The Heritage Insider: The fiscal outlook is still bad, state corporate welfare is also a problem, Leonard Liggio was a mentor to the classical liberal movement
October 18, 2014
Latest Studies
58 new items, including a report from the Beacon Center of Tennessee on the benefits of school choice, and a report from the Center of the American Experiment on what Minnesota can do to fix health care
Notes on the Week
The fiscal outlook is still bad, state corporate welfare is also a problem, Leonard Liggio was a mentor to the classical liberal movement
To Do
Defeat dictators, promote free markets, defend the rule of law
Latest Studies
Budget & Taxation
• The Cost of an Internet Access Tax – American Action Forum
• Revenue Sharing Reform: On the Road to Ohio’s Recovery – Buckeye Institute for Public Policy Solutions
• Aligning Taxes with Economic Growth – Center of the American Experiment
Crime, Justice & the Law
• The Original Intent of the Wire Act and Its Implications for State-based Legalization of Internet Gambling – Competitive Enterprise Institute
• Police and Crime Rates in Canada – Fraser Institute
• The Cost of Crime in Canada – Fraser Institute
• The History and Danger of Administrative Law – Hillsdale College
Economic and Political Thought
• The Origins and Traditions of Columbus Day – American Enterprise Institute
• Eclipse of Man: Human Extinction and the Meaning of Progress – Encounter Books
• Suicide of the West: An Essay on the Meaning and Destiny of Liberalism – Encounter Books
• How Adam Smith Can Change Your Life: Unexpected Guide to Human Nature and Happiness – Penguin Press
Economic Growth
• The Redevelopment Racket – American Enterprise Institute
• Unleashing Minnesota’s Job Creating Potential – Center of the American Experiment
• How Much Does the European Union Cost Britain? – United Kingdom Independence Party
Education
• Reinventing Financial Aid: Charting a New Course to College Affordability – American Enterprise Institute
• Allowing Children to Dream Big: School Choice Opportunities for Tennessee Families – Beacon Center of Tennessee
• The Evidence on Universal Preschool: Are the Benefits Worth the Cost? – Cato Institute
• Beyond the Factory Model – Education Next
• Civil Rights Enforcement Gone Haywire – Education Next
• Does Student Attrition Explain KIPP’s Success? – Education Next
• Inside Successful District-Charter Compacts – Education Next
• The Philadelphia School District’s Ongoing Financial Crisis – Education Next
• U.S. Students from Educated Families Lag in International Tests – Education Next
• What Effective Schools Do – Education Next
• Common Core: Yea & Nay – Encounter Books
• A Survey of Idaho’s Private Schools – Friedman Foundation for Educational Choice
• Why the Gap? English Language Learners and New York City Charter Schools – Manhattan Institute
• Dollars and Sense: Assessing Oklahoma’s Public Universities – Oklahoma Council of Public Affairs
• Not As Good As You Think: Why Middle-Class Parents in Texas Should Be Concerned about Their Local Public Schools – Pacific Research Institute
Elections, Transparency, & Accountability
• Met Council Power Grab: How the Dayton Administration Intends to Transform the Twin Cities Region for Decades to Come – Center of the American Experiment
Foreign Policy/International Affairs
• Dealing with China – Hoover Institution
Health Care
• Physician Payment Sunshine Act: A Primer – American Action Forum
• Primer: Interstate Sale of Health Insurance – American Action Forum
• ‘Taking’ Medical Care from Hospitals: The Emergency Medical Treatment and Active Labor Act Infringes the Fifth Amendment – Cato Institute
• Do Doctors Practice Defensive Medicine? Revisited – Cato Institute
• How to Make Medicine Safe and Cheap – Cato Institute
• No Discharge: Medicaid and EMTALA – Cato Institute
• Health Care: State Solutions in an Era of Federal Control – Center of the American Experiment
• Lessons from Singapore: Opt-Out Health Savings Accounts for Australia – Centre for Independent Studies
• Ebola: The Basics – The Heritage Foundation
• The Affordable Care Act and the New Economics of Part-Time Work – Mercatus Center
• Medicaid Expansion: Wisconsin Got It Right – National Center for Policy Analysis
Immigration
• Your Tax Dollars At Work: Liberal Religious Organizations Make Amnesty Pay – Capital Research Center
• ICE Enforcement Collapses Further in 2014 – Center for Immigration Studies
International Trade/Finance
• NAFTA at 20: The North American Free Trade Agreement’s Achievements and Challenges – Hoover Institution
Labor
• Religious Accommodation in the Workplace: Current Trends Under Title VII – Federalist Society
Monetary Policy/Financial Regulation
• Putting the Securities Laws to the Test – Cato Institute
National Security
• Speaking the Law: The Obama Administration’s Addresses on National Security Law – Hoover Institution
Natural Resources, Energy, Environment, & Science
• Climate Policy Implications of the Hiatus in Global Warming – Fraser Institute
Regulation & Deregulation
• Institution Building for a Fact-Based Rulemaking Process – American Action Forum
• FDA Misses the Mark with Food Labeling Rules – Cato Institute
• Regulating a Less Unhealthy Cigarette – Cato Institute
• Reining in Antitrust Immunity – Cato Institute
• FCC Must Quit Twisting Section 706 Reports – Free State Foundation
• Patents and the Global Diffusion of New Drugs – Hoover Institution
• A Report on Corporate Governance and Shareholder Activism – Manhattan Institute
• A Guide to Writing Public Interest Comments Using Economic Analysis – Mercatus Center
The Constitution/Civil Liberties
• Recent Decisions of the Supreme Court of North Carolina – Federalist Society
Notes on the Week
State corporate welfare is a problem, too. Corporate welfare isn’t just a way for federal lawmakers to give other people’s money to supporters. States do it, too. Veronique de Rugy shows who the culprits are using data from Subsidy Tracker 2.0:
The companies that get the most subsidies from states:
Nine states account for 58 percent of state corporate welfare:
[“Ranking Known State Subsidies to Private Businesses,” by Veronique de Rugy, Mercatus Center, October 15]
Has the long run arrived? The good news from the annual meeting of the International Monetary Fund is that the world’s finance ministers and central bankers may be closer than ever to reckoning with the reality that Keynesian policies don’t work. “The IMF,” writes Dan Henninger, “calls the economic policies in the years after the 2008 financial crisis a succession of ‘serial disappointments.’”
No one should underestimate the political dangers of persisting with a Keynesian economic model that looks depleted.
Several months ago this newspaper described how younger Europeans who are unemployed or underemployed have become bitter at their parents’ generation for wallowing in a system whose labor protections suppress the creation of new jobs. Economic anxiety in turn has fueled the rise of extremist political movements in France, Germany, England, Hungary and elsewhere.
Sustained, seemingly irreversible, weak economic growth in Europe or the U.S. is a political risk to national stability.
There is an alternative economic policy set to this failure. It would be based on the best policies that produced strong growth and jobs in major, formerly moribund Western economics.
Those successes include the German labor-market reforms initiated by Chancellor Gerhard Schröder in 2003; the structural public-spending reductions begun in Canada in 1995 by Liberal Finance Minister Paul Martin and sustained by current Conservative Prime Minister Stephen Harper (Harvard economist Alberto Alesina has documented the pro-growth payoff from permanent spending reductions); Poland’s remarkable post-Soviet revival from the 1989-91 pro-market reforms of Leszek Balcerowicz ; and of course the primary model—the U.S.’s tax-rate reductions and regulatory reforms in Ronald Reagan ’s presidency.
The key element in reviving the West isn’t economics, though that matters. It is political courage. Each example of high-growth success required a political leader willing to stand against finance ministries and a financial media that will ride demonstrably failed models off another cliff.
Given the admission of generalized policy collapse at the IMF meetings, what we are talking about is the courage of one leader: the next American president. [Wall Street Journal, October 15]
Discovering government intimidation in Houston: What’s going on in Houston, where the city this week subpoenaed the sermons and other private papers of a group of pastors? The background, from Andrew Kloster:
When the Houston City Council passed an ordinance that some claim would allow men into women’s restrooms, and vice-versa, voters got mad. Many pastors got mad too–and they helped organize a petition drive to remove the law from the books. They reportedly got more than 50,000 signatures, when all they needed was 17,269.
But the city claimed that only 15,000 were valid, and refused to place the issue on the ballot. So, in August, some of the petition’s supporters filed a lawsuit to force the mayor to allow citizens to vote on whether to repeal the law.
Here’s where it gets interesting: In response, the city of Houston has now issued incredibly broad subpoenas as part of the discovery process to several pastors who are not directly involved in the lawsuit demanding that they provide certain information. “Discovery” is a legal procedure which allows people who sue or are sued to obtain information that is relevant to that lawsuit. But rather than simply asking for information about the validity of petition signatures, which would be germane to the lawsuit, Houston has demanded that the pastors turn over all records in their possession relating to “the topics of equal rights, civil rights, homosexuality, or gender identity,” some communications with lawyers, budgetary information and “[a]ll speeches, presentations, or sermons related to [the bathroom ordinance], the Petition, Mayor Annise Parker, homosexuality, or gender identity….” [Daily Signal, October 15]
If it sounds to you like the city is just using the discovery process to intimidate critics, you’re not the only one who thinks so. Here is a letter Texas Attorney General Greg Abbot has sent to the City Attorney of Houston:
Dear Mr. Feldman:
Your office has demanded that four Houston pastors hand over to the city government many of their private papers, including their sermons. Whether you intend it to be so or not, your action is a direct assault on the religious liberty guaranteed by the First Amendment. The people of Houston and their religious leaders must be absolutely secure in the knowledge that their religious affairs are beyond the reach of the government. Nothing short of an immediate reversal by your office will provide that security. I call on you to withdraw the subpoenas without further delay.
I recognize that the subpoenas arise from litigation related to a petition to repeal an ordinance adopted by the city council. But the litigation discovery process is not a license for government officials to inquire into religious affairs. Nor is your office’s desire to vigorously support the ordinance any excuse for these subpoenas. No matter what public policy is at stake, government officials must exercise the utmost care when our work touches on religious matters. If we err, it must be on the side of preserving the autonomy of religious institutions and the liberty of religious believers. Your aggressive and invasive subpoenas show no regard for the very serious First Amendment considerations at stake.
A statement released by the Mayor’s Office claims that the subpoenas were prepared by outside lawyers and that neither you nor Mayor Parker was aware of them before they were issued. Nevertheless, these lawyers acted in the City’s name, and you are responsible for their actions. You should immediately instruct your lawyers to withdraw the City’s subpoenas. Religious institutions and their congregants should never have to worry that a government they disagree with will attempt to interfere in their religious affairs. Instead of safeguarding that trust, you appear to have given some of the most powerful law firms in Houston free rein to harass and intimidate pastors who oppose City policy. In good faith, I hope you merely failed to anticipate how inappropriately aggressive your lawyers would be. Many, however, believe your actions reflect the city government’s hostility to religious beliefs that do not align with ci ty policies.
I urge you to demonstrate the City’s commitment to religious liberty and to true diversity of belief by unilaterally withdrawing these subpoenas immediately. Your stated intention to wait for further court proceedings falls woefully short of the urgent action needed to reassure the people of Houston that their government respects their freedom of religion and does not punish those who oppose city policies on religious grounds.Sincerely,
Greg Abbott
Attorney General of Texas [As reproduced at Wilson County News, October 15.]
In response to considerable negative publicity over the subpoenas, the city filed a modified subpoena on Friday that did not include the word “sermon,” but otherwise asked the pastors to produce the same information as the original subpoena. Mayor Parker told the Houston Chronicle that the only thing the city wants is communications from pastors about the petitions process. [Houston Chronicle, October 17]
Video of the week: The Left’s anti-energy policies hurt the poor—and everybody else too. Trying to limit the burning of fossil fuels can only make energy more scarce and expensive. That has real negative consequences, especially for the poor:
More on this theme: “Fossil Fuels—The Engine of Prosperity,” by Kathleen Hartnett White, The Insider, Summer 2014.
The fiscal outlook is bad, still. According to the Congressional Budget Office, the 2014 federal deficit rings in at $486 billion. That’s 2.8 percent of gross domestic product—the federal budget deficit’s smallest share of the economy since 2007. (It was nearly 10 percent in 2009.) Should President Obama and federal lawmakers pat themselves on the back? Megan McArdle summarizes the rest of the story:
Congressional Budget Office projections currently show the deficit beginning to grow again in 2016, just in time for the presidential election. By 2019, it’ll be above its historical average, where it will stay until the end of the forecast window – and that historical average is itself a bit high, as it includes the post-war record deficit of the Obama administration, which ran close to 10 percent for several years.
If the growth in health-care costs continues to moderate, that may help a bit, but mostly, the rising cost of health care is not the problem. The problem is the rising number of aging citizens who will require Social Security benefits, Medicare and, eventually, Medicaid to pay for their nursing homes. For the next decade or so, it is demographics, not compound cost growth, that will account for most of our budget problems. And you can’t fix the demographics by directing providers to charge 2.9 percent less for their senior citizens. […]
As the Fed tightens up on monetary policy, our borrowing costs are going to rise, not just for the new debt we take on, but also for the debt we already have. As old debt matures, we’ve been borrowing at record-low interest rates, which has helped hold down the deficit. But as the Fed tightens, that party will end, and the numbers will start moving in the other direction. [Bloomberg View, October 14]
The reason the deficit has come down slightly is not that spending has moderated. Rather, as the CBO reports, tax revenues are up 9 percent—$239 billion over last year. [“Monthly Budget Review for September 2014,” Congressional Budget Office, October 8]
Jobs are costs, not benefits. A group called the Million Jobs project has produced a video that purports to show that “oursourcing” costs American jobs and that we can get those jobs back if consumers would just buy more American stuff instead of foreign stuff. You may have seen the video in your newsfeed. Apparently, it’s a big deal. It’s also competely wrong. As Robert Murphy explains, trying to save jobs in this way won’t just deprive poorer foreign workers of opportunities to work; it will make us worse off, too:
As the video describes it, US employers realized “about 30 years ago” that they could hire foreign workers to do the same jobs at much lower wages, so they relocated their production facilities abroad. This assertion raises the question: Why didn’t employers just cut US wages down to what the foreigners were asking?
The answer is that US workers won’t take such low-paying jobs because they have better options. […]
“Outsourcing” is simply a manifestation of the more general phenomenon of trade between countries. As a general rule, giving individuals the freedom to trade with whomever they wish, around the globe, maximizes the “real income” of the groups involved.
Looking at the issue from the other direction, we can say that if the US government imposes a barrier to trade—such as restricting imports from a particular country—then it might make some American workers richer, but only by making the average US consumer poorer. Furthermore, the losses to the consumers outweigh the gains to the “protected” workers, meaning the country as a whole is poorer when the government enacts a trade barrier. […]
The general logic of the benefits of free trade applies to outsourcing; a particular instance of outsourcing will (obviously) hurt the domestic workers involved, but it will shower on other Americans benefits that more than offset the loss. Immediately, the owners of the outsourcing firm benefit in the form of higher profits (because they’ve cut their wage bill). But the forces of competition will soon cause those cost savings to show up as lower prices for American consumers. Indeed, the video’s producers implicitly admit this when they acknowledge that their recommendation to buy 5 percent more American-made products would be more expensive for consumers.
The logic of free trade is irresistible once a person takes the first step on its path. By effectively paying foreign workers with US dollars when they send us TVs, clothes, and other goods, we give them the purchasing power to buy American exports such as wheat and aircraft components. The opposite holds as well: If American consumers reduce their purchases of foreign-made TVs and other goods, then those foreigners will cut back on their purchases of American wheat and so forth. Ultimately, the video’s suggestion to “buy American” won’t create more American jobs in total, but instead will merely rearrange employment among sectors, making Americans poorer in the process. [The Freeman, October 14]
And as Don Boudreaux continually reminds us jobs are a cost, not a benefit:
Consider the washing machine in your home. It’s a benefit to you precisely because of the labor that it saves you from having to exert to wash your clothes on a washboard. Your washing machine enables you to enjoy clean clothes plus whatever activities you pursue using the time that you would have otherwise spent washing your clothes by hand. That labor-saving device makes you richer. And likewise with trade, which is a technique for saving labor.
So just as you would not describe the labor that your washing machine saves you as a cost of washing machines, you should refrain from describing the labor that trade saves an economy as a cost of trade. It is not a cost of trade; it is a benefit. [Cafe Hayek, September 25]
Leonard Liggio, R.I.P. Leonard Liggio, who helped build many classical liberal institutions into powerful outlets for the message of liberty, died on Tuesday. He was 81.
During his long career promoting classical liberal ideas and mentoring the scholars and thinkers and leaders of the classical liberal movement, Liggio served as Presidents of the Mont Pelerin Society, the Philadelphia Society, and the Institute for Humane Studies; as an Executive Vice President at the Atlas Network; as a board member of the Competitive Enterprise Institute; and as a trustee of the Liberty Fund. In addition, he was a professor at George Mason University and a visiting professor at Universidad Francisco Marroquín.
The Atlas Society describes Liggio’s contributions this way:
Alex Chafuen and the late John Blundell once wrote that, if F.A. Hayek was the great architect of the revival of classical liberalism, then Leonard has been its “great builder, building a worldwide movement … one career at a time.” [Atlas Network, October 14]
Lawson Bader of the Competitive Enterprise Institute writes:
Whether leading a free-market organization, teaching college or graduate economics, working in the political trenches, providing reading materials to those trapped behind the Iron Curtain, or filming video shorts to reach youthful audiences, we all stand on the shoulders, sweat, minds and successes of many who have come before.
Leonard knew just about everything about classical liberalism—and just about everyone who helped build the movement. That is true. It is also true there are many more yet to come who will be worth knowing, and there will always be more to discover about the power of classical liberalism. But they, alas, will only read him, and of him. To know Leonard was to absorb the richness of his ideas and breadth of his insights. It was also a pleasure. Classical liberals are often typecast as a cantankerous lot. Leonard was certainly not. He was friends with all. Such is the power of legacy as generations move on. [Competitive Enterprise Institute, October 14]
Brian Doherty notes this unusual distinction of Liggio:
Liggio allied with Murray Rothbard in a mid-sixties attempt at finding common cause with the American left on peace and anti-imperialism and anti-corporatism in the fascinating journal Left and Right. Because of his willingness to reach out and speak to the left he became, I’m pretty sure, the only future president of Mont Pelerin to be condemned in Barron’s (inaccurately, to be sure) for being part of a dedicated conspiracy to “overthrow...our form of government by Socialist seizure of state power.”
And:
Liggio never wrote as much as his fans and students would have wanted; would that all he knew had been laid out on the page! When contemplating the rise of formerly obscure and derided ideological notions to prominence, though, it’s worth remembering that it takes a very special type of person to hack a path through thickets of contempt and derision, launching institutions that clear fresh space in the ideological landscape, in contrast to the (often certainly very skilled and admirable) types who can then slot themselves into institutions and spaces that those pioneers created.
Liggio was a pioneer, and while many may not remember his name, what he did to cement and spread libertarianism will echo in American and world history for a very long time to come. [Reason, October 14]
Here is Tom Palmer remembering Liggio and his work:
You can read many of Liggio’s articles and watch many of his speeches at LeonardLiggio.org.
Toolkit: Storytelling 101: So you want to tell a story as part of a presentation. Great, but some ways of telling a story are better than others. JD Schramm has a few ideas on how to do it right:
Parachute in, don’t preamble. The best storytellers draw us immediately into the action. They capture our attention and set the tone for a unique audience experience. Avoid opening with “I’d like to tell you a story about a time when I learned…” Instead, drop us into the action and draw the lesson out later.
Choose first and final words carefully. We never get a second chance to make a good first impression. One needn’t memorize the story, but great leaders know the first and final words cold … and can deliver them without hesitation. Take advantage of the impact of a powerful opening and conclusion.
Follow the “Goldilocks” theory of details. Give us “just the right amount.” If you give too many details, we get lost, or worse, bored. If you don’t give us enough detail, we may lack the context to grasp the story fully or to see ourselves inside your tale. If possible, test out your story with a few friends who have a similar background to your audience; let them help you discern the right level of detail.
Read the rest of his article for more ideas: “A Refresher on Storytelling 101,” Harvard Business Review, October 8.
To Do: Defeat Dictators, Promote Free Markets, Defend the Rule of Law
• Learn how to defeat dictators. The Oslo Freedom Forum will gather on October 21 – 23 to discuss strategies of nonviolent resistance, the use of art and film to promote freedom, courage and survival under authoritarian regimes, the growing threat to journalists around the world, and the impact of technology on human rights.
• Students, cut your teeth as a watchdog. The Institute for Justice is accepting applications for its Correspondents Program, which will train students on how to monitor and report what their local governments are up to. The application deadline is October 31.
• Develop your education policy analysis skills. The Pioneer Institute is accepting applications for its Ruth & Lovett C. Peters Fellowship in Education Policy. The fellowship is open to current and recent graduate students. The application deadline is October 21.
• Find out if capital markets should be regulated like banks. The Pacific Research Institute will host a luncheon discussion featuring former members and staffers of the U.S. Securities and Exchange Commission. The discussion will begin at noon on October 22 at the Omni Hotel in San Francisco.
• Hear Judge Janice Rogers Brown’s thoughts on “Repointing the Constitution.” Brown will deliver the 7th Joseph Story Distinguished Lecture at The Heritage Foundation. The event will begin at 5:30 p.m. on October 22.
• Explore free market ideas for currency reform, tackling poverty, and fixing the finances of American cities. These and more topics will be discussed at Hillsdale College’s next Free Market Forum. The conference will be held October 23 – 25 at the Indianapolis JW Marriot.
• Hear the story of Ben Freeth, a Zimbabwean who was evicted from his farm and tortured by Robert Mugabe’s government. Freeth will speak at the Cato Institute about his ordeal, his 2008 legal victory over the Zimbabwean government, and the work of promoting human rights and the rule of law in Zimbabwe. Freeth’s talk will begin at 4 p.m. on October 21.
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