Why Chris Christie Vetoed an ObamaCare Exchange
On Thursday’s episode of The Daily Show, New Jersey Gov. Chris Christie (R) gave one of the better explanations of why states should say no to an ObamaCare Exchange. (Goes from about 1:10 – 2:50.)
| The Daily Show with Jon Stewart | Mon – Thurs 11p / 10c | |||
| Chris Christie Pt. 2 | ||||
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Is Egypt Molded in Pakistan’s Image?
Last year, in a piece for AOL News titled “Will Egypt Follow Pakistan’s Troubled Path?” I warned that U.S. policymakers must be careful of whatever government follows ousted Egyptian strongman Hosni Mubarak by not repeating the mistake of giving lavish material support to a distasteful regime, as America did with Pakistan’s General-President, Pervez Musharraf. I had argued that the ample generosity of American taxpayers—in the form of lavish military and economic aid—to a foreign dictator’s all-powerful military hardly produces the desired outcomes, and results in a military that is further entrenched and able to ignore the popular demands of its people.
Sadly, that scenario is playing out in Egypt. An editorial in today’s Wall Street Journal picks up on my point from last year, stating, “the result may be a state that is less an Islamist-tinged democracy a la Turkey and more a military-Islamist condominium akin to unstable Pakistan.”
Indeed. The political turmoil in Egypt took yet another disappointing turn yesterday when its Islamist president, Mohamed Morsi, decreed that the military will assume responsibility for security during the country’s constitutional referendum, to take place on December 15. Amid protests against the referendum on a constitution hurried through an Islamist-dominated assembly, Morsi made his decrees immune from judicial review and gave the military the power to arrest civilians. As the Journal explains, the Egyptian military is the most powerful institution in the country and has its own reasons—such as maintaining de facto control over much of the economy—for keeping the status quo.
As for America’s role in this unfolding controversy, the Washington Post’s David Ignatius writes today:
The [Obama] administration’s rejoinder is that this isn’t about America. Egyptians and other Arabs are writing their history now, and they will have to live with the consequences…[B]ut it’s crazy for Washington to appear to take sides against those who want a liberal, tolerant Egypt and for those who favor sharia. Somehow, that’s where the administration has ended up.
Oddly enough, as Ignatius suggests, claiming that “this isn’t about America” is disingenuous. After all, America’s Egypt policy continues to tip the scale on both sides: it backs Egypt’s liberal protesters and the authoritarian government that oppresses them. The world is standing witness to a head-on collision between the Bush freedom agenda and the Cold War relic of U.S. grand strategy in the Middle East, as foreign policy planners in Washington pay lip service to principles of self-determination and political emancipation while simultaneously assisting authoritarian leaders who suppress the popular demands of their people.
In the end, while what is happening in Egypt is unfortunate, come what may. The best way to discredit Islamists is to let their record speak for itself. Egypt’s new Muslim Brotherhood President should be allowed to fail on his own terms. The Egyptian people voted to bring Islamists to power and it was their prerogative to do so. If Washington truly wants to leave Cairo’s future “to the Egyptian people,” then it should do so by phasing out aid to Egypt completely.
Tennessee Rejects an ObamaCare Exchange
Yet another state seems poised to lure employers away from Mississippi. Excerpts from Tennessee Gov. Bill Haslam’s press release:
Tennessee faces a decision this week about health insurance exchanges created by the Affordable Care Act.
I’m not a fan of the law. The more I know, the more harmful I think it will be for small businesses and costly for state governments and the federal government. It does nothing to address the cost of health care in our country. It only expands a broken system…
Since the presidential election, we’ve received 800-plus pages of draft rules from the federal government, some of which actually limit state decisions about running an exchange more than we expected.
The Obama administration has set an aggressive timeline to implement exchanges, while there is still a lot of uncertainty about how the process will actually work. What has concerned me more and more is that they seem to be making this up as they go.
In weighing all of the information we currently have, I informed the federal government today that Tennessee will not run a state-based exchange. If conditions warrant in the future and it makes sense at a later date for Tennessee to run the exchange, we would consider that as an option at the appropriate time.
Education Poll Exposes Moochin’ Americans
As we slide towards the “fiscal cliff,” President Obama’s stance seems pretty clear: Americans want lots of stuff but shouldn’t have to pay for it. (It’s a position the GOP has also often taken.) A new education survey suggests the President’s position is politically smart.
According to the poll, commissioned by the pro-spending Committee for Education Funding, 55 percent of respondents thought “education programs” should be spared automatic budget cuts, third behind Medicare (69 percent) and “tax credits for low-income families” (58 percent). That’s not surprising, since most people are rationally ignorant — how many have the time or inclination to delve into the minutiae of health, education, and tax policy? — and assume that spending on good-sounding things must be, well, good. That rampant rent-seeking and bureaucratic inefficiency squanders the dough probably isn’t something of which many are aware.
From a moral standpoint this isn’t hugely troubling, though one would hope that people would care much more about effects than intentions. What is quite troubling is that while many Americans think education is crucial and should be spared cuts, it seems they aren’t willing to pay for it themselves. 55 percent of respondents thought education should be protected from sequestration, but only 45 percent said they would “definitely” or “probably” be willing to pay more taxes to do it. And odds are respondents were much more willing to say they would accept higher taxes than they would be to support concrete efforts to actually get them.
So who, if anyone, should pay? While the survey isn’t crystal clear on that — indeed, there is much wiggle room throughout the findings – at least one indication is “the rich.” When given the (false) choice of either cuts to federal programs or tax increases for “those with incomes over $250,00 per year,” 58 percent chose the latter.
It’s hard to fault people for not knowing the depressing outcomes of federal programs that purportedly promote good things. It is not so difficult to fault them for saying that other people should pay for the initiatives they think are so dandy.
It seems there’s a fair amount of moochin’ goin’ on.
On the Fiscal Cliff Games
Today POLITICO Arena asks:
Will the wealthy bite back at the GOP?
My response:
The “fiscal cliff” debate going on in Washington today has almost nothing to do with the nation’s fiscal problems, which are rooted in too much spending, not too little taxing. Thus far, the debate’s all politics. Do we need any better evidence than Obama’s obsession with taxing the rich, expected to raise all of $1.6 trillion over 10 years (and we know how reliable those long-range static analyses are)? That barely covers the deficit for one year.
So those few Republicans, mostly in the Senate, who are playing this game deserve to be bitten, not simply by those who’ll be hit by the tax but by anyone who recognizes the game for what it is. When Obama and the Democrats, to say nothing of too many Republicans, get serious about reining in federal spending, then maybe they’ll be taken seriously.
In the meantime, the much over-hyped fiscal cliff looks increasingly attractive. Republicans will take the initial hit. But soon enough it’ll be “Obama’s economy.” That may be the jolt we need. Otherwise, we’ll keep borrowing until lenders decide it’s too risky to keep lending.
Scottish Independence
Alex Salmond, Scotland’s first minister, writes in the Washington Post that his country “once was independent and aspires to that status again.” I regret that a major part of his argument with the Post’s editorial board is whether Scotland would remain involved in global military intervention. You’d think the opportunity to extricate your country from quagmires like Iraq would be a great benefit to the Scots. But Salmond denies that an independent Scotland would mind its own business and live in peace.
Still, independence for any country ought to appeal to Americans, especially to those of us with Scottish roots. Some scholars argue that the Act of Union in 1707 made the Scots part of a larger and more advanced nation and opened the way to the Scottish Enlightenment of David Hume, Adam Smith, and other scholars. And perhaps those modern ideas and the connection with England made possible the achievements of the inventor James Watt, the architect Robert Adam, the road builder John MacAdam, the bridge builder Thomas Telford and later Scots such as Alexander Graham Bell and Andrew Carnegie.
But whatever the benefits of union might have been in 1707, surely they have been realized by now. And alas, the land of Adam Smith has become one of the poorest and most socialist parts of Great Britain. So maybe a libertarian shouldn’t look forward to Scottish independence. On the contrary, I think it’s easy for Scotland to whine and demand more money from the British central government. An independent Scotland would have to create its own prosperity, and surely the people who produced the Enlightenment are smart enough to discover the failures of socialism pretty quickly if they become free, independent, and responsible for their own future.
The Cato Institute’s late, lamented magazine Inquiry got to the topic of Scottish independence long before the voters did, in 1978. Its article was written by Alexander McCall Smith, a distinguished professor of law at the University of Edinburgh but now much better known as the author of the The No. 1 Ladies’ Detective Agency Series, and independence activist Peter Chiene. They haven’t achieved their goal yet, but the landslide victory in 2011 for the Scottish National Party has made national independence a real possibility.
Senate Hearing Wednesday: The ‘School to Prison Pipeline’
I’ll be testifying before the Senate Judiciary Subcommittee on the Constitution, Civil Rights, and Human Rights this Wednesday, at 2:00pm. The hearing will investigate the “school to prison pipeline”—the pattern of flawed disciplinary policies and practices, including “zero tolerance,” that has been widely faulted for unnecessarily pushing students out of school and into the juvenile justice system.
In addition to summarizing some important recent research on the subject, I’ll also be describing an alternative discipline policy that has shown enormous success in one of the most violent, crime-ridden districts in the country, and what Congress can do to encourage the adoption of such policies.
The hearing is open to the public (Dirksen building, room 226), and I’ll be posting my written testimony afterwards.
Exporting Natural Gas
Suddenly, due to improved drilling techniques, the U.S. is overflowing with natural gas, driving down domestic prices. But foreign prices remain high, which means there is an opportunity for us to export natural gas. Unfortunately, the infrastructure does not currently exist. To transport natural gas across the ocean, you have to liquefy it first. We have the facilities to import liquefied natural gas, but not to liquefy it ourselves and export. In order to start exporting, we need to build the appropriate facilities, which requires regulatory approval from the Energy Department. A number of applications have been made to build new facilities.
So why wouldn’t the Energy Department approve this? Some are arguing that allowing exports would raise prices for domestic consumers and manufacturers, and this would be bad for American users of natural gas.
For more on all this, see the Washington Post here and the NY Times here.
Normally, free trade is about whether or not to allow imports, but preventing exports in an effort to help domestic interest groups is really just the same situation in reverse. The Washington Post has a good editorial in which they argue for allowing exports. As they put it:
USUALLY, OPPONENTS of freer trade argue that Americans shouldn’t be buying so many cheap products from abroad, sending their cash overseas. But when it comes to exporting some of this nation’s abundant supplies of natural gas, those who oppose opening up to the world turn that logic on its head — arguing, strangely, that Americans shouldn’t be trying to sell this particular product to other nations, bringing money into the country in the process. Both arguments are unconvincing, and for the same reason: When countries can buy and sell to each other, their economies do what they are best at, producing more with less and driving economic growth.
That’s well put, but let me just add one thing: Under our international trade agreements, we have promised not to restrict exports. We can’t restrict exports just to keep domestic prices down. In fact, we have already brought a successful WTO complaint against China for doing similar things. If we want others to play by the rules, we have to do so as well.
So, not only is allowing exports of natural gas good policy, it is what we have promised to do, and what we are demanding of others.
It Is The Same Banks that Repeatedly Get in Trouble
When the December issue of the Journal of Finance landed on my desk, it was almost like Christmas had come early. Among the articles was an interesting examination of banks which failed (or were rescued) during the recent financial crisis (for a non-pay-wall working paper version see here). The authors set out to ask a simple question: how well does the performance of individual banks in 1998 predict their performance in the recent crisis?
Recall in 1998 Russia defaulted on some of its debts. It was generally believed (erroneously) that nuclear powers did not default. Market participants did not take the news well, with a resulting flight to quality and spike in lending spreads. Then Treasury Secretary Robert Rubin called it “the worst financial crisis in the last 50 years” (sounds a little familiar).
While the authors find that other factors, such as leverage and reliance on short-term funding, were significant predictors of failure, 1998 performance predicted well which banks got in trouble this past crisis. This effect is likely capturing a variety of bank specific characteristics, such a firm culture, risk tolerance and management style.
One of the central debates about financial crises is to what extent are shocks contagious, like a disease that spreads from one bank to another, or rather do shocks, such as recessions, separate weak firms from strong firms? If the former then broad-based Geithner-Bernanke style rescues might be appropriate. If however failures are limited to weak firms, then rescues keep these weak firms, with their dysfunctional cultures around.
The results of this paper suggest to me the importance of allowing firms to fail, rather than resorting to bailouts. One of the fundamental problems of our current bank regulatory regime is that it is subject to its own flawed theory of intelligent design. If only enlightened regulators are given sufficient power, they can design the best system. I believe reality is quite different. Only by allowing the evolutionary sorting of banks, and their firm cultures, can we improve the stability and efficiency of our financial system.
How Government Actually Works, Especially Unaccountable, Multi-Jurisdictional Government
In my book Libertarianism: A Primer, I have a chapter of pop public choice called “What Big Government Is All About.” The Metropolitan Washington Airports Authority isn’t really big government, just a local D.C.-Virginia-Maryland authority to run a couple of airports. But it demonstrates some of the problems you can expect from economic entities that don’t face a market test. Here’s how the Washington Post story today begins:
Meet the Kulle family: mom Helen, daughter Ann Kulle-Helms, son-in-law Douglas Helms, son Albert, daughter-in-law Michele Kulle and Michele’s brother, Jeffrey Thacker.
They all worked for the Metropolitan Washington Airports Authority. All at the same time.
And what about Dad, I wonder. No job for Dad?
Anyway, officers of the agency don’t seem perturbed by the story.
“There were no clear-cut guidelines,” said MWAA board member H.R. Crawford, who will leave the board next month when his term expires.
Crawford, who has had at least three relatives, including a daughter-in-law, work at the agency, said family members are employed frequently, particularly among board members.
“If you ask a third of those folks, their relatives work there,” he said. “I never thought that we were doing anything wrong.”…
“This is a government town and an agency town,” Crawford said. “If there’s a possibility that you can hire a relative . . . it was the norm.”…
“This is not a patronage mill,” said Davis, whose daughter worked in the fire department for two months in 2011. “Dozens of employees’ kids worked there.”
At this point the response of good-government liberals is always: Pass an ethics law. Yeah, that ought to work.
MWAA’s ethics code prohibits employees from hiring, supervising or working with relatives. They also cannot supervise family members — directly or indirectly — or “have influence over their work.”
The Current Wisdom: ‘Dumb People’ Syndrome
The Current Wisdom is a series of monthly articles in which Patrick J. Michaels, director of the Center for the Study of Science, reviews interesting items on global warming in the scientific literature that may not have received the media attention that they deserved, or have been misinterpreted in the popular press. Occasionally — as in this edition — we examine recent global warming perceptions that are at odds with reality.
“The habitability of this planet for human beings really is at risk.”
–Al Gore, July 18, 2007
The notion that people just can’t adapt to change (and therefore that governments must regulate change) is known as “Dumb People Syndrome” (DPS). Given the fact that the planet is “habitable” (meaning that there large numbers of people) over a mean annual temperature range of approximately 40°C , Gore’s statement—which is about a few degrees C, at best—is quintessential DPS.
DPS has its subtypes, such as “Dumb Farmer Syndrome”, in which there’s agricultural Armageddon as the world’s farmers fail to adapt to warming conditions. It’s not only preposterous, it’s inconsistent with history.
Farmers aren’t dumb, and there are incentives for their supply chain—breeders, chemical manufacturers, equipment companies, etc.—to produce adaptive technologies. Corn is already much more water-use efficient than it was, thanks to changes in genetics, tillage practices, and farm equipment. The history of U.S. crop yield bears strong witness (Figure 1).
A look at the horrible crop year of 2012 is instructive. Corn yield drops about 38 bushels per acre from what’s known as the “technological trend line.” Because the “expected” yield—thanks to technology—with good weather is so high (around 160 bushels/acre), that’s a drop of about 24%, which is simply unremarkable when compared to the other lousy weather years of 1901 (36%), 1947 (21%), 1983 (29%) and 1988 (30%). Did we mention that the direct fertilization effect of atmospheric CO2 has resulted in a corn yield increase of approximately seven per cent?
Most assessments of the impacts of climate change give some credence to DPS. Below is one of the “Key Findings” from the report Global Climate Change Impacts in the United States produced by the U.S. Climate Change Global Change Research Program (USGCRP), which was used as a major support for the U.S. Environmental Protections Agency’s “Endangerment Finding” that human carbon dioxide emissions are a threat to health and welfare. According to the USGCRP:
Climate Sensitivity Going Down
Global Science Report is a weekly feature from the Center for the Study of Science, where we highlight one or two important new items in the scientific literature or the popular media. For broader and more technical perspectives, consult our monthly “Current Wisdom.”
“Climate sensitivity” is the amount that the average global surface temperature will rise, given a doubling of the concentration of atmospheric carbon dioxide (CO2) in the atmosphere from its pre-industrial value. This metric is the key to understanding how much global warming will occur as we continue to burn fossil fuels for energy and emit the resultant CO2 into the atmosphere.
The problem is that we don’t know what the value of the climate sensitivity really is.
In its Fourth Assessment Report, released in 2007, the United Nations’ Intergovernmental Panel on Climate Change (IPCC) had this to say about the climate sensitivity:
It is likely to be in the range 2°C to 4.5°C with a best estimate of about 3.0°C, and is very unlikely to be less than 1.5°C. Values substantially higher than 4.5°C cannot be excluded…
In IPCC parlance, the term “likely” means a probability of greater than 66% and “very likely” means a greater than 90% change of occurrence. The IPCC’s 90% range for the climate sensitivity includes values at the low end which, if proven true, would engender very little concern over our use of fossil fuels as a primary energy source, and values at the high end would generate calls for frantic efforts (which would likely fail) to lower carbon dioxide emissions.
While there has been a lot of effort expended to better constrain estimates of sensitivity over the past several decades, little progress has been made in narrowing the range. The IPCC’s First Assessment Report, released back in 1990, gave a range of 1.5°C to 4.5°C. It’s not that climate science hasn’t progressed since then, but just that the advanced understanding has not led to substantially better constraints.
But what has occurred over the past several decades is that greenhouse emissions have continued to rise (in fact, half of the total anthropogenerated carbon dioxide emissions have been since the mid-1980s), and global temperature observations have continued to be collected. We now have much more data with which to use to try to determine the sensitivity.
While global carbon dioxide emissions continue to rise year-over-year (primarily driven by the rapid growth in developing countries such as China), global temperatures have not kept up—in fact, there has been little to no overall global temperature increase (depending upon the record used) over the past decade and a half.
That doesn’t bode well for the IPCC’s high-end temperature sensitivity estimates. The scientific literature is now starting to reflect that reality.
Never mind that Pat Michaels and I published a paper in 2002 showing that the sensitivity lies near the low side of the IPCC’s range. This idea (and those in similar papers subsequently published by others) had largely been ignored by the “mainstream” scientists self-selected to produce the IPCC Assessments. But new results supporting lower and tighter estimates of the climate sensitivity are now appearing with regularity, a testament to just how strong the evidence has become, for such results had to overcome the guardians of the IPCC’s so called “consensus of scientists”, which the Climategate emails showed to be less than gentlemanly.
Figure 1 shows the estimates of the climate sensitivity from five research papers that have appeared in the past two years, including the recent contributions from Ring et al. (2012) and van Hateren (2012)—both of which put the central estimate of the climate sensitivity at 2°C or lower, values which are at or beneath the IPCC’s current “likely” range.
The IPCC is scheduled to release its Fifth Assessment Report in 2013. We’ll see whether these new, lower, and more constrained estimates of climate sensitivity that are increasing populating the literature result in a modification of the IPCC estimates, or whether the IPCC authors manage to wave them all away (or simply ignore them, as was the case with our 2002 paper).
Regardless of how the IPCC ultimately assesses climate science in 2013, the fact of the matter is that there is growing evidence that anthropogenic climate change from the burning of fossil fuels is not going to turn out to be as much as climate alarmists have made it out to be.
References:
Annan, J.D., and J.C. Hargreaves, 2011. On the generation and interpretation of probabilistic estimates of climate sensitivity. Climatic Change, 104, 324-436.
Lindzen, R.S., and Y-S. Choi, 2011. On the observational determination of climate sensitivity and its implications. Asia-Pacific Journal of Atmospheric Sciences, 47, 377-390.
Michaels, P.J., P.C. Knappenberger, O.W. Frauenfeld, and R.E. Davis, 2002. Revised 21st century temperature predictions. Climate Research, 23, 1-9.
Ring, M.J., et al., 2012. Causes of the global warming observed since the 19th century. Atmospheric and Climate Sciences, 2, 401-415, doi:10.4236/acs.2012.24035.
Schmittner, A., et al., 2011. Climate sensitivity estimated from temperature reconstructions of the Last Glacial Maximum, Science, 334, 1385-1388, doi: 10.1126/science.1203513.
Solomon, S., et al., (eds.), 2007. Climate Change 2007: The Physical Science Basis. Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press, Cambridge, 996pp.
van Hateren, J.H., 2012. A fractal climate response function can simulate global average temperature trends of the modern era and the past millennium. Climate Dynamics, doi:10.1007/s00382-012-1375-3.
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