Megan McArdle : The Atlantic

Romney's America: Fewer Cops, Fewer Firefighters, Fewer Teachers?

Megan McArdle — Mon, 11 Jun 2012 14:49:55 GMT

Guest post by Mark A.R. Kleiman, public policy professor at UCLA. Professor Kleiman regularly blogs at The Reality Based Community.

Here is Mitt Romney, criticizing Barack Obama's plans to help the states and localities reverse the shrinkage in government employment currently dragging us back into recession:

"He wants another stimulus, he wants to hire more government workers. He says we

need more fireman, more policeman, more teachers. Did he not get the message of

Wisconsin? The American people did. It's time for us to cut back on government and

help the American people."

I haven't seen any polling on this, but if Romney wants to make this election about whether we need more cops, firefighters, and teachers, Barack Obama ought to accept the invitation. At least Romney is more honest (or just more tone-deaf) than his co-partisans such as Scott Walker, who usually pretend we can cut taxes by eliminating "bureaucrats."

Of course the real hard-core Ayn Rand types think it's a good thing if a schoolteacher loses her job and has to become a stripper -- since, after all, by definition private-sector employment is productive while public-sector employment is unproductive -- but Mitt's welcome to that 25% of the vote.

It's true that there are ways of getting crime control, firefighting, and teaching done with fewer people. The police are only starting to adapt to social and technical facts (almost everyone walking around with a video camera connected to the Net) that could allow the "crowdsourcing" of much of police information-gathering. Changing construction codes have greatly reduced the need for urban firefighters, and the Fire Department is not the best or cheapest way to provide emergency medical service. (On the other hand, increased wildfires due to climate change and exurban sprawl means we need more rural firefighting, and that's an expensive activity.) Interactive software and video can - will have to - replace much of the teaching function. In each case, we need to find a way past the Baumol Cost Disease.

But that's all in the long run.

Today and tomorrow, fewer cops means more crime, fewer firefighters means fewer heart-attack survivors, fewer teachers means worse-educated students. And in the medium term those technological changes will require investments. The cost curve will bend up before it bends down.

Romney thinks the "lesson of Wisconsin" is that the American people have been conned into wanting fewer public services so they can buy bigger TV sets. He's wrong as a matter of politics. In agreeing with them, he's also wrong as a matter of policy.

Farewell

Megan McArdle — Sun, 10 Jun 2012 22:55:15 GMT

This is a bittersweet post for me to write. I've missed you all terribly while on leave, and in the interim, Newsweek has come to me and made me an offer I couldn't refuse to move there. I'll still be on leave for a few more months while I finish up the project I've been working on, and then at the end of the summer, I'll start blogging and writing for Newsweek/Daily Beast.

True story: when I told my parents that I had decided to use my very, very expensive MBA to become . . . erm . . . a freelance journalist . . . they were understandably a little concerned. Hoping to assuage their fears, I said "I know it's risky, but look at it this way: if I work really hard, and get lucky, I might end up getting to write for The Economist, or The Atlantic." Even as I said it, I felt this was a bit of a pipe dream, but I figured they needed something to hang onto. It seemed better than my backup plan of telling them how surprisingly easy it is for broke freelancers to get food stamps.

I got very lucky: The Economist and The Atlantic are the only two places I've ever worked. And in different ways, both were truly dream jobs. At The Economist I was surrounded by people who'd been reporting the beats I wanted to cover for decades, and shared that hard-won knowledge liberally--and occasionally, quite critically.

In moving to The Atlantic I gave up the privilege of writing in what one colleague used to wryly call "The voice of God", and got to develop my own voice instead, at a publication which, more than any other, is about developing the individual writer's voice. We are a magazine where ideas are developed, showcased, and explained, rather than shoved down your throat by an iron editorial policy--which has, of course, led to some rather spirited moments between the various voices on the web.

I have benefited from the incredible editing of Don Peck and James Gibney (as well as Scott Stossel and James Bennet on the second pass). I've been given a remarkably free hand by Bob Cohn, the power behind the Atlantic's incredible transformation into a web juggernaut. And of course, I have constantly had my thinking challenged and expanded by the insanely deep talent pool of the Atlantic's web team: departed colleagues Ross Douthat, Andrew Sullivan, Matthew Yglesias, and Conor Clarke, and the current crop of stalwarts, like Clive Crook, James Fallows, Ta-Nehisi Coates, Jeffrey Goldberg, Derek Thompson, Alexis Madrigal and too many others to name--if I've forgotten you, apologies and please chalk it up to the impossibility of containing all the awesomeness of The Atlantic's web team in a single human mind at one time. I've also been continually awed by the performance of the business side under Justin Smith; lots of journalists get to write about this kind of dramatic financial turnaround, but very few get to witness one from the inside.

I'm very excited about the opportunity to work in a newsroom led by Tina Brown, whose turnarounds of Vanity Fair and The New Yorker are legendary. But it is not without regret--the inevitable regret that tradeoffs are necessary and I cannot take the job at Newsweek/Daily Beast without leaving so much behind at The Atlantic. In my five years here, we've gone from a magazine that was fantastic, but losing money by the bucketful to one that was still fantastic, but also profitable. That happened in the middle of the worst financial crisis since the Great Depression, an achievement which still boggles the mind. We've built a web presence, and a web brand, that few organizations can match. And it's been immense fun. Working for The Atlantic has been more than I ever dreamed it would be. I'll forever be immensely grateful to everyone who was here during my time--including my readers and my commenters, who are the ultimate reason that I get to spend my days reading and writing about stuff that interests me.

Come tomorrow, I should have a URL to give you for the new blog, where I'll be posting a little bit over the summer (expect a post when the Supreme Court decision on ObamaCare drops). For now, I'll just say thanks for reading. I miss you guys more every day.

Romney's America: Fewer Cops, Fewer Firefighters, Fewer Teachers?

Megan McArdle — Sun, 10 Jun 2012 14:49:55 GMT

Guest post by Mark A.R. Kleiman, public policy professor at UCLA. Professor Kleiman regularly blogs at The Reality Based Community.

Here is Mitt Romney, criticizing Barack Obama's plans to help the states and localities reverse the shrinkage in government employment currently dragging us back into recession:

"He wants another stimulus, he wants to hire more government workers. He says we

need more fireman, more policeman, more teachers. Did he not get the message of

Wisconsin? The American people did. It's time for us to cut back on government and

help the American people."

But that's all in the long run.

Romney's America: Fewer Cops, Fewer Firefighters, Fewer Teachers?

Megan McArdle — Sun, 10 Jun 2012 14:49:55 GMT

Guest post by Mark A.R. Kleiman, public policy professor at UCLA. Professor Kleiman regularly blogs at The Reality Based Community.

Here is Mitt Romney, criticizing Barack Obama's plans to help the states and localities reverse the shrinkage in government employment currently dragging us back into recession:

"He wants another stimulus, he wants to hire more government workers. He says we

need more fireman, more policeman, more teachers. Did he not get the message of

Wisconsin? The American people did. It's time for us to cut back on government and

help the American people."

But that's all in the long run.

On the Death of a Public Policy Giant

Megan McArdle — Wed, 06 Jun 2012 06:34:41 GMT

Guest post by Mark A.R. Kleiman, public policy professor at UCLA. Professor Kleinman regularly blogs at The Reality Based Community.

Jim Wilson, who died at a very young and vigorous 80 this March, left a huge imprint on American social science and public policy. He was also my friend, over a fairly yawning political divide. So I was delighted as well as honored when Zócalo Public Square asked me to moderate a panel discussion about his legacy.

The panelists were Angela Hawken of Pepperdine, Mark Peterson of UCLA, and Chief Charlie Beck of the LA Police Department. All of us admired him and learned from Jim, and all of us had critical things to say about some aspects of his thought, or the thought attributed to him. Charlie Beck's exposition of the difference between community policing based on the "broken windows" idea (often useful) and "zero tolerance" policing (always disastrous) is especially valuable, but Angela Hawken offers a wonder appreciation of Jim as a teacher and as someone willing to change his mind in the face of the facts, and Mark Peterson a clear explanation of how Jim, a conservative and a political scientist, differed from contemporary conservatism in politics and from the main conservative strain in political science: primarily in his belief in the positive role of government and the potential nobility of political action.

Full video (about 70 min.) here.

On the Death of a Public Policy Giant

Megan McArdle — Wed, 06 Jun 2012 06:34:41 GMT

Guest post by Mark A.R. Kleiman, public policy professor at UCLA. Professor Kleinman regularly blogs at The Reality Based Community.

Full video (about 70 min.) here.

Thyucidides on War With Iran

Megan McArdle — Tue, 05 Jun 2012 16:30:00 GMT

Guest post by Mark A.R. Kleiman, public policy professor at UCLA. Professor Kleinman regularly blogs at The Reality Based Community.

I'm grateful to Megan for the invitation to guest-blog, but I'm also somewhat daunted at the prospect of having to replace her usual output in quality and quantity. So, as I have before as a guest-blogger, I'm going to mix some new material with some recycled "greatest hits" from blogs of yesteryear.

So, to start off: In light of the current drumbeat for war with Iran -- from lunatics in Tel Aviv and their assistant lunatics on the American right wing -- some of what I said a decade ago in the run-up to war with Iraq seems relevant. At the end of the day, I wound up supporting that particular debacle, albeit unenthusiastically. That was a mistake. But at least I never allowed myself to fall into the delusion that war was ever without risks.

***

A blogger who thinks we should go to war quotes Thucydides: "The secret of happiness is freedom, and the secret of freedom is courage." Here's the full passage, in a different translation. It's from the great Funeral Oration of Pericles:

For the whole earth is the tomb of famous men; not only are they commemorated by columns and inscriptions in their own country, but in foreign lands there dwells also an unwritten memorial of them, graven not on stone but in the hearts of men. Make them your examples, and, esteeming courage to be freedom and freedom to be happiness, do not weigh too nicely the perils of war.

The language is magnificent; but the context made it deeply ironic then, and its use now in the pro-war cause is not less ironic. Pericles had just led the Athenians into the Peloponnesian war, and the speech, given after its first, victorious year, is confident of victory, even somewhat boastful. Yet Thucydides' readers knew that this was to be the high-water mark of Athenian greatness: what was to follow was defeat, conquest, and the imposition of a Quisling government. Later Athens was to regain its independence, but not its hegemony, and its permanently poisoned relationships with the other poleis were to lead, in the next century, to the conquest of all of Greece by the Macedonians under Philip and Alexander.

So when Pericles urges his hearers not to "weigh too nicely the perils of war," we are meant to hear in the background Thucydides' sardonic laughter. Pericles took his own advice (or perhaps Thucydides put into the mouth of Pericles words appropriate to his actions), and the result was catastrophe.

Going to war with Iraq may be the safest, smartest thing we could possibly do; reading the arguments made against it is almost enough to make me think so. What worries me is that I do not now see in power men and women who nicely weigh the perils of war. Rather, I think I see a truly Periclean hubris, albeit expressed in much less stirring language.

America is, in many ways, the new Athens. The parallels between the Peloponnesian war and the Cold War are almost eerie: a land-based, insular, impoverished, culturally conservative and backward land power against a wealthy, mercantile, culturally rich, heterogeneous, and innovative democracy. Only this time the good guys won. Let's not have it go to our heads. A calculating boldness is a virtue; rashness is a vice. There are better uses for the whole earth than to make it our tomb.

Thyucidides on War With Iran

Megan McArdle — Tue, 05 Jun 2012 16:30:00 GMT

Guest post by Mark A.R. Kleiman, public policy professor at UCLA. Professor Kleinman regularly blogs at The Reality Based Community.

***

For the whole earth is the tomb of famous men; not only are they commemorated by columns and inscriptions in their own country, but in foreign lands there dwells also an unwritten memorial of them, graven not on stone but in the hearts of men. Make them your examples, and, esteeming courage to be freedom and freedom to be happiness, do not weigh too nicely the perils of war.

Our Special-Ed System Favors the Rich (and Romney Has a Plan to Fix It)

Megan McArdle — Fri, 01 Jun 2012 18:24:10 GMT

Guest post by Dr. Manhattan, a lawyer in New York City who represents, among others, clients in the investment management industry.

Last week, Mitt Romney released a white paper detailing his (current) positions on education policy. One of its prominent features was a proposal to make federal funds allocated for special education under the Individuals with Disabilities in Education Act (IDEA) portable so that special-needs students can choose which school to attend and bring the federal funding along with them. This voucher-equivalent proposal would seem to go against the recent trends mentioned by Laura about how voucher proposals have lost much steam in education-reform debates, and there are plenty of legitimate concerns about how Romney's proposal could be implemented and how effective it would be. But it's worth noting that a quasi-voucher system already exists under IDEA for those families with the need and -- less obviously -- the financial resources to obtain them. This leads to an overwhelming inequality in how children obtain special education services which is not well understood. If a version of Romney's proposal was enacted, it would be almost certain to decrease this inequality substantially and increase opportunities for poorer children to receive better special education services. For that alone, liberals should take it seriously.

HOW SPECIAL-ED STUDENTS GET "SHADOW" VOUCHERS

Under the IDEA, when a student is diagnosed with special education needs, the student's family and school district are supposed to collaborate and formulate an "individualized education plan" (IEP) to meet the student's needs. In addition, the IDEA provides (as interpreted by numerous court decisions, including some by the Supreme Court) that if the school district does not offer or provide appropriate educational services, the student can obtain appropriate private services, including a private school at public expense. As such, if a local school district cannot meet the educational needs of a special-needs student, IDEA grants that student a publicly funded exit option. It's the functional equivalent of a voucher -- a "shadow" voucher.

In theory, and often in practice, the IEP process functions exactly how it should and is the best feasible mechanism for making sure students with special needs can receive an appropriate education.

But what if the school district can't or won't provide the appropriate services?

IT'S EASIER FOR THE RICH

In well-functioning school systems, the local schools usually can provide appropriate services for most special-needs children or recognize their inability to do so and refer the student to an appropriate private provider. In such systems, extended disputes between families and school districts are relatively rare.

Shockingly, many school systems are not well functioning. Their inability to provide an appropriate education for typical students is only mirrored more clearly when it comes to educating students with special needs. But because the latter have both a federal entitlement to an "appropriate" public education and an exit option to enforce that right, special education students have more ability to do something about the system's failures. In theory.

In practice, as another manifestation of their failures, malfunctioning school systems will often fight with all the bureaucratic resources they can muster effectively against families who attempt to use the rights granted under IDEA to obtain services which differ from what the system is offering. Thus, families will often need to fight the malfunctioning school systems to obtain services for their special-needs children. Those fights are necessary even for wealthy families, as children with extreme needs require services which can outstrip even the ability of rich families to pay entirely out of pocket.

My family has lived this reality for many years. We have a severely autistic son who has attended private schools which offer intensive behavioral therapy ("Applied Behavior Analysis" or "ABA," which is the only therapeutic methodology for which much evidence of effectiveness exists) with a student-teacher ratio of 1:1, and has also been receiving extensive ABA and other related services after school. Those schools and related services have enabled our son to make what progress he has been able to achieve. They are also necessarily and extremely expensive. But every single year, we have to "sue" NYC (technically it's not a lawsuit in a court but an impartial hearing as provided under IDEA, but it functions in very similar fashion) to cover the costs of such a school and services when they invariably recommend services far below what is necessary for our son to achieve any educational benefit. We have never lost one of our "suits" yet against NYC, but in the meantime we are required to front the cost of our son's school and services every year and seek eventual reimbursement from NYC. Very, very few families have the financial resources to do so. (And while we have enough resources to front the costs pending reimbursement, we are not nearly rich enough to bear the full costs of our son's school and services - those can exceed $170K per year.) Those that do not either have to move or make do with whatever the system offers, which is often far, far below what is necessary.

It should also be noted that the very malfunctions of large school systems such as NYC make it easier for families such as mine, who have enough resources to go through the battles every year, to obtain eventual public reimbursement for special education services. First, the IEP process described above presupposes intensive consideration of the student's individual educational needs. Large educational bureaucracies, such as NYC's, are not well equipped for that type of individual consideration. This leads to a tendency for the bureaucracies to offer services based on what's convenient and typical rather than what's appropriate for the student. Second, large school bureaucracies are not, to put it mildly, well renowned for their general administrative competence, and the IDEA imposes various elaborate procedural requirements on school districts that are regularly violated. A family can often demonstrate these two facts when necessary to enforce the IDEA against the school district, if they have the time and resources to spare.

The best article ever written about this dynamic can be found here. Since that article was published, we have seen NYC attempt to tighten its procedures...with respect to preparing for eventual hearings with families, not with respect to offering appropriate services. As such, the promise of the IEP process gets perverted into litigation-preparation from the outset. We have also seen NYC pour resources and effort into fighting families in the impartial hearing process; more on that below.

Part of NYC's refusal to recommend appropriate services is based on the fact that none of their public autism programs (with one charter-school exception) offer the intensive behavioral therapies with the 1:1 ratio required for the most severely autistic children like our son, perhaps because they consider it prohibitively expensive, thanks to their union-driven cost structure. Part of it is presumably based on a desire to save money. Our son's school costs over $100,000 a year; replicating it inside NYC's union-driven cost structure would presumably cost much, much more. But another part of it is almost certainly driven by a desire for control over resources: We have seen NYC refuse to approve private services which would have cost less than what they were offering, because the appropriate services were outside the system.

Making IDEA funding portable would, at the least, reduce the harmful effects of malfunctioning bureaucracies' desire for control.

THE CONSEQUENCES OF INEQUALITY

The existence of "shadow" vouchers under IDEA for families (such as mine) with enough resources to obtain them makes the usual concerns of income inequality -- and even the inequalities of our school systems generally -- seem picayune. It is bad enough for "typical" poor students to have as many disadvantages as they do; the consequences are only worse for students with special needs. And it is impossible to exaggerate the extent to which this inequality is created and accentuated by the school systems themselves. Presumably driven by budgetary concerns, we have seen NYC step up their efforts to fight families whose children require extensive services, only adding to the resources needed for families to obtain those "shadow" vouchers and excluding even more families who do not have that money. One example is worth noting: while in most circumstances IDEA requires families to front the cost of private educational services and seek reimbursement from the school district afterwards, in certain circumstances a school district can be required to pay those costs prospectively for poorer families (called "Connors" funding after the court case establishing this doctrine).

Some of the intensive-services autism schools had admitted a certain percentage of students from "Connors" families in order to offer opportunities to students whose families could never afford to front the sticker price. Apparently last year NYC refused to pay for services for numerous families whose entitlement to "Connors" funding was not in dispute. And as a result, some of those schools were forced to stop offering placement to "Connors" students because of the resulting gap in revenue, even telling students who were already attending that they could not continue unless they found alternate means of fronting the tuition.

WE NEED TO GET VOUCHERS OUT OF THE SHADOW

Clearly, the Romney proposal is -- like most campaign proposals -- many details shy of workable policy. But if the details are fleshed out right, it at least has to the potential to actually reduce a massive inequality -- far more so than, say, the "Buffett Rule." Here are a few additional thoughts.

In order for any such proposal to work, state and local special-education funding would have to be portable as well, as that is where most of the funding comes from. Perhaps that can be made a condition of the state receiving IDEA federal funding.
As set out above, because of the expense in providing high-quality intensive special-education services, even private special-education schools ultimately receive most of their tuition from the public (see the New York magazine piece linked above). Offering a voucher for whatever such schools charge would provide incentives for them to...not be overly concerned with cost efficiencies. (See, e.g., the first few decades of Medicare, what has happened to college tuitions, etc.) But this problem could likely be ameliorated by capping the voucher at what the cost would have been for the student to receive such services in the public system. There can even be an element of explicit progressivity in the voucher amount, as well as mandatory co-payments for families other than the poorest. This will likely cost families such as my own more, on a net basis, than the current system where those who can afford to front the costs and navigate the system are likely to get the entire cost reimbursed. I'm all for it.
Aside from the progressive impact, mandatory co-payments for most families should help dissuade families from encouraging dubious diagnoses of special educational needs. While most of us with special needs children are skeptical that families would want diagnoses of nonexistent special needs, diagnosis inflation almost certainly does occur at the margins and co-payments can help minimize that effect. It should also be noted that under the current system, schools may have the exact opposite incentive: Jay Greene and Greg Forster have argued that some of the increases in various special-needs diagnoses (at least through the 1990s; the effect may have slowed or ceased in the last decade) may be attributable to financial incentives for schools. In a response to Laura, they also noted that "the current system creates financial incentives for schools to label students as disabled and then not provide services. The label generates increased funding, but the services cost money. Schools therefore have a financial incentive to diagnose students and then not serve them - to "resist providing expensive services," as McKenna puts it." If Greene and Forster are correct, schools currently have an incentive to diagnose children with special needs and claim the additional funding from the state, skimp on the services the additional money is intended to cover, and pocket the spread. Just like a Wall Street bank! (Perhaps liberals will now be more sympathetic.)
In regular education debates, voucher opponents often scoff at the claims that new schools will be formed to serve students looking to take their vouchers and leave the existing public schools. As Megan pointed out in a debate with Laura several years ago, the existing special education landscape falsifies those scoffs. The existing system of shadow vouchers has funded a network of extremely high quality schools for autism in the greater NYC area, which have extensive waiting lists and people moving across the country for a spot in one of them. Many jurisdictions have extensive limits on the ability of charter schools to open to serve the general populace, which contributes to the perception that new schools won't open to meet the demand. If limits are lifted with respect to schools servicing special-education students (whether separately or as part of a larger school), as Romney's proposal contemplates, there's no reason to think that the market won't clear. (These limits sometimes exist for separate special education schools as well, albeit for other reasons in addition to a desire to limit competition for resources. That would have to be dealt with in a fully fleshed-out policy.)
As noted above, when school systems comprehensively fail to provide adequate special education services, that is typically a symptom of a larger problem providing an appropriate education for most of its students. It is no mistake that the system with the largest percentage of special education students attending private schools at public expense is the famously dysfunctional Washington DC, a system for which special education is the least of its problems. Laura has written about the resentment often directed at families of special needs children: while some of that is about a fear that those children drain resources from the overall system (a fear the school systems are typically all too happy to encourage), another part of it is about the unfairness of only certain families having a publicly funded exit option. And they're right; it is unfair. So while the Romney plan does not explicitly discuss vouchers beyond Title I and IDEA funding, if a viable system is in fact established for those students, it seems likely to lead to natural pressure to expand it to all students. I can think of worse things.

Our Special-Ed System Favors the Rich (and Romney Has a Plan to Fix It)

Megan McArdle — Fri, 01 Jun 2012 18:24:10 GMT

Guest post by Dr. Manhattan, a lawyer in New York City who represents, among others, clients in the investment management industry.

HOW SPECIAL-ED STUDENTS GET "SHADOW" VOUCHERS

In theory, and often in practice, the IEP process functions exactly how it should and is the best feasible mechanism for making sure students with special needs can receive an appropriate education.

But what if the school district can't or won't provide the appropriate services?

IT'S EASIER FOR THE RICH

Making IDEA funding portable would, at the least, reduce the harmful effects of malfunctioning bureaucracies' desire for control.

THE CONSEQUENCES OF INEQUALITY

WE NEED TO GET VOUCHERS OUT OF THE SHADOW

In order for any such proposal to work, state and local special-education funding would have to be portable as well, as that is where most of the funding comes from. Perhaps that can be made a condition of the state receiving IDEA federal funding.
As set out above, because of the expense in providing high-quality intensive special-education services, even private special-education schools ultimately receive most of their tuition from the public (see the New York magazine piece linked above). Offering a voucher for whatever such schools charge would provide incentives for them to...not be overly concerned with cost efficiencies. (See, e.g., the first few decades of Medicare, what has happened to college tuitions, etc.) But this problem could likely be ameliorated by capping the voucher at what the cost would have been for the student to receive such services in the public system. There can even be an element of explicit progressivity in the voucher amount, as well as mandatory co-payments for families other than the poorest. This will likely cost families such as my own more, on a net basis, than the current system where those who can afford to front the costs and navigate the system are likely to get the entire cost reimbursed. I'm all for it.
Aside from the progressive impact, mandatory co-payments for most families should help dissuade families from encouraging dubious diagnoses of special educational needs. While most of us with special needs children are skeptical that families would want diagnoses of nonexistent special needs, diagnosis inflation almost certainly does occur at the margins and co-payments can help minimize that effect. It should also be noted that under the current system, schools may have the exact opposite incentive: Jay Greene and Greg Forster have argued that some of the increases in various special-needs diagnoses (at least through the 1990s; the effect may have slowed or ceased in the last decade) may be attributable to financial incentives for schools. In a response to Laura, they also noted that "the current system creates financial incentives for schools to label students as disabled and then not provide services. The label generates increased funding, but the services cost money. Schools therefore have a financial incentive to diagnose students and then not serve them - to "resist providing expensive services," as McKenna puts it." If Greene and Forster are correct, schools currently have an incentive to diagnose children with special needs and claim the additional funding from the state, skimp on the services the additional money is intended to cover, and pocket the spread. Just like a Wall Street bank! (Perhaps liberals will now be more sympathetic.)
In regular education debates, voucher opponents often scoff at the claims that new schools will be formed to serve students looking to take their vouchers and leave the existing public schools. As Megan pointed out in a debate with Laura several years ago, the existing special education landscape falsifies those scoffs. The existing system of shadow vouchers has funded a network of extremely high quality schools for autism in the greater NYC area, which have extensive waiting lists and people moving across the country for a spot in one of them. Many jurisdictions have extensive limits on the ability of charter schools to open to serve the general populace, which contributes to the perception that new schools won't open to meet the demand. If limits are lifted with respect to schools servicing special-education students (whether separately or as part of a larger school), as Romney's proposal contemplates, there's no reason to think that the market won't clear. (These limits sometimes exist for separate special education schools as well, albeit for other reasons in addition to a desire to limit competition for resources. That would have to be dealt with in a fully fleshed-out policy.)
As noted above, when school systems comprehensively fail to provide adequate special education services, that is typically a symptom of a larger problem providing an appropriate education for most of its students. It is no mistake that the system with the largest percentage of special education students attending private schools at public expense is the famously dysfunctional Washington DC, a system for which special education is the least of its problems. Laura has written about the resentment often directed at families of special needs children: while some of that is about a fear that those children drain resources from the overall system (a fear the school systems are typically all too happy to encourage), another part of it is about the unfairness of only certain families having a publicly funded exit option. And they're right; it is unfair. So while the Romney plan does not explicitly discuss vouchers beyond Title I and IDEA funding, if a viable system is in fact established for those students, it seems likely to lead to natural pressure to expand it to all students. I can think of worse things.

How Good Parents and Good Intentions Lead to Dramatically Unequal Schools

Megan McArdle — Thu, 31 May 2012 19:10:54 GMT

Guest post by Laura McKenna, former political science professor, blogger, and freelance writer.

With the cutbacks in school funding, many school districts are creating education foundations to supplement programs in the schools.

Local education foundations (LEF) are 503(c)(3) groups formed in local school districts. They usually provide funding for auxiliary educational activities or after school activities, like Lego Leagues, music programs, or special field trips. Unlike PTA groups, they tend to focus on gathering large scale donations from local businesses or corporations.

There are wide variations in how much these groups can collect based on the wealth of the community. In a report in the Stanford Social Innovation Review, Rob Reich points to two communities and their foundations. In wealthy Woodside, CA, which has a median household income of $171,000, the foundation collected $10 million between 1998 and 2003. A nearby town with an average income of $45,000 does not have a foundation, but it could use one to provide basic necessities for the school like textbooks and classroom supplies.

Reich also writes that individuals and business who donate to these foundations receive tax breaks. In other words, government is subsidizing foundations that channel money to wealthy school districts. The poor school districts that are unable to create these foundations receive nothing. Ultimately, charitable donations are not going to areas where it is needed most.

In Slate magazine in November, Helaine Olen described the impact of wealthy school foundations in California.

One elementary school is so adept at getting its wealthy parents to open their checkbooks that it is able to spend an additional $2,000 per student on enrichment activities, which include employing multiple reading and instructional assistants, as well as classes in chorale music, marine science, and art. But at another Santa Monica-Malibu Unified school, located just a few miles away, a significant percentage of the kids come from economically disadvantaged homes and the local PTA can't even muster up an additional $100 per child, leaving the students to make do with a truncated music program, a few art classes, and one measly instructional assistant.

A couple of years ago, I was a trustee on our town's school foundation. The total budget for the foundation was extremely small, in part because the foundation was only two years old. The bigger problem was that we lived in a town of modest means. The foundation competed with the PTAs and the baseball teams for $25 donations from the local pharmacy and bagel shop. There were no corporate headquarters in town or hedge fund managers to milk for cash.

Still, the foundation did a lot of good even with its tiny budget. It provided money and parental support for a Lego League and a small school garden. It brought in a different set of parents to the school; it attracted people who were more comfortable in a corporate board room, rather than a PTA bake sale. As a big believer in the power of parental involvement in schools, I have to cheer for this development.

Foundations are part in parcel with other efforts in wealthier communities to supplement education. The local middle schools in our area send kids on three day trips to Boston or DC and ask parents to cover the tab. One town asked that each parent pay over $900 per child.

Infusions of cash from parents, PTAs, and foundations are invisible donations to schools, which may be increasing school inequity. Both Reich and Olen are concerned about this development. At the same time, these foundations are also a new means for parental involvement and have the potential to bring in money into starving school districts, as well as wealthy districts.

Since this is a blog post, rather than a proper article, I have decided to take the coward's way out of this argument and let the readers decide. Tell me what you think.

How Good Parents and Good Intentions Lead to Dramatically Unequal Schools

Megan McArdle — Thu, 31 May 2012 19:10:54 GMT

Guest post by Laura McKenna, former political science professor, blogger, and freelance writer.

With the cutbacks in school funding, many school districts are creating education foundations to supplement programs in the schools.

In Slate magazine in November, Helaine Olen described the impact of wealthy school foundations in California.

One elementary school is so adept at getting its wealthy parents to open their checkbooks that it is able to spend an additional $2,000 per student on enrichment activities, which include employing multiple reading and instructional assistants, as well as classes in chorale music, marine science, and art. But at another Santa Monica-Malibu Unified school, located just a few miles away, a significant percentage of the kids come from economically disadvantaged homes and the local PTA can't even muster up an additional $100 per child, leaving the students to make do with a truncated music program, a few art classes, and one measly instructional assistant.

Since this is a blog post, rather than a proper article, I have decided to take the coward's way out of this argument and let the readers decide. Tell me what you think.

50 Shades of Money: The Alluring Economics of the Romance Novel

Megan McArdle — Thu, 31 May 2012 16:16:04 GMT

Guest post by Laura McKenna, former political science professor, blogger, and freelance writer.

I became fascinated with the romance novel industry this spring.

It all began when a friend recommended that I check out a romance novel with an autistic hero, The Madness of Lord Ian Mackenzie. For multiple reasons, I found this book pretty horrifying. In order to purge my mind of this book, I decided that I had to read a different book pronto. Based on recommendations by Amazon readers, I downloaded In Bed with a Highlander and two other books, by Maya Banks, while sitting poolside on vacation in Puerto Rico.

I blogged about these books in a rather disdainful manner and was promptly smacked down by my readers, many of whom are highly educated women. They told me that I was unfair. They gave me a whole lesson about the academic journals that are devoted to the subject. They pointed me to Mary Bly, an English professor at Fordham, who writes best sellers under the pen name, Eloisa James. I learned about websites, like Smart Bitches, Trashy Novels.

The Romance Novel industry is big business for publishers. According to the Romance Writers of American website, romance novels brought in $1.4 billion in sales in 2010. They far outperform other genres of literature, including religious/inspirational books, mystery novels, science fiction and classic literary fiction.

Just as I was getting this education, Fifty Shades of Grey exploded. I read it. OK, I wasn't impressed with the quality of the writing. I was equally annoyed at some of the commentary on the book that tried to determine what the success of this book says about the status of feminism.

I am, however, impressed with the sales figures for this book. The book sold 10 million copies in six weeks. It completely dominates (heh) the New York Times best sellers lists. Last week, the author signed copies of the book at our local Barnes and Nobel. At 9am, a line of people wrapped around the building waiting for bracelets for that evening's signing.

Romance novels have always been a big sellers. They have a large, devoted following, even among highly educated women. The 50 Shades books hit a chord with women, because they take the traditional romance novel to a different level. There's an added level of naughtiness, a curiousity about a life style, and a dollop of materialism. Smart women are reading, writing, and buying these books. They might be reading them in the privacy of their e-readers, but they are surely reading them.

My spring reading list taught me to hold back my judgmental side and appreciate this subculture for what it is. Fun.

50 Shades of Money: The Alluring Economics of the Romance Novel

Megan McArdle — Thu, 31 May 2012 16:16:04 GMT

Guest post by Laura McKenna, former political science professor, blogger, and freelance writer.

I became fascinated with the romance novel industry this spring.

The Economic Impact of Autism on Families

Megan McArdle — Thu, 31 May 2012 14:50:09 GMT

Guest post by Laura McKenna, former political science professor, blogger, and freelance writer.

After parents first receive the news from a doctor or a teacher that their child is on the autistic spectrum, there is an inevitable period of grieving as they process the news. They must accept the fact that their child will face serious challenges and may miss out on the milestone events -- a home run on the Little League game, a driver's license, the prom -- that other parents proudly post on their Facebook page.

Most parents get over it. The child will have his own achievements and will reach different milestones, which are treasured as much as the traditional ones. Parental love and pride pushes aside the devastation.

However, once the parent overcomes that grieving process, they have to endure a lifetime of smaller cuts. The therapy, which is so necessary for the child's success, is very expensive. Parents will fight insurance companies and school districts to cover the costs. Often, they are unsuccessful, and they must deplete family bank accounts. They face hostile school districts and community members who accuse the family of stealing their children's money. Families become drained both emotionally and financially.

Working on their children's behalf becomes a full-time job. One parent, often the mother, either stops working or works less hours, in order to manage the educational and therapy of the child. She must shuttle the child long distances to find the right services. She must navigate the health care bureaucracy. She must meet frequently with teachers and constantly negotiate with the school district to get the therapy that their children need.

In an article in USA Today, Ricardo Dolmetsch, an associate professor of neurobiology at Stanford University, says his son's autism diagnosis has changed both his personal and professional life.

This work was made more difficult, Dolmetsch says, by the fact that caring for a child with a disability is a full-time job. Although his wife, neurobiologist Asha Nigh, supports his research, such as through managing projects and writing grant proposals, she has put her own scientific career on hold in order to care for their son and his brother, age 7. In his opinion, Dolmetsch says, his wife has earned an honorary doctorate "in getting insurance coverage for stuff."
"The finances of autism are brutal," Dolmetsch says. "The amount of continuous care these kids need is a lot. ... The only thing that works at all are behavioral treatments," which, depending on the state and one's health plan, may not be covered by insurance, he says. "They're very intensive... and they're horrifyingly expensive."

Dolmetch's experiences are not unique. A recent study looked at cost of autism on families. The research was conducted by David Mandell, associate director of the Center for Autism Research at the Children's Hospital of Philadelphia and associate director of the Center for Mental Health Policy and Services Research at the University of Pennsylvania, in Philadelphia.

Mandell found that mothers of children with autism earned, on average, less than $21,000 a year. That was 56 percent less than mothers whose children had no health limitations and 35 percent less than mothers whose children had other health limitations.

All this work makes a real difference for the child. A study coming from Columbia found that kids who outgrew many of their autistic characteristics received early, intensive therapy, which was facilitated by parents with more education and financial wherewithal.

As the reported cases of autism have soared in recent years, so have the overall costs. Some estimate that autism costs society $137 billion per year. And nobody wants to pick up that big tab. Autism falls into a black hole between medical and educational services. Insurance companies expect schools to pay, and schools want the insurance companies to pay.

Parents who have the educational and financial resources can provide these therapies for their children. They pay for it themselves. They move to wealthier school districts. They hire lawyers. They spend hours on the phone with insurance companies. They network with other parents to learn about new doctors and compare services in other school districts. Parents who don't have those resources are unable to get the right help for their children.

What should be done? My co-blogger, Dr. Manhattan, will follow up with one proposal.

The Economic Impact of Autism on Families

Megan McArdle — Thu, 31 May 2012 14:50:09 GMT

Guest post by Laura McKenna, former political science professor, blogger, and freelance writer.

In an article in USA Today, Ricardo Dolmetsch, an associate professor of neurobiology at Stanford University, says his son's autism diagnosis has changed both his personal and professional life.

This work was made more difficult, Dolmetsch says, by the fact that caring for a child with a disability is a full-time job. Although his wife, neurobiologist Asha Nigh, supports his research, such as through managing projects and writing grant proposals, she has put her own scientific career on hold in order to care for their son and his brother, age 7. In his opinion, Dolmetsch says, his wife has earned an honorary doctorate "in getting insurance coverage for stuff."
"The finances of autism are brutal," Dolmetsch says. "The amount of continuous care these kids need is a lot. ... The only thing that works at all are behavioral treatments," which, depending on the state and one's health plan, may not be covered by insurance, he says. "They're very intensive... and they're horrifyingly expensive."

What should be done? My co-blogger, Dr. Manhattan, will follow up with one proposal.

A Conservative's Approach to Combating Climate Change

Megan McArdle — Wed, 30 May 2012 15:11:00 GMT

Guest post by Jonathan H. Adler, a professor at the Case Western Reserve University School of Law and regular contributor to the Volokh Conspiracy

No environmental issue is more polarizing than global climate change. Many on the left fear increases in atmospheric concentrations of greenhouse gases threaten an environmental apocalypse while many on the right believe anthropogenic global warming is much ado about nothing and, at worst, a hoax. Both sides pretend as if the climate policy debate is, first and foremost, about science, rather than policy. This is not so. There is substantial uncertainty about the scope, scale, and consequences of anthropogenic warming, and will be for some time, but this is not sufficient justification for ignoring global warming or pretending that climate change is not a serious problem.

Though my political leanings are most definitely right-of-center, and it would be convenient to believe otherwise, I believe there is sufficient evidence that global warming is a serious environmental concern. I have worked on this issue for twenty years, including a decade at the Competitive Enterprise Institute where I edited this book. I believe human activities have contributed to increases in greenhouse concentrations, and these increases can be expected to produce a gradual increase in global mean temperatures. While substantial uncertainties remain as to the precise consequences of this increase and consequent temperature rise, there is reason to believe many of the effects will be quite negative. Even if some parts of the world were to benefit from a modest temperature increase -- due to, say, a lengthened growing season -- others will almost certainly lose.

Many so-called skeptics note that environmental activists and some climate scientists exaggerate the likely effects of anthropogenic warming, distorting scientific findings and overstating the extent to which contemporary events (hurricanes, etc.) may be linked to human activity to date. But the excesses of climate activists and bad behavior by politically active scientists (and the IPCC) do not, and should not, discredit the underlying science, or justify excoriating those who reach a different conclusion. Indeed, most skeptics within the scientific community readily accept the basic science. They contest the more extreme climate projections, but accept the basic scientific claims. Take, for example, Patrick Michaels of the Cato Institute. In one of his recent books, Climate of Extremes: The Global Warming Science They Don't Want You to Know (co-authored with Robert Balling, another prominent "skeptic"), Michaels readily acknowledges that there is a warming trend and that human activity shares some of the blame.

The position espoused by Michaels, Balling and most (but not all) skeptics is that anthropogenic global warming is occurring, but it is more of a nuisance than a catastrophe. Some even argue that the net effect of climate change on the world will be positive, due to increased growing seasons, less severe winters and the like. Were I a utilitarian, and if I placed substantial faith in such cost-benefit studies, I might find these arguments convincing, but I'm not and I don't. Even if these skeptics are correct that global warming will not be catastrophic and that the net effects in the near-to-medium term might be positive, there are still reasons to act.

Accepting, for the sake of argument, that the skeptics' assessment of the science is correct, global warming will produce effects that should be of concern. Among other things, even a modest increase in global temperature can be expected to produce some degree of sea-level rise, with consequent negative effects on low-lying regions. Michaels and Balling, for instance, have posited a "best guess" that sea levels will rise 5 to 11 inches over the next century. Such an increase in sea levels is likely manageable in wealthy, developed nations, such as the United States. Poorer nations in the developing world, however, will not be so able to adapt to such changes. This is of particular concern because these effects will be most severe in those nations that are both least able to adapt and least responsible for contributing to the concentration of greenhouse gases in the atmosphere.

It is a well established principle in the Anglo-American legal tradition that one does not have the right to use one's own property in a manner that causes harm to one's neighbor. There are common law cases gong back 400 years establishing this principle and international law has long embraced a similar norm. As I argued at length in this paper, if we accept this principle, even non-catastrophic warming should be a serious concern, as even non-catastrophic warming will produce the sorts of consequences that have long been recognized as property rights violations, such as the flooding of the land of others.

My argument is that the same general principles that lead libertarians and conservatives to call for greater protection of property rights should lead them to call for greater attention to the most likely effects of climate change. It is a well recognized principle of common law that if company A is flooding the land of person B, it is irrelevant whether company A generates lots of economic prosperity for the local community (including B). A's action would still violate B's property rights, and B would be entitled to relief of some sort. By the same token, if the land of a farmer in Bangladesh is flooded, due in measurable and provable part to human-induced climate change, why would he be any less entitled to redress than a farmer who has his land flooded by his neighbor's land-use changes? Property rights should not be sacrificed as part of some utilitarian calculus. Libertarians readily accept this principle when government planners violate property rights in the name of economic development (see e.g., Kelo v. New London). Yet they seem to abandon their commitment to property rights when it comes to global warming.

I readily recognize that there is, as yet, no international mechanism that adjudicate warming-based disputes, and I am quite sympathetic to those who believe any international entity capable of adjudicating such disputes would do more harm than good, but this does not negate the principle that global warming is, as best we can tell, likely to cause harms that should be addressed. The question is how to do it.

Accepting that global warming is a serious problem does not require the embrace of federal regulation of greenhouse gases under the Clean Air Act, as currently undertaken by the EPA. I have been quite critical of these efforts, which I believe are based on a misinterpretation of the Act by the Supreme Court. CAA regulation will be extremely costly but will not produce emission reductions sufficient to stabilize atmospheric concentrations of greenhouse gases. The pork-laden cap-and-trade legislation passed by the House of Representatives would not be much better. What then should we do?

If the effects of global warming are to be mitigated, it is necessary to stabilize atmospheric concentrations of greenhouse gases at a reasonable level. The emission reductions necessary for this to be achieved are enormous, and far beyond the capability of existing technologies. Just to reach a reasonable intermediate target the U.S. would have to reduce its emissions to levels not seen in 100 years, and reduce per capita emissions to levels not seen since Reconstruction. And even this would not be enough, for if equivalent emission reductions are not made elsewhere, it would all be for naught. As I explain in the first part of this paper, dramatic technological innovation is necessary to address the threat of climate change.

As Roger Pielke Jr. persuasively argues in his book The Climate Fix, nations will not decarbonize their economies until it is relatively cheap and easy to do so. Therefore, those who are concerned about climate change, as I am, should be pursuing policies that will make it cheaper and easier to adopt low-carbon technologies. What should these policies be? I've suggested several.

First, the federal government should support technology inducement prizes to encourage the development of commercially viable low-carbon technologies. For reasons I explain in this paper, such prizes are likely to yield better results at lower cost than traditional government R&D funding or regulatory mandates that seek to spur innovation.

Second, the federal government should seek to identify and reduce barriers to the development and deployment of alternative technologies. Whatever the economic merits of the Cape Wind project, it is ridiculous that it could take over a decade for a project such as this to go through the state and federal permitting processes. This sort of regulatory environment discourages private investment in these technologies.

Third, I believe the United States should adopt a revenue-neutral carbon tax, much like that suggested by NASA's James Hansen. Specifically, the federal government should impose a price on carbon that is fully rebated to taxpayers on a per capita basis. This would, in effect, shift the incidence of federal taxes away from income and labor and onto energy consumption and offset some of the potential regressivity of a carbon tax. For conservatives who have long supported shifting from an income tax to a sales or consumption tax, and oppose increasing the federal tax burden, this should be a no brainer. If fully rebated, there is no need to worry about whether the government will put the resulting revenues to good use, but the tax would provide a significant incentive to reduce carbon energy use. Further, a carbon tax would be more transparent and less vulnerable to rent-seeking and special interest mischief than equivalent cap-and-trade schemes and would also be easier to account for within the global trading system. All this means a revenue-neutral carbon tax could be easier to enact than cap-and-trade. And as for a broader theoretical justification, if the global atmosphere is a global commons owned by us all, why should not those who use this commons to dispose of their carbon emissions pay a user fee to compensate those who are affected.

Fourth and finally, it is important to recognize that some degree of warming is already hard-wired into the system. This means that some degree of adaptation will be necessary. Yet as above, recognizing the reality of global warming need not justify increased federal control over the private economy. There are many market-oriented steps that can, and should, be taken to increase the country's ability to adapt to climate change including, as I've argued here and here, increased reliance upon water markets, particularly in the western United States where the effects of climate change on water supplies are likely to be most severe.

I recognize that a relatively brief post like this is unlikely to convince many people who have set positions on climate change. I can already anticipate a comment thread filled with charges and counter-charges over the science. But I hope this post has helped illustrate that the embrace of limited government principles need not entail the denial of environmental claims and that a concern for environmental protection need not lead to an ever increasing mound of prescriptive regulation. And for those who wish to explore these arguments in further detail, there's lots more in the links I've provided throughout this post.

A Conservative's Approach to Combating Climate Change

Megan McArdle — Wed, 30 May 2012 15:11:00 GMT

Guest post by Jonathan H. Adler, a professor at the Case Western Reserve University School of Law and regular contributor to the Volokh Conspiracy

How Good Parents and Good Intentions Lead to Dramatically Unequal Schools

Megan McArdle — Tue, 29 May 2012 19:10:54 GMT

Guest post by Laura McKenna, former political science professor, blogger, and freelance writer.

With the cutbacks in school funding, many school districts are creating education foundations to supplement programs in the schools.

In Slate magazine in November, Helaine Olen described the impact of wealthy school foundations in California.

One elementary school is so adept at getting its wealthy parents to open their checkbooks that it is able to spend an additional $2,000 per student on enrichment activities, which include employing multiple reading and instructional assistants, as well as classes in chorale music, marine science, and art. But at another Santa Monica-Malibu Unified school, located just a few miles away, a significant percentage of the kids come from economically disadvantaged homes and the local PTA can't even muster up an additional $100 per child, leaving the students to make do with a truncated music program, a few art classes, and one measly instructional assistant.

Since this is a blog post, rather than a proper article, I have decided to take the coward's way out of this argument and let the readers decide. Tell me what you think.

Is Washington, D.C., Really the Environment's Savior?

Megan McArdle — Tue, 29 May 2012 16:38:12 GMT

Guest post by Jonathan H. Adler, a professor at the Case Western Reserve University School of Law and a regular contributor to the Volokh Conspiracy.

It can be a bit lonely working on environmental issues from the "right" side of the political spectrum. Environmental academics and activists rarely have much patience (let alone sympathy) for principles that would limit the scope of government power and few conservatives or libertarians take environmental issues seriously. Some of my friends on the right seem to think that any environmental problem the market cannot magically solve must be a hoax. There's no doubt many environmental threats have been exaggerated, and the capacity of traditional regulatory institutions to address environmental concerns is often oversold, but serious environmental problems remain, and they should be addressed. Yet in the political sphere, those on the right either oppose every environmental measure with a reactionary fervor or they insist that whatever we do, we just have to make it cost a bit less. Neither is a satisfactory response. Blind opposition to the Sierra Club's agenda does not an environmental policy make. Nor is there a compelling case for always doing environmental initiatives on the cheap. Across the aisle, unfortunately, concerns for regulatory costs and limitations are viewed with equal suspicion.

As illustrated in the past three posts, much of my work explores the possibility and potential of a "pro-environment" policy agenda that is consistent with principles of limited government. This sort of approach is often characterized as "free market environmentalism" or "FME." This moniker may be a bit of a misnomer in that it emphasizes the "market" rather than the underlying set of institutions upon which markets - and sound conservation - both depend, but it certainly communicates the idea of trying to reconcile free enterprise and environmental protection through the recognition and protection of property rights in environmental resources.

This approach cuts against the grain of conventional environmental policy. Suggestions for dramatic reform of environmental laws is regularly characterized as "anti-environmental." Part of the problem is the standard fable of federal environmental regulation which recounts an overly romanticized view of the federal government's role in environmental protection. Based on this fable, many believe any effort to curtail federal regulatory authority, expand protection of property rights, or create greater state flexibility is an attack on environmental protection. But it ain't necessarily so.

According to the standard fable, post-war environmental conditions got inexorably worse until the nation's environmental consciousness awoke in the 1960s and demanded action. State and local governments were environmental laggards, according to this story, and only the federal government was capable of safeguarding ecological concerns. Events such as the 1969 fire on the Cuyahoga River, memorialized in Time magazine with this picture, are pointed to as support for this traditional account. This fire, which helped spur passage of the 1972 Clean Water Act, is constantly cited as evidence of how bad things were before the federal government got involved.

Yet the standard fable is just that, a fable - a fictionalized account with some truth, but fiction nonetheless. Let's start with the 1969 fire. There was a fire on the Cuyahoga River in June 1969, Time magazine did run a photo of a fire on the Cuyahoga, and the story of the fire did help spur passage of the CWA. But that's about where the truth ends. The fire was actually a minor event in Cleveland, largely because river fires on the Cuyahoga had once been common, as they had been on industrialized rivers throughout the United States, throughout the late 19th and early 20th centuries. But river fires were costly and posed serious risks to people and property, prompting local governments and private industry to act. The fire was not evidence of how bad things could get, but a reminder of how bad things had been.

Further, the June 1969 fire was far smaller and less significant than the fires of years past. Where there had been some major infernos on the Cuyahoga in years past, the 1969 fire was not among them. The fire burned for less than thirty minutes, and was out before the cameras arrived. (Here's the closest thing to a picture of that fire.) And that picture in Time magazine? It was not of the 1969 fire but of a fire from 1952. Apparently the editors of Time felt the need to dramatize their story of environmental ruin with a picture of a real fire, so they used the best picture they could find, even if it was not of the fire featured in their story. [For those interested, here is an extensive treatment of this history.]

The problems with the standard fable extend beyond the story of one river. While there were plenty of serious environmental problems in the 1960s, it's wrong to suggest everything was getting inexorably worse until the federal government got involved. Just as the problem of river fires had gotten better, not worse, prior to the 1969 Cuyahoga river, many environmental indicators were improving before the enactment of the major federal environmental laws. According the Environmental Protection Agency's first national water quality inventory in 1972, levels of some key pollutants had been declining significantly in the decade prior to enactment of the CWA. Ambient concentrations of some air pollutants, such as sulfur dioxide, had declined substantially before enactment of the federal Clean Air Act. Wetland loss rates plummeted before the extension of federal regulatory protection. And so on. Not every trend was positive, to be sure, but many were. In particular, those environmental concerns that were most obvious, understandable, and costly were improving -- largely due to a combination of state, local and private efforts - whereas emerging or less-well understood problems were not. In some cases federal regulation augmented and enhanced these preexisting efforts, but in other areas it imposed redundant or excessive controls that crowded out more locally tailored efforts. (For more on these points, see here and here.)

None of this means that all federal environmental regulation was unnecessary or unwise. There are some environmental problems that state and local governments are unwilling or unable to address on their own. But, contrary to the standard fable, federal environmental regulation was not always necessary or an improvement over the available alternatives. Among other things it had the effect of dampening innovation and experimentation in environmental protection, encouraging a "one-size-fits-all" approach to some environmental problems that too often becomes "one-size-fits-nobody." And if there is to be renewed experimentation and innovation in environmental policy, there needs to be a recognition that not all environmental policy decisions are best made in Washington, D.C. My own proposal for how to encourage greater environmental innovation can be found here.

In my view, greater state flexibility is a necessary, but not sufficient, for meaningful environmental reform. Environmental problems are hard, and the best solutions are not always apparent. Even where there is a broad consensus on the desirability of a particular policy approach, questions of implementation and design remain. Experimentation and innovation are necessary to discover how best to get these details right. I believe that greater reliance on property rights and market institutions will lead to more effective and equitable environmental protection, but until such approaches are tried, the claim is speculative. Only by trying new approaches can we learn which measures best succeed, or fail. I believe property-based approaches will emerge as the best (or least bad) approach to many environmental problems, but we will not know for sure until we try. And unless one is truly satisfied with current approaches to environmental protection (and few are), there is no reason not to let the experiments begin.

Is Washington, D.C., Really the Environment's Savior?

Megan McArdle — Tue, 29 May 2012 16:38:12 GMT

Guest post by Jonathan H. Adler, a professor at the Case Western Reserve University School of Law and a regular contributor to the Volokh Conspiracy.

How Property Rights Could Help Save the Environment

Megan McArdle — Tue, 29 May 2012 13:10:35 GMT

Guest post by Jonathan H. Adler, a professor at the Case Western Reserve University School of Law and a regular contributor to the Volokh Conspiracy.

In my past two posts I've made a brief case for approaching environmental problems from a property rights perspective. In the first post I noted that Garrett Hardin identified private property (or something formally like it) as a solution to the "tragedy of the commons," and suggested that this sort of approach has been under-utilized in modern environmental policy. In a second post I discussed how the recognition of property rights in fisheries have, in fact, prevented the tragedy of the commons in marine fisheries. This is because transferable property rights, where properly defined and effectively enforced, align an owner's incentives with the value of the underlying resource. Fisheries are in trouble the world over, but property-based management regimes are a demonstrated way to prevent overfishing and fishery collapse.

The creative extension of property rights to ecological resources could help address many environmental problems. Particularly in the case of natural resources, property rights are a viable and demonstrated means of enhancing sustainability, particularly when compared to the available political alternatives. For those interested in more on this general approach, I have two articles which discuss this general approach at greater length: "Free & Green: A New Approach to Environmental Protection" and "Back to the Future of Conservation: Changing Perceptions of Property Rights and Environmental Protection." Work by others along these lines can be found on the website of the Property and Environment Research Center (PERC), a Bozeman-based think tank at which I am a senior fellow.

At the same time there is increasing evidence that a failure to respect and protect property rights undermines environmental stewardship, particularly on private land. This is important in a country like the United States in which a majority of land is privately owned. This problem is most evidence in the context of endangered species. A majority of those species listed as endangered or threatened rely upon private land for some or all of their habitat. If these species are not saved on private land, they may not be saved at all. Yet the Endangered Species Act, in effect, punishes private landowners for having maintained their land in a way that is beneficial for listed species. The end result, as empirical research has shown, is a decline in endangered species habitat on private land. Greater protection of property rights could actually enhance species conservation, as I explain here. (And for more on the Endangered Species Act in particular, see this book.)

Whatever the benefits of property rights for environmental protection, they are no panacea. Where property rights are a particularly effective way of aligning incentives for resource conservation, the application of property-rights approaches to pollution problems is more difficult. In principle, a commitment to property rights should entail a commitment to protecting people and their property from unprivileged or unconsented to invasions. Imposing waste or emissions on another's land should be recognized as a violation of their rights. In practice, however, this can be difficult to do. Whereas it may be relatively easy to adjudicate disputes between neighboring landowners, such as when one neighbor's activities generate odors or smoke that interfere with the other, it is more difficult to address those pollution problems that involve numerous parties on either side of the equation, particularly if one believes tort litigation, in the form of common law nuisance actions, is the best way to address pollution problems. I explore these problems in greater depth in this paper forthcoming in Critical Review.

While property-based environmental strategies have their limitations, they should not be overstated. Quite often, "markets" or private enterprise are blamed for environmental problems that have other roots. Nobel laureate Ronald Coase noted this phenomenon in his seminal essay, "The Problem of Social Cost"), when he commented on those who blame nuisances, environmental and otherwise, on market failure.

When they are prevented from sleeping at night by the roar of jet planes overhead (publicly authorized and perhaps publicly operated), are unable to think (or rest) in the day because of the noise and vibration from passing trains (publicly authorized and perhaps publicly operated), find it difficult to breathe because of the odour from a local sewage farm (publicly authorized and perhaps publicly operated) and are unable to escape because their driveways are blocked by a road obstruction (without any doubt, publicly devised), their nerves frayed and mental balance disturbed, they proceed to declaim about the disadvantages of private enterprise and the need for Government regulation.

Coase's immediate point is that problems blamed on private markets often have political roots, such as when the government authorizes or encourages environmentally destructive behavior. Pollution resulting from government subsidies for favored industries is a good example. More broadly, this passage suggests it is important to consider the underlying institutional arrangements when diagnosing environmental ills. Consider the tragedy of the commons scenario discussed before. Even if the relevant resource users are for-profit corporations, it would be a mistake to label a commons problem as "market failure" or evidence of the environmental rapaciousness of free enterprise. The reason for the tragedy of the commons has little to do with capitalism or corporate entities and everything to do with the underlying institutional arrangements, and the lack of property rights in particular.

Environmental problems are difficult, and typically defy easy solution. Though I believe in property-based solutions to many (if not most) environmental problems, the viability of such approaches should not be oversold. At the same time, the environmental limitations of property rights and markets should not be overstated, particularly in comparison to the viable regulatory alternatives. In environmental policy we rarely have the option of pursuing a clearly identifiable "ideal" approach. Rather, our choice comes from the collection of second-best (and third-best, fourth-best, etc.). The question is not which approach is perfect, but which approach is better (or not as bad) as the others.

How Property Rights Could Help Save the Environment

Megan McArdle — Tue, 29 May 2012 13:10:35 GMT

Guest post by Jonathan H. Adler, a professor at the Case Western Reserve University School of Law and a regular contributor to the Volokh Conspiracy.

When they are prevented from sleeping at night by the roar of jet planes overhead (publicly authorized and perhaps publicly operated), are unable to think (or rest) in the day because of the noise and vibration from passing trains (publicly authorized and perhaps publicly operated), find it difficult to breathe because of the odour from a local sewage farm (publicly authorized and perhaps publicly operated) and are unable to escape because their driveways are blocked by a road obstruction (without any doubt, publicly devised), their nerves frayed and mental balance disturbed, they proceed to declaim about the disadvantages of private enterprise and the need for Government regulation.

Wall Street's Obama Fury: Sometimes Even Spoiled Brats Have a Point

Megan McArdle — Fri, 25 May 2012 18:02:32 GMT

Guest post by Dr. Manhattan, a lawyer in New York City who represents, among others, clients in the investment management industry.

Paul Krugman argues in his current column that "Wall Streeters" are nothing but a bunch of spoiled brats throwing temper tantrums (who have contributed nothing of value to the economy, to boot). Krugman's view echoes those of other commentators such as Alec MacGillis' epic March cover story in the New Republic about how the hedge fund community loved Obama in 2008 and has since turned on him. However, MacGillis' story points to at least one very rational reason why the hedge fund and private equity communities have turned on Obama, which is at odds with the "spoiled brats" narrative.

Specifically, everyone knows how the Obama administration wants to tax "carried interest" received by general partners of hedge and private equity funds as ordinary income rather than as capital gains. On the one hand, that's a clear attack on the economic interests of the people running those funds (and making big donations with the proceeds); on the other, there's a clear argument that the carried interest should in fact be treated as compensation for services rather than capital gains. However, the Obama administration's proposals in fact went much further, as MacGillis summarizes:

The fault line that emerged was over the treatment of carried interest, the "hedge fund loophole," which allowed partners in investment firms to have their compensation--typically, a 20 percent cut of profits--taxed at the 15 percent capital gains rate instead of the 35 percent top rate for ordinary income.

Despite its name, the loophole benefited private-equity partners more than most hedge fund managers, who often trade on too short-term a basis to qualify for it. But hedge funds and private-equity firms alike bucked as it became clear that Congress was intent on closing the loophole in such a way that would hit all of them in a place that hurt: their profits, should they decide to sell stakes in their firm. Tax reformers had worried that, if the loophole was closed, managers would respond by selling shares in their firms to a third party. The money they gained from the sale--essentially, up-front payment for the firm's expected cut of investment gains--would be taxed at a lower rate as capital gains. In order to prevent one loophole being replaced by another, the emerging legislation would tax part of the sale of a stake in a firm at the much higher rate for ordinary income.
To many fund managers, this approach, which they dubbed the "enterprise value tax," was pure expropriation: They had built their firms from scratch and felt they deserved to have any sale taxed as capital gains. In his letter in 2010, Loeb declared the proposal an "arguably unconstitutional Bill of Attainder." The lobbyist who has represented hedge funds says: "The biggest thing that's infuriating to the hedge fund industry--the single biggest thing--is this enterprise-value tax. They feel they've been singled out. ... [It] is what they're metaphysically upset about. (Emphasis added.)

Hedge and private equity fund managers may be every bit the spoiled brats that MacGillis and Krugman say they are, but sometimes even spoiled brats are treated unfairly. The proposed "enterprise value tax" would in fact go far beyond putting carried interest on par with ordinary income; it would single out the sale of one kind of business for tax treatment not applicable to (as far as I know) any other kind of business at all. (I would like to know if there are other examples of business sales not being eligible for capital gains treatment.)

And how in the world is realizing capital gains by selling a portion of one's business a "loophole?" The proposed tax isn't aimed at some types of sale transactions which could be argued don't actually transfer the business interest; it would apply to any sale of any amount of a business which advises such funds (see page 139 of the proposed American Jobs Act). Is selling stock after holding it for 1 year rather than 364 days a "loophole" because the sale then qualifies for long-term capital gain treatment?) If selling some or all of a business is a "loophole," then the term "loophole" has no meaning other than "something which enables people I don't like to reduce their taxes."

Substantively, this is no different than, say, if revulsion at Mark Zuckerberg inspired a proposed tax code change to render the sale of shares in technology company IPOs ineligible for capital gain treatment. I'd respectfully suggest that if such a change was ever mooted, the reaction from Silicon Valley and their fans would make the billionaire egotists excoriated by Krugman and MacGillis' piece seem like Buddhists by comparison. Sometimes even paranoids have real enemies, and it's not surprising that they'd oppose people who have targeted them in such unique fashion. Even if they really are a bunch of spoiled brats.

Wall Street's Obama Fury: Sometimes Even Spoiled Brats Have a Point

Megan McArdle — Fri, 25 May 2012 18:02:32 GMT

The fault line that emerged was over the treatment of carried interest, the "hedge fund loophole," which allowed partners in investment firms to have their compensation--typically, a 20 percent cut of profits--taxed at the 15 percent capital gains rate instead of the 35 percent top rate for ordinary income.

Despite its name, the loophole benefited private-equity partners more than most hedge fund managers, who often trade on too short-term a basis to qualify for it. But hedge funds and private-equity firms alike bucked as it became clear that Congress was intent on closing the loophole in such a way that would hit all of them in a place that hurt: their profits, should they decide to sell stakes in their firm. Tax reformers had worried that, if the loophole was closed, managers would respond by selling shares in their firms to a third party. The money they gained from the sale--essentially, up-front payment for the firm's expected cut of investment gains--would be taxed at a lower rate as capital gains. In order to prevent one loophole being replaced by another, the emerging legislation would tax part of the sale of a stake in a firm at the much higher rate for ordinary income.
To many fund managers, this approach, which they dubbed the "enterprise value tax," was pure expropriation: They had built their firms from scratch and felt they deserved to have any sale taxed as capital gains. In his letter in 2010, Loeb declared the proposal an "arguably unconstitutional Bill of Attainder." The lobbyist who has represented hedge funds says: "The biggest thing that's infuriating to the hedge fund industry--the single biggest thing--is this enterprise-value tax. They feel they've been singled out. ... [It] is what they're metaphysically upset about. (Emphasis added.)