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The Voting Rights Amendment Act Is a Bad Idea

Fri, 01/24/2014 - 09:12

Ilya Shapiro

One of the responses to the Supreme Court’s eminently sensible ruling last year that deactivated part of the Voting Rights Act was to call for a new, updated law to subject particularly bad actors to enhanced federal oversight. We now see the product of that motivation, introduced by the motley bipartisan crew of Reps. Jim Sensenbrenner (R-WI) and Jim Clyburn (D-SC) and Sen. Pat Leahy (D-VT). As I write in my new Forbes.com column:

Last week, a group of lawmakers introduced the Voting Rights Amendment Act of 2014. The timing was no coincidence: The bill was announced on Martin Luther King’s birthday, right before the holiday designated to commemorate the civil rights giant (for which Congress took the week off). This is the long-expected legislation responding to the Supreme Court’s decision in Shelby County v. Holder last June that disabled one part of the Voting Rights Act. But it’s both unnecessary to protect the right to vote and goes far beyond the provision it replaces to rework the machinery of American democracy on racial lines.

Based on the reaction of certain elected officials to Shelby County you could be forgiven for thinking that a congressional fix is badly needed to prevent racial minorities from being disenfranchised. But all the Supreme Court did was strike down the “coverage formula” used to apply Section 5 of the Voting Rights Act, which required certain jurisdictions to “preclear” with the federal government any changes in election regulations—even those as small as moving a polling station from a schoolhouse to a firehouse. The Court found the formula to be unconstitutional because it was based on 40-year-old data, such that the states and localities subject to preclearance no longer corresponded to the incidence of racial discrimination in voting. Indeed, black voter registration and turnout is consistently higher in the formerly covered jurisdictions than in the rest of the country.

Nevertheless, the proposed legislation draws a new coverage formula, resurrecting Section 5’s requirements for states with five violations of federal voting law over a rolling 15-year period. (That formula would currently apply to four states: Georgia, Louisiana, Mississippi, and Texas.) It also sweeps in sub-state jurisdictions that have had one violation and “persistent, extremely low minority turnout”—which can mean simply an average racial-minority turnout rate lower than that nationwide for either minorities or non-minorities.

All that sounds reasonable—Congress is finally updating its coverage formula—until you realize that this reimposition of Section 5 comes without any proof that other laws are inadequate to address existing problems (which is what the Constitution demands to justify the suspension of the normal federalism in this area). After all, Section 5 was an emergency provision enacted in 1965 to provide temporary federal receivership of morally bankrupt state elections, not to enable a constitutional revolution based on arbitrary statistical triggers.

Read the whole thing, and download this longer piece on why the Shelby County ruling actually vindicates Martin Luther King’s dream.

Categories: Policy Institutes

Appropriate Appropriations? Transparency and Spending Control

Thu, 01/23/2014 - 17:26

Jim Harper

Luke Rosiak at the Washington Examiner is not just a journalist who rolls his sleeves up to root out corruption. He’s also a capable computer programmer. Rosiak has produced a new feature on the Examiner web site called “Appropriate Appropriations?” that is worth checking out.

The page lists the many bills in Congress that spend taxpayer money—bills that either authorize appropriations or appropriate your money. You can sort spending bills by size, by date of last activity, and by state—look and see if your member of Congress or senator is a spender.

Rather than complaining about spending in the aggregate—“waste, fraud, and abuse” are horses that have escaped the barn—people who want spending control can now rein it in by contacting their members of Congress and senators to talk about specific spending bills.

The “Appropriate Appropriations?” page is powered by data that we produce at Cato. Cato’s “Deepbills” data is in use a lot of other ways, too. We use it to build informative infoboxes for Wikipedia articles about bills in Congress. The New York Times’ “Inside Congress” web pages use Cato data to show what executive branch agencies are topics of the bills in Congress. (See the “Mentions” section of the page for H.R. 1104, for example.) My own WashingtonWatch.com uses the data to show relationships among agencies, bills, and representatives. You’ll also find Cato data used by GovTrack.us, the largest private government transparency web site, to make searches out of references to existing law in the bills in Congress.

There are many more things that can be done with this data. Luke’s code is available to help others get started.

It’s a long game, trying to undo federal government growth that has been underway for at least 80 years. I started talking about how transparency could undercut rational ignorance and rational inaction more than seven years ago here on the blog. The serious work began with the election of President Obama, who promised transparent government. We’ve written about how the government should publish data to make itself transparent, and we’ve graded the quality of the government’s data publication. Now we’re putting out data that the government should, and it’s bearing fruit.

You can now investigate what Congress is doing in terms of spending and ask yourself: Are these “Appropriate Appropriations?

Categories: Policy Institutes

Constitutional Legerdemain – Recess Appointments Branch

Thu, 01/23/2014 - 17:13

Roger Pilon

Constitutional restoration this far down the road will almost certainly come in small steps, one decision at a time, as in a case the Supreme Court heard last week, National Labor Relations Board v. Noel Canning. By most accounts, the justices were skeptical of the government’s claim that the president could make recess appointments when the Senate was arguably not in recess. That’s got friends of the modern executive state worried. Witness an op-ed in yesterday’s New York Times by AEI’s Norman Ornstein, than whom modern expansive government has few greater friends. Ordinarily a strong congressionalist, Ornstein here, in “Disarming the White House,” is alarmed that the case “represents the biggest threat to presidential power in decades.”

Given that President Obama, nearly every day, is making good on Nancy Pelosi’s counsel that we needed to pass Obamacare to find out what’s in it, we’ll be forgiven for thinking that the power of the president to make law as he goes along could use some threatening. But here it’s not some imagined presidential lawmaking power that’s at issue. It’s a real power, grounded in the Constitution, “to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.”

The problem as Ornstein sees it is that the D.C. Circuit Court below, and the justices last week, actually read that constitutional language for what it says. Rather than focus on the narrow question of “whether a president or the Senate gets to decide when the legislative body is in recess,” about which the Constitution is also clear, the judges below “ruled that virtually all recess appointments violated the direct language of the Constitution: Only those vacancies occurring during the recess between the two sessions of Congress, and only those filled during that recess, would be allowed.”

Shocking, for sure, that constitutional text should count this late in the day. But there it is. Unfortunately for his argument, what Ornstein has left out is the larger constitutional framework – and the principle underlying it. As Georgetown Law’s (and Cato’s own) Nick Rosenkranz made clear in a forum here just before the High Court heard the case, the president’s recess appointments power is subsidiary to his main power in the matter of appointments – the power to nominate, and by and with the Advice and Consent of the Senate, to appoint such officers as the Constitution and the Congress provide for. As was the case for a good part of our history, should the Senate not be in session when a vacancy occurred and therefore not be able to give its advice and consent to a nomination, the president has the power to make temporary appointments. But that is the exception, not the rule. And the underlying principle, rooted in the separation of powers, is that the Senate should have a role in determining who will fill important executive branch offices.

In the modern era, Ornstein laments, Senate recesses are very brief, which means that “the odds of a significant vacancy opening up during them are near zero.” Is that a problem? It means simply that the president will have to follow the normal course for filling vacancies. He’ll have to do so “by and with the Advice and Consent of the Senate.” Presidents from both parties have found a way around that requirement, of course, especially when the Senate opposes a nominee. They make “recess appointments” for vacancies that happen when the Senate is in session and therefore can consent, but they do so when the Senate is in recess, even briefly. To prevent that, the Senate more recently has held “pro-forma” sessions. But Obama went one further: Not only did the vacancies he filled happen when the Senate was in session, but he filled them when it was in a pro-forma session, and that brought the matter to a head.

Ornstein is unconcerned with such constitutional niceties. Instead, he offers a policy critique of what he fears the Court will do, namely, apply the Constitution as written. He contends that the Senate’s advice and consent power was meant originally only to vet nominees for qualifications, not to veto them over political differences. Yet he writes that “for most of American history, recess appointments were a safety valve for presidents when there were individual disputes over nominees, a modest weapon of the executive in the continuing struggle between the political branches” – constitutional limits on presidential power apparently notwithstanding.

Surely, the Framers were not unaware of the possibility of a struggle between the political branches. In fact, the Constitution is one big rule book for the conduct of that struggle. But in Ornstein’s view, recess appointments – not as they were written to be employed, but as they have come to be made – “are a limited tool, a modest safety valve to ameliorate the worst abuses of Senate power.” He sees the Senate’s refusal to confirm, based on other than narrow grounds, as an abuse of power – when the Constitution is silent on that point. He does not see the president’s exercise of a power he does not have as an abuse. There before you is the kind of argument that has brought us the modern executive state.

Categories: Policy Institutes

The Violence in Iraq: What Can Be Done?

Thu, 01/23/2014 - 16:32

Christopher A. Preble

Just over two years after the last U.S. combat troops were withdrawn from Iraq, an insurgency is raging throughout the country. The black flags of ISIS – the Islamic State of Iraq and al-Sham – now fly over Fallujah, the site of some of the bloodiest battles of the U.S war in Iraq. These recent gains by extremists, and the apparent inability of the Iraqi government to exercise control over its territory, have many in U.S. foreign policy circles worried.

Many blame Iraqi Prime Minister Nuri al-Maliki for the uptick in violence, arguing that his heavy-handed policies toward the Sunni minority laid the groundwork for the current insurgency. (e.g. here) Others blame the Obama administration for failing to successfully negotiate a Status of Forces Agreement (SOFA), which would have allowed a small residual U.S. force to remain in the country to help train the Iraqi army and conduct counterterrorist operations. The claim that such forces would have been able to exert great leverage over the Iraqi political class, and that Obama himself bears some blame for the violence because he withdrew U.S. troops rather than leave them in Iraq without a SOFA, ignores that our forces were unable to fix Iraq’s shattered political system even when they were in Iraq in large numbers. (More on this here.)

Iraqi politics, Iranian influence, and a spillover of violence from the Syrian civil war make the situation far more complex than most want to admit. It’s one thing to assign blame, it’s quite another to find solutions.

At an upcoming Cato policy forum, “Understanding the Continuing Violence in Iraq,” experts will provide context for the current situation, outline obstacles facing the Iraqi government, and debate what role, if any, the United States should play. Speakers include Douglas Ollivant of the New American Foundation, who wrote on this subject earlier this month, and Harith Hasan who, with Emma Skye, commented on Iraqi politics here last year, and has also written a book on the subject.

The event begins at Noon, on Tuesday, February 12th. To learn more, and to register, click here.

Categories: Policy Institutes

Wall Street Journal on Jury Nullification

Thu, 01/23/2014 - 15:40

Tim Lynch

Today, the Wall Street Journal has an article about recent developments to revive the doctrine of jury nullification.

Here’s an excerpt:

Juries in criminal cases in the U.S. have long had the power to acquit using the nullification principle. But New Hampshire is the only state in recent years to take steps to ensure juries in the state are aware of the concept.

The New Hampshire bill is a follow-up to one the state legislature passed in 2012 that explicitly says lawyers are allowed to tell jurors about nullification. That law has led to more defense lawyers urging juries to disregard the law if they find it unfair or overly harsh, say several New Hampshire lawyers.

The action that New Hampshire has taken on nullification has raised hopes of a revival of the idea among some constitutional scholars, defense lawyers and legislators in other states who view it as a way to boost civic engagement and cut down on what they see as overly aggressive prosecutions.

“What New Hampshire is doing represents the most significant development with jury nullification in a long, long time,” said Tim Lynch, the director of the libertarian Cato Institute’s criminal-justice project. “We’re hopeful that this marks the start of a resurgence.”

Not everyone shares his enthusiasm. Nullification is an “extremely dangerous notion,” said Scott Burns, executive director of the National District Attorneys Association.

I understand ‘disagree with’ and ‘have reservations about,’ but ‘extremely dangerous’? Please. 

Remember all the discretion that resides with the government. The police officer who can opt to tell the drunk: “quiet down and go home to sleep,” instead of taking him in for disorderly conduct. The prosecutor who can opt to dismiss charges–even if another, less busy prosecutor might files those charges. Jury nullification is about allowing the jury some discretion.

Cato has the most comprehensive book on the subject. Related items here and here.

Categories: Policy Institutes

Costa Rica’s Growth Paradox

Thu, 01/23/2014 - 14:02

Juan Carlos Hidalgo

Can a country enjoy a relatively high growth rate for a quarter of a century and still be unable to reduce its poverty rate? That’s the case of my homeland, Costa Rica, which happens to have a critical presidential election on February 2.

For over 25 years Costa Rica’s growth rate has averaged 4.7 percent a year – one of the highest in Latin America – and yet the country’s poverty rate has been stuck at around 20 percent since 1994. Even worse, Costa Rica is one out of only three Latin American countries where inequality has risen since 2000.

Today, I’ve published a study looking at some of the causes. Even though Costa Rica has undergone a substantial liberalization process since the mid-eighties, the country’s economic model is still in significant ways based on a mercantilist system that is biased in favor of certain sectors of the economy at the expense of the poor. You can read the paper here.

Categories: Policy Institutes

Should Free Traders Support Free Trade Agreements?

Thu, 01/23/2014 - 11:44

Daniel J. Ikenson

With the Trans-Pacific Partnership negotiations allegedly near completion, the transatlantic talks kicking into higher gear, and debate in Congress over U.S. trade policy objectives about to intensify, 2014 is shaping up to be the most consequential year for the trade agenda in a long time. Whether real free traders should rejoice over these developments depends on the emerging details, as well as the ability to avoid making the perfect the enemy of the good.

Real free traders abhor domestic trade barriers and want them removed regardless of whether other governments remove their own barriers. The benefits of trade are the imports we obtain, not the exports we give up. The immediate benefits are measured by the value of imports that can be purchased for a given unit of exports – the more, the better – and domestic barriers reduce those terms of trade. Of course, there are also the secondary benefits of imports, which include greater variety, lower prices, more competition, better quality, and the innovation spawned by those and other factors.

The process of U.S. trade policy formulation has never been particularly accommodating of free traders’ perspectives. Free trade views have been marginalized by their being subsumed within a broader category of views labelled “pro-trade,” which is dominated by business lobbies and other “pro-export” mercantilists. As the definition of free trade has been expanded to mean pro-trade, the definition of protectionism has been narrowed to exclude views, such as: “I’m not a protectionist; I just want a level playing field,” or; “I’m for free trade, as long as it’s fair trade.” Those are the clichés of protectionists, who are now popularly grouped under the pro-trade umbrella.

So, today’s trade debate (framed as it is by media, lobbyists, and politicians) does not feature free-traders on one side and protectionists on the other. Instead, one is either pro-trade or anti-trade, supports corporations or their workers, and believes free trade agreements are either good or evil. In a world with these binary choices, nuance gets squeezed out. Where do you fit if you support the tariff reductions in a trade agreement, but are unhappy with the corporate welfare it bestows on particular industries? What if you know that trade liberalization is good for both corporations and their workers alike? What if you’re pro-market, but not pro-business?

Given these and other ambiguities, should free traders support free trade agreements? Let me lay down a marker for free trade – “real” free trade, that is.

Free markets are essential to our prosperity, and free trade is the extension of free markets across political borders. Making markets freer and expanding them to integrate more buyers, sellers, investors, and workers deepens and broadens that prosperity. When goods, services, capital, and labor flow freely across borders, Americans can take full advantage of the opportunities of the international marketplace. Free trade provides benefits to consumers and taxpayers in the form of lower prices, greater variety, and better quality. And, it enables businesses and workers to reap the benefits of innovation, specialization, and economies of scale that larger markets afford. Countless studies have shown that economies that are more open grow faster and achieve higher incomes than those that are relatively closed.

The mission of the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies is to increase the public’s understanding of the benefits of free trade and the costs of protectionism. The focus of most of our work over the years has been on U.S. trade barriers, which we have identified and criticized as costly forms of corporate (and other special-interest) welfare that can never be justified by the existence of trade barriers abroad. U.S. trade barriers hurt U.S. citizens, as consumers, taxpayers, workers, producers, and investors. Removing U.S. barriers to trade is a purely domestic decision, which answers the question of whether policymakers think U.S. citizens are worthy of the freedom to make their own economic choices. It is a reform to which all free people are entitled, and can be achieved without need of any foreign government’s consent.

Since the founding of Cato’s trade center, our scholars have argued consistently that Americans would be better off if we simply undertook our own reforms – on tariffs, regulations, and other artificial impediments to commerce – without regard for what other government’s do. Free trade is about the freedom of people to transact as they wish, when they wish, with whom they wish, and without politicians and bureaucrats as gatekeepers.

There is generally broad agreement among economists and think tank scholars that free trade is a good thing. Many even call themselves “free traders.” But in too many cases, what these self-identified free traders mean is that they support free trade over there, in other countries, but not really over here in the United States. In other words, they are not free traders at all. They are mercantilists. They see increasing “trade” and increasing “exports” as synonymous. They are the trade establishment, routinely reinforcing the myth that imports are a drag on the U.S. economy and that existing U.S. barriers are not impediments but, rather, excellent leverage for securing better market access abroad through negotiations. Regrettably, this view remains fairly strongly entrenched in Washington.

Despite what we call them, free trade agreements are not really about free trade at all. Rather, they are institutions of managed trade, premised on assumptions that are anathema to real free traders. At the most fundamental level, free trade agreement negotiators see imports as the price we pay for exports, while free traders consider exports the price we pay for imports. Negotiators treat production as an end in itself (maximize exports over imports), while free traders see consumption as the sole purpose of production (maximize imports over exports). Managed trade is about the proliferation of often labyrinthine rules intended to benefit chosen producers, labor unions, and other NGOs, while free trade is about removing impediments that benefit some at the expense of others so that each of us individually has the fullest battery of choices to decide how best to use our own resources.

In many respects, free trade agreements give free trade a bad name. But does that mean free traders should oppose them?

Despite their flaws, free trade agreements have helped reduce domestic impediments to trade, expand our economic freedoms, and lock in positive reforms, even if only as the residual byproduct of an ill-premised mercantilist process. Ultimately, free trade agreements have delivered freer trade. Is that not good enough?

The question of whether free traders should support free trade agreements, then, hinges upon whether they can see past these shortcomings and inconsistencies to the end result. If one’s fealty is to the logic of free trade and its underlying assumptions, then those characteristics of trade agreements are not shortcomings, but fatal flaws. But if one is more concerned with the end result – the expanded economic liberties and the bounty of its promise – then that free trader might be more inclined to forgive the indiscretions and support an imperfect trade agreement.

Over the years, the default position of Cato’s trade scholars – more or less – has been the latter view. We have identified the flaws in the assumptions underlying mercantilist reciprocity, assailed the corporate welfare it bestows, and advocated for unilateral free trade, while still finding our way to supporting free trade agreements because, warts and all, they still increased economic liberty. That said, not all free trade agreements are the same. Ideally, the texts would be short, sweet, and unequivocal: “There shall be free trade among the parties.” But, regrettably, it’s more complex than that. So the devil is in the details.

What were once primarily rules addressing border issues, trade agreements nowadays penetrate much more deeply into traditionally domestic policy areas. The demand for trade rules in these areas has followed the proliferation of cross-border investment, global production and supply chains, and intermediate goods trade. (Ironically, these manifestations of globalization weaken the links between companies and their original home countries, yet trade agreements are negotiated by governments on behalf of these companies, as though it were a national imperative to guard their interests.) But as trade governance bumps up against issues of domestic sovereignty, the potential downside risks of trade agreements increase.

Consider the Trans-Pacific Partnership. The TPP is the largest free trade agreement to date – in terms of the volume of trade and share of global output represented by the 12 countries involved. Though the agreement has not been concluded, nor has any “official” draft text been released, the public has a decent idea of the deal’s coverage, if not its specifics.

The agreement (should one be had) will likely include 29 chapters dealing with traditional issues, such as: market access for goods, services, and agricultural products; rules of origin, and; other customs-related issues. It is also expected to include rules that discipline competition policy, government procurement, regulatory coherence, intellectual property, investment policy, labor policy, environmental policy, and others. It is this second grouping of negotiating areas that is fertile ground for potentially objectionable provisions – rules that might undermine the exercise of domestic sovereignty.

There has been a great deal of opposition expressed by certain civil society groups over various aspects of the TPP. Much of it is hyperventilation, stoked by interest groups like the AFL-CIO and Friends of the Earth, who oppose the agreement for other reasons and have no qualms about scaring people to their cause. Nevertheless, there is legitimate concern about potentially overreaching provisions on labor and environment, as well as on intellectual property and investment, which could threaten the exercise of domestic sovereignty in the United States and in the other member countries. And that would be something to weigh against the likely benefits of liberalization in the agreement.

Where there are provisions that undermine economic freedom or domestic sovereignty, expect Cato’s trade scholars to criticize and recommend changes, as we have. But an agreement that is clearly a net positive on all of the relevant factors is likely to have our support.

Categories: Policy Institutes

Can Litigation Save American Education?

Wed, 01/22/2014 - 17:20

Andrew J. Coulson

Next week, the case of Vergara v. California goes to trial. The question being litigated is whether or not the state’s laws on teacher tenure (“permanent employment”), dismissals, and last-in-first-out layoffs disproportionately harm poor minority kids, thereby violating California’s constitution.

Plaintiffs in the case feel they have the evidence to prove this point (see the links above), and so far the courts have acknowledged that their view is at least plausible. Certainly these laws are incompatible with efforts to maximize the quality of the teaching workforce. And it does seem as though they do the most damage in districts and schools serving the most disadvantaged kids. But will a victory by the plaintiffs in this lawsuit do substantial and lasting good?

That’s less obvious. For one thing, these employment practices can be found in many places where they are not codified in state statutes.They are employment guarantees and benefits of the sort that are often sought and obtained by teachers’ unions in collective bargaining with districts. So getting rid of the laws won’t necessarily get rid of the practices.

More broadly, over a dozen states have explicit constitutional provisions demanding that they create “uniform” education systems—a more stringent equality requirement than is contained in California’s constitution—and it’s not at all obvious that this seemingly strict legal guarantee has made any difference in the quality of educational opportunity in those states.

It’s easy to empathize with the desire to see state legal precedents enforced, and bad laws overturned. But neither state constitutions nor legal precedents have been able to secure either the uniformity or the quality of American education systems, and there is no reason to expect that to change no matter how the Vergara case is decided. More than half a century after the victory in Brown v. Board of Education, poor African-American kids are  still disproportionately likely to be assigned to lousy schools. I wrote about this 11 years ago, and little has changed since then. Lawsuits can redress specific legal wrongs, like compelled segregation, but they can’t produce educational outcomes that require the coordination and relentless dedication of thousands or even millions of people, year after year.

For those who really want to maximize the quality of education offered to disadvantaged and minority students—indeed to all students—the best hope is to study the different sorts of education systems that have been tried around the world and across history, and then ensure universal access to the best among them: a free educational marketplace.

 

Categories: Policy Institutes

Political Inequality: Residents of Washington are Different from the Rest of Us

Wed, 01/22/2014 - 13:35

Doug Bandow

America is a class-based society. Based on politics, not economics. An elite political class runs the state to their benefit. The rest of us pay the bill.

The differences between the assumptions and values of people within and without Washington’s 68 square miles of fantasy long have been on ostentatious display. The Democrats’ health care “reform” has become the latest example, offering tender treatment for those in the capital who approved the measure despite opposition from those outside the capital.

Critics of ObamaCare successfully pushed an amendment requiring congressmen and congressional staffers to purchase their health insurance through the new government exchanges. Being tossed from their special plans meant the end of federal subsidies, which run $5000 annually for individuals and $11,000 for families.

The new rule was meant to diffuse the anger of tens of millions of Americans who were forced to change plans and pay more for health care coverage. No surprise, residents of Capitol Hill were not happy. Alas, it wouldn’t look good to voters if Congress now enacted a special exemption. So without any legal authority, President Barack Obama maintained existing federal contributions.

Rep. Chris Stewart (R-Utah) observed:  “There’s no question it was the right thing to do. Not just for me, but for my staff. Heavens, I have staff who don’t make much money. This would be a really big bite for them.”

Too bad the president didn’t similarly step in to ensure that the rest of us won’t have to suffer “a really big bite” from ObamaCare.

It is no surprise that Democrats who supported the legislation backed this sub rosa subsidy. However, Republicans, who unanimously opposed the bill, also supported the illegal “fix.”

The GOP would win political points pushing a repeal amendment. But more important is getting a big federal “contribution.”  Noted my Cato Institute colleague Michael Cannon: “it appears the National Republican Senatorial Committee and the Democratic Senatorial Campaign Committee have negotiated a truce on this issue.” 

A similar difference in perspective afflicts foreign policy. Elites long have believed in sending average people off in constant wars, invasions, and occupations. Average people always are less enthused about being sent off to do endless battle.

Syria is the latest example. Secretary of State John Kerry, a veteran who opposed the Vietnam War, has turned global crusader. He has been joined by Nobel Peace Prize winner Barack Obama. The incessantly bombastic Republican uber-hawks, John McCain and Lindsey Graham, are even more insistent.

Normally the public is simply ignored. However, this time the president tossed the decision to Congress, causing opposition to erupt. Most legislators quickly arrayed themselves against the administration. 

Yet, as I pointed out in my American Spectator online article:

some elites, such as Sen. McCain, perhaps the Senate’s most hawkish member, then said that the president should go ahead and bomb even without congressional authorization.  Why should the Constitution, people’s elected representatives, or general public opinion matter? Some people, like those who populate Washington, are to rule.

Finally, thank America’s bipartisan paternalistic elite for killing the common incandescent light bulb, which disappeared into history on January 1. 

Light-emitting diodes, or LEDs, are more efficient than incandescents, but average people are less interested in spending $20 or $30 on a bulb that is slow to light, gives off a dull glow, and creates a mercury-laced toxic waste dump if broken. So George W. Bush and the Democratic Congress joined to ban the time-tested favorite.

Rather than thanking Washington, many people stocked up on the disappearing incandescent bulbs as January 1st loomed. Indeed, my basement is filled with a lifetime supply.

The wide gap between the political and working classes is not an argument for a populist democracy, but a constitutional republic in which government’s power is limited and individual liberties are protected. Elites always will enjoy disproportionate influence. However, restraining government will limit their ability to rule over the rest of us.

Categories: Policy Institutes

Mr. President, Increasing the Minimum Wage Is Wrong Medicine for Ailing Economy

Wed, 01/22/2014 - 09:44

James A. Dorn

When President Obama advocates a higher minimum wage in his State of the Union Address, he will no doubt argue that by increasing the minimum to $10.10, workers will have fatter pay checks and spend more, thus stimulating the economy and creating more jobs.  In fact, economic logic tells a different story. 

The law of demand is more powerful than the minimum wage law: when the price of anything, including labor, goes up, the quantity demanded goes down, other things constant.  No one has ever disproven this economic law—and neither the President nor Congress can overturn it.

The idea that raising the minimum wage will increase income confuses the price of labor (the wage rate) with labor income (wage rate x hours worked).  If a worker losers her job or can’t find a job at the higher minimum wage, her income is zero.  

Proponents of the minimum wage argue that those workers who do retain their jobs will consume more, which will increase aggregate demand and increase GDP.  But that line of argument is a case of upside-down economics.  Consumption is not a determinant of economic growth; it is the result of a prior increase in production.  Workers cannot be paid what they haven’t first produced.

A higher minimum wage—without a corresponding increase in the demand for labor caused by an increase in labor productivity (due to more capital per worker, better technology, or more education)—will mean fewer jobs, slower job growth, and higher unemployment for lower-skilled workers.  Higher-skilled workers and union workers will benefit, but only at the expense of lower-skilled workers, especially the young and minorities.  There is no free lunch.

Small business owners will see their profits cut, which will either drive them out of business or slow their expansion.  If prices are increased to offset the higher minimum wage—something that is difficult in globally competitive markets—consumers will have less money to spend on other things. Thus, there will be no net increase in employment. Moreover, an increase in the minimum wage cannot lead to an increase in aggregate demand unless the Federal Reserve accommodates the higher minimum by pumping up the money supply, which would lead to inflation and a loss of purchasing power. 

Mr. President, there is no magical way to stimulate the economy by increasing the minimum wage. The only sure way to increase jobs and wages for lower-skilled workers, and thus to increase their standard of living, is to increase economic growth.  The minimum wage is neither necessary nor sufficient for economic growth.  Hong Kong grew rich without a minimum wage because it undertook the reforms that fuel growth: free trade, low tax rates, limited government, a stable rule of law that safeguards private property, sound money, and low costs of doing business.  The United States should do likewise. 

Increasing the minimum wage is the wrong medicine for an ailing economy.  Further government intervention in free markets is the path toward socialism, not market liberalism.  Letting free markets determine wage rates is consistent with a free society and also with economic logic.  It is the surest the path toward greater income mobility as younger, low-skilled workers get experience and move up the income ladder.  Cutting that ladder off by mandating a higher minimum wage is a recipe for poverty not progress.   

Categories: Policy Institutes

Scalia the Unlikely Swing Vote in Big Workers Rights Case

Tue, 01/21/2014 - 18:37

Ilya Shapiro

Today the Supreme Court heard oral argument in Harris v. Quinn, the case regarding the forced unionization of home healthcare workers in Illinois (and by extension the 10 other states with similar laws). To me this is a pretty easy case: just because the state is paying these workers through its Medicaid program doesn’t mean it employs them – just like my doctor isn’t employed by my health-insurance company – which means that it can’t force them to pay dues to a union that negotiates Medicaid reimbursement rates. 

Like most of the labor cases in recent years, however, this one is likely to go 5-4. The so-called “liberal” justices were all openly hostile to the workers’ position, so the challengers will have to sweep the rest of the bench of to win. Fortunately, such an outcome is more than possible – though much will depend on the thinking of Justice Scalia, who was hostile to everyone.

The argument began in a frustrating manner, with a focus on the right to petition the government for redress of grievances, and whether a union asking for a pay increase was different from an individual public-sector employee (a policeman, say) asking for the same raise. Justice Scalia correctly pointed out that this wasn’t really the right at issue here, but he further confused the matter in distinguishing the right to petition from the First Amendment (when in fact that right is found in that amendment). He meant to invoke the First Amendment right to the freedoms of speech and association, but also indicated that he was prepared to give the government plenty of leeway when it was acting as an employer.

Justice Alito was the most skeptical of the union/government position, pointing out that unions don’t necessarily act in all workers’ interest, even when they succeed in negotiating certain “gains.” For example, a productive young worker might prefer merit pay to tenure provisions or a defined-benefit pension plan. Chief Justice Roberts was similarly concerned about administering the line between those union expenses that could be “charged” even to nonmembers (because related to collective bargaining) versus those that can’t because they involve political activity. Justice Kennedy, meanwhile, noted that in this era of growing government, increasing the size and cost of the public workforce is more than simple bargaining over wages and benefits; it’s “a fundamental issue of political belief.” In no other context could a government seek to compel its citizens to subsidize such speech. A worker who disagrees with the union view on these political questions is still made to subsidize it. 

It was also heartening to see that the continuing vitality of Abood v. Detroit Board of Education (1977) was in play. That case established that, in the interest of “labor peace,” a state could mandate its employees’ association with a union, forcing them to subsidize that union’s speech and submit to it as their exclusive representative for negotiating with the government regarding their employment. (Abood simply assumed, without further analysis, that the Supreme Court had recognized labor peace as a compelling interest.)

Justices Breyer and Kagan were particularly concerned that so many employers and unions had relied on the Abood doctrine over the years, so touching it would implicate significant reliance interests. But overruling or severely limiting Abood would only be one more step in the Court’s trend of protecting individual workers from having to support political activities. More workers could thus opt out of supporting a labor union – but if unions truly provide valuable services for their members, few workers would do so.

Of course, the Court could shy away from touching Abood and simply rule that being paid by state funds alone isn’t sufficient to make someone a state employee. Such a position might more easily attract Justice Scalia’s vote – and that of Chief Justice Roberts, who goes out of his way to rule narrowly – even if it leaves unresolved some of the contradictions at the heart of the jurisprudence in this area, such as the duty of courts to police the murky line between “chargeable” and “nonchargeable” union expenses.

For more on the case, see George Will’s recent op-ed and the Wall Street Journal’s editorial.

Categories: Policy Institutes

Flooding: Do Governments Make it Worse?

Tue, 01/21/2014 - 14:05

Chris Edwards

Both the economy and the environment are complex ecosystems. Governments often upset the natural balance and cause damage because they combine limited understanding with an excessive zeal to mandate and subsidize.

In Washington , we have snow and cold, but I can’t blame that on the government. However, Britain has been suffering from river flooding, and a Daily Mail article explains how subsidies are a key culprit: “Thought ‘extreme weather’ was to blame for the floods? Wrong. The real culprit is the European subsidies that pay UK farmers to destroy the very trees that soak up the storm.”

The author is a liberal environmentalist, but his piece illustrates how liberals and libertarians can share common ground on the issue of government subsidies.

The article describes how forests in the upstream areas of watersheds can mitigate floods. However, there “is an unbreakable rule laid down by the EU’s Common Agricultural Policy. If you want to receive your single farm payment … that land has to be free from what it calls ‘unwanted vegetation.’ Land covered by trees is not eligible. The subsidy rules have enforced the mass clearance of vegetation from the hills.”

In the United States, we’ve got our own environment-damaging farm subsidies. We’ve also got the Army Corps of Engineers, which the Daily Mail could be describing when it refers to British policy: “Flood defence, or so we are told almost everywhere, is about how much concrete you can pour.”

The long-time bias of the Army Corps has been to spend a lot of taxpayer money on reengineering nature. Apparently, it’s been a similar story in Britain :

Many years ago, river managers believed that the best way to prevent floods was to straighten, canalise and dredge rivers along much of their length, to enhance their capacity for carrying water. They soon discovered that this was not just wrong but also counter-productive. By building ever higher banks around the rivers, reducing their length through taking out the bends and scooping out the snags and obstructions along the way, engineers unintentionally did two things: they increased the rate of flow, meaning that flood waters poured down the rivers and into the nearest towns much faster; and, by separating the rivers from the rural land through which they passed, they greatly decreased the area of functional flood plains. The result, as authorities all over the world now recognise, was catastrophic.

You don’t have to be an environmental expert to conclude that governments should at least “do no harm,” and not worsen the damage done by adverse weather. That means they should end subsidies for farming, deforestation, and building in flood-prone areas.

Categories: Policy Institutes

Obama Administration Sacrifices Security and Human Rights in Egypt

Tue, 01/21/2014 - 09:49

Doug Bandow

A new pharaoh is rising in Egypt. Gen. Abdel Fata al-Sisi is preparing to grasp supreme power, most likely as the country’s next president.  He is posing as democracy’s savior while his troops detain or kill those opposing him.  The arrests and shootings continued during last week’s constitutional referendum.

During the Cold War the U.S. stole Cairo away from the Soviet Union.  When revolution loomed in 2011 the administration endorsed dictator Hosni Mubarak, before trying to work with newly elected President Mohammed Morsi.  But the latter failed to expand his popular appeal and discredited the Muslim Brotherhood, making his defeat almost certain in the next poll. 

However, Gen. Sisi and his confederates were in a hurry to seize power and staged a coup.  Although the Brotherhood was not without blame, the military killed hundreds or more in the August crackdown in Cairo.  Since then thousands more have died and been arrested.

As I noted in my latest Forbes online column:

The putative pharaoh has been actively restoring the Ancien Regime.  Gen. Sisi has tapped military officials as provincial gauleiters, recreated Mubarak’s secret and intelligence police, reinstituted military trials, enacted strict new restrictions on demonstrations, arrested journalists, deployed private thugs against Morsi supporters and regime critics, and prosecuted protestors.

McClatchy’s Amina Ismail and Nancy Youssef reported:  “Egyptians caught in the roundup have told McClatchy they were tortured while awaiting charges.”  The new constitution maintains the military’s privileged status and protects repressive state institutions from outside control. 

The press has been a special military target.  The Committee on Academic Freedom of the Middle East Studies Association cited a “worsening climate for free speech and peaceable assembly.” 

Overall, human rights activists say the situation is worse than under Mubarak.  Gamel al-Eid of the Arabic Network for Human Rights Information argued that the military was sending a message:  “There is only one choice—to support the military or to be in jail.”

The regime hopes to destroy the Brotherhood.  However, the group withstood decades of repression before and emerged strong enough to win Egypt’s first legislative and presidential elections.  Moreover, by confirming the extremist critique that democracy is a fool’s errand, Gen. Sisi has left opponents of his incipient dictatorship little choice but to use violence. 

The Mubarak regime’s crackdown on the Brotherhood four decades ago sparked the formation of new radical groups, including al-Qaeda.  Before joining that organization current leader Ayman al-Zawahiri was tortured by the Mubarak regime. 

Violent opposition to Gen. Sisi’s incipient dictatorship is rising.  Policemen are being killed while bombings are increasing in frequency.  Worse for America, warned Max Boot:  “as long as Washington is seen on the side of the generals, some of their violence will be directed our way.”

However, the administration still refuses to call a coup a coup.  It reluctantly withheld portions of the $1.55 billion in annual foreign aid, while assuring Cairo that doing so was not “punitive.”  Then the administration pushed to relax aid conditions.

But most of the roughly $75 billion given to Cairo over the years enriched political and military elites and funded the purpose of prestige weapons from American arms makers.  The U.S. never received much “leverage” in return.  For instance, the knowledge that the Egyptian military would cease to exist after a war with Israel, not American money, kept the peace. 

Anyway, the U.S. had no credibility to enforce conditions since it never was willing to stop the money.  The administration finally (kind of) did so last fall, but if America runs back to Cairo, cash-in-hand, the former will never again have the slightest hint of leverage.  Moreover, the regime now is flooded with money from Saudi Arabia and other Gulf states and doesn’t need American assistance.

Worse, underwriting a murderous regime inevitably stains the hands of American policymakers.  Who can believe Washington’s lectures on human rights when it is funding a grotesquely repressive regime in Egypt?

America should exit the Egyptian imbroglio. 

Categories: Policy Institutes

Mirror, Mirror, on the Wall, Which Nation Has Increased Welfare Spending the Fastest of All?

Tue, 01/21/2014 - 07:29

Daniel J. Mitchell

There’s an old joke about two guys camping in the woods, when suddenly they see a hungry bear charging over a hill in their direction. One of the guys starts lacing up his sneakers and his friend says, “What are you doing? You can’t outrun a bear.” The other guys says, I don’t have to outrun the bear, I just need to outrun you.”

That’s reasonably amusing, but it also provides some insight into national competitiveness. In the battle for jobs and investments, nations can change policy to impact their attractiveness, but they also can gain ground or lose ground because of what happens in other nations.

The corporate tax rate in the United States hasn’t been changed in decades, for instance, but the United States has fallen further and further behind the rest of the world because other nations have lowered their rates.

Courtesy of a report in the UK-based Telegraph, here’s another example of how relative policy changes can impact growth and competitiveness.

The paper looks at changes in the burden of welfare spending over the past 14 years. The story understandably focuses on how the United Kingdom is faring compared to other European nations.

Welfare spending in Britain has increased faster than almost any other country in Europe since 2000, new figures show.  The cost of unemployment benefits, housing support and pensions as share of the economy has increased by more than a quarter over the past thirteen years – growing at a faster rate than in most of the developed world. Spending has gone up from 18.6 per cent of GDP to 23.7 per cent of GDP – an increase of 27 per cent, according to figures from the OECD, the club of most developed nations. By contrast, the average increase in welfare spending in the OECD was 16 per cent.

This map from the story shows how welfare spending has changed in various nations, with darker colors indicating a bigger expansion in the welfare state.

American readers, however, may be more interested in this excerpt.

In the developed world, only the United States and the stricken eurozone states of Ireland, Portugal and Spain - which are blighted by high unemployment - have increased spending quicker than Britain.

Yes, you read correctly. The United States expanded the welfare state faster than almost every European nation.

Here’s another map, but I’ve included North America and pulled out the figures for the countries that suffered the biggest increases in welfare spending. As you can see, only Ireland and Portugal were more profligate than the United States.

Needless to say, this is not a good sign for the United States.

But the situation is not hopeless. The aforementioned numbers simply tell us the rate of change in welfare spending. But that doesn’t tell us whether countries have big welfare states or small welfare states.

That’s why I also pulled out the numbers showing the current burden of welfare spending - measured as a share of economic output - for countries in North America and Western Europe.

This data is more favorable to the United States. As you can see, America still has one of the lowest overall levels of welfare spending among developed nations.

Ireland also is in a decent position, so the real lesson of the data is that the United States and Ireland must have been in relatively strong shape back in 2000, but the trend over the past 14 years has been very bad.

It’s also no surprise that France is the most profligate of all developed countries.

Let’s close by seeing if any nations have been good performers. The Telegraph does note that Germany has done a good job of restraining spending. The story even gives a version of Mitchell’s Golden Rule by noting that good policy happens when spending grows slower than private output.

Over the thirteen years from 2000, Germany has cut welfare spending as a share of GDP by 1.5 per cent… Such reductions are possible by increasing welfare bills at a lower rate than growth in the economy.

But the more important question is whether there are nations that get good scores in both categories. In other words, have they controlled spending since 2000 while also having a comparatively low burden of welfare outlays?

Here are the five nations with the smallest increases in welfare spending since 2000. You can see that Germany had the best relative performance, but you’ll notice from the previous table that Germany is not on the list of five nations with the smallest overall welfare burdens. Indeed, German welfare spending consumes 26.2 percent of GDP, so Germany still has a long way to go.

The nation that does show up on both lists for frugality is Switzerland. Spending has grown relatively slowly since 2000 and the Swiss also have the third-lowest overall burdens of welfare spending.

Hmmm…makes you wonder if this is another sign that Switzerland’s “debt brake” spending cap is a policy to emulate.

By the way, Canada deserves honorable mention. It has the second-lowest overall burden of welfare spending, and it had the sixth-best performance in controlling spending since 2000. Welfare outlays in our northern neighbor grew by 10 percent since 2000, barely one-fourth as fast as the American increase during the reckless Bush-Obama years.

No wonder Canada is now much higher than the United States in measures of economic freedom.

Categories: Policy Institutes

The Great Fact of Economic Growth, in Three Glimpses

Mon, 01/20/2014 - 13:39

David Boaz

In Bourgeois Dignity: Why Economics Can’t Explain the Modern World, economic historian Deirdre McCloskey writes about the “Great Fact” – the enormous and unprecedented growth in living standards that began in the western world around 1700. She calls it “a factor of sixteen”: we moderns consume at least 16 times the food, clothing, housing, and education that our ancestors did in London in the 18th century. Two new books help us to understand what that means.

In Sunday’s Washington Post, Jonathan Yardley reviews Flyover Lives, a family memoir by Diane Johnson. She found diaries from some of her Midwestern ancestors, and Yardley notes what they tell us:

It must be just about impossible for a denizen of middle-class 21st-century America to imagine the toil and suffering that Catharine Martin [born 1800] and her counterparts underwent every day: living in crude houses — mere huts when they first settled in Illinois and elsewhere — slaving at open fires to prepare food for their families, and worst of all watching children fall ill and having nothing in their powers to help them: “Within a year of her marriage, with the fated fertility of women then, Catharine had her first baby, and named her Catharine Anne, after herself. They called her Sissie. This baby was followed by Charlotte Augusta in 1830 and Martha Olivia in 1831. When they were one, three, and five years old, all three little girls died in the space of a week or two.” Catharine herself was ill but survived to write many years later: “When I got up, my house was empty, three little prattlers all gone, not one left.”

This isn’t so long ago. Catharine Martin was the great-great-grandmother of Diane Johnson. Go back another century, and read about 18th-century life in another new book, Three Squares by Abigail Carroll:

Invited to dine with a ferryman and his family, [a 1744 traveler from Maryland to Maine] declined. He described the meal: “They had no cloth upon the table, and their mess was in a dirty, deep, wooden dish which they evacuated with their hands, cramming down skins, scales, and all. They used neither knife, fork, spoon, plate, or napkin because, I suppose, they had none to use.”

By the standards of the age, the ferryman’s repast was ordered: “Only about a third of the families in seventeenth-century Virginia had chairs or benches, and only one in seven had both,” writes Ms. Carroll. Only about a quarter of the early Virginian houses had tables.

And finally, I note an older book on my own Scottish ancestors, The Scotch-Irish: A Social History by James G. Leyburn:

The squalor and meanness of [lowland Scottish] life around 1600 [or 1700] can hardly be conceived by a person of the twentieth century. A cluster of hovels housed the tenants and their helpers….A home was likely to be little more than a shanty, constructed of stones, banked with turf, without mortar, and with straw, heather, or moss stuffed in the holes to keep out the blasts….The fire, usually in the middle of the house floor, often filled the whole hut with malodorous clouds, since the smoke-clotted roof gradually stopped the vent-hole. Cattle were tethered at night at one end of the room, while the family lay at the other end on heather piled upon the floor….Vermin abounded…skin diseases…Infectious diseases were propagated readily.

According to scholars such as Angus Maddison and Brad DeLong, GDP per capita hardly rose for thousands, or tens of thousands, of years before the emergence of capitalism. And then after 100,000 years of stagnation (by DeLong’s estimates), around 1750 capitalism and growth began, first in Northern Europe and the American seaboard, and spreading ever since to more parts of the world. That is, the existence of relatively free markets is the reason we don’t live like my Scottish ancestors. This is indeed the Great Fact of the modern world. We should celebrate it, even as we work to extend the benefits of markets to people and nations who don’t yet enjoy as much capitalism as they should.  

Categories: Policy Institutes

Good First Steps, But Real Surveillance Reform Will Require More

Fri, 01/17/2014 - 13:35

Julian Sanchez

The president’s speech on surveillance today proposed some welcome first steps toward appropriately limiting an expanding surveillance state — notably, an end to the NSA’s bulk phone metadata program in its current form, and a recognition that judges, not NSA analysts, must determine whose records will be scrutinized.

The details are important, however. Obama’s speech left open the possibility that bulk collection might continue with some third party — which would in effect be an arm of government — as a custodian. If records are left with phone carriers, on the other hand, it’s important to resist any new legal mandate that would require longer or more extensive retention of private data than ordinary business purposes require.

It was disappointing, however, to see that many of the recommendations offered by Obama’s own Surveillance Review Group were either neglected or specifically rejected. While the unconstitutional permanent gag orders attached to National Security Letters will be time-limited, they will continue to be issued by FBI agents, not judges, for sensitive financial and communications records.

Nor did the president address NSA’s myopic efforts to degrade the security of the Internet by compromising the encryption systems relied on by millions of innocent users. And it is also important to realize that changing one controversial program doesn’t alter the broader section 215 authority, which can still be used to collect other types of records in bulk—and for all we know, may already be used for that purpose.

Most fundamentally, Congress must now act to cement these reforms in legislation — and to extend them —to ensure safeguards implemented by one president cannot be secretly undone by another.

Categories: Policy Institutes

Damning Trade with Faint Praise

Fri, 01/17/2014 - 12:32

Daniel J. Ikenson

A Washington Post editorial today pushes back against the argument that a Trans-Pacific Partnership agreement would exacerbate income inequality. Amen, I suppose. But in making its case, the editorial burns the village to save it by conceding as fact certain destructive myths that undergird broad skepticism about trade and unify its opponents.

“All else being equal,” the editorial reads, “firms move where labor is cheapest.”  Presumably, by “all else being equal,” the editorial board means: if the quality of the factors of production were the same; if skill sets were identical; if workers were endowed with the same capital; if all production locations had equal access to ports and rail; if the proximity of large markets and other nodes in the supply chain were the same; if institutions supporting the rule of law were comparably rigorous or lax; if the risks of asset expropriation were the same; if regulations and taxes were identical; and so on, the final determinant in the production location decision would be the cost of labor. Fair enough. That untestable premise may be correct.

But back in reality, none of those conditions is equal. And what do we see? We see investment flowing (sometimes in the form of “firms mov[ing],” but more often in the form of firms supplementing domestic activities) to rich countries, not poor. In this recent study, I reported statistics from the Bureau of Economic Analysis revealing that:

Nearly three quarters of the $5.2 trillion stock of U.S.-owned direct investment abroad is concentrated in Europe, Canada, Japan, Australia, and Singapore. Contrary to persistent rumors, only 1.3 percent of the value of U.S.-outward FDI [foreign direct investment] was in China at the end of 2011.

Meanwhile, the United States (not China or Mexico) is the world’s #1 destination for FDI:

With a stock valued at $3.9 trillion, the United States is the top single-country destination for the world’s FDI outflows. There are plenty of reasons for that being the case, including the facts that the United States is the world’s largest market and has a sound legal system and a relatively transparent business environment. More than $4 out of every $5 of that stock (84.2%) is owned by Europeans, Canadians, and Japanese, with the U.S. manufacturing sector accounting for a full third of its value, making it the primary destination for inward FDI.

Are BASF, Michelin, BMW, Siemens, Airbus, InBev, Honda, Kia, Ikea, Shuanghui (recent Chinese purchaser of Smithfield Hams) and thousands of other foreign-headquartered companies invested here because labor is cheapest in the United States? They are here because firms conduct value-added activities wherever it makes the most sense to do so, given all of the considerations and restrictions that affect costs. For so many reasons, the United States is still the top destination for investment in manufacturing and most services industries. 

So stop. Just stop.

The editorial also indulges the most persistent myth of all, that increasing exports while minimizing imports is the purpose of trade agreements. As I’ve written on countless occasions in numerous different ways, increased imports are the real benefits of trade. Our exports are what we use to pay for our imports. If you prefer paying less for your products at the grocery store, you should prefer exporting less for the products you import. And for those concerned about income inequality—the editorial’s presumed audience—it is worth understanding that import competition increases choices and reduces prices, which means imports increase real incomes. 

The editorial concedes that imports from Vietnam may increase under the TPP (“suppose [the bilateral deficit] were to double”), but that the deficit “would still be tiny relative to the overall U.S. trade balance.” Instead of apologizing and rationalizing, as though this development were a cost, why not point out how lower-income Americans, in particular, would experience a lower cost of living because trade would reduce the cost of their clothing and footwear?

We need to do better a job explaining how trade does not lend itself to sports metaphors. Exports are not our “points.” Imports are not “their” points. The trade account is not a scoreboard. It is not Team America against the world. Trade is about mutually beneficial exchange between individuals in different political jurisdictions, and to the extent that those kinds of transactions are subject to the whims of politicians, more and more resources will be diverted from economic to political ends.

Though it may have had good intentions, the Washington Post should know better than to perpetuate simplistic myths spun by well-compensated K Street consultants on behalf of the business, labor, and environmental interests that benefit financially from restrictions on trade and investment.

Categories: Policy Institutes

Cato FOIA Request Reveals E-Verify Delays Hurt Workers

Fri, 01/17/2014 - 12:16

Alex Nowrasteh

Proponents of E-Verify, the Internet-based system to verify that a person is eligible to work in the United States, often tout its supposed speed and reliability. A recent Freedom of Information Act (FOIA) request from Cato has shed some light on how long it takes for the government to resolve contested tentative non-confirmations (TNC). The data should temper some enthusiasm for the system.

Our FOIA revealed that in 2012, the most recent year for which data are available, there were 68,775 contested TNCs through E-Verify. A TNC is an initial E-Verify determination that a worker is unlawful. Of those, 21,007 were handled by the Social Security Administration, with an average turnaround of 3.42 work day days.  

The Department of Homeland Security handled the other 47,768 contested TNCs, with an average turnaround of 6.01 work days. SSA deals with a lower volume of cases and deals with them in almost half the time that it takes DHS.

The information received as part of the FOIA included further breakdowns of resolution time:

Number of Days to Resolve

FY

Contested SSA TNC Cases

≤ 1 Day 1 to 2 Days 2 to 3 Days 3 to 8 Days ≥ 8 Days

2008

4,708

1,536

952

2,932

918

2009

3,180

987

577

1,800

748

2010

6,094

2,093

1,261

3,906

1,503

2011

6,274

2,221

1,344

4,503

1,695

2012

7,778

2,791

1,853

6,122

2,463

 

37.0%

13.3%

8.8%

29.1%

11.7%

FY

Contested DHS TNC Cases

≤ 1 Day 1 to 2 Days 2 to 3 Days 3 to 8 Days ≥ 8 Days

2008

5,284

855

530

1,118

16,924

2009

5,977

828

538

1,128

16,345

2010

11,880

2,053

1,172

2,587

20,936

2011

15,445

3,010

1,762

3,637

21,380

2012

16,246

3,166

1,928

4,224

22,204

 

34.0%

6.6%

4.0%

8.8%

46.5%

As can be seen, not only was DHS slower in resolving its cases, but nearly half of its cases took longer than 8 work days to resolve. Some 55.3 percent took over 3 work days for DHS resolve.

Some 52 million American workers were hired in 2012 and they were subjected to 21.1 million queries. This gives an indication that today’s relatively short delays would increase if tens of millions of additional American workers are forced to use E-Verify annually. 

Worse, Sen. Jeff Sessions (R-Ala.) has offered an amendment for national E-Verify that would require verification of all existing employees who were not previously verified—with a three-month deadline. There is a total civilian labor force of roughly 155 million people. Running more than 100 million workers through E-Verify within three months, as Senator Sessions’ amendment requires, would dramatically increase the wait time for resolving contested TNCs.

The 68,775 contested TNCs in 2012 came from a pool of 21.1 million total E-Verify queries nationwide, about 0.33 percent. Importantly, that is a percentage of contested TNCs to actual queries. It’s likely that individual workers were run through E-Verify by the same employer more than once, increasing the number of queries relative to the number of workers checked through E-Verify. That means that the rate of contested TNCs per worker run through E-Verify is actually higher than indicated here.

Applying that same rate to the 155 million workers Sessions envisions would produce 511,500 contested TNCs. About 36 percent of those, or 184,140, would take eight days or more to resolve—assuming (laughably) that increasing the number of people run through E-Verify by a factor of 7 will have no effect on speed.

The economic costs of nationally mandating E-Verify caused by TNC resolution delays will be higher than many of its proponents care to admit. That and the other economic costs of E-Verify, the worrying privacy issues surrounding it, its lackluster performance, and how it makes everyone ask for permission from the government to work should temper enthusiasm for this scheme.         

This post was written with the help of Scott Platton.  

Categories: Policy Institutes

New Study on Air Traffic Control Reform

Fri, 01/17/2014 - 10:28

Chris Edwards

Robert Poole is one the nation’s top experts on privatization and transportation policy reform. He has a great new Hudson Institute study on problems with our air traffic control (ATC) system and ideas for restructuring it. The nation’s ATC system is operated by the Federal Aviation Administration (FAA). Here are some of Bob’s findings:

  • The features and procedures of our government-run ATC system “have remained remarkably unchanged through a half century of dramatic advances in technology” elsewhere in the economy.
  • Our ATC system “has fallen well behind the capacity of new technologies to provide  safer, faster, more reliable, and more fuel efficient air travel and to keep up with the increasing volume of air travel.”
  • “Nearly all communications are still by voice radio, despite the ubiquity of text messaging and its greater ease and accuracy for routine communications.”
  • “Radar remains the principal means of aircraft position surveillance, despite the much greater accuracy of GPS and other systems.”
  • The FAA “is slow to embrace promising innovations in outside research organizations or private-sector companies.”
  • The FAA “does a poor job of procuring new technology, with many programs eventually cancelled or emerging years late at inflated cost.”
  • The FAA “is particularly resistant to high-potential innovations that would disrupt its own institutional status quo.”
  • Canada, Australia, New Zealand, Britain, and Germany are doing a better job of embracing new technologies for ATC. These countries have restructured their systems as self-supporting organizations outside of their government bureaucracies.

Ultimately, the culprit for America falling behind on ATC is not the FAA, but Congress. Congress has its head buried in the sand. Aviation demand is rising and our government-run system is not up to the challenge. ATC is an increasingly dynamic, high-tech business, and it is too important to consign to the lethargy, inefficiency, and bungling that dominates so many Washington bureaucracies.    For more, see this study on airport and ATC reform, and this op-ed on privatizing ATC. Bob’s work at the Reason Foundation is here.

Categories: Policy Institutes

In Maryland, A Left-Right Alliance on Surveillance

Fri, 01/17/2014 - 09:10

Walter Olson

Some issues lend themselves well to cooperation between liberals and conservatives who can both see the need to limit the arbitrary power of government. One prime prospect: the dangers to individual privacy of government surveillance run amok. This week in Annapolis several members of the Maryland legislature held a press conference to announce that they would push for an agenda of reforms setting out rules for law enforcement’s use of techniques including phone location tracking, automatic license plate readers, email surveillance, and drones. The group is led by Sen. Jamie Raskin (D-Silver Spring), one of the strongest liberals in the state legislature, and Sen. Chris Shank (R-Hagerstown), one of the strongest conservatives. Here (quoting verbatim) is the summary provided by the ACLU of Maryland

  • Email surveillance. Legislation to require that law enforcement go before a neutral arbiter and prove that the information they are obtaining is likely to turn up evidence of a crime before intercepting and accessing online data.
  • Location Tracking. Legislation to require that law enforcement get a warrant based on probable cause prior to obtaining mobile phone tracking information.
  • Drones. Legislation to impose limits and regulations on aerial surveillance that would protect against police fishing expeditions, and abusive use of these tools.
  • Automatic License Plate Recorders. Legislation that would keep law enforcement from storing records of license plates and locations that are not ‘hits’ against any database.

Others sponsoring the bills include Democratic delegates from Baltimore City and Montgomery County as well as Del. Mike Smigiel (R-Eastern Shore), a prominent supporter of Second Amendment rights. 

Looks like something worth keeping an eye on.

Categories: Policy Institutes

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