Richard Morrison, Jeremy Lott, Marc Scribner and Ryan Radia bring you Episode 87 of the LibertyWeek podcast. We take on the politics in the land of Lincoln, the chances of a union pension fund bailout, the fallout from Climategate and the strange bedfellows of electronic privacy.
January 2012
For 15-minutes or more today, the Washington Post carried December 30, 2009 news. Here are some of the front page articles:
Suicide bomber attacks CIA base in Afghanistan Bombing near Afghanistan-Pakistan border is believed to be deadliest single attack on U.S. intelligence personnel of the war, officials say.
Unnoticed clues haunt Fort Hood Viewed in retrospect, Nidal Hasan’s life becomes a trail of evidence leading to an inevitable end.
Charities look to last-minute gifts Nonprofits hope for an end-of-year surge in giving to mirror recent increase in consumer spending.
- Wintry mix glazes region’s roads
- Best of the Post | Sports: Best of the decade
- ’00 to ’09: Looking back at the decade in Washington
Washington Times cuts sections Paper slashes its 170-member staff, laying off top editor, scores of reporters, editors, photographers.
We know that the print media are having financial problems — have budgets been cut this much? Or was it a case of hacking?
H/T Anonymous friend
As the federal government continues to expand at an ever-growing pace, the Old Dominion is doing things differently. As The Richmond Times-Dispatch explains, Governor Bob McDonnell is trying to get the state to live within its means (and those of taxpayers), focusing on a key issue.
The most significant piece of McDonnell’s budget — though not widely noted — was the decision to trim the pension costs of future state employees. By shifting the model for those hired after July 1 to one that more closely resembles private-sector retirement plans, McDonnell took an enormous step in ensuring the state’s solvency — which should soon emerge as a distinct competitive advantage for Virginia’s economic development — while keeping faith with past promises made to current state workers.
This essential reform would have been impossible if Virginia politics were dominated by the public-sector unions that seem determined to drive California and New York, to name the most prominent examples, into bankruptcy, crippling tax increases — or perhaps both. McDonnell has set an important precedent here.
Indeed, as the Cato Institute’s Chris Edwards notes, Virginia, by barring collective bargaining by public employees, should serve as a model for other states. Almost as important is to depoliticize pension fund investment decisions, which have led pension funds to under-perform.
March 31 was Cesar Chavez Day. Cesar Chavez Day has been celebrated in California for some time. A few other states also recognize the holiday. But this year, for the first time, it was a national holiday.
The trouble is that nobody knew it at the time.
On April 2, the White House filed a Presidential Document declaring the holiday. It ran in the April 5 Federal Register, five days after the fact.
You’d think this would have been announced in advance. But Chavez remains a controversial figure. And the gesture will be seen by President Obama’s adversaries as yet more evidence of his capture by labor interests.
The president could rebut those charges directly. Instead he actively avoided confrontation, which is one way of admitting guilt.
Cato Institute’s Dan Ikenson had a timely opinion piece in Friday’s Wall Street Journal. He deconstructs the popular argument that China’s “undervalued” currency is a significant cause of the U.S. trade deficit.
As Ikenson points out, U.S. consumers continue to purchase Chinese goods and will continue purchasing goods from China regardless of an “appreciating renminibi.” In other words, forcing China to appreciate its currency will not alleviate the U.S.-China trade deficit. Additionally, Ikenson asserts that if Congress imposes sanctions on China due to its questionable monetary policy, the U.S. economy will suffer. He writes:
..Between July 2005 and July 2008 the renminbi rose 21% against the dollar, to $.1464 from $.1208, where it had been pegged since 1997. But the trade deficit, according to the trade statistics compiled by the U.S. Census Bureau, nevertheless increased to $268 billion from $202 billion over that period.
Textbooks say that the Chinese should increase purchases of American products when the renminbi’s value increases against the dollar — and indeed they did by $28.4 billion. But exports to China were already increasing rapidly before the currency began to appreciate, rising by $19 billion between 2002 and 2005, according to the Census Bureau.
…U.S. imports from China between 2005 and 2008 actually increased by a whopping $94.3 billion, or 39%.
By focusing on undervalued Chinese currency, Congress ignores any viable concerns over U.S.-Chinese trade relations. These suggested sanctions will do little to address U.S. trade deficit with China and could quite easily hurt U.S. business and consumers by a potential U.S.-China trade war.
Legislators in Maryland have disappointed the state’s wine lovers yet again by failing to pass a bill that would have allowed residents to receive wine via the mail. Sadly, the bill gained a sizable majority of the members (12-8) in the House Economic Matters Committee, but it was just shy of the 13 votes required (a majority of committee’s 26 members) before it could go for a full House vote. According to a memo produced by Marylanders for Better Wine and Beer Laws posted by wine writer Rob Garretson, three members were excused from voting, one because of religious views regarding alcohol and two others for unknown reasons. Something seems fishy here.
Staff at Marylanders for Better Wine and Beer Laws are optimistic that the state could open in 2011. This year, the legislature passed Maryland Winery Modernization Act, which Marylanders for Better Wine Laws says reduces regulation on Maryland wineries and allows wineries to open for the first time in Prince George’s County. In addition, the new law funded a study that could help build the case for direct shipping.
Nonetheless, such trade restrictions are just one problem with the prohibition-inspired, state-level regulatory morass. Some states have opened up, but problems abound. Even where shipping is allowed, myriad regulations and taxes needlessly burden consumers. The advocates of regulation make a host of arguments, some of which are quite similar to those made by the temperance movement to advance prohibition. Surely, responsible alcohol use is in order, but government bans and regulations are not necessary to protect us from ourselves. And the massive regulatory bureaucracy is not necessary to ensure simple ID checks to protect children. Instead, it largely serves politically organized players and government budgets.
In today’s Washington Examiner, David Freddoso outlines the close correlation between state government debt and public sector unions. As he notes, “the states with the highest per-capita debt all have something in common: Robust public-sector unions that have, over the years, cut sweetheart deals with politicians — usually, but not always, Democrats.”
There’s a good reason for that. Public sector unions receive considerable benefit from participating in the political process. In effect, they are working to elect their bosses. This in turn gives politicians an incentive to keep their union supporters happy.
Meanwhile, the costs of public employee rents (compensation above what they would earn in an open, competitive market) are dispersed widely to be borne by the population at large. As a result, public sector unions’ concentrated benefits give them a much greater incentive for involvement in the political process than diffuse costs give the rest of the population.
Now, however, there’s a new force coming into play in this scenario: Weakening state finances. The correlation is clear and voters are starting to notice, as the numbers tell the story.
[T]he states coalesce into three main groups:
- Among states whose government workers are less than 40 percent unionized, median per capita state debt is $2,238.
- Among states with between 40 and 60 percent of their government workers in public sector unions, the average debt is $3,609.
- Among states with more than 60 percent of the government workforce unionized, the average (median) per capita debt is $6,380.
As you keep an eye on the fiscal collapse of California, and New Jersey Gov. Chris Christie’s (R) efforts to rein in the unions’ power next year, bear in mind that this is quickly becoming the biggest fiscal issue in America today.
I couldn’t agree more. Yet state finances look even worse when considering the dire situation of many states’ public employee pensions.
So what to do? Freddoso cites the Cato Institute’s Chris Edwards, who recommends that, “states should follow the lead of Virginia and ban collective bargaining in the public sector.” Of course, getting there won’t be easy, but facing financial collapse could well force what once seemed politically nigh-impossible, as taxpayers decide they’ve had enough.
For more on public sector unions, see here and here.
UPDATE: Chris Edwards also writes about unions and government debt today at Cato@liberty.
Why are people killed in Toyotas? Because a huge number of Americans are killed by motor vehicles of all types and Toyota has been the third biggest seller her for the past decade. Why do so many people complain about sudden unintended acceleration in Toyotas? Because so many Americans complain of sudden unintended vehicles across the board and see above. And what links these two? Americans are crummy drivers. But mind you, it’s not us it’s them!
“Fully 80 percent of area adults often see distracted driving, with reports of such behavior surging in the past five years,” according to a new Washington Post poll . More than two-thirds of those surveyed said they often witness overly aggressive driving. Yet only one in eight considers his or her own driving too aggressive.
Almost everyone polled, including those under 30, said sending or reading texts or e-mails while driving should be illegal. But nearly a fourth of respondents said they e-mail, text or use the Internet while driving. For young adults that goes up to 40 percent.
“Do as I say, not as I do” is a common attitude. Often it’s a joke line. But when it comes to driving, in a nation that’s lost 400,000 people on the roads in the past decade of which all of 56 have been “associated with” runaway Toyotas (about half the total butcher’s bill per day, the joke isn’t very funny.
Some of the stranger governmental goings-on I dug up over the week:
-EnergyStar has been certifying bogus products, such as a gas-powered alarm clock and a space heater with a feather duster stuck in it. Out of 20 fake items that the GAO submitted, 15 were approved, 2 were rejected, and 3 received no response.
-NASA spent $500,000,000 on a launching pad for a rocket that will probably never be built.
-In Norfolk, VA, it is illegal for hens to lay eggs between 4:00pm and 8:00am.
-In Minnesota, it is illegal for women to play Santa Claus.
-In California, it is against the law to enter a restaurant on horseback.
-From Jeff Flake’s office: The federal government is spending $935,000 on pasteurizing shell eggs in Michigan.
-The federal government is spending $73,000,000 this year on the Agricultural Water Enhancement Program.
Trade policy that focuses only on exports while ignoring or taxing imports is likely to be counterproductive, but isn’t likely to be adopted by the U.S. The office of the U.S. Trade Representative (USTR) recently released the 2010 National Trade Estimate (NTE) report. NTE is an annual report that analyzes trade barriers over the past year and proposes potential actions for the coming year.
This year’s report endorses President Obama’s plan to focus on increasing exports while largely ignoring imports. When announcing the NTE findings to Congress this week, USTR Ambassador Ron Kirk said,
“The Obama Administration is following through on its commitment to call out and break down barriers to American exports worldwide. This year, we’ve gone beyond obligatory reporting to focus on some of the toughest hurdles America’s farmers, ranchers, manufacturers, and service providers face when they try to sell overseas. USTR will take the information in these new reports, as well as in the National Trade Estimate itself, and use all the tools that we have to get these markets open to American products.”
This is all well and good; but what about increasing imports? Every day, Americans enjoy the luxury of affordable products from around the globe. An increase in imports would greatly benefit the average American consumer through providing greater choice and lower prices for consumers, while encouraging competition and innovation, which leads to higher quality goods and services.
The Obama Administration is focused on removing the trade barriers that other countries have against U.S. exports. Yet American trade barriers against foreign imports are equally harmful to American businesses and consumers. In fact, our protectionist policies against imports can affect our long-term plans for American exports. Actions against China, for example, in relation to tire imports, may lead to retaliation. U.S. tariffs on imported ethanol and quotas for sugar imports don’t help the U.S. trade relationship with Brazil and other countries. Clearly, the U.S. wants the world to play fair with them, but also wants to keep its own protectionist measures up–even at the expense of the American people and the global economy.
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