The Heritage Insider: Fifty years later Reagan's speech still instructs, tales of the surveillance state, does foreign aid weaken Ebola response? and more

November 1, 2014

Latest Studies
38 new items, including an e21 study finding that more prosperity and lower inequality often do not go hand in hand, and a school starter checklist from the Friedman Foundation for Educational Choice

Notes on the Week
Fifty years later Reagan’s speech is still a bold statement for ordered liberty, tales of the surveillance state, does foreign aid make a country more vulnerable to Ebola? and more

To Do
Examine the poverty of compassion

Latest Studies

Budget & Taxation
• The Economic Costs of Capital Gains Taxes in Canada – Fraser Institute
• Moral Debts – Hoover Institution
• The Impact of Piketty’s Wealth Tax on the Poor, the Rich, and the Middle Class – Tax Foundation

Crime, Justice & the Law
• Overcriminalizing the Wolverine State – Manhattan Institute

Economic Growth
• ‘Whatever It Takes’ Breaks Down – American Enterprise Institute
• Inequality Does Not Reduce Prosperity: A Compilation of the Evidence Across Countries – e21 – Economic Policies for the 21st Century
• The 49th State: Revisiting Missouri’s GDP Sector by Sector – Show-Me Institute

Education
• Launching New Institutions: Solving the Chicken-or-Egg Problem in American Higher Education – American Enterprise Institute
• The School Starter Checklist: Meeting the Private Education Regulations in States with School Choice – Friedman Foundation for Educational Choice
• Michigan School Privatization – Mackinac Center for Public Policy

Elections, Transparency, & Accountability
• Imaginary Egypt – Hoover Institution

Family, Culture & Community
• For Richer, For Poorer: How Family Structures Economic Success in America – American Enterprise Institute

Foreign Policy/International Affairs
• The U.S. Should Not Rejoin the United Nations Industrial Development Organization – The Heritage Foundation
• U.S. Counternarcotics Efforts in Afghanistan Fail to Deliver – The Heritage Foundation
• Military Means for Political Ends in the Israeli-Palestinian Conflict – Hoover Institution

Health Care
• A Fresh Start for Health Care Reform – The Heritage Foundation
• Ebola: Dallas and New York City Experiences Drive Governments to Change Practices – The Heritage Foundation
• Fortress and Frontier in American Health Care – Mercatus Center

Information Technology
• Congress Begins to Consider a New Communications Act – Federalist Society
• Cyber Attacks on U.S. Companies in 2014 – The Heritage Foundation
• Have We Got it All Wrong? Forecasting Mobile Data Use and Spectrum Exhaust – Phoenix Center for Advanced Legal and Economic Public Policy Studies

International Trade/Finance
• The Trans-Pacific Partnership and America’s Strategic Role in Asia – American Enterprise Institute
• Will Nonmarket Economy Methodology Go Quietly into the Night? – Cato Institute

Monetary Policy/Financial Regulation
• Federal Reserve Performance: Have Business Cycles Really Been Tamed? – The Heritage Foundation
• Federal Reserve Performance: What Is the Fed’s Track Record on Inflation? – The Heritage Foundation
• Across the Great Divide: New Perspectives on the Financial Crisis – Hoover Institution

National Security
• NATO Air Power: A Self-Reliant Europe? – American Enterprise Institute
• Continuing Federal Cyber Breaches Warn Against Cybersecurity Regulation – The Heritage Foundation
• “Ukraine Is Fighting Our Battle” – Hoover Institution
• Just the Start of an Age-Old Conflict? – Hoover Institution

Natural Resources, Energy, Environment, & Science
• Not Beyond Coal: How the Global Thirst for Low-Cost Electricity Continues Driving Coal Demand – Manhattan Institute
• The Future of Farming and Rise of Biotechnology – National Center for Policy Analysis

Regulation & Deregulation
• Time to Reform FTC Advertising Regulation – The Heritage Foundation
• Regulation of Platform Markets in Transportation – Mercatus Center

Transportation/Infrastructure
• America’s Electricity Grid: Outdated or Underrrated? – The Heritage Foundation
• How Often Do Cities Mandate Smart Growth or Green Building? – Mercatus Center
• Evaluation of Plan Bay Area – Pacific Research Institute
• Regarding Population Growth and Housing Affordability in Texas – Texas Public Policy Foundation

Notes on the Week

Video of the week: The speech: Fifty years ago Monday, Ronald Reagan gave his first national political speech. In making his pitch for the country to get behind Barry Goldwater’s campaign for president, Reagan talked about many things, but especially government’s proper and limited role in a free society:

This is the issue of this election: Whether we believe in our capacity for self-government or whether we abandon the American revolution and confess that a little intellectual elite in a far-distant capitol can plan our lives for us better than we can plan them ourselves.

You and I are told increasingly we have to choose between a left or right. Well I’d like to suggest there is no such thing as a left or right. There’s only an up or down—[up] man’s old—old-aged dream, the ultimate in individual freedom consistent with law and order, or down to the ant heap of totalitarianism. And regardless of their sincerity, their humanitarian motives, those who would trade our freedom for security have embarked on this downward course.

In this vote-harvesting time, they use terms like the “Great Society,” or as we were told a few days ago by the President, we must accept a greater government activity in the affairs of the people. But they’ve been a little more explicit in the past and among themselves; and all of the things I now will quote have appeared in print. These are not Republican accusations. For example, they have voices that say, “The cold war will end through our acceptance of a not undemocratic socialism.” Another voice says, “The profit motive has become outmoded. It must be replaced by the incentives of the welfare state.” Or, “Our traditional system of individual freedom is incapable of solving the complex problems of the 20th century.” Senator Fullbright has said at Stanford University that the Constitution is outmoded. He referred to the President as “our moral teacher and our leader,” and he says he is “hobbled in his task by the restrictions of power imposed on him by this antiquated document.” He must “be freed,” so that he “can do for us” what he knows “is best.” And Senator Clark of Pennsylvania, another articulate spokesman, defines liberalism as “meeting the material needs of the masses through the full power of centralized government.”

Well, I, for one, resent it when a representative of the people refers to you and me, the free men and women of this country, as “the masses.” This is a term we haven’t applied to ourselves in America. But beyond that, “the full power of centralized government”—this was the very thing the Founding Fathers sought to minimize. They knew that governments don’t control things. A government can’t control the economy without controlling people. And they know when a government sets out to do that, it must use force and coercion to achieve its purpose. They also knew, those Founding Fathers, that outside of its legitimate functions, government does nothing as well or as economically as the private sector of the economy.

Government transfers wealth in leaky buckets. How leaky are those buckets?

French superstar economist Thomas Piketty thinks an annual wealth tax of 1 percent on net worth between $1.3 million and $6.5 million and 2 percent on wealth above $6.5 million would be one way to help the poor. But the Tax Foundation finds that the proposal generates a revenue gain for the government of only $20 billion while costing the economy as a whole $800 billion. When you tax wealth-creating behavior, people create less wealth. Here is a summary of the Tax Foundation’s findings from its Taxes and Growth (TAG) model:

Piketty’s basic tax would depress the capital stock by 13.3 percent, decrease wages by 4.2 percent, eliminate 886,400 jobs, and reduce GDP by 4.9 percent, or about $800 billion, all for a revenue gain of less than $20 billion.

The addition of a tax beginning at a net worth of about $260,000 would reduce capital formation by 16.5 percent, decrease wages by 5.2 percent, eliminate 1.1 million jobs, and reduce GDP by 6.1 percent (about $1 trillion annually in terms of today’s GDP), all for a revenue gain of only $62.6 billion.

All income groups would be worse off under a wealth tax due to decreased economic activity; in the second scenario, the after-tax income loss for the top quintile would exceed 10 percent, but the losses for all lower quintiles would be in the 7 to 9 percent range. [“The Impact of Piketty’s Wealth Tax on the Poor, the Rich, and the Middle Class,” by Michael Schuyler, Tax Foundation, October 2014]

And how much of that $20 billion would even reach the poor after passing through the hands of all the various bureaucracies that claim to look out for them?

Message received: Last week, we let you know about the call to send bibles and sermons to Houston Mayor Annise Parker. The point of the effort was to show support for the First Amendment and religious liberty following the city’s legal fishing expedition into the communications of some local pastors. Houston had been sued for disallowing a ballot petition relating to its equal rights ordinance. So the city responded with subpoenas that asked five pastors for “all speeches, presentations, or sermons related to [the Houston Equal Rights Ordinance], the Petition, Mayor Annise Parker, homosexuality, or gender identity prepared by, delivered by, revised by, or approved by you or in your possession.”

According to the Mayor’s office, it has received between 500 and 1,000 bibles. On Wednesday, Mayor Parker announced that the city was withdrawing the subpoenas entirely. [The Blaze, October 29]

Political spending in perspective:

Of course, political spending is scary to the people who have political power and are afraid they’ll be held accountable for how they have used that power.

The lessons of chess: Have you ever thought about why the game of chess has been around for millennia? Why it has roots in numerous cultures? Why it transcends language barriers? Economics professor Svetozar Pejovich has. He shared his thoughts in remarks made in both Serbian and English before the ninth annual online chess match between the University of Texas at Dallas and the University of Belgrade. Here is the English version:

From its appearance in the sixth century, the game of chess has withstood the test of time. It means that the game has qualities that go beyond the thrills of winning and the pains of losing. It has remained popular for over 1000 years because it bears a resemblance to the basic human craving for individual liberty under a rule of law. Why?

In some societies, the ruling elite restricts the freedom of individuals to make their choices. In some other societies individuals make choices free from outside interferences. In the game of chess, the outcome is fully dependent on the player’s freedom from outside interferences. Why is the freedom to choose important, in chess as well in life? Just ask yourself how your behaviors would change if you were not allowed to independently decide on your moves in chess. Discouraged? Disinterested? Lazy? All of which would lead to a lower competence level. Thus the freedom of choice creates incentives for us to excel in what we do. Hence chess is consistent with human preference for individual liberty.

Major economic functions of the rule of law are to protect the freedom of choice, and to minimize the discretionary power of the state to interfere with the right of individuals to pursue their preferences. Frequent changes in the rules increase the risk associated with activities that have future consequences. How discouraging would frequent changes in the rules of chess be on the quality of the game? How would frequent changes in the rules affect your ability to prepare for the game? And how would frequent changes in the rules influence your desire to play chess? Thus, chess requires stable rules

In summary, the game of chess, the game we all love, has survived 1500 years because it is not just a game; it is a lesson in life because it bears a resemblance to the basic human craving for individual liberty under a rule of law.

But who will police the campaign finance police? Milwaukee county district attorney John Chisholm’s attempt to criminalize political coordination between conservative organizations and Wisconsin Gov. Scott Walker is an attempt to criminalize political activity by one side of the political spectrum; it’s the kind of abuse that inevitably follows campaign finance regulation, writes George Will:

On October 14, much too late in the campaign season to rescue the political participation rights of conservative groups, a federal judge affirmed what Chisholm surely has known all along: Since a U.S. Supreme Court ruling 38 years ago, the only coordination that is forbidden is between candidates and independent groups that go beyond issue advocacy to “express advocacy” — explicitly advocating the election or defeat of a particular candidate.

But Chisholm’s aim — to have a chilling effect on conservative speech — has been achieved by bombarding Walker supporters with raids and subpoenas: Instead of raising funds to disseminate their political speech, conservative individuals and groups, harassed and intimidated, have gone into a defensive crouch, raising little money and spending much money on defensive litigation. Liberal groups have not been targeted for their activities that are indistinguishable from those of their conservative counterparts.

Such misbehavior takes a toll on something that already is in short supply — belief in government’s legitimacy. The federal government’s most intrusive and potentially punitive institution, the IRS, unquestionably worked for Barack Obama’s reelection by suppressing activities by conservative groups. Would he have won if the government he heads had not impeded political participation by many opposition groups? We will never know.

Would the race between Walker and Democrat Mary Burke be as close as it is if a process susceptible to abuse had not been so flagrantly abused to silence groups on one side of Wisconsin’s debate? Surely not.

Gangster government — Michael Barone’s description of using government machinery to punish political opponents or reward supporters — has stained Wisconsin, illustrating this truth: The regulation of campaigns in the name of political hygiene (combating “corruption” or the “appearance” of it) inevitably involves bad laws and bad bureaucracies susceptible to abuse by bad people. [National Review, October 25]

Does too much foreign aid make a country vulnerable to Ebola? Nigeria has done a much better job containing its Ebola outbreak than has Liberia. Foreign aid might account for the difference: The more a government depends on outside resources, the less effective it is at marshalling its own resources to respond to a public health crisis. Shikha Dalmia contrasts the two countries, noting that Nigerian officials understood what to do “when an infected Liberian-American man collapsed in Lagos airport.”

They quickly isolated him once his condition was diagnosed. They also mounted an immediate campaign to track down and monitor about 900 people who came in contact with him. They tapped staff from the country’s polio-eradication program to help run an emergency operations center. Ultimately, despite its dense population, Nigeria kept its outbreak to a grand total of 19 cases with only seven casualties—a mortality rate of 37 percent.

Liberia, however, is another story.

Unlike Nigeria, Liberia’s immediate reaction was not to marshal its domestic resources but to hold press conferences and appeal for international aid, points out Johannesburg-based Yale World Fellow Sisonke Msimang. Liberian President Ellen Johnson Sirleaf, a Nobel peace laureate, even penned an open letter to the “world” this week, plaintively crying that Ebola wasn’t a domestic problem but a global one that “governments to international organizations, financial institutions to NGOs, politicians to ordinary people in the street in every corner of the world” had a “duty” to combat through “emergency funds, medical supplies, or clinical capacity.”

But the “world” has been supplying all of this and more to Liberia in spades. Indeed, Liberia is among the largest aid recipients on the continent, with about 75 percent of its budget supplied by aid agencies. It receives $139 per capita in loans and grants, according to World Bank figures, compared with Nigeria’s $11 per capita.

Liberia’s capital, Monrovia, where 305 new Ebola cases were reported last week alone, is practically crawling with NGOs and aid workers. […]

This might seem surprising, but it is actually perfectly predictable. Western aid, though aimed at helping Liberia recover from decades of brutal civil wars, has created a hopelessly dependent political class that stays in business by ignoring good governance and appealing to its Western benefactors.

Liberian authorities therefore have neither the wherewithal nor the trust of their citizens to mobilize an action plan. In fact, Monrovians in a slum initially attacked crisis responders who approached them about the disease because they believed that Ebola was a government ploy to shake down international agencies for more aid. [Reason, October 28]

Tales of the surveillance state: When she was at CBS News, Sharyl Attkisson was one of the few reporters at a major network who didn’t stop asking questions about how the government responded to the 9/11/12 attack in Benghazi, Libya, that killed an American ambassador and three other Americans. That focus put her crossways with her bosses at CBS News. David Rhodes, CBS News President since 2011, is the brother of Ben Rhodes, who has worked in the White House writing national security speeches for President Barack Obama since 2007.

Did Attkisson’s doggedness also earn her some electronic surveillance from the government? Atkkisson’s new book, Stonewalled: My Fight for Truth Against the Forces of Obstruction, Intimidation, and Harassment in Obama’s Washington, will go on sale November 4. This week a number of news outlets are excerpting portions of the book, and they’ve noticed some bits that would be as entertaining as a spy novel—if they weren’t so troubling.

Kyle Smith and Bruce Golding report that in 2013 Attkisson learned her computer contained spyware that “monitored her every keystroke and gave the snoops access to all her e-mails and the passwords to her financial accounts” and may have even turned her computer into a listening device.

Attkisson says the source, who’s “connected to government three-letter agencies,” told her the computer was hacked into by “a sophisticated entity that used commercial, nonattributable spyware that’s proprietary to a government agency: either the CIA, FBI, the Defense Intelligence Agency or the National Security Agency.” […]

But the most shocking finding, she says, was the discovery of three classified documents that Number One told her were “buried deep in your operating system. In a place that, unless you’re a some kind of computer whiz specialist, you wouldn’t even know exists.”

“They probably planted them to be able to accuse you of having classified documents if they ever needed to do that at some point,” Number One added. [New York Post, October 27]

If you think that’s creepy, read the outtakes offered by Erik Wemple, which focus on the discovery of stray cable dangling from Attkisson’s Verizon FiOS Box—cable that Verizon technicians confirmed should not have been there. The technicians removed the cable from the box and left it behind in the Attkisson home. That piece of cable, however, was gone when Attkisson’s husband looked for it later. There’s also something about unmarked utility vans with unusual antennae parked up the street seemingly working on no known utility projects. [Washington Post, October 28]

To Do: Examine the Poverty of Compassion

• Learn how “liberal compassion ultimately fails to deliver on its promise to help others, although it never fails to make liberals feel better about themselves.” William Voegeli will talk about his new book, The Pity Party: A Mean-Spirited Diatribe Against Liberal Compassion at The Heritage Foundation. Voegeli’s talk will begin at noon on November 6.

• Assess the prospects for private currencies, decentralized monetary regimes, and free banking. The Cato Institute will host its 32nd Annual Monetary Conference, beginning at 9 a.m. on November 6.

• Discover what the Founders really thought about religion. Steven D. Smith with talk about his book The Rise and Decline of American Religious Freedom at the George Washington University Law School. Smith’s talk will start at noon on November 6.

• Break down the election results with Michael Barone, Karlyn Bowman, Norman Ornstein, Henry Olsen, and John Fortier. The election analyzing will begin at noon on November 6 at the American Enterprise Institute.

• Law students, win up to $3,000 by writing a great law article. The Pacific Legal Foundation is holding a Law Student Writing Competition. It’s open to anyone currently enrolled in law school in the United States. The submission deadline is January 16, 2015.

• Remember to vote; but, as President Obama reminded us, vote only once.

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