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David Boaz

The Washington Post reports:

As far as sales manager Brian Ward knows, Rep. Andy Harris has never shopped at Capitol Hill Bikes. But if the Maryland Republican congressman wanted to, he’d find a black and white picture of himself taped on the door with a message in bold type: NOT WELCOME.

To many in the District, Harris is a public enemy — the force behind language added to the massive federal government spending bill intended to block D.C. from legalizing marijuana despite local voters overwhelmingly approving it on the November ballot.

The move so infuriated District residents that someone has started a “Blacklist Andy Harris” tumblr asking local businesses not to serve Harris:

“My fellow Washingtonians, Rep. Andy Harris doesn’t give a d— about District residents or our rights, so let’s blacklist him! We can generate and distribute signs/stickers/posters with his face, words like “Persona non Grata” (or something similar), and ask local businesses to display them.”

I support these District of Columbia businesses’ right to refuse service to Representative Harris. Now I know there are people who would say to these small businesses, “Open a business to serve the public? You have an obligation to serve everyone.” But I say that Capitol Hill Bikes should be free to refuse service to Andy Harris, and Republicans and anti-drug activists should be free to refuse to patronize Capitol Hill Bikes. Every contract is an agreement voluntarily entered into on both sides, and no one should be forced to enter into contracts. Thus I support the right of D.C. businesses to refuse to serve those would-be customers who offend their conscience, just as I support the right (though not the rightness) of bakers, photographers, and innkeepers not to participate in gay weddings.

Ted Galen Carpenter

News stories in the West contend that Russia’s increasingly aggressive behavior is causing the Baltic states and other NATO members in Eastern Europe to become far more serious about national defense.  There is no doubt that tensions in the region are on the rise, including a surge of  incidents involving NATO intercepts of Russian military aircraft operating over the Baltic Sea.  The new congressional approval of military aid to Ukraine may well increase the already alarming level of animosity between NATO and Russia. 

But the notion that the Baltic republics have embarked on serious programs to boost their defense capabilities in light of Moscow’s menacing behavior is vastly overstated.  The military spending of those three countries has merely moved from minuscule to meager.  Although all NATO members pledged after the Alliance’s summit meeting in 2006 to spend a minimum of two percent of gross domestic product (GDP) on defense, few members have actually done so.  Indeed, eight years later, only the United States, Britain, Greece, and Estonia among the 28 member states fulfill that commitment

And Estonia barely met that standard.

All three Baltic governments are going to great lengths to highlight their alleged seriousness about defense, but the actual data fail to support the propaganda.  Amid much fanfare, Estonia plans to boost its military spending from 2.0 percent of GDP to…. wait for it, 2.05 percent!  Lithuania intends to raise its budget next year from 0.89 percent to 1.01 percent.  And Latvian leaders solemnly pledge that their country will spend no less than 1 percent—up from the current 0.91 percent.

The alarmist rhetoric of the Baltic republics about the danger of Russian aggression is not matched by their actions.  Given the security situation in the region, spending even 2 percent of GDP on defense, to say nothing of devoting 1 percent or less, is pathetic.  No one believes that the small Baltic states could repel a Russian invasion on their own, but it is not too much to expect that they would build military capabilities sufficient to slow an advance and raise the costs to Moscow in blood and treasure.  Such a commitment, however, would require military outlays at three to five times current levels.  There is no indication that the Baltic governments intend to boost spending to anything close to that

The geographic vulnerability of the Baltic states, combined with their continuing military weakness, should underscore to U.S. leaders that such “allies” are strategic liabilities, not assets.  Washington is drifting into confrontation with a nuclear-armed Russia over countries that have little economic or strategic relevance to the American republic.  U.S. officials need to consider carefully whether it makes sense for this country to incur such risks on behalf of so-called allies that seem unwilling even to make serious efforts on behalf of their own defense.  It is a stretch to argue that the United States should care so much about the defense of Estonia, Latvia, and Lithuania that we must be willing to risk war, but it is preposterous to argue that we should care more about their defense than they do.  Yet that appears to be the current situation.    

Nicole Kaeding

Over the weekend, the Senate approved the $1.1 trillion Cromnibus spending package, which funds parts of the government through September 2015.

The ink isn’t even dry on this spending bill, and already big spenders in Congress are gearing up to increase next year’s spending above agreed upon limits. The Wall Street Journal describes the situation:

After four years of a divided Congress, Republicans will take full control of both chambers in January with hopes of passing individual spending bills under an orderly process rarely seen in recent years. But complicating their task will be the return of the across-the-board spending cuts known as the “sequester” birthed out of the 2011 debt-ceiling deal, which set caps on spending for the next decade.

A two-year bipartisan budget deal brokered by Senate Budget Committee Chairman Patty Murray (D., Wash.) and House Budget Committee Chairman Paul Ryan (R., Wis.) eased those cuts for fiscal years 2014 and 2015. But the $1.1 trillion bill passed over the weekend, which will fund most of the government through September 2015, marks the final stretch of that agreement.

In fiscal 2016 the cuts return in full force. Lawmakers broadly agree the reductions inflict blunt pain on the federal budget. But Democrats and Republicans are at odds about how to mitigate them in a dispute likely to grow in intensity during the coming months.

How big are the cuts? The Wall Street Journal continues:

For fiscal 2016, which begins Oct. 1, funding for discretionary spending—the chunk of the federal government that Congress must approve each year—will stay relatively flat. The cap on military spending will rise slightly, to $523 billion from $521 billion, while the cap on nondefense discretionary spending will fall slightly to $492.3 billion from $492.4 billion. Democrats note the government’s purchasing power is diminished when inflation is taken into account.

Yes, you read that right. The budget “cuts” that will “inflict blunt pain”  will increase spending by about $2 billion.

Those figures also ignore two large categories of federal spending. The first, the Overseas Contingency Operations (OCO) slush fund, funds military operations in Iraq and Afghanistan and is not subject to the Budget Control Act spending limits. In the most recent Cromnibus, OCO was allocated $64 billion.

Second, it ignores the biggest source of federal spending, entitlement programs. In fiscal year 2016 the government will spend $2.5 trillion on entitlement programs such as Social Security, Medicare, Medicaid, ObamaCare, and food stamps. According to the CBO, entitlement spending is expected to rise $188 billion in 2016.

So while most discretionary spending is roughly frozen for 2016, the federal spending juggernaut rolls on in entitlement spending. Members of Congress are so used to the increases thatthe threat of just holding some spending constant strikes fear into many of them. Spenders cry foul and warn of a crisis befalling the country if a freeze is allowed to take effect, but little happened following the sequester cuts of 2013.

The incoming Republican Congress should ignore the big-spending voices and abide by the Budget Control Act. Arguably the biggest policy win in the last three years for Republicans was getting President Obama and Democrats to agree to these capped spending levels to limit the growth of the discretionary part of the budget. They should not use their new majorities to undo their own handiwork and ramp up federal spending.

Doug Bandow

MAE LA REFUGEE CAMP, THAILAND—Trees give way to primitive wooden homes in the rolling hills approaching Mae La refugee camp on Thailand’s border with Burma.  The largest camp in Thailand, Mae La, holds 50,000 refugees. 

Three years ago Burma’s ruling generals yielded authority to a nominally civilian leadership and initiated a series of ceasefires with various ethnic groups.  The resulting peace is real but imperfect. 

Today there are as many as 150,000 refugees in ten Thai camps.  Overcrowded Mae La was established three decades ago when many assumed that their stay would be short.

Residents are barred from even leaving the camps without official permission.  Education is difficult.  People’s lives, futures, and dreams are all confined by fences and armed guards.

Perhaps worse, sustenance is provided and work prohibited.  This has discouraged independence, enterprise, and entrepreneurship. 

With the changes in Burma serious discussions about closing the camps have begun.  In July Thailand’s military junta declared its objective to repatriate all refugees by 2015.

Mae La refugees I talked to wanted to return, but worried about security.  NGOs observe that a national political settlement has yet to be implemented.   

No doubt the concern over repatriation is genuine, but there also is a strong financial incentive for some groups to oppose the return of refugees.  My friend Jim Jacobson, president of the humanitarian group Christian Freedom International (CFI), observed that “a lot of people benefit from the camps.  A lot of government aid goes through the camps and trickles out.”

Ironically, the supposed direct beneficiaries suffer the most.  A survey by a French medical NGO found that half of adult camp residents suffered from some mental health problem.  Another consequence, say those who work with refugees, is a loss of self-sufficiency and growth of short-term thinking. 

Jim Jacobson’s CFI has supported health clinics, orphanages, and churches.  CFI runs a school—formally the Huai Kalok Bible Institute—in Mae Sot.  Karen students receive academic and vocational training, learn to work with computers and livestock, study theology, and more.  He noted that students from the camps are less self-reliant and demonstrate less initiative than those from outside.

While the peace is incomplete, as camp advocates warn, the improvement is dramatic.  When I last visited in 2006, any trek into Burma was fraught with danger.  The Burmese military routinely attacked villages and killed residents, the refugees fleeing into Thailand. 

Today Huai Kalok students go back and spend time in their villages.  Indeed, said Jacobson, “we are seeing real change coming.  The Karen are putting down roots.” 

Last month I visited a small village called Wallay, in which new farm equipment was visible, as well as a rudimentary saw mill.  “Imagine if a couple hundred thousand people returned to villages like this,” argued Jacobson. 

The local pastor agreed that Burmese coming home would spur development.  An official with the Karen National Union feared return would be premature, but even he acknowledged the lack of conflict.

Last month when I asked HBI students about their lives, none of them cited violence.  Most of the students wrote of hearing about the school and wanting to learn.  Many of their families still live in Burma.

In 2006 I asked students the same question.  Almost all had lost parents and homes while fleeing the Burmese military. 

Repatriation also would spur reconstruction.  New homes and villages must be built.  The sooner the Karen, with aid from groups like CFI, go back and start working, the sooner they will be able to recreate communities. 

“The ceasefire is not perfect,” admitted Jacobson, “but it has created new opportunities.”  New development and growth are evident in some Karen areas.  Coming back despite the uncertainty would be “better than being human debris at a refugee camp.”

As I wrote in American Spectator:  “It is time to start planning for the return of refugees to Burma.  Only then will people who have suffered through so much be able to prepare for a better future.”

Walter Olson

There’s a new legal attack under way against firearms, as the press reports

Ten families touched by the Newtown massacre filed a wrongful death lawsuit Monday against companies that made, distributed and sold the Bushmaster AR-15 rifle that Adam Lanza used to kill 20 children and six staffers at Sandy Hook Elementary two years ago. The suit argues that the gun is a military assault weapon that never should have been on the general market.

Jacob Sullum at Reason has more details, especially on the arbitrary nature of the epithet “assault weapons,” often uncritically repeated in the press. 

In 2005 Congress enacted the Protection of Lawful Commerce in Arms Act (PLCAA) specifically to put an end to product liability suits over guns that had been made and sold in accordance with law. The courts have generally enforced it as written – even the Ninth Circuit’s famously liberal Judge Stephen Reinhardt agreed that it was constitutional – which has mostly, if not entirely, led to the dismissal of such lawsuits. The new Connecticut suit seeks to reopen the question by stretching beyond recognition a narrow exception in the law allowing businesses to be sued over “negligent entrustment.” (The firearm used by the Newtown killer had been lawfully sold long previously to his mother.)

Last year I wrote a piece entitled “Six Myths About the Law That Bans Gun Lawsuits” for the Power Line blog, pointing out that the PLCAA for the most part codified the common law treatment of gun liability as it had stood for centuries, thus advancing both a constitutional liberty and the legitimate freedom of interstate commerce against efforts to obtain a radical change in doctrine. I also noted that PLCAA probably make little ultimate difference in the Sandy Hook case because claims against gun makers and distributors over that massacre would probably not have succeeded anyway. And I rebutted a notion that came to be promoted years later, that the law was somehow not meant to reach privately filed liability suits:

A Washington Post report in January [2013] claimed the law poses “unexpected hurdles” to victims of recent mass shootings, whose lawyers are supposedly “surprised” at its pre-emptive effect. At the time Congress passed the law, the Post concedes, big-city mayors had filed a wave of lawsuits on novel theories demanding (for example) that courts begin treating gun sales as a “public nuisance” . “But over the past eight years, the legal shield has increasingly been used to block a different stripe of legal action.” The Post’s implication that Congress intended to restrict only municipal suits, and not tort suits on behalf of individuals, is false. Lawmakers debated the question and chose to include both. One reason is that anti-gun strategists were actively employing individual as well as municipal suits in their nearly successful effort to bury gun makers under the costs of legal defense. An editorial complaining that the law banned both kinds of suits appeared on June 2, 2005 in (yes) the Washington Post.

Let’s not forget that the relatively shallow pockets of gun-related businesses was part and parcel of the abusive strategy of the politicians and lawyers promoting the suits back then: 

because gunmakers were too thinly capitalized to withstand the costs of years of legal defense, it was thought they’d fold their hands and yield to “gun control through litigation” (explicitly couched as an end run against a then-Republican Congress resistant to gun control proposals). …the suits eventually reached judges and were generally thrown out, but not before imposing huge and uncompensated costs on many small companies that had violated no laws. Some were bankrupted.

We may hope that the courts are alive to the ongoing importance of PLCAA, and willing, as appropriate, to apply the tool of sanctions against legal strategists and campaigners who would seek to circumvent its provisions in the name of ideological grandstanding, profit, or revenge.

Julian Sanchez

Back in October, Spain’s parliament passed a horribly ill-advised law at the behest of the Spanish news publishing lobby, the AEDE. Struggling to adapt to the information age in one of Europe’s more troubled economies, the AEDE thought it had hit on a brilliant new revenue source: They got a provision inserted in a new intellectual property law that, starting in January, will force news aggregation sites to pay newspapers for the privilege of linking to their stories.

This never made much sense: News aggregators are a massive source of traffic (and therefore ad revenue) for news sites.  In effect, the law seeks to make it more difficult and costly for anyone to give those sites free advertising.  Indeed, it’s hard to see the point of posting stories online unless you expect people to link to them, and it’s simple enough to automatically prevent search engines from indexing your site’s content if, for some obscure reason, you don’t want people to have an easy means of discovering your content.  But never mind the logic; the law seemed like a foolproof way for ailing news companies to milk a few euros from big tech corporations flush with cash. What could go wrong?

You know how the story ends, right?  Everyone but the newspapers themselves seems to have seen it coming, since something similar had just played out in Germany: Google News, the largest of the aggregators, announced last week that they would be shutting down operations in Spain. Since the company didn’t even show ads on its news site, keeping it open under the new regulations would be an unsustainable, money-losing proposition.

The hilarious coda to the story: The AEDE, which previously complained that news aggregators were “stealing” their work by publishing headlines and tiny snippets of stories, is now begging Spanish regulators to stop Google News from closing. The site’s shuttering, the group complained without irony, “would undoubtedly have a negative impact on citizens and Spanish businesses.” Give them points for chutzpah if nothing else: They’re not even waiting for the blood to dry on the hatchet before bemoaning the loss of their golden eggs.

Nicole Kaeding

Federal employees are generally overpaid. Federal, civilian employees made $81,076 in 2013 in wages, on average, compared to $55,424 in the private sector. Their benefit packages are particularly out of line with the private sector. Total compensation including wages and benefits for federal, civilian employees was $115,524 in 2013, on average, compared to $66,357 in the private sector.

A new study released by the National Bureau of Economic Research finds that the advantages of government employment include more than just higher compensation.  Government jobs are more secure, and employees are more likely to keep their jobs during economic downturns.

The authors of the study, Jason L. Kopelman and Harvey S. Rosen, used data for 800,000 workers from 1984 to 2012 to study the differences in job loss rates between workers in the private and public sectors. They wanted to determine how the differentials changed during recessions. They asked: Are government jobs more secure during recessions?

The results are striking. According to the researchers, “public sector jobs, while not generally recession-proof, do offer more security than private sector jobs, and the advantage widens during recessions. These patterns are present across genders, races, and educational groups.”

The researchers found that private sector workers are 4.2 percent more likely to lose their jobs than federal employees during nonrecession periods. The gap grows during recessions; private workers are 6.5 percent more likely to lose their jobs than federal employees. During the Great Recession, the gap narrowed slightly. Private workers were only 5.3 percent more likely than federal employees to lose their jobs.

The results for state and local government employees are similar. Private sector workers are 4.6 percent more likely than local government employees and 4.7 percent than state government employees to lose their jobs during a recession.

The study does not discuss the causes of the high federal job security, but a number of reasons seem obvious: civil service protections, the strength of federal employee unions, manager unwillingness to fire poor performers, and the greater budget stability in the government than the private sector.

In sum, the new NBER study provides input to the discussion about federal versus private pay. Federal workers received generous compensation packages, but they enjoy other advantages as well, such as higher job security.

Tim Lynch

Today is Bill of Rights Day. So it’s an appropriate time to consider the state of our constitutional safeguards.

Let’s consider each amendment in turn.

The First Amendment says that “Congress shall make no law… abridging the freedom of speech.” Government officials, however, have insisted that they can gag recipients of “national security letters” and censor broadcast ads in the name of campaign finance reform.

The Second Amendment says the people have the right “to keep and bear arms.” Government officials, however, make it difficult to keep a gun in the home and make it a crime for a citizen to carry a gun for self-protection.

The Third Amendment says soldiers may not be quartered in our homes without the consent of the owners. This safeguard is one of the few that is in fine shape – so we can pause here for a laugh.

The Fourth Amendment says the people have the right to be secure against unreasonable searches and seizures. Government officials, however, insist that they can conduct commando-style raids on our homes and treat airline travelers like prison inmates by conducting virtual strip searches.

The Fifth Amendment says that private property shall not be taken “for public use without just compensation.” Government officials, however, insist that they can use eminent domain to take away our property and give it to other private parties who covet it.

The Sixth Amendment says that in criminal prosecutions, the person accused is guaranteed a right to trial by jury. Government officials, however, insist that they can punish people who want to have a trial—“throwing the book” at those who refuse to plead guilty—which explains why 95 percent of the criminal cases never go to trial.

The Seventh Amendment guarantees the right to a jury trial in civil cases where the controversy “shall exceed twenty dollars.” Government officials, however, insist that they can impose draconian fines on people without jury trials.

The Eighth Amendment prohibits cruel and unusual punishments. Government officials, however, insist that a life sentence for a nonviolent drug offense is not cruel.

The Ninth Amendment says that the enumeration in the Constitution of certain rights should not be construed to deny or disparage others “retained by the people.” Government officials, however, insist that they will decide for themselves what rights, if any, will be retained by the people.

The Tenth Amendment says that the powers not delegated to the federal government are reserved to the states, or to the people. Government officials, however, insist that they will decide for themselves what powers they possess, and have extended federal control over health care, crime, education, and other matters the Constitution reserves to the states and the people.

It’s a disturbing snapshot, to be sure, but not one the Framers of the Constitution would have found altogether surprising. They would sometimes refer to written constitutions as mere “parchment barriers,” or what we call “paper tigers.” They nevertheless concluded that having a written constitution was better than having nothing at all.

The key point is this: A free society does not just “happen.” It has to be deliberately created and deliberately maintained. Eternal vigilance is the price of liberty. To remind our fellow citizens of their responsibility in that regard, the Cato Institute has distributed more than five million copies of our pocket Constitution. At this time of year, it’ll make a great stocking stuffer.

Let’s enjoy the holidays but let’s also resolve to be more vigilant about defending our Constitution. To learn more about Cato’s work in defense of the Constitution, go here. To support the work of Cato, go here.

Jason Bedrick

Give Rolling Stone credit: when their story on sexual assault at the University of Virginia completely unraveled, they at least had the decency to admit their errors and apologize to their readers. Sadly, the same cannot be said for Florida’s Sun-Sentinel.

A few weeks ago, the Sun-Sentinel ran an error-filled editorial against educational choice. Since then, it has refused to run a retraction or even a correction of its numerous errors, including:

  • Falsely claiming that the legislature enacted a “massive expansion” of the scholarship tax credit law this year;
  • Mistakenly relying on the moot fiscal analysis of a dead bill;
  • Misreading that analysis to report a “deficit” when it actually reports savings;
  • Falsely claiming that a separate fiscal analysis by the legislature’s budget office relied on “information provided by [private] schools.”

That list does not include several additional misleading comparisons and crucial omissions that were also brought to their attention.

Last week, they ran a rebuttal by Doug Tuthill, president of the Step Up for Students scholarship organization. However, they subsequently published a bellicose letter from Wayne Blanton, the executive director of the Florida School Boards Association, which attempts to rebut Tuthill… by repeating the same errors as the Sun-Sentinel editorial.

Blanton opened his letter by accusing Tuthill of “attempting to deceive the public,” but not a single one of Blanton’s accusations has any merit. Indeed, Blanton’s accusation better describes his own letter. Let us address his claims in order.

The Legislature Did Not Expand the Tax Credit This Year

Blanton first engages in a slight-of-hand by accusing Tuthill of claiming something that he did not actually claim:

The ‘massive expansion’ [Tuthill] denies exists refers to a $72 million increase in the program’s funding limit in just the past year.

In fact, Tuthill took issue with the Sen-Sentinel’s erroneous description of “this year’s massive expansion by the Legislature” because there was no such expansion by the legislature this year. The Sun-Sentinel was simply wrong. The tax credit cap automatically increases by 25 percent each year and that provision was added to the law several years ago.

Blanton also bewails the “exorbitant $358 million cap” without informing readers that the cap amounts to less than 1.4 percent of Florida’s total public school spending.

Scholarship Recipients Are Low-Income

Next, after noting that the legislature raised the income eligibility ceiling to include a family-of-four earning $62,000 per year (260 percent of the federal poverty line), Blanton snarkily comments “that doesn’t sound like ‘Florida’s poorest schoolchildren’” – a phrase Tuthill had used to describe the scholarship recipients.

Here, Blanton ignores two crucial facts. First, the law specifies that low-income students take priority. Second, the average household income of scholarship families was only $24,067 this year, just 4.5 percent above the poverty line. That certainly does qualify as “Florida’s poorest schoolchildren.”

The Scholarship Tax Credit Law Saves Money

Blanton then makes the same error as the Sun-Sentinel by misreading the legislature’s moot fiscal analysis regarding a dead bill:

And, in terms of saving the state money, apparently Tuthill is unaware of the Legislature’s own analysis showing that, if left unchecked, the program soon will create a financial deficit for the state.

In reality, the report found that “under both current and proposed law, the [Florida Education Finance Program] savings from the program are expected to exceed the revenue losses due to tax credits through FY 2018-19, though the net savings are expected to be lower as a result.” Florida’s scholarship tax credit law would save less money had the legislation passed (which it did not), but the state would still save money. Nowhere in that analysis does the legislature’s report state, as Blanton claims it does, that it will “create a financial deficit.”

Scholarship Students Perform Well Academically

Blanton further claims that there is “absolutely no way to measure whether these voucher [sic] schools are providing the high quality education guaranteed by our state constitution.”

In fact, Florida’s scholarship students take nationally norm-referenced exams and perform about average nationally, despite being among the most disadvantaged students. Moreover, previous apples-to-apples comparisons with Florida’s public schools students showed that the scholarship students performed as well or better.

The Sun-Sentinel Should Correct the Record

Not only has the Sun-Sentinel refused to correct its errors, it has compounded them by running a second op-ed full of the same errors. The first time was sloppy journalism. The second time is even less forgivable.

The Sun-Sentinel now owes its readers two retractions and a plethora of corrections. But since the editors of the Sun-Sentinel have displayed—at best—a careless disregard for the truth, readers shouldn’t hold their breath.

Ilya Shapiro

If you ask reasonably informed consumers of news media what the year’s big Supreme Court case was, most would probably say Burwell v. Hobby Lobby, that case where “five white men” (in Harry Reid’s description) decided that corporations can deny women access to birth control. But, as I’ve said elsewhere, what was at stake in Hobby Lobby has nothing to do with the power of big business, the freedom to use any kind of legal contraceptive, or how to balance religious liberty against other constitutional considerations. Much like Citizens United (which struck down restrictions on corporate political speech without touching campaign contribution limits) and Shelby County (which struck down Section 4(b) of the Voting Rights Act because it was based on obsolete voting data that didn’t reflect current realities as constitutionally required), Hobby Lobby is doomed to be misunderstood.

The case was actually a rather straightforward question of statutory interpretation regarding whether the government was justified in this particular case in overriding religious liberties. The Supreme Court evaluated that question and ruled 5-4 that closely held corporations can’t be forced to pay for all of their employees’ contraceptives if doing so would violate their religious beliefs. There was no constitutional decision, no expansion of corporate rights, and no weighing of religion versus the right to use birth control.

That’s it. Nobody has been denied access to contraceptives and there’s now more freedom for all Americans to live their lives how they want, without checking their conscience at the office door. The contraceptive mandate fell because it was a rights-busting government compulsion that lacked sufficient justification.

That the Hobby Lobby dissenters and their media chorus made so much noise over this case is evidence of a larger process whereby the government foments needless social clashes by expanding its control over areas of life we used to think of as being “public” yet not governmental. The government thus uses private voluntary institutions as agents in its social-engineering project. These are places that are beyond the intimacies of the home but still far removed from the state: churches, charities, social clubs, small businesses, and even “public” corporations (which are nevertheless part of the “private” sector).

Where Alexis de Tocqueville celebrated the civil society that proliferated in the young American republic, the Age of Obama has heralded an ever-growing administrative state that aims to standardize “the Life of Julia” from cradle to grave. Through an ever-growing list of mandates, regulations, and assorted other devices, the government is pushing aside the “little platoons” that made this country what it was. We can call this tide of national collectivism overtaking the presumptive primacy of individual liberty and voluntarism the “Hobbylobbification of America.”

For more on all this, read my recently published book – Religious Liberties for Corporations? Hobby Lobby, the Affordable Care Act, and the Constitution – where my co-author David Gans and I debate all sorts of interesting issues. Perhaps most curious is that I minimize the significance of the ruling or its precedential value, while David says it’s really, really big (and really, really bad). That’s an unusual inversion in Supreme Court commentary; typically the winning side trumpets its victory while the losers try to explain why the decision really doesn’t mean that much. (If you’re curious about any of this, come to our book forum/debate this Tuesday, or watch online.)

Patrick J. Michaels and Paul C. "Chip" Knappenberger

You Ought to Have a Look is a feature from the Center for the Study of Science posted by Patrick J. Michaels and Paul C. (“Chip”) Knappenberger. While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic. Here we post a few of the best in recent days, along with our color commentary.

In this issue of You Ought To Have A Look, we feature the work of Martin Hoerling and his research team at the Physical Science Division (PSD) of NOAA’s Earth System Research Laboratory—a place where scientists live and breathe atmospheric dynamics and a rare government facility that puts science before hype when it comes to anthropogenic climate change.

It is pretty obvious by now that whenever severe weather strikes—rain, snow, heat, cold, flood, drought, etc.—someone will proclaim the events are “consistent with” expectations of global warming from human emissions of greenhouse gases.

Harder to find (at least on TV) are folks who pooh-pooh such notions and instead point out that nature is a noisy place and a definitive study linking such-and-such weather event to human climate modifications does not exist.

In truth, the science of severe weather is a messy, muddy place, not at all the simple, clean “science is settled” description preferred by climate alarmists and regulation seekers.

Hoerling is one scientist who does conjure some press coverage when describing the general lack of human fingerprint on all manner of extreme weather events. While most others hand-wave the science, Hoerling and his team actually put the historical observations and the behavioral expectations from climate models directly to the test.

Take, for example, the ongoing California drought. There are all manner of folks calling the drought conditions there “historic” and “epic” and the “worst in 1,200 years” and, of course, pointing the finger directly at humans. Even President Obama has gotten in on the act.

Not so fast say Hoerling’s team, in this case, led by Richard Seager. They decided to look at just what the expectations of California drought should be under an increasing greenhouse effect—expectations, in this case, defined by the very climate models making the future climate projections and upon which the case for catastrophic climate change (and equally catastrophic regulations) are founded. Their findings caught the attention of Seth Borenstein, science writer for the Associated Press, who highlighted them in an article earlier this week—an article that raised awareness of Seager and Hoerling’s findings.

Borenstein’s article was headlined “Don’t Blame Man-made Global Warming for the Devastating California Drought, a New Federal Report Says” and began:

A report issued Monday by the National Oceanic and Atmospheric Administration said natural variations—mostly a La Niña weather oscillation—were the primary drivers behind the drought that has now stretched to three years.

Here are some additional highlights from the report itself (with emphasis added):

The current drought is not part of a long-term change in California precipitation, which exhibits no appreciable trend since 1895. Key oceanic features that caused precipitation inhibiting atmospheric ridging off the West Coast during 2011–14 were symptomatic of natural internal atmosphere-ocean variability.

Model simulations indicate that human-induced climate change increases California precipitation in mid-winter, with a low-pressure circulation anomaly over the North Pacific, opposite to conditions of the last three winters. The same model simulations indicate a decrease in spring precipitation over California. However, precipitation deficits observed during the past three years are an order of magnitude greater than the model-simulated changes related to human-induced forcing. Nonetheless, record-setting high temperature that accompanied this recent drought was likely made more extreme because of human-induced global warming.

Basically, aside from perhaps an added bit of warming, human-caused climate change played no role in the drought. In fact, climate models indicate almost the opposite set of occurrences (i.e., more winter precipitation).

This is but one of the Hoerling and team studies that burst warmie bubbles.

Here are a few more that you ought to have a look at:

Great Russian Heatwave of 2010:

We conclude that the intense 2010 Russian heat wave was mainly due to natural internal atmospheric variability. Slowly varying boundary conditions [that is, slowly increasing the greenhouse effect] that could have provided predictability and the potential for early warning did not appear to play an appreciable role in this event.

Great Plains Drought of 2012:

Climate simulations and empirical analysis suggest that neither the effects of ocean surface temperatures nor changes in greenhouse gas concentrations produced a substantial summertime dry signal over the central Great Plains during 2012.

In each case, the real expectations that the events are “consistent with” human-caused climate change are slim to none (despite the headlining media coverage to the contrary).

That’s the science. You ought to have a look!

K. William Watson

While government intervention often makes people’s lives worse, it can sometimes have aesthetically valuable side effects. For example, ancient pyramids are true marvels of human engineering, feudal despotism, and slave labor. Also, I’ll admit I’ve always enjoyed the iconic image of 1950s American cars in Cuba, which exist today because Cubans largely have been forbidden from buying new cars for over half a century.

A more modern consequence of big government causing cool things to happen is the existence of the Airbus Beluga Super Transporter. The Beluga exists because Airbus manufactures different parts of its planes in different European countries. Why does it do this? Subsidies! Lots of subsidies.

Airbus is based in France, where most of its planes are assembled. But the company is also subsidized by the United Kingdom, Germany, and Spain, and they each get at least one factory that makes some airplane component. In order to transport giant airplane parts like fuselages and wings from country to country, Airbus has designed a plane for the sole purpose of carrying plane parts between its factories.

 


I think it’s pretty cool looking. It’s also absurd. When your business model involves flying airplane parts around Europe in an airplane, it’s very possible you are inadequately concerned about efficiency.

To be clear, there’s nothing wrong with international supply chains.  In today’s globalized economy, it is not at all uncommon for manufacturing activity to be spread across multiple countries, particularly for complex or high-tech products. Today’s automobiles, regardless of their brand, contain a varied mix of foreign and domestic-made parts. An iPhone may be assembled in China, but its components were made in Korea and Japan, and its software was designed in California. Lots of factors go into deciding where to source manufacturing components, and when other factors outweigh transportation costs, global supply chains are born.

Perhaps, then, the Airbus Beluga would still exist in a free market, but I doubt it. The curious part of Airbus’s operations is not the fact of transportation, but the method. You may think it’s only natural that an airplane maker, when devising a logistical scheme for its supply chain, would gravitate toward air shipments. However, despite all the subsidies at home, Airbus has also set up factories in China and Alabama, where they somehow manage to send parts the same unexciting way all profit-maximizing global companies do—by sea.

 

Emma Ashford

While Washington focused yesterday on the prospect of yet another government shutdown, both House and Senate quickly and quietly passed bills which increase sanctions on Russia and authorize the sale of defensive arms to Ukraine.  S.2828 passed mid-afternoon by voice vote, while H.R. 5859 was passed without objection at 10:25pm last night, on a largely empty House floor. Indeed, the House resolution had been introduced only that day, giving members no time to review or debate the merits of a bill which has major foreign policy implications.

The bill requires the imposition of further sanctions on Russia, particularly on Rosboronexport, Russia’s main weapons exporter, as well as increasing licensing requirements for the sale of oil extraction technology to Russia. Any Russian company exporting weapons to Syria is also liable for sanctions. In addition, the bill contained a contingency, requiring the President to sanction Gazprom in the event that it interferes with the delivery of gas supplies to NATO members or to Ukraine, Georgia and Moldova. The bill also takes aim at Russia more broadly, directing the President to hold Russia accountable for its violations of the Intermediate Nuclear Forces (INF) Treaty, and to consider whether it remains in U.S. interests to remain a party to this treaty.

Significantly, the bill authorizes the president to make available defensive weapons, services and training to Ukraine, including anti-tank weapons, crew weapons and ammunition, counter-artillery radar, tactical troop-operated surveillance drones, and command and communications equipment. It  also includes additional aid for Ukraine, earmarked to help Ukraine loosen its reliance on Russian energy, and strengthen civil society. Other funds go to increasing Russian-language broadcasting in Eastern Europe by Voice of America and Radio Free Europe/Radio Liberty, in order to ‘counter Russian propaganda.’

S.2828 and H.R. 5859, which are reportedly identical, will likely be signed into law, although President Obama expressed concern on Thursday that further sanctions on Russia could prove counterproductive. While the bill stops short of some of the more extreme proposals found in various failed congressional bills (i.e., the Russian Aggression Prevention Act of 2014), it will have serious ramifications for U.S.-Russian relations. Up to this point, the White House has resisted arming Ukraine, fearing escalation of the conflict. But this bill will make it extremely difficult for the White House to continue this policy.

Arming Ukraine will escalate tensions with Russia, but it will do little to help the Ukrainian army - which is corrupt and in dire need of reform - to combat the insurgency in its Eastern regions. The bill ties the hands of diplomats, requiring that Russia ceases “ordering, controlling… directing, supporting or financing” any acts or groups which undermine Ukrainian sovereignty before sanctions can be lifted. The INF treaty stipulation is also dangerous, raising tensions, and increasing the possibility that both Russia and the U.S. could withdraw from the treaty.

Unfortunately, the provisions in this bill will make it all the more difficult to find a negotiated settlement to the Ukraine crisis, or to find a way to salvage any form of productive U.S.-Russia relationship. No wonder congress didn’t want to debate it openly.  

Patrick G. Eddington

Yesterday, CIA Director John Brennan delivered his public response to the Senate Select Committee on Intelligence report on the CIA’s detention and interrogation program. Rather than use the opportunity to fully acknowledge and accept the report’s findings and implications, Brennan offered a vigorous defense of the CIA, invoking the emotional trauma suffered by the country to help justify subsequent his agency actions.

Indeed, there were numerous, credible, and very worrisome reports about a second and third wave of major attacks against the United States,” Brennan said. “And while we grieved, honored our dead, tended to our injured, and embarked on the long process of recovery, we feared more blows from an enemy we couldn’t see … and an evil we couldn’t fathom.

“This is the backdrop against which the Agency was directed by President Bush to carry out a program to detain terrorist suspects around the world.

“In many respects, the program was uncharted territory for the CIA, and we were not prepared. We had little experience housing detainees, and precious few of our officers were trained interrogators. But the President authorized the effort six days after 9/11, and it was our job to carry it out.” (emphasis added)

But as the Senate report makes clear (p. 11), President Bush’s covert action Memorandum of Notification (MON, the formal authorization for the rendition and detention program) “made no mention of interrogations or interrogation techniques.” Thus, the initiative for the interrogations—including techniques involving torture under international and U.S. law—originated within the CIA. And as the Senate report lays out repeatedly—using the CIA’s own internal documents—agency personnel, and particularly its attorneys, knew very well that what they were proposing almost certainly violated U.S. and international law.

One early example (from p. 33 of the Senate report summary) of this articulated concern came in July 2002, when CIA attorneys

drafted a letter to Attorney General John Ashcroft asking the Department of Justice for “a formal declination of prosecution, in advance, for any employees of the United States, as well as any other personnel acting on behalf of the United States, who may employ methods in the interrogation of Abu Zubaydah that otherwise might subject those individuals to prosecution.” (emphasis added)

Enough CIA personnel understood they would be breaking the law that they had the foresight to ask preemptively for a DoJ “get out of jail free card” in the form of formal opinions from the Office of Legal Counsel. They got those opinions—which were later withdrawn, but which still likely would provide a shield from prosecution for waterboarding and the other torture tactics used by CIA interrogators.

And when pressed on whether the CIA should ever conduct such a program again, Brennan amazingly said he would “defer to the policymakers in future times when there is going to be the need to be able to ensure that this country stays safe if we face a similar type of crisis.”

Instead of learning the right lessons from this episode—that torture never produces accurate, reliable intelligence and that its use destroys the moral and political authority of the user—Brennan clearly left the door open to a future CIA rendition and detention program, including the use of coercive interrogation techniques.

Sen. Diane Feinstein, the outgoing chairwoman of the Senate Intelligence Committee, has called publicly for legislation to prevent a repeat of this episode. In light of Director Brennan’s remarks, it will be interesting to see whether Senator Feinstein’s first act in the 114th Congress will be to take legislative action to close the door on the CIA ever again engaging in rendition, detention and torture.

Walter Olson

For years the U.S. Department of Justice and Securities and Exchange Commission have been on a crusade to prosecute “insider trading,” even though it’s far from clear that activity should be criminal to begin with. Lately, those efforts have been led by Preet Bharara, U.S. Attorney for the Southern District of New York, who has obtained more than 80 convictions and plea deals, ruining countless careers and fortunes along the way.

On Wednesday, things changed. A three-judge panel of the New York-based Second Circuit U.S. Court of Appeals—the most influential lower court on questions of financial regulation—unanimously threw out Bharara’s high-profile conviction of hedge funders Todd Newman and Anthony Chiasson, directing that charges against them be dropped. It’s a “huge blow” to Bharara’s campaign, notes the New York Post, while Bloomberg Media calls it a “harsh rebuke” that “is likely to have far-reaching effects.” Alison Frankel of Reuters describes the ruling as “emphatic” and its conclusion “momentous.” The opinion is here.

Yale law professor Jonathan Macey, writing in the WSJ:

[The SEC and Bharara] prefer that the law exalt vague conceptions of “fairness” above the more concrete goals of having robust, liquid and efficient securities markets.

The new opinion is a game-changer. It signals to prosecutors that they cannot bring flawed cases and then hide behind the excuse that the law is vague. The Court of Appeals admonished that “the Supreme Court was quite clear” in previous cases about what is required to establish illegal insider trading.

Specifically, the Supreme Court and the lower federal courts have been explicit in saying that trading on an informational advantage is not necessarily illegal. To be illegal, the courts have said, trading by insiders must involve breaching a duty of trust and confidence. Courts have been clear, as the Supreme Court noted in Chiarella v. U.S. (1980) and again in U.S. v. O’Hagan (1997), that there is no “general duty between all participants in market transactions to forgo actions based on material, nonpublic information” because it is possible to acquire such information legitimately.

Tellingly, the Court of Appeals pointed out “the doctrinal novelty” of the government’s “recent insider trading prosecutions, which are increasingly targeted at remote tippees many levels removed from corporate insiders.”

And note this, from Alison Frankel’s Reuters column

The opinion not only sets clearer definitions for future insider trading prosecutions but also undermines the foundation of at least a half-dozen guilty pleas the Manhattan U.S. attorney’s office has already obtained [emphasis added—W.O.]. According to the 2nd Circuit, the government hasn’t proved the illegality of the insider disclosures underlying those pleas.

Yesterday, at a Cato book lunch for Brian Aitken, who was imprisoned by the State of New Jersey for carrying unloaded guns and ammunition in the trunk of his car, I observed that students of the plea bargaining system consider it absolutely standard that under the pressure of prosecution a large share of persons who believe themselves innocent of charges, and would have been cleared had they persisted to a final resolution in court, will nonetheless accept a plea deal for fear of the consequences of remaining defiant. That’s one reason congressional oversight of this area is urgently needed: our plea-bargain-driven system of criminal prosecution doesn’t really police itself well, even when the courts do the right thing. 

For another example of financial prosecutions run amok, see my post a while back on Justice Department enforcement actions under the Foreign Corrupt Practices Act.

Daniel R. Pearson

Sen. Sherrod Brown (D-OH) introduced a bill on Wednesday called the “Leveling the Playing Field Act.” According to the accompanying press release, the proposal would “restore strength to antidumping and countervailing duty laws” via a “crack down on unfair foreign competition.” The bill includes several provisions relating to practices used by the Department of Commerce to determine dumping and subsidy margins (i.e., the extent to which imported products are unfairly underpriced). It also contains modest changes to procedures used by the U.S. International Trade Commission (ITC) in deciding whether domestic industries have been “materially injured” by imports.

Since I have had only indirect exposure to the role of Commerce in antidumping and countervailing duty (AD/CVD) investigations, I will leave analysis of those proposed changes to others. However, my 10 years of experience as chairman and commissioner at the ITC provide a reasonable basis for commenting on the bill’s suggested modifications to the injury determination.

The existing AD/CVD statutes instruct the ITC to “evaluate all relevant economic factors” that relate to the effects of imports on the industry under consideration. A number of those factors are specifically mentioned, including the industry’s profits. Not being satisfied with just having the commission examine profits in general, the Brown bill adds, “gross profits, operating profits, net profits, [and] ability to service debt.” As a practical matter, the commission already looks in detail at an industry’s profitability and its ability to repay debts, so this additional wording would contribute nothing of substance.

The Brown bill would add a provision to the effect that an improvement in the industry’s performance over the period of investigation (normally about three years) should not preclude a finding that the industry has been materially injured by imports. Yes, there can be circumstances in which an industry’s results are strengthening, yet it is still being held back by import competition. However, the commission’s existing practice already considers this possibility, so the new language would not really change anything.

The bill also adds a section addressing the possible effects of a recession on the ITC’s injury analysis. It states that the commission may extend its period of investigation to begin at least a year before the recession started, which would allow before and after comparisons of how the domestic industry has performed. The ITC already has authority to adjust the period of investigation under special circumstances, but it relatively seldom does so.

Adding another year or two onto the period of investigation makes it more difficult for both domestic and foreign firms to provide the data required for the commission’s analysis. It also is likely to provide less helpful information than might be expected. In a recession, demand for goods tends to contract. It is quite normal for a recession to cause reductions in the quantity of imports as well as in the quantity produced domestically. Thus, extending the period of investigation probably won’t provide much information other than that both domestic industries and foreign producers tend to be hurt by recessions. The key reason that lengthening the period of investigation is not likely to influence the injury determination is that the most recent trends in the marketplace are almost always more relevant than whatever was happening four or five years earlier.

Although the changes proposed by Brown to the ITC’s injury determination are relatively modest, I would recommend against adopting them for a simple reason: litigation risk. The skilled and creative attorneys who represent domestic industries in AD/CVD cases would be only too happy to have another basis for appeal of commission decisions with which they disagree. A claim that the ITC had not adequately considered the newly crafted provisions would provide a potential justification for an appeal. Why invite such mischief?

If members of Congress actually are interested in modifying the AD/CVD statutes to make them better serve the interests of U.S. manufacturers, they should propose legislation that would balance the interests of domestic producers relative to the interests of U.S. consumers. Currently the ITC injury determination is limited to the effect of imports “on domestic producers of domestic like products.” In essence, the commission must disregard any costs that would be imposed on users of the product in the event that imports are restricted. Those costs often can be very large—well in excess of the potential benefits that might flow to domestic producers. (For more on this issue, see this thoughtful analysis by my colleague, Daniel Ikenson.)

As an example, the United States now imposes antidumping or countervailing duties (or both) on imports of hot-rolled steel from China, India, Indonesia, Russia, Taiwan, Thailand, and Ukraine. Hot-rolled is a basic form of steel coil that is further manufactured into products such as cold-rolled steel, corrosion-resistant steel, tin-coated steel, and welded steel pipe. In turn, those steel products are used to make automobiles, farm machinery, appliances, ventilation ducts, and a wide range of other products too numerous to mention. Manufacturing those value-added products employs far more people and contributes far more to the U.S. economy than is the case for hot-rolled steel.

The AD/CVD duties very likely cause hot-rolled steel to be higher priced in the United States than in many other countries. Thus, protection for hot-rolled producers raises costs for all other U.S. firms that utilize flat-rolled steel products. The spread between the cost of steel in the United States relative to other countries doesn’t have to be very wide before it can become more economical to import steel-containing manufactured products from other countries rather than producing them here.

If the Leveling the Playing Field Act achieves its intended purpose of providing an even greater level of protection to firms producing basic products, it certainly will have the unintended consequence of weakening the U.S. economy and reducing employment overall. Artificially increasing the costs borne by the wide swath of U.S. manufacturers that depend on steel as an input will make them more vulnerable to competition from overseas. Supporters of the bill instead should consider the possibility of adjusting the AD/CVD statutes to ensure that interests of downstream users are taken into account. The ITC’s injury determination should be changed so that the commission is required to assess not only the effects of imports on producers, but also the costs that import restrictions impose on users. This would be an important first step toward ensuring that AD/CVD measures don’t inadvertently damage the broad U.S. economy.

Simon Lester

Liberal activist Naomi Klein has a new book out provocatively subtitled “Capitalism vs. the Climate.” (For those of you who don’t want to buy her book, an essay she wrote a couple years ago with the same title is here.)

What amuses me about her attempt to pit capitalism and the climate against each other is that I came across an excerpt from the book in the Toronto Globe and Mail in which, unwittingly, she advocated policies that, even accepting the debate on her terms, can’t be good for the climate.

Not surprisingly, she supports subsidies for renewable energy. It’s hard to have renewable energy without those. But what struck me was that she also argued for tying those subsidies to the use of local content. For example, there is a government program in Ontario that subsidizes solar energy, but only if the energy suppliers use a certain percentage of labor and materials that are made in Ontario.

There are two obvious and related problems with such a requirement. First, by requiring local inputs, you make your product more expensive (especially when local means high-cost Canada). If your goal is cheaper renewable energy, raising the price of inputs doesn’t make a whole lot of sense.

Second, the idea that each sub-federal government should promote local production of a particular product is absurd. Imagine if that happened worldwide: there would be thousands of producers of these products! I can’t think of a more inefficient and energy-wasting approach to manufacturing.

Just to be clear, I know many strong supporters of taking action against climate change who do not believe in this kind of protectionist approach. They recognize that local content requirements are economically harmful and shouldn’t be part of these policies. For reasons that are difficult to understand, Klein seems to have missed this pretty obvious point. (I did tweet it at her, but I’m not expecting much from that!)

Matthew Feeney

Those who have argued for the deregulation of the taxi industry will be familiar with the claim that taxi deregulation was tried in the U.S. and that the results were so undesirable that regulation was introduced. In a recent Washington Post article about ridesharing and taxi regulation, Catherine Rampell states that prices rose in deregulated taxi markets and that the latest calls for deregulation are only the latest in a familiar cycle. However, future taxi deregulation will be different from past deregulation schemes thanks to relatively new changes in technology that allow passengers to overcome knowledge problems that led to price increases in deregulated taxi markets.

Rampell’s article includes some interesting historical insights. Regulations and licensing laws for passenger transport vehicles are nothing new. In the 17th century, Charles I tried to limit the number of horse-drawn carriages in London by passing an order which was ignored. During the Great Depression, some unemployed Americans found a source of income in the unlicensed taxi industry. By the 1990s much of the American taxi industry had been subjected to re-regulation following a wave of deregulation in roughly two dozen cities beginning in the 1960s.

Today, there are calls for the taxi industry to be deregulated amid the growth of ridesharing companies such as Uber, Lyft, and Sidecar. Some argue that taxis cannot fairly compete with ridesharing companies because they are hampered by outdated regulations, and that if taxis were deregulated they would be better suited to compete with rideshare companies. Rampell warns against deregulation, saying that we have “Been there, done that.”

While it is the case that the taxi industry in a number of American cities was re-regulated after a period of deregulation, many of the pricing problems cited as justification for taxi re-regulation are not applicable today thanks to technological advances.

In her article, Rampell links to a 1996 paper on taxi regulation written by Paul Dempsey, a law professor at McGill. The paper highlights an interesting problem that taxi customers face: a lack of good information.

Most taxi customers take the first taxi that appears. As Dempsey points out, it is not worth taxi customers conducting a price or service comparison in a deregulated market:

…consumers buying taxi service in a deregulated market often have little comparative pricing or service information, for the opportunity costs of acquiring it are high.

Taxi consumers do not have perfect information, so it is almost always worth taking the first taxi that appears. As Dempsey notes (citing work by economist Chanoch Shreiber), in the absence of fare regulation the prices of a taxi rides tends to increase:                                                                                                                

… because a prospective passenger who values his or her time will not likely turn down the first available cab on the basis of price, this will have an “upward pressure on the price.” A consumer hailing a cab from a sidewalk has an incentive to take the first taxi encountered, because both the waiting time for the next cab and its price are unknown. Paradoxically, in an open entry regime, prices tend to rise.

Although taxi prices did go up after the deregulation Dempsey discusses, we should not expect taxi deregulation in the future to have the same outcome.

Keep in mind that Dempsey’s paper came out in 1996, before smartphones allowed for companies like Uber and Lyft to emerge as strong taxi competitors.

Part of the appeal of ridesharing is that the apps used by Lyft and Uber customers allow users to overcome the knowledge problems highlighted by Dempsey. Uber and Lyft users can see the location of drivers, and Uber users can estimate a fare before their ride begins. Today, a taxi company could, unlike a taxi company in 1996, develop an app that allows for users to be better informed about fares and the availability of taxi drivers.

However, even if a taxi company were to develop such an app, it would have to compete with rideshare companies. One app that did allow its users to hail taxis, Hailo, was driven out of North America by the fierce competition between Uber and Lyft. MyTaxi, a Germany-based taxi app, is available in Washington, D.C and does allow users to estimate a fare before a ride begins and see the location of available drivers. If taxi companies want to remain competitive in markets where ridesharing drivers are operating an app like MyTaxi may be their best chance of surviving in the long term.

Ridesharing has dramatically changed vehicle-for-hire transportation, and as regulators look to address the rise of the sharing economy we should expect anything but the familiar regulatory cycle Rampell references. Taxi companies are facing strong competition from companies that would have been inconceivable almost twenty years ago, and they have the opportunity to develop products that can address the lack of information which contributed to taxi prices rising in deregulated markets. There may well be good arguments against the deregulation of the taxi industry, but such arguments must take into account changes in technology.  

Jason Kuznicki

This month at Cato Unbound, we’re talking about the Search for Extra-Terrestrial Intelligence, or SETI.

Why’s that, you ask?

Several reasons, really. First, although it’s not exactly a hot public policy topic, it will certainly become one if we ever actually find anything. But that’s hardly where the importance of the topic ends.

Much more interesting to me at least is that SETI can serve as a springboard for discussing all kinds of important concepts in public policy. Our contributors this month - David Brin, Robin Hanson, Jerome H. Barkow, and Douglas Vakoch - have talked about the open societycost-benefit analysisevolutionary psychology, the hubris of experts, the narcissim of small differences, and even Pascal’s Wager (and what’s wrong with it)

So… lots of interesting stuff, particularly for libertarians who are interested in public policy.

Doug Bandow

MOSCOW—Red Square is one of the world’s most iconic locales. Even during the worst of the U.S.S.R. the square was more symbolic than threatening. 

Very different, however, is Lubyanka, just a short walk away. 

In the late 19th century 15 insurance companies congregated on Great Lubyanka Street.  The Rossia agency, one of Russia’s largest, completed its office building in 1900. 

But in 1917 the Bolsheviks seized power.  They took the Rossia building for the new secret police, known as the All-Russian Extraordinary Commission for Combating Counter-Revolution and Sabotage, or Cheka.

The first Cheka head was Felix Dzerzhinsky.  He conducted the infamous “Red Terror,” what he called a “fight to the finish” against the Bolsheviks’ political opponents. 

After his death in 1926 Grand Lubyanka Street was renamed Dzerzhinsky Street.  A great statue of Dzerzhinsky, weighing 15 tons, was erected in a circle in front of the Cheka headquarters. 

After the KGB was dissolved the building went to the Border Guard Service, later absorbed by the Federal Security Service (FSB), responsible for foreign intelligence. Today Lubyanka looks non-threatening, a yellowish color and architectural style less severe than the harshly grandiose Stalinist architecture seen throughout the city.

The KGB faced its greatest challenge in the Gorbachev era.  Demands for reform raced beyond Mikhail Gorbachev’s and the KGB’s control.  In August 1991 KGB head Vladimir Kryuchkov helped plan the coup against Gorbachev. 

After the coup’s collapse a crowd gathered in front of Lubyanka and attempted to pull down the Dzerzhinsky monument.  City officials used a crane to finish the job.

Journalist Yevgenia Albats wrote:  “If either Gorbachev or [Boris] Yeltsin had been bold enough to dismantle the KGB during the autumn of 1991, he would have met little resistance.”  However, these two reformers attempted to fix rather than eliminate the agency.

And the KGB effectively ended up taking over Russia.  Yeltsin named Chekists, or members of the “siloviki” (or power agents), to important government positions, most importantly Vladimir Putin, who headed the FSB and then became prime minister—and Yeltsin’s successor as president when the latter resigned.

In 1999 Vladimir Putin became prime minister under President Yeltsin.  Anne Applebaum, Washington Post columnist, argued “that Putin—and, more importantly, most of the people around him—is deeply steeped in the culture of Andropov’s KGB.”  In her view they are modernizers but authoritarians, who “believe that the rulers of the state must exert careful control over the life of the nation.” 

After taking over Putin turned to his KGB network to run both the government and the economy.  The result, wrote UCLA’s Daniel Treisman, is a “silovarchy” in which “silovarchs” replaced the earlier economic oligarchs.  Whatever the economic consequences of this system, noted Treisman, “the temptation to use secret service tools and techniques predisposes such regimes toward authoritarian politics.”

As I wrote in the American Spectator online, “This system offers a tragic detour for people who desperately need liberty.  But despite the frenzied push in Washington for economic sanctions and military threats, the success of Putinism is well beyond America’s control.  The U.S. certainly should not promote military confrontation with nuclear-armed Moscow over an issue of limited importance to Washington.”

In fact, Putinism may face its strongest challenge on the economic front from declining energy prices, Western sanctions, and domestic distortions.  Putin’s poll ratings have risen since seizing Crimea, but as the nationalistic fervor fades the Russian people’s desire for prosperity may overcome the desire for order.

Finally, the system faces a natural limit:  The silivoki will die off.  Noted Applebaum, “Sooner or later, the generation trained in the mindset of Andropov’s KGB will retire.”  It’s hard to predict what will follow, but change is likely. 

It then will be critical for Russia’s new leaders to eliminate the Chekist mindset.  But  Lubyanka should be preserved, perhaps as a museum about tyranny.  No one should want to repeat the KGB experience.

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