Hoover Digest, 2013, No. 1, Winter

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HOOVER DIGEST · 2013 · NO. 1

The Economy

Politics

Entitlements

Islamism

Intellectual Property

Education

War and Intelligence

Russia

Autocracy

Immigration

The Environment

Interviews

Values

History and Culture

Hoover Archives

T H E H O O V E R I N S T I T U T I O N • S TA N F O R D U N I V E R S I T Y

R E S E A R C H A N D O P I N I O N

O N P U B L I C P O L I C Y

2 0 1 3 • N O . 1 • W I N T E R

T H E H O O V E R I N S T I T U T I O N

S ta n f o r d U n i v e r S i t y

R E S E A R C H A N D O P I N I O N O N P U B L I C P O L I C Y 2 0 1 3 · N O . 1 · W I N T E R

The Hoover Digest offers informative writing on politics, economics, and history by the scholars and researchers of the Hoover Institution, the public policy research center at Stanford University.

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On the CoverTwo trains thunder past each other in this 1923 poster advertising the long-gone New York Central Railroad. The Twentieth Century Limited shown here was the epitome of fast, luxurious overnight travel between New York and Chicago. Passengers leaving from Grand Central boarded from a scarlet carpet that was the source of the phrase “red-carpet treat-ment.” The painter of this scene was one of many people captivated by the romance of this train, whose final destination was American popular culture. See story, page 197.

Hoover DigestResearch and Opin ion on Publ ic Po l icy

2013 • no. 1 • winter www.hooverdigest.org

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Hoover Digest N 2013 · No. 1

ContentsHOOVER D IGEST · 2013 · NO . 1 · W I NTER

THE ECONOmy

9 Start NowThis should be the president’s overwhelming top priority: deal with the looming debt. By george p. shultz, michael j. boskin, john f. cogan, allan h. meltzer, and john b. taylor.

14 Why Hiring Is Stuck Don’t blame mismatched skills for stubbornly high unemployment. The sluggish economy just isn’t creating jobs. By edward paul lazear.

17 A Regulatory GiantThe Fed is too big and powerful to remain so unaccountable. By john h. cochrane.

POl I T ICS

21 The New New Deal It’s the spirit of 1932: unsustainable transfers of wealth, vague new “rights” (billed to the taxpayer), and a record of failure. By richard a. epstein.

ENT I TlEmENTS

27 A Tall Order for MedicareMedicare needs to cut costs, escape political interference, and stay in business. Here’s how it can do all three. By daniel p. kessler.


41 Rationing by Another NameBy paying doctors less than they’re willing to accept, an unelected panel will quietly restrict medical care. By scott w. atlas.

46 The Coming Fiscal Tsunami The first step to avoid drowning in debt? Stop ignoring the ap-proaching wave. By david koitz.

I S lAm ISm

55 Insult and InjuryWhy is the Arab world so easily offended? By fouad ajami.

61 The Courage to Be Tolerant Even the most sacred beliefs are better defended with forbearance than violence. By richard a. epstein.

67 The Ever-Useful MobBeware of “spontaneous” outrage and the temptation to appease-ment. By yuri yarim-agaev.


I NTEllECTUAl PROPERTy

71 Patent Nonsense The patent troll gets a bad rap. Guarding and managing intellectual property helps everyone. By rod cooper, richard a. epstein, and stephen h. haber.

EDUCAT ION

75 Struck OutChicago schoolchildren went back to class—and the striking teachers went back to business as usual. By terry m. moe.

79 The Best Teachers in the WorldFavor experience over credentials, hire the most qualified, and let principals lead. By john e. chubb.

87 Gifted and NeglectedSchools for high-flying students represent the other half of “oppor-tunity for all.” By chester e. finn jr.

WAR AND INTEll IGENCE

91 That’s Spytainment Movie and TV audiences love the world of spycraft. But in the real world, neither Bourne nor Bauer can be trusted. By amy b. zegart.

96 The New Model ArmyTiny weapons that creep and crawl and think for themselves: this is our future. By gabriella blum.

106 Our Robot ChildrenAt what point will we trust robots to kill? By shane harris.


RUSS IA

120 Mission to MoscowThe czars and commissars alike are long gone. Moscow has almost become a normal European city. By norman m. naimark.

AUTOCRACy

128 Hale, or FarewellA despot’s health is a serious matter. By bruce bueno de mesquita and alastair smith.

Imm IGRAT ION

135 Should Immigrants Pay at the Gate?Countries have many arbitrary ways of deciding who gets in. Here’s one idea that actually makes sense. By gary s. becker.

THE ENV IRONmENT

142 The Fires Next TimeThe latest fire season was brutal. By thwarting forest-thinning pro-grams, environmentalists are only helping fires get the upper hand. By terry l. anderson.


I NTERV IEWS

144 Will the Empires Strike Back?Liberal democracy took centuries to establish. Without American leadership it could collapse, says Hoover fellow charles hill. By robert l. pollock.

150 Talking SenseHoover fellow thomas sowell searches for tax sanity, self-responsibility, and other rare commodities. An interview with peter robinson.

VAlUES

158 Quiet Heroism down on the FarmCrop failures and drought ought to remind us that life—and the harvest—is uncertain. By victor davis hanson.

162 Food for ThoughtThe Chick-fil-A boycott and counterboycott showed why religious values should command our attention. By david davenport.

H ISTORy AND CUlTURE

165 Clouds over TechnopolisTechnology is marvelous, and marvelously oversold. By niall ferguson.

171 What Did the Founders Think They Were Doing?Why do we vote, and what do we get for our trouble? By harvey c. mansfield.


HOOVER ARCH IVES

184 Taught to Be EvilWhat we teach children can be a matter of life and death. Two pioneers of education confronted the power of indoctrination. By erwin h. epstein.

197 On the Cover

Hoover Digest N 2013 · No. 1 9

THE ECONOMY

GeorGe P. Shultz is the Thomas W. and Susan B. Ford Distinguished Fel-low at the Hoover Institution, the chairman of Hoover’s Shultz-Stephenson Task Force on Energy Policy, and a member of Hoover’s Working Group on Economic Policy. Michael J. BoSkin is a Hoover senior fellow, a member of the Shultz-Stephenson Task Force on Energy Policy and Working Group on Economic Policy, and the T. M. Friedman Professor of Economics at Stanford University. John F. coGan is Hoover’s Leonard and Shirley Ely Senior Fellow and a member of the Shultz-Stephenson Task Force on Energy Policy, Working Group on Health Care Policy, and Working Group on Economic Policy. allan h. Meltzer is a distinguished visiting fellow at Hoover and a professor of political economy at Carnegie Mellon University. John B. taylor is Hoover’s George P. Shultz Senior Fellow in Economics, the chairman of the Working Group on Economic Policy, a member of the Shultz-Stephenson Task Force on Energy Policy, and the Mary and Robert Raymond Professor of Economics at Stanford.

Start NowThis should be the president’s overwhelming top priority: deal with

the looming debt. By George P. Shultz, Michael J. Boskin, John F.

Cogan, Allan H. Meltzer, and John B. Taylor.

Sometimes a few facts tell important stories. The American economy is full of facts that tell stories that you really don’t want, but need, to hear.

Did you know that annual spending by the federal government now exceeds the 2007 level by about $1 trillion? With a slow economy, rev-enues are little changed. The result is an unprecedented string of federal budget deficits, $1.4 trillion in 2009, $1.3 trillion in 2010, $1.3 trillion in 2011, and another $1.2 trillion in 2012. The four-year increase in bor-rowing amounts to $55,000 per U.S. household.


The amount of debt is one thing. The burden of interest payments is another. The Treasury now has a preponderance of its debt issued in very short-term durations, to take advantage of low short-term interest rates. It must frequently refinance this debt, which, when added to the current deficit, means the Treasury had to raise $4 trillion in 2012 alone. So the debt burden will explode when interest rates go up.

The government has to get the money to finance its spending by taxing or borrowing. While it might be tempting to conclude that we can just tax upper-income people, did you know that the U.S. income tax system is already very progressive? The top 1 percent pay 37 percent of all income taxes, and 50 percent pay none.

Did you know that during the last fiscal year, around three-quarters of the deficit was financed by the Federal Reserve? Foreign governments accounted for most of the rest, as American citizens’ and institutions’ pur-chases and sales amounted to about zero. The Fed now owns one in six dollars of the national debt, the largest percentage of GDP in history, larger than even at the end of World War II.

The Fed has effectively replaced the entire interbank money market and large segments of other markets with itself. It determines the interest rate by declaring what it will pay on reserve balances at the Fed without regard for the supply and demand of money. By replacing large decen-tralized markets with centralized control by a few government officials, the Fed is distorting incentives and interfering with price discovery with unintended economic consequences.

Did you know that the Federal Reserve is now giving money to banks, effectively circumventing the appropriations process? To pay for quantita-tive easing—the purchase of government debt, mortgage-backed securi-ties, etc.—the Fed credits banks with electronic deposits that are reserve balances at the Federal Reserve. These reserve balances have exploded to $1.5 trillion from $8 billion in September 2008.

The Fed now pays 0.25 percent interest on reserves it holds. So the Fed is paying the banks almost $4 billion a year. If interest rates rise to 2 per-cent, and the Federal Reserve raises the rate it pays on reserves correspond-ingly, the payment rises to $30 billion a year. Would Congress appropriate that kind of money to give—not lend—to banks?


The Fed’s policy of keeping interest rates so low for so long means that the real rate (after accounting for inflation) is negative, thereby cutting significant-ly the real income of those who have saved for retirement over their lifetime.

The Consumer Financial Protection Bureau is also being financed by the Federal Reserve rather than by appropriations, severing the checks and balances needed for good government. And the Fed’s Operation Twist, buying long-term and selling short-term debt, is substituting for the Trea-sury’s traditional debt management.

The U.S. income tax system is already very progressive. The top 1 percent

of earners pay 37 percent of all income taxes.

This large expansion of reserves creates two-sided risks. If it is not unwound, the reserves could pour into the economy, causing inflation. In that event, the Fed will have effectively turned the government debt and mortgage-backed securities it purchased into money that will have an explosive impact. If reserves are unwound too quickly, banks may find it hard to adjust and pull back on loans. Unwinding would be hard to man-age now, but it will become ever harder the more the balance sheet rises.

The issue is not merely how much we spend, but how wisely, how effec-tively. Did you know that the federal government had forty-six separate job-training programs? Yet a forty-seventh for green jobs was added, and the success rate was so poor that the Department of Labor inspector gen-eral said it should be shut down. We need to get much better results from current programs, serving a more carefully targeted set of people with more effective programs that increase their opportunities.

Did you know that funding for federal regulatory agencies and their employment levels are at all-time highs? In 2010, the number of Federal Register pages devoted to proposed new rules broke its all-time record for the second consecutive year. It’s up by 25 percent compared to 2008. These regulations alone will impose large costs and create heightened uncertainty for business and especially small business.

This is all bad enough, but where we are headed is even worse.President Obama’s budget called for raising the federal debt-to-GDP

ratio to 80.4 percent in two years, about double its level at the end of


2008. Under this budget, the debt expands rapidly to $18.8 trillion from $10.8 trillion in ten years. The interest costs alone will reach $743 bil-lion a year, more than we currently spend on Social Security, Medicare, or national defense, even under the benign assumption of no inflation-ary increase or adverse bond-market reaction. For every percentage-point increase in interest rates above this projection, interest costs rise by more than $100 billion, more than current spending on veterans’ health and the National Institutes of Health combined.

Worse, the unfunded long-run liabilities of Social Security, Medicare, and Medicaid add tens of trillions of dollars to the debt, mostly because of rising real benefits per beneficiary. Before long, all the government will be able to do is finance the debt and pay pension and medical benefits. This spending will crowd out all other necessary government functions.

What does this spending-and-debt mean in the long run if it is not controlled? One result will be ever-higher income and payroll taxes on all taxpayers that will reach over 80 percent at the top and 70 percent for many middle-income working couples.

Did you know that the federal government used the bankruptcy of two auto companies to transfer money that belonged to debt holders such as pension funds and paid it to friendly labor unions? This greatly increased uncertainty about creditor rights under bankruptcy law.

The Fed is adding to the uncertainty of current policy. Quantitative eas-ing as a policy tool is very hard to manage. Traders speculate about whether and when the Fed will intervene next. The Fed can intervene without limit in any credit market—not only mortgage-backed securities but also secu-rities backed by automobile loans or student loans. This raises questions about why an independent agency of government should have this power.

When businesses and households confront large-scale uncertainty, they tend to wait for more clarity before making major commitments to spend, invest, and hire. Right now, they confront a mountain of regulatory uncer-tainty and potential sharp increases in taxes and declines in spending. Are you surprised that so much cash is waiting on the sidelines?

What’s at stake?We cannot count on problems elsewhere in the world to make Treasury

securities a safe haven forever. We risk eventually losing the privilege and


great benefit of lower interest rates from the dollar’s role as the global reserve currency. In short, we risk passing an economic, fiscal, and finan-cial point of no return.

Suppose you were offered the job of treasury secretary. Would you accept? You would confront problems that are so daunting even Alexander Hamilton would have trouble preserving the full faith and credit of the United States. Our first treasury secretary famously argued that one of a nation’s greatest assets is its ability to issue debt, especially in a crisis. We needed to honor our Revolutionary War debt, he said, because the debt, “foreign and domestic, was the price of liberty.”

History has reconfirmed Hamilton’s wisdom. As historian John Steele Gordon has written, our nation’s ability to issue debt helped preserve the Union in the 1860s and defeat totalitarian governments in the 1940s. Today, government officials are issuing debt to finance pet projects and pay off interest groups—not to support some vital, let alone existential, national purpose.

The problems are close to unmanageable now. If we stay on the current path, they will wind up being completely unmanageable, culminating in an unwelcome explosion and crisis.

The fixes are blindingly obvious. Economic theory, empirical studies, and historical experience teach that the solutions are the lowest possible tax rates on the broadest base, sufficient to fund the necessary functions of government on balance over the business cycle; sound monetary policy; trade liberalization; spending control and entitlement reform; and regula-tory, litigation, and education reform. The need is clear. Why wait for disaster? The future is now.

Reprinted by permission of the Wall Street Journal. © 2012 Dow Jones & Co. All rights reserved.

New from the Hoover Press is Government Policies

and the Delayed Economic Recovery, edited by Lee E.

Ohanian, John B. Taylor, and Ian J. Wright. To order, call

800.935.2882 or visit www.hooverpress.org.


THE ECONOMY

Why Hiring Is StuckDon’t blame mismatched skills for stubbornly high unemployment.

The sluggish economy just isn’t creating jobs. By Edward Paul Lazear.

The unemployment rate exceeded 8 percent for more than three years, leading commentators and policy makers to speculate that there has been a fundamental change in the labor market. The view is that today’s econo-my cannot support unemployment rates below 5 percent—like the levels that prevailed before the recession and in the late 1990s. Those in gov-ernment may take some comfort in this view; it lowers expectations and provides a rationale for the dismal labor market.

Excuses aside, this issue is also important for central banks. The Federal Reserve and other central banks have policy choices to make if the high rates of unemployment reflect cyclic phenomena. But if the problem is struc-tural—perhaps reflecting a mismatch between skills needed by business and skills possessed by the unemployed—there is little the Fed can do.

Research I’ve done with James Spletzer of the U.S. Census Bureau shows that the problems in the labor market are not structural. They reflect slow economic growth, and the cure is a decent recovery.

In 2007, the unemployment rate was 4.4 percent. Two years later, it reached 10 percent. The structure of a modern economy does not change that quickly. The demographic composition of the labor force, its educational breakdown, and even the industrial mix did not differ much between 2007 and 2009.

Edward Paul lazEar is the Morris Arnold and Nona Jean Cox Senior Fel-low at the Hoover Institution and the Jack Steele Parker Professor of Human Resources Management and Economics at Stanford University’s Graduate School of Business.


More specifically, from 2007 to 2009 unemployment grew dramatically in a few industries, and these changes contributed to the rise in overall unem-ployment. But the changes were similar to those experienced in prior reces-sions. As unemployment rates declined somewhat after 2009, the pattern played out in reverse. Industries that saw the largest increases in unemploy-ment were the ones with the largest decreases as overall unemployment fell.

Between November 2007 and October 2009, the national unemploy-ment rate rose 4.9 percentage points. Of that increase, 19 percent was accounted for by increases in unemployment in construction, 19 per-cent by increases in unemployment in manufacturing, and 13 percent by increases in unemployment in retailing. Although every industry experi-enced rising unemployment, half the increase occurred in those three.

Those same industries experienced the largest reductions in unem-ployment as the overall rate declined. Between October 2009 and March 2012, the overall rate fell by 1.9 percentage points. Of that fall, 22 per-cent was a result of declines in construction unemployment, 31 percent in manufacturing unemployment, and about 8 percent in retail. Once again, those three industries accounted for more than 50 percent of the reduc-tions in the rates of unemployment.

Whatever job “mismatch” exists today was also present when the labor

market was booming.

“Mismatch” is another measure of structural maladies in the labor mar-ket. Mismatch can take a number of forms, but the most important is industrial or occupational mismatch, in which industries that have many job openings have few unemployed workers with the requisite skills, and industries with many unemployed workers do not have job openings.

For example, suppose demand in health care is growing, providing openings for workers with the needed skills. At the same time, manufac-turing is declining, but workers who are well suited to manufacturing may not be able to move easily into health care.

Spletzer and I find that mismatch increased dramatically from 2007 to 2009. But it decreased just as rapidly from 2009 to 2012. Like unemploy-ment itself, industrial mismatch rises during recessions and falls as the econ-


omy recovers. The measure of mismatch that we use, which is an index of how far out of balance are supply and demand, is already back to 2005 levels.

Whatever mismatch exists today was also present when the labor mar-ket was booming. Turning construction workers into nurses might help a little, because some of the shortages in health and other industries are a long-run problem. But high unemployment today is not a result of the job openings being where the appropriately skilled workers are unavailable.

Even within industries, there may be some chronic mismatch between vacancies and skills available. Our results on occupational mismatch suggest there is a shortage of skilled managers and professionals in most industries.

That is not to imply that we are back to where we should be. The unemployment rate is still well above the 5 percent level that we can aspire to maintain.

The reason for the high level of unemployment is the obvious one: overall economic growth has been very slow. Since the recession formally ended in June 2009, the economy has grown at 2.2 percent per year, or 6.6 percent in total. An empirical rule of thumb is that each percentage point of growth contributes about half a percentage point to employment.

The economy has regained about four million jobs since bottoming out in early 2010, which is right around 3 percent of employment—just the gain that would be predicted from past experience. Things aren’t great, but the failure is a result of weak economic growth, not of a labor market that is out of sync with the rest of the economy.

The evidence suggests that to reduce unemployment, all we need to do is grow the economy. Unfortunately, current policies aren’t doing that. The problems in the economy are not structural and this is not a jobless recovery. A more accurate view is that it is not a recovery at all.


Available from the Hoover Press is Pension Wise:

Confronting Employer Pension Underfunding—And Sparing

Taxpayers the Next Bailout, by Charles Blahous. To order,

call 800.935.2882 or visit www.hooverpress.org.


THE ECONOMY

A Regulatory GiantThe Fed is too big and powerful to remain so unaccountable. By John

H. Cochrane.

Momentous changes are under way in what central banks are and what they do. We’re accustomed to thinking that central banks’ main task is to guide the economy by setting interest rates. Their main tools used to be “open market” operations, that is, purchasing short-term Treasury debt, and short-term lending to banks.

Since the 2008 financial crisis, however, the Federal Reserve has inter-vened in a wide variety of markets, including commercial paper, mort-gages, and long-term Treasury debt. At the height of the crisis, the Fed lent directly to teetering nonbank institutions, such as insurance giant AIG, and participated in several shotgun marriages, most notably between Bank of America and Merrill Lynch.

These “nontraditional” interventions are not going away anytime soon. Many Fed officials, including Chairman Ben Bernanke, see “credit con-straints” and “segmented markets” throughout the economy, which the Fed’s standard tools don’t address. Moreover, interest rates near zero have rendered those tools nearly powerless, so the Fed will naturally search for bigger guns. Last year in Jackson Hole, Bernanke made it clear that “we should not rule out the further use of such [nontraditional] policies if economic conditions warrant.”

John h. CoChrane is a senior fellow at the Hoover Institution and the AQR Capital Management Distinguished Service Professor of Finance at the University of Chicago’s Booth School of Business.


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est.But the Fed has crossed a bright line. Open-market operations do not

have direct fiscal consequences, or directly allocate credit. That was the price of the Fed’s independence, allowing it to do one thing—conduct monetary policy—without short-term political pressure. But an agency that allocates credit to specific markets and institutions, or buys assets that expose taxpay-ers to risks, cannot stay independent of elected, and accountable, officials.

In addition, the Fed is now a gargantuan financial regulator. Its inspec-tors examine too-big-to-fail banks, come up with creative “stress tests” for them to pass, and haggle over thousands of pages of regulation. When we imagine the Fed of ten years from now, we’re likely to think first of a financial czar, with monetary policy the agency’s boring backwater.

A revealing example emerged last spring, admirably documented on the Fed’s website. Using its bank-regulation authority, the Fed declared that the banks that had “robo-signed” foreclosure documents were guilty of “unsafe and unsound processes and practices”—though the documents scan-dal had nothing to do with the banks taking too much risk.

The Fed then commanded that the banks pro-vide $25 billion in “mortgage relief,” a simple transfer from bank share-


holders to mortgage borrowers—though none of these borrowers was a victim of robo-signing.

The Fed even commanded that the banks give money to “nonprofit housing counseling organizations, approved by the U.S. Department of Housing and Urban Development.” Why? Many at the Fed see mortgage write-downs as an effective tool to stimulate the economy. The Fed simply used its regulatory power to help meet that policy goal.

Even if you think it’s a good idea (I don’t), a forced transfer from sharehold-ers to borrowers in pursuit of economic policy is the province of the executive branch and Congress, subject to reproof from angry voters if it’s a bad idea.

The Fed said candidly that it was acting “in conjunction” with the state attorneys general and the Justice Department. So much for an apolitical, independent Fed.

True, $25 billion is couch change in today’s Washington. But you can see where we are going: hey, nice bank you’ve got

there. It would be a shame if the Consumer Finan-cial Protection Bureau decided your credit cards

were “abusive,” or if tomorrow’s “stress test”


didn’t look so good for you. You know, we’ve really hoped you would lend more to support construction in the depressed parts of your home state.

Conversely, when the time comes to raise interest rates, how can the Fed not consider that doing so will hurt the profits of the too-big-to-fail banks now under its protection?

The Fed is now a gargantuan financial regulator.

This is not a criticism of personalities. It is the inevitable result of investing vast discretionary power in a single institution, expecting it to guide the economy, determine the price level, regulate banks, and direct the financial system. Of course it will use its regulatory power to advance policy goals. Of course propping up the financial system will affect mon-etary policy. If we don’t like this sort of outcome, we have to break up the Fed into smaller agencies with narrowly defined mandates.

The political power of the European Central Bank (ECB) is, paradoxi-cally, even greater. The ECB was set up to do less—price stability is its only mandate, and it is not a financial regulator. But the ECB holds the key to the eurozone’s central fiscal-policy question. It has bought the debts of Greece, Italy, Spain, and Portugal, and it is lending hundreds of billions of euros to banks, which in turn buy more of those sovereign debts.

Eventually, the ECB will have to suck up this volcano of euros, by selling back the bonds it has accumulated. If it can’t—if the bonds have defaulted, or if selling them will drive up interest rates more than the ECB wishes to accept—then the ECB will need massive funds from Ger-man taxpayers to prevent a large euro inflation. It might ask for a gift of German bonds it can sell, as “recapitalization,” or it might ask for a bond swap of salable German bonds for unsalable southern bonds. Either way, German taxes end up soaking up excess euros.

Our views of central banks have changed every generation or so for centuries. The idea that central banks are centrally responsible for infla-tion and macroeconomic stability dates only from Milton Friedman’s work in the 1960s. Views are shifting again, and it would be better to think clearly, in advance, about what we want central banks to do.



POL IT ICS

The New New DealIt’s the spirit of 1932: unsustainable transfers of wealth, vague new

“rights” (billed to the taxpayer), and a record of failure. By Richard

A. Epstein.

Eighty years ago, Franklin Roosevelt rode into office at the height of the Depression. In many ways, the election of 1932 had much in common with the recently concluded presidential race. The economic record from 1929 to 1933 was grim. Unemployment rates spiked to close to 25 percent from a pre-1929 figure of about 4 percent. World trade was down by about a third, partly in response to the ill-advised Smoot-Hawley tariffs of 1930, which sparked retaliation from around the globe. And persistent deflation on the order of 20 percent meant that many could not repay their debts.

The situation is nowhere near as desperate as it was then, but there is little doubt that the nation has become stagnant and uneasy. Real eco-nomic growth has slowed and the future probably holds higher levels of insecurity and lower rates of growth. Today’s parents are no longer con-fident their children will lead lives as fulfilling and prosperous as their own. Falling expectations lead to rising discontent, and discontent leads to clarion calls for action.

What can we learn from the not-quite-parallel set of events of Roosevelt’s New Deal days? Some comparisons come quickly to mind, given the con-

RichaRd a. EpstEin is the Peter and Kirsten Bedford Senior Fellow at the Hoover Institution and a member of Hoover’s John and Jean De Nault Task Force on Property Rights, Freedom, and Prosperity. He is the Laurence A. Tisch Professor of Law at New York University Law School and a senior lecturer at the University of Chicago.


scious efforts of supporters of President Obama to hark back to Roos-evelt’s most powerful rhetoric, most notably his 1944 State of the Union address calling for a “Second Bill of Rights.” AFL-CIO President Richard Trumka used similar language at the “Workers Stand for America” rally last year in Philadelphia.

Individuals taxed to supply decent wages, home, and health to others

must forfeit their own right to reap the fruits of their labor.

But any analysis must take into account one stark difference: in 1932, Roosevelt could campaign as the outsider by attacking the record of the Republican incumbent, Herbert Hoover—who, ironically, was a pro-gressive himself. At the Democratic National Convention, Roosevelt pledged himself “to a new deal for the American people. This is more than a political campaign. It is a call to arms.” The object of this com-mon mission was “a more equitable opportunity to share in the distribu-tion of national wealth.”

But Obama, forced to defend his record, was deprived of any fresh opportunity to plead for his team to be given a chance to implement an agenda of hope and change. Instead, he had to argue that his old team needed four more years to implement a program that had already gener-ated so many dashed expectations over the previous four years.

CLASS WARFARE DEMANDS A V ILLA INRoosevelt’s 1932 New Deal campaign was not limited to evocative and elevating speeches. Every campaign also needs villains—those whose mis-deeds have frustrated the will of the people. Today, those villains are the “1 percent.” For Roosevelt, as he pointed out in his famous first inaugural address of March 1933, the villains were the “self-seekers”:

[These] rulers of the exchange of mankind’s goods have failed, through

their own stubbornness and their own incompetence, have admitted

their failure, and abdicated. Practices of the unscrupulous moneychang-

ers stand indicted in the court of public opinion, rejected by the hearts

and minds of men.


On coming to Washington, Roosevelt used the language of war and religion to conclude that “the moneychangers have fled from their high seats in the temple of our civilization.” His reference to the Bible could not be clearer, for when Jesus came to Jerusalem, he too went into the temple of God to cast out the moneylenders, castigating them for turning a house of prayer into a den of thieves.

The parable plays into the New Deal story that all financial transac-tions are sterile exchanges over which, Roosevelt insisted, government must impose “a strict supervision of all banking and credits and invest-ments,” in part to undo “the overbalance of population in our industrial centers.” But “our international trade relations, though vastly important, are in point of time and necessity secondary to the establishment of a sound national economy”—as if the two could be separated.

Roosevelt’s creation of public works programs to offset the decline in private spending did some modest good, far more than Obama’s bloat-ed stimulus programs. But spending programs come and go. Roosevelt’s enduring achievement was to put government muscle behind the agri-culture and labor cartels that persist to this very day. Roosevelt may not have understood why cartels are less efficient than monopolies—namely, because they set quotas to allocate some production to their least efficient members—but he did understand that cartels have a political pop that no monopoly firm could hope to match. A cartel can muster a large mem-bership base to work overtime to bolster its political allies. In this regard, Trumka’s recent rallies and Obama’s backing of the ethanol coalition both take a page out of Roosevelt’s New Deal playbook.

“B ILL OF R IGHTS ,” PART 2 : THE B ILL COMES DUEUnfortunately, Roosevelt never confronted the grim consequences of his eco-nomic initiatives. But he was without peer in packaging partisan programs in the language of universal truths. His use of the phrase “Second Bill of Rights” tied his political vision to one of this nation’s greatest achievements, the Consti-tution’s Bill of Rights. Roosevelt did so, however, without the slightest awareness that implementing Bill of Rights 2.0 necessarily undermines Bill of Rights 1.0.

His devilishly simple strategy was to list all the wonderful benefits that individuals could claim under 2.0 without stating what correlative duties


were needed to generate these new rights—or who would foot the bill for them. His list of protected interests under 2.0 is perfectly tailored to his political constituency:

The right to earn enough to provide adequate food and clothing and

recreation;

The right of every farmer to raise and sell his products at a return which

will give him and his family a decent living;

The right of every businessman, large and small, to trade in an atmo-

sphere of freedom from unfair competition and domination by monopo-

lies at home or abroad;

The right of every family to a decent home;

The right to adequate medical care and the opportunity to achieve and

enjoy good health;

The right to adequate protection from the economic fears of old age,

sickness, accident, and unemployment;

The right to a good education.

All of these rights spell security…

All of these are positive rights, which means necessarily that some unidentified individuals or groups have the duty to provide decent wages, home, health, and education to the people. The individual so taxed can discharge that duty only by forfeiting his own right to reap the fruits of his own labor. Yet Roosevelt left the incidence and size of these hefty cor-relative duties unaddressed.

We are witnessing today a modern rerun of Roosevelt’s incomplete strat-egy. The health care plan dubbed ObamaCare, for instance, designated a generous set of “essential health benefits” to a large number of individuals entitled to affordable care on the newly created government exchanges. But these benefits cannot be funded with higher taxes on the “millionaires and billionaires,” whose combined wealth falls short. So what duty will undergird the new right?


This sort of funding crisis could never arise under Bill of Rights 1.0, whose correlative duties are negative—or, put another way, they impose a “keep off ” sign on other people. If I have the freedom of speech, your duty is to forbear from disrupting the speech with force, and vice versa. Each of us can demand forbearance from the use of force by all others. If freedom of contract allows me to take whatever job I wish from any employer, your job is not to block the door because the lower wages offered by the employer amount to “unfair competition” to the higher wages I could command elsewhere. Government’s mission is to collect enough in taxes that it can create the social institutions that support these rights.

Vilifying the rich, attacking “outsourcers,” imposing a rich, unsustainable

set of benefits: all this should end.

The “social security” championed in Bill of Rights 2.0 imposes far more extensive correlative duties, but only on select portions of the population. The taxes needed to sustain them cut into the productive wealth from which they are collected in the first place, which is one reason why Social Security (the name is no accident), Medicare, and Medicaid are all in financial distress today.

CLOSING THE BOOKS ON THE NEW DEALSo it’s instructive to ask just how Roosevelt’s Second Bill of Rights fared in his time. For the duration of World War II, the economic demands were kept in check by the need to fight a common enemy. But once the war ended, the nation endured a sustained “strike wave” which led to a major shift to the Republicans in the 1946 election, one similar to that of 2010.

One major consequence of the Republican return to power was the pas-sage of the Taft-Hartley Act, which cut back on the collective bargaining rights of unions and allowed the government to impose eighty-day “cool-ing off ” periods to give mediators a chance to avert strikes. The legisla-tion passed over President Harry Truman’s veto, but thereafter he used it a dozen times to impose cooling-off periods to prevent damaging strikes.

How could one expect the labor statutes not to foster industrial unrest? The basic premise of the New Deal labor reforms was that a regime of collective


bargaining would force management to sit down with labor because of its statutory duty to bargain with the selected union. The statutory rigidity led to bitter confrontations, which a competitive market can avoid by making continuous wage adjustments in response to shifts in supply and demand.

But open markets hurt unions, which is why Trumka wants Congress to strengthen the unions’ bargaining position by card check—a stream-lined way of organizing workers—and mandatory arbitration. Yet even Trumka must recognize that the growth of free trade around the world—which neither Roosevelt nor Obama much supported—has reduced union power to the point where strikes against profitable telecommunications companies such as Verizon and profitable manufacturing companies like Caterpillar cannot raise union wages above competitive levels.

Recent developments in labor relations show how changed market condi-tions offer welcome correctives to the New Deal approach. These correctives are at risk under any administration that tracks Roosevelt’s early agenda: vilify the rich as unproductive ciphers of society and work toward a progressive tax structure; be hostile toward the growth of international trade by denouncing firms that outsource jobs as the enemies of domestic labor; continue to work in favor of extensive agricultural subsidies for ethanol and other farm crops, no matter how great a disruption these impose on domestic and foreign food mar-kets; and insist upon a rich set of unsustainable health care benefits through Medicare and Medicaid. Ironically, these are all manifestations of the “special interest” legislation heartily denounced by both Roosevelt and Obama.

It is time for the New Deal, which has championed cartels and massive, unsustainable wealth transfers in the name of the public good, to be brought to its long-overdue end.

Reprinted from Defining Ideas (www.hoover.org/publications/defining-ideas). © 2012 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved.

Available from the Hoover Press is The Case against the

Employee Free Choice Act, by Richard A. Epstein. To

order, call 800.935.2882 or visit www.hooverpress.org.


ENT ITLEMENTS

A Tall Order for MedicareMedicare needs to cut costs, escape political interference, and stay

in business. Here’s how it can do all three. By Daniel P. Kessler.

In 1994, during the fight over President Clinton’s health care reform pro-posal, Senator John Breaux told a story meant to illustrate how confused Americans were about health care policy. Breaux, a Louisiana Democrat, described being accosted at the New Orleans airport by an elderly con-stituent who yelled at him: “Don’t you let the government get a hold of my Medicare!” It was meant to be funny: Medicare, which provides health coverage to the elderly and disabled, is of course a huge government pro-gram. The fact that people wanted to keep the government out of it sug-gested that opposition to increased federal involvement in health care was motivated not by concerns about government’s administrative abilities, but rather by an ignorant resistance to change.

Joking aside, Breaux’s constituent made a point—whether she intended to or not—that today’s Medicare reformers would be wise to keep in mind. The administration of government programs can be influenced to greater or lesser degrees by politics, and Medicare suffers enormously from its constant micromanagement by Congress and the executive branch. The current debate over Medicare reform is often framed as a choice between centralized administration and market mechanisms, but there is a more

Daniel P. Kessler is a senior fellow at the Hoover Institution, a member of Hoover’s Working Group on Health Care Policy, and a professor at Stanford University’s Graduate School of Business and Law School.


clarifying way to evaluate the various reform proposals: by examining how much they would allow politics into the program, and how they would manage the competing desires of lawmakers, administrators, interest groups, health care providers, and beneficiaries.

Different approaches will either lessen or increase lawmakers’ ability to

tamper with Medicare to serve their own ends.

In recent years, reform proposals have fallen into two broad categories. Both aim to restrain the ballooning costs of Medicare without undermin-ing the program’s ability to provide comprehensive coverage for the elder-ly. The first category of reform would layer changes to Medicare on top of its current structure, in which the government sets the terms of coverage and the prices for health services. President Obama and Congress adopted this model in the recent health reform law, which created the Independent Payment Advisory Board (IPAB), a fifteen-member panel tasked with rec-ommending annual changes to Medicare payment rates and other policies to keep the program’s costs down.

The second approach to reform would instead transform Medicare into a marketplace of regulated, private health plans with government-provided subsidies for the premiums. This “premium support” model has been proposed most recently by Democratic Senator Ron Wyden of Oregon and Republican Congressman Paul Ryan of Wisconsin, but versions of the premium-support idea have been around for many years. Under the Wyden-Ryan plan, the government would each year set a standard for coverage, stipulating the basic procedures and treatments any eligible plan would have to include. Private insurers would then submit bids to see who could provide the required coverage at the low-est cost. (A federal fee-for-service insurer would also submit a bid, so that traditional Medicare-style coverage would be considered along with private-sector bids.) The government would set the level of the premium subsidy to match the cost of the second-cheapest plan (allocating more- generous premium subsidies to the poorest, sickest, and oldest seniors), ensuring that there would always be one option less expensive than the subsidy amount. If a senior chose this least expensive option, he could


pocket the difference; if he chose a more expensive option, he would have to make up the difference on his own.

Such a mechanism would provide beneficiaries with incentives to choose less-costly plans, in turn giving insurers incentives to organize their networks of health care providers as efficiently as possible. This would restrain the overall costs of Medicare, and the costs of health care more generally.

These models embody the two basic approaches to curbing cost growth in Medicare and, as such, have been debated extensively in the ongo-ing political fight over Medicare reform. But largely missing from this debate has been a consideration of Medicare’s politics, and of the ways each approach would lessen or increase lawmakers’ ability to tamper with the program’s administration to serve their own ends (and those of their supporters).

THE TROUBLE WITH MEDICAREThe fiscal trajectory of the federal government is completely unsustain-able. If current trends continue, government debt held by the public will grow rapidly for the foreseeable future, quickly eclipsing the size of our entire economy. By 2022, America’s debt will exceed 90 percent of gross domestic product; by 2037, it will be nearly 200 percent, according to the Congressional Budget Office (CBO). As a consequence of this debt explo-sion, interest payments will start to squeeze out other public spending. Policymakers will be less able to respond to unexpected challenges, lacking the funding to pay for military operations or disaster response. We will be at risk of a sudden fiscal crisis if investors lose confidence in our ability to make good on our obligations.

Unwise spending—on care that delivers minimal or no medical

benefit—has increased enormously.

Higher taxes alone cannot pay the bills coming due. The Congressio-nal Budget Office’s latest Long-Term Budget Outlook shows that achiev-ing fiscal sustainability through tax increases alone would require every source of government revenue—personal income taxes, corporate taxes,


firearm-license fees, everything—to go up by more than 20 percent, start-ing immediately. And these figures don’t account for the effects of higher taxes on behavior—impelling people to work less, alter investment strate-gies, or simply engage in more evasion. This means that taxes for everyone else would have to go far higher still. Such staggering tax hikes are, of course, politically impossible.

The fiscal gap will therefore have to be addressed largely through spending restraint, which will need to focus on the main causes of our deficits and debt. Without a doubt, the foremost driver of our long-term fiscal problems is the Medicare program, the growth of which has vastly outstripped all other increases in spending in recent decades. In 1970, according to the CBO, Medicare spending equaled 0.7 percent of GDP, while all other federal spending combined (except interest on the debt) was 17.9 percent of GDP. This year, Medicare spending will equal 3.7 per-

Peter Budetti of the Centers for Medicare and Medicaid Services, left, and Lewis Morris, a

Health and Human Services official, testify before a Senate panel in July 2011 at a hearing

on fraud in Medicare and Medicaid.


cent of GDP (more than five times what it was in 1970), while all other federal spending will be 18.3 percent of GDP. And that trend is expected to continue: in the future, the CBO expects Medicare costs to continue to increase as a share of the economy, while all other federal spending com-bined will remain roughly constant or actually decline.

Certainly some of this additional Medicare spending is worthwhile. It is indisputable that health care in the United States has made remarkable advances over the past fifty years. No one would seek to turn back the clock on medical care or medical spending to the 1960s.

But at the same time, the volume of resources that we spend unwisely—on care that delivers minimal or no medical benefit—has also increased enormously. And this waste is a huge driver of Medicare’s cost increases. Although reasonable people disagree about the precise magnitude, there is no disputing that the amount of low-value treatment is large and grow-ing. The problem is that in the field of medicine, it can be difficult to determine what precisely constitutes waste: an important treatment for one patient may be useless for most others, and vice versa.

Medicare will have to be sharply and relentlessly focused on high-value care. But in its current form, the program is simply incapable of rising to this challenge. The problem is not one of government incompetence: the program is administered by a highly knowledgeable, professional staff at the Centers for Medicare and Medicaid Services (CMS), part of the Department of Health and Human Services. Rather, the problem is fun-damentally political. Medicare is not focused on high-value care because it is structured in a way that allows other priorities to take precedence.

In Medicare, political incentives all point toward waste.

To begin with, Congress routinely intervenes in Medicare’s opera-tions, in both formal and informal ways. It has the final authority over the many complex formulas that determine the administrative prices that Medicare pays for everything from days in intensive care to MRI scans, home health care visits, and wheelchairs. One need not be a political-science professor to see that this offers Congress plentiful opportunities to dole out benefits to well-organized constituencies. And Congress has

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seized these opportunities, over and over again. Both parties play politi-cal games often and enthusiastically, and these games cost taxpayers bil-lions of dollars each year.

There is nothing surprising about spendthrift politicians, of course. But what makes Medicare different is the vast amount of money involved—the program now spends over half a trillion dollars a year—and the complex-ity of modern medicine, which makes it difficult for opponents of waste to identify and eliminate it. Political scientists describe this state of affairs as a “public-choice failure”—a situation in which the political incentives all point toward waste, and focused interest groups are rewarded at the expense of society as a whole.

For more than three decades, reformers both within CMS and in Con-gress have tried various means of containing cost growth through admin-istrative requirements: price controls, pre-set maximum growth rates for physician reimbursement, and assorted payment schedules and mecha-nisms. And all have failed, because Congress ultimately was not willing to see them implemented.

Beyond the danger of direct congressional intervention, Medicare’s centralized design and its exposure to political micromanagement also mean that it is subject to intense pressures from key interest groups—such as providers of medical products and services and lobbies that ben-efit financially from the current system. These pressures push the system toward more spending rather than more value, prevent the usual interplay of supply and demand from informing prices, and leave no one with any incentive to curb fraud and abuse.

L IMIT ING CONGRESSBoth the IPAB approach and premium support reflect an awareness of the danger of direct congressional micromanagement of Medicare. Both proposals tie the hands of Congress and delegate many responsibilities for particular decisions about prices and payments to an entity less subject to political pressure.

In the case of IPAB, that entity is an appointed expert board that makes recommendations that Congress must consider within ten weeks. If Congress does not approve the recommendations or find other means


of achieving the same level of savings within six months, the board’s pro-posals are implemented automatically.

In the case of premium support, the price-setting entity is the market. Although the required minimum level of insurance coverage would still be defined each year by CMS (a federal agency answerable to Congress), the original cost of providing coverage, and the annual growth of that cost, would be determined by an annual bidding process among com-peting insurers. Decisions about which benefits or payment rates to cut or restructure would be determined by supply and demand (though they would still be subject to significant political oversight through regula-tion).

Higher taxes alone can’t possibly pay the bills.

Thus both proposals attempt to tackle the great challenge of reining in political influence. But they are not equally well suited to the task. IPAB’s most serious limitation on this front is that its charter does not require Congress to hold up-or-down votes on the panel’s recommenda-tions. Instead, the law allows Congress to consider amendments to IPAB’s cost-cutting proposals as long as the changes “meet the same fiscal crite-ria under which the Board operates”—meaning they achieve the same level of savings. This provision enables Congress to, for example, replace the changes recommended by the board with lawmakers’ own reimburse-ment-rate cuts—which can then be undone by subsequent legislation—and still satisfy the health care law’s requirements. This provision reintro-duces politics into Medicare’s management at a crucial juncture.

As a 2011 report from the Kaiser Family Foundation explains, IPAB suffers from other flaws. There are statutory limits to its authority. Pay-ments for inpatient and outpatient hospital services—the lion’s share of Medicare’s expenditures—are exempt from IPAB-proposed reductions in payment rates until 2020, for instance. IPAB is also prohibited from mak-ing any recommendation that would ration care, restrict benefits, raise beneficiary premiums or cost-sharing, or modify eligibility criteria. These constraints make it hard to see how IPAB could achieve savings of the magnitude our fiscal situation demands.


IPAB’s charter also requires its mandated spending reductions to be “scoreable” by the CBO within a single implementation year. Such a requirement virtually guarantees that the board will seek savings by reduc-ing reimbursement rates rather than making more fundamental changes (which take longer to kick in), despite the fact that such fundamental changes would likely be more effective and more difficult to undo.

Some defenders of the IPAB approach argue that it will allow for the use of an alternative payment system—one with a better chance of controlling costs—within Medicare’s current administrative structure. This approach, known as “bundled payment,” involves making one payment for an “episode of care”—including, say, the hospital charges, surgeon’s fees, and follow-up visits for a hip replacement—rather than a separate payment for each indi-vidual service. The idea behind bundling is to create incentives for providers to manage care better, which would ultimately reduce low-value spending.

Although bundled payment is a good idea, there is little evidence to suggest that it will be enough to overcome Medicare’s fundamental public-choice problem. The results of a recent pilot project, the 2005–10 Physician Group Practice Demonstration Project, suggested that bundled payment might be able to improve quality of care but would have a much harder time generating savings.

Premium support stands a much better chance of insulating the system from political manipulation. Although the IPAB may be more removed from interest-group interference than Congress is, it too is a fundamen-tally political institution. Premium support, on the other hand, entrusts decisions about particular cuts to a market.

Like everything else, spending on administration is sometimes good and

sometimes bad. It’s good when it generates savings that exceed costs,

bad when it doesn’t.

Of course, in premium support’s initial phase, patient and provider groups will lobby to make the support payment and the required benefit package as generous and favorable to their interests as possible. Even so, they will have far less incentive to rig the system than they would under IPAB because each


party will be able to capture only a fraction of the benefits of any victory the group as a whole might achieve. For instance, if hospitals lobbied for higher premium-support payments, how would they know that the extra funding would flow to them rather than to ambulatory surgical centers, doctors, or medical-device manufacturers? That distribution would eventually be deter-mined by who is best able to offer an attractive insurance product to consum-ers on an open market. And since no one knows for sure what his competitors will do, there is less of an incentive to fight for the program’s expansion and more incentive to focus on providing a more attractive service at lower cost.

In a reasonably functional market system—one in which insurers com-pete to supply a defined package of benefits—providers are likely to focus far more on efficiency than they do under today’s system, or than they would under IPAB.

SETT ING PRICESProminent among the sources of inefficiency in the Medicare system today is how the program sets prices. Medicare currently uses a top-down approach: starting with direction from Congress and the administrator of CMS, the program’s staff determines what goods and services Medicare wants to offer to beneficiaries and what it will pay on the basis of internal analysis and the input of interested external parties. The alternative is a bottom-up approach, in which CMS would solicit bids from sellers to obtain information about the costs and characteristics of available goods and services and make its decisions accordingly.

Economists describe these two approaches as administrative pricing and competitive pricing, respectively. As Robert Coulam, Roger Feldman, and Bryan Dowd explained in the Journal of Health Politics, Policy, and Law in 2011, administrative pricing has a fundamental disadvantage: informa-tion flows from the party that knows little about costs (Medicare staffers) to the party that knows a lot (providers). Under competitive pricing, on the other hand, it is providers who tell Medicare staffers about the resourc-es required to provide a given product or service.

At first glance, it might seem that administrative pricing gives CMS an advantage over the providers, since those providers have to deal with the prices and payments dictated by the agency. But the opposite is true.


Administrative pricing is good for providers for the same reason that it is bad for society: it allows providers to exercise their natural informational advantage over Medicare. They organize their work with knowledge of how particular products and services will be reimbursed, and thus design their care with the aim of receiving maximal reimbursements, rather than of providing the best form of the service or product CMS wants at the lowest possible price. It is thus not surprising that providers’ opposition to competitive pricing in Medicare has been so vigorous: they stand to lose out under a more efficient, market-based system that makes Medicare rules more difficult to manipulate. (The public, however, would gain.)

Competitive pricing is not inconsistent with the current structure of Medicare—but it is inconsistent with Congress’s interests. Again, the problem is politics. Administrative pricing creates opportunities to make decisions that favor narrow groups of providers, thereby giving politicians valuable benefits to distribute to their advantage.

Premium support breaks this link between politics and pricing in a way that IPAB and bundled payment do not. Once the value of the over-all support payment is determined, the myriad individual prices that the competing insurance plans pay and charge will be determined by the mar-ket. And the result of that process is more likely to be politically stable. Under traditional Medicare, providers who oppose competitive pricing have no natural counterpart; under premium support, however, both insurers (who would claim some of the residual profits of successfully competing for customers) and beneficiaries (who would share in efficiency gains through lower premiums) would play this role.

Premium support would make use of markets on the demand side as well. Insurers would be forced to offer good value relative to their com-petitors; if they failed to do so, they would lose customers’ business. Ben-eficiaries, too, would face tradeoffs: between the extra features of more expensive coverage and their own money.

F IGHT ING FRAUD AND RENT-SEEKINGDefenders of today’s Medicare program often point out that Medicare spends much less on administrative activities than private health insurance plans do. A major appeal of the IPAB over premium support, they suggest,


is that it would retain Medicare’s administrative structure, which seems to involve significantly less overhead. Premium support, by contrast, would involve private insurers far more extensively in the operation of Medicare, and they tend to have higher administrative costs.

But are Medicare’s low administrative costs really a strength of the pro-gram? Is a dollar spent making sure that a doctor is really delivering the care he claims to deliver a dollar wasted? Like everything else, spending on administration is sometimes good and sometimes bad: it is good when it generates savings that exceed costs and bad when it does not.

By any realistic measure of this sort, Medicare spends too little, not too much, on administration and oversight. The program’s standards for the enrollment and payment of providers are notoriously lax, having been well documented in a series of 2011 reports by the U.S. Government Accountability Office. The GAO found that CMS had not adhered to its own internal procedures for determining whether a potential provider was a legitimate business before enrolling it in the program and making payments. Medicare also routinely underinvests in prepayment review of claims—automated payment controls that delay or select for further scru-tiny questionable claims, such as those associated with unusually rapid increases in billings or items or services unlikely to be prescribed in an appropriate course of medical care (like removing the same patient’s gall-bladder twice on the same day). Indeed, in 2006, the GAO estimated that a $1 investment in prepayment review would save $21 in improper Medicare payments. CMS has made changes designed to address some of these vulnerabilities, but it is clear that many problems remain.

Why does this laxity continue? Again, the reason is political. In tradi-tional Medicare, even honest providers have an incentive to lobby against aggressive efforts to control fraud and abuse. They have no opportunity to share in the gains of rooting out fraud; for reputable providers, stricter auditing requirements simply result in higher accounting costs.

Premium support would change the political dynamic. Privately admin-istered health plans can (and do) offer to share gains from controlling fraud and abuse with the vast majority of legitimate providers, thereby weakening their incentive to oppose anti-fraud measures. Similarly, ben-eficiaries in traditional Medicare have no reason to demand tighter over-


sight because any gains accrue entirely to the program without the ben-eficiaries’ even knowing about them. With premium support, however, this situation would change: seniors would enjoy some of the benefits of rooting out fraud in the form of lower premiums and costs.

Health care providers are not the only parties with an interest in preserv-ing Medicare as we know it. Special-interest groups, too, are deeply invest-ed, and thus highly engaged in the politics of entitlement reform. AARP (formerly the American Association of Retired Persons), for instance, lends its name to commercial insurers for the sale of AARP-branded Medicare supplemental, Medicare Advantage, and Medicare prescription-drug poli-cies. AARP earns enormous royalties from these sources; indeed, they now account for about half of the group’s income.

Hence the ferocity of the group’s opposition to premium support. In a system like the one proposed by Wyden-Ryan, seniors would select cover-age from among plans that all have the same required minimum benefits; as a result, there would be much less uncertainty about what one plan or another would or would not cover. This, in turn, would reduce seniors’ reli-ance upon AARP endorsements or branding to select plans. And insurers, forced to compete for seniors’ business—by offering a good product at the lowest possible price—would have every incentive to eliminate unnecessary costs. Immense royalty payments to AARP in order to borrow the group’s name would surely be among the first expenses to go. Moreover, any seri-ous premium-support insurance plan would probably eliminate traditional Medicare’s unlimited cost-sharing—thereby undermining the political and economic rationales for Medicare supplemental policies in the first place.

AARP offers only one example of how premium support would keep politics out of the system, and thereby help keep spending under control.

PROVIDER POWERTo be sure, premium support is not without its drawbacks. But the com-mon criticisms of such a market-based approach are not persuasive. One set argues that premium support would hurt the poorest, sickest, and oldest—and thus the most vulnerable—Medicare beneficiaries. For these seniors, the argument goes, higher health care costs would not be covered as easily by a set payment, and so patients would confront gaps in coverage.


Although premium support could be implemented in such a way, no realistic proposal would do so. All serious premium-support proposals, including Wyden-Ryan, graduate their support payments on the basis of income (more for the poor than for the rich), health status (more for the sick than for the healthy), and age (more for older retirees than for younger ones). Given the extensive racial and socioeconomic disparities in the quality of care provided by Medicare today, arguing for the status quo on the grounds of fairness is particularly unreasonable. Indeed, premium support has the potential to do better in this respect, by explicitly giving a larger payment to people who are socioeconomically disadvantaged.

Premium support depends on healthy competition, and there is a role for

regulators in ensuring such competition and combating monopoly power.

One concern about premium support does merit further consideration. Some areas of the country are served by only one or two hospitals, particu-larly for certain high-level, technologically intensive procedures like treat-ment for trauma, rare cancers, or serious cardiac illnesses. In these places, a premium-support system might give providers market power over private insurers, and thus increase the effective price that beneficiaries pay for care. Today’s Medicare program exercises nationwide, take-it-or-leave-it buying power, which gives it negotiating leverage over even these regional health care powerhouses. That take-it-or-leave-it monopoly status is, of course, part of the problem with Medicare. But while eliminating that power would improve efficiency in some ways, in these areas, it might tip the balance of power back to the regional behemoths—thereby leading to price increases so large as to outweigh premium support’s other gains.

Empirical evidence about the effects of provider market power sug-gests that this is a real problem. But it remains an open question whether retaining Medicare’s administrative-pricing structure is the appropriate policy response. In other contexts, giving a public agency the power to determine prices is not generally seen as a way to address failures of com-petition. Smarter and more assertively enforced antitrust laws would be a superior alternative. This concern has not been prominent enough on the agendas of advocates of premium-support reforms; if such reforms are


to proceed, these advocates will need to take the problem seriously and provide substantive means of addressing it. Premium support depends on healthy competition, and there is a role for regulators in ensuring such competition and combating monopoly power.

SOLV ING THE MEDICARE R IDDLEMedicare’s out-of-control spending is the natural result of its centralized, politicized structure. The creation of a centralized board of cost control-lers—all political appointees—is thus not the way to address it.

Premium support, in contrast, would deal with Medicare’s fundamen-tal problems far better. It would commit the program to a structure more resistant to lobbying by interest groups and meddling by Congress. It would create incentives for insurers and beneficiaries to avoid low-value care and invest appropriately in controlling fraud and abuse. And its market mechanisms would allow Medicare to make greater use of prices to transmit information about the real costs of treatment decisions and insurance-policy design. All of these factors would make Medicare better at delivering good value and controlling spending.

Premium support does carry risks, but when compared to the idea’s advantages—and the vastly greater danger of national fiscal collapse—those risks are worth taking. No approach to reforming Medicare is perfect or certain to work. But the question of how we keep the program’s spending under control, protect the poorest and sickest beneficiaries, and preserve the program for the future is one that nevertheless needs answering. Of the available options, premium support is the best approach.

Excerpted from National Affairs (www.nationalaffairs.com). Reprinted by permission. © 2012 National Affairs Inc. All rights reserved.

Available from the Hoover Press is Healthy, Wealthy, and

Wise: Five Steps to a Better Health Care System, second

edition, by John F. Cogan, R. Glenn Hubbard, and Daniel

P. Kessler. To order, call 800.935.2882 or visit www.

hooverpress.org.


ENT ITLEMENTS

Rationing by Another NameBy paying doctors less than they’re willing to accept, an unelected

panel will quietly restrict medical care. By Scott W. Atlas.

Health care reform has been one of the most polarizing discussions in all of public policy. Assertions that U.S. medical care suffers from poor access and low quality compared to nationalized systems—despite often being wholly contradicted by facts in the medical journals—have been used to justify the dramatic changes to the U.S. health care system fundamental to the Affordable Care Act (ACA) of 2010.

Only after President Obama signed those changes into law did the nature of those changes become visible. While many of the law’s provi-sions and their implications are necessarily complex, wordsmithing by the crafters of the ACA and strident denials by its supporters have masked some of its most significant impacts.

The ACA established the Independent Payment Advisory Board (IPAB), a fifteen-member panel of unelected federal employees, its mem-bers to be appointed by the president and confirmed by the Senate. The law does not require the IPAB to be bipartisan in structure, as is required for almost all other independent agencies. Its mission is specific: to restrict payments to doctors and hospitals in order to achieve a reduction in Medi-care spending beneath a specified cap.

Scott W. AtlAS, MD, is the David and Joan Traitel Senior Fellow at the Hoover Institution and a member of Hoover’s Working Group on Health Care Policy.


The reality is that the IPAB represents an unprecedented shift of power from individual Americans and their families to a centralized authority, a controlling board of political appointees that is virtually unaccountable, and destined to become the American version of the NICE rationing board in Britain’s socialized medical system, the National Health Service.

But wait: supporters of the Affordable Care Act point to language in the law that explicitly prohibits “rationing.” This is what might be termed implausible deniability. Beyond the obvious problem—the absence of any definition of rationing in the law—all evidence points to the de facto rationing that will clearly result from the IPAB’s dramatic payment cuts to doctors and hospitals.

ST IFL ING THE COMPET IT IONWe know that doctors cite the money-losing reimbursement rates for gov-ernment insurance as the number one reason for refusing new Medic-aid and Medicare patients. We also know that even before the stipulated ACA payment cuts of 31 percent, many primary care doctors and spe-cialists were already unwilling to accept any new Medicare and Medicaid patients. By 2019, Medicare cuts under the Obama law will be so severe that payments will become even lower than Medicaid, a system under which almost half of doctors already refuse to accept new patients.

But what about the claim by the law’s supporters that rationing by the IPAB in government insurance is no different from having private insur-ance, where coverage can be denied? No, it is not at all the same. When a government body or any single entity is the overwhelmingly dominant insurer for a group of people, or when such an entity is given vast and unaccountable authority over decisions, that body’s decisions to restrict care are essentially absolute. To the contrary, a private insurer has no monopoly: in a competitive environment, consumers can shop for insur-ance that meets their coverage needs. Just as in any other good or service, competition not only reduces prices but improves choices for individuals. The difference is that in this case, choice can save lives.

All that said, the clout of the IPAB is even broader and more nefarious than on initial consideration. Beyond overpowering authority to directly cut payments for care under Medicare, the IPAB has the power to regu-late all health care in the United States, including private health care and


private health insurance, so long as such action is deemed to “help reduce the growth rate [of national health expenditures] while maintaining or enhancing [Medicare] beneficiary access to quality care.” For instance, the IPAB can reduce reimbursement via private insurance down to, or even below, the reduced Medicare rates, thereby maintaining (equal) access to care for Medicare enrollees and limiting overall national spending.

Can we predict the future of the IPAB? Over a decade ago, Britain set up its National Institute for Health and Clinical Excellence (NICE), a group of appointees whose pronouncements limit medication and tech-nology usage based on costs. Despite the endless complaints and numer-ous lawsuits by doctors and citizen groups in Britain, NICE served as the model upon which the IPAB was based. A board of appointees like the IPAB, NICE is meant to reduce health spending.

NICE has become a rationing board, holding costs down by limiting avail-able treatments. Ninety percent of Britain’s hospital trusts are now rationing care by following NICE’s long list of “recommendations” that includes stop-ping access to drugs that prolong life or treat breast cancer, stomach cancer, kidney cancer, macular degeneration (a cause of progressive blindness), mul-tiple myeloma, rheumatoid arthritis, early Alzheimer’s disease, MS, and osteo-porosis that causes hip fractures and premature death. NICE also restricts hip and knee replacements, cataract surgery, procedures for back pain, infertility, steroid injections, and cancer screening like Pap smears.

When it comes to a health service provider, choice can save lives.

David Stout of the NHS Confederation, representing primary care trusts, explained to the BBC that “the NHS faces considerable financial pressures, and scarce resources have to be used as effectively as possible.” Under NICE, treatments are routinely refused on the grounds of limited resources and the need to make decisions based not on an individual or family’s choice, but on the government’s assessment of the benefit.

Ironically, according to its own annual reports, NICE is spending more money on propaganda about its decisions than it would have spent if it had allowed patients access to the very medicines it is denying. Britain’s Daily Mail reported that money that the institute spends on public-rela-


tions campaigns “could have paid for five thousand Alzheimer’s sufferers to get £2.50-a-day drugs for a year” or “nearly two hundred patients with advanced kidney cancer to have a drug for twelve months that would double their life expectancy.”

A COMMITMENT TO RAT IONING CARERegardless of how strident the denials by ACA supporters, nothing was more revealing about President Obama’s true agenda than his personal choice for administrator of Medicare and Medicaid, Donald Berwick, officially appointed within a few months of the bill’s signing. Berwick proclaimed to the NHS in 2008 that individual choice is not appropriate in structuring health care—“that is for leaders to do”—as he continued, “I’m romantic about the NHS. I love it,” despite its proven inferior out-comes and scandalous limits of access to care. A year later, Berwick praised Britain’s rationing board specifically, saying that “NICE is extremely effec-tive and a conscientious, valuable, and—importantly—knowledge-build-ing system.” This is the same Donald Berwick who declared before his stealth appointment while Congress was in recess that “the decision is not whether or not we will ration care—the decision is whether we will ration with our eyes open.”

Many primary care doctors are already turning away new Medicare patients.

The IPAB’s lack of accountability for such authority over the personal decisions of Americans by government appointees is unprecedented. Begin-ning January 15, 2014, and every year thereafter, the law requires the board to submit specific recommendations to the president and Congress to “slow the growth” in national health expenditures. However, decisions by the panel are not simply recommendations to Congress; if the Senate, the House, and the president do not concur on an alternative proposal, or if Congress does not act at all, the health and human services secretary is required to imple-ment the board’s recommendations. The secretary’s actions are immune from any administrative modification, presidential veto, or judicial review. As of August 15, 2014, if the IPAB does not submit such recommendations and Congress does not enact its own Medicare payment restrictions, the sec-


retary of HHS, an unelected official, is authorized to make and implement them unilaterally, that is, without any other approval.

Why the great lengths to isolate IPAB decisions from review or rejection? Apparently this was designed to isolate such decisions from political “pres-sures”—for example, facing the electorate in our accountable representative government. Also to be avoided: pressures that supposedly interfered with previous attempts to forcibly reduce health care costs by price fixing (see the article by Peter Orszag, former director of the Office of Management and Budget for President Obama, called “Too Much of a Good Thing: Why We Need Less Democracy,” in The New Republic, September 14, 2011).

Ultimately unaccountable and nearly omnipotent, the IPAB was called “independent in the worst sense of the word: it is independent of Con-gress, independent of the president, independent of the judiciary, and independent of the will of the people,” by senior attorney Diane Cohen of the Goldwater Institute, a government watchdog organization, in testi-mony to the House of Representatives on July 14, 2011.

Most Americans understand the reality of ObamaCare and want its repeal. It does not require a degree in economics to realize the obvious: that using an IPAB decree to reduce payment for a procedure below what a doctor would accept will severely restrict access to that care, and that the IPAB is a way of rationing care, whether or not the word “rationing” appears in the edict itself. And the attempt to justify such rationing by citing the truism that nothing is available without limits is frankly disin-genuous and even offensive, a cynical argument meant to obscure what is antithetical to America’s free society: the imposition of government dic-tates onto the personal lives of an unwilling American public.

Reprinted by permission of Forbes Media LLC © 2012. All rights reserved.

New from the Hoover Press is In Excellent Health:

Setting the Record Straight on America’s Health Care, by

Scott W. Atlas. To order, call 800.935.2882 or visit www.

hooverpress.org.


ENT ITLEMENTS

The Coming Fiscal TsunamiThe first step to avoid drowning in debt? Stop ignoring the

approaching wave. By David Koitz.

The United States will soon confront a major economic problem, perhaps one unparalleled in the nation’s history. It won’t strike tomorrow, next week, or next month, but it is out there, its roots fed by the demographics of the past half century and a body politic hesitant to tamper with aging institutions of government.

Lawmakers procrastinate, pass around blame, and kick the can down the road. Yet our looming fiscal problem is not a Democratic or Repub-lican problem but an American one. And as it draws ever closer, the need for political convergence becomes ever more pressing.

As our federal budget deficits have grown, the level of debt taken on by the U.S. Treasury has risen precipitously. Even a modest increase in the debt would be significant and pose huge risks if we stayed on our current course.

But the challenges in our path are not modest. Over the next twenty years the baby boom generation will nearly double the nation’s aged popu-lation, and the baby trough that followed the boom will slow the growth of the working population. The baby boomers and the major advances in life expectancy for subsequent generations will cause a swelling number of recipients of Medicare, Medicaid, and Social Security, and the spending of those programs will soar.

Our looming economic crisis is simply a mountain of debt.

DaviD Koitz is a visiting fellow at the Hoover Institution.


OUR DEBT IS NOT BENIGNThe common denominator of a country’s creditworthiness is its debt as a percentage of what its economy produces each year. It’s a proxy indicator, a way to gauge which nations are overextended and which have their fiscal houses under control.

How high does it have to go to become a concern? How much debt is too much? In 2011, Zimbabwe’s debt-to-economy ratio (debt-to-GDP) was 231 percent; Japan’s was 208 percent; Greece’s, 165 percent; Italy’s, 120 percent. Greece has certainly caught the world’s attention with the fiscal turmoil it has experienced. With the possibility of default, inves-tors got scared. Unprecedented changes in taxes and spending became necessary. Spain and Italy have also teetered on the brink, as have other European nations.

Can we in the United States take comfort because our debt-to-economy ratio was only 68 percent that year? With a lower ratio than that of other highly developed nations, with our Federal Reserve keeping short-term interest rates near zero, and with investors around the world flocking to U.S. Treasury securities as a safe haven, must we really worry? Moreover, while some countries are having difficulty, other countries with markedly higher debt-to-economy ratios than ours haven’t collapsed or sent shock waves around the world.

For many economists, the answer is more complicated than simply noting this ratio. What is the direction of the ratio and how rapidly is it moving up or down? How quickly has a high-ratio country’s econo-my advanced and what are its prospects? How significant are the com-mitments its government has taken on? And is the country’s political system stable?

The current level of U.S. Treasury debt and the direction it’s headed are not benign. The United States may be a large and powerful nation and our debt-to-economy ratio may not be as bad as others’, but there is no reason to be sanguine. Our debt will very likely go higher. The climb in our ratio from 63 percent in 2010 to 68 percent in 2011—seemingly modest—raised our Treasury debt by $1.1 trillion. That single year’s rise was larger than the economies of all but 12 of the 190 nations tracked by the World Bank. Absent changes that raise federal revenue or constrain


spending, our debt-to-economy ratio could rise above 80 percent over the next three years, exceed 100 percent by 2024, and reach an unfathomable 200 percent by the mid-2030s.

Yes, our economy is advanced and diverse and can produce a lot. And our circumstances differ greatly from those of Greece. But when we look to the future, our spending commitments are enormous. As other burgeon-ing countries such as China, India, South Korea, and Indonesia expand their economies, their net worth relative to ours will likely grow. Their propensity to generate larger growth rates has been demonstrated. As the Far East and South America continue their rapid spurts, how much more prominent will they become on the world’s economic stage? And what happens to our dollar’s strength then? As our Treasury debt continues its unrelenting rise, will the dollar and our securities still be viewed as a safe haven? Is there possibly a saturation point when investors will say, “We’re looking elsewhere”?

Equally important is that nearly half of our total Treasury debt is held in foreign hands, with most of that concentrated among a relatively small group. Three-fourths of what is owed abroad is held by China, Japan, the major oil-exporting nations, and four other countries and banking centers; 44 percent of that amount is held by China and Japan alone. That makes the debt an obvious national security concern. In early 2010, a shiver ran through the financial markets after China let go of $34 bil-lion of our debt. The Chinese could create turmoil for us by flooding the markets with their dollar holdings. Of course, they would also hurt themselves in the process, and that serves to deter exploitation. But what happens when other countries become increasingly attractive for inter-national trade and development, and our demand for China’s consumer goods becomes less important?

RISK ING OUR WAY OF L IFEThe issue is our future risks: to our economy, ability to grow, standard of living, and national security. Today, we may be in a bubble. The dollar is king, and so are our government’s securities. But where will we be in ten years? It’s not just the trajectory of our debt, but what causes it: our gov-ernment’s propensity to spend more than we are willing to tax ourselves Ill

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to provide. The level of debt the Treasury has issued publicly could rise to more than $11 trillion, but if we count the debt it owes to the Medicare and Social Security trust funds as well as to other entitlement programs—an additional $5 trillion—our debt-to-economy ratio suddenly rises above 100 percent.

The baby boom generation will nearly double the nation’s aged

population, while the baby trough that followed drags down the growth of

the working population.

Should we count those other obligations even though they are simply internal debt, IOUs from one arm of the government to another? Yes, because they represent spending commitments already set in law. Law-makers have the ability to change that, and to raise taxes. However, their steps so far have been no more than hesitant, with little or no change to the fiscal path those commitments put us on. And even if we some-how came up with the money to pay off those debts, we still wouldn’t have enough coming in to pay for all of the future spending commit-ted to those programs. According to the most recent projections of the Medicare and Social Security trustees, even if those internal IOUs were paid off, the programs would run down their legal authority to spend in 2024 and 2033, respectively. Taking that into account, the Congres-sional Budget Office projects that the amount of federal debt held by the public could rise to 157 percent of our annual economic production by 2032 and 200 percent by 2037. In today’s dollars, it would total more than $30 trillion.

It’s inconceivable that we could run up the national debt to that level. If it existed today, it would equal nearly half of what the entire world produces in a single year. Where are we going to find the investors—at home or abroad—to allow us to generate such debt? It’s one thing when Zimbabwe runs up a debt of 231 percent of its economy. Its annual eco-nomic output is only $7 billion; that doesn’t create economic paralysis in world markets. It’s vastly different to think of the United States doing so. Our expected $11 trillion or more in publicly held debt will account for


one-fourth of the $45 trillion in outstanding debt issued by all govern-ments worldwide.

As a nation, we have come to treat borrowing as simply another ready source of revenue. But it’s a loan that needs repaying, and as such it’s a claim against future taxes—taxes that may someday fall short because the loan and our spending expectations have grown too large. Procrastination and inattentiveness toward the rising debt of the world’s largest economy will someday catch up with us. The status quo must end.

LOSS OF BUDGETARY CONTROLIn many ways, and through a multitude of provisions embedded in law, the federal government’s spending and revenues are on autopilot.

Indexing provisions tie federal revenues and spending to changes in the economy—to inflation, increases in average wages, the rise in the gross domestic product, and various other economic measures. It’s an understatement to say that the effects of indexing constrain revenue and increase spending. And even though economic times are turbulent and will continue to be so over the coming decade, those indexing provisions are still active, like a faucet left running with little regard for whether the well might run dry.

“Cut the fat, not the muscle,” we always urge our leaders. The problem is

distinguishing between the two.

Of special note is the degree of spending authorized under what are referred to as permanent appropriations. Unlike the hundreds of pro-grams that must receive funding approval each year through annual appropriations bills—so-called discretionary programs—entitlement programs such as Medicare, Medicaid, Social Security, federal and mili-tary retirement, and veterans’ benefits are given indefinite permission to spend through the legislation that governs them. They are on autopilot until Congress sees some reason to re-examine them. These programs have their eligibility criteria and payments to individuals or institutions defined by the laws that created them and are labeled mandatory, reflect-ing the largely uninterrupted nature of their expenditures. Mandatory


spending has grown from 38 percent of the budget in 1972 to an esti-mated 56 percent in 2012.

Indexing provisions are like a faucet left running with little regard for

whether the well might run dry.

The president and Congress have focused on putting the economy back on track with stimulus measures and safety-net add-ons that increase federal spending and curtail revenues. But the public is uneasy with the ever-increasing budget deficits and national debt. Policy mak-ers are aware of the tension, and the public’s unease has resulted in some resistance to enacting additional costly stimulus measures without com-mensurate offsets.

However, there is considerable reluctance in fiscal-policy circles to stray from the federal budget’s general path. Economists generally believe that tightening the fiscal belt too soon could weaken the economic recovery. Politicians are apprehensive about the public’s willingness to accept large tax increases and a retrenchment of entitlement benefits—that is, raising taxes on middle- and higher-income taxpayers and constraining Medicare and Social Security benefits.

Some people believe the economy can grow its way out of the problem or that painless prescriptions can be found, but the prevailing view among those who study the issue is that neither of these hopes is viable. They fear that if the projections come to pass, the fix will require sudden, severe con-straints and economically stifling tax increases. But the view among fiscal-policy watchers is that the earlier we adopt serious change, the smaller it needs to be. That window, however, grows smaller every year, as the baby boom retiree cohort grows larger.

SO WHERE DO WE LOOK?Many want to blame the deficits on a surfeit of wasteful programs: extrav-agant earmarks, bridges to nowhere, defective weapons systems, fraud in Medicare and Medicaid, noncompetitive contracting, pork-barrel poli-ticking, and congressional perks. All those targets may be valid, but on the whole they suggest an inadequate prescription: that the budgetary


hole can be plugged by weaning out “bad” spending. The premise is “just cut the fat; no need to slice the muscle.” The problem is distinguishing between the two.

Discretionary spending is the one area where Congress exercises con-siderable choice. These programs comprise 37 percent of the budget, and the public suspects an abundance of excess and wasteful earmarks are to be found there. But attacking overspending in these programs may bring lit-tle in return. Disclosures of waste by the military notwithstanding, effec-tive armed forces are costly. And while spending on defense and the wars in Iraq and Afghanistan has been quite large, even at its current elevated level it is only 18 percent of the budget. Welfare programs are 10 percent of the budget; education spending, 2 percent; the National Institutes of Health (NIH), 1 percent; farm programs, less than 1 percent.

There may be a multitude of discretionary programs to explore for sav-ings, but as many budget hawks have observed, it’s hard to take them on en masse. Special interests will rise up in arms. Every lawmaker’s district has something to protect. The fight for small savings is almost as hard as that for bigger ones.

Absent changes that raise revenue or constrain spending, our debt-to-economy

ratio could reach an unfathomable 200 percent by the mid-2030s.

The big money lies with Medicare, Medicaid, and Social Security ben-efits. Nearly fifty million people have Medicare coverage, some seventy million are enrolled in Medicaid at various times during the year, and fifty-seven million people collect Social Security benefits. The big three are the major drivers of the long-range escalation of government spending.

Federal taxes as a share of the economy sit close to their lowest level in sixty years: 15.7 percent in 2012. Taxes have absorbed about 18 percent of the economy since the early 1950s. But even if they were to return to this historical average, they would be no match for the dramatic increase in federal spending over the next two decades driven by the big three entitle-ments and growing interest on the debt.

Policies that raise lots of revenue or significantly constrain spending—balanced or not—are assuredly contentious. Arguments aside, we as a


nation want our taxes low and our entitlements comprehensive. For many years we borrowed to satisfy those desires, but the clock is ticking down toward a day of debt reckoning, and the old strategies will no longer work.

A nation deep in debt is no different from an overextended individual or family. Like any other debtor, it needs to tighten its belt. As the wealth-iest nation on earth we can do so while still protecting the poor and dis-abled, although the politics of retrenchment are hardly inviting, in that they cause heartburn for politicians of both parties. But clinging to the premise that government can protect society only by spending hundreds of billions every year on rich and poor alike is false savings. Somewhere along the way, a generation fortunate enough to be living in the most prosperous of times has lost sight of a core tenet: you cannot have what you cannot afford or refuse to pay for.

Excerpted from Entitlement Spending: Our Coming Fiscal Tsunami, by David Koitz (Hoover Press, 2012). © 2012 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved.

New from the Hoover Press is Entitlement Spending: Our

Coming Fiscal Tsunami, by David Koitz. To order, call

800.935.2882 or visit www.hooverpress.org.


ISLAMISM

Insult and InjuryWhy is the Arab world so easily offended? By Fouad Ajami.

Modernity requires the willingness to be offended. And as anti-American violence across the Middle East and beyond shows, that willingness is something the Arab world, the heartland of Islam, still lacks.

Time and again in recent years, as the outside world has battered the walls of Muslim lands and as Muslims have left their places of birth in search of greater opportunities in the Western world, modernity—with its sometimes distasteful but ultimately benign criticism of Islam—has sparked fatal protests. To understand why violence keeps erupting and to seek to prevent it, we must discern what fuels this sense of grievance.

There is an Arab pain and a volatility in the face of judgment by outsid-ers that stem from a deep and enduring sense of humiliation. A vast chasm separates the poor standing of Arabs in the world today from their history of greatness. In this context, their injured pride is easy to understand.

In the narrative of history transmitted to schoolchildren throughout the Arab world and reinforced by the media, religious scholars, and laymen alike, Arabs were favored by divine providence. They had come out of the Arabian Peninsula in the seventh century, carrying Islam from Morocco to faraway Indonesia. In the process, they overran the Byzantine and Per-sian empires, then crossed the Strait of Gibraltar to Iberia, and there they fashioned a brilliant civilization that stood as a rebuke to the intolerance of the European states to the north. Cordoba and Granada were adorned

Fouad ajami is a senior fellow at the Hoover Institution and co-chairman of Hoover’s Herbert and Jane Dwight Working Group on Islamism and the Inter-national Order.


and exalted in the Arab imagination. Andalusia brought together all that the Arabs favored—poetry, glamorous courts, philosophers who debated the great issues of the day.

If Islam’s rise was spectacular, its fall was swift and unsparing. This is the world that the great historian Bernard Lewis explored in his 2002 book What Went Wrong? The blessing of God, seen at work in the ascent of the Muslims, now appeared to desert them. The ruling caliphate, with its base in Baghdad, was torn asunder by a Mongol invasion in the thirteenth century. Soldiers of fortune from the Turkic steppes sacked cities and left a legacy of military seizures of power that is still the bane of the Arabs. Little remained of their philosophy and literature, and after the Ottoman Turks overran Arab countries to their south in the sixteenth century, the Arabs seemed to exit history; they were now subjects of others.

The coming of the West to their world brought superior military, administrative, and intellectual achievement into their midst—and the outsiders were unsparing in their judgments. They belittled the military prowess of the Arabs, and they were scandalized by the traditional treat-ment of women and the separation of the sexes that crippled Arab society.

Even as Arabs insist that their defects were inflicted on them by outsid-ers, they know their weaknesses. Younger Arabs today can be brittle and proud about their culture, yet deeply ashamed of what they see around them. They know that more than 300 million Arabs have fallen into eco-nomic stagnation and cultural decline. They know that the standing of Arab states along the measures that matter—political freedom, status of women, economic growth—is low. In the privacy of their own language, in daily chatter on the street, on blogs and in the media, and in works of art and fiction, they probe endlessly what befell them.

But woe to the outsider who ventures onto that explosive terrain. The assumption is that Westerners bear Arabs malice, that Western judgments are always slanted and cruel.

In the past half-century, Arabs, as well as Muslims in non-Arab lands, have felt the threat of an encircling civilization they can neither master nor reject. Migrants have left the burning grounds of Karachi, Cairo, and Casablanca but have taken the fire of their faith with them. “Dish cities” have sprouted in the Muslim diasporas of Western Europe and Ill

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North America. You can live in Stockholm and be sustained by a diet of Al Jazeera television.

We know the celebrated cases when modernity has agitated the pious. A little more than two decades ago, it was a writer of Muslim and Indian birth, Salman Rushdie, whose irreverent work of fiction, The Satanic Vers-es, offended believers with its portrayal of Islam. That crisis began with book burnings in Britain, later saw protests in Pakistan, and culminated in Iran’s ruling cleric, the Ayatollah Ruhollah Khomeini, issuing a fatwa call-ing for Rushdie’s death in 1989. The protesters were not necessarily critics of fiction; all it took to offend was that Islam, the prophet Muhammad and his wives had become a writer’s material. The confrontation laid bare the unease of Islam in the modern world.

A vast chasm separates the poor standing of Arabs in the world today

from their history of greatness.

The floodgates had opened. The clashes that followed defined the new terms of encounters between a politicized version of Islam—awakened to both power and vulnerability—and the West’s culture of protecting and nurturing free speech. In 2004, a Moroccan Dutchman in his mid-twenties, Mohammed Bouyeri, murdered filmmaker Theo van Gogh on a busy Amsterdam street after van Gogh and a Somali-born politician made a short film about the abuse of women in Islamic culture.

Shortly afterward, trouble came to Denmark when a newspaper there published a dozen cartoons depicting the prophet Muhammad; in one he wears a bomb-shaped turban, and another shows him as an assassin. The newspaper’s culture editor had thought the exercise would merely draw attention to the restrictions on cultural freedom in Europe—but perhaps that was naive. After all, Muslim activists are on the lookout for such material. And Arab governments are eager to defend Islam. The Egyp-tian ambassador to Denmark encouraged a radical preacher of Palestinian birth living in Denmark and a young Lebanese agitator to fan the flames of the controversy.

But it was Syria that made the most of this opportunity. The regime asked the highest clerics to preach against the Danish government. The


Danish embassies in Damascus and Beirut were sacked; there was a call to boycott Danish products. Denmark had been on the outer margins of Europe’s Muslim diaspora. Now its peace and relative seclusion were punctured.

The storm that erupted last fall at the gates of American diplomatic outposts across the Muslim world was a piece of this history. As usual, it was easily ignited. The offending work, a fourteen-minute film trailer posted on YouTube in July, was offensive indeed. Billed as a trailer for Innocence of Muslims, a longer movie to come, it was at once vulgar and laughable. Its primitiveness should have consigned it to oblivion.

It is never hard to assemble a crowd of young protesters in the teeming cities of the Muslim world. American embassies and consulates are mag-nets for the disgruntled. It is inside those fortresses, the gullible believe, that rulers are made and unmade. Yet these same diplomatic outposts dispense coveted visas and a way out to the possibilities of the Western world. The young men who turned up at the U.S. embassies to protest and riot came out of this deadly mix of attraction to American power and resentment of it. The attack in Benghazi, Libya, that took the lives of four American diplomats, including Ambassador J. Christopher Stevens, ultimately appeared to have been premeditated and unconnected to the film protests.

Arabs assume that Westerners bear them malice, that Western judgments

are always slanted and cruel.

The ambivalence toward modernity that torments Muslims is unlikely to abate. The temptations of the West have alienated a younger generation from its elders. Men and women insist that they revere the faith as they seek to break out of its restrictions. Freedom of speech, granting license and protection to the irreverent, is cherished, protected, and canonical in the Western tradition. Now Muslims who quarrel with offensive art are using their newfound freedoms to lash out against it.

These cultural contradictions do not lend themselves to the touch of outsiders. Former president George W. Bush believed that America’s proximity to Arab dictatorships had begotten us the jihadists’ enmity. His


military campaign in Iraq became an attempt to reform that country and beyond. But Arabs rejected his interventionism and dismissed his “free-dom agenda” as a cover for an unpopular war and for domination.

President Obama found himself caught in the middle, conciliating the

rulers while making grand promises to ordinary people.

President Obama took a different approach. He was sure that his biog-raphy—the years he spent in Indonesia and his sympathy for the aspira-tions of Muslim lands—would help repair relations between America and the Islamic world. But soon he was caught in the middle, conciliating the rulers while making grand promises to ordinary people. The revolt of the Iranian opposition in the summer of 2009 exposed the flaws of his approach. Then the Arab spring played havoc with American poli-cy. Afterward, the Obama administration found itself unable to decide whether to defend the status quo or the young people hell-bent on top-pling the old order.

Cultural freedom is never absolute, of course, and the Western tradi-tion itself, from the Athenians to the present, struggles mightily with the line between freedom and order. In the Muslim world, that struggle is more fierce and lasting, and it will show itself in far more than burnt flags and overrun embassies.

Reprinted by permission of the Washington Post. © 2012 Washington Post Co. All rights reserved.

New from the Hoover Press is The Syrian Rebellion, by

Fouad Ajami. To order, call 800.935.2882 or visit www.

hooverpress.org.


ISLAMISM

The Courage to Be TolerantEven the most sacred beliefs are better defended with forbearance

than violence. By Richard A. Epstein.

Episodes of intolerance in recent months—the murder of the U.S. ambas-sador to Libya along with three of his colleagues, a fresh wave of riots and attacks on American embassies and schools throughout the Islamic world, supposedly triggered by an insulting movie—suggest that the so-called Arab spring is in disarray.

These unnerving events should come as no surprise. The dangers of fundamentalism were detailed in 1995, when religious scholars Martin Marty and R. Scott Appleby completed their eight-year Fundamentalism Project for the American Academy of Arts and Sciences, which extensively charted the rise of conservative religious movements around the world.

They warned of the serious dangers that fundamentalism posed to democratic institutions everywhere. Fundamentalist movements, they argued, are marked by a strong set of interlocking hierarchical arrange-ments in which power rests with a single person or group that wields abso-lute authority over a subject population. In one manifestation, husbands can dominate their wives and children; in another, religious observers

RichaRd a. EpstEin is the Peter and Kirsten Bedford Senior Fellow at the Hoover Institution and a member of Hoover’s John and Jean De Nault Task Force on Property Rights, Freedom, and Prosperity. He is the Laurence A. Tisch Professor of Law at New York University Law School and a senior lecturer at the University of Chicago.


must unquestioningly follow a complex set of rules, which prevents their exposure to outside intellectual and social influences that might temper their views.

Fundamentalism is often viewed in religious and moral terms. But it is equally instructive to think in terms of political economy, which makes the contrast between fundamentalism and Western democracy all the more vivid. Fundamentalists believe that “the chosen” are entitled, as if by divine writ, to exercise monopoly power to impose their beliefs. Democra-cies thrive on the rival worldview: competition between different groups best allows all individuals to decide how to optimally live and organize their lives.

F IRST , DO NO (ACT IONABLE) HARMOne of the most famous articulations of that second view comes from John Stuart Mill in his 1859 book On Liberty:

[T]he only purpose for which power can be rightfully exercised over any

member of a civilized community, against his will, is to prevent harm to

others. His own good, either physical or moral, is not a sufficient war-

rant. He cannot rightfully be compelled to do or forbear because it will

be better for him to do so, because it will make him happier, because, in

the opinions of others, to do so would be wise or even right.

At the root, this principle stands for the proposition that each indi-vidual may act as he pleases, so long as he does not infringe upon the like liberties of other individuals to do the same. But what is the definition of harm under the harm principle? Mill does not give a good explanation. Indeed, he makes a dangerous concession to the misguided principle of “social authority” that holds that

[f ]or such actions as are prejudicial to the interests of others, the indi-

vidual is accountable, and may be subjected either to social or to legal

punishment, if society is of the opinion that the one or the other is req-

uisite for its protection.

Tragically, this rule undermines the force of Mill’s original proposition by allowing “society” to form its own opinion of what activities should

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be regarded as “prejudicial” to others, which in turn allows the notion of harm to grow far beyond its original limited contours. The definition becomes so broad that it swallows the rule. Mill needed to narrow harm down to such activities that contravene the libertarian prohibitions of force and fraud.

A moment’s reflection helps demarcate the limits of this harm prin-ciple. The principle does not refer to harm caused by general social, eco-nomic, and political forces. At its core, it refers to physical force applied by one person to another. The principle must be extended to cover threats of force; otherwise, nothing could be done to combat the robber who gives his victim the choice between his money or his life, where threatening the latter becomes a way to obtain the former. Nor can it be construed so narrowly that it excludes, for instance, snares and traps triggered by the victims themselves.

George Shultz, the Thomas W. and Susan B. Ford Senior Fellow at Hoover, speaks during a

public memorial service in the rotunda of San Francisco City Hall for Ambassador Christo-

pher Stevens, who was slain during a terrorist attack in Libya.


The concern with fraud, for its part, must also take into account actions of concealment and the refusal to disclose information to people with whom one stands in a position of trust. It must embrace defamation, that is, false statements of fact that cause people to lose business and social associations.

Democracies thrive on the view that competition between rival groups

best allows all individuals to decide how to live.

The fine points in dealing with the definition of harm must not, how-ever, be allowed to obscure this key principle: it is not an actionable harm for individuals to do what they want with their own property no matter how great an offense it gives other individuals.

The stress on the word actionable is intended to call attention to the single most important feature of the term harm. There are lots of harms we all experience as genuine losses of happiness and utility that nonethe-less lie outside the legal protection of the harm principle. Unless this criti-cal qualification is both made and defended, the harm principle can, by degrees, turn into the greatest tool for oppression on the face of the planet.

BuRNINg quRANS AND FLAgSVirtually all the anti-American tumult of recent months sprang from legitimate objections to the burning of a Quran and to the making of a low-quality film that was highly critical of Islam.

But the question is not whether the grievance is legitimate. Rather, what remedy should be available to those who harbor it? Howls of protest are certainly appropriate as long as they do not involve the use or threat of force. But there it ends. It is never acceptable to use force against those who cause the grievance, let alone other innocent individuals from the same country who are pronounced vicariously guilty for the misdeeds of others. Stated otherwise, the mere offense taken by one group of indi-viduals against the actions of another never offers a social justification for shutting down that activity.

This issue arose in vivid form in the United States with the flag-burning episodes of the 1980s, which led to the 1989 decision Texas v. Johnson. In that ruling the U.S. Supreme Court threw out the one-year jail sentence


and $2,000 fine imposed on Gregory Lee Johnson for burning a flag in front of the Dallas City Hall to voice his protest against the policies of the Reagan administration.

To most Americans, the flag is not just a piece of cloth, but a power-ful symbol of the values and achievements of a nation. For some patri-otic Americans, it may take an enormous amount of self-restraint not to transform their inflamed emotions against the flag-burner into private violence. Mere offense, however intense or legitimate, does not justify the use of private force or criminal sanctions. Unless that line is clearly drawn, what is left to stop people from taking the law into their own hands by using force against those whose actions offend their core beliefs?

A broad definition of harm gives every group license to wield crimi-nal law or private force against individuals whose beliefs and practices they find abhorrent. John Locke picked the right word, toleration, in his famous 1689 A Letter Concerning Toleration. It takes no courage to allow the expression of views that echo one’s own, but it takes a good deal of it to tolerate the propagation of ideas that challenge one’s own deepest ideals.

Toleration doesn’t require people to accept the soundness of all, or indeed

any, of the religious beliefs in question.

The case for toleration thus rests on the view that competitive harms should not be actionable in a liberal society. A world in which each person can practice his own religious beliefs free from the control of others, with both sides knowing they could lose members to the other, leaves everyone better off. Such a world involves a level of generality and reciprocity never found in fundamentalist sects, which are so confident about the sound-ness of their own beliefs that they are prepared to use force to suppress those who oppose them.

L IvE AND LET L IvEOur account of the harm principle has to be narrowed, in ways Mill was not prepared to do, to make sure the views of “society” do not allow a majority to trample the religious convictions of a minority when it has the power to do so.


We each gain more from the ability to practice our own beliefs than we do from the ability to suppress those we hate. This does not mean anything goes in the expression of religious beliefs. The same harm prin-ciple that limits the use of force and fraud by ordinary people also limits religious individuals and groups.

An overbroad definition of “harm” gives every group license to wield

criminal law or private force against people whose beliefs and practices

they abhor.

This live-and-let-live principle presupposes parity between religions, where no religion gets added advantage in the public space by virtue of the supposed truth of its teachings. Toleration gains its strength from the fact that it does not require the people who put it into play to accept the soundness of all, or indeed any, of the religious beliefs in question. But therein lies its beauty, for it creates a climate in which respect for the boundaries of person and property offers the one best hope for all people to live together.

In foreign relations, we must defend our vision of a just society with confidence and vigor in the face of the Islamist threat. Religious intoler-ance is inconsistent with democratic pluralism. So long as we have pride in our own institutions, we should never stray from our fundamental proposition of a sound political and international order.

Reprinted from Defining Ideas (www.hoover.org/publications/defining-ideas). © 2012 by the Board of Trustees of the Leland Stanford Junior university. All rights reserved.

New from the Hoover Press is Israel and the Struggle

over the International Laws of War, by Peter Berkowitz. To



ISLAMISM

The Ever-Useful MobBeware of “spontaneous” outrage and the temptation to appeasement.

By Yuri Yarim-Agaev.

On November 9, 1938, thousands of German storm troopers, acting under direct orders, launched the anti-Jewish pogrom known as Kristall-nacht. The attacks left approximately 100 Jews dead and 7,500 Jewish businesses damaged. Hundreds of homes and synagogues were vandalized.

The mastermind of the pogrom, Nazi propaganda minister Joseph Goebbels, explained it to the world as a spontaneous reaction to the mur-der in Paris of a German diplomat by Herschel Grynszpan, a seventeen-year-old Jew. Goebbels said the pogrom showed the “healthy instincts” of the German people.

Some Jewish organizations, while strongly condemning German actions, expressed concern about the pogrom’s alleged cause. The World Jewish Congress stated that it “deplored the fatal shooting of an official of the German Embassy by a young Polish Jew.” These displays of contrition did not help. Kristallnacht was soon followed by the Holocaust, in which more than six million European Jews died.

What can we learn from that tragic history? First, atrocities on such a scale are rarely spontaneous. They require preparation and organization. Equally important is the lesson that accepting enemy propaganda makes us look weak and shortsighted. Any appreciation of the pretexts for such atrocities makes their perpetrators bolder and more aggressive.

Unfortunately, these lessons have not been learned. In the days after America’s ambassador to Libya and three other diplomatic personnel were

Yuri Yarim-agaev is a visiting fellow at the Hoover Institution.


killed last fall, when U.S. embassies in Egypt and other Muslim countries were besieged and the American flag burned, the Obama administration and the news media blamed a video clip instead of denouncing the per-petrators.

The lack of realism was stunning. “We reject all efforts to denigrate the religious beliefs of others,” said President Obama—focusing not on the persecution of Christians and Jews in Muslim countries but on an amateur film on YouTube. Secretary of State Hillary Clinton called the film “disgusting and reprehensible.” These sentiments were echoed by the chairman of the Joint Chiefs of Staff, the U.S. ambassador to the United Nations, and a multitude of pundits.

Yet soon it became clear that the events of September 11, 2012, were not a “spontaneous reaction” to the fourteen-minute trailer but were orga-nized—not only in Benghazi, where the Americans were killed, but in

In November 1938, mobs attacked Jewish-owned businesses in Nazi Germany in an event

remembered as Kristallnacht—the night of broken glass. Here, mannequins lie amid the

ruins of the Uhlfelder Department Store in Munich. Nazi officials excused the violence,

saying it was a “healthy” reaction to the murder of a German diplomat in Paris.


Cairo as well. The film, Innocence of Muslims, had been available on You-Tube for a long time without attracting any attention. Two days before the riots, it was broadcast in Arabic on the Salafi Egyptian television channel Al-Nas. Several popular preachers on other conservative Islamic satellite channels called upon people to turn out at the U.S. Embassy in Egypt. If this was not organization, what was it?

Still, America’s leaders effectively accepted that the main blame for the embassy attacks should be put on the producers of the video clip, not the organizers of the violence and the participants. Far from standing up for freedom of speech, American leaders practically apologized for the lack of censorship in the United States.

“The U.S. government had absolutely nothing to do with this video,” said Clinton, who clearly did not understand that for those brought up in the world of Islamist propaganda, any attempt to distance the Ameri-can government from the film could only feed suspicions that the United States was responsible for its production.

These were not merely rhetorical errors. In an ideological war, each such error represents a lost battle.

It is not surprising that America’s leaders are not proficient in the strate-gies and tactics of ideological warfare. Lessons learned from communism are now long forgotten, and are certainly not taught to current politicians. Still, U.S. leaders could have made fewer mistakes had they adhered to basic principles of American society that require respect for the right of any person to practice his religion peacefully—but not necessarily respect for that religion itself.

The president has no obligation to respect Islam or any other religion.

I know that difference from personal experience. In the Soviet Union, I fought together with my fellow dissidents for religious free-dom. Believers appreciated our support and never asked us to express any allegiance to their faith. Most of us dissidents were not religious people ourselves, but we risked our freedom to stand up for the right to worship. We did it because we believed that religious freedom is a fundamental human right.

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The president of the United States, too, should stand for religious free-dom. But he does not have an obligation to respect Islam or any other religion. America’s constitutional separation of church and state obliges its leaders to avoid publicly endorsing any particular religion even to the extent of expressing “respect” for it. Similarly, they are enjoined from cru-sading against blasphemy.

Atrocities on a broad scale are rarely spontaneous. They require

preparation and organization.

It is important to remember that a war with a fanatical foe is first of all an ideological war, and in such a war, appeasement doesn’t work. There are no defensive strategies. Any attempt to prove that you are right is a defeat. Any suggestion of compromise or acceptance of the legitimacy of your enemy’s ideology is a sign of your weakness—which only provokes further attacks.

An ideological war cannot be won by drones. The winning formula against Soviet communism proved to be peace through strength. A strong military and economy are important, but even more important is stand-ing strong for basic principles. Ronald Reagan, Pope John Paul II, and the Soviet and East European dissidents all understood this.

It is vain to hope that we can completely avoid ideological confrontation by taking more moderate and accommodating positions. We did not start wars with communism, Nazism, or Islamism. They were imposed upon us. Those ideologies thrive on confrontation with the free world. Today we must revisit Kristallnacht, the Holocaust, and the Cold War to recollect our successful experience of dealing with those virulent ideologies.


Available from the Hoover Press is Jihad in the Arabian

Sea, by Camille Pecastaing. To order, call 800.935.2882

or visit www.hooverpress.org.


INTELLECTUAL PROPERTY

Patent NonsenseThe patent troll gets a bad rap. Guarding and managing intellectual

property helps everyone. By Rod Cooper, Richard A. Epstein, and

Stephen H. Haber.

Patent wars involving cellphones, tablet computers, and other indispens-able high-tech products are much in the news. Some reports focus on controversial court decisions like federal Judge Richard A. Posner’s curt dismissal of every patent claim that Apple and Samsung brought against each other. Others fret about the anticompetitive implications of Federal Trade Commission reports on the role of patents in setting technological standards. And still others applaud Congress for considering whether to limit the power of the International Trade Commission to exclude from the United States products that infringe on domestic patents.

This anti-patent onslaught makes several distinct arguments. One is that the Patent and Trademark Office issues too many patents of dubious

The authors are collaborators in the Hoover Institution’s Project on Commercial-izing Innovation. Rod CoopeR is a Hoover Institution overseer. RiChaRd a. epstein is the Peter and Kirsten Bedford Senior Fellow at the Hoover Institu-tion and a member of Hoover’s John and Jean De Nault Task Force on Property Rights, Freedom, and Prosperity. He is also the Laurence A. Tisch Professor of Law at New York University Law School and a senior lecturer at the University of Chicago. stephen h. habeR is the Peter and Helen Bing Senior Fellow at the Hoover Institution; co-director of Hoover’s Project on Commercializing Innova-tion; a member of the John and Jean De Nault Task Force on Property Rights, Freedom, and Prosperity; and the A. A. and Jeanne Welch Milligan Professor in the School of Humanities and Sciences at Stanford University.


quality, thus cluttering the market for product innovation. But it is dan-gerous to rest that charge on a few dramatic examples like the notorious “one click” patent from the world of online shopping. The proper fix is not to alter patent law’s remedial structure but to put government agencies and courts on high alert against, for example, weak business-method and software patents and frivolous arguments in a dispute. To this concern, in 2011 President Barack Obama signed the Leahy-Smith America Invents Act, which provides for an expansive agency post-grant review of business-method patents.

Current patent law offers ample protection against the launch of a secret

patent assault.

Today’s narratives also give a major role to a villain dubbed the “patent troll.” As in fairy tales, the patent troll pounces on the supposedly unwary and innocent, here manufacturers who are forced to pay extortionate fees for using some product or process. But the patent troll story also includes this irony: the same large technology companies that once condemned patent trolls have become trolls themselves. Large corporations are spin-ning off their patents into wholly owned subsidiaries, or selling them to third-party nonpracticing entities that make money by licensing patents and by litigating to prevent infringement by nonlicensees.

Before 1995, the patent troll was indeed a more dangerous figure. Its “submarine” patents took effect only when issued, not when the original claim was officially filed. By delaying the issuing date, these old-style trolls could trap unsuspecting companies and exact heavy damages. Now that the patent period runs from the day the application is filed, companies have every incentive to get the most out of their patented technologies rather than just lie in wait.

The newest version of the fairy tale prefers companies that use pat-ents over the trolls that only license them. It is the intellectual-property version of the Luddite view that only people who put their shoulder to the wheel create enduring value. In fact, sound business logic often runs in the opposite direction. Selling a license to use a patent—especially a nonexclusive license—allows the technology to be employed across a vast


market and be more readily distributed to the ultimate beneficiary: the consumer. By contrast, a company that keeps a patented technology to itself is restricting its use.

Licensing works only if contracts are secure against potential infringe-ment. The system will break down if the patentee cannot obtain an injunction against nonlicensed third-party users. Why would anyone pay a handsome license fee if outsiders can unilaterally infringe the pat-ent? Why, for that matter, would anyone bother to develop a new prod-uct or process if the invention could be appropriated with impunity?

Bias is implicit in the lore against companies that invent to license, and it imposes an unnecessary obstacle to product innovation. Successful entities often specialize in niche research areas (often requiring extensive human and financial capital), and thus do not build up extensive manufac-turing operations in which to deploy their patents. Universities, research institutes, and small businesses across the globe readily come to mind. To hinder them in their dealings with third parties reduces the returns from licensing, which reduces their incentives to develop technologies in the first place.

The big tech companies that once condemned patent trolls have

become trolls themselves.

Against this background, it is socially destructive to denounce the patent owner as a nefarious troll. Assembling portfolios of patents helps everyone in the market buy or license some or all of the portfolio, as each applicant sees fit. Contrary to conventional wisdom, this business model doesn’t inhibit the use of new technology: it expands access by assembling useful portfolios that allow third parties to deal with one vendor instead of many.

A strong patent system, as research of the late UCLA economist Kenneth Sokoloff shows, allows small companies and inventors to create and enforce intellectual-property rights that drive economic growth. Indeed, a strong patent system was essential to the emergence of such modern industries as pharmaceuticals, medical devices, and electronics.


Current patent law offers ample protection against the launch of a secret patent assault. It’s wrongheaded to think that patent-contracting strategies allow Goliath to bludgeon David, or David to hijack Goliath. Instead, they enhance the operation of competitive markets that work as well for intellectual property as they do everywhere else.

Reprinted by permission of the Chicago Tribune. © 2012 Chicago Tribune. All rights reserved.

Available from the Hoover Press is Death Grip:

Loosening the Law’s Stranglehold over Economic

Liberty, by Clint Bolick. To order, call 800.935.2882 or

visit www.hooverpress.org.


EDUCAT ION

Struck OutChicago schoolchildren went back to class—and the striking

teachers went back to business as usual. By Terry M. Moe.

It is easy to see the recent Chicago teachers’ strike as an unfortunate incident that will soon be forgotten. It was, after all, their first strike in twenty-five years. The norm is that the district and the Chicago Teach-ers Union have regularly negotiated their way to contracts every sev-eral years. So it might appear that, almost always, collective bargaining “works.”

But does it? The purpose of the Chicago school system—and of the American school system more generally—is to educate children. The way to assess collective bargaining is not to ask whether it works to bring labor peace. It is to ask whether it promotes the interests of children in a high-quality education. And the answer to that question is no, it does not. Not even remotely.

Collective bargaining is not fundamentally about children. It is about the power and special interests of adults. In Chicago and elsewhere, the teachers’ unions are in the business of winning better salaries and benefits, protecting job security, pressuring for restrictive work rules, and in other ways advancing the occupational interests of their members. These inter-ests are simply not the same as the interests of children.

Terry M. Moe is a senior fellow at the Hoover Institution, a member of Hoover’s Koret Task Force on K–12 Education, and the William Bennett Munro Profes-sor of Political Science at Stanford University. His most recent book is Special

Interest: Teachers Unions and America’s Public Schools (Brookings Institution Press, 2011).


And they inevitably lead, through the exercise of union power, to con-tracts whose countless formal rules are literally not designed to create an effective organization for schools. In fact, they guarantee that the schools will be organized in perverse ways that no one in his right mind would favor if he just cared about what is best for kids.

Because of the formal rules that unions fight for in labor contracts, district leaders can almost never get bad teachers out of the classroom. Nor can they allocate good teachers to the schools and classrooms where they can do the greatest good for kids. Add to this the fact that the evalu-ation process is a full-blown charade in which 99 percent of all teachers,

Young Joshua Wildermuth holds a sign during a protest by Chicago parents and students

who wanted the recent teachers’ strike to end.


including the very worst, are regularly given satisfactory evaluations. Also, teachers are paid based on their seniority and formal credits, without any regard for whether their students are learning anything.

Unions have used their political power to block or seriously weaken

efforts at educational reform.

And so it goes. This is a school system organized for the benefit of the people who work in it, not for the kids they are expected to teach.

Collective bargaining is not the only arena in which jobs take priority over kids. It also happens in the politics of state and national govern-ments, which should be governing the public schools in the best interests of kids, but aren’t.

A major reason is that the teachers’ unions are by far the most powerful political force in American education. The National Education Association and the American Federation of Teachers have some 4.5 million members between them, they are among the top spenders in state and national elec-tions, they have activists in virtually every electoral district in the country, they have formidable lobbying machines, and much more. They are among the most powerful special interests of any type in the country.

What have they done with all this political power? For more than a quarter century, this country has been frantically trying to reform and bring real improvement to the public school system. And the unions have used their political power to block or seriously weaken these efforts: by preventing the spread of charter schools, undermining true accountabil-ity for schools and teachers, resisting performance pay, protecting teacher tenure, and in countless ways defending a poorly performing status quo. Very successfully.

In Chicago, as elsewhere, collective bargaining is not fundamentally

about children. It is about the power and special interests of adults.

Every one of us pays the price. Our children are being denied a high-quality education, fulfilling careers, and productive lives. The nation is losing precious human capital. Its long-term economic growth is taking

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a direct and destructive hit. And its position of leadership in the world is seriously threatened.

So the Chicago teachers’ strike was newsworthy for a short while. But the real problem is much deeper. It is that power over this nation’s key educational decisions—in Chicago and virtually everywhere else—is dis-proportionately exercised by special interests. Long after the strike has faded from memory, this problem will remain. The fundamental chal-lenge facing our country is to find some way of solving it.

Reprinted by permission of CNN. © 2012 Cable News Network. All rights reserved.

Available from the Hoover Press is A Primer on

America’s Schools, edited by Terry M. Moe. To order,



EDUCAT ION

The Best Teachers in the WorldFavor experience over credentials, hire the most qualified, and let

principals lead. By John E. Chubb.

For all the talk among political leaders about being first in the world in math and science or otherwise having the best schools and highest achievement in the world, there is little talk about having the best teach-ers. Yet research is increasingly clear that that is exactly what the aim of top achievement requires. If the United States wants the best achievement in the world, it will need to seek out, train, and retain the best teachers in the world. The United States is not currently serious about that aim.

Consider: the United States is now in the process of trying to establish high common academic standards for public school students. Over the past decade the states have set proficiency standards that vary widely in their expectations of students and that frequently fall short of standards set in the National Assessment of Educational Progress (NAEP), the “nation’s report card” for the past forty years. Through the Common Core project most states are now working together to establish voluntary national stan-dards with proficiency expectations closer to those set in NAEP.

Today’s teachers, however, do not come close to meeting the academic standards being set for students. A proficient score on NAEP reading or math translates into at least a 600 on the SAT, or about a 1,200 overall. The most generous estimate of the aptitude of new U.S. teachers recently

John E. Chubb is a distinguished visiting fellow at the Hoover Institution and a member of Hoover’s Koret Task Force on K–12 Education.


estimated SAT scores of 515 in critical reading (formerly verbal) and 506 in math, or 1,021 overall. It may be possible for teachers to educate stu-dents to levels above their own accomplishments. But a 200-point gap between teacher performance and student expectations amounts to a world of difference.

Today’s teachers don’t even meet the academic standards set for their

own students.

U.S. education policy shows no serious intent to reduce this gap. The federal government’s most important education policy, Title I of the Ele-mentary and Secondary Education Act, otherwise known as No Child Left Behind (NCLB), requires that states ensure all teachers are “highly qualified”—meaning state-certified and subject-matter competent. Most states have implemented these requirements by requiring new teachers to take Praxis I and II assessments (unless they have a relevant college major). But states frequently set Praxis passing scores at levels that translate into SAT reading-math scores of about 1,000—well below current expecta-tions for students.

Once on the job, teachers are rarely held accountable for student achievement, even though their schools have been held to account since NCLB was adopted in 2002. White House efforts to encourage states to use student achievement as part of teacher evaluations are just beginning, and achievement remains a relatively small part of the new systems.

By international standards teachers are not highly compensated in the United States—at least one factor that determines the quality of individu-als attracted to a profession and willing to stick with it.

The list goes on. U.S. education policy is not serious about high-quality teachers.

Attracting, developing, and retaining the best teachers in the world will require radically different policies and practices from what the United States currently follows. The United States is simply too far off course for anything else. Fortunately, there are lessons from school systems abroad and in the United States to provide guidance. There is substantial research about what affects student achievement and what does not. There is also


solid evidence of what helps teachers and what does not. I propose a new strategy for raising teacher quality to the highest levels in the world—a strategy based on scientific research and also on prominent examples of schools, colleges, and other educational organizations actually doing things very differently.

CASES IN PO INTPeabody College at Vanderbilt University merits a close look. It is rated number one at what it does by its peers, excels by all objective measures, attracts the highest-achieving undergraduate and graduate education students in the nation, employs some of the most distinguished figures in education research, and provides training along the lines of the most respected training institutions internationally—training that is already tailored to the United States. If education schools need ideas about how to improve teacher quality, Peabody would seem the most likely place to find them.

Another obvious source of ideas is schools where students are achiev-ing, especially with students who do not achieve easily themselves. The choice here is the Knowledge Is Power Program (KIPP). Since 1994, KIPP has slowly built a network of charter schools in disadvantaged communi-ties with documented success in raising student achievement. Its approach is simple: each school is built by an extraordinary principal whose job is to recruit, develop, and retain high-quality teachers. For reasons now reinforced by research, this approach holds much promise for improv-ing teacher quality. The U.S. Department of Education awarded a $50 million grant to KIPP this year to support replication of this approach in KIPP schools and select traditional public schools.

There is a lot of research about what affects student achievement and

what does not.

Efficient schools may prove as important as effective schools for boost-ing teacher quality. If teaching is to become an esteemed profession able to attract and retain the best and brightest, it will need to provide bet-ter compensation, recognition of performance, intellectual stimulation,


opportunities for growth, and more. Teaching in U.S. schools today can be drudgery, only partly occupied with instruction, often filled with rep-etition, and compensated without regard to merit. In other industries, this sort of wage labor has been replaced by highly skilled and more profes-sional roles, created through technological innovation. U.S. schools are beginning to experiment with new mixes of teachers and technology, to benefit students and improve the job of teaching. Some schools are getting far more from a smaller number of teachers.

A D IFFERENT STRATEGYMy strategy for raising teacher quality is very different from the approach this country has historically followed. It takes seriously the aim of raising student achievement to levels comparable to those of the best nations in the world. It therefore largely rejects the approach to teacher quality that has been this country’s hallmark—but which has not given us the best teachers in the world. The new strategy has three major elements.

First, the United States will never have a world-class teaching force unless teaching attracts and retains higher-caliber individuals. Teach-ers drawn on average from the lower ranks of high school graduates simply will not do. To attract higher-potential teaching candidates and to retain the most successful of them, the teaching profession must become more attractive relative to alternative lines of employment. This means work that is less menial and more expert, less prescribed and more responsible. It means less wage labor and more pay for performance. It means sub-stantially better compensation. It does not, however, need to mean more education spending. The United States already spends more on education per capita than most any nation in the world. It should not need to spend more.

The teaching profession can be improved by helping teachers be more productive. As in every industry before it, education can improve pro-ductivity by turning to technology. Reconfiguring schools to use teachers and technology to the best of their abilities could transform teaching. The profession would become more selective, requiring perhaps 20 percent fewer teachers overall. The work would become more differentiated and more highly skilled. Pay could be raised materially. These changes could


reverse the brain drain that has plagued teaching since women gained oth-er opportunities more than a generation ago. Teaching could once again be a destination for top talent.

Second, teaching is not an art to which some are born and others are not. It is an intellectually demanding endeavor that can and should be guided by research-based practice. Teachers should be trained, both before they take charge of a classroom and thereafter. They should not be trained, however, in the schools of education that predominate today. They should be trained in institutions and programs able to demonstrate their efficacy in producing teachers who raise student achievement. The last point is critical, as teacher quality has no meaning apart from student achievement.

Third, school leadership is critical to quality teaching. Principals have major influences on teacher development on the job, coaching teachers directly and helping teachers learn from one another or receive the external training they require. Principals play a lead role in creating the school culture that shapes student achievement. Principals create the working conditions that help determine whether great teachers remain. Principals evaluate teachers on all of the practices that go into student achievement, and should help schools keep the best teachers and improve or shed the weaker ones. Principals specifically must retain top-quartile teachers, replace bottom-quartile teachers, and hire new teachers with higher probabilities of success. High-quality teaching therefore requires a different approach to the hiring and training of school principals, one that focuses, in a word, on achievement. Candidates for the post of principal should offer hard evidence that they have helped students learn, and sub-sequent training should emphasize the same.

These three elements comprise an approach to teacher quality that is fundamentally different from the U.S. norm, which is grounded in licens-ing and credentialing. As odd as it may seem to license manicurists and not teachers, that is precisely what U.S. policy makers should do—or at least the not-licensing-teachers part of the comparison. The United States needs to attract as many high-caliber people into teaching as possible, and licensing requirements today serve largely as an impediment to attract-ing high quality. There is no evidence that licensing or certification cre-


ates better teachers or even sets a floor beneath which quality cannot fall. Teacher quality is much more likely to be driven by changes in the work-place—productivity enhancements, compensation improvements, more professional leadership and management—than by requirements for how teachers are trained before or during their careers.

Teaching in U.S. schools today can be drudgery, only partly occupied with

instruction, often filled with repetition, and compensated with no regard

to merit.

This is not to say that there are not promising models of teacher prepa-ration and in-service training. But we know far too little to mandate any single approach to teacher preparation and credentialing. Instead of trying to provide quality assurance through licensure, policy makers should pro-vide quality assurance by measuring performance directly. Policy should provide for the direct measurement of teacher effectiveness and the direct measurement of training effectiveness. Training programs might be uni-versity-based or not, pre-service or in-service. The effectiveness of each should be gauged by the ability of participants subsequently to raise stu-dent achievement. Once the effectiveness of programs is objectively deter-mined and made public, prospective teachers and employers will patronize those programs that work and eschew those that do not. In time, success-ful training programs will replicate and replace unsuccessful ones. Policy makers need not mandate them. Policy makers should focus instead on providing districts, schools, and principals with strong incentives to select, develop, and retain well-trained and high-performing teachers.

Moving beyond licensing and other regulatory approaches to teacher quality will not be easy. The status quo does not change readily in educa-tion. Over the years it has resisted innovation in countless ways, including technology, training, accountability, compensation, and more. The strate-gy advanced here is surely a threat to influential interests in the education-al system, from teachers’ unions to schools of education. It promises to cut teaching positions and put ineffective education schools out of business. It also offers benefits. Teaching can become more professional and better


compensated. University-based training can play a serious role in teacher development. In the past, the cost-benefit calculation has always come down on the side of resistance. And U.S. students have paid the price in achievement.

Today, there is growing consensus that teachers are the key to achieve-ment. The next step is recognizing that achieving with the best in the world requires teaching with the best. We have a long way to go in achieve-ment—and so too a long way to go in teaching. A very different strategy is clearly necessary, whatever the politics.

I T ’S FUNDAMENTALThe strategy recommended here is meant to change the incentives and opportunities for educators themselves to re-create their profession. The strategy does not look to policy makers to strengthen the profession. It looks to policy makers to give educators the freedom and reason to do so.

So policy makers are not asked to tell educators whom they can and cannot hire. Policy makers are instead asked to provide educators with information about who has been well trained and who has not. Similarly, educators are not to be told whom to retain or promote or let go. Policy makers will provide value-added estimates of teacher effectiveness and rig-orous qualitative assessments of instruction, but the judgments are in the hands of the professionals. Much the same with technology: policy makers should not tell schools how to use technology, how to reap savings, or how to use the savings to improve teacher compensation. Policy makers should ensure that schools have powerful incentives to experiment and adopt.

There’s no evidence that licensing or certification creates better teachers

or even sets a floor for quality.

In exchange for the freedom, schools and especially school leaders must be held strictly to account for student progress. That is the bargain that professionals should want: autonomy to control their work fully, to be compensated for it fairly, and to accept responsibility for its results. This is a very different arrangement from the one that has long governed educa-tion—and that now impedes the improvement of teacher quality.


Given strong incentives to perform and the information to do so, the American educational system will improve teacher training. It will select, develop, and retain teachers who perform best for students. It will incor-porate technology to boost productivity and teacher compensation. And it will promote and reward school leaders who make decisions in the best interests of students and teachers.

In exchange for freedom, schools and their leaders must be held strictly

to account for student progress.

There is no material reason why the United States cannot have the best teachers in the world. More than anything, it requires a willingness to let go of an approach, rooted in prescription and regulation, that has outlived its usefulness. This will not be easy politically. But nothing fundamental ever is. In the final analysis, if the nation wants an educational profession that is home to the best and the brightest, it will need to trust the profession and hold the profession strictly accountable for doing the right things.

Excerpted from The Best Teachers in the World: Why We Don’t Have Them and How We Could, by John E. Chubb (Hoover Press, 2012). © 2012 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved.

New from the Hoover Press is The Best Teachers in the

World: Why We Don’t Have Them and How We Could,

by John E. Chubb. To order, call 800.935.2882 or visit

www.hooverpress.org.


EDUCAT ION

Gifted and NeglectedSchools for high-flying students represent the other half of

“opportunity for all.” By Chester E. Finn Jr.

Every motivated, high-potential young American deserves a shot at an excellent education, but the majority of very smart kids lack the where-withal to enroll in rigorous private schools. They depend on public edu-cation to prepare them for life. Yet that system is failing to create enough opportunities for hundreds of thousands of these high-potential girls and boys.

Mostly the system ignores them, with policies and budget priorities that concentrate on raising the floor under low-achieving students. A good and necessary thing to do, yes, but we’ve failed to raise the ceiling for those already well above the floor.

Public education’s neglect of high-ability students does more than deny individuals the opportunities they deserve. It also imperils the country’s supply of scientists, inventors, and entrepreneurs.

Today’s systemic failure takes three forms.First, we’re weak at identifying “gifted and talented” children early, par-

ticularly if they’re poor or members of minority groups or don’t have savvy, pushy parents.

Second, at the primary and middle school levels, we don’t have enough gifted-education classrooms (with suitable teachers and curriculums) to serve even the existing demand. Congress has “zero funded” the Jacob

Chester e. Finn Jr. is a senior fellow at the Hoover Institution, chairman of Hoover’s Koret Task Force on K–12 Education, and president of the Thomas B. Fordham Foundation.


K. Javits Gifted and Talented Students Education Program, Washington’s sole effort to encourage such education. Faced with budget crunches and federal pressure to turn around awful schools, many districts are cutting their advanced classes as well as art and music.

Third, many high schools have just a smattering of honors or Advanced Placement classes, sometimes populated by kids who are bright but not truly prepared to succeed in them.

Great public schools are accessible to families who can’t afford private

schooling or expensive suburbs.

Here and there, however, entire public schools focus exclusively on high-ability, highly motivated students. Some are nationally famous (Boston Latin, Bronx Science), others known mainly in their own com-munities (Cincinnati’s Walnut Hills, Austin’s Liberal Arts and Science Academy). When my colleague Jessica A. Hockett and I went searching for schools like these to study, we discovered that no one had ever fully mapped this terrain.

In a country with more than 20,000 public high schools, we found just 165 of these schools, known as exam schools. They educate about 1 percent of students. Nineteen states have none. Only three big cities have more than five such schools (Los Angeles has zero). Almost all have far more qualified applicants than they can accommodate. Hence they practice very selective admission, turning away thousands of students who could benefit from what they have to offer. Northern Virginia’s acclaimed Thomas Jefferson High School for Science and Technology, for example, gets some 3,300 applicants a year—two-thirds of them academically qual-ified—for 480 places.

We built a list, surveyed the principals, and visited eleven schools. We learned a lot. While the schools differ in many ways, their course offer-ings resemble AP classes in content and rigor; they have stellar college placement; and the best of them expose their pupils to independent study, challenging internships, and individual research projects.

Critics call them elitist, but we found the opposite. These are great schools accessible to families who can’t afford private schooling or expen-


sive suburbs. While exam schools in some cities don’t come close to reflecting the demographics around them, across the country the low-income enrollment in these schools parallels the high school population as a whole. African-American youngsters are “overrepresented” in them and Asian-Americans staggeringly so (21 percent versus 5 percent in high schools overall). Latinos are underrepresented, but so are whites.

That’s not so surprising. Prosperous, educated parents can access mul-tiple options for their able daughters and sons. Elite private schools are still out there. So are New Trier, Scarsdale, and Beverly Hills. The schools we studied, by and large, are educational oases for families with smart kids but few alternatives.

They’re safe havens, too—schools where everyone focuses on teaching and learning, not maintaining order. They have sports teams, but their orchestras are better. Yes, some have had to crack down on cheating, but in these schools it’s OK to be a nerd. You’re surrounded by kids like you—some smarter than you—and taught by capable teachers who wel-come the challenge, teachers more apt to have PhDs or experience at the college level than high school instructors elsewhere. You aren’t searched for weapons at the door. And you’re pretty sure to graduate and go on to a good college.

Many more students could benefit from schools like these—and the numbers would multiply if our education system did right by such stu-dents in the early grades. But that will happen only when we acknowledge that leaving no child behind means paying as much attention to those who have mastered the basics—and have the capacity and motivation for much more—as those who cannot yet read or subtract.

Public education’s neglect of high-ability students imperils our supply of

scientists, inventors, and entrepreneurs.

It’s time to end the bias against gifted and talented education and quit assuming that every school must be all things to all students, a simplis-tic formula that ends up neglecting all sorts of girls and boys, many of them poor and minority, who would benefit more from specialized public schools. America should have a thousand or more high schools for able


students, not 165, and elementary and middle schools that spot and pre-pare their future pupils.

Fear of seeming elitist will most likely keep political leaders from pro-posing more exam schools—ironic, considering where many of them went to school. Smart kids shouldn’t have to go to private schools or get turned away from Bronx Science or Thomas Jefferson simply because there’s no room for them.

Reprinted by permission of the New York Times. © 2012 The New York Times Co. All rights reserved.

Available from the Hoover Press is Reroute the

Preschool Juggernaut, by Chester E. Finn Jr. To order,



WAR AND INTELL IGENCE

That’s SpytainmentMovie and TV audiences love the world of spycraft. But in the real

world, neither Bourne nor Bauer can be trusted. By Amy B. Zegart.

For fans of spy movies and television shows, a visit to CIA headquar-ters will be disappointing. America’s best-known intelligence agency looks nothing like the sleek, high-tech headquarters of Jason Bourne or Jack Bauer. The entrance has no fancy retina scans or fingerprint devices, and the place has something of a shabby, circa 1970 office-building feel. The National Counterterrorism Center (NCTC) is another story. Created after 9/11 to fuse terrorism threat reporting across the U.S. intelligence community, NCTC looks as if it came straight out of Hollywood. Because it did. Government officials actually flew out a Disney team to help design the operations center.

Fake spies are influencing real intelligence policy in ways both large and small. Over the past fifteen years, the spytainment industry has skyrock-eted. Tom Clancy video games have sold seventy-four million units world-wide, the number of spy-themed hit television shows has increased six-fold, and spy movies have become big business on the big screen, earning nearly $2 billion in U.S. theatres alone. Today, the relationship between Hollywood and Washington is cozier than ever, with the CIA pitching movie storylines on its website and the Pentagon forward-deploying to Los Angeles to set up entertainment liaison offices. Kathryn Bigelow and Mark Boal, the award-winning team behind The Hurt Locker, got bet-

Amy B. ZegArt is a senior fellow at the Hoover Institution and an affiliated faculty member at the Center for International Security and Cooperation at Stan-ford University.


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est.ter access to operational details of

the bin Laden raid for their latest flick, Zero Dark Thirty, than most intelligence officers or members of Congress.

Don’t get me wrong. I love being transported to imagi-nary worlds where congres-sional oversight works and spies always look like Daniel


Craig. But the blurring of fact and fiction makes for great entertainment at a hidden cost: Americans are steeped in misperceptions about what intelligence agencies actually do and have misplaced expectations about how well they can do it.

A 2006 report from the nonpartisan Intelligence Science Board con-cluded that spy-themed entertainment had become adult education. I found the same thing when I surveyed UCLA undergraduates three years ago. Those who said they always watched the now-departed hit television show 24, which depicted torture often and always favorably, were statisti-cally more likely than their peers to approve of torture. Of course, surveys cannot prove that watching 24 actually caused these attitudes. But the dean of West Point was so concerned that it did that he asked the show’s writers to create some episodes in which torture backfired.

Even government officials sometimes have trouble knowing where the real world ends and creative license begins. In fall 2002, Lieutenant Colo-nel Diane Beaver, the senior military lawyer at Guantánamo Bay, ran a series of brainstorming sessions about interrogation techniques that might

be used on terrorist detainees there. She later told British human rights lawyer Philippe Sands that Jack Bauer, hero of 24, “gave people

lots of ideas,” noting that the show “was hugely popular” at Gitmo. She later recommended, and senior Pentagon

officials approved, the use of dogs, sexual humili-ation, and other controversial interrogation

techniques.Confirmation hearings for Bush

Attorney General Alberto Gonzalez and Obama’s former CIA director, Leon Panetta, both discussed Holly-wood-inspired “ticking time bomb” scenarios—even though experts have long argued that these situations

are the stuff of fantasy. Panetta, when asked what he would do

if a terrorist had vital infor-mation about an imminent


catastrophic attack, reassured the Senate Intelligence Committee that he would seek “whatever additional authority” was necessary. The policy was quickly dubbed by the press the “Jack Bauer exception” to President Obama’s ban on the use of harsh interrogation techniques.

The makers of Zero Dark Thirty got better access to operational details of

the bin Laden raid than did most members of Congress.

In a 2006 Heritage Foundation panel discussion of 24, former Secre-tary of Homeland Security Michael Chertoff praised Jack Bauer and the show as “reflecting real life.”

Supreme Court Justice Antonin Scalia even suggested—twice, in pub-lic—that he would turn to Bauer to resolve legal questions about interro-gation methods. At a 2007 international conference on torture and terror-ism law, a Canadian judge offhandedly remarked, “Thankfully, security agencies in all our countries do not subscribe to the mantra, ‘What would Jack Bauer do?’ ” Scalia rushed to the fake operative’s defense, referring to details of the show’s second-season plotline, in which Bauer tortures a terrorism suspect to prevent a nuclear attack on Los Angeles. “Jack Bauer saved Los Angeles,” Scalia remarked. “He saved hundreds of thousands of lives.” Arguing that law enforcement officials deserve latitude in times of crisis, Scalia challenged the panel, “Are you going to convict Jack Bau-er? . . . I don’t think so.” Somebody needs to watch a little less TV.

In one survey, people who said they always watched 24, which depicted

torture often and favorably, were more likely than their peers to approve

of torture.

Hollywood will be Hollywood. It’s up to the press and the academy to fill the knowledge gap. But I wouldn’t hold my breath. Despite wide-spread coverage of the bin Laden operation, Facebook users in 2011 were more interested in “sharing” news stories about the death of Jackass televi-sion star Ryan Dunn and how not to dress your girls like tramps. My own profession has always pooh-poohed intelligence research and teaching as


too “real world” and not theoretical enough, and it shows. Twice as many of the top twenty-five universities ranked by US News & World Report last year offered courses on the history of rock and roll than intelligence, giv-ing undergrads a better chance of learning about U2 the band than U-2 the spy plane.

Since 9/11, political scientists have written nearly two thousand articles in the top three academic journals. Only three pieces examined intelli-gence topics. While policy makers have been grappling with warrantless wiretapping, targeted killing, interrogation techniques, detainee policy, and intelligence reform, political scientists have been busy researching just about everything else.

Is the public going to get a better idea of how intelligence really works any time soon? As Justice Scalia would say, I don’t think so.

Reprinted by permission of Foreign Policy (www.foreignpolicy.com). © 2012 Slate Group LLC. All rights reserved.

Available from the Hoover Press is Eyes on Spies:

Congress and the United States Intelligence Community,

by Amy B. Zegart. To order, call 800.935.2882 or visit




The New Model ArmyTiny weapons that creep and crawl and think for themselves: this is

our future. By Gabriella Blum.

You walk into your shower and find a spider. You are not an arachnologist. You do, however, know that one of the following options is possible:

The spider is real and harmless.The spider is real and venomous.Your next-door neighbor, who dislikes your noisy dog, has turned her per-

sonal surveillance spider (purchased from “Drones ‘R’ Us” for $49.95) loose and is monitoring it on her iPhone from her seat at a sports bar downtown. The pictures of you, undressed, are now being relayed on multiple screens during the break of an NFL game, to the mirth of the entire neighborhood.

Your business competitor has sent his drone assassin spider, which he pur-chased from a bankrupt military contractor, to take you out. Upon spotting you with its sensors, and before you have any time to weigh your options, the spider shoots a tiny needle into a vein in your left leg and takes a blood sample. As you beat a retreat out of the shower, your blood sample is being run on your competitor’s smartphone for a DNA match. The match is made against a DNA sample of you that is already on file at EVER.com (Every-thing about Everybody), an international database (with access available for $179.99). Once the match is confirmed (a matter of seconds), the assassin spider outruns you with incredible speed into your bedroom, pausing only

Gabriella blum is a contributor to the Hoover Institution’s Koret-Taube Task Force on National Security and Law. She is the Rita E. Hauser Professor of Human Rights and International Humanitarian Law at Harvard Law School (HLS) and co-director of the HLS-Brookings Project on Law and Security.


long enough to dart another needle, this time containing a lethal dose of a synthetic, undetectable poison, into your bloodstream.

The assassin, on summer vacation in Provence, then withdraws his spi-der under the crack of your bedroom door and out of the house and presses its self-destruct button. No trace of the spider or the poison it car-ried will ever be found by law enforcement authorities.

This is the future. According to some uncertain estimates, insect-sized drones will become operational by 2030. These drones will be able to not only conduct surveillance but also act on it with lethal effect. Over time, it is likely that miniaturized weapons platforms will evolve to be able to carry not merely the quantum of lethal material needed to execute individuals, but also weapons of mass destruction sufficient to kill thousands. Political scientist James Fearon even speculates that at some more distant time, individuals will be able to carry something akin to a nuclear device in their pockets.

Modern technology means we are all vulnerable, and all menacing.

Assessing the full potential of technology requires a scientific expertise beyond my ken. The spider in the shower is merely an inkling of what probably lies in store. But even a cursory glance at ongoing projects shows us the mind-bending speed at which robotics and nanobotics are develop-ing. A whole range of weapons are growing smaller, cheaper, and easier to produce, operate, and deploy from great distances. If the mise-en-scène above seems unduly alarmist or too futuristic, consider the following: drones the size of a cereal box are already widely available, can be con-trolled by an untrained user with an iPhone, cost roughly $300, and come equipped with cameras. Palm-sized drones are commercially available as toys, although they are not quite insect-sized and their sensory input is limited to primitive perception of light and sound.

TOYS NO LONGERTrue minidrones are in the developmental stages and the technology is pro-gressing quickly. The technological challenges seem to be not in making the minidrones fly but in making them do so for long periods while also carrying some payload (surveillance or lethal capacity). The flagship effort


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t.appears to be the Micro Autonomous Systems and Technology (MAST) alliance, which is funded by the Army and led by BAE Systems and UC-Berkeley, among others. The alliance’s most recent creations are the Octoro-ach and the BOLT (Bipedal Ornithopter for Locomotion Transitioning). The Octoroach is an extremely small robot with a camera and radio trans-mitter that can cover up to a hundred meters on the ground. The BOLT is a winged robot that can also scuttle about on the ground to conserve energy.

Scientists at Cornell University, meanwhile, recently developed a hand-sized drone that uses flapping wings to hover, although its stability is still limited and battery weight remains a problem. A highly significant element of the Cornell effort, however, is that the wing components were made with a 3D printer. Three-dimensional printers are already in use. This heralds a not-too-distant future in which a person can simply download the design of a drone at home, print many of the component parts, assemble them with a camera, transmitter, battery, and so on, and build a fully functioning, insect-sized surveillance device.

Crawling minidrones are clearly feasible, merely awaiting improvements in range and speed to be put to work on the battle-


field and in the private sector. Swarms of minidrones are being developed to operate with a unified goal in diffuse command and control structures. Robotics researchers at the University of Pennsylvania recently released a vid-eo of what they call “nano quadrotors”—flying mini-helicopter robots that engage in complex movements and pattern formation.

Nanobots or nanodrones are still more futuristic. Technology for manufacturing microscopic robots has been around for a few years, but recent research has advanced to microscopic robots assembling them-selves and even performing basic tasks. The robotics industry, both gov-ernmental and private, is working hard to enhance autonomous capa-bilities, that is, to be able to program a robot to perform complex tasks with only a few initial commands and no continuous control. Human

testing for a microrobot that can be injected into the eye to perform certain surgical

tasks is now on the horizon. Similar developments have been made

toward nanobots that will clear blocked arteries and perform

other procedures.


Now put the robotics technology alongside other scientific advance-ments—the Internet, telecommunications, and biological engineering—all of which empower individuals to do both good and terrible things to others. From here, it is not hard to imagine a world rife with miniature, possibly molecule-sized, means of inflicting harm on others from great distances and under a cloak of secrecy.

AN END TO MONOPOL IES ON V IOLENCEWhen invisible, remote weapons become ubiquitous, neither nation-al boundaries nor the lock on our door will guarantee us an effective defense. When the risk of being detected or held accountable dimin-

ishes, inhibitions toward violence decrease. Whether political or criminal, violence

of every kind becomes easier to


inflict and harder to prevent or account for. Ultimately, modern tech-nology makes individuals at once vulnerable and threatening to all other individuals to an unprecedented degree: we are all vulnerable, and all menacing.

Three special features of new weapons technologies seem likely to make violence more possible and more attractive: proliferation, remoteness, and concealment. The technologies essentially generate a more level playing field among individuals, groups, and states.

Proliferation leads to a democratization of threat. Countries can gener-ally be monitored, deterred, and bargained with, but individuals and small groups are much harder to police, especially on a global scale. If govern-mental monopolies over explosives, guns, or computer technologies have proven nearly impossible to enforce, how much harder will it be to control deadly minidrones, including homemade weapons, that are secretly built and untraceable?

The violence-exacerbating feature of remoteness, meanwhile, cre-ates a mental distance between the attacker and his victim. When the body is out of harm’s way but the mind is engaged in a playlike envi-ronment of control panels and targets moving onscreen, killing can

quickly turn into a game.


Any hope that this level playing field of the future will be a blood-less contest of robots fighting one another, rather than robots fighting humans, is likely to be in vain. If a war between robots, whether min-iaturized spiders or large Reaper drones, were possible, all wars could be resolved through video games or duels. But wars are ultimately fought between humans, and to matter, they need to hurt humans. The fewer humans available to hurt on the battlefield, the more humans outside the battlefield will be subjected to the suffering and death demanded by war.

Much of our political, strategic, and legal frameworks for dealing with violence assumes that a violent act can be attributed to its source and that this source can be held accountable—through a court of law or retaliatory strikes. If defenses against invisible threats such as microrobots and cyber-attacks fail to keep up with attackers’ skills, violent actors will no longer be inhibited by the risk of exposure. Safely concealed, they will have a free pass for killing.


A N IGHTMARE DEFERRED?Most technological innovations in weapons, biology, or the cyber world are closely followed by apprehensions of Armageddon—so much so that in some cases people make pre-emptive efforts to ban these technologies. Take, for instance, the 1899 treaty to ban balloon air warfare, which is still in force for its signatories (among them the United States). Genetic and biological engineering, which can save and improve lives on a mass scale, also has been met with criticism about the impropriety of “man playing God” and predictions of the end of the human race. And yet the world still stands, despite the existence of destructive capabilities that can blow up planet Earth hundreds of times over. In fact, some credit the very exis-tence of nuclear weapons and the accompanying nuclear arms race with a reduction in overall violence.


Still, history has proven that offensive capabilities, at least for a time, usually outrun defensive capabilities. In the robotic context especially, as costs go down, availability grows, and the global threat grows with it. Even if defensive technologies catch up with present threats and many of the concerns raised here could be set aside, it is always useful to continue thinking about defense as it should evolve in the micro-world. Moreover, it is unclear that meeting threats with equal threats—as in the case of nuclear weapons—would yield a similar outcome of mutual deterrence when it comes to personalized weapons of the kind I imagine.

We should also note that robots can be put to good or bad use, and the good or bad often depends on where one stands. On today’s battle-fields, robots serve many functions, ranging from sweeping for improvised explosive devices (IEDs), to medical evacuation, supply chain manage-ment, surveillance, targeting, and more. Technology has life-saving as well as life-taking functions. But the same systems that can save victims of atrocities can easily be deployed for pernicious purposes.

In the age of 3D printers, somebody may be able to download a plan for a

tiny surveillance drone and build it at home.

The Internet, telecommunications, travel, and commerce have all made the world smaller and strengthened global interconnectedness and social-ization. In a recent eloquent and wide-ranging book, Harvard psycholo-gist Steven Pinker argues that our society is the least violent in recorded history, in part because technology, trade, and globalization have made us more reasoned, and in turn more averse, to violence. Notwithstand-ing Pinker’s powerful account, the same technology that brings people closer—computers, telecommunications, robotics, biological engineering, and so on—now also threatens to enable people to do infinitely greater harm to each other.

The threat from technological advances is only one manifestation of a sea change in social and cultural relations that technology as a whole brings about. Technology influences both capabilities and motivations, but not in a single trajectory; the technology to inflict harm is countered by the technology to prevent or correct against it. Motivations to inflict


harm are constantly shaped and reshaped by the local and global environ-ments. So any assessment of new weapons must reckon with both the growing capability to inflict violence and the growth or decline in motiva-tions to do so.

Over time, miniaturized weapons could evolve to the point of carrying

weapons of mass destruction.

If it turns out that political, ideological, or personal motivations for harm diminish—for instance, because interconnectivity and interdepen-dence reduce violent hatred, demonization of others, or the attractiveness of violence as a means to promote ideological goals—we have less to worry about. But it seems to me that the lethal capabilities of miniaturized tech-nologies will spread before pacifying social forces, whatever their nature, can turn more of our world into a peaceful place.

Violence, of course, does not require fancy weapons. Even in our pres-ent age, it took little more than machetes for Hutus to kill 800,000 Tutsis and moderate Hutus in a mere hundred days. When people want to kill other people, they can. But having simpler means to do so might tip the scale.

Excerpted from “Invisible Threats,” part of the Hoover Institution’s online essay series Emerging Threats in National Security and Law. © 2012 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved.

Available from the Hoover Press is Skating on Stilts: Why

We Aren’t Stopping Tomorrow’s Terrorism, by Stewart

Baker. To order, call 800.935.2882 or visit www.

hooverpress.org.



Our Robot ChildrenAt what point will we trust robots to kill? By Shane Harris.

In the game of life and evolution there are three players at the table:

human beings, nature, and machines. I am firmly on the side of nature.

But nature, I suspect, is on the side of the machines.

—George B. Dyson, Darwin Among the Machines

If you want to understand how human beings stack up next to machines in the conduct of modern warfare, consider this: in World War II, it took a fleet of one thousand B-17 bombers—flown, navigated, and manned by a crew of ten thousand men—to destroy one Axis ground target. American bombs were so imprecise that on average, only one in five fell within a thousand feet of where they were aimed. Aerial bomb-ing was a clumsy affair, utterly dependent on the extraordinary labor of human beings.

Just one generation later, that was no longer true. In the Vietnam War, it took thirty F-4 fighter-bombers, each flown and navigated by only two men, to destroy a target. That was a 99.4 percent reduction in manpower. The precision of attack was also greatly enhanced by the first widespread use of laser-guided munitions.

After Vietnam, humans’ connection to air war became even more attenuated, and less relevant. In the Gulf War, one pilot flying one plane could hit two targets. The effectiveness of the human-machine pairing was

Shane harriS is a contributor to the Hoover Institution’s Koret-Taube Task Force on National Security and Law. He is a senior writer at Washingtonian magazine.


breathtaking. A single “smart bomb” could do the work of one thousand planes dropping more than nine thousand bombs in World War II.

By the time the United States went to war in Afghanistan and Iraq, one pilot in one plane could destroy six targets. These weapons were guided by global positioning satellites orbiting thousands of miles above the sur-face of the earth. And increasingly, the pilots weren’t actually inside their planes anymore.

As aircraft and weapons have become more precise, human beings have become less essential to the conduct of war. And that may suit the military just fine.

In 2009, the Air Force released its “Flight Plan” for unmanned aircraft systems, a big-picture forecast about how the service will fight wars by the year 2047. It dutifully points out that humans currently remain “in the loop” on strike missions—that is, they still actually fly airplanes. But within the next five to ten years, the Air Force intends that one pilot will control four aircraft. He or she will not sit in a cockpit, or even in a seat thousands of miles away made up to look like one. The pilot will commu-nicate with the fleet via a computer terminal and a keyboard, maybe even a smartphone. After issuing a flight plan, the aircraft will be responsible for completing many important aspects of the mission unassisted: taking off, flying to the target, avoiding detection by adversaries. The Air Force’s goal is for one human controller and a fleet of drones to be able to attack thirty-two targets with near-perfect precision.

In this scenario, the pilot will be “on the loop.” It is a rather dis-quieting place to be, since it is only a step away from being out of the loop—which is where, by midcentury, when the Air Force’s plan takes full effect, people will be. A single “mission commander” will communi-cate with a swarm of autonomous unmanned systems. These self-oper-ated flying robots, the size of flies or moths, will be able to fly inside buildings, conduct reconnaissance, and mass upon their targets with insect-like efficiency. In some cases, the swarm won’t communicate with a human being but with other drones.

It seems implausible that the U.S. military would deliberately reduce the warrior’s role in war to the point that people become mere monitors of autonomous, man-made technology. But this is precisely where the evolu-


tionary trend has been heading since the 1940s. Autonomy is the logical endpoint of a century of technological progress. And since taking human beings out of the loop means making them safer, it is an attractive goal.

Within five to ten years, the Air Force intends that one pilot will control

four aircraft. And not from a cockpit—from a computer, maybe even a

smartphone.

While there is a tremendous amount of money and thought going towards the construction of new drones, comparatively less attention is being paid to managing the consequences of autonomous warfare. The proliferation of drones raises profound questions of morality, hints at the possibility of a new arms race, and may even imperil the survival of the human species. Many of the most important policy judgments about how to adapt the machines to a human world are based on the assumption that a drone-filled future is not just desirable but inevitable.

This dilemma is not restricted to the battlefield. Civilian society will eventually arrive at this automated future, and by then we probably won’t understand how we got there or how the machines gained so much influ-ence over our lives. This is the fate that Bill Joy, the co-founder and former chief scientist of Sun Microsystems, described in his dystopian essay “Why the Future Doesn’t Need Us,” published in Wired magazine in 2000. Joy’s fear—as controversial now as it was then—is that human beings will sow the seeds of their own extinction by building machines with the ability to think for themselves, and eventually to reproduce and destroy their creators. Joy begins his essay unwilling to accept that human beings would ever con-sciously allow this to happen. But then he visits a friend, the futurist Danny Hills, who co-founded Thinking Machines Corporation. Hills tells Joy the

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A mannequin dressed for battle holds a minidrone and its remote-control unit at a trade fair in Germany. Human input is becoming less and less important for robot warriors, which soon will make combat decisions for themselves.



future will not be announced with a Hollywood bang but that “the changes would come gradually, and that we would get used to them.”

This is the path the military has followed, gradually adjusting as it pushes humans out of certain tasks that a generation ago would never have been handed over to machines. The robots and nanobots Joy imag-ined exist today as unmanned aerial vehicles, more commonly known as drones. The Air Force studiously avoids the term drone—and encour-ages others to do the same—because it connotes a single-minded insect or parasite that is beyond the control of people. Drone operators pre-fer remotely piloted aircraft, which reminds us that as independent as the missile-wielding flying robot might seem, there is always a human being at the end of its digital leash. That is, of course, until the human becomes passive to the swarm.

Soon a single “mission commander” will communicate with a swarm of

self-operated flying robots the size of flies or moths.

In any case, it is not an overstatement to say that the people building and flying these machines are wrestling with the very fundamentals of what it means to be human. And while senior military officials and poli-cymakers swear that humans will always have at least a foot in the loop, and that the military would never deploy robots that can select and attack targets on their own, the evidence suggests otherwise.

In his 2009 book Wired for War: The Robotics Revolution and Conflict in the 21st Century, P. W. Singer documents at least five formal programs or plans put in motion by the military and the Defense Department in recent years to build autonomy into weapons systems. Indeed, the Joint Forces Com-mand wrote a report in 2005 suggesting that “autonomous robots on the battlefield will be the norm within twenty years,” Singer writes. “Its official title was somewhat amusing, given the official mantra one usually hears on the issue: ‘Unmanned Effects: Taking the Human Out of the Loop.’ ”

To a certain degree, the unmanned systems flying combat missions today over Iraq, Afghanistan, and Pakistan, where they’ve become cen-

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tral to the war effort, are already autonomous. “They’re riding on beefy autopilots,” says Kyle Snyder, the director of unmanned aerial systems programs at Middle Tennessee State University. The drones are using tech-nology similar to that in commercial airplanes. They know how to hold a heading and altitude without human intervention.

But Snyder, who is educating the next generation of drone-makers and operators, says flight control technology is rapidly becoming more independent. “What makes [the next generation of aircraft] so smart is how they interact with the rest of air traffic and other unmanned aerial vehicles,” he says. “Right now, we’ve got a human in the loop, looking at screens or out windows, seeing traffic and listening to air traffic con-trol. The new technology makes UAVs autonomous, because it lets them understand what the [human] air traffic controller is saying: ‘You’ve got traffic at twelve o’clock. It’s a 777, and it’ll pass you.’ ”

In the “microaviary” lab at Wright-Patterson Air Force Base, First Lieutenant Greg Sundbeck

and team leader Gregory Parker watch an experimental drone test its wings. Such systems

are meant to find, track, and target potential adversaries. The Air Force vows never to

relinquish human control over tomorrow’s flying weapons, even as robotic systems learn to

process information faster—and in some ways, more competently—than humanly possible.


Snyder is not talking about drones in the combat theater, but in domes-tic U.S. air space. The military has paved the way for the proliferation of unmanned systems for domestic use. Once the Federal Aviation Admin-istration changes airspace regulations to accommodate, and to adapt to, remotely piloted and autonomous aircraft, drones will move from the battlefield to the friendly skies.

While the idea of boarding a Delta Airlines flight with no pilots might terrify today’s traveler, in the near term—perhaps over the next two decades—many experts consider it likely that FedEx or UPS will replace some of its cargo fleet with unmanned planes. “The public is going to have to be warmed up to the idea that they’re flying on an aircraft sharing the sky with aircraft that are unmanned,” says Rick Prosek, who manages the FAA’s Unmanned Aircraft Program Office. “You’ve got to get a toe into the water.”

Listening to Prosek, one hears that gradual shift towards the inevitable. “When I was a kid and you got onto an elevator, there was a guy sitting on the stool who asked you what floor to go to,” he says. “Now most people are not aware there ever was an elevator operator out there.”

Prosek calls it “a far larger step” to accept sharing the airspace with fully autonomous vehicles, capable of deciding on their own how fast to fly, how to avoid rough weather, and how to steer clear of other planes. But that day, which he and so many experts have anticipated for years, is coming. “We used to joke that the air crew of the future would be one pilot and one dog. The dog would be there to bite the pilot if he tried to do anything.”

Currently, the FAA prohibits anyone not affiliated with the federal gov-ernment from flying unmanned aircraft, unless it is for the purpose of experimental research. The operators are expressly forbidden from gener-ating any profit, which has largely sidelined most entrepreneurs and kept the commercial drone business from taking off. But once the FAA lifts those restrictions, experts predict that a proliferation of drone technology will eclipse what the military has experienced thus far.

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Using the Air Force’s own flight plan as a rough guide, by 2040:

• Agricultural producers will use small hover drones to monitor crop yields and herd livestock.

• SWAT teams will send mechanical insects equipped with video cameras to creep inside a building during a hostage standoff.

• The U.S.-Mexico border will be monitored by a fleet of robotic birds, which may stay aloft for days or weeks without recharging their batteries.

• Traffic helicopters will no longer require a human pilot.

And this forecast is probably too conservative. Right now, law enforce-ment agencies and the military are using experimental, autonomous robots for surveillance missions with domestic applications, such as border patrol and hostage rescue. Designers are taking their inspiration from nature, a

In a test of an autonomous sentry system, a South Korean soldier surrenders to a machine-

gun-armed robot bristling with sensors. South Korea has developed the system to protect

its heavily armed border with North Korea, programming it to raise the alarm and provide

suppressive fire during an emergency.


field of research known as biomimicry. They are building drone “spiders” to climb up tree trunks, skitter to the end of a branch, and then “perch and stare” at their surroundings. The Air Force’s Wasp III, a collapsible prop plane, is modeled after a soaring bird. It weighs only a few pounds, and its wings are made of a foam composite. The Wasp patrols from above using an internal GPS and navigation system, as well as an autopilot. The Wasp can function autonomously from takeoff to landing.

The people building and flying these machines are wrestling with the very

fundamentals of what it means to be human.

The Wasp actually looks more like a hawk. “It kind of circles up in the air,” says Lindsay Voss, the senior research analyst at the Association for Unmanned Vehicle Systems International, which promotes the use of unmanned systems in nonmilitary settings. “If you didn’t know what it was, you would think it was just a bird. They’ll attract other hawks in the area, because they’re territorial. And then other birds will come to see what’s going on, because they think it’s looking for prey.”

If the drone experts’ predictions are on track with those of futurists like Joy and Hills, then by 2047, animal-like machines will be practically indis-tinguishable from their sentient counterparts. In fact, Joy predicts that the potential for a crossover will come as soon as 2030. By then, what he calls “radical progress in molecular electronics—where individual atoms and molecules replace lithographically drawn transistors”—will allow us “to be able to build machines, in quantity, a million times as powerful as the personal computers of today.” Machines will process information so pow-erfully and so quickly that, in effect, they will begin to learn.

“Given the incredible power of these new technologies,” Joy asks, “shouldn’t we be asking how we can best coexist with them?”

Those hyperspeed computers will be essential for military drones, par-ticularly those used for surveillance and reconnaissance. While the hunter variety of unmanned aircraft—the Predator and Reaper craft that obliter-ate unsuspecting terrorist targets with a Hellfire missile—have achieved


the most notoriety, most drones flying today are just big sensor platforms. They’re freighted with a dizzying array of ever-more-sophisticated cam-eras, imaging tools, and eavesdropping devices.

The amount of rich, detailed information they absorb is overwhelming. More than one hundred intelligence analysts track a routine drone flight, poring over communications, signals, and imagery.

The military wants to limit the number of auxiliary personnel, in large part because they add significant cost to unmanned flights. But humans also process information and react slower than computers. People are standing in the way of drones’ autonomy, and therefore their progress.

In the next few years, the military hopes to create aircraft control sys-tems that let one pilot fly several drones and that will lessen the number of ground support crew it takes to maintain a flight. The systems today are proprietary: each manufacturer’s unmanned aircraft has its own control system. And each aircraft has its own system, too.

This inflexible design was partly intentional. Only a drone builder, or its designated subcontractors, knows how to work on the machine. It is full of unique software codes and other features. The customer is locked into a relationship with the manufacturer, most of which are very large, and—by today’s standards—very old Defense Department contractors whose busi-ness model is to create expensive, proprietary weapons systems. If Google were building drones, the relationship probably would not work this way.

“We used to joke that the air crew of the future would be one pilot and one

dog. The dog would be there to bite the pilot if he tried to do anything.”

In fact, Google may soon be in the drone business. In May 2011, DIY Drones, a do-it-yourself company that helps enthusiasts build their own unmanned systems, released the PhoneDrone Board for Android, built in collaboration with Google. It is a circuit board designed to be compatible with Google’s phone-based Android operating system. “You just plug the Android’s phone USB connector into the board and you have two-way communications,” the company announced in a blog post.


The technology to fly tomorrow’s drones is premised on the idea that humans want to perform fewer tasks, and simpler ones at that. So a com-plex, clunky command system becomes an elegant touchscreen.

But giving a machine some level of autonomy has other benefits besides convenience. A determined adversary “can interrupt the links” between a remote aircraft and its pilot, says retired lieutenant general Dave Deptula, who was the Air Force’s first deputy chief of staff for intelligence, surveil-lance, and reconnaissance. That could allow an enemy to disable the air-craft or even to commandeer it and turn it against his foes.

“One way around this is to build a system that’s autonomous,” Deptula says. He notes that the Global Hawk, a long-range surveillance aircraft, is the first generation of such a system. “There’s not a person sitting on the ground with a stick, rudder, and throttles. He’s sitting at a computer terminal, typing in a mission profile, and when ready for takeoff, he hits the enter button and it goes off and does its thing.”

Even the next generation of surveillance aircraft primarily flown by humans in a cockpit will also be “pilot optional.” Northrop Grumman is building a new spy plane called Firebird that, with a few modifications, can be rigged for remote flight. The company is so confident that the fea-ture will appeal to a cash-strapped Defense Department that it is building the aircraft at its own expense.

“We have the potential to achieve greater and greater degrees of auton-omy,” Deptula says. “But that brings with it huge policy issues. We’re not ready today, and may never be, to hit a button and say, OK, come on back after you’ve delivered your bombs and tell us what you hit.”

Humans are standing in the way of drones’ autonomy, and therefore

their progress.

That points to one more group of people, in addition to analysts and ground staff, who attend drone strikes: lawyers. Ultimately, they are the ones deciding which people are justifiable targets under the laws of war, running down a checklist with military and intelligence agencies to ensure the strikes are legal and necessary and will not result in disproportional collateral damage. This is not to say, of course, that a machine couldn’t

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make these decisions. From a software perspective, it is just another cal-culation. “The reality is there have been all sorts of new technologies that people insisted in absolutist terms would ‘never, ever’ be allowed to run on their own without a human in the loop,” Singer wrote in Wired for War. “Then, as the human roles were redefined, they were gradually accepted, and eventually were not even thought about.”

The Defense Advanced Research Projects Agency, the Pentagon research arm that first developed stealth aircraft technology, has joined up with the Air Force to study ways to give drones autonomous control over their weapons. The Persistent Close Air Support program is ostensibly aimed at speeding up the process by which tactical air controllers can call in strikes, either to piloted or unmanned aircraft. It takes about half an hour now, and researchers want to whittle that down to six minutes. To do that,

Boy meets robot at a Defense Ministry open house last summer in Berlin. Machines like this

protect troops from ambushes, bombs, and other hazards, and are finding useful work in

the civilian world. Meanwhile, policy makers are exploring how far they can trust the more

lethal machines that will fight tomorrow’s wars.


the program will build equipment that lets unmanned aircraft respond autonomously to a request for weapons fire from the controllers. It will be up to the drones to figure out how best to attack the target.

“We’re not ready today, and may never be, to hit a button and say, OK,

come on back after you’ve delivered your bombs and tell us what you hit.”

During a drone strike, the computer is absorbing more information than humans ever could. The drone is “seeing” reality on the ground, sucking up huge caches of data to determine precisely who the target is, how many innocent bystanders there are, and where best to aim the ordnance. With that level of intelligence, who wouldn’t trust the com-puter’s conclusion?

Humans will not tell a drone to go out and kill so much as trust that it knows who best to kill. At this point, the dystopian futurists would say it is only a matter of time before the machines decide to kill us, overthrow their masters, and ascend to their rightful rung in the evolu-tionary ladder.

You need not buy in to a bleak vision of self-replicating robots to agree that the increasing use of autonomous unmanned systems forces us to confront moral dilemmas. How much control do we relinquish? How do we widen the loop enough so that it still includes people, even if we have one foot in and one foot out?

Joy’s prescription, broadly speaking, is to abandon the pursuit of tech-nologies that have the power to destroy us. He was most worried about the proliferation of reproducing nanotechnologies, computerized organ-isms that could be used as strategic weapons by nations or terrorist groups. Without a doubt, drone technology will become so ubiquitous and cheap that ordinary civilians will be able to acquire, use, and modify it.

Society will not follow Joy’s advice and give up the drone. When the FAA, an often intransigent federal bureaucracy, says its official policy is to “accommodate and integrate” unmanned systems into the national air space, you know we have passed the point of no return.


What we need now is a heightened vigilance about the perils of our inventions, on par with the ambition and energy we are pouring into their creation. We need a code of ethics for drones.

Jordan Pollack, a professor of computer science and complex systems at Brandeis University, has proposed a set of seven questions about robot ethics. Question six in his Wired article asks, “Should robots carry weap-ons?” Pollack was writing in 2005, before we put that one to rest, but his answer is instructive. “We must distinguish autonomous robot weapons from remote-control armaments—unmanned telerobots supervised by humans. The ethical difference between the two: who’s responsible for pulling the trigger.”

I suggest that this ethical difference is not the most important problem, and that it is becoming irrelevant. Human supervision is the issue we are most clearly grappling with right now, and it is one that we can shape. I would even replace “human supervision” with “adult supervision.” Unmanned systems are our robot children. We want them to follow our rules, but we also want them to learn to think for themselves when appro-priate. As they mature, we should define our role in the terms of a parent. That means accepting that one day the young will leave the nest. So we should prepare for that inevitable day, however unpleasant or terrifying it seems now.

Excerpted from “Out of the Loop: The Human-free Future of Unmanned Aerial Vehicles,” part of the Hoover Institution’s online essay series Emerging Threats in National Security and Law. © 2012 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved.

New from the Hoover Press is State of Disrepair: Fixing

the Culture and Practices of the State Department, by

Kori N. Schake. To order, call 800.935.2882 or visit



RUSSIA

Mission to MoscowThe czars and commissars alike are long gone. Moscow has almost

become a normal European city. By Norman M. Naimark.

Moscow evokes a variety of images in the West: the onion-domed churches of the medieval Kremlin; stolid Soviet leaders reviewing military parades in Red Square; the glitzy wealth of the post-Soviet elite; the macho self-presentation of Vladimir Putin. But images change much more slowly than realities. The incredibly deep, efficient, and loud subway system is still there. The Stalinist wedding-cake skyscrapers still dominate the skyline. There are still too many restaurants and nightclubs that far too few people can afford and horrendous traffic that is daunting for even the most experienced drivers. But Moscow has changed. It has become—almost—a normal European capital.

I have been a regular visitor to the city for over forty years. I asked myself why, during a research trip last summer, I felt—for the first time, really—pretty much at home. I think the basic reason is that the Russian capital has become much more Europeanized. A plethora of interesting and reasonably priced restaurants and coffeehouses have popped up all around the down-town, and even in some of the more remote districts. There are plenty of fast food places—too many, in fact. In my immediate neighborhood there was a “cute” Georgian restaurant; an interesting courtyard cafe with a ceil-ing of open umbrellas (it showed art films, too); a delicious Uzbek restau-

NormaN m. Naimark is a senior fellow at the Hoover Institution and the In-stitute for International Studies. He is also the Robert and Florence McDonnell Professor of East European Studies at Stanford University, where he is the Fisher Family Director of the Division of International, Comparative, and Area Studies in the School of Humanities and Sciences.


rant; and a Thai place. Not only was the food good and genuinely “ethnic,” but the prices were reasonable, at least by the standards of most European metropoles, something relatively new to Moscow in the post-Soviet period.

My old-fashioned Soviet apartment did not have wi-fi, so I headed out after work to the coffeehouses, a different one almost every evening, and all with wireless Internet connections. Starbucks was everywhere, of course, as in any other European capital, but I was impressed by the vari-ety of other shops selling coffee, tea, and pastries. Other urban amenities abound: a quick train ride from the subway system to the international airport; public bathrooms (though not enough of them); better street signage; Internet cafes; and computer services in the post offices.

Also, people were mostly (one wouldn’t want to go overboard) friendly, nice, and helpful in public places. For anyone who had been to Russia during the Soviet period, the previous sentence might seem laughable. In Soviet times, Russians were generous and hospitable in their homes, but absolutely stone-faced on the streets, where Hobbes’s state of nature ruled. That has changed gradually since the end of the Soviet period. But this was the first time people actively helped me: dealing with punching the tickets on the trolleybus; finding my way when I was looking at a map; sorting unfamiliar coins; getting off at the right train stop while coming home from a visit to a friend’s dacha. In the cafeteria of the archives, where I ate lunch every day, the women who worked behind the counter were positively charming, friendly, helpful, even a bit flirtatious. Again, anyone who remembers such institutional cafeterias (stolovaia) from the Soviet period will also remember the intimidating, harsh, and unwelcoming women who worked there, not to mention the unpalatable food. These changing attitudes may have something to do with the volunteerism asso-ciated with the flood relief efforts in the Krasnodar region last August. The local government failed its citizens on a number of counts; at the same time, waves of volunteer help, funds, and gifts flowed into the area swiftly and efficiently.

FEWER BODYGUARDS AND HOMIC IDAL DRIVERSI am convinced that street life in Russia has also become markedly more civilized, especially over the past decade. No more does one see armed


guards around luxury stores or chauffeurs standing by limousines waiting for their bosses with hands on weapons. After the fall of communism, when Muscovites first started buying cars and driving everywhere, the automobile culture was brutal. You could be run down by drivers who regularly parked their proud new possessions on the sidewalks. Living in Moscow in 2000, I had several near misses crossing the street, where pedestrians had absolutely no rights. There also was a lot of drinking, spitting, and unruly behavior on the streets, day or night. It’s not that Russians have stopped drinking—alcoholism is still a big problem—but street culture has changed markedly for the better, no doubt bolstered by stricter and more enforceable rules for public behavior. Smoking has decreased, and will soon be banned in restaurants, cafes, and other pub-lic places. Drivers are driving better and more politely. There are regular pedestrian crossings, which work; drivers will stop to let you cross, even when the crosswalk is not marked. Most astonishing of all, Russian drivers will sometimes motion for you to cross when you make eye contact.

In Soviet times, Russians were generous and hospitable at home, but

absolutely stone-faced on the streets, where Hobbes’s state of nature ruled.

A large and growing workforce of Central Asian immigrants does the work that most Muscovites shun, including keeping the streets and side-walks clean, dealing with the city’s garbage and (now) recycling bins, and handling a lot of the lower-end service positions. Moscow’s mayor, Sergei Sobyanin, has estimated that about two million illegal immi-grants are living in the capital, out of a total population of maybe fifteen million. Others suggest these estimates are exaggerated. The reported unemployment rate for Russians is low, 4.9 percent, the lowest, accord-ing to the Financial Times, in a decade. Foreigners are increasingly able to find unskilled construction jobs and other blue-collar work. Many Central Asians, in particular, work in restaurants and cafes; others sell vegetables and fruit in the market stands and low-cost household goods on street corners. There are complaints and worries about the immi-grant population, just as in comparable European capitals. Periodically, there are confrontations with right-wing Russian thugs and violence

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against the “guest workers.” But, on the whole, the newly arrived Cen-tral Asians—some know Russian, many do not—have integrated fairly well into the economic life of the city.

Other aspects of contemporary Moscow make it seem like a regular European capital. There is a lot of good music—opera, symphony, bal-let—that remains, despite the higher prices, within the means of enough people to fill the concert halls. The museums remain of high quality and easy accessibility. There are fancy shopping centers and low-priced depart-ment stores. Numerous dachas for the wealthy are being built or reno-vated outside the city (some of them resembling small palaces); nearly half the city’s residents have access to some form of dacha during the heat and humidity of summer. Younger people appear relaxed and cool. Young couples are out on the street with their children, something rarely seen even a decade ago. Moscow’s birthrate, in fact, has gone up, defying expec-tations. Apocalyptic predictions of a decade ago about the rapidly declin-ing Russian birthrate and the high death rate, in particular for men, now seem wildly pessimistic. The rising birthrate indicates Russians’ growing confidence in the world around them and their ability to support a family. At work, too, Russians seem more at ease with themselves and their cir-cumstances. All my friends were more at one with the lives they were liv-ing—if not at all with the political system dominating the country—than at any time since the fall of communism.

A MORE PROMIS ING ECONOMYMany of the changes come from the development of a real middle class of Muscovites who work in business, education, communications, and even government, who regularly travel abroad, more than ever in the Rus-sian past, and have developed the social and cultural tastes of cosmopoli-tan European urban dwellers. The garishly dressed men and women of the early post-communist gold rush days have dwindled in comparison to the tastefully attired modern Muscovites, though there are still plenty of diamond-bedecked, mannequin-like blondes and Al Capone doubles hopping out of their chauffeur-driven cars into chic restaurants and night-clubs. The cars still seem bigger and more expensive than need be. There is a stunning attachment to shining new Mercedes-Benzes and BMWs,


especially black SUVs. (BMW sales rose at least 30 percent in 2012.) But projected new taxes on bigger vehicles, the planned installation of park-ing meters, and devastating traffic, will, I suspect, change this automobile landscape as well.

Drivers are driving better and more politely. They will even stop to let you

cross, crosswalk or not.

The sense of financial well-being among middle-class Russians may well derive ultimately from petroleum, natural gas, and other resource commodities, but they nevertheless manage to have well-paying jobs in fairly normal institutions. Of course the government, broadly defined, is a huge employer in Moscow. Working in the bureaucracy pays well, and it offers contacts and networks for increasing one’s income in a variety of illegal and semilegal ways. There is still an awful lot of corruption, which everyone recognizes, at least publicly, is hurting business and investment. But it is also true that there is a remarkable growth of well-paying jobs in finance, industry, trade, government, and service industries. This cannot be said for many depressed regions outside the capital.

For the moment there seems to be relative stability in the Russian econ-omy. One cannot say it is going gangbusters, but at roughly 3.5 percent to 4 percent GDP growth and with some problems with inflation, Russia’s economic situation can be seen as comparatively robust when compared with its European counterparts.

Now that Russia belongs to the World Trade Organization, Moscow will become even more like other European capitals. There will be more European food products and problems for Russia’s agricultural econo-my. Buying European cars will be easier and the Russian automobile industry will face new competition, though tariff barriers do not seem to have hindered Muscovites from buying from the West in any case. Most observers predict that joining the WTO will contribute to a mod-est growth in trade and commerce that will help attract investment and may even bolster the government’s reform efforts in commercial and financial law. In this sense, the middle class will benefit; its consumer


habits—Muscovites rarely save—will continue to be stimulated by new services and products from abroad.

THE REAL ROADBLOCK: THE POL IT ICAL SYSTEMThe big problem for members of this expanding middle class is the politi-cal system. They displayed their expectations in the protests last winter that drew tens of thousands of mostly well-dressed and well-heeled Mus-covites after the “re-election” of Vladimir Putin to the presidency. Just as their expectations for urban amenities and their tastes in food, clothes, music, and cars have been shaped by European norms and trends, so too do they expect a political system that allows them to speak, write, read, and vote like their European counterparts, in a democratic and parlia-mentary system. Instead they have Putin, a combination of would-be dic-tator and front man for a complex, interconnected network of political and economic oligarchs, whom some have now labeled a new Politburo. The Muscovite middle class, at least a good part of it, is embarrassed by the political system and upset with the murders of opposition journalists, which seem to have abated for the time being, and repeated examples of political repression, which have not.

Many of the changes come from development of a real middle class of

Muscovites who work in business, education, communications, and

government.

Putin appears on television almost every night in somewhat different, highly crafted poses: hectoring politicians to do a better job of provid-ing flood relief, enjoining athletes to do their best, mixing with common folk on the street, discussing issues of administrative responsibility with governors or bureaucrats. Unlike the Soviet dictators of the past, Putin is seen very close up. His every gesture, expression, and facial movement seems scripted. His speech is both down to earth and determined, and his control of facts, problems, and events appears real. He’s not the “czar/father” of the imperial period, nor is he Stalin. He is more accessible than either, and his disciplined and forceful mien seems to appeal to Russians,


and he knows it. Every poll indicates a high approval rating for Putin, who always outpolls his present prime minister and former president, Dmitry Medvedev, and any potential opposition leader. The demonstrations against Putin and his dictatorial regime have been serious and important, but Muscovite middle-class liberals cannot compete with his appeal to the population as a whole. Not only that, there seems to be no legitimate alternative, either within the government clique or without.

People in Moscow expect a political system that allows them to speak,

write, read, and vote like their European counterparts.

Even the “Pussy Riot” affair indicated that Moscow has become almost a normal capital. The punk-rock feminist group itself could fit in easily in Berlin, Milan, Paris, or Liverpool. Its staged protest in a church, which led to three convictions (one later reduced), could have happened anywhere in Europe. What was unusual, and distinctly not normal for the conti-nent, were the harsh conditions of the trial and detainment and the outra-geous sentences to a penal colony, a punishment clearly influenced by the Soviet-style norms of the court, the Orthodox Church, and Putin and his government. Elsewhere in Europe, a night in jail and a fine might have been expected. Muscovites outraged by the sentence were those who feared that their increasingly good lives could be violated by a government insist-ing on dated judicial norms and behavior. It hurts them to realize that they still live under a form of dictatorship, whose attachment to the rule of law is tenuous and unpredictable.

Special to the Hoover Digest.

Available from the Hoover Press is Boris Pasternak:

Family Correspondence, 1921–1960, translated by

Nicolas Pasternak Slater and edited by Maya Slater. To



AUTOCRACY

Hale, or FarewellA despot’s health is a serious matter. By Bruce Bueno de Mesquita

and Alastair Smith.

No one likes to go to the doctor. But for a political leader, even the news of such a trip can sound the death knell for his political career. It is small wonder therefore that a leader’s health is the most important state secret in many countries.

Examples of this type of secrecy abound. Not long ago, the news media were riveted by the mystery of the whereabouts of Xi Jinping, on the eve of his ascension to the post of China’s paramount leader. Xi disappeared from public view for weeks while undergoing treatment for a condition that may have been either back pain or heart troubles, depending on which reports you believe. Last fall in Venezuela, voters re-elected Presi-dent Hugo Chávez, who had been less than forthcoming about his can-cer diagnosis, claiming a number of dubious miraculous recoveries while periodically jetting off to Cuba for treatment. In Zimbabwe, rumors of eighty-eight-year-old President Robert Mugabe’s death turned out to be false in April, but citizens were probably not reassured by the govern-ment’s ham-handed efforts at message control.

Last year also witnessed the deaths in office of four African leaders—in Ethiopia, Ghana, Guinea-Bissau, and Malawi—all of whom had sought

Bruce Bueno de Mesquita is a senior fellow at the Hoover Institution as well as the Julius Silver Professor of Politics at New York University, where he directs the Alexander Hamilton Center for Political Economy. alastair sMith is a pro-fessor of politics at NYU. They are the co-authors of The Dictator’s Handbook:

Why Bad Behavior Is Almost Always Good Politics (PublicAffairs, 2011).


treatment abroad and kept the state of their health a carefully guarded state secret before their deaths. Although the recently deceased leaders varied in age from a quite young fifty-seven to a moderately elderly seventy-eight, careful studies show that leaders, especially in undemo-cratic countries, outlive the life expectancy in their countries by a sig-nificant margin. Those national life expectancies, however, are already short because of the miserable way those leaders rule. Presumably, all leaders could have access to the best medical care, but getting that care can be a kiss of political death.

For heads of state, there’s also an inherent tension between maintain-ing good health and revealing to cronies or the public that all is not well. The difficulty, especially in autocratic systems, is that medical care can be sought only at the risk of losing one’s hold on power—a risk worth taking only in extremis. After all, “loyal” backers—even family members—remain loyal only as long as their leader can be expected to continue to deliver them power and money. Once the grim facts come to light, the inner circle begins to shop around, looking to curry favor with a likely successor. No wonder that when medical care is needed, country leaders like Mugabe or the late Meles Zenawi of Ethiopia tend to seek it in a foreign hospital, usually in a country with strict respect for patient-client confidentiality. Doctors at home are too risky—they might talk to their buddies and spread the word that their leader is gravely ill, thereby hastening the incumbent’s political, if not physical, demise. Terminal illness or even extreme old age, which is, after all, the most terminal of illnesses, are excellent indicators that the beloved leader won’t be reliable for long.

NO COUNTRY FOR DY ING MENPolitics, especially autocratic politics, requires symbiosis between leader and supporters. In return for power, perks, benefits, and privileges, a leader’s backers support him over rivals and, when necessary, suppress the people, bash in the heads of opponents real and imagined, and make life miserable for all but the elect (but not elected) few. These tasks can be unpleasant, which is why a successful leader rewards his supporters well and why corruption and graft are so prevalent in autocracies.


This symbiosis fails once either side of the relationship can no longer sustain the other. If the leader fails to take care of his loyalists, then he can expect they will plot to overthrow him. If backers won’t suppress the people on behalf of the leader, then protest and revolution threaten the entire regime. Supporters know that their leader, no matter how gener-ous and beloved, simply cannot deliver from beyond the grave. Once their privileges and perks are in jeopardy, the inner circle looks for its next meal ticket. When the symbiosis fails, upheaval is likely and, under the right circumstances, can even have a plus side for society. After all, even many normally nasty elites may be reluctant to turn their guns on the people when the new, revolutionary leadership may be drawn from those very people.

It can therefore be wise to hedge one’s bets, just as the military did in Egypt during the 2011 uprising. Seeing that President Hosni Mubarak was very old, rumored to be seriously ill, and coming up short on his command over the amount of continued U.S. foreign aid, the Egyptian army chose to shop around to see whom among likely successors it could control. It’s far from clear whether this strategy will work out for Egypt’s generals.

Leaders in undemocratic countries already outlive their fellow citizens’

life expectancy by a significant margin.

Contrary to popular opinion, revolutions are more about elite choices than they are about the people. In autocratic societies, the people’s lot is usually miserable, so the desire for revolutionary change is always there. It is an opportunity to overwhelm the state that is generally lacking. As long as the leader’s coalition of critical support from the military, senior civil service, and security forces remains cohesive, dissent is met with violence, and only the courageous or foolish few protest.

Opportunity is most keenly seen when the people see that the incum-bent is knocking on death’s door, and when they believe that those who keep the boss in office see this too.

People protest, and revolutions succeed, when those who can stop such popular uprisings choose not to. The shortened time horizon induced by

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a leader’s ill health increases the chance that regime supporters will remain passive in the face of protest. And the heightened chance of success is just what the people need to make the risk of taking to the streets worthwhile.

The Arab spring is a case in point. Although Mohamed Bouazizi’s death from self-immolation on January 4, 2011, served as a focal point for the disaffected people of Tunisia, in retrospect it is unlikely that revolution would have been postponed much longer. President Zine el-Abidine Ben Ali was already rumored to be gravely ill (and, according to some reports, went into a coma after suffering a stroke in Saudi Arabia several weeks after stepping down). The Tunisian economy was in bad shape, increasing his vulnerability. Elsewhere in the Arab world, the wounding of Yemeni President Ali Abdullah Saleh by anti-government rebels in June 2011 and his medical evacuation to Saudi Arabia were a critical turning point in his fall from office.

Venezuelan leader Hugo Chávez, having survived both cancer and a tough re-election fight,

pledges in October to be a “better president” and work with the opposition. After fourteen

years in power, Chávez has had to confront simmering discontent with his socialist revolu-

tion. Among his responses has been to downplay his medical condition.


Libya’s Muammar Gadhafi appears to have been an exception. There are no indications that Gadhafi was ill, and many of his (extremely well-paid) supporters in fact remained loyal to the very end. NATO had to use airstrikes to prevent those loyalists from crushing the rebellion.

STRONGMEN DON ’T GET S ICKThe importance of a leader’s health to the success of revolution is noth-ing new. In 1997, Laurent Kabila’s rebel forces swept across Zaire, now the Democratic Republic of the Congo, when it became evident that Mobutu Sese Seko was gravely ill. Mobutu had made the mistake of openly seeking treatment in Europe and rallying the people to celebrate his return from treatment (medical care was not up to snuff in Zaire). Ferdinand Marcos faced a similar fate in the Philippines. As his lupus progressed, his regime loyalists began to desert him, and he fell from power in 1986, dying in exile in Hawaii three years later. This too was the story of Shah Mohammed Reza Pahlavi of Iran. As the New York Times reported on May 17, 1981, well after his fall, “There is, for instance, a hint from his cancer specialist at New York Hospital that if the shah had been treated like an ordinary patient with the same set of physicians from the onset of his illness, he might be alive today.”

If the autocrat fails to take care of his loyalists, he can expect they will

plot to overthrow him.

But that’s not what the shah did, of course. His problem, like that of so many autocrats who must keep their loyalists content, was simple and lethal: if the extent of his cancer were known, then his supporters would almost certainly have deserted him and his overseas support could have dried up—a death sentence. Yet, without proper treatment his illness would—and eventually did—kill him. His was a sad story of a desperately sick man smuggling French doctors into Iran and sneaking into clinics under false names. But, as eventually happened, knowledge of his impend-ing demise unraveled his rule. The Iranian people took to the streets, and the Ayatollah Ruhollah Khomeini, long in exile, returned to lead an upris-ing and install an Islamic regime in 1979. Much, perhaps most, of the shah’s previously loyal army stood aside, putting up little resistance.


Leaders need to appear virile and strong even in a democracy. U.S. Presi-dent Woodrow Wilson’s inner circle kept the gravity of his serious respiratory problems secret during World War I; Franklin D. Roosevelt hid his paralysis; John F. Kennedy hid his dependence on corticosteroids. In less-democratic settings, the urgency of appearing in robust health is even more vital.

Anyone of a certain age, reflecting on Xi’s recent disappearance and return to public view in China, cannot help but remember the long period of uncertainty in China in the 1990s over whether Deng Xiaoping was alive or dead or, for that matter, in earlier years whether Mao Zedong had already expired or still clung to life. Party and succession stability in China, as in so many autocracies, requires at least a modicum of confidence that the king is not yet dead before the new king is designated the heir apparent.

People protest, and revolutions succeed, when those who can stop such

uprisings choose not to.

For less democratic leaders, who seek to retain power for much lon-ger periods, the appearance of good health can be even more important. Thus, in addition to a massive dose of machismo, there is political logic to Russian President Vladimir Putin’s antics. He is frequently seen bare-chested, hunting in forests, flying ultralight planes over the Arctic, and undertaking other physically strenuous acts. Such displays of virility are also a symbol of national strength for voters who recall the succession of elderly premiers who died in office during the waning years of the Soviet Union or the times of economic distress during the 1990s when the over-weight, alcoholic Boris Yeltsin was in charge.

Leaders, keenly aware of the immediate risks they face when rumored to be ill, handle health crises in different ways. Theoretically, they could use the opportunity of their impending passing to improve their society and leave democratization as their legacy, but unfortunately, we are at a loss to identify a single example. They can, as noted, simply engage in secrecy. And when that fails, denial is common.

However, the combination of the Internet, mobile technologies, and advances in remote medical-diagnosis technology make it increasingly dif-ficult for leaders to hide their health conditions. There is, for instance,


an entire blog dedicated to tracking Chávez’s cancer, where alongside his dubious claims to have beaten the disease—“I thank God for allowing me to overcome difficulties, especially health, giving me life and health to be with you in this whole campaign”—are detailed discussions of every statement, treatment option, comings and goings of his doctors, change in schedule, and photograph from the campaign trail. These might appear like minutiae, but in fact hints about the president’s prognosis are politi-cally far more important than his policy statements.

When secrecy and denial are no longer options, dynastic succession offers leaders a way to retain political loyalty. Settling the succession ques-tion ahead of time ensures continuity in the symbiosis between leaders and those who keep them in power. Backers are more vested in keeping a decrepit incumbent when they know their wealth and privileges are likely to continue even after the leader’s death. The Kim family in North Korea, Hafez al-Assad in Syria, and Fidel Castro in Cuba all used this tactic to successfully mitigate the political risks induced by declining health.

That is almost certainly why today we see the growing emergence of dynastic dictatorship. The Kim Jong Ils of the world knew where the money was and probably were happy to tell their trusted children. In this era of medical miracles, it is remarkable to think that political dynasties are making a comeback—but it’s surely no coincidence.

Reprinted by permission of Foreign Policy (www.foreignpolicy.com). © 2012 Slate Group LLC. All rights reserved.

New from the Hoover Press is Freedom Betrayed:

Herbert Hoover’s Secret History of the Second World

War and Its Aftermath, edited by George H. Nash. To



IMMIGRAT ION

Should Immigrants Pay at the Gate?Countries have many arbitrary ways of deciding who gets in. Here’s

one idea that actually makes sense. By Gary S. Becker.

Hoover senior fellow Gary S. Becker presented what he called a “radical solu-tion” to the challenge of immigration in a lecture at the Institute of Economic Affairs (London). Here are highlights of that talk:

Some of my libertarian friends—with whom I agree on many policies—have suggested that the United States go back to its policy in the nine-teenth century and allow unlimited immigration. They point to the great benefits this country has obtained from immigrants. I strongly believe that immigrants have been a huge source of value for most countries, especially the United States. My wife is an immigrant, my parents were immigrants, and there’s hardly an American, if you go back only a few generations, who does not have immigrant ancestors.

But the world is very different now, mainly because of the increased role of government and the welfare state. Some, probably many, people would be willing to move to a rich country, if they would receive many benefits, such as welfare. Briefly, the welfare state is a major reason

Gary S. Becker is the Rose-Marie and Jack R. Anderson Senior Fellow at the Hoover Institution and a member of Hoover’s Working Group on Economic Policy and Shultz-Stephenson Task Force on Energy Policy. He is also the Uni-versity Professor of Economics and Sociology at the University of Chicago. He was awarded the Nobel Memorial Prize in Economic Sciences in 1992.


why a return to the unlimited immigration policies of the past would be unwise.

One might try to impose rules that limit how soon immigrants can collect welfare benefits, but they would be very hard politically to imple-ment. In addition, legal immigrants become voters and influence the out-comes of elections, so there is much concern about the political affiliations of immigrants and how they would influence government spending and vote on various policies.

Immigrants who expect to stay permanently would express their

motivation through a willingness to pay.

If it is unwise to return to a policy of unlimited immigration, what should be done about reforming immigration policy? The United States’ policy toward skilled immigration illustrates the difficulties with the pres-ent approach. For example, the United States has H1B immigrants who come in on special visas as skilled workers and stay for up to six years. Congress has pushed back the quota so that only about seventy thousand H1B immigrants can enter every year. The quota is usually filled by the end of January. Many more skilled individuals want to immigrate to the United States under this and other programs, but they cannot. The cur-rent approach does not seem to be the right one.

A S IMPLE PRICEI have a very simple proposal. You might say it is naively simple. Govern-ments should sell the right to immigrate. The government should set a price each year, and anyone who pays that price would be accepted, aside from obvious cases such as potential terrorists, criminals, and people who are very sick and would be a big burden on the health system. But aside from these cases, this proposal allows anybody to immigrate who could make the payments.

U.S. policy in the nineteenth century permitted anybody to immigrate at a zero price. But no country has ever adopted a system that allows everyone to immigrate if they can pay a positive price. I will try to convince you that this proposal makes a lot of sense—that it meets the objections not only of


individuals opposed to admitting large numbers of immigrants, but also of those like myself who would like to see more immigration. This idea is not perfect, but it would be a major improvement over the present system.

I will come to the size of the immigration fee a little later. First, let us see how a fee would shape the immigration pool in beneficial ways. For illustration, we can pick a number: $50,000 for the United States, or its equivalent in other countries. First, who would be most willing to pay? The list obviously would include more skilled individuals because the gain to skilled people from moving to a rich country is substantially greater than the gain to the less skilled. Skilled workers coming from India or China to the United States boost their incomes by at least $20,000 to $30,000. For example, a graduate from Indian Institutes of Technolo-gy—very fine schools in which to train as engineers—would increase their incomes by more than $30,000 a year by coming to the United States. In this case, a $50,000 fee to enter would be earned very rapidly, typically within two years.

It’s not realistic—or even desirable—to go back to unlimited immigration,

however much immigrants have contributed to society.

Young people, too, would be attracted by a fee system since they antici-pate collecting higher earnings over many years. Many young people have lots of good ideas, are energetic, and want their families to do better in the future.

A country wants immigrants who make a commitment to their new country. Some immigrants will be disappointed; they will go back. But a country hopes that those who stay, raise their children, and otherwise settle down will commit to the land they enter, even when they still pre-serve some of their original culture. Immigrants who expect to stay per-manently would be more willing to pay a sizable fee than those who want to come for a short time.

A FREE R IDE? FAR FROM ITOpponents often claim that immigrants get a free ride. They come in, so the argument goes, make use of free health services, get an education, and


cash in on other benefits. The system I propose eliminates any chance of a free ride: immigrants pay for the right to enter and add to tax revenue. This is no small consideration in the United States, Britain, and many other countries, where the financial crisis has made raising government revenue increasingly important. Many countries are piling up large defi-cits. Immigrants under my proposed system not only would pay to get in but would also generally work. As I have shown, they would be younger and more skilled than much of the workforce, thus making only minimal use of welfare benefits, and even those who did use these benefits would have contributed toward their cost. Seeing immigrants pay their way will not necessarily eliminate all opposition to immigration, but it will reduce the hostility.

What about illegal immigration? Immigrants come illegally when they cannot enter legally. Some people living in a country unlawfully will rea-son that if they legalize their status by paying the entry fee, their oppor-tunities will get much better. As illegal entrants, they are limited to low-paying, low-skilled, off-the-books jobs and are mired in the underground economy. Not all illegal immigrants in the United States would pay the fee, of course, but those who want to make a long-term commitment to this country, and create better opportunities for themselves and their families, are likely to do so.

Considering the boost in wages for skilled immigrants, even a $50,000

price to enter the country could be repaid rapidly.

Naturally, readers will worry about poor potential immigrants who cannot afford the entrance fee. I do not want to exclude these individuals, particularly poor, ambitious immigrants trying to help not only them-selves but their children. They are willing to work hard and save a lot because they take the long view. You want to encourage them to immi-grate; it would surely be a foolish policy to bar the door to them.

That means one has to think creatively about how to help poorer aspi-rants finance an immigration fee. One approach is similar to student loans. An immigration loan program would be a way to enable poor-er immigrants to invest in human capital by moving to a country that


offers them greater opportunities than they had before. Immigrants might finance their loans by signing contracts with companies that pay the fees directly for them. In return, an immigrant could commit to working for the company for a certain period. If an immigrant decides to move to another company, he would have to repay the loan (or contract with the new company to repay the loan).

Such systems already help immigrants finance their education. Stu-dents from Brazil, for example, study at American universities. Their gov-ernment has a program under which it finances a student’s education, say in economics at Chicago. The student has to agree to return to Brazil and work for a number of years in certain fields (for example, at a central bank or university). Students who return but do not want to go into these fields have the option of repaying the loans.

HOW WOULD IT WORK?First, of course, one has to determine a price, which is mainly dependent on two variables: how many immigrants a country wants to admit (that would be a decision for voters) and how the number of applicants would vary with price. If the number of applicants did not vary much with price, a country would get more revenue and not many fewer applicants by set-ting a high price. If the number of applicants varied a lot with price, a country would have to take that into account.

I have made some rough calculations for the United States, which has been admitting about a million legal immigrants a year along with an unknown number of illegal immigrants. What equilibrium price would lead to one million immigrants wanting to come here legally? At a zero price, many more than one million would want to immigrate—probably three million or more. That is a measure of the excess demand to immi-grate. Let us suppose that the previously suggested price of $50,000 would attract one million immigrants. Collecting that fee would yield $50 billion a year in government revenue—not enough to eliminate the federal deficit, but a significant sum. At a 5 percent interest rate, this annual revenue has a present value of roughly $1 trillion, the kind of money that might convince some critics that immigration would not be such a bad idea.


Perhaps the equilibrium fee should be higher. As I mentioned before, many immigrants boost their earnings substantially by coming to such countries like the United States, compared with prevailing wages in India, China, Pakistan, or elsewhere. Those with high skills might increase their incomes by $30,000 a year or more. These immigrants could borrow money and pay off their loans quickly, with money left over.

People with lower skills would gain much less, but even an unskilled worker can make much higher wages in the Unites States than, say, in Pak-istan or Mexico. The gains would amount to perhaps $5,000 to $10,000 a year, so that even an unskilled worker could pay off his or her loans reasonably quickly.

Poorer immigrants are willing to work hard and save a lot because they

take the long view. You want to encourage such people.

My guess is that more than one million immigrants would be willing to come each year to the United States at a price of $50,000, if they can get help in financing the entrance fee. Yet, although the revenue potential is great, the main purpose of the proposal is not simply to raise revenue. The proposal provides a criterion by which a country can select immigrants who offer the greatest advantages, such as more skilled, younger, and com-mitted immigrants.

Many details would have to be worked out. Some people have argued that companies should buy the right to immigrate for their employees. But it is better to let individuals buy the right to immigrate than to put that in the hands of companies. One also has to take into account the immigrants who come with children and spouses, and how to set prices for families. In addition, the United States might want to establish differ-ent fees for different skill levels.

REMEMBER THE MARKETMen and women in many parts of the poorer world want to immigrate to rich countries, particularly the United States, the United Kingdom, Ger-many, and Switzerland. Many arbitrary rules are used to limit the number allowed in, leading to excess demand to immigrate.


When companies have excess demand for their products (for example, when fewer cars are offered for sale than people want to buy), companies raise the price they charge. Conversely, as in recent years, amid a greater supply than demand, the car companies have lowered their prices, offering zero percent financing and cash discounts. This is how markets operate. Think of immigration as a market.

Based on the market concept, the price to immigrate to many rich countries is too low (zero usually), so governments should try to find a price that equilibrates the desired number of immigrants and the number who want to enter. Doing this, countries will get more of the type of immigrant they hope to attract—and keep.


Available from the Hoover Press is The Essence

of Becker, edited by Ramon Febrero and Pedro S.

Schwartz. To order, call 800.935.2882 or visit www.

hooverpress.org.


THE ENV IRONMENT

The Fires Next TimeThe latest fire season was brutal. By thwarting forest-thinning

programs, environmentalists are only helping fires get the upper

hand. By Terry L. Anderson.

Now that the wildfires that burned millions of acres in the West last sea-son have given way to winter snows, environmentalists undoubtedly will blame climate change. They might look in the mirror instead.

Environmental laws since the 1970s require public input into federal land-use decisions including logging on national forests. This has led to lawsuits challenging efforts by the U.S. Forest Service to prevent forest fires by thinning out trees (most of which are dead or diseased) and brush by machines and carefully controlled burns. This dead wood is the fuel that feeds catastrophic wildfires.

Removing the fuel reduces the likelihood of fires, and if fires do break out, makes them easier to fight. Meanwhile, the suppression of fires costs the federal government nearly $2.5 billion annually.

A fuels-management project to log and thin 4,800 acres in the Boze-man, Montana, watershed exemplifies the problem. This project has been held up since 2010 on grounds that the environmental-impact assessment did not adequately protect the habitat of the Canadian lynx and the griz-zly bear, both listed as threatened species.

Terry L. Anderson is the John and Jean De Nault Senior Fellow at the Hoover Institution, co-chair of the Hoover Institution’s John and Jean De Nault Task Force on Property Rights, Freedom, and Prosperity, and executive director of the Property and Environment Research Center (PERC) in Bozeman, Montana.


Last year a wildfire threatened that watershed, burning over 10,000 acres and costing more than $2 million to fight. As one firefighter put it, “fire is the environmentalist’s way of thinning the forests.”

Jack Ward Thomas, who was President Clinton’s Forest Service chief, noted a few years ago that court battles have tied the agency in a “Gordian knot” creating a “vicious cycle of increasing costs, time delays, and inabil-ity to carry out management actions.” As a result, most national forests are a tinderbox of old-growth trees ravaged by disease and insects.

Making matters worse, dense conifer canopies intercept rain and snow, with 30 percent lost to evaporation instead of soaking into the ground or flowing into rivers. When a little rain fell on the Bozeman fire on August 31, the Forest Service reported that it was caught in the treetops and quickly evaporated. An estimate by Wesleyan University’s Helen Poulos and James Workman for the Sierra Nevada in California puts the annual water loss due to evaporation at more than five trillion gallons. That is enough to supply Los Angeles for twenty-six years.

Forest fires also contribute significantly to atmospheric carbon. A 2007 study by the federally funded National Center for Atmospheric Research found that “large wildfires in the Western National United States can pump as much carbon dioxide into the atmosphere in just a few weeks as cars do in those areas in an entire year.” Scientists at Stanford University and the National Snow and Ice Data Center believe that carbon soot from wildfires is adding to the greenhouse effect and contributed to last sum-mer’s unusual thaw in the Arctic and Greenland.

Cutting the Gordian knot is necessary if the Forest Service is to prop-erly manage national forest assets and reduce wildfires. A start would be to require environmental groups to post a sizable bond when they file lawsuits. If the area burns while the suit is in the courts, the bond would be forfeited to defray firefighting costs.

This would allow public involvement through judicial review but hold opponents accountable. This might lead to a more responsible form of environmentalism.



INTERV IEW

Will the Empires Strike Back?Liberal democracy took centuries to establish. Without American

leadership it could collapse, says Hoover fellow Charles Hill. By

Robert L. Pollock.

Yale Professor Charles Hill is often called a conservative. But he is one of the foremost students and advocates of what he calls the liberal (“in the finest sense of the word”) world order. And he is worried that Americans increasingly don’t understand how special the modern era has been or their own crucial role in developing and securing it.

To some, the Obama administration’s desire to “lead from behind” and seek United Nations approval for actions abroad represented an appropri-ate retreat to a more humble American posture. Hill, by contrast, sees the possible end of a great era of human rights and democracy promotion the likes of which the planet has never seen.

Our world has “been increasingly tolerant and increasingly trying to eradicate racism and increasingly trying to expand freedom. And it can come to an end,” he says.

What might replace it? “Spheres of influence.” Or to use a more archaic term, “empire.”

Charles hill is a research fellow at the Hoover Institution and a member of Hoover’s Herbert and Jane Dwight Working Group on Islamism and the International Order. He is the Brady-Johnson Distinguished Fellow in Grand Strategy, the senior lecturer in international studies, and the senior lecturer in humanities at Yale University. robert l. PolloCk is a member of the editorial board of the Wall Street Journal.


Hill is the all-too-rare professor with an extensive background outside academia. He made his career in the U.S. Foreign Service working on China and the Middle East, among other issues. He has advised secre-taries of state Henry Kissinger and George Shultz and served as a policy consultant to U.N. secretary-general Boutros Boutros-Ghali. His ability to combine real-world experience with appreciation of the intellectual currents animating history—Dickens comes up during our discussion of the anti-slavery movement in nineteenth-century Britain—has made his courses some of the most popular at Yale.

So what makes our era unique and valuable? And how did we get here? To understand the road we’ve traveled, we have to go back—a long way.

“The way the world through almost all of history has been ordered is through empires,” Hill says. “The empire was the normal unit of rule. So it was the Chinese empire, the Mughal empire, the Persian empire, and the Roman empire, the Mayan empire.”

What changed this was the Thirty Years War in the seventeenth century. “That was a war between the Holy Roman Empire and states, and states were new. They had come forward in northern Italy in the Renaissance and now they were taking hold in what we think of as a state-sized entity. The Netherlands and Sweden and France were among these. . . . France was both an empire and a state—and the key was when [Cardinal] Richelieu took France to the side of the states, which was shocking because France was Catholic and the empire was Catholic and the states were Protestant.”

Our modern concept that war should be governed by law dates from the era. “It was so awful that it produced Grotius,” the Dutch philosopher of international law, says Hill.

“When the states themselves don’t want to get involved and hand

something over to the U.N., then it always goes wrong.”

It also produced the Treaty of Westphalia. “What they did in creat-ing something to prevent another Thirty Years War, they put in place what would develop into the international state system. . . . This is a work of genius, probably inadvertent in some sense,” Hill says. “To be a good member of the international club you had to follow minimal proce-


dures. . . . You could be Catholic or Protestant, but you had to be a state. So the state then replaces the empire as the fundamental unit of world affairs.”

The next major event is the Congress of Vienna in 1814, when the powers that defeated Napoleon Bonaparte put their own stamp on the system. Meanwhile, the procedural norms for membership in the inter-national club—such as hosting and protecting ambassadors—are being supplemented by more substantive and moral-sounding requirements.

“The way the world through almost all of history has been ordered is

through empires. The empire was the normal unit of rule.”

“The Ottomans are an empire and there’s kind of a back-and-forth across the nineteenth century—it’s kind of a precursor to the Turkish thing of the twentieth century—of European statesmen saying, well, yeah, you can come into it, but you have polygamy, you have slavery, so you can’t be all the way in,” Hill says.

“My view is that every major modern war has been waged against this international system. That is, the empire strikes back. World War I is a war of empires which comes to its culmination point when a state gets into it. That’s the United States.” And then we get something very interesting added: “That’s Woodrow Wilson and [the promotion of ] democracy.”

“World War II, and I think this is uncomprehended, although it’s per-fectly clear . . . World War II is a war of empires against the state system. It’s Hitler’s Third Reich. It’s Imperial Japan.” The goal of the Axis “is to establish an empire. The Nazi empire would be Europe going eastward into the Slavic lands. The Japanese empire is the Greater East Asia Co-Prosperity Sphere, as they called it.”

Is the story uncomplicated? Of course not. One of the most important developments was the rise of the British navy—of the “empire” on which “the sun never set”—in the mid-nineteenth century. But that so-called empire arguably was the global rules-based system, committed to abolish-ing slavery and to free trade and free movement on the seas.

So too for the United States, as it assumed responsibility for protect-ing the air and sea-lanes while the British pulled back after World War II.


“The grand strategy of the U.S. since Harry Truman,” says Hill, has been the establishment of a rules-based system built on institutions like the United Nations and NATO. It’s a system designed to protect the rights of states to Wilsonian “self-determination,” not to subject them to the will of the strongest.

Hill is neither a U.N.-basher nor romantic about the institution. “The U.N. is a very useful organization. Its usefulness goes up or down” depending on “whether it is used within the boundaries it was designed to be used. . . . When the states themselves don’t want to get involved and hand something over to the U.N., then it always goes wrong.” He cites Bosnia, and now Syria, as examples.

“The European vision is we’re just going to be nice. . . . The Chinese view

is why should we not do what we want to do with these little people who

used to pay us tribute?”

On former secretary-general Kofi Annan’s recent mission to Syria: “What he’s doing is very detrimental. By its own design it can’t do any-thing but serve as a kind of rescue mission for Bashar Assad.” Annan “takes a U.N. approach to this that says what you want to do is stop the fighting. Well, if you stop the fighting you’re serving Assad.”

And then there is the misimpression that the United Nations is itself a global governing body, rather than an instrument of the state system.

“Model U.N. is very deleterious. It has been educating now two or more generations of high school and college students about a U.N. that isn’t really the U.N. Now when people talk about the U.N. they talk about something that doesn’t exist. They talk about it as though it’s a kind of untethered inter-national governing body. So you’ve got four thousand high-school students coming in for a weekend at Yale” and “you give them forty-five minutes for a little problem like Iran’s nuclear program, and they solve it! And they won-der why, if we solved it this morning before lunch, why can’t you solve it?”

The United Nations works, Hill says, when states take charge. “The point is not that the U.S. has to act unilaterally. . . . The point is, will the U.S. take a leading role?” he says. “The whole system has been defended


by the leadership of the U.S. and its allies. And the idea of open expression and open trade is the American way of seeing the world improve itself in the future. If America is not going to do that, nobody else is going to do it. And that’s what’s happening now.”

Hill sees two very different kinds of challenges to the liberal, state-based world order. One, the aggressive kind, is exemplified by China. The other, very different, can be seen in the European Union.

China has been a believer in the international system in recent decades, he says. It has seen advantages in the doctrine of state equality (which it uses to defend against human rights complaints) and has gained from the liberalization of trade. But as the United States pulls back—a shrinking Navy, President Obama’s foreign policy—things have started to change.

The Chinese are talking about how they used to approach the world in the dynastic era, says Hill. “ ‘[We] know that states are not equal and therefore we need a world order in which that reality is recognized.’ This meme is getting around in China and is what accounts for statements starting two years ago as regards the South China Sea to Vietnam or the Philippines, saying openly, ‘We are a big power and you’re not a big power, and therefore you should follow what we say.’ ”

The problem of the European Union, by contrast, is not the over-asser-tion of state power but the abdication of it without a suitable replacement. Of the current troubles in Europe, Hill says, “They took away the sover-eign powers of the states” but they “didn’t take enough power to Brussels to be able to run the continent under crisis situations.”

Why did Europe do that? Hill suggests that German and other war guilt was a big factor. “It so sickened the European intelligentsia” that “it was almost as though they said, yes, Europe has been the cause of all the world’s problems. Napoleon and colonialism and imperialism and Stalin and Marx and Lenin and Hitler and the Holocaust. But no more. Now we’re going to be the most moral people in the world. And the Americans who have been causing these problems along with us? They represent the past, we represent the future.”

In short, “the European vision is we’re just going to be nice” and “peo-ple will follow our lead. The Chinese view is why should we not do what we want to do with these little people who used to pay us tribute?”


What amazes Hill is how much of a break the Obama foreign policy represents compared with the bipartisan consensus stretching back to Harry Truman. That culminated in President George W. Bush’s second inaugural address, which Hill likens to an “emancipation proclamation for the world.” But, he says, “The democracy wave that began twenty years ago [at the end of the Cold War] is now turning backward.” Why? “The conduct of the Obama administration.”

So is the future still very much a choice, not an inevitability?“Absolutely. It’s been a choice,” he says. “I’m not so sure now that peo-

ple even see the choice because the mentalities are shifting. . . . What I’m beginning to see is that when you try to explain something like this to someone, they don’t have any idea what you’re talking about. They just don’t get it. But you wrecked your educational system the way we have. I’m talking about fourth grade, not higher education.”

He talks about his aunt, who was principal of a middle school. The library was “incredible.” Students read “Tacitus or Horace or Caesar’s Gal-lic Wars. Now we don’t teach that. And we don’t teach American history.”

I ask about other possible future spheres of influence if the internation-al system breaks down. If Europe doesn’t get its act together, “the sphere of influence is going to be run from Moscow,” Hill says. “There is an Indian sphere of influence” and “you look this way to Bali and this way to Zan-zibar.” Is Brazil a power of the future? “As they say, it always will be,” he chuckles, alluding to a well-known joke about the country.

But the message remains dead serious. The “battle” for liberal democracy and some semblance of international order “has been being won because the U.S. has been putting out the effort for it,” he says. “And now we’re not.”


Available from the Hoover Press is Trial of a Thousand

Years: World Order and Islamism, by Charles Hill. To



INTERV IEW

Talking SenseHoover fellow Thomas Sowell searches for tax sanity, self-responsibility,

and other rare commodities. An interview with Peter Robinson.

Peter Robinson, Uncommon Knowledge: The author of more than thirty books and of a syndicated column that appears in more than two hundred newspapers, Doctor Thomas Sowell holds degrees from Har-vard and the University of Chicago and has taught economics at insti-tutions including Cornell, Amherst, and UCLA. Now a fellow at the Hoover Institution, Doctor Sowell has just released a new offering, a revision of his famous essay, “Trickle Down” Theory and “Tax Cuts for the Rich.” Tom, welcome. Thomas Sowell: Thank you.Robinson: Last summer, you wrote: “This election is a test not just of the opposing candidates but of the voting public.” Explain yourself.Sowell: Well, it’s not just a question of what the administration is doing, but of the extent to which the public understands what they’re doing. Not only on particular issues like medical care, but about the whole way the country is governed. That is, if you can have a president who by executive order can nullify acts of Congress, can decide that some portions of the law that he likes will be enforced and other portions that he doesn’t like will not be enforced, then we no longer have separation of powers; we have the executive acting as the overruling power in the nation.

Thomas sowell is the Rose and Milton Friedman Senior Fellow on Public Policy at the Hoover Institution. PeTer robinson is the editor of the Hoover

Digest, the host of Uncommon Knowledge, and a research fellow at the Hoover Institution.


Robinson: So what you’re saying is that this election, more than most, represents a test of the democratic experiment: whether we can govern ourselves?Sowell: Absolutely. Will we have learned a lesson or will we turn off our common sense when there is the first woman president, the first Asian

president, the first Latin president? I mean, are we so hung up on symbolism that we don’t under-stand that being pres-ident of the United States means having

the lives of 300 million people in your hands and the future of people yet unborn? If we don’t understand that and we’re willing to vote for people on the basis of symbolism, then we’re lost.Robinson: This question is politically incorrect, which makes it all the more important to ask. Some component of the voting public voted for the president last time around as an act of national expiation. We were all proud—even those of us who supported the opponent—that in the Unit-ed States of America we finally have a black man as president. All right, that’s perfectly understandable. Four years later, what about the argument that it is so important for him to get this right, so important as a continu-ation of this national act of expiation and healing, that it’s only right to give him more slack then you might another president?Sowell: Affirmative action for presidents.Robinson: I suppose that’s what it amounts to. I guess you don’t buy that one?Sowell: Well, when you realize that the president has the lives of 300 million people in his hands, he has the future of Western civilization in his hands, he has the freedom that has been inherited over the centuries in his hands, and he’s already starting to dismantle that, I really don’t think this is a question of any individual, whoever is in the White House, being cut any slack. The last thing you need to do is cut slack to people who have power over 300 million other people.


TR ICKLE DOWN AND MILL IONAIRESRobinson: In “Trickle Down” Theory and “Tax Cuts for the Rich” you write: “At various times and places, particular individuals have argued that existing tax rates are so high that the government could collect more tax revenues if it lowered those tax rates.” Explain that argument.Sowell: The argument is based on the belief that people will change their behavior as you change the tax rates. Those on the left often act as if human beings are just like inert blocks of wood or like chess pieces that you can move around on the chessboard to put wherever you want to carry out some grand design. But, of course, people react to these things. Now it’s a theory, it’s a hypothesis, and you can test it; almost never is it tested. People instead say, “Oh you just want to give tax cuts to the rich.”Robinson: You write about various times and places people have advo-cated this, and you note several in particular. Republican Treasury Secre-tary Andrew Mellon argued for lower tax rates in the 1920s. Democratic President John Kennedy argued for tax cuts in the 1960s. Republican President Ronald Reagan lowered tax rates in the 1980s, and George W. Bush lowered tax rates again in the 2000s. Four experiments, as it were, one by a Democrat. In each of those cases, what was the effect on the economy?

“If you can have a president who by executive order can nullify acts of

Congress . . . then we no longer have separation of powers.”

Sowell: The effect on the economy was to increase the rate of growth, increase the revenue received by the government. The rich not only paid more taxes after the “tax cuts for the rich,” as they call it, they paid a higher percent-age of all taxes. This started back in the 1920s. In the early ’20s the tax rate on the top income was 73 percent. People making over $100,000 paid like 30 percent of all taxes. By the end of the decade, the tax rate on the top had been cut to 24 percent. People making over $100,000 now paid 65 percent of all taxes, and the reason is quite simple: when you have the tax rate at 73 percent, people simply don’t pay it. They put their money into tax-exempt securities and arrange their financial affairs. So what we’re really talking about is, do you want a symbolic higher tax rate on the high-income people to win votes


politically—which the rich themselves are not going to pay—or do you really want more tax revenue coming into the government?Robinson: So, the argument is an empirical matter because you can test it; it has been tested four different times and it always worked.Sowell: That’s right.

“Are we so hung up on symbolism that we don’t understand that being

president of the United States means having the lives of 300 million

people in your hands and the future of people yet unborn?”

Robinson: You quote such progressive heroes as Woodrow Wilson and John Maynard Keynes on the importance of keeping tax rates modest. The Keynes quotation is especially striking: “Taxation may be so high as to defeat its object . . . a reduction of taxation will run a better chance than an increase of balancing the budget.” Then you write, “At this point there was not yet a sharp . . . partisan difference on . . . lowering high tax rates.” When did this sharp partisan difference emerge? Sowell: In the second half of the twentieth century. I guess over time the Dem-ocrats moved further and further left, and so you had in the party only those people who thought it was wonderful to raise tax rates on high-income people.Robinson: President Obama in April: “During the Bush years, the wealthy got wealthier . . . but prosperity sure didn’t trickle down.” Again, in July: “We’ve tried it their way. It didn’t work. . . . We were told that . . . prosperity would start at the top and then trickle down.” Where does this phrase “trickle down” come from?Sowell: I don’t know. It goes as far back as the Roosevelt administration. This is a nonexistent theory that is constantly being attacked. Some years ago in my newspaper column I challenged anybody to cite any economist outside of an insane asylum who had ever made that argument. Nobody ever came up with a single person. I don’t know of anybody who has ever said it.Robinson: So “trickle down” is not an economic theory; it’s a political hack phrase?Sowell: It’s a caricature. In other words, the argument really is not that you should put more money in the hands of the wealthy. It’s also part of


a zero-sum conception of the economy. There’s a thought that if you cut the tax rates on the rich, then there will be less taxes for the government or you’ll have to raise the taxes on other people to make up the difference, or cut programs, and so forth. That I hear all the time, and it drives me crazy.Robinson: So what about this notion that George W. Bush cut taxes on the rich, and if he had not done that, the budget would be much closer to balanced? He was just giving it away, it was pointless?Sowell: In my paper I point out where the New York Times itself says there’s been an unexpectedly large increase in tax revenues from the wealthy and from corporations, which has reduced the projected budget deficit. Yes, expectations are in the eyes of the beholder. Unexpected by the New York Times, but that’s exactly what people have been expecting for three-fourths of a century, and which has been happening, and the New York Times just chose not to understand it.Robinson: President Obama at the Democratic National Convention: “Now, I’ve cut taxes for those who need it, middle class families, small businesses. But I don’t believe that another round of tax breaks for mil-lionaires will bring good jobs to our shores or pay down our deficit.” So there, Tom.Sowell: It so happens that both of those things happened in the 1920s after Mellon finally got his tax cuts, and they were across-the-board tax cuts, not tax cuts for millionaires. But it was precisely after the tax cuts that gov-ernment revenue increased and they brought down the national debt by about one-fourth as a result of the money pouring into Washington.

THE T IPP ING POINTRobinson: Tom Sowell: “We are not yet Greece, but we are not exempt from the . . . rules of arithmetic that . . . caught up with Greece. We have just a little more time.” So what bad things happen?Sowell: For one thing, we start running out of money, and that’s the problem of Greece. The secret of the welfare state is you can do almost anything in the short run, juggling money from here to there, and so on. But in the long run the arithmetic can’t be ignored, and you’re going to run out of money, which is what’s happened in Greece, which is starting to happen in Spain, and which can happen in the United States.


Robinson: So you’re an optimist? That is to say, the welfare state against which you have devoted enormous professional energies over several decades is about to come to an end one way or the other?Sowell: That’s right, but it makes a difference how it comes to an end.Robinson: OK, we have 8 percent unemployment. As a matter of fact, if the same number of people still were in the workforce as when President Obama took office, the unemployment rate would be 11 percent. The economy is really bad, but by historical standards it’s still a wealthy coun-try. Journalists are already defining the state of affairs as the “new normal.” So four more years of Barack Obama does what to us? We can skate by—

“Do you want a symbolic higher tax rate on the high-income people to

win votes politically—which the rich themselves are not going to pay—

or do you really want more tax revenue coming into the government?”

Sowell: The question is, how long can you skate? Greece discovered that there does come a point where there is no more money. In Spain, people are already leaving in droves and taking their money out of the Spanish banks with them. One of the things that you can do in the long run or be forced to do is simply print more money. And as they print more money, that is simply a hidden form of taxation. I mean when the Federal Reserve creates money to buy government bonds and keeps the interest rate low in order to make the price of the debt service low, what that means is that if you have your money put aside in the bank and you’re getting 1 percent, and the inflation rate is 3 percent, that means they’re taking 2 percent of your savings every single year, and you know how compound interest is. And even under the current conditions $100 in 1998 would not buy as much as $20 would have bought in 1960. So the thievery that goes on through inflation is huge.Robinson: My friend John Hinderaker, who writes on the Power Line blog, agrees with you that if the election had been decided on the facts, Obama would have been doomed. He wrote, “This election should be a cakewalk for the Republicans. Why isn’t it? I am afraid the answer may be that the country is closer to the point of no return than most of us


believed. With over 100 million Americans receiving federal welfare ben-efits, millions more going on Social Security disability, and many millions on top of that living on entitlement programs—not to mention enormous numbers of public employees—we may have gotten to the point where the government economy is more important, in the short term, than the real economy.” Every word of that rings true to you?Sowell: Yes. The Republicans I think have a notion that because so many people are unemployed and on food stamps, that that is a negative for Obama. Franklin D. Roosevelt was elected in a landslide after having an unemployment rate higher than Obama’s. There was not a single month in the first term of Franklin D. Roosevelt when unemployment was not in double digits, and in a number of months unemployment was over 20 percent, and he won the biggest landslide in American history. So the people who think the economy is the key and you can’t win if unemploy-ment is 8 percent, forget it.Robinson: There’s a lot of talk that this was the most consequential elec-tion since 1980, Reagan versus Carter. But things are worse now then they were in 1980—the underlying fundamentals. You’d agree with that?Sowell: Absolutely.Robinson: You’ve become famous in recent years—famous to me, any-way—for remarking that you’re not terribly worried about the country’s future because you’re no longer worried about the future. Now I’m not going to let you do that—you’ve got grandchildren. For that matter, what about the college students who are watching this program and saying, “Well, all right, Doctor Sowell may have turned eighty, but I’m young. I value liberty, I want to do what I can to preserve this republic.” What is your advice to them?Sowell: Social Security is not going to be there for them the way it is set up right now; something is going to have to be done. Now anyone who proposes doing something will be accused of being heartless and wanting to get rid of Social Security. Arithmetic will get rid of Social Security if you don’t do anything; you don’t have the option to just let Social Secu-rity keep going. This is the reason for the welfare states of Europe being in such turmoil—riots in the street and austerity and unemployment rates over 20 percent and so on—it’s that the chickens have come home


to roost. You have unfunded mandates out there, and you’ve essentially promised people things; it’s like giving them a generous check and know-ing that there’s not enough money in the bank to cover it. And now we’re discovering that the hard way, and it’s only a matter of time before the younger generation gets there and discovers that all the money they paid into Social Security went to pay the pensions of the previous generation as well as other spending by Washington.Robinson: So what’s really pernicious about the welfare state as it nears the edge of the cliff—and as we see it breaking down in Greece—is that people very understandably plan their lives around the notion that they’ll be getting such-and-such a check for this and that they’ll be getting health care for that, and then suddenly they discover that their plans are worth-less. So your advice to these twenty-year-olds would be to plan on reality, not on the government’s lies about the welfare state that will always be there to take care of you?Sowell: Absolutely, and particularly in the case of Social Security, what they need to do is put their money someplace where politicians can’t touch it. If a private insurance company does what the Social Security system does, you can put the people behind bars in a federal prison because they have to have enough assets to cover their liability.Robinson: They’re breaking the law.Sowell: That’s right. Congress can do that but private people can’t, and that’s why you shouldn’t have the money such that Congress is in direct control. Put it somewhere else.


VALUES

Quiet Heroism down on the FarmCrop failures and drought ought to remind us that life—and the

harvest—is uncertain. By Victor Davis Hanson.

American farmers suffered ruinous drought and crop-destroying heat during much of last year’s growing season. Corn, wheat, dairy, and meat prices will probably climb still higher, offering American consumers a rare reminder of who creates the bounty they take for granted.

Most Americans pay little attention to the nation’s annual crop pro-duction, unless it falters before agriculture’s multifarious natural enemies: drought, flood, infestation, and disease. That’s understandable. We are an insular suburban culture. Our food is grown by only about 1 percent of the population. Usually an impressive variety of produce simply appears—safe, plentiful, fresh, and relatively cheap—on our grocery store shelves.

Americans don’t expect the weather to be absolutely predictable, but when it turns for the worse, we assume that any pernicious effects will be either temporary or ameliorated by modern ingenuity. And it is true that much of the historic uncertainty in farming disappeared in the twentieth century, thanks to sophisticated new irrigation systems, high-tech farm machinery, computers, better pesticides and herbicides, and genetic engi-neering.

The result has been that at a time of table talk about American decline—staggering deficits, lackluster manufacturing, mediocre public schools,

Victor DaVis Hanson is the Martin and Illie Anderson Senior Fellow at the Hoover Institution.

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and insolvent entitlement programs—American farming keeps producing record harvests that earn critical foreign exchange and ensure relatively low food prices. At least until last summer.

The drought provoked some public alarm: news clips sounded almost like apocalyptic Hollywood films, with portentous voices warning about long-term food shortages and permanently changed farming conditions. I doubt both scenarios. In my own experience, farmers have proved to be among the nation’s most ingenious, self-reliant, and audacious citizens. They continue in adversity when most others would quit.

I certainly have found it far harder to produce a profitable raisin or plum crop each year on my family’s California farm than to teach classi-cal Greek, write books on history, or lecture university audiences. After all, ideas like tenure, defined pensions, employer-supplied health care, and sick leave do not exist on the farm—at least not for the independent

Farmworkers flood an orchard near Modesto in January 2012, as a dry winter begins to take

its toll on Central Valley crops. Drought in much of the United States has stressed farmers’

finances and raised food prices, evidence that uncertainty can never be entirely removed

from the enterprise of farming.


operator and his family. Being able to weld does not preclude the need to master sophisticated math to figure out crop-spray calibrations. The requisite politeness shown your banker is not so wise an hour later with a tough neighbor or belligerent hired hand.

In the past few decades, Americans have increasingly entrusted their futures to technocrats, deemed brilliant by virtue of their blue-chip-uni-versity brands—as if their studied divorce from the brutal world of human muscle and natural disaster made them more, rather than less, reliable stewards of our fate. That the country’s aggregate debt is nearly unsustain-able, and that many in our nation’s capital are reluctant to tap vast new gas and oil wealth, should remind us that PhDs, MAs, and JDs may be less well-rounded, and certainly less pragmatic, than the vanishing thousands who produce our food.

The mystery isn’t that we have devastating droughts, but that so few

Americans manage to produce so much food against such daunting odds.

While the drought will hurt all farmers and may bankrupt some, the threat of disaster is a constant for growers, who by their nature and habit cope. In the 1930s, ’50s, and ’60s, serial droughts nearly wiped out the Midwest farming belt. The seemingly endless dry weather of 1988 was the worst since the Dust Bowl of the 1930s. Thankfully, far more farmers now carry crop insurance than in ’88, which will help keep them afloat.

I once asked my mother why, all of a sudden, unseasonable September rains of 1976, 1978, and 1982 ruined our drying raisins in California’s pre-dictably arid Central Valley—in a way that hadn’t happened before during the raisin industry’s first century. She paused and then offered, “Well, isn’t it a little unnatural to put your entire year’s work on the ground each year to dry, as if there can never be a gray cloud in the sky?”

So it is with all farming—an unnatural enterprise to coax food from the unforgiving earth. The mystery isn’t that we have devastating droughts like last year’s, but that so few Americans manage to produce so much food against such daunting odds. The ancient Greeks were so baffled by how each season a tiny seed grew into a wheat stalk, which in turn provid-ed life-giving bread, that they created the goddess Demeter, their “Earth


Mother.” Worship of her sacrosanct mysteries was vital for the goddess’s food miracles to continue.

Can we learn anything new from present-day drought? At a time when American gas and oil reserves seem to be expanding daily, given break-through technologies like hydraulic fracturing, or fracking, and horizontal drilling, it makes no sense to divert 40 percent of the corn crop to etha-nol production. For all the uncertainty of drilling a gas or oil well, it is a far more inexact science to produce corn, wheat, or soy—given drought, flood, disease, pests, and human error.

Farmers are among the nation’s most ingenious, self-reliant, and audacious

citizens. They continue in adversity when most others would quit.

We might also recalibrate our notion of “flyover country,” that vast and productive region that rarely earns attention except during close national elections. The federal government is insolvent; high finance is still suspect. Yet thousands of mostly unknown farmers in Iowa, Indiana, or Ohio get better at what they do, and better too than all their counterparts across the globe—drought or no drought.

Dry seasons remind us that we still live in an often-tragic world that all our high-tech devices and therapeutic gobbledygook cannot overcome. The comfortable life of smartphones, reality TV, and Facebook seems a birth-right only because it is predicated on the talents of Americans who, with little fanfare, put a bounty of food on our tables and the world’s.


Available from the Hoover Press is Conserving Liberty,

by Mark Blitz. To order, call 800.935.2882 or visit www.

hooverpress.org.


VALUES

Food for ThoughtThe Chick-fil-A boycott and counterboycott showed why religious

values should command our attention. By David Davenport.

I skipped Chick-fil-A Appreciation Day, not because I didn’t appreciate it, but because I have never gotten excited about economic boycotts or counterprotesting with my diet. I’m consistent that way—I ignored Mar-tin Sheen when he stood outside my local grocery trying to stop me from buying grapes and, if I skipped a Jane Fonda movie, it wasn’t because she had gone to Hanoi during the Vietnam War. As college endowment managers learned, it’s pretty difficult to get all your principles and poli-tics lined up with your investment portfolio, much less with your diet or entertainment.

Still, the debates that centered on the sandwich chain offered an opportunity to chew over more than just a chicken sandwich. On the surface, the controversy entailed company president Dan Cathy’s sup-port for his understanding of biblical marriage (one man and one wom-an for life) and attempts by supporters of gay marriage to boycott the chain or, in the case of certain politicians, even try to prevent its stores from locating in their districts. But at a deeper level, the battle of Chick-fil-A underscored the growing dilemma over Christianity and democ-racy in America.

Increasingly loud voices argue that there is no longer room for Chris-tianity—or at least fundamentalist or evangelical Christianity—in the American public square. Why? Because such conservative forms of Chris-

DaviD Davenport is counselor to the director and a research fellow at the Hoover Institution.


tianity are not themselves democratic—their principles are not put to a popular vote and therefore do not change much over time. Dan Cathy was not so much expressing his own personal view about marriage as he was articulating what he understands the Bible to say about marriage, a teach-ing he does not feel free to ignore or change. In the view of evangelical Christians, Christianity is not a democracy and God does not take votes to decide policy or doctrine. It is what God said it is in the Bible.

This antidemocratic view holds that there is absolute truth, which does not sit well in an increasingly relativist, secular culture. It’s the answer to a question one of my children asked growing up attending public schools in a very secular place: “Dad, why is it OK in my school to be anything but a Christian?” It was OK to be a socialist or a vegetarian or a secular-ist. Christians are not able to compromise many of their core beliefs, I explained, adding that many Christians also were not very gracious in how they carried and expressed their views, but that’s another story.

The irony, of course, is that America has always understood itself to need Christian values to make its democratic republic work. Business people established great companies like Chick-fil-A, people got jobs and made money, and their Christian values became what French journalist Alexis de Tocqueville observed in Democracy in America, the “habits of the heart” that made American democracy work.

In the view of evangelical Christians, Christianity is not a democracy and

God does not take votes to decide policy or doctrine.

These sometimes clashing, sometimes collaborating values have created the energy that has moved America forward. I always loved the cartoon of the Pilgrims with their funny hats and religious values coming across on the Mayflower, with one asking another what they would do when they got to America. The other Pilgrim responded, “First we will establish our basic religious values, then we will go into real estate.” Tocqueville said the influence of Christianity on America was what first caught his eye, propelling the Protestant work ethic but, more important, creating the “mores that render Americans . . . capable of supporting the empire of democracy.” George Washington, whose own faith has been questioned


and debated, nevertheless observed in his farewell address that “of all the dispositions and habits which lead to political prosperity, religion and morality are indispensable supports.”

Ironically, America has always understood itself to need Christian values

to make its democratic republic work.

It seems right for supporters of Chick-fil-A and its president’s values to be concerned about their right to follow God’s word as they understand it, and even to believe that their point of view deserves a seat at the table in American democracy. Indeed, there is a long history supporting the notion that such values have been of real, practical value to elevating the mores and values that allow a free republic to work. And it seems right for Americans who find those views too narrow to decline to eat at Chick-fil-A, though not for elected leaders to use their offices to block a business whose leader expresses his freedoms of speech and religion.

In the end, Americans should chew over the powerful dilemma of Christianity and its impact on the democratic republic for 250 years. We may well be traveling the road of secular Europe, prepared to throw out the baby of religious values with the bathwater of religious teachings that are no longer popular.

Reprinted by permission of Forbes Media LLC © 2012. All rights reserved.

New from the Hoover Press is Eric Hoffer: The

Longshoreman Philosopher, by Tom Bethell. To order,



HISTORY AND CULTURE

Clouds over TechnopolisTechnology is marvelous, and marvelously oversold. By Niall Ferguson.

Are you a technoptimist or a depressimist? This is the question I have been pondering after a weekend hanging with some of the superstars of Silicon Valley.

I had never previously appreciated the immense gap that now exists between technological optimism on the one hand and economic pessi-mism on the other. Silicon Valley sees a bright and beautiful future ahead. Wall Street and Washington see only storm clouds. The geeks think we’re on the verge of the Singularity. The wonks retort that we’re in the middle of a Depression.

Let’s start with the technoptimists. I listened with fascination as a panel of tech titans debated this question: “Will science and technology produce more dramatic changes in solving the world’s major problems over the next twenty-five years than have been produced over the past twenty-five years?”

They all thought so. We heard a description of what Google’s Project Glass, the Internet-enabled spectacles, can already do. (For example, the spectacles can be used to check if another speaker is lying.) Next up: a search engine inside the brain itself. We heard that within the next twenty-five years, it will be possible to take thousand-mile journeys by being fired through tubes. We also heard that biotechnology will deliver genetic “pho-tocopies” of human organs that need replacing. And we were promised genetically engineered bugs, capable of excreting clean fuel. The only note of pessimism came from an eminent neuroscientist who conceded that a

Niall FergusoN is a senior fellow at the Hoover Institution and the Laurence A. Tisch Professor of History at Harvard University.


major breakthrough in the prevention of brain degeneration was unlikely in the next quarter century.

WONDROUS TECHNOLOGY ISN ’T NEWFor a historian, all this technoptimism is hard to swallow. The harsh real-ity, as far as I can see, is that the next twenty-five years (from now until 2038) are highly unlikely to see more dramatic changes than science and technology produced in the past twenty-five (1987–2012).

For a start, the end of the Cold War and the Asian economic miracle provided one-off, nonrepeatable stimuli to the process of innovation in the form of a massive reduction in labor costs and therefore the price of hardware, not to mention all those ex-Soviet PhDs who could finally do something useful. The information-technology revolution that began in the 1980s was important in terms of its productivity impact inside the United States—though this shouldn’t be exaggerated—but we are surely now in the realm of diminishing returns (the symptoms of which are defla-tion plus underemployment due partly to automation of unskilled work).

The breakthroughs in medical science we can expect as a result of the successful mapping of the human genome probably will result in fur-ther extensions of the average lifespan. But if we make no commensurate advances in neuroscience—if we succeed only in protracting the life of the body, but not the mind—we will simply increase the number of depen-dent elderly.

My pessimism is supported by a simple historical observation. The achievements of the past twenty-five years were actually not that big a deal compared with what we did in the preceding twenty-five years, 1961–86 (for example, landing astronauts on the moon). And the twenty-five years before that, 1935–60, were even more impressive (e.g., splitting the atom). In the words of Peter Thiel, perhaps the lone skeptic within a hun-dred miles of Palo Alto: in our youth we were promised flying cars. What did we get? One hundred and forty characters.

Moreover, technoptimists have to explain why the rapid scientific tech-nological progress in those earlier periods coincided with massive conflict between armed ideologies. (Which was the most scientifically advanced society in 1932? Germany.)

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So let me offer some simple lessons of history: more and faster informa-tion is not good in itself. Knowledge is not always the cure. And network effects are not always positive.

In many ways, the discussion I’ve just described followed logically from a widely reported spat between Thiel and Eric Schmidt at the Brainstorm Tech conference in Aspen, where Schmidt took the technoptimistic line and Thiel responded with a classic depressimistic question: why, if infor-mation technology is so great, have median wages stagnated in the forty years since 1973, whereas in the previous forty years, between 1932 and 1972, they went up by a factor of six?

Democracy is chronically shortsighted, especially if there are major

elections every two years.

By the same token, there was great technological progress during the 1930s. But it did not end the Depression. That took a world war. So could something comparably grim happen in our own time? Don’t rule it out. Let’s remind ourselves of the sequence of events: economic depression, crisis of democracy, road to war.

Talk to anyone who manages money these days and you will hear a doleful litany: the global economic slowdown, the persistence of unem-ployment, widening inequality, the problem of excessive debt, the declin-ing effectiveness of monetary policy. Recently Ray Dalio—founder of the mega–hedge fund Bridgewater—spoke of a “dangerous dynamic . . . mak-ing a self-reinforcing global decline more likely.” With good reason, Dalio frets about the dangers of a “debt implosion” or currency breakup in Europe.

In the 1930s, economic disaster undermined weak democracies all over the world. The equivalent phenomenon in our own time is the seeming inability of many Western politicians to get re-elected. That, however, is no more than what you’d expect in a time of depression. More troubling is the evidence that our basic faith in democracy is being corroded.

I have heard a politician admit that the generous benefits that have been promised to retired public workers are in danger of bankrupting the country. I have heard a leading entrepreneur complain that the revolving


door leading from the Pentagon to defense contractors is a subtle form of corruption. And I have heard more than one reputable academic assert that the Chinese one-party system offers real advantages over our own antiquated system of democracy.

This is certainly the Chinese view. Viewed from Beijing, Western “participatory democracy” is defective in at least three ways. It is anti-intellectual (politicians are condemned if they are too “professorial”). It is shortsighted, to the detriment of future generations. And, if democracy is applied in multiethnic societies, it can lead to discrimination and even violence against minorities.

Sadly, not all of this is wrong. Democracy works best with constit-uency-based, bicameral parliaments under the rule of law, and works less well with proportional representation and referendums. That is one reason Europe is in such a mess. Democracy is chronically shortsighted, especially if there are major elections every two years. With our increas-ing lifespans (life expectancy was just over fifty when the U.S. Constitu-tion was written, compared with seventy-eight today), a case can surely be made for longer terms in office (say, 50 percent longer) and therefore less-frequent elections.

As the American empire wanes, whoever emerges on top in the world’s

trouble spots is unlikely to get there without bloodshed.

As for the problem of corruption, it is all too real. But it takes two forms: the power of cash-rich vested interests as exemplified by the lob-byists on K Street, and the growing share of public-sector employees and welfare recipients relative to direct taxpayers in the electorate. If anything, it is the second of these that has been pushing the Western world ever deeper into debt over the past decade.

DANGEROUS AND UNKNOWNIn the 1930s script, democratic decay is followed by conflict. I am not one of those who expect Europe’s monetary meltdown to end in war. Europeans are too old, disarmed, and pacifist for there to be more than a few desultory urban riots. But I am much less confident about peace to


Europe’s south and east. North Africa and the Middle East now have the ingredients in place for a really big war: economic volatility, ethnic ten-sion, a youthful population, and an empire in decline—in this case the American empire.

Weary of warfare and waking up to the fossil-fuel riches made acces-sible by fracking, the United States is rapidly winding up four decades of hegemony in the Middle East. No one knows who or what will fill the vacuum. A nuclear Iran? A neo-Ottoman Turkey? Arab Islamists led by the Muslim Brotherhood? Whoever emerges on top is unlikely to get there without bloodshed.

Knowledge is not always the cure.

It’s a dangerous world. Ask anyone who works in the world of intelli-gence to list the biggest threats we face, and the list is likely to include bio-terrorism, cyberwar, and nuclear proliferation. What these have in com-mon, of course, is the way modern technology can empower radicalized (or just plain crazy) individuals and groups.

I wish I were a technoptimist. It must be heartwarming to believe that Facebook is ushering in a happy-clappy world where everybody “friends” everybody else and we all surf the Net in peace (insert smiley face). But I’m afraid history makes me a depressimist. And no, there’s not an app—or a gene—that can cure that.

Reprinted by permission of Newsweek. © 2012 The Newsweek/Daily Beast Company LLC. All rights reserved.

Available from the Hoover Press is Bits, Bytes,

and Balance Sheets: The New Economic Rules of

Engagement in a Wireless World, by Walter B. Wriston. To



HISTORY AND CULTURE

What Did the Founders Think They Were Doing?Why do we vote, and what do we get for our trouble? By Harvey C.

Mansfield.

Here are some thoughts and readings for freshmen (or first-years) who were excited by our just-concluded presidential campaign and are now pondering the outcome. They also apply to the rest of us longtime voters who might care to think about the meaning and the nature of elections. Do we know more than freshmen? “Live and learn” says we do; “it’s never too late to learn” says we don’t. It’s safer to think that we don’t, and that we would profit from taking another look at things we take for granted.

Here I will identify and introduce half a dozen passages on elections in famous books on politics that every educated person, or serious citizen, would reasonably wish to be acquainted with.

To start, we all take for granted that elections are the touchstone of democracy. If a country holds elections, it’s democratic; if not, it isn’t. That’s a rule of thumb, not a universal truth. For though democracies

Harvey C. Mansfield is the Carol G. Simon Senior Fellow at the Hoover In-stitution, a member of Hoover’s Boyd and Jill Smith Task Force on Virtues of a Free Society, and the William R. Kenan Jr. Professor of Government at Harvard University. He is the author of Tocqueville: A Very Short Introduction (Ox-ford University Press, 2010).


hold elections, not all elections are democratic in the sense that they main-tain democracies. Some may be dangerous to democracy, when democ-racy turns on itself and elects an enemy who puts an end to democracy.

ARISTOTLE ’S POL IT ICSPolitics calls into question the assumption that elections are democratic. Democracy stands for living as you please, Aristotle says, which means as you choose. But choosing means taking better over worse, or a respectable life over doing menial tasks, the noble over the necessary. In choosing to have an election—the word for choice also means “election”—you give your support to someone or a party you admire or at any rate think better of. What is this preference but the choice of an aristocracy, literally, the rule of the best, or of the best in this situation?

Therefore, an election is essentially aristocratic, not democratic. Aristo-tle’s analysis shows that if you begin from democracy, you move into aris-tocracy as soon as you choose. Of course, if everyone chooses, and chooses from everyone, this is more democratic than if only the few best choose from the few best. Democracy as we have it, with the representation of the people rather than their direct rule, appears to be a mixture of democracy and aristocracy, as we say, a “liberal democracy.” Such a mixture combines elitism (aristocracy) with dislike of elitism (democracy).

Aristotle thinks that every regime combines quality and quantity, the few and the many. An oligarchy (rule of the few) cannot forget the many, and a democracy cannot avoid the few.

You can find these arguments in Aristotle’s Politics, particularly book III, chapter 11; book IV, chapters 7 and 12; and book V, chapter 8.

MACHIAVELL I ’S REAL ISMSuppose, however, that elections are not so much about choosing as about facing necessities. Everyone may want the best, but to get the best you have to act quickly ahead of others. Try to be nice, and see where it gets you: your disappointment, perhaps even your ruin. To be ahead of the competition, you have to play rough and dirty.

This is the necessity that dominates politics, and with it we have depart-ed from the assumption of Aristotle that human beings can choose their


lives, and are now in the territory of Machiavelli. Machiavelli tells us that there are two ways to play dirty: by open force when you are clearly stron-ger and can demand that others obey—or by concealed force, or fraud, in which the weaker party bamboozles the stronger party and somehow persuades it to do his will. An election is the second way, a fraud in which the few, who as such are weaker than the many, find a way to convince the many that the few should rule.

Just try to be nice, says Machiavelli, and see where it gets you:

disappointment, maybe even ruin.

Machiavelli believes that human beings are divided into the few who want to rule and the many who do not care to rule themselves but do not want to be ruled by others either. Then those who want to rule must conceal their rule from the many if they wish to succeed. How can they do this? Machiavelli went about conceiving a “new mode of ruling,” a hid-den government that puts the people “under a dominion they do not see.” Government is hidden when it appears not to be imposed on you from above but when it comes from you, when it is self-imposed.

Machiavelli recounts a psychological truth about humans: “wounds and other evils that a man does upon himself spontaneously and by choice hurt much less than those that are done to you by someone else.” It sounds crazy to claim that it hurts less when you break your leg yourself than when someone or something else does it. But when you do it your-self, the hurt is less because it doesn’t include resentment against whoever or whatever did it to you.

A further step in the argument: the many, the common people, resent government because of the necessary hurts it imposes—as people say, death and taxes. Government demands sacrifices in return for the peace, comfort, and justice it provides. But government hurts less, and is even hidden from you, when it comes from you—when it comes from an election.

An election is not so much a positive choice, as you might suppose from Aristotle, as the purging of resentment against government and the humbling of the few who run for office. As we saw in the contest between Barack Obama and Mitt Romney, an election forces the rulers to seek our


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est.approval, our vote. It enables us to choose one, and perhaps more impor-

tant, to deny the other. Partisanship often shows itself less in having your side win than in having the other side lose.

In this way, an election allows people to think that their government comes from them, when in fact it remains pretty much the same whether


it’s Obama or Romney. The particular candidate may win or lose, but the class of “politicians” that we decry, the few who desire to rule, always wins.

For their part, the people indulge in the luxury of throwing out


the losing candidate, expressing their resentment against being governed, while (almost) incidentally electing the winner, who then governs in their name with their consent.

In all this, necessity is paramount: the people necessarily resent govern-ment, but must necessarily be made to accept that government is neces-sary, while necessarily not noticing its necessity. The idea that election is a choice is fraudulent.

These arguments will be found in Machiavelli’s Discourses on Livy, book I, chapters 34 and 37; book II, chapter 21; and in The Prince, chapters 9 and 10. Of course, Machiavelli leaves it to you to put them together.

FA IR OR FRAUD? LOCKE ’S LEGACYToday we hear of elections that were won by fraud, but we do not believe that elections are necessarily fraudulent. We believe that fair elections are possible, even to be expected. We hold this belief under the influence espe-cially of John Locke, who, on this point, opposed Machiavelli’s penetrat-ing exposure of the hidden government that has been cleverly constructed for us—to fool us for our benefit. Locke thinks that popular government, government by consent, can be open and just. His doctrine of how this can be done has prevailed in our time and has been driven into our minds, emerging as the assumptions we make in how we think and how we live.

To Locke, elections are just because they prevent the tyranny of the few,

and open because they let citizens criticize the government.

Locke does not begin, as Aristotle and Machiavelli do, by looking at politics as we see it. Or maybe he does look, and does not like the frantic and bigoted partisanship that he sees. Instead of analyzing the nature of politics from the politics visible to us, he imagines an extreme case where there is no government, and calls that abstraction the state of nature—bor-rowing from Thomas Hobbes, its inventor.

The result is to make government itself the problem, somewhat like Machiavelli, but in such a way as to make all men equal. For in the state of nature, no one has the security he needs to live as he might wish. Locke


can thus forget the difference between the many and the few, at least as regards the fundamental principle of government. Since all are equal, the principle is that no one can or should be governed without his consent.

It’s quite likely that as long as liberalism lasts, it will be taunted by

critics who side with Rousseau. With him, they cry “sellout.”

Locke establishes government by consent, and not only in the social contract at the beginning, but afterward too, in elections by which the few who govern are held accountable by the many. We see that the few/many difference returns, in the form of those elected as against those who elect. But now, the few cannot dominate the many as with Machiavelli; they have to cater to them so as to gain their consent—the tables are turned. The many now have fundamental rights that are derived from the equality of all men, rights they can understand.

Government may try to use electoral tricks to fool the people, but the people have a sense of their rights and a constitution that protects them. Elections are just because they prevent the tyranny of the few, and open because they expose the government to criticism through freedom of speech. The few can be satisfied as well. They may content themselves with constitutional offices and powers, no longer dominating the people and threatening their freedom.

And with a secure right of private property, they have an enhanced opportunity to gain wealth for themselves while improving the standard of living for all. Having more money becomes a safer and more peace-able substitute for having more honor and power. Actually, since there is enough honor in being rich, an ambitious man need no longer seek to hold mastery over others like a Machiavellian prince.

Locke’s thoughts on elections are available in his Second Treatise of Gov-ernment, chapters 1, 2, 7, and 13 (especially section 154).

ROUSSEAU: ELECT IONS ENSLAVE THE ELECTORATEJean-Jacques Rousseau presents himself as a critic of Locke and of Locke’s proposed bargain between the few and the many. In his On the Social Contract, one finds a famous protest against “free” elections: “The English


people thinks it is free. It greatly deceives itself; it is free only during the election of members of Parliament. As soon as they are elected, it is a slave; it is nothing.”

Rousseau says the people needs to think of itself not merely as a collec-tion of particular wills, as Locke has it, but as a community with a general will. The modern man that Locke created has a split personality between his public character, when he votes to elect the government, and his pri-vate life when he lives as a “slave” under the laws that not he, but rather his representatives, have made. Freedom requires laws that restrict freedom, it is true, but Rousseau insists that these laws be created by the people who live under them, not by others acting in their name.

The use of elections is, for Rousseau, not the exercise of freedom but the surrender of freedom; elections stand for the democratic abdication of democracy. The people must make their own laws, acting under the general will that unites them and creates them as a people. When they live under laws made by others they become slaves to their particular wills, the particular necessities they believe they face.

In this way, Rousseau can be said to overcome the objection of Aristo-tle that an election is inherently aristocratic. Election becomes democratic when it extends to making the laws that one lives under. In that case one is not obeying an outside force but freely obeying oneself. Locke had thought this to be true of representative government, but Rousseau claims that one cannot be free after giving or transferring sovereignty to someone else.

This is a mere sliver of Rousseau’s political philosophy, taken out of the context of the whole, which shows better how to judge the import of his criticism of Locke. Clearly he proposes a model for a small, homogeneous, virtuous state that is perhaps impossible to achieve and which has rarely or never existed. It would have to have a legislator of “superior intelligence” to found it, Rousseau argues, particularly to establish the mores, the laws of the heart, that dispose men to live freely together. The legislator would have to feel that he is “capable of changing human nature, so to speak.”

Moreover, there would have to be a government to execute the laws made by the people, one with an aristocracy of merit and virtue suffi-cient to perform that function with both competence and fidelity. Pure


democracy undiluted by representatives and elections is the requirement for the legitimacy of republican government, but a democratic govern-ment (understood as the executive of the general will) is suited only to “a people of gods.”

Rousseau has no direct influence on politics now; the Jacobins cited him in the French Revolution, but no party today claims him as its founder or forebear. He inspired a variety of movements, from conservative romanti-cism to radical socialism and anarchism, and is read today principally for his criticism of bourgeois liberalism.

It’s quite likely that as long as liberalism lasts, it will be taunted by critics or opponents who agree with Rousseau that it lacks both personal authenticity and community spirit. They will say, not altogether wrongly, that elections are a sellout of freedom and justice in which the people give over their government rather than exercise it.

Rousseau’s criticism of elections is mainly in his On the Social Contract, book I, chapter 6; book II, chapters 7 and 12; and book III, chapters 1, 4, 5, and 15.

ENTER THE FOUNDERSThe Federalist, authored by Alexander Hamilton, James Madison, and John Jay, published under the name of Publius, was written to advocate the ratification of the U.S. Constitution in 1787–88. It is not a work of political philosophy, but it shows the influence of political philosophy in the thinking of the American founders.

As against Rousseau and the opposing party of the Anti-Federalists, it argues in favor of a large republic with a diverse population inspired by the spirit of individual liberty (though not indifferent to virtue). It endorses the Lockean principle of representative government, togeth-er with the institution of periodic elections to hold that government accountable to the people. But it differs from Locke by insisting that the government be “wholly popular” in that every branch of it be derived from the people, either by election (Congress and the presidency) or through appointment by elected officials (the judiciary).

Moreover, The Federalist, while assuming that Americans are repub-lican in spirit, lays particular stress on the defects of republican govern-


ment. Having chosen a form of government, one must be attentive to its problems rather than merely vaunt its advantages. The main problem in republican government does not arise from the attempts of the few to usurp popular government but misrule by the people themselves; this is the problem of majority faction.

The people may be carried by sudden bursts of passion away from sound government into the violation of the rights of minorities and actions against the interest of the whole. This problem cannot be cured entirely by mak-ing the government responsible to the people through elections, however, because it is just in elections that their passions may take hold of them. So what is needed in addition to elections are auxiliary precautions, as Madi-son calls them. These are to form the government so as to make it difficult to compose a majority and to ensure that a majority, once made, will be extensive rather than concentrated—and hence more likely to be moderate.

Having chosen a form of government—the republican form—the

American founders realized that one must pay attention to its problems,

not just its advantages.

Two forms besides elections are used in the Constitution to coun-ter majority faction: the separation of powers and the creation of a sys-tem of federalism where the state and federal governments share, and to some extent compete, in the government. If we return to the distinction between the few and the many, one sees that by these formal institutions, the few are divided into rival groups competing against one another for the people’s favor—the two systems of state and federal government and the three branches within each system.

“Let ambition counteract ambition” is Madison’s succinct statement of the principle at work in the Constitution. The bane of republican govern-ment throughout its history had been demagoguery, the incitement of the many against their own interest or against the few by a single clever speaker.

The Federalist, with its auxiliary precautions, offers a remedy against demagogues that uses the few—perhaps other demagogues—to curtail them. They thus act one against the ambition of the other and, as a whole,


on behalf of the true interest of the many. This is also a remedy for the inadequacy of elections.

Federalist 10 and 51 are the most famous papers in the collection, but one should be aware that the whole book is a treasury of wisdom for those who wish to understand American politics.

TOCQUEV ILLE ’S TWO CENTSLast, we must not pass over Alexis de Tocqueville’s Democracy in America, which contains a host of valuable reflections on democratic elections, posi-tive and negative. For Tocqueville, writing in 1835, democracy in America had become an accomplished fact.

He is a philosopher, but a modest one who reasons to the “image” of democracy from its actual existence in America rather than working from an imaginary ideal. He does not try to distinguish a democracy from a republic, as does Madison in Federalist 10, and he does not think that the sovereignty of the people can be set in the background of politics so that it does not intervene. In a democracy the people will have its way, Tocqueville says, despite the forms of auxiliary precautions that The Fed-eralist sets against its direct rule.

Democratic elections will install democratic officials, many of whom Tocqueville does not hesitate to describe as “vulgar men.” Elections are the typical method through which democratic public opinion, that of the mediocre mass, holds sway. The American founders were a temporary aris-tocracy that America was very fortunate to have at its origin, when making its Constitution, but that is not the type that the Constitution actually puts in power. More typical of democratic America is Andrew Jackson, the president when Tocqueville was writing his book, of whom he thought little.

On the other hand, one must consider elections in the light of the dan-ger in democracy that Tocqueville most feared. This was the menace of democratic despotism from the “immense being” of a centralized govern-ment to which the people might resign their political freedom in exchange for benefits and security.

For Tocqueville, political freedom is best shown and best preserved in elections, particularly local elections. Such elections multiply the occa-


sions for citizens to act together, depending on one another instead of a central administration that acts for them. The election of a local official is a democratic procedure that secures the independence of that official vis-à-vis the central power, analogous to a local noble in a monarchy who, by his hereditary right, has a certain independence from the king.

Tocqueville sees presidential contests putting voters into a feverish state,

a crisis of intrigues and agitation. But when “fortune has pronounced,”

ardor subsides like a river returning to its bed.

Here, and in general, Tocqueville likes to contrast democracy with aris-tocracy, and sometimes he uncovers hidden similarities between demo-cratic practices and their aristocratic counterparts. On the whole, he believes that government of the many is distinct from government of the few, and yet, as we have seen with the other modern philosophers, the few are there behind the scenes, acting behind the cover of the many, present in fact and absent in name. Contrary to Rousseau, for Tocqueville elec-tions are not the mere surrender of freedom; they are the prime expression of the crucial freedom, political freedom. Elections, as it were, tend to ensure that democratic monarchy, instead of being assisted and promoted by democratic bureaucracy, is checked by democratic aristocracy.

The number and frequency of elections enliven the nation, keeping it alert and awake rather than passive and inert under the soothing provi-dence of the state. The expression of public spirit enhances rather than overrides the activity of private interest: “It is not the elected magistrate that makes American democracy prosper; but it prospers because the mag-istrate is elective.”

Tocqueville speaks at some length (and depth) on presidential elec-tions. When they come, they capture the attention of the whole nation, which falls into a feverish state and suffers through a crisis of intrigues and agitation. But when the election is done, and “fortune has pronounced,” the ardor subsides, like a river returning peacefully to its bed after the storm is over. An election is a choice, but in democracies, a choice often made in consequence of some chance circumstance or event. We like to


think we govern ourselves, Tocqueville seems to say, but to some extent we are deluded.

Tocqueville’s Democracy in America is a book no educated American should leave unread. The passages referred to are in 1.1.8 (volume 1, book 1, chapter 8), 1.2.5, 2.2.4, and 2.4.7.

Reprinted from Defining Ideas (www.hoover.org/publications/defining-ideas). © 2012 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved.

Available from the Hoover Press is Failing Liberty 101:

How We Are Leaving Young Americans Unprepared

for Citizenship in a Free Society, by William Damon. To



HOOVER ARCHIVES

Taught to Be EvilWhat we teach children can be a matter of life and death. Two pioneers

of education confronted the power of indoctrination. By Erwin H. Epstein.

[O]ur national security depends upon our technological supremacy. Fur-

ther, with our whole economy dependent upon technical advances, any

lag is endangering our entire way of life.

Does this quotation from the New York Times sound familiar? It should. Reports that the United States is falling behind many countries in tech-nological fields have become commonplace. In response to such claims, President Obama announced in 2011 a program to train ten thousand new American engineers every year and generally promote education in science, technology, engineering, and mathematics. The clear emphasis is that although weapons and soldiers are the front line of national defense, a modern nation ultimately depends for its security on the intellectual preparation of its citizens.

Yet the quotation is not recent; it appeared in the Times more than a half-century ago, on June 19, 1955. Over the decades since then, U.S. policy makers, like the president, have often despaired of the failure of American education to keep pace in science and math in view of the seem-ing superiority of other nations in these areas. In doing so, these policy makers often gloss over the fact that evidence about shortages of scientists and engineers has been inconclusive.

Erwin H. EpstEin is the historian of the Comparative and International Edu-cation Society and a professor emeritus of comparative education at Loyola Uni-versity Chicago.


Consider the consequences of extrapolating beyond the evidence. As the New York Times article claims, the condition and focus of education are matters of national security and economic well-being. If it is true that the United States falls short in preparing scientists and engineers, national security is indeed at risk. If it is not true, however, then precious national resources will be wasted trying to fill a gap that does not exist.

Where do we turn for reliable evidence to answer such issues of vital national concern? The area of research that most focuses on how school-ing affects national security, economic development, wars, revolutions, and peace is comparative education, a field that applies the theories and methods of history and the social sciences to understanding international issues of education. Though having strong roots in the nineteenth centu-ry, comparative education grew up in the twentieth, guided in good mea-sure by two of the field’s giants: Isaac L. Kandel (1881 –1965) and William W. Brickman (1913–1986). The Hoover Institution Archives houses the main collections of documents from both of these influential scholars.

SCHOLARS OF THE WORLDKandel and Brickman had much in common. Both were historians, iden-tified strongly as Jews, and generated ideas on education that were shaped by firsthand experiences with international conflict, revolution, and dis-crimination. As prolific scholars, they advanced many of comparative edu-cation’s most important topics: how schools indoctrinate children, build national identities, strengthen or weaken democracy, and reduce or exac-erbate ethnic and racial cleavages and gender and social class inequalities.

Kandel was born in Romania and immigrated with his parents to Brit-ain when he was five years old. He was raised in a comfortable but not affluent home and educated in English schools. Brickman, by contrast, was born in the United States to poor immigrant parents; like Kandel, he would live and work in several countries. Both were multilingual, lec-turing and writing in several languages as well as English, and both were editors of the highly regarded scholarly periodical School and Society, with Brickman, the younger of the two, following Kandel in that position.

No one gave shape to early twentieth-century scholarship in compara-tive education more than Isaac Kandel, and no one gave rise to comparative


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ARISTOCRATIC AIR: The insights of Isaac L. Kandel (1881 –1965) and his younger colleague,

William W. Brickman, grew from firsthand experiences with war, revolution, and discrimina-

tion. They were intensely interested in how schools build national identities, strengthen or

weaken democracy, and affect ethnic, racial, gender, and class inequalities.


education as a professional field more than William Brickman. Kandel wrote the book Comparative Education, published in 1933, which set the stage for the field’s scholarly development in the decades that followed. Brickman, together with Gerald Read of Kent State University, organized the meetings that saw the birth of the field’s first professional association, the Comparative Education Society, in 1956, the first among about forty national and region-al comparative education associations currently recognized by the World Council of Comparative Education Societies, and became its first president.

Although Kandel and Brickman shared philosophical perspectives, their lifestyles were different. Kandel had a rather aristocratic air and kept a neat and tidy office at Columbia University, as reflected in the impec-cably arranged files found in the collection of nine boxes of his papers in the Hoover Archives. By contrast, Brickman’s files in the Hoover Archives are generally loosely and somewhat chaotically organized in 128 boxes, much like the organization of his office at the University of Pennsylva-nia. Despite their common interests, they engaged in epic philosophical contests that were aligned with the somewhat different periods of time in which they wrote and lectured.

Arguably, their differences in style grew out of their very different upbringings. As a child, Kandel attended an English primary school and then, upon winning a scholarship in a competitive examination, entered the Manchester (England) Grammar School, the largest and one of the oldest (chartered in 1515) independent day school for boys ages seven through eighteen in Britain. The Manchester Grammar School enforced strict discipline, emphasized the classics, and taught students mainly by rote. Kandel studied Latin, Greek, French, and German for six years before entering the University of Manchester to take a degree in classics. Later, he spent a year in Latin America, learned Spanish, and gave a series of lectures in that language in Mexico. He also mastered Portuguese, Dutch, and Norwegian. Though not from an aristocratic family, Kandel had an education that followed classic British upper-class lines.

Brickman grew up in a vastly different environment. His childhood was spent in the impoverished Lower East Side of New York City. His com-mand of languages was an outgrowth of his home environment, where he absorbed Yiddish, Hebrew, Aramaic, Polish, German, and Russian, and


his education was molded by the give and take of the Jewish cheder. He eventually learned several other languages—so many, indeed, that in an instruction sheet he handed his students at the University of Pennsylvania he wrote, “A foreign student may present his paper in his native language, but he should first ascertain if the instructor can read it. (As of this date, the instructor does not read Chinese, Japanese, Arabic, Farsi, and the South Asian languages, among others.)” Few American instructors would allow students to write in any language other than English, and if such allowance were made, it would be for no more than one or possibly two foreign languages. How many instructors would specify the languages in which students would not be permitted to write?

Whereas Kandel’s early worldliness was influenced by the international travels of his parents (his father was an exporter), Brickman’s was formed by the stories told by his parents about the old country. His father was born in Germany and his mother grew up in the town of Jedwabne, Poland, and it was there that his parents were married and most of his family lived. However different their backgrounds, as Jews Kandel and Brickman were both deeply affected by the rise of Nazism and the Holocaust.

Kandel was already sixty years old and had lived in New York City for many years when the United States entered World War II in 1941, so he did not have a direct role in the war effort. Brickman, however, was thirty when he was drafted into the U.S. Army in 1943. In view of his command of German, he was recruited by the Office of Strategic Services, the forerunner of the CIA, and his fluency was such that he mastered the dialects of Bavaria, Austria, Silesia, Rhineland, Berlin, and Leipzig. The OSS decided to send him on clandestine missions behind enemy lines.

U.S. policy makers continually despair of the failure of American

education to keep pace in science and math.

Brickman’s main task as a spy was to infiltrate the German army to locate high-ranking Nazi officers (like Martin Bormann) who were attempting to flee from the Allied forces as the war was ending. He and several other spies would cross the border into Germany, where high-ranking officers


were trying to escape. Brickman would sit at the back of a shop dressed in a Nazi SS uniform as his co-conspirators visited local taverns, where they would let it be known that there was an SS officer capable of arranging escapes to South America. Through this means, Brickman would learn the identity of German officers who wished to escape. Before each of these would-be fugitives came to meet with him, he would place insignia on his uniform indicating he was one rank higher than the visitor. Brickman would then instruct the officer to meet him in the local woods on a cer-tain night, and Brickman’s co-conspirators would sequester the officer and bring him to Nuremberg for interrogation.

COSMOPOLITAN MIND: William W. Brickman (1913–1986) began learning the

first of his many languages as the child of poor immigrants in the Lower East

Side. As a professor, he once instructed a class that a student could “present his

paper in his native language, but he should first ascertain if the instructor can

read it.” Brickman’s office at the University of Pennsylvania, like his boxes of

materials in the Hoover Archives, was rather loosely and chaotically organized.


Being a Jew who fought the Nazis from behind their lines—while using their own language to defeat them—was as stressful as it was heroic. Like much of the territory overrun by German forces, Brickman’s ancestral town, Jedwabne, was the scene of a horrendous massacre of Jews. It is plausible that this 1941 massacre provided an unusually strong incentive for Brickman to engage the enemy. Almost the entire Jewish population of Jedwabne—some 1,600 men, women, and children—was cruelly mur-dered, a slaughter that came mainly at the hands of the Jews’ own Polish neighbors as SS officers looked on. Some of Brickman’s relatives would almost certainly have been among the victims.

CHILDREN OF WARHow are people indoctrinated to engage in evil? This question preoccupied both Brickman and Kandel, much of whose scholar-ship focused on how dictatorship and conflict influenced children. Kandel wrote what is likely the first book in English on Nazi education, titled The Making of Nazis, in 1935, not long after Hitler came to power. Similarly, Brickman, especially in his final years, wrote on Nazi indoctrina-tion of children, most notably in a trenchant analysis that appeared in Western European Education, a journal of which he was editor.

UNDERCOVER: Brickman saw the effects of Nazism first-hand. Drafted in 1943, he spent

part of his military service behind enemy lines in Germany—where he donned an SS uniform

and served as a spy for the OSS, the forerunner of the CIA. The agency relied on his fluency

with multiple languages and dialects to lure high-level Nazis out of hiding and round them

up for interrogation.


That article deeply probed original documents written by the Nazis as they took control of German schools. It was titled “Ideological Indoc-trination toward Immola-tion: The Inauguration of National Socialist Education in Germany in 1933.”

Kandel and Brickman wrote extensively on educa-tion in war and its aftermath, as well as on education in general under totalitarianism. Articles that Kandel wrote include such titles as “The Messianic Complex” (co-writ-ten with W. M. Kotschnig), “Reorienting Japanese Edu-cation,” “We Move toward Centralization,” “Education for Enduring Peace,” “Con-flicts of Power in Modern Culture,” “The Vichy Gov-ernment and Education in France,” “Education in an Era of Transition” (referring to educational recon-struction), “Education and Human Rights,” and “Approaches to World Peace.” Brickman’s works include such titles as “Education in the Occupied Countries,” “Education under Totalitarianism and Reconstruction,” “Com-munism and American Education,” “The Changing Soviet School,” and “The New Assault on Academic Freedom.”

Nazi education was one abiding interest of both men; so was Soviet education. Although Kandel and Brickman had a similar antipathy to the Soviet system, their aversion took opposite forms. Kandel refused to travel to the Soviet Union, preferring to study it from afar, whereas Brick-

AMONG ENEMIES: Brickman, shown wearing Army

fatigues and holding a pistol, once said that weight

gain was one of the occupational hazards of his

career as a spy. As an Orthodox Jew trying to keep

kosher even among the Nazis, he was forced to fill

up on potatoes.


man jumped at the chance to go and observe that country first-hand. To some extent, Kandel’s reaction stemmed from not having a command of Russian, whereas Brickman had mastered that language among the many he knew.

More than lacking a facility in Russian, Kandel was reluctant to go to the Soviet Union because of his opposition to the progressive movement, several members of which were touting the values of the Soviet system of education in the 1920s and 1930s. Progressivism emerged initially from the ideas of John Dewey, but according to both Dewey and Kandel, those ideas were distorted by some of their colleagues, especially William Kil-patrick and George Counts, at Teachers College, Columbia University. Progressive education stood for “self-realization,” “solving the problems of life,” spontaneous learning, and catering to the immediate needs of most students. It advocated physical, practical, and social activity as against an emphasis on the classics, history, the arts, and mathematics.

As Jews, Kandel and Brickman were both deeply affected by the rise of

Nazism and the Holocaust.

Progressive education, abetted by the great prominence of the Teachers College faculty who led the movement, began in the 1920s and became a national phenomenon in the 1930s, embraced by many schools through-out the country. Kandel, joined by William Bagley, also at Teachers Col-lege and equally prominent, vigorously opposed progressivism. They referred to themselves and their allies as essentialists, proponents of a tra-ditional curriculum, with a heavy emphasis on traditional subjects in the humanities and the natural and mathematical sciences. As Kandel wrote in The Parents’ Magazine,

Growth cannot be self-directed; it needs direction through a carefully

chosen environment to a pattern or patterns in the minds of those who

have charge of the child’s education.

The battle between these two movements has echoed throughout the years, with the popularity of each side ebbing and flowing as the mood in the United States changes.


Kandel was particularly alarmed at a direction that Kilpatrick, at least initially, and Counts had taken. Kilpatrick and Counts had traveled to the Soviet Union to observe the new Russian socialist educational sys-tem. They were ecstatic to find that the new Soviet education followed a progressive path in which children worked on solving practical prob-lems relating to agriculture and the workplace. Kilpatrick went so far as to invite a Soviet professor to lecture at Teachers College on the benefits of the Soviet educational system.

Kandel was alarmed to see elements of the Soviet educational system being

held up as a model. Schools should not serve state ideology, he argued.

Kandel, however, observed a profound contradiction in the progressives’ adoration of the Soviet system: the progressives advocated spontaneity and self-realization in students, yet every detail in the curriculum was planned in advance by the Soviet authorities to conform to the political ideology of the state. Eventually, Kilpatrick recognized the contradiction and, like Kan-del, disavowed the system of indoctrinating children and preventing them from thinking for themselves. Counts, however, was not bothered by this contradiction and continued to visit the Soviet Union, extolling the virtues of having schools that molded children for the benefit of society.

By contrast, Kandel remonstrated against the use of schools for indoc-trinating children to further the aims of the state’s ideology. He often focused on extreme nationalism in schools, a topic emanating from his concerns over Nazi and Soviet education.

CONTEXTUAL ISM VERSUS POSIT IV ISMBrickman fought a different battle, especially in the 1950s and 1960s. He too was an essentialist, but his struggle was not as fierce or so much in conflict with the progressives. Rather, his concern was more with episte-mology than ideology. Specifically, he was apprehensive about the growing strength of positivism in comparative education. Brickman and Kandel, who valued the use of history and philosophy and a strong grasp of social and national context in comparative studies of education, stood together on one side of the debate. They insisted that only with a deep probing of


BEWARE OF MANIFESTOS: Brickman, like Kandel, paid close attention to how the Soviet

Union taught its children. Unlike Kandel, Brickman actually traveled to the USSR to see for

himself. Here he stands under a banner in a Soviet classroom that extols a principle used by

Soviet educators, who had their admirers in the United States. Both Kandel and Brickman

warned of the dangers of extreme nationalism, among other themes.


a society’s history, philosophy, and culture, requiring a command of that system’s language, can one fully understand a system of education.

The battles of educational philosophy still rage.

By contrast, the positivists, whose strength was growing in the 1950s through the early 1970s, advocated studies that isolated and identified uni-versal factors that influenced schooling, and that showed how school-society relationships functioned cross-culturally. Positivists such as Harold Noah, Max Eckstein, and C. Arnold Anderson de-emphasized context in favor of a “science” of comparative education, in which cross-national statistical analy-ses of education would rank supreme. These polarities, defined by Kandel and Brickman on one side and Noah, Eckstein, and Anderson on the other, have fashioned the underlying structure of comparative education. Just as there have been ebbs and flows in the popularity of progressivism and essen-tialism, so too there have been ups and downs in the embrace of positivism and the contextualism of Kandel and Brickman. Positivists require the tools of statistics; contextualists require a command of languages. Most compara-tivists can read and use statistics in their work, but few have the skill or incli-nation to establish cross-national typologies. Similarly, most comparativists have a command of one or two languages beyond their maternal tongue, but very few have a mastery of languages approaching the command pos-sessed by Kandel and Brickman. Consequently, most comparativists work in the middle ground, using simple statistical analysis for limited purposes, an analysis of original documents in a foreign language, or both.

BUILD ING ON THE IR INS IGHTSKandel and Brickman played a crucial role in making educators and pol-icy makers aware of how knowledge about education in the United States and abroad is gained, and in doing so, helped set a direction for compara-tive education.

Too few take into account the monumental contributions of these two scholars in setting the platform for this field. What Brickman wrote of Kandel in an article titled “I. L. Kandel—International Scholar and Edu-cator” could just as easily have applied to Brickman himself:


One would have to roam far and wide in educational literature in many

languages to escape the name of Kandel. . . . Prolific author of mono-

graphic studies, textbooks, articles, editorials, and reviews; editor of

yearbooks, encyclopedias, and journals; teacher and research mentor

to advanced students in many universities; active consultant to govern-

ments, school boards, and educational bodies of five continents—this is

but a bare outline of his achievements.

Besides giving Americans an insight into the educational philosophies

and administrations of foreign nations, Dr. Kandel also acted as an inter-

preter of American education to educators in Europe, Latin America,

Asia, Australia, and Africa. . . . It is scarcely an exaggeration to character-

ize Kandel as an international teacher of teachers.

It should appear plain that his signal achievements earn him a permanent

niche, not only in the several branches of education in which he excels,

but also in the general pattern of American and international educa-

tion. . . . His originality and thoroughness in scholarship, his exemplary

use of foreign languages and campaign against pedagogical isolation, his

penetrative insight into the pressing problems of the world and American

education have won the [admiration] of educationists and scholars in

academic specialties the world over.

Kandel and Brickman were rooted in the same ethno-religious back-ground, witnessed the ravages of Hitler’s depravity, and were bound togeth-er by common ideals of democracy and a love of comparative education.


Available from the Hoover Press is Tests, Testing, and

Genuine School Reform, by Herbert J. Walberg. To order,



On the CoverPainter William Herndon Foster found poetry in an image of speed, pur-pose, and transition: a moonlit scene of two trains passing in the night—in this case, the westbound and eastbound versions of the Twentieth Century Limited, America’s most famous train. The luxurious trains raced between Chicago and New York during the middle of their namesake century. In this painting, they are probably crossing west of Buffalo, about halfway into their opposite journeys, the passengers snug in their Pullman bunks and the powerful steam locomotives taking full advantage of the smooth “Water Level Route,” whose straightaways and broad curves hugged the rivers and lakes of the Northeast. Travelers from New York would have stepped aboard in Grand Central Terminal from a scarlet carpet, emblazoned with the Twentieth Century’s name, that was the very origin of the phrase “red-carpet treatment”—and once aboard, they expected nothing short of the best.

This image, drawn from the poster collection of the Hoover Archives, dates from 1923 and was used to advertise the New York Central Railroad. The Twentieth Century Limited was then in its heyday as the preferred mode of travel for the influential and well heeled, who could also connect with Western destinations on other romantically named trains. William Foster, who liked scenes of airplanes, cars, and hunting dogs, had painted the train at least once before, in a 1917 work titled The Twentieth Century Limited—the Greatest Train in the World. Earlier, in an article he wrote and illustrated for Scribner’s magazine in 1910 titled “All in a Day’s Run,” Fos-ter used charcoal sketches and a keen ear for dialect to capture the gritty life of the engineers, brakemen, and stokers who worked the steam trains. That same year he produced an ad for Oldsmobile showing the car racing alongside (and beating) the celebrated Twentieth Century Limited.

Something about this glamorous train lent itself to romance of many sorts. There was the technological: not only were the trains fast, but innova-tions in streamlining made them even faster. Industrial design wizard Hen-ry Dreyfuss created its most famous locomotives and cars, lending them the same functional grace he gave to vacuum cleaners, clocks, typewriters, and telephones of the era. His steam engines and wraparound parlor cars


seem to be streaking past even when standing still.

The Limited epitomized the romance of the desti-nation, the anticipation of waking up in a new city after a night of cocktails, filet mignon, and gazing out the sleeper-car window at the lights of towns and crossings blurring past.

Naturally the Twentieth Century Limited blazed its way into popu-lar culture, too, often acquiring romantic associations of the literal sort. One of the earliest was Twentieth Century, a 1932 Broadway play by Ben Hecht and Charles MacArthur (creators of The Front Page) that spawned multiple movies and musicals featuring madcap misadven-tures, showbiz, and love. The train hosted a crooked poker game in the Redford-Newman movie The Sting. But its most famous role may have been in Alfred Hitchcock’s North by Northwest (1959), wherein Cary Grant and Eva Marie Saint meet, seduce each other as the Hudson River flashes by outside the dining car, and wind up in her compart-ment. “Tell me,” he asks, “what do you do besides lure men to their doom on the Twentieth Century Limited?” Their unforgettable trip, like the train’s, is just beginning.

However, by the 1950s, and indeed after World War II, the romance was over. The Twentieth Century Limited and train travel everywhere were in decline. Passenger trains couldn’t compete with cheap air travel, especially after jet planes came along, or interstate highways. Like ocean liners, long-distance trains became a relic.

The last of the Twentieth Century Limited trains ended its run well before the century itself, on December 3, 1967. Today Amtrak runs an overnight train, the Lake Shore Limited, along much the same route, though much slower than in the 1930s. Sleeper cars are still available—but no red carpets.

— Charles Lindsey


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Documents

Hoover Digest, 2013, No. 1, Winter