A Disgruntled Democrat’s State of the Union III

Prologue:

Once again, and for the last time before the 2012 election gives me a heart attack, I return to offer my thoughts on President Obama’s State of the Union address.

These days, I spend most of my spare time reading about the ragtag gang of misfits in the GOP nominating contest. I also nervously refresh Nate Silver’s 538 Election Models, and watch the ferris wheel of idiocy that is the RCP polling index.

Because I am a self-hating glasses-wearer who avoids MSNBC, I don’t even know the latest Democratic talking points.  Of course, the bar has been set so low by GOP election rhetoric that just hearing the word “regulation” without the prefix “job-killing” will be bliss.  I also look forward to an audience that won’t boo the very existence of minorities or Mexico.  I even have my sunglasses ready to protect my eyes from John Boehner’s day-glo skin.

Christ, it’s been so long that I barely remember our country’s actual issues.  Education? Infrastructure? Unemployment? Environment?  Either way, time to see if President Obama can remind the 54% of Americans who disapprove of his performance why we elected him in the first place.

* * * *

The Speech:

Can you tell it’s election year?  In a sweeping, occasionally feisty speech that (unofficially) kicks off the 2012 campaign, President Obama dove headfirst into the populist waters of job creation and tax reform.  Overall, I thought the speech was effective, if a bit long.  But let’s dive into the substance.

Foreign Policy:  Obama kicked off with what is (in my opinion) his single greatest accomplishment: ending the war in Iraq.  Yes, the war was unpopular from nearly the beginning.  But people scream bloody murder when any sort of defense cuts are on the table, and you know opposition must have been tough when candidates like (oops… I forgot his name) even advocated going back in.  President Obama also touted the assassination of Osama Bin Laden in his opening, to raucous applause.  Obama is clearly trying to remind the  extra 5% of people who approved of him for a month following the assassination and then resumed hating his guts that he shares their thirst for terrorist blood.  Still, it is one feat the GOP can’t possibly diminish, so it makes for good stumping.

Later in the speech, Obama turned to the issue of Iran just long enough to say that he was keeping “all options on the table” but that a peaceful resolution was still possible.  And whereas I’m sure this did not satisfy the hardcore republicans tripping over themselves to bomb Iran into the Atone Age, I have to think that at least some Americans recognize that we can’t possibly afford another war.  Obama even took the time to laud our iron clad — iron clad  — relationship with Israel.  I am sure repeating the adjective twice will earn him points tomorrow at his daily meeting with Netanyahu.

Manufacturing: The President waxed poetic on his hopes for the rebirth of American manufacturing.  I have my doubts that the United States will return to being a manufacturing powerhouse with our relatively high labor and environmental costs.  However, this is election season and nothing sells better than the idea that, with a few tweaks, companies will gladly pay a thousand times more for fat Ohioans who get weekends and holidays. Don’t get me wrong, I am very much in favor of restructuring our tax code to encourage job creation — it’s just a process that will prove far more arduous than either party cares to admit.

Obama’s tax proposals, most involving cuts for manufacturers who hire domestically (and penalties for those who hire abroad) are ripped right from the GOP playbook.  Indeed, much of the address played out as a paean to the American worker, and, for long stretches, I wouldn’t have been able to distinguish it from a Romney stump speech.  That is, until he showed his hand by hinting that the government might help play a part in recovery by “turning our unemployment system into a reemployment system.”

Education: The President’s education remarks were pretty uninspired, but it did make me reflect on how little I’ve heard of the issue lately.  Lost in the GOP war drums of tearing down the government, we have a systemic crisis of education ranging from achievement gaps in distressed communities to higher education that is bankrupting the middle class.  Obama addressed both in sweeping fashion, making the usual points about teacher accountability and school funding.  He also threatened to withhold federal funding to universities that didn’t slow tuition growth.  Perhaps most importantly, he urged Congress to keep money in federal aid programs.  It will be important moving forward to remind the American people that, in many cases, government spending can do a lot of good — and students about to see rate increases because of Tea Party intransigence will learn that lesson the hard way.

Energy: Obama walked carefully here, pledging explicitly to open up oil reserves before calling for an “all of the above” energy strategy that, I suppose, implicitly contains all of the energy resources we should be focusing on.  I am mildly annoyed that solar and wind were mentioned once each, while natural gas and oil were discussed extensively.  Such is the nature of election year pandering.  Of course, the first words from this idiot‘s mouth following the speech (yes, I watched it on Fox News) criticized the lack of Keystone Pipeline in the speech.  Does anyone else remember a time when we cared about the noble caribou instead of maximizing our domestic drilling?  At least Obama had the courtesy to drop the understatement of the century so far: “The differences in this chamber may be too deep right now to pass a comprehensive plan to fight climate change.”

Deficit:  “Take the money we’re no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home.”  Amen. If I had to sum up my policy prescription for America in one sentence, this would be it.

Milk Spill Joke: Not Bad

Congress: Remember these?

  • “Send me a bill that bans insider trading by Members of Congress, and I will sign it tomorrow.”
  • “Send me these tax reforms, and I’ll sign them right away.”
  • “Send me a law that gives them the chance to earn their citizenship. I will sign it right away.”
  • “Send me a bill that creates these jobs.”
  • “So put them in a bill, and get it on my desk this year.”

On one level, these requests smack of naivete; after all, we know that the Republican House would never contemplate useful legislation.  Even if they agreed with it, they couldn’t risk letting Obama reap any benefit. However, I think the strategy is more subtle; it reminds the American people that the biggest obstacle to significant political progress are the clowns in Congress. Not that they need much reminding, as Congress is less popular than Communism.

Moreover, it’s important for LIBERALS to remember that Obama’s supposed ineffectiveness comes largely from the recalcitrance of Congress rather than his philosophical shortcomings.  There are few things Obama has exclusive control over, and reminding Americans of that will only help him.  Of course, all of this may be wishful thinking; perhaps people in the White House are just too lazy to draft up bills.

Shameless Lincoln Plug: I’ll take it over another goddamn Reagan reference.

The Big Finish: To close out, Obama again returned to the Osama story, using it as a metaphor for the importance of sticking together as a country.  As Obama opined,  “Each time I look at that flag, I’m reminded that our destiny is stitched together like those fifty stars and those thirteen stripes.”  Although lines like that will always make a liberal elitist cringe, it is a vastly better campaign strategy than telling it like it is.  If the 2012 election must be won by winning over the generally-apathetic flag-waving masses, then so be it.

* * * *

The State of the Union is always an exercise in platitude. Indeed, you can simply cobble together old ones and make a serviceable speech.  But now is not the time to overly scrutinize its contents.  It is election year.  Any liberal with a pulse should be trying to figure out how to prevent Republicans from dismantling the moderate progress President Obama has made in health care, banking regulation, foreign policy, and the rest.  My own frustrations with President Obama have ebbed and flowed, but I am frightened daily by the alternative.

Some day, the progressive movement will again gain political traction in America.  Until that day, however, it is far better to stand against the irrational rightwing than to submit to apathy.  The speech tonight was a worthy opening salvo in our upcoming electoral struggle, and that is all that matters.  Now if you’ll excuse me, I have poll numbers to cringe at.

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In 500 Words: SOPA/PIPA and the Great Internet Blackout*

For many, today may be the first that they will have heard of the Stop Online Piracy Act (SOPA) and the Protect IP Act (PIPA), the two pieces of substantially similar legislation pending in (respectively) the House and the Senate which prominent sites today are going dark to protest. For my first post on Stone Soup (and hopefully the first in a regular series that will aim to provide context for current events–more on this in the future), I will not only attempt to provide an objective overview of SOPA/PIPA geared at newcomers to this issue but will also try to do so in under 500 words (starting after this sentence). 

The Basics. SOPA and PIPA, which have received broad bipartisan support, represent the latest Congressional efforts to address the perennial problem of foreign piracy Web sites—problematic because they harm American copyright holders, benefit from American-based search engines, advertising, and payment systems, yet tend to escape liability under U.S. law—by granting sweeping new enforcement powers to rights-holders and the U.S. Department of Justice (DOJ). Both work by choking off funding and American user access to foreign piracy sites; specifically, SOPA/PIPA would allow the DOJ to require (1) search engines to de-index and remove all links to an infringing site (and, it appears, to continually police against such links); (2) payment processors (like PayPal) and advertisers to stop doing business with the site; and, perhaps most controversially, (3) Internet Service Providers (ISPs) to block customer access to the foreign site entirely. These obligations represent a potentially radical change from the current Digital Millennium Copyright Act (DMCA) regime, under which intermediary sites merely hosting or linking to infringing material are exempted from liability as long as they make good-faith efforts to take down infringing material when asked to.

The Criticisms. Though sponsors of SOPA/PIPA insist they target only “foreign Web sites that are primarily dedicated to illegal and infringing activity,” the two bills are drafted in broad language, leaving unclear the scope of key terms such as “foreign” or “search engine.” These ambiguities potentially allow the legislation to be interpreted to encompass even domestic sites, including social networking sites, sites such as Reddit made up primarily of user-shared links, and blogs, among others. Critics argue that this uncertain yet potentially significant liability for intermediaries will hurt startups and smaller firms and that permitting entire sites to be blocked via their domain name raises the specter of censorship. Critics also argue that the bills’ reliance on Domain Name Servers (DNS)-blocking as an enforcement tool could alter the very architecture of the Internet, an argument which has recently succeeded in persuading legislators to drop those provisions.

The Politics. The SOPA/PIPA debate pits the historically politically well-connected entertainment industry (which has spent $91M thus far lobbying for SOPA/PIPA) and the similarly formidable U.S. Chamber of Commerce and AFL-CIO (persuaded of online piracy’s harm to American jobs) against the far less politically-established tech and internet industries (among other allies), which are nevertheless in an interestingly unique position to influence citizens directly. Until recently, approval of SOPA by the House Judiciary Committee (which would send the bill to the full House for a vote) seemed all but guaranteed. However, with this most recent January 18 protest and with the White House’s strong hint disapproval of the two bills on January 14, passage of the bills is now far from certain. A Senate debate on PIPA is scheduled for January 24, while SOPA will be debated in the House in early February. However, even if defeated this time, aspects of SOPA/PIPA are likely to return in other forms. Meanwhile, a counter-proposal is now also pending in the form of the OPEN Act.

*This post primarily written without the assistance of Wikipedia.

In Defense of Clarence Thomas

(This piece was cross-posted at the HLPR blog, where I’ve been writing this semester, but I had long-ago intended it as part deux of the “In Defense of” series, which started with farm subsidies.)

I recently asked my Facebook network which Supreme Court justice, modern or historical, would they elect to partner with on a Constitutional Law final exam, assuming the justice had taken the class with them that semester. John Marshall, Oliver Wendell Holmes Jr., Robert Jackson, and William Brennan were predictable choices as powerful writers and influential molders of constitutional thought. Scalia, well-known for his bombastic style yet clear exposition of facts and law, was popular. Clarence Thomas received no votes. Perhaps it is to be expected that among the constellation of judicial stars, Thomas would pale in popularity–his legacy, after all, has yet to be defined. No doubt for others his judicial philosophy, hewing tightly to original intent and historical understanding, leaves progressive-minded comrades ill at ease. Yet if a motivating factor for unpopularity is Thomas’ silence at oral argument, I would ask my friends to reconsider.

Clarence Thomas joined the Supreme Court in October 1991. On February 22, 2006, Thomas posed a question during oral argument, and has stayed silent ever since. His silence has been the subject of much commentary and speculation, and perhaps inevitably, ridicule and accusations of un-intellectualism. This disparaging category of charges is unfair, and deserves some scrutiny.

In a piece on the fifth anniversary of Thomas’ silence, Adam Liptak of the New York Times quoted a law review article which opined: “If Justice Thomas holds a strong view of the law in a case, he should offer it . . . It is not enough that Justice Thomas merely attend oral argument if he does not participate in argument meaningfully.” One Huffington Post author, writing on important questions Thomas had asked, noted, “. . . Thomas’ silence has also left many casual observers — that is, ordinary American citizens — with the impression that the man either does not care about the cases or cannot intellectually compete with his colleagues.”

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Could Mitt Romney Repeal Obamacare by Waiver?

Presidential candidate Mitt Romney has repeatedly stated during the presidential debates that he would “direct the Secretary [of Health and Human Services] … to grant a waiver from Obamacare to all 50 states” once elected. Walking back a bit from the statement in a post on the National Review blog and in an editorial in USA Today, Romney said that his executive order would “pav[e] the way” for Obamacare waivers, directing federal officials “to return the maximum possible authority to the states” and mentioning that such an order would be “the first step” in his health care plans.

Could Mitt Romney repeal Obamacare on day one with a waiver to all 50 states? Some of Mitt’s supporters have claimed that he can, pointing to the more than 1,000 waivers granted by the Obama administration since the law has passed. As noted by Washington Monthly blogger Rick Ungar, however, the waivers received by states, companies, and labor unions during the Obama administration are temporary waivers, which cannot extend beyond 2014. These temporary waivers are meant to help states get in compliance with the law gradually and prevent excessive rises in health insurance premiums. None of the waivers have applied to the most controversial component of Obama’s health care proposal, the individual mandate, which won’t become law until 2014 anyway.

The Patient Protection and Affordable Care Act (ACA) does include more extensive waivers of the act’s requirements (including the individual mandate), called “waivers for state innovation,” but the Secretary of Health and Human Services’ ability to grant those waivers is more clearly defined by the statute. The legal requirements for “state innovation” waivers are set out in Section 1332 of the ACA. A number of the requirements make a categorical waiver for all 50 states seem highly dubious:

  • The statute requires states to apply for waivers, but goes even further than that, stipulating a number of requirements for state applications for waivers, including a “comprehensive description of the state legislation and program to implement a plan meeting the requirements for waiver,” a “10-year budget plan that is budget neutral for the Federal Government,” and extensive public notice-and-comment procedures before an application can even be submitted;
  • The law states the Secretary of Health and Human Services may grant a waiver request “only if the Secretary determines” that the state plan will:
    1. provide coverage that is “at least as comprehensive” as the coverage in the ACA;
    2. provide coverage and cost sharing protections against “excessive out-of-pocket spending” that are at least as affordable as the coverage in the ACA;
    3. provide coverage to a “comparable number” of its residents as the provisions of the ACA; and
    4. not increase the federal deficit.
  • The Secretary of Health and Human Services is required to monitor and evaluate state programs and report to Congress on them, to ensure that the requirements of the waiver process are being met;
  • States may only apply for “state innovation waivers” starting on or after January 1, 2017, making it even less likely that President Romney would be able to issue such waivers at least until a hypothetical second term;
  • The statute mandates that waivers expire after five years, so even a successful Romney waiver action would be unlikely to survive long after he was out of office.

It’s pretty easy to conclude, based on these provisions, that granting waivers to all 50 states on “day one” of a Romney presidency would be illegal. But the Obama administration, for its part, isn’t setting up a great precedent for such a contingency:

With a growing number of states rebelling against the No Child Left Behind law and stalled efforts in Congress to reform it, the Obama administration says it will grant waivers to liberate states from a law that it considers dysfunctional.

Representative John Kline (R-MN), chairman of the House Education and Workforce Committee, recently asked the Congressional Research Service about the legal authority for such waivers. The CRS responded with a memorandum outlining the legal issues involved with the Secretary of Education’s waiver authority under No Child Left Behind. Finding the Secretary’s authority to grant waivers under the language of the statute “very broad,” the memo finds that the Department of Education “appears to have the authority” to waive most of the provisions at issue in the Obama administration’s education proposals.

Could Romney’s waivers survive a legal challenge, or does the Secretary of Health and Human Services have similarly broad authority? Supporters of the Affordable Care Act can take some comfort in the stringent language of the statute, including its requirements that states provide health care coverage “at least as comprehensive” as that provided by the Act and that states must cover “at least a comparable number” of their residents as the Act would. Some of the legal analysis in the CRS memo may be instructive on this point:

The starting point in interpreting a statute is the language of the statute itself. The Supreme Court often recites the “plain meaning rule,” that, if the language of the statute is plain and unambiguous, it must be applied according to its terms. See, e.g., Barnhart v. Sigmon Coal Co., 534 U.S. 438, 450 (2002)

If Romney’s Secretary of Health and Human Services granted waivers in a way that contradicted the “plain meaning” of the Affordable Care Act, as interpreted by the courts, it would likely be struck down. This would seem to be the case where, as Romney seems to propose, waivers would be granted to states that do not apply for waivers or states that do not even attempt to create a plan for covering their residents as specified in Section 1332.

The CRS memorandum also notes that “reviewing courts have cited the Administrative Procedure Act (APA) as affording judicial authority to invalidate waivers” that are found to be “arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with law.” While courts give deference to federal agencies in determining whether an agency’s action was arbitrary and capricious, the CRS points to a case where the 9th Circuit Court of Appeals struck down a statutory waiver granted by the Secretary of Health and Human Services under Section 1115 of the Social Security Act. Section 1115 allows states to apply for waivers from the statutory requirements of welfare programs to implement pilot programs that further their stated goals.

In 1992, California proposed a “work incentive” reform to its state welfare system, a precursor to the welfare reforms that would later become law throughout the United States, and applied for a waiver under Section 1115 from requirements of the Aid to Families with Dependent Children (AFDC) program. The Secretary of Health and Human Services granted the waiver, and a group of residents receiving benefits under the AFDC program challenged it. The 9th Circuit found the grant of the waiver “arbitrary and capricious” in violation of the APA, in that

the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. (quoting Motor Vehicle Mfr. Ass’n. v. State Farm Ins., 463 U.S. 29, 44 (1983))

In particular, the court found that the Secretary of Health and Human Services did not take into consideration evidence submitted by representatives of residents receiving benefits of the plan’s danger to those residents. If a Romney Secretary of Health and Human Services were to fail to consider evidence mounted against a waiver, or violate other requirements imposed by courts under the APA, it would likely face a challenge on such grounds. Issuing waivers “on day one” of a Romney presidency would almost surely “rel[y] on factors which Congress has not intended it to consider,” even if review under the APA tends to be deferential (evidenced by the paucity of cases cited in the CRS report where waiver decisions were invalidated).

That said, the greatest barrier to a challenge to waiver decisions may not be the legal merits, but whether or not any plaintiffs in opposition to such a waiver have standing to sue. In the California welfare case, the individuals who faced benefit cuts after the California waiver clearly met the requirements that plaintiffs show (1) an “injury-in-fact” and (2) “causation” of the injury. The only question about standing in that case was whether a victory for the plaintiffs, sending the waiver decision back to the Secretary of Health and Human Services to consider the evidence presented by the plaintiffs, would fulfill the third prong of standing, “redressability.” But a waiver from the provisions of the Affordable Care Act (or for that matter, the No Child Left Behind Act) would not have as clear an injured party as a welfare recipient facing a loss of benefits. Who, then, would have standing to challenge Romney waivers?

Constitutionality of the Individual Mandate, and Regulating “Economic Inactivity”.

A friend of mine had dinner last week with one of her friends who was in town for the American Conservative Union’s Conservative Political Action Conference (CPAC), and asked for some tips on talking to a hard-core conservative about health care reform, especially in light of two rulings from federal judges in VA and FL that invalidate ACA in part, or in toto. Instead of sending her a list of articles that I had read, I thought I’d summarize my impressions in a blog post. (Apologies if you’ve read all these arguments elsewhere, already.)

For many conservatives, the central problem with the Affordable Care Act is the “individual mandate”. Prof. Randy Barnett, of Georgetown Law, wrote early on in an op-ed in the Washington Post:

But the individual mandate extends the commerce clause’s power beyond economic activity, to economic inactivity. That is unprecedented. While Congress has used its taxing power to fund Social Security and Medicare, never before has it used its commerce power to mandate that an individual person engage in an economic transaction with a private company.

But, as many more qualified legal scholars have noted, Congress does not rely on the Commerce clause alone. The power to “to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes”, while broadly conceived in such cases as Wickard and Raich, is being used to regulate the insurance industry–to create health care exchanges, to prohibit discrimination against preexisting conditions, etc. The idea that in order to have insurance we must have everyone participate–the so-called “individual mandate”–is empowered by the Necessary and Proper clause.

The owner of this home was taxed for inactivity.

Universal participation in health insurance was deemed necessary by Congress for the effective operation of that scheme, that is, the risk pool will be insufficiently large, or the elimination of preexisting conditions limits would encourage selection bias. As Prof. Tribe points out in a recent op-ed, it was necessary to Scalia, concurring in Raich, when the federal government quashed even small, purely intrastate marijuana operations: “Our cases show that the regulation of intrastate activities may be necessary to and proper for the regulation of interstate commerce in two general circumstances.” In the landmark case McCulloch, Chief Justice John Marshall writes: “Take, for example, the power ‘to establish post-offices and post roads’ [an enumerated power of Congress]. This power is executed by the single act of making the establishment. But, from this has been inferred the power and duty of carrying the mail along the post-road, from one post-office to another. And, from this implied power, has again been inferred the right to punish those who steal letters from the post-office, or rob the mail.” So even though postal carriers were not mandated by the Constitution, and even though Congress is not supposed to deal with intrastate commerce, both of those things are necessary to the achievement of Congress’ constitutional ends. That is, Marshall explained, if “the end be legitimate,” then “all means which are appropriate, which are plainly adapted to that end… are constitutional.”

Of course, as many people have pointed out, the government is not creating a “mandate” in the sense that it will jail you for your “economic inactivity”. It is going to tax your income if you aren’t paying health insurance premiums. So the part of the Constitution that specifically relates to the individual mandate is in fact the General Welfare Clause, whereby “Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States…” And the decision on what constitutes “general welfare” is for the democratically-elected Congress to decide, not activist judges. Justice Cardozo wrote in Helvering v. Davis:

“The line must still be drawn between one welfare and another, between particular and general…There is a middle ground or certainly a penumbra in which discretion is at large. The discretion, however, is not confided to the courts. The discretion belongs to Congress, unless the choice is clearly wrong, a display of arbitrary power is not an exercise of judgment. This is now familiar law.”

So far we’ve talked about whether the government can regulate your “economic inactivity”, I also wanted to give an example in which government clearly does regulate your “economic inactivity”.

One example is blight law. In Virginia, for example, if a property is vacant, or subject to many complaints, or is in a dilapidated condition or lacks normal maintenance or upkeep, it may be subject to a blight declaration:

After the owner is notified that the property is blighted if the property owner does not remove the blight or present an acceptable plan to cure the blight within a reasonable period of time, under powers granted under the Code of Virginia, the County can declare, by ordinance, any blighted property as a nuisance and then compel the abatement of the nuisance.

If the owner or owners fail to abate the nuisance, the County may do so and charge and collect the cost thereof from the owner of the property in any manner provided by law for the collection of state or local taxes.

In San Francisco:

But if the property is privately held, the DPW will have to determine the owner’s name and then contact that person about the applicable code violations. The owner will receive a notice from the city giving him or her 30 days to clean up and/or repair the property. If the owner does not respond or comply, the DPW may go there and do the work, billing the owner for the services or placing a lien against the property for repayment.

Mike Dorf pointed out that governments can also mandate positive actions in other arenas: jury duty, schooling your children (state gov.), Selective Service, and even vaccination. Jury duty, for example, is necessary if the federal government is to provide the juries alluded to in the Bill of Rights, in the course of prosecuting federal crimes. And for the originalists out there, as early as 1792, Congress passed a militia act (since repealed) that required citizens between 18 and 45 to “provide [themselves] with a good musket or firelock, a sufficient bayonet and belt, two spare flints, and a knapsack, a pouch, with a box therein, to contain not less than twenty four cartridges, suited to the bore of his musket or firelock, each cartridge to contain a proper quantity of powder and ball; or with a good rifle, knapsack, shot-pouch, and powder-horn, twenty balls suited to the bore of his rifle, and a quarter of a pound of powder”.

In the blight example these are state laws, but they derive that power from the same type of police or taxation powers as the federal government, and philosophically the theory is the same. So it’s clear that “economic inactivity” is still “activity” in the sense that your inaction can effect commerce generally–an unwillingness to maintain your property can be a nuisance and eyesore for a community, an unwillingness to educate your kids creates dumb citizens, and an uninsured person will impact the health care system by going to emergency rooms when they do get sick, or relying on family and friends to support them when they get ill. A 2008 Kaiser study finds that “the uninsured will spend $30 billion out-of-pocket for health care in 2008 while receiving $56 billion in uncompensated care, three quarters of which will be from government sources.” It is equally clear that the government can, and currently does, regulate “inactivity”, the government can compel behavior, and at the very least, the government can tax.

In Defense of Farm Subsidies

A while ago I thought it would be fun to have an “In Defense Of” series that would present arguments for some oft-not-supported causes. Stay tuned for Defenses of Robert Bork and Clarence Thomas…

While debating for Columbia, Josh and I were also responsible for teaching debate to interested students. One aspect of the style we participated in was that the government team proposed the “case” in each round, and unlike [m]any high school debate formats, the “case” was unrestricted by any previously determined resolution. However, there were a handful of prohibitions designed to keep the rounds fair, and one of these was the injunction against “tight cases”–ideas that were so obviously true or one-sided that no matter how well the opposition side argued, they wouldn’t be able to defeat the case. A good example, often used in philosophy, of this is the moral proposition that “we should not torture innocent babies for fun”. Another common example used in illustrating a “tight case” was “the government should end farm subsidies”.

There is a litany of reasons against farm subsidies, which I will briefly mention. Budget hawks harp on their enormous expense. Direct aid to farmers totals around $15-20 billion each year, and one report that aggregated indirect subsidy (i.e. programs for irrigation, export credits, nutrition food aid and loan guarantees) claimed that total direct and indirect aid exceeded $180 billion. Health-conscious critics like Mark Bittman will point out that overproduction of corn allows the cheap production of high fructose corn syrup and all the sugary, diabetes-causing products it engenders, not to mention the corn-fed snack industry. For those who oppose the conglomeration of power in the hands of a few, the Farm Bill disproportionately pays out to large agribusinesses, and not small farmers. Overproduction of wheat, corn, livestock require oil-based fertilizers that destroy the soil and environment. And finally, though I may be missing a few reasons, farm subsidies allow American food producers to dump cheap wheat and corn on the world market, and destroy the livelihood of local farmers in developing countries where agriculture is the primary comparative advantage. Without food subsidies, the argument goes, these local farmers would either be self-sufficient feeders, or could sell their foodstuffs in the market at the same price as American companies.

Let’s look at the last point a little bit. I found a website that showed world production of the three most important cereals: corn, wheat, and rice. (albeit from 2003).

Corn Total Production, Mt %world prod. yield, Mt/ha
World 637,444,480
United States 256,904,560 40.3 8.92
China 114,175,000 17.9 4.85
Brazil 47,809,300 7.5 3.7
Mexico 19,652,416 3.1 2.53
Argentina 15,040,000 2.4 6.47
Wheat
World 549,433,727
China 86,100,250 15.7 3.91
India 65,129,300 11.9 2.62
United States 63,589,820 11.6 2.97
Russia 34,062,260 6.2 1.71
France 30,582,000 5.6 6.23
Rice
World 588,563,933
China 166,417,000 28.3 6.07
India 132,013,000 22.4 3
Indonesia 52,078,832 8.8 4.54
Bangladesh 38,060,000 6.5 3.43
Vietnam 34,518,600 5.9 4.63

One thing I found interesting was theyield, or metric tons of a commodity produced for each hectare planted. The United States, for example, produces 8.92 metric tons of corn per hectare, but the productivity ranges widely, down to Russia’s meager 1.71 metric tons of wheat per hectare. It seemed to me that richer countries generally had higher yields than poorer countries, and in fact a country like Eritrea yielded only 0.24 Mt/ha for wheat and 0.33 Mt/ha for corn. Kuwait and Qatar, on the other hand, have double digit yields of 20 and 12.5, respectively, for corn, despite not being known as particularly fertile places. This makes sense, because a major component of your yield is whether you can afford fertilizer, pesticides, genetically modified crops, or modern machinery. This is not to say that some poorer developing countries do not have excellent climates for agriculture–Egypt, for example, has corn:wheat:rice yields of 7.71, 6.15, and 9.43. Clearly it has retained its historic reputation as a regional breadbasket.Yet even in Egypt, after the building of the Aswan dam, cereal production hasn’t been the same and the country is now the world’s largest importer of wheat.

Just as obviously, it is not so that developing countries have a comparative advantage in agriculture. It seems foolish, in retrospect, to lump together countries like Egypt and Eritrea, which has less than 0.5 yields for both corn and wheat. Even though agriculture is the main economic activity of that latter country, it is subsistence agriculture at best–plagued by manmade disasters like war and deforestation, but also by erosion, drought, and insect infestations. Comparative advantage should not be measured in terms of what uneducated people with time on their hands can traditionally do–modern agriculture is for those with good soil, temperate climate, adequate rainfall, and the technology to maximize those geographical advantages. Nor is it profitable to be an agrarian society, where the majority of people are involved in farming; on the contrary, a nation of small farmers is usually quite impoverished. The fact that America feeds poor people in Africa through cheap corn and wheat, brought about by farm subsidies, is a good thing for countries that don’t have the god-given nor man-made tools to grow as efficiently, and their real comparative advantage is not time for agriculture, but cheap labor galvanized into factory work (think China, Thailand). (note: some Western African countries have a comparative advantage in cotton, but, as far as I know, not wheat/corn/rice).

The other thing I found interesting was that the United States is a Top 5 Producer of both Corn and Wheat, and ranks 11th in terms of Rice. The corn production is astounding: over 40% of the global supply! Recent news has been dominated by coverage of political protests in Egypt and Tunisia, and the specific timing is often attributed to rising food prices. Indeed similar riots occurred in Egypt in 2008, when there was also a wheat shortage, and food prices are higher in 2011 than in 2008, in fact the highest ever since the UN’s Food and Agriculture Organization began indexing prices in 1990. Already, half the Egyptian family’s budget is spent on food. Other Middle Eastern rulers are taking heed. In Bahrain, King Hamad raised government subsidies on flour, poultry, and meat. “Algeria, Libya and Jordan have either relaxed food taxes or duties on food imports or cut prices of staple food. Elsewhere in the Gulf, Kuwait recently introduced a generous stipend and free food for its citizens until March 2012 to ease the pain of higher costs.” Note the benevolence of these dictators is targeted toward food.

Why are wheat prices suddenly so high? The heat wave and fires in Russia/Ukraine, combined with floods in Australia severely diminished the harvests of those major exporters. India and Pakistan both suffered flooding as well. Russia, the world’s 6th largest exporter of wheat, canceled exports. Now China may also be contributing to the problem, as major agricultural regions face the worst drought in centuries, as reported yesterday in the NYTimes. China is a self-sufficient nation with very little exporting or importing, though with many mouths to feed, and a poor harvest could make China’s rich government, with $2.85 trillion in foreign exchange reserves, a big buyer in the international arena, raising prices in an already unstable market.

What does this have to do with farm subsidies? They were originally created in the U.S., in response to the Great Depression, to combat boom-and-bust pricing patterns for agriculture. In bumper years, prices would plummet and it’d be hard to make a profit in an oversaturated market. In lean years, farmers would lose their harvests and need to take on loans just to replant, while the consumer suffered from fluctuating prices. Government subsidies provided a price floor, and income was guaranteed no matter how low prices got. In return, farmers were incentivized to overproduce–there was, after all, a buyer of last resort–and food became cheap and plentiful.

Now in the United States we don’t worry about expensive food; our problem is overeating. But the food riots across in the world, in Manila and Mexico, Cairo and China, remind us why we spend in order to have years of plenty. If America stopped its farm subsidies and American farmers produced only what was domestically needed and a little more, no longer flooding the world market with cheap wheat and corn, would this unpredictable world food crisis have been even more severe? Would the food crisis be better if the U.S. had never had farm subsidies to begin with, and there were small farmers in developing countries trying to feed the Sphinx and the Dragon? Food protectionism costs a lot, no question. But in these modern times with poor countries developing slower than their populations are growing, food security affects global stability. America is no longer merely protecting itself from hunger, but, as an able producer of surplus food, serves as bulwark against global hunger–the farmer of last resort.

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How The Other Side Thinks

Chinese president Hu Jintao visited the White House this week. Much of the focus was on economic issues like currency manipulation, protecting intellectual property, and lifting the Chinese government preference for contracting only Chinese companies in aerospace and renewable energy fields. The goodwill between our nations was symbolized by a $45 billion export package. Obama addressed human rights only toward the end of his press conference remarks, prioritizing trade, global and regional security, environmental issues, and nuclear proliferation. Predictably, Hu focused on the latter, and discussed human rights only in terms of national sovereignty.

The media, on the other hand, zeroed-in on rights. Only two American reporters were given the opportunity to ask questions. The first reporter, from the AP, asked:

President Obama, you’ve covered the broad scope of this relationship, but I’d like to follow up specifically on your comments about human rights. Can you explain to the American people how the United States can be so allied with a country that is known for treating its people so poorly, for using censorship and force to repress its people? Do you have any confidence that as a result of this visit that will change? … And, President Hu, I’d like to give you a chance to respond to this issue of human rights. How do you justify China’s record, and do you think that’s any of the business of the American people?

Hu Jintao didn’t answer the question, not having heard it due to a technical translation problem, but the American press would not be deterred. The second (and final) question from an American journalist, from Bloomberg this time, reiterated: “President Hu, first off, my colleague asked you a question about human rights, which you did not answer. I was wondering if we could get an answer to that question.”

I was a bit surprised, given the zeitgeist themes of losing domestic manufacturing to overseas workers, the exchange rate issue, and the overall trade imbalance; that the media returned to censorship and political speech–a rather traditional scolding for an untraditional Communist state. Americans are, for better or worse, preoccupied with political rights (even for citizens of another country). Sometimes it seems more important for a politician to be Christian and pro-life/choice/guns/privacy than well-educated, competent, and possessed of a clear plan for the future. In college, students are expected to have a liberal arts education–in literature, philosophy, and history, but not necessarily in science, math, and economics. Our core values are in the humanities. It’s no surprise that our leaders reflect our values, and for their legislative and policy decisions to reflect their educational expertise.

I was curious to see whether this correlation between educational values and leadership carries for other countries, and did a little impromptu research. I looked at the top 9 leaders of each country, and found their undergraduate major and/or graduate field. I started with the U.S., China, India, Singapore, and Germany. I would be interested in seeing others; however, I lack the language skill or Googling will to look them up.

I’ll leave you to draw your own conclusions, but perhaps it should come as no surprise, given the results, that the Chinese government is less concerned about humanitarian issues than economic growth, infrastructure development, and technological advancement.

United States (first nine in order of succession, modified Senate pres.)
Barack Obama President law
Joe Biden Vice-President law
Nancy Pelosi Speaker of the House political science
Harry Reid Senate Majority Leader law
Hillary Clinton Secretary of State law
Tim Geithner Secretary of the Treasury economics and East Asian studies
Robert Gates Secretary of Defense history
Eric Holder Attorney General law
Ken Salazar Secretary of Interior law
China 9 members of standing committee of politburo
Hu Jintao President hydraulic engineering
Wu Bangguo Chairman of Standing Committee electrical engineering
Wen Jiabao Premier geology and engineering
Jia Qinglin Chairman of Nat. Com. Of CPPCC engineering
Li Changchun head of propaganda/media affairs electrical engineering
Xi Jinping Vice President chemical engineering
Li Keqiang First Vice Premier law
He Guoqiang Secretary of Central Commission for Discipline Inspection inorganic chemistry
Zhou Yongkang Secretary of Central Political and Legis. Comm. geophysical survey
India top 9 cabinet ministers
Manmohan Singh Prime Minister Economics
Pranab Mukherjee Minister of Finance law/history
P Chidambaram Minister of Home Affairs statistics/law/business
AK Anthony Minister of Defense law
Sharad Pawar Min. of Agri. commerce
Veerappa Moily Minister of Law/Justice law
SM Krishna Minister of External Affairs law
Virbhadra Singh Minister of Steel horticulture
Vilasrao Deshmukh Minister of Heavy Industries law/finance
Singapore
Lee Hsein Loong Prime Minister mathematics, public admin.
Teo Chee Hean Deputy PM, Defense electrical engineering, comp sci.
Wong Kan Seng Deputy PM, National Security business
Goh Chok Tong Senior Minister economics
Sunmugam Jayakumar Senior Minister law
Lee Kuan Yew Minister Mentor law
George Yeo Yong-Boon Minister for Foreign Affairs engineering, business
Tharman Shanmugaratnam Minister of Finance economics, public admin.
Mah Bow Tan Minister for Nat. Dev. industrial engineering
Germany first 9 in list of German cabinet
Angela Merkel Chancellor physics
Guido Westerwelle Vice-Chancellor, Foreign Minister law
Norbert Röttgen Minister of Environment law
Rainer Brüderle Minister of Economics economics
Karl-Theodor zu Guttenberg Minister of Defense law, journalism
Kristina Schröder Minister of Family Affairs sociology, history
Ronald Pofalla Minister of Special Tasks law
Thomas de Maizière Minister of Interior law
Annette Schavan Minister of Education education, theology