Tag Archives: Heritage Foundation

National Endowment for Rich Farts

08 Wednesday Mar 2017

Posted by in Big Government, Charity, Subsidies

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Wailing has begun over the possible defunding and demise of the National Endowment for the Arts (NEA). How could those cretins propose to eliminate an institution so very critical to promoting artistic expression? If that’s your reaction, you haven’t thought much about the main beneficiaries of federal sinkholes like the NEA. Granted, at $146 million annually, it is not a major federal budget item, but I’d rather not stoop to defend a lousy program because it’s small. So what’s my beef with the NEA, you ask? Read on.

First, any implication that the NEA is the lifeblood of the arts is laughable. No, the arts won’t die if federal funding is denied. Jeff Jacoby quotes figures suggesting that grants from the NEA represented less than 1% of all support for the arts and culture in the U.S. in 2015. Great art was created prior to the establishment of the NEA in 1965. Without the NEA, such bungles as “Piss Christ” would have met with less acclaim. As such a minor funding vehicle, eliminating the NEA won’t make much difference to artists, but it will end a subsidy for wealthy patrons, who can and do provide support for worthy projects, but also derive essentially private benefits from the federal arts spigot.

A large share of NEA grant money goes to non-profit organizations that are already subsidized to the extent that they are not taxed. (Let’s face it: the term “non-profit” itself is often a term of art.) Large arts organizations, which receive a significant share of NEA grants, often have highly-paid administrators and sumptuous facilities. Contributions to those organizations are tax-deductible for the donors. And few of those organizations provide art to the public for free or at a discount. Indeed, as noted at the last link, they often charge significant prices for attendance, and their audiences include a disproportionate percentage of high-income patrons.

Lawrence Reed argues persuasively that government need not subsidize the arts in an article in his series on the Cliches of Progressivism. Here are the highlights:

  • “Government funding of the arts… carries with it all the downsides of dependence on politics.
  • Claims that arts spending is magically “multiplied” are specious and usually self-serving, and never look at alternative uses of the same money.
  • Culture arises naturally and spontaneously among people who chose to interact with each other. Art is part of that, but it also competes with all sorts of other things people choose to do with their time and money.
  • If art is truly important, then the last thing we should want to do is politicize it or divert it toward those things that people with power think we should see or hear.”

Reed’s comment regarding “multipliers” might need some explanation in this context. The NEA’s defenders often claim that each dollar of NEA grant money results in multiple additional grants from other sources, but there is absolutely no evidence to support this claim except for a requirement that NEA grants be matched at the state level (not to mention a requirement for a state-level arts agency). Obviously, that represents another cost to taxpayers. It is quite possible, in fact, that the NEA and matching state grants act as substitutes for, and depress, private arts giving. See this piece in Forbes for more background. This NBER research utilized a large panel data set on individual charities and found only mixed support for the proposition that government grants encourage private contributions. In fact, the estimated effect was ambiguous for individual categories of charitable giving (which did not explicitly address the arts as a category). In any case, a positive cross-sectional effect of government grants on private giving for individual charities is consistent with a negative effect on other charities that do not receive public grants.

In a 20-year-old report from the Heritage Foundation, Stuart Butler offered a list of reasons to defund the NEA, which have held up well. Here, I provide eight that seem relevant:

  1. The arts will have more than enough support without the NEA: See above.
  2. Welfare for cultural elitists: See above. NEA grants fund a number of big and very elite organizations, but they would have you believe that it’s a veritable welfare program for the arts. That is a huge distortion. There is no question that the distribution of patrons of these organizations skews to the wealthy.
  3. Discourages charitable gifts to the arts: See above. Is the award of an NEA grant the equivalent of establishing a credit record to an arts organization? This might hold up for a few small organizations with projects the NEA has funded, but again, the support for this proposition is anecdotal and self-serving, and the numbers are small. And is there an implied stain on the legitimacy of any organization unable to win such a grant?
  4. Lowers the quality of American art: Committee decisions and central planning are not conducive to the spirit of creativity. Public institutions are often guided by political agendas, and government-sanctioned art stands in sharp contradiction to the ideal of free expression. Butler quotes Ralph Waldo Emerson: “Beauty will not come at the call of the legislature…. It will come, as always, unannounced, and spring up between the feet of brave and earnest men.”
  5. Funds pornography: this is not my hot button… it’s an issue only to the extent that public funds should not be used for purposes only flimsily in the public interest that many taxpayers find morally repugnant.
  6. Promotes politically correct art: See #4 above. The merits are then judged on the basis of criteria like race, ethnicity, and gender identity, not the quality of the art itself.
  7. Wastes resources: Butler offers a few examples of the waste at the NEA, a shortcoming common to all bureaucracies. The NEA funds organizations that behave as non-profit cronyists, engaging in lobbying efforts for more support. Butler also cites evidence that recipients of government grants in the UK hire more administrative staff than non-recipients, and tend not to reduce ticket prices.
  8. Funding the NEA disturbs the U.S. tradition of limited government: I suppose this goes without saying….

The federal government in the U.S. was granted a set of enumerated powers in the Constitution, and promoting the arts was not one of them. It wasn’t as if the subject didn’t come up at the Constitutional Convention. It did, and it was voted down. Today, entrenched interests at organizations like the NEA and National Public Radio distort the character of the constituencies they serve. In reality, those constituencies  are heavily concentrated among the cultural and economic elite. The NEA and NPR also promote the fiction that they are all that stand between access to the arts and culture and a bleak, artless dystopia. Give them credit for creating a fantasy about which the political left readily suspends disbelief.

Politicians and Infra-Hucksters

05 Thursday Jan 2017

Posted by in Government, infrastructure, Technology

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img_3863

We’ll soon have a new president and already we’ve heard new promises of infrastructure investment. Once again, a chorus of politicians and pundits decries the woeful state of America’s road, bridges, sewers and airport terminals. Then, there are hosannas in adoration of the economic stimulus and job creation promised by large public works projects. And of course there are proposals to integrate politically-favored technologies with new infrastructure. All three rationales for a publicly-financed infrastructure program are flawed. Our infrastructure is not as inadequate as many believe; it is bad public policy to justify infrastructure decisions on the basis of the construction jobs required; and new infrastructure should not be treated as a vehicle for large-scale deployment of unproven technologies.

Ownership

Much of our nation’s infrastructure is privately owned. This includes, but is not limited to, power generation and the power grid, communication networks, many water systems and sewer systems, most rail lines, some toll roads and bridges, and some river, sea and space ports. Maintenance and upgrades to private facilities, and to some public facilities, depend on the adequacy of the rates or fees charged to users. On the other hand, the quantity and quality of publicly-owned and operated infrastructure is often left up to taxpayers rather than users. Proposals for federal infrastructure investment are largely about these public facilities, but they might also involve subsidies for the development of private infrastructure.

Crisis or Crock?

In a Heritage Foundation research report, Michael Sargent notes that the poor state of the country’s public infrastructure is wildly exaggerated:

“The notion that America’s infrastructure is ‘crumbling’ and in uniquely poor condition is not supported by data. The percentage of the nation’s bridges deemed ‘structurally deficient (not necessarily unsafe, but requiring extensive maintenance) has declined annually since 1990 and now sits at under 10 percent, well under half of what it was 25 years ago. Similarly, analyses of highway pavement quality conclude that the nation’s major roads have been steadily improving in quality and are likely in their best shape ever. Our airports and airways safely move more people and goods than those of any other nation. Overall, the U.S. ranks near the top of G-7 nations for infrastructure quality.“

The usual poster child of the infrastructure “crisis” is the nation’s transportation system, but this report from the Reason Foundation shows that those troubles are something of a myth.

Nevertheless, there are always repairs, maintenance and replacement projects to be considered, as well as possible expansion and new facilities. Infrastructural shortfalls and expansion must be prioritized, but as Sargent emphasizes, an even larger number of projects should and probably would be handled privately if not for burdensome federal regulations. In addition, an irrational mistrust of privately-operated facilities among some segments of the public creates pressure to burden taxpayers with costs, rather than users. Complaints about congestion on roads offer a case in point: the best solutions involve efficient (and positive) pricing of existing capacity, rather than continued expansion of a “free” good. The avoidance of rational solutions like efficient pricing underscores the extent to which demands for increased public investment in infrastructure are driven by hyperbole, rather than sound analysis.

It’s About the Infrastructure, Not the Jobs 

Public infrastructure projects are also pitched as effective engines of economic stimulus and job creation. Both of those claims are questionable. Most importantly, the real rationale for infrastructure investment is the value of the infrastructure itself and the needs it serves going forward. The public expense and the jobs required to produce it are cost items! This point was made recently by economist T. Norman Van Cott, who rightfully asserts that a given output is of greater benefit when its costs are low and when it requires less labor input. (Van Cott’s piece uses the Keystone pipeline as an example, a controversial private project that I find objectionable for its dependence on eminent domain actions.) The sharp distinction between creating value and creating jobs is also made here by Jerry L. Jordon and here by Steven Horowitz. Here is Horowitz:

“Creating jobs is easy; it’s creating value that’s hard. We could create millions of jobs quite easily by destroying every piece of machinery on U.S. farms. The question is whether we are actually better off by creating those jobs—and the answer is a definite no.“

Yet this is how so many infrastructure projects are pitched at the national, state and local levels. It’s also puzzling that economic stimulus is used as a rationale even when the economy is operating near its potential output. Even by the standards of traditional Keynesian economic analysis, that is the wrong time for stimulus. Infrastructure projects should be evaluated on their own merits, not on how many construction workers must be hired, or on how much of their paychecks those workers will spend. Many of them must be bid away from competing projects anyway.

The Public Investment Trough

Here’s a brief anecdote from my own experience with an “advanced” public infrastructure project. Some years ago in the region around my city, St. Louis, Missouri, transportation agencies began to install a network of electronic highway message boards to convey real-time information to drivers on road conditions, congestion, and various public service announcements. The 100+ signs in the area today are connected to operators in a central office via fiber optic cable. This type of system is used elsewhere, and it is partly funded by the federal government.

I seriously question the benefits of this system relative to cost. The signs themselves cost well in excess of $100,000 each. The fiber network is undoubtedly costly, and there are other fixed and variable system costs. The signs have an anachronistic look, vaguely the quality of old high school scoreboards. The information they provide generally adds little to what I already know (“12 minutes to I-270”). The signs are in fixed positions, so the occasional report of an accident or congestion usually comes too late to give motorists decent alternatives. The information the signs provide on road conditions is obvious. Missives such as “buckle up” are of questionable value. Before I depart on a commute, or if I have a passenger, we can consult maps and other apps on cell phones to avail ourselves of far better information. Other, more flexible technologies were outpacing the message boards even before they could be fully deployed, and the boards are still being deployed. This is a project that might have sounded brilliant to highway engineers 20 years ago, but it represented something of a luxury relative to other needs, and it still got funded. Today, it looks like waste.

The politics of infrastructure often means that the enabling legislation gets loaded with poorly-planned projects and shiny jewels to dangle before home constituencies. Legislators are so eager to demonstrate their sophistication that they fall over themselves to approve taxpayer funds for unproven but politically-favored technologies. For example, a recent post by Warren Meyer notes the technical folly of solar roads. These are unlikely to attract much private money because they represent such a monumentally stupid idea. Proponents will go after tax money instead. The same is true of ideas like Elon Musk’s tunnel boring project, for which he hopes to collect massive taxpayer subsidies. Musk claims that tunnels will eliminate road congestion, but efficient pricing would do much to eliminate this problem without tunnels, and other technologies like automated vehicles are likely to reduce congestion by the time Musk over-invests tax money in tunnel-boring equipment, roads and hyper-loops inside tunnels.

In general, taxpayers should be wary of “green infrastructure” proposals. A large number of bike lanes, pedestrian bridges and greenways sound wonderful, but they are serious cost inflators. Federal dollars are regularly squandered on charming but wasteful projects such as trolleys. Even worse are ongoing efforts to subsidize the construction of high-speed rail systems. All of these bright ideas should be resisted.

Let’s Be Rational

The country certainly has infrastructural needs, but claims that we face a crisis are greatly exaggerated. With a new administration and what are likely to be supporting majorities in both houses of Congress, the danger of rushing into big funding commitments is heightened. The sponsors of this kind of legislation will herald massive job creation, but that is incidental to the cost side of the ledger. The benefits of individual projects should be evaluated carefully in comparison to costs. Then they can be prioritized if deemed of sufficient value. Finally, large scale deployment of unproven technologies should be avoided on the public dime.

I haven’t even mentioned one very large infrastructure project that has been proposed by President-Elect Donald Trump: the border wall. I suspect that it would be easier and less expensive to solve the problem of border security using more advanced and flexible technologies, but the permanence and symbolism of a wall appeals to many of Mr. Trump’s supporters. The benefits of a wall in terms of border security and control of immigration flows are difficult if not impossible to evaluate, as are the costs to taxpayers, with Trump promising to extract some form of payment from Mexico. The wall, however, is being “sold” to the American public in emotional terms. Come to think of it, that’s how too many other infrastructure proposals are sold by politicians!

There are promising opportunities to improve the nation’s infrastructure through the private sector, where the value of projects is subject to evaluation by parties who must put “skin in the game”. This will be addressed in my next post.

Hillary’s (C)mail Fail

13 Wednesday Jul 2016

Posted by in National Security, Privilege

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Clinton email

Hillary Clinton’s classified email scandal might look like a minor distraction once facts about the suspicious dealings of the Clinton Foundation are unraveled. I’ll cover the foundation later this week. In this post, I’ll review some considerations relevant to the email case. This is the second in a three-part series of posts on Hillary’s more recent foibles, following the first installment on her role in the Benghazi disaster.

Hillary Clinton’s “grossly negligent” misuse of classified email during her tenure as Secretary of State was harshly criticized by FBI Director James Comey last week. Nevertheless, the Bureau declined to recommend an indictment to the Department of Justice (DOJ) based on their inability to prove mens rea, or any awareness of guilt or an intent to do harm. It is doubtful that Clinton had any intent to harm the country. At a minimum, however, Comey’s statements implied that she did not take security seriously.

The basis of any claim that Clinton lacked awareness of her security responsibilities is shaky, to say the least. Clinton’s private email stunt was a willful effort to avoid legitimate scrutiny, such as FOIA requests. The IT expert who set up her private servers and other devices pled the Fifth Amendment to avoid self-incrimination! There have been reports that Clinton asked aides to remove classified markings (also see here). All we have from the State Department on that allegation is a denial. Clinton repeatedly lied to the public and to Congress (under oath) about classified material and the number of devices she used. She also lied to a federal judge (under oath) about having turned over all work-related emails to the State Department. Many of those emails were deleted, leaving suspicious gaps in the pattern of traffic. Indeed, Clinton’s actions in the case give every appearance of an effort to obstruct justice.

Some of the missing emails will come to light. Wikileaks has released a trove of Clinton’s emails showing additional classified material. There are also pending civil cases related to the emails in which the plaintiffs wish to subpoena Mrs. Clinton. Needless to say, her lawyers are making every effort to stop the subpoenas.

Jacob Sullum at Reason discusses Comey’s decision in the context of mens rea. He notes that Clinton’s offenses were certainly prosecutable under the letter of the law. Despite denials from Clinton apologists, the case of a Navy operations specialist in 1992 is instructive. The defendant in that case claimed that willingness to mishandle classified information was not sufficient for a conviction, but the military court disagreed under the same provision of the law referenced by Comey:

“… the court turned to the subsection at issue in Mrs. Clinton’s case: ‘Section 793(f) has an even lower threshold, punishing loss of classified materials through ‘gross negligence’ and punishing failing to promptly report a loss of classified materials.’”

Nevertheless, Sullum thinks Comey’s defense of mens rea protections for individuals accused of certain violations of law is admirable, and I agree (except Comey’s second clause in the quote below, regarding “in that statute in particular“, is not strictly true). The explosion of federal law, especially regulatory law, makes this more crucial than ever from a libertarian perspective. Here is Comey:

“‘The protection we have as Americans is that the government in general, and in that statute in particular, has to prove before [it] can prosecute any of us that we did this thing that’s forbidden by the law, and when we did it, we knew we were doing something that was unlawful. We don’t have to know the code number, but [the government must show] that we knew we were doing something that was unlawful.’“

For background on the issue of a defendant’s willingness to violate the law, Paul Rosenzweig of the Heritage Foundation has a great article called  “Ignorance of the Law Is No Excuse But It Is In Reality“. By that title, Rosenzweig means that there are so many federal crimes today that ignorance of the law very often should be a valid excuse. However, the contention that Hillary Clinton was ignorant of the law regarding her duties in handling classified information is dubious at best.

Unfortunately, Clinton’s interview with the FBI just days before Comey’s announcement was not conducted by Comey, was not made under oath, and was not recorded. That leaves significant doubt about the seriousness of the FBI’s effort to learn the truth about the record, or any contradictions in the record, that might shed light on Clinton’s awareness or intent to violate the law. And Attorney General Loretta Lynch, after a “personal” meeting with Bill Clinton, recused herself and her office from prosecutorial duties prior to Comey’s announcement, stating that she would accept the FBI’s recommendation without examining the case. That step casts doubt on her seriousness as an independent prosecutor. Hillary skates, for now.

 

Border Integrity or Lines In The Sand?

02 Tuesday Dec 2014

Posted by in Uncategorized

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obama-dictator

The constitutionality of President Obama’s recent amnesty order is debatable, to say the least, Obama himself having admitted that he simply “changed the law”. If that’s what he thinks he did, the law professor should know that his action was out-of-bounds from a constitutional perspective. The executive branch cannot make or change laws!

In “Legal but Still Poor: The Economic Consequences of Amnesty“, Joel Kotkin puts aside the constitutional question to focus on difficulties that are likely to be aggravated by amnesty. Kotkin emphasizes the economic distress that now hampers the working class. Illegals already compete for certain jobs, of course, a point Kotkin doesn’t mention. Nevertheless, the amnesty order will create new competition among workers for some positions, many of whom already face difficult conditions:

“… the country suffers from rates of labor participation at a 36 year low. Many jobs that were once full-time are, in part due to the Affordable Care Act, now part-time, and thus unable to support families. Finally there are increasingly few well-paying positions—including in industry—that don’t require some sort of post-college accreditation.”

Furthermore, the order might create incentives for new illegal immigration, leading to further labor market stress. Politically, the order is seen as an act of betrayal by legal immigrants who have gone to considerable effort and expense to obtain their status. It is also likely to be viewed as betrayal by some minority workers, who tend to be more heavily represented in parts of the labor market most vulnerable to the new competition:

“African-American unemployment is now twice that of whites. The black middle class, understandably proud of Obama’s elevation, has been losing the economic gains made over the past thirty years. … Latino-Americans have made huge strides in previous decades, but now are also falling behind, with a gradual loss of income relative to whites. Poverty among Latino children in America has risen from 27.5 percent in 2007 to 33.7 percent in 2012, an increase of 1.7 million minors.”

Kotkin mentions several other administration policies that are likely to diminish prospects for new and existing workers.

“Ironically, the places where the cry for amnesty has been the loudest—New York, San Francisco, Los Angeles, and Chicago—also tend to be those places that have created the least opportunity for the urban poor. … Whatever their noble intentions, these cities generally suffer the largest degree of income inequality, notes a recent Brookings study.”

The amnesty order will be expensive for taxpayers. Many newly legal immigrants will qualify for various forms of public assistance and benefits. The negative fiscal effects will be compounded if, as expected, those immigrants and the workers with whom they compete have greater difficulty finding jobs:

“Herein lies the great dilemma then for the advocates of amnesty. In much of the country, and particularly the blue regions, they will find very few decent jobs but often a host of programs designed to ease their poverty. The temptation to increase the rolls of the dependent—and perhaps boost Democratic turnouts—may prove irresistible for the local political class.”

Obama’s amnesty order attempts to deal head-on with the impossibility of deporting a large number of illegal immigrants. Unfortunately, many others will be made worse-off by the order: legal immigrants, relatively low-skilled workers and taxpayers are all likely to suffer negative consequences. And the order fails to deal adequately with the real economic need for more highly-skilled immigrants; it might well damage the prospects of achieving any near-term reform in this area. Instead of working with Congress to achieve more comprehensive reform, the President’s hasty action fuels suspicion that the real reason for his amnesty order is simply to build a larger constituency for a statist agenda.

Well Done, Mr. President… You’ve Screwed Your Supporters!

23 Tuesday Sep 2014

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CensusIncome_Race

Sorry for the sarcasm, but I always have to laugh when I see that meme from The Daily Kos congratulating President Obama for a job well done. It lists some misleading, cherry-picked  statistics about the economy, pre- and post-Obama, and it attributes certain outcomes to the president over which he has absolutely no control. Would it be unfair to say that Obama had any control over the lousy outcomes cited by Stephen Moore in “Obamanomics victimizes president’s biggest supporters most“? Probably not, because this is exactly where an economic philosophy based on redistribution takes you: increasing dependency on the state. That’s economic cannibalism, and it is sad, though in fairness it must also be said that the big-government Bush years were a period of relatively stagnant median income growth.

As Moore says, “Income redistribution is not an economic strategy for growth. It’s a lifeboat strategy. It would be hard to point to a single initiative the Obama administration has proposed that would help businesses grow and invest.” And so we see that certain groups — blacks, hispanics, Americans with a high-school education or less, and single women with children — have all suffered disproportionately under President Obama relative to the median family, and the median family has nothing to brag about, having weathered more than a 3% decline in income since June 2009. See the chart in Moore’s article. The one inserted above is a little older, but it shows growth over a longer period by race.

My apologies for the obnoxious pop-up ads that appear when you go to the link with Moore’s article.