Tag Archives: Economics 101

Only 6.8% of those released from Guantanamo during the Obama administration have returned to terrorism to far. Progress!

Cliff Sloan, the bureaucrat responsible for winding down the terrorist detention center at Guantanamo for the past 18 months, takes to the pages of the New York Times to laud progress during his tenure and downplay the perceived challenges in finishing the job.

One of his main arguments suffers from some fatuous logic.  He cites former Vice President Dick Cheney’s report that 30% of those released are “confirmed” or “suspected” to have returned to Islamic terrorism after their release as a “deeply flawed” exaggeration because only half of those fall into the “confirmed” category.  Great, so only 15% of the released detainees certainly returned to terrorism!  (Thankfully, some of these have been killed or recaptured, and others have bounties on their heads, which should certainly give us pause in praising the wisdom of releasing anyone.)

He claims as some sort of success that fewer still of those more recently released have returned to the battlefield:

Of the detainees transferred during this administration, more than 90 percent have not been suspected, much less confirmed, of committing any hostile activities after their release.  The percentage of detainees who were transferred after the Obama-era review and then found to have engaged in terrorist or insurgent activities is 6.8 percent.

By definition, the more recent the sample size we are examining at any point in time, the lower the percentage of recidivism will be.  This obvious logic seems lost on Sloan.  Among terrorists who were released yesterday, the recidivism rate is zero!  Complete success!  Naturally it takes time for released terrorists to escape Uruguay, Kazakhstan, Qatar, or wherever they are sent from Guantanamo, be debriefed, reintegrate into the terrorist network to resume their calling to jihad, and come to the attention of our intelligence agencies.

Reasonable people can disagree about our Guantanamo policy.  There are legitimate arguments to be made about efficacy, cost, and even due process.  (Though Sloan’s quote from an anonymous “high-ranking security official from one of our staunchest allies on counterterrorism” that “The greatest single action the United States can take to fight terrorism is to close Guantanamo” seems like a non sequitur.)

Most Americans probably agree with the maxim that it is “better for 100 guilty men to go free than for one to be wrongly convicted.”  But this applies to American criminal defendants subject to U.S. constitutional protections.  It is easy to make the opposite argument—or at least to prescribe the presumption of guilt—when it comes to foreign terrorists captured on the battlefield taking up arms against the U.S. and its interests.

In any event, the citation of 6.8% of those released having definitively returned to terrorism in a relatively short time should be a red flag, not a celebration of success.  Not only does all evidence and logic inform us that that number will necessarily increase as time goes on, but there is no doubt that a principle of diminishing returns applies.  Presumably the 127 Muslim terrorists still detained at Guantanamo are the most risky cases, which is why they haven’t been released so far.

Let’s not throw around small-sounding (and artificially deflated) numbers as a means to take credit for the perhaps relatively lower-hanging fruit in an effort to obscure the grave risks of releasing terrorists back into the war against our civilization.

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Another comedy of errors when government tries to play venture capitalist

This project, in which the federal government attempts to unilaterally create a manufacturing industry in Oregon to produce politically-correct streetcars, really has it all.

As reported in the Washington Post, politicians, including then-Transportation Secretary Ray LaHood and Rep. Peter DeFazio (D), descended on Portland to join executives at a politically connected company in DeFazio’s state of Oregon, United Streetcar, to launch a boondoggle “meant to show how federal backing could spark a rebirth in American manufacturing.”  Whoops.  The effort has been a predictable failure for all of the usual reasons.

Most obviously, none of the luminaries seemed to consider whether the business-unfriendly locale of Portland could viably house such a manufacturing endeavor.  The company even had the fantasy to export its machines.  According to LaHood, “These are the first streetcars to be manufactured in America in nearly 60 years.”  No one seemed to wonder why, and apparently David Ricardo was unavailable to advise on the concept of comparative advantage.

Sure enough, the company couldn’t seem to muster the engineering expertise to be able to compete with other domestic and foreign competitors.  It tried the time-honored tradition of spreading out the supply chain—to “300 suppliers in 32 states,” each of which with a Congressman to keep the money flowing—but it backfired.

The politicians’ assumptions about how many people would actually want to ride the trains were inflated (as they always are).  Their assumptions about how many cities would jump on the bandwagon to build streetcars were wildly optimistic.  Their dreams of obviating local buyers’ pesky diverse preferences weren’t realized.  Officials piled on the usual rhetoric about how such mass transit projects would spur economic development along their lines.  LaHood admitted that, thanks to the essentially unlimited flow of stimulus money, cities didn’t really have to worry about prioritizing or managing projects with any discipline:  “we didn’t have to pick and choose.”

Meanwhile, other cities simply ignored better bids from overseas manufacturers to “buy American.”

Another left-wing local Congressman, Earl Blumenauer (D), proposed to double-down on the central planning:  the federal government should just buy a bunch of the cars (from, presumably, the same company in his district that has donated to his campaigns) and then give them to cities.  He lamented, in the Post‘s words, that the Federal government “essentially ceded the market in light-rail cars to big foreign competitors.”  Every aspect of this endeavor has been based on political calculations as opposed to market forces, which is apparently Rep. Blumenauer’s preferred economic model.  The Soviet experiment didn’t teach him any lessons about the likely result.

This episode serves as a potent reminder that when government imposes its utopian vision for how city-dwellers should live, then tries to implement industrial policy to pick winning companies, with minimal resource constraints, the results are always disastrous.  LaHood laments that “maybe our calculations weren’t right.”  When have they ever been?

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Conservatives calling for a Constitutional convention: Be careful what you wish for

Instapundit has been discussing the calls for a constitutional convention called by the states under Article V.  As a thought experiment, put aside all of the speculation about how the delegates for such a convention might be chosen, and assume that, however it comes together, the result of the convention—an amendments package or a rewrite of the whole constitution—accurately reflects the opinions of a majority of the population.  That is a scary thought for people who value liberty.

There seems to be little doubt that Americans like their big government, as we seemed to learn in 2012.  How can anyone think that a new constitution, if it accurately reflected the will of the majority, would be better than the one we have now?  The right to bear arms would be toast, and the freedom of speech that resulted from new wordsmithing would surely be less absolute than the First Amendment.  No other country protects speech as fully as the U.S.; it is very likely that, taking the lead of other Western countries, some provision excepting “hate speech” or “racism” or “denying historical facts such as the Holocaust” or “corporations contributing money to political campaigns” would end up in the constitution.  Such a provision, which a large majority of the low-information (and low-principles) populace would see as innocuous, would of course be used by the government to persecute conservative and pro-liberty elements of the population from day one after its enactment.

Less perniciously, but still with disastrous effect, a new constitution would, no doubt, include more “positive” rights like the “right” to health care, education, or a job—just like supposedly “progressive” constitutions of other countries include.  The beauty of the U.S. constitution is that it includes almost only “negative” rights—rights to be free from certain forms of government interference—as opposed to positive rights bestowed upon citizens.  This makes the current constitution a libertarian’s dream:  pretty much the only positive individual rights covered in the original text and its amendments are the right to Privileges and Immunities, right to petition the government for a redress of grievances, and the right to vote.

The country’s balance of power could be altered.  The need to secure ratification by three-quarters of states would prevent small-population states from being totally left behind, but a clever majority could build in mechanisms—in the name of “fairness”—to increase the proportion of representation allocated to larger-population states and cities.  In an extreme scenario, delegates from 45 states could gang up on, for example, tiny red Wyoming, Idaho, Montana, North Dakota, and South Dakota to dilute their power without much regard for the long-term consequences.  No doubt the left would try this.

But a document that reflects the will of the majority is probably the best-case scenario.  More likely, a constitutional convention would be hijacked by enemies of liberty, like, oh, every other lever in our national politics and culture has been over the past century.

Even if we accept arguendo that a majority of citizens, who for example do not have any interest in owning a firearm, would nonetheless understand the value of the Second Amendment both for the positive externality that it creates and for the check on government power that it ensures, there is little reason for optimism that they would be able to act on this principle at a constitutional convention.  The left is always better at mobilizing its foot soldiers than the right, and at shaming the crowd with cries of “what about the children,” “you are racist,” “evil corporations control our politics,” and similar emotionally-charged harangues that have dominated our popular discourse for the last 20 years.

No doubt the attendees at any constitutional convention would be composed disproportionately of union activists, government bureaucrats, college professors and students, and other special interest groups that the left could marshal.  When it came time for the result to be ratified by the states, we would see the same mobilization by the left, egged on by the media, to bring its voters, alive and dead, to vote early and often for what would no doubt be a dastardly document.

Of course the need to attain ratification by three-quarters of the states would be a challenge, but, since there is no time limit for this to be achieved, one could easily imagine the left picking off one state at a time, taking over state legislatures through Soros-funded electioneering, bullying, state court packing, voter fraud, media takeovers, changing the rules, and whatever other means are necessary to get to 38.  Our culture wars over the past half-century suggest that the leftist forces seeking to fundamentally transform our country are better funded, organized, and motivated—even if they don’t represent a majority—than those who seek to maintain liberty.

Whether our institutions are failures because of their lack of fidelity to the constitution or the constitution itself is a failure because it hasn’t been strong enough to hold up is a moot debate, so it’s tempting to try to rectify the problem at the putative source.  But this thinking is a fallacy because we’d be left with the same culture—and a far less liberty-minded constitution to boot.

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Surprisingly, the government is a poor venture capitalist

Once again, the government (state of Rhode Island this time) is poor at picking winners.  Every private venture capital firm passed, but the state said, where do I sign?!?

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Obamacare will lead inevitably to single-payor

Speaking of Obamacare, not enough commentators are picking up on what seems to us as clear logic:  Obamacare will eventually lead to a so-called single-payor system, i.e., government provision of all health care.  Call it an intended consequence and probably a shrewd strategy for the socialists who know that single-payor is not politically viable yet.

The chain of events will go something like this:  Mandates on insurance companies to cover anyone at prices that the insurers don’t control will turn health insurers essentially into public utilities—with all of the responsiveness and innovation that we have come to expect from such enterprises.  Meanwhile, increasing costs, the “Cadillac tax,” and other burdens will cause more and more employers to drop their health insurance coverage.  A few years after the law is fully implemented, and most Americans despise the system, politicians will do what they do best:  throw more money at the beast.  When that doesn’t work, politicians will adopt another of their favorite tactics:  blame evil corporations.  The big health insurers and big employers have heartlessly failed to take care of their customers and employees, the argument will go, so only benevolent government can step in and provide for the hapless citizenry.  Americans, as we will have done for nearly a century by then, will accept this logic as the only solution.

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A USAID program we can support, for a change

We don’t mind the existence of the U.S. Agency for International Development, as long as its mission is seen as part of our national security apparatus.  On the contrary, almost all of its programs futilely ram government-centered bureaucratic “economic development” programs down the throats of third-world societies that are laughably unable to cope with them.  The result is, inevitably, utter waste, incompetence, and corruption.  (We once worked on a typically inept USAID program at the Ministry of Information and Communications Technology in Afghanistan in efforts to improve automation of government services—except that most government buildings lacked electricity and most government employees were illiterate in every language.)

Here is one decent example of a USAID program that seems to have the right goals:  creating alternatives to terrorism in the southern Philippines by training locals to work as call center agents.  It brings the added value of benefiting U.S. companies and maybe even exposing the area to some positive American cultural influence.

Predictably, leftists and protectionists decry the effort as undermining jobs at home.  Memo to the opportunist politicians who are slightly unattuned to business realities:  call center operators in the Philippines making $200 a month are not a threat to U.S. workers.  Those jobs are gone.

We can have a legitimate debate about whether the U.S. should be spending any money on such a program given our fiscal straits, but, if we’re doing to have a USAID at all, this seems like one of its better efforts.

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Ex-Im Bank seems like the perfect template for corporate welfare

We consider ourselves fairly well-versed in civics, but we were only vaguely aware of the Export-Import Bank.   So let’s get this straight:  American taxpayers subsidize loans for the worst major airline in the world, Air India, which is also bankrupt by the way, so that it can buy Boeing planes instead of Airbuses?  Why not just subsidize Boeing directly (not that we would advocate that), or just place boxes of cash in front of a Pratt & Whitney jet engine to be sucked in and shredded?

Ex-Im Bank seems to offer a trifecta of government ineptitude, corporate welfare, and protectionism.  (And this loan to Air India seems like bad industrial policy anyway.)  It must distort the market in multiple conflicting ways simultaneously.  Abolish it.

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