Policy Institutes

Nearly 20% of Americans report a police officer having used profanity with them. Yet, an overwhelming majority—77%—of Americans say police should be prohibited from using profanity or swearing at citizens while on the job. Twenty-three percent (23%) say police ought to be allowed to swear at citizens while on duty, according to a newly released Cato Institute/YouGov survey.

Find the full public opinion report here.

Opposition to police profanity reaches rare bi-partisan consensus—77% of Democrats and 75% of Republicans agree that police shouldn’t swear at people. Americans of virtually every demographic group identified strongly oppose allowing police use such language, including 77% of whites, 82% of blacks, and 72% of Latinos.

Why might police profanity matter? First, police image matters, and profanity could make police appear unprofessional, undisciplined, or “lacking self-control” as one research subject put it. Research experiments have shown that police using profanity are perceived as less fair and impartial. Further, police using profanity at the same time as using physical force with a person may cause people to view the force as excessive.  Given that personal encounters with police may be the strongest driver of attitudes toward law enforcement, one bad experience with police profanity may significantly harm a person’s willingness to trust and cooperate with police.

Second, some have argued that officers using profanity can “set someone off” and unnecessarily escalate confrontations with people leading to more force being used than was otherwise needed. Third, some contend police using such language can harm officers during court proceedings by appearing less sympathetic in front of the judge and jury.

Experience with Profanity

Some groups are more likely than others to report having an experience where police used profanity or abusive language with them. I combined two Cato Institute/YouGov surveys that asked this same question (which offers greater precision among small groups) and found: men (23%) are about twice as likely as women (12%), millennials (22%) about twice as likely as those over 55 (13%), households making less than $30,000 a year (24%) are about twice as likely as those making over $60,000 (13%), and blacks (26%) are about twice as likely as whites (15%) to report a police officer using profanity or abusive language with them.

Libertarians (20%) and liberals (19%) are also slightly more likely than conservatives (14%) to say an officer swore at them. Democrats (21%) and independents (21%) each are about twice as likely as Republicans (11%) to say a police officer used abusive language with them.

In sum, younger people, men, African Americans and Latinos, people living in cities, and individuals who are lower income are more likely to report having had this negative experience with the police. The ideological differences also suggest that dispositions toward authority may also impact the likelihood one encounters police profanity.

Indeed our research finds that individuals with little respect for authority figures are about three times as likely to say police have sworn at them, compared to those with high respect for authority (27% vs. 9%). However, this pattern primarily holds among white Americans. African Americans and Hispanic Americans are about equally likely to experience police profanity regardless of their dispositions toward authority figures.

In sum, although about 1 in 5 report experience with police profanity, and some groups disproportionately so, Americans overwhelmingly oppose police using profanity with people. Furthermore, research suggests policing guidelines prohibiting use of such language is wise and could enhance police-community relations.

For public opinion analysis sign up here to receive Cato’s upcoming digest of Public Opinion Insights and public opinion studies. You can follow Emily Ekins on twitter @emilyekins.

The Cato Institute/YouGov national survey of 2,000 adults was conducted June 6–22, 2016 using a sample drawn from YouGov’s online panel, which is designed to be representative of the U.S. population. YouGov uses a method called sample matching, and restrictions are put in place to ensure that only the people selected and contacted by YouGov are allowed to participate. The margin of sampling error for all respondents is +/-3.19 percentage points. The full report can be found here, topline results can be found here, and full methodological details can be found here.

 

 

Michael Mann is a climate scientist and researcher whose work has been at the center of the global warming debate for decades. After emails came to light concerning Mann’s statistical methods, two of his critics wrote scathing pieces arguing that Mann had “molested and tortured data in the service of politicized science,” and calling for “a fresh, truly independent investigation.” Despite such harsh criticism being par for the course in online commentary, Mann sued both writers (Mark Steyn and Rand Simberg) and their publishers (National Review and the Competitive Enterprise Institute, respectively) for libel.

A three-judge panel of the D.C. Court of Appeals (the District’s highest court) ruled that Mann’s libel claim could succeed in front of a jury, and allowed the case to go forward. The defendants have asked the court to reconsider the implications of its decision, and Cato has filed a brief supporting that request.

Harsh words are common to the discourse of pundits and politicians alike. Op-eds and stump speeches frequently feature terms like “fraud,” “scam,” “misconduct,” and even “treason.” Whether such characterizations are apt or not is for readers and listeners to judge, but until now few imagined that using them could lead to years of litigation and a costly libel verdict.

Similarly, calls for investigation and accusations of whitewashing have a long history dating back to Emile Zola’s J’accuse…! and continuing today with debates over the trials of O.J. Simpson, George Zimmerman, and many others. If Mann’s critics committed actionable libel, then so might everyone who has voiced disagreement with such verdicts, as well as everyone who has called for politicians to be investigated for corruption, fraud, or war crimes.

Finally, the court wrongly held that merely comparing a public figure to a “notorious person” could be libelous. As we know from Godwin’s law, such comparisons are a time-honored tradition of American debate. Opinion writers in recent years have invoked colorful analogies to Timothy McVeigh, Charles Manson, and Jack the Ripper to express their displeasure with the conduct of public figures. Writers and historians concerned with the conduct of politicians have drawn parallels with Stalin, Mussolini, and, of course, the ubiquitous Hitler. Right or wrong, such language is unquestionably speech on subjects of public concern.

The D.C. Court of Appeals should give Mann v. National Review a second look and reverse its earlier decision. It’s no exaggeration to say that the court’s reasoning could put thousands of articles, blogposts, and even tweets under a cloud of potential liability, thereby chilling the speech that is the lifeblood of Washington politics. Cultural and political debates should be litigated in the court of public opinion, not law.

In a case involving the state’s attempt to confiscate a man’s handgun following his conviction for disorderly conduct, the intermediate appellate Pennsylvania Commonwealth Court has ruled that asset forfeiture is not a part of the state’s common law:

We conclude that common law forfeiture, as that concept originated and developed in England, was never incorporated into or became part of our Commonwealth’s common law tradition. Based upon our research, the Commonwealth’s organic law, namely Article 9, Sections 18 and 19 of the Pennsylvania Constitution of 1790, denounces and effectively abolishes any notion of common law forfeiture and that the predominate, if not unanimous, weight of the authority has determined that common law forfeiture never made it across the seas to America. Therefore, absent a statute that specifically authorizes the forfeiture of property, the Commonwealth and the courts have no authority to seek and order forfeiture of [property not unlawful to own in itself, but used in perpetration of an unlawful act].

And that should bring the Keystone State (finally) in line with the general view of American courts: while most states long ago rejected the traditions of English royal governance and required a statutory basis for forfeitures, Pennsylvania had been an exception, thanks to three decisions by its Superior Court in the 1980s that approved seizures on a so-called common law theory.  No more. 

The practical result is that law enforcement in Pennsylvania — as is the norm in other states — must either point to an authorizing statute or hand a seized item back. 

 

In the aftermath of Betsy DeVos’s confirmation hearing—but really, anytime someone’s talking about federal education policy—it is important to look at evidence. Today we’ve got several items to add to the evidence pile, none of them good for fed ed.

The first is a new report on the School Improvement Grants program, an initiative aimed at turning around troubled schools with various possible interventions ranging from replacing principals to closing schools. What did the report find? The multi-billion dollar undertaking “had no impact on math or reading test scores, high school graduation, or college enrollment.”

Next, to higher education. A Wall Street Journal article today reports that the U.S. Department of Education widely overstated the repayment rate of student loans. Indeed, when the Journal recalculated the numbers, “the data revealed that the Department previously had inflated the repayment rates for 99.8% of all colleges and trade schools in the country.” The problem, according to an education department spokesperson cited in the article: a programming error.

Finally, we come to Navient, a company that exists largely on a contract to service student loans for the U.S. Department of Education. Yesterday the Consumer Financial Protection Bureau (CFPB)—itself a big federal fiasco—announced that it was suing Navient for deceptive and exploitative practices it allegedly undertook to cut costs and maximize revenues.

The CFPB isn’t entirely known for its own straight shooting, so Navient should get the benefit of the doubt. But it is certainly plausible that this government-privileged company takes advantage of its largely captive clientele. And who is Navient’s mother, by the way? Why none other than Sallie Mae—the company was spun off from Sallie in 2014—which was originally a government-sponsored enterprise like Fannie and Freddie, created by Washington to buy and service student loans in 1972.

In her confirmation hearing, Betsy DeVos pretty consistently indicated an aversion to federal power. The evidence is on her side, and growing every day.

Every year, Oxfam releases a report meant to shock the public about the extent of income and wealth inequality. This year’s report claims that the eight richest people on Earth have as much wealth as the bottom half of the world’s population (3.6 out of 7.2 billion people). That’s certainly shocking. It’s also profoundly misleading. 

As others have pointed out, Oxfam reached that number with a questionable methodology, which also led them to several other absurd conclusions. According to their own graphs, more poor people live in North America and Europe than China (see the far left of the chart below). How can that be, given that traditional poverty measures show the opposite

Oxfam isn’t using a traditional poverty measure (such as the number of people with a purchasing-power-adjusted income of less than, say, $2 per day). Instead, they focus on something called “net wealth.” This is the sum of an individual’s wealth minus any debts. 

Of course, many people in rich countries carry debt due to university loans or a home mortgage, yet also enjoy high incomes and an enviable standard of living. 

Here are some illustrations of just how absurd it is to use net wealth as a measure of poverty. 

Consider this. Oxfam claims a penniless, starving man in rural Asia or Sub-Saharan Africa is far richer than an American university graduate with student debt but a high-paying office job, a $2,000 laptop and a penchant for drinking $8 designer coffees. 

Let that sink in. 

(I must credit Cato’s Adam Bates for that example). 

Here is another example, courtesy of Johan Norberg. He points out that his daughter, a child with only about twenty dollars in her piggy bank, is richer than 2 billion people by Oxfam’s logic. If that were true, then the solution would surely not be to take away the humble savings of his daughter and redistribute them among those 2 billion souls, but rather to generate more total wealth, “enlarging the pie” so to speak. 

That’s the core problem with obsessing over “inequality.” If the goal is to further human wellbeing, then instead of decreasing inequality through redistribution, we should focus on decreasing poverty by creating ever more wealth. Happily, thanks to the wealth-creating power of market exchange, we’re doing just that. The trend lines all show that poverty (by any reasonable measure) is in retreat.

If you want to understand how flawed America’s immigration system is, consider this: the government treats immigrants differently based on their place of birth. The system considers immigrants’ education, use of welfare, criminal history, employment, family connections, and other personal details, but where you were born can make the difference between receiving legal residency immediately and waiting decades. This discrimination makes as little sense as discriminating based on race, gender, or any other attribute over which the individual has no control, and it should be abolished.

Fortunately, Rep. Jason Chaffetz (R-UT), chairman of the House Oversight and Government Reform Committee, has reintroduced the Fairness for High Skilled Immigrants Act (H.R. 392) to abolish this discrimination for all employment-based immigrants.

Here is how the discrimination works. Rather than waiting in one big line together in the order that their applications were received, immigrants wait in separate lines based on their nationality—a line for Mexicans, a line for Swiss, a line for Canadians, etc. Each line has the same limit on the number of visas issued in any given year: no more than 7 percent of all visas issued that year. These are called the “per-country limits.” For example, there are 40,000 visas made available to immigrant workers (and their families) with a bachelor’s degree. No country can receive more than 2,800 of them.

This means that the line for the Estonians and the line for the Chinese each get the exact same number of visas—despite the fact that Estonia has just 1.3 million people and China has 1.3 billion. The U.S. government used to discriminate against the Chinese in favor of Europeans because it disliked the Chinese and liked Europeans. Now it discriminates against them—as well as Indians, Filipinos, Mexicans, etc.—because they were unfortunate enough to have been born in a much more populous country.

No one knows or is keeping track of how many people are waiting in the green card queue. The line grows and grows, but absolutely no one in the administration has an accurate estimate of how long those applicants will have to spend in line. Indian workers are one of the groups most negatively impacted by this system. As I have explained before:

All we know is this: that somewhere between 230,000 and 2 million Indian workers are in the backlog, so they’ll be waiting somewhere between half a century and three and a half centuries.

This is the system under which immigrant workers come to the United States. Come from a country with few applicants, and you get ushered to the front of the line. Come from a country with many applicants, and wait decades. Think about this from the perspective of their employers: you are effectively penalized for hiring Indians or Chinese workers. Both the employer and the immigrant must wait year after year, even as other immigrants from smaller nations receive their green cards. It is simply unfair.

The Fairness for High Skilled Immigrants Act would completely eliminate the per-country limits for employment-based green cards. Because such a long backlog has built up for certain nationalities, the bill phases the limits out over three years, reserving 15 percent of the immigrant visas in the first year after the bill passes for countries other than the top two in a specific category, and then 10 percent in the following two years before ending them altogether. It would also double the per-country limits for green cards for family members of U.S. citizens or residents.

This bill has a very good chance of becoming law this year. The country’s biggest anti-immigrant group NumbersUSA has said that it will not oppose the bill. This position helped an earlier version of the legislation pass the GOP-controlled House by an overwhelming vote of 389 to 15 in 2011. Unfortunately, Senators Charles Grassley and Jeff Sessions managed to hold up passage of the bill in the Senate. But last Congress, it was sponsored or cosponsored by 148 representatives—more than a third of all members of the House—and with Sen. Sessions out of the Senate and Sen. Grassley showing some willingness to compromise on the issue, it is possible that the bill could snake its way across the finish line.

Like all other people, immigrants should be judged based on their individual merits. Their place of birth, race, or gender should have no bearing on whether they can come to America.

The following post is a draft of a forthcoming Cato Institute publication.

Executive Summary

Donald Trump has proposed eliminating or severely modifying the Deferred Action for Childhood Arrivals (DACA) program. Many Americans believe that the presence of unauthorized immigrants is harmful to the economy and would like to see steps taken to reduce their presence. However, a repeal or roll-back of DACA would harm the economy and cost the U.S. government a significant amount of lost tax revenue. We estimate that the fiscal cost of immediately deporting the approximately 750,000 people currently in the DACA program would be over $60 billion to the federal government along with a $280 billion reduction in economic growth over the next decade.

We arrived at our estimates by comparing and adjusting the characteristics of DACA recipients to similarly well-educated immigrants admitted through the H-1B visa program, a cohort that not only resembles the population of DACA recipients but whose own economic impact has been well-studied. We use the estimated budgetary and economic impact of H-1B visa workers and adjust it to reflect the age and earnings differences between the two groups to calculate our figures.

Background

President Obama created the DACA program in 2012 via executive action. DACA’s objective was to allow American residents who entered the country illegally as children to receive temporary protection from deportation, work permits, and an incentive to invest in their own human capital. The program only applies to those who have lived in the United States for five years or longer and do not have a criminal record. Essentially, these are people who never knowingly broke any law and have been productive and peaceful members of society since their arrival. The logic of the Obama Administration in creating DACA is that it makes little sense to expend time and resources trying to track down, arrest, and deport these people when they have not committed any crime save for being unwittingly brought across the border by others.

There is much legitimate debate in the United States over the role that immigration—both legal and illegal—plays in the economy, and what should be done about border security. Inseparable from this problem is the question of what to do with the undocumented immigrants already in the country, a sizeable population that is estimated to number 11 to 12 million.[1]

President-Elect Donald Trump has taken an absolutist position on the issue, vowing not only to build a wall with the intent of greatly reducing illegal entry from the Mexican border, but also to unilaterally nullify President Obama’s executive actions dealing with immigration, including the action which spawned DACA.

As with any sudden and dramatic shift in any policy, there are bound to be costs associated with implementation, as well as after-effects of the policy, not all of which are immediately intuitive. It is the goal of this paper to examine the costs that the wholesale repeal of DACA would impose on the American economy, both in terms of enforcement as well as the sudden loss of a large number of residents and their contributions to the domestic economy.

Who Are the DACA Recipients?

Although there have been many previous studies on the costs and benefits of immigration as a whole (we recently authored a review of such studies), it is important to note that we cannot simply assume that DACA recipients constitute a representative sample of the immigrant population. In addition to the aforementioned screening for criminal activity, workers in the DACA program tend to be younger, better educated, and more highly paid than the typical immigrant. To extrapolate from the studies on immigration in general, therefore, would significantly underestimate the opportunity cost to the economy of deporting the approximately 750,000 program participants, due to their higher level of productivity.

We instead looked for another group that might more closely resemble the demographic characteristics of those in the DACA program whose economic and budgetary impacts on the economy is well established: the recipients of H-1B visas, which are issued to skilled workers who are invited into the country to fulfill specific economic needs. This coincidence is useful.

The average DACA recipient is 22 years old, employed, and earns about $17 an hour. The majority are still students and 17 percent are pursuing an advanced degree.[2] By contrast, most recipients of H-1B visas are between 25 and 34 and hold either a Bachelor’s Degree or a Master’s Degree. In short, they appear to be a close reflection of what DACA recipients will look like a few years from now as they complete their educations.[3]

While the comparison is not perfect, as no such comparison can be, calculating costs under the assumption that DACA recipients are more like H-1B Visa holders than the general population of unauthorized immigrants will, we believe, yield a more accurate result. And given that we know the demographic and educational differences between the two groups we take those differences into account when estimating the fiscal and economic costs of repealing DACA.

Economic Costs

As of June 2016, U.S. Citizenship and Immigration Services has received 844,931 applications for the DACA program. Of these, 741,546 were accepted, with the rest either denied or pending approval.[4] It should be noted that the applicants to DACA are asked to pay the administrative fees for background checks and processing, so the administrative costs of implementing the program itself are minimal. While the Obama Administration had announced its intention to expand the program last year, this is unlikely to occur under the Trump Administration, so we will accept these numbers as representative of the affected population.

Little research has been done on the effects of DACA itself, which is why we have chosen to extrapolate the program’s economic impact from the research done on holders of H-1B visas, who are demographically similar to workers in the DACA program, as well as from the numerous studies on the economic effects of undocumented immigration generally.

One study on DACA itself was conducted by Nolan G. Pope and published in the Journal of Public Economics in 2016. Nolan found that DACA moved between 50,000 and 75,000 immigrants into employment from either outside the formal labor force or unemployment, and increased the average income of immigrants in the bottom of the income distribution.[5] This is a positive labor market outcome for a number of reasons: working and earning a higher level of income in the formal sector means that the DACA workers pay more taxes, both through payroll, income, and sales as a result of greater consumption associated with higher incomes. The Organization of Economic Co-operation and Development (OECD) cited employment as “the most important factor that weighs on migrants’ net fiscal contributions,” so it is clear that any increase in immigrant employment will tend to result in a positive fiscal impact.[6]

A 2014 survey found that 59 percent of DACA recipients reported getting their first job, 45 percent received a pay increase, 49 percent opened their first bank account, and 33 percent got their first credit card due to their participating in DACA.[7] All of these factors contribute positively to the economy. But while the survey also noted that recipients would be eligible for higher levels of education, Pope’s research completed two years later found no correlation between DACA participation and education, although it is possible that simply not enough time has passed to observe an effect.

Turning more generally to the cost-benefit analysis of unauthorized immigration as a whole, the evidence suggests that the mere presence of undocumented workers, especially non-criminals like those covered under DACA, is not nearly as detrimental to the economy as most people suppose, and may actually be a net benefit. Legalizing unauthorized immigrants and allowing them to participate in society as legal workers dramatically reduces government enforcement costs and generates broader economic benefits.[8]

Quantifying the Net Costs

Quantifying the costs of any action on immigration presents enormous difficulties, due to the complexity and number of variables involved.

Alex Nowrasteh, a scholar at the Cato Institute, points out that while the economic impact of immigration is large and positive, the fiscal impact tends to be minimal. Nowrasteh also stresses the need to take into account the long-term effects of immigration, meaning the contributions of immigrants’ children and grandchildren, which tend to be more positive than those of first generation immigrants.[9]

There are unquantifiable benefits from DACA as well, such as providing increased access to private health insurance, driver’s licenses, and auto insurance, all of which generate spillover benefits to the rest of society. This analysis also leaves out the effects of simply having more productive minds in the country capable of producing innovations and increasing labor productivity. The data show that immigrants start their own businesses and file patents at greater rates than native-born Americans.[10] 

The fiscal costs of DACA recipients are also minimal and comparable to the fiscal costs of H-1B workers.[11] Under current law, DACA recipients are ineligible for means-tested welfare benefits provided by the federal government or funded through federal matching grants to the states.[12]  Although states can extend welfare benefits to DACA recipients if they choose to, few have done so. DACA recipients, like everybody else in the United States, are eligible for emergency Medicaid. Thus, DACA does not boost government welfare expenditures above the level consumed by unauthorized immigrants.     

To reiterate, we need to isolate DACA recipients—who tend to be more educated, younger, and less prone to criminal activity—from the general population of unauthorized immigrants to derive an accurate estimate of DACA’s impact. To do this, we begin by comparing them to the holders of H-1B visas, the work permits issued for high-skilled labor. The main difference between the two groups is age, with H-1B visa holders being on average 3 to 12 years older. With this age gap also comes the concomitant difference in education and earnings, which we can adjust for in our calculations.

Thomas Church, a senior fellow at the Hoover Institution, estimates that expanding the H-1B visa program over a ten year period would increase GDP by $456 billion and tax revenues by $113 billion, assuming that 660,000 new H-1B immigrants would arrive over the decade.[13] Church obtains his results by taking the mean wages for H-1B immigrants, assuming an average wage growth of 3 percent per year, and applying the appropriate tax rates.

Church also incorporates income accrued to capital from these workers, using the relatively stable historical averages calculated by the Congressional Budget Office. Multiple studies have been conducted on the impact of immigration on native wages, and the results have been both positive and negative, albeit small in either direction. There is also some evidence that the presence of immigrant workers can increase purchasing power by reducing consumer prices. Given these conflicting and minor findings, Church has not included wage or purchasing power effects in his calculations, and we have done the same.

We take Church’s estimate as our baseline and begin by adjusting it to reflect the 741,546 participants in the DACA program—which is a bit more than his H-1B expansion called for—producing an estimated GDP gain of $512 billion and a budgetary impact of $127 billion.

However, since the average wages of DACA participants are lower than H-1B immigrants, we corrected these values to reflect the relative youth and inexperience of DACA immigrants. DACA participants earn an average of $34,000 annually and H-1B participants an average of $72,000 annually, a ratio of 47 percent. Applying this ratio to the economic and fiscal costs above yields an economic impact of $215 billion and a fiscal impact of $60 billion.

We feel this is a conservative estimate due to the fact that many DACA immigrants are young and still acquiring education credentials that will boost wages later.  DACA immigrants are less like H-1B immigrants at half the salary, and more like younger H-1B workers. Additionally, the higher tax brackets associated with higher incomes would increase DACA immigrants’ fiscal contributions at a greater rate than the increase in salary. In other words, doubling the wages of DACA participants would more than double their contributions to state and federal budgets. Thus, a life-cycle comparison of the wages of the two groups would produce a narrower difference.

For comparison, an influential study by the National Research Council[14] examined the present value fiscal impact of immigration in the United States, with an emphasis on long-term impact. The study points out that immigrants become more productive over time as they learn new skills and become more fluent in English. The authors concluded that the average immigrant will have a net long-term impact on state, local and federal budgets of $80,000, which includes tax payments as well as the impact of the children of immigrants, who tend to be less costly—and higher-earning—than their parents. Multiplying this estimate by the number of DACA recipients produces an estimated fiscal impact of $59.3 billion, nearly identical to the $60 billion fiscal impact we derived from the Hoover study.

We also need to add the actual cost of deportation for current DACA recipients to the fiscal and economic estimates. For this we borrow from a study from the Center for American Progress that estimates the marginal deportation costs at just over $10,000 per removal.[15] The total deportation cost would then be $7.5 billion.

Summing these numbers produces a total cost estimate of immediately eliminating the DACA program and deporting its participants of $283 billion over 10 years. In other words, the United States economy would be poorer by more than a quarter of a trillion dollars if President Trump were to make good on his threat to repeal it.

There are other variables that potentially impact both the costs and benefits of immigrant workers, and the further into the future we attempt to project such costs and benefits the more difficult accurate estimates become. For example, our calculation used only the current number of DACA recipients, but it is estimated that there could be another one million eligible residents who have not yet applied for, or received, membership in the program.[16] We do not make any forecast regarding whether this cohort would eventually take advantage of the program and instead assume none of them would do so.

Likewise, assuming immediate deportation instead of a temporary reversion to undocumented status changes the calculus as well, considering the costs that result from people trying to live outside the law. This would need to be taken into account.

Alex Nowrasteh of Cato suggested that it is probably more realistic to assume that upon a repeal of DACA the newly unauthorized immigrants would predominantly remain in the United States and pursue employment illegally, at wages 10 percent to 20 percent less than they earned legally. If we combined that with a similar reduction in employment levels then the resulting economic impact would be a bit less—in the range of $60-$100 billion—but still significant.[17]

Regardless of the response, it is clear that there is a significant fiscal and economic cost to the immediate repeal of DACA, one borne by all of the nation’s residents and not just by those whose lives would be upended by such a move. This suggests that it would make more sense to focus immigration enforcement efforts elsewhere—if indeed the aim is to protect American national sovereignty, as well as the life, liberty, and private property of Americans.

Small Gains, Big Costs

There are valid reasons to be concerned about unauthorized immigration in the United States. The DACA program, however, screens out anyone with a criminal past as part of its core eligibility requirements. DACA participants are not eligible for means-tested welfare benefits or Obamacare subsidies.

Since DACA applicants pay their own processing fees, the program itself does not have an administrative cost, and so the only costs we need to evaluate are those that stem from having these people in the country in the first place. We submit that any such costs are far outweighed by the benefits that come from immigrants who are able to work openly and legally, pay taxes, support entitlement programs, create jobs, innovate, and sire children who will one day do the same.

The deportation of DACA participants would cost the American economy billions of dollars, as well as billions of tax dollars foregone, while doing little to address the true concerns that Americans may have about unauthorized immigrants.

[1] Jeffrey S. Passel and D’Vera Cohn, “Unauthorized Immigrant Population Stable for Half a Decade,” (Washington: Pew Research Center, September 21, 2016), http://www.pewresearch.org/fact-tank/2016/09/21/unauthorized-immigrant-population-stable-for-half-a-decade/.

[2] Tom K. Wong, “Results of Tom K. Wong, National Immigration Law Center, and Center for American Progress National Survey,” (Washington: National Immigration Law Center and Center for American Progress, June 2015), https://cdn.americanprogress.org/wp-content/uploads/2015/07/DACA-Wong_NILC_CAP-Codebook-PDF.pdf.

[3]“Characteristics of H-1B Specialty Occupation Workers,” Fiscal Year 2014 Annual Report to Congress (Washington: U.S. Citizenship and Immigration Services, February 26, 2015), https://www.uscis.gov/sites/default/files/USCIS/Resources/Reports%20and%20Studies/H-1B/h-1B-characteristics-report-14.pdf.

[4] “Number of I-821D, Consideration of Arrivals by Fiscal Year, Quarter, Intake, Biometrics, and Case Status: 2012-2016,” (Washington: U.S. Citizenship and Immigration Services, June 30, 2016), https://www.uscis.gov/sites/default/files/USCIS/Resources/Reports%20and%….

[5] Nolan G. Pope, “The Effects of DACAmentation: The Impact of Deferred Action for Childhood Arrivals on Unauthorized Immigrants,” Journal of Public Economics 143 (2016): 98-114.

[6] Organization for Economic Cooperation and Development, “International Migration Outlook,” (Paris: OECD, 2013), p. 161.

[7] Robert G. Gonzales and Angie M. Bautista-Chavez, “Two Years and Counting: Assessing the Growing Power of DACA,” American Immigration Council Special Report (Washington: American Immigration Council, June 14, 2014), https://www.americanimmigrationcouncil.org/research/two-years-and-counting-assessing-growing-power-daca.

[8] Ike Brannon and Logan Albright, “Immigration’s Impact on the Texas Economy,” Texas Public Policy Foundation (Austin: TPPF, March 2016), http://www.texaspolicy.com/library/doclib/Immigration-s-Impact-on-the-Texas-Economy.pdf.

[9] Alex Nowrasteh, “The Fiscal Impact of Immigration,” Cato Institute Working Paper (Washington: Cato Institute, July 23, 2014), https://object.cato.org/sites/cato.org/files/pubs/pdf/working-paper-21-fix.pdf.

[10] American Immigration Council, “Value Added: Immigrants Create Jobs and Businesses, Boost Wages of Native-Born Workers,” American Immigration Council Factsheet (Washington: AIC, January 2, 2012), https://www.americanimmigrationcouncil.org/research/value-added-immigrants-create-jobs-and-businesses-boost-wages-native-born-workers.

[11] Ruth Ellen Wasem, “Noncitizen Eligibility for Federal Public Assistance: Policy Overview and Trends,” Congressional Research Service (Washington: CRS, September 27, 2012).

[12] “Frequently Asked Questions: The Obama Administration’s DAPA and Expanded DACA Programs,” National Immigration Law Center (Washington: NILC, March 2, 2015), https://www.nilc.org/issues/immigration-reform-and-executive-actions/dapa-and-expanded-daca-programs/.

[13] Thomas V. Church, “Estimating the Economic and Budgetary Effects of New H-1B Visas in the Senate Gang of Eight’s Proposed Immigration Bill,” Hoover Institution (Stanford: Hoover, May 7, 2013),  http://www.hoover.org/sites/default/files/uploads/aafs/2013/05/Estimating-the-Economic-and-Budgetary-Effects-of-H-1B-Reform-In-S.744.pdf.

[14] James P. Smith and Barry Edmonston, editors, “The New Americans: Economics, Demographic, and Fiscal Effects of Immigration,” National Academies Press (Washington: NAP, 1997), p. 346.

[15]https://www.americanprogress.org/issues/immigration/news/2015/02/23/1069…

[16] Philip E. Wolgin, “What Would it Cost to Deport All 5 Million Beneficiaries of Executive Action on Immigration?” Center for American Progress (Washington: CAP, February 23, 2015),  https://www.americanprogress.org/issues/immigration/news/2015/02/23/106983/what-would-it-cost-to-deport-all-5-million-beneficiaries-of-executive-action-on-immigration/.

[17] Alex Nowrasteh, “Heritage Immigration Study Fatally Flawed,” Cato at Liberty, April 4, 2013, https://www.cato.org/blog/heritage-immigration-study-fatally-flawed

Some members of Congress are considering restructuring DC Metro’s management and oversight. Big reforms are needed given the disastrous service, safety, and financial performance of the system in recent years.

Why not privatize Metro? Countries around the world have been privatizing their transportation infrastructure in order to improve management and efficiency. Privatizing Metro buses would be straightforward, but even privatizing the subway system would not be an unheard of reform.

Hong Kong privatized its subway system in 2000. In a recent study on infrastructure, McKinsey reported:

Hong Kong’s MTR Corporation has defied the odds and delivered significant financial and social benefits: excellent transit, new and vibrant neighborhoods, opportunities for real-estate developers and small businesses, and the conservation of open space. The whole system operates on a self-sustaining basis, without the need for direct taxpayer subsidies.

MTR’s railway system covers 221 kilometers and is used by more than five million people each weekday. It not only performs well—trains run on schedule 99.9 percent of the time—but actually makes a profit: $1.5 billion in 2014. MTR fares are also relatively low compared with those of metro systems in other developed cities. The average fare for an MTR trip in 2014 was less than $1.00, well under base fares in Tokyo (about $1.50), New York ($2.75), and Stockholm (about $4.00).

That sounds pretty darn good. The average fare on the DC Metro is about $3. The on-time record of Metro is unclear, but in technical terms I think “crappy” best describes it. Note that Hong Kong’s 99.9 percent on-time record means that “of the average 5.2 million passenger trips made on the MTR heavy rail and light rail networks on each normal weekday, 5.195 million passengers safely reach their destinations within 5 minutes of their scheduled arrival times.” In 2014, “the system ran for 120 consecutive days without a single delay over eight minutes.” Wow.

That stellar performance induces strong demand for the Hong Kong system, which in turn generates high fare revenues. The ratio of passenger fares to operating costs is a high 185 percent, which means that fares fully cover operating costs and part of capital costs. MTR raises other funds for capital from real estate deals under which it gains from land value increases near stations. The Hong Kong system is profitable and unsubsidized. By contrast, the average ratio of fares to operating costs for U.S. subway systems is just 46 percent, and the systems are heavily subsidized.

The MTR is probably the best-run subway system in the world. The system is an “immaculately clean, well-signposted, cheap, regular, convenient system.” And there’s free Wi-Fi in most stations.

The system is so admired that MTR has been contracted to run systems in other cities. CNN says: “MTR Corporation now operates the London Overground, and two lines of the Beijing Metro, as well as parts of the Shenzhen and Hangzhou Metro systems in China, the Melbourne Metro in Australia and the Stockholm Metro in Sweden … London Overground enhanced its punctuality from 88.4% in 2007 to 96.7% in 2013 after MTR took over its operation for a year.”

Can we get MTR Corporation to expand into Washington? Metro Board Chairman Jack Evans wants a federal takeover of Metro, but how about a private takeover?

Massive preparations are underway here in the District of Columbia for Donald Trump’s inauguration. Temporary fencing is going up along with bleachers and roadblocks. In addition to thousands of well-wishers, thousands of protesters are expected. It will doubtless be an unforgettable day. 

It is worth remembering that before Mr. Trump can take any official action whatsoever, he must first take an oath to support and defend the Constitution. There are many other checks and balances in our system, but the oath of office is supposed to be the first line of defense. Mr. Trump can use the bully pulpit (and his Twitter account) to respond to his critics, but he must respect their right “to peaceably assemble, and to petition the Government for a redress of grievances,” as the First Amendment makes clear.

Can you imagine the outcry if Mr. Trump were to threaten to arrest protesters at his inauguration? It would be deafening—and fully justified. And yet, if you can believe it, there have been previous attempts to do just that. We should remember such episodes in our history.

In January 1997, Rev. Patrick Mahoney and a few other anti-abortion protesters planned to demonstrate along the sidewalks adjacent to President Bill Clinton’s inaugural parade route. When word got around about these modest plans, something had to be done. Mahoney and his Christian Defense Coalition received oral and written warnings that they would be arrested if they proceeded with their small protest. Shocked by such threats, Mahoney went to court to seek an emergency injunction to protect his group’s constitutional right to protest on the big day: January 20, 1997.

It soon became apparent that this story was bigger than a low-level bureaucrat trying to intimidate some guy that didn’t have any political connections. Attorneys trained at our best law schools arrived in court to double down. Yes, the local U.S. Attorney admitted, Randall Myers, counsel for the National Park Service, had informed Mahoney that his people wouldn’t be arrested if their signs offered congratulations to Clinton, but they would be arrested for signs containing any criticisms of Clinton. This blatant discrimination between viewpoints could be justified, said the local U.S. Attorney.

The Court of Appeals was pretty flabbergasted by such claims. Here is an excerpt from the unanimous ruling: “[A]ll constitutional authority supports the position we would have thought unremarkable, that a government entity may not exclude from a public forum persons who wish to engage in First Amendment protected activity solely because the government actor fears, dislikes, or disagrees with the opinions of those citizens. None of the authorities offered by the government is to the contrary. Indeed, none is on point.” Ouch! That’s a body slam in legal circles. And a well-deserved one.

Let’s fast-forward to recent news. Since Mr. Trump’s election, the left has been busy with plans to organize a resistance movement. California Assembly Speaker Anthony Rendon has promised to “lead the resistance to any effort that would shred the social fabric of our Constitution.” It was recently announced that California has retained former Attorney General Eric Holder to defend the Constitution from the Trump administration. That was not a wise move. In 1997, Holder was the U.S. Attorney in the District of Columbia. He was the one who tried to justify arresting protesters that were critical of President Clinton. If Holder is the Constitution’s defender, we’re in big trouble.

One of the reasons that our Bill of Rights is in trouble is because there are not many people or organizations that make a principled defense when it is attacked. Let’s resolve to do better going forward.

For related Cato scholarship, go here, here, and here.

I got my dinner and a show last night. The dinner was fine, but the show? Not so great. Not much substance was covered in the DeVos confirmation hearing before the Senate Health, Education, Labor and Pensions committee, and when meaty issues were brought up they were too often smothered in gotcha questions and commentary rather than meaningful discussion.

A good part of the hearing was occupied by bickering over each committee member only getting one, five-minute questioning period, and whether or not that was committee tradition or an effort by the GOP majority to protect the witness. Maybe that’s insightful stuff if you care about the politics of all this—though I doubt it—but it doesn’t tell us one whit about where the nominee stands on the federal role in education.

The good news is that when DeVos was asked about her views on federal policy, she was deferential to states and districts. I don’t recall her stating resolutely that the Constitution leaves ed power to the states and the people—she stated little resolutely—but she hit the right notes. Included in that was telling committee chair Lamar Alexander (R-TN) that she would not use the power of her office to try to coerce school choice. She said she would try to convince Congress to push choice—an unconstitutional goal, but at least using the constitutionally correct process—but she would not try to do it unilaterally.

Of course, talk is cheap—we’ll see what happens. After all, President-elect Trump promised to “immediately” spend $20 billion to, in some way, incentivize choice expansion.

Alas, what will probably be most discussed about the hearing will amount to political point scoring. A big one stems from Chris Murphy (D-CT) demanding to know if DeVos thought guns should be in schools. DeVos said such policy should be left to states and “locales”—you know, federalism—and when she gave an example of why a school might need a gun, she referred back to a rural school she discussed with Sen. Mike Enzi (R-WY) that had a fence to protect students from bears. She said there was a good chance it had a gun on the premises, maybe to protect against grizzly attacks.

Sadly, rather than acknowledging the legitimate, serious issues behind this—for both legal and practical reasons, maybe there shouldn’t be a blanket national policy on guns and schools—DeVos opponents have mocked her out of context.

Another seeming stumble was under questioning by Sen. Al Franken (D-MN), who held forth on what constitutes the education “mainstream” before asking about measuring student “growth” versus “proficiency.” DeVos started by talking about “mastery,” asking if she understood Franken’s question right, and before she could clarify Franken stepped on her to say that she didn’t seem to comprehend the issue and hence the committee needed more time to question her. Maybe she does not know the issue, but Franken didn’t really give her a chance to answer.  

Finally, Maggie Hassan (D-NH) and Tim Kaine (D-VA) questioned DeVos quite a bit about the Individuals with Disabilities Education Act (IDEA), in particular its application were taxpayer money to follow a child to a private school. Many observers have asserted that DeVos did not know that IDEA was federal law when she answered that decisions on accommodations—perhaps thinking about when non-federal funds are in use—should be state and local decisions.

To hear the questioning, you’d think IDEA was flawless law. It isn’t. More important, its application would not, or at least should not, be as simple as requiring that any private school taking a voucher student should have to provide a full range of services. That a school is chosen means families voluntarily accept what it has to offer. Indeed, choice fundamentally changes the education power structure, empowering families rather than making them dependent on bureaucratic protections like IDEA against politically controlled, assigned government schools. It is also indisputable that lots of public schools don’t provide full accommodations, and when a student’s challenges are very substantial districts sometimes send kids to private schools.

One final complaint. (I get to do this because I gave up my family dinner to watch this stuff.)  Two senators—Elizabeth Warren (D-MA) and Tim Kaine—invoked Trump University to demand that DeVos hold for-profit colleges “accountable,” as if Trump U had been an actual university receiving federal funding. Of course it wasn’t, and the education secretary did not have jurisdiction over it. If the senators did not know that, they’ve got some studying to do. If they did, there goes any pretense of objective focus on policy, not politics.

So after almost four hours and one inconvenienced meal, what did I learn? Not much about DeVos except a stated deference to states and localities and support for school choice. About the hearing process? That it is a lot more about grandstanding and ginning up controversy than open-mindedly discussing issues. About my digestive system? That political dinner theater makes me go crawling for the Pepto.

Like the foreign policy commentary you see here on Cato’s blog? If you’re a PhD candidate or recent PhD, you should consider applying for our visiting research fellow position.

The Defense and Foreign Policy department is seeking candidates for a visiting fellow post. This one-year paid fellowship allows candidates to expand upon the policy implications of their dissertation research, and contribute to the work of the Cato defense and foreign policy department.

In order to apply, candidates must be either A.B.D. PhD candidates or a recent PhD graduate in political science, history or a related field, and must have authorization to work in the United States.

Candidates should also share Cato’s commitment to moving U.S. foreign policy towards prudence and restraint, and the policy implications of their work should be broadly compatible with a pragmatic, realist or restrained approach to foreign policy. You can find more information about Cato’s work on defense and foreign policy issues here.

During their time at Cato, the visiting fellow is responsible for:

  • Producing one scholarly paper (8,000-10,000 words) in the Institute’s Policy Analysis series on a foreign policy issue (which may or may not be part of the fellow’s dissertation)
  • Organizing at least two events
  • Authoring op-eds and blog posts
  • Handling media requests on international security issues

Fellows will work from Cato’s Washington, D.C. offices for the 2017-2018 academic year. Predoctoral fellows will receive $40,000, and postdocs will receive $50,000 in addition to health care coverage. Ideally, the fellow’s work at Cato would overlap considerably with his or her dissertation, making the fellowship useful both for policy research and finishing or refining the candidate’s dissertation.

If you are interested in applying, please submit a C.V. and a writing sample via Cato’s online application system no later than February 15, 2017. The application can be found here.

In case you missed it, Ben Carson has been labeled as being “at odds with fair housing.” During his senate confirmation hearing last week, Carson was required to defend his position on Affirmatively Furthering Fair Housing (AFFH), the Department of Housing and Urban Development’s (HUD’s) controversial 100-page-plus contemporary interpretation of the Fair Housing Act.

It may sound appalling that anyone anywhere would be against fair housing. Still, there are sane reasons to object to the rule. Carson suggested a couple of possibilities; for example, he worries about Washington, D.C. administrators demanding that local communities “go looking for a [racial] problem” when no evidence of such a problem exists a priori.

If you don’t like intemperate federal agencies running riot, there is another process-related objection that Carson missed: AFFH may insert the federal agency into policy areas not even remotely authorized by the legislation it purportedly interprets.

The table below provides a comparison of the original Fair Housing Act language and AFFH language, so that you can decide for yourself:

Fair Housing Act of 1968 (original legislation) Affirmatively Furthering Fair Housing of 2015 (HUD’s re-interpretation) 1)    Prohibits landlords from discriminating against minority tenants. 1)    Stated objective is to “replace segregated living patterns with truly integrated and balanced living patterns [within cities].”  2)    Uses the word “segregated” or “segregation” a total of 0 times. 2)     Uses the word “segregated” or “segregation” a total of 126 times and urges“overcoming historic [geospatial] patterns of segregation.” 3)    The original FHA law uses the word “zoning” just 1 time, wherein it instructs the HUD Secretary to refer discriminatory local zoning or land use laws to the Attorney General so that he/she can file a lawsuit. 3)    The AFFH mentions “zoning” 53 times, wherein it suggests that communities change their zoning to improve racial integration (not a bad suggestion, but a departure from the original law). 4) The original FHA law uses the word “affirmatively” 2 times. Each time, it asks executive departments and agencies to administer their programs and activities in a way that affirmatively furthers “the purposes of this subchapter,” where the subchapter focuses on prohibiting a discriminatory relationship between landlord/seller and tenant/buyer. 4) The AFFH rule uses the word “affirmatively” 423 times, wherein it redefines the term to mean “replacing segregated living patterns with truly integrated and balanced living patterns” and “transforming racially and ethnically concentrated areas.” 5) The original FHA law uses the word “concentration,” referring to the concentration of poverty or concentration of minorities in cities, 0 times. 5) The AFFH rule uses the word “concentration” 56 times and urges “reducing racial or ethnic concentrations of poverty.”

HUD believes the rule merely implements the Fair Housing Act’s intent.  You can form your own view.

This morning the Supreme Court of Florida declined to hear McCall v. Scott, the Florida teachers’ union lawsuit against the state’s popular scholarship tax credit, which helps nearly 100,000 low-income students attend the school of their choice. That means the lower court’s decision dismissing the lawsuit stands, and the law is safe from further challenge on these grounds.

As I wrote back in August, the union and its allies had alleged that the scholarship program unconstitutionally supported a “parallel” system of public education and violated the state constitution’s historically anti-Catholic Blaine Amendment, which prohibits publicly funding religious schools. However, the trial court judge rejected this claim, holding that the plaintiffs lacked standing to sue because the scholarships were privately (not publicly) funded and that they were unable to prove that the scholarship program adversely impacted the district school system. The union appealed but the appellate court unanimously upheld the lower court decision. Today’s state supreme court decision is the proverbial nail in the coffin for the union’s legal challenge.

Supporters of the scholarship program expressed their satisfaction this morning:

“The court has spoken, and now is the time for us all to come together to work for the best interests of these children,” Doug Tuthill, [president of Step Up for Students, Florida’s largest scholarship organization], said in a statement. “We face enormous challenges with generational poverty, and we need all hands on deck.”

After the lawsuit was filed in 2014, supporters of the program — including parents and clergy members — waged a full-court press supporting the program. Almost exactly a year ago, they staged a massive rally in Tallahassee.

“On behalf of all the scholarship children, their families and their clergy in the Save Our Scholarships coalition, I commend the state Supreme Court on their wise application of the law,” Reverend R.B. Holmes of Bethel Missionary Baptist Church in Tallahassee, said in a statement. “We look forward to working together with all parties to improve the educational outcomes of low income children in our state.”

School choice is safe in Florida. But just north of the panhandle, Georgia’s scholarship tax credit faces a similar legal challenge. Oral arguments in Gaddy v. Georgia Department of Revenue are scheduled for next week, which just happens to be National School Choice Week. For justice to prevail, the Georgia Supreme Court should dismiss that case as well. 

Last week, President-Elect Trump received a visit from none other than Robert F. Kennedy Jr., who our colleague Walter Olson refers to as America’s Most Irresponsible Public Figure. Keeping with this title, Kennedy will be joining the Trump team on a panel to vet vaccine safety.

This, like many of Trumps moves, will create international debate. For example, the most prominent advocate in Britain of the idea that there is a link between vaccinations (in his case the MMR or measles, mumps and rubella vaccine) and autism was Dr. Andrew Wakefield, whose 1998 Lancet paper (now retracted) attracted vast global interest. But Dr. Wakefield’s conduct of the research behind that paper was judged so unacceptable by the regulatory body, the General Medical Council, that his license to practice medicine was revoked. In that vignette we see a microcosm of the whole debate, because too many of the anti-vaccination advocates are not citing evidence and science at the highest level. And such episodes matter because if public confidence in vaccination falls too low, the rate of uptake of the vaccines will fall, herd immunity will fall, and epidemics of preventable yet dangerous disease will recur.

Much anti-vaccination anxiety focuses on the role of the mercury-based chemical thiomersal, which was once widely used to helped preserve vaccines but which is used less today. Nonetheless systematic reviews of the field have repeatedly affirmed that there is no evidence to suppose that thiomersal precipitates autism (see M Maglione et al, 2014, Pediatrics, 134: 325-337.)

Autism is a serious condition, which deserves serious investigation. No harm need come from this new Trump-inspired investigation as long as it is not in itself used to damage the credibility of existing vaccination protocols.

Among the many failures of federal policies over the decades, the failures of Indian policies stand out. The government has deprived American Indians of their lands, resources, and freedom in many ways. It has failed to create an institutional structure supportive of prosperity on reservations. And the Bureau of Indian Affairs has been mismanaged for two centuries, as I discuss here.

Naomi Schaefer Riley addresses the failures of Indian policies in The New Trail of Tears, which she will discuss at an upcoming AEI forum. I will be commenting on Riley’s book at the forum.

One of Riley’s themes is the failure of federal and tribal efforts to provide a decent education for children on reservations. Riley visited numerous schools, and she reports on the disheartening conditions that she saw.  

Last week the Washington Post reported:

The federal government has repeatedly acknowledged and even lamented its failure to provide adequate education for Native American children. Now, nine Native children are taking to the courts to force Washington to take action.

The children are all members of the Havasupai Nation, whose ancestral homelands are in and around the Grand Canyon. They attend an elementary school that is run by the federal Bureau of Indian Education and is, according to a lawsuit filed Thursday, hardly recognizable as a school at all.

Havasupai Elementary School does not teach any subjects other than English and math, according to the complaint; there is no instruction in science, history, social studies, foreign language, or the arts. There aren’t enough textbooks or a functioning library or any after-school sports teams or clubs, according to the complaint. There are so many and such frequent teacher vacancies that students are allegedly taught often by non-certified staff, including the janitor, or they are taught by a series of substitutes who rotate in for two-week stints. The school shuts down altogether for weeks at a time.

The Obama administration has been candid about the federal government’s failure to meet the needs of nearly 50,000 Native young people in nearly 200 schools the Bureau of Indian Education oversees.

“Indian education is an embarrassment to you and to us,” [Interior Secretary Sally] Jewell told the Senate Indian Affairs Committee in 2013.

The Bureau of Indian Education (BIE) oversees 183 Indian schools with 41,000 students, as I discuss in this study. The BIE operates about one-third of the schools, and tribal governments operate the other two-thirds.

The poor performance of the schools does not seem to be caused by a lack of funding. The schools received $830 million of federal aid in 2014, which is $20,000 per pupil. The GAO reports that “the average per pupil expenditures for BIE-operated schools—the only BIE schools for which detailed expenditure data are available—were about 56 percent higher than for public schools nationally.”

If more money is not the answer, what is? How about private management and school choice? Rather than running schools, the federal government could provide education block grants to the tribes, who would then outsource school management to expert education firms. Even better, federal funding could flow directly to Indian parents in the form of vouchers to be used at schools of their choice. I’ll be interested to see what former BIE head Keith Moore says about those options at the AEI forum.

More on school choice here.

At 5:00 this afternoon—almost guaranteeing it will interrupt my usual dinner time—the confirmation hearing for education secretary-nominee Betsy DeVos will take place. With my Hungry Man “Gamer Grub” on a tray and my laptop right next to it, I’ll be live-tweeting the proceedings. So, too, will Jason Bedrick, though I have no idea what he’ll be eating if he’s dining at all. One can easily lose one’s appetite while witnessing political theater.

Here are the things I’m hoping to hear discussed:

  • Broadly speaking, what does DeVos think is the proper federal role in education? I know my—and the Constitution’s—answer.
  • What role, if any, should the federal government have in advancing school choice? For my answer, see the point above. And this. And this.
  • Does school choice work? Dems are likely to point to Michigan—DeVos’s home state—to answer “no.” In contrast, Jason and the Manhattan Institute’s Max Eden show that a fair reading of the Michigan research indicates the answer is “yes.”
  • President-elect Trump talked about getting rid of the Common Core. How would DeVos do that? Here’s what I think.
  • How should the Every Student Succeeds Act—the more hands-off successor to No Child Left Behind—be implemented? I say follow the spirit and letter of the law.
  • How do we get control of skyrocketing college prices, not to mention massive noncompletion? It is unclear what DeVos will say, but the evidence is powerful that Washington must do the opposite of what it has been doing.
  • What will be DeVos’s approach to for-profit colleges? I hope she’ll put them in the full higher education context.
  • What is the federal role in enforcing civil rights? My answer here.
  • Finally, won’t school choice—educational freedom—destroy the “cornerstone” of democracy, or America, or something else equally foundational? The answer—despite decades of rhetoric—is crystal clear: Quite the opposite.

There could be a lot of substance to chew on if the hearings stick to issues and not political theatrics. But if we mainly get the latter, at least I’ll have my frozen Salisbury steak, or some other grub, on which to chew.

In what follows, I update my annual Misery Index calculations. A Misery Index was first constructed by economist Art Okun as a way to provide President Lyndon Johnson with a snapshot of the economy. 

The original Misery Index was just a simple sum of a nation’s annual inflation rate and its unemployment rate. The Misery Index has been modified several times, first by Robert Barro of Harvard and then by myself. My modified Misery Index is the sum of the unemployment, inflation, and bank lending rates, minus the percentage change in real GDP per capita. A higher Misery Index score reflects higher levels of “misery,” and it’s a simple enough metric that a busy president without time for extensive economic briefings can understand at a glance.

Below is the 2016 Misery Index table. For consistency and comparability, all data come from the Economist Intelligence Unit (EIU).

Venezuela holds the inglorious spot of most miserable country for 2016, as it did in 2015. The failures of the socialist, corrupt petroleum state have been well documented over the past year, including when Venezuela became the 57th instance of hyperinflation in the world.

Argentina holds down the second most miserable rank, and the reasons aren’t too hard to uncover. After the socialist Kirchner years, Argentina is transitioning away from the economy-wracking Kirchner policies, but many problematic residues can still be found in Argentina’s underlying economic framework.

Brazil, at number 3, is a hotbed of corruption and incompetence, as the recent impeachment of Brazilian President Dilma Rousseff indicates. It’s similar in South Africa, at number 4, where corruption runs to the very highest office. President Zuma of South Africa just recently survived impeachment after the Constitutional Court unanimously decided that Zuma failed to uphold the country’s constitution.

Egypt, ranked fifth most miserable, is mired in exchange controls, a thriving Egyptian pound black market, and military-socialist rule. However, Egypt is likely suffering even more than this table indicates, as the EIU’s inflation estimate for Egypt (17.8 percent) is far off from the Johns Hopkins-Cato Institute Troubled Currencies Project, which I direct, estimate of 150.7 percent.

Next, with a Misery Index score of 36.0, is Ukraine, a country still feeling the effects of the highly-publicized civil war that began three years ago. With a civil war and endemic corruption, it comes as a shock to no one that Ukrainians are miserable?

Azerbaijan is plagued by corruption, fraud, and incompetence, and currency devaluations are commonplace – the manat has been devalued twice since 2015, losing 57 percent of its value against the dollar. This weakness in the currency markets makes it difficult to do business, and the Azerbaijani economy has faltered as a result.

Turkey faces a despotic leader in Islamist Erdogan, who devotes all of his resources to staying in power rather than governing the state, leading to a strongly depreciating currency and a populous mired in fear. The Turkish lira has lost over 24 percent of its value against the dollar in the last year, and the economy is in the process of spontaneously dollarizing. Not surprisingly, Turkey is a member of the Fragile Five, which also include Brazil, India, Indonesia, and South Africa.

The reasons for Iran’s rank on this list are almost too obvious and plentiful to enumerate, but it’s safe to say that a combination of corruption, incompetence, theocratic-authoritarian rule, and more have led to its state of misery.

Rounding out the ten most miserable countries is Colombia. The Colombian government has been so preoccupied negotiating peace talks with the rebel FARC group that the economy has been neglected, causing interest rates to spike as the economy stands still.

On the other end of the table one finds Japan with the low score of 0.4. Japan’s low misery is not the result of high GDP per capita growth (Japan’s figure is only 0.7 percent), unlike most other countries at the bottom. Instead, it’s Japan’s -3.5 percent inflation rate that drives the score down. China is the next best, with the second-least miserable score of 4.5, almost entirely due to its high (6.3 percent) GDP per capita growth rate.

Also of note on this list is the United States. In President Obama’s final year in office, the United States ranked lower than Slovakia, Romania, Hungary, China, and even Vietnam. What a legacy.

Last week the Supreme Court heard oral arguments in Expressions Hair Design v. Schneiderman—an important First Amendment case in which Cato filed an amicus brief—challenging a New York law that allows merchants to advertise “discounts” for paying cash, but makes it illegal to tell their customers that they’re charging an economically equivalent “surcharge” for using a credit card. More simply, the New York legislature was lobbied by credit-card companies to abridge the rights of merchants to convey—and the right of people to receive—information about how prices are structured in the marketplace.  

During the argument, Justice Stephen Breyer invoked a familiar trope when he opined: “We are diving headlong into an area called price regulation. It is a form of price regulation, and price regulation goes on all over the place in regulatory agencies. And so the word that I fear begins with an “L” and ends with an “R”; it’s called Lochner. And there we go.”

Lochner v. New York (1905) involved the Fourteenth Amendment rights of bakers to contract with their employers regarding working hours, and whether the state could restrict those contractual relationships. Unionized bakers had lobbied the New York legislature to put certain conditions on employment that favored bigger bakeries as against upstart immigrant entrepreneurs. The established bakeries could afford to employ more people to keep their shops running for the long hours required in that industry. The Supreme Court recognized the cronyism involved and struck down the law as violating economic liberty.

Lochner became discredited under the New Deal as improper judicial interference with legislative authority. It continues to be seen in progressive and conservative circles alike as the consummate example of “judicial activism,” whereby judges substitute their policy judgment for that of the people’s elected representatives. To say the least, such criticism gets both the history and the law wrong. (For more on how the conservative call for “judicial restraint” is actually based on progressive legal theories, see Ilya Shapiro’s essay in National Affairs.)

So is Justice Breyer really worried that protecting the First Amendment rights of merchants and customers is akin to the states’ ability to regulate the working conditions for bakers in the early 1900s? Lochner had nothing to do with the First Amendment, but it has become a familiar tool for judges to use to advance the theory of judicial deference in cases they don’t like.

Broadly defined, judicial deference is the theory that judges should be restrained when reviewing legislation passed by majorities. This practice is a product of the Progressive-era idea that democracy is the touchstone of our republic, and that people get their rights at the polls. This view, however, goes against our Founding ideal that preservation of liberty is the ends for which we have delegated the government limited powers—and that the judiciary is the branch that should assure that majorities are staying within their bounds.

James Madison made it clear that majorities are dangerous in Federalist 10. He argued that one of the most basic threats to liberty was the ability of “factions” to come together to seek concentrated benefits from majorities through favorable legislation and regulation, rather than competing in the marketplace. The Court in Lochner recognized these dangers when striking down the arbitrary legislation involved, and it has therefore become a symbol of anti-democratic values for progressives who advocate for deference to legislatures.

But even the progressive foundation for judicial deference has its limits. Indeed, the New Deal case United States v. Carolene Products (1938)—the root of the modern presumption of constitutionality of most statutes—explicitly carved out exceptions. In that case’s famous (or infamous) footnote 4, the Supreme Court indicated that this presumption would not apply to certain categories of legislation, including those that run afoul of the First Amendment. And just because a law may have some connection to economics, does not mean that judges should ignore the Constitution when a state has abridged the right of the people to speak freely.

This is not the first time Justice Breyer has used a “parade of horribles” argument when a state legislature has violated the First Amendment. In Sorrell v. IMS Health (2011)—a case in which the Court ruled 6-3 that a Vermont law restricting the sale, disclosure, and use of records revealing the prescribing practices of individual doctors was an unconstitutional speech restriction—Breyer writing in dissent warned: “At best the Court opens a Pandora’s Box of First Amendment challenges to many ordinary regulatory practices that may only incidentally affect a commercial message. At worst, it re-awakens Lochner’s pre-New Deal threat of substituting judicial for democratic decisionmaking where ordinary economic regulation is at issue.”

Justice Oliver Wendell Holmes’s dissent in Lochner denigrated the majority for deciding the case “upon an economic theory which a large part of the country does not entertain”—implying that the Court was invoking laissez-faire ideology to enact “Mr. Herbert Spencer’s Social Statics.” In response to Justice Breyer’s concerns in Sorrell, Justice Kennedy noted that while “[t]he Constitution ‘does not enact Mr. Herbert Spencer’s Social Statics[,]’ [i]t does enact the First Amendment.”

Let’s hope that the Court majority sticks to that principle in Expressions Hair Design and similarly rebuffs Breyer’s bogeyman.

Jason Richwine just blogged about my recent Mariel Boatlift post that confirmed George Borjas’ finding of wage increases for those with only a high school degree in post-Mariel Miami.  George Borjas understood my quick extension of his research.  Below are some of Richwine’s points and my quick responses. 

“The point is not especially interesting, since the standard immigration narrative has always been that efficiency gains come at the expense of the natives with whom immigrants most directly compete – high school dropouts, in the case of Mariel.”

It’s important to identify which skill-group of Miamians could have benefited from the Boatlift.  George Borjas pointed out in his report for the Center for Immigration Studies:  “Economic theory predicts that immigration will redistribute income by lowering the wages of competing American workers and increasing the wages of complementary American workers as well as profits for business owners and other “users” of immigrant labor.”  Borjas focused on the benefits for business owners and other “users” of immigrant labor in that paper. 

Although he argues that dropouts and workers with only a high school degree are not substitutes, he doesn’t provide evidence of potential complementarity.  In at least the Mariel case, there is some evidence of that.  My post shifts the narrative from “only businesses and the rich gain from low-skilled immigration” to “the real beneficiaries could be a much larger pool of workers who actually bothered to finish high school.”  That matters. 

Furthermore, if “efficiency gains come at the expense of natives with whom immigrants most directly compete,” then who gains in Richwine’s analysis?  The cross-skill wage elasticities for those above a high school degree are not statistically significant.  They are for workers with only a high school degree according to Table 4 in this paper by Borjas and Joan Monras.  My Mariel post is perfectly consistent with those findings. 

“But it would have been simple to determine the HS-and-below impact directly from the Borjas and Monras paper: Just take a weighted average of the dropout and graduate wage effects reported in their Table 4.  Doing that yields a negative number that does not reach statistical significance.”

I didn’t work backward from Borjas and Monras because they ended their analysis in 1984.  Using 1984 in my post would have unfairly biased my results against Borjas’ findings in his Mariel paper.  I chose 1986 because wages for dropouts were at their nadir in that year and to be consistent with Borjas’ Mariel paper. 

Furthermore, Richwine’s point that combining wages for dropouts and high school only workers yields a result that is statistically insignificant shows yet again that high school graduate wages increased to outweigh the negative wage effects on dropouts.  I don’t think Richwine intended to neutralize Borjas’ findings in exactly that way.    

“Overall, Nowrasteh frames his argument as the following: Borjas may or may not be right about Mariel lowering the wages of dropouts, but if he is, then we must also conclude that Mariel raised the wages of dropouts and high-school-only natives put together. The argument doesn’t work. Across several different methodological scenarios that do not alter Borjas’s conclusion, Nowrasteh’s numbers – both his own and those of economists who previously studied the same question – do not tell a consistent story. His claim that accepting Borjas requires accepting that HS-and-below natives benefited from Mariel is therefore unconvincing.”

Those who swooned over Professor Borjas’ Mariel paper have consistently failed to note the increase in wages for high school graduates that Borjas and Monras discovered.  To quote their paper:

“As before, the estimated own wage effect is negative and significant, with a wage elasticity of about -0.9. Similarly, the estimate of the own employment effect is not distinguishable from zero.  The analysis, however, shows that the cross effects are numerically important.  Although the supply shock of the predominantly low-skill Marielitos lowered the wage of high school dropouts, it raised the wage of workers with a high school education, and this effect is both numerically and statistically significant. The cross-wage elasticity is about +0.7.  In addition, the unemployment rate of workers with more than a high school diploma also fell significantly [Emphasis added].”

That such dramatically different findings can result from such minor changes in methodology weakens all of the research on this topic – including mine.  Reading the work by Card, Peri and Yasenov, Borjas, and Borjas and Monras, and then conducting my own replication and extension of their results has significantly weakened my confidence in any of these findings.  For instance, weekly earnings for Hispanic dropouts between the ages of 25 and 59 increased in Miami shortly after the Boatlift (Figure 1).  Hispanic dropouts should be the most substitutable for Marielitos but they’re not according to Borjas’ methods.  This graph would well fit into David Card’s research. 

Figure 1

Weekly Earnings for Hispanic Dropouts Age 25-59

 

 

It’s baffling how anybody can replicate these findings, look at these graphs, and maintain their confidence in this research. 

This week the Cato Daily Podcast (Subscribe!) focuses on the importance of trade as the Trump Administration arrives next week. Here’s a quick rundown.

Monday:

Daniel J. Ikenson and Daniel J. Mitchell discusses the backgrounds and new roles for Trump’s “protectionist triumvirate” of Wilbur Ross, Peter Navarro, and Robert Lighthizer.

Tuesday:

Simon Lester discusses the potential fallout of President-elect Trump’s taking to Twitter to threaten companies like Carrier, Ford, Toyota, and General Motors.

Wednesday:

Daniel R. Pearson discusses how multinational corporations make location decisions. For all the handwringing over cheap labor outside the United States, Pearson notes that American workers are far more productive than workers in lower-wage countries. He adds that the savings from lower-priced inputs like steel could contribute substantially to a firm’s decision to increase production outside the United States.

Thursday:

Daniel J. Ikenson makes a sobering assessment of the Presidential powers governing trade. As it has in many other areas, Congress has delegated many powers governing trade to the executive branch.

Friday:

Daniel J. Mitchell and Daniel J. Ikenson discuss the so-called “border adjustment tax” included in a House tax reform a Congressional attempt to head off attempts to restrict trade. Depending on your perspective, the border adjustment tax could be a poison pill for tax reform or an effort to level the playing field in international trade, or both.

Please susbscribe to the Cato Daily Podcast.

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