W.E.B. DuBois on States Rights and the CSA

DuBois is not one of my favorite historical figures but he is essentially right on this point. One could add that states rights or the rights of the states is not even mentioned in the secessionist declarations of South Carolina and Mississippi. Essentially, the main theory these documents put forward was the Northern states had violated the “compact” by obstructing and otherwise failing to enforce the Fugitive Slave clause.

The Fugitive Slave clause:

“Copperheads like the New York Times may magisterially declare: “of course, he never fought for slavery.” Well, for what did he fight? State rights? Nonsense. The South cared only for State Rights as a weapon to defend slavery. If nationalism had been a stronger defense of the slave system than particularism, the South would have been as nationalistic in 1861 as it had been in 1812.”

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David T. Beito is a Research Fellow at the Independent Institute, Professor of History at the University of Alabama, and co-author with Linda Royster Beito of T. R. M. Howard: Doctor, Entrepreneur, Civil Rights Pioneer (Independent Institute, 2018).

Three Surprises About Nobel Laureate Nordhaus’s Model of Climate Change

Yale University professor William Nordhaus was named a co-recipient of this year’s Nobel (Memorial) Prize in Economic Science for his work on climate change. The award was of particular interest to me because back in 2009 I published an article in The Independent Review offering a thorough analysis and critique of his Dynamic Integrated Model of Climate and the Economy (DICE). At the Institute for Energy Research website, I have explained that Nordhaus’s latest version of his model does not support the United Nations’ current push for aggressive measures to limit global warming. In the present post, I will revisit my 2009 article to showcase three surprising facts about Nordhaus’s DICE model, all of which are very relevant for the climate change policy debate.

What Is Your State’s Fiscal Health Ranking?

It’s ranking season for comparing the relative health of individual U.S. states! After covering how your state ranks on personal income taxes, it’s now time to dig deeper into your state’s fiscal health, which we can do with the 2018 edition of the Mercatus Center’s State Fiscal Condition Rankings, which were just published earlier this month.

Conducted by Eileen Norcross and Olivia Gonzalez, the 2018 study measures how well state governments within the U.S. are able to meet their short and long-term obligations based on their financial statements. Norcross and Gonzalez paid close attention to the following five measures of fiscal stability, which they combined to produce an overall ranking for the solvency of state governments.

  • Cash solvency. Does a state have enough cash on hand to cover its short-term bills?
  • Budget solvency. Can a state cover its fiscal year spending with revenues, or does it have a budget short-fall?
  • Long-run solvency. Can a state meet its long-term spending commitments? Will there be enough money to cushion it from economic shocks or other long-term fiscal risks?
  • Service-level solvency. How large a percentage of personal income are taxes, revenue, and spending? How much “fiscal slack” does a state have to increase spending if citizens demand more services?
  • Trust fund solvency. How much debt does a state have? How large are its unfunded pension and healthcare liabilities?

The following map illustrates their results, emphasizing the Top 5 states (Nebraska, South Dakota, Tennessee, Florida, and Oklahoma) and the Bottom 5 states (Kentucky, Massachusetts, New Jersey, Connecticut, and Illinois) in the rankings.

For Most Americans, U.S. Defense and Foreign Affairs Take Place in a Parallel Universe

Americans have a unique advantage (or disadvantage, depending on how one looks at it) in experiencing their nation’s defense and foreign affairs, namely, that for the great majority such affairs take place “over there” somewhere, often in a place they can’t locate on a map and about which they know approximately nothing. They don’t have to smell the smoke and the decomposing bodies. They don’t have to hide in holes while their homes are demolished by bombs, rockets, and artillery. Because they have so little first-hand experience, they are vulnerable to being bamboozled by what their leaders tell them about what’s going on halfway around the world.

The leaders themselves don’t know much, either, notwithstanding the great sums they expend on gathering and analyzing information. Top leaders more or less ignore this intelligence and make their decisions on more personal, immediate, and political grounds. But they don’t need to know much in any event, because they have great power, and even if they don’t really know much about places X, Y, and Z, they can still drop bombs on those places, claim credit for protecting the American people, and hope the situation does not unravel too visibly before the next election.

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Robert Higgs is Senior Fellow in Political Economy at the Independent Institute, author or editor of over fourteen Independent books, and Editor at Large of Independent’s quarterly journal The Independent Review.

What California Can Teach Harvard

A group of Asian-Americans is suing Harvard with backing from the U.S. Department of Justice, which filed papers stating: “The record evidence demonstrates that Harvard’s race-based admissions process significantly disadvantages Asian-American applicants compared to applicants of other racial groups—including both white applicants and applicants from other racial minority groups.” This is a rare case where California policy could provide positive guidance. 

The back story here is the dogma that all institutions must precisely reflect the racial or ethnic diversity of the wider population. If they do not, the reason must be deliberate discrimination and the only remedy is government action, namely, racial and ethnic preferences. This dogma ignores personal differences, effort, and choice and proclaims some groups “overrepresented.” On this basis, the University of California discriminated against Asians, a group that had suffered decades of official discrimination in California. 

Enter the California Civil Rights Initiative, Proposition 209 on the November 1996 ballot: “The state shall not discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting.” Administrators and politicians attacked it in apocalyptic terms, but California voters approved it 54 to 46 percent. The disaster the preference forces predicted never came about. 

As Thomas Sowell noted in Intellectuals and Race, declines in minority enrollment at UCLA and Berkeley have been offset by increases at other UC campuses. More important, the number of African-American and Hispanic students graduating from the UC system has gone up, including a 55 percent increase in those graduating in four years with a GPA of 3.5 or higher.

Proposition 209 did not mean the end of “affirmative action.” Universities could still help disadvantaged students on an economic basis, but they could not discriminate on the basis of race and ethnicity, as Asian students claim Harvard is doing. UC Davis Medical School likewise discriminated against Allan Bakke by rejecting him in favor of lesser-qualified minority candidates. In 1978, the U.S. Supreme Court ruled 5-4 in Bakke’s favor.

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K. Lloyd Billingsley is a Policy Fellow at the Independent Institute and a columnist at The Daily Caller.

More Evidence of FDR’s Hostility Toward Free Speech

“As the supper [in May 1939] progressed, I found myself revising my previous concept of [Franklin D. Roosevelt]... I had long admired him for his sagacious statesmanship. Hearing him in this informal atmosphere, I realized how much I had idealized him. He was as neither wise nor as proud as I had supposed him to be. His glibness, his propensity for generalizations jarred me; so did his lack of prudence especially when he spoke of Boake Carter, a popular radio commentator who was an outspoken enemy of the New Deal. The President made no bones of the fact that he was having Carter ‘thoroughly investigated,’ apparently by the FBI. He was quite certain that Carter‘or whatever his real name is’had a nefarious background which, when brought to light, would put an end to his career. That Roosevelt, the statesman I had admired, should admit to such vindictiveness came as the greatest jolt of all.”

Jerry Mangione, An Ethnic at Large: A Memoir of America in the Thirties and Forties (New York: G.P. Putnam’s Sons, 1978), 248.

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David T. Beito is a Research Fellow at the Independent Institute and Professor of History at the University of Alabama. His latest book, co-authored with Linda Royster Beito, is T.R.M. Howard: Doctor, Entrepreneur, Civil Rights Pioneer.

Federal Spending Drives Budget Deficit in 2018

All year long, many Americans have been dreading what the U.S. government’s fiscal state would be at the conclusion of its 2018 fiscal year, which just ended on September 30, 2018. The combination of tax cuts passed into law in December 2017 that slashed corporate income tax rates and a budget deal in February 2018 that boosted federal spending at the same time seemed to be a sure recipe for creating a massive fiscal headache for American taxpayers.

But, only one of these measures appears to have negatively impacted the U.S. government’s fiscal situation since President Trump signed both measures into law. After a four-day delay, the U.S. Treasury Department issued its final monthly treasury statement for the U.S. government’s 2018 fiscal year, where the following chart shows one expected result and one surprising result.

U.S. Government Cumulative Tax Collections and Spending by Month, Fiscal Years 2017 and 2018

The expected result is what happened with federal spending, which increased from $3.981 trillion in FY 2017 to $4.107 trillion in FY 2018. The unexpected result can be seen in the cumulative total for the U.S. government’s tax collections, which in a year of tax cuts, surprisingly rose from $3.315 trillion to $3.329 trillion. Overall, the U.S. government ran a $779 billion deficit in its 2018 fiscal year, up $113.2 billion from the $665.8 billion deficit in 2017.

According to CNS News, the national debt increased by $1.271 trillion during FY 2018, a $492 billion difference from the $779 billion deficit that the federal government reported for the year.

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Craig Eyermann is a Research Fellow at the Independent Institute and the creator of the Government Cost Calculator at MyGovCost.org.

How Does Your State Rank on Individual Taxes?

Taxes are the price that regular people pay for government spending. Whether that spending goes to things and services that people want, like road repairs, schools, fire and police protection, trash pickup, public parks, or to things that people don’t really want, like sports stadiums or excessively lavish pension benefits for bureaucrats, the bill for all these things is ultimately paid through taxes.

For most states in the United States, the primary means by which state governments take money from their residents is through income taxes. As part of its 2019 State Business Tax Climate Index, the 81-year-old nonpartisan Tax Foundation has ranked U.S. states according to their individual income tax burden, which is the heaviest-weighted component of their state business tax climate index. The following map shows where each state has ranked according to state income taxes going into 2019.

Tax Foundation Individual Tax Component Rankings, 2019

When Healthy Policy Neglects Economic Principles, Patients Suffer

The healthcare sector of the U.S. economy is extraordinarily dynamic and complex, providing constant challenges for policymakers and regulators working to improve healthcare markets. However, recent research and policies suggest the greatest challenges for policymakers might be their misunderstanding of economic fundamentals.

Earlier this year, the Annals of Internal Medicine journal published a paper which found the prices increased for nearly 100 drugs while they were in a shortage between 2015 and 2016. The paper also notes these “price hikes” (price increases) were less severe in markets with comparatively more competitors (defined as more than three drug providers).

Although the authors consider these findings “mysterious,” they confidently offered policy recommendations to correct “the imbalance between supply and demand.” As they stated in their conclusion, “If manufacturers are observed using shortages to increase prices, public payers could set payment caps for drugs under storage and limit price increases.”

The situation described above, and the folly of its policy prescription, are no mysteries for anyone who understands basic economics.

Proposition 47 Backstory to Mac Attacks?

Customers at the Apple store in Sacramento’s Arden Fair Mall last weekend noticed an armed police officer standing at the door. This was a response to a wave of Apple store robberies in northern California, including four at the Apple store in nearby Roseville in 30 days. In July, in similar style, four thieves stole $27,000 of Apple products from the Apple store in Fresno’s Fashion Fair Mall.

This recent crime wave may have been inspired by Prop 47, which lowered sentences for drug possession, theft, shoplifting, identity theft, receiving stolen property, writing bad checks and check forgery. The 2014 ballot measure changed these offenses from felonies that can bring prison terms to misdemeanors that often bring minimal jail sentences, if thieves are charged at all.

As we noted, in San Francisco last year criminals pulled off nearly 30,000 car break-ins and police made arrests in only 1.7 percent of the cases. That could easily have proved inspiring to those now ripping off Apple stores, and these thefts are more than simple property crime. The stolen items all belong to people, whether consumers or business owners. Meanwhile, violent criminals also enjoy new government incentives.

Proposition 57, California’s 2016 Public Safety and Rehabilitation Act, expanded parole possibilities for nonviolent offenders and was supposed to reduce the prison population and save taxpayers money. Instead, it burns up more taxpayer dollars and gives some of the worst violent offenders a shot at early release. Those include convicted double murderer Daniel Marsh of Davis, one of the most depraved criminals in state and national history. Despite no new exculpatory evidence, Prop 57 was applied retroactively and his conviction reversed pending a “transfer hearing.”

Next week, a Yolo County judge will rule whether Marsh serves only until age 25, which would amount to nine years for two murders. SB 1390, signed by Gov. Jerry Brown on September 30, bars the prosecution in adult court of those ages 14-18, whatever the gravity of their crime.

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K. Lloyd Billingsley is a Policy Fellow at the Independent Institute and a columnist at The Daily Caller.

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