Topic: Cato Publications

Review of Side Effects and Complications: The Economic Consequences of Health-Care Reform

By Michael F. Cannon

In the latest issue of Cato Journal, I review Casey Mulligan’s book, Side Effects and Complications: The Economic Consequences of Health-Care Reform.

Some ACA supporters claim that, aside from a reduction in the number of uninsured, there is no evidence the ACA is having the effects Mulligan predicts. The responsible ones note that it is difficult to isolate the ACA’s effects, given that it was enacted at the nadir of the Great Recession, that anticipation and implementation of its provisions coincided with the recovery, and that administrative and congressional action have delayed implementation of many of its taxes on labor (the employer mandate, the Cadillac tax). There is ample evidence that, at least beneath the aggregate figures, employers and workers are responding to the ACA’s implicit taxes on labor…

Side Effects and Complications brings transparency to a law whose authors designed it to be opaque.

Have a look (pp. 734-739).

Topics:
Cato Publications, Health Care & Welfare, Tax and Budget Policy

CBO Projections Are No Basis for Claiming Tax Reform “Loses Trillions”

By Alan Reynolds

I recently wrote in The Hill on Donald Trump’s fiscal plan. The graph below clarifies some of my comments.

CBO REVENUE PROJECTIONS

Estimates purporting to show the new, evolving Trump/Ryan Tax Reform must “lose trillions” over 10-20 years are usually static – meaning they assume lower marginal tax rates on labor and capital have zero effect on economic growth or tax avoidance.  Yet that is a relatively small part of the problem.

Even if static estimates made any sense, the alleged revenue losses would still be wildly exaggerated because they compare estimated revenues from reform plans with “baseline” revenues projections from the Congressional Budget Office (CBO).  

As the graph shows, CBO projections pretend that revenues from the existing individual income tax will somehow rise as a share of GDP every year –forever– reaching levels never before seen in U.S. history, even in World War II. 

Real wages in the CBO forecast supposedly rise so rapidly that more and more middle-income taxpayers are pushed into higher and higher tax brackets.  Since tax reform eliminates the highest tax brackets, it thwarts these sneaky tax increases and thus appears to “lose money.” But the CBO’s phantom projections are sheer fantasy and no basis for rejecting sensible tax reforms to encourage more business investment and greater labor force participation.

 

Topics:
Cato Publications, Finance, Banking & Monetary Policy, Government and Politics, Tax and Budget Policy

Is Education “Privatization” Really Just Devious Deceit?

By Neal McCluskey

Education historian Diane Ravitch is against charter schools, voucher programs – any sort of education “privatization.” And that’s fine. I just wish she would bring more to bear in opposing such measures than accusations about privatizers’ hand-rubbing, dastardly motives, and unsupported assertions about what privatization has or has not done.

Here’s the part that really got to me in Ravitch’s latest writing on privatization:

A quarter century after privatization began in earnest, it is clear that its main effect has been to undermine the public schools. Actually, that has always been the goal of the privatization movement. Their propaganda campaign – which now spans from Kenya to the United Kingdom – blames public schools for the persistence of poverty and for the low test scores of children who grow up in poverty, without adequate food or medical care.

The privatization movement has cleverly and deceitfully branded itself as a “reform movement.” As they divert resources and students from public schools, which still enroll the vast majority of students, they congratulate themselves for leading a civil rights movement and introducing market discipline into what has traditionally been a government responsibility.

These are pretty tough accusations. But where’s the evidence? Ravitch offers basically none, save attacking the 1983 report “A Nation at Risk” for overinflating the dangers posed to the United States by its education system. (A point, by the way, to which I am sympathetic.)

But demonstrate that the main goal—and effect—of privatizers has been to hurt public schools, not help kids? No evidence. That privatizers have “deceitfully” used the term “reform movement,” as if more school choice weren’t somehow a reform? No evidence. That they blame public schools, presumably exclusively, for the persistence of poverty? No evidence.

I can’t speak to the motivations of others, but my goal in supporting “privatization” is absolutely to reform the system and help not just children, but all of society. Not only do I think the evidence shows public schooling does not work as well as free-market education academically, government schooling is fundamentally at odds with basic American values, forcing social conflict and creating inequality under the law. And Ravitch herself has furnished a significant amount of the evidence that has led me to those conclusions.  

Those conclusions have, of course, caused me to believe that the government monopoly over education should go away, and that funding should follow each, unique child to the educational options chosen by his or her parents. The end of government schooling, however, is not my goal, but a consequence of achieving my desired goals: improving education and maximizing liberty.

There is also weighty evidence of the power of privatized—meaning, really, freedom-based—education. As James Tooley’s work has vividly illustrated, private, for-profit schools seem to be providing education, typically better than the public schools, to many of the poorest people in the world. And the cases of Sweden and Chile to which Ravitch points actually furnish far from damning evidence that choice fails.

Of course, Ravitch may not agree with the findings of Tooley and others, but she at least ought to deal with them. Instead, she brusquely dismisses privatization and impugns the motives of “privatizers.” To truly determine what’s best for children and society, that’s not a very useful argument.

Topics:
Cato Publications, Education and Child Policy, General

A Friedman Prize for Courage

By David Boaz

The 2016 Milton Friedman Prize for Advancing Liberty has been awarded to Flemming Rose and will be formally presented at a dinner in New York on May 25. (Tickets still available!)

Flemming Rose is a Danish journalist. In the 1980s and 1990s he was the Moscow correspondent for Danish newspapers. He saw the last years of Soviet communism, with all its poverty, dictatorship, and censorship, and the fall of communism, only to be disappointed again with the advance of Russian authoritarianism. After also spending time in the United States, he became an editor at the Danish newspaper Jyllands-Posten. In 2005 he noticed “a series of disturbing instances of self-censorship” in Europe. In particular, “a Danish children’s writer had trouble finding an illustrator for a book about the life of Muhammad. Three people turned down the job for fear of consequences. The person who finally accepted insisted on anonymity, which in my book is a form of self-censorship.”

Rose decided to take a stand for free speech and the open society. He asked 25 Danish cartoonists “to draw Muhammad as you see him.” Later, he explained that 

We [Danes] have a tradition of satire when dealing with the royal family and other public figures, and that was reflected in the cartoons. The cartoonists treated Islam the same way they treat Christianity, Buddhism, Hinduism and other religions. And by treating Muslims in Denmark as equals they made a point: We are integrating you into the Danish tradition of satire because you are part of our society, not strangers. The cartoons are including, rather than excluding, Muslims.

Rose promised to publish all the cartoons he received. He got 12. They were by turns funny, provocative, insightful, and offensive. One implied that the children’s book author was a publicity seeker.  One mocked the anti-immigration Danish People’s Party. One portrayed the editors of Jyllands-Posten as a bunch of reactionary provocateurs. The most notorious depicted the prophet with a bomb in his turban.

A firestorm erupted. Protests were made. Western embassies were attacked in some Muslim countries. As many as 200 people were killed in violent protests. Rose and the turban cartoonist were the subject of death threats. To this day Rose travels with security. 

Is Rose in fact a provocateur or anti-Muslim? No. When we discovered that his book A Tyranny of Silence had not been published in English, that was the first question we asked. From reading the manuscript, and from talking to contacts in Denmark and Europe, we became confident that Rose was a genuine liberal with a strong anti-authoritarian bent, sharpened during his years as a reporter in the Soviet Union. His book, recently reissued with a new afterword, confirms that. Chapter 10, “A Victimless Crime,” traces the history of religious freedom from the Protestant Reformation to the challenges faced today by Muslims of different religious and political views.

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Topics:
Cato Publications

Negative Effects of Minimum Wages

By Chris Edwards

California and New York have approved bills to increase their state minimum wages over time to $15 an hour. Presidential candidates Hillary Clinton and Bernie Sanders favor raising the federal minimum wage. But such mandated increases do more harm than good, and they hurt the exact groups of people that policymakers say that they want to help.

Labor economist Joseph Sabia of San Diego State University summarized the academic evidence on minimum wages in this 2014 bulletin for Cato.

Sabia’s own statistical research with economist Richard Burkhauser “found no evidence that minimum wage increases were effective at reducing overall poverty rates or poverty rates among workers.” And a study by economists David Neumark and William Wascher “found that while some poor workers who kept their jobs after minimum wage increases were lifted out of poverty, others lost their jobs and fell into poverty.”

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Topics:
Cato Publications, Health Care & Welfare

A Libertarian Argument for Bernie Sanders?

By Michael F. Cannon

Will Wilkinson notes that there is a libertarian argument for Bernie Sanders. I’m not sure I buy the precise point Wilkinson is making. Sanders says he wants to make the United States more like Finland, Sweden, and Denmark. And those countries do indeed rank higher than the United States in the Cato Institute’s Human Freedom Index, compiled by my colleagues Ian Vásquez and Tanja Porčnik. But Sanders wants to emulate those countries in the ways they are less free than the United States (i.e., expanding government transfers), not in the ways they are more free (taxes and regulation). I think this powerful Sanders ad featuring Eric Garner’s daughter Erica is a much better libertarian argument for Sanders.

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Topics:
Cato Publications, General, Government and Politics, Health Care & Welfare, International Economics, Development & Immigration, Law and Civil Liberties, Political Philosophy, Regulatory Studies, Tax and Budget Policy

Taking (Tax) Credit for Education

By Jason Bedrick

One of the most promising recent developments in education policy has been the widespread interest in education savings accounts (ESAs). Five states have already enacted ESA laws, and several states are considering ESA legislation this year. Whereas traditional school vouchers empower families to choose among numerous private schools, ESAs give parents the flexibility to customize their child’s education using a variety of educational expenditures, including private school tuition, tutoring, textbooks, online courses, educational therapies, and more.

Today the Cato Institute released a new report, “Taking Credit for Education: How to Fund Education Savings Accounts through Tax Credits.” The report, which I coauthored with Jonathan Butcher of the Goldwater Institute and Clint Bolick (then of Goldwater, now an Arizona Supreme Court justice), draws from the experiences of educational choice policies in three states and offers suggestions to policymakers for how to design a tax-credit-funded ESA. Tax-credit ESAs combine the best aspects of existing ESA policies with the best aspects of scholarship tax credit (STC) policies. Like other ESA policies, tax-credit ESAs empower families to customize their child’s education. And like STC policies, tax-credit ESAs rely on voluntary, private contributions for funding, making them more resistant to legal challenges and expanding liberty for donors.

Here’s how it would work: individuals and corporations would receive tax credits in return for donations to nonprofit scholarship organizations that would set up, fund, and oversee the education savings accounts. There’s already precedent for this sort of arrangement. In Florida, the very same nonprofit organizations that grant scholarships under the state’s STC law also administer the state’s publicly funded ESA. Moreover, New Hampshire’s STC law allows scholarship organizations to help homeschoolers cover a variety of educational expenses, similar to ESA policies in other states. 

For more details on how to design tax-credit ESAs, how they would work, and the constitutional issues involved, you can read the full report here. You can also find a summary of the report at Education Next.

Topics:
Cato Publications, Education and Child Policy, Law and Civil Liberties

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