Via Maria Farrell, wise words from Jurgen Habermas on Germany:

After Helmut Kohl, our political elites underwent a sweeping change in mentalities. With the exception of a too-quickly exhausted Joschka Fisher, since Gerhard Schröder took office a normatively unambitious generation has been in power. It seems to enjoy Germany’s return of Germany to normality as a nation-state – and just wants be “like the others”. Conscious of the diminishing room for political manoeuvre, these people shy away from farsighted goals and constructive political projects, let alone an undertaking like European unification. I detect a certain indifference towards this project. On the other hand, the politicians can no longer deceive themselves concerning the fact that the Federal Republic is the greatest beneficiary of the single currency. Self-interest dictates that they support the preservation of the euro zone.

However, that can only be accomplished if the euro countries build up a common economic government and co-ordinate their fiscal policies. There are extreme economic imbalances among the countries in the euro zone; this is why, at the time the euro was introduced, the medium-term goal was to harmonise the levels of development of those rather heterogeneous national economies. Now it turns out that the stability pact is much too rigid an instrument for achieving this goal. As a result, we now face the alternative of either co-operating more closely or of doing away with the single currency. The pivotal political question from a German perspective is whether the Federal Republic is ready to change its European policy before it is too late, and then whether it is also able to co-operate with France in leading the other EU countries in that direction.

In some ways, I think this is unfair to the current generation of German leaders. What Habermas says is correct, but there’s the problem highlighted by Tyler Cowen that there’s really not much of a European demos or public sphere outside of elite circles and that makes it extremely difficult for the EU project to go forward. I do think Cowen is being a bit unfair by choosing Berliner Morgenpost headlines instead of those of a larger and more nationally oriented paper like Süddeutsche Zeitung, FAZ, or Die Welt but the basic issue still holds. I think “European” consciousness is more advanced in smaller countries (Finland is very “European”) but they can’t lead effectively. Which is to say that the kind of integration that Europe needs is fairly unlikely to manifest itself.

But this all just underscores how urgent it is for the European Central Bank to do a good job. The ECB functions perfectly well as an institution, monetary policy is elite-driven everywhere anyway, and monetary policy is the aspect of European life where integration has gone the furthest. Making policy for the whole continent to suit the mindset of extremely conservative Germans is not a good idea.

Recommended reading, Mike Konczal’s short paper “Getting the Best of Both Bills” about the FinReg conference committee.

Sebastian Mallaby has a good piece in the Atlantic on Paul Romer and the idea of “charter cities”—places that would be administered by credible developed democracies but inhabited by migrants from poor countries—that I recommend to one and all.

One thing I will say, however, is that there’s a tension between the desire to emphasize how new and exciting and thought-provoking this idea is and the desire to actually persuade people to do it which involves trying to explain that it’s not quite as weird as it sounds. Consider, for starters, the fact that situations of ambiguous sovereignty aren’t actually all that rare. The United States governs Puerto Rico, the District of Columbia, and other territories that don’t have full voting rights under a series of ad hoc arrangements. Britain has Gibraltar, China has Hong Kong, France has New Caledonia, etc.

What’s more, it’s very common for people to be living in a democratic country that they aren’t citizens of and can’t vote in. Legal residents of the United States who moved here from Mozambique aren’t horribly oppressed or put-upon, they’re just immigrants. The real problem for would-be migrants from Mozambique is that Americans are resistant to the idea of letting an unlimited number of people move from Mozambique to the United States, and the citizens of other rich countries tend to be even more resistant. So a country might see it as serving its own interests to take a relatively uninhabited part of its territory and invite it to be administered by a rich and successful country that in the eyes of the world is a credible provider of good governance. Especially if the country in question—unlike the United States—isn’t viewed as harboring grand geopolitical ambitions.

So suddenly you have a swathe of territory being administered by some earnest Norwegians in association with an international crew of policy wonks and a couple of entrepreneurs interested in opening sweatshop-type factories. Would everyone want to move there? Of course not. Would some people want to move there? Of course they would. And if the first couple of factories were successful, then there’d be more interest in setting up more firms and that would increase the value of the land providing the Norwegians with the money they need to keep the place growing and running. The city would still be poor, of course, but there’s a lot of range within poor places—Nicaragua’s per capita GDP is over double Mozambique’s. Citizens of the original country would benefit from their ability to move, and also from remittances, and also because the presence of an island of prosperity right by their borders would have spillovers.

Yesterday a coalition of thinkers from different progressive and libertarian organizations (including CAP’s Larry Korb) released their Sustainable Defense Task Force report (PDF) calling for steep cuts in defense spending as a key element of creating a long-term sustainable fiscal situation. Some of this is what you might call Gates Plus, cuts that are in the spirit of Defense Secretary Robert Gates’ proposals for reaping efficiencies. But Gates really is looking for efficiencies—to spend less on certain weapons systems so he can spend more on other stuff. This crew, by contrast, is really looking to curb unnecessary spending which involves taking a much deeper axe.

Notably, as Spencer Ackerman observes, the report calls on policymakers to be more careful about the missions they undertake, rejecting adventures “that exhibit a poor cost-benefit payoff and capabilities that fail the test of cost-effectiveness or that possess a very limited utility.”

This is the key thing. When Generals Petraeus and McChrystal formulate their strategies for Afghanistan they don’t ask “would it make more sense to spend all this money on healthy school lunches for American children?” And it’s not their job to ask those questions. But it is the President’s job and it is Congress’s job. What’s more, though it’s not military officers’ job to undertake that sort of broadly intermodal cost-benefit analysis it is their job to recognize that they deserve to be subject to that kind of scrutiny just as much as any other public agency.

In some informal discussions with people, I’ve heard folks assume that Geer Wilders’ rising popularity is due to the severity of the economic downturn in Europe. It’s worth noting that the economic situation in the Netherlands is actually quite mild (see lots of data here) in terms of the labor market:

And the relatively strong labor market has meant that the budgetary situation in the Netherlands hasn’t deteriorated to nearly the extent that you see in most developed countries. In part that reflects good Dutch fundamentals, but it’s also a lesson about the importance of forceful countercyclical policy. Your budget stays in much better shape if you do what it takes to keep people employed than if you go down a cycle of recession and slow growth.

By Ryan McNeely

Many people are wary of the increased reliance on standardized testing to measure student performance, a key component of No Child Left Behind and the education reform movement. While it is useful to have a universal standard to measure how well students are learning relative to one another, yesterday’s New York Times contains an account of a perverse incentive created by high-stakes testing: teacher and administrator cheating. Both the principal and assistant principal of a Houston elementary school were forced to resign after it was discovered that they had conspired to give their students an advantage. The scheme wasn’t particularly ingenious: they simply bent the sealed test booklets far enough so they could see the questions, and then created study guides based on those questions. The students’ scores were invalidated.

But this isn’t the first time teachers have been caught manipulating test results. Brian Jacob and Steven Levitt released a study in 2003 showing that when teachers have an incentive to cheat, some will do so. Invited into the Chicago public schools for a three-year investigation by then-Chief Education Officer Arne Duncan, Jacob and Levitt used a statistical algorithm to demonstrate that between “3 to 6 percent of classrooms experience instances of teachers or administrators’ doctoring students’ exams.” Note that the study only examined instances of very crude cheating—teachers literally changing answers on scoresheets—and did not account for other less egregious forms of cheating like the Houston “study guides” or simply giving students extra time on exams.

One response is to simply minimize the problem. For example, Beverly L. Hall, superintendent of the Atlanta Public Schools, responded to the Houston scandal by saying that instances of cheating are rare, and that “teachers over all are principled people in terms of wanting to be sure what they teach is what students are learning.” A smarter response is to simply acknowledge that while assessing and acknowledging difference in teacher quality is both promising and important its promise will be undermined unless proponents address cheating. The good news is that the Jacob and Levitt study demonstrated that even very simple oversight measures, such as making teachers aware that scores will be scrutinized for irregularities, can dramatically reduce cheating frequency. As the trend toward greater reliance on tests increases, responsible policymakers will have to remain vigilant about the potential for cheating and inform themselves about the most effective countermeasures.

An excellent point from Jon Chait yesterday—there’s simply no equivalent on the liberal side to the gobs of money that the conservative movement is able to throw at middleweight orthodox conservatives just for being orthodox conservatives. We have liberal groups in DC, and they pay people salaries, and it’s always possible that you’ll write a popular book or something. But no progressive nonprofit is going to hand out multiple $250,000 checks to people on an annual basis just because they’re swell.

This is important not just because it makes me sad (though it does make me sad) but because it has real impact on people’s incentive-structure. Everyone suffers from groupthink and pressures toward conformity, but there are also counterveiling pressures to try to make yourself stand out and seem unique and important. The presence of large financial rewards for just sticking it and being a loyal footsoldier (not just in the form of prizes, but also make-work fellowships, bulk book purchases, etc.) changes that structure.