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We Still Need Police Reform

Sorrow over recent the murder of two New York policemen should not detract from the continued need for reform of all institutions exercising the legal monopoly on the use of force. The need for fundamental reform extends far beyond the police forces to encompass corrections officers, border security, the intelligence services, and the military. It is unfortunate that many conservatives who normally are the loudest defenders of personal freedom and state limits in the economic sphere tend to blindly support government agencies when more personal freedoms are at stake. The editorial page of the Wall Street Journal leaps to mind.

Put plainly, there is a vast difference between arguing that a rookie officer should not kill a 12-year old holding a toy gun and advocating violence against officers. One can object to choking a man to death for selling illegal cigarettes without approving the looting that accompanied demonstrations in Ferguson. Those who represent the nation’s enforcers need to distinguish between political opposition and lawlessness. Their job is not to support all applications of force, no matter how unproked, no matter how violent.

The state’s monopoly on the legitimate use of force should be subject to a high standard of conduct. Yet the great political deference to state officials has instead fostered a climate of mediocrity in which officials accustomed to uncritical deference grow lax in both their competence and their respect for civil rights. Our border security officials are beyond management. The culture of prison guards has become corrupt and violent. The vast resources that intelligence agencies spend collecting data on ordinary citizens detracts them from the difficult job of collecting intelligence on foreign enemies. The military has lost the ability to apply power subtly or supply its troops at an acceptable cost. Police departments display a fetish for military hardware and finance themselves with extrajudicial seizures.  Just as the Catholic Church seemed to attract a disproportionate share of sexually confused males, these agencies increasingly attract petty men with a fetish for power. I remember a time when to raise the issue of abuse by clergy was to question the representative of God on Earth. One would think that the many great men in these institutions would object to the corruption that threatens them.

No nation can be great, no democracy can be safe, unless those who exercise the monopoly on legal force are fully answerable to the people over whom they hold that power. That cannot happen if the institutions supervising them are not fully independent. It cannot happen absent openness and debate about the conditions under which the state can gather information and use force.

I increasingly find that my personal interactions with police officers are annoying rather than pleasant. Resources seem to be devoted to the collection of revenue and the enforcement of minor laws rather than the protection of public safety. As the father of a minority son, I deeply resent the need to talk to him about how to navigate the heightened dangers he faces if stopped by an agent of the state.

The vast majority of Americans are law-abiding and patriotic. They have the right to expect their government to act on that assumption.

 

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The Cost of Sochi

The Sochi winter games will soon open and whether by choice or sheer over powering much of the world’s attention will be directed to Russia. Although the opening ceremony and most of the athletic events will be carefully choreographed to display pageantry and the triumph of internationalism over politics, it is worth considering what the games are likely to cost us.

The formal price of Sochi has now been estimated at $50 billion. A figure far in excess of anyone’s imagination at that time that the Olympic Committee awarded the games to Russia. In theory the money has gone into transforming a relatively quaint resort into an international sports mecca. In practice most of the money, like much Russian wealth before it, has gone to line the pockets of oligarchs. Still, if the theft of Russian resources were the only cost of these games one could perhaps overlook it. Unfortunately, the games are likely to be costly in at least three more dimensions.

The first is in the integrity of the games themselves. Parading at Sochi requires deception on many levels; in pretending that shoddy infrastructure is first rate, in pretending that the imposition of a police state mentality is routine security, in pretending that the personal pursuit of an authoritarian ruler of a dying country represents the collective celebration of a rising nation, and perhaps most of all in pretending that the Olympic games themselves bear no responsibility for the tremendous financial waste and political repression that have accompanied them.

The second area of cost is likely to be the personal security of the athletes and spectators at the games. By voluntarily deciding to award the games to  Russia, the Olympic Committee inserted itself into a political climate built on repression and violence. It is virtually certain that groups will try to disrupt the games with violence. It is very possible that they will succeed. Security can move the barrier surrounding the games far from the arenas where they actually occur but only at a cost to the games themselves. Moreover, it cannot erase it completely. An attack at the barrier is an attack on the games and an attack on the games will affect them profoundly even if it does not disrupt the schedule.

Finally, the integrity of the events themselves is likely to suffer. This is Russia after all. Every Olympics has had its share of judging controversies but the Moscow games perhaps set the pace. The nature of hosting, especially in Russia means that the events are not totally under the control of the Olympic Committee. Having done so poorly in the last games and spent so much on Sochi, Putin’s government is unlikely to lose gracefully.

The lesson is that international sports bodies cannot be excused from taking responsibility for the decisions they make. There is an obligation to the athletes and fans to chose venues that are adequate and safe. But there is also an obligation to refrain from lending the credibility of major sports events to corrupt and incompetent governments whether they be in Russia, Bahrain, or Brazil. If these bodies want politics to stop while the games go on, they will have to wait until the poor are no longer hungry and the dissidents are no longer in jail.

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A Good Example of Bad Medicine

The New York Times reported on a recent decision by the American Board of Obstetrics and Gynecology to severely restrict the practice of their members. One of the key restrictions covers the ability of board-certified doctors to see male patients. This anti-competitive act should draw the immediate attention of antitrust officials and state licensing offices.

Although the Board recently backed off of a similar restriction on seeing males who are at a high risk of anal cancer, its broader determination to limit the practice of its members and thereby limit both competition among doctors and care for their patients should call into question the role of medical boards in licensing doctors.

The Board’s decision is not motivated by any evidence that doctors are delivering sub-standard care. There is no allegation that seeing male patients in any way detracts from the care that female patients receive. Rather, the decision seems to be driven by a desire to further separate the specialty from other areas of medicine. Why such as separation would benefit anyone but the leadership of the Board itself is unclear.

It is also not clear why private boards should possess such influence over licensing decisions, especially if the motivating factor in is self-interest rather than public welfare. Private boards may have an advantage in testing professionals for specific knowledge and then certifying the acquisition of that knowledge so that hospitals and patients can rely on it. Government agencies still need to oversee these standards to make sure that they are not hidden attempts to limit entry into a field. But boards should have absolutely no right to restrict doctors’ practice of that knowledge within arbitrary limits. The question of whether a given doctor possesses the somewhat arbitrary minimum amount of knowledge and experience needed to obtain board certification is totally unrelated to the question of whether the doctor should be allowed to use that and other knowledge to help any given patient. In fact, to be consistent with the ethical standards of medicine, the Board should encourage doctors to apply their knowledge to any patient that they can help.

The medical industry needs to demonstrate much higher productivity over the next two decades. To achieve this it will be necessary to break apart many of the institutional barriers that protect providers from competition to reduce costs and improve care. The Board has just provided an excellent example of the type of restrictions that need to be removed.

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Why the NSA Should be Uprooted (if not abolished)

The latest revelations make it hard for even the intelligence communities stanchest friends to continue to defend it. It is now apparent that the NSA spied on vast numbers of people, misled the courts, Congress, and (if Obama is to be believed) even the White House about what it was doing. Yet it continues to act in complete denial of the position it is in.

The damage done by the intelligence community is immense. The spying exceeds even the worst case imaginings of many civil liberties groups. Its scope, as well as the reluctant responses of the intelligence community, have shaken public confidence in the those who say they are defending us. The ability of Congress to oversee a major part of our defense establishment is severely compromised. America’s leadership in the Internet and cloud computing is threatened because the federal government apparently takes the position that it should have complete access to the data of foreign citizens who use Google, Facebook, and similar services. The National Institute of Standards and Technology’s role in helping to set encryption standards is jeopardized because the NSA apparently built a back door to one of the common standards. Our relationships with key allies has been set back because we apparently tap their leaders’ communications.

And yet, to hear the intelligence leaders talk, none of this is their fault. It is all Edward Snowden’s. Its as if you met someone who recently lost their job, their family, and their freedom because he watched child pornography and all he can talk about is how their secretary ruined his life by turning him in. An agency and a community that continues to be in this type of denial is probably beyond redemption. Since the beginning of these revelations, the response of Director of National Intelligence James Clapper and NSA Director General Keith Alexander remind me most of Anthony Comstock, whose single-mindedness in setting himself up as defending America against his own demons ruined many lives before the country regained its common sense.

The irony is that if the agencies had asked for this power openly and visibly subjected themselves to the type of strong controls needed to protect democracy, they probably would have gotten strong support for using most of the data they seek.

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Initial Thoughts on the Detroit Bankruptcy

Over the past four months I have been working on a report that reviews both the economics and law surrounding state bankruptcy. I intend to summarize some of my findings once the report comes out. What I have learned suggests several important points about Detroit’s recent filing for bankruptcy.

First, Detroit’s case is likely to reaffirm the precedent that pension benefits can be cut in bankruptcy, even for existing retirees. This had already been established by Central Falls, RI where pensions were cut by up to 50 percent (although the state agreed to make up half of the cut for the first five years) . The cuts in Michigan are also likely to be deep. This is despite the fact that the state constitution protects pensions. Federal bankruptcy law governs. Unions, which have been assuring their members for decades that the pensions will never be touched, regardless of the level of underfunding, are likely to face a growing level of concern among their members. We may see unions placing relatively more emphasis on pension funding and less on wages in future negotiations.

Second, unions are benefiting from a curious turnaround in the calculation of Detroit’s liabilities. For years Detroit followed the standards set by the Governmental Accounting Standards Board and discounted future pension benefits by the assumed rate of return on pension assets, currently 8 percent. Most economists believe these obligations should be discounted at a much lower rate. Unions have strongly resisted doing this because it increases the estimated underfunding. In calculating Detroit’s liabilities, the Emergency Manager lowered the discount rate to 7 percent. This apparently had the effect of giving the pension plan an additional $3.5 billion in unsecured claims, thus ensuring that workers get a larger share of the total recovery. Had he used a risk-free rate as most economists advocate, retirees would have had an even larger claim. It seems that using a lower discount rate actually benefits unions as a city or state approaches insolvency.

Third, any final plan to emerge from bankruptcy is likely to include significant asset sales, possibly including the estimated $2 billion worth of art owned by the city. The law is not clear on whether Detroit’s creditors can force the city to sell these assets against its wishes. But the fact that they account for approximately ten percent of the losses that bondholders and pensioners are being asked to take and that many retirees will press for their sale in exchange for smaller cuts may influence the city’s position.

Fourth, it is interesting that retiree health benefits have been included in the list of claims against the city. Unions and governments have long argued that retirees do not have a legal right to these benefits. Since they can be withdrawn at any time, cities should not have to prefund them. But if this is true, then they should also not be listed as an unsecured asset in a bankruptcy proceeding. The fact that they have been indicates that governments should begin to set aside money to pay for future claims. This will add a new strain to city budgets.

Fifth, I expect this filing to move relatively quickly. Although a state judge issued an injunction ordering the city to withdraw its petition, federal law governs. If higher state courts do not remove the injunction, federal courts will. I do not think creditors will succeed in challenging the petition, since the city is clearly insolvent and has tried to negotiate a deal. The real test is how quickly the Emergency Manager can put together a plan for emerging from bankruptcy. I expect him to act quickly and to present a plan that is fair to all creditors, given the financial circumstances. If he does this, there are not many grounds for the court to refuse approving it, even if a majority of creditors object. This area of the law is still undefined, however.

Last, there should be no bailout. Steven Rattner, has recently argued to the contrary. His reasoning seems to hinge on the assertion that “the 700,000 remaining residents of the Motor City are no more responsible for Detroit’s problems than were the victims of Hurricane Sandy for theirs, and eventually Congress decided to help them.” This is false. The victims of Hurricane Sandy were hit by a natural disaster whose damage was largely beyond their control. Detroit’s failures are largely the result of decades of mismanagement and corruption by both elected leaders and union officials. If the residents of Detroit are not responsible for the quality of its elected officials, who is? And if city workers are not responsible for the positions taken by union leaders, who is? Democracy only works if people accept responsibility for the leaders they elect. Bailing out Detroit would dramatically reduce the pressure on other cities and states to reform their finances. The bailout of Wall Street is still preventing regulators from dealing with banks that are too big to fail. And the government’s interference in the auto bankruptcies set bad precedents that we may still someday regret, despite the strong rebound of the companies involved.

Finally, debt reform of one type or another was inevitable. The money simply is not there. The first rule of getting out of a downward spiral is to hit bottom as quickly as possible. Only then does the future become brighter than the past. Although bankruptcy can eliminate Detroit’s debt overhang, its real future will depend on a willingness to create an environment that is welcoming to all people and businesses. That has been a relatively foreign concept.

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Belated thoughts on the Fourth of July

Early this month I spent a week in Minnesota visiting family and seeing medical specialists. While there my wife and I contacted a couple who run a website devoted to Dravet’s Syndrome. They spontaneously invited us to come to their house in Afton, Minnesota to talk. They also encouraged us to stay for the town’s Fourth of July parade and then boat with them on the St. Croix (we did not have time to do the second). The day has stuck with me for several reasons.

Here is a normal husband and wife who happened to have a son with a serious illness. Rather than passively accept the advice of doctors and hope for the best, they began an national organization and sponsored a website, dravet.org, that provides detailed information about the disease. They put themselves in touch with the best doctors and researchers in the world. And they wrapped themselves in a community of other families with the same diagnosis. Some of the parents in their organization know more about the disease and current research than the average neurologist and they are willing to meet on call with any other family and share what they know. People and organizations like this belie the common statement that patients cannot be trusted to choose among providers and treatments. These parents are currently fighting the government for access to drugs that have been effective in other countries.

The parade was another experience. It was not very long and almost all the floats were from local businesses or organizations. Very hoaky. And yet, when you look deeper it is not too hard to see the real strength of America. On float after float you saw small businessmen who had risked their own capital to start a barbershop, dance studio, or restaurant and were now celebrating with the community that supported them. You saw people clapping and waving, usually not at the specific float or person, but at the idea of a life lived in freedom and comfort. These are not people who aspire to leadership or fame. If offered it, most would probably decline because it takes too much away from what is important: time with family, fishing, watching the ball game on TV. These are not people who need to be led by the nose. They are the strength of our country. The source of everything that makes us prosperous and great. They do not need a government that erodes their civil rights for their own protection, that spies on them, or that hides what it is doing in secrecy. They do not need to be protected from themselves.

The more I think about that day, the more convinced I am that Americans deserve much better from those who currently have money and power. They deserve parties that are willing to put forth sensible plans to deal with today’s problems. They need a President that will lead, not dictate. They need executives who refrain from using government to protect themselves from competition. They need business and political leaders with a strong sense of morality and the common decency to go away when they are caught in scandals. And most of all they need politicians and executives who realize that they are the beneficiaries, not the source, of the power that makes this country great.

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Obama: “Nobody is listening to your telephone calls”

“All that is necessary for evil to triumph is for good men to do nothing”

Edmund Burke

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