Wednesday, August 15, 2018

The EPA's SAFE Vehicle Rule Poses a False Choice. We Can Have Safe Vehicles AND Clean Air.

The EPA has released a proposed rule that would freeze corporate average fuel economy (CAFE) standards at 37 miles per gallon, rather than allowing them to rise to the Obama administration’s target of 54 MPG, as currently scheduled. The administration’s  proposal has the cute name of Safer and Affordable Fuel-Efficient Vehicles Rule, or “SAFE Vehicle Rule,” for short.

The proposed rule has been widely panned by environmentalists, and rightly so. However, the critics of the rule are wrong simply to defend the existing CAFE standards. The EPA’s analysis of the flaws of those standards is justified. But neither the EPA nor its critics are reaching the right conclusion, which is that we should repeal CAFE standards and replace them with a carbon tax — one tough enough to reduce carbon emissions by as much, or more, without the unintended consequences.

Tuesday, August 14, 2018

Is That Government Best Which Regulates Least?


In a recent post, I questioned Henry David Thoreau’s aphorism, “That government is best which governs least.” The data, it seems, show something different. Countries with small governments, as measured by the share of expenditures and taxes in GDP, tend actually to be somewhat less free and prosperous than those with larger governments. The quality of government, as measured by things like rule of law, independent judges, and integrity of government officials turns out to matter much more than the size of government. I concluded that Thoreau’s aphorism should be revised to read, “That government is best which governs well.

In response, several readers questioned whether the size of government, as measured by spending, was the right measure of “governs least.” Excessive regulation, they pointed out, may do more damage than spending and taxes. Maybe what we should say is, “That government is best which regulates least.”

Niskanen Center’s Will Wilkinson puts it this way:
Whether a country’s market economy is free — open, competitive, and relatively unmolested by government — is more a question of regulation than a question of taxation and redistribution. . .
If we want to encourage freedom and prosperity, we should pay more attention to easing the grip of the regulatory state.
The point is a good one — worth putting to the same kind of statistical test used in the previous post. Here we go:

Thursday, August 2, 2018

More on Work Requirements: A Response to AEI

An op-ed by Angela Rachidi and Robert Doar in Real Clear Policy, reprinted on the American Enterprise Institute’s blog, challenges some points I made about the effects of work requirements in my commentary on the topic last week. Rachidi and Doar’s critique focuses on the interpretation of data from the National Evaluation of Welfare to Work Strategies (NEWWS), which analyzed the results of 11 controlled experiments conducted around the country in the 1990s. Each experiment compared the experience of a group of welfare recipients who were subject to work requirements with a control group who did not face work requirements.

Rachidi and Doar point out that some of the programs were “jobs-first” programs that placed a primary emphasis on job placement, while others were “education-first” programs that emphasized human capital development before job placement. They claim that only the jobs-first variants are relevant to today’s debate over work requirements for noncash welfare such as SNAP, Medicaid, and housing assistance. Linking specifically to my commentary, they maintain that critics:
incorrectly cite the results from the education-focused programs, which were found to be largely ineffective compared to jobs-first programs, to suggest that work requirements would not be effective today in SNAP or Medicaid. The education-first programs are largely irrelevant to today’s discussion of extending work requirements to other safety-net programs — no one proposes that recipients be required to go to college in order to receive SNAP or Medicaid.

Wednesday, August 1, 2018

Does the Government That Governs Least Really Govern Best? A Quick Look at the Data.


Libertarians are fond of quoting Henry David Thoreau’s aphorism, “That government is best which governs least.” Thoreau was evidently paraphrasing his contemporary John O’Sullivan, but no matter who first said it, the quotation has become an axiom of those who love freedom. But is it true?

Let’s treat this aphorism as a hypothesis and test it against the data. To know what data we want, we first need to decide just what we mean by “best government” and “least government.”

“Best government” could mean one of three things: 
  1. It could mean the government that produces the best results in terms of human prosperity –  not just high GDP, but good health; access to food, clean water, shelter and education; safe communities; clean environment; and so on. To measure those things, we will use the Legatum Prosperity Index (LPI). 
  2. “Best government” could instead mean the government that allows the greatest degree of human freedom, including freedom of speech and religion, freedom in personal relationships, personal safety and security, security of property rights, freedom to trade, and so on. To measure those things, we will use the Human Freedom Index (HFI) from the Cato Institute. 
  3. Rather than a results-based measure, we could define “best government” in a procedural sense – a government that adheres to rule of law, maintains fair and impartial criminal justice, and is free from corruption. We can compile such a measure by extracting and combining relevant indicators from the LPI and HFI to construct a Quality of Government Index (QGOV). 

Saturday, July 28, 2018

Is the War on Poverty Really Over?



The Council of Economic Advisers recently released a report that began with the startling statement that the War on Poverty is over and has ended in victory. Properly measured, says the CEA, the poverty rate has fallen to just 3 percent.

Can such a low poverty rate, less than a quarter of the official measure (12.7 percent for 2017), be in any way credible? The answer turns out to be both “yes” and “no.”

There are, in fact, many different measures of the poverty rate. In addition to the official measure, the Census Bureau also publishes a modernized version called the Supplemental Poverty Measure, estimated at 13.97 percent for 2016. The Organization for Economic Cooperation and Development, a club of 36 middle- and high-income democratic countries, defines poverty as earning less than half of a country’s median income. By that definition, the U.S. poverty rate is 16.8 percent, the third highest in the OECD. Only Israel and Turkey have higher poverty rates.

Tuesday, July 24, 2018

Work Requirements Are the Newest Front in the War on the War on Poverty


On July 12, President Trump’s Council of Economic Advisers released a report titled “Expanding Work Requirements in Non-Cash Welfare Programs” in response to an April 2018 executive order on reducing poverty in America.

The CEA’s basic argument is simple: The war on poverty has been won — properly measured, the poverty rate is just 3 percent, a historic low. However, victory has left an ever-increasing number of able-bodied working-age adults dependent on in-kind welfare, especially on Medicaid, SNAP (formerly food stamps), and housing assistance. This problem can best be addressed by expanding work requirements for non-cash welfare programs. Work requirements will encourage self-sufficiency, strengthen the economy, and ultimately benefit the welfare recipients themselves.

The CEA is right, at least in part, in its critique of current in-kind public assistance programs. However, the picture it draws is misleading in a number of ways, and the case it makes for work requirements is unconvincing. There are better ways to address the weaknesses of the current welfare system. Here are some questions that need to be addressed before undertaking a wholesale expansion of work requirements.

Thursday, July 5, 2018

Is Single-Payer the Right Way Forward for Health Care?


America’s progressives are right when they say we need a health care system that guarantees everyone affordable access to essential care, asks everyone to pay their fair share of the cost, but not more, and makes health care transparent, efficient, and consumer-friendly. But are the also right about the best way to get there?

They ask, why don’t we just adopt a single-payer health care system like every other rich democratic country has? Why can’t the government just pay everyone’s medical bills and be done with it?

These are understandable questions, but they oversimplify. If we look closely at the world’s top-rated health care systems – those in countries like the UK, Australia, and the Netherlands – we find that they are not true single-payer systems. Compared with proposals like Bernie Sanders’ Medicare for All, other countries’ health care systems are much more decentralized, and stop well short of paying for all care for everyone.

To get a health care system that is universal, affordable, fair, and efficient, the United States needs to learn from other countries’ experience and adapt it to specific American circumstances. Universal catastrophic coverage offers a more plausible model than an idealized single-payer system that exists nowhere else.

For a full discussion, check out the slideshow of my July 5th presentation to the Cracker Barrel Society of Northport, Michigan.