Money And School Performance: Lessons from the Kansas City Desegregation Experiment

Executive Summary

For decades critics of the public schools have been saying, "You can't solve educational problems by throwing money at them." The education establishment and its supporters have replied, "No one's ever tried." In Kansas City they did try. To improve the education of black students and encourage desegregation, a federal judge invited the Kansas City, Missouri, School District to come up with a cost-is-no-object educational plan and ordered local and state taxpayers to find the money to pay for it.

Kansas City spent as much as $11,700 per pupil--more money per pupil, on a cost of living adjusted basis, than any other of the 280 largest districts in the country. The money bought higher teachers' salaries, 15 new schools, and such amenities as an Olympic-sized swimming pool with an underwater viewing room, television and animation studios, a robotics lab, a 25-acre wildlife sanctuary, a zoo, a model United Nations with simultaneous translation capability, and field trips to Mexico and Senegal. The student-teacher ratio was 12 or 13 to 1, the lowest of any major school district in the country.

The results were dismal. Test scores did not rise; the black-white gap did not diminish; and there was less, not greater, integration.

The Kansas City experiment suggests that, indeed, educational problems can't be solved by throwing money at them, that the structural problems of our current educational system are far more important than a lack of material resources, and that the focus on desegregation diverted attention from the real problem, low achievement.

New IRS Documents Used Donor Lists to Target Audits

New IRS Documents Used Donor Lists to Target Audits

(Washington, DC) – Judicial Watch announced today that it has obtained documents from the Internal Revenue Service (IRS) that confirm that the IRS used donor lists to tax-exempt organizations to target those donors for audits.  The documents also show IRS officials specifically highlighted how the U.S. Chamber of Commerce may come under “high scrutiny” from the IRS.  The IRS produced the records in a Freedom of Information lawsuit seeking documents about selection of individuals for audits, based upon  application information and donor lists submitted by Tea Party and other 501(c)(4) tax-exempt organizations (Judicial Watch v. Internal Revenue Service (No. 1:15-cv-00220)).

A letter dated September 28, 2010, then-Democrat Senate Finance Committee Chairman Max Baucus (D-MT) informs then-IRS Commissioner Douglas Shulman: “   I request that you and your agency survey major 501(c)(4), (c)(5) and (c)(6) organizations …”  In reply, in a letter dated February 17, 2011, Shulman writes: “In the work plan of the Exempt Organizations Division, we announced that beginning in FY2011, we are increasing our focus on section 501(c)(4), (5) and (6) organizations.”

Patterico's Pontifications » Yes, Sally Kohn, Laws Are Coercive

Patterico's Pontifications » Yes, Sally Kohn, Laws Are Coercive

Who knew?

Some readers may remember Sally Kohn from such articles as “I’m gay. And I want my kid to be gay too.” Kohn’s latest Dispensed Wisdom is an argument that, hey, government’s not forcing you to cater a gay wedding with your pizza, because you don’t have to sell pizza:

This issue of government force is a funny one. You could also argue that the government is forcing you to drive below the speed limit or wear a seatbelt in your car. But it’s not. There isn’t a police officer holding a gun to your head literally forcing you to buckle up. In fact, you are 100 percent free to speed and not wear your seatbelt—and simply deal with the consequences if you’re pulled over. Is the threat of the fine for breaking the law amount to “forcing” you to follow the law? No.
And more to the point, the government certainly isn’t forcing you to drive. If you don’t like the speed limit and seatbelt rules, and don’t want to be subject to the consequences of breaking them, then you can not drive. Whether to drive or not is your choice.
This all seems simple when we talk about driving, but somehow a fringe set of rightwing conservatives want us all to believe that hapless business owners are somehow being forced, against their will, to serve pizza to gay people. Nothing could be further from the truth. If you don’t want to serve pizza to gay people, by all means, don’t—which, by the way, is legal in Indiana and 28 other states, but even where it is illegal, you’re still free to do so and deal with the consequences of breaking the law. That, pizza shop owner, is your choice. And if you don’t want to deal with those consequences, well, no one is forcing you to be in the pizza business. You’re free to do something else.
. . . .
Don’t like following the laws that apply to businesses—including serving all customers equally? Then don’t start a business. That’s your choice.

Yes, I suppose that you could say that people don’t “have” to drive, or sell pizza. By the same logic, people don’t “have” to have sex. So I guess that means that if government wanted to pass laws mandating that any sex be heterosexual, then by Kohn’s logic, that wouldn’t be “forcing” people to have heterosexual sex.

In other words: Don’t like laws that apply to everyone having sex? Then don’t have sex. That’s your “choice.”

Right, Ms. Kohn?

But even if you could mount an argument that such laws would not “force” homosexuals to have heterosexual sex, it’s more difficult to argue that these examples do not involve government coercion. Even if you’re not literally “forced” into the behavior government demands, you are indeed being coerced into either a) performing that behavior, or b) giving up a major life function.

Kohn doesn’t seem to understand that labeling coercive action as coercive (or even as “force”) does not necessarily make that action wrong. Government “forces” those who drive to drive on the correct side of the road, and that is a proper function of government. Rather than make lame arguments that coercive action isn’t coercive, the honest approach is to recognize coercion for what it is, and defend it . . . if you can.

Kohn is busy digging deeper holes on Twitter, and exposing herself further as someone who can’t hold her own in logical debate. For example, she dismisses the example of sodomy laws I give above, which has been raised by many people, with the following “logic”:

But the cherry on top of this delicious hypocrisy sundae comes courtesy of Sean Davis, who sent me a link to Kohn’s article on the Hobby Lobby decision. You’ll never guess what she said there (OK, actually, you will). Namely, she said that conservatives were trying to “force” their religious beliefs on America.

To put it mildly, our forbearers would be appalled by how right-wing conservatives are trying to use government to force their religious views on all of us.

We’ll place to one side, for the time being, the question: “What the hell is a forbearer?” To put it mildly, our forebears would be appalled at seeing their language mangled like this. But they would also be amused, as I am, by the inconsistency of Kohn’s “laws don’t force people to do stuff!” argument, as contrasted with her Hobby Lobby position.

Ms. Kohn: you don’t like religious freedom laws that apply to Hobby Lobby and other similar closely held corporations? Don’t work for said closely held corporations. That’s your “choice.” Where’s the “force”?

In the end, the Hobby Lobby decision isn’t actually coercive because there is plenty of freedom to work for companies that are not closely held corporations run by highly religious people. By contrast, your life is severely restricted if are told you can’t drive, or engage in your chosen occupation, or even engage in sexual activity. So governmental restrictions on such activities should be absolutely necessary — because they are inherently coercive.

Ultimately, all government laws are coercive, because resistance always ends up with men coming to your door and pointing guns at you. Keeping this precept in the forefront of the minds of the citizenry is critical, because it helps focus our attention on the fact that passing laws is serious business. Laws and government should protect the public. They should not be used for much else. Certainly, laws should not be used to force you to make me a sandwich. Although I would like a sandwich.

Patterico's Pontifications » My Hopefully Final Response to Dan Gillmor on Net Neutrality: Why I Trust the Market Over Government, Every Time

Patterico's Pontifications » My Hopefully Final Response to Dan Gillmor on Net Neutrality: Why I Trust the Market Over Government, Every Time

The argument comes down to this: in a free market system, consumers’ ability to fight Big Business by choosing to spend money elsewhere isvastly superior than voters’ ability to fight Big Government by voting for someone else. Let’s look to public choice theory for some of the reasons, which (as you will see) are largely interrelated.

First, there is the issue of whether the actor is informed. Now, obviously consumers are not always as informed as they could be. However, when you compare an important purchase to an important election, a consumer’s incentive to research his purchasing options is much greater than a voter’s incentive to research politicians or political issues. Consumers mulling over a new computer or car or iPad are much more likely to spend time looking over resources containing detailed reviews and specifications about competing products, as compared to the time the typical voter spends researching a candidate. Part of the reason is that a purchase costs money. A vote costs nothing but the time it takes to cast.

Second, and related, is the issue of whether your action will have an effect. This can be expressed in terms of the existence and immediacy of incentives to make a good choice, and disincentives to make a bad choice. It is related to the first issue, because the lower your incentive to research, the less informed you are likely to be.

When you choose to spend your dollar on Product A vs. Product B, this has an immediate and undeniable effect on your well-being. You personally enjoy the benefits of your selected product, or feel the ill effects of its shortcomings. If your computer runs like a dream, or if your car is a lemon, these experiences provide immediate and concrete feedback to your dollar-spending decision. True, your one dollar or purchase will not make or break a company, but the incentive to reward good products and punish bad ones is clearly strong, and those strong incentives add up collectively.

For a voter, by contrast, your feedback is weak and sometimes nonexistent. If your preferred candidate (the one for whom your voted) loses, you will never feel the consequences of your choice, good or bad. If your preferred candidate wins, he has no obligation to live up to his promises. And in any event, even if he does, some of the promises he carries out may offend you, unless you happened to agree with him on every single issue.

This is not a situation that incentivizes being an informed voter.

Let’s compare apples to apples to show how stark the difference in incentives truly is. Imagine the following scenario:

You go to a store to buy a product for your company. Your company does not know you are the one making the purchase, so you will never be held accountable if the purchase turns out to be bad. Your purchase will cost you nothing, personally. Any effect the product’s quality has on your life will be so indirect that you will rarely think about it. The store policy is that you may not get the item you choose. If you do happen to get the item you choose, there is no guarantee it will work.

How much research are you going to do for that purchase, compared to the research you will do on a product you are buying for yourself?

Voters are also aware that, unless the election is tied and their vote breaks the tie — which never, ever, ever happens — their vote is utterly and completely meaningless. So voters rationally conclude it’s pointless to vote — and if they do, they rationally conclude that it is pointless to become informed.

All this leads to a pretty dismal reality. No company can consistently provide bad products and survive for long. But politicians can offer the same bad service, year in and year out, and people will routinely show up and vote for the least bad option. There is no real choice and your act has no effect.

So the free market wins out as regards your ability to effect change and your ability to be informed. But meanwhile, what about the supposed benefits of the First Amendment? Gillmor tells us that companies are not bound by the First Amendment (which is true) while the government is.

Me, I don’t trust the courts to protect my rights to free speech. Call me cynical, but that’s where I am. We live in a country where free speech rights have been violated by government since the very founding of the nation, with regularity and impunity. Yes, the First Amendment has protected us at times. Other times, it has not — just ask Eugene Debs.

I’ll take the market, thanks very much.

5 Things Every Young American Should Know About Politics - John Hawkins - Page full

5 Things Every Young American Should Know About Politics - John Hawkins - Page full

1) There is no free lunch: There is no such thing as “free” birth control, “free” community college, “free” health care or “free” anything else. Someone ALWAYS has to pay and if you’re not sure who that “someone” is, the person paying may be YOU. Even if you’re sure it’s not you this time, it may be you the next time, which is why people who work hard, play by the rules and take care of themselves run from “free” offers like a deer who catches sight of Ted Nugent off in the distance.

2) Politicians are interested in getting elected, not making your life better: There are well-meaning politicians who put the country first, but they’re about as common as professional athletes who eat dinner at McDonald’s every day. Politicians generally aren’t brave, they aren’t virtuous, they can be bought off, they often won’t do the right thing unless they’re being watched and they are not looking out for people like you. You wouldn’t leave your dog with people who think like that, but we’re trusting the fate of our nation to them.

3) Rarely does government ever "fix" problems: There’s always some politician promising to “solve” a problem, but as the great Thomas Sowell says, “There are no solutions; there are only trade-offs." As a practical matter, what that means is that when politicians move to “solve” a problem, they often create new problems that are just as bad as the ones they were trying to solve. Then they move to “solve” those problems and create more problems. After you rinse and repeat enough, you end up with the government micromanaging which bathrooms people use to make sure they’re “gender inclusive” enough.

4) People respond to incentives: Ever heard someone say, “Be careful what you wish for?” Well, you REALLY better be careful what you incentivize. In a nation of 316 million, there are people, sometimes millions of them, who will do just about every sort of crazy, self-destructive thing you can imagine if they get rewarded for doing it somehow. Changes in government policy can kill industries, change the culture for the worse and lead millions of formerly independent people to become slothful and dependent. Ah, but you’re probably thinking, “If incentives can create all of those bad outcomes, then think of all the GOOD we can do with them!” Well, that might be true except that…

5) Government isn’t a good; it’s a necessary evil: Government is inherently slow, stupid, inefficient, wasteful and dangerous. Moreover, it is, was, and will always be that way, no matter who’s in charge because that is the nature of the beast. Now combine that with power-hungry politicians and dead-eyed bureaucrats who feel entitled to force you to do things at gunpoint and you should be very wary of anyone telling you about all the wonderful things government can do. Whether the government is offering Americans something “free” or pointing a gun at our heads, we’re all better off with as little of it as possible in our lives.

Does Government Spending Boost the Economy? : The Freeman : Foundation for Economic Education

Does Government Spending Boost the Economy? : The Freeman : Foundation for Economic Education

A recent article in Business Insider by Jim Edwards offers putative “Proof That Government Spending Cuts Hurt Economic Growth.” He even goes so far as to claim that “war is good (economically).” In this article, I’ll explain what’s wrong with this popular and age-old fallacy.

First, I want to point out something quite amusing. Edwards relies on a Financial Times story that presents a series of charts produced with data from the Bureau of Economic Analysis (BEA). Here is one of the charts, along with Edwards’s description:

This chart, from the FT's Matthew Klein based on data from the BEA, seems to show that government has a pretty straightforward effect on GDP. When spending goes up, it adds to economic growth. When it goes down, it subtracts from it and hobbles the economy:

Edwards seems to think that the above chart shows at least a correlation between government spending and economic growth. After all, he wrote that the BEA chart “seems to show that government has a pretty straightforward effect on GDP.” But as Scott Sumner pointed out in amusement when he saw the article, the chart does nothing of the kind.

Look carefully at the legend. The various colored rectangles are different components of government spending. Specifically, the rectangles indicate how the change in each component — positive or negative — relates to the change in overall GDP. The black line is not GDP growth, but is instead the sum of the various components of government spending. In short, Matt Klein at the FT is telling us that if we take the BEA’s word for how much each component of government spending contributed to GDP growth in each quarter, then we can stack those numbers on top of each other and even add them up! Contrary to Edwards, the FT chart doesn’t “show” anything at all, except that the BEA each quarter announces how much various components of government spending contributed to, or subtracted from, GDP growth.

But let’s move past Edwards’s hilarious misinterpretation of the chart and get to the more fundamental issue. The problem with these ostensibly scientific and empirical measurements is that GDP itself is definedto include government spending. As they teach in any introductory macro class, the expenditure-based formula for GDP is

GDP = C + I + G + NX,

where C and I are private consumption and investment, G is government spending, and NX is net exports (gross exports minus gross imports).

Now we see the problem. Even if we set aside the serious theoretical and practical difficulties with the aggregation necessary to estimate these figures, we are still stuck with the fact that the above formula is an accounting tautology, not an economic theory. Yes, other things equal, an increase in government spendingG on the right-hand side will make GDP on the left-hand side increase dollar for dollar. The whole argument, however, centers on whether other things will remain equal.

For example, in a depressed economy with excess capacity, the typical Keynesian will say that an increase inG will cause private consumption and investment to increase also, so that a dollar of extra government spending will cause GDP to rise by more than a dollar — the famous Keynesian multiplier.

In contrast, the typical Austrian- or Chicago-school economist will say that an increase in G will tend to make private-sector spending fall by a greater amount, so that a dollar of extra government spending will cause GDP to fall. (We could get the confident support of free-market economists for this conclusion if we stipulate that the extra government spending is financed through higher taxes, which destroy more private after-tax income than they raise in extra revenue.)

After this discussion, we can see why pretty charts from the FT showcasing government spending’s “contribution to GDP growth” quarter by quarter don’t really mean anything. It’s the same for the ex post “empirical” analyses that concluded that the Obama stimulus package “saved or created” such-and-such million jobs. The underlying models that generate these estimates assume a Keynesian world, and thus cannot test whether the Keynesian model is correct.

The critical yet missing piece of information in these analyses is the counterfactual, to know what the size of the economy and level of employment would have been in the alternate universe where government spending had taken a different course. From a naïve, “let the facts speak for themselves” perspective, the Obama stimulus package clearly hurt the economy. Remember that unemployment shot up higher with the stimulus than the Obama team warned people would occur without the stimulus.

The exact opposite happened with the so-called sequester. For example, the firm Macroeconomic Advisers, using a Keynesian model, predicted that the spending cuts would knock 1.3 percentage points off of second quarter 2013 growth, and 0.6 percentage points off of third quarter 2013 growth. Here’s what really happened:

It’s the mirror image of the Keynesians’ stimulus blunder. The economy grew faster with the sequester than the Keynesians said would occur without the “drag” of the spending cuts. In the case of the Obama stimulus, their excuse was, “Wow, the economy was worse than we realized, good thing we got that deficit spending in there, inadequate though it was.” In the case of the sequester, their response would have to be, “How about that, the economy was stronger than any of us realized. We dodged a bullet, since the sequester dragged down growth so much.”

In summary, we shouldn’t trust empirical “proof” that government spending boosts the economy, when the alleged evidence so often rests on a model that assumes as true the very issue under dispute.

Bookworm Room � The House’s refusal to fund Obamacare is entirely constitutional — and James Madison personally approves this message

Link: http://www.bookwormroom.com/2013/10/03/the-houses-refusal-to-fund-obamacare-is-entirely-constitutional-and-james-madison-personally-approves-this-message/

My stock response to all those liberal Facebook friends who have insisted that the House is "unconstitutionally" holding Obamacare hostage, is that the Founders named it the "House of Representatives" and gave it the power of the purse for a reason.
....
The above response came off the top of my head.  If I had studied the Federalist papers recently, however, I could simply have quoted James Madison. one of the Constitution's primary architects, writing in Federalist No. 58 (and a groveling h/t to Tom Elias, of The New Editor, for this brilliant find):

The House of Representatives cannot only refuse, but they alone can propose, the supplies requisite for the support of government. They, in a word, hold the purse that powerful instrument by which we behold, in the history of the British Constitution, an infant and humble representation of the people gradually enlarging the sphere of its activity and importance, and finally reducing, as far as it seems to have wished, all the overgrown prerogatives of the other branches of the government. This power over the purse may, in fact, be regarded as the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people, for obtaining a redress of every grievance, and for carrying into effect every just and salutary measure.  (Emphasis added.)

What the House is doing is entirely constitutional, and we conservatives should be doing our best to trumpet that fact.  Moreover, given the federal takeover of the Lincoln Memorial, we should remind everyone that we live in a nation guaranteed "government of the people, by the people, for the people."  Unlike a monarchy, the federal government doesn't own the properties it is denying us.  Instead, we own the federal government.  The government is merely a caretaker, and a pretty damn surly, ineffectual, greedy, and tyrannical one at that.

And there's also this:
http://nationalreview.com/article/360228/origins-origination-clause-andrew-c-mccarthy

In a Bench Memos post, my friend Matt Franck objects to the contention in my column for last weekend that the Constitution's Origination Clause (Art. I, Sec. 7) gives the House of Representatives primacy over spending as well as taxing. Matt claims that my interpretation is bereft of historical support, a defect I'm said to camouflage by an extravagant reading of an "at best . . . ambiguous" passage in Madison's Federalist No. 58.
It is Matt's history, though, that is incomplete. As Mark Steyn observes, there is a rich Anglo-American tradition of vesting authority over not merely taxing but also spending in the legislative body closest to the people. This tradition, stretching back nearly to the Magna Carta, inspired the Origination Clause. It also informed Madison, whose ruminations, besides being far from ambiguous on the House's power of the purse, are entitled to great weight — not only because he was among the Constitution's chief architects but also because his explication of the Framers' design helped induce skeptics of centralized government and its tyrannical proclivities to adopt the Constitution.
Plainly, Matt is correct that the Origination Clause refers to "bills for raising revenue." From the time it was debated at the Philadelphia convention, however, the concept at issue clearly referred to more than tax bills. It was about reposing in the people, through their most immediately accountable representatives, the power of the purse. Indeed, the term persistently used throughout the Framers' debates was "money bills" — the phrase used by Elbridge Gerry, perhaps the principal advocate of the Origination Clause, when (as the debate records recount) he "moved to restrain the Senatorial branch from originating money bills. The other branch [i.e., the House] was more immediately the representatives of the people, and it was a maxim that the people ought to hold the purse-strings."
...The Heritage Foundation's Guide to the Constitution, for example, notes that the clause was meant to be "consistent with the English requirement that money bills must commence in the House of Commons." Traditionally, that requirement aggregated taxing with spending — the "power over the purse" — which the Framers sought to repose "with the legislative body closer to the people."
Similarly, the Annenberg Institute for Civics, in its series on the Constitution, instructs students that the Clause means "the House of Representatives must begin the process when it comes to raising and spending money. It is the chamber where all taxing and spending bills start" (emphasis added)...

The problem is, though, the Republicans don't seem to remember their pledge to the Constitution.
http://nationalreview.com/article/359767/how-constitutionally-fund-government-andrew-c-mccarthy

Fwd: New at Reason: David Harsanyi on Getting Government Out of Marriage

New at Reason: David Harsanyi on Getting Government Out of Marriage

via Hit & Run on 8/6/10

Imagine if government had no interest in the definition of marriage, writes David Harsanyi. Individuals could commit to each other, head to the local priest or rabbi or shaman—or no one at all—and enter into contractual agreements, call their blissful union whatever they felt it should be called, and go about the business of their lives. Isn't it about time we freed marriage from the state?

Time for a Divorce

Why government should get out of the marriage business

In the 1500s, a pestering theologian instituted something called the Marriage Ordinance in Geneva, which made "state registration and church consecration" a dual requirement of matrimony.
....
In our Utopian vision, no group is empowered to dictate what marriage should mean to another. And one of the great perks would be the end of this debate.

Ultimately, though, I'm not sure how many Libertarians really want Government out of marriage. There seems to remain the assumption that married couples will continue to get the tax and other legal benefits that accrue to married couples today.

A Response to Professor Seidman: Our American Constitution

Link: http://constitution.i2i.org/2013/01/04/a-response-to-professor-seidman/ (via shareaholic.com)

A Response to Professor Seidman

...there always have been American Tories—people who chafe at restraints on central power and would prefer a British-style government. In recent years, as political “progressives” have gradually lost the scholarly battle over constitutional interpretation, some have stopped pretending the Constitution means whatever they want it to, and have begun to trash the document itself.....Consider, by contrast, the record of the United States during the 140 years in which the Constitution’s limits on federal power were usually respected. During this period of limited government and great personal freedom, the United States became the most successful nation in the history of the planet. Inflation was low. The budget was usually balanced. The foundation of the modern economy was laid. It was a period of unprecedented innovation and unprecedented advances in health, life expectancy, and living standards. It saw the end of slavery and astounding progress for women and even for the most disadvantaged minorities. In other words, it was adherence to the Constitution, not disregard for it, that enabled America (in Professor Seidman’s words) to “grow and prosper.”
Professor Seidman seems to assume that politicians can be trusted to make “considered judgments” and act “on the merits,” and that the public does not need to impose outside constitutional restraints on their power (except, perhaps, through elections). The Founders were wiser. They knew that the entire history of humankind suggests the opposite—as, in fact, does the current fiscal crisis. If Mr. Seidman thinks the United Kingdom is a stronger, freer, less dysfunctional, and more prosperous country because of its unwritten constitution, he should live there for a while, as I have. Britain’s relative decline has been precipitous over the past century. Without the support of America, it is doubtful Britain would have survived as a free country.

Edward Niedermeyer: Romney's Plan Would Also Have 'Saved' Detroit - WSJ.com

Link: http://online.wsj.com/article/SB10001424052970204712904578090461206142072.html?mod=djemEditorialPage_h

When the president forced GM and Chrysler into bankruptcy court, the White House's auto task force used the process to execute a prearranged reorganization it had masterminded with political allies. By contrast, Mr. Romney called for a true bankruptcy, in which creditors and stakeholders negotiate reorganization together, with the government merely providing the minimum support needed to prevent disorderly liquidation. In retrospect, Mr. Romney's approach not only would have produced outcomes superior to the president's, it was actually the braver course of action.

To understand why, it is necessary to examine GM and Chrysler's behavior in the weeks and months that preceded their bailouts. Thanks to inept management and a rapacious union, GM and Chrysler had been shedding market share and jobs for decades before the credit crunch of 2008 brought the global economy to its knees. Despite rocky shores and rough waters, the managements of GM and Chrysler and their United Auto Workers partners never imagined they would have to pay the true cost of their failure to compete.

In fact, when Mr. Romney's op-ed was published in November 2008, the leaders of both GM and Chrysler were insisting that "bankruptcy is not an option," because they were sure nobody would buy a car from a bankrupted company, despite both having already repeatedly begged Congress for a government bailout. Industry watchers later discovered that, despite an emergency transfusion from the Bush administration, the auto makers never prepared contingency plans before President Obama decided to initiate a bailout and reorganization.

This failure to prepare bankruptcy plans was more than inexcusable mismanagement, it was akin to blackmail. Without responsible preparations in place for a worst-case scenario, GM and Chrysler could argue that unless the government intervened they wouldn't be able to secure financing for a bankruptcy in the necessary time frame. They would have to liquidate their holdings and assets, which would jeopardize if not crush America's entire auto-manufacturing supply chain.

....

The White House auto task force pushed a dealership cull on the auto makers that eliminated over 2,000 GM and Chrysler dealerships, forcing tens of thousands of Americans onto unemployment rolls, all with no appreciable benefit to either company.

Making matters worse, the Treasury Department issued notices which let "New GM" acquire $45 billion in tax write-offs from its defunct predecessor, a blatant violation of basic bankruptcy law. This not only deprived the government of billions in tax revenue, it hid the true cost of the bailout while disproportionally benefiting the UAW, an unsecured creditor.

By giving the UAW's unsecured claims against GM and Chrysler a higher priority than those of secured creditors, the government's reorganization further damaged bankruptcy precedent. The net result was a $26 billion transfer to a key Democratic ally and political donor, according to analysis by scholars from the Heritage Foundation and George Mason University.

GM and Chrysler could have averted tens of thousands of lost jobs, and the government could have preserved billions of dollars in tax revenue, by undergoing a true bankruptcy reorganization, even if the government had provided full debtor-in-possession financing.

In a true bankruptcy guided by the law rather than by a sympathetic, rule-bending political task force, GM and Chrysler would have more fully faced their competitive challenges, enjoyed more leverage to secure union concessions, and had the chance to divest money-losing operations like GM's moribund Opel unit. True bankruptcy would have lessened the chance that GM and Chrysler will stumble again, a very real possibility in the brutally competitive auto industry.

Michael Tanner: In Disaster Relief, Bigger Government Isn't Always Better - WSJ.com

Link: http://online.wsj.com/article/SB10001424052970204846304578090873245350506.html?mod=djemEditorialPage_h (via shareaholic.com)

The wind and rain from Hurricane Sandy hadn't even stopped before some people argued that the storm made the case against reducing the size of the federal government or giving states more say in their affairs. The federal response to a crisis became the proxy for big government in all its bureaucratic glory. Cutting government, we were meant to understand, means letting Sandy's victims fend for themselves.

This is the classic straw-man gambit. To argue in favor of smaller or less costly government is not to demand no government at all. Opposition to, say, the federal government granting $505,000 to a thriving company that makes pet toothpaste and shampoo doesn't lead inexorably to opposing disaster relief. Calls for reforming a Medicare program that is at least $38 trillion in debt aren't tantamount to saying that the storm-stricken people of New York and New Jersey should be on their own.
An old trick of governments at all levels is to respond to the prospect of spending cuts by announcing that they will lay off teachers and firefighters first. By targeting the most essential services, they try to assure that public outcry will keep the tax dollars flowing. Equating disaster relief from the Federal Emergency Management Agency with big government and big spending in general represents the same old scam.

The federal government spent $10 billion on disaster relief last year. That amounts to roughly 0.002% of federal spending. It also suggests that an awful lot of federal spending could be cut before we put FEMA under the knife. One might even argue that a smaller, leaner and more efficient government could better offer services such as disaster relief. A government that tries to do everything is liable to do nothing particularly well.

....

Mitt Romney is being attacked in some quarters because he suggested in a 2011 debate that some federal disaster-relief functions might be shifted to the states. Critics claim that this means he simply doesn't care about people affected by disaster—that he is putting dollars and ideology before people's lives. But might not a more locally focused disaster-relief program make sense?

After all, much of the federal government's relief efforts simply amount to shifting funds from one part of the country to another and back again. Yesterday New York paid for assistance to Louisiana; today Louisiana pays for assistance to New York. Is that necessarily the most efficient way to accomplish our goals?

FEMA essentially represents a centralized "command and control" approach to disaster relief. It presumes that only the experts in Washington—not state and local officials, and certainly not private charities—know best how to respond to local needs and conditions.

In the wake of Katrina and other disasters, there have been numerous stories of federal officials rejecting offers of assistance—from Coca-Cola KO -1.48% offering to send water, for example, or private organizations trying to deliver hospital supplies—because those offers didn't fit neatly into the bureaucratic script. Initial indications do suggest that with Hurricane Sandy, federal, state and local coordination has been better. But that doesn't argue against giving more authority, and more responsibility, to those actually in the affected areas.

The bottom line: Big government is seldom the same as effective government. That applies as much to disaster relief as to anything else.

Medicare’s Administrative Cost — The Last Word, I Hope

Medicare’s Administrative Cost — The Last Word, I Hope

via John Goodman's Health Policy Blog by John Goodman on 9/4/12

As I have written before, no one knows what administrative costs are. Like "fraud and abuse," there is typically no line item for the expense. Even if there were, it would be an arbitrary number. So why do people obsess over it? Because the socialists have decided that in places like Canada, administrative costs are lower than they are in the United States. These same folks and the columnists who parrot their views in the popular press also claim Medicare is less expensive to administer than private insurance.
In the latest foray, Yuval Levin at NRO argues that Medicare's administrative costs are underreported in a column responding to Paul Krugman. Although he points out that "fact checking Krugman is rarely worth the time," he has some good observations. See our own response to the Krugman column as well. In addition to Levin's case, Tyler Cowan observes that the cost of collecting taxes is 20% or more of each dollar of revenue. Although he doesn't say so, the critics of U.S. health care almost always include the private insurance cost of selling insurance and collecting premiums, but exclude the cost of tax collection. Austin Frakt chimes in, but in my opinion misses the subtext: Is Medicare less expensive to administer than private insurance?
Here is a brief review of the literature: Robert Book discovered that reported Medicare's administrative costs per patient (not as a percentage of the bills) were actually higher than private insurance. A Milliman study concluded that when all costs are considered (including the cost of tax collection) Medicare's cost as a percent of total spending is 66% higher than private insurance. Ben Zycher  concludes that a government run system would have higher administrative costs than a private system. And Tom Saving and I showed (based on CBO numbers) that Medicare has not been more successful that the private section in holding down costs — as Krugman, Robert Reich and others have claimed.

Last-hope prostate drug not funded | London | News | London Free Press

Link: http://www.lfpress.com/news/london/2012/08/22/20130276.html (via shareaholic.com)

Zytiga (Abiraterone Acetate)

• Pills taken daily with few side effects.
• Health Canada OK'd July 2011. Every province but Ontario funds it.
• Extends life an average four months and reduces pain.

--- --- ---
WHAT THE PROVINCE SAYS
Letter from Ontario Health Ministry to patient denying coverage:
"Although there is a well-conducted randomized controlled trial demonstrating a statistically and clinically significant increase in overall survival without substantial side effects in this group of patients . . . the cost effectiveness of this agent is not favourable. As a result, the (Committee to Evaluate Drugs) recommended that Zytiga not be funded."

The cost?  $5000/month.  (Don't know if that's $US or $Can.)

Is Medicare More Efficient Than Private Insurance? – Health Affairs Blog

Link: http://healthaffairs.org/blog/2011/08/09/is-medicare-more-efficient-than-private-insurance/ (via shareaholic.com)

Includes a lot of meat in the comments.

Let Government Certify and Churches Sanctify – UPDATE

Let Government Certify and Churches Sanctify – UPDATE

via The Anchoress on 5/14/12

Last week before I left for this "working-vacation" I repeated an idea I've brought for years: ". . . the churches should reconsider their roles in authenticating marriage. Governments issue birth certificates; churches issue baptismal certificates. Governments issue death certificates; churches pray the funerals. Governments issue divorces; Churches annul. Both work within their separate and [...]

Guns and Freedom: A Different Argument

Guns and Freedom: A Different Argument

via Ideas by David Friedman on 2/14/11

A recent post by former BBC North American editor Justin Webb expresses puzzlement at the pattern of gun ownership in the U.S., reporting that the zip code he used to live in, an area safe enough so that people routinely left their doors unlocked, had a surge of gun purchases after the Supreme Court found unconstitutional the D.C. ban on handgun ownership. He thinks it is obvious that his one-time neighbors have no need for guns to protect themselves, and attributes the pattern to a peculiarly American belief in a link between private ownership of firearms and political freedom.

I have no idea whether his facts or his interpretation are correct; his post does not provide any link to his data source on handgun purchases, leaving open a variety of other explanations. He is surely correct, however, that many Americans see private ownership of firearms as something that makes tyranny less likely.

The interesting question is why. Webb takes it for granted that the underlying argument is that firearms make rebellion against oppression easier, and that is indeed an argument common among supporters of the Second Amendment. He points out, as evidence against, that we have just had an example of a successful rebellion in Egypt, and private firearms played no significant role.

As it happens, I agree with the view that private ownership of firearms helps prevent tyranny. But I don't think the main reason is that it makes rebellion easier. That argument was plausible in the 18th century, and probably played a considerable role in the writing of the Second Amendment. But changes since then make it a much weaker argument now. The gap between private weaponry and military weaponry has become much larger, as has the size of the professional military. Part of the original theory, at least as I read it, was that a large militia made a large professional army unnecessary.

In my view, the real argument for private firearm ownership is a different one. The less able individuals are to protect themselves from crime, the more dependent they are on protection by government law enforcement. The more dependent they are on protection by government law enforcement, the more willing they will be to accept abuses by government law enforcement. The more willing we are to be pushed around by the police, the harder it will be to prevent a tyrannical government from arising. Indeed, in some contexts, most obviously the War on Drugs, one can argument that one has already arisen. And been tolerated.

--

The Wheel of the Year: Now available on Amazon Kindle

The Official Manual for Spice Cadets: Now available on Amazon Kindle

Another response to Elizabeth Warren

http://pajamasmedia.com/blog/elizabeth-warrens-social-contract-an-ideological-fantasy/?singlepage=true

Notably, the core governmental services that protect people from harm — the military, police, and the courts — constitute a sliver of the the budget of federal and state governments. Most political spending goes toward entitlements at the federal level and welfare or union-dominated education at the state level.
Moreover, businesses directly pay for many of the services that Warren mentions. Businesses pay for their road use through gasoline taxes. Any given business faces a miniscule risk of a large fire breaking out, because businesses provide their own sprinkler systems, alarms, and other fire-prevention infrastructure. Private firms hire more security guards than the total number of police officers in the country. Regarding education, not only do many business leaders finance schools and scholarships, but businesses spend large sums training and educating their employees. (Whether government ultimately should provide services not directly related to law and order, and if so how, are broader issues.)
....
Warren contends "there is nobody in this country who got rich on his own." In a sense she's right: people get rich by providing enormously valuable goods and services to others who willingly pay for them. Warren and other politicians should not be able to dictate what "hunk" of the earnings of others they forcibly seize. Any social contract consistent with justice recognizes that legitimate government does not loot "the rich" (or anyone else) but instead protects people's rights, including their rights to their earnings.

--

The Wheel of the Year: Now available on Amazon Kindle

The Official Manual for Spice Cadets: Now available on Amazon Kindle

The Moocher's Credo

The "crab bucket syndrome", also known as the politics of envy.

The Moocher's Credo

via The American Spectator and AmSpecBlog by Green Lantern on 9/26/11

Elizabeth Warren has become an instant celebrity among liberals for her rant before what appeared to be a small coffee klatch of supporters captured on YouTube in her bid to replace Scott Brown as the Senator from Massachusetts.
The former Harvard professor, who blazed the trail for President Obama's new Consumer Credit Financial Protection Bureau (although Republicans in Congress blocked her being appointed the first head), puts forth a spontaneous declaration of liberal and Democratic claims on the American economy. I'm going to print the whole thing because I think it's worth deconstructing, word-by-word. You don't have to look any further to see why Obamaism points straight towards Greece.

I hear all this, you know, "Well, this is class warfare," this is whatever." No. There is nobody in this country who got rich on his own -- nobody.
You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police-forces and fire-forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory -- and hire someone to protect against this -- because of the work the rest of us did.
Now look, you built a factory and it turned into something terrific, or a great idea. God bless -- keep a big hunk of it. But part of the underlying social contract is, you take a hunk of that and pay forward for the next kid who comes along.

Got that? OK, let's take a look at what she's saying.
My first reaction on reading this is, "Wow, this is the crab bucket syndrome." It's well known among police officers, social workers and community organizers (like Barack Obama) that one of the most difficult and tragic phenomena in African-American ghettoes is that when one individual starts succeeding at something, like crabs hanging onto the legs of another crab trying to escape the bucket, everybody will impede his or her progress to the point making it impossible for them to escape into the outside world. For a while there was a practice in eastern cities known as "kneecapping," where a young athlete who was showing promise as a basketball player would have his kneecaps broken so that he could not leave his buddies behind. Any student who tries hard to succeed at school is accused of "acting white."
"We're the ones who made you what you are!" "You never would have gotten anywhere without us!" "You owe us!" These are the common cries of people who are afraid they will come up short. And of course all this glides easily into, "You're not going anywhere unless you take us."
It's not an isolated phenomenon. It's common enough in families, particularly the extended families of developing countries. People who study immigration have found that the Senegalese salesmen who sprout on the sidewalks of New York selling umbrellas whenever it rains or the Guatemalans trying to make a living mowing people's lawns are usually sending half their income back home to their extended families in West Africa or Central America. It's an admirable act of loyalty but also a real impediment to any individual success, since workers are constantly being drained of their savings.
Developmental economists who studied the Third World in the 1960s and 1970s found this one of the most difficult roadblocks to growing a commercial economy. It is, in fact, the age-old problem of capitalism -- whenever an individual succeeds at something, they immediately earn the resentment of their neighbors who believe that if someone is getting rich then other people must be getting poor. Anyone who starts a business is immediately overwhelmed by the claims of friends and relatives -- and government officials -- demanding their share.
This produced what seemed an extremely puzzling anomaly -- that throughout the Third World the entrepreneurial sectors were run largely by foreigners, often immigrants from other Third World countries. The small business sector in Latin America was dominated by Japanese and Chinese immigrants. Cuba had a large complement of Chinese entrepreneurs who, when chased out by the Cuban revolution, moved to New York and opened a string of restaurants advertising "Comidas Cubana y Chinoise." The commercial sector in East Africa was run largely by Indian immigrants. The most important step in development, the economists argued, would be to get native peoples to accept entrepreneurial success among their own countrymen. This is what Deng Xiaoping was trying to do when he told his fellow Chinese that it didn't matter what color a cat was as long as it could catch mice.
What Elizabeth Warren is trying to do, then, is bring this Third World mentality to America. "Nobody in this country ever got rich on their own. Nobody!" "You only made it because of the rest of us." Which is to say, "You owe us, buddy -- big time."
To her way of thinking, things such as roads, law enforcement, and education can only be provided by the government. Without the state, every private business in America would be besieged by mobs trying to rip off their inventory and sell their machinery for scrap. (That "community organizers" such as Elizabeth Warren and Barack Obama would probably be leading such mobs will pass notice for now.) Let's look at the examples Warren offers:
Roads and transportation. The fact that government now owns most of the roads in the country does not mean without government there would be no roads. It simply means that road building and maintenance are mundane and unimaginative tasks that have been turned over to the government because nobody sees any chance of making money at it-- or rather that the government would undoubtedly prevent anyone from profiting at it if they tried. Many of America's first roads were toll roads built by private companies. Ferries, bridges, and commuter railroads were also private. Eventually people began to resent paying these fares and asked the government to take them over "for the good of the people." Road building has also devolved to the government because, as the landscape becomes more settled, it requires the power of eminent domain to push roads through populated areas. This is a compromise most people accept, although the details of "taking private property without due compensation" are still being worked out in the courts.
Perhaps the best example of this is the New York City subway system. The original subway line -- the Interborough Rapid Transit (IRT) -- was built in 1905 on contract by a private corporation and then leased back to it by the city government. The Brooklyn-Manhattan Transit (BMT), built shortly after, was entirely private. During the 1920s the Independent (IND) line was built by the city government to prove it could do things just as well as private enterprise. The big problem was the "5-cent fare." Because the fare had been 5 cents in 1905 when the first line was built, New York City politicians decided it should be 5 cents forever. Whole mayoral campaigns were run around "saving the 5-cent fare." Finally, just before World War II, the 5-cent fare bankrupted both the IRT and the BMT and the city took over. The fare stands at $2.50 today but must be hugely subsidized in order to pay the wages and pensions of the Transit Workers Union.
Police protection. The police power has indeed been ceded to governments for as long as there have been governments. One of the most succinct definitions of government is that it is the "entity that has the official monopoly on force." When those police disperse the mobs outside the factory owner's building, they are exercising the powers of the state. But that does not mean government is the only form of protection. In Haiti, where government authority has completely broken down, a private guard with a machine gun stands outside every shop in what is left of the commercial sectors. All over America, major corporations and many small businesses contract for private security. Nor is it just the business and commercial sector that sometimes looks beyond the gendarmes. One growing practice in upscale suburbs is for subdivisions to wall themselves off with private roads and police forces.
The alternative to government law enforcement is not no law enforcement but private law enforcement. Public authority is simply the fairest and most efficient way of achieving domestic tranquility. But if people find it inadequate, they will not succumb to violence. They will look for private security.
Education. Education? What can we say? Warren may think "the rest of us paid to educate" today's workers but the poor state of education in the workforce is now regarded as one of the greatest vulnerabilities of the American economy. The government monopoly on education is being challenged on all fronts, through home schooling, charter schools, and the campaign for vouchers. People choose these alternatives because they believe the government isn't doing a very good job.
The unraveling of public education corresponds precisely with the rise of teachers' unions, which, like all dominating unions, run a business for their own benefit rather than the benefit of consumers. Teaching assignments are made on seniority rather than merit, labor contracts calculate teachers' break time and lunchroom duties to the second, and colleges of education participate in the charade of awarding graduate credits for courses offered on weekends or during spring break so teachers can move up the "grid" to higher pay. In the classroom, first graders study the rainforest and chant "Man did it" to an honor role of extinct and endangered species almost before they learn their ABCs. For this we should be thankful?
Warren's is making the Hobbesian argument that without the government life would be solitary, poor, nasty, brutish and short. So shut up and pay. It worked well to justify the absolute monarchies of the 17th century. Forty years after Leviathan, John Locke published Two Essays on Government, which posited the doctrine of Natural Rights. The Natural Rights argument says people have a right to choose differently if they don't like their governments and has proved to be much more compatible with democracies.
The problem with defending "you'd-be-nowhere-without-us" government is that government is no different from any other organization in society -- it seeks its own aggrandizement. AT&T, General Motors, and Microsoft would love to have world monopolies, controlling all the resources and expanding into every corner of people's lives. But they are limited by competition, the dynamics of the marketplace, and the need to win people's consent in order to market their products.
Government is different. It expands by fiat, through legislation, through taking advantage of emergencies, and by declaring that private entities can't be trusted and government intervention is necessary. Most of all it grows by raising taxes and hiring more and more people so that soon its voter base approaches a majority of the electorate. In Greece, 14 percent of workers are employed by the government. In New York City the figure is slightly higher. Add in family members dependent on a government paycheck and you're getting close to a third of the population. And that doesn't even count the people who live off government benefits. When you reach this kind of critical mass, all kinds of things become possible. In Greece, the government is now trying to balance its budget by raising the property tax. It has given up tax collection, however, since evasion is already endemic. Instead it is trying to collect the property tax on the bills from the government-owned electrical company. But the electric workers are unionized and are refusing to collect the tax! Carry mooching to its logical conclusion and you end up where Greece is now.
What Elizabeth Warren is expressing, then, is the moocher's credo, updated to fit contemporary America. In the 1930s, liberals argued that government could run businesses better than private companies. They didn't need to make a profit and could eliminate "greed." They would install college-educated engineers and professionals to replace the ignorant plutocrats and cowboy capitalists that ran corporate America. Now liberals are content to regulate business instead of owning it. They have become parasites instead of carnivores. And so the rallying cry has become: "You couldn't do it without us! Where's our fair share?"
The enemy of all this is individuality -- individual enterprise, individual responsibility, individual initiative, and individual creativity. There is nothing more difficult in the contemporary world than starting your own business -- having the courage to risk your savings and years of work effort and defying some traditional way of doing things by saying, "I'll bet I can do this differently, and better."
It is hard to imagine America without this.

Figures don't lie, but...

... if you torture data enough it will tell you anything.

The American Spectator : AmSpecBlog : More Zombies

Paul Krugman writes: "...I see that John Taylor is peddling the zombie claim that there has been a huge expansion in the federal government under Obama."

....

Krugman is right that automatic stabilizers and Medicaid have been the biggest drivers of the increase in spending so far. But the story is a little different when you look at those same numbers in absolute terms instead of growth rates (CBO data, in 2010 dollars)

....

As you can see, "everything else" is a much bigger category in absolute terms than one might guess from looking at Krugman's graph.

But there's still a weird element to this graph: the x-axis categories, again. Krugman includes two full years of the Bush administration (2007-2008) as Obama years. He explains that he used those divisions because 2007 was the last pre-recession year, and the recession has changed the size and composition of government outlays. The recession led to an increase in automatic stabilizer spending under Bush, too. In order to get a more direct comparison of Bush vs. Obama, I generated a graph illustrating Bush's last two years vs. Obama's first two

....

By the growth of "everything else" in this graph, it looks like there has indeed been a "huge expansion" of the federal government under Obama, including both automatic stabilizers and everything else.

....

But the suggestion that Obama hasn't expanded the government at all, or the claim that "[t]he "Obama spending binge" was almost entirely mythical" (a claim Jonathan Chait makes based on Krugman's post), is likely to lead readers away from the truth.

The Non-Defense of DOMA

The Non-Defense of DOMA
We have a precedent. It will be interesting to see what people do with it.