paraprofessional Healthcare Institute. [“Nursing Homes Seek Exemptions from Health Law,” New York Times, May 15, 2011.]
Summing up: The price controls of federal health care programs squeeze providers so much that they can’t afford to give their own employees health insurance as required by Obamacare. Yet, we’re told, it’s fortunate that Obamacare expands those very programs so that health care workers will be covered. How fortunate we are, indeed, to be governed by people smart enough to know that any problem created by government can always be fixed with more government!
Eighty-eight percent of health care is funded by people spending other people’s money. Why would anybody be a smart shopper in that kind of system? Dan Mitchell makes a pitch for changing that system, starting with voucherizing Medicare:
It takes the average American taxpayer two hours and 13 minutes of every work day to earn enough money to pay his taxes in 2011, reports the Tax Foundation. That makes 11:13 a.m. “tax freedom minute.” The Tax Foundation also calculates Tax Freedom Day every year, which was April 12 this year. Either concept shows that the nation’s tax burden is 27.7 percent of the economy in 2011. The latest ever “tax freedom minute” was for the year 2000, when it took the average taxpayer until 11:38 to earn enough to pay his tax bill. Of course, budget deficits also have to be paid for, too, eventually. To pay for the cost of government including the federal deficit this year, the average taxpayer would have to work for the government until 12:07 p.m. every work day.
See: “Nation Works until 11:13 AM to Pay All Taxes, Lunchtime to Pay off the Deficit,” by Kail Padgitt and Alicia Hansen, The Tax Foundation, May 5, 2011.
Taxes on “Big Oil” are a little more complicated that what President Obama would have you believe. The President has proposed eliminating various tax breaks for oil and natural gas companies.
As the Tax Foundation often says, the tax code should not favor one economic activity over another. That leads to misallocations of resources.
But the tax breaks in question are available to all manufacturers—not just oil companies. A really neutral tax code would eliminate those breaks for all companies. Further, as The Heritage Foundation’s Morning Bell points out, real neutrality toward economic activity would require eliminating all the subsidies received by so-called “green energies,” too.
And as long as we’re talking about fairness, consider this fact: In 2010, taxes paid by oil and natural gas companies amounted to 41 percent of their net income before taxes. For the rest of the companies in the S&P Industrials Index, the figure is 26.5 percent. (Source: Compustat North American Database, as cited in “Putting Earnings into Perspective: Facts for Addressing Energy Policy,” American Petroleum Institute, April 2011.)
Read more: “Morning Bell: The Truth Behind Oil Subsidies,” The Heritage Foundation, May 13, 2011.
Gary Palmer, President of the Alabama Policy Institute, saw firsthand the destruction that the tornados left behind in
Though word about the destruction in Hackleburg did not get out immediately, volunteers started to arrive from around the state and most were individuals from churches. The first organized relief came from the Southern Baptist disaster relief teams, who have the third largest disaster relief organization in
behind only the Red Cross and the Salvation Army. America
Times such as these can bring out the best in us. Most Americans in general and Alabamians in particular are not people who sit back and wait for the government to show up to take care of them. Even though it took a couple of days for FEMA to get there, people did not wait to get started with the relief effort. When word got out about the devastation in Hackleburg, hundreds of volunteers poured in to help with the recovery.
Churches from a multitude of denominations across
and from neighboring states began loading trucks with food, clothing and other badly needed supplies and sent them to the town. Volunteers came with chain saws and equipment for removing debris while others served food or helped with the unloading of trucks. Alabama
This is what self-government is really all about: people taking responsibility to help one another without being made to or told to. [“The Tornado That Destroyed My Hometown,” by Gary Palmer, Alabama Policy Institute, May 13, 2011.]
Environmental shackles are putting the famed Alaskan pipeline at risk, reports Russell Gold:
Now, dwindling oil production along Alaska’s northern edge means the pipeline carries less than one-third the volume it once did—and the crude takes five times as long to get to its destination.
That leisurely flow means the oil is above ground longer and more exposed to
’s frigid weather; the crude sometimes arrives chilled to 40 degrees. As the flow and temperature continue to drop, experts say the risks of a clog or corrosion increase, as do the odds of ruptures and spills. Alaska
Unless a technological solution can be found, the arcane physics of crude flow may force the multibillion dollar, 48-inch-wide steel pipeline to shut down—and determine the fate of the largest oil field ever found in the U.S.
But production from
’s giant oil fields has been falling for years. Turning that around would require drilling in new areas, some of them environmentally sensitive and most controlled by the federal government. [“Shrinking Oil Supplies Put Alaskan Pipeline at Risk,” by Russell Gold, Wall Street Journal, May 11, 2011.] Alaska
“A 10 percent increase in total trade openness reduces aggregate unemployment by about three quarters of one percentage point,” they conclude. To be a bit more precise, they find, “A 10 percentage point increase lowers the equilibrium rate of unemployment by about 0.76 percentage points.” Trade creates jobs. …
Without going into detail, the European economists derive a real trade openness index by taking differing price levels among countries into account.
The researchers then compare the relative trade openness of 20 developed countries in the Organization for Economic Cooperation and Development with their unemployment rates over time. They take into account other factors such as union membership, national employment protection policies, tax rates on wages, and the generosity of unemployment insurance.
The researchers report that generous unemployment benefits correlate slightly with higher unemployment, suggesting that workers have less incentive to look hard for work. Also, high unemployment correlates with the size of the tax wedge, that is, the difference between what employees take home in earnings and what it costs to employ them. Basically, this means the higher the income tax rate, the higher the level of unemployment. …
So why does free trade create more jobs? The study suggests that freer trade boosts overall productivity, enabling companies to hire more workers. Trade enhances competition which weeds out inefficient firms and allows more productive ones to expand. As the average efficiency of firms in a country increases, they can earn more revenues by boosting production. And that leads to hiring additional workers. [“‘No Nation Was Ever Ruined by Trade,’” by Ronald Bailey, Reason, May 3, 2011.]
Broad-based entitlement programs can be a very expensive way to expand access to a good or service. The Medicare prescription drug benefit that Congress created in 2003 is a case in point, as new research shows that about 75 of public spending simply replaces private spending on drug coverage. Paul Winfree summarizes the findings from economists Gary Engelhardt and Jonathan Gruber:
By comparing those just under age 65 to those 65 and over, Engelhardt and Gruber estimate that Part D was responsible for increasing prescription drug coverage among seniors by 10 percentage points. But this increase accounts for only a quarter of the new population with public drug coverage, suggesting that the remaining 75 percent of those who are newly publicly insured were covered by private drug coverage before Part D.
Engelhardt and Gruber find similar levels of “crowding out” of private spending by public spending. They note that although seniors spent an average of $525 more per year on drugs after implementation of Part D, average public expenditures went up by about $2,100. According to the authors, this means that “each dollar of public expenditure raises total expenditure by roughly 25 cents or that there is about a 75% crowd-out.” [“Research Shows Medicare Part D Crowds Out Private Insurance, Public Funds Cut Seniors’ Costs,” by Paul Winfree, Heritage Foundation, May 9, 2011.]
Efforts to nationalize K- 12 curriculum in the
Concerned that the Department of Education plans to incentivize states into adopting a de facto national curriculum, the statement also takes the Department of Education to task for hiring two private consortia to develop a national curriculum behind closed doors. Neither the Constitution nor any law passed by Congress gives the department the authority to develop a national curriculum, says the group.
For a review of the national curriculum goings-on, see Greg Forster’s May 9 post at the Witherspoon Institute blog (“Closing the Door on Education Innovation”). Forster worries that one national curriculum will be like the “One Ring” that bedeviled Tolkien’s Middle Earth: so tempting a power that a new culture war breaks out to determine its control. “And once you forge this ring,” says Forster, “there’s no
But just saying “no” to national standards won’t work, says Neal McCluskey. His May 9 post at Cato-at-Liberty (“National Curriculum Battle Joined”) argues that school choice must be a part of the fix, because “[u]ntil all parents have real, full choice they will have no option but to demand that higher levels of government force intractable lower levels to provide good education” which won’t work because of special interest politics.
See also Jim Stergios’ round-up: “Big Cracks in the National Standards Consensus,” Pioneer Institute for Public Policy Research, May 9, 2011.
A leading CEO and scholar of entrepreneurship explain:
And The Heritage Foundation has a plan to do it. The plan, released Tuesday, is Heritage’s contribution to the Peter G. Peterson Foundation’s Solutions Initiative. The Solutions Initiative challenged six organizations to come up with solutions to the nation’s long-term national debt. The other participating organizations are the American Enterprise Institute, the
Heritage’s plan has lots of big ideas, particularly reforming entitlements. Heritage proposes to fix Social Security’s 75-year, $7.8 trillion funding gap by shifting the system gradually from a pay-as-you-go entitlement to a true system of insurance against poverty for older Americans. Meanwhile, Medicare’s $30-trillion shortfall over the next 75 years would be fixed by moving from a defined-benefit set-up to a defined-contribution system in which seniors can pick the health insurance they want—much like members of Congress now do through the Federal Employees Health Benefits Program.
Other features of the Heritage plan: replacing Obamacare with a consumer-oriented health care system; and replacing most federal taxes with a single, low rate on all income spent on consumption.
The Heritage plan balances the budget in 10 years (according to static, not dynamic, estimating) by reducing federal spending from its current level of nearly 25 percent of gross domestic product to its historical norm of 18.5 percent of GDP. Heritage also estimates that its plan will reduce the national debt from its current level of 70 percent of GDP to 30 percent by 2035. Under current policies, the national debt is projected to rise to 185 percent of GDP by 2035.
Many higher education administrators and lobbyists claim that the typical college subsidizes the education of its students. But it’s not true, says a new report from the Center for College Affordability and Productivity. Yes, say researchers Andrew Gillen, Matthew Denhart, and Jonathan Robe, colleges do spend more than they charge students for tuition.
But, they point out, General Electric also spends more overall than what their customers pay for GE alarm clocks. Does it make sense, then, to claim that GE subsidizes consumers of alarm clocks, even though only a fraction of GE’s overall spending is devoted to making alarm clocks? No, and neither does the claim about colleges subsidizing students hold up on inspection.
According to Gillen, Denhart, and Robe, when you exclude things like spending on research and student activities, most schools overcharge their students. The authors calculate that between 52 percent and 76 percent of all students attend institutions that spend less on education than what students and third parties pay in tuition.
What’s really being subsidized, the authors point out, is the research mission of many universities—by students paying for an education.
Gillen, Denhart, and Robe’s study, published in March 2011, is “Who Subsidizes Whom?”
Being on Medicaid isn’t the same as having access to health care. Medicaid’s low reimbursement rates make it hard for Medicaid patients to find a doctor willing to see them. A large body of research, which Brian Blase has rounded up, shows that Medicaid patients inferior receive care. Some highlights:
Rachel Rapaport Kelz and her colleagues found, for example, that after colon cancer surgery, Medicaid patients had a 22 percent greater chance of complications and a 57 percent greater chance of dying in the hospital than the privately insured. The risk for uninsured individuals was in the middle—less than the risk for Medicaid recipients and greater than the risk for individuals with private coverage. Kathleen McDavid and her colleagues found lower cancer survival rates for Medicaid enrollees. The risk of mortality for individuals with Medicaid was higher than the risk for the privately insured by 56 percent for colorectal cancer, 14 percent for lung cancer, 66 percent for female breast cancer, and 149 percent for prostate cancer. Of three of the four measures, Medicaid recipients had a higher risk of mortality than the uninsured.
researchers recently completed the most comprehensive study yet relating insurance coverage and surgical outcomes. The study controlled for individual characteristics and co-morbidities as well as other important factors, such as whether the surgery was elective, and hospital characteristics. Based on eight surgical procedures, the authors found that Medicaid patients were more likely to die in the hospital than the uninsured and the privately insured. [Internal citations omitted.] Universityof Virginia
Blase’s paper is “Medicaid Provides Poor Quality Care: What the Research Shows,” published by The Heritage Foundation, May 5. For more, see Roger Stark’s “The Medicaid Disaster Ahead,” in the latest issue of The Insider.
… as Ed Ring demonstrates, if all retirees in the country received the $55,000-per year pensions that California public employees get:
If every American over the age of 55 received a pension of $55,000 per year, it would cost current workers $4.45 trillion per year, an amount equivalent to nearly one-third of
’s annual GDP. Put another way, it would cost every one of the 128 million Americans of working age $34,800 per year to support retirees. America
Over the coming decades, the financial burden on
workers to support retirees will worsen as life expectancy continues to improve and birthrates decline. U.S. is fortunate compared with most nations, having the highest birthrate of any developed nation as well as significant immigration of young people. But by 2030, the Census Bureau projects the United States will have 139 million citizens between the ages of 25 and 55, and 112 million citizens 55 or older—a ratio of 1.24 to one. That works out to $44,300 per worker per year to support the retired population. [“What If Everyone Had a California State Pension?” by Ed Ring, City Journal, May 5, 2011.] America
The folly of our public school monopoly setup can be demonstrated with a thought experiment, which Don Boudreaux performs in his Wall Street Journal article, “If Supermarkets Were Like Public Schools” (May 5). As Boudreaux points out, government-run supermarkets, each providing “free” groceries to its own set of captive “shoppers,” must deliver poorer service. What happens next:
Responding to these failures, thoughtful souls would call for “supermarket choice” fueled by vouchers or tax credits. Those calls would be vigorously opposed by public-supermarket administrators and workers.
Opponents of supermarket choice would accuse its proponents of demonizing supermarket workers (who, after all, have no control over their customers’ poor eating habits at home). Advocates of choice would also be accused of trying to deny ordinary families the food needed for survival. Such choice, it would be alleged, would drain precious resources from public supermarkets whose poor performance testifies to their overwhelming need for more public funds.
As for the handful of radicals who call for total separation of supermarket and state—well, they would be criticized by almost everyone as antisocial devils indifferent to the starvation that would haunt the land if the provision of groceries were governed exclusively by private market forces.
In the face of calls for supermarket choice, supermarket-workers unions would use their significant resources for lobbying—in favor of public-supermarkets’ monopoly power and against any suggestion that market forces are appropriate for delivering something as essential as groceries. Some indignant public-supermarket defenders would even rail against the insensitivity of referring to grocery shoppers as “customers,” on the grounds that the relationship between the public servants who supply life-giving groceries and the citizens who need those groceries is not so crass as to be discussed in terms of commerce.
The Supreme Court’s 2005 decision in Kelo v. New London said that economic development was a valid use of eminent domain, as long as the government is following a “comprehensive development plan.”
See IJ’s Web site for more on the case. As Doug Kaplan pointed out in our Fall 2008 issue of The Insider (“The Allure of Public-Private Development,”) eminent domain is but one of the many tools the redevelopment agencies use to direct economic development. What it all amounts to is politicians deciding what consumers want instead of consumers deciding what consumers want.
Your hear now and then that there’s grade inflation in higher education, but two professors at Ball State University have recently put some numbers on the problem. Clarence R. Deitsch and T. Norman Van Cott have found that in 24 out of 26 introductory courses at their school, students in 2009 got a grade of A or B in higher percentages than did students in 1990. The grade point averages of students for those classes increased 11.9 percent between 1990 and 2009. Deitsch and Van Cott tallied these figures only after they forced their own school to give them the data through the Indiana Access to Public Records Act.
The problem, of course, is not that we need to compare students in 1990 to those in 2009. Rather, as the distribution of grades becomes more concentrated at the upper end of the scale, grades become less useful as a way of comparing the academic achievements of current students. Or, as Deitsch and Van Cott, quoting Chester Finn, observe: “Once everyone’s wearing rhinestones, you might not notice someone wearing diamonds.” Thus,
Here’s the rest of the story:
Current federal and state legislative efforts to offer colleges and universities monetary incentives for graduating students in 4 years will only exacerbate grade inflation. Professors don’t have to be rocket scientists to figure out that low grades can delay student graduation, thereby undermining state funding and faculty salaries. The legislative “fix” will be like putting grade inflation on steroids.
See “Too Many Rhinestones,” The
There will always be a debate about whether harsh interrogation techniques are justified, but news reports so far show that those techniques have been effective. In fact, they produced information that turned out to be vital to finding Osama Bin Laden,
Current and former
officials say that Khalid Sheikh Mohammed, the mastermind of the Sept. 11, 2001 terrorist attacks, provided the nom de guerre of one of bin Laden’s most trusted aides. The CIA got similar information from Mohammed’s successor, Abu Faraj al-Libi. Both were subjected to harsh interrogation tactics inside CIA prisons in U.S. Polandand . [“Officials: CIA Interrogators at Secret Prisons Developed First Strands that Led to Bin Laden,” Associated Press, May 2, 2011.] Romania
And, reports Shannen Coffin, it’s not likely we would have gotten the information without using those techniques:
As our colleague Marc Thiessen learned in writing Courting Disaster, KSM’s resistance was “superhuman.” It was only after being subjected to waterboarding and other enhanced measures that he became compliant, and from that point forward, cooperated with more conventional techniques. As one of the CIA interrogators told Marc, “If we had not had these techniques, we would have gotten zero from him.” [“Breaking Down KSM,” National Review, May 3, 2011.]
Today’s rich got richer by enriching the rest of us, too, explains John Tamny:
As opposed to distant, the top 1% of today had a tendency to get there by virtue of having a very keen and close understanding of what the middle classes and poor desire. Whereas the other 99% doubtless looked on in awe 25 years ago as the top 1% enjoyed wireless cellular communication ($3,995 for a Motorola phone in 1983, not to mention roaming charges), personal computers (top end models in the ’90s retailed for $9,000+ - and they didn’t work very well), and cable access to the best television channels and movies the world over, members of today’s top 1% achieved such status by making all three available at low prices to all Americans.
Read Tamny’s Tuesday column (“Joseph Stiglitz’s 1% Fallacy, and Why We Can’t Trust 99% of Economists,” Real Clear Markets, May 3, 2011) for a brief but effective debunking of the argument, as laid out in a recent Vanity Fair article by Joseph Stiglitz, that rising income inequality is a major problem.
The fight goes on, says American Foreign Policy Council’s Ilan Berman:
struggle with radical Islam isn’t about personalities; it’s about ideas. Al-Qaeda understands this very well, and over the past decade has worked diligently to convey the impression of an organization on the march, and convince the wider Muslim world that it is fighting—and winning—a religious war against the West. The logic behind this approach is clear; as Bin Laden himself boasted in the wake of the September 11th attacks, “when people see a strong horse and a weak horse, by nature they will like the strong horse.” ur
So far, we haven’t done much to counter this perception. To be sure, we’ve invested heavily in targeting al-Qaeda on the battlefields of
Iraqand , with notable effect. Yet we’ve spent remarkably little time discrediting the organization’s radical ideology, debunking its claims about the West, and delegitimizing its authority to speak on behalf of all Muslims. And because we haven’t, Bin Laden’s message still carries a great deal more resonance abroad than it should. Afghanistan
With his death, it’s al-Qaeda that now looks like the weak horse—at least for the moment. Whether we can parlay the death of al-Qaeda’s leader into the terminal decline of his ideology remains to be seen. What is clear, however, is that we should try. [“What Bin Laden’s Death Means for the War on Terror,” by Ilan Berman, Forbes, May 2, 2011.]