It’s not surprising that Treasury Secretary Geithner’s recent G‑20 proposal that governments agree to keep their current-account balances (either surplus or deficit) within 4 percent of GDP has met with resistance. After all, it assumes governments can and should manage the buying, selling, and investment decisions of hundreds of millions of Americans and billions of people worldwide. But I marvel at how deeply Chinese Vice Foreign Minister Cui Tiankai’s tongue must have been planted in cheek when he uttered this rich rejection of Geithner’s idea: “The artificial setting of a numerical target cannot but remind us of the days of a planned economy.” If the shoe fits.…

With the Constitution — and its limits on government — playing such an outsized role in Tuesday’s elections and American political discourse generally, this would be a good time to mention a new program that teaches high school students about our founding document. 

My sometime co-author Josh Blackman, who is the founder of the Harlan Institute (a constitutional education non-profit for which, full disclosure, I serve on the board of directors) recently launched this year’s version of Fan​ta​sySCO​TUS​.org, a Supreme Court fantasy league that was featured (along with Harlan) in yesterday’s Washington Post. In FantasySCOTUS, students learn about and make predictions for pending Supreme Court cases, including recent headliners Snyder v. Phelps (the funeral protest case) and Schwarzenegger v. EMA (the violent video game case). The project, among other Harlan Institute initiatives, is already being used by teachers in over 100 schools across the country, and is growing rapidly. 

Anyone interested in getting involved should consider participating in the Harlan Institute’s “virtual mentoring program.” On November 11, Harlan Institute will be holding the inaugural SCOTUS Skype-Teach-A-Thon:

As a complement to Fan​ta​sySCO​TUS​.org, the Harlan Institute has trained a group of Mentors to to deliver virtual lectures to classrooms using Skype video chats.

If you are an attorney or law student interested in volunteering with us, please fill out this form. The time commitment would probably be about 1 hour on November 11. Our mentors consist of attorneys, law professors, and law students who are all committed to raising awareness of the Constitution and the Supreme Court.

For an entertaining and informative testimonial about Harlan and FantasySCOTUS, see this clip:

Quote of the day from outgoing Chairman (and soon-to-be Ranking Member) of the House Agriculture Committee, Collin Peterson (D., MN):

“I’ll be able to take care of sugar, that’s not even a question,” Peterson said. “We’ll keep the same program; it doesn’t cost anything. That won’t be hard.”

(Source: the North Dakota InForum, which has many more gems from the Chairman about why the election is not a problem for Big Ag)

Au contraire, Mr Peterson. The U.S. sugar program costs sugar consumers, including food manufacturers, billions of dollars a year, by the government’s own figures.

I just love the way that so many politicians (and bureaucrats) assume that if something doesn’t show up as a line item in the budget, then it is essentially free. Tens of thousands of pages added to the Federal Register every year, placing staggering regulatory burdens on business? Costless! The immense inconvenience to travellers and business people from debilitating lines at airports because of security measures? No need to consider those costs against any supposed security benefits; they’re paid for by the fairies. And the sugar program, which shifts the burden of supporting sugar prices onto consumers rather than taxpayers? Well, it simply “doesn’t cost anything.”

For more of Cato’s work on sugar policy, see here, here, and here.

Ford Motor Company ran a full-age ad this morning in The Washington Post urging Congress and President Obama to reject the pending free-trade agreement with South Korea unless its provisions on automobiles are changed to promote the sale of more U.S.-made vehicles in Korea.

To drive home the point, the ad shows 52 cars with Korean flags in the windshield dominating one car sporting an American flag. The ad claims that, “For every 52 cars Korea ships here, the U.S. can only export one there.”

As my colleague Dan Ikenson blogged earlier, Ford blames the disparity on Korean trade barriers that discourage auto imports. Ford demands that the Obama administration “fix” the agreement before it can be approved by Congress.

In a study we released last month analyzing the agreement, Cato senior fellow Doug Bandow offered a different explanation of why we import so many more cars from Korea than the Koreans import from the United States, and why the agreement would go a long way to addressing legitimate concerns about barriers to U.S. auto exports:

In terms of tariff reduction, the agreement would deliver the “level playing field” many members of Congress demand. Tariffs on imported passenger cars and parts and accessories are currently 8 percent in Korea and 2.5 percent in the United States. Most of those tariffs would be eliminated upon enactment of the agreement, and all by its full implementation.

Although the FTA reduces South Korean tariffs, American automakers complain that the accord does not address non-tariff restrictions. … In fact, social and cultural barriers may be more important than government policies. One problem is auto size, since American cars are larger than those typically preferred by apartment-dwelling South Koreans. Even if all tariff and non-tariff-barriers were removed, the average Korean would still be much less inclined to buy a Ford F‑150 pickup truck, a Chevy Suburban, or a Jeep Grand Cherokee than the average American would be inclined to buy a smaller, more fuel-efficient Korean-made vehicle such as a Hyundai Sonata. No free trade agreement can change fundamental consumer preferences.

Instead of complaining about all those Korean cars Americans want to buy, we should be glad for an agreement that opens both markets to greater competition.

In coming months, new Republican members of Congress will be looking for ways to cut the budget deficit and also to increase economic growth. One way to do both is to privatize government assets, such as the U.S. Postal Service, Amtrak, and the air traffic control system.

Privatization can reduce deficits from the one-time gain of an asset sale and from the elimination of annual taxpayer subsidies. Privatization can spur economic growth by moving resources from moribund government agencies to the higher-productivity and more innovative private sector.

A new report by a trade magazine specializing in privatization confirms that the United States lags many nations on innovative infrastructure financing. Public Works Financing has been tallying data on “public-private partnerships” around the world since 1985. PPP is sort of half way toward the full privatization of government assets such as highways. I prefer full privatization (such as this highway), but PPP has swept the world in recent years and it is a step in the direction of market reform.

Public Works Financing is subscription only, but I can summarize a few findings from their October annual survey.

• Since 1985, the magazine has tallied 1,867 PPP infrastructure projects worldwide valued at $712 billion. U.S. projects represented just 8 percent of the total value.
• With a population about 10 percent as large as the United States, Canada had 53 percent of the U.S. PPP deal value. With a population of a similar size as the United States, Europe has had five times the value of PPP deals.
• Of the 35 top global transportation firms doing PPP deals, the United States had only one firm, Flour, which was ranked number 33. Countries with firms heavily involved in PPP include Spain, Australia, China, and France. American entrepreneurs are apparently losing out because U.S. policymakers are asleep at the switch regarding private sector infrastructure financing.

Examples of PPP in the United States include the project to widen the Capital Beltway in Virginia, which involves the firms Transurban and Flour, and the leasing of the Indiana Toll Road, which involves Cintra and Macquarie. These deals aren’t full privatization, but they will hopefully bring some market efficiencies into an area of the economy dominated by the government over the last half century.

Congress is expected to write a major transportation authorization bill next year. The likely GOP chairman of the House Transportation and Infrastructure Committee, John Mica, has a more favorable view of private infrastructure than the prior Democratic chairmen. However, it is not clear that some of the incoming Republicans really understand the anti-spending message that voters delivered on Tuesday. Regarding President Obama’s $8 billion in wasteful high-speed rail subsidies, Mica did not call for killing them, but just for making them “better directed.”

The election ended the debate over whether to cut federal spending, but the debate about cutting particular programs has just begun.

Though it has been relatively successful in the marketplace lately, the Ford Motor Company continues to confound in its public policy commitments.

First, the company remained silent for the better part of two years as its chief domestic rivals General Motors and Chrysler were nursed back to viability by a doting government dispensing $65 billion of taxpayer-funded nourishment. Not once (to my knowledge) did Ford publicly complain that the government bailout of its struggling competitors was an affront to its own prospects or that it would deny the company its rightful increase in sales and market share (the so-called spoils of competition).

But now Ford is trumpeting its opposition to the U.S.-Korea Free Trade Agreement. In a full page ad in today’s Washington Post, Ford implores Americans to reject the agreement as it currently stands, arguing that it would “allow Korea to remain one of the most closed automotive markets in the world.” So all of a sudden Ford is concerned about sales and market share?

Had GM and Chrysler been allowed to contract to a degree commensurate with their reckless decisions over the years, Ford might have hit the mother lode of sales and market share. But Ford didn’t even attempt to make that case. If Ford is so concerned about sales and market share, where is the outrage over the $45.4 billion in unconventional tax deferrals being granted GM as part of the ongoing bailout bonanza? Aren’t those deferrals just subsidies to help GM regain market share … at Ford’s expense?

Instead, Ford has chosen to target a trade agreement that promises enormous benefits to American businesses and consumers, a slew of new domestic employment opportunities, and annual increases in GDP of anywhere from $17 to $43 billion (bailout-type sums!) on the grounds that the agreement contains no guarantees of increased U.S. auto sales in Korea.

There are no guarantees in trade. But that’s what Ford and others in the U.S. auto industry and in Congress want: guaranteed sales figures, bilateral trade balance within the auto sector, managed outcomes. Is that what Ford means in the ad where it claims to support free trade?

Granted, the Korean auto market has been notoriously difficult to penetrate. Behind-the-border taxes levied on engine size and other non-tariff barriers have discouraged purchases of U.S. automobiles in Korea. But without the agreement, none of that will change. With the agreement, Korea reduces its tariff on passenger vehicles from 8% to 0 immediately, while the United States reduces its tariff on passenger vehicles from 2.5% to 0 immediately. So both are good reforms, but there is no question that U.S. auto exporters get a relatively bigger boost from the agreement. And though there are no guarantees of hard sales quotas, one can be pretty well assured that only the most inept producer/​exporter would fail to capitalize on an 8 percent cost reduction granted with the stroke of a pen.

Ford should stop politicking and stay focused on the goal of making better automobiles.

On Tuesday — you may have missed this because of some political developments that day — the Supreme Court heard oral arguments in Schwarzenegger v. Entertainment Merchants Association. This case is a First Amendment challenge to a California law that prohibits selling violent video games to minors. 

Cato had filed a brief pointing out that, to paraphrase the Four Tops, it’s just the same ol’ song, but with a different meaning whenever a new form of entertainment comes along. In other words, it is difficult to find any form of entertainment that did not once suffer the ire of parents’ groups, smoldering church bonfires, and would-be government protectors of children. From the Brothers Grimm, to “penny dreadful” novels, to comic books, to movies, to video games, each new entertainment medium was said to achieve innovative levels of mind control that corrupted children with flashing pictures, bright colors, or suggestive mental imagery. 

And it seems like the justices were listening.

Throughout a lively oral argument that primarily dealt with the vagueness of trying to define a “violent video game,” justices and counsel consistently discussed the rogues gallery of past entertainment industries that were said to corrupt our children. At one point Justice Scalia asked California’s attorney what “deviant violence” is, to which the attorney responded, “deviant would be departing from established norms.” Scalia asked incredulously, “There are established norms of violence?” The attorney began to say “Well, if we look back…” before Scalia cut him off with, “Some of the Grimm’s fairy tales are quite grim, to tell you the truth.” When California’s attorney said he would not advocate banning Grimm’s fairy tales, Justice Ginsburg came back, asking, “What’s the difference?…[I]f you are supposing a category of violent materials dangerous to children, then how do you cut it off at video games? What about films? What about comic books? Grimm’s fairy tales?”

Later in the argument, Paul Smith, attorney for the Entertainment Merchants Association, referenced Cato’s argument: “We do have a new medium here, Your Honor, but we have a history in this country of new mediums coming along and people vastly overreacting to them, thinking the sky is falling, our children are all going to be turned into criminals.”

Granted, these arguments could have been raised even without Cato’s brief, but exchanges like these demonstrate the value of amicus briefs. Along with novel legal arguments, they can supply the Court with historical, statistical, sociological, and other information that is relevant to deciding the case.

You can read the argument transcript here and the audio will be available tomorrow at this site. Thanks to Cato legal associate Trevor Burrus for his continuing work on this case (including with this blogpost).