Competitive Enterprise Institute
(CEI is a free-market think tank that supports principles of free enterprise and limited government, and actively engages in public policy debate.)
WASHINGTON--C:\Spin--Wild Cards: The Antitrust Division Shuffles Its Deck
By James V. DeLong
Charles A. James, Assistant Attorney General for Antitrust, announced on January 4 a reorganization of his Antitrust Division, effective in February 2002. Those who believe that minimal regulation and the free market are best for the tech business should worry. Not panic--that would be excessive--but worry.
Much of the shuffling looks like routine bureaucratics, designed to even out workloads and reflect the current balances of internal power and competence. But two changes are eye-catching. The existing Telecommunications Task Force will become the Telecommunications and Media Enforcement Section, and the Computers and Finance Section will morph into the Networks and Technology Enforcement Section.
The organization chart shows both sections under a Deputy AAG (Regulatory), and they will constitute two-thirds of his bailiwick, with about 30 lawyers in each. (The rest are in a section on Transportation, Energy & Agriculture.)
Why worry? Because in government morphology is destiny, and restructuring and renaming sends powerful signals of activism to come.
So let's look at the two new units, Telecom/Media first.
The history of telecom regulation is a sorry one. For 70 years, the FCC, on its own and in league with Congress, has hobbled technological innovation through suppression of FM radio, attacks on cable and satellite service, delay of cell phones, constraints on low power radio, protection of the Bell monopoly, creation of cable monopolies, extensions of universal service subsidies, and, most recently, the inhibition of broadband. The saga is driven by corporate capture, by political corruption (think LBJ and the Austin, Tex. TV licenses), and by the hubris of people who think they can devise appropriate industrial policy for high tech.
The Antitrust Division could be a counterbalance. Once upon a time it was thought that an important role of the Division should be to press the FCC to stop all this regulating and free up the market--remember the Bell breakup. Now, however, the Antitrust Division is caught up in the coils of the Telecommunications Act of 1996, and the only comments it files with the FCC nitpick about the adequacy of the Bell companies' efforts to open up local markets before they are allowed to enter long distance. The Division usually comes down on the side that more regulation is needed, not that the markets should be unchained.
This stance bodes ill for future Antitrust Division actions on telecom. It also raises a distressing possibility that an industrial policy mindset will be engrafted onto analysis of efforts to restructure the media world to reflect the realities of new technologies, especially because the AAG (Economics) is a former Chief Economist for the FCC under Chairman Reed Hundt, a man whose view of the proper role of the regulator is stunningly expansive.
The new special section for Networks and Technology also rings an alarm. The antitrust establishment loves a theory called "network externalities," (a.k.a. "path dependence," or "lock-in"). The problem is that disinterested analysis shows that the examples usually used to support the theory are embarrassingly wrong, and much of it is merely good old economies-of-scale in new clothes.
The antitrust establishment enthuses over network analysis because it promises them action, power, and a fountain of fees, and, while some useful work exists, serious skepticism is in order. Creating a section entitled "Networks" assumes a highly debatable conclusion.
Mere straws in the wind, perhaps, but were I a private lawyer or economist representing high tech companies on antitrust I would order up the new Mercedes (and make it the top of the line model, too).
(James V. DeLong is senior fellow in the Project on Technology and Innovation at CEI.)
Center for Strategic and International Studies
WASHINGTON--Updated Report Analyzes Readiness, Manpower, Budget, Arms Imports of Saudi Military Forces
Saudi Arabia must change its military spending priorities to emphasize manpower and sustainability over arms imports, and must put a greater effort into building effective security alliances with Gulf allies, according to an updated report form CSIS.
The report, by Anthony Cordesman, who holds the CSIS Burke Chair in Strategy, assesses in detail Saudi Arabia's arms transactions, defense modernization, military organization, readiness, manpower quality and quantity, defense budget levels and management, and the status of the Gulf coalition.
The analysis is part of a CSIS project entitled "Saudi Arabia Enters the 21st Century." Directed by Cordesman, the project will examine the trends shaping the future of Saudi Arabia and their impact on the stability of the Gulf.
Cordesman uses a net assessment approach that explores all of the major factors affecting Saudi Arabia's strategic, political, economic, and military position.
"Saudi Arabia's military development presents serious problems for the Kingdom," said Cordesman. "It faces major strategic challenges from Iran and Iraq, and its strategic position may deteriorate significantly if those powers obtain major new supplies of modern conventional arms or succeed in large-scale proliferation.
"Saudi Arabia has made significant progress in a number of areas, but there are serious weaknesses in its army, navy, and air force. It needs to restructure its force development plans and put its modernization and sustainment funding on a sounder financial footing. Furthermore, it needs to forge a better approach to collective security with its Gulf allies and create a more stable long-term security arrangement with the United States and the West."
Cordesman has served in senior positions in the Departments of Defense, State, and Energy, and in the Defense Advanced Research Projects Agency.
The Ludwig von Mises Institute
(The LVMI is a research and educational center devoted to classical liberalism -- often known as libertarianism -- and the Austrian School of economics. Grounded in the work of economists Ludwig von Mises and Murray N. Rothbard, LVMI seeks a radical shift in the intellectual climate by advancing the Austrian School of economics and by promoting the market economy, private property, sound money and peaceful international relations, while opposing government intervention as economically and socially destructive.)
AUBURN, Ala.--The Truth About Pork
By Gary M. Galles
Before the Christmas break, Washington labored mightily and gave birth to the 2001-2002 federal budget. Therefore, it was pork barrel time, with taxpayers made unwilling Santas for politicians' favored constituents.
But the billions of dollars devoted to the several thousand earmarked projects that could not survive the regular budget process also highlight an important underlying question about pork barrel spending: is it an essential lubricant necessary to achieve passage of well-understood, -designed and -implemented policies that are truly justified as advancing Americans' general welfare, or is it in fact the essential ingredient in legislation, despite doing little or nothing to advance the public good?
It is all but impossible to find any earmarks among the thousands included that solve either a serious failure of the market or a pressing need. This is especially so, given that if the needs were so pressing to the local beneficiaries, they should have been willing to fund them through the local government or affected private interests.
The $2 million (and $1.5 million last year) included to renovate a monument to Vulcan, the Roman god of metalwork, for Birmingham, Alabama--a project rationalized because the statue is an important symbol of the city's steel-making heritage--is a prime example.
The fact that those with the most power over spending get the most pork--and by far the greatest contributions from those whose self-interest would be advanced by such pork--is also inconsistent with the essential lubricant view. After all, that view would imply that committee chairs and influential members are, in fact, the chief extortionists standing in the way of beneficial legislation, rather than public servants leading the efforts to craft such legislation.
The $300 million given to sheep and goat ranchers, resurrecting a program that was established to guarantee an adequate supply of wool and mohair for military uniforms--even though the military stopped using wool uniforms half a century ago--is simply one of the most preposterous among many examples.
To justify the pork as it was being divided up in the budget process, politicians endlessly recycled the claim that it was important for constituents to "get something back" for the taxes they send to Washington. But this argument implies that everything the federal government actually does to advance the welfare of Americans is not worth what it costs taxpayers. Otherwise, constituents would already see they were getting more than their money's worth.
This argument also implies that the federal government is failing at its most central tasks, which is inconsistent with the "pork-is-necessary-to-accomplish-a-greater-public-good" excuse used for the essential lubricant argument.
Our representatives also defended earmarks as necessary because, as Adam Schiff (D-Calif.) put it, "there is a value in letting the elected representatives have a direct say in funding their communities." But this is really an argument that the federal government should not be involved at all; view enshrined in the Constitutional principle of federalism.
Locals should both decide and fund such projects, if they know better. And if those directly affected are unwilling to pay out of their own pockets, then the money would be better left in their pockets, without an expensive detour inside the beltway. All that expensive trip creates is the fiction that when a fraction of locals' tax money comes back in the form of projects they wouldn't be willing to pay for, they somehow reap a benefit as a result.
After their labors, politicians returned home for the holidays, where they spent much of their time emphasizing their role in bringing home the bacon to those local interests who benefit. But as Congress returns to "the work of the people" in a midterm election year, it is worth remembering that the pork brought home had to be extorted from others by those politicians as the price of their assent (usually with a laughable rationale) in exchange for others' reciprocal extortion of their constituents; that those earmarks were unable to even meet the lard-filled standards of the regular budget process; and that not one cent of the funding came from anyone except taxpayers.
It seems to be an awful lot of lubricant for very little real work.
(Gary M. Galles is a professor of economics at Pepperdine University.)
Institute for Public Accuracy
(The IPA is a nationwide consortium of policy researchers that seeks to broaden public discourse by gaining media access for experts whose perspectives are often overshadowed by major think tanks and other influential institutions.)
WASHINGTON--Too Early to Declare Hunger Crisis Averted in Afghanistan
The following statement is from James Jennings, president of the humanitarian aid organization
Conscience International. Jennings will return to Afghanistan on Jan. 16 for the group's third mission since May, bringing assistance with food, blankets and health care.
"It is too early to declare a humanitarian disaster averted in Afghanistan. Early in the Afghan campaign the U.S. recognized that it was necessary to win victories on both the military and humanitarian fronts. Yet while emphasizing that the war is not over, Washington has already hailed an early victory over a looming famine that threatened to kill millions.
"World Food Program emergency deliveries, using local Afghan employees, have largely replaced the needed grain tonnage lost or delayed by the war. But merely restoring capacity destroyed by the war hardly constitutes a victory, because the time lost in fighting hunger and malnutrition cannot easily be made up.
"The main concerns remain security and stability for the whole country---not just the capital; delivery of large-scale food assistance to remote or inaccessible regions; and the scant nutritional value of the food basket.
"Longer-term worries include the fact that people have eaten their seed grain, the irrigation system remains devastated, and farmers failed to plant winter wheat during October and November because of the war and bombing campaign.
"I still expect preventable deaths to be very high, perhaps in the lower range predicted earlier, but a deadline of next spring is artificial. I don't think the higher numbers will be reached this winter, but even the lowest previous estimate of up to 1 million deaths is bad enough. What we are likely to see over time is a continuum, a slow ticking of the clock extending far beyond May, with death for many of the most vulnerable, especially children, as a result.
"Severe malnutrition already exists among a significant percentage of the population. The food budget for wheat purchases is adequate for the immediate emergency, but a bread-only diet is certainly inadequate for the neediest people.
"A complex emergency is just that: complex. People die because of malnutrition, disease, inability to reach medical care, enforced migration, exposure, and unhygienic conditions in the refugee camps. Probably triple the amount now being spent by USAID would come nearer to solving the problem.
"I would spend more on transportation-related items, to make sure food aid reached the people in the mountains, and reached them in time to survive the winter. Then I would double the caloric value of the food basket by diversification, primarily with more legumes and ghee.
"While USAID has done a fine job so far, last week USAID administrator Andrew Natsios did some fancy footwork with the numbers. They appear to be impressive, and indeed the December total tonnage is impressive. But in my calculation, it merely makes up for the amounts not delivered during the war. Still, it came a bit late.
"Put the lack of seed grain together with the inability to plant in October during the heaviest bombing, and the snows on mountain roads and trails, and you can see that, to reach their targets, WFP is delivering grain mostly to four cities: Mazar, Kabul, Jalalabad (which has road access to food supplies anyway and hasn't suffered so much in the drought) and Herat.
"Secretary Rumsfeld may think things are infinitely better in Afghanistan than before the war, but I doubt if most of the burka-clad beggars I regularly see there would agree."
The Cato Institute
WASHINGTON--U.S. nukes are "reduced" by "storing" them: an accounting gimmick, says Cato analyst
According to reports, the Pentagon's highly classified Nuclear Posture Review calls for many of the warheads, bombs, and missiles included in President Bush's promised nuclear reductions to be retained and kept in reserve. Cato Senior Defense Policy Analyst Charles Peña had the following comments:
"Candidate Bush pledged that he would unilaterally reduce the U.S. strategic nuclear arsenal if he became president. Last November, President Bush and Russian President Vladimir Putin both declared that the United States and Russia would dramatically reduce their nuclear weapons by roughly two-thirds over the next decade, leaving each side with no more than 2,200 warheads.
What got lost in the shuffle, amidst all the good news, was a statement released by the White House that changed how those weapons would be counted--from weapons to "operational nuclear weapons."
"Under the Pentagon's new proposal, the stored weapons would not be operational nuclear weapons and thus not count towards the 2,200 total. This is an accounting sleight of hand, bad arms control, and bad policy.
"The primary rationale for retaining more weapons in reserve is as a hedge against some unforeseen future threat. The perceived need for a reserve seems to reflect the thinking of many conservatives and military officials that Russia could one day again become a nuclear rival, or that China could pose a future nuclear threat. But this becomes a self-fulfilling prophesy. If the United States retains more weapons, so will Russia. And the Chinese will likely view the entire U.S. strategic arsenal -- not just deployed weapons--as a threat and react accordingly.
"Furthermore, if the Russians decide to retain more weapons in storage, there are legitimate concerns about the safety and security of those weapons. By definition, they will be less secure than deployed weapons guarded regularly by military personnel. As such, they become attractive targets for terrorists seeking to acquire weapons of mass destruction. So taking the weapons off operational deployment without destroying them could possibly lessen U.S. security rather than enhance it.
"Thus, when both Russia and the United States agree to reduce their strategic arsenals and remove weapons from operational status, those weapons should be destroyed, not stored. Saying that weapons that are stored are 'reduced' is fuzzy math."
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