Friday, March 24, 2017

The Problem With Climate Catastrophizing

By Oren Cass in Foreing Affairs. Oren Cass is a senior fellow at the Manhattan Institute, where he focuses on energy, the environment, and antipoverty policy. Excerpts:

"The well-established scientific consensus that human activity is causing the climate to change does not extend to judgments about severity. The most comprehensive and often-cited efforts to synthesize the disparate range of projections—for instance, the United Nations’ Intergovernmental Panel on Climate Change (IPCC) and the Obama administration’s estimate of the “Social Cost of Carbon”—consistently project real but manageable costs over the century to come. To be sure, more speculative worst-case scenarios abound." 

"Catastrophism can also lead to the trampling of democratic norms. It has produced calls for the investigation and prosecution of dissenters and disregard for constitutional limitations on government power. In The Atlantic, for example, Peter Beinart offered climate change as his first justification for an Electoral College override of the election of Donald Trump as U.S. president."

"Catastrophists typically condemn fracked natural gas because, although it results in much lower greenhouse-gas emissions than coal, it does not move the world toward the zero-emissions future necessary to avert climate change entirely. Yet fracking has done more in recent years to reduce carbon-dioxide emissions in the United States than all renewable energy investments combined. It has boosted U.S. economic growth as well."

"A strong scientific consensus holds that human activity is producing climate change. But from that starting point, scientists have produced a range of estimates in response to a variety of complicated questions: How quickly will greenhouse gases accumulate in the atmosphere? What amount of warming will any given accumulation cause? What effect will any given level of warming have on ecosystems and sea levels and storms? What effect will those changes in the environment have on human society? The answers to all of these questions are much debated, but broad-based efforts to synthesize the best research in the physical and social sciences do at least offer useful parameters within which to assess the nature of the climate threat.

On scientific questions, the gold-standard summary is the Assessment Report created every few years by thousands of scientists under the auspices of the United Nations’ Intergovernmental Panel on Climate Change (IPCC). By averaging widely varying projections and assuming no aggressive efforts to reduce greenhouse-gas emissions, they estimate an increase of three to four degrees Celcius (five to seven degrees Fahrenheit) by the year 2100. The associated rise in sea levels over the course of the twenty-first century, according to the IPCC, is 0.6 meters (two feet).

Most of the rise in sea levels results not from melting glaciers, but from the thermal expansion of ocean water as it becomes warmer. Melting ice from Greenland and Antarctica, which may eventually threaten a dramatic increase in sea levels, will barely begin in this century—in the IPCC analysis, the Antarctic ice sheet will have almost no effect and may even slow sea level rise as increased precipitation adds to its snowpack. Meanwhile, melting from Greenland’s ice sheet will contribute 0.09 meters (3.5 inches). In fact, “the near-complete loss of the Greenland ice sheet,” which could raise sea levels by seven meters, the IPCC reports, “would occur over a millennium or more.”

What about ecology? Predicting or quantifying damage to vulnerable ecosystems and specific species is notoriously difficult, but the IPCC offers a helpful heuristic for the likely magnitude of damage from climate change: “With 4°C warming, climate change is projected to become an increasingly important driver of impacts on ecosystems, becoming comparable with land-use change.” In other words, the impact should be similar to that which human civilization has imposed on the natural world already. Substantial and tragic, to be sure; but not something that modern society deems intolerable or a threat to human progress.

Economic tools called “integrated assessment models” attempt to convert the potential effects of climate change—on sea level and ecosystems, storms and droughts, agricultural productivity, and human health—into tangible cost estimates. This exercise is as much art as science, but it represents the best available exploration of how the impacts of climate change will likely stack up against society’s capacity to cope with them. Three of these models form the basis of the Obama administration’s analysis of the “Social Cost of Carbon”—the U.S. government’s official estimate of how much climate change will cost and thus what benefits come from combatting it. Economists and policymakers who want to place a price (that is, a tax) on carbon-dioxide emissions to force emitters to pay for potential damage resulting from climate change typically embrace the analysis as well.

According to the assessment models, a warming of three to four degrees Celcius by 2100 will cost the world between one and four percent of global GDP in that year. To put the high end of that range concretely, the Dynamic Integrated Climate-Economy (DICE) model developed by economics professor William Nordhaus at Yale University estimates that in a world without climate change, the global economy’s GDP would grow from $76 trillion in 2015 to $510 trillion in 2100 (an annual growth rate of 2.3 percent). A rise in temperatures of 3.8 degrees Celcius would cost 3.9 percent of GDP ($20 trillion) that year, effectively reducing GDP to $490 trillion.

Twenty trillion dollars is a very large number—representing a cost greater than the entire annual economic output of the United States in 2016. But from the perspective of 2100, such costs represent the difference between the world being 6.5 times wealthier than in 2015 or 6.7 times wealthier. In the DICE model, moreover, the climate-change-afflicted world of 2105 is already more prosperous than the climate-change-free world of 2100. And because the impacts and costs of climate change emerge gradually over the century—0.3 percent of GDP in 2020, 1.0 percent in 2050—in no year does the model foresee a reduction in economic growth of even one-tenth of a percentage point. Average annual growth over the 2015–2100 period declines from 2.27 percent to 2.22 percent."

"Among the three models the Obama administration picked for its analysis alone, the range of outputs is enormous: the DICE model’s four percent-of-GDP estimate is near the 95th percentile of the projections from the middle-case model, while the low-case model’s one percent-of-GDP estimate is below the middle-case’s 5th percentile. But nowhere is catastrophe to be found."

"the societal collapse that catastrophists envision—one that poses an “existential” threat beyond the scope of other human problems, one that makes procreation an ethically dubious proposition—is simply irreconcilable with the outlook the science and economics offers."

"what if, rather than not caring about their grandchildren, people have confidence that their grandchildren will enjoy a far higher standard of living and have a greater capacity to cope with whatever climate change might bring? In purely economic terms, both seem likely. Even after accounting for climate change, the DICE model forecasts a world 6.5 times richer than today’s for a population only 40 percent larger. Condemn mainstream economic estimates as hopelessly optimistic, increase the annual cost estimate for 2100 tenfold from $20 trillion to $200 trillion, and the world is still four times richer than today."

"Environmentalists, for example, have long worried about global population outstripping food supply. In 1970, the biologist Paul Ehrlich warned that, due to population growth, “at least 100-200 million people per year will be starving to death during the next ten years.” Instead, a technological revolution caused agricultural yields to surge. Today, even as concern grows about potential water crises around the world, the seeds of their resolution may be sprouting as well. Israel, suffering from the same drought often blamed for helping plunge Syria into civil war, is using desalination technology to make the desert bloom. Recently, it found itself with a water surplus. India is constructing more than one million irrigation ponds that will increase agricultural yields by as much as 300 percent and buffer against changes in the timing of the monsoon season."

"Richer countries experience significantly lower fatality rates from natural disasters and also significantly lower damages relative to the size of their economies. The World Health Organization reports that in the three cyclones of maximum severity striking Bangladesh in 1970, 1991, and 2007, total fatalities declined from 500,300 to 138,958 to 4,234. The diffusion of existing technologies worldwide, and the development of new ones—coupled with unprecedented resources for implementation—should ensure that these trends continue."

"Take, for instance, the EPA’s “Climate Change Risks and Analysis” project. Among its most prominent claims: Unmitigated climate change will cause more than 12,000 annual deaths from extreme heat in major U.S. cities by 2100. (The U.S. Centers for Disease Control and the EPA report fewer than 500 heat-related deaths in 2014, a figure that has been on a downward trajectory over the past 15 years). To reach 12,000 by 2100, the analysis took each city’s mortality rate from extreme heat in 2000 and applied it to the hotter temperatures forecast for 2100. It concluded that, by 2100, the heat in New York City would be killing at 50 times the rate in Phoenix in 2000 (even though the New York City of 2100 is not expected to be as hot as the Phoenix of 2000). If one believes that residents of New York City will be dropping like flies from heat in the future, climate change must seem terrifying indeed. But that is not a rational belief."

"even if fully half of global agricultural production must relocate over a century, the required shift each year is only 0.5 percent of total production. For comparison, annual additions to global food production have averaged more than two percent over the past 50 years."

"Even stipulating that adaptations will displace hundreds of millions of people, that displacement will not happen all at once. Spread over decades, such a disruption would look little different from the status quo. China alone currently supports a domestic migrant worker population of 278 million. According to estimates by the United Nations, there are currently 232 million international migrants. The organization projects that the figure will grow by several million each year. By 2050, the World Bank estimates that 2.5 billion people will migrate to cities for reasons unrelated to climate change."

"If people allocating capital—be they small-town farmers, resort designers, or mayors—have the information and incentives to incorporate climate adaptation into their planning, it need not impose sudden and unmanageable recovery costs."

"Although climate impacts may be permanent and on-going, costly adaptation—if done wisely—need occur only once. A Manhattan properly insulated from rising waters will not require new protection each time sea level climbs another foot. Conversely, that hypothetical $20 trillion represents the resources that society might commit to the problem in the single year 2100. In Nordhaus’ DICE model, the total allocated to climate costs between 2050 and 2150 is more than $2.5 quadrillion, all without ever slowing annual growth by more than one-tenth of one percentage point. The world’s productive capacity, bolstered by innovation and adaptation over time, is orders of magnitude larger than the demands climate change is expected to impose. Such adaptation may represent a tragic long-term drain on society’s resources, but that does not mean it will noticeably alter the trajectory of human civilization."

"Working with a catastrophic mindset and a century-long timeline, one can construct an apocalyptic scenario from almost any problem."

"the Global Priorities Project at Oxford observes that climate change could “render most of the tropics substantially less habitable than at present,” as compared to the hundreds of millions or billions of deaths associated with other challenges. Another Oxford study surveyed conference participants about the extinction-level risks of various catastrophes and neglected to even consider climate change; respondents gave molecular nanotechnology, superintelligent AI, and an engineered pandemic all at least a two percent chance of erasing humanity by 2100."

"arguments against catastrophism rarely reach the audience that might benefit most from hearing them."

"As Paul Romer, the chief economist of the World Bank, recently observed:

    During the 1970s, the Club of Rome famously argued that our economic system was on the verge of collapse because we were running out of fossil fuel. This analysis was flawed not simply because it got the magnitudes wrong. It got the signs wrong. The problem facing the world is not that the earth’s crust contains too little fossil fuel and that we won’t have enough innovation to solve this problem. The real problems are that the earth’s crust contains far too much fossil fuel and that too much [innovation] is making this problem much worse.

In other words, even though the Club of Rome was wrong in the 1970s, Romer believes its broader perspective should be embraced. Seemingly oblivious to the irony, he attributes the failure last time around to “an instance of motivated reasoning. Advocates seem to have been too eager to generate a sense of pessimistic urgency.”

Schrag, the Harvard geology professor, is even more blunt. Reflecting on Ehrlich’s predictions of eminent mass starvation in the 1970s, Schrag acknowledges that “none of his predictions came true.” Nevertheless, says Schrag, “It’s quite amazing that we’re actually able to feed the world at all. Ehrlich wasn’t wrong in ’68, he’s just wrong today.” In this view, the catastrophist is not accountable for considering how growth, innovation, and adaptation might avert catastrophe. But Ehrlich was indeed wrong in 1968, for the same reasons his intellectual heirs are likely wrong about climate change today."

Monday, March 20, 2017

Welfare programs reduce the supply of labor and, thus, push wages up

See If Economic Ignorance Were a Natural Resource, Our World Would Be Paradise by Don Boudreaux.

Here’s a letter to a new correspondent who writes that he is “impressed” by a recent letter in the Wall Street Journal by a Mr. Scot Phelps of New York.  (In contrast, I was not impressed by Mr. Phelps’s letter.)
"Mr. Chris Indovino
Mr. Indovino:
I did indeed read Scot Phelps’s Wall Street Journal letter in which he argues that government subsidization of low-skilled workers’ “housing, food, medical care, and transportation” enables employers of such workers to pay them less than their “true” value.  I didn’t respond to it because I had nothing to say about such an economically unmoored argument that I’ve not said in the past.  (See also this EconLog post by my colleague Bryan Caplan.)  The central economic point is this: the welfare programs to which Mr. Phelps alludes (with the possible exception of transportation subsidies) reduce the supply of labor and, thus, push wages up.  Far from employers being subsidized by such welfare programs, employers of workers who receive these government benefits are obliged, as a result, to pay wages that are made artificially high.
But to show just how deeply confused this Mr. Phelps is, let’s pretend that he’s correct to insist that welfare programs artificially reduce wages.  Mr. Phelps then asserts that “Failure to pay a living wage gives consumers artificially low prices and increases corporate profits.”  Because nearly all employers of low-skilled workers operate in intensely competitive industries such as retail and food service, workers’ artificially low wages would indeed result in artificially low prices for consumer goods, but not in increased corporate profits.  The ability to hire workers at artificially low wages would attract new entrants into these markets, as well as cause existing firms to expand their outputs, until the rate of profit earned by employers of these workers is no higher than it would be if wages were higher.  That Mr. Phelps is oblivious to this reality is sufficient reason to dismiss his economic analysis.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030"

Sunday, March 19, 2017

While the foreign stake in our economy continues to grow, the net worth of American households and businesses has grown by an even larger amount

See Inflow of foreign capital makes Americans richer, not poorer by Daniel Griswold of Mercatus. Excerpt:
"Since 2000, the U.S. has run a deficit on the current account that has averaged just above $500 billion a year. That means, in a typical year, foreign investors are acquiring about $500 billion more in U.S. assets than Americans acquire in foreign assets.

Have we been slouching, as Navarro and Buffett warn, toward a state where “we are likely to be owed by foreigners,” where “our net worth [is] being transferred abroad at an alarming rate,” where “we will have nothing left to trade,” and where we are “working long hours just to have food and service our debt”?

No, no, no, and no.

From 2000 through the third quarter of 2016, the value of U.S. assets owned by foreigners did indeed increase by $23.4 trillion, from $9.2 trillion to $32.6 trillion. But in that same time, the net worth of U.S. households and non-profits increased by $47.3 trillion, to $90.8 trillion. The net worth of U.S. businesses, corporate and non-corporate, increased by another $18.7 trillion. While the foreign stake in our economy continues to grow, the net worth of American households and businesses has grown by an even larger amount. Our net worth is not being transferred anywhere except to the bottom line of our own balance sheets.

Nothing left to trade? Americans exported $2.2 trillion in goods and services last year, more than double in dollar value what we exported in 2000. Since then, U.S. exports as a share of our GDP have climbed from 10.5 percent to 11.9 percent. Although export growth has stalled in recent years, that’s because of slowing growth abroad, not because we have less to offer for export.

And finally, if Americans are working longer hours, it’s not primarily to buy food and service foreign debt. Food continues to decline as a share of consumer spending, as it has done in every other advancing economy down through human history. Outward payments on foreign investment in the United States — profits, dividends, and interest — have been rising along with the stock of inward investment, but so too have inward payments to Americans who own assets abroad. In fact, in recent years Americans have earned about $200 billion more a year on the foreign assets they own than foreigners have earned on their U.S. assets. Millions of Americans may struggle to pay their bills each month, but their condition is not caused by any increase in what they pay for food or service on foreign investment."

For all the hoopla about the ACA exchanges, it appears that Medicaid accounts for the lion's share of coverage gains

See Be skeptical about coverage numbers in health-care debate by Doug Badger of the Galen Institute. Excerpts:
"The "20 million" figure appears to have originated in a March 2016 report by the U.S. Department of Health and Human Services (HHS). That report declared that "the provisions of the ACA have resulted in gains in health insurance coverage for 20.0 million adults through early 2016."
The precision of the figure - 20.0 million, not 20.1 or 19.9 - suggests a level of certitude that the report doesn't actually deliver. Its authors analyzed a blend of data from the government's National Health Interview Survey (NHIS), and the private Gallup Healthways survey. They concluded that 17.7 million nonelderly adults gained coverage between January 2014 and February 2016. The agency also estimated that 2.3 million young adults had gained private coverage between 2010 and 2013 because the ACA required employers to cover dependent "children" until their 26th birthdays.

Since the release of the HHS study, the government has published two additional surveys of health-insurance coverage - the Current Population Survey (CPS) and the American Community Survey (ACS). Both offer data through the end of 2015, allowing for comparison with the NHIS estimate.
The three surveys use different methodologies to produce estimates of the number of nonelderly adults who gained coverage. These estimates vary by 20 percent - ranging from the CPS estimate of 13.7 million to the NHIS estimate of 16.5 million.

Additional estimates by the Heritage Foundation's Edmund F. Haislmaier and Drew Gonshorowski fall near the lower end of that range. Their study found that 14 million people (including children) gained public or private coverage in 2014 and 2015. Unlike government surveys, Haislmaier and Gonshorowski examined data from insurance company regulatory filings and from the government's own headcount of Medicaid enrollment.

They found that 84 percent of the newly insured gained coverage through Medicaid and a related government program for low-income children. Another study attributed much of these gains to the ACA's expansion of Medicaid to nondisabled, non-pregnant adults. The authors also found that nearly half the new Medicaid enrollees met eligibility standards that were in place before the ACA.

For all the hoopla about the ACA exchanges, it appears that Medicaid accounts for the lion's share of coverage gains and that many new Medicaid enrollees would have been eligible for that program even if the ACA had never passed.

Then there's the HHS estimate that 2.3 million young adults gained coverage between 2010 and 2013 because the ACA requires employers to cover dependents age 19 to 25. HHS failed to mention that private coverage declined for every other age group over that period, falling to the lowest level in history. The biggest drop in private coverage occurred among children 18 and younger. By the end of 2013, 1.2 million fewer children were covered under their parents' policies than in 2010."

Saturday, March 18, 2017

A remedial lesson from Milton Friedman for Team Trump to address its ‘understanding deficit’ of international trade

By Mark Perry.
"Donald Trump has demonstrated his profound misunderstanding of the basic economic principles of international trade for several years now, and perhaps reached a pinnacle when he told the New York Daily News in an interview last August that “we’re getting hosed by the Chinese — and that we’ve done it with our eyes wide shut.” Here’s more of Trump from that interview, further demonstrating his clueless and child-like misunderstanding of international trade:
“What China has done to America?” he raged. “The money and the jobs they’ve taken from us? It is the greatest single theft in the history of the United States.” In other words, China is to the United States as Bernie Madoff is to investors. “And Japan is almost as bad,” he stormed. “Japan sells us millions of cars — and we sell them wheat!
MP: Alternatively, we might say “What the US has done to China? The manufactured goods we’ve taken from them? It is the greatest single theft in the history of China.” In other words, the United States is to China as Bernie Madoff is to investors. Here’s more from the interview:
“I’ve been saying for years that China would take us down. Why? Because our leaders are stupid and China’s leaders are smart. They sell to us, no taxes, no nothing. We sell them 10% of what they sell us. Ninety percent to 10%! It’s crazy. Our trade deficit with China is like having a business that continues to lose money every single year. Who would do business like that?”
Peter Navarro, in his Wall Street Journal opinion piece earlier this week (see related CD post here) demonstrated his fundamental misunderstanding of international trade when he opened his op-ed with the following question: “Do trade deficits matter?” Just to ask the question is to admit one’s ignorance of trade theory, which has been pretty settled on this topic since Adam Smith taught us in 1776 that “Nothing…can be more absurd than this whole doctrine of the balance of trade.”

To help Mr. Trump and Mr. Navarro with their “understanding deficit” about international trade theory and trade deficits, it’s a good time to invoke the timeless wisdom of Milton Friedman (featured on CD here), presented below as a remedial refresher on some of the most basic principles of international trade (updated for today):
In the international trade area, the political rhetoric is almost always about how we must export, and what’s really good for America is an industry that produces exports. And if we buy from abroad and import lots of goods from countries like China, Japan and Mexico, that’s supposed to be bad. In the words of Donald Trump, we are getting “hosed,” “ripped off,” “crushed,” and killed” by our trade partners who then laugh at us as they supposedly steal our jobs.
But clearly that is backwards and upside-down thinking. After all, the goods we send abroad to other countries we now can’t eat ourselves, we can’t wear, and we can’t use for our homes and households. Simply put, the goods and services we export and send abroad are goods and services not available to us. On the other hand, the goods and services we import from China, Japan, Germany and Mexico provide Americans with TV sets we can watch, automobiles we can drive, food we can eat, with all sorts of nice things for us to use.
Here are two important points about trade that Mr. Trump and Mr. Navarro need to understand: 1) the economic gain to Americans from foreign trade is what we import from countries like China, Japan and Mexico, and 2) what we export is the cost of getting those imports. And the proper objective for a nation as Adam Smith put it, is to arrange things, so we get as large a volume of imports as possible from China, Japan and Mexico, for as small a volume of our exports as possible.
This carries over to the terminology we hear Mr. Trump and Mr. Navarro use. When they talk about a favorable balance of trade, what is that term taken to mean? It’s taken to mean that we export more than we import. But from the point of view of our economic well-being and our standard of living, that’s an unfavorable balance. That means we’re sending out more goods and getting fewer in return. Each of you in your private household would know better than that. You don’t regard it as a favorable balance when you have to send out more goods to get less coming in. It’s favorable when you can get more by sending out less.

Why the Feds Should Legalize Interstate Commerce in Healthcare

By Richard D. Kocur. He is an assistant professor of business at Grove City College. He specializes in marketing and business strategy and has over 25 years of experience in the healthcare industry.
"In a recent television interview, Aetna CEO Mark Bertolini, head of one of America’s largest health insurers, commented that selling insurance across state lines is “an outdated concept” in these days of the Affordable Care Act (ACA). Bertolini went on to explain the rationale for his statement: “Insurance products are now tightly aligned with networks, so buying an insurance product from another state, that’s tied to a network in another state, really doesn’t work for people seeking care.”
The sale of health insurance as interstate commerce is often cited as a pillar of healthcare reform by proponents of market-based solutions. In fact, I offered up this idea in a previous article as one of the ways to return empowerment and control to Americans seeking quality, affordable healthcare in the aftermath of Obamacare. While there are a number of issues that would need to be resolved in order to make healthcare across state lines work, they are not insurmountable, nor is the concept outdated.

At one time, nearly all individual health insurance was regulated at the state level. Each set of state regulations established insurance mandates requiring plans within the state to cover a specific set of treatments. With the passage of the ACA, the federal government usurped health insurance regulatory control from the states making the individual mandate even more onerous. As the last year of Obamcare demonstrated, insurance mandates raise the cost of premiums. Younger, healthier individuals are forced to pay more for insurance due to mandated coverages they do not need or want. If individuals were able to purchase insurance across state lines and tailor their coverage, costs would decrease and, in time, create more competitive insurance markets. Some speculate that the interstate commerce of health insurance may even draw individuals currently enrolled in employer-sponsored plans — Aetna’s bread and butter — in favor of less expensive out-of-state individual plans. In order for any of this to occur, however, the repeal of Obamacare must return regulatory control of health insurance to the states.

Once regulatory control is returned to the states, insurers in those states could begin to craft offerings which reflect the desires of the marketplace. It’s here that Mr. Bertolini’s statement regarding provider networks comes into play. How could a woman in Oregon purchase health insurance, allowing her to see her local doctor, from an insurer in Ohio with ties to a network of Ohio doctors? The answer is: She couldn’t — for now.

Networks are established when health-insurance companies contract with healthcare providers in order to serve their policy holders. Building provider networks is a time-consuming process and will not happen overnight, but it will happen. While a nationwide solution would be ideal, it is likely that the health-insurance market would evolve slowly at first, focusing around large metropolitan areas near state lines. The proximity of eastern Pennsylvania, metro New York, and New Jersey, as well as eastern Maryland, Washington, D.C., and northern Virginia, serve as examples. The next evolution in across-state-lines health insurance would likely be the emergence of a handful of larger regional insurers offering a variety of plans across multiple states. As provider networks grow and risk pools and product offerings increase, more individual Americans will enjoy greater healthcare choice, access, and affordability.

Crossing the line with American’s healthcare is not for the impatient, but unlike the Edsel, disco, or rotary phones, the idea of pursuing greater market-based reforms in our healthcare system will never be outdated."

Friday, March 17, 2017

Ending Taxpayer Funding for Public Broadcasting

By David Boaz.
"Thank you for the opportunity to testify on taxpayer funding for the Corporation for Public Broadcasting and by extension for National Public Radio and the Public Broadcasting System. I shall argue that Americans should not be taxed to fund a national broadcast network and that Congress should therefore terminate the funding for CPB.

We wouldn’t want the federal government to publish a national newspaper. Neither should we have a government television network and a government radio network. If anything should be kept separate from government and politics, it’s the news and public affairs programming that informs Americans about government and its policies. When government brings us the news — with all the inevitable bias and spin — the government is putting its thumb on the scales of democracy. Journalists should not work for the government. Taxpayers should not be forced to subsidize news and public-affairs programming.

Much of the recent debate about tax-funded broadcasting has centered on whether there is a bias, specifically a liberal bias, at NPR and PBS. I would argue that bias is inevitable. Any reporter or editor has to choose what’s important. It’s impossible to make such decisions without a framework, a perspective, a view of how the world works.

As a libertarian, I have an outsider’s perspective on both liberal and conservative bias. And I’m sympathetic to some of public broadcasting’s biases, such as its tilt toward gay rights, freedom of expression, and social tolerance and its deep skepticism toward the religious right. And I share many of the cultural preferences of its programmers and audience, for theater, independent cinema, history, and the like. The problem is not so much a particular bias as the existence of any bias.

Many people have denied the existence of a liberal bias at NPR and PBS. Of course, the most effective bias is one that most listeners or viewers don’t perceive. That can be the subtle use of adjectives or frameworks — for instance, a report that “Congress has failed to pass a health care bill” clearly leaves the impression that a health care bill is a good thing, and Congress has “failed” a test. Compare that to language like “Congress turned back a Republican effort to cut taxes for the wealthy.” There the listener is clearly being told that something bad almost happened, but Congress “turned back” the threat.

A careful listener to NPR would notice a preponderance of reports on racism, sexism, and environmental destruction. David Fanning, executive producer of “Frontline,” PBS’s documentary series, responds to questions of bias by saying, “We ask hard questions to people in power. That’s anathema to some people in Washington these days.” But there has never been a “Frontline” documentary on the burden of taxes, or the number of people who have died because federal regulations keep drugs off the market, or the way that state governments have abused the law in their pursuit of tobacco companies, or the number of people who use guns to prevent crime. Those “hard questions” just don’t occur to liberal journalists.
Anyone who got all his news from NPR would never know that Americans of all races live longer, healthier, and in more comfort than ever before in history, or that the environment has been getting steadily cleaner.

In Washington, I have the luxury of choosing from two NPR stations. On Wednesday evening, June 29, a Robert Reich commentary came on. I switched to the other station, which was broadcasting a Daniel Schorr commentary. That’s not just liberal bias, it’s a liberal roadblock.

In the past few weeks, as this issue has been debated, I’ve noted other examples. A common practice is labeling conservatives but not liberals in news stories — that is, listeners are warned that the conservative guests have a political agenda but are not told that the other guests are liberals. Take a story on the Supreme Court that identified legal scholar Bruce Fein correctly as a conservative but did not label liberal scholars Pamela Karlan and Akhil Amar. Or take the long and glowing reviews of two leftist agitprop plays, one written by Robert Reich and performed on Cape Cod and another written by David Hare and performed in Los Angeles. I think we can be confident that if a Reagan Cabinet official wrote a play about how stupid and evil liberals are - the mirror image of Reich’s play - it would not be celebrated on NPR. And then there was the effusive report on Pete Seeger, the folksinger who was a member of the Communist Party, complete with a two-hour online concert, to launch the Fourth of July weekend.

And if there were any doubt about the political spin of NPR and PBS, it was surely ended when a congressional subcommittee voted to cut the funding for CPB. Who swung into action?, Common Cause, and various left-wing media pressure groups. They made “defending PBS” the top items on their websites, they sent out millions of emails, they appeared on radio and television shows in order to defend an effective delivery system for liberal ideas. Public broadcasters worked hand in glove with those groups, for instance linking from the NPR website to those groups’ sites.

There are many complaints today about political interference in CPB, PBS, and NPR. I am sympathetic to those complaints. No journalist wants political appointees looking over his shoulder. But political interference is entirely a consequence of political funding. As long as the taxpayers fund something, their representatives have the authority to investigate how the taxpayers’ money is being spent. Recall the criticism directed at PBS in 1994 for broadcasting Tales of the City, which has gay characters. Because of the political pressure, PBS decided not to produce the sequel, More Tales of the City. It appeared on Showtime and generated little political controversy because Showtime isn’t funded with tax dollars. Remove the tax funding, and NPR and PBS would be free from political interference, free to be as daring and innovative and provocative as they like.

One dirty little secret that NPR and PBS don’t like to acknowledge in public debate is the wealth of their listeners and viewers. But they’re happy to tell their advertisers about the affluent audience they’re reaching. In 1999 NPR commissioned Mediamark Research to study its listeners. NPR then enthusiastically told advertisers that its listeners are 66 percent wealthier than the average American, three times as likely to be college graduates, and 150 percent more likely to be professionals or managers.

But perhaps that was an unusual year? Mediamark’s 2003 study found the same pattern. As NPR explained, based on the 2003 study:
Public radio listeners are driven to learn more, to earn more, to spend more, and to be more involved in their communities. They are leaders and decision makers, both in the boardroom and in the town square. They are more likely to exert their influence on their communities in all types of ways - from voting to volunteering
Public radio listeners are dynamic - they do more. They are much more likely than the general public to travel to foreign nations, to attend concerts and arts events, and to exercise regularly. They are health conscious, and are less likely to have serious health problems. Their media usage patterns reflect their active lifestyles, they tend to favor portable media such as newspapers or radio.
As consumers, they are more likely to have a taste for products that deliver on the promise of quality. Naturally, they tend to spend more on products and services.
Specifically, the report found, compared with the general public, NPR listeners are
  • 55 percent less likely to have a household income below $30,000
  • 117 percent more likely to have a household income above $150,000
  • 152 percent more likely to have a home valued at $500,000 or more
  • 194 percent more likely to travel to France
  • 326 percent more likely to read the New Yorker
  • 125 percent more likely to own bonds
  • 125 percent more likely to own a Volvo.
PBS has similar demographics. PBS boasts that its viewers are
  • 60 percent more likely to have a household income above $75,000
  • 139 percent more likely to have a graduate degree
  • 98 percent more likely to be a CEO
  • 132 percent likely to have a home valued at $500,000 or more
  • 315 percent more likely to have stocks valued at $75,000 or more
  • 278 percent more likely to have spent at least $6000 on a foreign vacation in the past year.
Tax-funded broadcasting is a giant income transfer upward: the middle class is taxed to pay for news and entertainment for the upper middle class. It’s no accident that you hear ads for Remy Martin and “private banking services” on NPR, not for Budweiser and free checking accounts.

Defenders of the tax-funded broadcast networks often point out that only about 15 percent of their funding comes from the federal government. Indeed, NPR and PBS have been quite successful at raising money from foundations, members, and business enterprises. Given that, they could certainly absorb a 15 percent revenue loss. Businesses and nonprofit organizations often deal with larger revenue fluctuations than that. It isn’t fun, but it happens. In a time of $400 billion deficits, Congress should be looking for nonessential spending that could be cut. Tax-funded broadcasting is no longer an infant industry; it’s a healthy $2.5 billion enterprise that might well discover it liked being free of political control for a paltry 15 percent cut.

Finally, I would note that the Constitution provides no authority for a federal broadcasting system. Members of Congress once took seriously the constraints imposed on them by the Constitution. In 1794 James Madison, the father of the Constitution, rose on the floor of the House and declared that he could not “undertake to lay his finger on that article of the Federal Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.” In 1887, exactly 100 years after the Constitution was drafted, President Grover Cleveland made a similar point when he vetoed a bill to buy seeds for Texas farmers suffering from a drought, saying he could “find no warrant for such an appropriation in the Constitution.” Things had changed by 1935, when President Roosevelt wrote to Congress, “I hope your committee will not permit doubts as to constitutionality, however reasonable, to block the suggested legislation.” I suggest that this committee take note of the fact that no article of the Constitution authorizes a national broadcast network.

Even if this committee comes to the conclusion that taxpayer funding for radio and television networks is imprudent and constitutionally unfounded, I recognize that you may hesitate to withdraw a funding stream that stations count on. In that regard, I would note again that federal funding is only about 15 percent of public broadcasting revenues. But you might also phase out the funding, perhaps on a five-year schedule. The total funding request for this year is about $500 million. Congress might decide to reduce it by $100 million a year, leaving the CPB entirely free of federal taxpayer funding at the end of five years.

But Congress’s resolve in such matters is not trusted. Recall the 1996 Freedom to Farm Act, which likewise promised to phase out farm subsidies. Barely two years had passed when Congress began providing “emergency relief payments” to make up for the scheduled reductions. This time, if Congress pledges to phase out broadcasting subsidies, it needs to make sure that its decision sticks.

A healthy democracy needs a free and diverse press. Americans today have access to more sources of news and opinion than ever before. Deregulation has produced unprecedented diversity-more broadcast networks than before, cable networks, satellite television and radio, the Internet. If there was at some point a diversity argument for NPR and PBS, it is no longer valid. We do not need a government news and opinion network. More importantly, we should not require taxpayers to pay for broadcasting that will inevitably reflect a particular perspective on politics and culture. The marketplace of democracy should be a free market, in which the voices of citizens are heard, with no unfair advantage granted by government to one participant."