What Unions Do: How Labor Unions Affect Jobs and the Economy. By James Sherk
Heritage Backgrounder #2275
May 21, 2009
What do unions do? The AFL-CIO argues that unions offer a pathway to higher wages and prosperity for the middle class. Critics point to the collapse of many highly unionized domestic industries and argue that unions harm the economy. To whom should policymakers listen? What unions do has been studied extensively by economists, and a broad survey of academic studies shows that while unions can sometimes achieve benefits for their members, they harm the overall economy.
Unions function as labor cartels. A labor cartel restricts the number of workers in a company or industry to drive up the remaining workers' wages, just as the Organization of Petroleum Exporting Countries (OPEC) attempts to cut the supply of oil to raise its price. Companies pass on those higher wages to consumers through higher prices, and often they also earn lower profits. Economic research finds that unions benefit their members but hurt consumers generally, and especially workers who are denied job opportunities.
The average union member earns more than the average non-union worker. However, that does not mean that expanding union membership will raise wages: Few workers who join a union today get a pay raise. What explains these apparently contradictory findings? The economy has become more competitive over the past generation. Companies have less power to pass price increases on to consumers without going out of business. Consequently, unions do not negotiate higher wages for many newly organized workers. These days, unions win higher wages for employees only at companies with competitive advantages that allow them to pay higher wages, such as successful research and development (R&D) projects or capital investments.
Unions effectively tax these investments by negotiating higher wages for their members, thus lowering profits. Unionized companies respond to this union tax by reducing investment. Less investment makes unionized companies less competitive.
This, along with the fact that unions function as labor cartels that seek to reduce job opportunities, causes unionized companies to lose jobs. Economists consistently find that unions decrease the number of jobs available in the economy. The vast majority of manufacturing jobs lost over the past three decades have been among union members--non-union manufacturing employment has risen. Research also shows that widespread unionization delays recovery from economic downturns.
Some unions win higher wages for their members, though many do not. But with these higher wages, unions bring less investment, fewer jobs, higher prices, and smaller 401(k) plans for everyone else. On balance, labor cartels harm the economy, and enacting policies designed to force workers into unions will only prolong the recession.
Full report here
Thursday, May 21, 2009
A High-Speed Rail Mirage
A High-Speed Rail Mirage, by Randal O'Toole
This article appeared in USA Today on May 20, 2009
At first glance, President Obama's enthusiasm for building a high-speed rail network linking major cities seems like a wise move. On closer inspection, however, it is clear that the plan would cost taxpayers billions of dollars and do little to reduce traffic congestion or improve the environment.
Already California, Florida, Illinois and other states are applying for funds under the president's plan. But, except for rail contractors, Americans should find little reason to like this proposal.
Although every taxpayer would share the cost of these trains, high-speed rails are not about serving the common people. Instead, they are aimed at the elite. Japanese and French high-speed trains are attractive to tourists, but they're not heavily used by local residents. Residents of Japan and France on average ride their bullet trains less than 400 miles a year.
Pricey option
Amtrak charges a minimum of $99 for its high-speed Acela from New York to Washington, but only $72 for its conventional train. Fares for unsubsidized buses on this route start as low as $20 (including free Wi-Fi), while airfares start at $99. Only the wealthy and those whose employers cover the cost will pay the $99 rail fare.
Obama's 9,000-mile high-speed rail plan reaches just 33 states, yet the $13 billion he proposes to spend would cover about 2.5% to 25% of the cost, depending on how the system is built. In contrast with the interstate highway system, which paid for itself out of user fees, high-speed rail fares would not cover the capital costs and only part of the operating costs.
Most of Obama's plan should really be called "moderate-speed rail," as it would upgrade existing freight lines to run passenger trains at top speeds of 110 mph. At around $5 million per mile, the total cost would come close to $50 billion.
Not satisfied with moderate-speed trains, California says it wants half of all federal funds so it can build brand-new 220-mph rail lines. But it's unlikely other states will settle for the slower trains if California gets the faster ones. Building fast trains nationwide would cost at least $500 billion. (By comparison, and adjusting for inflation, the 47,000-mile interstate highway system cost about $425 billion.)
Little congestion relief
Besides the high costs, these trains do little to relieve congestion. "Not a single high-speed track built to date has had any perceptible impact on the road traffic" in Europe, says Ari Vatanen, a European Parliament member. California predicts its 220-mph trains would take just 3.5% of cars off of roads. California highway traffic grows that much every two years.
Moderate-speed trains would do even less. Nor would such trains be good for the environment. Amtrak diesel trains are only a little more energy efficient than flying or driving, and pumping those trains up to 110 mph would reduce their efficiency. Because planes and cars are growing 2% more energy-efficient per year, rail would fare poorly by such measures over the next 15 to 20 years.
Moreover, high-speed rail consumes enormous amounts of energy and emits enormous volumes of greenhouse gases. These would cancel out any operational savings over cars and planes.
Interstates paid for themselves out of gas taxes, and most Americans use them almost every day. Rail requires huge tax subsidies and would regularly serve only a small elite. Which is the better symbol for the America President Obama wants to build?
This article appeared in USA Today on May 20, 2009
At first glance, President Obama's enthusiasm for building a high-speed rail network linking major cities seems like a wise move. On closer inspection, however, it is clear that the plan would cost taxpayers billions of dollars and do little to reduce traffic congestion or improve the environment.
Already California, Florida, Illinois and other states are applying for funds under the president's plan. But, except for rail contractors, Americans should find little reason to like this proposal.
Although every taxpayer would share the cost of these trains, high-speed rails are not about serving the common people. Instead, they are aimed at the elite. Japanese and French high-speed trains are attractive to tourists, but they're not heavily used by local residents. Residents of Japan and France on average ride their bullet trains less than 400 miles a year.
Pricey option
Amtrak charges a minimum of $99 for its high-speed Acela from New York to Washington, but only $72 for its conventional train. Fares for unsubsidized buses on this route start as low as $20 (including free Wi-Fi), while airfares start at $99. Only the wealthy and those whose employers cover the cost will pay the $99 rail fare.
Obama's 9,000-mile high-speed rail plan reaches just 33 states, yet the $13 billion he proposes to spend would cover about 2.5% to 25% of the cost, depending on how the system is built. In contrast with the interstate highway system, which paid for itself out of user fees, high-speed rail fares would not cover the capital costs and only part of the operating costs.
Most of Obama's plan should really be called "moderate-speed rail," as it would upgrade existing freight lines to run passenger trains at top speeds of 110 mph. At around $5 million per mile, the total cost would come close to $50 billion.
Not satisfied with moderate-speed trains, California says it wants half of all federal funds so it can build brand-new 220-mph rail lines. But it's unlikely other states will settle for the slower trains if California gets the faster ones. Building fast trains nationwide would cost at least $500 billion. (By comparison, and adjusting for inflation, the 47,000-mile interstate highway system cost about $425 billion.)
Little congestion relief
Besides the high costs, these trains do little to relieve congestion. "Not a single high-speed track built to date has had any perceptible impact on the road traffic" in Europe, says Ari Vatanen, a European Parliament member. California predicts its 220-mph trains would take just 3.5% of cars off of roads. California highway traffic grows that much every two years.
Moderate-speed trains would do even less. Nor would such trains be good for the environment. Amtrak diesel trains are only a little more energy efficient than flying or driving, and pumping those trains up to 110 mph would reduce their efficiency. Because planes and cars are growing 2% more energy-efficient per year, rail would fare poorly by such measures over the next 15 to 20 years.
Moreover, high-speed rail consumes enormous amounts of energy and emits enormous volumes of greenhouse gases. These would cancel out any operational savings over cars and planes.
Interstates paid for themselves out of gas taxes, and most Americans use them almost every day. Rail requires huge tax subsidies and would regularly serve only a small elite. Which is the better symbol for the America President Obama wants to build?
Seven Bad Ideas for Health Care Reform
Obamacare to Come: Seven Bad Ideas for Health Care Reform. By Michael D. Tanner
Cato, May 21, 2009
President Obama has made it clear that reforming the American health care system will be one of his top priorities. In response, congressional leaders have promised to introduce legislation by this summer, and they hope for an initial vote in the Senate before the Labor Day recess.
While the Obama administration has not, and does not seem likely to, put forward a specific reform plan, it is possible to discern the key components of any plan likely to emerge from Congress:
Full report:
Download the PDF of Policy Analysis no. 638 (505 KB)
View this Policy Analysis in HTML
Cato, May 21, 2009
President Obama has made it clear that reforming the American health care system will be one of his top priorities. In response, congressional leaders have promised to introduce legislation by this summer, and they hope for an initial vote in the Senate before the Labor Day recess.
While the Obama administration has not, and does not seem likely to, put forward a specific reform plan, it is possible to discern the key components of any plan likely to emerge from Congress:
- At a time of rising unemployment, the government would raise the cost of hiring workers by requiring employers to provide health insurance to their workers or pay a fee (tax) to subsidize government coverage.
- Every American would be required to buy an insurance policy that meets certain government requirements. Even individuals who are currently insured — and happy with their insurance — will have to switch to insurance that meets the government's definition of "acceptable insurance."
- A government-run plan similar to Medicare would be set up in competition with private insurance, with people able to choose either private insurance or the taxpayer-subsidized public plan. Subsidies and cost-shifting would encourage Americans to shift to the government plan.
- The government would undertake comparative-effectiveness research and cost-effectiveness research, and use the results of that research to impose practice guidelines on providers — initially, in government programs such as Medicare and Medicaid, but possibly eventually extending such rationing to private insurance plans.
- Private insurance would face a host of new regulations, including a requirement to insure all applicants and a prohibition on pricing premiums on the basis of risk.
- Subsidies would be available to help middle-income people purchase insurance, while government programs such as Medicare and Medicaid would be expanded.
- Finally, the government would subsidize and manage the development of a national system of electronic medical records.
Full report:
Download the PDF of Policy Analysis no. 638 (505 KB)
View this Policy Analysis in HTML
Historic compromise on tough fuel economy rules: 'Ford Might Not Survive'
'Ford Might Not Survive.' By Henry Payne
Planet Gore/NRO, May 22, 2009
Detroit, Mich. — Washington’s lap-dog press obediently wagged their tails yesterday at The One’s announcement that autos would have to achieve an absurd 35 mpg in six years (a 40 percent increase in little over one product cycle). Even the Detroit Free Press — which might ask whether the bankrupt industry in its backyard could afford government edicts that will increase their per vehicle costs from $2,500 to $8,000 — fell in line.“President Barack Obama announced a historic compromise on tough fuel economy rules,” gushed Washington reporter Justin Hyde, that “were a ‘harbinger of a change’ for Washington.”
The only dissonant note in the Free Press account was a stray thought about whether anyone would actually buy Obama’s dream cars. “The wild card remains consumers,” allowed the Freep. In a consumer-based market economy, consumers are a “wild card?”Fortunately, media watchdogs still exist.
Los Angeles Times reporter Jim Tankersley took the novel approach of calling sources to find that the “great victory” (as Obama pal Guv Schwarzenegger put it) reached by automakers, greens, and pols was not all hugs and kisses.In fact, Ford had cold feet about the deal right through the weekend. As the only Detroit company without a direct line to Uncle Sugar, Ford faces the massive costs of new mandates alone.
On Sunday, just two days before Obama’s big Rose Garden announcement, reports Tankersley, “a senior Ford executive said the company had run the numbers again and concluded it might not survive if it accepted the deal.”
Ford might not survive.
“In the end, with more number-crunching and another application of White House pressure, Ford did not bolt,” continued the Times report. And since we know the Obama adminstration threatened Chrysler secured debtholders into submission, “White House pressure” is a loaded term.
Whatever pressure was brought, Ford also likely got guarantees that it would have access to the 3 percent of cap-and-tax revenue Mich. Rep. John Dingell has negotiated as part of the upcoming energy bill.
In an industry where government wields unprecedented power, we need watchdog journalism.
The Times report also bucked its media brethren by actually talking to Republicans and the picture got even more chilling.
"These exact companies were fighting this . . . tooth and nail six months ago, and now suddenly they love it?" Rep. John Campbell (R., Calif.) said, accurately reconstructing the recent past. "No, they don't love it. This is what this administration is doing: This administration is autocratically forcing people to do whatever it wants."
Even Schwarzenegger pointed out the 800-pound Rottweiler in the room. "All of a sudden, the car manufacturers needed . . . the taxpayers' money," he said. "So in order to get that help, I'm sure that President Obama said: 'OK . . . here's what you need to do.' "
Translation: Let me make a deal youse Detroiters can’t refuse.
Planet Gore/NRO, May 22, 2009
Detroit, Mich. — Washington’s lap-dog press obediently wagged their tails yesterday at The One’s announcement that autos would have to achieve an absurd 35 mpg in six years (a 40 percent increase in little over one product cycle). Even the Detroit Free Press — which might ask whether the bankrupt industry in its backyard could afford government edicts that will increase their per vehicle costs from $2,500 to $8,000 — fell in line.“President Barack Obama announced a historic compromise on tough fuel economy rules,” gushed Washington reporter Justin Hyde, that “were a ‘harbinger of a change’ for Washington.”
The only dissonant note in the Free Press account was a stray thought about whether anyone would actually buy Obama’s dream cars. “The wild card remains consumers,” allowed the Freep. In a consumer-based market economy, consumers are a “wild card?”Fortunately, media watchdogs still exist.
Los Angeles Times reporter Jim Tankersley took the novel approach of calling sources to find that the “great victory” (as Obama pal Guv Schwarzenegger put it) reached by automakers, greens, and pols was not all hugs and kisses.In fact, Ford had cold feet about the deal right through the weekend. As the only Detroit company without a direct line to Uncle Sugar, Ford faces the massive costs of new mandates alone.
On Sunday, just two days before Obama’s big Rose Garden announcement, reports Tankersley, “a senior Ford executive said the company had run the numbers again and concluded it might not survive if it accepted the deal.”
Ford might not survive.
“In the end, with more number-crunching and another application of White House pressure, Ford did not bolt,” continued the Times report. And since we know the Obama adminstration threatened Chrysler secured debtholders into submission, “White House pressure” is a loaded term.
Whatever pressure was brought, Ford also likely got guarantees that it would have access to the 3 percent of cap-and-tax revenue Mich. Rep. John Dingell has negotiated as part of the upcoming energy bill.
In an industry where government wields unprecedented power, we need watchdog journalism.
The Times report also bucked its media brethren by actually talking to Republicans and the picture got even more chilling.
"These exact companies were fighting this . . . tooth and nail six months ago, and now suddenly they love it?" Rep. John Campbell (R., Calif.) said, accurately reconstructing the recent past. "No, they don't love it. This is what this administration is doing: This administration is autocratically forcing people to do whatever it wants."
Even Schwarzenegger pointed out the 800-pound Rottweiler in the room. "All of a sudden, the car manufacturers needed . . . the taxpayers' money," he said. "So in order to get that help, I'm sure that President Obama said: 'OK . . . here's what you need to do.' "
Translation: Let me make a deal youse Detroiters can’t refuse.
WaPo: A good credit card bill that isn't really needed
A Good Credit Card Bill . . . WaPo Editorial
. . . That isn't really needed
WaPo, Thursday, May 21, 2009
WHY, YOU MIGHT ask, did Congress pass new credit card legislation just months after the Federal Reserve Board adopted what Fed Chairman Ben S. Bernanke described as "the most comprehensive and sweeping reforms" of credit card accounts? The legislation isn't identical to the Fed reforms, but it is awfully similar. As much as anything, this is about Congress not wanting to let a ripe issue go by -- especially one with more popular appeal than, say, bailing out banks.
Redundant as the bill might be, the basic changes make sense. Credit card contracts, and all the fine print that comes with them, have become far more complex over the years; few would disagree with that. To help clarify the terms, the Fed issued a number of changes under the Federal Trade Commission Act and the Truth in Lending Act. Included were requirements for simplified language to help customers understand what they are agreeing to, requirements for a 45-day notice of rate increases (rather than 15), and summary tables of changes in key borrowing terms to make the information more obvious. The Fed also restricted the circumstances under which interest rates could be increased on outstanding balances or accounts with promotional rates; ensured that consumers have adequate time between receiving a bill and having to make a payment; prohibited double-cycle billing; and required that payments be applied to balances carrying the highest interest rates or across the board on balances carrying different rates and not just to balances with the lowest rates.
The Fed rules aren't scheduled to take effect until July 1, 2010, and Congress wanted to speed things up: That's the rationale for a legislative package. However, the time Congress has taken to put the bill together means most changes won't be phased in much sooner than the Federal Reserve rules will be. Congress also has added some measures, including penalty restrictions and disclosure requirements regarding how long it would take to pay off a debt if only the minimum amount were paid each month, as well as an absurd provision that would allow visitors to national parks to carry concealed weapons. But for the most part, the legislation is strikingly similar to what is already set to be phased in.
Increasing clarity is sensible. The new restrictions also make sense on balance, though there will be trade-offs: lending, especially to small businesses and low-income people, who happen to be the riskiest borrowers, will be negatively affected. Fortunately, Congress has resisted the bad idea of placing a cap on the interest rates that companies can charge. Overall, ending the model under which profits stem from customer confusion is a sensible reform -- even if Congress didn't need to jump into the game to get us there.
. . . That isn't really needed
WaPo, Thursday, May 21, 2009
WHY, YOU MIGHT ask, did Congress pass new credit card legislation just months after the Federal Reserve Board adopted what Fed Chairman Ben S. Bernanke described as "the most comprehensive and sweeping reforms" of credit card accounts? The legislation isn't identical to the Fed reforms, but it is awfully similar. As much as anything, this is about Congress not wanting to let a ripe issue go by -- especially one with more popular appeal than, say, bailing out banks.
Redundant as the bill might be, the basic changes make sense. Credit card contracts, and all the fine print that comes with them, have become far more complex over the years; few would disagree with that. To help clarify the terms, the Fed issued a number of changes under the Federal Trade Commission Act and the Truth in Lending Act. Included were requirements for simplified language to help customers understand what they are agreeing to, requirements for a 45-day notice of rate increases (rather than 15), and summary tables of changes in key borrowing terms to make the information more obvious. The Fed also restricted the circumstances under which interest rates could be increased on outstanding balances or accounts with promotional rates; ensured that consumers have adequate time between receiving a bill and having to make a payment; prohibited double-cycle billing; and required that payments be applied to balances carrying the highest interest rates or across the board on balances carrying different rates and not just to balances with the lowest rates.
The Fed rules aren't scheduled to take effect until July 1, 2010, and Congress wanted to speed things up: That's the rationale for a legislative package. However, the time Congress has taken to put the bill together means most changes won't be phased in much sooner than the Federal Reserve rules will be. Congress also has added some measures, including penalty restrictions and disclosure requirements regarding how long it would take to pay off a debt if only the minimum amount were paid each month, as well as an absurd provision that would allow visitors to national parks to carry concealed weapons. But for the most part, the legislation is strikingly similar to what is already set to be phased in.
Increasing clarity is sensible. The new restrictions also make sense on balance, though there will be trade-offs: lending, especially to small businesses and low-income people, who happen to be the riskiest borrowers, will be negatively affected. Fortunately, Congress has resisted the bad idea of placing a cap on the interest rates that companies can charge. Overall, ending the model under which profits stem from customer confusion is a sensible reform -- even if Congress didn't need to jump into the game to get us there.
About Those 'Speculators' . . . Pension funds also got whacked by Uncle Sam
About Those 'Speculators' . . . WSJ Editorial
Pension funds also got whacked by Uncle Sam.
WSJ, May 21, 2009
Remember how President Obama blamed Chrysler's bankruptcy filing last month on "a small group of speculators" who turned down Treasury's $2 billion final offer for their $6.9 billion in debt? Well, it turns out that hedge funds and other short sellers weren't the only secured creditors who got a raw deal from Uncle Sam.
Indiana Treasurer Richard Mourdock revealed this week that his state's police and teacher pension funds have lost millions of dollars in the Chrysler "restructuring." Indiana's State Police Fund and Major Moves Construction Fund, which finances roads and bridges, together lost more than $1 million. And the Teacher's Retirement Fund "suffered, at a minimum, a loss of $4.6 million due to the action of the Federal government," reports Mr. Mourdock.
Far from being speculators, these funds represent retired public employees, including cops and teachers. The funds paid a premium to buy "secured" status, only to discover that they were politically outranked by the United Auto Workers in the White House hierarchy.
"In the past, to be 'secured' meant an investor was 'first in line' in the event of a bankruptcy and 'non-secured' creditors would receive value after secured-creditors were paid," Mr. Mourdock says. "In the Chrysler bankruptcy, however, secured creditors received $.29 on the dollar even as non-secured creditors received higher values and ended up with a 55% ownership of the new company, which is fundamentally wrong and a dangerous precedent to the capital markets."
We've worried that the Chrysler sandbagging would discourage bond investment. And, sure enough, Mr. Mourdock says that from now on no funds under his control will invest in the secured debt of "General Motors, other manufacturing companies, or those insurance companies who have or will be receiving bailout funds." Given the recent actions by the feds, he adds, "the risk is too great for any prudent investor to accept."
This isn't political grandstanding. Public investment officials like Mr. Mourdock have a fiduciary duty to seek maximum returns for retirees. The question for all public officials responsible for investing pension money is whether they too should conclude that investing in U.S.-aided companies now carries so much political risk that it violates their legal obligations. Such are the wages of White House disdain for legal contracts.
Pension funds also got whacked by Uncle Sam.
WSJ, May 21, 2009
Remember how President Obama blamed Chrysler's bankruptcy filing last month on "a small group of speculators" who turned down Treasury's $2 billion final offer for their $6.9 billion in debt? Well, it turns out that hedge funds and other short sellers weren't the only secured creditors who got a raw deal from Uncle Sam.
Indiana Treasurer Richard Mourdock revealed this week that his state's police and teacher pension funds have lost millions of dollars in the Chrysler "restructuring." Indiana's State Police Fund and Major Moves Construction Fund, which finances roads and bridges, together lost more than $1 million. And the Teacher's Retirement Fund "suffered, at a minimum, a loss of $4.6 million due to the action of the Federal government," reports Mr. Mourdock.
Far from being speculators, these funds represent retired public employees, including cops and teachers. The funds paid a premium to buy "secured" status, only to discover that they were politically outranked by the United Auto Workers in the White House hierarchy.
"In the past, to be 'secured' meant an investor was 'first in line' in the event of a bankruptcy and 'non-secured' creditors would receive value after secured-creditors were paid," Mr. Mourdock says. "In the Chrysler bankruptcy, however, secured creditors received $.29 on the dollar even as non-secured creditors received higher values and ended up with a 55% ownership of the new company, which is fundamentally wrong and a dangerous precedent to the capital markets."
We've worried that the Chrysler sandbagging would discourage bond investment. And, sure enough, Mr. Mourdock says that from now on no funds under his control will invest in the secured debt of "General Motors, other manufacturing companies, or those insurance companies who have or will be receiving bailout funds." Given the recent actions by the feds, he adds, "the risk is too great for any prudent investor to accept."
This isn't political grandstanding. Public investment officials like Mr. Mourdock have a fiduciary duty to seek maximum returns for retirees. The question for all public officials responsible for investing pension money is whether they too should conclude that investing in U.S.-aided companies now carries so much political risk that it violates their legal obligations. Such are the wages of White House disdain for legal contracts.
How to Win the 'Long, Hard Slog' - WSJ.com
How to Win the 'Long, Hard Slog' - WSJ.com. By Douglas Feith
Obama is right that we need to be better at civilian national-security operations.
Obama is right that we need to be better at civilian national-security operations.
Wednesday, May 20, 2009
Libertarian on nuclear disarmament
Proliferated Nonsense, by Ted Galen Carpenter
The National Interest (Online), May 20, 2009
It's been a really bad springtime for arms-control activists who want to see a nuclear-free world. First, when the UN Security Council criticized North Korea's test of a long-range ballistic missile in early April, Pyongyang used that response—toothless though it was—as a pretext to withdraw from the six-party talks on its nuclear program. Later that month, Iran announced a breakthrough in its uranium-enrichment efforts, boasting that it was now running seven thousand centrifuges. And just this week, credible media reports indicate that Pakistan is rapidly expanding its nuclear arsenal.
Yet while the trend is unmistakably in the direction of more, not fewer, nuclear powers, the arms-control community is devoting ever more time and resources to the goal of "global zero"—the abolition of nuclear weapons. That obsession is a fascinating and maddening detachment from reality.
It is not even clear that abolishing nuclear weapons would produce an unambiguously beneficial result. Perhaps it is only a coincidence, but the six and a half decades since the dawn of the atomic age constitute the first extended period since the emergence of the modern state system in the seventeenth century that no major wars have occurred between great powers. Many historians conclude that the principal reason the cold war did not turn hot was because both Moscow and Washington feared that a conventional conflict could easily spiral out of control into a nuclear conflagration. It is at least a worrisome possibility that the elimination of nuclear weapons could inadvertently make the world safe for new great-power wars. And given the destructive capacity of twenty-first-century conventional weapons, such wars would be even more horrific than the two bloodbaths in the twentieth.
But even if global zero did not produce such a perverse outcome, the goal is simply unattainable. It is improbable enough that the United States, Russia, Britain, France and China would be willing to relinquish their arsenals. It is a much bigger stretch to believe that such countries as Israel, India and Pakistan would do so. And it is bordering on fantasy to expect such wannabe nuclear powers as North Korea and Iran to abandon their aspirations.
All of those countries embarked on nuclear programs because of acute regional and extra-regional security concerns. Israel worries about the huge demographic edge enjoyed by its Islamic neighbors, and the prospect that the Jewish state's edge in conventional military capabilities will gradually erode. Pakistan worries about the growing economic and military power of its larger neighbor, India. New Delhi, for its part, not only distrusts Pakistan, but frets about China's geostrategic ambitions. All of those countries regard their nuclear arsenals as their ace in the hole, guaranteeing not only their regional status, but in some cases their very existence. They are highly unlikely to relinquish such a tangible insurance policy in exchange for paper security promises from the United Nations or any other source.
The incentives are at least as strong for Iran and North Korea to join the ranks of nuclear-weapons powers. As a Shiite country, Iran is surrounded by hostile Sunni neighbors—as well as its arch-nemesis, Israel. Tehran also has reason to fear the United States. Iranian leaders see how Washington has treated nonnuclear adversaries since the end of the cold war. If the U.S. mugging of Serbia didn't convey the message sufficiently, Iran had a ringside seat to the ouster of Saddam Hussein's regime. It was not a manifestation of paranoia for the Iranian leadership to conclude that the only way to prevent Iran becoming the next item on Washington's regime-change agenda was to develop a nuclear deterrent. North Korea appears to have reached a similar conclusion.
Of course, other factors—including national pride and prestige—have played relevant roles in the decision of various countries to become, or seek to become, nuclear powers. But the security concerns appeared to be paramount.
Unfortunately, the emergence of even one nuclear-weapons state in a region creates a greater likelihood that others will follow suit. India's nuclear program made it inevitable that Pakistan would go down the same path. Israel's arsenal likely figured in Tehran's calculations. If Iran continues its nuclear ambitions, it is highly probable that Saudi Arabia, Egypt and other countries in that region will decide on a similar course. North Korea's de facto nuclear status creates pressures on Japan, South Korea and Taiwan to abandon their own commitment to remain nonnuclear. The promise of the U.S. nuclear shield may restrain those ambitions for a time, but it requires considerable optimism to believe that it will do so over the long term.
Instead of pursuing the chimera of global zero, the arms control community needs to focus on attainable goals in a world in which proliferation is becoming an unpleasant reality. Getting the United States and Russia to drastically cut their bloated nuclear arsenals is one such goal. So, too, is an effort to induce India and Pakistan to adopt more explicitly defensive nuclear doctrines, and in the case of Pakistan, to improve the security of its arsenal. It may be possible—although it is more of a long shot—to persuade Iran to refrain from weaponizing its nuclear program, thereby reducing the incentive of its worried neighbors to build their own deterrents. An effort to reduce Pyongyang's temptation to become the global supermarket for the sale of nuclear technology has at least some prospect of success.
Even those more limited and practical goals will require patient, creative diplomacy by the United States and other countries. We are entering a more dangerous era, and there is no policy panacea.
The National Interest (Online), May 20, 2009
It's been a really bad springtime for arms-control activists who want to see a nuclear-free world. First, when the UN Security Council criticized North Korea's test of a long-range ballistic missile in early April, Pyongyang used that response—toothless though it was—as a pretext to withdraw from the six-party talks on its nuclear program. Later that month, Iran announced a breakthrough in its uranium-enrichment efforts, boasting that it was now running seven thousand centrifuges. And just this week, credible media reports indicate that Pakistan is rapidly expanding its nuclear arsenal.
Yet while the trend is unmistakably in the direction of more, not fewer, nuclear powers, the arms-control community is devoting ever more time and resources to the goal of "global zero"—the abolition of nuclear weapons. That obsession is a fascinating and maddening detachment from reality.
It is not even clear that abolishing nuclear weapons would produce an unambiguously beneficial result. Perhaps it is only a coincidence, but the six and a half decades since the dawn of the atomic age constitute the first extended period since the emergence of the modern state system in the seventeenth century that no major wars have occurred between great powers. Many historians conclude that the principal reason the cold war did not turn hot was because both Moscow and Washington feared that a conventional conflict could easily spiral out of control into a nuclear conflagration. It is at least a worrisome possibility that the elimination of nuclear weapons could inadvertently make the world safe for new great-power wars. And given the destructive capacity of twenty-first-century conventional weapons, such wars would be even more horrific than the two bloodbaths in the twentieth.
But even if global zero did not produce such a perverse outcome, the goal is simply unattainable. It is improbable enough that the United States, Russia, Britain, France and China would be willing to relinquish their arsenals. It is a much bigger stretch to believe that such countries as Israel, India and Pakistan would do so. And it is bordering on fantasy to expect such wannabe nuclear powers as North Korea and Iran to abandon their aspirations.
All of those countries embarked on nuclear programs because of acute regional and extra-regional security concerns. Israel worries about the huge demographic edge enjoyed by its Islamic neighbors, and the prospect that the Jewish state's edge in conventional military capabilities will gradually erode. Pakistan worries about the growing economic and military power of its larger neighbor, India. New Delhi, for its part, not only distrusts Pakistan, but frets about China's geostrategic ambitions. All of those countries regard their nuclear arsenals as their ace in the hole, guaranteeing not only their regional status, but in some cases their very existence. They are highly unlikely to relinquish such a tangible insurance policy in exchange for paper security promises from the United Nations or any other source.
The incentives are at least as strong for Iran and North Korea to join the ranks of nuclear-weapons powers. As a Shiite country, Iran is surrounded by hostile Sunni neighbors—as well as its arch-nemesis, Israel. Tehran also has reason to fear the United States. Iranian leaders see how Washington has treated nonnuclear adversaries since the end of the cold war. If the U.S. mugging of Serbia didn't convey the message sufficiently, Iran had a ringside seat to the ouster of Saddam Hussein's regime. It was not a manifestation of paranoia for the Iranian leadership to conclude that the only way to prevent Iran becoming the next item on Washington's regime-change agenda was to develop a nuclear deterrent. North Korea appears to have reached a similar conclusion.
Of course, other factors—including national pride and prestige—have played relevant roles in the decision of various countries to become, or seek to become, nuclear powers. But the security concerns appeared to be paramount.
Unfortunately, the emergence of even one nuclear-weapons state in a region creates a greater likelihood that others will follow suit. India's nuclear program made it inevitable that Pakistan would go down the same path. Israel's arsenal likely figured in Tehran's calculations. If Iran continues its nuclear ambitions, it is highly probable that Saudi Arabia, Egypt and other countries in that region will decide on a similar course. North Korea's de facto nuclear status creates pressures on Japan, South Korea and Taiwan to abandon their own commitment to remain nonnuclear. The promise of the U.S. nuclear shield may restrain those ambitions for a time, but it requires considerable optimism to believe that it will do so over the long term.
Instead of pursuing the chimera of global zero, the arms control community needs to focus on attainable goals in a world in which proliferation is becoming an unpleasant reality. Getting the United States and Russia to drastically cut their bloated nuclear arsenals is one such goal. So, too, is an effort to induce India and Pakistan to adopt more explicitly defensive nuclear doctrines, and in the case of Pakistan, to improve the security of its arsenal. It may be possible—although it is more of a long shot—to persuade Iran to refrain from weaponizing its nuclear program, thereby reducing the incentive of its worried neighbors to build their own deterrents. An effort to reduce Pyongyang's temptation to become the global supermarket for the sale of nuclear technology has at least some prospect of success.
Even those more limited and practical goals will require patient, creative diplomacy by the United States and other countries. We are entering a more dangerous era, and there is no policy panacea.
IRS disputes $US100b tax-haven loss estimate
IRS disputes $US100b tax-haven loss estimate
Bloomberg, May 20, 2009
Internal Revenue Service Commissioner Douglas Shulman said projections that the US loses $US100 billion annually to offshore tax havens are "wild estimates" that "don't have much basis".
Still, the tax commissioner said today, the problem is serious enough that the agency needs hundreds of new employees and new law-enforcement tools recommended by President Barack Obama.
"Those numbers are pretty broad numbers," Shulman said. The $US100 billion figure, a compilation of private-sector estimates, is often cited by Michigan Senator Carl Levin, a Democrat who led a congressional investigation into the role played by Swiss bank UBS and Liechtenstein's LGT Group in tax avoidance by Americans. North Dakota Senator Byron Dorgan also frequently cites the $US100 billion figure.
Shulman testified today before a House appropriations subcommittee on the IRS's $US12.1 billion budget request for the fiscal year that begins Oct. 1. The request, including funds to hire 800 new workers to focus on international tax issues, would be a 5.2 per cent increase over the agency's current budget.
Shulman said it was too difficult to accurately estimate how much of the $US290 billion in taxes that go uncollected each year can be attributed to international transactions by individuals and companies.
Bloomberg, May 20, 2009
Internal Revenue Service Commissioner Douglas Shulman said projections that the US loses $US100 billion annually to offshore tax havens are "wild estimates" that "don't have much basis".
Still, the tax commissioner said today, the problem is serious enough that the agency needs hundreds of new employees and new law-enforcement tools recommended by President Barack Obama.
"Those numbers are pretty broad numbers," Shulman said. The $US100 billion figure, a compilation of private-sector estimates, is often cited by Michigan Senator Carl Levin, a Democrat who led a congressional investigation into the role played by Swiss bank UBS and Liechtenstein's LGT Group in tax avoidance by Americans. North Dakota Senator Byron Dorgan also frequently cites the $US100 billion figure.
Shulman testified today before a House appropriations subcommittee on the IRS's $US12.1 billion budget request for the fiscal year that begins Oct. 1. The request, including funds to hire 800 new workers to focus on international tax issues, would be a 5.2 per cent increase over the agency's current budget.
Shulman said it was too difficult to accurately estimate how much of the $US290 billion in taxes that go uncollected each year can be attributed to international transactions by individuals and companies.
Golden rice an effective source of vitamin A
Golden rice an effective source of vitamin A
Eurekalert, May 13, 2009
HOUSTON – (May 13, 2009) – The beta-carotene in so-called "Golden Rice" converts to vitamin A in humans, according to researchers at Baylor College of Medicine (www.bcm.edu) and Tufts University in an article that appears in the current issue of the American Journal of Clinical Nutrition.
Golden Rice was developed in the early 1990s with a grant from the Rockefeller Foundation with the goal of creating rice that had beta-carotene -- a vitamin A precursor – in the rice grain. In its current form, Golden Rice contains 35 micrograms of beta-carotene per gram.
"We found that four units of beta-carotene from Golden Rice convert to one unit of vitamin A in humans," said Dr. Michael Grusak (http://www.bcm.edu/cnrc/faculty/?PMID=9536), associate professor of pediatrics at the USDA/ARS Children's Nutrition Research Center (http://www.bcm.edu/cnrc/?PMID=0) at BCM and Texas Children's Hospital.
They determined this by feeding five healthy adults a specific amount of specially-labeled Golden Rice and measured the amount of retinol, a form of vitamin A, in the blood.
Vitamin A deficiency is prevalent in many parts of the world where poorer community members rely on rice as their major food source. People who lack adequate amounts of this vitamin can have vision problems or even blindness as a result.
"By incorporating vitamin A into the major crop that is consumed, we would be able to make it accessible to the majority of people in the area," said Grusak.
Additional research is necessary before Golden Rice is made commercially available. The next steps of the research include incorporating this technology into the rice grains found in various regions and continuing testing the conversion rates in humans.
###
Others who participated in this study include Guangwen Tang, Jian Qin, Gregory G. Dolnikowski and Robert M Russell, all of the Jean Mayer US Department of Agriculture Human Nutrition Research Center on Aging at Tufts University.
Funding for this study came from the National Institute of Diabetes and Digestive and Kidney Diseases, a part of the National Institutes of Health.
The study can be found at http://www.ajcn.org/cgi/rapidpdf/ajcn.2008.27119v1.
For more information on basic science at Baylor College of Medicine, please go to www.bcm.edu/news or www.bcm.edu/fromthelab.
Eurekalert, May 13, 2009
HOUSTON – (May 13, 2009) – The beta-carotene in so-called "Golden Rice" converts to vitamin A in humans, according to researchers at Baylor College of Medicine (www.bcm.edu) and Tufts University in an article that appears in the current issue of the American Journal of Clinical Nutrition.
Golden Rice was developed in the early 1990s with a grant from the Rockefeller Foundation with the goal of creating rice that had beta-carotene -- a vitamin A precursor – in the rice grain. In its current form, Golden Rice contains 35 micrograms of beta-carotene per gram.
"We found that four units of beta-carotene from Golden Rice convert to one unit of vitamin A in humans," said Dr. Michael Grusak (http://www.bcm.edu/cnrc/faculty/?PMID=9536), associate professor of pediatrics at the USDA/ARS Children's Nutrition Research Center (http://www.bcm.edu/cnrc/?PMID=0) at BCM and Texas Children's Hospital.
They determined this by feeding five healthy adults a specific amount of specially-labeled Golden Rice and measured the amount of retinol, a form of vitamin A, in the blood.
Vitamin A deficiency is prevalent in many parts of the world where poorer community members rely on rice as their major food source. People who lack adequate amounts of this vitamin can have vision problems or even blindness as a result.
"By incorporating vitamin A into the major crop that is consumed, we would be able to make it accessible to the majority of people in the area," said Grusak.
Additional research is necessary before Golden Rice is made commercially available. The next steps of the research include incorporating this technology into the rice grains found in various regions and continuing testing the conversion rates in humans.
###
Others who participated in this study include Guangwen Tang, Jian Qin, Gregory G. Dolnikowski and Robert M Russell, all of the Jean Mayer US Department of Agriculture Human Nutrition Research Center on Aging at Tufts University.
Funding for this study came from the National Institute of Diabetes and Digestive and Kidney Diseases, a part of the National Institutes of Health.
The study can be found at http://www.ajcn.org/cgi/rapidpdf/ajcn.2008.27119v1.
For more information on basic science at Baylor College of Medicine, please go to www.bcm.edu/news or www.bcm.edu/fromthelab.
On Professor Goldsmith's New Republic article on President Obama approach to fighting terrorism
The Goldsmith Variations. By Scott Johnson
Powerline Blog, May 20, 2009 at 5:29 AM
Professor Jack Goldsmith's New Republic article gives President Obama high marks for his approach to fighting terrorism, in part because he appears to be continuing controversial policies established by President Bush. Paul Mirengoff commented on Goldsmith's article here. Professor Goldsmith is a preeminent authority with on-the-job professional experience in the issues he addresses in the article.
Several of the policies considered by Professor Goldsmith are policies for which Obama condemned the Bush administration (and for which he continues to condemn it). I deduce from Professor Goldsmith's account that the Democratic critique of Bush administration national security policies has been long on partisanship and short on principle. Professor Goldsmith, however, commends Obama with respect to his superior diplomacy in continuing these policies.
Professor Goldsmith does not indict Obama for his partisan treatment of the issues. According to Professor Goldsmith, Obama is merely finding governing harder than campaigning. That is certainly one way of putting it. Professor Goldsmith explains Obama's actions by reference to the fact "that many of the Bush policies reflect longstanding executive branch positions." One might think that this basic fact places Obama's "campaigning" in a poor light, along with his continuing criticism of the Bush administration policies he is following.
Goldsmith criticizes the expansive rhetoric of the Bush administration on executive power based on Justice Department opinions, presidential signing statements and Vice President Cheney's express desire to "leave the presidency stronger than we found it." He finds this rhetoric unprecedented. If this expansive rhetoric was the keystone of Bush administration policies, one might think that Professor Goldsmith could have quoted a full sentence from some speech given by President Bush in the course of his eight years in office.
Here Goldsmith compares Obama favorably to Lincoln and Roosevelt, by contrast with President Bush:
[The Obama administration] seems to have embraced, probably self-consciously, the tenets of democratic leadership that Roosevelt and Lincoln used to enhance presidential trust, and thus presidential effectiveness, during their wars. Like Roosevelt and to some degree Lincoln, President Obama has chosen a bipartisan national security team to help convey that his national security actions are in the public interest and not a partisan one. Also like our two greatest war presidents, President Obama seems committed to genuine consultation with Congress. If he gets Congress fully on board for his terrorism program, he will spread responsibility for the policies and help convince the public and the courts that the threat is real and the steps to counterterrorism necessary. President Obama has also promised a less secretive executive branch than President Bush. There is little evidence yet that his administration has done this, but if it does, it will reduce the mistakes that excessive secrecy brings and produce a more responsible and prudent government.
Finally, the Obama administration is following the Lincoln-Roosevelt approach to rhetoric and public symbols. The president talks frequently about the importance of adhering to constitutional values, he worries publicly about terrorism policies going too far, and he suggests that he is looking for ways to keep them in check. He has said not a word about presidential prerogative in national security or the importance of expanding his power. Closing GTMO--especially in the face of loud opposition--is an important symbol of the new president's commitment to the rule of law even if the detainees ultimately receive no greater rights. The small restrictions his administration has placed on itself as compared to the late Bush practices are public indications of restraint, especially when contrasted with the early Bush insistence on maximum presidential flexibility at all costs. They are yet more significant because the Obama administration is embracing them on its own initiative rather than, as was so often true of its predecessor, under apparent threat of judicial or congressional scrutiny.
Is this contrast between Bush on the one hand, and Lincoln and Roosevelt on the other hand, fair? Does Bush compare unfavorably to them with respect to sensitivity to civil liberties in wartime? (As for public rhetoric, no one, including Obama, can compare with Lincoln.)
The constitutional powers of the commander-in-chief in time of war are critical to the system established by the framers. Lincoln's analysis and exercise of the commander-in-chief's war powers during the Civil War both serve to illuminate those powers and to place Bush's actions in a relevant context.
Lincoln's primary aim as commander-in-chief was of course the preservation of the Union -- the restoration of democracy and the rule of law among the seceding states. He meant to demonstrate that "among free men, there can be no successful appeal from the ballot to the bullet; and that those who take such appeal are sure to lose their case, and pay the cost."
Indeed, as Professor Daniel Farber recalls in Lincoln's Constitution, Lincoln originally called up the militia in the name of the rule of law because "the laws of the United States have been for some time past, and now are opposed, and the execution thereof obstructed" by "combinations too powerful to be suppressed by the ordinary course of judicial proceedings."
In subduing the Confederacy, Lincoln took his bearings by his constitutional duty to "preserve, protect and defend the Constitution." Though this is the subject for another day, it should be noted that, given the Supreme Court's handiwork in the Dred Scott case, he was not an advocate of judicial supremacy. As president and commander-in-chief, he suspended habeas corpus, used martial law, instituted military trials, and exercised power to the limits of his constitutional authority in a manner that suggests the loose nature of those limits when confronted by necessity.
As Farber notes, "several Civil War actions taken under military authority impinged on freedom of speech." Perhaps best known is the case of former Ohio Congressman Clement Vallandingham. As commanding general of the Department of Ohio, Ambrose Burnside prohibited "the habit of declaring sympathies for the enemy." In the spring of 1863, Burnside had Vallandingham arrested for violating the order in a speech calling the war "wicked, cruel and unnecessary."
As Farber recounts, "he called upon his audience to [use the ballot box to] hurl 'King Lincoln' from his throne." The echoes of Vallandingham in the Democrats' recurrent gibes at President Bush are surely inadvertent. The Peace Democrats of 1863 nevertheless sound remarkably like the contemporary Democrats who have castigated President Bush.
In any event, the military commission found Vallandingham guilty of violating Burnside's General Order No. 38 and ordered him confined until the war ended. The ensuing controversy elicited Lincoln's famous letter to Erastus Corning defending the policy of military arrests in the name of public necessity. Lincoln ultimately resolved the controversy over Vallandingham's conviction and confinement by banishing him to Confederate territory (from which he escaped to Canada). Perhaps Lincoln's letter provides an example of the superior rhetorical dexterity that Professor Goldsmith attributes to Lincoln, but he also had more to justify than President Bush ever did.
From the case of Vallandingham, Farber moves on to consider the case of the New York World. The case of the World combines elements of the 2004 presidential campaign and the role played by another New York newspaper of our own day in a way that gives it a surprisingly contemporary feel. As Farber tells it:
Two journalists forged an Associated Press story about a bogus presidential call for drafting four hundred thousand men. (As a signal of desperation by the president, this "news" was supposed to drive up the price of gold, allowing the two men to make a quick profit.) The World fell for the stunt and published the story. Suspecting a Confederate plot, Lincoln ordered the arrest of the editors and publishers, as well as the seizure of the premises. This put the newspaper out of business until the order was countermanded.
So much for Lincoln. What about Franklin Roosevelt? Even before World War II, Franklin Roosevelt was concerned about domestic subversion. In Roosevelt's Secret War: FDR and World War II Espionage, Joseph Persico writes that "[f]ew leaders have been better suited by nature and temperament for the anomalies of secret warfare than FDR." He quotes Roosevelt: "You know that I am a juggler, and I never let my right hand know what my left hand does." As Persico demonstrates (pages 34-36), President Roosevelt's enthusiasm for intelligence extended to prewar domestic wiretapping of "diplomats, journalists, labor leaders and political activists" in the face of newly enacted statutory bans on wiretapping that had been upheld by the Supreme Court.
"I have agreed with the broad purpose of the Supreme Court relating to wiretapping in investigations," Roosevelt instructed J. Edgar Hoover. "However, I am persuaded that the Supreme Court never intended any dictum in the particular case which it decided to apply to grave matters involving the defense of the nation." Persico summarizes: "In short, never mind Congress, the Supreme Court, or the attorney general's qualms. The nation was in peril." (Persico's reference to Roosevelt's attorney general is of course to future Supreme Court Justice Robert H. Jackson.) Roosevelt's wiretapping program was not blessed by congressional consultation. Neither rhetoric nor public symbols were invoked to support it.
During the war, President Roosevelt did not seem particularly moved by constitutional limits or self-imposed restraint. To take just one example, consider the detention of Japanese American citizens that took place on his order. It took place under the authority of Executive Order 9066 without let or hindrance by the Supreme Court in Hirabayashi and Korematsu . Was this because of Roosevelt's brilliant public tact? I don't think so.
One might well ask whether President Bush ever took any action remotely comparable to these undertaken by Lincoln or Roosevelt at the margin of their authority. Again, I don't think so. Lincoln certainly did not escape the severe censure of his Democratic opponents. Indeed, the vituperation heaped on Bush during his eight years in office by Obama et al. might be roughly comparable to that heaped on Lincoln during his tenure in office. At least to me, Professor Goldsmith's analysis seems lacking in an element of fairness.
Professor Goldsmith's invocation of Franklin Roosevelt in this context is instructive, if not exactly as he intends. It is difficult to imagine Barack Obama wielding the powers of his office against America's foreign enemies with anything like the enthusiasm and ferocity of Roosevelt or, for that matter, Harry Truman, whom Obama seems more apt to apologize for than to emulate.
(On Lincoln, this post closely follows Farber's book at pages 170-173 and 176. For more, see Professor Michael Paulsen's brilliant review of Farber's book in the spring 2004 issue of the University of Chicago Law Review, Mark Neely's Pulitzer Prize-winning The Fate of Liberty, and William Rehnquist's All the Laws But One.)
Powerline Blog, May 20, 2009 at 5:29 AM
Professor Jack Goldsmith's New Republic article gives President Obama high marks for his approach to fighting terrorism, in part because he appears to be continuing controversial policies established by President Bush. Paul Mirengoff commented on Goldsmith's article here. Professor Goldsmith is a preeminent authority with on-the-job professional experience in the issues he addresses in the article.
Several of the policies considered by Professor Goldsmith are policies for which Obama condemned the Bush administration (and for which he continues to condemn it). I deduce from Professor Goldsmith's account that the Democratic critique of Bush administration national security policies has been long on partisanship and short on principle. Professor Goldsmith, however, commends Obama with respect to his superior diplomacy in continuing these policies.
Professor Goldsmith does not indict Obama for his partisan treatment of the issues. According to Professor Goldsmith, Obama is merely finding governing harder than campaigning. That is certainly one way of putting it. Professor Goldsmith explains Obama's actions by reference to the fact "that many of the Bush policies reflect longstanding executive branch positions." One might think that this basic fact places Obama's "campaigning" in a poor light, along with his continuing criticism of the Bush administration policies he is following.
Goldsmith criticizes the expansive rhetoric of the Bush administration on executive power based on Justice Department opinions, presidential signing statements and Vice President Cheney's express desire to "leave the presidency stronger than we found it." He finds this rhetoric unprecedented. If this expansive rhetoric was the keystone of Bush administration policies, one might think that Professor Goldsmith could have quoted a full sentence from some speech given by President Bush in the course of his eight years in office.
Here Goldsmith compares Obama favorably to Lincoln and Roosevelt, by contrast with President Bush:
[The Obama administration] seems to have embraced, probably self-consciously, the tenets of democratic leadership that Roosevelt and Lincoln used to enhance presidential trust, and thus presidential effectiveness, during their wars. Like Roosevelt and to some degree Lincoln, President Obama has chosen a bipartisan national security team to help convey that his national security actions are in the public interest and not a partisan one. Also like our two greatest war presidents, President Obama seems committed to genuine consultation with Congress. If he gets Congress fully on board for his terrorism program, he will spread responsibility for the policies and help convince the public and the courts that the threat is real and the steps to counterterrorism necessary. President Obama has also promised a less secretive executive branch than President Bush. There is little evidence yet that his administration has done this, but if it does, it will reduce the mistakes that excessive secrecy brings and produce a more responsible and prudent government.
Finally, the Obama administration is following the Lincoln-Roosevelt approach to rhetoric and public symbols. The president talks frequently about the importance of adhering to constitutional values, he worries publicly about terrorism policies going too far, and he suggests that he is looking for ways to keep them in check. He has said not a word about presidential prerogative in national security or the importance of expanding his power. Closing GTMO--especially in the face of loud opposition--is an important symbol of the new president's commitment to the rule of law even if the detainees ultimately receive no greater rights. The small restrictions his administration has placed on itself as compared to the late Bush practices are public indications of restraint, especially when contrasted with the early Bush insistence on maximum presidential flexibility at all costs. They are yet more significant because the Obama administration is embracing them on its own initiative rather than, as was so often true of its predecessor, under apparent threat of judicial or congressional scrutiny.
Is this contrast between Bush on the one hand, and Lincoln and Roosevelt on the other hand, fair? Does Bush compare unfavorably to them with respect to sensitivity to civil liberties in wartime? (As for public rhetoric, no one, including Obama, can compare with Lincoln.)
The constitutional powers of the commander-in-chief in time of war are critical to the system established by the framers. Lincoln's analysis and exercise of the commander-in-chief's war powers during the Civil War both serve to illuminate those powers and to place Bush's actions in a relevant context.
Lincoln's primary aim as commander-in-chief was of course the preservation of the Union -- the restoration of democracy and the rule of law among the seceding states. He meant to demonstrate that "among free men, there can be no successful appeal from the ballot to the bullet; and that those who take such appeal are sure to lose their case, and pay the cost."
Indeed, as Professor Daniel Farber recalls in Lincoln's Constitution, Lincoln originally called up the militia in the name of the rule of law because "the laws of the United States have been for some time past, and now are opposed, and the execution thereof obstructed" by "combinations too powerful to be suppressed by the ordinary course of judicial proceedings."
In subduing the Confederacy, Lincoln took his bearings by his constitutional duty to "preserve, protect and defend the Constitution." Though this is the subject for another day, it should be noted that, given the Supreme Court's handiwork in the Dred Scott case, he was not an advocate of judicial supremacy. As president and commander-in-chief, he suspended habeas corpus, used martial law, instituted military trials, and exercised power to the limits of his constitutional authority in a manner that suggests the loose nature of those limits when confronted by necessity.
As Farber notes, "several Civil War actions taken under military authority impinged on freedom of speech." Perhaps best known is the case of former Ohio Congressman Clement Vallandingham. As commanding general of the Department of Ohio, Ambrose Burnside prohibited "the habit of declaring sympathies for the enemy." In the spring of 1863, Burnside had Vallandingham arrested for violating the order in a speech calling the war "wicked, cruel and unnecessary."
As Farber recounts, "he called upon his audience to [use the ballot box to] hurl 'King Lincoln' from his throne." The echoes of Vallandingham in the Democrats' recurrent gibes at President Bush are surely inadvertent. The Peace Democrats of 1863 nevertheless sound remarkably like the contemporary Democrats who have castigated President Bush.
In any event, the military commission found Vallandingham guilty of violating Burnside's General Order No. 38 and ordered him confined until the war ended. The ensuing controversy elicited Lincoln's famous letter to Erastus Corning defending the policy of military arrests in the name of public necessity. Lincoln ultimately resolved the controversy over Vallandingham's conviction and confinement by banishing him to Confederate territory (from which he escaped to Canada). Perhaps Lincoln's letter provides an example of the superior rhetorical dexterity that Professor Goldsmith attributes to Lincoln, but he also had more to justify than President Bush ever did.
From the case of Vallandingham, Farber moves on to consider the case of the New York World. The case of the World combines elements of the 2004 presidential campaign and the role played by another New York newspaper of our own day in a way that gives it a surprisingly contemporary feel. As Farber tells it:
Two journalists forged an Associated Press story about a bogus presidential call for drafting four hundred thousand men. (As a signal of desperation by the president, this "news" was supposed to drive up the price of gold, allowing the two men to make a quick profit.) The World fell for the stunt and published the story. Suspecting a Confederate plot, Lincoln ordered the arrest of the editors and publishers, as well as the seizure of the premises. This put the newspaper out of business until the order was countermanded.
So much for Lincoln. What about Franklin Roosevelt? Even before World War II, Franklin Roosevelt was concerned about domestic subversion. In Roosevelt's Secret War: FDR and World War II Espionage, Joseph Persico writes that "[f]ew leaders have been better suited by nature and temperament for the anomalies of secret warfare than FDR." He quotes Roosevelt: "You know that I am a juggler, and I never let my right hand know what my left hand does." As Persico demonstrates (pages 34-36), President Roosevelt's enthusiasm for intelligence extended to prewar domestic wiretapping of "diplomats, journalists, labor leaders and political activists" in the face of newly enacted statutory bans on wiretapping that had been upheld by the Supreme Court.
"I have agreed with the broad purpose of the Supreme Court relating to wiretapping in investigations," Roosevelt instructed J. Edgar Hoover. "However, I am persuaded that the Supreme Court never intended any dictum in the particular case which it decided to apply to grave matters involving the defense of the nation." Persico summarizes: "In short, never mind Congress, the Supreme Court, or the attorney general's qualms. The nation was in peril." (Persico's reference to Roosevelt's attorney general is of course to future Supreme Court Justice Robert H. Jackson.) Roosevelt's wiretapping program was not blessed by congressional consultation. Neither rhetoric nor public symbols were invoked to support it.
During the war, President Roosevelt did not seem particularly moved by constitutional limits or self-imposed restraint. To take just one example, consider the detention of Japanese American citizens that took place on his order. It took place under the authority of Executive Order 9066 without let or hindrance by the Supreme Court in Hirabayashi and Korematsu . Was this because of Roosevelt's brilliant public tact? I don't think so.
One might well ask whether President Bush ever took any action remotely comparable to these undertaken by Lincoln or Roosevelt at the margin of their authority. Again, I don't think so. Lincoln certainly did not escape the severe censure of his Democratic opponents. Indeed, the vituperation heaped on Bush during his eight years in office by Obama et al. might be roughly comparable to that heaped on Lincoln during his tenure in office. At least to me, Professor Goldsmith's analysis seems lacking in an element of fairness.
Professor Goldsmith's invocation of Franklin Roosevelt in this context is instructive, if not exactly as he intends. It is difficult to imagine Barack Obama wielding the powers of his office against America's foreign enemies with anything like the enthusiasm and ferocity of Roosevelt or, for that matter, Harry Truman, whom Obama seems more apt to apologize for than to emulate.
(On Lincoln, this post closely follows Farber's book at pages 170-173 and 176. For more, see Professor Michael Paulsen's brilliant review of Farber's book in the spring 2004 issue of the University of Chicago Law Review, Mark Neely's Pulitzer Prize-winning The Fate of Liberty, and William Rehnquist's All the Laws But One.)
Why Barack Obama is waging a more effective war on terror than George W. Bush
The Cheney Fallacy. By Jack Goldsmith
Why Barack Obama is waging a more effective war on terror than George W. Bush.
The New Republic Published: Monday, May 18, 2009
Former Vice President Cheney says that President Obama's reversal of Bush-era terrorism policies endangers American security. The Obama administration, he charges, has "moved to take down a lot of those policies we put in place that kept the nation safe for nearly eight years from a follow-on terrorist attack like 9/11." Many people think Cheney is scare-mongering and owes President Obama his support or at least his silence. But there is a different problem with Cheney's criticisms: his premise that the Obama administration has reversed Bush-era policies is largely wrong. The truth is closer to the opposite: The new administration has copied most of the Bush program, has expanded some of it, and has narrowed only a bit. Almost all of the Obama changes have been at the level of packaging, argumentation, symbol, and rhetoric. This does not mean that the Obama changes are unimportant. Packaging, argumentation, symbol, and rhetoric, it turns out, are vitally important to the legitimacy of terrorism policies.
The Bush approach to counterterrorism policy included eleven essential elements. Here is the Obama position to date on each.
1. War v. Crime
A bedrock Bush principle was that the threat posed by al Qaeda and its affiliates required the president to assert military war powers. The legality of controversial policies like military detention, military commissions, and targeted killings depends in the first instance on the United States being in a state of war. Many Obama supporters and most allies sharply disagree with the war characterization, and maintain that the criminal justice system--arrest, extradition, civilian trials, and the like--suffices to meet the terror threat. President Obama mostly skirted this issue on the campaign trail. But his administration has embraced the Bush view that, as a legal matter, the United States is in a state of war with al Qaeda and its affiliates, and that the president's commander-in-chief powers are triggered. This position should be unsurprising: Congress has made clear that we are at war with these groups, and the Supreme Court has affirmed that we are.
2. Guantanamo Bay
President Obama has announced that he is closing the detention facility at Guantanamo Bay, Cuba. By itself, this is not a departure from the Bush administration, which also stated a desire to close GTMO. The new administration is implementing this policy with greater vigor, however, and is seriously considering bringing terrorist detainees to the United States. Congress and our allies are throwing up roadblocks to these efforts. Even if the administration overcomes them, closing GTMO may have no material impact on U.S. detention practice. Because the Supreme Court has ruled that habeas corpus rights extend to detainees on the island, the detainees will likely receive no more rights on U.S. soil than in Cuba. The real question is not where the detainees are located, but rather the basis for their detention. On this issue, as explained below, the new president is swimming close to the old one.
3. Military detention
Many Obama supporters thought he would oppose the detention of terrorist suspects without trial. But not so. Last month Secretary of Defense Gates hinted that up to 100 suspected terrorists would be detained without trial. And a few weeks ago the Obama Justice Department filed a legal brief arguing that the president can detain indefinitely, without charge or trial, members of al Qaeda, the Taliban, "associated forces," and those who "substantially support" these groups, no matter where in the world they are captured. Federal district court judge Reggie Walton correctly noted that the Obama administration refinements drew "metaphysical distinctions" with the Bush position that seemed to be "of a minimal if not ephemeral character." The Obama refinements might preclude detention of some suspected terrorists who would be detainable under the Bush regime, but only at the margin. The core Bush legal position remains in place.
4. Habeas Corpus
During the campaign former professor Obama spoke eloquently about the importance of habeas corpus review of executive detentions of enemy soldiers. Habeas corpus is "the foundation of Anglo-American law" and "the essence of who we are," he said. But his administration has applied this principle in the same narrow fashion as the late Bush administration. It has argued that Guantanamo detainees can challenge the "fact, duration, or location" of confinement on habeas review, but not their "conditions of confinement." It has maintained that "the Geneva Conventions are not judicially enforceable by private individuals" in habeas proceedings. And it has made clear its belief that the limited habeas rights it recognizes for the two hundred or so detainees on Guantanamo Bay do not extend to the 600 or so detainees in Bagram Air Base. This latter position might prove more controversial for President Obama than for President Bush. The new president's enlarged military commitment in Afghanistan and Pakistan, combined with the forthcoming closure of Guantanamo, means that the number of suspects detained in Bagram--without charge or trial and without access to lawyers or habeas rights--is likely to increase, perhaps dramatically.
5. Military Commissions
On his first day in office, President Obama sought a 120-day suspension of military commissions that many viewed as their death knell. But last week the Obama administration said it would revive military commissions. The main impetus for this decision, according to The Washington Post, is that the new administration, like its predecessor, concluded that its cases "would fail in federal courts or in standard military legal settings." The new commissions rules have not been published but they will apparently disallow evidence obtained from coercion, admit hearsay only if it is reliable, and give detainees more freedom to choose their attorneys. These are not large changes from the Bush rules as they stood in 2008. Under the Bush regime military judges could and did suppress evidence obtained from coercive interrogations (though not to the same degree as they will be able to do under Obama) and declined to admit unreliable hearsay. And the Obama alteration on defense lawyers does not appear substantial. So, if we map the distance between the rights that suspected terrorists would receive under Bush military commissions and the rights they would receive in civilian trials, suspects tried in Obama military commissions gain relatively little from the Bush baseline.
6. Targeted Killing
Targeted killing is another Bush administration policy being continued, and indeed ramped up, by President Obama. The new administration has used unmanned predator drones to kill suspected al Qaeda targets in Afghanistan and Pakistan at a greater rate than the Bush administration. These more aggressive targeted killings have predictably caused more collateral damage to innocent civilians. In what appears to be the worst episode since 9/11, a predator attack earlier this month killed many dozens of civilians, including many women and children, in the Farah province of Afghanistan. The targeted killing policy has grown very controversial in Afghanistan and among human rights groups. The International Committee of the Red Cross maintains that international law permits targeting only of people "continuously" engaged in hostile actions, and that only "necessary" force can be used against them. This standard would require a significant rollback of the Obama targeted killing program. It is thus not surprising that the Obama State Department views the Red Cross restrictions as "problematic."
7. Rendition
The Obama administration has said that it will continue renditions--the practice, dating back at least to the Clinton administration, of grabbing suspected terrorists in one country and bringing them to another. CIA director Panetta has said that the Obama administration will not render suspects for purposes of torture, and many have seen this position as a rejection of the Bush form of rendition. But despite this rhetoric, the Obama administration will continue to use the Bush-Clinton standard of foreign country assurances concerning torture, a standard that prohibited rendition only when it is "more likely than not"--that is, a greater than 50 percent chance--"that the suspect will be subjected to torture." Because the public knows little about the rendition practice, it is unclear how, if at all, the practice will change under Obama. But the core legal standard articulated by the new administration appears to be the same as its predecessor.
8. Secret Prisons
While the Obama administration has not rejected rendition to third countries, it has dismantled the Bush system of secret overseas prisons (so-called "black sites") and thus has eliminated rendition to and detention in these prisons. Although the Bush administration used these facilities little in recent years, this seems like a departure from the Bush era. But even here the Obama practice may be closer to the late Bush practice than meets the eye. President Obama's executive order barring the CIA from using "detention facilities" contained a loophole for "facilities used only to hold people on a short-term, transitory basis." The degree to which the Obama policy is a true departure from the late Bush practice thus depends on the administration's (probably secret) interpretation of what it means to detain someone on a "short-term, transitory basis."
9. Surveillance
In the summer of 2008, candidate Obama voted to put President Bush's unilateral warrantless wiretapping program, which he had opposed as an abuse of presidential power, on a legally more defensible statutory basis. Obama supported the bill even though it gave telecommunication firms that cooperated with President Bush immunity from lawsuits, a provision Obama disliked. In office, President Obama has not renounced or sought to narrow any of the surveillance powers used by the late Bush administration, and has not sought legislation to reverse the telecom's immunity. Nor has he yet acted to fulfill his campaign pledge to significantly strengthen the Privacy and Civil Liberties Board that oversees and protects civil liberties in intelligence gathering. The Obama surveillance program appears to be identical to the late Bush era program.
10. State Secrets
The state secrets doctrine allows the government to prevent the disclosure of evidence in court based on its view that the disclosure would endanger national security. Candidate Obama criticized the Bush administration's use of this doctrine. But in at least three lawsuits growing out of Bush-era surveillance and rendition practices, the Obama Justice Department endorsed the same broad view of the state secrets privilege as the Bush administration. President Obama said last month that "the state secret doctrine should be modified" to make it a less "blunt instrument," and his lawyers are seeking ways to narrow the doctrine in some cases. But it is unclear how far this initiative will go, and in any event for now the Obama position is the Bush position.
11. Interrogation
On his first day in office President Obama signed an executive order requiring the CIA to use only the relatively benign techniques approved by the military field manual. He later released and rejected Department of Justice legal interpretations of the Torture statute and related laws. This is a large change in announced policy from the Bush administration, and the change that the former Vice President seems to like least. But it is less of a departure from the late Bush practice than meets the eye. Several reports suggest that a 2006 Supreme Court ruling, legislation concerning interrogation that same year, and growing public opprobrium led the Bush team, by 2007, to narrow the range of CIA-approved interrogation techniques, especially as compared to 2002-2003. Moreover, the Obama executive order established a task force to study whether the CIA should be able to use different interrogation techniques than the military, and CIA Director Panetta supports tougher interrogation techniques for his agency in some circumstances. As a result, the jury is still out on the differences between CIA interrogation techniques used during the late Bush administration and those ultimately used by Obama's CIA.
The Obama administration is still debating many of these issues, and its final policies are not all set. Its changes to Bush practices thus far--cutting back on secret detentions, probable new restrictions on interrogation, and relatively small procedural changes to military commissions--will leave some suspected terrorists in a better place than they would have been under the Bush regime (although Obama's increase in targeted killings will likely result in more deaths and injuries, without due process, to terror suspects and innocent civilians). Even with these caveats, at the end of the day, Obama practices will be much closer to late Bush practices than almost anyone expected in January 2009. Why has this happened, and what does it mean?
One reason the Obama practices are so close to the late Bush practices is that the late Bush practices were much different than the early ones. In 2001-2003, both fear of terrorism and Bush unilateralism were at their height. But in the last six years, the terror threat has appeared to fade (at least to the public), and Congress and the courts have engaged on terrorism issues, pushing back on some, approving others, and acquiescing in yet others. Congress altered somewhat and then approved the early Bush approach to surveillance, military commissions, and military detention. Rendition and targeted killings have gone on for over a decade without congressional pushback. Congress and the courts restricted permissible interrogations. Some courts have approved the state secrets doctrine as well as military detention without trial. The Supreme Court declared that a portion of the Geneva Conventions applies to the conflict with al Qaeda and rejected early Bush positions on the scope of habeas corpus. In these and many other ways, U.S. terrorism law looked wholly different at the outset of the Obama administration than in 2001-2003. The law was much clearer in 2009, and there was much greater consensus--across political parties and the branches of government--about permissible policies and their limits. Many Obama policies reflect that consensus.
The Obama policies also reflect the fact that the Bush policies were woven into the fabric of the national security architecture in ways that were hard if not impossible to unravel. The new administration would not face the difficulties of closing GTMO if GTMO had not been used as a detention facility in the first place. It would have an easier time prosecuting some terrorist suspects in civilian courts had information about their crimes not been extracted through coercion (assuming, that is, that it would have nabbed the suspects in the absence of the information gained through coercion). And so on. It is impossible to know how an Obama (or any other) administration would have dealt with the manifold terrorist challenges beginning on 9/11, or how the world might look different today if the Bush administration had made different decisions. But no doubt some of the Obama agreement with Bush policies reflects the fact that Obama inherited challenges that were created by decisions with which he would not have agreed.
A third reason for the closeness of the Bush and Obama policies is that many of the Bush policies reflect longstanding executive branch positions. Every wartime president has asserted the right to detain enemy forces without charge or trial during war. Many of them used military commissions for war criminals. Presidents dating back at least to Carter have maintained that habeas corpus review does not extend to aliens detained outside the United States. The state secrets doctrine is over a century old and has been employed vigorously by presidents since the 1970s. Rendition and targeted killings began under Clinton if not earlier. It is no surprise that President Obama seeks to maintain these presidential powers. It would be a surprise if he did not do so.
A final explanation for the congruence between Obama and Bush policies is that governing is much harder than campaigning. The presidency invariably gives its occupants a sober outlook on problems of national security. The "responsibilities placed on the United States are greater than I imagined them to be, and there are greater limitations upon our ability to bring about a favorable result than I had imagined them to be," said President John F. Kennedy, nearly two years into his presidency. "There is such a difference between those who advise or speak or legislate, and between the man who must select from the various alternatives proposed and say that this shall be the policy of the United States. It is much easier to make the speeches than it is to finally make the judgments."
President Obama has gone from a legislator and presidential candidate to the commander in chief wholly responsible for the nation's safety. He now reads the same threat reports as President Bush and confronts the same challenge of stopping Islamist terrorists who hide among civilians and who want to use ever-smaller and more deadly weapons to disrupt our way of life. He also faces the same paucity of truly useful information about the enemy and the same hard tradeoffs between liberty and security. And he knows that the American people will blame him and no one else if the terrorists strike. "The whole government is so identified in the minds of the people with [the president's] personality," said William Howard Taft, "that they make him responsible for all the sins of omission and of commission of society at large." The intense personal responsibility of the president for national security, combined with the continuing reality of a frightening and difficult-to-detect threat, has unsurprisingly led President Obama, like President Bush, to want to use the full arsenal of presidential tools.
The main difference between the Obama and Bush administrations concerns not the substance of terrorism policy, but rather its packaging. The Bush administration shot itself in the foot time and time again, to the detriment of the legitimacy and efficacy of its policies, by indifference to process and presentation. The Obama administration, by contrast, is intensely focused on these issues.
The Bush White House had a principled commitment to expanding presidential power that predated 9/11. This commitment led it early on to act unilaterally on military commissions, detention, and surveillance rather than seeking political and legal support from Congress, and to oppose judicial review of these and other wartime policies. The public concerns about presidential power induced by these actions were exacerbated by the administration's expansive rhetoric. Department of Justice opinions and presidential signing statements, for example, made broad claims for an untouchable Commander-in-Chief power that were unnecessary to the tasks at hand. Just as damaging was the administration's frequently expressed desire to expand executive power in order, as Vice President Cheney put it, "to leave the presidency stronger than we found it."
Such rhetoric was unprecedented in American wartime history, and was especially unfortunate in a war involving a novel enemy and widespread public doubts about the appropriateness of using war powers against such an enemy. The public worries about excessive presidential power during war, and prudent presidents try to assuage and meet these concerns. Abraham Lincoln and Franklin D. Roosevelt were the most powerful war presidents in our history. They never talked publicly about a desire to expand their power, for doing so would have been self-defeating and politically stupid. When they exercised extraordinary authorities, as they often did, they put forth a grudging public face, expressions of respect for constitutional values, and explanations about why the steps were an unfortunate but necessary means to an important national security end.
The Bush administration's opposite rhetorical strategy led many people to suspect that the president was acting to increase his own power rather than to keep the country safe. The strategy's main effect was to distort the legitimacy of many Bush wartime practices that had been uncontroversial in previous wars. The early Bush administration failed to grasp what Lincoln and Roosevelt understood well: the vital ongoing need to convince the citizenry that the president is using his extraordinary war powers for the public good and not for personal or institutional aggrandizement. By the time the Bush administration began to act on this principle in its second term, it was too late; its credibility on these issues--severely damaged not only by unilateralism and expansive rhetoric, but also by mistaken intelligence in the war with Iraq--was unrecoverable.
President Obama, by contrast, entered office with great stores of credibility in speaking about the dangers of terrorism and the difficulties of meeting the terror threat. The new president was a critic of Bush administration terrorism policies, a champion of civil liberties, and an opponent of the invasion of Iraq. His decision (after absorbing the classified intelligence and considering the various options) to continue core Bush terrorism policies is like Nixon going to China. Because the Obama policies play against type and (in some quarters of his party) against interest, they appear more likely to be a necessary response to a real terror threat and thus less worrisome from the perspective of presidential aggrandizement than when the Bush administration embraced essentially the same policies.
This credibility cannot last forever, and probably won't last long without careful nurturing. The Obama administration shows every sign of trying to do just that. It seems to have embraced, probably self-consciously, the tenets of democratic leadership that Roosevelt and Lincoln used to enhance presidential trust, and thus presidential effectiveness, during their wars. Like Roosevelt and to some degree Lincoln, President Obama has chosen a bipartisan national security team to help convey that his national security actions are in the public interest and not a partisan one. Also like our two greatest war presidents, President Obama seems committed to genuine consultation with Congress. If he gets Congress fully on board for his terrorism program, he will spread responsibility for the policies and help convince the public and the courts that the threat is real and the steps to counterterrorism necessary. President Obama has also promised a less secretive executive branch than President Bush. There is little evidence yet that his administration has done this, but if it does, it will reduce the mistakes that excessive secrecy brings and produce a more responsible and prudent government.
Finally, the Obama administration is following the Lincoln-Roosevelt approach to rhetoric and public symbols. The president talks frequently about the importance of adhering to constitutional values, he worries publicly about terrorism policies going too far, and he suggests that he is looking for ways to keep them in check. He has said not a word about presidential prerogative in national security or the importance of expanding his power. Closing GTMO--especially in the face of loud opposition--is an important symbol of the new president's commitment to the rule of law even if the detainees ultimately receive no greater rights. The small restrictions his administration has placed on itself as compared to the late Bush practices are public indications of restraint, especially when contrasted with the early Bush insistence on maximum presidential flexibility at all costs. They are yet more significant because the Obama administration is embracing them on its own initiative rather than, as was so often true of its predecessor, under apparent threat of judicial or congressional scrutiny.
A good example of these strategies in action is the Obama administration's "new" rationale for detaining enemy forces indefinitely without charge or trial. The administration took the same basic position as its predecessor but placed it in prettier wrapping. It eliminated the dreaded label "enemy combatant." It narrowed the scope of those who can be detained from persons who "support" al Qaeda and its affiliates to persons who "substantially support" them--a change without large practical consequences, but a change nonetheless. And it grounded its authority to detain in Congress's authorization for the war and the international laws of war, showing that the president's detention powers were approved by bodies outside the presidency. This was the Bush position as well, but with an important difference: The Bush administration argued that it could detain enemy soldiers on its own constitutional authority, and without congressional support. The Obama administration dropped this argument (but did not reject it), and won favorable press coverage for its "departure" from the Bush position even though the change affected nothing in the president's present power to detain.
One can view these and many similar Obama administration efforts as attempts to save face while departing from campaign promises and supporter expectations. And no doubt there is an element of this in the Obama strategy. But the Obama strategy can also be seen, more charitably, as a prudent attempt to legitimate and thus strengthen the extraordinary powers that the president must exercise in the long war against Islamist terrorists. The president simply cannot exercise these powers over an indefinite period unless Congress and the courts support him. And they will not support him unless they think he is exercising his powers responsibly, under law, with real constraints, to address a real threat. The Obama strategy can thus be seen as an attempt to make the core Bush approach to terrorism politically and legally more palatable, and thus sustainable.
If this analysis is right, then the former vice president is wrong to say that the new president is dismantling the Bush approach to terrorism. President Obama has not changed much of substance from the late Bush practices, and the changes he has made, including changes in presentation, are designed to fortify the bulk of the Bush program for the long-run. Viewed this way, President Obama is in the process of strengthening the presidency to fight terrorism.
Jack Goldsmith, a professor at Harvard Law School and a member of the Hoover Institution Task Force on National Security and Law, was an Assistant Attorney General in the Bush administration and is the author of The Terror Presidency: Law and Judgment Inside the Bush Administration (W.W. Norton 2007).
Why Barack Obama is waging a more effective war on terror than George W. Bush.
The New Republic Published: Monday, May 18, 2009
Former Vice President Cheney says that President Obama's reversal of Bush-era terrorism policies endangers American security. The Obama administration, he charges, has "moved to take down a lot of those policies we put in place that kept the nation safe for nearly eight years from a follow-on terrorist attack like 9/11." Many people think Cheney is scare-mongering and owes President Obama his support or at least his silence. But there is a different problem with Cheney's criticisms: his premise that the Obama administration has reversed Bush-era policies is largely wrong. The truth is closer to the opposite: The new administration has copied most of the Bush program, has expanded some of it, and has narrowed only a bit. Almost all of the Obama changes have been at the level of packaging, argumentation, symbol, and rhetoric. This does not mean that the Obama changes are unimportant. Packaging, argumentation, symbol, and rhetoric, it turns out, are vitally important to the legitimacy of terrorism policies.
The Bush approach to counterterrorism policy included eleven essential elements. Here is the Obama position to date on each.
1. War v. Crime
A bedrock Bush principle was that the threat posed by al Qaeda and its affiliates required the president to assert military war powers. The legality of controversial policies like military detention, military commissions, and targeted killings depends in the first instance on the United States being in a state of war. Many Obama supporters and most allies sharply disagree with the war characterization, and maintain that the criminal justice system--arrest, extradition, civilian trials, and the like--suffices to meet the terror threat. President Obama mostly skirted this issue on the campaign trail. But his administration has embraced the Bush view that, as a legal matter, the United States is in a state of war with al Qaeda and its affiliates, and that the president's commander-in-chief powers are triggered. This position should be unsurprising: Congress has made clear that we are at war with these groups, and the Supreme Court has affirmed that we are.
2. Guantanamo Bay
President Obama has announced that he is closing the detention facility at Guantanamo Bay, Cuba. By itself, this is not a departure from the Bush administration, which also stated a desire to close GTMO. The new administration is implementing this policy with greater vigor, however, and is seriously considering bringing terrorist detainees to the United States. Congress and our allies are throwing up roadblocks to these efforts. Even if the administration overcomes them, closing GTMO may have no material impact on U.S. detention practice. Because the Supreme Court has ruled that habeas corpus rights extend to detainees on the island, the detainees will likely receive no more rights on U.S. soil than in Cuba. The real question is not where the detainees are located, but rather the basis for their detention. On this issue, as explained below, the new president is swimming close to the old one.
3. Military detention
Many Obama supporters thought he would oppose the detention of terrorist suspects without trial. But not so. Last month Secretary of Defense Gates hinted that up to 100 suspected terrorists would be detained without trial. And a few weeks ago the Obama Justice Department filed a legal brief arguing that the president can detain indefinitely, without charge or trial, members of al Qaeda, the Taliban, "associated forces," and those who "substantially support" these groups, no matter where in the world they are captured. Federal district court judge Reggie Walton correctly noted that the Obama administration refinements drew "metaphysical distinctions" with the Bush position that seemed to be "of a minimal if not ephemeral character." The Obama refinements might preclude detention of some suspected terrorists who would be detainable under the Bush regime, but only at the margin. The core Bush legal position remains in place.
4. Habeas Corpus
During the campaign former professor Obama spoke eloquently about the importance of habeas corpus review of executive detentions of enemy soldiers. Habeas corpus is "the foundation of Anglo-American law" and "the essence of who we are," he said. But his administration has applied this principle in the same narrow fashion as the late Bush administration. It has argued that Guantanamo detainees can challenge the "fact, duration, or location" of confinement on habeas review, but not their "conditions of confinement." It has maintained that "the Geneva Conventions are not judicially enforceable by private individuals" in habeas proceedings. And it has made clear its belief that the limited habeas rights it recognizes for the two hundred or so detainees on Guantanamo Bay do not extend to the 600 or so detainees in Bagram Air Base. This latter position might prove more controversial for President Obama than for President Bush. The new president's enlarged military commitment in Afghanistan and Pakistan, combined with the forthcoming closure of Guantanamo, means that the number of suspects detained in Bagram--without charge or trial and without access to lawyers or habeas rights--is likely to increase, perhaps dramatically.
5. Military Commissions
On his first day in office, President Obama sought a 120-day suspension of military commissions that many viewed as their death knell. But last week the Obama administration said it would revive military commissions. The main impetus for this decision, according to The Washington Post, is that the new administration, like its predecessor, concluded that its cases "would fail in federal courts or in standard military legal settings." The new commissions rules have not been published but they will apparently disallow evidence obtained from coercion, admit hearsay only if it is reliable, and give detainees more freedom to choose their attorneys. These are not large changes from the Bush rules as they stood in 2008. Under the Bush regime military judges could and did suppress evidence obtained from coercive interrogations (though not to the same degree as they will be able to do under Obama) and declined to admit unreliable hearsay. And the Obama alteration on defense lawyers does not appear substantial. So, if we map the distance between the rights that suspected terrorists would receive under Bush military commissions and the rights they would receive in civilian trials, suspects tried in Obama military commissions gain relatively little from the Bush baseline.
6. Targeted Killing
Targeted killing is another Bush administration policy being continued, and indeed ramped up, by President Obama. The new administration has used unmanned predator drones to kill suspected al Qaeda targets in Afghanistan and Pakistan at a greater rate than the Bush administration. These more aggressive targeted killings have predictably caused more collateral damage to innocent civilians. In what appears to be the worst episode since 9/11, a predator attack earlier this month killed many dozens of civilians, including many women and children, in the Farah province of Afghanistan. The targeted killing policy has grown very controversial in Afghanistan and among human rights groups. The International Committee of the Red Cross maintains that international law permits targeting only of people "continuously" engaged in hostile actions, and that only "necessary" force can be used against them. This standard would require a significant rollback of the Obama targeted killing program. It is thus not surprising that the Obama State Department views the Red Cross restrictions as "problematic."
7. Rendition
The Obama administration has said that it will continue renditions--the practice, dating back at least to the Clinton administration, of grabbing suspected terrorists in one country and bringing them to another. CIA director Panetta has said that the Obama administration will not render suspects for purposes of torture, and many have seen this position as a rejection of the Bush form of rendition. But despite this rhetoric, the Obama administration will continue to use the Bush-Clinton standard of foreign country assurances concerning torture, a standard that prohibited rendition only when it is "more likely than not"--that is, a greater than 50 percent chance--"that the suspect will be subjected to torture." Because the public knows little about the rendition practice, it is unclear how, if at all, the practice will change under Obama. But the core legal standard articulated by the new administration appears to be the same as its predecessor.
8. Secret Prisons
While the Obama administration has not rejected rendition to third countries, it has dismantled the Bush system of secret overseas prisons (so-called "black sites") and thus has eliminated rendition to and detention in these prisons. Although the Bush administration used these facilities little in recent years, this seems like a departure from the Bush era. But even here the Obama practice may be closer to the late Bush practice than meets the eye. President Obama's executive order barring the CIA from using "detention facilities" contained a loophole for "facilities used only to hold people on a short-term, transitory basis." The degree to which the Obama policy is a true departure from the late Bush practice thus depends on the administration's (probably secret) interpretation of what it means to detain someone on a "short-term, transitory basis."
9. Surveillance
In the summer of 2008, candidate Obama voted to put President Bush's unilateral warrantless wiretapping program, which he had opposed as an abuse of presidential power, on a legally more defensible statutory basis. Obama supported the bill even though it gave telecommunication firms that cooperated with President Bush immunity from lawsuits, a provision Obama disliked. In office, President Obama has not renounced or sought to narrow any of the surveillance powers used by the late Bush administration, and has not sought legislation to reverse the telecom's immunity. Nor has he yet acted to fulfill his campaign pledge to significantly strengthen the Privacy and Civil Liberties Board that oversees and protects civil liberties in intelligence gathering. The Obama surveillance program appears to be identical to the late Bush era program.
10. State Secrets
The state secrets doctrine allows the government to prevent the disclosure of evidence in court based on its view that the disclosure would endanger national security. Candidate Obama criticized the Bush administration's use of this doctrine. But in at least three lawsuits growing out of Bush-era surveillance and rendition practices, the Obama Justice Department endorsed the same broad view of the state secrets privilege as the Bush administration. President Obama said last month that "the state secret doctrine should be modified" to make it a less "blunt instrument," and his lawyers are seeking ways to narrow the doctrine in some cases. But it is unclear how far this initiative will go, and in any event for now the Obama position is the Bush position.
11. Interrogation
On his first day in office President Obama signed an executive order requiring the CIA to use only the relatively benign techniques approved by the military field manual. He later released and rejected Department of Justice legal interpretations of the Torture statute and related laws. This is a large change in announced policy from the Bush administration, and the change that the former Vice President seems to like least. But it is less of a departure from the late Bush practice than meets the eye. Several reports suggest that a 2006 Supreme Court ruling, legislation concerning interrogation that same year, and growing public opprobrium led the Bush team, by 2007, to narrow the range of CIA-approved interrogation techniques, especially as compared to 2002-2003. Moreover, the Obama executive order established a task force to study whether the CIA should be able to use different interrogation techniques than the military, and CIA Director Panetta supports tougher interrogation techniques for his agency in some circumstances. As a result, the jury is still out on the differences between CIA interrogation techniques used during the late Bush administration and those ultimately used by Obama's CIA.
The Obama administration is still debating many of these issues, and its final policies are not all set. Its changes to Bush practices thus far--cutting back on secret detentions, probable new restrictions on interrogation, and relatively small procedural changes to military commissions--will leave some suspected terrorists in a better place than they would have been under the Bush regime (although Obama's increase in targeted killings will likely result in more deaths and injuries, without due process, to terror suspects and innocent civilians). Even with these caveats, at the end of the day, Obama practices will be much closer to late Bush practices than almost anyone expected in January 2009. Why has this happened, and what does it mean?
One reason the Obama practices are so close to the late Bush practices is that the late Bush practices were much different than the early ones. In 2001-2003, both fear of terrorism and Bush unilateralism were at their height. But in the last six years, the terror threat has appeared to fade (at least to the public), and Congress and the courts have engaged on terrorism issues, pushing back on some, approving others, and acquiescing in yet others. Congress altered somewhat and then approved the early Bush approach to surveillance, military commissions, and military detention. Rendition and targeted killings have gone on for over a decade without congressional pushback. Congress and the courts restricted permissible interrogations. Some courts have approved the state secrets doctrine as well as military detention without trial. The Supreme Court declared that a portion of the Geneva Conventions applies to the conflict with al Qaeda and rejected early Bush positions on the scope of habeas corpus. In these and many other ways, U.S. terrorism law looked wholly different at the outset of the Obama administration than in 2001-2003. The law was much clearer in 2009, and there was much greater consensus--across political parties and the branches of government--about permissible policies and their limits. Many Obama policies reflect that consensus.
The Obama policies also reflect the fact that the Bush policies were woven into the fabric of the national security architecture in ways that were hard if not impossible to unravel. The new administration would not face the difficulties of closing GTMO if GTMO had not been used as a detention facility in the first place. It would have an easier time prosecuting some terrorist suspects in civilian courts had information about their crimes not been extracted through coercion (assuming, that is, that it would have nabbed the suspects in the absence of the information gained through coercion). And so on. It is impossible to know how an Obama (or any other) administration would have dealt with the manifold terrorist challenges beginning on 9/11, or how the world might look different today if the Bush administration had made different decisions. But no doubt some of the Obama agreement with Bush policies reflects the fact that Obama inherited challenges that were created by decisions with which he would not have agreed.
A third reason for the closeness of the Bush and Obama policies is that many of the Bush policies reflect longstanding executive branch positions. Every wartime president has asserted the right to detain enemy forces without charge or trial during war. Many of them used military commissions for war criminals. Presidents dating back at least to Carter have maintained that habeas corpus review does not extend to aliens detained outside the United States. The state secrets doctrine is over a century old and has been employed vigorously by presidents since the 1970s. Rendition and targeted killings began under Clinton if not earlier. It is no surprise that President Obama seeks to maintain these presidential powers. It would be a surprise if he did not do so.
A final explanation for the congruence between Obama and Bush policies is that governing is much harder than campaigning. The presidency invariably gives its occupants a sober outlook on problems of national security. The "responsibilities placed on the United States are greater than I imagined them to be, and there are greater limitations upon our ability to bring about a favorable result than I had imagined them to be," said President John F. Kennedy, nearly two years into his presidency. "There is such a difference between those who advise or speak or legislate, and between the man who must select from the various alternatives proposed and say that this shall be the policy of the United States. It is much easier to make the speeches than it is to finally make the judgments."
President Obama has gone from a legislator and presidential candidate to the commander in chief wholly responsible for the nation's safety. He now reads the same threat reports as President Bush and confronts the same challenge of stopping Islamist terrorists who hide among civilians and who want to use ever-smaller and more deadly weapons to disrupt our way of life. He also faces the same paucity of truly useful information about the enemy and the same hard tradeoffs between liberty and security. And he knows that the American people will blame him and no one else if the terrorists strike. "The whole government is so identified in the minds of the people with [the president's] personality," said William Howard Taft, "that they make him responsible for all the sins of omission and of commission of society at large." The intense personal responsibility of the president for national security, combined with the continuing reality of a frightening and difficult-to-detect threat, has unsurprisingly led President Obama, like President Bush, to want to use the full arsenal of presidential tools.
The main difference between the Obama and Bush administrations concerns not the substance of terrorism policy, but rather its packaging. The Bush administration shot itself in the foot time and time again, to the detriment of the legitimacy and efficacy of its policies, by indifference to process and presentation. The Obama administration, by contrast, is intensely focused on these issues.
The Bush White House had a principled commitment to expanding presidential power that predated 9/11. This commitment led it early on to act unilaterally on military commissions, detention, and surveillance rather than seeking political and legal support from Congress, and to oppose judicial review of these and other wartime policies. The public concerns about presidential power induced by these actions were exacerbated by the administration's expansive rhetoric. Department of Justice opinions and presidential signing statements, for example, made broad claims for an untouchable Commander-in-Chief power that were unnecessary to the tasks at hand. Just as damaging was the administration's frequently expressed desire to expand executive power in order, as Vice President Cheney put it, "to leave the presidency stronger than we found it."
Such rhetoric was unprecedented in American wartime history, and was especially unfortunate in a war involving a novel enemy and widespread public doubts about the appropriateness of using war powers against such an enemy. The public worries about excessive presidential power during war, and prudent presidents try to assuage and meet these concerns. Abraham Lincoln and Franklin D. Roosevelt were the most powerful war presidents in our history. They never talked publicly about a desire to expand their power, for doing so would have been self-defeating and politically stupid. When they exercised extraordinary authorities, as they often did, they put forth a grudging public face, expressions of respect for constitutional values, and explanations about why the steps were an unfortunate but necessary means to an important national security end.
The Bush administration's opposite rhetorical strategy led many people to suspect that the president was acting to increase his own power rather than to keep the country safe. The strategy's main effect was to distort the legitimacy of many Bush wartime practices that had been uncontroversial in previous wars. The early Bush administration failed to grasp what Lincoln and Roosevelt understood well: the vital ongoing need to convince the citizenry that the president is using his extraordinary war powers for the public good and not for personal or institutional aggrandizement. By the time the Bush administration began to act on this principle in its second term, it was too late; its credibility on these issues--severely damaged not only by unilateralism and expansive rhetoric, but also by mistaken intelligence in the war with Iraq--was unrecoverable.
President Obama, by contrast, entered office with great stores of credibility in speaking about the dangers of terrorism and the difficulties of meeting the terror threat. The new president was a critic of Bush administration terrorism policies, a champion of civil liberties, and an opponent of the invasion of Iraq. His decision (after absorbing the classified intelligence and considering the various options) to continue core Bush terrorism policies is like Nixon going to China. Because the Obama policies play against type and (in some quarters of his party) against interest, they appear more likely to be a necessary response to a real terror threat and thus less worrisome from the perspective of presidential aggrandizement than when the Bush administration embraced essentially the same policies.
This credibility cannot last forever, and probably won't last long without careful nurturing. The Obama administration shows every sign of trying to do just that. It seems to have embraced, probably self-consciously, the tenets of democratic leadership that Roosevelt and Lincoln used to enhance presidential trust, and thus presidential effectiveness, during their wars. Like Roosevelt and to some degree Lincoln, President Obama has chosen a bipartisan national security team to help convey that his national security actions are in the public interest and not a partisan one. Also like our two greatest war presidents, President Obama seems committed to genuine consultation with Congress. If he gets Congress fully on board for his terrorism program, he will spread responsibility for the policies and help convince the public and the courts that the threat is real and the steps to counterterrorism necessary. President Obama has also promised a less secretive executive branch than President Bush. There is little evidence yet that his administration has done this, but if it does, it will reduce the mistakes that excessive secrecy brings and produce a more responsible and prudent government.
Finally, the Obama administration is following the Lincoln-Roosevelt approach to rhetoric and public symbols. The president talks frequently about the importance of adhering to constitutional values, he worries publicly about terrorism policies going too far, and he suggests that he is looking for ways to keep them in check. He has said not a word about presidential prerogative in national security or the importance of expanding his power. Closing GTMO--especially in the face of loud opposition--is an important symbol of the new president's commitment to the rule of law even if the detainees ultimately receive no greater rights. The small restrictions his administration has placed on itself as compared to the late Bush practices are public indications of restraint, especially when contrasted with the early Bush insistence on maximum presidential flexibility at all costs. They are yet more significant because the Obama administration is embracing them on its own initiative rather than, as was so often true of its predecessor, under apparent threat of judicial or congressional scrutiny.
A good example of these strategies in action is the Obama administration's "new" rationale for detaining enemy forces indefinitely without charge or trial. The administration took the same basic position as its predecessor but placed it in prettier wrapping. It eliminated the dreaded label "enemy combatant." It narrowed the scope of those who can be detained from persons who "support" al Qaeda and its affiliates to persons who "substantially support" them--a change without large practical consequences, but a change nonetheless. And it grounded its authority to detain in Congress's authorization for the war and the international laws of war, showing that the president's detention powers were approved by bodies outside the presidency. This was the Bush position as well, but with an important difference: The Bush administration argued that it could detain enemy soldiers on its own constitutional authority, and without congressional support. The Obama administration dropped this argument (but did not reject it), and won favorable press coverage for its "departure" from the Bush position even though the change affected nothing in the president's present power to detain.
One can view these and many similar Obama administration efforts as attempts to save face while departing from campaign promises and supporter expectations. And no doubt there is an element of this in the Obama strategy. But the Obama strategy can also be seen, more charitably, as a prudent attempt to legitimate and thus strengthen the extraordinary powers that the president must exercise in the long war against Islamist terrorists. The president simply cannot exercise these powers over an indefinite period unless Congress and the courts support him. And they will not support him unless they think he is exercising his powers responsibly, under law, with real constraints, to address a real threat. The Obama strategy can thus be seen as an attempt to make the core Bush approach to terrorism politically and legally more palatable, and thus sustainable.
If this analysis is right, then the former vice president is wrong to say that the new president is dismantling the Bush approach to terrorism. President Obama has not changed much of substance from the late Bush practices, and the changes he has made, including changes in presentation, are designed to fortify the bulk of the Bush program for the long-run. Viewed this way, President Obama is in the process of strengthening the presidency to fight terrorism.
Jack Goldsmith, a professor at Harvard Law School and a member of the Hoover Institution Task Force on National Security and Law, was an Assistant Attorney General in the Bush administration and is the author of The Terror Presidency: Law and Judgment Inside the Bush Administration (W.W. Norton 2007).
Waxman-Markey Cost-Benefit Analysis
Waxman-Markey Cost-Benefit Analysis. By Jim Manzi
The Corner/NRO, Wednesday, May 20, 2009
There has been widespread agitation in the influential blogosphere for a cost-benefit analysis of the Waxman-Markey cap-and-trade proposal. This sure seems like a reasonable request to me, and you have to wonder why the sponsors and advocates of this bill — who are, after all, proposing an enormous commitment of resources — haven’t provided one. So I tried to do a quick version of it. I have a longer and more complete version of this coming in the next National Review, but wanted to get the bones of the analysis out for discussion as rapidly as possible.
Background Analysis
According to the authoritative U.N. Intergovernmental Panel on Climate Change (IPCC), under a reasonable set of assumptions for global economic and population growth, the world should expect (Table SPM.3) to warm by about 2.8°C over the next century. Also according to the IPCC (page 17), a global increase in temperature of 4°C should cause the world to lose about 3 percent of its economic output. So if we do not take measures to ameliorate global warming, the world should expect to be about 3 percent poorer sometime in the 22nd century than it otherwise would be. This is very far from the rhetoric of global destruction. Because of its geographical position and mix of economic activities, the United States is expected (Table 3) to experience no net material economic costs from such warming through the end of this century, and to begin experiencing net costs only thereafter.
A government program to force emissions reductions to avoid some of these potential future losses would impose a cost of its own: The loss in consumption we would experience if we used less energy, substituted higher-cost sources of energy for fossil fuels, and paid for projects — which are termed “offsets” — to ameliorate the effect of emissions (an example would be planting lots of trees). It’s complicated to estimate the cost of an emissions-reduction program, but the leading economists in this area generally agree that it would be large, and that we should simply let most emissions happen, because it would be more expensive to avoid them than to accept the damage they would cause. This makes sense, if you consider that most such plans (for example, Waxman-Markey) call for eliminating something like 80 percent of carbon dioxide emissions within the next 40 years or so. Even if the economy becomes more efficient over this period, such a quick transition away from our primary fossil-fuel sources will be expensive.
If a) the total potential benefit of emissions abatement is about 3 percent of economic output more than 100 years from now, b) we can avoid only some of this damage, and c) it’s expensive to prevent those emissions that we can prevent, the net benefit of emissions reduction will likely be a very small fraction of total economic output. William Nordhaus, who heads the widely respected environmental-economics-modeling group at Yale, estimates (page 84) the total expected net benefit of an optimally designed, implemented, and enforced global program to be equal to the present value of about 0.2 percent of future global economic consumption. In the real world of domestic politics and geostrategic competition, it is not realistic to expect that we would ever have an optimally designed, implemented, and enforced global system, and the side deals made to put in place even an imperfect system would likely have costs that would dwarf 0.2 percent of global economic consumption. The expected benefits of emissions mitigation do not cover its expected costs. This is the root reason that proposals to mitigate emissions have such a hard time justifying themselves economically. (If interested, you can read much more about this here).
Costs vs. Benefits of Waxman-Markey
Let’s start with the costs. The Environmental Protection Agency (EPA) has done the first cost estimate for Waxman-Markey. It finds (page 17) that by 2020 Waxman-Markey would cause a typical U.S. household to consume about $160 less per year than it otherwise would, and about $1,100 less per year by 2050 (before any potential benefits from avoiding warming). That doesn’t sound like the end of the world, but this cost estimate is based on a number of assumptions that seem pretty unrealistic, to put it mildly.
First, it assumes that every dollar collected by selling the right to emit carbon dioxide will be returned to taxpayers through rebates or lowered taxes. Waxman-Markey establishes this intention but doesn’t (as of the time I’m writing this) describe how it would be achieved, which reflects the political difficulty of achieving it. Second, it assumes no costs for enforcement and other compliance measures, which would be awfully nice. Third, it assumes that large numbers of foreign offsets will be available for purchase; without these, costs would be far higher. Fourth, it assumes that the rest of the world will begin similar carbon-reduction programs. Lack of such foreign action would either increase U.S. costs or risk a trade war if we tried to compensate for lack of international cooperation with targeted tariffs. Fifth, it assumes that there will be no exemptions or other side deals — that is, no economic drag created by the kind of complexity that has attached to every large, long-term revenue-collection program in history. And so on.
The EPA forecast is something like an estimate of the pure loss in economic productivity from replacing some fossil fuels with less economically efficient fuels or conservation in a laboratory setting; in the real world, expected costs are far above 0.8 percent of economic consumption by 2050. The EPA does not forecast costs beyond 2050.
Remember that the U.S. should not expect any net economic damage from global warming before 2100. That is, the bill’s benefits would accrue to U.S. consumers — who are also bearing its costs — sometime in the next century. The EPA underestimate has costs rising from zero to 0.8 percent of consumption between now and 2050, and offers no projection beyond that year; but to what level would costs rise over the more than 50 years between 2050 and the point in 22nd century when we might actually expect some net economic losses from global warming? The answer is likely to be much higher.
Now consider the benefits. Climatologist Chip Knappenberger has applied standard climate models to project that, under the scenario for global economic and population growth referenced above (A1B), Waxman-Markey’s emissions reductions would have the net effect of lowering global temperatures by about 0.1°C by 2100. Remember that the estimated cost of a 4°C increase in temperature (40 times this amount) is about 3 percent of global economic output. Assume for the moment that global warming has the same impact on the U.S. as a percentage of GDP as it does on the world as a whole (an assumption that almost certainly exaggerates the impact on the U.S.). A crude estimate of the U.S. economic costs that Waxman-Markey would avoid sometime later than 2100 would then be about one-fortieth of 3 percent, or about 0.08 percent of economic output. This number is one-tenth of 0.8 percent, the EPA’s estimate of consumption loss from Waxman-Markey by 2050. To repeat: The costs would be more than ten times the benefits, even under extremely unrealistic assumptions of low costs and high benefits. More realistic assumptions would make for a comparison far less favorable to the bill.
I’ve had to rely on informal studies and back-of-envelope calculations to do this cost/benefit analysis. Why haven’t advocates and sponsors of the proposal done their own? Why are they urging Congress to make an incredible commitment of resources without even cursory analysis of the net economic consequences? The answer should be obvious: This is a terrible deal for American taxpayers.
Two Potential Objections
One potential objection to my analysis is that the bill is part of a global drive for all countries to reduce emissions, and that the U.S. needs to “show leadership.” By this logic, we should ascribe much larger benefits to the Waxman-Markey bill — specifically, the benefits to American consumers of the whole world’s engaging in similar programs. There are two obvious problems with this argument, however. First, ascribing all of the benefits of a global deal to reduce emissions to a specific bill that does not create such a commitment on the part of any other countries is loading the dice. The benefit we should ascribe to the bill is rather that of an increase in the odds of such a global deal. But would Waxman-Markey actually increase them, or would it decrease them instead? Whenever one nation sacrifices economic growth in order to reduce emissions, the whole world can expect to benefit, because future temperature should decrease for the entire globe. Every nation’s incentive, therefore, is to free ride on everybody else. Our most obvious leverage with other emitting nations would be to offer to reduce our emissions if they reduced theirs. Giving up this leverage and hoping that our unilateral reductions would put moral pressure on China, Russia, Brazil, and similar countries to reduce their emissions reveals a touchingly sunny view of human nature, but it strikes me as a poor negotiating strategy. Second and more fundamentally, even if the whole world were to enact similar restraints on emissions, the cost/benefit economics would still not be compelling, for the reasons outlined at the beginning of this post.
A second and more serious potential objection to my analysis is that while Waxman-Markey may not create benefits if the projections I offered above turn out to be accurate, climate science is highly inexact, and the bill is an insurance policy against higher-than-expected costs. Now, climate and economics modelers aren’t idiots, so it’s not as though this hadn’t occurred to them. Competent modelers don’t assume only the most likely case, but build probability distributions for levels of warming and associated economic impacts (e.g., there is a 5 percent chance of 4.5°C warming, a 10 percent chance of 4.0°C warming, and so on). The economic calculations that compose, for example, the analysis by William Nordhaus that I cited earlier are executed in just this manner. So the possibility of “worse than expected” impacts means, more precisely, the possibility of “impacts worse than those derived from our current probability distribution.” That is, we are concerned here with the inherently unquantifiable possibility that our entire probability distribution is wrong.
This concept has been called, somewhat grandiosely, the “Precautionary Principle.” Once you get past all the table-pounding, this is the crux of the argument for emissions abatement. It is an emotionally appealing political position, as it easy to argue that we should reduce some consumption now to head off even a low-odds possibility of disaster. The most compelling version of this argument, by far, has been presented by Martin Weitzman. You can read my detailed response here (note that this was to a slightly earlier edition of the paper). The essence of my response is that in order to drive a decision, Weitzman must take his argument from the conceptual idea of a “fat-tailed distribution” of danger to a numerical estimate of risk. He recognizes that the logic of his argument entails this. In his article, he ends up having to do the kind of armchair climate science that has been the bane of the “global warming is all a hoax” set. He uses a couple of ice bore studies to develop his own probability distribution for potential warming that calls for a 1% chance of 22.6C or more of warming by 2100. To put this in perspective, a 22.6C increase in the earth’s temperature would mean that the average global year-round temperature would be the same as summertime Death Valley is today. If you could convince me that there was a reliably-quantified 1% chance of this happening, you wouldn’t need all of the mathematical formalism of Weitzman’s paper — I’d be the biggest emissions-mitigation proponent on earth. The problem is that the IPCC has already built a distribution of potential temperature changes (see Figure 10.28, page 808) that looks nothing like this. If you don’t want to believe me, read Cass Sunstein’s book about why the Precautionary Principle, even in sophisticated form, is a very bad decision rule.
In the end, clarity about costs and benefits is the enemy of Waxman-Markey. It is hard to get around the conclusion that it can not be justified rationally based on the avoidance of climate change damages.
The Corner/NRO, Wednesday, May 20, 2009
There has been widespread agitation in the influential blogosphere for a cost-benefit analysis of the Waxman-Markey cap-and-trade proposal. This sure seems like a reasonable request to me, and you have to wonder why the sponsors and advocates of this bill — who are, after all, proposing an enormous commitment of resources — haven’t provided one. So I tried to do a quick version of it. I have a longer and more complete version of this coming in the next National Review, but wanted to get the bones of the analysis out for discussion as rapidly as possible.
Background Analysis
According to the authoritative U.N. Intergovernmental Panel on Climate Change (IPCC), under a reasonable set of assumptions for global economic and population growth, the world should expect (Table SPM.3) to warm by about 2.8°C over the next century. Also according to the IPCC (page 17), a global increase in temperature of 4°C should cause the world to lose about 3 percent of its economic output. So if we do not take measures to ameliorate global warming, the world should expect to be about 3 percent poorer sometime in the 22nd century than it otherwise would be. This is very far from the rhetoric of global destruction. Because of its geographical position and mix of economic activities, the United States is expected (Table 3) to experience no net material economic costs from such warming through the end of this century, and to begin experiencing net costs only thereafter.
A government program to force emissions reductions to avoid some of these potential future losses would impose a cost of its own: The loss in consumption we would experience if we used less energy, substituted higher-cost sources of energy for fossil fuels, and paid for projects — which are termed “offsets” — to ameliorate the effect of emissions (an example would be planting lots of trees). It’s complicated to estimate the cost of an emissions-reduction program, but the leading economists in this area generally agree that it would be large, and that we should simply let most emissions happen, because it would be more expensive to avoid them than to accept the damage they would cause. This makes sense, if you consider that most such plans (for example, Waxman-Markey) call for eliminating something like 80 percent of carbon dioxide emissions within the next 40 years or so. Even if the economy becomes more efficient over this period, such a quick transition away from our primary fossil-fuel sources will be expensive.
If a) the total potential benefit of emissions abatement is about 3 percent of economic output more than 100 years from now, b) we can avoid only some of this damage, and c) it’s expensive to prevent those emissions that we can prevent, the net benefit of emissions reduction will likely be a very small fraction of total economic output. William Nordhaus, who heads the widely respected environmental-economics-modeling group at Yale, estimates (page 84) the total expected net benefit of an optimally designed, implemented, and enforced global program to be equal to the present value of about 0.2 percent of future global economic consumption. In the real world of domestic politics and geostrategic competition, it is not realistic to expect that we would ever have an optimally designed, implemented, and enforced global system, and the side deals made to put in place even an imperfect system would likely have costs that would dwarf 0.2 percent of global economic consumption. The expected benefits of emissions mitigation do not cover its expected costs. This is the root reason that proposals to mitigate emissions have such a hard time justifying themselves economically. (If interested, you can read much more about this here).
Costs vs. Benefits of Waxman-Markey
Let’s start with the costs. The Environmental Protection Agency (EPA) has done the first cost estimate for Waxman-Markey. It finds (page 17) that by 2020 Waxman-Markey would cause a typical U.S. household to consume about $160 less per year than it otherwise would, and about $1,100 less per year by 2050 (before any potential benefits from avoiding warming). That doesn’t sound like the end of the world, but this cost estimate is based on a number of assumptions that seem pretty unrealistic, to put it mildly.
First, it assumes that every dollar collected by selling the right to emit carbon dioxide will be returned to taxpayers through rebates or lowered taxes. Waxman-Markey establishes this intention but doesn’t (as of the time I’m writing this) describe how it would be achieved, which reflects the political difficulty of achieving it. Second, it assumes no costs for enforcement and other compliance measures, which would be awfully nice. Third, it assumes that large numbers of foreign offsets will be available for purchase; without these, costs would be far higher. Fourth, it assumes that the rest of the world will begin similar carbon-reduction programs. Lack of such foreign action would either increase U.S. costs or risk a trade war if we tried to compensate for lack of international cooperation with targeted tariffs. Fifth, it assumes that there will be no exemptions or other side deals — that is, no economic drag created by the kind of complexity that has attached to every large, long-term revenue-collection program in history. And so on.
The EPA forecast is something like an estimate of the pure loss in economic productivity from replacing some fossil fuels with less economically efficient fuels or conservation in a laboratory setting; in the real world, expected costs are far above 0.8 percent of economic consumption by 2050. The EPA does not forecast costs beyond 2050.
Remember that the U.S. should not expect any net economic damage from global warming before 2100. That is, the bill’s benefits would accrue to U.S. consumers — who are also bearing its costs — sometime in the next century. The EPA underestimate has costs rising from zero to 0.8 percent of consumption between now and 2050, and offers no projection beyond that year; but to what level would costs rise over the more than 50 years between 2050 and the point in 22nd century when we might actually expect some net economic losses from global warming? The answer is likely to be much higher.
Now consider the benefits. Climatologist Chip Knappenberger has applied standard climate models to project that, under the scenario for global economic and population growth referenced above (A1B), Waxman-Markey’s emissions reductions would have the net effect of lowering global temperatures by about 0.1°C by 2100. Remember that the estimated cost of a 4°C increase in temperature (40 times this amount) is about 3 percent of global economic output. Assume for the moment that global warming has the same impact on the U.S. as a percentage of GDP as it does on the world as a whole (an assumption that almost certainly exaggerates the impact on the U.S.). A crude estimate of the U.S. economic costs that Waxman-Markey would avoid sometime later than 2100 would then be about one-fortieth of 3 percent, or about 0.08 percent of economic output. This number is one-tenth of 0.8 percent, the EPA’s estimate of consumption loss from Waxman-Markey by 2050. To repeat: The costs would be more than ten times the benefits, even under extremely unrealistic assumptions of low costs and high benefits. More realistic assumptions would make for a comparison far less favorable to the bill.
I’ve had to rely on informal studies and back-of-envelope calculations to do this cost/benefit analysis. Why haven’t advocates and sponsors of the proposal done their own? Why are they urging Congress to make an incredible commitment of resources without even cursory analysis of the net economic consequences? The answer should be obvious: This is a terrible deal for American taxpayers.
Two Potential Objections
One potential objection to my analysis is that the bill is part of a global drive for all countries to reduce emissions, and that the U.S. needs to “show leadership.” By this logic, we should ascribe much larger benefits to the Waxman-Markey bill — specifically, the benefits to American consumers of the whole world’s engaging in similar programs. There are two obvious problems with this argument, however. First, ascribing all of the benefits of a global deal to reduce emissions to a specific bill that does not create such a commitment on the part of any other countries is loading the dice. The benefit we should ascribe to the bill is rather that of an increase in the odds of such a global deal. But would Waxman-Markey actually increase them, or would it decrease them instead? Whenever one nation sacrifices economic growth in order to reduce emissions, the whole world can expect to benefit, because future temperature should decrease for the entire globe. Every nation’s incentive, therefore, is to free ride on everybody else. Our most obvious leverage with other emitting nations would be to offer to reduce our emissions if they reduced theirs. Giving up this leverage and hoping that our unilateral reductions would put moral pressure on China, Russia, Brazil, and similar countries to reduce their emissions reveals a touchingly sunny view of human nature, but it strikes me as a poor negotiating strategy. Second and more fundamentally, even if the whole world were to enact similar restraints on emissions, the cost/benefit economics would still not be compelling, for the reasons outlined at the beginning of this post.
A second and more serious potential objection to my analysis is that while Waxman-Markey may not create benefits if the projections I offered above turn out to be accurate, climate science is highly inexact, and the bill is an insurance policy against higher-than-expected costs. Now, climate and economics modelers aren’t idiots, so it’s not as though this hadn’t occurred to them. Competent modelers don’t assume only the most likely case, but build probability distributions for levels of warming and associated economic impacts (e.g., there is a 5 percent chance of 4.5°C warming, a 10 percent chance of 4.0°C warming, and so on). The economic calculations that compose, for example, the analysis by William Nordhaus that I cited earlier are executed in just this manner. So the possibility of “worse than expected” impacts means, more precisely, the possibility of “impacts worse than those derived from our current probability distribution.” That is, we are concerned here with the inherently unquantifiable possibility that our entire probability distribution is wrong.
This concept has been called, somewhat grandiosely, the “Precautionary Principle.” Once you get past all the table-pounding, this is the crux of the argument for emissions abatement. It is an emotionally appealing political position, as it easy to argue that we should reduce some consumption now to head off even a low-odds possibility of disaster. The most compelling version of this argument, by far, has been presented by Martin Weitzman. You can read my detailed response here (note that this was to a slightly earlier edition of the paper). The essence of my response is that in order to drive a decision, Weitzman must take his argument from the conceptual idea of a “fat-tailed distribution” of danger to a numerical estimate of risk. He recognizes that the logic of his argument entails this. In his article, he ends up having to do the kind of armchair climate science that has been the bane of the “global warming is all a hoax” set. He uses a couple of ice bore studies to develop his own probability distribution for potential warming that calls for a 1% chance of 22.6C or more of warming by 2100. To put this in perspective, a 22.6C increase in the earth’s temperature would mean that the average global year-round temperature would be the same as summertime Death Valley is today. If you could convince me that there was a reliably-quantified 1% chance of this happening, you wouldn’t need all of the mathematical formalism of Weitzman’s paper — I’d be the biggest emissions-mitigation proponent on earth. The problem is that the IPCC has already built a distribution of potential temperature changes (see Figure 10.28, page 808) that looks nothing like this. If you don’t want to believe me, read Cass Sunstein’s book about why the Precautionary Principle, even in sophisticated form, is a very bad decision rule.
In the end, clarity about costs and benefits is the enemy of Waxman-Markey. It is hard to get around the conclusion that it can not be justified rationally based on the avoidance of climate change damages.
Cancer and the Government
Cancer and the Government, by Michael D. Tanner
Cato, May 20, 2009
The American Cancer Society Cancer Action Network announced recently that it will spend $3 million over the next several months not on urging Americans to stop smoking or get mammograms, but on campaigning for a government takeover of the U.S. health-care system. This is perverse: It's hard to imagine anything worse for cancer patients than government-run health care.
For all its faults and all the criticism that it has received, the United States' free-market health-care system has made America the place you want to be if you have a serious illness.
Cancer patients understand this. The overall five-year survival rate for all types of cancer for men in America is 66.3 percent, and 62.9 percent for women, the best outcome in the world.
We shouldn't be surprised. The one common characteristic of all national health-care systems is that they ration care.
Sometimes they ration it explicitly, denying certain types of treatment altogether. More often, they ration more indirectly — imposing global budgets or other cost constraints that limit the availability of high-tech medical equipment or imposing long waits on patients seeking treatment.
In the United States, there are no such government-set limits, meaning that the most advanced treatment options are far more available. This translates directly into saved lives.
A prime example of denying patients treatment that has the potential to, if not save, at least prolong one's life comes from the much vaunted National Health System (NHS) in the United Kingdom. In order to keep the budget under control, the U.K. government established the National Institute for Health and Clinical Excellence (or NICE). NICE acts as a comparative-effectiveness tool for NHS, comparing various treatments and determining whether the benefits the patient receives, such as prolonged life, are cost-efficient for the government. Outlines for reform put forth by President Obama and Democrats in Congress include a comparative-effectiveness body similar to NICE.
NICE, however, is not simply a government agency that helps bureaucrats decide if one treatment is better than another. With the creation of NICE, the U.K. government has effectively put a dollar amount to how much a citizen's life is worth. To be exact, each year of added life is worth approximately $44,305 (£30,000). Of course, this is a general rule and, as NICE chairman Michael Rawlins points out, the agency has sometimes approved treatments costing as much as $70,887 (£48,000) per year of extended life.
Approval for expensive treatments, regrettably, is the exception and not the rule. Such treatments are only approved if it can be shown they extend life by at least three months and are used for illnesses that affect fewer than 7,000 new patients per year. After all, as Rawlins notes, "We have a finite pot of money."
This unfortunate truth has led to many controversial decisions in Britain. Most recently, in August 2008, NICE refused to approve four new treatments for kidney cancer, three of which had already been approved for use in the U.S. for a year or more. In April 2009 NICE reversed its ban on one drug, Sutent. Sutent can double the life expectancy of patients and costs around $35,465 (£24,000) per year. For the other three drugs, however, NICE confirmed its ban, despite each having similar costs to Sutent.
The advantages of free-market health care go far beyond an absence of rationing. With no price controls, free-market U.S. medicine provides the incentives that lead to innovative breakthroughs in new drugs and other medical technologies. U.S. companies have developed half of all the major new medicines introduced worldwide over the last 20 years.
In fact, Americans played a key role in 80 percent of the most important medical advances of the last 30 years. Eighteen of the last 25 winners of the Nobel Prize in Medicine either are U.S. citizens or work here.
If the American Cancer Society got the government-run national health-care system it wants, we would eliminate consumer choice and put a stop to the innovations we count on to improve our health. It would condemn thousands of cancer sufferers to waiting lists and denied care. In the end, it would cost lives.
If the Cancer Society truly wants to help Americans suffering from that complex array of diseases called cancer, it will get back to campaigning for mammograms and quitting smoking, and keep the government out of the picture.
Cato, May 20, 2009
The American Cancer Society Cancer Action Network announced recently that it will spend $3 million over the next several months not on urging Americans to stop smoking or get mammograms, but on campaigning for a government takeover of the U.S. health-care system. This is perverse: It's hard to imagine anything worse for cancer patients than government-run health care.
For all its faults and all the criticism that it has received, the United States' free-market health-care system has made America the place you want to be if you have a serious illness.
Cancer patients understand this. The overall five-year survival rate for all types of cancer for men in America is 66.3 percent, and 62.9 percent for women, the best outcome in the world.
We shouldn't be surprised. The one common characteristic of all national health-care systems is that they ration care.
Sometimes they ration it explicitly, denying certain types of treatment altogether. More often, they ration more indirectly — imposing global budgets or other cost constraints that limit the availability of high-tech medical equipment or imposing long waits on patients seeking treatment.
In the United States, there are no such government-set limits, meaning that the most advanced treatment options are far more available. This translates directly into saved lives.
A prime example of denying patients treatment that has the potential to, if not save, at least prolong one's life comes from the much vaunted National Health System (NHS) in the United Kingdom. In order to keep the budget under control, the U.K. government established the National Institute for Health and Clinical Excellence (or NICE). NICE acts as a comparative-effectiveness tool for NHS, comparing various treatments and determining whether the benefits the patient receives, such as prolonged life, are cost-efficient for the government. Outlines for reform put forth by President Obama and Democrats in Congress include a comparative-effectiveness body similar to NICE.
NICE, however, is not simply a government agency that helps bureaucrats decide if one treatment is better than another. With the creation of NICE, the U.K. government has effectively put a dollar amount to how much a citizen's life is worth. To be exact, each year of added life is worth approximately $44,305 (£30,000). Of course, this is a general rule and, as NICE chairman Michael Rawlins points out, the agency has sometimes approved treatments costing as much as $70,887 (£48,000) per year of extended life.
Approval for expensive treatments, regrettably, is the exception and not the rule. Such treatments are only approved if it can be shown they extend life by at least three months and are used for illnesses that affect fewer than 7,000 new patients per year. After all, as Rawlins notes, "We have a finite pot of money."
This unfortunate truth has led to many controversial decisions in Britain. Most recently, in August 2008, NICE refused to approve four new treatments for kidney cancer, three of which had already been approved for use in the U.S. for a year or more. In April 2009 NICE reversed its ban on one drug, Sutent. Sutent can double the life expectancy of patients and costs around $35,465 (£24,000) per year. For the other three drugs, however, NICE confirmed its ban, despite each having similar costs to Sutent.
The advantages of free-market health care go far beyond an absence of rationing. With no price controls, free-market U.S. medicine provides the incentives that lead to innovative breakthroughs in new drugs and other medical technologies. U.S. companies have developed half of all the major new medicines introduced worldwide over the last 20 years.
In fact, Americans played a key role in 80 percent of the most important medical advances of the last 30 years. Eighteen of the last 25 winners of the Nobel Prize in Medicine either are U.S. citizens or work here.
If the American Cancer Society got the government-run national health-care system it wants, we would eliminate consumer choice and put a stop to the innovations we count on to improve our health. It would condemn thousands of cancer sufferers to waiting lists and denied care. In the end, it would cost lives.
If the Cancer Society truly wants to help Americans suffering from that complex array of diseases called cancer, it will get back to campaigning for mammograms and quitting smoking, and keep the government out of the picture.
Federal President at the Auto Buffet: With no resistance, he ate the whole thing
Obama at the Auto Buffet. By Holman W Jenkins, Jr.
With no resistance, he ate the whole thing.
WSJ, May 20, 2009
With his latest installment of ever-higher fuel mileage requirements for the auto industry, Barack Obama embraces a momentary, crisis-spawned expansion of the art of the possible, unleavened by any art of the rationally desirable.
Detroit is dependent on Washington loans for survival. The industry's lobbyists and its congressional allies have collapsed in a heap, offering no resistance. So why not go for broke? If you're alone in front of the shrimp buffet, why not eat all the shrimp -- even if it makes you barf later?
Defenders of the Obama administration's Chrysler bankruptcy finagle misguidedly argue that, if not for taxpayer money, the company's secured creditors would have gotten as little or less than they did in the imposed settlement.
They miss the point. Anyone can always imagine an outcome more "fair" than the outcome provided by people duly exercising -- and the legal process duly upholding -- their rights. Fairness in a law-abiding society is due process. In the Chrysler bankruptcy, the administration hijacked the legal forms for a political end that it could have delivered honestly by the government buying Chrysler out of liquidation and handing it to the UAW.
But then Mr. Obama's purposes would have been exposed a little too nakedly for public consumption.
Already, of course, the swim of events has moved on, into deeper and more chaotic waters. The union will own 55% of Chrysler, and it would be quite rational to prefer an additional dollar of wages and benefits to 55 cents of earnings (55 cents being the union's share of a dollar of earnings).
Even this overstates the union's incentive to concern itself with the auto maker's profitability. The Chrysler stake would actually be owned not for the benefit of current workers but for retirees, since its ostensible purpose is to fund retiree health care. Yet power would still rest with a union chief elected exclusively by active members.
The administration at least understands the conflict it has set in motion. Under a reported new Chrysler contract dictated by the White House, the union surrenders its right to strike for the next six years. A redolent fact, though, is that Ron Bloom, the administration's real acting car czar in this case, was a principal in the now-defunct investment banking firm of Keilin & Bloom, which secured the 55% stake for the unions in United Airlines in the mid-1990s.
United's pilots did not strike in pursuit of what eventually became the richest contract in the industry. They did engage in work slowdowns that led to thousands of canceled and delayed flights and ferocious anger among the airline's customers. Pilot leader Rick Dubinsky told management in 2000: "We don't want to kill the golden goose. We just want to choke it by the neck until it gives us every last egg." United filed for bankruptcy two years later.
So far, the Obama administration has yet to lay out its magical thinking on how the homegrown auto makers are to become "viable" when required to subordinate every auto attribute that consumers find desirable in favor of achieving a passenger-car average of 39 miles per gallon by 2016. Nonetheless the answer has quietly seeped out: Taxpayers will write $5,000 or $7,000 rebate checks to other taxpayers to bribe them to buy hybrids and plug-ins at a price that lets Detroit claim it's earning a "profit" on its Obamamobiles.
Mr. Obama was supposed to be smart. His administration was supposed to be a smart administration. But the policy coming out has not been smart. It has been a brute shifting of power to the president's political allies, justified by the shibboleths of copybook liberalism (though Mr. Obama is clever enough to know that nothing he's done will have a meaningful effect on atmospheric carbon or climate change or the country's need for oil imports).
With no overarching philosophy in evidence, the art of the possible has come to define the Obama administration. One thing that has proved possible is an untrammeled power grab over the auto industry. Yet it all seems mainly to testify to the limitations of Saul Alinsky as a political philosopher. The doyen of community organizing, his views profoundly influenced Mr. Obama. The late Alinsky was unsentimental about power, and about accumulating it in order to extract from "the system" benefits for his constituents.
But a president also has to represent the system. He has to care about whether the setup is sustainable and ultimately meets a nation's needs and reflects its values. In delivering unlimited sway over the domestic auto makers to the greens and labor, Mr. Obama is creating a catastrophically unbalanced "system" with no effective pushback on behalf of profits (aka "viability") -- that is, except from consumers, who ultimately will doom his attempt. How so? By declining to pay enough for the forthcoming Obamamobiles to cover the cost of designing and building them.
With no resistance, he ate the whole thing.
WSJ, May 20, 2009
With his latest installment of ever-higher fuel mileage requirements for the auto industry, Barack Obama embraces a momentary, crisis-spawned expansion of the art of the possible, unleavened by any art of the rationally desirable.
Detroit is dependent on Washington loans for survival. The industry's lobbyists and its congressional allies have collapsed in a heap, offering no resistance. So why not go for broke? If you're alone in front of the shrimp buffet, why not eat all the shrimp -- even if it makes you barf later?
Defenders of the Obama administration's Chrysler bankruptcy finagle misguidedly argue that, if not for taxpayer money, the company's secured creditors would have gotten as little or less than they did in the imposed settlement.
They miss the point. Anyone can always imagine an outcome more "fair" than the outcome provided by people duly exercising -- and the legal process duly upholding -- their rights. Fairness in a law-abiding society is due process. In the Chrysler bankruptcy, the administration hijacked the legal forms for a political end that it could have delivered honestly by the government buying Chrysler out of liquidation and handing it to the UAW.
But then Mr. Obama's purposes would have been exposed a little too nakedly for public consumption.
Already, of course, the swim of events has moved on, into deeper and more chaotic waters. The union will own 55% of Chrysler, and it would be quite rational to prefer an additional dollar of wages and benefits to 55 cents of earnings (55 cents being the union's share of a dollar of earnings).
Even this overstates the union's incentive to concern itself with the auto maker's profitability. The Chrysler stake would actually be owned not for the benefit of current workers but for retirees, since its ostensible purpose is to fund retiree health care. Yet power would still rest with a union chief elected exclusively by active members.
The administration at least understands the conflict it has set in motion. Under a reported new Chrysler contract dictated by the White House, the union surrenders its right to strike for the next six years. A redolent fact, though, is that Ron Bloom, the administration's real acting car czar in this case, was a principal in the now-defunct investment banking firm of Keilin & Bloom, which secured the 55% stake for the unions in United Airlines in the mid-1990s.
United's pilots did not strike in pursuit of what eventually became the richest contract in the industry. They did engage in work slowdowns that led to thousands of canceled and delayed flights and ferocious anger among the airline's customers. Pilot leader Rick Dubinsky told management in 2000: "We don't want to kill the golden goose. We just want to choke it by the neck until it gives us every last egg." United filed for bankruptcy two years later.
So far, the Obama administration has yet to lay out its magical thinking on how the homegrown auto makers are to become "viable" when required to subordinate every auto attribute that consumers find desirable in favor of achieving a passenger-car average of 39 miles per gallon by 2016. Nonetheless the answer has quietly seeped out: Taxpayers will write $5,000 or $7,000 rebate checks to other taxpayers to bribe them to buy hybrids and plug-ins at a price that lets Detroit claim it's earning a "profit" on its Obamamobiles.
Mr. Obama was supposed to be smart. His administration was supposed to be a smart administration. But the policy coming out has not been smart. It has been a brute shifting of power to the president's political allies, justified by the shibboleths of copybook liberalism (though Mr. Obama is clever enough to know that nothing he's done will have a meaningful effect on atmospheric carbon or climate change or the country's need for oil imports).
With no overarching philosophy in evidence, the art of the possible has come to define the Obama administration. One thing that has proved possible is an untrammeled power grab over the auto industry. Yet it all seems mainly to testify to the limitations of Saul Alinsky as a political philosopher. The doyen of community organizing, his views profoundly influenced Mr. Obama. The late Alinsky was unsentimental about power, and about accumulating it in order to extract from "the system" benefits for his constituents.
But a president also has to represent the system. He has to care about whether the setup is sustainable and ultimately meets a nation's needs and reflects its values. In delivering unlimited sway over the domestic auto makers to the greens and labor, Mr. Obama is creating a catastrophically unbalanced "system" with no effective pushback on behalf of profits (aka "viability") -- that is, except from consumers, who ultimately will doom his attempt. How so? By declining to pay enough for the forthcoming Obamamobiles to cover the cost of designing and building them.
Free markets are the worst economic system except for all the others
Why Government Can't Run a Business. By John Steele Gordon
Politicians need headlines. Executives need profits.
WSJ, May 20, 2009
The Obama administration is bent on becoming a major player in -- if not taking over entirely -- America's health-care, automobile and banking industries. Before that happens, it might be a good idea to look at the government's track record in running economic enterprises. It is terrible.
In 1913, for instance, thinking it was being overcharged by the steel companies for armor plate for warships, the federal government decided to build its own plant. It estimated that a plant with a 10,000-ton annual capacity could produce armor plate for only 70% of what the steel companies charged.
When the plant was finally finished, however -- three years after World War I had ended -- it was millions over budget and able to produce armor plate only at twice what the steel companies charged. It produced one batch and then shut down, never to reopen.
Or take Medicare. Other than the source of its premiums, Medicare is no different, economically, than a regular health-insurance company. But unlike, say, UnitedHealthcare, it is a bureaucracy-beclotted nightmare, riven with waste and fraud. Last year the Government Accountability Office estimated that no less than one-third of all Medicare disbursements for durable medical equipment, such as wheelchairs and hospital beds, were improper or fraudulent. Medicare was so lax in its oversight that it was approving orthopedic shoes for amputees.
These examples are not aberrations; they are typical of how governments run enterprises. There are a number of reasons why this is inherently so. Among them are:
1) Governments are run by politicians, not businessmen. Politicians can only make political decisions, not economic ones. They are, after all, first and foremost in the re-election business. Because of the need to be re-elected, politicians are always likely to have a short-term bias. What looks good right now is more important to politicians than long-term consequences even when those consequences can be easily foreseen. The gathering disaster of Social Security has been obvious for years, but politics has prevented needed reforms.
And politicians tend to favor parochial interests over sound economic sense. Consider a thought experiment. There is a national widget crisis and Sen. Wiley Snoot is chairman of the Senate Widget Committee. There are two technologies that are possible solutions to the problem, with Technology A widely thought to be the more promising of the two. But the company that has been developing Technology B is headquartered in Sen. Snoot's state and employs 40,000 workers there. Which technology is Sen. Snoot going to use his vast legislative influence to push?
2) Politicians need headlines. And this means they have a deep need to do something ("Sen. Snoot Moves on Widget Crisis!"), even when doing nothing would be the better option. Markets will always deal efficiently with gluts and shortages, but letting the market work doesn't produce favorable headlines and, indeed, often produces the opposite ("Sen. Snoot Fails to Move on Widget Crisis!").
3) Governments use other people's money. Corporations play with their own money. They are wealth-creating machines in which various people (investors, managers and labor) come together under a defined set of rules in hopes of creating more wealth collectively than they can create separately.
So a labor negotiation in a corporation is a negotiation over how to divide the wealth that is created between stockholders and workers. Each side knows that if they drive too hard a bargain they risk killing the goose that lays golden eggs for both sides. Just ask General Motors and the United Auto Workers.
But when, say, a school board sits down to negotiate with a teachers union or decide how many administrators are needed, the goose is the taxpayer. That's why public-service employees now often have much more generous benefits than their private-sector counterparts. And that's why the New York City public school system had an administrator-to-student ratio 10 times as high as the city's Catholic school system, at least until Mayor Michael Bloomberg (a more than competent businessman before he entered politics) took charge of the system.
4) Government does not tolerate competition. The Obama administration is talking about creating a "public option" that would compete in the health-insurance marketplace with profit-seeking companies. But has a government entity ever competed successfully on a level playing field with private companies? I don't know of one.
5) Government enterprises are almost always monopolies and thus do not face competition at all. But competition is exactly what makes capitalism so successful an economic system. The lack of it has always doomed socialist economies.
When the federal government nationalized the phone system in 1917, justifying it as a wartime measure that would lower costs, it turned it over to the Post Office to run. (The process was called "postalization," a word that should send shivers down the back of any believer in free markets.) But despite the promise of lower prices, practically the first thing the Post Office did when it took over was . . . raise prices.
Cost cutting is alien to the culture of all bureaucracies. Indeed, when cost cutting is inescapable, bureaucracies often make cuts that will produce maximum public inconvenience, generating political pressure to reverse the cuts.
6) Successful corporations are run by benevolent despots. The CEO of a corporation has the power to manage effectively. He decides company policy, organizes the corporate structure, and allocates resources pretty much as he thinks best. The board of directors ordinarily does nothing more than ratify his moves (or, of course, fire him). This allows a company to act quickly when needed.
But American government was designed by the Founding Fathers to be inefficient, and inefficient it most certainly is. The president is the government's CEO, but except for trivial matters he can't do anything without the permission of two separate, very large committees (the House and Senate) whose members have their own political agendas. Government always has many cooks, which is why the government's broth is so often spoiled.
7) Government is regulated by government. When "postalization" of the nation's phone system appeared imminent in 1917, Theodore Vail, the president of AT&T, admitted that his company was, effectively, a monopoly. But he noted that "all monopolies should be regulated. Government ownership would be an unregulated monopoly."
It is government's job to make and enforce the rules that allow a civilized society to flourish. But it has a dismal record of regulating itself. Imagine, for instance, if a corporation, seeking to make its bottom line look better, transferred employee contributions from the company pension fund to its own accounts, replaced the money with general obligation corporate bonds, and called the money it expropriated income. We all know what would happen: The company accountants would refuse to certify the books and management would likely -- and rightly -- end up in jail.
But that is exactly what the federal government (which, unlike corporations, decides how to keep its own books) does with Social Security. In the late 1990s, the government was running what it -- and a largely unquestioning Washington press corps -- called budget "surpluses." But the national debt still increased in every single one of those years because the government was borrowing money to create the "surpluses."
Capitalism isn't perfect. Indeed, to paraphrase Winston Churchill's famous description of democracy, it's the worst economic system except for all the others. But the inescapable fact is that only the profit motive and competition keep enterprises lean, efficient, innovative and customer-oriented.
Mr. Gordon is the author of "An Empire of Wealth: The Epic History of American Economic Power" (HarperCollins, 2004).
Politicians need headlines. Executives need profits.
WSJ, May 20, 2009
The Obama administration is bent on becoming a major player in -- if not taking over entirely -- America's health-care, automobile and banking industries. Before that happens, it might be a good idea to look at the government's track record in running economic enterprises. It is terrible.
In 1913, for instance, thinking it was being overcharged by the steel companies for armor plate for warships, the federal government decided to build its own plant. It estimated that a plant with a 10,000-ton annual capacity could produce armor plate for only 70% of what the steel companies charged.
When the plant was finally finished, however -- three years after World War I had ended -- it was millions over budget and able to produce armor plate only at twice what the steel companies charged. It produced one batch and then shut down, never to reopen.
Or take Medicare. Other than the source of its premiums, Medicare is no different, economically, than a regular health-insurance company. But unlike, say, UnitedHealthcare, it is a bureaucracy-beclotted nightmare, riven with waste and fraud. Last year the Government Accountability Office estimated that no less than one-third of all Medicare disbursements for durable medical equipment, such as wheelchairs and hospital beds, were improper or fraudulent. Medicare was so lax in its oversight that it was approving orthopedic shoes for amputees.
These examples are not aberrations; they are typical of how governments run enterprises. There are a number of reasons why this is inherently so. Among them are:
1) Governments are run by politicians, not businessmen. Politicians can only make political decisions, not economic ones. They are, after all, first and foremost in the re-election business. Because of the need to be re-elected, politicians are always likely to have a short-term bias. What looks good right now is more important to politicians than long-term consequences even when those consequences can be easily foreseen. The gathering disaster of Social Security has been obvious for years, but politics has prevented needed reforms.
And politicians tend to favor parochial interests over sound economic sense. Consider a thought experiment. There is a national widget crisis and Sen. Wiley Snoot is chairman of the Senate Widget Committee. There are two technologies that are possible solutions to the problem, with Technology A widely thought to be the more promising of the two. But the company that has been developing Technology B is headquartered in Sen. Snoot's state and employs 40,000 workers there. Which technology is Sen. Snoot going to use his vast legislative influence to push?
2) Politicians need headlines. And this means they have a deep need to do something ("Sen. Snoot Moves on Widget Crisis!"), even when doing nothing would be the better option. Markets will always deal efficiently with gluts and shortages, but letting the market work doesn't produce favorable headlines and, indeed, often produces the opposite ("Sen. Snoot Fails to Move on Widget Crisis!").
3) Governments use other people's money. Corporations play with their own money. They are wealth-creating machines in which various people (investors, managers and labor) come together under a defined set of rules in hopes of creating more wealth collectively than they can create separately.
So a labor negotiation in a corporation is a negotiation over how to divide the wealth that is created between stockholders and workers. Each side knows that if they drive too hard a bargain they risk killing the goose that lays golden eggs for both sides. Just ask General Motors and the United Auto Workers.
But when, say, a school board sits down to negotiate with a teachers union or decide how many administrators are needed, the goose is the taxpayer. That's why public-service employees now often have much more generous benefits than their private-sector counterparts. And that's why the New York City public school system had an administrator-to-student ratio 10 times as high as the city's Catholic school system, at least until Mayor Michael Bloomberg (a more than competent businessman before he entered politics) took charge of the system.
4) Government does not tolerate competition. The Obama administration is talking about creating a "public option" that would compete in the health-insurance marketplace with profit-seeking companies. But has a government entity ever competed successfully on a level playing field with private companies? I don't know of one.
5) Government enterprises are almost always monopolies and thus do not face competition at all. But competition is exactly what makes capitalism so successful an economic system. The lack of it has always doomed socialist economies.
When the federal government nationalized the phone system in 1917, justifying it as a wartime measure that would lower costs, it turned it over to the Post Office to run. (The process was called "postalization," a word that should send shivers down the back of any believer in free markets.) But despite the promise of lower prices, practically the first thing the Post Office did when it took over was . . . raise prices.
Cost cutting is alien to the culture of all bureaucracies. Indeed, when cost cutting is inescapable, bureaucracies often make cuts that will produce maximum public inconvenience, generating political pressure to reverse the cuts.
6) Successful corporations are run by benevolent despots. The CEO of a corporation has the power to manage effectively. He decides company policy, organizes the corporate structure, and allocates resources pretty much as he thinks best. The board of directors ordinarily does nothing more than ratify his moves (or, of course, fire him). This allows a company to act quickly when needed.
But American government was designed by the Founding Fathers to be inefficient, and inefficient it most certainly is. The president is the government's CEO, but except for trivial matters he can't do anything without the permission of two separate, very large committees (the House and Senate) whose members have their own political agendas. Government always has many cooks, which is why the government's broth is so often spoiled.
7) Government is regulated by government. When "postalization" of the nation's phone system appeared imminent in 1917, Theodore Vail, the president of AT&T, admitted that his company was, effectively, a monopoly. But he noted that "all monopolies should be regulated. Government ownership would be an unregulated monopoly."
It is government's job to make and enforce the rules that allow a civilized society to flourish. But it has a dismal record of regulating itself. Imagine, for instance, if a corporation, seeking to make its bottom line look better, transferred employee contributions from the company pension fund to its own accounts, replaced the money with general obligation corporate bonds, and called the money it expropriated income. We all know what would happen: The company accountants would refuse to certify the books and management would likely -- and rightly -- end up in jail.
But that is exactly what the federal government (which, unlike corporations, decides how to keep its own books) does with Social Security. In the late 1990s, the government was running what it -- and a largely unquestioning Washington press corps -- called budget "surpluses." But the national debt still increased in every single one of those years because the government was borrowing money to create the "surpluses."
Capitalism isn't perfect. Indeed, to paraphrase Winston Churchill's famous description of democracy, it's the worst economic system except for all the others. But the inescapable fact is that only the profit motive and competition keep enterprises lean, efficient, innovative and customer-oriented.
Mr. Gordon is the author of "An Empire of Wealth: The Epic History of American Economic Power" (HarperCollins, 2004).
Subscribe to:
Posts (Atom)
Posts
