Join Cato policy analysts while they comment on the presidential debates live tonight at 9:00 p.m. EST.

Here’s how: Log on to Twitter when the debate begins and see what Cato scholars have to say about the policies the candidates propose.

Some Twitter highlights from the last presidential debate:

• Did Sen. McCain answer the question about Social Security? I’d say no. –Jagadeesh Gokhale
• Obama’s health plan would outlaw the most affordable 50 percent of health insurance plans currently on the market. -Michael Cannon
• Need to understand the rest of the tax code to fix Social Security? Dissemblobama at its best! –Jagadeesh Gokhale
• The $700 billion financial-sector bailout is less than one percent of the amount required to bail out Medicare. -Michael Cannon

Read more about Cato’s live-blogging of the debate on K Street Cafe.

Even if some people won’t admit it, by now everyone understands that the No Child Left Behind Act is just one, big, perverse incentive, an obnoxious federal law that practically screams at states, “lie about ‘proficiency’ and ‘accountability.’ As long as I can prattle on about caring for all children, I don’t care what you do!â€

Despite this widespread understanding, it’s rare to catch a public official actually admitting to gaming the law, which is what makes this bit from Monday’s New York Times ickily refreshing:

Thanks for the candor, Mr. O’Connell. It concisely illustrates why NCLB and its predecessors have been failures, and why the only way to improve education is to give parents, not politicians, power over the schools.

I’ve been absent for Cato-at-liberty in recent weeks because I’ve been busy with the bailout and various related issues. I’ve missed the opportunity to post and get feedback from readers, so I’m posting some of my recent articles for your reading pleasure.

My first foray into the issue was a column for Real Clear Politics arguing against the bailout.

Needless to say, the political class disregarded my sage advice and voted to give the Treasury Department a blank check for $700 billion. So my next article was part of a Google-sponsored debate on whether the turmoil in financial markets is a reason to expand the size and scope of government. You can also see my opponent’s article  and my rebuttal if you are so inclined. You can also rate both of our arguments if you feel like putting your thumbs on the scale.

I’m also taking part in a debate sponsored by the Los Angeles Times. Monday’s topic was whether government should have any role in subsidizing housing, and Tuesday’s topic focused on who should get blamed for the current mess. I’ll post subsequent debates as they become available.

I’m reading left-wing critiques of John McCain’s health plan and coming across doozies like this one from the Center for American Progress and Planned Parenthood:

Wildly wrong.  Individuals and families already pay 100 percent of health care costs.  They don’t just pay for out-of-pocket spending and the “employee share” of their health-insurance premiums.  They also pay for the cost of government spending through higher taxes.  And they pay for the “employer contribution” to their health-insurance premiums because employers reduce workers’ wages.

The McCain plan would let individuals and families control a greater proportion of health-care spending — specifically, that “employer contribution,” which averages $9,000 for those with family coverage.  For example, see this.

Perhaps that is what the Left fears?

News that France will suspend football (soccer) games at which “La Marseillaise” has been booed reveals how the famous credo of that country has fallen into disuse.

A liberal approach toward speech - giving Tunisians in France the liberté to boo their country of residence - would communicate powerfully that France is stronger than such slights - yet still welcoming of Tunisians as frères et soeurs.

The booing wouldn’t last long, as the Tunisians would recognize and appreciate the égalité légale accorded them by France.

Fin.

Harold Meyerson in the Washington Post has a column titled “Gods That Failed.” He’s referring to a famous book:

And then he makes this analogy: “Today, conservative intellectuals might want to consider writing a tome on the failure of their own beloved deity, unregulated capitalism. ”

Where to begin? Certainly we haven’t had any unregulated capitalism lately. As I put it the other day, the kind of capitalism that has encountered the current crisis is “the kind in which a central monetary authority manipulates money and credit, the central government taxes and redistributes $3 trillion a year, huge government-sponsored enterprises create a taxpayer-backed duopoly in the mortgage business, tax laws encourage excessive use of debt financing, and government pressures banks to make bad loans.”

As for conservative intellectuals, some of them may wish for some form of “unregulated capitalism,” though plenty of them — from Russell Kirk to David Brooks and Michael Gerson and that Arkansas Aristotle, Mike Huckabee — have been pretty darn skeptical about capitalism. But whatever the more free-market conservatives may have dreamed of, they didn’t get laissez-faire. Nor did they ever make capitalism their deity, the way communists truly did make the workers’ state their god.

But let’s think about the comparison that Meyerson is making. Some intellectuals once supported communism, and that failed. Some intellectuals, we’ll concede for the moment, were just as enraptured with capitalism; and that system, too, in Meyerson’s view, has failed. Are these equivalent failures?

Communism’s failure involved Stalin’s terror-famine in Ukraine, the Gulag, the deportation of the Kulaks, the Katyn Forest massacre, Mao’s Cultural Revolution, Che Guevara’s executions in Havana, the flight of the boat people from Vietnam, Pol Pot’s mass slaughter — a total death toll of 94 million people, according to the Black Book of Communism. Prominent American leftists — from Lillian Hellman and Dalton Trumbo and lots of other writers to Alger Hiss of the State Department and FDR speechwriter Michael Straight, who became the publisher of The New Republic – were members of the party that did these things. And that party had total control in the countries that it ruled. There were no opposition parties, no filibusters, no election-related maneuverings that prevented the party in power from getting what it wanted.

What the Communist Party wanted, it got. Communism in practice was communist theory made real.

In the United States, on the other hand, economic and political outcomes are always the result of jockeying between parties and interest groups. So even if Ronald Reagan and his advisers wanted to give Americans “unregulated capitalism,” they had to deal with Tip O’Neill and the Democrats, and with critics in the media, and with many other players. As these forces played out, in the late 1970s and early 1980s some deregulation did occur, along with some tax-cutting. And indeed there was some financial deregulation in the Clinton years as well.

And what is the ”failure,” as Meyerson puts it, of this semi-deregulated capitalism? Does it involve mass starvation? Does it involve terror-famines? Does it involve millions of deaths? No, so far it involves a sharp decline in the stock market from record levels. Taking 1980 as the starting point for Meyerson’s nightmare vision of “unregulated capitalism,” here’s what has happened to the S&P 500. It’s had some dips, but it still reflects vast wealth creation, and vast increases in the assets of our IRAs and 401(k)s.

(click for larger version)

The “failure” of capitalism and the failure of communism are not morally equivalent, and Meyerson should be embarrassed to even imply such a comparison.

Friend of liberty (and Cato) Declan McCullagh has a new column on CBSNews.com called “Other People’s Money.”

With that moniker for the column, methinks he’ll be addressing Washington’s ways from an important but underrepresented perspective.

His inaugural column, “Will U.S. Taxpayers Need a Bailout?“, points out the perils of politically directed investments in the banking sector.

“It’s beautiful to see the amount and quality of food here, the choices, the possibilities. Meanwhile, people are hungry in Cuba, scraping to get by, obsessing about where they’ll find dinner. I have to be careful with all this great food. If I keep eating, I won’t be able to run anymore and I’ll get out of shape.”

–Reinier Alcántara, a Cuban soccer player who defected last week while his team was in Washington, DC., recounts his emotional first visit to a grocery store in the U.S.

The Chicago Tribune quotes me this morning on issues the candidates aren’t talking about and may not anticipate. It’s true that issues are likely to arise in the next four years that no one anticipates today. But there are also some issues that are pretty easy to identify that the candidates aren’t being pressed to talk about. Some of those include:

Paul Krugman wrote some interesting essays in international economics theory (he is not noted for using facts), but began to put politics above economics ever since the 1992 presidential campaign –as shown in my 1994 review of his book, Peddling Prosperity.

Wiser choices for future Nobel prizes would be Arnold Harberger and Martin Feldstein for their innovative work in microeconomics and public finance.

…then why are our so-called leaders in Washington doing so much fear-mongering and thrashing around?

Verizon’s CEO Ivan Seidenberg exhibits much better economic leadership than anything we’ve heard from congressional leaders, President Bush, or Treasury Secretary Paulson. He simply has confidence, and he hasn’t mistaken “investment banking” or “banking” for “the economy.”

From a WSJ Deal Journal post called “No Bailout For Me, Thanks“:

While political leaders shivver in their boots and talk about confidence, here’s a genuine leader getting on with it.

An otherwise interesting Washington Post front-pager on “What Went Wrong” claims the current situation “has erupted into the biggest economic crisis since the Great Depression.”  On the contrary, that honor surely goes to 1980-82, with 1973-75 as a close runner-up.

This may indeed be the biggest postwar financial crisis, but that is a very different thing.

The biggest postwar financial crisis so far was the S&L collapse of the late 1980s, when nearly 3000 financial institutions were closed.  But the impact  of the S&L debacle on the real economy was minor at best (the economy grew by 2.9% a year during that “crisis”).  The stock market crash of 1987 inspired many hysterical predictions but no recession at all.

An economic crisis implies a deep and prolonged drop in real output and employment, not just another routine recession.  To describe current conditions as a worse economic crisis than 1980-82 is fanciful nonsense.

This story says a lot about who most wants bank bailout money, and why:

“Pressed” how, exactly? One wonders. But common sense suggests two strong indicators that money is being misallocated. The first is when it goes to an institution with a track record of failure. The second is when it’s being urged on a recipient who does not even want it. It seems that we’re faced with one or the other now.

The other day, my colleague Michael Cannon published a fun little Briefing Paper entitled “Does Barack Obama Support Socialized Medicine?” In it, he gives the provocative label, “socialized medicine,” a sensible meaning and examines where some important people stand on it. Worth a read.

There were a couple of lines in it that I thought were particularly interesting:

Awwwwwwwww. Did Michael not get a call from reporters when we thought he was supposed to? Pooor baaaaby! And welcome to the club, bud!

But today I spent some more time reviewing Mr. Cannon’s work: to wit, this blog post about Paul Krugman.  His post links to this NPR story on the debate. I’m not all that big on reading, so I skipped down to the audio highlights and listened to a segment from each of six speakers chosen by NPR. And do you know what I heard?

Twenty-nine seconds from one advocate of socialized medicine. Forty-one seconds of a second advocate of socialized medicine. And twenty-four seconds from a third.

Not very much, you say? That’s our hyper-kinetic, media-saturated world. But get this:

The other side’s three advocates - Cannon among them - got fourteen seconds, twenty-one seconds, and fourteen seconds respectively.

The longest clip given to advocates of freedom is shorter than the shortest clip given to advocates of socialized medicine, and the total time given to socializers is just shy of double the time given to keepers of the flame of liberty.

Media bias! Proven! At least - according to the weakest possible standards of proof. …But still, ya gotta wonder.

A study prepared by the Deutsche Bank estimates that Venezuela needs the price of oil to stay above $97 per barrel in order to pay for government expenditures. Yesterday, the barrel of West Texas Intermediate Crude Oil at Nymex closed at $81.19.

If the troubled global economy keeps pushing the price of oil downwards, Hugo Chávez’s Bolivarian revolution will be in serious trouble.

It seems that there is a growing trend in Latin America to openly challenge Washington’s war on drugs. Yesterday, Manuel Zelaya, president of Honduras, openly called for the legalization of drugs as a way to tackle drug-trafficking violence. The venue for Zelaya’s plea couldn’t be less welcoming: a ministerial summit of the UN Office of Drugs and Crime.

However, Zelaya is not alone in Latin America. In Argentina, the current government of Cristina Fernández is promoting the decriminalization of drug consumption. In Mexico, where drug related violence is tearing the country apart, the PRD, the biggest opposition party, has also openly called to legalize drugs. And this is not just a left-leaning phenomenon. Felipe Calderón, Mexico’s conservative president, has recently proposed decriminalizing small amounts of some drugs, including cocaine and marijuana.

There are several factors that explain why Latin American leaders are now calling for a different approach to the U.S. international war on drugs. First, the left-leaning governments that don’t enjoy good relations with Washington are less concerned with upsetting it. Second, drug-related violence and corruption are reaching highly disturbing levels, especially in Mexico and Central America and are overwhelming law enforcement authorities. In Guatemala the local army recently admitted that there are portions of the country’s territory under the control of local cartels. Washington’s war on drugs is threatening the stability of these democracies.

However, another important factor is that many Latin American countries are now less susceptible to punishment from the United States, thanks in part to free trade agreements. A decade ago, all Latin American countries but Mexico depended on unilateral trade preferences to export to the U.S. market. Upsetting Washington could represent losing these preferences. Today, 11 Latin American countries have implemented (or are in the process of implementing) permanent trade agreements with the United States that ironically gives them more stability in their relationship with Washington.

As Ted Galen Carpenter recently explained in an op-ed, the stakes are too high for stability and security not only for Latin American countries but also for the U.S. Let’s hope that more leaders in the region raise their voices against the failed international war on drugs, and call for sensible policies such as drug legalization.

Michael Barone on “The Coming Liberal Thugocracy:”

Read the whole thing. Conservatives are not well-positioned to lodge complaints. Especially McCain.

A Critique of the National Popular Vote by John Samples

What To Do About Executive Compensation by Alan Reynolds

A Compilation of Cato Research on the Financial Crisis by Cato Scholars

New President Won’t Tame Executive Power by Gene Healy

Podcast: Candidates Avoid Specifics on Security featuring Benjamin H. Friedman

Event Today at the Cato Institute: Book Forum: The Encyclopedia of Libertarianism, 4:00 pm, Watch Live Online!

Freedom is blossoming across the land - er, off the coast of Florida - as a law requiring salvagers there to have a license has been repealed.

Democratic Senator Bill Nelson of Florida is the one who took a scythe to the regulatory underbrush (or kelp, I suppose). Republican John Mica of Florida’s 7th District introduced the companion bill in the House.

On the campaign trail, reports MSNBC, Sarah Palin is telling audiences Barack Obama would raise taxes and expand the federal government. Her punch line:

That’s for sure.

Now that we’ve released the Cato Supreme Court Review and the Court has started its new term, I’m on the road quite a bit giving speeches and participating in debates.  Here’s the schedule for my next trip, which starts tomorrow in Atlanta.  All events are open to the public (though the lawyers’ events charge admission):

10/14 at 12pm - Atlanta Federalist Society Lawyers - Kilpatrick Stockton, 1100 Peachtree St.

10/14 at 4pm - Emory Law School - 1301 Clifton Rd., Atlanta

10/15 at 12pm - University of Florida Law School - 2nd Ave. & 25th St., Gainesville

10/15 at 4pm - Florida State University - 425 W. Jefferson St., Tallahassee

10/16 at 11:30am - Florida Coastal School of Law - 8787 Baypine Rd., Jacksonville

10/16 at 5:30 pm - Orlando Federalist Society Lawyers - The Citrus Club, 255 S. Orange Ave., 18th Floor

10/20 at 12pm - University of Miami Law School - 1311 Miller Dr., Coral Gables

If you come to one of these events because you learned of it from this blog post, please do come up and introduce yourself.

In the November issue of Liberty magazine I write about one factor that I think reduces the political impact of libertarian-leaning voters: the fact that they’re all over the map about which party or faction represents the lesser of the evils:

If only some candidate or movement could bring them all together.

Today, the Royal Swedish Academy of Sciences awarded Princeton University economist and New York Times columnist Paul Krugman the Nobel Memorial Prize in Economic Sciences “for his analysis of trade patterns and location of economic activity.”  

I recently debated Krugman on whether it’s a good idea for government to guarantee universal health insurance coverage.  But today I have nothing but congratulations for him.

The Swedish Academy of Sciences has awarded the 2008 Nobel Memorial Prize in Economic Sciences to Paul Krugman, in recognition of his contribution to trade theory and specifically for his work on the effect of economies of scale in international trade.

Although Prof. Krugman is perhaps better known these days for his columns in the New York Times and his strong criticism of the Bush administration, trade wonks are well aware of his scholarly contributions, which number in the hundreds of scholarly journal articles and tens of books (including, jointly with Maurice Obstfeld, my undergraduate trade textbook). He won the John Bates Clark medal in economics in 1991, an arguably tougher prize to win than the Nobel.

I have my concerns with Prof. Krugman’s later work and his tendency to allow his political views to trump economic good sense. As the Economist [$] wrote in 2003 “A glance through his past columns reveals a growing tendency to attribute all the world’s ills to George Bush…Even his economics is sometimes stretched…” He is generally considered to be a big-government liberal. But the prize was not awarded for his NYT columns or his opinions on economic or foreign policy.

The Nobel is much deserved, even if Prof. Krugman’s rants have led him to stray far from his admirable trade-theory roots.

Many argue that the demand for public goods justifies government spending and taxing.  Defense spending is a classic public good. The New Times offers an interesting case study of how the federal government actually spends money on defense.

The story recounts the activities of Michael Cantrell, a Defense Department employee who turned into a lobbyist for various projects connected to the missile defense program. According to the story, Cantrell “extracted nearly $350 million for projects the Pentagon did not want, wasting taxpayer money on what would become dead-end ventures.”

Cantrell is awaiting sentencing on corruption charges related to taking kickbacks for defense contractors. But his violations of the law did not start until 2000. Much of the $350 million wasted on defense projects happened before he started taking a cut of the action.

Read the whole story. Here is my summary: Pentagon officials did not want the projects Cantrell pushed, but powerful members of Congress did support such outlays. DOD had missile ranges around the world, but Ted Stevens thought another one was needed in Alaska. Acoustics research might have been conducted many places, but Trent Lott preferred the work done by the University of Mississippi in Oxford and a Huntsville defense contractor that had a branch office in Oxford. And so on.

In other words, members were directing the DOD budget to benefit their constituents in exchange for votes on election day. “Vote for me and I will give you $1,000″ is not limited to presidential elections.

Gordon Tullock once wrote of campaign finance:

It should of course be kept in mind that [campaign contributions] are not actually for the purpose of buying votes. The votes are bought by the bills passed by Congress, or the Legislature, which benefit voters. But the campaign money is used to inform the voters about what their congressman has done. Since the voters pay little attention, concentrating the message on a narrow scope and repeating it again and again is necessary even though it annoys intellectuals. On the whole it is the actual things done for the voters by the votes of their and other congressmen, which attract voters to elect those congressmen.

The Cantrell story confirms Tullock’s insight. The reporter mentions campaign finance contributions by defense contractors, but by and large, the story is one of constituent service (that is, the creation and maintenance of vote purchase schemes).

There are several interesting questions here. Can Congress actually provide public goods efficiently? Isn’t Cantrell’s story one of earmarking without the earmarks? If so, won’t the practice of earmarking continue even if Congress gets rid of earmarks? The story shows Congress in a poor light, but don’t we want the legislature to control its agents (like the Pentagon) instead of simply delegating authority to spend to them?

One final lesson. The Cantrell story shows what happens when Congress has money to spend on national defense. In coming days, the federal government may come into ownership of many banks. How do you think Congress will spend the capital of those banks?

Jonathan Chait, a journalist who frequently attacks supply-side economics, derides Peter Robinson of National Review for making a big deal out of a statement by 100 economists (or maybe it’s only 90) warning about the dangers of Barack Obama’s plans to raise taxes and restrict international trade. Robinson may have gone a bit far in calling the statement “The Booming of the Big Guns.” As Chait says, 100 economists isn’t all that many. After all, 200 economists warned against the Wall Street bailout, and you see how much good that did.

But Chait also sneers at the quality of the economists who signed this statement opposing new burdens on production and trade. “The list certainly does not suggest excessive discrimination about credentials. It’s heavily larded with GOP apparatchiks now residing in the right-wing think tank world.” Actually, it’s not. There are maybe half a dozen who list think-tank affiliations, including people like Eric Hanushek of the Hoover Institution, who–perhaps Chait does not know–holds a Ph.D. from MIT and taught for years at the highly regarded University of Rochester econ department. And then there are five Nobel Laureates–Gary Becker, James Buchanan, Robert Mundell, Edward Prescott, and Vernon Smith.

After his snipe at “GOP apparatchiks now residing in the right-wing think tank world,” Chait says “(my favorite is “economist” George Schultz of the Hoover Institution).” OK, let’s think about that. First, it’s Shultz, not Schultz. And just who is this “GOP apparatchik George Schultz”? Well, Chait probably thinks that seven successful years as Secretary of State doesn’t qualify you as an expert on taxes and international trade. Maybe not. But Shultz also has a Ph.D. from MIT. And he taught economics for 20 years at MIT and the University of Chicago. He then served as director of OMB and Secretary of the Treasury. Qualified to comment on U.S. economic policy? I’d say so.

But if you insist on academic credentials–and 20 years at MIT and Chicago in the past doesn’t count–that still leaves you five Nobel laureates. And lots more economists of substantial accomplishment and reputation, including some who just might get a Nobel Prize one of these days, people like Robert Barro, Mike Jensen, John Taylor, Michael Boskin, Martin Feldstein, Anne Krueger, Glenn Hubbard, Burton Malkiel, Kevin Murphy, and Cato’s own Bill Niskanen. The fact is, I’ve seen a lot of petitions from economists, and this one is more top-heavy with academic credentials than most.   

It’s intriguing to note that the statement does not endorse McCain’s economic proposals, it just criticizes Obama’s. Perhaps they couldn’t get five Nobel laureates and the other accomplished economists on the list to do that.