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Bundesbank. The single-minded Bundesbank ideology — price stability-uber-alles — cannot work in a Europe where recession threatens to in­crease already high unemployment; the Fed's pragmatic willingness to bring growth and employment into the balance can.

The lessons for tax policy are less direct. What is thought of, as tax
policy in the United States cannot exist in the European Union because
the EU levies no taxes of its own? It is financed by contributions from the
member states, which use their tax revenues to support the EU budget as
well as their much larger national needs. Although political infighting
over relative contributions is inevitable, EU members have also been
squabbling over «harmonization» of national taxes — setting EU-wide
rules for rates and regulations.

The American experience suggests that this is quite unnecessary. The US Constitution provides few constraints on the ways in which the states may raise revenues: they can legally levy income taxes, corporate taxes, sales taxes and property taxes on their individual and corporate residents at any rates they want, and they do. State taxes vary, but the variations stay within limits because the citizens and the companies in the states compete with one another.

The limits are imposed by economics, not legislation; they work and cause few quarrels. Similar natural limits are in fact becoming visible in Europe; the squabbles are unnecessary.

With monetary policy in the hands of the European Central Bank,
fiscal policy — budget deficits and surpluses a la Keynes — is the re­
maining tool with which the member states of European Economic and
Monetary Union, or EMU, can affect their own growth and employment.
But such national autonomy is illusory however; the rules of monetary
union limit deficits, and economic reality reinforces the rules. Before
EMU a state could finance a deficit by borrowing from its own centra!
bank.

The US model is again illuminating. The American states cannot run persistent deficits because they cannot borrow to finance those deficits, except at prohibitive interest rates. The federal government, however, can borrow from the Federal Reserve to finance immense deficits, has done so, and surely will again when economic downturn calls for fiscal stimu­lus. Except for one crucial difference, the government of EMU could similarly borrow from the central bank when dictated by Europe's needs — the difference, of course, being that there is no government of EMU.

This leads to the possible lesson for political confederation. When re­cession suggests a continentwide need for stimulus, the pressure will be on the member states to create some sort of joint fiscal decision-making mechanism. Such a mechanism will not be called a confederation but it

will be a major step in that direction. It will raise the question of whether the mechanism should be used for making other joint decisions. That in turn should reraise the question of the «democratic deficit»; in particular, should the one body elected by European individuals, the Parliament, be given more power over such decisions?

The move will be on. At that point, an American might even have the temerity to suggest that Europeans read «The Federalist» papers.

2. What Happened to That «Global Architecture?

When Brazil had devalued the real, the folks in Washington who claim responsibility for global monetary order were uncustomarily silent. One is tempted to say there was stunned silence, but that would imply that Brazil's move came as a surprise to the Treasury and the International Monetary Fund.

Surely it didn't, but there was another very good reason to keep quiet. Brazil had been a test case for that new global «financial architecture» that President Bill Clinton proclaimed to the world last fall. The real's collapse made abundantly clear what some of us had assumed: The promise of a «new architecture» was just more Bill Clinton hot air.

Of course, the hot air had a purpose, as do all of Mr. Clinton's skill­fully crafted orations. He wasn't striving for «new architecture» as he claimed, but rather trying to save the old architecture, which was in dan­ger of collapse. Specifically, he was trying to persuade the US Congress to cough up more money for the tottering IMF. The Brazil gambit was one of the arguments employed. If the IMF were not refinanced, it could not bait out Brazil and Brazil would go the way of the Asian tigers, with serious repercussions for the US and world economy.

The string of disasters midwifed by the global money managers is re­flective not only of misjudgments but of a fatal flaw in the existing «architecture.» Mr. Clinton had the words right in September, he just didn't know the score. Either new architecture or no architecture at all is needed. But a president who spends most of his working hours figuring out how to buy votes with public money is not likely to be very critical of a multilateral agency that does pretty much the same thing. It subsidizes two very influential constituencies, international bankers and the profligate politicians who preside over such places as Russia, Indonesia and Brazil.

These bankers and politicians got the IMF's number a long time ago. They knew that institutions, like natural organisms, fight for self-preservation. The IMF keeps itself in business by winkling money out of



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rich nations such as the US and handing it out to the poorer brethren, who usually are poor because of gross economic mismanagement. In this age in which income transfers are deeply imbedded in politics, the IMF doesn't lack for clients.

What is absent is any convincing evidence that this has made the world a better place. Africa appears to be regressing, despite the billions poured into it by the IMF, US aid agencies and the World Bank. Asia, acting partly on IMF and US Treasury advice, took a big step backward, in terms of living standards, with the 1997 devaluations, as did Mexico in 1994. The Brazilian and Russian governments, living well beyond their means, were shielded from reality for far too long. The people in such places now must pay a price and their politicians will blame everyone but themselves, including Bill Clinton and Michel Camdessus.

The IMF has proved that it is impossible to get good conduct from politicians by subsidizing their bad conduct. President Fernando Henrique Cardoso (Brazil) made himself very popular when he killed hyperinfla­tion and gave his country a solid currency with the Real Plan. But he didn't follow through by reforming government itself. Had there been no international safety net supplied by an act of the US Congress, he might have seen fit to work harder. There should have been plenty of evidence around that monetary policy alone cannot compensate for governmental indiscipline.

So it's back to the drawing board for the US Treasury and the IMF — will they really come up with some new «architecture» this time, some­thing like going out of the global management business? Don't count on it.

3. A Dangerous Gun Show

As we listen to the post-Littleton debate on gun control, it's impossi­ble not to notice the enormous gap between the problem gun-control ad­vocates describe and what their proposals can be expected to deliver. Childproof gun locks, requiring instant checks of buyers from licensed dealers at gun shows, holding adults liable for letting children get guns — none of these would have stopped the Littleton murderers, who planned their crime and assembled their arsenal for a year and violated several existing laws in the process. These proposed new laws would make only a marginal difference. The gun controllers' rhetoric, decrying the large number of guns in the United States and pointing out that gun deaths are much lower in countries that ban guns, makes much more sense as an ar­gument for eliminating gun ownership altogether — which many gun controllers would like to do.

This misfit between problem and solution is typical of reformers,

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mostly liberal but some conservative. Gun-control advocates are not the only reformers whose solutions are tiny next to the problem they address and who ignore the practical difficulties of their unspoken agendas — while remaining uncurious about possible unanticipated consequences.

Consider advocates of the latest campaign finance bill, who decry the importance of money in politics and then propose new laws that will surely be evaded as previous laws have been. The problem is basic: In a big-government democracy, people will want to influence elections, out of idealism as well as self-interest, and they will spend money to do so. And they will be acting on a claim of right: the First Amendment. To which some campaign finance reformers respond: Get rid of the First Amendment. In March 1997, 38 senators voted to amend the First Amendment to allow campaign spending limits. Or as House Minority Leader Dick Gephardt put it: « What we have here is two important val­ues in direct conflict: freedom of speech and our desire for healthy cam­paigns in a healthy democracy. You can't have both.» The Framers disagreed.


There is little evidence that gun-control advocates have given much thought to the practical difficulties of a serious gun ban. For the fact is that while the media lavish attention on marginal changes in federal gun-control laws, the great source of successful reforms in the 1990s is the states, which have been passing laws allowing law-abiding citizens, after a background check, to carry concealed weapons. Today 31 states, with 50 per cent of the nation's population, have such laws. None of the nega­tive consequences predicted by gun controllers has come to pass. Instead, according to the most complete statistical study by University of Chicago economist John Lott, concealed-weapons laws have reduced crime. Citi­zens stop crimes 2 million times a year by brandishing guns, Lott writes, and criminals are deterred from attacking everybody because they know that a small number of intended victims will be armed. Lott's book, More Guns, Less Crime, presents a strong argument that more gun control would produce more crime.

Even if sweeping gun control did not have that unintended conse­quence, it would be fiendishly difficult to enforce. There are some 240 million guns in America, most of them owned by people with a claim of right. And not a frivolous claim. The intellectually serious debate is over how far the Second Amendment right extends: Congress can surely ban the possession of nuclear weapons and surely cannot ban all handguns and rifles; the Second Amendment blocks the road somewhere in be­tween. Earlier this month, former members of Congress Abner Mikva and Mickey Edwards, heads of a bipartisan committee, urged caution in pro­posing constitutional amendments, and they are surely right in urging avoidance of triviality. What do they have to say to the reformers who would repeal the heart of the First Amendment and ignore the Second?

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4. Down with the Death Penalty

The warrior and the executioner do similar jobs. Both kill the enemies of the state. But there the similarity ends. From time immemorial the war­rior has been feted and honoured. The public executioner, by contrast, has always had to lurk in the shadows, working anonymously or for a pit­tance. There is no glory in what he does.

That sense of discomfort and shame is why a growing number of countries have washed their hands off judicial execution. Today nearly all western democracies, as well as dozens of other countries, have aban­doned capital punishment. Most of the countries, which still use it with much frequency, such as China or Iran, are authoritarian states without independent legal systems.

The single most defiant — and most notable — exception to this trend is the United States. To the irritation of many of its allies, the American government regularly defends the death penalty in international forums, reflecting widespread support for capital punishment at home. Too often, death-penalty opponents have reacted to America's stubborn exception-alism on this issue with knee-jerk condemnation, or despair. Instead they should relish the chance to convert the world's most vigorous democracy to a saner policy. For they have a better case.

Three basic arguments are made for the death penalty: that it deters others, saves innocent lives by ensuring that murderers can never kill again, and inflicts on them the punishment they deserve. The first two, utilitarian arguments, do not stand up to scrutiny, while the moral claim for retribution, although naturally more difficult to refute, can be an­swered.

Despite voluminous academic studies of American executions and crime rates, there is no solid evidence that the death penalty is any more effective at deterring murder than long terms of imprisonment. This seems counter-intuitive. Surely death must deter someone. But the kinds
of people who kill are rarely equipped, or in a proper emotional state, to make fine calculations about the consequences. Moreover, even for those who are, decades of imprisonment may be as great a deterrent as the re­mote prospect of execution. Although European countries have abolished the death penalty, their rates of violent crime have risen more slowly than crime overall. Indeed, their murder rates remain far below America's.

It is indisputable that executing a murderer guarantees that he cannot kill again, and this argument once carried considerable weight in societies that could not afford to imprison offenders for long periods. But today most countries, and especially America, can afford this. Opinion polls

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show that support for the death penalty among Americans drops sharply when life imprisonment without parole is the alternative. Executions are not needed to protect the public.

Against the dubious benefits of capital punishment must be weighed its undoubted drawbacks. It is a dangerous power to give any govern­ment, and has been grossly abused by many to kill political opponents and other inconvenient people under the colour of law. Even America, with all its legal guarantees and complex system of appeals, has not been able to apply it fairly or consistently. Worst of all, it is irrevocable. Mis­takes can never be rectified. America, like all countries, which use the death penalty, has executed innocents. This is too high a price to pay for an unnecessary punishment.

Where does this leave retribution? Some crimes are so heinous that a societal cost-benefit analysis hardly appears relevant. Death alone seems sufficient. And yet, as many relatives of murder victims have discovered, real retribution can never be achieved. For example, the only way to re­pay fully those who have committed multiple murder, or killed in a ghastly way, would be to torture them physically in turn, or to strive to make them endure repeatedly the torments of death. Modern societies have rightly turned away from such practices as barbaric, tempering their demands for retribution in recognition that tit-for-tat vengeance is beyond the reach of human justice. That is where the death penalty, too, belongs.

In 1976, after short lull, the court allowed executions to proceed again under redrafted state statutes. Since then it has frequently changed the rules, most recently restricting appeal avenues so as to shorten the time between conviction and execution, now averaging almost ten years. Even so, researchers still find inequities in how the death penalty is applied. Avoiding a death sentence depends a lot on having a good lawyer. Not surprisingly, rich, well-educated murderers rarely get a capital sentence. And the risk of executing the innocent remains very real. Since 1973, 78 people have been released from death row after evidence of their inno­cence emerged.

The attempt to apply the death penalty fairly has exhausted even some of its staunchest supporters on the bench. After retiring from the Supreme Court, Lewis Powell, the author of a landmark 1987 decision upholding Georgia's death penalty even in the face of an undisputed statistical study showing racial bias in its application, said that he regretted the decision and backed abolition.

America's stubborn retention of the death penalty is usually seen as the abolitionist movement's greatest defeat. And yet in the long term it may prove to be one of its greatest assets. If even America, with its com-

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plex legal guarantees and elaborate court system, cannot apply the death penalty fairly or avoid condemning the innocent, then do executions have a place in any society which values justice?

5. The end of privacy The Surveillance Society

«The right to be left alone.» For many this phrase, made famous by
Louis Brandeis, an American Supreme Court justice, captures the essence of a notoriously slippery, but crucial concept. Drawing the boundaries of privacy has always been tricky. Most people have long accepted the need to provide some information about themselves in order to vote, work, shop, pursue a business, socialise or even borrow a library book. But ex­ercising control over who knows what about you has also come to be seen as an essential feature of a civilised society.

Totalitarian excesses have made «Big Brother» one of the 20th cen­tury's most frightening bogeymen. Some right of privacy, however quali­fied, has been a major difference between democracies and dictatorships. An explicit right to privacy is now enshrined in scores of national Con­stitutions as well as in international human-rights treaties. Without the «right to be left alone,» to shut out on occasion the prying eyes and im­portunities of both government and society, other political and civil liber­ties seem fragile. Today most people in rich societies assume that, pro­vided they obey the law, they have a right to enjoy privacy whenever it suits them.

They are wrong. Despite a raft of laws, treaties and constitutional pro­visions, privacy has been eroded for decades. This trend is now likely to accelerate sharply. The cause is the same as that which alarmed Brandeis when he first popularised his phrase in an article in 1890: Technological change, in his day it was the spread of photography and cheap printing that posed the most immediate threat to privacy. In our day it is the com­puter. The quantity of information that is now available to governments and companies about individuals would have horrified Brandeis. But the power to gather and disseminate data electronically is growing so fast that it raises an even more unsettling question: in 20 years' time, will there be any privacy left to protect?

Most privacy debates concern media intrusion, which is also what bothered Brandeis. And yet the greatest threat to privacy today comes not from the media, whose antics affect few people, but from the mundane business of recording and collecting an ever-expanding number of every-

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day transactions. Most people know that information is collected about them, but are not certain how much. Many are puzzled or annoyed by un­solicited junk mail coming through their letter boxes. And yet junk mail is just the visible tip of an information iceberg. The volume of personal data in both commercial and government databases has grown by leaps and bounds in recent years along with advances in computer technology. The United States, perhaps the most computerised society in the world, is leading the way, but other countries are not far behind.

Advances in computing are having a twin effect. They are not only making it possible to collect information that once went largely unre­corded, but are also making it relatively easy to store, analyse and retrieve this information in ways which, until quite recently, were impossible.

Just consider the amount of information already being collected as a matter of routine — any spending that involves a credit or bank debit card, most financial transactions, telephone calls, all dealings with na­tional or local government. Supermarkets record every item being bought by customers who use discount cards. Mobile-phone companies are busy installing equipment that allows them to track the location of anyone who has a phone switched on. Electronic toll-booths and traffic-monitoring systems can record the movement of individual vehicles. Pioneered in Britain, closed-circuit TV cameras now scan increasingly large swathes of urban landscapes in other countries too. The trade in consumer infor­mation has hugely expanded in the past ten years. One single company,