Cato Recent Op-eds

Truly a Turkey by Michael D. Tanner

Thu, 19 Nov 2009 23:00:00 -0600

Just in time for Thanksgiving, Sen. Harry Reid has given us a giant turkey of a health-care bill. At 2,074 pages and more than 370,000 words, it's officially "scored" as costing $849 billion over 10 years -- $400 million per page, or $2.3 million per word.

But that doesn't come close to measuring its true cost. The bill uses various accounting gimmicks to hide its true cost. For example the bill doesn't include more than $200 billion needed to prevent a 21 percent cut in Medicare next year. [The CBO "score" actually assumes Reid cuts Medicare 23 percent -- Ed.] That cost has been spun off into a separate bill, even though the Senate voted down that approach last month.

Moreover (as Jeffrey H. Anderson notes), much of the spending is back-loaded. The bill doesn't start spending until 2014, and only costs $9 billion that year. But by 2019, the annual cost hits $196 billion. The minority staff of the Senate Budget Committee reports that, if you factor out all the budget gimmicks and look at the 10 years of actual implementation, the cost is closer to $2.5 trillion.

And, while Reid brags that the bill will reduce the deficit by $127 billion over the next 10 years (which is about $50 billion less than the deficit the government ran last month alone), even that tiny savings depends on budget gimmicks and the willingness of future Congresses to make huge cuts in Medicare spending. Any wagers on the chances of that actually happening? In fact, even the CBO warns that it will be "difficult" to achieve the predicted savings.

Perhaps more important, much of the cost has simply been shifted from the federal budget onto the backs of workers, businesses and state governments. Judging by previous reforms, as much as 60 percent of the cost won't show up in government accounting.

To pay for all the new spending, Reid would enact at least 15 new or increased taxes totaling more than $493 billion.

But the cost alone doesn't begin to describe how intrusive this bill would be for the average American. For instance, it would require everyone to buy a government-designed insurance plan, even if it was more expensive than their current policy. Failure to comply brings a penalty of up to $6,750 for a family of four.

Another provision would mandate that employers provide insurance to their workers. If they fail to do so, and if even a single worker qualified for federal subsidies, the employer could be fined up to $750 per employee. The CBO estimates that those penalties will amount to more than $28 billion.

Unemployment is now 10.2 percent, and the Senate bill will make it more costly to hire workers. And because the penalty only applies in the case of subsidy-eligible workers, it is low-wage and unskilled workers that will suffer the most.

Of course, the plan contains the government-run "public option" that many experts believe will ultimately crowd out private insurers. And don't be misled by Reid's "opt-out" provision: It comes with so many restrictions that it will be nearly impossible for a state to actually opt out.

Besides, there won't be any opting out of the taxes that will ultimately be necessary to pay for it.

Finally, the bill sets the stage for government-imposed rationing. If you think the recent controversy over mammograms is something, just wait until the dozens of new boards, commissions and agencies created by this bill get to work. The "reform" also gives the secretary of Health and Human Services broad new powers to determine "quality," "efficiency" and "appropriate utilization."

At first, these restrictions would only apply to government programs like Medicare, but they'd create the framework for eventual extension to private insurance.

If Reid gets the 60 votes he needs to pass this, US taxpayers, businesses and patients can expect to pay a high price for this congressional feast.

The 'Stimulus' for Unemployment by Alan Reynolds

Mon, 16 Nov 2009 23:00:00 -0600

Why did the unemployment rate rise so rapidly — from 7.2 per cent in January to 10.2 percent in October? It was clearly the administration's "stimulus" bill — which in February provided $40 billion to greatly extend jobless benefits at no cost to the states.

As Larry Summers, the president's top assistant for economic policy, noted in July, "the unemployment rate over the recession has risen about 1 to 1.5 percentage points more than would normally be attributable to the contraction in GDP." And the rate has moved nearly a percentage point higher since then, even though GDP increased. Countries with much deeper declines in GDP, such as Germany and Sweden, have unemployment rates far below ours.

Summers knows why the US rate is so high. He explained it well in a 1995 paper co-authored with James Poterba of MIT: "Unemployment insurance lengthens unemployment spells."

That is: When the government pays people 50 to 60 percent of their previous wage to stay home for a year or more, many of them do just that.

And the stimulus bribed states to extend benefits — which have now been stretched to an unprecedented 79 weeks in 28 states and to 46 to 72 weeks in the rest. Before mid-2008, by contrast, only a few states paid jobless benefits for even a month beyond the standard 26 weeks.

When you subsidize something, you get more of it. Extending unemployment benefits from 26 to 79 weeks was guaranteed to leave many more people unemployed for many more months.

And longer unemployment translates to higher unemployment rates — because the relatively small numbers of newly unemployed are added to stubbornly large numbers of those who lost their jobs more than six months ago.

Until benefits are about to run out, many of the long-term unemployed are in no rush to make serious efforts to find another job — or to accept job offers that may involve a long commute, relocation or disappointing salary and benefits.

(Incidentally, the "mercy" of longer benefits does no long-term favors: The literature is quite clear that a prolonged period on unemployment tends to depress income for years after you finally go back to work.)

The median length of unemployment hovered around 10 weeks for six months before February's "stimulus" plan. Since half the unemployed found jobs within 10 weeks, more than half of those counted among the unemployed in one month would no longer be included three months later. In other words, more frequent turnover among the unemployed held down monthly unemployment.

But after February, with jobless benefits stretched out to 46 to 79 weeks, the median duration of unemployment nearly doubled, reaching 18.7 weeks by October.

The unemployment rate has not been rising because of growing numbers of newly jobless people. Indeed, initial claims for unemployment benefits are way down. And the number of unfilled private job openings increased by 9.3 percent from the end of April to the end of September.

The unemployment rate has been rising because unprecedented numbers of those who became unemployed six to 19 months ago are remaining "on the dole" until their benefits are nearly exhausted.

Summers isn't the only administration economist who understands this very well. Assistant Secretary of the Treasury for Economic Policy Alan Krueger co-authored a 2002 survey of the topic with Bruce Meyer of the University of Chicago. They found that "unemployment insurance and worker's compensation insurance . . . tend to increase the length of time employees spend out of work." Last August, Krueger and Andreus Miller of Princeton also found that "job search increases sharply [from 20 minutes a week to 70] in the weeks prior to benefit exhaustion."

Similarly, Meyer found "the probability of leaving unemployment rises dramatically just prior to when benefits lapse." In other words: If you extend benefits to 79 weeks, many people won't find an acceptable job offer until the 76th or 78th week.

Meyer and Lawrence Katz of Harvard estimated that "a one-week increase in potential benefit duration increases the average duration of the unemployment spells . . . by 0.16 to 0.20 weeks." Apply that formula to the 20-to-53-week extension we've seen, and you get an average of three to ten more weeks spent on unemployment. And, sure enough, the average unemployment spell has risen by seven weeks this year — to nearly 27 weeks by October.

Katz also found that extended benefits, by making it easier for workers to wait and see whether they get their old jobs back, also makes it easier for employers to delay recalling laid-off workers. Just before unemployment benefits run out, Katz found "large positive jumps in both the recall rate and new job finding rate."

The White House recently made the mysterious claim of having "saved" 640,329 jobs, at a cost of only $531,250 per job ($340 billion).

In reality, the evidence is overwhelming that the February stimulus bill has added at least two percentage points to the unemployment rate. If Congress and the White House hadn't tried so hard to stimulate long-term unemployment, the US unemployment rate would now be about 8 percent and falling rather than more than 10 percent and — rising.

Obama's Phony Federalism by Gene Healy

Mon, 16 Nov 2009 23:00:00 -0600

Friends of federalism cheered last month when the Obama administration reversed the Bush policy of prosecuting medical marijuana cases in states that have legalized the practice. Welcome though that change was, let's hold the applause.

Not yet a year into his administration, Obama's record on 10th Amendment issues is already clear: He'll let the states have their way when their policies please blue team sensibilities and he'll call in the feds when they don't. Thus, he'll grant California a waiver to allow it to raise auto emissions standards, but he'll bring the hammer down when the state tries to cut payments to unionized health care workers.

That's not how it's supposed to work. As Madison explained in Federalist 45, the powers delegated to the federal government were "few and defined," to be exercised mainly on "external objects" like foreign policy and international trade. All else — criminal law, marriage, social policy — remained with the states or the people.

Of course, No. 45 also contains one of the Federalist's saddest sentences, in which Madison predicts that federal tax collectors will be "principally on the seacoast, and not very numerous." (Sometimes the Framers weren't all that prescient.)

Indeed, the federal government's massive power to tax and spend has increasingly allowed it to trample state prerogatives. As the $786 billion stimulus package came online this year, for the first time ever, federal aid surpassed the sales tax as the largest source of revenue for the states.

"This money isn't manna from heaven," warned Indiana state Sen. Jim Buck, "it comes with a price."

California learned that lesson back in May. Struggling to close a $40 billion budget gap, the state government lowered payments to home health care workers, but the Obama team threatened to withhold billions of dollars in stimulus money unless the wage subsidies were restored.

Officials in Gov. Arnold Schwarzenegger's office accused the Service Employees International Union, a longtime Obama ally, of improper influence.

Just a few years back, the Republicans — nominally the party of federalism — were busily wielding federal power to enforce red state values — prosecuting medical marijuana patients, punishing doctors participating in Oregon's "Death with Dignity" initiative, and trying to overturn Florida court decisions that allowed Terry Schiavo to be removed from life support. In that odd political climate, you often heard liberals lamenting the decline of states' rights.

That strange new respect for the 10th Amendment lasted roughly as long as the blue team's exile from power.

Education Secretary Arne Duncan said recently that "if we accomplish one thing in the coming years, it should be to eliminate the extreme variation in standards across America." Diversity is bad, uniformity double-plus good; get with the program, comrade.

But one of federalism's core virtues is the enormous diversity it allows. Decentralization makes it easier for Americans to escape unwelcome state experiments with fiscal and social policy.

It enhances the political power of individual citizens by allowing important decisions of governance to be settled closest to where Americans live and work. And it avoids making politics a centralized war of all against all, where each contested issue is settled in a one-size-fits-all fashion at the level furthest from the people.

Our federal system shouldn't be a red team/blue team issue, respected or flouted depending on who's up and who's down. Conservatives are learning to rue their abandonment of federalist principles during the last administration; liberals may come to regret their rush toward centralization during the next.

Will Democrats Err in Immigration Reforms? by Daniel Griswold

Mon, 16 Nov 2009 23:00:00 -0600

Immigration reform has been moving up the to-do list for President Obama and Democratic leaders in Congress. Our immigration system sorely needs an overhaul, and illegal immigration remains a perplexing problem, but the Democrats in Washington seem ready to repeat the mistakes of the past.

In a speech Friday, Department of Homeland Security Secretary Janet Napolitano said the administration supports a "three-legged-stool" approach to reform "that includes a commitment to serious and effective enforcement, improved legal flows for families and workers, and a firm but fair way to deal with those who are already here." She spent almost the entire rest of the speech talking about enforcement, but offered no details about "improved legal flows."

Meanwhile, the reform taking shape on Capitol Hill appears to have only two legs: Most of the 11 million immigrants living in the United States illegally would be offered legal status, while enforcement would be ratcheted up through tighter employment verification. Missing from the agenda is a robust temporary-worker program to allow more immigrants to enter legally in the future.

This all has a familiar ring. In 1986 Congress passed the Immigration Reform and Control Act. The bill legalized 2.7 million illegal immigrants and ramped up enforcement with increased border patrols and employer sanctions for the first time in American history. Missing then, as now, was any provision to address the future labor-force needs of the U.S. economy.

By all accounts, IRCA was a failure. The one-time legalization temporarily reduced the number of illegal workers, but their numbers soon began to rise again as the U.S. economy continued to create job opportunities for low-skilled immigrants. With no legal path for entry, workers from Mexico, Central America and elsewhere crossed the border illegally or entered on nonworker visas and overstayed.

A temporary-worker program would recognize the reality that the U.S. economy benefits from low-skilled immigration. As the United States shakes off a deep recession, it is only a matter of time before job growth resumes, including lower-end jobs in retail, landscaping, food preparation and service, and home and commercial cleaning that attract low-skilled immigrants.

At the same time, the cohort of U.S. workers who have traditionally filled those jobs, namely high school dropouts, continues to shrink. In the past decade, the number of adults 25 and older without a high school diploma fell by 3.2 million, and their ranks will fall by another 2 million to 3 million in the next decade. Yet our current immigration system offers no legal pathway for anywhere near a sufficient number of foreign-born workers to fill that growing, structural gap in our labor market.

Now is the right time to fix this fundamental flaw in our system despite worries about the economy. A temporary-worker program will not aggravate the unemployment problem. If no jobs are available, immigrants will leave and potential immigrants will stay home. The economy is the main reason why apprehensions along the Mexican border have dropped by two-thirds and the illegal-immigrant population actually has declined in the past two years.

When the economic recovery picks up steam, a robust temporary-worker program will actually expand income and job opportunities for American families. An orderly inflow of legal, low-skilled immigrants will allow important segments of the economy to grow to meet rising demand. An expanding economy will create opportunities up the employment ladder, allowing American workers to produce more and earn more.

In a recent Cato Institute study, "Restriction or Legalization: Measuring the Economic Benefits of Immigration Reform," authors Peter Dixon and Maureen Rimmer found that a temporary-worker program that allows a 30 percent increase in low-skilled immigrant workers over the course of the next decade would boost the annual income of U.S. households by $180 billion.

Expanded legal immigration would increase the overall output of the economy, expand returns on investment, transfer smugglers fees to productive uses, and increase incentives for American workers to move up to better-paying jobs with higher employment rates.

In contrast, a policy of "enforcement only" promises only more political frustration, compounded by real economic losses from a downsized economy and relatively fewer job openings in better-paying occupations. Mr. Dixon and Ms. Rimmer calculate that a crackdown that managed to reduce low-skilled immigration by 30 percent would actually reduce the income of U.S. households over the same period by $80 billion a year. The advantage of legalization over restriction thus amounts to a sustainable "stimulus" for American families of a quarter of a trillion dollars year after year.

A temporary-worker program has been the missing ingredient in the ongoing effort to curb illegal immigration. We can only address this problem if both parties work together for real reform that includes the third leg — a legal channel to accommodate the future labor needs of a growing economy.

Republican leaders need to liberate themselves from the Lou Dobbs minority within their own ranks that will oppose any legalization. Democratic leaders need to face down their labor-union constituency that opposes any workable temporary-visa program. Working together, President Obama and a bipartisan majority in Congress can seize the current opportunity to reform the immigration system and finally fix the problem of illegal immigration.

Clueless or Despotic? by Richard W. Rahn

Mon, 16 Nov 2009 23:00:00 -0600

Do you think people who refuse to (or cannot for whatever reason) purchase health insurance should be subject to a $250,000 fine and/or five years in jail?

Well, a slim majority of the U.S. House of Representatives seems to think such a draconian (and probably unconstitutional) measure is just fine because that is one of the provisions of the health care reform bill they just passed. A person, or group of people, who are unable to think through the consequences of their actions and often resort to oppression of others are either clueless or despotic.

Thinking and compassionate people understand that there may be many good reasons why people do not buy, or do not wish to buy, health insurance. The health care bill is Exhibit A to demonstrate that a majority of Congress is now clueless when it comes to economic sense or understanding about how the U.S. Constitution was designed to protect individual liberty.

No provision gives government the power to require people to buy health insurance, let alone fine and/or send them to jail for non-purchase.

Sen. Jack Reed, Rhode Island Democrat, tried to justify the constitutionality of the health bill by saying it was like the "draft." This recalls a debate 30 years ago between Gen. William Westmoreland and Milton Friedman about whether the United States should go to an all volunteer army.

Westmoreland said he "did not want to command an army of mercenaries," to which Friedman replied, "Then sir, you would prefer to command an army of slaves." (To his credit, Westmoreland changed his view many years before his death, upon seeing the success of the all-volunteer army.)

Implicitly, members of Congress like Mr. Reed seem to believe the American people are the "slaves of government," not the other way around as the Founding Fathers intended. Sound — and constitutional — proposals for health care reform may be found on the Web sites of the Cato Institute and the National Center for Policy Analysis.

Exhibit B exposes those in the Obama administration, Congress and in certain state governments who say they believe government can collect more tax revenue to fund the health care bill and "cap-and-trade," as well as other counterproductive and coercive government activities, by increasing tax rates on the "rich."

Perhaps they have failed to notice that there is strong empirical and theoretical evidence that the maximum marginal U.S. federal income tax rates, plus high state marginal rates, are already above the revenue and national welfare maximizing rates.

If the Bush tax rate cuts are repealed and if the proposals for funding health care and the energy bills by increasing marginal tax rates are passed into law, it is a certainty that total long-run tax revenues will be lower, not higher, and that economic growth and employment will be lower.

Ah, but this concept is just too complex for the clueless who work in Washington. (They seem to have missed the widely reported fact that many of the highly taxed in New York, California and elsewhere are moving to lower-tax states, a number of which have no state income tax.) Check the Institute for Research on the Economics of Taxation Web site for first-rate analyses and papers on tax rate/revenue issues.

Exhibit C: Members of Congress have just introduced the "Foreign Account Tax Compliance Act," which would force foreign financial institutions, trusts, corporations and tax advisers to provide extensive information about U.S. account holders, owners, guarantors and clients.

The reporting provisions would be so costly and onerous (and in many cases violate local law and privacy rights), and the fines so draconian, that few foreign entities would continue to operate and/or invest in the United States.

At a time when the United States is running record deficits and needs large amounts of foreign capital to finance these deficits, it is clueless to drive away trillions of dollars to try to obtain a few extra billion dollars of tax revenue. If the Internal Revenue Service wishes to go after Americans who it believes are evading taxes, it should do so directly. The IRS has no business bullying foreign private companies and governments to make them its unwilling agents. The Center for Freedom and Prosperity has extensive information on this issue.

Exhibit D: Those in the administration and Congress who blame "deregulation" for the financial crisis and, in particular, portions of the Glass-Steagall Act, which was partially repealed a decade ago, and are now proposing many counterproductive regulatory proposals. Peter Wallison, former general counsel of the U.S. Treasury and now a senior fellow at the American Enterprise Institute, has just produced an excellent paper debunking this myth.

Mr. Wallison shows the "crisis was caused by the government's own housing policies, which fostered the creation of 25 million subprime and other low-quality mortgages — almost 50 percent of all mortgages in the United States — that are now defaulting at unprecedented rates ... the fact that two-thirds of these weak mortgages are now held by government agencies, or were produced by government requirements, shows the demand for these mortgages — and the financial crisis — originated in Washington." The clueless in Congress, rather than abolishing Fannie Mae and Freddie Mac, which were responsible for much of the crisis, continue to encourage them to make loans to those who will be unlikely to be able to service their mortgages, thus setting up the next crisis.

The good news is, at some point, it is likely that a majority of the voters will understand that many of their elected representatives are either clueless or have little regard for the U.S. Constitution and will vote out the rascals.

Europe as Weltmacht by Doug Bandow

Mon, 16 Nov 2009 23:00:00 -0600

European leaders are giddy like school children before Christmas. The European Union is about to install a president and foreign minister. Then, the European elite insist, the continent can act as a true counterweight to the U.S.

The European Union began decades ago as a small organization for economic cooperation. Over time it expanded to 27 states and took on significant political roles. In 2004 leading Eurocrats drafted a constitution to turn the still loose federation into something closer to a continental nation state. Most notable was the shift of responsibilities, or "competencies," from member governments to Brussels, reduced national vetoes over EU decisions, appointment of a High Representative for Foreign Affairs, creation of a European foreign service, and appointment of a permanent President of the European Council.

But the European establishment pushed one agreement too far. Voters in France and the Netherlands said no, killing the accord. The lesson was clear. Former French President Valery Giscard d'Estaing opined: "Above all, it is to avoid having referendums." The European governments moved a few commas and made the document even more abstruse, before reissuing it as a treaty that only required parliamentary approval.

But Ireland's constitution mandated a referendum and last June the Irish shocked the Eurocrats by voting no. One British Labor MP called the Irish "extremely arrogant." German Interior Minister Wolfgang Schaeuble complained that "a few million Irish cannot decide on behalf of 495 million Europeans," preferring instead that a few thousand Euroelites do the deciding.

After briefly toying with the idea of either kicking out the recalcitrant Celts or confining Ireland to secondary status, the EU establishment insisted that Ireland vote again. The treaty passed the second time in October, primarily due to economic scare-mongering. Judith Crosbie wrote in European Voice: "the vote largely reflected concerns about the Irish economy, with most voters saying 'Yes' to staying close to where the money it," even though Lisbon actually offered no economic benefits.

Then the treaty was held up by Czech President Vaclav Klaus, who refused to sign his nation's ratification. This sparked more than the usual petulance from other European leaders, including demands for his impeachment. In early November Klaus acquiesced, allowing the Eurocrats to get down to important business: divvying up the political spoils.

In theory, Lisbon was about more important issues. Irish Sen. Deirdre de Burca argued: "If I had to name just one compelling reason to support the Lisbon Treaty, however, it is because the treaty will enhance the capacity of the EU to become a more effective actor at an international level." Similarly, claimed Wilfried Martens, a leading Member of the European Parliament, "the EU must be united and able to speak with one voice on the world stage."

Europeans were acutely aware that the continent is still seen as largely as an economic entity. Charles Grant, director of the Centre for European Reform, complained: "On many of the world's big security problems, the EU is close to irrelevant. Talk to Russian, Chinese or Indian policy-makers about the EU, and they are often withering. They view it as a trade bloc that had pretensions to power but has failed to realize them because it is divided and badly organized." Similarly, said President Sarkozy, the treaty was necessary since "Europe cannot be a dwarf in terms of defense and a giant in economic matters."

In short, Lisbon was about Europe, not Europeans. There is no evidence that most Europeans worry much about whether people around the world think of Europe as an equal to the U.S., China, and Russia. But Eurocrats worry about it.

Yet while supposedly hoping to use Lisbon to turn Europe into a Weltmacht, leading Europeans now are engaged in an unseemly squabble over offices. The plotting has grown ever more intense with the approach of Thursday's summit, and scheduled decision on the new president and foreign minister.

Despite Lisbon's many claimed benefits, the treaty has not changed Europe. The EU remains an amalgam of nations rather than a single political community. Since the center-right is ascendant, conservative governments claimed the presidency. But the center-left must be mollified, so its representatives expect the foreign ministry — a prescription for divisive inaction. The Poles are demanding a genuine say in the decision, and perhaps even one of the positions, for the Central and Eastern European states. Times columnist Brownen Maddox observed: "The haggling over Europe's new top jobs resembles that old children's card game of mixing up the heads, bellies and feet of different animals, for a deliberately preposterous result."

There's more, however. Some Eurocrats argue that British officials should not be considered because even if they, most notably former Prime Minister Tony Blair and current Foreign Minister David Miliband, personally are Europhiles, the majority of Britons are Euroskeptics. And Blair, of course, was chummy with U.S. President George W. Bush and supported the Iraq war.

Even stranger, after pushing a treaty to strengthen Europe, some of the governments want to select new officers who won't strengthen Europe. For instance, Denmark, Finland, and Ireland issued a joint statement advocating a "chairman not a chief" for the Council presidency. This means, as the Economist puts it, EU leaders talking "to themselves" rather than "to the world." One reason is rivalry between the European Commission (representing the continent) and the European Council (representing governments). Still, someone more attentive to EU governance might be useful in a petty-bureaucratic sense. George Wittman pointed to the need to "bring some order to a bureaucracy at EU headquarters in Brussels that has mutated and proliferated like a bad case of hives." Alas, as Wittman observed, there are few things at which Europe better excels than bureaucratic growth.

However, a chairman won't enhance Europe's international influence. There's a good argument for not claiming that any one person speaks for 500 million Europeans but, as the Wall Street Journal observed, "this is an argument against the Lisbon Treaty itself." The Eurocrats cheerfully told their publics that Lisbon was necessary to promote EU efficiency while telling each other that Lisbon was necessary to promote EU influence. The elite defenestrated concern over accountability and representativeness long ago.

Having decided that the lack of a European polity didn't matter, it would make sense to choose someone who might help the continent fulfill its potential. As a friend of Tony Blair's observed in making the pitch for the former premier's candidacy, "God knows what the Americans would do if we got [a] Belgian as European president. They already can't be bothered with us most of the time."

Yet after going to the trouble of ramming through a treaty that polls indicate was opposed by popular majorities in half of the EU member states, EU leaders apparently plan to reject the most impressive candidates for the top jobs. Blair was the early favorite for president, but has faded. The field is dominated by a gaggle of colorless national politicians.

Current candidates include Belgium's Herman Van Rompuy, Denmark's Jan Peter Balkenende, Ireland's Mary Robinson, Latvia's Vaira Vike-Freiberga, Luxembourg's Jean-Claude Juncker, and Sweden's Fredrik Reinfeldt. All of these people are respectable and accomplished in various ways — Van Rompuy is noted for his haiku writing, for instance — but none will "stop the traffic" in foreign capitals, as Miliband put it. The lack of international gravitas doesn't mean President Barack Obama won't ever call, but he will phone the British prime minister, French president, German chancellor, and perhaps the leaders of Italy, Poland, and Spain first.

Blair could still reemerge in the EU's "time-honored fashion… the cosy back-room stich-up," in the words of the Times of London. One Eastern European diplomat complained: "Trying to work out who is going to be President of the EU Council is not dissimilar to decoding who was in or out in the Kremlin in the 1970s. It seems strange to many of us that 20 years after the fall of the Berlin Wall we have to dust off our Kremlinology skills here in Brussels."

However, even choosing Tony Blair or a similar figure likely wouldn't matter much to the EU. As the British think tank Open Europe observed: "the idea for a President is mostly about giving the EU a symbolic, political figurehead to help propel its wild dreams about becoming a world superpower." The so-called European Project remains far from completion.

Europe remains deeply divided over international issues, and those differences won't disappear through attempts by another official, even one as charming and talented as Blair, in Brussels to plaster over the cracks. Nor is adding a foreign minister — here, too, there are favorites and underdogs in a constantly changing race — and diplomatic corps enough to create a united foreign policy.

Moreover, as French Foreign Minister Bernard Kouchner observed: "We must bear in mind, the necessity of supporting our diplomatic efforts with a common defense, a European defense…. Without this European defense our diplomacy lacks strength." Yet no one in Europe is interested in spending more on the military, creating forces which are combat capable, or deploying troops in harm's way. Even Great Britain is likely to retrench militarily in the face of a deep and prolonged recession.

Most Europeans live meaningful lives without great concern over how their continent is viewed in Washington or elsewhere. But Europe's political leadership remains burdened by the old Henry Kissinger insult: what's Europe's phone number? The Lisbon Treaty was drafted in part to provide such a phone number.

However, the EU remains a collection of nation states, not a nation state. Despite the forced passage of Lisbon, the differences among EU members remain great. And the addition of a president and foreign minister won't make anyone more willing to die for Brussels. Until Europeans are more loyal to Europe than their home countries, the European project will remain unfinished and unfulfilled. And the Lisbon Treaty will prove to be costly diversion.

Guns & Butter by Doug Bandow

Sun, 15 Nov 2009 23:00:00 -0600

The president is on his first official trip to Asia. Unfortunately, his agenda appears focused on reinforcing the status quo—"strengthening" the usual ties with the usual allies and forging an "enduring" American presence. Worse, the administration is dedicated to maintaining and even expanding Washington's Cold War era security ties.

The United States achieved its dominant position in East Asia in the aftermath of World War II. Washington defeated Japan and created a network of alliances to both prevent any imperial Japanese renaissance and contain Soviet and, later, Chinese expansion. The Cold War with China, which went unrecognized for three decades, and North Korea, which remains unrecognized after six decades, was very chilly indeed.

But that world has largely disappeared. Japan has recovered and created the world's number two economy. The Soviet Union is gone. Maoist China lives on only in the late dictator's ubiquitous image. Vietnam has joined the global economy. South Korea has raced past the decrepit Democratic People's Republic of Korea. Other countries, ranging from Australia to India, are capable of playing a stabilizing role in the region.

The recent naval clash between South and North Korea demonstrates that the potential of conflict remains. However, without any link to a global hegemonic competitor like the Soviet Union, such regional instability poses little threat to the United States. Indeed, Pyongyang doesn't even pose much of a threat to the Republic of Korea. How else to explain why the ROK has for years failed to further expand its own military while subsidizing its supposed antagonist?

Yet Washington's Cold War alliance structure remains essentially unchanged. The United States maintains one-sided "mutual" defense treaties with Japan and South Korea. American officials routinely resist host nation demands to reduce deployments and close bases. That America must remain both militarily dominant and guarantor of regional peace is taken for granted. In Washington the People's Republic of China's apparent determination to create a military capable of deterring U.S. intervention along its border is treated as a threat to American security.

What has ever been must ever be appears to be the basis of U.S. foreign policy and military deployment.

The Obama administration should pursue a different course, a transformational agenda, emphasizing economic integration while promoting military detachment. America still has a major economic role to play, but should increasingly devolve defense responsibilities on countries in the region.

The most important relationship for the twenty-first century will be that between the existing superpower and the potential superpower. Washington should strengthen economic and trade ties with China. That requires maintaining an open market at home while working through contentious disputes, such as the value of the Yuan. The United States also needs to address its own irresponsible fiscal practices which may discourage Chinese purchase of U.S. government securities and investment in private American companies.

Moreover, Washington must forge a cooperative relationship on difficult regional issues like North Korea. The PRC has much at stake in a stable Korean peninsula; China also has much to gain from taking the lead in promoting diplomatic solutions of regional problems. The president should press hard for a more active PRC policy to support reinvigorated U.S. engagement with the North. In that case, Beijing should be prepared to take forceful measures if Pyongyang rejects a peaceful solution. Successfully defusing the North Korean geopolitical bomb would offer some of the "strategic reassurance" which the administration has talked about.

The United States should speak frankly about the importance of human rights, while recognizing Washington's limited ability to influence the PRC's behavior. An improved bilateral relationship is more likely than isolation to encourage greater respect by Beijing for the liberty of its citizens.

Japan, with a new and untested government in Tokyo, is likely to be another tough test for the president. He should treat Japan as a full partner. In economics, that means proposing a free-trade agreement (FTA). On defense, that means shifting to genuinely mutual security ties.

Rather than merely adjust its controversial Status of Forces Agreement, Washington should withdraw its garrisons from Japanese soil, turning defense responsibility for Japan over to Tokyo. The Japanese people must decide on the foreign policy and military forces which best serve their interests, but they should understand that the United States will no longer step into any resulting security gap.

Washington also should encourage greater cooperation between Japan and its neighbors. Some in East Asia continue to express disquiet at the thought of Tokyo taking on greater security responsibilities, but World War II ended more than six decades ago. The Japanese do not have a double dose of original sin and the Americans should no longer play geopolitical wet-nurse for nations which long ago developed the means to assert their own interests. Washington should engage North Korea over its nuclear program—in fact, bilateral talks are planned later this year.

At the same time, the United States should inform the North that full international integration requires the participation of South Korea, China, Japan, and Russia as well. The president should use this trip to begin a concerted effort to coordinate South Korea, Japanese, and U.S. policies regarding Pyongyang. However, Washington should allow the Republic of Korea (ROK) to lead the nonproliferation campaign. The South, with some forty times the North's GDP and twice its population, is well able to deter North Korean adventurism. Seoul also has the most at stake in maintaining a peaceful peninsula. As the U.S. steps back from its dominant military role, the ROK and its neighbors should step forward.

At the same time, Washington should seek to tighten economic integration. The starting point for that strategy should be an announcement—appropriately made at the Asia-Pacific Economic Cooperation forum—of a push to ratify the FTA with South Korea and a campaign to promote further trade liberalization in a region that already has 168 FTAs in force, only two of which involve the United States (with Australia and Singapore).

President Obama needs to promote a changed attitude as much as offer specific policies. The new government in Japan appears to be particularly interested in promoting a regional order, called the East Asian Community, apart from the U.S. Washington should embrace rather than resist such an approach—which would represent genuine "change" from today's policy, which is still rooted in a nonexistent Cold War.

America will be most secure if friendly states in East Asia work together to confront sources of instability, promote respect for human rights, and encourage peaceful settlement of disputes. Such a cooperative venture, backed by a willingness to commit real resources to defense, as reflected, for instance, in Australia's defense white paper earlier this year, also would help channel China's rise in peaceful directions.

The United States will remain engaged in East Asia. America's cultural and economic ties to the region are long-lasting and mutually beneficial. But Washington no longer has any need to attempt to preserve regional military hegemony. And at a time of economic crisis the United States is losing its financial ability to do so. It will take time to transform America's military role. But President Obama should begin moving the region into a new era of less security dependence on Washington.

Delayed Economic Reform Killed 14.5 Million Children by Swaminathan S. Anklesaria Aiyar

Sat, 14 Nov 2009 23:00:00 -0600

The 20th anniversary of Communism's fall is a good time to estimate the costs borne by countries like India that did not become Communist but drew heavily on the Soviet model. For three decades after Independence, India levied sky-high taxes, strove for self-sufficiency, and gave the state an ever-increasing role in controlling the means of production. These socialist policies yielded economic growth averaging 3.5% per year, just half of that in export-oriented Asian countries, and yielded poor social indicators too.

Growth accelerated with tentative reforms in 1980, and shot up to 9% after reforms deepened in the current decade. How much lower would infant mortality, illiteracy and poverty have been had India commenced reform a decade earlier, and enjoyed correspondingly faster growth and human development? I have published estimates in a paper for the Cato Institute (see http://www.cato.org/pubs/dbp/dbp4.pdf). This shows that the delay in reforms led to an additional 14.5 million infant deaths, an additional 261 million illiterates, and an additional 109 million poor people. Indian socialism delivered a monumental tragedy, lacking both growth and social justice.

Economists frequently estimate what would have happened had policies been different. The assumptions on which such estimates are based can always be questioned.

For instance, Nobel Laureate Amartya Sen has popularized the notion of 100 million missing women on account of gender discrimination in China, South Asia, West Asia and North Africa. These regions have 94 females per 100 males, against 105 females per 100 males in other countries with equal gender treatment. Sen assumed that without gender discrimination, the female:male ratio in the four developing regions would also have been 105:100. On this basis, he estimated that gender discrimination had caused a shortfall of over 100 million females — what he called "missing women".

Sen's model was so simplistic that he did not send his paper to an economic journal: he published these estimates in the New York Review of Books. Various economists complained that he had neglected other causes of gender differences, and some came out with alternative estimates.

Despite these objections, Sen's estimate of 100 million became world famous, and his phrase, "missing women", became standard lexicon in gender debates. What mattered was not the precision of his estimates, but the magnitude of the social disaster he was able to highlight.

In the same spirit (but without implicating Sen), i have sought to estimate the number of missing children, missing literates, and missing non-poor arising from the delay in economic reforms. Had reforms started in 1970 rather than 1980, India would have grown faster. In this fast-growth scenario, i assume that per capita income growth in the 1970s would have been what was actually achieved in the 1980s: growth in the 1980s would have been what was actually achieved in the 1990s: and growth in the 1990s would have been what was achieved in 2001-08.

I calculate the rate of change of infant mortality, literacy and poverty with GDP since 1971. I then apply this rate of change to the fast-growth scenario. This reveals what infant mortality, literacy and poverty would have been with faster growth.

In a fast-growth scenario, infant mortality would have been less every year, and in 2008 would have been 27 deaths per thousand births, against the actual 54 per thousand. The cumulative number of "missing children" turns out to be a massive 14.5 million. This is two-and-a-half times the number of Jews killed by Hitler.

I use trends from the latest surveys to calculate actual literacy and poverty levels in 2008, and compare these with literacy and poverty levels in a fast-growth scenario. With faster growth, literacy would have been virtually 100% by 2008, and 261 million more people would have been literate. Again, faster growth would have reduced the number of poor people in 2008 from 282 million to 174 million. This means we have 109 million "missing non-poor" on account of delayed reform.

Doubtless critics will object, as they did after Sen's exercise, that i have used a simple model that neglects other factors affecting infant mortality, literacy and poverty. Demographer Ansley Coale reworked Sen's calculations to show that the number of missing women was probably 60 million, not 100 million. That did not dent public horror at the social tragedy that Sen unveiled.

I invite critics to produce more sophisticated models on the impact of delayed reform, as Coale did in the case of missing women. If these more sophisticated models conclude that Indian socialism killed only 10 million children and not 14.5 million, i will shrug. My point about the magnitude of the social tragedy will stand.

In Era of Upheaval, Author Stood Against Storm by James A. Dorn

Sat, 14 Nov 2009 23:00:00 -0600

Nien Cheng, the author of Life and Death in Shanghai, died in Washington on November 2 at the age of 94. She was an incredibly courageous woman and the embodiment of grace and wisdom. She loved traditional Chinese culture, but her world was shattered on August 30, 1966, when Red Guards ransacked her home and, on September 27, arrested her. She spent the next 6½ years in Shanghai's No 1 Detention House, in solitary confinement.

Communist Party interrogators accused Cheng of being a spy, but her real "crime" was that she was viewed as a "capitalist roader". She had attended the London School of Economics in the 1930s, where she met her husband, Kang-chi Cheng, who later became general manager for Shell in Shanghai.

When he died, in 1957, Nien Cheng became a special adviser to the new general manager. She was the highestranked businesswoman in China at the time. Her skills in dealing with party officials were invaluable and helped Shell stay in China until the start of the Cultural Revolution in 1966.

During her imprisonment, Cheng refused to admit to any wrongdoing. She was tortured and nearly died, but her determination to survive and her deep faith gave her the strength to persevere. She was released from prison on March 27, 1973, only to find the Red Guards had murdered her only child, Meiping, for failing to "confess" and denounce her mother as a "class enemy". Cheng's one hope in life was gone; she left China forever in 1980, and settled in Washington in 1983.

Anyone who knew Cheng could immediately see that she was special – even the doctor at the No 1Detention House said he never met a more "truculent and argumentative" prisoner. When she learned of her imminent release, she refused to leave the prison unless the authorities declared, in writing, that she was "innocent of any crime or political mistake". She insisted that they offer "an apology for wrongful arrest", and called the official statement "a sham and a fraud".

After nearly seven years in prison, she declared: "I shall remain here until a proper conclusion is reached about my case." The authorities refused, and the guards had to drag her out of prison.

It is ironic that Cheng learned about socialism during her studies at the London School of Economics, where she became a leftist. In her essay The Roots of China's Crisis, she wrote: "When I read a book on the Soviet Union by Sidney and Beatrice Webb, I thought, 'How wonderful and idealistic socialism sounds'."

Later, after her husband had served in Australia as a diplomat for the Nationalist government, the Chengs made the fateful decision to return to China in late 1948. They and many of their Western-educated friends were seduced by Mao Zedong's call for democracy, and wanted to help build a new China.

In her essay, Cheng notes that while she had learned about socialist ideals, such as the apparent success of Soviet central planning and state ownership, her professors never talked of "class struggle" or "the realities of communist rule".

What she painfully discovered was that in a society where individuals have no economic freedom, and there is no genuine rule of law, no one is safe from the power of the state. The Communist Party under Mao's iron fist destroyed civil society and traditional culture.

As she wrote in Life and Death in Shanghai, a new China was created after the communists' victory in 1949, but it was not the socialist ideal she had envisioned. Rather, the party created "mindless robots, unburdened by the capacity for independent thinking or a human conscience". Success depended on power, and justice vanished. "The result was a fundamental change in the basic values of Chinese society," she wrote.

Mao's mantra was: "Strike hard against the slightest sign of private property." Cheng's property, including her priceless porcelain collection, was confiscated. Her daughter was murdered and her freedom destroyed by the state.

While in jail, in 1971, the inmates were assembled and an official announced: "Many of you are here precisely because you worshipped the capitalist world of the imperialists and belittled socialist China. You placed your hope in the capitalist world and believed that one day capitalism would again prevail in China."

Today, mainland China is perhaps more capitalist that any other country, but it is "crony capitalism". The nation lacks full-fledged private property rights, especially in land; there is no independent judiciary to protect people and property against the party's monopoly on power; and freedom of religion and expression are sharply curtailed. The battle for justice that Cheng fought has not yet been won.

In her book, Cheng recognised the significance of president Richard Nixon's visit to China in 1972, and the importance of engaging China. She witnessed the progress the mainland had made since Deng Xiaoping's opening to the outside world in 1978. She understood the critical role of trade and investment in linking China to the West. But she also understood that, "Unless and until a political system rooted in law, rather than personal power, is firmly established in China, the road to the future will always be full of twists and turns."

Health Care: A Trillion(s)-Dollar Bill by Michael D. Tanner

Sat, 14 Nov 2009 23:00:00 -0600

A trillion here, a billion there, and pretty soon we're talking real money.

The House of Representatives has now passed its version of health care reform — a gargantuan 2,000-page, 70-pound collection of mandates, regulations, and subsidies that may well be among the most expensive pieces of legislation in U.S. history.

When the bill was first introduced, the Congressional Budget Office estimated that it would cost $1.1 trillion over the next 10 years. However, as is the way with government programs, that cost has already begun to grow. By the time the "managers amendment" and certain provisions had been added to the bill, the final product was projected to cost more than $1.7 trillion.

In theory, this increase in spending would be partially offset by $628 billion in Medicare cuts, giving the bill a "net" cost of slightly more than $1 trillion. But how likely is it that those cuts will take place? After all, this is an administration that is paying seniors $250 to make up for the fact that they didn't get a Social Security cost-of-living increase this year (because the cost of living didn't increase). And Congress is in the process of repealing a scheduled increase in Medicare premiums.

To see how this may play out, look what Congress is doing about the so-called "doc fix."

Under current law, there is supposed to be a 21 percent cut in reimbursements to Medicare providers next year. But no one in Washington seriously believes that Congress will let that happen. In fact, those cuts have been supposed to take place every year since 2003. And every year Congress postpones them until the following year.

However, in order to pretend that their bill costs less than it actually does, the Democrats simply assume that this time Congress will let those cuts take effect. Then, in an unparalleled display of cynicism, they have introduced a separate bill repealing those cuts at a cost of $200 billion.

That means that the cost of the "doc fix" isn't technically part of health care reform. And your household budget would look so much better if you didn't have to pay your mortgage and car payment. (The Senate tried to do something similar, only to have the cynical ploy rejected 53-47, with 13 Democrats refusing to play along.)

Moreover, the CBO provides 10-year projections of a bill's cost, between 2010 and 2019 in this case. Yet, while the taxes and other revenue measures in the bill kick in immediately, most of the spending doesn't take effect until 2014.

So the "10-year" cost projection includes only six years of the bill. Wouldn't it be great if you could count a whole month's income, but only two weeks' expenditures in your household budget?

If we look at the bill more honestly over the first 10 years that the programs are actually in existence, say from 2014 to 2024, it would actually cost nearly $3 trillion.

There has been a lot of talk recently about "bending the curve" of health care spending, but as the actuaries at the Centers for Medicare and Medicaid Services (CMS) recently noted, the House bill bends the curve in the wrong direction — increasing government health care costs.

All this new spending will be accompanied by equally massive federal tax hikes, roughly $500 billion over the first 10 years — $770 billion if the penalties for failing to comply with the mandate are included.

Furthermore, much of the bill's cost is shifted off the federal books onto businesses, individuals, and state governments. These business and individual mandates are the equivalent of tax increases, but those costs aren't included in the bill's cost estimates.

Under the House bill, many small businesses that do not currently provide health insurance would have to do so, or they may face a new tax of up to 8 percent of payroll. Other businesses that do offer insurance, but whose benefits are not as comprehensive as the government mandates, will have to purchase new, more expensive policies. This cost may not be included in a CBO "score," but it is a very real cost for businesses — especially at a time of 10.2 percent unemployment.

Similarly, individuals will also have to buy insurance that meets the government's minimum benefit standards or pay up to 2.5 percent of their income as a penalty. That added burden is a cost, too.

So is the cost of increased insurance premiums — and nearly everyone agrees that insurance premiums will go up under reform, especially for younger and healthier people.

And state governments will have to pick up at least part of the cost for the bill's Medicaid expansion. In fact, already strapped states could have to come up with as much as $34 billion.

This is all taking place at a time when the government is facing an unprecedented budgetary crisis. The U.S. budget deficit hit $1.4 trillion in 2009, and we are expected to add as much as $9 trillion to the national debt over the next 10 years, a debt that is already in excess of $12 trillion and rising at a rate of nearly $4 billion per day.

Social Security will begin running deficits in 2016, and Medicare even sooner than that. Under current projections, government spending will rise from its traditional 20-21 percent of our gross domestic product to 40 percent by 2050. That would require a doubling of the tax burden just to keep up.

Add a multi-trillion-dollar health care bill on top of that, and we risk permanently damaging our economy and leaving our children and grandchildren an unconscionable burden of debt and taxes.

There is now widespread consensus that our health care system needs some kind of reform.

But surely it must be possible to control health care costs, improve quality, and extend coverage to more people without bankrupting the nation.

Health care reform now goes to the Senate. There are 3 trillion reasons to hope they are not as fiscally reckless as their counterparts in the House.

Smart-Growth Plans Are a Failure in Portland by Randal O'Toole

Fri, 13 Nov 2009 23:00:00 -0600

Some people have suggested that Houston could have avoided the Ashby high-rise controversy if it had more planning and smart growth. In fact, the opposite is true: Smart-growth planning makes land-use debates even more contentious.

Smart-growth planners believe that Americans live the wrong way, and they use land-use regulation to impose on others what they believe is the right way to live. Surveys consistently show that all but 15 percent to 25 percent of Americans want to live in single-family homes with a yard, but planners think we would be better off if a much higher percentage lived in high-density apartments or condos.

Consider my former hometown of Portland, Ore., which many consider the nation's leader in smart-growth planning. To increase urban densities, planners are turning dozens of neighborhoods of single-family homes into apartments and condos. While past land-use rules set maximum densities, Portland's rules set minimum densities.

This means if your neighbors own a vacant lot, they cannot build a single-family house on it; they must build a rowhouse or apartment. In some cases, regulation is so strict that, if your house burns down, you cannot rebuild it; you must replace it with an apartment.

Portland planners soon decided that rowhouses and low-rise apartments were not dense enough, so they increased height limits to 50 feet or 60 feet to allow four- and five-story mid-rise apartments. Even that isn't dense enough, so now they are beginning to encourage high-rises.

After the first high-density developments saturated the demand, planners supplemented land-use mandates with tax breaks, below-market land sales and other subsidies to developers who built high-density housing. This means Portland neighborhoods continue to be invaded by mid-rise and high-rise developments, even though there is no more demand for dense housing.

Many of these developments are in transit corridors. Yet independent studies reveal that the people living in them don't ride transit significantly more than residents of single-family neighborhoods.

Portlanders did not welcome densification. Almost all of the targeted neighborhoods fought it; almost all of them lost. Planners followed a divide-and-conquer strategy, taking one neighborhood at a time so opponents could not build up enough momentum to stop the process.

Increased densities destroyed the small-town atmosphere that once made Portland attractive. Congestion is worse, housing and consumer costs are high, and urban services such as fire, police and schools have declined as the city took money from these programs to subsidize high-density developers.

Despite these problems, scores of cities from Missoula, Mont., to San Diego, Calif., have passed similar smart-growth regulations. Planners want to use smart growth everywhere they can, including Houston.

To get out of Portland, I moved to an exurban neighborhood 150 miles away. Like many Houston neighborhoods, we have a homeowners association and deed restrictions, so we will never have to worry about outside planners imposing some unwanted development on us.

Unlike most other cities, Houston makes it easy to create homeowners associations in neighborhoods that do not have them. Houston's system of deed restrictions puts you and your neighbors in charge of your neighborhood's future.

By contrast, smart-growth planning puts your neighborhood's future in the hands of people who may know little about you or your neighbors and whose ideas about how you should live may be very different from yours. If you want to protect your neighborhood from high-rises and other unwanted developments, then smart-growth planning is the last thing you need.

Obama Gets Inflated Grade on Education Reform by Neal McCluskey

Fri, 13 Nov 2009 23:00:00 -0600

Even as President Barack Obama's approval ratings continue to slide, folks of all political persuasions are singing his praises on education -- though he has done little of substance.

In a speech last Wednesday, Obama lamented that "people have seen schools as sort of a political spoil having to do with jobs" and declared that "we are putting our resources behind the kinds of reforms that are going to make a difference."

What "reforms" was he talking about? The ones states are encouraged to make to get part of the $4.35-billion "Race to the Top" Fund, a kitty of stimulus cash controlled by the U.S. secretary of education, for which official guidelines were announced this week.

To compete, the administration has said states must end prohibitions on using student achievement data to evaluate teachers. They should also eliminate caps on charter schools, adopt "internationally benchmarked" curricular standards and prepare to "turn around" bad schools.

It's these seemingly tough stipulations that have education reformers on both the left and right applauding. Even former House Speaker Newt Gingrich called Obama "courageous" for taking these positions.

The only problem is, there's no there there.

Consider teacher evaluations. While states are being told they can't prohibit the use of achievement data in evaluating teachers, there's nothing pushing schools to go ahead and actually use the data. But shouldn't that be the ultimate goal? Of course, but it's also what teacher unions really want to avoid, so Race to the Top avoids it, too.

How about lifting charter caps? It's certainly a good idea, but a lot more than that goes into getting good charter schools. Unfortunately, points out Jeanne Allen, president of the charter-advocating Center for Education Reform, "the president and his education secretary are...giving states credit for talking about charter schools rather than actually changing laws to improve the likelihood that children will have real school choice."

So Race to the Top is great talk but little substance. But at least it isn't making matters worse. The same can't be said for the one substantive thing that Obama has done in education: Deliver a gargantuan $100 billion in direct stimulus to schools.

The stated rationale for doing this was to save schools from financial devastation, including deep cuts to the most fundamental educational functions. But few public schools were likely facing such a dire scenario.

According to the most recent federal data, inflation-adjusted, per-pupil expenditures in public schools nearly doubled between the 1975-76 and 2005-06 school years. Similarly, in 1990 there were 9.2 students per public-school employee. By 2006 there were only 8.

The schools have been anything but starving. They've also been anything but improving: According to the National Assessment of Educational Progress -- the so-called "nation's report card"--academic outcomes have stagnated since the 1970s.

The situation in higher education is no different. Obama's announced goal for the United States is to have the world's highest proportion of college graduates by 2020. This has translated into colleges getting their own part of the stimulus windfall, as well as creation of the Student Aid and Fiscal Responsibility Act, a bill that would funnel yet more money into tuition-inflating student aid and other bankrupting federal programs.

Like K-12 resources, the evidence shows that we already push college too much, not too little.

According to the Bureau of Labor Statistics, 25 percent of all jobs in 2006 required at least a bachelor's degree, but as of March 2007 roughly 29 percent of Americans had one. And most new jobs in the coming years will require not a college education, but on-the-job training.

But don't we have to keep up with the Chinese? Hardly. China has certainly been pushing higher education, but to its detriment. According to a September report from the Chinese Academy of Social Sciences, China has such a glut of degree holders that college grads are earning wages on par with migrant workers.

There's no valid reason to emulate that.

Okay, there's one, and it's been serving Obama well since his campaign: Talking about great education--but doing little to actually get it--appears to be a surefire political winner. But that's hardly change we should believe in.

ObamaCare Is Not Pro-Choice -- for Anyone by Michael F. Cannon

Thu, 12 Nov 2009 23:00:00 -0600

"This is a health care bill, not an abortion bill," says President Obama. Au contraire, mon frère.

Whatever your views on abortion, the fight over abortion in the Obama health plan illustrates perfectly why government should stay out of health care.

When the government subsidizes health care, anything you do with that money becomes the voters' business. And rather than allow for choice between different ways of doing things, the government typically imposes the preferences of the majority — or sometimes, a vocal minority — on everybody.

On Saturday, the House of Representatives passed their version of President Obama's health care overhaul. Among other things, the legislation would subsidize private health insurance for millions of Americans.

To appease pro-life Democrats, Speaker Nancy Pelosi (D-Calif.) allowed them to insert an amendment to prohibit taxpayer dollars from touching any health insurance plan that covers abortion. House Majority Whip Jim Clyburn (D-S.C.) says the bill would have come up 10 votes short without it.

The amendment incensed pro-choice Democrats. The bill's subsidies would be so pervasive that prohibiting the use of taxpayer dollars for abortion coverage would restrict access to such coverage even for women who don't use the subsidies. Rep. Diana DeGette (Colo.) says she and 40 other pro-choice Democrats "are not going to let this into law."

Democratic leaders are searching for a compromise, but there is no way to split the baby here. Either the government will force taxpayers to fund abortions, or the restrictions necessary to prevent taxpayer funding will reduce access to abortion coverage. There is no middle ground. Somebody has to lose. Welcome to government-run health care.

The same thing happens, in all areas of health care, whenever government foots the bill. Do you think chiropractic is nonsense? Too bad, the government forces you to pay for it through Medicare.

Faith healing seem like quackery too you? Sorry, Charlie. Medicare and Medicaid force you to pay for faith healers at prices "comparable with those of real health care providers," according to law professors David Hyman and Charles Silver.

The problem extends far beyond those trivial examples. The government uses price and exchange controls to pay health care providers. We call those controls Medicare's "fee-for-service payment system" in polite company. Yet the effects are anything but genteel.

Researchers believe Medicare's exchange controls encourage unnecessary services, which account for at least one third of its $430 billion budget, according to the Dartmouth Atlas. Those controls actually penalize doctors and hospitals that coordinate care, use electronic medical records, or try to reduce the estimated 100,000 annual deaths due to medical errors. Congress has "reformed" Medicare's exchange controls approximately once in the program's 43-year history, with a "payment system" that encourages an estimated $12 billion of avoidable hospitalizations per year.

President Obama's economic advisor Larry Summers sums it up: "Price and exchange controls inevitably create harmful economic distortions. Both the distortions and the economic damage get worse with time."

Should grandma want to escape Medicare's price and exchange controls — if she would rather see a doctor that operates under less-perverse financial incentives — too bad. If she would prefer a smaller network of doctors that provides safer, more convenient, coordinated care, she's out of luck. The choice of what kind of medicine she receives belongs to the majority, or a vocal minority.

To be fair, the Medicare Advantage program allows some seniors to escape the traditional Medicare program's price and exchange controls. But Medicare Advantage has its own perversities, thanks to a separate price-and-exchange-control scheme the government uses to pay participating insurers. And in keeping with the overall hypothesis, Democrats are trying to eliminate Medicare Advantage, anyway.

Pro-choice Democrats want to preserve access to private abortion coverage. Pro-life Democrats want to preserve the right to choose whether to fund abortions. Fair enough. But any vote for government subsidies is a vote against choice.

Get government out of health care, and you'll be able to make choices for yourself. Not before.

Warning Label for Pelosicare by Michael F. Cannon

Thu, 12 Nov 2009 23:00:00 -0600

It's too bad the health care overhaul that House Democrats narrowly approved last week isn't a medical product. If it were, it would have to come with a warning label, Which could read something like this:

WARNINGS:

•This product will increase your health insurance premiums. Millions who are satisfied with their current, low-cost health plans would have to switch to more expensive plans, solely because Congress decided they weren't buying enough coverage.

The legislation would increase premiums even further over time, as drug companies, chiropractors, acupuncturists, fertility specialists and other special interests lobby Congress to force you to purchase coverage for their services too.

•This product will reduce the quality of your health care. America's health care sector is often inconvenient, poorly coordinated, and makes less use of information technology than your local supermarket. Research shows that medical errors kill as many as 100,000 Americans per year.

Markets would solve those problems, but government thwarts doctors and entrepreneurs who try to improve quality. Medicare — by far the largest purchaser of medical services in the world — actually penalizes doctors and hospitals that reduce medical errors.

The House bill would cement those deficiencies in place with yet another massive government program, and create new quality problems, like insurers skimping on care and customer service for the sickest patients.

•This product probably won't make you healthier. The House bill would expand coverage, but at a steep cost and with zero evidence that doing so is a cost-effective way of improving health.

Little research supports the notion that broadly expanding insurance coverage makes people healthier. Medicare established near-universal coverage for the elderly, yet research shows that program didn't save a single life in its first 10 years of operation. Whether it has had any subsequent impact on mortality rates — positive or negative — remains an open question.

•This product will make you poorer. The House bill contains at least $2 trillion in explicit and implicit taxes. Tax rates for wealthy Americans would rise to 45 percent, with an ever-expanding definition of "wealthy." For the middle class, effective tax rates would average 60 percent to 70 percent and exceed 100 percent in some cases.

•This product will make your children poorer. Since the bill would actually increase the federal budget deficit, the tax burden would grow over time.

The bill purports to cut Medicare spending, but those cuts are not likely to happen. Want proof? At the same time House Democrats promise future spending cuts, they are gutting $210 billion of spending cuts promised by past Congresses.

And like most government health care programs, this bill's actual costs will exceed current projections. In 1967, Congress predicted that Medicare would cost $12 billion in 1990. Medicare's actual cost that year was $110 billion. Oops.

When this bill causes the deficit to explode, Congress will come after your children's paychecks. Congress has increased Medicare taxes on average once every four years — and Medicare's still $90 trillion in the hole. House Speaker Nancy Pelosi, D-San Francisco, suggests that maybe Congress should impose a European-style value-added tax.

•This product will make you irrational. Spending other people's money has a way of making people nutty. Pelosi thinks that under her legislation, "There is a cap on what you pay in but there is no cap on the benefits that you receive." Limited costs, but unlimited benefits? Really?

After a few years of Pelosicare, you yourself may vote both to eliminate wasteful health care spending and to protect all existing hospitals and doctors' jobs. And you'll wonder why Congress can't do both!

But hey, why not be irrational? Socialized medicine socializes the cost of that, too.

•This product will make you resent immigrants. The House bill would offer hidden subsidies to undocumented immigrants in a new national health insurance "exchange." Turning America's health care sector into a welfare magnet for immigrants will fuel anti-immigrant sentiment. Pretty soon, we're France — in more ways than one.

•This product will make you feel like you're being watched. When taken in combination with its Senate counterpart, the bill would create a national identification system to monitor compliance with its mandates and determine eligibility for its subsidies. With the ability to collect data on every American, the government will always find new uses for any national ID system.

The Pelosi bill is neither safe nor effective. If it were medicine, the Food and Drug Administration would have to ban it.

A Real Team of Rivals by Malou Innocent

Wed, 11 Nov 2009 23:00:00 -0600

This morning the New York Times reported that U.S. ambassador to Afghanistan, Karl W. Eikenberry, expressed in writing his reservations about deploying additional troops to the country. His reason: the pervasive corruption and illegitimacy of President Hamid Karzai's regime.

Concerns over the legitimacy of the U.S.-backed central government were also voiced by Brookings Institution senior fellow Bruce Riedel, who chaired an interagency review of policy toward Afghanistan and Pakistan for the Obama administration. Riedel said at a Brookings event in August: "If we don't have a government we can point to that has some basis of legitimacy in the country, the best generals, the best strategy isn't going to help turn it around."

Now in its ninth year in Afghanistan, the United States finds itself in the unenviable position of assisting and sponsoring a corrupt, illegitimate, and slightly autocratic regime, which itself is contributing to the collapse of public confidence and to the resurgence of the Taliban insurgency. Conflicting assessments over what to do in Afghanistan is why President Obama has been "dithering" on a decision. His hesitancy is an implicit recognition that the United States might not succeed in laying a centrally-administered facade onto Afghanistan's preexisting society. As the U.S. Senate Committee on Foreign Relations stated in an August 2009 report:

Unlike Iraq, Afghanistan is not a reconstruction project—it is a construction project, starting almost from scratch in a country that will probably remain poverty-stricken no matter how much the U.S. and the international community accomplish in the coming years.

The fact that Americans are even discussing the capacity and political will of the government of Afghanistan shows how far we have strayed from our original objectives. The October 2001 invasion was to punish al Qaeda and overthrow the Taliban regime that harbored them. That narrow mission has since morphed into improving governance, fighting corruption, and building infrastructure. Underpinning U.S. strategy in Afghanistan is the belief that remaining will keep America safe, despite evidence to the contrary. For example, a 2004 Pentagon Task Force that reviewed the Bush administration's anti-terrorism efforts found that the underlying sources of threats to American interests were America's direct intervention in the Muslim world. This was the same task force that reported: "Muslims do not 'hate our freedom,' but rather, they hate our policies." Reminder: That was Rumsfeld's Pentagon.

But when some people in Washington hear that nation-building in Afghanistan is not a precondition to making America safer, or that prolonging our presence undermines America's security, the argument for remaining then shifts to preserving the security and human rights of the people of Afghanistan. While I too would endorse preserving the human rights of the Afghan people, this line of reasoning invites certain questions: how many Afghans will be killed to save one Afghan life? How long should America stay until it sees progress? And what if some Afghans do not want the protection of western troops or the central government we keep afloat?

Of course, the same people who argue for preserving the security and human rights of the people of Afghanistan overlook certain contradictions. For instance, America's commitment to maintaining forward basing rights in countries like Uzbekistan puts America in the position of appearing to side with states that repress its own people. And, as my Cato Institute colleague Chris Preble says here on a recent bloggingheads.tv appearance, the rationale for intervening in Afghanistan was not the Taliban's human rights abuses, which we were well aware of in the late 1990s. Rather, the rational was for bringing al Qaeda to justice. Similarly in Iraq, the central rationale was not that Saddam Hussein did horrible things to his people. Only later — after several years of mission creep — did U.S. policymakers shift the goalposts of the mission to include moral considerations.

As we honor our veteran's this week with Armistice Day, we should be asking yet another important question regarding the preservation of human rights abroad: should U.S. soldiers be asked to fight and die for issues not directly related to U.S. national security?

In a recent article that appeared in the Times of London:

'We're lost — that's how I feel. I'm not exactly sure why we're here,' said Specialist Raquime Mercer, 20, whose closest friend was shot dead by a renegade Afghan policeman last Friday. 'I need a clear-cut purpose if I'm going to get hurt out here or if I'm going to die.' Sergeant Christopher Hughes, 37, from Detroit, has lost six colleagues and survived two roadside bombs. Asked if the mission was worthwhile, he replied: 'If I knew exactly what the mission was, probably so, but I don't.' The only soldiers who thought it was going well 'work in an office, not on the ground'. In his opinion 'the whole country is going to s***'.

Over one million U.S. soldiers have fought in the wars in Iraq and Afghanistan. According to General George Casey, U.S. Army chief of staff, troops have endured tough rotations of one-year-in, one-year-out for the past five years. Ryan Jaroncyk over at The Humble Libertarian writes that repeated deployments are leading to record suicide rates and an explosive epidemic of Post-Traumatic Stress Disorder (PTSD).

Given the strains on America's all volunteer force, we should not forget that within the first one hundred days of his administration, Obama approved sending an additional 21,000 troops (it was actually more like 30,000 when we include the number needed for logistical and support purposes). These numbers don't include the more than 70,000 private security contractors in the country right now.

Washington has already surged into Afghanistan once this year. The United States should not spend more American blood and more of its ever-diminishing financial resources to prop up Karzai's ineffectual regime.

Currency That Kills by Richard W. Rahn

Tue, 10 Nov 2009 23:00:00 -0600

Can you imagine how many people have physically handled your money? Do you know who has previously touched it? Did they have a flu virus or some other communicable disease that is transmitted by physical contact with an infected object? Physical paper currency is often dirty - not so much to the sight, but it is a good home for dangerous microbes. It is often kept warm by our body heat and even absorbs some body moisture - a perfect breeding ground for bad stuff.

It has been well-known for decades that paper currency is a major source of disease transmission. During the life of the average dollar bill, it will be handled by hundreds, if not thousands, of people. It is hard to think of any physical object that is handled by more different people than paper currency. Millions become ill every year as a result of handling currency, and a not insignificant percentage of them die. The Centers for Disease Control and Prevention (CDC) estimates that 36,000 Americans die each year from flu-related causes. How many people received the flu from paper currency? The precise percentage is unknown, but if it is just 10 percent, that still translates into a couple of million needlessly ill people and thousands of deaths.

The good news is that it is no longer necessary to use paper currency in the digital age. Payments of all types can be made by electronic means - with electronic banking; credit, debit and smart cards; and cell phones - all of which help the user avoid physical contact with dirty paper money. (Note: Most paper currencies are made largely from cotton cloth, which makes them very absorbent.)

The bad news is that government policies are slowing down and, in many cases, preventing the movement to the use of digital currencies. Most electronic payment systems require the user to have a bank account. For decades, the percentage of the population having a bank account grew, but that growth stopped a couple of decades ago as the government started its war on money laundering - which, ironically, resulted in the unintended consequence of requiring more people to handle dirty paper money.

Physical money is expensive to produce. It is subject to counterfeiting, easily stolen and costly to handle. As noted, it is a major transmitter of disease. A rational and responsible government would be doing everything possible to eliminate physical currency. But no - legislators and policymakers have put destruction of the citizen's financial privacy and tax collection above reducing the costs and dangers of physical currency.

People will only move away from paper currency when they can easily use an "electronic wallet" and have the ability to make non-identifiable and non-traceable transactions. As noted above, an electronic wallet can be a credit, debit or smart card - a cell phone or a PC. The electronic money can be held in an electronic chip within the cell phone or other device or in a depository account that can be in a bank, telecom company or some other depository institution. Encryption software has become sufficiently robust to protect users of digital money and is far safer than holding or handling physical cash.

In many parts of the world, monetary transfers by cell phone are becoming the norm - they are particularly useful for small payments. The Philippines has become a world leader in cell-phone payment systems and use. Cell-phone use is expanding at a very high rate through the developing world - already, in Africa, a third of the people have cell-phone subscriptions, most of which can be used for electronic payments. The fact is that the spread of digital technologies will soon make it possible for all paper currency to become obsolete, but unfortunately, that is unlikely to happen because of the global political class.

The politicians and international bureaucrats are increasingly limiting the ability of people to use non-highly regulated bank institutions as the depositories and clearinghouses for electronic money. As the political class demands ever-more-stringent and costly "know your customer" and other anti-money-laundering regulations, fewer and fewer people can qualify for bank accounts. The young, who have no financial track record; the poor; and those in transient occupations are particularly discriminated against and thus are forced to use inefficient, costly and unhygienic paper currency.

The political class is also increasingly requiring banks and other depository institutions to spy on their customers and reveal all transactions to government officials - which gives individuals about as much privacy as having all their expenditures posted on a public Web site. Almost everyone occasionally wants to keep some expenditures private; for example, not wanting a spouse or loved one to know how much one spent on a gift; making an anonymous or confidential contribution to a church, charity or other nonprofit group; or even using the Internet for legal gambling, porn, cigarette or alcohol expenditures, etc.

Encryption technology has developed to the point where electronic expenditures can be kept private if governments would only allow it. The fact is, people will not give up the use of paper currency, for good or bad reasons, until they know they will have the same anonymity with electronic money as they do with paper currency. Meanwhile, each year, millions of people needlessly get sick and thousands die because the folks who run Washington and the other world capitals are too dimwitted to understand the unintended consequences of their financial regulations - or are just plain callous.

Passing Bill As Bad As PelosiCare Quite An Achievement For Dems by Michael F. Cannon

Tue, 10 Nov 2009 23:00:00 -0600

House Democrats rolled three impressive feats into one when that chamber approved their health care overhaul.

First, Saturday's House vote was the first time that either chamber of Congress voted — albeit by a razor-thin, three-vote majority — to force all Americans to purchase health insurance.

Second, Speaker Nancy Pelosi, D-Calif., cajoled a majority to vote for the bill, even though a majority of the House does not support it.

Third, Pelosi did all this before the Congressional Budget Office could report that the bill costs far more than supporters claim.

Forcing Americans to purchase health insurance has been a goal of the American left since the Roosevelt administration — that's Teddy, not Franklin.

Despite Weak Support

Though Congress enacted Medicare in 1965, neither chamber had ever voted to force people under age 65 to buy health insurance.

The Clinton health plan would have done so, but it never even came up for a vote.

That makes Saturday's vote historic, especially since the House bill is more radical than the Clinton plan. It would not only make health insurance compulsory, but would also create a government program — the public option — that supporters hope will displace private health insurance.

One might expect such a radical bill to lack majority support — and indeed it does. According to public opinion polls, most of the public opposes it, as do most House members.

Pelosi got a majority of the House to vote for it anyway. Some moderate Democrats, like Rep. Jim Cooper of Tennessee, fear the enormous cost, but voted aye just to keep the process moving.

Unknown Cost

More important, some 40 pro-choice Democrats voted for the bill, and then immediately vowed to kill it. They object to an amendment offered by Rep. Bart Stupak, D-Mich., and inserted on the House floor that they say would restrict a woman's freedom to purchase private abortion coverage with her own money.

Rep. Diana DeGette, D-Colo., says, "We're not going to let this into law."

Very few of those 40 members would need to switch their votes to wipe out PelosiCare's three-vote margin of victory when the bill comes back to the House for final passage.

But if Democratic leaders alter the Stupak amendment, a similar number of pro-life Democrats (and the bill's lone Republican supporter) say they will kill the bill.

In other words, Pelosi assembled a three-vote majority for the idea of a health care overhaul, but there may be no bill that could command a majority for final passage.

If Saturday's vote had sent the bill to the president rather than the Senate, the outcome likely would have been different. And there's even more to come that could disrupt that narrow majority.

Pelosi brought the bill to a vote before the CBO could estimate the costs it would impose on the private sector.

The CBO has estimated only the on-budget costs to the federal government ($1.3 trillion) and state governments ($34 billion).

If Congress forces people to purchase health insurance, that mandate imposes further costs on individuals and employers.

Federal law requires the CBO to estimate the cost of any private-sector mandates that exceed $139 million per year, but the agency has yet to do so.

Its only statement on the issue, which came the day before the House vote, is that the bill's private-sector mandates "would greatly exceed" that threshold.

Reckless Lawmaking

Indeed, if history is any guide, the private-sector mandates will double the cost of the bill.

In both the Clinton health plan and the Massachusetts health plan, similar mandates accounted for 60% of total costs, according to the CBO and the Massachusetts Taxpayer's Foundation, respectively.

In the coming weeks, then, we can expect the CBO to report that the total cost of the House bill is not $1 trillion, but in the $2 trillion to $3 trillion range.

Holding the vote before that number becomes public was an impressive feat, though not exactly responsible governance.

Obama's Arrogance of Power by Gene Healy

Mon, 09 Nov 2009 23:00:00 -0600

Last year's financial meltdown rightfully destroyed former Federal Reserve Board Chairman Alan Greenspan's reputation as an infallible "wise man," but he said something wise in his 2007 memoirs, describing a constitutional amendment he'd been "pushing for years."

Wrote Greenspan: "Anyone willing to do what is required to become president of the United States is thereby barred from taking that office. I'm only half joking."

It's no laughing matter. After all, what sort of person wants the job badly enough to spend years living out of a suitcase, begging for cash, glad-handing through primary states, and saying things that no intelligent person could possibly believe?

Greenspan's point was that people who seek the presidency today display a pathological power lust that ought to make us uncomfortable, given the powers the modern president enjoys.

George Washington was called "the American Cincinnatus," after the Roman hero who took power reluctantly and returned humbly to his plow when crisis passed. That's the model Americans once expected presidents to follow. Things have changed, and not for the better.

The last candidate to pay tribute to the Cincinnatus model was 1996 GOP contender Bob Dole, who praised the virtues of his birthplace, Russell, Kan., insisting it was either the White House or "home." It turned out that Dole left "home" deliberately vague. After losing, he returned to his condo at the Watergate, making bucks as a lobbyist and Viagra pitchman.

As for the current POTUS, "he's always wanted to be president," according to Obama's longtime friend and advisor Valerie Jarrett. No surprise, then, that, as Newsweek editor Jon Meacham put it in a profile of Obama earlier this year, he "likes and enjoys power," even "revels" in it.

In a fascinating article, presidential scholar Richard Ellis writes that "in the beginning, the presidency was envisioned not as an office to be enjoyed but as a place of stern duty." "Powerful cultural norms" told 19th-century presidents to approach the role humbly, with a keen awareness that power corrupts.

In public and in private, early presidents often acknowledged their deficiencies. "No event could have filled me with greater anxieties," Washington said of his election. Likewise, in his first inaugural, Jefferson worried that the task he'd undertaken was "above my talents."

Today, Ellis explains, the public demands greater confidence from presidential aspirants. Senate Majority Leader Harry Reid tells us that when he congratulated Barack Obama for a "particularly fine" speech Obama made as a freshman senator, Obama "said quietly, 'I have a gift, Harry.'"

Reid reports that Obama said that with "deep humility." We'll have to take his word for it.

Calvin Coolidge, a genuinely humble man and a fine president, wrote in his autobiography that it was "a major source of safety to the country" for the president "to know that he is not a great man." Few of our recent presidents display Coolidge's self-awareness.

Newsweek's Meacham reports that Barack Obama relishes "the capacity to shape reality in his image and by his lights." An interesting phrase, that — reminiscent of the Bush aide who bragged to reporter Ron Suskind that "we're an empire now, and when we act, we create our own reality."

And yet, as we learned during the Bush years, reality has a way of fighting back.

Obama's supporters have embraced the epithet Suskind's source coined. They fancy themselves members of the "reality-based community." Yet they doggedly defend a president for whom the word "hubris" might have been invented — one who thinks that the government, under his direction, can rationally reshape the one-sixth of the U.S. economy devoted to health care.

Our president describes his budget as a "blueprint" for America's future, and believes that, with the proper mix of social workers and soldiers, we can bring orderly governance to Afghanistan, which has never enjoyed it.

We'd do far better if our presidents had Coolidge's sense of his own limitations and of government's as well.

It's easy enough to blame the overconfident, self-aggrandizing characters who seek the office. But at the end of the day, we're the ones who reward them. Unless and until we seek out candidates who share Coolidge's modesty, we'll have no one to blame but ourselves.

Celebrate Fall of Wall, Freedom Every Day by Doug Bandow

Sun, 08 Nov 2009 23:00:00 -0600

On Nov. 9, 1989, the Berlin Wall, the most dramatic symbol of the most grotesque human tyranny ever to plague the globe, was opened. Free, free at last, shouted residents of half a continent and beyond.

So dramatic was the ensuing revolution that it is easy today to forget that communism ever existed -- or at least what it really meant. Decades of totalitarian oppression were swept away in an instant.

What may be the most important liberating moment in human history should give us hope even if we are tempted to despair about the future of our own nation and of Western civilization.

Communism was unmatched in its endless slaughter, killing more than 100 million. It impoverished spiritually as well as economically.

Yet what seems inevitable today was not obviously so in 1989. Liberty had always ended up stillborn in the Soviet empire.

But 1989 proved to be different.

In Poland the communist leadership organized free elections -- which it promptly lost. Hungary tore down its wall with Austria, allowing East Germans to escape their country through Hungary and on to the West. Demonstrations engulfed the so-called German Democratic Republic, forcing the Communist Party to retreat.

On Nov. 9 the regime opened the Wall, never to be closed again. Within a year a regime distinguished mainly by its willingness to shoot desperate people seeking freedom disappeared.

Revolution erupted even in Romania, unseating the monstrous Ceausescus. Eventually even the Soviet Union disappeared.

The collapse of communism remains a fantastic triumph of the human spirit. With minimal bloodshed, average people overthrew a gaggle of tyrannies; the desire for liberty trounced the lust for power.

There were heroes in all of the communist countries. Average people willing to speak out, demonstrate, and demand their rights as human beings.

Some heroes stand out. Alexandr Solzhenitsyn, the Soviet novelist who chronicled the horrors of the gulag. Lech Walesa, the electrician who climbed atop a shipyard wall in Gdansk, Poland, to declare that the time of repression was over. Pope John Paul II, who told his Polish countrymen to fear not.

The playwright Vaclav Havel, who called the Czech regime to account for its crimes. Imre Pozsgay, who broke with his Hungarian Poliburo colleagues to call the 1956 uprising a "popular revolt."

Even more important was Mikhail Gorbachev. He was a reform communist, but he kept the Soviet troops in their barracks, leaving Eastern European apparatchiks to stand alone.

Finally, there was Ronald Reagan. He understood the real nature of communism, that it truly was an "Evil Empire." He also believed that communism could be defeated and tossed into the dustbin of history.

On June 12, 1987, he stood in front of the Brandenburg Gate and said: "Mr. Gorbachev, tear down this wall!" Another 29 months would pass, and Ronald Reagan would leave office, but the Brandenburg Gate did open.

Today it is almost as if the Wall never existed. Only a few small sections remain. The structure continually grew more deadly, yet several thousand people made it over, under, or around the Wall and the border fortifications lining the rest of the border between the two Germanys.

Alas, tens of thousands of East Germans were caught and imprisoned for "Republikflucht" -- attempting to flee the workers paradise. Worse, roughly 1,000 people were murdered attempting to escape their national prison.

The first person to die was 58-year-old Ida Siekmann, who jumped from her building to the bordering road in West Berlin on Aug. 22, 1961. Two days later a 24-year-old tailor, Guenter Litfin, became the first to be shot and killed -- while attempting to swim the River Spree.

On Feb. 6, 1989, 20-year-old Chris Gueffroy was the last East German to be murdered while seeking liberty. He was shot 10 times. On March 8, 32-year-old Winfried Freudenberg, an electrical engineer, became the last person to die in an escape attempt, when his home-made balloon crashed.

The fall of the Wall, and the evil system behind it, deserves to be celebrated. Not just on Nov. 9. But every day.

Two decades later much remains to be done by those who love liberty. Abroad tyranny remains. At home liberty also is threatened, though not as dramatically. The expansive welfare rather than the brutal authoritarian state is on the march.

Yet hope remains. Two decades ago what had only seemed to be a faint dream became a reality. The Berlin Wall fell. Communism disappeared. Hundreds of millions of people became free.

The spirit of liberty remains. Sometimes deeply buried. But the spirit of liberty remains.

America's Alliances Are Costly Relics by Justin Logan

Sun, 08 Nov 2009 23:00:00 -0600

Over the past 60 years, the United States has accumulated a remarkable number of alliances. Today, nearly all of Europe, Canada, Japan, South Korea, Australia and a range of other nations peer out at the world from behind America's skirts. America's allies bring a multitude of liabilities and few assets to the table, however, and it is unclear how today's global archipelago of alliances serves American interests.

Start with the locus classicus of American alliances, NATO. Several former heads of state and other policymakers from Central and Eastern European NATO members greeted the Obama administration six months into its term with a hectoring letter demanding Washington pay more attention to their region. The letter argues that these leaders' "ability to sustain public support at home for our contributions to Alliance missions abroad … depends on us being able to show that our own security concerns are being addressed in NATO and close cooperation with the United States."

In other words, these countries have options, and if Uncle Sam would like to continue receiving their contributions in places like Afghanistan, Washington had better pony up. The authors have several suggestions for us, one being to deploy military personnel on their territory. After all, they argue, "at a regional level and vis-à-vis our nations," Russia acts as a revisionist power.

It is easy to understand why these countries, given their experience with Russia, want increased American support. The trouble is that capitals across Central and Eastern Europe have shown precious little interest in carrying their own weight within the NATO alliance.

This past summer, for example, the Czech Defense Ministry announced it was cutting its defense budget by more than 10 percent. Other countries complaining of the looming threat from Russia, such as Poland, Estonia, Latvia and Lithuania, all spend less than 2 percent of their gross domestic product on defense, an anemic figure.

Note that the countries could afford a robust defense against Russia if they chose. In 2008, the combined GDP of the NATO members added after the Cold War was roughly equal to Russia's. Along with wealthier Western European countries, these nations could keep Russia from pushing them around.

The simplest explanation for these countries' low defense spending is that their leaders know that Washington will do the work for them. And why should they pay for a service that will be provided anyway? That was more or less how things went during the Cold War.

U.S. alliances in Asia are almost as perverse. During his recent visit to Japan and South Korea, Defense Secretary Robert Gates faced a plucky new Japanese prime minister, Yukio Hatoyama. After imploring Hatoyama to continue Japan's miniscule contribution to the war in Afghanistan and not to reconsider the deal to realign U.S. forces in Japan, Gates was asked whether the U.S. military role in Japan might be scaled back. Offering the obligatory reference to the countries' "shared interest" in regional security, Gates admitted that "the primary purpose of our alliance from a military standpoint is to provide for the security of Japan … It allows Japan to have a defense budget … of roughly 1 percent of GDP."

This is an excellent reason why the Japanese should support the alliance, but it raises the question of why U.S. taxpayers should want to pick up the tab for Japan's security.

The next day, Gates was in South Korea, where he reassured the South Koreans that the United States would continue to provide extended deterrence to Seoul, "including the nuclear umbrella." There is such a thing as too much reassurance, however. Gates' statement likely had two effects: one, to diminish Seoul's concerns about the threat posed by the North, and two, to diminish Chinese apprehension that a nuclear North Korea may ultimately lead to a U.S. departure from Japan and South Korea, possibly causing those countries to develop their own nuclear arsenals.

Given that Washington's current policy on North Korea would benefit from a greater, not lesser, concern about the future in both Seoul and Beijing, Gates' explicit promise of nuclear extended deterrence to Seoul likely dampened the admittedly low prospects for progress on the North Korean nuclear issue.

America's alliances are no longer considered responses to security challenges. Instead, they have become ends in themselves. In an era of record-breaking budget deficits and serious economic problems at home, the billions of dollars Uncle Sam pays each year to baby-sit Europe and East Asia ought to be coming in for scrutiny, not perpetual affirmation.