Mary Anastasia O’Grady has an excellent article in today’s Wall Street Journal on the Obama administration’s failure to push the U.S.-Colombia preferential trade agreement. She rightly points out that the terms of the agreement should be especially favorable to mercantalists, since the agreement would see no reductions in the tariffs the United States places on Colombian goods — most of which already enter duty-free under the terms of the Andean Trade Preference Act — but will oblige Colombia to open its markets to those U.S. exports the administration is always banging on about.
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Obama Adopts Cato Pay Proposal
The Obama administration is supporting a two-year freeze on federal pay. I haven’t seen the details yet, but this appears to be a good start at getting excessive government pay under control.
I’ve been calling for a pay freeze since an op-ed in the Washington Post in 2006. Since then, average federal pay has continued to soar far above average private pay, which has finally prompted policymakers to take note.
The Obama proposal would apparently save $28 billion over five years. Hopefully, that will be the first of many budget savings that the administration and Republicans in Congress can work on together in coming months. I’ve described other ways to tackle the government’s overspending problem here.
The next step to reform federal worker compensation should be to pare back overly generous benefit packages — for example, by eliminating defined-benefit pension plans, which come on top of the defined-contribution pensions that federal workers enjoy.
Another step would be to call in an outside human resources firm to audit the federal pay methodology, particularly the mysterious formula used to calculate the federal “pay gap,” which purports to show that federal workers are grossly underpaid.
See this essay on overpaid federal workers for details on reforming federal pay.
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Diane Ravitch Is Right on Republicans and NCLB
Writing in yesterday’s WSJ, education historian Diane Ravitch laments that Republicans have abandoned their earlier defense of federalism and limited government in education, embracing vast and expanding powers for Washington over the nation’s schools. In particular, she faults the No Child Left Behind act for demanding public school improvements that have not been forthcoming and for imposing “corrective” measures that will not correct the problem.
Though I depart from Ravitch on most education policy matters — and not just on conclusions but also methodology — she is right in both of the above observations. Over the past decade, many Republicans have championed new federal powers in education that have no basis in the U.S. Constitution, no plausible empirical justification, and no evidence of success. NCLB demands higher achievement without creating the market freedoms and incentives that would actually allow it — asking, in other words, for the impossible.
With the current resurgence of public interest in limited government, Republicans have an excellent opportunity to rekindle their commitment to the limited federal role in education laid out by the U.S. Constitution. Phasing out NCLB would be a good place to start.
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The Consumer Spending Fallacy behind Keynesian Economics
I’m understandably fond of my video exposing the flaws of Keynesian stimulus theory, but I think my former intern has an excellent contribution to the debate with this new 5‑minute mini-documentary.
The main insight of the mini-documentary is that Gross Domestic Product (GDP) only measures how national output is allocated between consumption, investment, and government. That’s useful information in many ways, but if we want more output, we should focus on Gross Domestic Income (GDI), which measures how national income is earned.
Focusing on GDI hopefully would lead lawmakers to consider ways of boosting employee compensation, corporate profits, small business income, and other components of national income. Focusing on GDP, by contrast, is misguided since any effort to boost consumption generally leads to less investment. This is why Keynesian policies only redistribute national income, but don’t boost overall output.
You may recognize Hiwa. She narrated a very popular video earlier this year on the nightmare of income-tax complexity.
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What Austrian Economics Is
…and what it is not. That’s Steve Horwitz’s topic in this post at Coordination Problem. He notes a recent post at FrumForum about “the Austrian school’s disdain for American foreign policy and willingness to call Lincoln a tyrant.”
No, Horwitz says. Austrian economics is “an approach to the study of human action and the social world, not a set of policy conclusions.” Austrian economics is not the same thing as libertarianism, natural rights, or any perspective on American wars past or present.
TSA’s Strip/Grope: Unconstitutional?
Writing in the Washington Post, George Washington University law professor Jeffrey Rosen carefully concludes, “there’s a strong argument that the TSA’s measures violate the Fourth Amendment, which prohibits unreasonable searches and seizures.” The strip/grope policy doesn’t carefully escalate through levels of intrusion the way a better designed program using more privacy protective technology could.
It’s a good constutional technician’s analysis. But Professor Rosen doesn’t broach one of the most important likely determinants of Fourth Amendment reasonableness: the risk to air travel these searches are meant to reduce.
Writing in Politico last week, I pointed out that there have been 99 million domestic flights in the last decade, transporting seven billion passengers. Not one of these passengers snuck a bomb onto a plane and detonated it. Given that this period coincides with the zenith of Al Qaeda terrorism, this suggests a very low risk.
Proponents of the TSA’s regime point out that threats are very high, according to information they have. But that trump card—secret threat information—is beginning to fail with the public. It would take longer, but would eventually fail with courts, too.
But rather than relying on courts to untie these knots, Congress should subject TSA and the Department of Homeland Security to measures that will ultimately answer the open risk questions: Require any lasting security measures to be justified on the public record with documented risk management and cost-benefit analysis. Subject such analyses to a standard of review such as the Adminstrative Procedure Act’s “arbitrary and capricious” standard. Indeed, Congress might make TSA security measures APA notice-and-comment rules, with appropriate accomodation for (truly) temporary measures required by security exigency.
Claims to secrecy are claims to power. Congress should withdraw the power of secrecy from the TSA and DHS, subjecting these agencies to the rule of law.
Lame Ducks and Locavores On Food Safety
Last week the New York Times reported on the story of Estrella Family Creamery, an award-winning, very-small-scale producer of raw milk farmstead cheeses in Montesano, Wash. The family faces a Food and Drug Administration ban on its products because the food pathogen listeria has been found in its facilities; when it expressed defiance, the FDA proceeded to stage a raid to seize its entire cheese stock. It’s not easy to sort out how large a health risk may be involved (listeria, a widely disseminated form of bacteria, poses a real danger of food poisoning, but no actual illness has been traced to Estrella cheese). I was struck, in any event, by these paragraphs from the Times account:
“If the F.D.A. wanted to shut down the U.S. artisan cheese industry, all they’d have to do is do this environmental surveillance and the odds of finding a pathogen would be pretty great,” said Catherine W. Donnelly, co-director of the Vermont Institute for Artisan Cheese of the University of Vermont, referring to the listeria testing at cheese plants. “Is our role to shut these places down or help them?”
Kurt Beecher Dammeier, owner of Beecher’s Handmade Cheese, an artisan cheesemaker and retailer in Seattle, said the F.D.A. needed to work harder to understand artisans like Ms. Estrella. “The F.D.A. comes from an industrial, zero-defect, highly processed, repeatable perspective, and she comes from a more ancient time of creating with what she gets,” he said. “I’m not sure they can really even have a conversation.”
What lends some urgency to these continuing debates is that that the Senate is expected to vote as early as this week on a bill that will conscript thousands of food producers, processors and “facilities” — including many that produce or import relatively low-risk foods for specialty, local or ethnic clienteles — into a best-industrial-practices safety model with extensive recordkeeping requirements and other regulatory burdens. The bill cleared a Senate cloture vote the other day 74–25 and is scheduled for floor consideration Monday.
Much of the bill’s press coverage — as with a USA Today editorial which followed ridiculously slanted coverage in that paper — appears blithely unaware of the apprehension the bill has raised among small farmers and organic/“locavore” advocates. Some of those fears played out in a battle over an amendment offered by Sen. Jon Tester (D‑Mont.) to lessen regulatory burdens on smaller local producers, and strongly backed by (e.g.) foodie guru Michael Pollan. Most big “consumer” groups, however, including Consumers Union and the Center for Science in the Public Interest, lined up against the small farmers and facilities, as did (following their lead) the New York Times, whose editorial managed to denounce the Tester amendment without actually saying what it did, lest its readers (who of course include many foodie/locavore believers) be confused. Moreover, many big agribusiness sectors have actively opposed the Tester amendment as well, on the view that any regulatory regime they have to live with, Uncle Perry with his parsnip patch should have to live with too, even if it means he won’t manage to stay in business while they will. Despite that line-up, Senate leaders have now reportedly accepted a watered-down version of the Tester amendment, which does not by any means exempt small producers from federal regulatory control — they will face plenty of it — but at least nods toward the principle of “tiering” burdens. (Earlier here, here, here, here, etc.)
The wider question is whether the bill as a whole, with its massive ramp-up of federal regulation to displace both voluntary market choices and state-level regulation, is a good idea. As I observed to TownHall’s Jillian Bandes, despite the panic atmosphere generated over the issue in recent years, the best evidence is that the incidence of food poisoning continues to fall, not rise; one reason for the greater press coverage of the issue is that science has gotten better at identifying and tracing the sorts of outbreaks that were happening all along. To some who promote a more intensive regulatory state, the resulting “crisis” presents a welcome opportunity, even though, on these advocates’ own terms, the existing array of laws provides ample means by which federal agencies can crack down on food actually shown to pose a hazard.
When the new Congress convenes in January, it will bring to Washington dozens of new lawmakers with more skeptical views about regulation, who may listen with favor to colleagues like Sen. Tom Coburn (R‑Okla.), who has argued against the pending FSMA as an unjustified power grab. Could that be why Sen. Harry Reid (D‑Nev.) is determined to force through the bill during the lame duck session? In this case — as with the very bad Paycheck Fairness Act, which Republicans managed to stop earlier this month, and the even more appalling “Public Safety Employer-Employee Cooperation Act” to force unionization on local public safety workers — it’s almost as if the point of the post-election session is to push controversial measures that would encounter more resistance if held over to the next Congress. Is this really a proper use of the lame duck?