Catallaxy Files

Peter Garrett May 2007

A Rudd Labor Government will increase diplomatic pressure on Japan and pull out all stops in the international courts to stop whaling for all time.

Kevin Rudd December 2007

Well, I think I have a clear idea as to what the previous Australian Government did – which was nothing – when it came to the proper action to protect whales. I understand the full complexity and difficulty of this challenge. I’m fully aware of the depth and strength of our bilateral diplomatic relationship with Japan. I’m equally aware of the fact that no-one seriously believes that this is whaling for scientific purposes. Therefore, we need to embrace a proper, considered, reasonable, balanced course of action.

Peter Garrett January 2010

The Australian government has repeatedly called upon all parties to exercise restraint to ensure safety at sea and condemns violent or dangerous activities.

If this goes to court it’ll get very ugly and I can’t see it ending well.

This is why I am so glad to report that Michael Mann – creator of the incredible Hockey Stick curve and one of the scientists most heavily implicated in the Climategate scandal – is about to get a very nasty shock. When he turns up to work on Monday, he’ll find that all 27 of his colleagues at the Earth System Science Center at Penn State University have received a rather tempting email inviting them to blow the whistle on anyone they know who may have been fraudulently misusing federal grant funds for climate research.

It turns out the US has a False Claims Act whereby whistleblowers get to keep a portion of any money recovered from individuals who get public money by making false statements. So it looks like ‘hide the decline’ will be tested in court. A clear explanation of the legislation and process can be found here.

The False Claims Act permits whistleblowers to sue in the name of the government as a “qui tam” plaintiff. Qui tam whistleblowers have used the FCA for decades to police (some would say hound) government contractors accused of obtaining government money by means of false statements. What’s the non-altruistic incentive for exposing fraud on the government? Successful whistleblowers can keep a share of the money that a federal judge or jury says should be paid back to the government, sometimes up to 30% of the recovery. Indeed, whistleblowers have recovered hundreds of millions of dollars in these suits over the last 20 years.

There is no reason this legal tool can’t be used against unscrupulous professors, scientists, and “green jobs” hucksters who knowingly submit false statements to get government grants that fund their research, fuel their green-tech start-ups, and underwrite their proselytizing about supposed man-made climate change.

Importantly, false statements necessary to justify a False Claims Act suit don’t have to involve the same type of data-manipulation exposed in the current ClimateGate scandal. A climate-fraud FCA case could be made out of any type of false statement made in order to get or keep government money. Government grants and contracts typically involve a significant amount of ongoing certification of compliance with bureaucratic restrictions – think of a government contractor’s progress reports or a hospital’s never-ending stream of paperwork assuring that all is in order – and false statements in this paperwork may open the door to a lawsuit.

I had thought that people would first start suing the alt.energy firms looking at statements they had made in their prospectuses, but the first move I am aware of is going after the scientists themselves. As best I can see Michael Mann is in their targets, but Phil Jones should be worried too.

I’m hoping that no-one there realizes I have a US DoE grant and have had this (with Tom W.) for the last 25 years.

What is going to make this particularly interesting is that Mann will be sued in his personal capacity – his employer is a state-based organisation and can’t be sued under this federal legislation. I’m wondering if their litigation insurance would apply in this situation?

At the core of the case will be a whistleblower (one of Mann’s former trusted colleagues) v Mann (and perhaps others). On trial will be their working relationship, work practices and academic procedures. As I said above, this will be ugly and involve a lot of ‘he-said, she-said’ type argument. So overall I do have mixed feeling on this; the AGW lobby did bring it upon themselves, they played very hard with little regard for playing the man or the ball. But the collateral damage these actions will do to their home institutions and disciplines is also very high. Part of the problem is that the AGW lobby corrupted the governance mechanisms of their home institutions and disciplines in pursuit of their narrow self-interested objectives as opposed to playing within the governance mechanisms.

Joseph Stiglitz is in Vanity Fair talking about the origins of the GFC.

The administration talked about confidence building, but what it delivered was actually a confidence trick. If the administration had really wanted to restore confidence in the financial system, it would have begun by addressing the underlying problems—the flawed incentive structures and the inadequate regulatory system.

This is a motherhood statement, that everyone can agree with. The capitalist economy deals with flawed incentive structures via a process known as ‘bankruptcy’ and regulatory intervention has prevented that process from working. But I’m sure that isn’t what Stiglitz has in mind. He goes on

The truth is most of the individual mistakes boil down to just one: a belief that markets are self-adjusting and that the role of government should be minimal.

Okay, so he suggesting then that government should be larger? That experiment has just been tried. As described by Gary Becker, Steven Davis and Kevin Murphy in the WSJ.

Liberal Democrats won a major victory in the 2008 elections, winning the presidency and large majorities in both the House and Senate. They interpreted this as evidence that a large majority of Americans want major reforms in the economy, health-care and many other areas. So in addition to continuing and extending the Bush-initiated bailout of banks, AIG, General Motors, Chrysler and other companies, Congress and President Obama signaled their intentions to introduce major changes in taxes, government spending and regulations—changes that could radically transform the American economy.

The efforts to transform the economy began with a fiscal stimulus package of nearly $800 billion. While some elements served the package’s stated purpose and helped to soften the recession’s impact, the overall package was not well designed to foster a speedy recovery or set the stage for long-term growth. Instead, the “stimulus” was oriented to sectors that liberal Democrats believe are deserving of much greater federal help. This explains why much of the stimulus money is going toward education, health, energy conservation, and other activities that would do little to soak up unemployed resources and stimulate the economy.

Reading Stiglitz is very frustrating. We can agree that institutional failure occurred leading to the GFC. It isn’t clear, however, that more government is the solution to that failure. Certainly not more government in a macroeconomic sense which is what we’re getting.
Update: Karl Rove indicates just how much more government the US is getting.

After President Obama devoted much of 2009 to health care and global warming—two issues far down Americans’ list of concerns—the White House says he will pivot to jobs and deficit reduction in his State of the Union speech in a few weeks. The White House is considering dramatic gestures, perhaps announcing a spending freeze or even a 2% or 3% reduction in nondefense spending.

But Americans shouldn’t be misled by the election year ploy: Mr. Obama rigged the game by giving himself plenty of room to look tough on spending. He did that by increasing discretionary domestic spending for the last half of fiscal year 2009 by 8% and then increasing it another 12% for fiscal year 2010.

So discretionary domestic spending now stands at $536 billion, up nearly 24% from President George W. Bush’s last full year budget in fiscal 2008 of $433.6 billion. That’s a huge spending surge, even for a profligate liberal like Mr. Obama. The $102 billion spending increase doesn’t even count the $787 billion stimulus package, of which $534 billion remains unspent.

The ten best pro-liberty books of the decade. Great picks! Bill Easterley has two on the list. (hat tip to Michael Warby).

A new pro-liberty Kiwi think tank.

Becker at al on the slowness of the US recovery. Regime uncertainty and waste.

The second factor is less obvious, but possibly also of great importance. Liberal Democrats won a major victory in the 2008 elections, winning the presidency and large majorities in both the House and Senate. They interpreted this as evidence that a large majority of Americans want major reforms in the economy, health-care and many other areas. So in addition to continuing and extending the Bush-initiated bailout of banks, AIG, General Motors, Chrysler and other companies, Congress and President Obama signaled their intentions to introduce major changes in taxes, government spending and regulations—changes that could radically transform the American economy.

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