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Daniel J. Ikenson

If you don’t yet subscribe to Cato Trade, the monthly newsletter of the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies, you can find the current edition here.  Highlighted in this month’s release is Simon Lester’s new paper, Expanding Trade in Medical Care through Telemedicine.  Additionally, you will find Cato trade scholars’ commentaries on the Export-Import Bank; the Trans-Pacific Partnership talks; Investor-State Dispute Settlement (ISDS); Trade Promotion Authority (TPA); and, other important matters of U.S. trade policy.

And here are the links to all previous monthly newsletters:

Cato Trade Monthly Update, Mar. 4, 2015

Cato Trade Monthly Update, Feb. 2, 2015

Cato Trade Monthly Update, Jan. 6, 2015

Cato Trade Monthly Update, Dec. 1, 2014

Cato Trade Monthly Update, Nov. 3, 2014

Cato Trade Monthly Update, Oct. 1, 2014

Cato Trade Monthly Update, Sept. 2, 2014

Cato Trade Monthly Update, Aug. 4, 2014

Cato Trade Monthly Update, July 1, 2014

Cato Trade Monthly Update, June 2, 2014

Cato Trade Monthly Update, May 1, 2014 

Cato Trade Monthly Update, Apr. 1, 2014

Cato Trade Monthly Update, Mar. 4, 2014

Cato Trade Monthly Update, Feb. 4, 2014

Cato Trade Monthly Update, Jan. 6, 2014

Cato Trade Monthly Update, Dec. 2, 2013

Randal O'Toole

American Nightmare is in some ways the most profound of the three books I have written for Cato. It covers a wide range of issues, including a detailed explanation of the 2008 financial crisis. But the overarching theme is that urban planning and zoning are best viewed as a form of economic warfare by the upper and middle classes against the working and lower classes. While that might not have been the original intent, to judge by the smug attitudes of the beneficiaries of such planning and zoning, they are perfectly happy with the results.

The book, therefore, was really about inequality, an issue that of course has been made popular and controversial by Thomas Piketty’s book Capital in the Twenty-First Century. Piketty’s thesis is that income inequality is necessarily rising because the returns to capital wealth are greater than overall economic growth, thus giving people one more reason to hate capitalists.

Last month, a paper by an MIT graduate student in economics named Matthew Rognlie, examined Piketty’s thesis in detail. Rognlie found that, contrary to Piketty, the returns on most kinds of wealth and capital have not been greater than overall economic growth, and therefore haven’t been contributing to income inequality. The one exception, Rognlie found, was housing.

“Is capital income displacing labor income?” asks Rognlie in a Brookings paper. “Only if you count housing.” As The Economist summarizes Rognlie’s results, “surging house prices are almost entirely responsible for growing returns on capital,” which means that “rising house prices may be chiefly responsible for rising inequality.” As a result, Rognlie concludes, Piketty should have titled his book, Housing in the Twenty-First Century.

 

Here’s the housing bubble that contributed to the 2008 financial crisis and growing wealth inequality.

American Nightmare showed that those surging housing prices only happen in certain regions, specifically those that use planning and zoning to increase urban densities. This includes most of Europe, Australia, much of New Zealand, most coastal states in the United States, and a few Canadian cities including Vancouver, Victoria, Toronto, and Montreal.

Housing is also a factor in many developing nations where most land is still owned by the government, or held in trust by the government on behalf of local villages. This includes most of Africa, much of South America, and part of Asia. In such places, the only people who can enjoy the benefits of “surging housing prices” are the few who own their own land, and since land ownership opportunities are limited due to widespread state control, everyone else stays poor. (In the United States, the closest analogues are Nevada, where 90 percent of the land is owned by the government, and Hawai’i, where more than 90 percent of the land is owned by a handful of corporations and trusts that might be willing to sell it for housing, but the state governent won’t let them.) 

Urban areas like Houston, Indianapolis, and Raleigh were and are growing much faster than the ones shown in the previous chart, yet experienced no bubble because they didn’t have the restrictive land-use rules found in the bubble regions.

On the other hand, places that don’t practice restrictive zoning and land-use planning don’t see housing prices surge. The classic example is Houston, but in fact the infamous housing bubble that peaked in 2006 only took place in a minority of American cities and states. No bubbles were seen in most of the South (except Florida), the Midwest, or the arid West (except Arizona and Nevada).

In other words, Piketty isn’t entirely wrong. As The Economist concludes, “a story in which a privileged elite uses its political clout to create economic rents for the few (albeit through the planning system) fits Mr Piketty’s argument to a tee.” But anyone who concludes that this is some conspiracy by the 1 percent is wrong: instead, as American Nightmare shows, it is a conspiracy by the 30 percent (at least in the developed world) who are among the middle and upper classes who own their own homes.

The solution to inequality, therefore, isn’t to make war on the upper classes through punitive taxation, but simply to relax the zoning and other land-use restrictions that make housing prices so volatile. This will both reduce the returns to housing and make housing more affordable to lower-income families so they can enjoy the benefits of modest wealth accumulation that come with property ownership.

John Samples

I will be taking part in a discussion of money, politics, and policymaking on April 8, 2015, at 7:30pm at Beth Sholom Congregation, 8231 Old York Road, Elkins Park, PA 19027.

Craig Holman of Public Citizen will also set out his views on this topic. The event will be moderated by Chris Satullo, Vice President, WHYY, and Co-founder/co-director, of the Penn Project for Civic Engagement.

The Bernard Wolfman Civil Discourse Project is sponsoring this event. You can register for the event and find out more about this worthy institution at www.CivilDiscourseProject.org. You might also register by calling 215.887.1342.

Craig and I will disagree about much on April 8, but we won’t be disagreeable, and I hope we say something you might not have heard about money and politics. I’m looking forward to participating, and I would love to see Cato folks there, whether you agree with me or not.

Jonathan Blanks

Yesterday, the Department of Justice announced that President Obama commuted the sentences of 22 federal prisoners, eight of whom were sentenced to spend the rest of their lives in prison. These commutations are in line with the administration’s criteria for reviewing certain clemency petitions.

Courtesy of the Clemency Project, the administration’s criteria to apply for the new clemency policy require the applicant to:

  • be serving a federal sentence;
  • be serving a sentence that, if imposed today, would be substantially shorter;
  • have a non-violent history with no significant ties to organized crime, gangs or cartels;
  • have served at least 10 years;
  • have no significant prior convictions; and
  • have demonstrated good conduct in prison.

Of course, these commutations are a welcomed development. But there are potentially thousands of inmates eligible under these criteria, as well as many others who have paid more than enough for their past misdeeds. Yesterday’s action doubled the number of granted petitions during Obama’s presidency, but these grants are not nearly enough.

Governors in the 50 states should institute their own clemency initiatives. Most of America’s incarcerated population is under state jurisdiction. The states house many more prisoners that should be brought back into society instead of  serving draconian prison sentences.

Kudos to the Clemency Project’s member organizations and 1,500 attorneys working pro bono to bring these and the many other inmates home. And congratulations to those 22 individuals who can be reunited with their friends and families as they look to rebuild their lives and rejoin society.

In a new Why Liberty? video released today, Families Against Mandatory Minimums’ founder (and Cato alumna) Julie Stewart talks about why she started her organization and the work that still needs to be done in sentencing reform.

Charles Hughes

Last week, the Associated Press reported that more than 9,000 food stamp recipients in Maine have been removed from the program because they failed to comply with the program’s work requirements. These requirements themselves are largely nothing new, but in the years since the recession, almost every state received a waiver exempting them from these provisions. By allowing the waiver to lapse, Maine will again enforce the requirement that able-bodied adults without dependents participate in some form of work activity. These rules only apply to a small fraction of beneficiaries, just 10 percent of Maine’s beneficiaries in 2013. A spokesman for the Maine Department of Health and Human Services revealed that the number of SNAP beneficiaries subject to the reinstated requirements has fallen from roughly 12,000 to 2,680. This is a steep reduction, but relatively small compared to the 250,000 people in the Supplemental Nutrition Assistance Program (SNAP) when the rule change went into effect.

Even before the recession, the percentage of Maine households in the program surged from 9.6 percent in 2002 to 12.3 percent in 2007. The recession caused the beneficiary rolls to swell even further, and they have continued to grow in the years since, in part due to the waiver. In 2013, 18 percent of Maine households participated in SNAP, third highest in the country. As the figure shows, since October 2010, Maine’s unemployment rate has fallen significantly, but the number of SNAP recipients remains elevated. Since the enforcement of the new rules began, these two measures have been more highly correlated.

Maine Unemployment Rate vs. SNAP Beneficiaries

 

Sources: Federal Reserve Bank of St. Louis, “Federal Reserve Economic Data,” MEUR_NBD20100901, BRME23M647NCEN; Office of Family Independence, “Geographic Distribution of Programs and Benefits,” Maine Department of Health and Human Services, June 2013-February 2015.

Some advocates for the poor have raised concerns that there are not enough jobs available, so even willing beneficiaries might be disqualified. Looking at the broad array of activities that meet the work requirements could allay some of these fears. As the state’s Employment and Training Plan explains, the requirements are “very broad” and include aspects like job training, assisted job search and education, in addition to traditional work. Beneficiaries who volunteer for 24 hours a month would also meet these requirements.

Part of the motivation for this renewed enforcement is to provide a better path for beneficiaries to transition off  the program and back into the mainstream economy. Many beneficiaries are on the program for extended periods of time, and for too many, next to nothing is being done to help them improve their employment prospects during this time. A recent national study found that, over a 56 month period, a full quarter of beneficiaries participated for more than four years. Some of these people are exempt due to disability status or age, but those with the capacity for work are not really helped by a program that leads them to languish for years on the welfare rolls.

Reinstating enforcement SNAP’s work requirements will not drastically change the entire anti-poverty regime. SNAP is just one small (but growing) component of the welfare system, and these requirements only apply to a small fraction of those beneficiary households. Those caveats aside, Maine’s renewed focus on work requirements is an improvement and will help more people transition out of the program and into work, where they are much more likely to flourish.

Kat Murti

April is Alcohol Awareness Month. What better time to take a close look at one of our nation’s most heavily regulated industries and the inventive ways entrepreneurs are innovating within this realm?

The ratification of the 21st Amendment may have officially ended this nation’s failed experiment with alcohol Prohibition, but the policy hangover has had lingering effects. From dry counties to bans on Sunday sales, the sale of alcohol is severely restricted in a confusing patchwork of local, state, and federal regulations. Homebrewing was not legal in all 50 states until 2013 (and homebrewers still cannot legally sell their product). Eighteen states maintain a state monopoly over the wholesaling or retailing of some or all categories of alcoholic beverages. But, even in this stifling economy, intrepid businesses are finding new ways to serve thirsty consumers.  

One real-world example of this is Klink, formerly known as DrinkDrivers, a rapidly growing start-up with a strong foothold in the nation’s capital. The app-based alcohol delivery company relies upon the mechanisms of the sharing economy—which has faced its own share of difficulties from overzealous regulators—to navigate the treacherous legal landscape of the American alcohol industry.

The concept behind Klink is a simple one: modern consumers want the ease of on-demand goods and services, deliverable at the touch of a button, wherever they are. Yet, Klink is not an alcohol provider in the traditional sense.

Unlike many other businesses in the sharing economy, Klink is stringent in its adherence to the laws and regulations governing alcohol sales. When you place an order, the company does not itself process your payments or deliver your alcohol. Instead, Klink plays the role of middleman, partnering with licensed liquor retailers, providing an easy-to-use online platform to connect alcohol providers with customers and occasionally running localized marketing campaigns.

Tomorrow at noon, I’ll be moderating a live-streamed lunchtime discussion featuring my colleague Matthew Feeney, who is Cato’s leading expert on the sharing economy; David Ozgo, the Distilled Spirits Council of the United States (DISCUS)’s Senior Vice President of Economic & Strategic Analysis; and Klink’s Founder and CEO, Jeffrey Nadel.

We’ll be discussing the ways in which Klink is navigating the treacherous regulatory waters of both the sharing economy and the alcohol industry, the regulatory hurdles standing in their way, and what this means for the future of tech innovation and alcohol sales. The panel will be live-streamed, and at-home viewers are encouraged to participate in the Twitter discussion—and tweet their question—using #CatoDigital.

Ilya Shapiro

This debate is so banal. Progressives shout “discrimination,” conservatives cry “liberty,” and it really all boils down to the difference between government and private action, which both sides misunderstand.

Progressives aren’t satisfied with state recognition of same-sex couples and want to bend the will of those private citizens who have religious objections to the only belief system that’s now allowed by MSNBC polite society. Conservatives are wrong to oppose the extension of state marriage licenses to same-sex couples – I’m against such licensing schemes, but states have no good reason to treat gay and straight people differently – and it’s that opposition that breeds distrust when they correctly argue that people should be free to live their lives according to their consciences.

As I said a year ago,

[The Indiana law] does nothing more than align state law with the federal Religious Freedom Restoration Act (which passed the House unanimously, the Senate 97-3, and was signed by President Clinton in 1993). That is, no government action can “substantially burden” religious exercise unless the government uses “the least restrictive means” to further a “compelling interest.” This doesn’t mean that people can “do whatever they want” – laws against murder would still trump religious human sacrifice – but it would prevent the government from forcing people to violate their religion if that can at all be avoided. Moreover, there’s no mention of sexual orientation (or any other class or category).

The prototypical scenario that [the law] is meant to prevent is the case of the New Mexico wedding photographer who was fined for declining to work a same-sex commitment ceremony. This photographer doesn’t refuse to provide services to gay clients, but felt that she couldn’t participate in the celebration of a gay wedding. There’s also the Oregon bakery that closed rather than having to provide wedding cakes for same-sex ceremonies. Why should these people be forced to engage in activity that violates their religious beliefs?

For that matter, gay photographers and bakers shouldn’t be forced to work religious celebrations, Jews shouldn’t be forced to work Nazi rallies, and environmentalists shouldn’t be forced to work job fairs in logging communities. This isn’t the Jim Crow South; there are plenty of wedding photographers – over 100 in Albuquerque – and bakeries who would be willing to do business regardless of sexual orientation, and no state is enforcing segregation laws. I bet plenty of [Indiana] businesses would and do see more customers if they advertised that they welcomed the LGBT community.

At the end of the day, that’s what this is about: tolerance and respect for other people’s beliefs. While governments have the duty to treat everyone equally under the law, private individuals should be able to make their own decisions on whom to do business with and how – on religious or any other grounds. Those who disagree can take their custom elsewhere and encourage others to do the same. 

I hate to repost exactly the same thing, but literally nothing has changed but the site of the overwraught protests.

Moreover, I don’t know why you’d want to have someone who can’t in good faith (literally) support your celebration be a vendor for that event. Actually, I do know: it’s the desire of some to change and narrow the rules of the game “such that private institutions are allowed to continue operating only as long as they follow a prescribed list of behaviors and mores.” (To quote something new, my recent recent National Affairs essay on “Hobby Lobby and the Future of Freedom.”) For more smart takes, see Josh Blackman and Jon Adler.

Oh, and apparently Arkansas is now joining the party too. This could become one of the big issues of the 2016 election – not same-sex marriage itself, mind you, but the brave new world of government mandates clashing with religious (among other) freedoms.

Adam Bates

Today Attorney General Eric Holder issued new guidelines to federal prosecutors tightening the rules for seizing assets for so-called “structuring” offenses.

Under the Bank Secrecy Act, structuring occurs when someone is suspected of arranging their financial transactions as to avoid triggering a report to the federal government by the financial institution.  Some of civil asset forfeiture’s most egregious abuses are the result of federal prosecutors utilizing this nebulous statute to empty the bank accounts of unwitting citizens and small businesses who are never charged with any crime or even aware that their transactions are considered illegal. 

The new rules require:

1. That structuring seizures against people for whom there is no criminal charge be based upon probable cause that the funds were either generated by unlawful activity or intended for use in anticipated unlawful activity.  Alternatively, prosecutors must procure a warrant from a court and with the approval of either the U.S. Attorney (for Assistant U.S. Attorneys) or the Chief of the Asset Forfeiture and Money Laundering Section (AFMLS) (for Criminal Division trial attorneys).

2. That when the prosecutor determines subsequent to a structuring seizure that the government lacks the necessary evidence to succeed at either a civil or criminal trial, the seizing agency must return the full amount.

3. That when a prosecutor seizes property pursuant to suspicion of structuring, the prosecutor must file either a criminal indictment or a civil complaint, or receive an exception from either a U.S. Attorney or Chief of AFMLS within 150 days or else return the seized assets.

4. That all settlements must be complete and in writing.  Informal settlements are expressly prohibited.

Time will tell how impactful these reforms are, and they certainly stop well short of the abolition of civil forfeiture advocated by civil liberties advocates like Cato and the Institute for Justice.  The reforms are also limited to seizures made under suspicion of structuring, which represent only a portion of civil asset forfeiture abuses.

However, much like Eric Holder’s previous reforms to the federal government’s equitable sharing program, this memo can be taken as yet another signal that even the federal government is concerned about the increasingly publicized abusive nature of the government’s asset forfeiture regime. In that sense, these common sense reforms represent another step in the right direction, toward a legal system that respects due process and property rights.

Nicole Kaeding

The Veterans Health Administration (VHA) is plagued with problems. Veterans wait months for medical care and have few options for accessing non-VHA providers. In addition to all of the issues relating to providing health care, construction of VA medical facilities is mismanaged, which costs taxpayers billions of dollars in extra costs.

However, the VHA might be trying to change direction. Glenn Haggstrom, the individual who oversees VHA construction, “stepped down” last week after being put under internal investigation. Hopefully, he will be replaced by a reform-minded leader. In 2013 the Government Accountability Office (GAO) studied the four largest VHA construction projects, which are located in Denver, Orlando, New Orleans, and Las Vegas. GAO found a host of problems. All four projects had major cost overruns and schedule delays.

GAO discovered that the combined costs for the projects have doubled, from $1.5 billion to $3 billion. Construction of the Denver facility was 144 percent over budget and the Orlando facility was 143 percent over budget. The New Orleans facility was only 59 percent over-budget.The construction projects are also taking much long than planned. The Denver and New Orleans projects were 14 months behind schedule. The Las Vegas project was 74 months behind scheduled. GAO put much of the blame for these problems on the VHA: “Our review of VA’s four largest projects indicates that weaknesses in VA’s construction management processes…contributed to cost increases and schedule delays.” These sorts of problems have continued since GAO’s 2013 analysis. Costs at the Denver facility have continued to skyrocket. The most recent estimate in 2015 put total costs at $1.73 billion, five times greater than its original projected cost of $328 million, and $900 million more than GAO’s 2013 estimate.

Members of Congress were furious with the latest cost estimate. Many called for all VHA construction to be shifted to the Army Corps of Engineers, which handles construction for many federal agencies. The Chairman of the House Armed Services Committee said, “One thing is certain: Congress will not authorize another dime until VA gets its construction affairs in order.” These problems increased the pressure on Haggstrom. The VHA launched an investigation into the agency’s handling of construction issues. Haggstrom decided to step down, but not before collecting $64,000 in bonuses over the last several years. Since Haggstrom left voluntarily, he will continue to be eligible for his federal pension.

Haggstrom’s investigation and departure is a good first step to remedying the problems surrounding VHA hospital construction, but much more reform is needed. The failures with VHA construction projects are endemic. The inefficiencies related to the construction of VHA hospitals is another reason why veterans health care should be shifted to a system based on private providers.

K. William Watson

When deciding whether to impose antidumping duties on imports from Vietnam, the United States uses what’s known as nonmarket economy (NME) methodology.  That is, instead of comparing a product’s U.S. price with the price for the same or similar product in Vietnam, U.S. authorities compare it with a fictitious price constructed using surrogate values from third countries.

The use of NME methodology is prohibited under the rules of the World Trade Organization.  But when Vietnam and China joined the WTO, they each agreed that the use of NME methodology would be permitted against them for an additional 15 years.  For China that’s until the end of 2016, and for Vietnam it’s until the end of 2018.

Vietnam, however, is also a negotiating party to the Trans-Pacific Partnership, a 12-member free trade agreement that may be concluded this year.  Last week, Vietnam’s Ambassador to the United States implied that Vietnam was seeking to have its NME status revoked as part of those negotiations.  As reported at Inside U.S. Trade ($):

“I think on the question of the market economy status, we can do it together. Vietnam has been doing it with other countries and I think about three dozen or something countries have recognized that,” said Pham Quang Vinh, Vietnam’s ambassador in Washington. Vinh added that he hopes “when we reach a conclusion of the TPP, then everything [with regard to this issue will] be resolved.”

It certainly makes sense that Vietnam would hope to negotiate the end of NME treatment.  As the Ambassador explained, they’ve already secured market economy status in other countries.  The TPP is a natural vehicle for getting a similar commitment from the United States .  But there’s no guarantee they’re going to get it:

But his counterpart, U.S. Ambassador to Vietnam Ted Osius, seem to tamp down those expectations. Speaking at the same event, Osius indicated that while TPP might put Hanoi on strong footing to make the economic reforms necessary to become a market economy, a change in its status would be likely be further down the road. Both officials spoke at March 24 event at the Center for Strategic and International Studies (CSIS).

Osius said that the U.S. Commerce Department process to determine a country’s market economy status is non-political, and that Vietnam still needs to fulfill certain requirements, such as having a convertible currency.

The U.S. official’s characterization is telling.  The U.S. government has consistently argued that NME status is a factual question.  That is, if Vietnam or China meets the criteria under U.S. law for market economy treatment, their NME status will be revoked accordingly. 

This characterization is misleading and troubling for a number of reasons.  First, NME status is very much a political decision.  There are factors for evaluating nonmarket economy status under U.S. law, but those factors are not especially relevant to the problem a genuinely nonmarket economy poses for the use of regular antidumping methodology.  “Currency convertibility” is an excellent example.  Moreover, the factors ask regulators to evaluate “the extent of” certain interventionist policies without giving guidance on how extensive they must be.  And a determination of whether a country “meets” the factors is explicitly not reviewable by any court. 

Second, the important question is not about Vietnam’s economy but about when the U.S. will end this abusive antidumping practice.  As I explained in a policy analysis paper last year, the NME designation is merely an excuse for lawless protectionism.  Whatever factors the U.S. government wants to come up with, the fact remains that Vietnam and China both are sufficiently market-oriented that authorities can use domestic prices to determine whether goods are being sold in the United States at “dumped” prices.

Finally, it’s particularly repugnant for the United States to impose NME treatment on imports from a country it has a free trade agreement with.  The TPP should eliminate barriers to trade between the United States and Vietnam and further integrate their markets, so that increased competition can effectively drive economic growth.  Singling out Vietnam for discriminatory antidumping treatment is entirely incompatible with that goal.

Vietnam is right to demand an end to abusive NME treatment by the United States.  If U.S. negotiators are serious about making the TPP an “ambitious, 21st Century agreement,” they should welcome that demand without objection.

Roger Pilon

Few recent battles have seized the nation’s moral compass quite as emotionally as the one going on in Indiana right now, pitting defenders of religious liberty against opponents of discrimination based on sexual orientation. But Apple’s chief executive Tim Cook brings the moral confusion surrounding the battle to a head this morning with his op-ed in the Washington Post. Lumping together both legitimate and illegitimate “religious freedom restoration acts,” he writes, “they go against the very principles our nation was founded on.”

Really? Let’s see if that claim stands up. We find those principles in the nation’s founding document, the Declaration of Independence. And Cook himself invokes them: freedom and equality. Rightly understood, they hold that we’re all born free, with equal rights to remain free. That means—to cut to the chase—that we may associate with anyone who wishes to associate with us; but we are equally free to decline to associate with others, for any reason, good or bad, or no reason at all. That right to discriminate is the very essence of freedom. That’s why people came to this country, to escape forced associations—religious, economic, political, or otherwise.

Cook turns those principles on their head. He says religious freedom bills “rationalize injustice” by, for example, allowing a baker to decline to bake a cake for a same-sex wedding. He would compel the baker to accept that request, by force of law. That’s the very opposite of the freedom of association—the right to be left alone—that the nation was founded on.

Just to be clear, I’m as offended as Cook is by that kind of discrimination. But I’m even more offended by the belief that we can force people to conform to our values when they’re asking simply to be left alone to enjoy their right to pursue their values. And precisely there is the source of Cook’s confusion, his conflation of rights and values, two very different moral notions. True liberalism recognizes that distinction. It’s the epistemic foundation of a free society, absent which not only intolerance reigns—ironically, what Cook charges even as he practices it—but intolerance coupled with the force of law.

There are many related issues, of course—too many for a mere post. (See here, here, and here.) These religious freedom restoration acts arose, for example, only because of an erroneous 1990 Supreme Court decision. More deeply, our anti-discrimination law, inconsistent as it is with freedom of association, arose understandably from the ashes of slavery and Jim Crow; and its spill-over to private discrimination was probably necessary to break the back of institutional racism in the South. More immediately, the discrimination permitted here, as Cook says, is “bad for business” and therefore will likely arise only in rare cases. But the principle at issue is crucial. If we lose that, as this battle suggests we’re doing, it will fall ever more to government to determine what values will and will not be tolerated, and that will be the end of liberty—including the liberty to offend, which a free society must tolerate.

Adam Bates

In 2012, the people of Colorado voted to legalize marijuana through a state constitutional amendment, which went into effect in January of 2014.  Two of Colorado’s neighbors, Nebraska and Oklahoma, subsequently filed a lawsuit urging the U.S. Supreme Court to prohibit the state of Colorado from constructing a regulatory regime for the marijuana industry.  Last Friday, Colorado filed its response.

The Nebraska/Oklahoma argument: because the federal government, through the Controlled Substances Act, has banned marijuana, states are not allowed to contradict that ban by creating a regulatory framework for legalization.  Further, Colorado’s official regulation of recreational marijuana imposes a nuisance burden on surrounding states due to an alleged increase in drug trafficking.  While Nebraska and Oklahoma disclaim any intent to force Colorado to “re-criminalize” marijuana, the suit argues that Colorado’s official efforts to regulate the legal marijuana industry bring the state into conflict with federal and international drug laws.

Colorado’s response: there is no conflict.  Federal marijuana prohibition is still in effect, and the decision not to prioritize enforcement in states that legalize marijuana came from the federal government, not Colorado.  If Nebraska and Oklahoma object to the manner in which the federal government is discharging its law enforcement duties in Colorado, they should be suing the federal government.  Colorado’s regulation of the marijuana industry is within its prerogatives under the CSA. As to the nuisance claim, Colorado argues that mere policy differences between states that don’t directly injure the sovereignty of other states are not actionable nuisances.

The legal basis for the lawsuit has been questionable from the beginning, with legal commentators both challenging its merits and pointing out the irony in two of America’s “reddest” states taking a legal posture that overruns state sovereignty in favor of federal power.

And, of course, if prohibition states are concerned with the costs, they could always legalize and regulate marijuana themselves and spare their justice systems the immense costs of prohibition.  

While some notable conservatives appear to be coming around in favor of a federalist experiment on drug legalization, it is a testament to the unfortunate power of the drug war that two state governments that routinely invoke the merits of federalism would abandon it in favor of federal prohibition.  As discussed previously, federalism would hardly be the only cherished principle to be left in the drug war’s wake.

Daniel J. Mitchell

There’s a “convergence” theory in economics that suggests, over time, that “poor nations should catch up with rich nations.”

But in the real world, that seems to be the exception rather than the rule.

There’s an interesting and informative article at the St. Louis Federal Reserve Bank which explores this question. It asks why most low-income and middle-income nations are not “converging” with countries from the developed world.

…only a few countries have been able to catch up with the high per capita income levels of the developed world and stay there. By American living standards (as representative of the developed world), most developing countries since 1960 have remained or been “trapped” at a constant low-income level relative to the U.S. This “low- or middle-income trap” phenomenon raises concern about the validity of the neoclassical growth theory, which predicts global economic convergence. Specifically, the Solow growth model suggests that income levels in poor economies will grow relatively faster than developed nations and eventually converge or catch up to these economies through capital accumulation… But, with just a few exceptions, that is not happening.

Here’s a chart showing examples of nations that are – and aren’t – converging with the United States.

The authors analyze this data.

The figure above shows the rapid and persistent relative income growth (convergence) seen in Hong Kong, Singapore, Taiwan and Ireland beginning in the late 1960s all through the early 2000s to catch up or converge to the higher level of per capita income in the U.S. …In sharp contrast, per capita income relative to the U.S. remained constant and stagnant at 10 percent to 30 percent of U.S. income in the group of Latin American countries, which remained stuck in the middle-income trap and showed no sign of convergence to higher income levels… The lack of convergence is even more striking among low-income countries. Countries such as Bangladesh, El Salvador, Mozambique and Niger are stuck in a poverty trap, where their relative per capita income is constant and stagnant at or below 5 percent of the U.S. level.

The article concludes by asking why some nations converge and others don’t.

Why do some countries remain stagnant in relative income levels while some others are able to continue growing faster than the frontier nations to achieve convergence? Is it caused by institutions, geographic locations or smart industrial policies?

I’ll offer my answer to this question, though it doesn’t require any special insight.

Simply stated, Solow’s Growth Theory is correct, but needs to be augmented. Yes, nations should converge, but that won’t happen unless they have similar economic policies.

And if relatively poor nations want to converge in the right direction, that means they should liberalize their economies by shrinking government and reducing intervention.

Take a second look at the above chart above and ask whether there’s a commonality for the jurisdictions that are converging with the United States?

Why have Hong Kong, Singapore, Taiwan, and Ireland converged, while nations such as Mexico and Brazil remained flat?

The obvious answer is that the former group of jurisdictions have pursued, at least to some extent, pro-market policies.

Heck, they all rank among the world’s top-18 nations for economic freedom.

Hong Kong and Singapore have been role models for economic liberty for several decades, so it’s no surprise that their living standards have enjoyed the most impressive increase.

But if you dig into the data, you’ll also see that Taiwan’s jump began when it boosted economic freedom beginning in the late 1970s. And Ireland’s golden years began when it increased economic freedom beginning in the late 1980s.

The moral of the story is – or at least should be – very clear. Free markets and small government are the route to convergence.

Here’s a video tutorial.

Free Markets and Small Government Produce Prosperity

And if you want some real-world examples of how nations with good policy “de-converge” from nations with bad policy, here’s a partial list.

Gee, it’s almost enough to make you think there’s a relationship between good long-run growth and economic freedom!

Andrew J. Coulson

A week ago, the Atlanta Journal Constitution published an on-line op-ed critiquing Chile’s nationwide public-and-private school choice program. In a letter to the editor, I objected to several of the op-ed’s central claims. The authors responded, and the AJC has now published the entire exchange. A follow-up is warranted, which I offer here:

Comment on the Gaete, Jones response to my critique:

Their response consists chiefly of “moving the goalposts”—changing the issue under debate rather than responding to the critique of the original point. The first claim in their original op-ed to which I objected was that “there is no clear evidence that [Chilean] students have significantly improved their performance on standardized tests.” In contradiction of this claim I cited the study “Achievement Growth” by top education economists and political scientists from Harvard and Stanford Universities. That study discovered that Chile is one of the fastest-improving nations in the world on international tests such as PISA and TIMSS—which were specifically designed to allow the observation of national trends over time. It is hard to conceive of clearer evidence that Chilean students “have significantly improved their performance”, contrary to the claim of Gaete and Jones.

To the extent that Gaete and Jones address this evidence at all it is by saying: “it is true that Chile has shown a certain improvement in [its] relative position in PISA scores. But (1) this may say less about Chilean improvements and more about other countries’ relapse.” That is an empirically testable claim. It has been tested, and it is false. As I pointed out in my original letter, prof. Gregory Elacqua has shown that the same pattern of improvement in academic performance is visible on Chile’s own national SIMCE test, which is entirely unaffected by the performance of foreign nations (see chart 1). Moreover, the improvement in Chilean academic achievement noted in the “Achievement Growth” study is not purely relative to other countries but is an objective gain compared to Chile’s own earlier performance.

Chart 1:  Same trend in national tests (SIMCE language and math, 4th grade)

Source: Gregory Elacqua, “Factors contributing to achievement growth in Chile.”

Even if that were not the case and Chile were only improving relative to the entire rest of the world because the whole rest of the world was suffering a decline, it would beg the question: what is Chile’s secret that is allowing it to buck this worldwide slump? Certainly it would be wrong to dismiss Chile’s education system out of hand as part of the explanation.

But rather than spending much time trying to dispute this evidence that contradicts their original claim, the authors try to change the subject, proposing that “testing is neither the only nor the best way or criterion to determine the quality of an educational system, it is simply the way favoured by market-oriented systems.” It was also, recall, the very first way in which Gaete and Jones themselves proposed to evaluate Chilean education in their op-ed, with their mistaken claim about a lack of test score improvement. But rather than seriously confronting the evidence that refutes them, the authors choose to change the subject, asserting that: “there are no big differences between the private and public system in the [domestic Chilean] SIMCE [test].” This new claim is entirely beside their original point, which was the trend in academic performance for the nation’s students as a whole.

But, having addressed the authors’ original claim, I have no objection to addressing this new one. The effects of a competitive education system are not limited to—or even chiefly comprised by—differences in performance between the sectors. One the contrary, it is the overall performance of all schools and children that is of interest. Alas, Gaete and Jones seem unaware that increased competition from private voucher schools improves the performance of nearby government schools. This has been shown empirically by Francisco Gallego in his study “When does Inter-School Competition Matter? Evidence from the Chilean `Voucher’ System.”

Next, Gaete and Jones attack Chile’s education system on the grounds that it suffers from an educational gap between its wealthier and poorer students. That it does, but so do other nations. It is more meaningful to ask how Chile compares in this respect to its peer Latin American nations. Inequality can be measured using several different metrics, one of which is to look at differences in test scores between wealthier and poorer students. These results vary somewhat by subject, grade, and test, but as an example we can look at the PISA test of reading among 15-year-olds. Here, Chile’s achievement gap is statistically indistinguishable from the overall average of all participating countries and significantly smaller than the gaps in most other Latin American countries. Chile’s achievement gap is also significantly smaller than the gaps in the United States, France, Belgium, and several other rich nations (“PISA 2009 Results: Learning to Learn,” Vol. III, Table III A, 2010).

Another way of measuring educational inequality is the average number of years of schooling completed by the wealthiest versus the poorest students. On this point, professor Claudio Sapelli summarizes the evidence for El Mercurio: “Chile has the lowest average educational inequality in Latin America. To measure inequality using the education gap between quintile 5 (richest) and 1 (poorest). In terms of change in this gap in the last 20 years, Chile is among the few countries in Latin America to decrease it.” So, here again, the data on Chile’s education system seem encouraging.

Looking beyond the education system to the broader economy, income inequality has also been falling in recent decades, as has poverty. “The fraction of the population living under the poverty line in Chile fell from 45.1% to 13.7% between 1987 and 2006” (Eberhard & Engel, 2008). Meanwhile, “from 1990 onwards the wage of the 10th percentile [poorest] and the median wage [middle class] grew faster than [that of the] the 90th percentile [the wealthy]” (Eberhard & Engel, 2008).

As for public sentiment toward the program, to which Gaete and Jones make reference, I leave explaining that to the political scientists and sociologists.

Steve H. Hanke

Charles W. Calomiris and Peter Ireland, two distinguished economists and friends, wrote an edifying piece in The Wall Street Journal on 19 February 2015. That said, their article contains a great inflation canard.

They write that “Fed officials should remind markets that monetary policy takes time to work its way through the economy—what Milton Friedman famously referred to as “long and variable lags”—and on inflation.” That’s now a canard.

For recent evidence, we have to look no further than the price changes that followed the bursting of multiple asset bubbles in 2008. The price changes that occurred in the second half of 2008 were truly breathtaking. The most important price in the world — the U.S. dollar-euro exchange rate — moved from 1.60 to 1.25. Yes, the greenback soared by 28% against the euro in three short months. During that period, gold plunged from $975/oz to $735/oz and crude oil fell from $139/bbl to $67/bbl.

What was most remarkable was the fantastic change in the inflation picture. In the U.S., for example, the year-over-year consumer price index (CPI) was increasing at an alarming 5.6% rate in July 2008. By February 2009, that rate had dropped into negative territory, and by July 2009, the CPI was contracting at a -2.1% rate. This blew a hole in a well-learned dogma: that changes in inflation follow changes in policy, with long and variable lags.

Milton Friedman was certainly correct about the period covered in the classic, which he co-authored with Anna J. Schwartz: A Monetary History of the United States, 1867-1960. Recall that the world of that era was one in which the fixed exchange rates ruled the roost. That’s not today’s world. Indeed, many important currencies now float. Since the world adopted a flexible exchange-rate “non-system”, changes in inflation can strike like a lightning bolt.

Roger Pilon

Continuing the media firestorm of the last few days, George Stephanopoulos spent over 11 minutes today on ABC’s “This Week” browbeating Indiana Gov. Mike Pence over the meaning of the Religious Freedom Restoration Act the governor had just signed, and the governor spent the entire 11 minutes refusing to say what the Act plainly says, that individuals and businesses, in the name of religious liberty, may discriminate against members of the LGBT community by, for example, declining to provide bakery or florist services for gay weddings.

Such today is the dishonesty of our politics, on both sides, that those who defend religious liberty cannot or will not speak plainly, while those who defend anti-discrimination measures—like Bill Clinton, who signed the federal Religious Freedom Restoration Act, and Barack Obama, who was an Illinois state senator when that state’s religious freedom act was passed unanimously—cannot bring themselves to say that they are limiting religious liberty—assuming the media would ever ask them to say that.

Doubtless spurred by the upcoming NCAA “Final Four” games in Indianapolis, we have here, of course, the continuation of the hysteria that followed the Supreme Court’s Hobby Lobby decision last year, which upheld the right of the deeply religious owners of that chain of stores to refrain from paying for abortifacients for their employees, as was required under the administration’s interpretation of Obamacare. (See Cato’s brief in that case, and some of my thoughts on the issue here and here.) “Hysterical” is no overstatement: ABC News reports today that Seattle’s mayor wants to prohibit city employees from traveling to Indiana. Why stop there? Prohibit travel across the U.S., where the federal law is in force.

In truth, we have in this Act the analogue of what we see every day in the area of free speech, which the left assiduously and rightly defends—but this is religion, and for the left, that’s another matter. Just as we defend a person’s right to say what he pleases, which is not the same as defending what he says, so too here we can defend a person’s right to discriminate on the basis of his religious beliefs without defending those beliefs or the actions they may require of a believer. As one more sign of how modern liberals have turned the Constitution on its head, they would have the statutory rights created by our anti-discrimination law trump the constitutional rights the First Amendment was ratified to protect. I discuss those issues in much greater depth here.

Ilya Shapiro

Mdicaid, the entitlement program for low-income Americans jointly funded by the state and federal government, represents about 25 percent of state budgets. Federal funding represents more than half (57 percent) of that amount, and that funding is now being threatened by Obamacare.

In what seems like déjà-vu all over again, Maine’s Department of Health and Human Services (DHHS) is pursuing a lawsuit to prevent this sort of federal coercion.

Here’s the scoop: In 2009, the American Recovery & Reinvestment Act (ARRA) offered states stimulus funds if they agreed to a maintenance-of-effort (“MOE”) provision that required them to maintain Medicaid-eligibility standards at July 2008 levels through December 2010. MaineCare, Maine’s Medicaid program, accepted those funds and the accompanying MOE provision. In relevant part, MaineCare covered low-income individuals ages 18 to 20 in 2008 — even though Medicaid doesn’t require states to include non-pregnant, non-disabled 18- to 20-year olds — so that MOE provision required Maine to continue to do so through 2010. Then the Affordable Care Act came along and added its own MOE provision, which required states to “freeze” eligibility levels until 2019 or risk losing all federal Medicaid funding.

When the ACA took effect on March 23, 2010, Maine was still bound by the ARRA’s MOE requirements, and thus had to continue to cover 18- to 20-year olds for an additional nine years. In August 2012, however, the Maine DHHS sought to drop this coverage. The federal Center for Medicare and Medicaid Services (CMS) rejected Maine’s position regarding alleged inconsistencies between the MOE provisions.

On appeal, Maine argued that the ACA’s MOE provision is unconstitutionally coercive under the Spending Clause, that it unconstitutionally applies retroactively to ARRA MOE provisions, and that it violates Maine’s right to equal sovereignty. Nevertheless, the U.S. Court of Appeals for the First Circuit affirmed the CMS decision, so Maine now seeks Supreme Court review.

Cato has filed a brief supporting that petition. We outline the significance of the case and reiterate concerns over the executive branch’s interpretations of NFIB v. Sebelius (the previous Obamacare case at the Supreme Court). The issues presented here need to be resolved so states can decide whether to establish exchanges — regardless of how King v. Burwell is decided — or expand their Medicaid programs. In enforcing the eligibility freeze, the ACA creates inequality among states in administering their Medicaid programs and threatens state sovereignty.

After NFIB struck down mandatory Medicaid expansion, U.S. HHS Secretary Sebelius suggested that the Court’s ruling didn’t apply to populations covered under MOE requirements. Yet the Supreme Court majority clearly stated that expanding mandatory Medicaid eligibility beyond “discrete categories of needy individuals” represented a dramatic increase of state obligations. All 34 states that have chosen not to establish exchanges are still responsible for the populations under the MOE provision, however, and most states that haven’t expanded Medicaid are facing budget shortfalls.

Aside from clear federalism issues, this case therefore has a huge impact on state budgets. The Court must grant cert. in order to address federalism issues and provide clarity so that the states can make informed decisions about ACA implementation.

The Supreme Court will decide whether to take up Mayhew v. Burwell later this spring.

Ilya Shapiro

The Supreme Court heard arguments on Wednesday in Michigan v. EPA, asking whether it was unreasonable for the Environmental Protection Agency to ignore costs in determining the appropriateness of regulating mercury emissions from power plants. The EPA’s proposed regulations are expected to cost the coal industry a whopping $9.6 billion, but only offer a meager $500,000 to $6 million in public health benefits. 

Cato filed an amicus brief in the case that focuses on why the EPA chose to ignore costs in developing these regulations. It turns out that EPA could achieve its goal of comprehensively regulating utility emissions only if it ignores the costs. That in turn allowed the EPA to single out power plants – which it couldn’t do under other programs, and to avoid working through the states – as the other programs require. This strategy amounts to little more than a clever trick to circumvent statutory limits on the EPA’s own authority.

In effect, the EPA is exploiting nearly harmless levels of mercury emissions as a Trojan horse – an excuse to regulate all power plant emissions, even ones that are covered by other programs that deny EPA the ability to regulate in this fashion.

Chief Justice Roberts picked up on this point from our brief when he questioned the Solicitor General extensively as to the radical disparity between costs and benefits (see discussion starting p.59 here). He also asked pointed questions regarding the EPA’s attempt at making an “end run” around restrictions on the Clean Air Act.

As Roberts explained, this “end run” works by the EPA first finding a hazardous air pollutant (HAP) that is suitable for regulation—in this case mercury. In the government’s view, this then opens the door for the EPA to “regulate all hazardous pollutants that the source emits,” even if those pollutants – this time particulate matter – are not covered by the applicable sections of the Clean Air Act. The Chief Justice scoffed at the government’s argument, remarking that “I understand how the end run works … I’m just questioning the legitimacy of it.”

The EPA is attempting to offset the admitted disparity between the costs and benefits of regulating mercury emissions by claiming that regulating “co-pollutants” like particulate matter would deliver “$30 to $90 billion” in benefits, far outweighing the $6 million in benefits from mercury regulation and allegedly justifying the tremendous costs to the coal industry. 

But what we’re really witnessing here is a heavy-handed power grab. The federal government is grasping at straws to target coal-fired power plants in ways that Congress denied to it. As explained in Cato’s brief, “by refusing to consider costs when deeming it ‘appropriate and necessary’ to regulate power plant’s HAP emissions, the EPA was able to circumvent the Clean Air Act’s statutory bar on regulating criteria pollutants as hazardous air pollutants and aggrandize its authority at the expense of that of the states and their citizens.”

The Economist also recently highlighted many of the concerns we raised. In the end, it seems clear that the EPA’s reading of the law is, as Justice Scalia put it, “silly.” This is just another unacceptable power grab by the executive branch.

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.

More evidence this week that high-end forecasts of coming climate change are unsupportable and Americans’ worry about environmental threats, including global warming, is declining. Maybe the general public isn’t as out of touch with the science as has been advertised?

First up is a new paper by Bjorn Stevens from Germany’s Max Plank Institute for Meteorology that finds the magnitude of the cooling effect from anthropogenic aerosol emissions during the late 19th and 20th century was less than currently believed, which eliminates the support for the high-end negative estimates (such as those included in the latest assessment of the U.N.’s Intergovernmental Panel on Climate Change, IPCC). Or, as Stevens puts it “that aerosol radiative forcing is less negative and more certain than is commonly believed.”

This is important, because climate models rely on the cooling effects from aerosol emissions to offset a large part of the warming effect from greenhouse gas emissions. If you think climate models produce too much warming now, you ought to see how hot they become when they don’t include aerosol emissions. The IPCC sums up the role of aerosols this way:

Despite the large uncertainty range, there is a high confidence that aerosols have offset a substantial portion of [greenhouse gas] global mean forcing.

The new Stevens’ result—that the magnitude of the aerosol forcing is less—means the amount of greenhouse gas-induced warming must also be less; which means that going forward we should expect less warming from future greenhouse gas emissions than climate models are projecting.

Researcher Nic Lewis, who has done a lot of good recent work on climate sensitivity, was quick to realize the implications of the Stevens’ results. In a blog post over at Climate Audit, Lewis takes us through his calculations as to what the new aerosols cooling estimates mean for observational determinations of the earth’s climate sensitivity.

What he finds is simply astounding.

Instead of the IPCC’s estimate that the equilibrium climate sensitivity likely lies between  1.5°C and 4.5°C, Lewis finds the likely range to be 1.2°C to 1.8°C (with a best estimate of 1.45°C). Recall that the average equilibrium climate sensitivity from the climate models used by the IPCC to make future projections of climate change and its impacts is 3.2°C—some 120% greater than Lewis’ best estimate. But perhaps even more important than the best estimate is the estimate of the upper end of the range, which drops from the IPCC’s 4.5°C down to 1.8°C.

This basically eliminates the possibly of catastrophic climate change—that is, climate change that proceeds at a rate that exceeds our ability to keep up. Such a result will also necessarily drive down estimates of social cost of carbon thereby undermining a key argument use by federal agencies to support increasingly burdensome regulations which seek to reduce greenhouse gas emissions.

If this Stevens/Lewis result holds up, it is the death blow to global warming hysteria.

 

Which brings us to the last results of Gallup’s annual poll gauging the level of environmental concern among Americans—something the polling agency has been keeping track of since the late 1980s. 

Here’s Gallup’s summary of this year’s results:

Americans’ concern about several major environmental threats has eased after increasing last year. As in the past, Americans express the greatest worry about pollution of drinking water, and the least about global warming or climate change.

And Gallup’s full write-up includes this gem:

Importantly, even as global warming has received greater attention as an environmental problem from politicians and the media in recent years, Americans’ worry about it is no higher now than when Gallup first asked about it in 1989.

Says something about the effectiveness of the climate alarm campaign.

The full set of questions and results are available here. You ought to have a look!

Adam Bates

Over at the Washington Post, Radley Balko details a recent Fourth Circuit ruling overturning an award for a father whose son was shot and killed in a military-style SWAT raid after marijuana residue was found in an outside garbage bag. A jury awarded the father $250,000 after it was shown that the police failed to comply with their obligation to knock and announce their presence before barging in and that they lied about several aspects of the raid.

Without repeating the entirety of Balko’s excellent analysis, a particularly troubling aspect of the ruling is the nonchalant way in which the Fourth Circuit judges, even in dissent, treat the militarized raid over marijuana residue and dispense with any suggestion that such escalated violence is constitutionally questionable:

Let’s first start by noting one very important issue that is not in dispute—whether the massive amount of force the police brought to bear in this case was reasonable under the Fourth Amendment. As far as the federal courts are concerned, it was. As Judge Pamela Harris points out in her dissent, “The point here, to be clear, is not to take issue with the Officers’ decision to execute a search warrant based on marijuana traces by way of a military-style nighttime raid.”

Harris is correct. The courts long ago decided that dangerous, punishing SWAT-style raids to search for pot—even when there is no evidence of distribution—are reasonable under the Fourth Amendment. A lawsuit arguing otherwise will be promptly tossed.

Balko then points out that such behavior is precisely what the Fourth Amendment was designed to prevent:

But it’s worth considering the absurdity of that position. In the 20 or so years leading up to the American Revolution, the British crown began stationing troops in the streets of Boston to enforce England’s tax and import laws. The British troops and enforcement officers were armed with writs of assistance, or general warrants that gave them broad powers to search colonists’ homes. They didn’t need to establish probable cause, or even specificity as to a person or residence. The abuse that came with those warrants made Boston a hub of revolutionary fervor, and memories of that abuse are why the Founders created a Fourth Amendment after the war.

But while today’s search warrants require both specificity and some evidence of wrongdoing, in many ways the colonists had more protections than we do today. For example, the British soldiers could serve warrants only during the day. And they were always required to knock, announce themselves, announce their purpose and give the resident time and opportunity to come to the door to let them in peacefully. This was all in observance of the Castle Doctrine, or the idea that the home should be a place of peace and sanctuary and that it should be violated only in the most extreme circumstances. Even then, the Castle Doctrine had a rich history in English common law, a tradition that carried over in the United States until the Supreme Court began chipping away at it in drug cases, beginning in about the 1960s.

Today, of course, authorities can break into homes without knocking. They can conduct raids at night. In theory, we’re today protected by the requirement that authorities show probable cause before serving a warrant, but given the deference judges give to police and prosecutors in much of the country and the boilerplate language you’ll often find on warrant affidavits, you could make a good argument that in many jurisdictions the probable cause protection is little more than a formality. In any case, if the Fourth Amendment is due to the Founders’ offense at British soldiers forcibly entering homes in daylight hours after knocking and announcing to search for contraband, it seems safe to say that the Founders would be appalled by the fact that today, dozens of times each day, heavily armed government officials break into homes, often at night, without first knocking and announcing, in order to conduct searches for contraband.

It’s a persuasive point. Whether the issue is civil asset forfeiture, warrantless surveillance, or armed government agents barreling through your front door at 4:30 in the morning, there is a strong case to be made that the drug war has mangled the Fourth Amendment beyond recognition. That federal courts can observe as much with so little concern is a testament to the institutional nature of this problem.

The entire ruling can be found here.

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