Judge Gorsuch and the Dissolution of the Administrative State

The New York Sun ran an editorial today about a New York Times article by two children of left-wing judges.  They claim that the appointment of Judge Gorsuch will threaten the administrative state. The reason is that Judge Gorsuch opposes a decision called Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc  (467 U.S. 837, 1984), and Judge Gorsuch's appointment may lead to  its reversal.  The decision enunciated the Chevron principle, by which the Supreme Court held that when decisions are unclear the courts should defer to administrative agencies.

Repeal of such deference would be a great thing, and if we start a tabulation of costs versus benefits of the Trump administration, curtailing or ending the Chevron principle would add to the benefits side of the ledger.    

I go further.  The Chevron principle is a good argument for the inability of the courts to determine Constitutionality.  That claim was made in the early 19th century, but it was violated by Abraham Lincoln and denied by Andrew Jackson.  

The  Lincoln and Johnson administrations were unwilling to adjudicate the issue of secession. Rather than sue the first seven states that seceded, Lincoln chose to raise an army and illegally threaten them with military power.  The issue of secession was never adjudicated, which is why the North did not punish the leaders of the Confederate States of America for treason. If secession had been adjudicated early on, Chief Justice Taney's Supreme Court may have ruled on the side of the South.  The Civil War may have been averted.  At one point Lincoln issued an arrest warrant for Chief Justice Taney, but it was never carried out.  

The Chevron doctrine exhibits an authoritarian bias that reminds me of of Friedrich Hayek's warning, in The Road to Serfdom, that the bureaucratic state is inherently dictatorial.  By renouncing its own authority in favor of bureaucrats, the Supreme Court has ceded American governance to dictatorship by appointed agency.

The bungling incompetence of the appointed dictatorship that the Times has supported since the 1930s needs little clarification.  From 1830 to 1970 the average American saw wage gains of .5% to 2.0% per year.  Since the expansion of the administrative state under Johnson and Nixon, and especially the abolition of the gold standard in 1971 and the expansion of the powers of the Federal Reserve Bank, economic improvement for the average American has been nil. 

If wage gains had continued at 1.5% per years from 1971 to 2015, the average American would be earning roughly twice what he is earning now.  The administrative state is responsible for the halving of Americans' wages. 

New York Sun Au Revoir

Today is the last day of the New York Sun's brief life of seven years. It was the best paper of my adult recollection, and I will miss it greatly.

Barack Obama's Leeches

Mayor Bloomberg was on television yesterday. I wasn't paying careful attention but he seemed to be suggesting that American International Group will survive despite financial losses and that markets need to be regulated. The Sun reports today that Governor Paterson is changing New York insurance law to allow the firm to borrow from its subsidiaries. The rule of law is is becoming an alien concept to our increasingly socialistic, government-by-whim society. What especially troubles me is that I doubt that Governor Paterson or Mayor Bloomberg have ever learned about or thought about why the rule of law was associated with the solitary (in world history) rise of technology and wealth under free market capitalism, and how violating it will destroy the incentives and flexibility that enable it. Americans have allowed themselves to be led by fools.

Another potential milestone on America's government-built expressway to serfdom is that, as the Sun's Russell Berman reports, our inept automakers may get a bailout from the American people. The automakers don't think enough of American workers to locate their plants in Flint or Detroit, but they are happy to accept alms from those same workers.

The Sun notes:

"The nation's top car manufacturers are pushing Congress to act by the end of this month to guarantee $25 billion in loans to help them invest in the production of fuel-efficient vehicles. The idea is being greeted warmly by both the Democratic and Republican presidential candidates, who see it as a way to win votes in the swing state of Michigan while also moving America away from dependence on foreign oil."

The pattern of government support for incompetently managed businesses, from Fannie Mae in Washington to General Motors in Detroit to Bear Stearns in Manhattan, is a function of a failed, mercantilist economic model associated with Harvard University and the New Deal. The vicious harm that this ideology is doing to America's future is evident. When firms are badly managed, they should be closed and replaced by more nimble firms with more capable managements, not supported at taxpayer expense through the printing of money. Readjustments are painful, but the alternative is economic decline as resources are diverted to incompetent and slothful cronies at the expense of innovative entrepreneurs.

In response to massive over-regulation, government subsidized-firm incompetence and failed, New Deal economic theories, Senator Barack Obama, like Mayor Bloomberg a product of Harvard's graduate program, calls for more regulation. This call is echoed by John McCain, Harry Reid and our other illiterate leaders, who tell the American public that they will illegalize greed, all the while snickering as the laws that they pass reflect their own greed.

Senator Obama reminds me of Benjamin Rush, the physician who signed the Declaration of Independence. As a political activist we can respect Rush, but as a physician he advocated the aggressive use of leeches to cure disease. The idea that leeches can cure cancer is much like Senator Obama's and Mayor Bloomberg's idea that more regulation can cure economic decline.

The Sun notes that Senator McCain's diagnosis is as off base as Senator Obama's, and they are right. The state of education about economics is this. The establishment advocates economic ideas that harm innovation and the average American's long term prospects, and they do it in the name of helping the average American. Regulation is a leech-cure that weakens the patient instead of curing him. What is worse, though, is that regulation does protect one group: the physicians' friends, the wealthy recipients of corporate welfare.

Benjamin Rush aimed to cure his patients. Barack Obama and Mayor Michael Bloomberg are much worse. They are willing to harm the American public in order to benefit themselves, their contributors and their fellow Harvard alumni. They may really believe their silly ideas. But alternative knowledge is available, and they are unwilling to be educated.

New York's Best Newspaper May Close

Although I spend only two weekdays in Manhattan during the school year and fewer during breaks, I subscribe to the New York Sun. As well, I have bought a subscription for my mother who lives in the boroughs. The Sun is the very best newspaper I have ever seen, and the only one I have ever cared about. Sadly the paper may close at the end of this month. The courageous editor, Seth Lipsky, wrote about the paper's prospects today. If you live in New York, please consider subscribing. It's the best journalistic bang for the buck I have ever read. It would be wrenching to see the only high-quality conservative daily in the city to disappear. Mr. Lipsky wrote:

"This morning I write to you about the future of The New York Sun, which is in circumstances that may require us to cease publication at the end of September unless we succeed in our efforts to find additional financial backing. The managing editor, Ira Stoll, who is one of the founding partners in the paper, and I have shared this news with our colleagues, and we would like our readers as well to be aware of the situation.

"When we launched this business in October 2001 and began publishing the daily newspaper on April 16, 2002, it was with two goals. There was an editorial — an idealistic — goal of providing an alternative to the New York Times in coverage of New York City, politics, foreign policy, and culture. And there was a financial goal of making a profit. We have always been, and still are, of the view that the paper needs to achieve both goals to be a success.

"After more than six years of publication, the Sun is now at a crossroads. It has succeeded in establishing journalistic credibility and a reputation for quality and verve, and in becoming a part of the local, national, and international conversation. It is read daily by tens of thousands of New Yorkers, including the political, policy, and cultural leadership in the city. It is read in the nation's capital — in the White House, the Congress, and in the foreign chancelleries. Newspapers and Web sites in the city and around the world follow our scoops, quote our editorials, refer to our cultural criticism, and analyze our sports coverage.

"Even many who disagree with the views of our editorial page enjoy reading the Sun. "A fabulous read for culture," is the way it was described in the Nation. David Remnick of the New Yorker sent a note to say how much he admired what we are doing with the Sun, which he called "just plain good." He added: "OK, I agree with about ten percent of your editorials, but so what. ... I'm a lot happier, and richer, for having faced the Sun in the a.m."

Read the whole thing here. The Sun is a major force for a better New York and better America. Please subscribe.

New York Sun Covers Shut-Down of Mitchell Langbert's Blog/Google Apologizes

The New York Sun's Anna Phillips has covered the shut down of this and other anti-Obama blogs last week. Google has posted a general apology here. The Google text follows the Sun article.

Google insists that the problem is purely due to their computer algorithm. I do not know enough to argue, but it seems too coincidental that the Hillary Clinton campaign was having a similar problem several months ago when Hillary was running against Obama, and now I and other Republican anti-Obama bloggers have had the very same problem.

Just by way of self-defense, although it may look like I spend more time on the political diatribe-type blogs, the academic-type blogs such as my write-up of Howe's book on the Whigs take up 4/5ths of my blogging time. Thus my claim to Ms. Phillips about the blog being two thirds academic stuff is probably an understatement, although it may appear to be an overstatement.

Anna Phillips's Sun Article:

>Anti-Obama Bloggers Say They Were Silenced

Web loggers who are campaigning against Senator Obama's presidential run are accusing Google and Obama supporters of silencing them after their Web logs were marked as spam and their accounts temporarily frozen.

On Thursday, hours after publishing a post about an online petition demanding that Mr. Obama publicly produce his birth certificate, an associate professor of business administration at Brooklyn College, Mitchell Langbert, found that he could no longer access his Web log.

Google's Blogger hosting service had suspended "Mitchell Langbert's Blog," which Mr. Langbert describes as "two-thirds academic stuff I'm working on and one-third politics," until it could verify the Web log was not a "spam blog," or a site designed solely to increase the page views of associated Web sites.

A day later Google lifted the block on the account, but the incident and earlier Web log freezes in late June have led Mr. Langbert and other anti-Obama bloggers to accuse the Illinois senator's supporters of intentionally identifying their blog addresses to Google as spam blogs. They also say the company has reflexively suspended the sites.

"These tech-savvy smart alecks have figured out that if you report a blog you don't like, you can do some damage to a person," Mr. Langbert said.

A spokesman for Google, Adam Kovacevich, said in a statement that an overzealous antispam filter was responsible for the blocks.

"We believe this was caused by mass spam e-mails mentioning the 'Just Say No Deal' network of blogs, which in turn caused our system to classify the blog addresses mentioned in the e-mails as spam," he said. "We have restored posting rights to the affected blogs, and it is very important to us that Blogger remain a tool for political debate and free expression."

Several of the blogs that were blocked, including hillaryorbust.com and comealongway.blogspot.com, are part of the "Just Say No Deal" network of anti-Obama blogs. But Mr. Langbert's blog is not, leading him to conclude that Obama supporters had targeted him.

On her right-leaning blog "Atlas Shrugs," Pamela Geller keeps a list of blogs that Google has temporarily blocked. "The blockings do come in waves," she said. "The last wave was this past week, and now it got very quiet."

Some writers have had their blogs unblocked, while others have moved them to WordPress, a rival blog host.

"I don't think" Google has "malicious intentions at all, it's just that spammers can literally overrun a service if you're not careful, so their defenses have become overzealous," a spokesman for WordPress, Matthew Mullenweg, said in an e-mail.

"We always have human review before turning off an active blog," he said. "People invest so much time into their blogs, to treat it with anything less than the utmost respect is criminal."

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Two Google Apologies (h/t Phil Orenstein):

Google Apology

Spam Fridays

"While we wish that every post on this blog could be about cool features or other Blogger news, sometimes we have to step in and admit a mistake.

"We've noticed that a number of users have had their blogs mistakenly marked as spam, and wanted to sound off real quick to let you know that, despite it being Friday afternoon, we are working hard to sort this out. So to those folks who have received an email saying that your blog has been classified as spam and can't post right now, we offer our sincere apologies for the trouble.

"We hope to have this resolved shortly, and appreciate your patience as we work through the kinks."

AND

You Are Not Spam

You knew that already, and now we do too. We have now restored all accounts that were mistakenly marked as spam yesterday. (See: Spam Fridays)

We want to offer our sincerest apologies to affected bloggers and their readers. We’ve tracked down the problem to a bug in our data processing code that locked blogs even when our algorithms concluded they were not spam. We are adding additional monitoring and process checks to ensure that bugs of this magnitude are caught before they can affect your data.

At Blogger, we strongly believe that you own and should control your posts and other data. We understand that you trust us to store and serve your blog, and incidents like this one are a betrayal of that trust. In the spirit of ensuring that you always have access to your data, we have been working on importing and exporting tools to make it easier to back up your posts. If you'd like a sneak peek at the Import / Export tool, you can try it out on Blogger in Draft.

Our restoration today was of all blogs that were mistakenly marked as spam due to Friday's bug. Because spam fighting inherently runs the risk of false positives, your blog may have been mis-classified as spam for other reasons. If you are still unable to post to your blog today you can request a review by clicking Request Unlock Review on your Dashboard.

The New York Sun's Home Run

The New York Sun has hit a home run. I had previously blogged about my concern that the Sun's and Fox's coverage of the recent upsurge in prices has omitted the underlying cause: monetary expansion. This is of concern because economists have come up with many nonsensical explanations for inflation such as "cost push" inflation, "demand pull" inflation, unions cause inflation, oil prices cause inflation, consumer expectations cause inflation, speculators cause inflation, ad infinitum and ad nauseum. In the 1970s such spurious explanations reached a crescendo when President Ford wore a button that said "Win" if I recall, and argued that "jaw boning" would stop inflation. Worse, President Nixon had implemented price controls and controls on gasoline prices led to endless lines.

It doesn't take much to expose an unclothed Emperor. The Sun has come out and forthrightly said that the Fed has caused inflation. It will be hard for the mainstream media to spin the kind of fabrications that it spun in the 1970s. The Sun deserves a Pulitzer Prize for this editorial. Perhaps single handedly it will stop the establishment's reluctance to take the necessary steps to end the inflationary cycle and the mainstream media's eagerness to blow smoke in support of inflation.

The media have every reason to fabricate nonsense explanations for inflation. As I have previously blogged, there are special interests that demand inflation: the commercial banks, Wall Street, the real estate business and stock investors. The working man, the conservative saver and the entrepreneur who looks to build a business over the long term are harmed. Thus, in exchange for short term heating of the economy, the public loses entrepreneurial vision, the withdrawal of competent labor (as honest workers are diverted into less productive activities like stock investing), and there are dramatic increases in uncertainty for people on fixed incomes. It is also true that demand for labor is stimulated, but the jobs so created are temporary because the businesses that are created are of insufficient quality to survive the inevitable economic downturn that occurs when the Fed tightens interest rates because it has become politically impossible to continue printing money. By then, fortunes have been extracted from the public by those who had first access to the new money, namely hedge fund managers, and the public pays through higher prices and increased poverty.

Let us applaud the New York Sun and be thankful that at least one firm in lower Manhattan has clear vision and integrity.

The Depreciating Dollar

The New York Sun, New York's best newspaper, has run a front page editorial concerning the dollar, which the Sun argues, should be called the "Greenspan" instead of the "greenback". The reasons are in part that Greenspan's biography the Age of Turbulence came out today; the Fed's Open Market Committee will meet tomorrow to discuss whether to lower interest rates (depreciating the dollar further); and the Sun is increasingly concerned about the depreciating gold value of the dollar. Over the past two years the Sun has editorialized that the dollar declined from 1/265th ounce of gold in 2000, when President George W. Bush took office, to 1/500th of an ounce of gold in December 2005, to 1/637th of an ounce of gold in November 2006 to, well Kitco reports at 3:17 that gold has risen to $717 in light of tomorrow's Fed meeting, so it's 1/717th of an oz. of gold per dollar.

The problem facing the dollar is in some ways like previous inflations, such as the German inflation of the 1920s. In some ways, though, it is unique because never before has a fiat currency both served as a worldwide medium of exchange and been subject to aggressive depreciation in value. There are a number of interesting ramifications of this story that my friend Howard S. Katz has exposed through the years in his book The Paper Aristocracy; through his blog and through his investment advisory services.

First, Katz has brought the effects of monetary expansion on income inequality to the attention of libertarian politicians such as Ron Paul and to the attention of all who will listen. The left's game plan, evidenced during the great depression, has been to use disruption caused by mismanagement of the money supply, such as the 1929 stock market crash, the depression of the 1930s and the concomitant political strains, to agitate for quack nostrums like extension of government regulation that does nothing to cure the monetary problem and instead cripples the economy and interferes with legitimate business. Once again, we see an increase in agitation concerning income inequality just as the past two decades' monetary expansion is peaking.

Second, the effects on income inequality this time, which Katz discusses in his blog, may be more extreme than in the past. Because the monetary expansion has not resulted in the same degree of inflation as it normally would, interest rates have been reduced to very low levels, corporate profits have been energized and stock markets boosted to high levels. This seems to have turned Keynesianism on its head. The traditional Keynesian model is that stimulation of economic activity would create new jobs (hence the Phillips curve's trade off between inflation and unemployment) and workers would not object to the erosion of their real wages, essentially because they are suckers.

Instead, in the late 20th century and early 21st century world, which is far more globalized than Keynes's world of the 1930s, monetary stimulus may have reduced demand for US labor even as real wages have fallen. It may have done so because executives have been granted stock options that motivate them to maximize shareholder value more aggressively than they did in the prior postwar period. Rather than risk a higher degree of innovation, the executives focused on cost cutting, i.e., moving plants and services, to include white collar ones, to lower wage countries. These steps had some effect on stock values, enhancing the income inequality that naturally occurs because of monetary expansion and that is part and parcel of what the Fed does. Thus, traditional Keynesian economics has become not only a kind of deception (relying as it does on monetary illusion) as it has always been, but also has become increasingly outdated because of globalization. Real wages are stagnant; the stock market increases; but high paying jobs flee the country, all due to the Fed's monetary policy combined with aggressive stock option programs.

Third, the Fed now functions like a casino manager. The US dollar does not function just as a traditional money supply that provides a store of value; a medium of exchange; a unit of account and a standard of deferred payment. Rather, the dollar has become a commodity that is held by investors all over the world as a form of speculation. This new function puts the Fed in the role of casino game manager that needs to determine whether enough "chips" have been manufactured---chips that have meaning only so long as there are gamblers to use them.

Although economists have meaningful credentials, there is no reason to believe that they understand how to market casino chips. I am sure that Ben Bernanke, like Alan Greenspan, is a brilliant guy, but he is no better at marketing than a layman. Should Americans have faith in an institution like the Fed, which claims to manage the money supply while quietly extending its role to facilitator of a global crap shoot? Isn't it time to rethink the Fed altogether?

Military Strategy and the Bush Administration

Warren Buffett once said that he likes to buy stocks of companies that are so well strategically situated (have such a good "moat") that even if they are run by idiots they will be profitable. Buffett's goal was to find such companies and then make sure that they were staffed by competent executives like Roberto Goizuetta or Kathryn Graham. In today's New York Sun Andrew Ferguson has a story about the new Bob Woodward book, State of Denial, which is about the incompetence of Donald Rumsfeld and the Bush administration.

The journalists who write for the media are probably capable at what they do (no more or less capable than say the managers who run US corporations or the politicians in Washington, after all they are educated by the same universities and likely have about the same SAT scores) yet rarely have been exposed to a broad range of literature through a core curriculum and even more rarely have taken the time to seriously study subjects like management, strategy, economics and military history. Hence, it is not surprising that journalists' discussions of strategic issues lack the breadth that would have resulted from their completion of a competently executed liberal arts education that includes a grounding in the classics, philosophy and history, and lacks the sophistication that would result from relevant technical training in business or military strategy. In an earlier post I discussed the evolution of Thomas Friedman's "thinking" about Iraq. There is little doubt in my mind that the lack of perspective in his work and the acclaim that his work has received have resulted from a general failure of our education system, a failure that has debilitated America intellectually.

Criticisms about President Bush may be correct, and the Republicans may have engaged in five years of self-indulgent over-spending and cronyism. In this, I doubt that they are very different from the Democrats who, for example, run the New York State Assembly whom Mr. Friedman and the New York Times never criticize. (Mr. Woodward writes for the Washington Post, and it would be interesting to trace his coverage of government competence in Washington, DC, to include stars like Marion Barry.) In any case, the issue of the administration's competence is not quite the same as the issue of strategy in the Iraqi War.

Larwyn has forwarded some interesting links about paradoxes in the media's coverage of the Iraqi War, and the incoherence with which the press has discussed the strategic implications and even facts about the war. First, though, The Economist has written a report on the leaked intelligence report in its United States section which is short on facts and analysis but long on sneering about President Bush("These blunt conclusions...are hard to dismiss by any but the willfully dim sighted") following Thomas Friedman's tone and similarly short on intelligent discussion.

I wrote the Economist the following letter in response:

"The US intelligence community that was brutally inept with respect to anticipating September 11, 2001 now informs us that fighting terrorists on their own soil is unpopular with terorists and is therefore a mistake ("Stating the Obvious", September 30). There were similar arguments about nurturing terrorists' happiness concerning sanctions preceding the Iraqi War. Indeed any action taken to confront terrrorism will become a cause celebre among those who view themselves as part of the terrorists' community of belief. Hence, your response to the report amounts to a call to do nothing. That is a foolhardy bargaining strategy. Might have the fire bombing of Tokyo during World War II caused the Japanese to dislike the US and so increased the probability of kamikaze attacks? If so, was this a reason not to fire bomb Tokyo? Moreover, the leaked intelligence report assumes that fighters who commit acts of terror would not have in the absence of the Iraqi War (for otherwise their feelings are moot). Isn't such an assumption, that the Iraqi War alone generates terrorist acts absent fertile psychological soil, silly? And might not encouraging terrorists to fight and die in Iraq be helpful to the rest of the world by ridding us of those most likely to commit terrorist acts?"

The story Larwyn sent me is a blog by Tigerhawk which compares an article in the Washington Post about the dire fighting in Anbar, western Iraq. In contrast, the Guardian points out that much of the fighting in Anbar has involved tribes in Anbar fighting directly with al Qaeda (where are the arguments that the invasion of Iraq has nothing to do with al Qaeda?) and the Guardian states that "The clashes erupted after a new grouping calling itself the Anbar Rescue Council - which claims to represent a large number of Anbar tribes and sub-clans - said it intended to clear the province of the terrorist group." The fighting also involves in-fighting in al Qaeda where Osama bin Laden was angry with Zarqawi for killing Sunni religious scholars. According to the article "It is these issues that have been at the heart of the rift between al-Qaida and the tribes, many of whose members support the nationalist resistance". Such issues escape coverage in the Economist, the New York Times and the Washington Post.

The Failure of American Public Debate

The New York Sun reports that various politicians and pundits have been offering pessimistic assessments about the Iraqi conflict. Henry Kissinger, the foreign policy expert from the 1970s and 1980s who did not predict the important emergence of Islamic terrorism in the millenium, advises us that the war in Iraq is not winnable. The same Sun article quotes John McCain as saying that "there's only one thing worse (than deploying more troops), and that is defeat." Today, the Sun quotes Senator Obama of Illinois as saying that "a substantial number of American troops ought to be withdrawn" from Iraq. Thomas Friedman of the Times (Paid access, November 8) insists that the Bush team arrived in Iraq with too few troops (ignoring that, like Friedman, the Bush team was mostly in the United States and that it relied on the US military, specifically Tommy Franks, to project troop strength). Friedman, bombastic and ill-informed as always, suggests either reshaping Iraq into a federation (bad) or leaving Iraq by a fixed date (worse).

What is fascinating about all of these analyses is the willingness to make strong or absolute assertions without the benefit of a falsifiable theory or a body of empirical evidence that would point to the viability of one theory over another. Rather, pundits like Friedman and Kissinger and politicians like Obama and McCain (with whom I viscerally agree) pretend to know what they are talking about.

What is revealing about the discussion about Iraq is not just the failure of US intelligence and strategic planners (on both the intelligence and military sides) to anticipate and devise an updated strategy that would anticipate the diverse tribal and religious differences in the Arab world and methods for effectively handling terrorism, but the degree to which the politicians, press and media continue to remain uninformed. The arguments being made in the public press suggest a failure of American public debate and an unwillingness to learn.

In particular, Kissinger, McCain, Friedman, Obama and their ilk have had many years to conceptualize an intelligent response to terrorism and to develop a method of proactively responding to strikes like 9/11. Yet, no ideas are forthcoming. Instead, given their assessment that the American military has failed to respond competently (a point concerning which they offer no information and are apparently utterly uninformed), the "pundits" and politicians carp critically but offer no body of falsifiable theory nor any empirical evidence for their endless complaints and criticisms. Those of us who have other occupations (I work in the human resource management field) are forced to spend our valuable time reading about Iraq because those who are paid to do so have done such an incoherent and, plainly put, stupid job.

For example, consider Kissinger's claim that the war in Iraq is not winnable. This is obviously false. We can win any war by redefining it as a total war and killing the entire country of Iraq. I am not suggesting this as an option. However, the use of our moral restraint as propaganda to attack us is a tactic that ought not be permitted to work indefinitely. Perhaps total war ought to be an option against population groupings that support terrorism. I'm not sure why saying it isn't is "realpolitik". Because Kissinger says so? But Kissinger hasn't come up with a solution to terrorism, so what does he really have to offer? Is he the kind of 17th century physician who used leeches to bleed patients? I suspect that the entire field of foreign affairs has this quality of quackery. So why is the public taking the quacks seriously?

The Iraqi war is certainly winnable. The question is which path maximizes the US's interests. One thing that I am certain of: defining the war as not winnable is not in the US's interests. Kissinger ought to reframe his analysis to make it more precise. Someone who has failed to grasp the nature of or project methods to resolve the terrorist assault on America, like Kissinger, ought to be busy revising his theories and doing some basic reading instead of offering advice that has proven unsuccessful in the past. Yet, I do not hear anything new.

It seems evident that in dealing with a multiplicity of terrorist groups the concept of winning and losing that held true through World War II may no longer apply. The question is, how to convince the people of Iraq to support a moderate government and how to convince them to take action to stop terrorist violence. This might involve securing control of specific territories, providing economic support in those areas, propagandizing to the remaining areas, targeting specific terrorists and eliminating immigration here to the United States. There are likely other approaches. One might be total war.

But we are not hearing about them. What we are hearing is that the US's media, press and politicians lack ideas.

Gotham's Colleges

My following article appears in the December 6,2006 issue of the New York Sun based on an article I wrote in the Spring 2006 issue of Academic Questions.

Gotham's College$
By MITCHELL LANGBERT
December 6, 2006

The College Board recently reported that the cost of a four-year college degree is up 35% from four years ago after adjusting for inflation. At four-year private colleges, costs are currently $13,200 after financial aid adjustments, and at public colleges they are $5,836. The College Board estimates that from 1989 to 2005, college tuition inflation was almost double the rate of general inflation, 5.94% versus 2.99%.The reason for the ever-increasing costs is lax management. The solution is improved university governance.

The adjacent table shows that, in the New York region, baseline tuition ranges from $36,088 at Sarah Lawrence College to $4,157 at the City University of New York. Baseline tuition at Columbia and New York University is $35,166 and $33,420, respectively. University presidents' salaries similarly vary. They range from Shirley Kenny's $287,000 at SUNY Stony Brook to John Sexton's $789,989 at NYU. Note that, with a couple of exceptions, presidents at the higher-priced institutions tend to earn more than presidents at the lower-priced institutions.

Lax administration rather than faculty salaries explains high tuitions. An increasing percentage of professors are adjuncts, parttime faculty members paid on a per course basis. Adjuncts earn peanuts. CUNY's heavy reliance on adjunct faculty explains its modest tuition. Most adjuncts earn under $5,000 per course, even when a large lecture course generates $180,000 or more in revenue. In 2005, the Chronicle of Higher Education reported that while nationally, colleges employed 60,000 more professors in 2003 than in 2001, the increase for full-timers was only 2% whereas the increase for adjuncts was 10%, resulting in a 50-50 ratio of full-timers to adjuncts. This trend may be related to adjuncts generally not receiving health insurance as well as to their low direct pay.

Moreover, average full-time faculty pay excluding health insurance has approximately tracked inflation. In 2004, inflation was 1.9%, while full-time faculty pay increased on average 2.1%. If the average associate professor makes $90,000, including health and retirement benefits, while the average adjunct makes $25,000, the average of the two is $57,500 including benefits. The result of averaging the modest pay increases for full-time faculty with the low salaries of adjuncts suggests that faculty salaries cannot explain tuition increases. Indeed, executives in many other industries would envy universities' ability to substitute part-timers for fulltimers.

Insiders know that administrative and facilities' costs are a large percentage of total higher education costs, though it is difficult to get universities to admit to how much. Currently, the federal government caps the percentage of administrative costs of university research grants — for which colleges have to delineate all expenses — at 26% and allows an unlimited amount for facilities. Yet, colleges argue that the cap is restrictive and should be eliminated.

In the spring 2006 issue of the journal Academic Questions, I wrote an article in which I correlated university expenses, student characteristics, endowment growth, denominational affiliation of the university, geographic region, ranking, and category of institution with university presidents' pay. The strongest correlations are between presidents' pay and revenues and between presidents' pay and expenses. In addition, revenues and expenses per student have strong, slightly above .5, correlations with university presidents' pay.

Economists like to think in terms of incentives. What are the incentives that university presidents face with respect to tuition? They are that higher budgets and higher costs per student are, at least on the surface, associated with higher presidential pay. Thus, college presidents not only have no incentive to contain tuition costs, they also may have incentives to see that tuition increases, especially if tuition is linked to increases in overall revenue and expenditure.

Some economists have argued that budget size ought to be associated with university executive pay levels because decisions of executives of large universities have larger effects than decisions of executives of small universities. However, this claim is debatable because executives of larger universities have larger staffs to whom they can delegate difficult decisions, have larger budgets for consultants to provide them with advice, and find it easier to obtain funding from public and private sources. Presidents' pay should not be increased because they spend more.

One way to resolve the debate is to see whether factors that are unarguably related to institutional performance, such as the entering students' SAT scores, the school's tier, and the percentage of classes with fewer than 20 students, have a larger effect than factors that are unarguably unrelated to institutional performance, such as enrollment, religious affiliation, and the kind of college, such as liberal arts, university, and so forth. It turns out that enrollment, expenses, religious affiliation, and kind of institution explain most of the variability in college presidents' pay, while performance-related factors such as SAT scores explain almost none.

Universities have expended almost no effort to create incentives that might encourage university presidents to cut costs and constrain tuition. Moreover, it is difficult for outsiders to assess management even in the best of circumstances, yet colleges continue to use not-for-profit financial disclosure methods that are designed to leave outsiders in the dark about what university managers are doing.

Thus, those who are concerned about rising college tuition should look to reform the management of universities. In that regard, two steps would be effective. First, parents, students, and government should insist that universities issue financial statements that include information that is specifically relevant to colleges, such as facilities, operations, and instructional costs per student. Second, they should insist that university trustees begin to grapple with the design of appropriate incentives that will motivate university presidents to constrain rather than to expand costs.

A number of approaches are available. For example, university presidents could be paid bonuses when tuition is reduced. They could also be rewarded for improvements in faculty research productivity, students' participation in extracurricular activities, and improvement in performance on achievement tests. Trustees who have the skills and motivation to monitor presidents could be hired, and such trustees could develop strategic plans, linking presidents' pay increases to achievement of specific objectives. Trustees could also increase their interaction with faculty and administration to learn about cost-saving ideas. They could base merit pay for faculty and administration on cost reduction and increased student performance.

To implement such management policies, universities would need to develop objective measures of student performance, student participation, and faculty research productivity that would be made public. The sunlight of public disclosure would likely prove effective in limiting tuition hikes.

Mr. Langbert is an associate professor of business management and finance at Brooklyn College and may be visited at democracy-project.com.