Policy Institutes

“1. We must do something. 2. This is something. 3. Therefore, we must do this.” That’s not just a famous line from the BBC’s old comedy Yes, Minister, it might serve as a philosophy of government for about 90 Democrats on Capitol Hill led by Rep. David Cicilline (D-R.I.), who are seeking to revive a failed Clinton-era ban on so-called assault weapons that Congress let lapse a decade ago. (Gun homicide rates have plunged since the Clinton era.) 

The lawmakers’ timing could hardly be worse, with both the New York Times/CBS and ABC News/Washington Post polls showing American public opinion has turned against such bans, which once drew support at levels of 80% or higher. In the latest ABC poll, a 53-45 percent majority of Americans are opposed to such a ban.

That trend in opinion has been in progress for years, since well before this year’s shocking round of mass shootings in Charleston, San Bernardino, and elsewhere. And it owes much to the steady accumulation of evidence on such laws and their effect. Cato has long made gun control one of its topics of interest, with at least three recent publications shedding light on the assault-weapons controversy: David Kopel’s magisterial overview (summary) of the poor track record of supposed common-sense reforms, Jonathan Blanks’s distinction between the actual incidents that dominate gun crime statistics and the outlier episodes that are seized on as symbolic, and Trevor Burrus’s response to the New York Times’s recent overwrought front-page editorial. 

At the Volokh Conspiracy blog, UCLA law professor Eugene Volokh has been doing a series of posts (first, second, third, fourth so far) on why even a liberal gun-control advocate like Prof. Adam Winkler has come to see assault weapons bans as “largely ineffectual…bad policy and bad politics,” and why gun rights advocates are not unreasonable to see such bans as strengthening (desirably, for some proponents) the likelihood of future bans on conventional handguns. I’ve also covered the topic a couple of times at my Cato blog Overlawyered, including here (noting columnist Steve Chapman’s description of the ban as part of a “Potemkin Village” array of reforms with no discernible effect) and more recently here (noting false claims in circulation about mass shootings).

In my last post regarding Ben Bernanke’s memoir, I took Bernanke’s Fed to task for electing to sterilize its pre-AIG emergency lending, thereby making sure that, while it was rescuing a small number of troubled firms, it was also reducing the liquid reserves available to others. It was doing this, moreover, at a time when increasingly worrisome economic conditions were giving rise to exceptional liquidity demands. The predictable result was an overall shortage of liquidity, which manifested itself in a collapse of bank lending and spending.

I now turn to an even more mind-bogglingly wrongheaded step taken by Bernanke’s Fed in the course of the financial crisis: it’s decision to pay interest on banks’ excess reserves.

The Fed began paying interest on reserves (IOR) in mid-October 2008, just after ending its program of sterilized lending. That these steps coincided was no accident, for interest on reserves was meant to be a substitute for sterilization, aimed at the same result, namely: that of making sure that the Fed’s gross asset purchases did not give rise to any corresponding increase in bank lending.

The Fed resorted to IOR because, by the time of Lehman’s failure, it had reduced its Treasury holdings to their practical minimum. Consequently, when it came to bailing-out AIG, the Fed found itself in a quandary: the bailout would mean an increase in the overall size of the Fed’s balance sheet, and a like increase in the monetary base. Other things equal, the increase would mean a loosening of monetary policy. Yet the Fed was determined to avoid such a loosening.

It was to escape from this quandary that the Fed came up with the oh-so-clever idea of rewarding banks for not lending their otherwise unneeded reserves in the middle of one of the twentieth-century’s most severe economic contractions. You needn’t take my word for it. Here it is from the horse’s mouth:

We had initially asked to pay interest [in 2006] on reserves for technical reasons. But in 2008, we needed the authority to solve an increasingly serious problem: the risk that our emergency lending, which had the side effect of increasing bank reserves, would lead short-term interest rates to fall below our federal funds target and thereby cause us to lose control of monetary policy. When banks have lots of reserves, they have less need to borrow from each other, which pushes down the interest rate on that borrowing — the federal funds rate.

Until this point we had been selling Treasury securities we owned to offset the effect of our [emergency] lending on reserves (the process called sterilization). But as our lending increased, that stopgap response would at some point no longer be possible because we would run out of Treasuries to sell. At that point, without legislative action, we would be forced to either limit the size of our interventions…or lose the ability to control the federal funds rate, the main instrument of monetary policy…[By] setting the interest rate we paid on reserves high enough, we could prevent the federal funds rate from falling too low, no matter how much [emergency] lending we did (Courage to Act, pp. 325-6).

Nor does Bernanke’s understanding of the Fed’s action differ from that of other Federal Reserve authorities. In December 2009, for example, Richmond Fed economists John R. Walter and Renee Courtois offered an almost identical account. The Fed’s emergency credit injections, they wrote,

had the potential to push the fed funds rate below its target, increasing the overall supply of credit to the economy beyond a level consistent with the Fed’s macroeconomic policy goals, particularly concerning price stability.

For a while sterilization solved the problem. But

following the failure of Lehman Brothers and the rescue of American International Group in September 2008, credit market dislocations intensified and lending through the Fed’s new lending facilities ballooned. The Fed no longer held enough Treasury securities to
sterilize the lending.

This led the Fed to request authority to accelerate implementation of the IOR policy that had been approved in 2006. Once banks began earning interest on the excess reserves they held, they would be more willing to hold on to excess reserves instead of attempting to purge them from their balance sheets via loans made in the fed funds market, which would drive the fed funds rate below the Fed’s target for that rate.

There you have it. The Fed paid banks to hold excess reserves, so that they would quit lending them, in order to make sure that the “overall supply of credit” did not exceed levels “consistent with the Fed’s macroeconomic policy.”

And what level of credit supply was it that the Fed was so anxious to not “exceed”? Perhaps the following chart will give you some idea:

If you are starting to forgive me for using the term “wrongheaded,” I have made my point.

When the Fed first started paying interest on reserves, it did so at a rate exceeding the rate at which banks were prepared to borrow from one another in the overnight (“federal funds”) market. Because this was the case, banks more-or-less withdrew from that market, leaving only some GSE’s, which had reserve accounts at the Fed but were not eligible for IOR, to participate in it. The observed average overnight rate for transactions among these institutions — the so-called “effective” federal funds rate — has been consistently below the interest rate on excess reserves:

Needless to say, after most banks withdrew from the overnight market, the overall volume of overnight loans declined substantially. Remember all that talk about how Lehman’s failure led to heightened concerns about counterparty risk, which caused the interbank market to seize-up? Well, that’s not what happened. Although some large banks had to cut-back on overnight borrowing in response to Lehman’s failure, small banks actually borrowed more. A Liberty Street Economics post, from which the following image is taken, supplies details.

It’s possible, of course, that the banks that were flush with excess reserves wouldn’t have lent those reserves even if they didn’t bear interest, because those banks were also short of capital. The thesis is at least plausible, since the Fed supplied fresh reserves to capital-starved firms by swapping them for mortgage debt and other illiquid assets. The exchange reduced the cash recipients’ (risk-adjusted) capital requirements, but did so only if they held on to the cash. As an alternative to having to raise new capital, the swaps were a bargain — and especially so once reserves bore a modest return.

According to Huberto M. Ennis and Alexander L. Wolman, capital shortages did at first discourage banks that held excess reserves from lending them. But already by late 2009 some “would have been able to use reserves to accommodate a significant increase in loan demand without facing binding capital constraints.” Two years later, the same authors report, “a significant proportion of the reserves held by large banks…could have been quickly used to fund loans without pushing these banks against their minimum regulatory capital levels.”

The reserves “could have been” used. But they weren’t. Why not? Ennis and Wolman conclude that, for banks that were no longer capital constrained, limited “loan demand was likely the main driving force behind banks’ lending behavior.” But that is just another way of saying that the anticipated return on loans was low compared to the return from not lending — that is, compared to the return on holding reserves.

It remains possible nonetheless that IOR made little difference, because the return on loans would have been below the return on reserves even if the latter bore no interest. That at least some “natural” interest rates, including the natural overnight rate, became negative during the crisis, and that a few may still be negative today, is the belief of more than a few economists. That includes authorities in charge of several European central banks. What’s more, it includes Janet Yellen, who in a recent paper observes that “the natural real rate fell sharply with the onset of the crisis and has recovered only partially,” and supplies the following chart summarizing extant estimates of the natural ffr:

If these estimates, or at least some of them, are correct, banks would have withdrawn from the federal funds market by early 2009 even without IOR.

But several caveats are in order. First, note that the natural ffr estimates turn decisively negative only in late 2008. This suggests that, if, instead of introducing IOR in the first place, the Fed had allowed its post-Lehman asset purchases to translate into increased bank lending, and especially if it had not sterilized its asset purchases before then, the natural funds rate might never have gone negative. As I pointed out in my post on sterilization, a collapse in aggregate demand means, among other things, a collapse in the nominal demand for all sorts of credit, and a corresponding decline in market-clearing nominal interest rates.

Second, and no less importantly, while overnight lending rates may have turned negative, not all lending rates did so. Returning the interest rate on reserves to zero would therefore have encouraged bank lending, even if it failed to encourage overnight lending. The one caveat is that, because the supply of overnight funds itself would have remained constrained, banks would still have had a greater than usual need for excess reserves to meet their settlement needs.

Finally, even allowing that nothing short of negative interest on excess reserves would have inspired banks to lend those reserves, it remains the case that IOR was a bad policy, in the sense that abandoning it would at least have been a step in the right direction.

For my part, I do not doubt that, whether negative IOR would have been ideal or not, positive IOR played an essential part in the vast post-2008 accumulation of bank excess reserves — an accumulation that proceeded in lock-step with the Fed’s large-scale asset purchases, thereby allowing the Fed to add trillions to its balance sheet, without contributing a jot to bank lending:

Here is where I must part company with some of my Market Monetarist friends. For while those friends hold, as I do, that IOR was counterproductive, and that Fed asset purchases might have been far more effective in boosting recovery without it, they have tended nonetheless to defend the Fed’s large scale asset purchases (“quantitative easing”). I think this was a mistake, both because it meant accepting the Fed’s own dubious (and hardly “monetarist”) theories about how LSAPs were supposed to aid recovery despite the non-lending of added reserves, and because it overlooked the very real adverse effects of those purchases, including the sacrifice of ordinary means for monetary control that they entailed.

There are, I realize, some who argue that IOR isn’t really equivalent to paying banks not to lend, and that it is therefore not to blame for their having accumulated so many excess reserves. Their arguments are, if anything, even more screwy than the logic — which those arguments manifestly contradict — underlying the Fed’s decision to resort to IOR in the first place. But this post is long enough, so I’ll turn to these arguments in Part II.

***

As it happens, just as I am completing this post, Janet Yellen is holding a press conference announcing what she regards as the Fed’s first steps toward the “normalization” of monetary policy that has become a policy desideratum in the wake of the Fed’s highly abnormal marriage of IOR and large-scale asset purchases. Of what do these steps consist? First, the Fed will raise its federal funds rate target by a quarter of a percentage point — a meaningless gesture, given (as Yellen herself understands) that the target was already above the “natural” funds rate before the hike.

Second, the Fed plans to double the rate of interest on excess reserves.

Madness.

[Cross-posted from Alt-M.org]

Those are the words of Paul Ryan (R-WI) in October, ahead of his elevation to Speaker of the House. He was objecting to a budget deal being rammed through the House, and he went on to say, “This is not the way to do the people’s business, and under new management we are not going to do the people’s business this way.”

Today, the House is scheduled to debate an omnibus spending bill that has highly controversial cybersecurity surveillance legislation slipped into it.

Well. That didn’t take long.

Recent discussions of trade negotiations have focused on the Trans Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), often referred to as “mega-regional” trade talks.  But most economists and other trade experts agree that trade liberalization would be more beneficial if done on a multilateral basis, at the World Trade Organization (WTO).  There are talks going on at the WTO, referred to as the Doha Round, but they started in 2001 and are widely seen as not likely to achieve much.

What would it take to get WTO liberalization going again?  There are lots of theories on this, but my view is that it’s really pretty simple:  The major trading countries need to propose significant liberalization.  That hasn’t happened yet, and that’s why there has been so little progress.

There are probably several examples of what might constititute significant trade liberalization, but the most obvious one is agriculture subsidies.  There is a long-standing criticism from, well, everyone, that the U.S. and EU and others subsidize their agriculture sector too much, in ways that distort trade.  Obviously, it would take a serious commitment by the U.S./EU to take on domestic special interests and propose big subsidy cuts here, but the domestic and international benefits of doing so are clear.

So what are the chances of this happening?  Based on the rhetoric on these issues, it seems unlikely.  Here is U.S. Trade Representative Michael Froman writing in the Financial Times:

When Doha was launched in 2001, the focus was on US and EU agricultural subsidies, which have since been cut. Now, some emerging markets are the biggest providers of agricultural subsidies but would be exempt under Doha from cuts. If you are a poor farmer facing a global market distortion, it does not matter where the subsidies causing it came from. Artificial distinctions between developed and emerging economies make no economic sense.

There’s a bit of truth in this, but all in all the picture drawn here is misleading.  Yes, developing countries have increased their agriculture subsidies.  That part is true.  But the assertion about U.S./EU cuts is a questionable one, as OECD data show a more complex picture.  Agriculture subsidies vary widely in terms of methods used to provide them, but relying on the general category of “producer support estmates,” here is the breakdown of U.S./EU agriculture subsidies from 1995-2014:

 

 Source: OECD.Stat

You could look at that data and say there was a “cut” between 2001 and 2014, at least for the U.S..  But a more accurate description would be to say that these subsidies were very large over the whole period (and peaked in 1999-2001 for the U.S.).

With these facts in mind, the solution is kind of simple and obvious:  Some government – could be the U.S. or EU, but also Brazil or China – needs to propose that all governments cut their agriculture subsidies significantly, say, 50% to start, and going down further from there.  We are all doing it; we should all stop.  Someone needs to take the lead and argue this, but so far, no one has stepped up.  Instead, governments hide behind the actions of others to avoid doing any liberalizing of their own.

The upshot of all this is that the chances of large-scale multilateral liberalization are very low right now.  Until the major governments are willing to propose liberalization, there is no deal to be had.  Instead, it appears as though we will continue the current focus on regional trade deals, which offer tariffs cuts and some other liberalization on a preferential basis to a few trading partners only, combined with special interest rules on IP, labor and the environment.  When it comes to more comprehensive trade liberalization, there has been no one willing to take the lead.

Now that the Trans-Pacific Partnership negotiations have concluded, a lot of people across the political spectrum are going to have insightful and intelligent things to say about the agreement.  Their analyses may argue for opposing positions, but the public will be better off and more informed for having listened to any of them.  On the other hand, some opponents of the deal will rely on baseless fearmongering.

Fear of the unknown is a natural (and largely beneficial) human extinct.  When people feel like they don’t understand how something works, they’re more likely to imagine that it does something horrible.  This is why opponents of trade liberalization constantly exaggerate the secrecy of negotiations why they focus their rhetoric on things like transnational corporate agendas, loss of national sovereignty, or lower food safety—things that most people don’t understand very well but are afraid of. 

Most often, fantastic predictions about the consequences of free trade arguments are put forward by the Left.  They have claimed that the TPP will kill dolphins, allow corporations to bypass government regulations, cause global warming, or force us all to eat GMOs.  None of this is true, but anti-trade groups are making fairly persuasive arguments based on inaccurate and exaggerated claims.

Anti-trade groups on the political right use similar methods.  The easiest target for these groups has been apprehension among conservative voters over the intentions of President Obama, focusing on things like immigration and gun control.  Conservative protectionists adopted the term “Obamatrade” to refer—interchangeably, in order to profit from confusion—to the TPP, trade promotion authority, and even the WTO.  During the debate earlier this year over trade promotion authority, a number of politicians fell for the simplistic but inaccurate argument that TPA would enable Obama to secretly liberalize America’s immigration laws.

The most recent right-wing, anti-trade boogieman is the idea that the TPP will enable Obama to implement the Paris climate treaty without getting approval from Congress.  Unfortunately, this theory has gained traction among respectable commentators.  Most publicly, the National Review’s Kevin Williamson, an eloquent advocate for genuine free trade, cited the back door climate treaty theory as a reason free traders should oppose the TPP.

Since it’s already doing real damage to the public debate over the TPP, let me explain the theory and why it’s wrong.  The source of the theory appears to be an article at americanthinker.com that was predictably picked up by Breitbart.com.  I’ve quoted the relevant parts below:

It turns out that Senator Jeff Sessions was correct when he said that the treaty creates a new legislative body called the “Commission,” a term meant to invoke the European Commission, known for its recent decision to require that all the countries of the European Union take in Moslem [sic] refugees from the Middle East.

Chapter 20, the environmental chapter of the TPP, already requires compliance with previous multilateral environmental agreements that have been negotiated. So, the terms of the climate treaty will likely be incorporated into the TPP when the Commission first meets after the TPP passes. This is more or less specified in Article 20.4 which states:

  1. The Parties recognise that multilateral environmental agreements to which they are party play an important role, globally and domestically, in protecting the environment and that their respective implementation of these agreements is critical to achieving the environmental objectives of these agreements. Accordingly, each Party affirms its commitment to implement the multilateral environmental agreements to which it is a party.

When President Obama finished negotiating the Iran Nuclear Deal, he went first to the UN Security Council, not to Congress, to get the deal approved. More or less the same thing could happen with the multilateral environmental agreement that Obama negotiates in Paris. It will be incorporated into the TPP, whether Congress agrees with its terms or not.

In summary, they’re claiming that the TPP creates a Commission that could amend the TPP at Obama’s urging to incorporate the climate agreement without Congressional approval, and so if Congress approves the TPP, it will open the door for Obama to unilaterally implement the climate treaty.

The theory relies on flatly inaccurate readings of the TPP’s text to concoct a complex conspiracy where none exists.

First, the “TPP Commission” is not a powerful legislative body that can alter the TPP agreement.  It is just a name for a meeting of the members’ representatives.  Chapter 27 of the TPP envisions the Commission meeting regularly to discuss certain topics.  It is not and will never become a supranational government unaccountably changing U.S. laws. 

Second, U.S. obligations under the TPP cannot be amended without Congress’s approval.  Chapter 30 of the agreement explains that any amendments must be “approved in accordance with the applicable legal procedures of each Party.”  That means it must be ratified by Congress.  The TPP doesn’t enter into force for the United States until it’s ratified by Congress, and amendments must follow the same procedures.  The TPP is not a conspiracy to bypass the U.S. Constitution.

Finally, Article 20.4 in the Environment Chapter does not require the United States to abide by any international environmental agreements.  It merely states that each party “affirms” its commitments under such agreements.  The provision is legally meaningless hortatory fluff.  In fact, one of the biggest complaints about the TPP from environmental activists is that it does not do what this theory claims.  The last four U.S. free trade agreements before the TPP did require parties to abide by their environment commitments under other treaties subject to dispute settlement.  The TPP intentionally does not.

The back door climate treaty theory may be well designed to scare conservatives who already distrust President Obama into opposing the TPP, but it is not supported by a well-reasoned argument.  

Needless to say, these sorts of exaggerations and conspiracy myths don’t help the debate.  There are, in fact, plenty of things actually in the TPP that free market advocates should oppose, though they may not be sufficient reasons to oppose the whole package.

How can you tell the difference between a reasonable complaint and a false one?  For starters, keep reading the Cato blog!  Cato scholars have been and will continue to highlight the positives and negatives of the TPP and free trade agreements generally.

But also, everyone should be especially skeptical of complaints that build on existing narratives—like Obama’s executive overreach—that are unrelated to trade policy.  These may be attempts to misdirect the debate away from relevant issues—like whether free trade is good—where popular opinion lines up with supporting the TPP.

The Department of Homeland Security has been pressuring state legislatures to implement our U.S. national ID law, the REAL ID Act. States are free to set their own policies because the DHS will always back down. But many state legislators don’t know that. They’re in a bind where they feel obligated to obey federal mandates, but they want to do right by the citizens of their states. Law-abiding Americans shouldn’t have to scrounge up long-lost identity documents, stand in line at DMVs, and see themselves entered into a national ID system just so they can carry a driver’s license.

So practical legislators are seeking that golden compromise, which the REAL ID Act seems to hold out. But watch your wallet, because a “non-federal” license may still be a national ID.

REAL ID permits the issuance of “non-federal” licenses and IDs. These can be issued without the many stringent, time-consuming, and annoying requirements of REAL ID. Such a card simply has to state clearly on its face that it may not be accepted by federal agencies for official purposes, and it must use unique designs or colors to indicate this.

But REAL ID also requires compliant states to give all other states access to the information contained in their motor vehicle databases. The law requires them to share all the data printed on the REAL ID cards, as well as driver histories, including motor vehicle violations, suspensions, and points on licenses.

That leaves an open question: Does the REAL ID Act require nationwide info-sharing on every licensee? Or just the licensees who carry REAL ID cards?

The question is important, because of the huge data security implications from exposing data about every driver to the motor vehicle bureau of every other state. A good reason to avoid REAL ID is to avoid the risk that a rogue DMV employee in any state can access the data of drivers in all the others. That’s a recipe for mass-scale identity fraud.

Drivers who are worried about identity fraud and their privacy should be able to opt out of this information sharing. While we’re at it, the privacy of security-conscious drivers could be protected if “non-federal” licenses came without the “machine-readable zone” that REAL ID requires. It allows easy collection of driver data and tracking with every swipe or scan of the card in a digital reader.

States should really resist REAL ID entirely. Congress should stop funding it and repeal the unnecessary and burdensome national ID law. But if there are to be “non-federal” IDs from compliant states, it would be nice if they offered Americans a way to opt out of the insecure information-sharing requirements in this national ID system.

Police body cameras are overwhelmingly popular across political and socio-economic demographics. However, while it is important to consider how the public views police body cameras, it is also worth noting what police law enforcement leadership thinks about the technology. Researchers from Florida Atlantic University and the University of West Florida have conducted a body camera survey on a small number of law enforcement leaders. The results show that half of police commanders would support body cameras being used in their agency and that two-thirds of commanders believe that the public supports body cameras because “society does not trust police officers.”

Survey participants were from Sunshine County, “a large southern county with 27 local law enforcement agencies, home to a number of state and federal law enforcement agencies, and a population of approximately 1.3 million people.” Each month, the leadership staff within the Sunshine County law enforcement community meet. Surveys were sent to the staff in March this year. Twenty-four surveys were completed.

The graph below shows how the respondents answered questions about the use of body cameras and their influence on police officer behavior. Fifty percent of the respondents support using body cameras in their department. The same percentage was also neutral when asked whether body cameras would improve officers’ behavior, although one-third agreed or strongly agreed.  

 

It is too early to say definitively how the use of police body cameras affects officers’ behavior. A widely cited body camera trial in Rialto, California found that the deployment of police body cameras was followed by a reduction in complaints and use-of-force incidents (see chart below).

  

However, Rialto’s experience has not been replicated in every city where body cameras have been used, and it is important to keep in mind that some of Rialto’s findings could be attributed to citizens changing their behavior around officers wearing body cameras rather than officers changing their behavior. Nonetheless, as I have argued before, police body cameras should be used regardless of the relative lack of data on their impact on officers’ behavior. 

The survey did show that a majority (54 percent) of respondents believe that body cameras will reduce the number of unwarranted complaints against officers. This isn’t surprising. Body camera footage has already proven useful in dismissing unwarranted complaints. For instance, body camera footage showed that a woman suspected of drunk driving had lied when she accused an Albuquerque, New Mexico police officer of sexual assault.

When it comes to use-of-force, police leaders are divided on whether body cameras will reduce officers’ use of excessive force, but a clear majority agree or strongly agree that body cameras “will impact police officers’ decisions to use force in encounters with citizens” (see graph below).

   

This isn’t surprising. Recently, there has been widespread coverage of police misconduct and the need for more accountability and transparency in law enforcement. Body camera footage or cell phone footage has proven invaluable in cases against officers involved in the killings of Walter Scott, Samuel DuBose, James Boyd, and 6-year-old Jeremy Mardis. Thanks to advances in technology, many instances of alleged police misconduct can be filmed and shared widely.

Videos of police encounters, of course, don’t just include bad behavior. Body camera footage has provided us with examples of police officers behaving appropriately in difficult circumstances. Nonetheless, 66.7 percent of the law enforcement leadership indicated in the survey that they strongly agree or agree that “The use of body-worn cameras is currently supported by the public because society does not trust police officers.”

Polling data from Gallup suggests that confidence in the police is declining. As the graph below shows, the portion of Americans who say that they have a “great deal” or “quite a lot” of confidence in police is the lowest it has been since 1993. In addition, the portion of Americans who say that they have “very little” confidence in the police is the highest it has been in twenty-two years. 

 

Of the 24 survey respondents, only three said that their agency was using body cameras. Those respondents who haven’t outfitted their officers with body cameras ought to consider that while public confidence in police is not as high as it once was, body cameras–when used with the right policies in place–offer an opportunity to highlight good policing while showing the public that they are committed to accountability and transparency. It’s an opportunity worth seizing. 

I’ve been watching “Childhood’s End” on the SyFy channel this week. I remember the book, a 1953 novel by Arthur C. Clarke, being a big deal when I was in junior high school. My bookish friends and I all read it. But I had little memory of the plot, so watching the show is an entirely new experience. It’s well done, mysterious, maybe a little slow. But I noticed one thing that reminds me that it was written by a British author educated in the first half of the 20th century.

The technologically superior alien Overlords arrive, take control of earth, and impose their rule on us without any real challenge. They announce that they will end war, poverty, and injustice. And they do, just like that. Sure, a few cranks in the #freedomleague complain that we’re not free, but nobody denies the peace, abundance, and good health that the Overlords have delivered. Earthlings don’t even have to work any more. That is, the book and the miniseries don’t even stop to ponder whether absolute centralized government – terrestrial or alien – could deliver more peace, harmony, and abundance than a market system. It’s just taken for granted. 

And that’s a common theme in mid-century sci-fi. In his Foundation series, Isaac Asimov imagined a branch of mathematics known as psychohistory that could predict the future. Because human action, taken en masse, can be predicted for millennia.

And as I wrote on Ira Levin’s death, his wonderful libertarian novel This Perfect Day reflected similar assumptions about centralization and government planning. The novel is set 141 years after the Unification, the establishment of a world government guided by a central computer. The computer, Uni, provides all the members of the human race with everything they need - food, shelter, employment, psychotherapy, and monthly “treatments” that include vaccines, contraceptives, tranquilizers, a drug to prevent messy beard growth, and a medication that reduces aggressiveness and limits the sex drive. Everyone loves Uni, which gives them everything they could want, except for a few hardy rebels who just value freedom.

But like Clarke and Asimov, Levin was caught in the intellectual milieu of his times. (The novel was published in 1970.) He understood the cost to freedom of a government that controlled and provided everything. But he did seem to believe that such central planning would be efficient. He had the rebels worry that if they managed to shut down Uni, planes would fall out of the sky, people would die, trains would crash, food wouldn’t get to the dinner table. In other words: centralized planning worked, in the view of Levin, Clarke, and Asimov.

In this starry-eyed view of the economic efficiency of planning, the authors were led by the world’s most famous economists. John Kenneth Galbraith, for instance, wrote, “the Russian system succeeds because, in contrast with the Western industrial economies, it makes full use of its manpower.” And Paul Samuelson wrote in his widely used textbook: “What counts is results, and there can be no doubt that the Soviet planning system has been a powerful engine for economic growth…. The Soviet model has surely demonstrated that a command economy is capable of mobilizing resources for rapid growth.” Actually, novelists writing in the 50s and 60s could be excused for their misconceptions more than Galbraith and Samuelson, economists who wrote those lines in the 1980s, only a few years before the final collapse of Soviet-style socialism.

In 1985, I had the economist Don Lavoie send Levin a copy of his fine book National Economic Planning: What Is Left?, inscribed something like “in the hopes of persuading you that central planning is no more workable than it is humane.”

I think some of the newer dystopian novels – such as Hunger Games, The Giver, and Divergence – are less prone to such misplaced confidence in planning. Those authors seem to realize that centralized control may benefit the planners, but it won’t make society prosperous. That probably reflects the failures of planning in both the communist countries and the western welfare states, which weren’t so obvious when the earlier authors were writing. Which is why writers at Salon and the Guardian keep complaining about dystopian novels and films that cause people to question the benevolence of the state.

Over a month ago — when Venezuelan’s were still living under the heel of Nicolás Maduro’s United Socialist party — Ilya Shapiro and I had a very interesting meeting with the folks behind DolarToday.  As the Wikipedia article concerning it explains, DolarToday  “is an American [nota bene] website that focuses on Latin American politics and finance.  The company is more known for being an exchange rate reference to the Venezuelan bolívar, a currency which is not freely convertible.”

My reason for attending the meeting was obvious enough: Venezuela has recently been suffering from the world’s highest inflation rate, making the Banco Central de Venezuela, Venezuela’s government-owned central bank, the current poster-child for government abuse of fiat money.  Ilya, on the other hand, was there because, besides being a senior fellow in Constitutional Studies at Cato and editor-in-chief of the Cato Supreme Court Review, he’s a lawyer.

You see, the Banco Central de Venezuela decided to sue DolarToday for “destabilizing” Venezuela’s currency.  That is, it claimed that the website, far from merely reporting the bolívar’s deterioration, was to blame for that deterioration and also for Venezuela’s general economic decline.

But hold on: doesn’t Wikipedia call DolarToday an “American” website?  It does indeed, and quite correctly.  The site is both Delaware-based and owned by U.S. citizens, who started it back in 2010.  But that hasn’t stopped the Venezuelan authorities from trying to shut it down, by filing their suit in Delaware’s U.S. District Court.

The lawsuit itself offers a remarkable glimpse at the twisted logic of totalitarian regimes.  The prologue to the plaintiff’s description of the action’s gravamen will give you the general idea:

How far will some go to enrich themselves (and their friends) and to regain the political power they crave to enrich themselves further?  Would they go so far as to hurt their own countrymen by making their already challenging lives even harder?  Defendants would.  And they have.

The 32-page suit goes on to accuse DolarToday’s owners of everything from racketeering and cyber-terrorism to attempting to overthrow Venezuela’s government.  Really you have got to read it to believe it.  If I hadn’t been told otherwise I’d have thought it a spoof.

Except there’s nothing funny about it.  Ludicrous as the suit is, the Venezuelan government isn’t laughing, which means that, although the odds of it making it to trial, much less of its ending with a decision for the plaintiff, are infinitely smaller than those of the Phillies winning the next three World Series, the defendants have got to…well, defend themselves.  That costs money.  And, despite what the Venezuelan suit alleges, the defendants aren’t rich — at least, they haven’t gotten so at Venezuela’s expense, through their website or otherwise.

But that’s not all.  The lawsuit is just one of several hardball tactics that the Venezuelan government employed in its effort to shut down DolarToday.  Back in July then-president Maduro accused the site’s owners of cyber-terrorism on national TV, threatening to have them extradited and given a dose of Venezuelan justice.  The Banco Central has also tried to take advantage of the “discovery process” connected to its suit to determine the identity of DolarToday’s anonymous Venezuelan owners and supporters, so as to be able to persecute them and their family members.

In case you are short of lawyers to hate, you will be delighted to know that Squire Patton Boggs, a U.S. law firm, is assisting the Banco Central in this noble undertaking.  So far it has pursued the case with great zeal, even going so far as to publish press releases repeating the cyber-terrorism charge along with the alleged terrorists photographs.  If that’s not enough to make you want to want to add the firm’s partners to your Valentine’s-card mailing list, consider that the same  firm also happens to be representing Campo Flores,  Maduro’s stepson, who has been indicted on drug trafficking charges by the U.S. Justice Department.

Just how much, I wonder, do top U.S. law firms charge these days per billable hour spent intimidating U.S. citizens and their friends, for the purpose of suppressing freedom of information?  Whatever it is, I’m sure the Central Bank of Venezuela can afford it.  After all, what’s a few more bolívars to them?

Alas, Cato’s Center for Monetary and Financial Alternatives can’t print its own money, yet.  But that doesn’t mean that we’re taking this lying down.  In fact, we are doing something just by drawing attention to what the Banco Central is up to.  But we are also making sure that, if anything should happen to DolarToday, it won’t do that bank or any other enemy of freedom a lick of good, because people will still be able to get all the information they want about the true state of Venezuela’s currency by looking it up on our own Troubled Currencies Project.  There they will find all the information that DolarToday itself supplies, and much more besides, all of it thanks to Cato Senior Fellow and FX-expert extraordinaire Steve Hanke.  Indeed, DolarToday just recently announced that it now relies entirely on Steve’s own estimates of Venezuela’s inflation rate.

So, if the Central Bank of Venezuela really wants to snuff-out information concerning its mismanagement of the bolívar, shutting down DolarToday just won’t cut it:  it’s going to have to shut us down as well.  So how ‘bout it, guys?  Our lawyers can’t wait!

[Cross-posted from Alt-M.org]

The first issue of the Financial Time’s FTWeekend in December 2015 featured its regular “Lunch with the FT.” Richard Leakey was Clive Cookson’s luncheon guest, and Cookson’s account was appropriately titled “From Fossils to Film Stars.” Yes, Leakey, an accomplished paleontologist and son of Louis and Mary Leakey, has, like his parents, made many headline-grabbing fossil finds. He has also rubbed elbows with plenty of film stars. Just last month, Angelina Jolie and Leakey were in London, where they discussed plans for a movie in which Brad Pitt will portray Leakey.

At 70 years of age, Leakey is still going strong. Among other things, he is busy building the Turkana Basin Institute, which he founded, into a world-class research center on the site in northern Kenya where the Leakeys made many notable discoveries, including an almost complete 1.6 million-year-old skeleton known as Turkana Boy. But that’s not all Leakey is up to. Recently, he was appointed by President Uhuru Kenyatta to chair the Kenya Wildlife Service, which Leakey founded and served as director-general from 1989-1994.

In addition to paleontology, Leakey has a passion for wildlife conservation. I learned of this during my first lunch with him in the spring of 1972. It was then that the anthropologist Neville Dyson-Hudson, an expert on East African pastoral peoples, and I broke bread with Leakey at the Johns Hopkins Faculty Club in Baltimore. I anticipated plenty of paleontology and anthropology, but those weren’t on the menu. The conversation quickly turned to the topic that most interested Leakey, and as it turns out, the reason why my former colleague Dyson-Hudson had invited me to lunch in the first place: the economics of natural resources.

Leakey had a vision of land use and wildlife resources in East Africa. His observation was that the East African savannahs were, in large part, common property resources. In addition, Leakey noted that the wildlife that roamed over these vast savannahs were fugitive common property resources. He concluded that, unless property rights could be established, both the savannahs and wildlife would eventually be destroyed. For him, this would be a great tragedy not only for the wildlife, but also the indigenous peoples living off the lands in East Africa.

Leakey questioned whether the current system – burdened with its common property problems and regulated by a very British-type system of hunting rules (charges for hunting licenses and penalties for unlicensed hunting, violations of closed seasons and the killing of protected species) – was sustainable. He also questioned whether parks and game reservations – coupled with restrictions on the trade of wildlife meat, skins, and trophies – would actually conserve wildlife. Leakey’s conjecture was: if property rights in the savannahs and wildlife resources could be established, they could be properly managed to enhance land-use productivity. This would, he conjectured, give wildlife economic value, save it from destruction, and enhance the economic well-being of those indigenous peoples who co-exist among the wildlife herds in East Africa.

Leakey wanted to know what I thought of his ideas. Could good property rights cut down on poaching and corruption, save wildlife and enhance the productivity of East Africa’s savannahs? Could well-managed game cropping, trophy hunting, tourism and so forth, coupled with pastoral herding, generate more prosperity than the current land-use arrangements? And could such a wildlife-oriented economy co-exist with traditional herding? On-and-on the questions flowed.

I responded that I thought Leakey was, in principle, on the right track, but that definitive answers about just how one would establish property rights in East Africa’s common property resources, as well as the economic values involved, were practical, empirical questions. Field work and the collection of primary data, among other things, would be required. In addition, I also recall telling Leakey that the questions he raised posed a complex production economics problem. On that point, I was certain. I had learned my lessons on production economics from one of my professors, the great John M. Cassels, an economist who had written a classic essay on that topic in 1936: “On the Law of Variable Proportions.”

Leakey responded positively: he invited me to prepare a research proposal, and subject to its approval, to join him at the National Museums of Kenya as a Research Associate.

I agreed and wrote a proposal, which was approved. In the summer of 1972, I arrived in Nairobi, where I took up residence at the Norfolk Hotel. In addition to spending hot days going over records of hunting licenses, ivory and game trophy export permits in Nairobi, I spent about a month in the field on safari. I have many memories of that. Two notable ones come to mind.

While camping in the Masai Mara National Reserve, I observed first-hand a great deal of poaching, some of it by government employees.  

I also ran into Joy Adamson of Born Free fame out in the bush. It was in the middle of the afternoon, so Adamson had her tracker and scout lay a fire, and we had tea. We spent an hour or so chatting about the economics of wildlife and conservation. Adamson gave my research project a thumbs up, which was very encouraging.

What was not encouraging were some of the findings in those records back in Nairobi. When I added up the number of hunting licenses issued each year and the export permits for ivory, etc., there was a huge gap. Legal exports of wildlife trophies, ivory, etc.–which were recorded at the Customs Department–exceeded hunting licenses issued by the Game Department by a wide margin. There was Trouble in Paradise. Indeed, all my arithmetic pointed to a massive amount of corruption at the very highest levels of government. When the Chief Game Warden figured out where my collection and analysis of (what were considered to be) rather obscure primary data were pointing, I became persona non grata. Shortly thereafter, I caught a flight from Nairobi to Switzerland, where the World Wildlife Fund (WWF) is located.

It was at the WWF headquarters in Morges, Switzerland that I started to put some of my notes together. Eventually, many of my findings appeared in a piece I co-authored with Robert K. Davis and Frank Mitchell “Conventional and Unconventional Approaches to Wildlife Exploitation,” which was published in 1973. We concluded that the system of parks, protection, prohibitions on trade and traditional hunting rules and regulations – no matter how well intended – were destined to fail to generate prosperity and conserve wildlife. Only by establishing good property rights in land and wildlife will these resources be rendered valuable. Markets for them would then develop. In consequence, they would be wisely used, protected, and conserved. Prudent resource use is, as it always has been, all about property, prices, markets and legitimate trade.

If Leakey is to succeed during his second tour as the leader of the Kenya Wildlife Service, he must do something big, bold, and unconventional. To that end, he should revisit the findings of the research project he initiated many moons ago at Johns Hopkins.

According to four American researchers–(Baumann et al. (2015))–projections of ocean acidification, in which the average pH of the open ocean is predicted to decline by 0.3 pH unit over the next century, have “heightened the need to better understand the sensitivity of marine organisms to low pH conditions.” As a result, numerous ocean acidification experiments have been conducted on various marine organisms, producing a wide range of results. This “complexity of organism responses to elevated CO2,” continue Baumann et al., “appears to stem, in part, from insufficient knowledge and thus appreciation of the scales of natural pH variability experienced by marine organisms in their habitats.” Coastal environments, for example, generally experience greater fluctuations in pH than the open ocean. And since the majority of ecologically and economically important marine species spend a vast portion of their life cycles in coastal environments, the authors say there is a great need to “characterize [such] marine habitats in terms of their short- and long-term pH variability.”

In an effort to fill this knowledge gap, this team of researchers embarked on a journey to “characterize the patterns and magnitudes of diel [daily], seasonal, and interannual fluctuations in pH and dissolved oxygen (DO) in an undisturbed tidal salt marsh adjacent to Long Island Sound, using a multiyear, high-frequency data set.” Flax Pond (40.96°N, 73.14°W), a one square kilometer tidal salt marsh located on the north shore of Long Island Sound, served as the specific study site where data were collected between April 2008 and November 2012. And what did those data reveal?

As shown in Figure 1, large fluctuations in pH occurred at Flax Pond on both daily and seasonal time scales. The daily pH range varied from a low of 0.22 unit during the winter to a high of 0.74 unit in the summer. Seasonally, the highest pH values occurred in February (average of 8.19) and the lowest values (average of 7.59) occurred in August. Thus, average pH conditions in Flax Pond “decline from early spring until late summer by approximately 0.6 units” and “average diel [daily] pH fluctuations exceed 0.7 units and commonly approach one unit of magnitude in July and August.” Yet even more extreme fluctuations in pH were found to occur within a single tidal cycle. The right panel of Figure 1 presents a three-day record of detailed measurements that reveal a pCO2 fluctuation “between ~350 µatm and nearly 4,000 µatm within one tidal cycle.” Thus, within a few short hours, the marine life within Flax Pond was subjected to a pH fluctuation that reached values as low as 6.9, which is nearly 1 full pH unit below the predicted decline by the end of this century.

Figure 1. Left panel: monthly averages of the daily pH range from Flax Pond salt marsh, averaged across the period 2008-2012. Center panel: monthly mean pH values (black circles connected by the red line with ±1 SD shown in shading) from Flax Pond salt marsh averaged across the period 2008-2012. The blue line on the y-axis indicates the open ocean pH decline since the mid-1800s, while the red line indicates the projected decline between now and the end of the 21st century. Right panel: Variations in pH (lower panel, red line) and pCO2 (upper panel, green line) from Flax Pond salt marsh over five tidal cycles across a three day period in late July, 2012. Adapted from Baumann et al. (2015).

With respect to the cause of these large variations, Baumann et al. state they are chiefly biologic, the magnitude of which is “modulated by tides and the time of day, with the most acidic and hypoxic conditions occurring during low tide at the end of the night” due to community respiration. During the day, the pH rises as photosynthetic marine life assimilate CO2 and incoming water of a higher pH from the open ocean flows into the marsh from the incoming tide.

In discussing the implications of their findings, the American researchers note that the highly variable pH conditions observed in Flax Pond, though higher in magnitude, are characteristic of observations made in other coastal locations. However, such fluctuations have “yet to be adequately represented” in laboratory ocean acidification experiments, where the pH change is near unanimously held at a constant value and may falsely project a marine organism’s response to ocean acidification out in the real world of nature.

Perhaps the most significant finding to be gleaned from this analysis, however, is that fact that despite current daily and seasonal pH fluctuations that often exceed – and by more than two-fold – the projected 0.3 unit decline that acidification alarmists expect to wreak havoc on marine ecosystems between now and the end of the century. This salt marsh is teeming with life, including the marsh’s “main founding angiosperm Spartina alterniflora, … ribbed mussels (Geukensia demissa), crabs (Seasarma reticulatum, Uca pugnax, Uca pugilator, and Dyspanopeus sayi), and forage fish like Atlantic Silversides, Menidia menidia, and Killifish, Fundulus spp. (Hovel and Morgan 1997), which comprise major prey items for transient predators like striped bass or bluefish (Tupper and Able 2000). Clearly,” Baumann et al. continue, “such marsh organisms and their offspring cope with frequent periods of high CO2 and low oxygen conditions in their habitat, as well as with large diel to seasonal fluctuations in both parameters. Hence, many tidal salt marsh organisms and – more generally – coastal marine species may prove to be largely insensitive to elevated CO2 levels (Frommel et al. 2012; Hendriks et al. 2010; Hurst et al. 2013), particularly levels mimicking the predicted increase in average open ocean conditions over the next 300 years (i.e., up to 2,000 μatm; Riebesell et al. 2010).”

 

References

Baumann, H., Wallace, R.B., Tagliaferri, T. and Gobler, C.J. 2015. Large natural pH, CO2 and O2 fluctuations in a temperate tidal salt marsh on diel, seasonal, and interannual time scales. Estuaries and Coasts 38: 220-231.

Frommel, A., Schubert, A., Piatkowski, U. and Clemmesen, C. 2012. Egg and early larval stages of Baltic cod, Gadus morhua, are robust to high levels of ocean acidification. Marine Biology 160: 1825-1834.

Hendriks, I.E., Duarte, C.M. andÁlvarez, M. 2010. Vulnerability of marine biodiversity to ocean acidification: a meta-analysis. Estuarine, Coastal and Shelf Science 86: 157-164.

Hovel, K.A. and Morgan, S.G. 1997. Planktivory as a selective force for reproductive synchrony and larval migration. Marine Ecology Progress Series 157: 79-95.

Hurst, T.P., E.R. Fernandez, and J.T. Mathis. 2013. Effects of ocean acidification on hatch size and larval growth of walleye pollock (Theragra chalcogramma). ICES Journal of Marine Science 70: 812-822.

Riebesell, U., Fabry, V.J., Hansson, L. and Gattuso, J.P. 2010. Guide to best practices for ocean acidification research and data reporting. Publications Office of the European Union: 260.

Tupper, M. and Able, K.W. 2000. Movements and food habits of striped bass (Morone saxatilis) in Delaware Bay (USA) salt marshes: Comparison of a restored and a reference marsh. Marine Biology 137: 1049-1058.

Much is said these days about the mismatch of missions and resources for the military. A recent Rand Corporation report warned that failing to deploy a large enough Army could “lead to a failure of the U.S. strategy and subsequent regret.”

But as I point out in National Interest online, “the solution is not to spend more. It is to reassess foreign policy objectives. Better to scale back an over-ambitious strategy than to waste scarce resources pursuing dubious goals.”

For instance, Rand pointed to 2007-2008, when the Bush administration decided to increase combat forces in both Iraq and Afghanistan. The report explained: “Unfortunately, insufficient ground forces existed to meet the demands in both Iraq and Afghanistan.”

Yet what was achieved by both of these wars? The disastrous Iraq invasion was misguided from the start. Little more has been achieved in Afghanistan after14 year of nation-building.

The problem was not too few troops. It was the wrong objectives.

That continues to be the case. Rand addressed contingencies involving the Islamic State, Russia in the Baltics and Ukraine, and North Korea. To “limit regret” in confronting such challenges, Rand advocated adding more soldiers.

Better would be reducing requirements. After relying on America for decades, Washington’s defense dependents should do more to protect themselves.

First there’s the Middle East and the Islamic State. If the mission in these areas changes, noted Rand, then U.S. forces “would need to increase significantly.”

Yet Yemen long has been a mess and the Houthis have been fighting the central authorities for decades. There’s no reason to believe that keeping combat forces in Afghanistan for another year will do more than prolong failure.

As for ISIL, where are America’s supposed Arab allies? Most have essentially gone AWOL. Yet the Islamic State is essentially at war with every major country in the Middle East. Counting paramilitary forces, more than a million men are available to deal with a couple tens of thousands of ISIL fighters.

The second “threat” to the U.S. comes from Moscow. In the Rand analysts’ view, some 120,000 additional U.S. army personnel are required to confront possible Russian aggression.

Yet while the lawless dismemberment of Crimea offends Americans’ sense of justice, it threatens neither the U.S. nor Europe. As for garrisoning the Baltics, where are the Europeans? The European Union has a larger population and economy than America.

Finally, there’s North Korea. Even Rand acknowledged that “a wealthy and technologically advanced South Korea can now provide well-trained and armed forces to defeat a conventional invasion.” But the researchers cited the North’s artillery, missiles, and unconventional capabilities and feared collapse would leave nuclear materials vulnerable to theft.

Nearly 200,000 extra U.S. soldiers could be needed.

But where are the South Koreans? With around 40 times the economic strength and twice the population, they could put more men under arms.

And how about neighboring states? The studious refusal of the South Koreans and Japanese to cooperate depends on Washington’s continuing willingness to step into the gap.

Moreover, China would not be comfortable with 150,000 U.S. soldiers heading toward the Yalu. Beijing might intervene to preserve a puppet rump state, keep U.S. forces away from the border, and collect nuclear materials.

Pushing defense responsibilities back on those who actually are threatened is the best way to close the strategy-resource mismatch. Rand’s objection is striking: “this approach ignores the fact that the most capable U.S. allies are currently cutting their ground forces more than we are and that they rely on U.S. ground forces for much of the combat and logistics support they receive during deployed operations.”

Yes, because Washington allows them to do so. But if they won’t defend themselves, why should Washington do so?

Facing an entitlement tsunami, Americans soon will have little choice but to expect their foreign “friends” to do more. The U.S. should start shifting defense responsibilities now.

There is a supposed “secret policy” that prevented consular and immigration officers from checking Tashfeen Malik’s social media accounts where she wrote about jihad (possibly under a pseudonym or in personal messages).  If her statements were discovered then she would have been denied a visa, preventing the atrocity.  This is getting a lot of attention on blogs and Secretary Jeh Johnson responded by saying that there are certain limits that probably apply to personal messages although he’s unclear. 

After following this controversy, I heard from five different immigration attorneys that there is no such secret policy and their clients’ routinely have their social media accounts checked by immigration officials – or at least have heard of it happening. 

Matthew Kolken of Kolken and Kolken in Buffalo, New York told me:

The first time I confirmed that the government was investigating social media was around 2009 when an adjudicator at a marriage fraud interview confronted my client with a series of pictures he was tagged in on Facebook. The only person more surprised than me was his wife when she saw that the pictures were posted by his girlfriend the previous weekend.  The silver lining is that when the officer witnessed my client’s rage he approved the application on the spot.

Charles Kuck at Kuck Immigration Partners in Atlanta, Georgia wrote:

USCIS and other government immigration agencies have been using social media for at least the last five years in naturalization, green card, and visa cases.  It is disingenuous of USCIS to now say they have not used information gleaned from these sites to question and even deny applications.  We have advised clients for years of this practice by USCIS, ICE, and other DHS agencies as well as by the Department of State.

Greg Siskind at Siskind Susser PC wrote:

We’ve heard anecdotally for years about how immigration examiners will look at social media and scour the Internet when adjudicating a case and I’ve told clients to assume that their online history is being reviewed.  But the immigration bar’s understanding of this has been vague – when it happens, what they’re looking for, what sites they’ll look at, whether they have a way of looking at password-protected pages, etc.  We did just hear from a client who is applying for naturalization who received an inquiry from the FBI regarding his posting a statement where he actually denounced terrorism.

Aileen Josephs wrote:

The USCIS office in West Palm Beach, Florida has and continues to explore social media (Facebook) with marriage cases.  Before the interview, they do in fact explore postings to see if the marriage is bona fide. The excuse that the Administration is giving that they do not have a policy of using social media is incorrect.  They have and they do.  The question is why did they not use it in the US Embassy in Pakistan?  Who interviewed Ms. Malik at the Embassy?  An American State department official or a paid, local that works at the Embassy?  So many questions that need to be answered.

Bryan Johnson at Amoachi and Johnson, PLLC told me:

I don’t have any anecdotes of clients being confronted with information from their Facebook profiles but the federal government’s claim that it would be impossible to vet social media accounts of visa applicants is implausible at best.  The government has time to interview every applicant in person so therefore they would have time to do a brief social media search – it takes about two minutes.

I’m not convinced this “secret policy” to ignore social media is real after hearing from these professionals.  Here’s to hoping that reporters will seek to verify whether such a policy exists. 

Sen. Jeff Flake (R-Ariz.) follows retired Tom Coburn in reporting on the ludicrous waste of taxpayer dollars in Washington with “Wastebook 2015: The Farce Awakens.” Alas, the waste never sleeps, despite the supposed austerity that we hear so much about.

For instance, the National Institutes of Health spent about $10 million on studies of monkeys on treadmills. The results are to help “address physiological responses of exercise in a marmoset model.”

The Agency for International Development dropped $2.1 million on tourism promotion for Lebanon. Last May the State Department issued a travel advisory urging Americans to avoid this neighbor of Syria “because of ongoing safety and security concerns.”

The National Institutes of Health used $5 million to convince “hipsters” to stop smoking. Parties were organized for and payments were made to persuade Hipsters to quit tobacco.

The National Science Foundation provided $5 million to figure out how long a “koozie” would keep a beer cold. Researchers instructed drinkers not to wipe off condensation drops, which would warm the drink.

The National Institute of Drug Abuse spent almost $1 million to learn that pizza may be as addictive as crack cocaine. At least to college students. Perhaps the Obama administration plans a War on Pizza?

The Department of Agriculture (known as USDA) devoted $119 million in 2015 to underwrite the tobacco industry. Whose prime product the government is paying Hipsters not to use.

NSF provided $276,194 to figure out the impact of physical attraction on dating. Spoiler alert: physical attractiveness helps.

The Department of Defense, with nothing else in the world to do, is spending $2 million to develop music-playing robots. Both trumpet and jazz.

USDA provided $79,000 for a “Broadway and Brunch” party in Redlands, California to promote local farmers. Guests got to sing their favorite show tunes.

NSF shows up again with $2.6 million to promote the use of art for science. Like mimicking moisture vaporizers from the first Star Wars movie.

NSF dropped nearly a million dollars to study how online dating affects relationships. It does.

SBA provided $8500 to Circus Mojo, a Kentucky traveling circus, to travel. The players joined the governor on a trade mission to Canada.

USDA offered a $55,000 grant to study the potential of commercial reindeer herding in Alaska. Industry officials say the biggest problem in meeting existing demand has been department regulations governing what it labels “game meat.”

The Federal Emergency Management Agency paid $180,000 to elevate a beachfront cottage five feet. After spending $40,000 a few years before to raise the building three feet.

NSF spent $2.6 million studying why tweets are retweeted. It helps to be a celebrity and write well.

NSF dropped nearly a million bucks to study fighting by mantis shrimp. Size didn’t always determine the winner.

The Department of State spent $35,000 on a grant to promote cartooning in India. Which, the Department admitted, already has “a rich history of cartooning.”

NSF gave $185,000 to help New York’s Ithaca College host a “Back to the Future Day.” It featured action figures on hoverboards.

USDA devoted nearly a million dollars to Vermont Law School’s “How to Use a Lawyer” guide. The law school called it “vital work.”

NASA provided $3 million for a mock trip to Mars filmed in Hawaii. Conclusion: personality conflicts arise in when people are stuck together for an extended time.

USDA spent $5 million on the “Ultimate Tailgating Package” for fans attending a University of Nebraska football game. No one ever accused Cornhusker fans of not knowing how to tailgate.

On the waste goes. Money for a robot lobby greeter, fat detector, sexist anti-drunk driving campaign, “ethanol blender pumps,” piñata appreciation, “Boat to Plate” app for fish eaters, reader recommendations for library patrons, and more.

For most of us, as I point out in American Spectator, “the loss of a few thousand or million dollars matters. But obviously not in the nation’s capital. It’s time for voters to change that.”

The Federal Reserve is set to act this week to raise short-term interest rates.  There are a number of technical and policy questions raised by this long-anticipated decision.  The Fed conventionally raises short-term interest rates by selling short-term Treasury obligations.  It no longer owns any short-term Treasuries to sell.

Based on prior statements, the Fed is expected to increase the interest rate on reserves held by commercial banks at Federal Reserve banks.  The Fed is operating in uncharted waters.  It is not clear how increasing interest on reserves will affect other short-term interest rates.  Further, the Fed is already paying commercial banks over $6 billion in interest payments annually.  That amounts to a fiscal transfer from taxpayers to bankers.  Raising rates will only increase that transfer.  As we approach a presidential election year, that is likely to become grist for political mills.

The Fed could also raise the interest rate on reverse repurchase agreements at a facility at the New York Fed.  The Fed is effectively borrowing money from financial institutions like money market funds.  It functions as a subsidy to those institutions, as the Federal Reserve System has no business or policy reason for borrowing money.  Once again, I would anticipate political questioning of such a move.

Free-market economists are in a policy conundrum.  Most have long advocated higher interest rates.  But the facilities through which that policy will now be effected have questionable validity.  Some of the same economists advocating higher short-term rates have also been critical of the Fed’s payment of interest on reserves.  Those economists must now ask for more of something they wanted none of.  Operational considerations are confounding substantive policy.

All of the above is a consequence of the Fed’s having implemented extraordinary monetary policy.  That included shedding all liquid, short-term Treasury obligations in favor of loading up on risky and illiquid, long-term debt obligations.  Critics argued the Fed would rue the day it did that.  Now that day has arrived.

[Cross-posted from Alt-M.org]

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

Let’s consider each amendment in turn.

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

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

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

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

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

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

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

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

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

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

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

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

Let’s enjoy the holidays (and remember many of the positive trends that are underway) but let’s also resolve to be more vigilant about defending our Constitution. To learn more about Cato’s work in defense of the Constitution, go here. To support the work of Cato, go here.

Some prominent conservatives like Larry Kudlow, David Bossie, and Ann Coulter have now called for a complete moratorium on immigration because of the threat of Islamic terrorism.  However, they all focus on the benefits and neglect the costs of such a policy.  An immigration moratorium will cost the U.S. economy about $200 billion annually on net, even if it is successful at significantly reducing terrorism.

Costs of Terrorism and the Benefits of an Immigration Moratorium

According to the New America Foundation, jihadists have killed 45 Americans on U.S. soil since 9/11.  John Mueller estimates that each murder by jihadists costs about $15 million – double that of other deaths.  That means the cost of jihadist terrorism on American soil, just taking in to account the loss of life, is about $50 million a year since 9/11.  Let’s double that to $100 million to try and take account of other costs, excluding counter-terrorism spending. 

Under the most pessimistic assumptions, 73 percent of convicted terrorists in the decade after 9/11 were foreign-born.  Assuming that those 73 percent of immigrant terrorists are responsible for 73 percent of the jihadist murders since 9/11, their annual cost is $73 million.  At best, assuming there are no immigrant terrorists currently in the United States, the benefits of reducing terrorism via an immigration moratorium are $73 million annually.       

Costs of a Moratorium

Of course, measuring just the benefits of a moratorium is only half of the relevant calculation.  We must also estimate the economic costs of a moratorium on all future immigration.  Professor Benjamin Powell of Texas Tech University estimated the economic costs of a total immigration moratorium at $229 billion annually – $193 billion in rent-seeking costs and an additional loss of the conservatively estimated $36 billion annual immigration surplus.  Powell’s estimate is remarkably similar to Raul Hinojosa-Ojeda’s related estimate that removing 11 million unauthorized immigrants would lower GDP over a ten period by $2.6 trillion (Powell’s ten-year cost is $2.3 trillion).

For the purposes of this projection, I’m going to round down the economic costs of a moratorium to a mere $200 billion annually.  Thus, an immigration moratorium that eliminates 73 percent of Islamic terrorism in the U.S. will produce a net cost to our economy of $199,927,000,000 a year.  Under the current threat faced by Islamic terrorism, the cost of a moratorium is about 2000 times as great as the benefits under assumptions that greatly exaggerate the threat and undercount the costs.  A moratorium produces huge economic costs for very minor benefits. 

When Is a Moratorium Worth It?

There are situations where a total moratorium on immigration would be a cost effective counter-terrorism measure, assuming there are no cheaper or more effective security options available.   

For an immigration moratorium that costs the U.S. economy $200 billion annually and reduces the number of terrorist murders by 73 percent, it would have to prevent 800 San Bernardino-sized terrorist attacks each year (73 percent of the 1,096) just to break even as a counter-terrorism policy – leaving 296 additional attacks a year undeterred (see Table 1, row 4).  If we lived in such a dire security situation then 15,344 Americans inside of the United States would be murdered each year by Islamic terrorists and we would be suffering almost 5.6 San Bernardino-level attacks per week.  As tragic and brutal as the San Bernardino terrorist attack was, we can all be grateful that it is rare and that the number Americans actually murdered by jihadists every year is about one-five-thousandth of that number.            

Table 1

Breakeven Costs of Terrorist Attacks and Immigration Moratorium

Risk Reduction (Percent)

San Bernardino

Boston Marathon

September 11th

 

$250,000,000

$500,000,000

$200,000,000,000

10

8,000

4,000

10

25

3,200

1,600

4

50

1,600

800

2

73

1,096

548

1.37

75

1,067

533

1.33

90

889

444

1.11

100

800

400

1.00

Source: Table design and formulas from CHASING GHOSTS by John Mueller and Mark Stewart, pp. 140-147.  Mueller and Stewart estimated the costs for the Boston Marathon and 9/11 attacks while I estimated the costs for Fort Hood and San Bernardino.      

Conclusion

A moratorium on all immigration to reduce the threat of Islamic terrorism will cost about $200 billion a year more than it will produce in benefits under the very generous, and unrealistic, assumptions I’ve made here.  Security is an important service vital to the maintenance and prosperity of every civilization but we must still judge its worth using the same economic cost-benefit tools we apply to every other decision.      

Although the threat from immigrant-caused terrorism is low, some small immigration reforms like allowing immigration agents to search social media or to focus their efforts entirely on detecting security concerns rather than fake marriages will be far more cost effective than a $200 billion annual immigration moratorium.  Perhaps we should try those cheaper methods first? 

Would more vigorous antitrust enforcement reduce income inequalityHow should genetically modified organisms be regulatedHow should government regulate speech by professionals?

The answers to these questions can be found in the Winter issue of Regulation.

The short answer to the first question is no.  For the longer answer read Professor Dan Crane’s article.  The short answer to the second question, provided by Henry Miller and John J. Cohrssen, is that the regulation of biotechnology should be proportional to the risks it creates.  And those are generally less than the risks created by traditional cross breeding techniques that are widely accepted and unregulated.  Tim Sandefur rhetorically answers the third question by asking why can government regulate professionals’ speech, when non-professionals can freely engage in the same speech though they lack the professional expertise?

In another article on professional speech, University of Michigan, Flint professor Thomas Hemphill explores the implications of recent court rulings about what manufacturers can “say” to health professionals about so-called “off-label” uses of prescription drugs.

Many believe that early-childhood-intervention programs reduce the educational achievement gap between low-income and other children.  Many of these programs have been subject to random-assignment evaluation and the results often do not show positive effects.  Even though all policy professionals support the use of scientific evaluation of social programs in theory, many have resisted the implications of negative evidence for the particular programs they favor.  University of Missouri Law professor Philip Peters examines the evaluation of such programs and argues we should follow the evidence and terminate those programs that do not work.

Cal State, Northridge economist Robert Krol finds that transportation project projections consistently under predict costs by at least 25 percent.  They also over predict rail passenger traffic and under predict road utilization.  And these errors have not improved over time.

In “Using Delegation to Promote Deregulation” legal scholar Michael Rappaport argues that while libertarians would prefer that Congress enact statutes with explicit instructions for agencies, most laws delegate policy problem definitions and solutions to agencies.  Because efforts to fight Congressional delegation to agencies appear ill-fated, Rappaport advocates the creation of a special agency that would have the same incentives and abilities to deregulate that regulatory agencies have to regulate.

The review section contains reviews of books on a range of interesting topics. Included are reviews of Edwards Stringham’s new book Private Governance by Thomas Hemphill, Christopher and Rachel Coyne’s Flaws and Ceilings by David Henderson, and George Leef’s review of Daniel DiSalvo’s Government Against Itself.

Finally, my Working Papers column this issue describes papers on air pollution, CAFE standards, and cigarette taxation.

Read the full issue here.

There has a recent surge of allegations that the underlying motive for outrages such as the attacks in Paris and San Bernardino is that radical Islamists hate Western values. Senator Marco Rubio is perhaps the most blatant in pushing that thesis. One of his campaign commercials asserts flatly that such violent extremists target us because we let women drive and girls attend school.

That argument is simply an updated version of the meme that President George W. Bush highlighted in the period following the 9-11 attacks. According to Bush and his supporters, Islamists hated us “because of our freedoms.” Just nine days after the assault on the World Trade Center and the Pentagon, Bush addressed Congress and emphasized that theme. “They hate our freedoms,” he said, “our freedom of religion, our freedom of speech, our freedom to vote and assemble and disagree with each other.” Such an argument was simplistic and misleading then, and it is simplistic and misleading now.

That is not to say that it is impossible to find a jihadist somewhere who is so unhinged that he would want to slaughter Americans simply because of a virulent hatred of Western culture. But even the bipartisan commission that investigated the 9-11 attacks conceded that the primary driving force for Islamist terrorism was anger at U.S.-led foreign policy in the Middle East. And there were no pacifists, “blame America first” types, or “isolationists” on that commission. The members made the grudging admission that Western actions in the Middle East were root cause of Islamic terrorist blowback because there was overwhelming evidence that it was true.

The Marco Rubios of the world act as though Western policy and the wreckage it has caused in the Muslim world is an irrelevant factor with respect to terrorism. But the United States and its allies have been meddling extensively throughout the region for decades. Indeed, beginning with the military intervention in Lebanon in 1982, they have been almost continuously imposing punishing economic sanctions on, bombing, or invading Muslim countries. Such conduct, and the acute suffering it has caused, might have a little something to do with the rage that is now directed at the West.

Indeed, there are more than a few hints of that motive from the statements of radical Islamic operatives. Osama Bin Laden responded directly to Bush’s facile argument that al-Qaeda attacked the United States because of a hatred of Western values. Bin Laden noted that his group had not attacked countries such as Sweden. That was true even though Scandinavian culture (especially its liberal sexual mores) was far more offensive than American culture to conservative practitioners of Islam. The reason for the restraint, Bin Laden emphasized, was that Sweden had not attacked Muslim countries. Indeed, he stated categorically that “any nation that does not attack us will not be attacked.”

It is also pertinent to remember the words of the terrorist gunmen at the Bataclan concert hall in Paris. They did not shout out: “This is because you let women drive!” Instead, they shouted: “This is for Syria!” France (along with the United States and other Western allies) had been bombing areas controlled by ISIS in Syria for more than a year. The Paris attacks were bloody payback.

Lest the usual flock of neoconservative hawks try to distort this analysis as a “justification” for terrorism, let’s make it perfectly clear: deliberately attacking innocent civilians is never justified, no matter what the underlying grievance. But stressing that point is far different from pretending that there is no underlying grievance, which is what Rubio and his ideological cohorts are attempting to do.

Ending the U.S.-led policy of militarized meddling in the Middle East might not mean the end of radical Islamic terrorism directed against the West—at least not immediately. But the old adage that when you find yourself in a hole, your first action should be to stop digging, applies here. As a first step, we need to stop pursuing the policies that have produced such catastrophic blowback.

Thirty years ago, in the case Williamson County Regional Planning Commission v. Hamilton Bank (1985), the Supreme Court created a rule that effectively bars regulatory-takings plaintiffs from ever receiving the just compensation they are due under the Fifth Amendment. Williamson County’s noxious rule says that federal courts won’t hear Takings Clause claims until the state has not only issued a final order taking the plaintiff’s property but the plaintiff has been denied just compensation after seeking it “through the procedures the State has provided for doing so.”

This state-litigation requirement means that when the government issues a regulation that diminishes property values—for instance, by saying that the owner can’t do any excavation on rocky terrain that can’t be developed without it, as was the case in Arrigoni Enterprises v. Town of Durham—the landowner can’t file its claim in federal courts until it has lost in state court. Not only does this state-litigation rule severely delay the landowner’s remedy; in most cases, it means that the taking will go unremedied altogether.

One reason to have federal courts is to ensure that citizens whose rights have been violated by their state can have their rights vindicated by a truly impartial judge. The state-litigation requirement, however, often prevents federal courts from ever seeing such cases because a number of legal doctrines intended to promote fairness and efficiency bar the plaintiff from even seeking redress in federal court after a state court has already considered the matter. This means that the only way for many plaintiffs to get federal judicial review is to ask the U.S. Supreme Court to take their case after exhausting state courts—an uphill battle to say the least.

Arrigoni Enterprises decided not to pursue its federal Takings Clause claim in state court, and thereby presents the Supreme Court with the opportunity to overrule Williamson County’s state litigation requirement once and for all. Cato has filed a brief supporting Arrigoni’s petition. We argue that Williamson County’s rule was not tenable when written and has proven unworkable. The rule relegates Takings Clause claims to second-class status among other federal constitutional provisions, even though these claims are no more premature and state courts have no greater experience to address them than any other constitutional claims.

Four justices indicated 10 years ago in San Remo Hotel v. San Francisco (2005) that they would be willing to reconsider the wisdom of the state-litigation requirement in an appropriate case. That case has arrived, but if the Court declines to overrule the requirement outright it should at least resolve the current circuit split by ruling that the state-litigation rule is merely prudential such that federal courts can disregard it under the right circumstances and hear Takings Clause cases not litigated through state courts. 

This post, and the brief it discusses, was co-authored by Cato legal associate Jayme Weber.

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