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HOOVER DIGEST RESEARCH + OPINION ON PUBLIC POLICY FALL 2015 NO. 4 THE HOOVER INSTITUTION • STANFORD UNIVERSITY The Hoover Institution on War, Revolution and Peace was established at Stanford University in 1919 by Herbert Hoover, a member of Stanford’s pioneer graduating class of 1895 and the thirty-first president of the United States. Created as a library and repository of documents, the Institution approaches its centennial with a dual identity: an active public policy research center and an internationally recognized library and archives. The Institution’s overarching goals are to: » Understand the causes and consequences of economic, political, and social change » Analyze the effects of government actions and public policies » Use reasoned argument and intellectual rigor to generate ideas that nurture the formation of public policy and benefit society Herbert Hoover’s 1959 statement to the Board of Trustees of Stanford University continues to guide and define the Institution’s mission in the twenty-first century: This Institution supports the Constitution of the United States, its Bill of Rights, and its method of representative government. Both our social and economic sys- tems are based on private enterprise, from which springs initiative and ingenuity. Ours is a system where the Federal Government should undertake no govern- mental, social, or economic action, except where local government, or the people, cannot undertake it for themselves. The overall mission of this Institution is, from its records, to recall the voice of experience against the making of war, and by the study of these records and their publication to recall man’s endeavors to make and preserve peace, and to sustain for America the safeguards of the American way of life. This Institution is not, and must not be, a mere library. But with these purposes as its goal, the Institution itself must constantly and dynamically point the road to peace, to personal freedom, and to the safeguards of the American system. By collecting knowledge and generating ideas, the Hoover Institution seeks to improve the hu- man condition with ideas that promote opportunity and prosperity, limit government intrusion into the lives of individuals, and secure and safeguard peace for all. • • • The Hoover Institution is supported by donations from individuals, foundations, corporations, and partnerships. If you are interested in supporting the research programs of the Hoover Institution or the Hoover Library and Archives, please contact the Office of Development, telephone 650.725.6715 or fax 650.723.1952. Gifts to the Hoover Institution are tax deductible under applicable rules. The Hoover Institution is part of Stanford University’s tax-exempt status as a Section 501(c)(3) “public charity.” Confirming documentation is available upon request. HOOVER DIGEST RESEARCH + OPINION ON PUBLIC POLICY FALL 2015 • HOOVERDIGEST.ORG THE HOOVER INSTITUTION STANFORD UNIVERSITY HOOVER DIGEST RESEARCH + OPINION ON PUBLIC POLICY FALL 2015 • HOOVERDIGEST.ORG HOOVER The Hoover Digest explores politics, economics, and history, guided by the scholars and researchers of the Hoover Institution, the public policy research DIGEST center at Stanford University. PETER ROBINSON The opinions expressed in the Hoover Digest are those of the authors and Editor do not necessarily reflect the opinions of the Hoover Institution, Stanford University, or their supporters. As a journal for the work of the scholars and CHARLES LINDSEY researchers affiliated with the Hoover Institution, the Hoover Digest does not Managing Editor accept unsolicited manuscripts. BARBARA ARELLANO The Hoover Digest (ISSN 1088-5161) is published quarterly by the Hoover Senior Publications Manager, Institution on War, Revolution and Peace, Stanford University, Stanford CA Hoover Institution Press 94305-6010. Periodicals Postage Paid at Palo Alto CA and additional mailing offices. POSTMASTER: Send address changes to the Hoover Digest, Hoover Press, HOOVER Stanford University, Stanford CA 94305-6010. INSTITUTION © 2015 by the Board of Trustees of the Leland Stanford Junior University THOMAS J. TIERNEY Chair, Board of Overseers CONTACT INFORMATION SUBSCRIPTION INFORMATION BOYD C. SMITH Comments and suggestions: $30 a year to US and Canada THOMAS F. STEPHENSON [email protected] (international rates higher). Vice Chairs, Board of Overseers (650) 723-1471 http://hvr.co/subscribe THOMAS W. GILLIGAN Reprints: Phone: (877) 705-1878 Tad and Dianne Taube Director [email protected] (toll free in US, Canada) STEPHEN LANGLOIS (650) 498-7880 or (773) 753-3347 (international) Senior Associate Director Write: Hoover Digest, MICHAEL FRANC Subscription Fulfillment, Director of Washington, DC, PO Box 37005, Chicago, IL 60637 Programs DONALD C. MEYER ON THE COVER Counselor to the Director A raging wildfire and an indifferent spectator ASSOCIATE are the focus of this 1918 poster created to DIRECTORS support Australian recruiting in the last year of the Great War. Many Australians had signed CHRISTOPHER S. DAUER up as the war began and even after the bloody COLIN STEWART debacle of Gallipoli, which cost eight thousand ERIC WAKIN (Robert H. Malott Australian lives, but by 1918 enlistments were Director of Library & Archives) flagging. At the same time, Australia was ERYN WITCHER TILLMAN becoming deeply divided over compulsory (Bechtel Director of Public Affairs) military service. This poster urges Australian ASSISTANT volunteers to step forward and finish the job. DIRECTORS See story, page 180. DENISE ELSON MARY GINGELL JEFFREY M. JONES NOEL S. KOLAK VISIT HOOVER INSTITUTION ONLINE | www.hoover.org FOLLOW US ON SOCIAL MEDIA DOWNLOAD OUR APP TWITTER @HooverInst Stay up to date on the latest FACEBOOK www.facebook.com/HooverInstStanford analysis, commentary, and news YOUTUBE www.youtube.com/HooverInstitution from the Hoover Institution. ITUNES itunes.apple.com/us/itunes-u/hoover-institution Find daily articles, op-eds, blogs, INSTAGRAM https://instagram.com/hooverinstitution audio, and video in one app. Fall 2015 HOOVER DIGEST THE ECONOMY 9 Are the Good Times Over? Don’t settle for a “new normal” of sluggish growth—not when information technology is just beginning to bloom. By Michael J. Boskin 13 Where the Business Climate Is Fair and Warming States that are friendly to business are climbing out of recession more quickly than those that aren’t. By Edward Paul Lazear 16 Reach for 4% Growth Make a clean sweep in taxes, regulation, and investment, and the economy will leave stagnation in the dust. By John H. Cochrane INEQUALITY 20 Don’t Ask, Just Take President Obama believes personal success is just a game of chance. No wonder he encourages government to demand a bigger and bigger cut. By Thomas Sowell HOOVER DIGEST • FALL 2015 3 23 Bernie Sanders’s Sneakers The socialist candidate thinks the free market forces Americans to choose between shoes and food. For all he’s learned about the failure of central planning, the twentieth century might as well never have happened. By Richard A. Epstein PROPERTY RIGHTS 29 Kelo, Ten Years On The notorious eminent-domain ruling still provokes outrage and legal confusion. By Richard A. Epstein HEALTH CARE 34 Pill of Great Price As Sovaldi demonstrates, even a very expensive new drug can save money. A prescription for strong patents and less government price-fixing. By David R. Henderson TERRORISM 40 The Terrorist’s Apprentice HELP WANTED: Must be zealous, willing to travel. Benefits to die for. By Mark Harrison 4 HOOVER DIGEST • FALL 2015 INTELLIGENCE AND CYBERWAR 46 Secrets in a Transparent World Hoover fellow Jack Goldsmith urges the intelligence community to accept a few leaks, earn some credibility, and let in the sunshine. 56 Snowden Shrugged If the NSA had done what Chinese hackers did—steal millions of Americans’ dossiers—privacy advocates would be up in arms. By Benjamin Wittes 60 Deterrence Has to Be Lethal Cyberwar is real war, which means strategists must develop ways to punish—and yes, to kill—those who wage it. By Enrique A. Oti THE ARCTIC 65 North Star Rising The Arctic is the world’s new frontier for resources, shipping, and security. We need to stake our claim. By Gary Roughead CALIFORNIA 75 The Golden Tipping Point A lack of housing threatens to take the shine off California’s economy. And where is opposition to new construction strongest? Not in conservative areas. By Carson Bruno 79 It Didn’t Happen Here It was all spelled out in 1982: a plan to save water, streamline zoning, build homes, and cut construction costs. This was California’s road not taken, and it could still make all the difference. By Carol Galante HOOVER DIGEST • FALL 2015 5 EDUCATION 82 Readiness Isn’t Optional New tests can show parents whether their kids are on track. Will the states give them the results straight? By Chester E. Finn Jr. 86 Mired in Social Poverty Poor schools need more than money. They need social capital. By Michael J. Petrilli DEMOCRACY 90 Freedom’s Creative Clamor Free speech has given us cranks, crazies, alarmists—and some of history’s best ideas. Why we must defend this most basic of rights. By Victor Davis Hanson 95 A Very Cozy Duopoly One unaccountable gatekeeper—the Commission on Presidential Debates—still bars the door to third-party candidates. By Larry Diamond THE MILITARY 100 “You Built Your Own Monument” General James Mattis speaks to his fellow vets. 6 HOOVER DIGEST • FALL 2015 106 Speaking Too Softly A case for keeping Teddy Roosevelt’s big stick: overwhelming military force. By Thomas Donnelly RUSSIA 112 What Leninism Cost Russia Hoover fellow Robert Service is a leading scholar of the Soviet icon’s “dangerous genius,” whose legacy still damages Russia today. By Vladimir Koryagin 118 Another Russia Will Rise Vladimir Putin is only mortal. Soon enough he will have to give way to others—who will lead Russia out of its imperial afterlife and into the modern world. By Timothy Garton Ash ASIA 122 Will Japan and China Ever Make Up? The problem is never whether a particular apology is “enough.” The problem in both countries is domestic politics.