Policy Institutes

On this day 100 years ago, the Battle of the Somme began. Over the course of five months it would see a million men killed or wounded. The British suffered almost 60,000 casualties on July 1 alone, making it the worst day in British military history.

Cato senior fellow and historian Jim Powell wrote about the blunders and consequences of World War I in his book Wilson’s War: How Woodrow Wilson’s Great Blunder Led to Hitler, Lenin, Stalin, and World War IIHe summarized his argument in Cato Policy Report two years ago:

World War I was probably history’s worst catastrophe, and U.S. President Woodrow Wilson was substantially responsible for unintended consequences of the war that played out in Germany and Russia, contributing to the rise of totalitarian regimes and another world war. 

Indeed World War I was a catastrophe, a foolish and unnecessary war, a war of European potentates that both England and the United States could have stayed out of but that became indeed a World War, the Great War. In our own country the war gave us economic planning, conscription, nationalization of the railroads, a sedition act, confiscatory income tax rates, and prohibition. Internationally World War I and its conclusion led directly to the Bolshevik revolution, the rise of National Socialism, World War II, and the Cold War. 

On this weekend as we celebrate American independence we should mourn those who went to war, and we should resolve not to risk American lives in the future except when our vital national interests are at stake.

On June 30, U.S. Trade Representative Michael Froman, former U.S. Trade Representative Clayton Yeutter, and other trade policy experts joined Cato’s trade scholars in the Hayek Auditorium for an event titled: ”Should Free Traders Support the Trans-Pacific Partnership?” The main purpose of the event was to reveal the findings of a forthcoming paper by my trade center colleagues and me, in which we provide a chapter-by-chapter assessment of the 30-chapter, 5,500-page trade deal and reach the conclusion that, yes, free traders should support the TPP.

In our assessment, we make the distinction between free trade and free trade agreements:

For free traders, the ideal is free trade: No border barriers; no domestic regulations or policies that have protectionist intent or effects or that otherwise bestow relative privileges on domestic companies or their products; no superfluous rules that are merely tangentially related to trade, but violations of which can be invoked to erect new impediments to trade. Measured against those standards, the TPP – with its 5,500 pages of explicit rules and exemptions – would not pass the free trade test. The TPP is not free trade. Like all other U.S. trade agreements, the TPP is a managed trade agreement, with provisions that both liberalize and restrict trade and investment. Some free traders would reject the TPP out of hand for its failure to eliminate all restrictions.

While such comprehensive trade liberalization would be ideal, expecting the TPP to deliver real free trade is unrealistic. That outcome is simply politically unattainable. Holding out for the ideal would make the perfect the enemy of the good, when the good is very likely better than the status quo. If the TPP will deliver more trade liberalization than restriction, and realistic alternatives to more comprehensive liberalization are unavailable, why not support the TPP?

Here is an abstract of the forthcoming paper, which includes our chapter-by-chapter scores, various averages of those scores, an explanation of methodology, and summaries of our scoring rationale for each graded chapter.  But here are some bullets:

  • We graded 22 of 30 chapters (8 did not lend themselves to this kind of evaluation) on a scale of 0 (protectionist) to 10 (free trade) – with 5 meaning the chapter would have a neutral impact.  
  • Chapters earning scores above 5 are considered “net liberalizing,” and those graded below 5 are considered “net restrictive.”
  • 15 of 22 chapters received scores above 5.
  • 5 of 22 chapters received scores below 5.
  • 2 of 22 chapters received neutral scores of 5.
  • The highest score assigned was 8 and it was assigned to 5 chapters.
  • The lowest score assigned was 3 and it was assigned to 3 chapters.
  • The median and mode scores were both 6.
  • The straight average score was 5.82 (but this measure assigns every chapter the same weight, which doesn’t make sense to do).
  • The average for “market access” oriented chapters was 6.18.
  • The average for “rules and governance” oriented chapter was 5.45.
  • The average for “First Tier” chapters (those that have to most bearing on the quality of the agreement) was 6.63.
  • The average for “Second Tier” chapters was 5.36.
  • The weighted average (where twice as much weight is assigned to First Tier chapters) was 6.03

Obviously, not everything in a free trade agreement is going to be to the liking of free traders. Some issues simply don’t belong in trade agreements.  But in our view every little bit of liberalization helps, and as long at it doesn’t come at a cost that exceeds the benefits, it is worthy of support. The bottom line is that, in our assessment, the TPP would be net liberalizing – it would, on par, increase our economic freedoms.  I hope it will be ratified and implemented as soon as possible.

Watching the Brexit campaign generated mixed feelings: It was a little like the man who saw his mother-in-law drive his new Mercedes off a cliff. In the United Kingdom some people who hated free trade, immigration, and market innovation challenged the officious, wannabe super-state headquartered in Brussels. Who to cheer for?

The Brexiteers, who deserve at least a couple hurrahs. The European Union created a common economic market throughout the continent, an undoubted good, but since then has focused on becoming a meddling Leviathan like that in Washington, D.C. The good guys won.

  1. Average folks took on the commanding heights of politics, business, journalism, and academia and triumphed. Obviously, the “little guy” isn’t always right, but the fact he can win evidences a system which remains open to all of us.
  2. Told to choose between economic bounty and self-governance, a majority of Britons chose the latter. It’s a false choice in this case, but people recognized that the sum of human existence is not material.
  3. Those governed decided that they should make fundamental decisions about who would rule over them. The Eurocrats, a gaggle of politicians, bureaucrats, journalists, academics, lobbyists, businessmen, and others, were determined to achieve their ends no matter what the people thought. No longer, said the British.
  4. The rule of law will be respected—or at least not so flagrantly flouted. Those signing up as EU members did not realize that it would be a transfer union. At least some countries likely would not have agreed to expand Brussels’ writ had they realized that explicit strictures against bail-outs would be ostentatiously ignored.
  5. Routine incantations of the need for “more Europe” no longer will be confused with arguments. Those in charge always want more—more money to distribute, publicity to satisfy, rules to enforce, and power to wield. Their vision of “more Europe” is Europe giving them more.
  6. Democracy triumphed over bureaucratic inertia. The EU is known for its “democratic deficit,” a hydra-headed, unelected executive. The Brussels bureaucracy has become the perfect means to impose policies which otherwise lack political support.
  7. The pretensions of the EU as Weltmacht never looked so silly. A flag that no one salutes and anthem that no one sings. Multiple presidents: three, four, or is it five?
  8. Demonstrating that other EU members can throw off the cloak of, if not tyranny, bureaucratic obsession. The Eurocrats most often crush unplanned independent thinking. Until now.
  9. The recognition that most human decisions are not wrong but different, and need not be uniform across a continent, especially one made up of such diverse peoples. People often value different approaches and standards and are entitled to live their lives as they wish, even if inconsistent with the continent’s most “progressive” thinking.
  10. Schadenfreude is a terrible thing, but almost all of us glory in the misfortune of at least some others. The recriminations among the Remain camp in Britain are terrible to behold. Apparently America isn’t the only home for myopic bickering.
  11. Sometimes the advocate of a lost cause triumphs. Nigel Farage has been campaigning against the EU forever, it seems. Finally the British ended up taking his advice.
  12. A bracing reminder that people want to believe that their views matter, that what they do actually makes a difference and those claiming to represent them actually listen. Otherwise, normally decent folk will look the fringes to find political champions willing to speak for them.

As I wrote in National Interest: “Could Brexit turn out to be a mistake? Yes. We live in an uncertain world with imperfect knowledge. We can only guess at the future. However, Britain has been capably governing itself for hundreds if not thousands of years.”

Kaya Henderson has gotten great reviews for her work as chancellor of D.C. Public Schools. Test scores are up during her tenure, though not as much as the hype. But take a look at this vision in an article on her departure:

Henderson cautions that improving schools that had long struggled does not happen quickly. And even with the school reform efforts over the the past decade, it may still be another decade — or more — before anyone can declare something approaching victory.

“There will be a day when every school in the city is doing amazing work and you won’t have to enter a lottery, you literally could drop your kid off at any school and have them an amazing experience. I believe we’re within reach of that, probably sometime in the next 10 or 20 years,” she says.

Good schools “sometime in the next 10 or 20 years” – “probably”? Can you imagine a private-company CEO promising that his company would be good at its core business “probably sometime in the next 10 or 20 years,” after his retirement?

No wonder Albert Shanker, the first head of the American Federation of Teachers, said back in 1989:

It’s time to admit that public education operates like a planned economy, a bureaucratic system in which everybody’s role is spelled out in advance and there are few incentives for innovation and productivity. It’s no surprise that our school system doesn’t improve: it more resembles the communist economy than our own market economy.

Indeed, we have in each city in the United States an essentially centralized, monopoly, uncompetitive, one-size-fits-all school system that has been stagnating for more than a century. As I wrote in the book Liberating Schools,

The problem of the government schools is the problem inherent in all government institutions. In the private sector, firms must attract voluntary customers or they fail; and if they fail, investors lose their money, and managers and employees lose their jobs. The possibility of failure, therefore, is a powerful incentive to find out what customers want and to deliver it efficiently. But in the government sector, failures are not punished, they are rewarded. If a government agency is set up to deal with a problem and the problem gets worse, the agency is rewarded with more money and more staff — because, after all, its task is now bigger.  An agency that fails year after year, that does not simply fail to solve the problem but actually makes it worse, will be rewarded with an ever-increasing budget.  What kind of incentive system is this?  

This is ridiculous. Every form of communication and information technology is changing before our eyes, except the schools and the post office. It’s time to give families a choice. Free them from the monopoly school system. Give families education tax credits or education savings accounts. Make homeschooling easier. Let them opt out of the big-box school – and get their money back – and watch Khan Academy videos. 

Children spend 12 years in government monopoly schools. If they don’t get started right in the first couple of years, they’re running behind for life. It’s just not right to tell parents to wait 10 to 20 years for the tax-supported monopoly schools to start educating decently.

The U.S. Postal Service (USPS) has lost more than $50 billion since 2007, even though it enjoys legal monopolies over letters, bulk mail, and access to mailboxes. The USPS has a unionized, bureaucratic, and overpaid workforce. And as a government entity, it pays no income or property taxes, allowing it to compete unfairly with private firms in the package and express delivery businesses.

As we discussed yesterday at a Cato forum on Capitol Hill, the USPS needs a major overhaul. It should be privatized and opened to competition.

But instead of reform, congressional Republicans are moving forward with legislation that tinkers around the edges. Their bill adjusts retiree health care, hikes stamp prices, and retains six-day delivery despite a 40 percent drop in letter volume since 2000. The bill would also create “new authority to offer non-postal products,” thus threatening to increase the tax-free entity’s unfair competition against private firms.

The Democrats overseeing postal issues are happy as larks with the GOP bill, which appears to be a victory for unionized postal workers. You might wonder what the point of electing Republicans to Congress is if they are just going to let Democrats run the show in defense of unions and monopolies.

Republicans see their party as the one favoring free enterprise and competition. Yet those pro-growth goals are obliterated in America’s tightly regulated postal monopoly. When it comes to the postal industry, federal law defends bureaucracy and bans entrepreneurship, and the GOP seems to have no problem with that.

Why are Republicans so timid in advancing free market postal reforms? Their timidity is particularly striking when you compare their no-reform bill to the dramatic postal reforms in Europe. The European Union released a detailed report last year on the postal landscape in its 28 member countries. The report is written in the EU’s bureaucratic language, but it nonetheless reveals some impressive changes:

  • Since 2012 all EU countries have opened their postal industries to competition for all types of mail.
  • A growing number of countries have privatized their postal systems, including Britain, Germany, Portugal, and the Netherlands. Other countries, such as Italy, are moving in that direction.
  • EU countries have narrower and less burdensome “universal service” requirements than we do. And, crucially, the EU does not view such requirements as barriers to open competition and privatization, as American policymakers and USPS defenders do.
  • On-the-ground competition is small but growing in Europe. In a dozen countries, new competitors have carved out more than five percent of the letter market, and in a handful of countries the share is more than ten percent.
  • Dozens of competitors have entered the fray in numerous countries, although many are focused on niche markets, such as business-to-business mail. Dominant firms in some countries are launching subsidiaries in other countries to gain market share.

It remains to be seen how successful the new entrants will be against dominant national postal firms. But at least the Europeans are giving entrepreneurs a chance. In response to even the modest competition that has developed so far, major European postal companies have “increased their efficiency and restructured their operations to reduce costs,” according to the EU report.

Meanwhile, political leaders in this country aren’t letting anybody challenge our inefficient postal monopoly. But they should heed what current member of Congress Jared Polis said in a thoughtful article back in 2001: we should “end all monopolistic protections and special treatment enjoyed by USPS [and] transfer the capital stock of USPS to private hands.” Since then, the case for privatization and open competition has only become stronger.

Yesterday, the New York Times ran a front-page story purporting to show that “betting big” on charters has produced “chaos” and a “glut of schools competing for some of the nation’s poorest students.” (One wonders how many of those low-income families are upset that they have “too many” options.). However, the article’s central claim about charter school performance rests on a distorted reading of the data.

The piece claims that “half the charters perform only as well, or worse than, Detroit’s traditional public schools.” This is a distortion of the research from Stanford University’s Center for Research on Education Outcomes (CREDO). Although the article actually cites this research – noting that it is “considered the gold standard of measurement by charter school supporters across the country” – it only does so to show that one particular charter chain in Detroit is low performing. (For the record, the “gold standard” is actually a random-assignment study. CREDO used a matching approach, which is more like a silver standard. But I digress.) The NYT article fails to mention that the same study found that “on average, charter students in Michigan gain an additional two months of learning in reading and math over their [traditional public school] counterparts. The charter students in Detroit gain over three months per year more than their counterparts at traditional public schools.”

As shown in this table from page 44 of the CREDO report, nearly half of Detroit’s charter schools outperformed the city’s traditional district schools in reading and math scores, while only one percent of charter schools performed worse in reading and only seven percent performed worse in math.

Grouping the very few underperforming charters with the approximately half of schools that perform at roughly the same level as the district schools distorts the picture. It’s just as fair to say that more than nine out of ten Detroit charters performed as well or better than their district school counterparts. The most accurate description would note that about half of Detroit’s charters outperform their district school counterparts, about half perform roughly the same, and a very small number underperform.

According to CREDO’s 2015 nationwide study, 60 percent of charter schools outperform their district school competition in math and 51 percent outperform the district schools in reading. By contrast, the district schools outperform only 8 percent and 4 percent of Detroit charters in math and reading, respectively. The following two charts from pages 29 and 31 of the report show comparisons of charter school performance in various cities against “the alternative schooling options their students face” (i.e., the nearby district schools to which students would otherwise be assigned). 

 

In other words, the best available research on Detroit’s charter school sector shows almost exactly the opposite of what the NYT piece portrayed. Indeed, as Professor Jay P. Greene of the University of Arkansas noted

To claim that half the charters perform the same or worse than traditional public schools is a grotesque distortion of the study’s findings. […] [I]f the reporter cites that research to demonstrate that one charter management organization has sub-par performance, it is journalistic malpractice not to mention the positive overall results.  And those positive overall results contradict the very foundation of the entire article.

The NYT reporter, Kate Zernike, took to Twitter to defend her reporting against Greene’s takedown, citing data from Excellent Schools Detroit. However, as Greene explained, those data do not allow for direct comparisons. Zernike is right that the data show the citywide averages in each sector, but looking at the averages is misleading.

The charter schools tend to be mission-based schools that open in the toughest areas and serve the most at-risk students. Comparing city-wide averages fails to take that into account. It would be like comparing the New England Patriots against a championship high school team and concluding that the teenagers are superior athletes because they scored more touchdowns per game.  

The appropriate comparison is between the charters and the district schools that serve the same or similar student populations. That is what the CREDO study attempted to do by matching students with similar characteristics and initial test scores in each sector, then tracking and comparing them.

Zernike is still claiming that the CREDO study “does not consider Detroit[’s charter sector] stellar,” even though both the 2013 CREDO study of Michigan’s charter sector and the 2015 CREDO study of charters nationwide found that, on average, Detroit’s charter schools outperformed the district schools that their students would otherwise have attended. Indeed, one even called Detroit’s charter sector “a model to other communities.”

Zernike is simply wrong.

For an even more detailed critique of the article, read Tom Gantert of the Mackinac Center for Public Policy here.

 

Earlier this week, the Financial Stability Oversight Council (FSOC) removed GE Capital from its list of systemically important financial institutions (or SIFIs).  How big a deal is this?  Big.  And not so big.  And a little bit scary.  Let’s back up a bit to see why.

FSOC is a new entity created by Dodd-Frank.  Its members are the heads of the federal financial agencies, with the Secretary of the Treasury serving as Chair.  In comparison to other similar bodies, which only advise the president, FSOC has broad authority to act.  Chief among its tools is the ability to designate an entity as a SIFI, and to impose stringent oversight and regulatory requirements on it thereafter. 

The SIFI designation and attendant oversight have been promoted as a means to end Too Big to Fail.  Many people, myself among them, have questioned how labeling entities as systemically important and putting them under greater oversight can possibly end Too Big to Fail.  Isn’t a SIFI designation essentially the same as slapping a big “TBTF” label on the thing?  Well, here’s where GE Capital’s story gets scary.

Aside from concerns about having a SIFI designation at all, the greatest critique of the designation has been the process itself.  Dubbed the “modern day Star Chamber” by SEC Commissioner Michael Piwowar, its deliberations and the criteria it uses to decide if an entity is a SIFI have been notoriously opaque.  FSOC has defended its processes by asserting that “much of the discussion in a designation process involves reviewing internal information.” FSOC has issued some guidance on how it makes its decisions, but it has had difficulty even sticking to those very minimal guidelines.  The insurance company MetLife was designated a SIFI in 2014 and filed suit to challenge the designation.  It won at the trial court level, garnering a scathing opinion from District Court judge Rosemary Collyer who found that FSOC “focused exclusively on the presumed benefits of [MetLife’s] designation and ignored the attendant costs.”  Until GE Capital’s de-designation this week, MetLife was the only company to have escaped SIFI status.

This is unsurprising.  Because entities don’t know why they have been designated SIFIs, it’s been very hard for them to get de-designated.  There is no roadmap for a company to follow.  As others have pointed out, this makes no sense if we want to end Too Big to Fail.  The TBTF concept assumes that there are companies that are so big that their demise could bring down the whole economy because they are, in short, systemically important.  If you want to end TBTF, don’t you want to help companies understand how to become less systemically important?  To help them get de-designated as SIFIs?

Apparently, this is not what FSOC wants.  And so companies like GE Capital who want to shed the SIFI label have had to cast about and find by trial and error what will satisfy FSOC.  This is what is scary.  Instead of providing companies with a clear plan for how to eliminate just those things that make them SIFIs, retaining everything else, including any efficiencies gained by being a large company, it encourages them to shed everything.  GE Capital shed about $260 billion of assets since 2014, including $160 billion in commercial loans and a $26.5 billion portfolio of commercial real estate investments, as part of a massive downsizing project it has named “Project Hubble.”  And now it has been de-designated as a SIFI.

Does this mean that other companies can simply follow GE Capital’s lead? is this now a roadmap?  No.  First, GE Capital is unlike many other companies in that it has GE itself standing behind it.  Most other companies with SIFI status do not have such a wealthy and powerful parent to act as backstop.  Second, and most important, GE Capital had strong business-based incentives to shed these assets.  According to Wharton Professor of Management Emeritus, Lawrence Hrebiniak, GE CEO Jeff Immelt is “betting on the future of industrials with greater margins and greater returns. This will increase the valuation of the company.”  GE Capital was fortunate in that what was good for business was also good for SIFI de-designation.  For other companies, such downsizing would not be advantageous.

It’s important that at least one company has achieved de-designation.  This shows that designation is not a life sentence and that, under certain circumstances, FSOC is willing to remove a company from the list.  That’s all to the good.  But because GE Capital downsized so substantially, it is impossible to tell which of its actions convinced FSOC to de-designate it.  There is no roadmap.  The only thing we know is that, when it comes to SIFI designation, smaller is better.  But there is no reason to think that this is universally true for our economy as a whole.  There are in many cases great efficiencies to be gained from consolidation and increased size.  Unfortunately, FSOC’s current tack simply encourages downsizing for the sake of downsizing without any consideration for what such downsizing may do to productivity and growth.

In this post, I will stray a bit from monetary issues but not too far.  The British people voted last Thursday (June 23rd ) to exit the European Union.  How should that decision be viewed by classical liberals?  Do Americans have a stake in the outcome?

The political classes on both sides of the Atlantic are appalled at the voters’ decision.  The peasants have risen up in revolt and their decision cannot be allowed to stand.  There are already calls for a political mulligan in the form of a second referendum.  Others have called for the British Parliament to nullify the vote.  Both suggestions reveal the low regard for democratic decision making among Britain’s and Europe’s political elites.  No one can predict the outcome at this point.

Let us pause for a moment and consider what the vote’s outcome says about the prescience of the ruling class in Britain, on the Continent and, yes, over here.  (President Obama interjected himself into the vote and appeared dumbstruck last Friday when British voters rejected his advice.)  Political leaders pretend to be wiser and better able to look into the future and discern what is best for the people.  But almost to a person, they were unprepared for the referendum’s outcome.  That speaks both to their distance from the people they claim to represent and their ability to forecast events even 24 hours in advance.  So much for the wisdom of the elites.

(I am perplexed by just how surprised political and business leaders were.  I was in Europe the weekend before and was briefed by a veteran British MP, who was firmly in the Remain camp.  He called the election too close to call.  He said that victory by the Leave side was entirely possible.)

What was at stake in the election?  The leaders of the European Union portray it as promoting free trade and economic liberalism.  It is far from that.  The bureaucracy in Brussels has created an overbearing regulatory super-state, against which the British voters rose up.  To classical liberals, since the demise of the Soviet Union, the European Union is the last bastion of central planning.

As is always true, there were multiple motivations to those wanting to breakaway.  One group certainly felt that Britain could be more economically free out than in.

Immigration was an important issue there, as it has become here.  Voters opposed an immigration policy imposed from afar.  Additionally, Britain as an island had heretofore been largely immune from the mass migration from the Middle East, North Africa and elsewhere.  It appeared that would no longer be true.  Again, there is an echo in the United States in the debate over accepting Syrian refugees.  Being emotion-laden, immigration can be the leading edge of popular discontent.

One thing not at stake in the election was the hoary issue of the currency.  That issue had already been decided soon after the euro’s introduction as a currency on January 1, 1999.  There was a move for Britain to adopt the euro, but it was strongly rebuffed.  I am not usually an advocate of floating currencies.  Faced with a monetary straightjacket of the euro, however, Britain wisely chose the flexibility of keeping the pound sterling.  I helped make that case in Britain, and history has shown it to be a good decision.  The pound was a monetary safety valve for Britain.  But the political differences remained and eventually boiled over in this vote.

The core monetary issue is that no monetary policy could be the correct one for countries as economically diverse as those comprising the European Union (now numbering 28).  The area did not meet the criteria of being an optimal currency area.  Given those facts, Britain was better off conducting its own monetary policy.[1]  There are now a total of nine countries within the EU that do not use the euro.[2]

Prime Minister Cameron was the architect of the referendum and, hence, his own demise.  He advocated remaining in the EU but wanted to end the debate over the issue within the Conservative Party.  He did not even consult his own Cabinet over the decision.  For Cameron, it was a massive political blunder.  He compounded that blunder by announcing his resignation, effective in October, at a news conference the day after the referendum.  That rendered him the lamest of political ducks.

But the method by which the referendum got on the ballot put supporters of an EU exit at a profound disadvantage.  They had no strategic economic plan in the event the referendum passed. That is why there is such extreme political and economic uncertainty.  No one has exited the EU before.  Neither the yet-undecided new British Prime Minister nor the EU leaders know what comes next.  That is a situation of extreme economic uncertainty, which markets hate.  We see this in the volatility in financial markets.  Blame not British voters, however, but Cameron’s political stunt.

Fifteen years ago, two colleagues and I first proposed a global free trade association.[3]  It would be a coalition of the willing, the most free-trading countries in the world.  Some, but not all members of the EU would have qualified.  That created the very problem now facing Britain: how can it trade more freely with the rest of the world and also trade preferentially with EU countries.  The answer we eventually hit on was that Britain (and other qualifying EU members) could move from membership in the EU to membership in the broader European Economic Area (as Iceland, Liechtenstein and Norway are today).

The key point was that Britain would have had a plan and first have negotiated with the EU.  Only then would it (and possibly other countries) have exited as members of the EU.  Had it been done in that fashion, we would not be facing the global turmoil we are right now.  It would have been Brexit with a plan.

We are where we are, however, and Britain’s new leadership must make the best of it.  Assuming they honor the vote, they need to try to negotiate the best possible deal with the EU.  It would be in Europe’s economic interests to negotiate the closest possible economic relationship.  Financial markets have signaled that Continental European countries have more potentially to lose than does Britain.  Some EU leaders have suggested, in effect, that Britain be punished for leaving.  German Chancellor Merkel has called for calm and a sensible negotiating position.  One hopes her good counsel prevails.

If the EU hotheads prevail, they will be cutting off their noses to spite their faces.  As with all trade barriers, Britain’s “punishment” will inure to the harm of their own citizens as much as Britain’s.[4]  I personally believe that Britain will prosper with or without a special relationship with the EU.

The divisions within the United Kingdom of England, Wales, Scotland and Northern Ireland were not created by the Brexit vote, but have been exacerbated by it.  Scotland voted heavily to Remain, and Northern Ireland somewhat less heavily so.  There is a move afoot for Scotland to hold a second referendum on its independence so it can join the EU on its own.  I offer no opinion on whether Scotland will or should enter into disunion with the rest of the United Kingdom.  If the union no longer benefits the British peoples, I wish them peace and prosperity as they chart their own courses.  It would be difficult for an American of Irish heritage to say otherwise.

I conclude by answering my three questions.  First, classical liberals should always applaud when a people chooses its own political future.  This is especially so when they do so peacefully.  Second, the United States has a special relationship with Britain, and it is in our interest to maintain that whether Britain is inside or outside the EU.  Doing that may be complicated, and I only wish that the Obama administration had drawn up contingency plans for a Brexit vote.  Finally, Britain’s choice to retain the pound is a test case for advocates of floating currencies.  There are some problems they can address, but they are not a panacea.

_____________

[1] The Bank of England always had the option to track the monetary policy of the European Central Bank.  Some countries outside the euro effectively peg to it, which means they are importing ECB monetary policy.

[2] Besides the United Kingdom, they are Bulgaria, Croatia, the Czech Republic, Denmark, Hungary, Poland, Romania and Sweden.

[3] See Chapter 3, “The Free Trade Association: A Trade Agenda for the New Global Economy” by John C. Hulsman, Gerald P. O’Driscoll, Jr., and Denise H. Froning in 2001 Index of Economic Freedom, Gerald P. O’Driscoll, Jr., Kim R. Holmes and Melanie Kirkpatrick, eds.,(Washington, D.C. The Heritage Foundation and The Wall Street Journal, 2001): 43-62.

[4] One argument to punish Britain is to make it an example to others who might exit the EU. It is a curious position to take by those claiming the EU is a good deal for its members.

[Cross-posted from Alt-M.org]

Despite a constant barrage of stories portraying rising atmospheric carbon dioxide (CO2) as a danger and threat to the planet, more and more scientific evidence is accruing showing that the opposite is true. The latest is in a paper recently published in the journal Scientific Reports, where Lu et al. (2016) investigated the role of atmospheric CO2 in causing the satellite-observed vegetative greening of the planet that has been observed since their launch in 1978.

It has long been known that rising CO2 boosts plant productivity and growth, and it is equally well-established that increased levels of atmospheric CO2 reduce plant water needs/requirements, thereby improving their water use efficiency. In consequence of these two benefits, Lu et al. hypothesized that rising atmospheric CO2 is playing a significant role in the observed greening, especially in moisture-limited areas where soil water content is a limiting factor in vegetative growth and function. To test their hypothesis, the three scientists conducted a meta-analysis that included 1705 field measurements from 21 distinct sites from which they evaluated the effects of atmospheric CO2 enrichment on soil water content in both dryland and non-dryland systems.

According to the authors, the meta-analysis revealed that “increasing atmospheric CO2 to between 1.2 to 2.0 times the ambient CO2 level has a positive effect on soil water content” (Panel A, figure below). What is more, the CO2-induced increase in soil water content was found to be greater in drylands (17%) than non-drylands (9%) (Panel B, figure below). Lu et al. also note their analysis showed “no evidence for any significant effects” of soil texture, vegetation type, land management practices or climate regime on soil water content under elevated CO2 conditions. Given as much, they conclude that considering the inherent water limitation in drylands, the additional soil water availability brought about by rising atmospheric CO2 concentrations over the past half-century is “a likely driver of observed increases in vegetation greenness” during this period.

Figure 1. (Panel A) Sensitivity of the soil water response ratio to CO2 enrichment for the entire data set, calculated as the soil water content under elevated CO2 divided by the soil water content under ambient CO2. The closed circles are the observations, with the solid black line providing a linear regression. The red lines represent the 95% confidence intervals of the observations and the dashed grey lines represent the 95% confidence interval of the model. (Panel B) Enhancement of soil water content under elevated CO2 for dryland versus non-dryland regimes. Adapted from Lu et al. (2016).

Here is yet another study indicating rising atmospheric CO2 is benefiting the biosphere, rather than harming it.

 

Reference

Lu, X., Wang, L. and McCabe, M.F. 2016. Elevated CO2 as a driver of global dryland greening. Scientific Reports 6: 20716, doi:10.1038/srep20716.

A recent Washington Post analysis has argued that political events as diverse as the Brexit and the rise of Donald Trump can be explained by a “revolt” of the world’s economic “losers.”

Before proceeding, it is important to keep in mind that all income groups in the world have seen gains in real income over the last few decades. That said, some have gained more than others. Between 1988 and 2008, for example, the lowest gains were made by people whose incomes fit beteen the world’s 75th to 90th income percentiles. That includes much of the middle and working class in rich countries.

The Washington Post calls the people in this group the bitter “losers” of globalization. But, are they?

There are at least two problems with characterizing such people as “losers.” First, it seems to suggest that income growth rate matters more than absolute income level. Yet a person in the 80th income percentile globally would not want to trade places with or envy someone in the bottom 10th percentile, despite the latter’s much higher income growth rate.

Consider real GDP per person, adjusted for differences in purchasing power, in China and the United States. Between 1988 and 2008, China’s per person GDP grew by over 340 percent. America’s per person GDP, in contrast, grew by “only” 40 percent. China may be making gains more quickly, but it would be wrong to argue that the United States was a “loser,” for American GDP per person in 2008 was $52,704 and China’s $8,104.

Poor countries are seeing faster income gains partially because their starting point is so much lower—it’s a lot easier to double per person GDP from $1,000 to $2,000 than from $40,000 to $80,000.

The second problem is that the Washington Post piece suggests that the incredible escape from poverty that has occurred in poor countries during my lifetime has come at the expense of the middle classes in the developed world. (This is a fascinating reversal of the more popular, but equally inaccurate, opinion that the Western riches came at the expense of poor countries).

Thus, the Washington Post piece claims, “global capitalism didn’t always work so well for workers in the United States and Europe even as—or, in some cases, because [emphasis mine]—it pulled hundreds of millions of people out of poverty everywhere else.”

Fortunately, prosperity is not a zero sum game.

When trying to understand the “winners” and “losers” of globalization, it is important that we do not compare income growth rates over the last few decades with some imagined ideal. Instead, we should compare income growth to what would have happened in a world without globalized trade. In such a world, hundreds of millions of people would have remained in extreme poverty. And the middle class of the developed world would also have made fewer gains. Just look at the amazing reduction in price of consumer goods that we have collected at HumanProgress.

A few individuals in select industries would benefit from protectionism, like the U.S. sugar industry does now. But on average everyone would be poorer, just as in 2013 Americans collectively paid 1.4 billion dollars more for sugar than they would have without protectionism. (The U.S. manufacturing industry, it may be worth noting, would not be among the “select industries” to benefit—most manufacturing job losses have come from mechanization rather than outsourcing, and have been offset by new jobs in other sectors).

Thanks to trade and exchange, people in all income percentiles have made real gains, and living standards for the middle class in advanced economies have soared in ways not captured by looking at income alone. America’s middle class is getting richer, and the people in the world’s 75th to 90th income percentiles are also winners.

A group of State Department officials recently sent a confidential cable chiding the administration for not adding another war to America’s very full agenda. The 51 diplomats called for “targeted military strikes” against the Syrian government and greater support for “moderate” forces fighting the regime.

One of the architects of current policy, presumptive Democratic presidential nominee Hillary Clinton, also has turned against the administration’s more disengaged approach. She urged creation of a no fly zone, an act of war, as well as greater support for insurgents.

The conflict is horrid, of course, but no one has explained how U.S. entry into Syria’s multi-sided civil war would actually end the murder and mayhem. Nor has anyone shown how America making another Middle Eastern conflict its own would serve Americans’ interests.

Despite the repeated failure of social engineering at home, Washington officials believe that they can transcend culture, history, religion, ethnicity, geography, and more and forcibly transform other peoples and nations. Those who resist America’s tender mercies via bombs, drones, infantry, and special operation forces are assumed to deserve their fate.

This interventionist impulse is particularly inappropriate for a devilishly complex conflict like Syria. Unfortunately, Washington’s early insistence on Bashar al-Assad’s overthrow thwarted hope for a negotiated settlement.

The claim that the U.S. could have provided just the right amount of assistance to just the right groups to yield just the right outcome is a fantasy, belied by America’s failure get much of anything in the Middle East right. Even when Washington seemingly enjoyed full control in Iraq the U.S. did just about everything wrong, triggering the sectarian conflict which spawned the Islamic State.

Military action would be even more dangerous today given Russia’s involvement. Syria matters much more to Russia, which has a long relationship with Damascus, enjoys access to the Mediterranean from a Syrian base, and has only limited influence elsewhere in the region.

No fly proponents blithely assume that Moscow would yield to U.S. dictates, but America would not surrender if the situation was reversed. A no fly zone would not bring peace to Syria but would risk a military incident with a nuclear-armed power.

The State Department dissenters argued for limited strikes on Syria. What if such attacks failed? What if Damascus deployed Russian anti-aircraft systems? What if Moscow escalated against U.S.-supported insurgents? Would Washington concede or double down?

In fact, no one has a realistic scheme to put the Syrian Humpty-Dumpty back together again. Ousting Assad would effectively clear the way for the Islamic State and other radical factions.

So far supporting so-called moderate insurgents has done little more than end up indirectly supplying ISIL and al-Nusra, an al-Qaeda affiliate, with recruits and weapons. Turkey is at war with the same Kurdish fighters America supports.

While horror is the appropriate reaction to Syria’s civil war, the U.S. has no solution to offer. The U.S. should adopt a policy of first do no harm.

As I argue in National Interest: “Stay out of the conflict. Don’t add to the tragedy. Accept refugees fleeing for their lives. Provide humanitarian aid to those within reach. That would be an agenda of which Americans could be proud.”

Echoing concerns I expressed last week, Reason’s Peter Suderman notices a problem with House Republicans’ new plan to replace ObamaCare:

As it turns out, the health care policy that Republicans might pursue looks, well, a lot like Obamacare—except, possibly, worse.

Although the plan starts by repealing the health care law in its entirety, it ends up replacing many of its central components with similar provisions: preexisting coverage rules, subsidies for the purchase of insurance, and even an (implicit) mandate. Rather than offer ObamaCare-lite, Congress should repeal ObamaCare and then make health care better, more affordable, and more secure by moving toward a market system.   Sen. Jeff Flake (R-AZ) and Rep. Dave Brat (R-VA) have introduced legislation that contains the building blocks of such an approach.
This week we are introducing a new feature on the blog where we provide links to the day’s latest polls and public opinion studies available:   HuffPost/YouGov June 27, 2016 Republicans Are Totally In Favor Of Brexit
  • 59% of Republicans approve of #Brexit; only 17% of Democrats and 32% of Independents agree
  • 43% of Democrats agree free trade agreements are “good thing” for US; 28% of Republicans agree
  Morning Consult  June 27, 2016 Clinton Gains in Polls, but Voters Favor Trump to Grow Economy
  • 45% of registered voters said Trump would be better for the economy, 38% said Clinton would be better for economy.
  NBC/Wall Street Journal June 27th, 2016 Poll: Majority of Republicans Prefer Someone Else to Trump
  • 52% of Republicans say they’d prefer a nominee other than Trump, 45% are satisfied with Trump. Republicans felt similarly about John McCain in 2008 (52% preferred someone else, 44% satisfied)
 

Gallup June 27, 2106 Clinton, Trump Gaining Favorability Within Parties 

  • Trump favorability 20 percentage points lower than any prior recent GOP candidate among Republicans in early summer. Favorable= Trump (64%), Romney (82%), McCin (88%), W. Bush (94%), H.W. Bush (88%)
  • Clinton favorability (71%) nearly 20 percentage points lower than Obama (87%) and Kerry (87%) among Democrats.
  Gallup June 28, 2016 No Immediate Brexit Effect on U.S. Economic Confidence

 

Pew Research Center  June 27, 2016 Report: On Views of Race and Inequality, Blacks and Whites Are Worlds Apart 
  • 88% of African-Americans say the country needs to continue making changes for blacks to have equal rights with whites. 43% are skeptical changes will ever occur, 42% are optimistic that the country will eventually make changes needed.

 

Rasmussen  June 28, 2016 Voters Favor GOP Plan To Sell Health Insurance Across State Lines
  • 66% say employers and individuals buying health insurance be allowed to buy insurance plans across state lines.

 

Rasmussen

June 27, 2016 Health Care Law 
  • 60% say more free market competition between insurance companies would do more to reduce costs, compared to 27% who thought that this would be best done by more government regulation.
  The Texas Tribune June 27, 2016 TEXAS: UT Poll: Trump Leads Clinton by 8 in Texas        Talk Business & Politics-Hendrix College June 26, 2016 ARKANSAS: TB&P-Hendrix Poll: Trump holds lead over Clinton in Arkansas     Sign up here to receive Cato’s upcoming digest of Public Opinion Insights and public opinion studies.   Sam Henick contributed research to these polling links.

With the arrival of President Hugo Chávez in 1999, Venezuela embraced Chavismo, a form of Andean socialism. In 2013, Chávez met the Grim Reaper and Nicolás Maduro assumed Chávez’s mantle.

Chavismo has not been confined to Venezuela, however. A form of it has been adopted by Rafael Correa – a leftist economist who became president of a dollarized Ecuador in 2007.

Even though the broad outlines of their economic models are the same, the performance of Venezuela and Ecuador are in stark contrast with one another.

The most telling contrast between Venezuela’s Chavismo and Ecuador’s Chavismo Dollarized can be seen in the accompanying chart of real GDP in U.S. dollars. We begin in 1999, the year Chávez came to power in Venezuela.

The comparative exercise requires us to calculate the real GDP (absent inflation) and do so in U.S. dollar terms for both Venezuela and Ecuador. Since Ecuador is dollarized, there is no exchange-rate conversion to worry about. GDP is measured in terms of dollars. Ecuadorians are paid in dollars. Since 1999, Ecuador’s real GDP in dollar terms has almost doubled.

To obtain a comparable real GDP for Venezuela is somewhat more complicated. We begin with Venezuela’s real GDP, which is measured in terms of bolívars. This bolívar metric must be converted into U.S. dollars at the black market (read: free market) exchange rate. This calculation shows that, since the arrival of Chávez in 1999, Venezuela’s real GDP in dollar terms has vanished. The country has been destroyed by Chavismo.

 

Venezuela is clearly in a death spiral. The only way out is to officially dump the bolívar and replace it with the greenback.

The European Union’s leaders said they wanted the United Kingdom to remain in the EU. But Brussels offered only minimal concessions to British Prime Minister David Cameron, undercutting his effort to sell the benefits of continued EU membership.

Now the Eurocrats who dominate EU policy are attempting to push the UK out the door. London should slow down the process and maximize its leverage.

The vote to Leave shocked Eurocrats across Europe. Even many Brexit advocates believed that Remain would carry the day. The British government is not prepared to announce a Brexit program.

However, EU leaders almost immediately began pressing London to act. They want the UK to trigger Article 50, which begins a two-year process to renegotiate a departing member’s relationship with the EU.

Once taken the decision cannot be reversed. And if no agreement is reached within two years the country is unceremoniously defenestrated without any special access to the European market.

But the UK need not hurry. The British government should hold off until it is ready.

First, the situation is chaotic. The prime minister is resigning. The opposition leader might be forced to resign. Scotland might again vote for independence. No one is ready to discuss Brexit terms.

Second, with both leading parties in flux, waiting would allow a new government and opposition to emerge. How to implement the vote remains to be decided. A new government should be in office first.

Third, the Eurocrats have split between those determined to impose punitive terms in order to discourage other states from leaving and those who prefer to be generous and maximize continued cooperation. Better to let passions cool.

Fourth, when the Brexit trigger is pulled is a political, not legal issue. The referendum was advisory. No enabling legislation has been passed. Effective negotiations won’t be possible until a government, backed by a stable majority, is prepared to act.

Fifth, waiting would increase London’s bargaining power. The Eurocrats understand that accelerating the process would put greater pressure on London to make concessions, since a shorter deadline would threaten to leave the UK outside of the EU without any special access to the European market. However, Britain can play the same game by delaying.

Sixth, as passions cool the desire to exact revenge—to punish Britain to discourage other exiteers—likely will fade. While punitive measures might provide emotional satisfaction for some, failing to reach an agreement with the world’s fifth and Europe’s second largest economy would hurt everyone. Continued commercial links between the UK and continent are too important to sacrifice in a fit of pique.

Seventh, slowing the process would give Washington more time to play a positive role. As I wrote in the American Spectator: “It should start by indicating its willingness to begin negotiations with the UK over a free trade agreement as soon as the Brits are ready. The U.S. also should indicate that a smoother UK-EU divorce would improve the chances of a U.S.-EU trade pact.”

Eighth, holding off on the official trigger creates at least a possibility of rapprochement between the UK and EU. Brexit just might shock Europe’s leading powers toward serious reforms. Donald Tusk, one of the EU’s many presidents (of the European Council) admitted that “ordinary people, the citizens of Europe, do not share our Euro-enthusiasm.” The EU will have to work to regain public trust and support. If successful, the EU might even change attitudes in the UK.

The ultimate impact of Brexit remains to be seen. All parties should allow the passions political battle to cool. In fact, slowing down the process would benefit Europe as well as the UK. A hasty, angry negotiation would serve no one. The British vote could change the EU for the better. There’s no need to hurry the Brexit. 

It was an odd and sad year at the Supreme Court. Most years, reporters and pundits devise a “theme” that’s mostly an artificial construct driven by the vagaries of the docket: “The Court moved left/right/minimalist/unanimous …” But this year there actually is a real theme: the loss of Justice Antonin Scalia. Justice Scalia’s passing “deflated” what would otherwise have been yet another blockbuster term in many ways, defusing several high-profile cases as well as removing the most quotable pen on Earth from media coverage these last weeks of June.

In practical terms, however, Scalia’s absence was felt in ways different than most people assume. For example, of the major cases, only Friedrichs (worker rights) came out the other way, affirming the lower court by a 4-4 vote that would’ve been a 5-4 reversal with Scalia. United States v. Texas (immigration) would’ve been a 5-4 affirmance of the lower-court injunction instead of a 4-4 affirmance. Fisher II (affirmative action) would’ve been a 4-4 affirm instead of 4-3. Zubik (contraceptive mandate) would’ve been 5-4 reversal instead of a weird 8-0 decision to vacate that effectively forces a compromise that the challengers can accept. Whole Women’s Health (abortion) would’ve been a 5-4 reversal instead of a 5-3. To be sure, there would’ve been interesting nuances from the opinions in Scalia’s presence – which may have set precedents for, say, future executive actions – but the direct results wouldn’t have really changed except in Friedrichs (which was a big deal, don’t get me wrong) and a handful of lower-profile cases.

Also, this was a term of very few surprises; the conventional wisdom was borne out in every case that I followed except Fisher II. I still can’t figure out what Justice Kennedy was doing there, reversing himself from Fisher I regarding deference to administrators and voting to uphold a use of racial preferences for the first time ever. Maybe he was just tired of the case. Indeed, both Fisher and Whole Women’s Health, while making national news due to their fraught subject matter, are minimalistic and sui generis, dealing with very specific government policies.

But regardless of the good, bad, and ugly, when the dust cleared, there was one aspect of continuity that’s particularly gratifying to me: Cato continued its successful streak in cases in which we filed amicus briefs. While not as dominating as two terms ago, we still managed to pull off a 4-4 (or 3-3-2, as I’ll explain shortly) record.

Here’s the breakdown, in the order the opinions arrived:

Winning side (4): Luis v. United StatesU.S. Army Corps of Engineers v. HawkesZubik v. BurwellUnited States v. Texas (4-4 affirming our position).

Losing side (4): Evenwel v. Abbott; Fisher v. UT-AustinTyson Foods v. BouaphakeoFriedrichs v. California Teachers Association (4-4 affirming position we opposed).

But regardless, we still pipped our main competition, the U.S. government, which went 13-14 on the term, including a record 10 unanimous losses. This administration is easily the worst performer of any to have come before the Court in modern times (and probably ever, though it’s more relevant to compare Obama to Bush, Reagan, and Kennedy than, say, Benjamin Harrison). There are three basic reasons for this: expansive executive action, envelope-pushing legal theories, and Justice Kennedy acting like a libertarian on close cases.

I’ll have more to say on this in future commentary, but if you’d like to learn more about all these cases/trends and the views of Cato-friendly scholars and lawyers, register for our 15th Annual Constitution Day Symposium, which will be held September 15 to review the term and look ahead to next year. That’s also when we’ll be releasing the latest volume of the Cato Supreme Court Review, the editing of which will consume much of my summer.

Here are links to the latest polls and public opinion studies:   CBS/YOUGOV June 26, 2016 WISCONSIN, NORTH CAROLINA, FLORIDA, COLORADO — Poll: Donald Trump, Hillary Clinton in tight races in battleground states
  • CBS polls of likely voters show Clinton narrowly leading Trump across a number of key states of Florida (44 to 41 percent); Colorado (40 to 39 percent); Wisconsin (41 to 36 percent) and North Carolina (44 to 42 percent). North Carolina has flipped back and forth between the parties in the last two elections.

ABC/Washington Post
June 26, 2016
In new poll, support for Trump has plunged, giving Clinton a double-digit lead

  • Two-thirds of Americans see Trump as biased against groups such as women, minorities, or Muslims. Sixty-four percent of respondents say Trump is unqualified to serve as president, a new high, and 34 percent say he is qualified. 

Wall Street Journal/NBC
June 26, 2016
Hillary Clinton Holds 5-Point Lead Over Donald Trump, Latest Poll Finds

  • Half of registered voters (50 percent) said they were concerned the government would go “too far” in curtailing the people’s right to own guns while 47 percent said they worry the government would not do enough to regulate the ability to get guns. Forty-two percent of those polled had a positive image of the NRA, while 36 percent viewed the group negatively. 

American Enterprise Institute:
June 23, 2016
Report: Public opinion on affirmative action
Karlyn Bowman and Eleanor O’Neil

  • Americans generally support “affirmative action” in employment and education, but oppose “preferential treatment.”
Gallup
June 27, 2016
Trump Not Yet Generating Evangelical Republican Zeal
  • Highly religious white Protestant Republicans are no more likely to view Trump favorably than are white Protestant Republicans who are moderately or not religious. In contrast, while he was still in the race, former candidate Ted Cruz’s appeal was significantly higher among highly religious members of this group than among those who were less religious.

Gallup
June 24, 2016
In U.S., Slim Majority Confident About Financial Future

  • Fifty-three percent of respondents were “very” or “somewhat” confident about financial future compared to 46 percent who report feeling at least somewhat insecure about their financial future, including 17 percent who feel “very” insecure. Lower-income Americans report being the most financially insecure: 37 percent of those making below $30,000 a year reported feeling “very insecure.”
Public Policy Polling (PPP) June 24, 2016  NC Governor’s Race Remains Tied; HB2 Still Unpopular
  • Only 28 percent of voters think HB2 (also known as the Charlotte Bathroom Bill) is helping North Carolina, whereas 52 percent think it’s hurting the state. Voters feel the law it’s having an adverse effect both on the state’s economy (49 percent say it’s having a negative impact, only 10 percent say it’s having a positive one) and on the state’s national reputation (50 percent say it’s having a negative impact, only 19 percent a positive one.)

Rasmussen
June 27, 2016
Most Voters Don’t See Love As Answer to Terrorism

  • Fifty-three percent of Americans disagree with Loretta Lynch that love is the best response to terror incidents like the one in Orlando.

Portland Press Herald
June 25, 2016
MAINE: Charts: Portland Press Herald/Maine Sunday Telegram poll results

  • Governor Paul LePage suffers from low favorability. Just 36 percent or respondents view him favorably whereas 59 percent hold unfavorable opinions.

PRRI/Brookings
June 23, 2016
Report: How Immigration and Concerns about Cultural Change are Shaping the 2016 Election | PRRI/Brookings Survey
Betsy Cooper, Ph.D., Daniel Cox, Ph.D., E.J. Dionne Jr., Rachel Lienesch, Robert P. Jones, Ph.D., William A. Galston

  • The general public is evenly divided over whether American culture and way of life have mostly changed for the better (49 percent) or changed for the worse (50 percent) since the 1950s. White working-class Americans (62 percent) and white evangelical Protestants (70 percent) are among the most likely to believe that American culture and the American way of life has changed for the worse since the 1950s. Approximately eight in ten Republicans (79 percent) and Trump supporters (83 percent) believe the values of Islam are at odds with the American way of life. This view is shared by a majority (54 percent) of independents and less than half (42 percent) of Democrats. A majority (55 percent) of Democrats say Islam does not conflict with American values.
Pew Research June 22, 2016 Partisanship and Political Animosity in 2016
  • For the first time in surveys dating back to 1992, majorities in both parties express not just unfavorable but “very unfavorable” views of the other party. And today, sizable shares of both Democrats and Republicans say the other party stirs feelings of not just frustration, but fear and anger. More than half of Democrats (55 percent) say the Republican Party makes them “afraid,” while 49 percent of Republicans say the same about the Democratic Party. Among those highly engaged in politics – those who say they vote regularly and either volunteer for or donate to campaigns – fully 70 percent of Democrats and 62 percent of Republicans say they are afraid of the other party.
 Sam Henick contributed research to these polling links.

 

 

 

 

Today, The Supreme Court issued a unanimous ruling on the closely watched corruption case concerning former Virginia governor, Robert McDonnell. McDonnell and his wife were charged with a Hobbs Act violation and honest services fraud. The McDonnells had accepted $175,000 in loans and gifts from the CEO of Star Scientific, a nutritional supplement developer. Merely accepting gifts is not a crime, however. Under the honest services statutes and the Hobbs Act, a government official must have exchanged “official acts” for those gifts. The crux of the case boiled down to what, exactly, constitutes an “official act”.

The prosecution argued that McDonnell made five official acts, all in furtherance of getting Star Scientific’s new supplement, Anatabloc, tested by Virginia’s public universities, which would greatly assist the FDA-approval process. The acts included sending aides to view and take notes at meetings between the CEO and others, hosting events where he encouraged state universities to conduct studies on Anatabloc, contacted other officials within the governor’s office to encourage the same studies, allowing the CEO to invite business partners to events at the governor’s mansion, and suggesting that Anatabloc be a part of the state healthcare plan.

Another “official act” was an email saying “pls see me about Anatabloc issues at VCU and UVA.”

Jonnie Williams, the CEO, failed in his attempts to get state universities to conduct his studies, but according to the prosecution, it was the intention to influence the process which triggers the corruption charges.

The situation does look suspicious on its face, but a problem stems from the fact that if the government construes the term “official acts” this broadly, it could criminalize many actions which officials take in order to make government function more smoothly for any and all of its constituents. If the prosecution succeeded in its argument (and it had succeeded in two lower courts before making its way to SCOTUS), it could punish any official who sends or forwards an email to a slow-moving bureaucracy urging them to remedy the problems of an aggrieved citizen. It could punish any official who invites business leaders to an event. It could punish any official who attends an event which is promoted by business leaders. And it could punish an official who asks any of his subordinates to take notes at any of these meetings. During oral arguments, Justice Breyer said, “For better or for worse, it puts at risk behavior that is common.”

Seventy-seven former attorneys general from a variety of states agreed with these fears and reiterated them in an amicus curiae brief. “McDonnell’s acts were ‘assuredly ‘official acts’ in some sense,’ but they ‘[were] not ‘official acts’ within the meaning of’ the federal bribery statutes. United States v. Sun-Diamond Growers of Cal.” Lastly, from page 5 of the same, “And when they ask their legal advisers, ‘Does this violate the law?’ too often the reply will be, ‘We really don’t know.’”

Here’s an excerpt from the ruling:

[C]onscientious public officials arrange meetings for constituents, contact other officials on their behalf, and include them in events all the time. The basic compact underlying representative government assumes that public officials will hear from their constituents and act appropriately on their concerns—whether it is the union official worried about a plant closing or the homeowners who wonder why it took five days to restore power to their neighborhood after a storm. The Government’s position could cast a pall of potential prosecution over these relationships if the union had given a campaign contribution in the past or the homeowners invited the official to join them on their annual outing to the ballgame. Officials might wonder whether they could respond to even the most commonplace requests for assistance, and citizens with legitimate concerns might shrink from participating in democratic discourse.

This concern is substantial. White House counsel who worked in every administration from that of President Reagan to President Obama warn that the Government’s “breathtaking expansion of public-corruption law would likely chill federal officials’ interactions with the people they serve and thus damage their ability effectively to perform their duties.” Six former Virginia attorneys general—four Democrats and two Republicans—also filed an amicus brief in this Court echoing those concerns, as did 77 former state attorneys general from States other than Virginia—41 Democrats, 35 Republicans, and 1 independent. [internal citations removed]

Chief Justice Roberts made it clear that the underlying facts were distasteful (the McDonnells exercised extremely poor judgment), but the Court had to consider the implications of the government’s “boundless interpretation” of the federal corruption statutes.  By its unanimous vote, the Court has sent a powerful signal to both the U.S. Attorney General and the lower federal courts: Stop stretching the laws to cover grubby politicking; only crack down on old-fashioned bribery.  Lastly, the Court noted that due process requires that people have fair notice of what conduct is criminal and what conduct is lawful.  When the government urges broad interpretations of the criminal statutes, due process is threatened.  To avoid that danger, courts should generally embrace a more confining view of the statute and thus federal prosecutorial power.

It may appear abstract, but look at what happened today.  Prosecutors asked that Robert McDonnell be imprisoned ten years for his conduct.  Today, he remains a free man because it is not obvious that his conduct was unlawful.  There might still be a retrial, but the prosecution’s theory was unanimously rejected by the Supreme Court.

Related item here.  

 

Smithsonian leaders have revealed that renovating the Air and Space museum in Washington, D.C. will cost almost $1 billion. That’s the equivalent of an army of 10,000 workers earning $100,000 each for a year to fix it up. Geez, government projects are expensive!

My letter in the Washington Post today proposes that rather than hitting taxpayers, museum visitors should pay for the renovation:

Regarding the June 23 Style article “Estimate for Air and Space facelift closes in on $1 billion”:

About $250 million of the ballooning makeover costs for the National Air and Space Museum will come from private donations, leaving a $750 million bill for taxpayers.

But rather than burdening taxpayers, how about charging visitors? The Post noted that the museum gets 7 million visitors a year, so a modest $5 fee would raise $35 million a year and pay back the makeover costs over 21 years.

Aside from the greater fairness of charging users rather than taxpayers, fees would limit demand and thus improve the visitor experience at the overcrowded institution. User fees for Air and Space — and other Smithsonian museums — would also help level the playing field with private D.C. museums, such as the International Spy Museum.

There is one more advantage of user pays. The Post notes that the estimated cost of the renovation has already skyrocketed from earlier figures of $250 million and $600 million (a common pattern). If the museum were required to fully cover renovation costs through voluntary donations and user fees, Smithsonian executives would have a strong incentive to find design savings and control construction costs.  

Where did Hillary Clinton’s campaign get the “I’m with her” slogan that Donald Trump criticized last week? I saw this in the Washington Post:

Ida Woldemichael, a designer who came up with “I’m with Her” for the Clinton campaign,…is a graphic designer who worked for the Clinton Foundation before joining the campaign about a year ago.

Not that the Clinton Foundation is any kind of tax-exempt, dictator-supported, $2 billion advance team for the Clinton campaign.

Pages