Don’t Limit Campaign Spending
Stanley C. Brubaker, “The Limits of Campaign Spending Limits,” in The Public Interest (Fall 1998), 1112 16th Street N.W. #530, Washington, D.C. 20036.

In Buckley v. Valeo (1976), the Supreme Court declared that limits on federal campaign spending violate First Amendment rights. Undaunted, proponents of spending limits make several arguments:

Campaigns cost too much. In 1995-96, federal candidates spent $2.2 billion, according to the Center for Responsive Politics, or $11.25 per eligible voter. Stanley Brubaker of Colgate University points out that this rate of spending is comparable to other democracies and that Americans spend twice as much on perfume and cologne.

Limits on spending benefit challengers. On the contrary, Brubaker replies, Incumbents have advantages like free press coverage and government-subsidized mail to keep their name before the public, while challengers require more funds than incumbents in order to “gain name recognition and positive publicity.” Spending limits “would almost certainly further ensconce incumbents.”

More money encourages politicians to “go negative.” Actually, rationing funds may encourage campaign managers to choose cost-effective negative ads over more costly positive ones.

Brubaker calls for Congress to enact several reforms, including tripling the individual donation limit of $1,000 (which hasn’t been raised since 1974) to adjust for inflation, removing restrictions on the amount political parties can give candidates, and restoring deductions for campaign contributions limited in the 1986 tax reform. Such changes, he argues, would be “congruent with, not wholly foreign to, our Constitution.”

Lessons in Tax Reform
John Hood, “Tax Reform Schools,” in Reason (November 1998), 3415 South Sepulveda Boulevard #400, Los Angeles, California 90034.

State taxes are often more regressive than federal taxes, and John Hood, president of the John Locke Foundation, suggests it may be more difficult to reform a tax code at the state level than in Washington.

Consider the debate over tax reform in Texas, a state with no personal or corporate income tax. Texas has punitive property and franchise taxes on businesses that own a great deal of land, such as mining companies, oil refineries, and manufacturers. In 1997, Governor George W. Bush proposed slashing school property taxes by 40 percent, raising the sales tax by 0.5 percent, and replacing existing corporate taxes with a 1.25 percent ‘business activity” tax that would apply uniformly to all enterprises with annual sales above $500,000. The proposal would have resulted in $2.8 billion in tax cuts and $1.8 billion in tax increases, for a total tax savings of $1 billion.

Many groups applauded Bush’s decision, including the trade associations for farmers, oil and gas firms, and ranchers. But partnerships objected to the higher taxes they would have to pay, and others opposed new taxes on fringe benefits and on Social Security, Medicare, and unemployment compensation.

The Texas legislature debated several proposals and could not decide on any of them. Ultimately, only one part of Governor Bush’s tax package was passed: an amendment to the state constitution to provide homes with a $25,000 property tax exemption. This constitutional change, subsequently approved by voters in a referendum, resulted in $1 billion in tax relief.

Texas, Hood contends, shows tax reform must be gradual to succeed. He applauds Virginia Governor James Gilmore’s move to repeal a state property tax on cars. Another useful reform is to allow the self-employed to deduct all their health insurance premiums.

“The fact that there are political barriers to tax reform does not mean the cause is doomed,” says Hood. “Reformers will need to design discrete, incremental policies that are consistent with the principles of tax neutrality and simplicity yet salable to lawmakers and voters.”

Getting Rich Pretty Quick
Marvin H. Kosters, Wage Levels and Inequality: Measuring and Interpreting the Trends. aei Press, 1150 17th Street N.W., Washington, D.C. 20036.

Critics of business such as Robert Reich, Lester Thurow, and John Judis often cite data from the Bureau of Labor Statistics (bls) which show stagnation in workers’ wages. But Marvin Kosters of the American Enterprise Institute argues the data are severely misleading.

For instance, the bls reports real average hourly earnings for nonsupervisory workers have fallen by 9 percent since 1973. But that figure does not include year-end bonuses or profit-sharing, even though studies on union contracts show 40-50 percent of union workers receive some type of annual bonus. Fringe benefits such as health insurance or pensions, which for decades have been rising far faster than wages, also are not counted. When the bls counts all forms of compensation, far from falling by 9 percent, the average worker’s compensation since 1973 rises by 16 percent in constant dollars.

The data have also been increasingly distorted by the bls definitions of “production worker” and “supervisor.” One way the bls distinguishes “workers” from “supervisors” is by income, but the dividing line has not been adjusted for inflation since 1975 and thus assembly line workers—who earn good pay—are now not counted by the bls as workers.

How are workers in fact doing? After correcting for distortions in the data, Kosters estimates that in constant dollars, the typical worker has seen his wages rise by 15 percent in the past quarter-century. Throw in fringe benefits and the typical worker earns 25 percent more than in 1973. “These numbers represent a slowdown in real wage growth since the 1950s or 1960s,” he writes, “but not stagnation or pervasive deterioration.”

Depressed? Get Married and
Go to Church
William R. Mattox, Jr., “Bawling Alone,” in Policy Review (September/October 1998), Heritage Foundation, 214 Massachusetts Avenue N.E., Washington, D.C. 20002.

We live in prosperous times, yet more people are depressed, and persons born in recent decades report more cases of depression than those born earlier this century.

There are many reasons depression is rising. One involves the media, which find they can gain higher ratings with the gloomy than the hopeful. Similarly, researchers conduct 21 times more psychological studies on depression, anger, and anxiety, than on joy, happiness, or life satisfaction.

But William Mattox of usa Today contends that “the decline of civil society” is the primary reason depression is so common. According to the National Institute for Healthcare Research, people who live alone are more likely to be depressed than those who live with families. And singles “enmeshed in a community of supportive relationships” are happier than people who are isolated.

Churchgoers, for instance, are more content than people who don’t belong to a church. Lisa Miller, a psychologist at Columbia University, found that young women whose mothers were devoutly religious were 50 percent less likely to be depressed than other young women. If mother and daughter share the same faith, depression falls further by about 30 percent. mit social psychologist Sheena Sethi-Iyengar found that choice of denomination is also a factor in depression; members of conservative congregations were less likely to be depressed than members of more liberal faiths, because the conservatives were less likely to blame themselves for their problems.

“Much of our nation’s ‘epidemic’ in clinical depression,” Mattox contends, “is undoubtedly linked to nihilistic thinking.” People who reach out to others, and to God, will end up being less unhappy.

Don’t Mess with the SAT
David W. Murray, “The War Against Testing,” in Commentary (September 1998), 165 East 56th Street, New York, New York 10022.

For decades, students from low-income families who have scored well on the Scholastic Aptitude Test (sat) have used their test scores to attend good schools and get ahead in life. Today, the sat is under severe assault because the test’s foes wish to “achieve the ends of affirmative action by other, more politic means,” reports David Murray of the Statistical Assessment Service.

Critics of the sat argue that the test “favors certain kinds of students over others.” Education writer Peter Sacks argues the test is biased against the poor because the knowledge tested is allegedly more available to middle-class whites than to minorities. In addition, feminists argue that girls suffer because the questions (such as identifying antonyms) favor “male” forms of thought.

The Educational Testing Service has responded to these charges with a series of concessions. In the 1970s, scores on the Preliminary Scholastic Aptitude Test (psat) were changed so the verbal portion of the test would count double the math part, in hopes more girls would receive scholarships awarded for excellent psat scores. In 1996, the ets “re-centered” the sat, inflating scores so that someone who would have received a 730 on the verbal test will now score a perfect 800.

Murray contends such changes are misguided because little evidence supports the complaints made against the sat. An investigation by the National Academy of Sciences found no evidence the sat is culturally biased. Moreover, if the sat did discriminate against minorities, minorities with low sat scores would tend to earn good grades once admitted to college. But Keith Widaman of the University of California found the sat overestimated the first-year grades of black and Hispanic students.

No worthy replacement for the sat exists. Grades are often inflated, and an A from a ghetto school is often not equivalent to an A in a suburb. While it’s important to look at a high school senior’s life achievements, only the sat provides objective evidence of a potential student’s ability to “pass a biology final or write a political-science research paper.”

Ultimately, Murray worries, sat foes want to abolish testing so schools will have no choice but to decide admissions by race and gender.

They Don’t Have Your Number
Capers Jones, “Bad Days for Software,” in ieee Spectrum (September 1998), Institute of Electrical and Electronics Engineers, 345 East 47th Street, New York, New York 10017.

Corporations and governments worldwide worry about the “Y2K crisis,” when many computers will confuse the year 2000 with the year 1900, and cause disarray. But Capers Jones of Artemis Management Systems warns there are many other dates worldwide computers may have a hard time reading.

The first crisis should come in January 1999, when 11 European nations will replace their national currencies with the euro. By switching to the new currency, the European Union is launching the world’s second-largest software project at the same time the year 2000 conversions are taking place. “Current figures indicate that worldwide there are too few working programmers to complete either in time,” Jones writes. “Trying to do both on the same schedule will cause weighty economic problems.”

If computers survive January 1, 2000, the next problem should come the following month, when many software programs won’t realize that 2000 is a leap year and start misdating programs on February 29, 2000.

In the twenty-first century, three other long-term computer problems will cause problems. Theoretically, there are 1 billion potential Social Security numbers, but since Social Security numbers are not reused, problems will result when no new numbers remain. Shorter-term problems will arise when America runs out of ten-digit phone numbers, which will occur around 2015. Another long-term software problem will be reconciling American methods of month-first dating (as in 10/18/98) with European methods of writing dates with the day first (18/10/98).

Jones believes programmers will eventually solve such number problems. The cost to the world economy: $5 trillion.

The Murky World of Wetlands
Wetlands Overview: Problems With Acreage Data Persist. GAO/RCED-98-150. General Accounting Office, P.O. Box 37050, Washington, D.C. 20013.

In 1989, President Bush declared the nation’s wetlands in jeopardy and vowed there would be “no net loss” of wetlands during his administration. The Clinton administration repeated the pledge and this past February promised to increase the nation’s wetlands by 100,000 acres each year beginning in 2005.

But nine years after Bush’s pledge, the General Accounting Office (gao) reports, the federal government has no idea how many wetlands exist in the U.S., nor whether their acreage is increasing or shrinking.

Thirty-six federal agencies have some jurisdiction over wetlands, including the departments of Agriculture, Commerce, Defense, Energy, Housing and Urban Development, Interior, Justice, State, and Transportation. In fiscal year 1997, these agencies spent $787 million—and 4,308 staff-years—on activities related to wetlands.

Two agencies—the Interior Department’s Fish and Wildlife Service (fws) and the Agriculture Department’s Natural Resources Conservation Service (nrcs)—have issued sharply differing analyses of the nation’s wetlands. The fws claims there are 101 million acres of wetlands, with 1.4 million lost to farms from 1985-95. The nrcs counters that there are 112 million acres of wetlands and that 309,000 acres were turned into farms from 1982-92. Both sets of numbers are extrapolated from statistical samples, not actual surveys of land use.

The two agencies don’t even agree on the definitions of “protection,” “restoration,” and “improvement” of wetlands. The fws, for example, says that a “restored” wetland is a piece of land that used to be a wetland, changed status, and then was restored, but it reasons that such a “restored” wetland can’t count toward “a net gain of wetland acres.”

Since 1990, five inter-agency task forces have failed to convince the government to apply a uniform standard for measuring the scope of America’s wetlands. Because the government doesn’t know how many acres of wetlands exist, and can’t even agree on what a wetland is, the gao concludes, “the progress made toward achieving the goal of no net loss of the nation’s remaining wetlands …cannot be measured.”

The EPA Inspector Calls
Jonathan H. Adler, “Bean Counting for a Better Earth: Environmental Enforcement at the epa,” in Regulation (Spring 1998), Cato Institute, 1000 Massachusetts Avenue N.W., Washington, D.C. 20001.

In December 1997, the Environmental Protection Agency (epa) announced it had issued more penalties and passed on more civil and criminal cases to the Justice Department than in any year in the agency’s history. But Jonathan Adler of the Competitive Enterprise Institute argues that while “escalating fines, penalties, and jail terms may make for good politics,” they “do not necessarily make for a cleaner planet.”

When the epa was founded in 1970, it hired “shock troops” eager to indict corporate polluters. The epa boasted that it had fined more corporations in its first two months than its predecessor agencies had in five years. Within two years the epa increased its enforcement staff from 300 to 1500. Except for Anne Gorsuch (epa director, 1981-83), every epa administrator has asked for, and received, more funding from Congress to enforce regulations.

While the epa brags about its criminal suits, the states, which actually conduct 85 percent of all environmental prosecutions, have found it more productive to seek businesses’ cooperation. In the past five years, two dozen states have passed “audit privilege” laws in which corporations conduct environmental audits of their factories and reveal violations of environmental regulations in return for protection from state lawsuits. But the epa has threatened to sue states that have audit privilege laws and has sued firms that have voluntarily reported violations to states.

Adler charges that the epa pursues high-profile criminal enforcement actions that garner headlines and bigger budgets, instead of using less confrontational tactics that might do more to stop pollution. In 1995, for example, epa administrator Carol Browner announced General Motors was fined $11 million (the second-largest fine ever issued under the Clean Air Act) because 500,000 air conditioners in Cadillacs emitted carbon monoxide. Although carbon monoxide causes problems in the winter, it is not a problem in the summer when the air conditioners would presumably operate. Thus the prosecution of GM may have generated favorable publicity for the epa, but it “can hardly be seen as a victory for environmental protection or public health.”

“There is little, if any, evidence,” Adler concludes, that the epa’s “priorities are tied to quantifiable risks to human health or environmental quality.”

More Trouble Ahead for Asians
Nicholas Eberstadt, “Asia Tomorrow, Gray and Male,” in The National Interest (Fall 1998), 1112 16th Street N.W. #540, Washington, D.C. 20036.

Most of Asia is in the throes of economic depression. Nicholas Eberstadt of the American Enterprise Institute believes demographic trends will increase Asia’s misery. Some of the most disturbing trends include “rapid population aging, declining manpower availability, and unnaturally imbalanced sex ratios.”

Asia “will contain populations grayer than any yet witnessed in human history,” Eberstadt writes. Whereas today Southeast Asia has ten children for every person 65 or older, by 2015 there will be only four children per senior citizen—and in Northeast Asia the ratio will be less than two to one.

Paying the pensions of elderly Asians will be a tremendous burden. Japan’s social insurance system already has debts three times that of Social Security. To keep the system solvent, Japanese taxes on incomes will have to double by 2025. If Japan doesn’t reform its social insurance system, the country’s national debt will rise from 17 percent of its gross domestic product (gdp) in 1995 to 102 percent of gdp by 2015. China’s problems will be far worse, since by 2015 approximately 9 million Chinese will be turning 65 each year. In a low-income country where public and private pensions are rare, these elderly are virtually guaranteed to live in “crushing poverty.”

As Asian nations age, finding young workers becomes increasingly difficult. Indonesia, the Philippines, and Vietnam still have a large youth population, but other Asian countries with falling birth rates will have a more difficult time. Since most Asian nations shun immigrants (in 1995, Switzerland naturalized more immigrants than Japan did), labor shortages will rise in Asia, further dampening economic growth.

Asia also faces another problem: A relative boom in the male birth rate. In most countries, 107 boys are born for every 100 girls. In South Korea, 116 boys are born for every 100 girls, and South Korea’s government predicts the ratio will rise to 123:100 by 2010. In China the boy-girl ratio is 115:100. These imbalances, says Eberstadt, are largely caused by infanticide and abortion against girls by families preferring sons. If North and South Korea unify, one reason may be to make North Korean women available to South Korean bachelors.

Cuba’s Decline Continues
Mark Falcoff, “Reflections on a Dying Revolution,” in Orbis (Fall 1998), Foreign Policy Research Institute, 1528 Walnut Street #610, Philadelphia, Pennsylvania 19102.

As Cuban dictator Fidel Castro begins his fortieth year in power, he has witnessed his nation transformed from a vanguard of revolution to a Communist anachronism. At the height of the Cold War, Cuba—buoyed by an annual subsidy of $6 billion from the Soviet Union—was able to send its troops throughout the world. Today Cuba is barely able to wield influence in the Caribbean, and has become so tourist-oriented that American Enterprise Institute scholar Mark Falcoff calls Cuba “a fraying Marxist police state in partnership with Club Med.”

Falcoff suggests it’s unlikely the economy will be saved by the tourist dollar. Given that Cuban bureaucracies consume so much of every tourist dollar, Falcoff predicts Cuba will need $18-24 billion each year from tourists to replace the lost Soviet subsidies. Mexico, a nation much more attractive to travelers, attracts only $7.6 billion from tourists. “Cubans can never expect to return to the relatively good old days of the Soviet subsidy.”

What will happen to Cuba after Castro dies? After Castro came to power in 1959, most of the ruling classes emigrated to the U.S. and became productive citizens. Their children and grandchildren, while still speaking Spanish at home and still proud of their Cuban heritage, largely think of themselves as Americans of Cuban descent. As a result, Falcoff says,“Cuban-American meddling in island politics is likely to be minimal.” There will probably be some token compensation for seized factories, but Cuban-American influence in Havana will probably end up comparable to that of American Jews in Israel or American Greeks in Greece.

Cuba’s next leader will have to realize that, besides Cuban-Americans, few people will “care whether or not the country is rich or poor, or—since the end of the Cold War—stable or unstable.”

When the World Bank Calls
Pascal Wick and Jane S. Shaw, “The Côte d’Ivoire’s Troubled Economy: Why World Bank Intervention Failed,” in Cato Journal (Spring/Summer 1998), Cato Institute, 1000 Massachusetts Avenue N.W., Washington, D.C. 20001.

In the 1960s and ’70s the Ivory Coast was an African showcase. President Felix Houphouët-Boigny admired the West, and his nation was often portrayed as one of the West’s few friends in Africa. From independence in 1960 until 1985, its economy grew by an average of 8 percent annually. But since then, Ivory Coast has turned into another collapsing African economy. From 1985-94, Ivory Coast’s gross domestic product fell by an average rate of 4.3 percent annually.

Agricultural economist Pascal Wick and Jane S. Shaw of perc see one primary culprit—the World Bank. In the 1960s and ’70s, the World Bank heavily subsidized the country’s economy. Ivory Coast’s ruling class used bank loans to produce “prestigious but inefficient projects,” including several huge dams and a new national capital, resulting in the government increasing its control of Ivory Coast’s economy from 40 to 60 percent. In addition, Ivory Coast’s rulers diverted much of the development loans into their personal bank accounts.

In the meantime, coffee and cocoa farmers suffered. They could only sell their crops to the government, which paid less than the crops were worth.

By the mid-1980s, Ivory Coast’s international debt was $6.8 billion, equal to 85 percent of its gross domestic product. World Bank economists warned that the nation was on the verge of collapse and that drastic market-oriented reforms were needed, but higher-ups at the Bank ignored the advice and continued to loan the Ivory Coast money.

In 1990, seeing their money being wasted, World Bank bureaucrats finally cut off the country’s loans. Ever since, Ivory Coast’s leaders have denounced the “North” for not providing more funds and have complained that low international prices for coffee and cocoa keep their economy ailing.

Wick and Shaw reply that Ivory Coast’s entrepreneurial farmers were heavily taxed for decades by “a predatory ruling class,” which was kept in power through World Bank loans. Had the farmers been able to sell their crops directly to the world market, the country’s economy would today be both “more diversified” and in much better shape.