Policy Institutes

I’ve previously written about the Compact for America, an organization that advocates a balanced budget amendment (BBA) to the Constitution through an interstate compact.  (Full disclosure: I’m on the CFA Council of Scholars.)

Not surprisingly there are several organizations and grassroots movements out there pushing BBAs. They all have their pluses and minuses, and they’re all trying to mobilize states to get behind their efforts to get Congress to call an Article V amendment convention.

As I’ve detailed before, CFA’s procedural advantage is that once a state has acted, it’s done; there’s a cascading turn-key operation that goes into effect once three-quarters of the states have passed the enabling legislation and Congress has acquiesced. CFA currently has four states signed up – Georgia, Alaska, Mississippi, and North Dakota – with various others considering the relevant legislation (I testified before the Texas legislature earlier this year). 

Other efforts claim to have more states signed up but the problem is that the BBA idea has been around for so long that the existing state resolutions are so different that they can’t be considered together as one unified call for Congress to call a convention under Article V. I’ve always known this intuitively, but recently I was sent a study that shows why the various resolutions are irreconcilable. It was put together by Jeff Kimble, a West Virginia attorney who dabbles in legal theory and public policy. As you can imagine, I get plenty of queries from amateur constitutionalists, but this looks pretty thorough. Judge for yourself: here’s the appendix that shows all 27 BBA resolutions that have been passed to date, grouped into the 10 categories that Kimble has devised.

In sum, there are no short cuts to a BBA – and that’s even before you consider the economic merits of the different kinds of BBAs.

Sens. Marco Rubio and Rand Paul scored points with their respective supporters during their brief but spirited exchange over military spending in Tuesday evening’s debate.

Paul scolded Rubio for his profligate ways. “How is it conservative,” Paul asked, “to add a trillion dollars in military expenditures? You cannot be a conservative if you’re going to keep promoting new programs that you’re not going to pay for.”

Paul’s approach appealed to Katherine Timpf at National Review Online, who called it “refreshingly logical and level-headed.” The American Conservative’s Dan McCarthy praised Paul’s brand of “conservative realism.” 

Rubio, for his part, called Paul “a committed isolationist.” “The world is a safer place,” Rubio explained, “when America is the strongest military power in the world.” As sound bites go, Rubio scored. But the statement conflates the safety of the entire world with the safety of the American people. And his claim that vast increases in military spending are needed to make the U.S. military the strongest in the world imply, falsely, that it is not already. 

As I and others have noted elsewhere on numerous occasions, Rubio’s name-calling reveals the shallowness of his understanding of history and world politics. Defenders of the status quo can be counted on to shout the “isolationist” epithet whenever they want to discredit any challenges to it. Despite his relative youth, Rubio has adopted the foreign policy of men nearly twice his age. He seems blissfully unaware even of recent history. His campaign slogan calls for “A New American Century.” Sound familiar?

In terms of entertainment value, the debate was all good fun. Watching two men talk over one another on a stage was just like…watching two men talk over one another on a cable news program, complete with split screens.

But we should expect a presidential debate to be about more than crosstalk and TV ratings. So far, the candidates have largely avoided a serious discussion of the U.S. military’s roles and missions. For the most part, they reflect the elite consensus that U.S. power is essential to the functioning of the international system. Without it, the world descends into chaos. And however much power we have – our military is today the most capable force the world has ever known – it is never enough. Thus the reflexive call for more. Much more.

Rand Paul only seems an outlier relative to the interventionist class that occupies the foreign policy high ground. Credit him for speaking out early and often against the Iraq war and its progeny. Score a point for his sensible observation that “You can be strong without being involved in every civil war around the world.” Kudos for questioning those who were so anxious to arm al Qaeda’s allies in Syria, and for pushing back against the ill-conceived Libyan intervention.

On the other hand, Paul’s own proposal for increasing military spending by $190 billion over the next two years, although it is a far cry better than Marco Rubio’s call for $1 trillion in additional spending, feeds into the false narrative that the U.S. military is too small.

That is true only if one refuses to scrutinize the military’s missions, and accepts as a given that the United States must address all threats, in all places, and at all times. It only makes sense if the object is to discourage others, including our wealthy allies, from playing a larger role in their respective regions, or globally.

I hope that the next debate doesn’t merely discuss what the U.S. military must do, and what American taxpayers must pay, in order to keep the whole world safe. The next round of Paul vs. Rubio should also examine what, if anything, will be expected of others. 

Small business owners aren’t typically lawyers, though they are undoubtedly familiar with the thousands of inscrutable pages of new regulations published every year in the Federal Register. Instead of devoting their energies to growing their businesses, owners must expend significant time and resources ensuring compliance with these voluminous and often vague regulations, with costly fines looming as consequences for failure to comply. “The Fourth Branch & Underground Regulations,” a new report by the National Federation of Independent Businesses (NFIB), details the processes by which administrative agencies skirt “notice-and-comment” requirements to impose new interpretations of rules that avoid the constitutional system of checks and balances. Unfortunately, operating on this shifting field disproportionately affects small businesses, as they are most poorly equipped to lobby for favorable rules.

The Administrative Procedure Act established “notice-and-comment” as a means for regulated businesses to voice concerns with or offer suggestions to improve proposed regulations. However, “non-legislative rules,” or “general statements of policy” and “interpretive rules,” are not required to undergo this process. This grants administrative agencies – the “Fourth Branch” of government – significant leeway in how “legislative rules” are interpreted and implemented, essentially giving them law making power. The recent Supreme Court ruling in Perez v. Mortgage Bankers Association allows agencies not only to interpret rules without undergoing “notice-and-comment,” but also the ability to change their interpretation at any point.(Cato filed an amicus brief in the case.)

Without a required need for transparency, agencies are thus free to issue “underground regulations” that impose serious and sudden rules on regulated businesses. NFIB examines four ways in which these “underground rules” are established: executive orders, guidance documents, amicus filings, and enforcement actions. Recognizing the potential dangers of this “underground” system of lawmaking, NFIB argues that “the regulated public should have a right to voice concerns over any newly announced rules, policy, or administrative interpretation of law that may impose affirmative regulatory burdens on individuals or businesses” and urges agencies to “allows some opportunity for notice-and-comment on all new rules imposing liabilities or other regulatory burdens – without regard to quantifiable compliance costs.”

Freed from congressional oversight and the beneficiary of considerable judicial deference, administrative agencies can pursue ideological agendas without the general public even being aware regulations are being instituted. One way this is achieved is by filing an amicus brief in a case between two private parties. An agency can offer the court its authoritative interpretation of a rule – though given the ruling in Perez, the agency can change that interpretation in a later brief in another case or court.

For example, NFIB’s report details the process by which the National Labor Relations Board (NLRB) reclassified McDonalds as a joint-employer with it franchisees, upending the franchise model and thirty years of established rules. In a June 2014 amicus brief, the NLRB announced it’s plans to reinterpret its “joint-employer” rule to “treat franchisors as joint-employers with franchisees, or other independent contracting firms, so long as they exert ‘significant control’ over the same employees.” The NLRB further announced that significant control could be shown “simply by demonstrating that a franchisor has significant control over every-day business operations, without regard to whether the franchisor has exercised any control over personnel decisions.” Under previous rules, influence over personnel decisions dictated whether franchisors were considered “joint-employers,” so given McDonalds franchisees had control over hiring and disciplinary practices, McDonalds was not considered a joint-employer.

Following this amicus brief, the NLRB filed thirteen complaints – enforcement actions – against McDonalds, alleging misconduct on the part of some of it franchisees, presenting McDonalds with a choice: loosen quality control over its franchisees (and thus risk brand degradation) or radically alter its business model and become more involved in the personnel decisions of its franchisees. While McDonalds might not be the most sympathetic victim of underground rule making, the rule change also affects its franchisees, “threaten[ing] a successful collaborative business model that has enabled many entrepreneurs to launch their own business.”

Readers of this blog will be familiar with ongoing litigation over the current administration’s use of executive actions to pursue its immigration policy and EPA rule-making to further its climate agenda – let alone the ongoing dispute between the House of Representatives and the president over the implementation of the Affordable Care Act – but NFIB’s report offers numerous examples of how “underground regulation” affects businesses of all sizes in ways that don’t gain media attention. 

Research assistant Anthony Gruzdis contributed to this blogpost.

Bad foreign policy ideas have a nasty habit of recirculating. One of the worst is the proposal to impose a no-fly zone in Syria to protect rebel forces attempting to overthrow Bashar al-Assad’s regime. President Obama has wisely resisted that scheme, but the likely Democratic presidential nominee, Hillary Clinton, has endorsed it. And in the most recent GOP debate, several candidates, especially Senator Marco Rubio and Carly Fiorina, enthusiastically signed-on to the strategy. Only Senator Rand Paul unequivocally opposed it.

Even under normal circumstances, imposing a no-fly zone in Syria would be a spectacularly bad idea. Such measures were a prelude of America’s disastrous, full-scale military intervention in Iraq, and a similar danger of escalation exists in this case. Moreover, the move would strengthen the position of the ideologically murky amalgam that opposes Assad. The reality is that even the non-ISIS rebel groups exhibit a disturbing level of radical Islamic influence. Indeed, the largest and strongest anti-Assad faction appears to be al Nusra, al Qaeda’s affiliate in Syria. It is mystifying why American hawks would want to empower such forces.

But special circumstances in Syria make the no-fly proposal even more dangerous than normal. Russia has intervened in that country and is flying numerous combat missions against rebel units. Establishing a no-fly zone over Moscow’s objections would be extremely provocative. Yet neither Clinton nor the GOP hawks gave any hint that creating the zone should be contingent on Russia’s consent. Indeed, there was an undertone in the debate comments by Rubio and Fiorina that imposing the zone would be an effective way to humiliate Vladimir Putin and make it clear that Russia would not be able to exercise influence in the Middle East.

If that is the nature of no-fly zone proposals, they are extraordinarily reckless. How would we enforce the unilateral no-fly edict?  Would we actually shoot down Russian planes if they dared continue their combat flights?  That would carry the obvious risk that Moscow might respond in kind—and that would bring two nuclear-armed powers to the brink of all-out war. Even if Russia did not directly challenge the United States with aerial combat in Syria, it has other options to retaliate against a U.S. effort to humiliate the Kremlin. Putin could, for example, redouble his military efforts in Ukraine, intensifying that messy conflict. And there is always the chance that he would move militarily against the vulnerable Baltic republics, creating a crisis of credibility for NATO.

There is nothing at stake in Syria that warrants the United States risking such a dangerous confrontation with Russia. Imposing a no-fly zone under the current circumstances is utterly reckless. Anyone who embraces such a scheme should be disqualified automatically from occupying the Oval Office.

This interview is another indication of the changing climate on the marijuana laws. 

Stephen Grills John Kasich On Pot Legalization

Yesterday, the Institute for Justice, which has long been a leader in the fight against the abusive practice of civil asset forfeiture, released a new edition of its important 2010 study Policing for Profit.

Civil asset forfeiture has been with us for centuries, but the Drug War has kicked the government’s incentives to seize property without charge or trial into high gear.  Federal seizures alone have gone from tens of millions to billions of dollars a year over the last generation, while the vast majority of states still use a deficient and abusive process to take private property from citizens who haven’t been charged with any wrongdoing.

Thanks to the work of organizations like IJ, journalist exposés of numerous egregious abuses, and legislators committed to the rule of law, several states have reformed their forfeiture laws.  But as the new report shows, the work is far from finished, and, despite a pledge to reform, the federal government continues to undermine state reforms while seizing billions of dollars on its own.

The key findings of the report include:

  • a massive increase in civil forfeiture actions in the 21st century
  • a continued burden on property owners who have to prove themselves innocent rather than being proven guilty by the state
  • an abject lack of transparency about how much the government seizes and how the agencies are spending the proceeds of those seizures
  • the perverse incentives provided by laws that allow executive agencies to add to their own budgets by taking property and cash from individuals

 The report also includes updates to IJ’s state-by-state assessments of forfeiture laws, with 35 states and the federal government earning grades of D+ or worse.

 IJ also released an excellent video to summarize their findings:

Policing for Profit Visualized: How Big Is Civil Forfeiture?

 The full report can be found here.  How does your state stack up?

 For Cato’s explainer on the issues and abuses inherent in civil asset forfeiture, click here.

Were she still alive, Anna Schwartz, one of the last centuries’ greatest monetary economists, would have celebrated her 100th birthday today.

Alas, we must commemorate the date without her. To do so, I repost here remarks I made upon her death in 2012. In what has become a prolonged era of unconventional monetary policy, the loss of her expertise and wisdom is even more sorely felt than it might have been otherwise. Still all of us, and the economics profession especially, are much better off thanks to her straightforward and uncompromising scholarship.

Happy Birthday, Anna.


She was one of my intellectual heroes, Anna was — together with Milton and Leland, David Laidler, Sir Alan Walters, and Dick Timberlake. Old monetarists all, come to think of it. Now only three are left; and, no, they do not make them like that any more.

I met Anna at NYU. Back then the NBER occupied the 8th floor of 269 Mercer Street. NYU’s economics department was on the 7th floor. Of course I went to meet her. She turned out to be very nice, so I got the bright idea to ask her to serve as an external member of my dissertation committee. I had the impression that I was one of very few NYU Ph.D. candidates to think of doing that, which struck me as odd. But then a lot of things about NYU, and about the economics business generally, struck me (and still strike me) as odd.

Anna gave me some good advice; indeed, apart from Larry White (who was my supervisor, and who I talked to almost daily) she was my most helpful adviser at NYU. Naturally I don’t remember much about the particular advice she gave me. But I do distinctly remember her telling me that, once I got into the business, I had better write about stuff besides free banking if wanted to survive. I took Anna’s advice, and still found it rough going. Had I not listened to her I’m sure I would have had to give up.

I’m also pretty sure that it was only thanks to Anna that some of the the free banking stuff that did make it into the better journals got through: she was one of the few persons who was both greatly respected by the editors of those journals and willing to give the free bankers a hearing. Indeed, Anna was more than sympathetic: she was, or she became, one of us. I am reasonably certain that she played a very large, if not crucial, part in encouraging Milton to revise his thinking on the topic, as he did when he and Anna published their 1986 JME paper “Has Government Any Role in Money?”. That Anna’s views on the proper scope of government interference in banking became progressively more radical I have no doubt. For example, while in a 1995 Cato Journal article she and Mike Bordo took the conventional line that you couldn’t have a stable banking system without some sort of deposit insurance, when I questioned her about this stand a few years ago Anna claimed that she had since rejected that view, having come to believe instead that the moral hazard arising from deposit guarantees ultimately caused such guarantees to do more harm than good.

I was lucky to be able to talk to Anna at length on several occasions during the last few years, thanks to Walker Todd, who arranged for her to visit the American Institute for Economic Research while I was there as a summer fellow. What I remember most about those conversations was how very candid and uncompromising they were: Anna never held a punch, and when she threw one, it landed square on target. Not that Anna wasn’t generous with praise: it’s just that, whatever she thought, she always came right out with it. She’d lived long enough, I suppose, to earn that. In any event it meant that talking to her was really a blast. (If only I could repeat all that I heard!)

Now, with all the dominoes lined-up from Greece to Brussels and beyond, and ready to start toppling at any moment, how I wish that this tough and uncompromising monetarist was still among us! No one can say just what she’d have made of it all; but whatever she made you can bet she would have served it up straight.

[Cross-posted from Alt-M.org]

Police body cameras can only be as good as the policies which govern them allow. Regrettably, despite widespread calls for more police officers to wear body cameras in order to improve accountability and transparency, many police departments across the United States are governed by poor policies and practices.

The Leadership Conference on Civil and Human Rights and Upturn recently released a body camera scorecard, which grades body camera policies in 25 cities, including the 15 largest departments which currently or will soon outfit officers with body cameras.

Each department was judged on a range of issues including public access to body camera policies, restrictions on biometric technology, allowing officers to view body camera footage before making a statement, and officer discretion. The results (shown below) are not encouraging.

Of the 25 departments, only one–Baltimore–limits facial recognition technology being used in body cameras. None of the 25 departments explicitly prohibit officers from reviewing body camera footage before making an initial statement or report for any incident. The majority of the departments do not have body camera policies publicly available on their websites. Only two of the departments (Parker, Colorado and Washington, D.C.) allows people filing a police misconduct complaint to view at least some of the relevant body camera footage.

Some of the departments with disappointing policies have received funding from the Department of Justice (DOJ). The Los Angeles Police Department, for example,  was awarded $1 million for body cameras despite requiring officers involved in a fatal use-of-force incident to view body camera footage before making a statement.

Body cameras are a relatively new technology with great potential, but this potential could go unrealized if lawmakers are not careful. Amid ongoing discussions on criminal justice and police misconduct, it is not surprising that body cameras are often cited as tools which can play a role in reforms. However, as the Leadership Conference on Civil and Human Rights and Upturn scorecard demonstrates, many body camera policies do not help provide the much-needed increase in law enforcement transparency and accountability.

In my latest Cato Institute policy analysis, I propose a number of policies which would, if implemented, provide increased transparency and accountability in law enforcement. It is understandable that law enforcement agencies and lawmakers across the country are keen to deploy body cameras. But body camera policy shouldn’t be rushed. Without the right policies in place, body cameras could come to be seen not as a valuable part of criminal justice reform, but rather a secretive and confusing law enforcement tool with worrying privacy implications.

There is nothing easier or seemingly more popular in higher education than bashing openly for-profit colleges. (I use “openly,” by the way, for a reason.) If you burrow into the demographic and funding weeds, however, you’ll see that proprietary schools are likely no worse, as a whole, than any other sector of uber-subsidized higher ed. And now Gallup has produced a little more good news for these beleaguered schools, to the extent that any news from our bloated Ivory Tower is good: For-profits seem to do a better job of serving veterans – at least from the vets’ perspective – than public colleges and, depending on how you slice the data, nonprofit private colleges as well.

As the table below shows, when veterans rank how well they feel their schools understood their needs, the percentage giving a 4 or 5 – the top scores – to for-profit schools beats any other sector, and at just the 5 level only nonprofit private institutions surpass them. Comparing for-profit and public schools, for-profits get more 4s and 5s by a 15 percentage point margin.

It’s probably not a mystery why this is. For-profits are more nimble than public colleges, and their desire for profits may actually – get ready – make them more responsive to the needs of the students who buy their services. Yes, there are bad for-profit actors – though the extent to which that is the case is unclear – but maybe on the whole they work better for students than lumbering, impersonal public institutions that get big taxpayer subsidies upfront. At the very least, that’s what this evidence suggests. Not that evidence has mattered much in this debate so far.

In last night’s Republican Presidential debate, Donald Trump argued that President Eisenhower immigration enforcement plan called Operation Wetback (Trump didn’t use that horrendous name) drastically reduced unlawful immigration in the early 1950s.  He said:

“Let me just tell you that Dwight Eisenhower. Good president. Great president. People liked him. I liked him. I Like Ike, right? The expression, ‘I like Ike.’ Moved 1.5 million illegal immigrants out of this country. Moved them just beyond the border, they came back. Moved them again beyond the border, they came back. Didn’t like it. Moved ‘em waaaay south, they never came back. Dwight Eisenhower. You don’t get nicer, you don’t get friendlier. They moved 1.5 million people out. We have no choice. We. Have. No. Choice.”

The evidence and statements by border patrol and INS officials in the 1950s and afterward disagree with Mr. Trump’s analysis.  Increased immigration enforcement did not reduced unauthorized immigration in the 1950s, legal migration did.


In 1942, the United States government created Bracero guest worker visa program to allow Mexican farm workers to temporarily work for American farmers during World War II.[i]  The government entered into a bilateral labor agreement with Mexico that regulated the migrant’s wages, duration of employment, age of workers, health care, and transportation from Mexico to U.S. farms.[ii] Transportation to the farm, housing, and meals were sold by the employers for a low price.[iii]  Ten percent of the migrant’s wages were deducted from their paychecks and deposited in an account that would be turned over to them once they returned to Mexico.[iv]  

The Bracero program did not limit the number of migratory workers as long as the government’s conditions were met, making the system flexible to surges in demand. As a result, nearly five million Mexican workers used the Bracero program from its beginnings in 1942, when the first group of 500 braceros arrived at a farm in California, until the program’s cancellation in 1964.[v]  The program’s flexibility increased over time as the Border Patrol and INS realized that the Bracero program was an indispensable component of reducing unlawful immigration by providing a lawful means of migration. During the early phase of the program, the United States government acted as the arbiter and distributor of the Mexican workers to American farms – heavily subsidizing the movement and not requiring total reimbursement for government expenses on medical and security screenings.[vi]  Later, as the number of unauthorized immigrants began to rise, the government reformed the program to allow for workers and employers to deal more directly with fewer regulations and government subsidies.[vii] 

Unauthorized Immigration in the 1950s

During the early, more regulated, and thus restricted phase of the Bracero program, unauthorized immigrants continued to cross the border which resulted in almost two million of them living in the United States by the early 1950s.[viii]  The immigration enforcement apparatus performed well when few unauthorized immigrants were trying to enter the Untied States during the Great Depression and World War II, but it suddenly broke down in the face of sustained postwar unlawful migration.

In 1946, the year after the war ended, an INS report recorded a massive increase in unauthorized entries that was “riddling the country of aliens illegally in the United States” with more illegal entries than any previous year.[ix]  Reports in subsequent years reported the same steady increase in the number of illegal immigrants and enforcement actions (table 1).[x]  In 1950-51, the volume of unauthorized Mexican immigrants was so high that the INS institutionalized a voluntary departure procedure that was quicker and cheaper.[xi]  Government reports described the large increase in unauthorized immigration after World War II as “virtually an invasion.”[xii]


Table 1

Aliens Deported and Voluntary Departures, 1946-1952


Aliens Deported

Voluntary Departures






















Source: Congressional Research Service, 1980.     

Government Responses – Expanding Visas & Enforcement

The government responded to the increased illegal immigration with two interrelated and coordinated actions.  The first and more important action (to say nothing of its humanity), was a legal reform and expansion of the Bracero guest worker visa program in 1951.[xiii] The second was called Operation Wetback, a nasty immigration enforcement operation begun in 1954 (it expanded on earlier program) that altogether removed almost two million unauthorized Mexicans in 1953-1954.[xiv] 

What Mr. Trump and other supporters of harsh enforcement actions like Operation Wetback won’t tell you is that increased enforcement was combined with an increase in legal migration opportunities.  Many of the migrants rounded up in the enforcement buildup to Operation Wetback were legalized on the spot, a long-standing process derogatively referred to as “drying out” illegal migrant workers,[xv] and given a bracero work visa.[xvi]  “Drying out” was not invented during Operation Wetback; it had been common practice beginning in 1947 and was made law in 1951.[xvii]  Although data is sparse on the number of unlawful migrants who underwent “drying out,” in 1950, 96,239 migrant workers were legalized in that process and the Department of Labor actually gave preference to legalizing unlawful migrants over admitting new braceros.[xviii]

Other unlawful migrants were driven down the border and made to take one step across the border and come back in as a legal bracero worker, a process referred to as “a walk-around statute.”[xix] The combination of a legal migration pathway with consequences for breaking immigration laws incentivized Mexican migrants to come legally.  As a result, the number of removals in 1955 was barely three percent of the previous year’s numbers.  Those who previously would have entered unlawfully instead signed up to become braceros, which was the intended purpose of the reforms.[xx]

The government did not tolerate unlawful entry but the INS made it very easy for migrants to get a guest worker visa and used the Border Patrol to funnel unauthorized migrants and potential unauthorized migrants into the legal system – sometimes simplifying the system beyond what Congress intended.[xxi] Increased lawful migration, flexibility, and enforcement funneled migrant workers into the bracero Program and reduced unauthorized immigration by an estimated 90 percent.[xxii]  The existence of a legal visa for lower skilled Mexican migrants was essential to the decrease in unlawful immigration. 

Bracero Deserved Credit for Halting Unauthorized Immigration, According to Border Patrol and INS

The Bracero program was effective at stopping unlawful immigration for two reasons.  First, it created a large and easy to use visa for farmers in the Untied States.  If the cost of employing bracero workers was too high, farmers would just hire unauthorized immigrants as they threatened to do numerous times – and Border Patrol and INS listened.[xxiii]  Prior to the expansion and partial deregulation of the Bracero program in 1951, employers in the Rio Grande Valley referred to the Border Patrol as a “Gestapo outfit” that wrenched their willing unlawful workers away from employment.[xxiv]  Along with increased enforcement, INS Commissioner Joseph Swing realized that he would have to enlist the cooperation of the employers of unlawful migrant workers if the INS was to have any hope of shrinking the number of unauthorized workers.[xxv]  He knew he would have to affect both the supply and demand for unauthorized workers. 

Before launching Operation Wetback, Swing travelled and spoke to numerous audiences and farmers assuring them that their unauthorized workers would be replaced with legal workers from Mexico on a bracero work visa.[xxvi]  In Swing’s words, the purpose of a ten-day trip to visit farmers along the border prior to the launch of Operation Wetback, was to tell them: “If there is any employer who cannot get legal labor all he has to do is let either the Department of Labor or Immigration know and we will see that he gets it … I am quite emphatic about this because I know I am going to run into some opposition in Southern Texas.”[xxvii] 

Swing characterized the success as an “exchange” of illegal workers for legal guest workers.[xxviii]  For example, the 1953 harvest in the Rio Grande Valley only employed 700 legal guest workers while in 1954 the number had grown to 50,326.[xxix]  At every opportunity, Swing praised farmers and gave them credit for the substitution of illegal workers for legal bracero workers, saying the “accomplishment of this task would have been impossible without the generous cooperation extended to the effort by ranchers, farmers, and growers.”[xxx] 

Beginning in 1954, Commissioner Swing also issued I-100 cards to law-abiding bracero workers who were favored by particular American growers, further simplifying the bureaucratic process for them to re-enter and work in the future.[xxxi]  The INS eventually came to believe that the I-100 cards were an integral part of their efforts to keep unlawful immigration low.[xxxii]  The INS also made it easy for braceros to move among farms to work regardless of the original labor contract.[xxxiii]  As historian Ernesto Galarza wrote, “[t]he most skeptical of farm employers could see that the private black market was no longer vital, now that a public one could be created at will.”[xxxiv]  The Bracero program made it economically advantageous for American employers of unlawful immigrants to cooperate with the Border Patrol and INS to ensure that their workforces were legal.          

Second, the visa was also very easy for Mexican migrants to access and guaranteed that they would not have to work illegally and face the possibility of deportation.  Over the course of the Bracero program, the INS and Border Patrol progressively removed the Mexican government from selecting the bracero migrants and moved toward a model where U.S. growers selected their workers – often based on previous experience with the individual migrant.  Removing the Mexican government from the process decreased opportunities for corruption and abuse of the workers.  When the Mexican government was actively involved in selecting the Mexicans who could work in the United States prior to the reforms in 1951, the migrant often had to pay a mordida– a bribe – to Mexican officials.  The migrant was then sent to a central processing center where he would have to pay yet anotherbribe to be considered.[xxxv]  The Mexican government was frustrated when the U.S. government allowed American growers to unilaterally recruit braceros, but cutting out the Mexican government middleman likely saved braceros a lot of money and headaches.

From 1955 to 1960, annual bracero migration fluctuated between 400,000 and 450,000[xxxvi] and replaced the roughly two million unauthorized immigrants who moved to the United States after World War II.  During this time, the government allowed braceros to work in virtually every sector of agriculture[xxxvii]  The Bracero guest worker visa program, more so than any immigration enforcement system, practically eliminated unauthorized immigration. 

A Border Patrol official warned that if the Bracero program was ever “repealed or a restriction placed on the number of braceros allowed to enter the United States, we can look forward to a large increase in the number of illegal alien entrants into the United States.”[xxxviii]  That official’s prediction came true.  When the Bracero program was ended in 1965 and not replaced by another effective lower skilled guest worker visa program, unlawful immigration as measured by the number of removals and returns skyrocketed (see Figure 1).    

Figure 1

Removals and Returns of Unlawful Immigrants and Numbers of Guest Worker Visas, 1942-2011

Source: Department of Homeland Security and Immigration and Naturalization Service annual reports.


One legal worker on a visa seems to be worth more than one unauthorized immigrant worker – meaning a favorable trade off for those concerned about the number of guest workers who could migrate if a large guest worker program was implemented.  In 1954, one guest worker visa replaced 3.4 unauthorized immigrants, meaning that one legal worker seemed to be equal to more than three illegal workers (see Figure 1).  That far fewer “physically able, adult male” braceros could do the same quantity of work as several illegal workers was even noted at the time.[xxxix]  If an important goal of a lower skilled guest worker visa is to eliminate the American economic demand for unauthorized immigrants, relatively fewer guest worker visas can replace a much larger unauthorized immigrant population.

Figure 2 indicates that increased numbers of Border Patrol and border enforcement were unnecessary to get this result.  When the government launched Operation Wetback and expanded the Bracero program, the number of border patrol agents did increase but only to a previous high. 

Figure 2

All Illegal Immigrants Removed and Returned and Number of Border Patrol Agents, 1942-1960

Sources: Department of Homeland Security, Immigration and Naturalization Service annual reports, and National Foundation for American Policy.

By allowing unauthorized immigrants to get work visas, by not punishing them or employers for coming forward, and by making work visas available to future migrants, almost all future and current unauthorized immigrants can be funneled into the legal market without a large increase in enforcement.  This was the policy followed in the 1950s and it worked. 

Clearly Operation Wetback should not be a guide for future enforcement policy because its racially discriminatory and harsh enforcement policies were unethical and legally unsound.  However, a new guest worker visa program combined with a refocused immigration enforcement system that seeks to channel unlawful and new migrants onto the guest worker visa could be effective.

End of Bracero and Re-Ignition of Unlawful Immigration

By the time of Bracero’s cancellation in 1964, increasing regulations promulgated by the Department of Labor (DOL) and restrictions whittled the number of Bracero guest worker visas down to just 200,000 that year.[xl] New DOL wage regulations and labor certification raised costs for farmers and migrants, incentivizing them to move into the informal, underground economy.[xli] By making lawful employment of migrants so expensive, the government created unauthorized immigration.  Since 1964, very few lower skilled workers have been allowed in and the unauthorized immigrant population has skyrocketed.  Ending Bracero did not end temporary worker migration to the Untied States; it merely made such migration illegal.[xlii]

After cancellation of the Bracero program, the H-2 guest worker visa became the source of legal foreign agricultural workers. The H-2 was underused relative to the Bracero program because of complex rules, numerical restrictions, and the cost of sponsoring migratory workers.[xliii] The H-2 visa was initially created through the Immigration and Nationality Act of 1952 for “other temporary workers” not covered by the Bracero program.[xliv] From 1964 until 1986, mostly temporary unauthorized Mexican migration filled the gap left by the repeal of the Bracero program, which was unfilled by the H-2 visa.[xlv] After the end of Bracero, the modern age of unlawful immigration began as Figure 1 shows.  The rest is history.


Mr. Trump is correct that unauthorized immigration decreased markedly in the 1950s, but he is wrong to attribute all or even most of that to increased enforcement under the utterly inhumane Operation Wetback.  That operation would have been a complete failure if there was not a Bracero guest worker visa available to provide a legal avenue for lower skilled migration.  The Bracero program had a lot of problems, and any modern visa program would have to be very different, but it was better than the black market alternative.  Border Patrol and INS agents at the time credited Bracero with ending unlawful immigration and predicted, correctly, that ending Bracero would reignite it.  Despite what Mr. Trump says, the lesson from the 1950s is not that harsh and inhumane immigration enforcement is effective, it is that a legal migration pathway can halt unlawful immigration.   


[i] The program is named for the Spanish term bracero, which means “strong arm.”

[ii] See Wayne D. Rasmussen, The Emergency Farm Labor Supply Program 1943–47, U.S. Department of Agriculture Bureau of Agricultural Economics, Monograph no. 13, Washington, September, 1951.

[iii] Ibid.

[iv] Ernesto Galarza, Merchants of Labor: The Mexican Bracero Story, McNally and Loftin Publishers, Charlotte NC, 1964, p. 47.

[v] Douglas S. Massey, Jorge Durand, and Nolan J. Malone, Beyond Smoke and Mirrors: Mexican Immigration in an Era of Economic Integration (New York: Russell Sage Foundation, 2002), pp. 35–39.

[vi] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, pp. 20-24 and Ernesto Galarza, Merchants of Labor: The Mexican Bracero Story, McNally and Loftin Publishers, Charlotte NC, 1964, pp. 44, 84-85.

[vii] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, pp. 70-71, 93.

[viii] Deborah Cohen, Braceros: Migrant Citizens and Transnational Subject in the Postwar United States and Mexico, University of North Carolina Press, 2011, pp. 213–14.

[ix] “History of the Immigration and Naturalization Service,” Congressional Research Service, December 1980, p. 54.

[x] “History of the Immigration and Naturalization Service,” Congressional Research Service, December 1980, p. 54.

[xi] “History of the Immigration and Naturalization Service,” Congressional Research Service, December 1980, p. 54.

[xii] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, p. 50.

[xiii] Deborah Cohen, Braceros: Migrant Citizens and Transnational Subject in the Postwar United States and Mexico, University of North Carolina Press, 2011, pp. 213–14 and Vernon M. Briggs Jr., Immigration Policy and the American Labor Force, The Johns Hopkins University Press, Baltimore, 1984, p. 99, 103.

[xiv] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, pp. 50-61.

[xv] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, p. 34.

[xvi] Deborah Cohen, Braceros: Migrant Citizens and Transnational Subject in the Postwar United States and Mexico, University of North Carolina Press, 2011, p. 209, Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, pp. 25-26, and Ernesto Galarza, Merchants of Labor: The Mexican Bracero Story, McNally and Loftin Publishers, Charlotte NC, 1964, p. 63.

[xvii] Ernesto Galarza, Merchants of Labor: The Mexican Bracero Story, McNally and Loftin Publishers, Charlotte NC, 1964, p. 64.

[xviii] Ernesto Galarza, Merchants of Labor: The Mexican Bracero Story, McNally and Loftin Publishers, Charlotte NC, 1964, p. 63.

[xix] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, p. 43 and Ernesto Galarza, Merchants of Labor: The Mexican Bracero Story, McNally and Loftin Publishers, Charlotte NC, 1964, pp. 66-67.

[xx] Deborah Cohen, Braceros: Migrant Citizens and Transnational Subject in the Postwar United States and Mexico, University of North Carolina Press, 2011, pp. 213–14.

[xxi] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, p. 3.

[xxii] Daniel Griswold, “Comprehensive Immigration Reform: What Congress and the President Need to Do to Make It Work,” Albany Government Law Review 3, no. 1 (2010): p. x.

[xxiii] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, p. 90.

[xxiv] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, p. 37.

[xxv] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, p. 57.

[xxvi] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, p. 57.

[xxvii] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, p. 57.

[xxviii] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, p. 59.

[xxix] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, p. 59.

[xxx] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, p. 63.

[xxxi] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, pp. 94-95, 104-105.

[xxxii] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, p. 104.

[xxxiii] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, p. 107.

[xxxiv] Ernesto Galarza, Merchants of Labor: The Mexican Bracero Story, McNally and Loftin Publishers, Charlotte NC, 1964, p. 69.

[xxxv] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, p. 66.

[xxxvi] Daniel Griswold, “Comprehensive Immigration Reform: What Congress and the President Need to Do to Make It Work,” Albany Government Law Review 3, no. 1 (2010): p. 37.

[xxxvii] Ernesto Galarza, Merchants of Labor: The Mexican Bracero Story, McNally and Loftin Publishers, Charlotte NC, 1964, pp. 74-75.

[xxxviii] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, pp. 89-90.

[xxxix] Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, p. 63.

[xl] Douglas S. Massey, Jorge Durand, and Nolan J. Malone, Beyond Smoke and Mirrors: Mexican Immigration in an Era of Economic Integration (New York: Russell Sage Foundation, 2002), pp. 35–39. p. 41 and Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, pp. 130-132, 138-140.

[xli] Douglas S. Massey, Jorge Durand, and Nolan J. Malone, Beyond Smoke and Mirrors: Mexican Immigration in an Era of Economic Integration (New York: Russell Sage Foundation, 2002), pp. 35–39. p. 41 Kitty Calavita, Inside the State: The Bracero Program, Immigration, and the INS, Quid Pro Books, New Orleans, Louisiana, 2010, pp. 142-143.

[xlii] Joyce Vialet, Barbara McClure, and Marsha Cerny, “Temporary Worker Programs: Background and Issues,” Congressional Research Service, February 1980, p. 55, Vernon M. Briggs Jr., Immigration Policy and the American Labor Force, The Johns Hopkins University Press, Baltimore, 1984, p. 151, 156, Vernon M. Briggs Jr., Immigration and American Unionism, Cornell University Press, Ithaca, NY, 2001, p. 143.

[xliii] Massey, Durand, and Malone,  pp. 43–47.

[xliv] See Lindsay M. Pickral, “Close to Crucial: The H-2B Visa Program Must Evolve, but Must Endure,” University of Richmond Law Review 42, no. 4, (March 2008).

[xlv] See Douglas S. Massey and Audrey Singer, “New Estimates of Undocumented Mexican Migration and the Probability of Apprehensions,” Demography, 32 (1995): 203–13.

Jonathan Chait comments on the University of Missouri failure:

The upsurge of political correctness is not just greasy-kid stuff, and it’s not just a bunch of weird, unfortunate events that somehow keep happening over and over. It’s the expression of a political culture with consistent norms, and philosophical premises that happen to be incompatible with liberalism. The reason every Marxist government in the history of the world turned massively repressive is not because they all had the misfortune of being hijacked by murderous thugs. It’s that the ideology itself prioritizes class justice over individual rights and makes no allowance for legitimate disagreement.

Chait deserves praise. I had thought the time was past – long past – when a committed Social Democrat could hold liberal views on the freedom of speech. Time to jettison my prior beliefs about Jonathan Chait. But he is pretty much alone, no?

I see political correctness in this instance as an outgrowth of egalitarianism, a worldview that sees everywhere only oppressors and the oppressed. The former can have no rights that the latter are bound to respect, and thus it makes perfect sense, as the law professor Owen Fiss once proposed, to “restrict the speech of some elements of our society in order to enhance the relative voice of others.”

Free speech needs support from the political left. It is hard to see how such support might be revived.

The weekend meeting between Chinese President Xi Jinping and President Ma Ying-jeou of Taiwan was a positive development for peace in the Taiwan Strait, despite the meeting’s mostly symbolic nature. No grand bargains or binding statements resulted, but the meeting highlights the importance of high-level discussions and constructive dialogue.

The question of Taiwan’s political status, as an independent country or renegade province, is of serious concern to the United States. A forceful military “reunification” of Taiwan with China could draw the United States into war. U.S. government officials should encourage steps that reduce the possibility of armed conflict such as the Xi-Ma meeting.

Figuring out a way to settle the Taiwan question peacefully has been complicated by the fact that the military balance across the Taiwan Strait has shifted firmly in China’s favor. China’s military capabilities have also raised the cost that the United States would have to pay in a war over Taiwan.

These developments in the cross-strait military balance don’t mean that a Chinese attack is inevitable. But the changing balance creates a sense of urgency for keeping the cross-strait dispute from erupting into war. This will require a new military strategy in Taiwan. However, preventing war isn’t solely in the hands of the military; the political leaders on both sides need to recognize that “mutual compromise is the only effective way forward.”

The Xi-Ma meeting is by no means a silver bullet. Ma’s push for close economic ties with China has significantly damaged the popularity of his Kuomintang (KMT) party. The KMT will likely lose the 2016 presidential election to the more pro-independence Democratic Progressive Party, led by Tsai Ing-wen. Tsai was highly critical of Ma’s decision to meet with Xi. Many Taiwanese people were also opposed to the meeting, and want little to do with mainland China’s political system.

Despite the challenges, regular summits between the presidents of China and Taiwan should become a permanent fixture of cross-strait relations. War over Taiwan could inflict a great deal of damage to Taiwan, China, and the United States. High-level summits won’t eliminate the possibility of war, but they can provide a space for disagreements and crises to be resolved peacefully before they spiral into conflict.

I’m a big fan of the flat tax because a low tax rate and no double taxation will result in faster growth and more upward mobility.

I also like the flat tax because it gets rid of all deductions, credits, exemptions, preferences, exclusions, and other distortions. And a loophole-free tax code would be a great way of reducing Washington corruption and promoting simplicity.

Moreover, keep in mind that eliminating all favors from the internal revenue code also would be good for growth because people then will make decisions on the basis of what makes economic sense rather than because of peculiar quirks of the tax system.

Sounds great, right?

Well, it’s not quite as simple as it sounds because there’s a debate about how to measure loopholes. Sensible people want a tax code that’s neutral, which means the government doesn’t tilt the playing field. And one of the main implications of this benchmark is that the tax code shouldn’t create a bias against income that is saved and invested. In the world of public finance, this means they favor a neutral “consumption-base” tax system, but that’s simply another way of saying they want income taxed only one time.

Folks on the left, however, are advocates of a “Haig-Simons” tax system, which means they believe that there should be double taxation of all income that is saved and invested. You see this approach from the Joint Committee on Taxation. You see it from the Government Accountability Office. You see it from the Congressional Budget Office. Heck, you even sometimes see Republicans mistakenly use this benchmark.

Let’s look at three examples to see what this means in practice.

Example #1: Because they don’t want a bias that encourages people to spend their income today rather than in the future, advocates of a neutral tax code want to get rid of all double taxation of savings (Canada is moving in that direction). So that means they like IRAs and 401(k)s since those vehicles at least allow some savings to be protected from double taxation.

Proponents of Haig-Simons taxation, by contrast, think that IRAs and 401(k)s are loopholes.

Example #2: Another controversy revolves around the tax treatment of business investment. Advocates of neutral taxation believe in expensing, which is simply the common-sense view that investment expenditures should be recognized when they actually occur.

Proponents of Haig-Simons, however, think that investment expenditures should be “depreciated,” which means companies are forced to pretend that most of their investment costs which are incurred today actually take place in future years.

Example #3: Supporters of neutral taxation think capital gains taxes should be abolished because there already is tax on the income generated by assets such as stocks and bonds. So the “preferential rates” in the current system aren’t a loophole, but instead should be viewed as the partial mitigation of a penalty.

Proponents of Haig-Simons, not surprisingly, have the opposite view. Not only do they want to double tax capital gains, they also want them fully taxed, which would mean an economically jarring jump in the tax rate of more than 15 percentage points.

Now, having provided all this background information, let’s finally get to today’s topic.

If you’ve been following the presidential campaign, you’ll be aware that there’s a controversy over something called “carried interest.” It’s a wonky tax issue that seems very complicated, so I’m very happy that the Center for Freedom and Prosperity has produced a video that cuts through all the jargon and explains in a very clear and concise fashion that it’s really just an effort by some people to increase the capital gains tax.

There are four points from the video that deserve special emphasis.

  1. Partnerships are voluntary agreements between consenting adults, and both parties concur that carried interest helps create a good incentive structure for productive investment.
  2. Capital formation is very important for growth, which is one of the reasons why there shouldn’t be any capital gains tax.
  3. A capital gain doesn’t magically become labor income just because an investor decides to share a portion of the gain with a fund manager.
  4. An increase in the tax on carried interest would be the camel’s nose under the tent for more broad-based increases in the tax burden on capital gains.

By the way, I liked that the video also took a gentle swipe at some of the ignorant politicians who want to boost the tax burden on carried interest. They claim they’re going after hedge funds, when the tax actually is much more targeted at private equity partnerships.

But what really matters is not the ignorance of politicians. Instead, we should be focused on whether tax policy is being needlessly destructive because of high - and duplicative - taxes on saving and investment.

Such levies would reduce investment. And that means lower levels of productivity and concomitantly lower wages.

In other words, ordinary people will suffer a lot of collateral damage if this tax-the-rich scheme for carried interest is implemented.

Over at Cato’s Police Misconduct web site, we have selected the worst case for the month of October.

It was the case from Owasso, Oklahoma.  Officer Michael Denton was charged with excessive force for beating a motorist with the butt of a shotgun.  The reason why this matter is arguably the worst case from last month is because this is the very same officer who was fired for excessive force for elbowing an inmate in the face.  An arbitrator later reversed that dismissal and in February Denton was awarded $280,000 in back-pay.

So it is not just a problem officer here.  The system for getting rid of problem officers seems broken.  If Denton does not go to prison, will he be reinstated again?  We will be watching with interest.

Cato will be hosting a conference on Policing in America on December 1. 


Debates about income inequality, “the top 1 percent,” and poverty typically examine those issues within the context of a single country. But, consider a global perspective. This web tool lets you find out which income percentile you belong to relative to all the other people in the world. If you make more than $32,400 per year, you are in the top 1 percent of the richest people in the world! 

And, bear in mind that the world is more prosperous than it has ever been in the past. Compared to you, the vast majority of people who have lived on this planet were desperately poor. Poverty, as Cato’s David Boaz put it in this online lecture, used to be ubiquitous. “Why are some people poor? That’s always the wrong question. The question is why are some people rich? Poverty is the natural condition of mankind, but it’s easy to forget that.” 

Fortunately, prosperity is rising and global inequality decreasing. Even as the world population has exploded, the number of people living in poverty has fallen. As a result of spreading prosperity, infant mortalityilliteracy, and malnutrition are in decline, and people are living longer. Extreme poverty’s end is in sight.

Prosperity does not, of course, materialize without a cause. The role of industrialization and trade in bringing about economic growth and prosperity cannot be emphasized enough. 

So the next time someone brings up poverty or income inequality within the United States, keep in mind the importance of a proper perspective. From a global standpoint, you may very well be a part of “the top 1 percent.”

The U.S. Court of Appeals for the Fifth Circuit has now affirmed the injunction against President Obama’s executive actions on immigration. The opinion seems daunting at 135 pages, but only just half of that is the majority opinion, and much of that consists of technical discussion. The nub of the ruling is that the 26 plaintiff states have established a “likelihood of success” on their claim that (1) the administration both violated the Administrative Procedure Act by not going through proper rulemaking channels and (2) exceeded the authority that the relevant statutes give the executive branch in enforcing immigration law. This was not a surprise given the way oral argument went – and that the two judges in the majority were also on the panel that denied the administration an emergency stay of the injunction earlier in the year – but it’s still significant.

The court cuts through the government’s obfuscation about “prosecutorial discretion” and the like, the argument that granting temporary status to millions if people is no different than a decision to prioritze deportation of murderers over those whose only violation is being in the country without authorization: ”Deferred action, however, is much more than nonenforcement: It would affirmatively confer ‘lawful presence’ and associated benefits on a class of unlawfully present aliens.” (35) “Moreover, if deferred action meant only nonprosecution, it would not necessarily result in lawful presence… . Declining to prosecute does not transform presence deemed unlawful by Congress into lawful presence and confer eligibility for otherwise unavailable benefits based on that change.” (36)

The court goes on to explain how the novel Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA) goes against what Congress has legislated. “The interpretation of those provisions that the Secretary advances would allow him to grant lawful presence and work authorization to any illegal alien in the United States—an untenable position in light of the INA’s intricate system of immigration classifications and employment eligibility.” (62) Moreover,

because DAPA is not authorized by statute, the United States posits that its authority is grounded in historical practice, but that “does not, by itself, create power,” and in any event, previous deferred-action programs are not analogous to DAPA. “[M]ost … discretionary deferrals have been done on a country-specific basis, usually in response to war, civil unrest, or natural disasters,” but DAPA is not such a program. Likewise, many of the previous programs were bridges from one legal status to another, whereas DAPA awards lawful presence to persons who have never had a legal status and may never receive one. (63)

This analysis mirrors the argument we make in Cato’s brief regarding the proper application of deferred action historically, as a bridge between lawful statuses rather than a tunnel around under and around the immigration laws.

In short, while we wish Congress had acted to make some sense of our immigration regime, it hasn’t – and the president can’t rewrite the law even it makes good policy sense to do so.

Now, where do we go from here? If the government files a cert petition with the Supreme Court this or next week, the case could conceivably make it onto the docket as one of the last ones to be argued this term, meaning a decision the last week of June 2016. But the government may not do that – it waited an awfully long time to file its “emergency” motion to stay the district court’s injunction – in order to keep this immigration battle alive into the presidential election. Indeed, regardless whether the Supreme Court ultimately upholds or dissolves the injunction against President Obama’s executive action, presumptive Democratic nominee Hillary Clinton would probably rather maintain the issue as a live one – especially if, as the conventional wisdom now holds, she’ll be running against one of the Cuban-Americans running for the GOP nomination, Ted Cruz or Marco Rubio.

But that’s all political speculation. For the moment we have another defeat for the imperial executive and a victory for the separation of powers and the rule of law.

On Thursday, November 12th, Cato hosts its 33rd Annual Monetary Conference. This year’s conference theme is “Rethinking Monetary Policy.” I will be presenting a paper on “Monetary Policy: The Knowledge Problem.”

The knowledge problem in conducting monetary policy, or any other government policy, is that the required knowledge is simply not available to policymakers. The knowledge is not available in any one place, nor can it be assembled in a form that would enable policymakers to formulate an “optimal” policy.

My paper focuses on Friedrich Hayek because he first formulated the knowledge problem. He argued that knowledge is inherently dispersed and localized across the population of economic agents. It is not possible to assemble the totality of knowledge existing in society in any one mind or place. Moreover, what the totality of individuals knows far exceeds what any policymaker can know, no matter his expertise and wisdom.

In order to formulate an optimal policy, a monetary authority must predict how alternative policy actions will affect the plans of millions of people. That information is unavailable. Assuming it exists in an economic model doesn’t make it so.

It is the conceit of central bankers (or at least most) that they can acquire the knowledge needed to conduct optimal monetary policy. In his Nobel Prize lecture, Hayek called that “The Pretence of Knowledge.”

In my paper, I also detail Milton Friedman’s contribution to the knowledge problem in monetary policy. That contribution has been under-appreciated in the literature.

Some problems cannot be solved. The knowledge problem is one such. But it can be mitigated, and I conclude my paper by discussing how that might happen. I suggest, as did Hayek and Friedman, that a monetary rule works best.

(If you would like to see this paper presented, you can register here. With several central bankers on the distinguished line up, including St. Louis Fed President James Bullard, Richmond Fed President Jeffrey Lacker, and Bank of Mexico Deputy Governor Manuel Sánchez, this year’s conference is a particularly interesting place to discuss the knowledge problem in the context of central banking. If you cannot attend, the conference papers will appear in a forthcoming edition of the Cato Journal).

[Cross-posted from Alt-M.org]

One measure of the government’s size is government spending as a share of gross domestic product. The OECD has released new data (Table 25) on this measure for 31 member countries, which I chart here for 2015. The spending includes all levels government: federal, state, and local.

Politics and bureaucratic mismanagement drive up costs and generate failure in the federal government. More evidence comes from a Washington Post report today on a botched computer project at the Department of Homeland Security:

Heaving under mountains of paperwork, the government has spent more than $1 billion trying to replace its antiquated approach to managing immigration with a system of digitized records, online applications and a full suite of nearly 100 electronic forms.

A decade in, all that officials have to show for the effort is a single form that’s now available for online applications and a single type of fee that immigrants pay electronically. The 94 other forms can be filed only with paper.

This project, run by U.S. Citizenship and Immigration Services, was originally supposed to cost a half-billion dollars and be finished in 2013. Instead, it’s now projected to reach up to $3.1 billion, and be done nearly four years from now.

A six times cost overrun! That is epic. I’ve described Edwards law of Cost Doubling in government, but this DHS project rises to an elite screw-up category reached by the Big Dig, the San Francisco-Oakland Bay Bridge, and a veterans hospital in Denver, which all more than quadrupled in cost.

Other than “shoddy planning” and mismanagement, what else contributed to the latest DHS screw-up? The Post reports on the role of politics:

By 2012, officials at the Department of Homeland Security, which includes USCIS, were aware that the project was riddled with hundreds of critical software and other defects. But the agency nonetheless began to roll it out, in part because of pressure from Obama administration officials who considered it vital for their plans to overhaul the nation’s immigration policies, according to the internal documents and interviews.

… By 2012, the system’s fundamental flaws — including frequent computer crashes and bad software code — were apparent to officials involved with the project and, according to one of them, and it was clear that “it wasn’t going to work.”

But killing the project wasn’t really an option, according to officials involved at the time. President Obama was running for reelection and was intent on pushing an ambitious immigration reform program in his second term. A workable electronic system would be vital.

“There was incredible pressure over immigration reform,” a second former official said. “No one wanted to hear the system wasn’t going to work. It was like, ‘We got some points on the board, we can go back and fix it.’ ”

For more, see the new Downsizing Government essays Federal Government Cost Overruns and Bureaucratic Failure in the Federal Government.

In another installment of our series on how science and technology are working to improve lives and solve problems, we sum up some exciting new developments in robotics and 3-D printing, and even news on a sonic tractor beam right out of Star Wars.

The Robots Chasing Amazon

In 2012, Amazon bought the warehouse robot maker, Kiva Systems, in order to keep the technology away from its competitors. This created a gap in demand for warehouse robots, giving Fetch Robotics and Harvest Automation a chance to enter the market. Both of these companies have created robots that follow warehouse employees around for the purpose of collecting and moving the inventory items that they take off the shelves. These robots have greatly improved efficiency and are cheaper than hiring more workers or introducing more infrastructure, such as conveyor belts. Fetch Robotics currently sells these robots for $25,000, while Harvest Automation will sell them for $15,000 or rent them for $1,000 a month beginning next year. Currently these robots are designed to work alongside warehouse employees, but Fetch Robotics has already begun working on warehouse robots that grab the items from the shelves themselves.

Robot Builder Designed for Construction Sites

Recently at ETH Zurich, a robot that is able to lay bricks in various designs was created. It is the first robot that can lay bricks without rigid design constraints, which could make construction sites much more efficient. The robot consists of a robotic arm attached to a mobile base unit and two computer systems. The first computer controls the arm, while the second generates a 3D version of the construction site, allowing it to envision its location. It is hoped that in the future, construction workers and these robots will be able to work together in order to efficiently erect various structures. ETH Zurich is also working on two other projects. One is a robot that can analyze pieces of rubble and then assemble them into a structure. The second robot uses the 3D-printing of mesh, along with the use of concrete filler, to replace older methods of using molds for making concrete pieces. A new robotic fabrication facility will hopefully open by September of 2016. 

3D-printed hip and knee joints coming to a hospital near you

A new breakthrough has occurred in the world of hip and knee surgery. Dr. Clarke has created a technique where virtual models of patient’s bodies are generated for two purposes: One being so surgeons are able to practice the procedure beforehand. The second being so precision instruments for the surgery can be made. Currently, because the size and shape of everyone’s hip and knee joints are different, surgery involves a “trial and error” procedure in order to discover the correct fitting of instruments for an individual’s joint. But Dr. Clarke’s cutting-edge technique allows surgeons to know the size and shape of the patient’s joint beforehand, which lets them use 3D-printing to create surgical instruments that perfectly fit the specific person. This technique diminishes recovery time, allows for smaller incisions, and reduces blood loss.

Star Wars style sonic tractor beam invented by scientists              

It has been portrayed in movies like Star Wars and Star Trek, but now it is a reality. Researches have created a tractor beam that can move, rotate, and suspend a four millimeter plastic bead in mid-air. It uses sixty-four miniature loud speakers that emit high frequency sound waves, which the human ear cannot detect. However, in order to lift larger objects, lower frequencies that humans can detect would have to be used, which poses an unfavorable sound problem. Other implications of this technology include performing surgical procedures inside the human body without making any incisions.