David Boaz

I was just listening to the December CatoAudio interview with Tom Palmer and Ian Vasquez about the fall of the Soviet empire 20 years ago, and Tom mentioned that even as late as October 7, 1989, when the East German government held a gala celebration of its 40th year in power, no one anticipated that within a month the Wall would open and communism would come to an abrupt end in eastern Europe. And then I looked at the predictions of various scholars and pundits at Politico's Arena one year ago today and noticed how wrong most of them were -- Terry McAuliffe would be elected governor of Virginia, Rod Blagojevich would still be governor in April, Iran would test a nuclear weapon, several Republican members of Congress would switch to the Democratic Party (!), Justice Stevens would retire. No one predicted the surge of small-government, anti-spending sentiment, which was arguably the top political story of 2009. And then, looking up who said "Nobody knows anything" (screenwriter William Goldman, about Hollywood), I stumbled on this blog post from October 2008:

I pulled from my desk drawer a copy of the Wall Street Journal from Wednesday, May 23, 2007. It was not a particularly notable day.  The bull market was in force, and the Dow was hitting new highs … even though gasoline prices were at record levels.  But here at Cabot we had been noting a growing divergence in the market; both the NYSE Advance-Decline Line and the Nasdaq had failed to confirm the Dow’s high.  Also, we detected a high level of optimism among both investors and the general media.  So I saved The Wall Street Journal, in part because of the lead article that announced, “Why Market Optimists Say This Bull Has Legs.” The subhead of the article followed with, “They See Decade of Gain Fed by Global Growth; Skeptics Cite Big Doubts.”... So I reread the article and what did I find?  Fundamental talk about global growth, low interest rates and a technology revolution that would boost productivity.  [One bull] even had the courage to utter the phrase that makes an experienced investor quail, ” … it really is different this time.” Also given ink were the detractors, who claimed that reversion to the mean was inevitable, that low interest rates couldn’t last, and that the weak dollar and above-average P/E ratios would eventually pull the market down. But here’s what I found interesting (in hindsight):  Not once in the entire article did anyone mention credit!!! Today, we know from our rearview mirror that credit was the culprit of a decline that has crushed the global financial system.  But just 17 months ago, a reporter looking for reasons the bull might not last found no one mentioning credit!

All of which is to explain why you're not going to find any predictions for 2010 in this post.

A court in Saudi Arabia has sentenced a Lebanese television host to death for the crime of "sorcery." Apparently Ali Hussein Sibat was recognized by Saudi religious police as he made a pilgrimage to Mecca. On his show, he gave advice to callers and made predictions about their future. He could be executed any day now. In an article in the Daily Star of Lebanon, the leading English-language newspaper in the Middle East, Cato senior fellow Tom G. Palmer and University of Chicago dean Raja Kamal call on King Abdullah to face down the religious police and release Ali Hussein Sabat to Lebanon:

This case illustrates the tremendous power of the religious police in Saudi Arabia. King Abdullah faces an uphill battle in his struggle against extremists; not only the Al-Qaeda terrorists who kill innocent people, but the religious police and judiciary, who kill innocents as well.... The king and his supporters need to act decisively to eliminate the power of the extremists to carry out improper arrests, level false charges, coerce testimony, and conduct unjust trials, especially those culminating in murder. Sibat and others in his situation are being made into human sacrifices by the extremists in order to maintain their own power.... Lebanon also has a responsibility to speak up for and to protect its own citizens. The government of Prime Minister Saad Hariri has a special relationship with the ruling family of Saudi Arabia. That’s why the government needs to show that, as the representative of a democratic Arab country with a strong broadcasting industry, it will support freedom of expression – particularly that of Ali Hussein Sibat and others who broadcast from Lebanon.

This is not the change we hoped for. President Obama rose to power on the basis of his early opposition to the Iraq war and his promise to end it. But after a year in the White House he has made both of George Bush's wars his wars. Speaking of Iraq in February 2008, candidate Barack Obama said, "I opposed this war in 2002. I will bring this war to an end in 2009. It is time to bring our troops home." The following month, under fire from Hillary Clinton, he reiterated, "I was opposed to this war in 2002....I have been against it in 2002, 2003, 2004, 5, 6, 7, 8 and I will bring this war to an end in 2009. So don't be confused." Indeed, in his famous "the moment when the rise of the oceans began to slow" speech on the night he clinched the Democratic nomination, he also proclaimed, "I am absolutely certain that generations from now we will be able to look back and tell our children that . . . this was the moment when we ended a war." Now he has doubled down on the war in Afghanistan and has promised to keep the war in Iraq going for another 19 months, after which we will have 50,000 American troops in Iraq for as far as the eye can see. If McCain had proposed this sort of minor tweaking of the Bush policy, I think we’d see antiwar rallies in 300 cities. Calling the antiwar movement! President Obama’s promises are becoming less credible. He says that after all this vitally necessary and unprecedented federal spending, he will turn his attention to constraining spending at some uncertain date in the future. And he says that he will first put more troops into Afghanistan, and then withdraw them at some uncertain date in the future ("in July of 2011," but "taking into account conditions on the ground"). Voters are going to be skeptical of both these promises to accelerate now and then put on the brakes later. The real risk for Obama is becoming not JFK but LBJ -- a president with an ambitious, expensive, and ultimately destructive domestic agenda, who ends up bogged down and destroyed by an endless war. Congress should press for a quicker conclusion to both wars -- and should also remember the years of stagflation and slow growth that followed President Johnson's expansion of the welfare state.

The Washington Post reports on what new data reveal about the Chicago public schools run for the past seven years by Arne Duncan, now President Obama's secretary of education:

This month, the mathematics report card was delivered: Chicago trailed several cities in performance and progress made over six years. Miami, Houston and New York had higher scores than Chicago on the National Assessment of Educational Progress. Boston, San Diego and Atlanta had bigger gains. Even fourth-graders in the much-maligned D.C. schools improved nearly twice as much since 2003.

As I've said before, what always struck me about Obama's appointment of Duncan to run the nation's schools -- and he is actually moving to do just that, more so than any previous federal administration -- is that Arne Duncan ran the Chicago schools for seven years, and in that time he didn't manage to produce a single school that the Obamas chose to send their own children to. Valerie Schwartz of the Post reminds us that Duncan is not the first Cabinet secretary to be appointed on the basis of great results in a previous job, that then turned out to be not so great. Of course, you could have read much of the data about Duncan's results right here at Cato @ Liberty back in July.

Bart Hinkle makes some interesting observations in the Richmond Times-Dispatch about the unfortunate similarities between neoconservatives and progressives. Progressives, he says (and of course they're not really for progress, so they might better be called left-liberals), spent the Bush years criticizing "bullying," "heavy-handed meddling," and even "neoconservative theories of social engineering." They preferred "soft power."

Yet turn the subject to domestic policy, and what happens? Progressives eagerly embrace the use of coercive hard power to achieve their aims. Force industry to adopt a cumbersome cap-and-trade policy to reduce carbon emissions? Check. Force the country to adopt a health care "public option"? Check. Threaten people with fines and even prison to impose an individual mandate? Check. So much for the concern about "social engineering" and well-intentioned but "heavy-handed meddling." When it comes to domestic policy, progressives are just as eager as neocons are to embrace "expansive dreams" and "gargantuan plans." Just as hopelessly romantic about what the threat of force can achieve. And just as arrogant about the rightness of wielding it.

After some more critical analysis of the inconsistency of the left, Hinkle concludes:

Of course, everything that has just been said about progressives could be turned with equal validity against conservatives of the talk-radio right -- many of whom think Americans should push the rest of the world around, but leave one another the heck alone.

If only there were an alternative to heavy-handed liberals and heavy-handed conservatives...

Three years ago a Washington Post editorial conceded: "Sometimes libertarians deserve to win an argument." "Gee, thanks," I wrote at the time. "I'm glad libertarian arguments against over-regulation made sense to the editorial writer in this case. But I'm disappointed in the suggestion that this is a rare occasion." After all, libertarians and Post editorial writers no doubt agree on a lot of basic principles -- private property, markets, the rule of law, limited constitutional government, religious toleration, equality under the law, a society based on merit and contract not status, free speech, free trade, individual rights, peace -- though of course we disagree a lot over just how closely public policy should adhere to such principles. And indeed, the three editorials in Sunday's Post demonstrate some of the market-liberal values that libertarians and Post editorial writers share. A strikingly good lead editorial, "Redefining human rights," raps Secretary of State Hillary Clinton for saying that the Obama administration would "see human rights in a broad context," in which "oppression of want -- want of food, want of health, want of education, and want of equality in law and in fact" -- would be addressed alongside the oppression of tyranny and torture. "That is why," Ms. Clinton said, "the cornerstones of our 21st-century human rights agenda" would be "supporting democracy" and "fostering development." The Post sternly warns:

This is indeed an important change in U.S. human rights policy -- but the idea behind it is pure 20th century. Ms. Clinton's lumping of economic and social "rights" with political and personal freedom was a standard doctrine of the Soviet Bloc, which used to argue at every East-West conference that human rights in Czechoslovakia were superior to those in the United States, because one provided government health care that the other lacked. In fact, as U.S. diplomats used to tirelessly respond, rights of liberty -- for free expression and religion, for example -- are unique in that they are both natural and universal; they will exist so long as governments do not suppress them. Health care, shelter and education are desirable social services, but they depend on resources that governments may or may not possess. These are fundamentally different goods, and one cannot substitute for another.

Precisely (though we probably disagree about whether it is desirable for such services to be provided by government)! A second editorial deplores flaws in the criminal justice system that continue to send innocent people to jail, including two men who were released this month after spending more than 25 years in prison. It's a topic that Cato media fellow Radley Balko has been covering regularly. And finally, an editorial on the Federal Trade Commission's antitrust case against chipmaker Intel. The Post is by no means as critical of antitrust law as libertarians often are, but it does warn that "the agency's actions are aggressive and potentially worrisome." And it concludes, more cautiously than I would, but still by noting that consumers have been prospering during this alleged anti-consumer behavior:

The chip market is highly concentrated, and Intel has long been the dominant force. Yet year after year, consumers have benefited from more powerful and cheaper computers. The FTC is right to keep a close eye on the industry and on Intel, in particular, but it must use its power wisely and with restraint. 

As David Kirby and I wrote in "The Libertarian Vote," the United States is "a country fundamentally shaped by libertarian values and attitudes." Despite all the assaults on liberty of the past decade, that's a point that politicians and pundits should keep in mind. And editorials like these remind us that the ideas of individual rights, the rule of law, and competitive markets are still widely held.

Today’s question at “Politico Arena": “Is the filibuster good or bad for America?” My response: The United States is a republic, not a majoritarian democracy. The Founders were rightly afraid of majoritarian tyranny, and they wrote a Constitution designed to thwart it. Everything about the Constitution -- enumerated powers, separation of powers, two bodies of Congress elected in different ways, the electoral college, the Bill of Rights -- is designed to protect liberty by restraining majorities. Furthermore, the Senate was intended to be slower and more deliberative. Washington said to Jefferson, "We put legislation in the senatorial saucer to cool it." The Founders didn't invent the filibuster, but it is a longstanding procedure that protects the minority from majority rule. It shouldn't be too easy to pass laws, and there's a good case for requiring more than 51 percent in any vote. During the Bush years, when Republicans controlled the Senate, Democrats used the filibuster especially to block judicial nominations. Many conservatives and Republicans denounced the use of the filibuster. They complained about "tyranny by the minority" and said "all we are asking for is an up or down vote." I warned conservatives in 2005, "But those conservatives are being ahistorical, short-sighted, and unconservative. Judicial nominations are important, but so are our basic constitutional and governmental structures. Conservatives aren't simple majoritarians. They don't think a 'democratic vote' should trump every other consideration....Conservatives may believe that they can serve their partisan interests by ending filibusters for judicial nominations without affecting legislative filibusters. But it is naïve to think that having opened that door, they won't walk through it again when a much-wanted policy change is being blocked by a filibuster." In another column that year, I noted, "Republicans who once extolled the virtues of divided power and the Senate's role in slowing down the rush to judgment now demand an end to delays in approving President Bush's judicial nominees. President Bush says the Democrats' 'obstructionist tactics are unprecedented, unfair, and unfaithful to the Senate's constitutional responsibility to vote on judicial nominees.' Democrats who now wax eloquent about a 'rubber stamp of dictatorship' replacing 'the rights to dissent, to unlimited debate and to freedom of speech' in the Senate not too long ago sought to eliminate the filibuster altogether." I noted various liberal politicos and journalists who appeared to have flip-flopped on the legitimacy of the filibuster, from Sen. Hillary Clinton to the New York Times editorial page. And my old friend E. J. Dionne, who "groused about the 'anti-majoritarian filibuster rules' that were preventing needed action in 1998 but warned in 2005 that ending the filibuster would be 'a radical departure' that 'would be disastrous for minority rights.'" Now, I regret to note, the Democrats are back where they belong, in control of the Senate, the Republicans are once again the obstructionist minority, and E. J. is again denouncing the filibuster: "In a normal democracy, such majorities would work their will, a law would pass, and champagne corks would pop." In a democracy, maybe. But not in a constitutional republic. As I wrote back in 2005, "American constitutional government means neither majoritarianism in Congress nor acquiescence to the executive." And of course, there's a question about what ought to happen if we were indeed a "normal democracy." A majority of the Senate wants to pass this bill. But a majority of the public opposes it. Is it "democratic" for representatives to defy the majority of their constituents? If the filibuster allows the public to find out more about a proposed bill and to make its views known, then it is serving a useful purpose. If it sometimes blocks a bill, then it is also serving a useful purpose. But there aren't many people in Washington who stick to the same position no matter which party is in power. That's a good reason to have constitutional and procedural rules that last longer than temporary majorities.

Advocates of health care reform and other big government programs, this is the business you have chosen:

Main Street has had a tough year, losing jobs and seeing little evidence of the economic revival that experts say has already begun. But K Street is raking it in. Washington’s influence industry is on track to shatter last year’s record $3.3 billion spent to lobby Congress and the rest of the federal government — and that’s with a down economy and about 1,500 fewer registered lobbyists in town, according to data collected by the Center for Responsive Politics.... Plenty of sectors have scaled back their K Street spending, including traditional big spenders like real estate and telecommunications. But Obama’s push for legislation on health reform, financial reform and climate change has compensated for the grim economic times. And that’s after Obama kicked off the year with a massive economic stimulus package — and every major business sector tried to get a piece of the action. ... “If lobbying the federal government did not work, people wouldn’t spend money doing it,” [Dave Levinthal, a spokesman for CRP] said.

Lay out a picnic, you get ants. Hand out more wealth through government, you get lobbyists. As Craig Holman of the Ralph Nader-founded Public Citizen says: “the amount spent on lobbying . . . is related entirely to how much the federal government intervenes in the private economy.” More on the lobbying bonanza in President Obama's Washington here. Back in 2001 David Laband and George McClintock tried to estimate the total costs to society of efforts to effect forced transfers of wealth in their book The Transfer Society.

Ross Douthat at the New York Times, with help from Reihan Salam and Tim Carney, explains how the Senate health care bill can be both a government takeover and a huge subsidy to the insurance industry:

We’ve achieved an unusual left-right convergence in the health care debate: Both conservatives and liberals are attacking the current version of reform as an egregious giveaway to the insurance industry. (Both sides sound an awful lot like Tim Carney, in other words.) Suddenly, it’s hard to tell the difference between the right’s Yuval Levin ("The bill is basically a massive subsidy to the insurers — it is not a reform of the system”) and the left’s Markos “Daily Kos” Moulitsas ("it’s unconscionable to force people to buy a product from a private insurer that enjoys sanctioned monopoly status”). Ed Kilgore argues that the two sides’s concerns, while superficially similar, are actually contradictory:

… on a widening range of issues, Obama’s critics to the right say he’s engineering a government takeover of the private sector, while his critics to the left accuse him of promoting a corporate takeover of the public sector. They can’t both be right, of course, and these critics would take the country in completely different directions if given a chance.

He’s right about the gulf between the critics’ prescriptions, but I think he’s wrong about the incompability of their critiques. Here’s Reihan, explaining why:

Actually, it is entirely possible for both sets of critics to be correct. The concern from the right isn’t that the Obama approach will literally nationalize for-profit health insurers. Rather, it is that for-profit health insurers will continue evolving into heavily subsidized firms that function as public utilities, and that seek advantage by gaming the political process. Profits, including profits governed by medical loss ratios, can and will then be cycled into political action, which leads to the anxiety concerning a “corporate takeover of the public sector.” Again, progressives don’t literally believe that such a takeover is happening. Instead, they believe, rightly, that subsidies without effective cost containment represent a massive windfall for the private insurance sector, including non-profit insurers that generate salaries for large numbers of politically active middle and upper middle class professionals. So yes, Obama does not intend to nationalize the private insurance industry and then turn around and auction off the new nationalized health agency to Rupert Murdoch or Monsanto. But the anxieties of critics on the left and right are, to italicize for a moment, perfectly compatible.

The point is that the more intertwined industry and government become, the harder it is to discern who’s “taking over” whom — and the less it matters, because the taxpayer is taking it on the chin either way. Or to put it another way: The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which …

Tim Carney will discuss his book, Obamanomics: How Barack Obama Is Bankrupting You and Enriching His Wall Street Friends, Corporate Lobbyists, and Union Bosses, at a Cato Book Forum on January 12.

The Wall Street Journal reports that some mortgage insurers and lenders are beginning to relax their down-payment requirements, so that buyers in some parts of the country can now borrow 95% instead of 90% of a property's value. Buyers who can't come up with even a 5% down payment can turn to the Federal Housing Administration, which will make loans with as little as a 3.5% down payment. Unsurprisingly, the FHA is increasing its market share. Meanwhile, the Treasury department is pressuring mortgage companies to reduce payments for many more troubled homeowners, averting foreclosures. So, good news: people who lack income and assets will be able to take out loans to buy houses, and if they can't make the payments they signed up for, the government will pressure their lenders to accept lower monthly payments in return. We're back on the road to easy, universal homeownership. Oh, wait.