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In today’s Cato Online Forum essay, the AFL-CIO’s Celeste Drake asserts that labor unions are not opposed to trade per se, but to neo-liberal trade deals that only benefit corporate entities. Drake argues that the Transatlantic Trade and Investment Partnership offers a good opportunity to change the nature of trade agreements to include progressive, standard-raising provisions that promote inclusive growth and shared prosperity. She concludes:

No one believes that righting the course of globalization and trade will be quick or easy.  But if the process is to begin, the TTIP, with informed, active and engaged civil society on both sides of the Atlantic, seems an opportune place to make a stand to change the rules: not to stop trade, but to use it as a tool to achieve a global economy that works for all.

Celeste’s essay is offered in conjunction with a Cato Institute conference on the TTIP taking place October 12.  Read it. Provide feedback.  And please register to attend the conference.

Last week, I wrote about a man who spent 6 months of his life and $1,500 to make a sandwich entirely from scratch, without the benefits of market exchange. The story illustrates how exchange and trade enrich our lives.

After making his incredibly costly sandwich, the same man embarked on an even costlier endeavor: making a suit from scratch. He picked cotton from a field, spun the cotton into thread, wove the thread into cloth, sheared wool from a sheep, harvested hemp, raised silkworms for their silk, killed a deer and tanned its hide to make leather. This process cost him 10 months of work and $4,000.

At the end of the video documenting how he made the “suit,” he stands in a bizarre-looking outfit with pants that end at his knees and says with regret, “OK, even with all that work, I might have run a little short on material.” Even after 10 months of intense labor, he was unable to come close to matching the quality and price of a product that he could procure through the free market. 

Thanks to market exchange and the division of labor, obtaining new clothes is simple and increasingly affordable. For example, increasing cotton yields have lowered the price of a staple fabric material.

The real price of a suit, measured in the number of hours it takes an average worker to earn enough to buy one, has declined: a two-piece wool suit cost the average American 12.4 fewer hours of work in 2012 than it did in 1956. (Check out Professor Don Boudreaux’s analysis for further details).

Critics sometimes decry increasingly affordable clothing, viewing falling prices as a sign of worker exploitation. In 1891, U.S. President Benjamin Harrison summed up this viewpoint when he said, “I pity the man who wants a coat so cheap that the man or woman who produces the cloth or shapes it into a garment will starve in the process.” However, as Johan Norberg pointed out yesterday in the U.K. Huffington Post, far from making people poorer, the garment industry has actually helped to decrease poverty. As he eloquently puts it:

Western activists rail against “sweatshops,” but among researchers and economists from left to right there is a consensus that these jobs are the stepping stones out of poverty.

Take a moment to consider what you are wearing right now, and how much work went into its creation, from the harvesting of its raw materials to the finishing touches. No one person created it—it is the fruit of a complex family tree of mutually beneficial human cooperation through the market.

The private meeting between President Obama and Russian President Vladimir Putin at the United National General Assembly session in New York apparently did not go well. The atmosphere was frosty, and both leaders also used their speeches before the UN body to take verbal shots at the other country. That outcome is most unfortunate, because Russia and the United States have important interests in common that are being damaged by ongoing bilateral tensions. In particular, both Moscow and Washington want to see ISIS decisively defeated and the overall threat of radical Islamic terrorism diminished.

Yet the Obama administration objects strongly to Russia’s growing political and military presence in Syria to support the beleaguered government of Bashar al-Assad against ISIS insurgents. Washington seems to resent any manifestation of Russian geopolitical influence outside the borders of the Russian Federation, even when it might indirectly benefit U.S. interests. Worse, U.S. leaders continue to cling to the fantasy that simultaneously seeking to defeat ISIS and Assad is a coherent policy. 

Washington’s clumsy handling of relations with Russia has brought the two countries dangerously close to a second cold war. As I discuss in a new article in Aspenia Online, both sides bear responsibility for the deterioration of the bilateral relationship, but the bulk of the blame lies at the doorstep of the United States. And trouble began long before Russia’s 2014 annexation of Crimea and support for separatists in eastern Ukraine triggered the most acute crisis.

Moscow deeply resented NATO’s decision to expand into Central and Eastern Europe, especially the addition of the Baltic republics in 2004. Russian policymakers believed, with good reason, that NATO enlargement violated pledges that the United States and its allies had made when the Kremlin acquiesced to a united Germany’s membership in NATO.

In addition to anger over NATO’s enlargement, Kremlin officials fumed that the Western powers were trampling on long-standing Russian interests in the Balkans. Russian leaders viewed NATO’s decision to prevent the partition of Bosnia, and especially the alliance’s 1999 war against Serbia to detach its restless province of Kosovo, as taking advantage of their country’s temporary economic and military weakness. The subsequent decision by the United States and its key EU allies to bypass the UN Security Council (and a certain Russian veto) to recognize an independent Kosovo in 2008 further inflamed Moscow’s anger.

Russia’s military action against Georgia on behalf of two secessionist regions later in 2008 sent a dual message to the West. One was that contrary to Washington’s insistence that the Kosovo episode was unique, the Kremlin viewed the situation in Georgia (and perhaps elsewhere) as sufficiently similar to apply the Kosovo precedent on outside military intervention. The second message was that the Western powers needed to abandon any desire for further NATO expansion, especially flirting with the notion of offering membership to Georgia and Ukraine.

Thus, the surge of tensions over the past 18 months (triggered by U.S. and European Union support for the ouster of Ukraine’s pro-Russian government) is not a sudden, unpredictable disruption. It is instead the culmination of trends that have been building for more than two decades.

Western opinion elites need to stop viewing Putin’s Russia as a reincarnation of Nazi Germany or the Soviet Union. In marked contrast to those malignantly expansionist powers, today’s Russia seems to have far more limited, largely defensive, ambitions—focused on maintaining a sphere of influence along the country’s borders. That is a far cry from the continental ambitions of Nazi Germany or the global ambitions of the Soviet Union.

Creating a more cooperative relationship requires a crucial change in U.S. policy. American officials regard the existence of spheres of influence as illegitimate in the twenty-first century international system. That hostility is unrealistic and myopic. Great powers understandably are more concerned about developments, particularly hostile developments, in their immediate neighborhoods. And contrary to recent, self-serving rhetoric, the United States is no exception.

A partnership with Moscow can help solve a number of problems in the international system, including North Korea’s worrisome nuclear program. Russia is also an important ally in the fight against radical Islamic terrorism in Syria, Iraq, and elsewhere. Conversely, if the West insists on treating Russia as an adversary, the Kremlin can create nasty difficulties in several arenas.

Putin’s Russia may not be the easiest great power to deal with, but the United States will assuredly not benefit from provoking a new cold war. Yet Washington’s current policy toward Moscow is simultaneously ineffectual and provocative. A course correction is badly needed, and President Obama missed an important opportunity to do so at his meeting with Putin in New York. 

Can it really be the case that a police officer violates the Fourth Amendment’s prohibition on using excessive force when he points a live firearm at a non-threatening individual, but not if he actually shoots and kills this person? That’s the argument being made in Stamps v. Town of Framingham, which is now before the U.S. Court of Appeals for the First Circuit.

During a military-style SWAT raid on the home of 68-year-old grandfather Eurie Stamps—to execute a drug-search warrant regarding his stepson’s alleged activities—Officer Paul Duncan pointed an assault rifle at Stamps with the safety disengaged and his finger on the trigger, even though Stamps lay on the floor with his hands up. Duncan now claims that he became immune from suit when he unintentionally fired the rifle and killed Stamps.

Under the doctrine of “qualified immunity,” government officials—including police officers—are immune from suit if their actions don’t violate a “clearly established” constitutional right. The crux of Duncan’s argument is that when his weapon discharged, he became immune from suit even if pointing an assault rifle at Stamps was an unconstitutional act by itself—because there’s no clearly established right against accidental death. This ridiculous argument was duly rejected by the lower court, because it’s both legally unsound and practically dangerous.

As a legal matter, Fourth Amendment protections against being unreasonably targeted with a firearm don’t evaporate when things turn out worse than an officer intended. Moreover, accidental discharge is hardly an unforeseeable consequence of pointing a loaded semi-automatic weapon—which could’ve been turned to full-auto here—during a tense paramilitary raid. Foreseeable accidents don’t remove liability from the harming actor; if anything, unintended consequences augment the scope of the Fourth Amendment violation rather than immunizing an officer from liability for the foreseeable result of his intentional actions. 

As a practical matter, granting immunity to SWAT officers whose unreasonable behavior causes deadly accidents would be absurd and would likely lead to more deadly accidents. The case thus raises pressing issues of police militarization in society. In briefing for a militarization case with nearly identical facts, Kane v. Lewis, Cato noted that “SWAT team deployments have increased more than 1,400% since the 1980s… .  SWAT teams and tactical units were originally created to address high-risk situations, such as terrorist attacks and hostage crises. Today, however, these extreme situations account for only a small fraction of SWAT deployments; they’re used primarily to serve low-level drug-search warrants.”

Accordingly, Cato has now filed a brief in the Stamps case, joining the ACLU, NAACP, National Bar Association, and LatinoJustice PRLDEF in requesting that the First Circuit affirm the lower court’s decision and posthumously vindicate Eurie Stamps’s Fourth Amendment rights. 

Ten years ago today, Judge John Roberts took the oath of office to become the 17th Chief Justice of the United States. Although we speak of “the Roberts Court”—its 10th term now behind it, its 5th under its current composition—it’s somewhat misleading to do so since it seems to imply that the chief justice has more power than in fact he has. To be sure, he leads the Court in a number of administrative respects, including the not inconsiderable power of assigning opinion writing when he’s in the majority in a given case. But at the end of the day, his vote counts for no more than that of any other justice.

Nevertheless, that’s the custom, so with those milestones before us, it’s worth asking how the Roberts Court is doing from a classical liberal perspective—liberty through limited constitutional government—the perspective we at Cato’s Center for Constitutional Studies have advanced since our inception over a quarter of a century ago. Given Roberts’ 2012 and 2015 opinions upholding Obamacare and his ringing dissent last June in the same-sex marriage case, one is tempted to answer “not well.” Those opinions speak volumes, about which I’ll say a bit more shortly. But on balance, it’s been a fairly good record. There are exceptions, for sure, and many cases are decided on technical grounds having little to do with substantive issues. But the Roberts Court has generally been supportive, for example, of property rights, religious liberty, free speech—especially political speech in the campaign finance context—and the Second Amendment, and it has mostly stood against affirmative action, executive branch overreach, and a number of other governmental intrusions.

What then of the exceptions—in particular, of Roberts’ own opinions in the two most important cases to come before the Court since he took over its helm, 2012’s NFIB v. Sebelius, upholding Obamacare’s individual mandate and thus the Act itself, and last June’s King v. Burwell, the statutory ruling that saved the Act from collapsing from its own unartful design? And what of the chief’s impassioned dissent a day later in Obergefell v. Hodges, the landmark same-sex marriage decision? It’s worth asking what those opinions say about Roberts’ very approach to the law and to the role of the Court in securing it.

I address those questions in some detail in the Foreword to the new Cato Supreme Court Review, the title of which, “Roberts’ Rules: Deference Trumps Law,” captures what I take to be the heart of the problem. Let me simply sketch the point here.

Recall the metaphor Roberts used during his Senate confirmation hearings: “Judges are like umpires. Umpires don’t make the rules; they apply them.” All well and good as a critique of the liberal judicial activism conservatives often complain about, often rightly. But it was followed immediately by talk of judicial “modesty” and “humility”—suggesting that Roberts might err in the opposite direction, that he might be too deferential to the political branches. More important, it doesn’t tell us anything about his conception of the Constitution.

When we read those three unfortunate opinions, however, we see how it is that Roberts’ extraordinary concern to avoid overriding the political branches trumps an accurate reading of the law. In NFIB, for example, he upheld the Affordable Care Act on the ground that the individual mandate could be read simply as a tax on those who chose not to buy insurance—even though he never said what kind of a tax it was, much less whether the tax was constitutionally cognizable.

In King, he dismissed as “ambiguous” what he himself said was “the most natural reading” of the ACA’s text, which authorized tax credits only for those who purchased insurance through “an Exchange established by the State,” ruling instead that that text could also be read as authorizing subsidies for those who purchased insurance through an exchange established by the federal government, thus saving the Act a second time by allowing subsidies in the 34 states that had declined to establish exchanges.

And in his lengthy dissent in Obergefell, Roberts offered perhaps his clearest statement to date of his understanding of the Constitution and the Court’s role in checking state actions that might violate rights or deny equal protection of the laws. In a nutshell, as with so many conservatives, it was clear from the start that he hasn’t yet come to grips with the full scope of the changes the Fourteenth Amendment brought to America’s federalism, which infused in the Constitution at last the classical liberal vision of the Founders that slavery precluded their accomplishing originally. Instead, like his fellow conservatives in this case, each of whom wrote an opinion, Roberts struggled within the deeply flawed post-New Deal methodology Progressivism set in motion, offering up an analysis that was far removed from the nation’s First Principles. His vision, like Robert Bork’s before him, is of a nation in which majorities are entitled to rule in wide areas simply because they are majorities, while in some areas minorities are entitled to be free from such rule. That gets Madison’s Constitution exactly backwards. Madison stood for liberty first, as our natural right, limited majoritarian democracy second, as a means toward securing that liberty.

Here too, then, from a mistaken inversion of our moral and political order, coupled with an understandable but inordinate fear of judicial activism, Roberts was led to defer to the states that had denied same-sex couples the equal protection of the laws. Judicial “modesty” became a cover for judicial abdication. That will not change until a more accurate understanding of the Constitution itself comes into view. Again, see that Foreword for details.

Presidents Putin and Obama presented two radically different worldviews at the UN yesterday morning, but both obliquely described the other as the key cause of global unrest. Putin took aim at the United States, implying that the Arab Spring was orchestrated by the United States and that sanctions on Russia are undermining global trade, while President Obama called for a return to the rule of law, and lambasted human rights violators. These disagreements reportedly carried on into the private meeting held by both leaders last night on Syria and Ukraine. 

But the root of the disagreement on Syria isn’t differing objectives: both Russia and the United States want to see ISIS contained and degraded, and an end brought to the terrible conflict in Syria and Iraq. The difference lies in the means both sides want to use to achieve this objective. The Russians want to protect the sovereignty and power of the Assad regime, while U.S. leaders insist that Assad must go, to be replaced with a government which includes representation from the Syrian opposition.

Given this agreement on ends - if not on means - it’s in the interest of both sides to continue to discuss Syria to see if common ground can be found. And Russian involvement in Syria is not necessarily a bad thing for the United States for a couple of reasons. Firstly, Russian involvement against ISIS could actually be more effective than U.S. involvement, if only because the Russians have a reliable allied military on the ground. Secondly, violence has actually dropped in Eastern Ukraine, as Russia shifts its attention and military resources towards the Middle East.

Both sides have signaled the possibility of some diplomatic flexibility. Putin called in his speech for an anti-ISIS coalition similar to the one which defeated Nazi Germany. And in his press conference following last night’s meeting with President Obama, he said both that there was a great need for further U.S.-Russia bilateral cooperation, and that any solution in Syria must involve a political reform process (although he believes the Assad regime should be part of this process). For his part, President Obama did not call for the immediate overthrow of the Assad regime, instead calling for a ‘managed transition’ to create a more representative Syrian government.

None of this suggests that disagreements don’t exist on Syria; they are in fact numerous and challenging. Yet it is to be hoped that the United States and Russia will continue to talk about these issues. As one of my colleagues noted last week, a lack of general diplomacy with Russia is counterproductive and resolves no problems. In the case of Syria, cooperation between Russia and the United States is far more likely to yield a positive outcome than any other approach to the problem.



Russia’s push to support Assad in Syria and its agreement to share intelligence with Syria, Iran, and Iraq has evoked the predictable handwringing here in the United States. Some worry that Russian involvement will derail the U.S. fight against IS. Others worry that Russia’s engagement will weaken U.S. influence in the Middle East and further embolden Vladimir Putin in his various misadventures. Such concerns are misplaced. Even though Putin has no intention of helping the United States his maneuverings have in fact done just that. Rather than ramping up U.S. engagement to outdo the Russians, as hawks are calling for, Obama should instead take this opportunity to reassess and redirect U.S. policy.

Russian actions have improved Obama’s Middle East “strategy” in three ways.

First, Russian initiative in 2013 kept the United States from getting involved in Syria too early. As horrendous as the $500 million training initiative turned out to be, it was a drop in the bucket compared to what the United States would have spent by now had the United States engaged earlier and more aggressively. When Assad’s regime blew past Obama’s ill-advised “red line” on chemical weapons, it was Russia that came in to save the day, brokering an arrangement that led Syria to give up its chemical weapons. Had Obama instead launched a few meaningless missile strikes at the Assad regime the United States would have shouldered greater responsibility for the regime’s behavior. Both Republicans and liberal interventionists in his own party would have pushed Obama toward deeper and ultimately more costly intervention.

Second, Putin’s recent actions make clear that the United States does not have to carry the expanding burden of fighting IS alone. In the absence of any real partners on the ground and with no desire to go it alone, the United States has been reduced to half-measures in Syria. Had there ever been an identifiable group of moderate rebels then perhaps a U.S. training program would have made sense. Today, however, with IS pressing hard and moderates thin on the ground, such a strategy is clearly too little and too late. Without partners, the United States has no real ability to influence events on the ground. Airpower has many strengths, but even a much broader campaign of airstrikes could not win the day without the backing of U.S. ground troops. Russia is not the partner the United States would have chosen, of course, but the fact remains that Russia is willing and able to take the fight to IS in ways that benefit the United States.

Third, to the extent that Russian involvement replaces U.S. involvement, the United States will benefit from passing the role of “bullseye” to Russia. Fourteen years of military intervention, occupation, and aggressive counterterrorism has not produced a pro-U.S. coalition determined to combat IS but instead a widespread and deepening anti-Americanism. As the Arab Barometer reveals, robust majorities of many Arab publics believe that U.S. interference in the Middle East justifies attacks against the United States. Expanding the U.S. footprint in Syria and Iraq at this point will produce more unhappiness, more radicalism, and more anti-American violence.

Best of all, Russia has given Obama the opportunity to pivot away from the miscues, missteps, and misreads that have produced zero visible impact on IS and zero progress in resolving the mess in Syria or Iraq. Russian involvement essentially precludes increased U.S. military involvement and shifts the balance of power toward Assad. On the one hand this limits U.S. options and stymies Obama’s call for Assad to step down. At the same time, however, it also prevents Obama from doubling down on failed strategies to find and train non-existent moderates and precludes any notion of sending ground troops. This gives Obama the necessary breathing room to reconsider U.S. goals in Syria and to redirect U.S. strategy.

Some will argue that the price tag of Russian engagement is too high: Putin rising, Assad in power, U.S. influence on the wane in the Middle East. The truth, though, is that the United States has wielded unprecedented influence over the Middle East since 9/11 and has discovered that it is the price of influence that is too high. Through 2014 the United States had suffered almost 7,000 casualties and spent over $4.4 trillion on the war efforts in Afghanistan, Iraq, and Pakistan. For that unimaginable toll the United States has bought two broken nations, spurred the creation of IS, and ensured the growth of Iranian power. And as yet there is no end in sight. Vague concerns about our future ability to promote national interests in the Middle East pale in comparison to the certain costs of war. Given this, Obama’s best move today is to thank Putin and reconsider what sort of influence in the Middle East the U.S. truly needs and how to achieve it.

It is Banned Books Week, designated by the American Library Association and others as the time for “celebrating the freedom to read.” Of course, having the freedom to read whatever one wants is essential to a free society. But regular abuse of the term “banning,” and the violations of freedom that often occur before any so-called banning is attempted, are just as crucial to recognize if we really care about liberty.

Unfortunately, just about any time a parent or taxpaying citizen challenges the presence of a book in a public library or school, deafening alarm bells are rung that there is an attempted banning underway. But, as this Slate article nicely explains, there is very little actual “banning” being attempted, if by banning we mean “officially or legally prohibiting” someone from accessing a book. Just because you may not be able to get a book at a library does not mean you cannot legally obtain it at all. For the most part, it just means you have to hop onto Amazon and buy the book yourself. Which takes us to the violation that occurs before most “banning” is even tried.

As I explained a few years back, when a public library or school purchases a book with taxpayer dollars, it compels taxpayers to support someone else’s speech – a violation of liberty. This is even more the case if the library decides that it will purchase some books and not others, which it must do unless it has, essentially, infinite funds. Then a government entity not only compels support of speech, but chooses to elevate some speech above others.

Most knotty, however, is when public schools put specific books on recommended reading lists or assign them to be read. Then a government entity chooses to elevate some speech and, if it is assigned, requires people to read it. In that case, far from threatening to ban such books, objecting parents are often trying to defend their children against imposition of speech – speech elevated in part with their money – that the parents find age inappropriate, or offensive, or immoral. Of course that affects other families who might think the books should be read, but the violation of liberty is not in the actions of the objecting parents, but the government picking and choosing speech to begin with. And no, as happens too often, it is not okay to just dismiss the concerns of objecting parents as being from fringe types.  The very essence of a free society is protecting everyone’s rights. Nor is it acceptable for the majority to simply default to “well, kids are going to be exposed to this stuff sooner or later, so they must read it now.” That essentially says “we, the government, will decide what is, or is not, okay for your child, now butt out,” a very frightening authority to hand over to government. This is a major reason to demand educational freedom: it lets families and educators – not government – decide among themselves what children will be taught.

Recent polling has shown that 28 percent of Americans would be okay with actually banning some books – making it illegal to publish or read them – and we should absolutely condemn any such efforts. But challenges to books in public libraries and schools are very different animals, and the violations of freedom occur before such “banning” efforts ever come along.

As you probably know if you follow the news, a man named Martin Shkreli in charge of a startup firm called Turing Pharmaceuticals bought the rights to a drug called pyrimethamine (brand name Daraprim), used in the treatment of AIDS and malaria, and announced that he was jacking up its price from $13.60 to $750. Massive outrage resulted, which has echoed through social media for the past week.

Pyrimethamine is long since off patent. It is not difficult to manufacture, and sells cheaply in Europe. But under the distinctive food and drug laws of the United States you can’t just start turning out pills in your factory to compete with Shkreli, at least not without compiling and submitting a huge pile of regulatory paper with the U.S. Food and Drug Administration. This calls on the services of lawyers and scientists, costs a lot of money, and takes time, and you might or might not be able to recover the costs from the relatively small pool of users.

Alex Tabarrok and commenters explain, and pharmaceutical blogger Derek Lowe has much more detail in a series of posts:

The FDA grants market exclusivity to companies that are willing to take “grandfathered” compounds into compliance with their current regulatory framework, and that’s led to some ridiculous situations with drugs like colchicine and progesterone. (Perhaps the worst example is a company that’s using this technique to get ahold of a drug that’s currently being provided at no charge whatsoever).

Among laws that used the “marketing exclusivity” technique to award monopolies on older drugs, on the logic that otherwise no one would step forward to handle the heavy costs of getting those drugs regulatory clearance, were the Drug Price Competition and Patent Term Restoration Act of 1984, better known as the Hatch-Waxman Act, originally introduced by Sen. Charles Mathias (R-Md.), and the Orphan Drug Act of 1983, introduced by Rep. Henry Waxman (D-Calif.) In various ways that backers appear not to have foreseen, opportunistic actors have succeeded in seizing the legal-monopoly status made available for some of these compounds without always providing as much public benefit in return as had been expected. To enforce their legal monopoly, some of these companies sue rival drugmakers to force them to pull their competing offerings off the market.

Underlying it all — but seldom asked — was whether the gigantic costs of regulatory approval are really a necessary evil. Libertarians questioned whether hugely expensive studies and paperwork made even theoretical sense in the case of grandfathered or “generally recognized as safe” drugs, many of which have been familiar to the medical profession for decades or even centuries, allowing for a collective sense to emerge of their safety and effectiveness. But the view that progressives tended to champion — which prevailed — was that older compounds and those used for rare diseases should be held to no less stringent a standard than any other, and should either be withdrawn from the market or have their safety and effectiveness proved at someone’s expense.

Meanwhile, today’s moralistic politicians denounce the resulting fiasco without acknowledging the role of yesterday’s moralistic politicians in helping to bring it about (cross-posted and slightly adapted from Overlawyered).

Donald Trump was on 60 Minutes Sunday night, saying things like this about trade in an interview with Scott Pelley: 

Trump: … Mexico, by the way, is taking our jobs. I love the Mexican people. They’re great people. But the leadership is too smart for our country. Ford Motor Company, moving a $2.5 billion plant to Mexico. Mexico.

Pelley: But there’s nothing you can do about that as president.

Trump: Sure there is.

Pelley: How do you keep them from exporting American jobs to Mexico?

Trump: Let’s say Ford, let’s say Ford moves to Mexico. If they want to sell that car in the United States they pay a tax. Here’s what’s gonna happen: They’re not going to build their plant there. They’re going to build it in the United States.

Pelley: But there is a North American Free Trade Agreement.

Trump: And there shouldn’t be. It’s a disaster.

Pelley: But it is there.

Trump: OK, yeah, but—

Pelley: If you’re president, you’re going to have to live with it.

Trump: Excuse me, we will either renegotiate it or we will break it. Because, you know, every agreement has an end.

Pelley: You can’t just break the law.

Trump: Excuse me, every agreement has an end. Every agreement has to be fair. Every agreement has a defraud clause. We’re being defrauded by all these countries.

Pelley: It’s called free trade—

Trump: No, it’s not.

Pelley: —and it is a plank—

Trump: It’s not the—

Pelley: —of the Republican platform.

Trump: Scott, we need fair trade. Not free trade. We need fair trade. It’s gotta be fair.

Sometimes people make things more complicated than they really are, and here I appreciate the clarity and simplicity in Trump’s statements. While others might try to obscure their proposals, Trump comes right out and says what he means.  What we have here is Trump proposing to tax imports from Mexico.  Under NAFTA, the U.S. and Mexico (and Canada) have agreed not to impose import taxes (tariffs) on each other (with a few exceptions here and there).  Trump would renegotiate NAFTA so that the U.S. could impose these taxes, at least on automobiles.

Of course, if you get rid of the trade liberalization established by NAFTA, that would also mean that Mexico could impose taxes on U.S. exports to Mexico, making U.S. products uncompetitive in that market and harming some U.S. producers.  The result of all this “fair trade” would be no net job increases, just higher taxes and higher prices for consumers.

So, the best description of Trump’s trade policy is that it’s a tax increase for everyone involved.

Checking out the news this morning, the following five stories caught my attention.  First, NASA has confirmed that there is water on Mars, thus raising the enticing possibility of extra-terrestrial life as well as colonization of the red planet.  Second, surgeons have developed a cure for age-related macular degeneration, which is the most common form of blindness.Third, a British scientist has developed a new liquid crystal material that can be printed onto any product, including pill bottles and banknotes. This invention could help to eliminate the counterfeit goods industry worth up to $1.5 trillion per year.

Fourth, a clinical trial at St George’s University of London confirmed the cancer-fighting potential of the anti-malarial drug called artesunate. This breakthrough could cut the price of colon cancer treatment from $45 to $1 per day. Fifth, an analysis of a huge amount of health and genetic data from British volunteers has yielded some fascinating clues on the genetic makeup and DNA mutations of smokers who do not develop cancer. Down the line, these findings could help develop gene-based therapies for lung cancer.

I am sure there are plenty of other inventions, breakthroughs and discoveries that took place in the last 24 hours that I have not yet read about. Not bad, fellow earthlings, not bad at all!  

A recent Gallup poll finds that government employees are considerably more satisfied than their private sector counterparts with their compensation fringe benefits–namely government retirement plans (+25), health insurance benefits (+23), and vacation time (+17).

The poll compared satisfaction with 13 different job aspects for both government and nongovernment employees, ranging from stress on the job, flexibility, recognition, salary, relations with coworkers and bosses, etc. In 9 of the 13 characteristics, government and private sector workers reported similar levels of satisfaction (all above 60%) with job stress, recognition, flexibility, safety, salary, hours, promotion opportunities and job security. 

However, 82 percent of government workers reported being completely or somewhat satisfied with their retirement plan compared to 57 percent of their private sector peers, a +25 point difference. Government workers typically receive defined benefit pension plans, which typically offer employees a guaranteed monthly amount in retirement. In contrast, private sector workers’ retirement plans are not guaranteed but based on the amount they save, their employer contributes, and investment returns.

Again, 80% of government workers say they are satisfied with their health insurance benefits compared to 57% of private sector workers (a +23 point difference). Gallup reports that government worker health insurance plans typically require lower out-of-pocket costs than found in the private sector, which may explain these differences.  

In addition, fully 9 in 10 government employees are satisfied with their vacation time compared to 74% of private sector employees (a +17 point difference).

These stark disparities in satisfaction with retirement and health insurance benefits and vacation between government and private sector workers may indicate that government workers receive “above market” fringe benefits, meaning they receive more than what the market would pay. The fact that government and non-government workers report similar satisfaction with their salaries, but significant differences in non-salary perks raises the question if government employee compensation packages should be adjusted to match market offerings.

Research Assistant Nick Zaiac contributed to this post.

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In June I took note of Sen. Sheldon Whitehouse’s (D-R.I.) op-ed “urg[ing] the U.S. Department of Justice to consider filing a racketeering suit against the oil and coal industries for having promoted wrongful thinking on climate change, with the activities of ‘conservative policy’ groups an apparent target of the investigation as well.” I pointed out that this was a significant step toward criminalizing policy differences and using litigation and government enforcement to punish opponents in public debate, and meshed with an existing fishing-expedition investigation of climate-skeptic scholarship by Whitehouse and other Democrats on Capitol Hill. Others had already gone farther than the senator himself, calling for making “climate denial” a “crime against humanity,” holding public trials of fossil fuel executives for having resisted the truth, and so forth. (Gawker: “arrest climate change deniers.”) And I noted a recurring argument – “we did it to the tobacco companies, so there’s no reason we can’t do it here too” that tended to confirm my fears that the federal government set a dangerous precedent back then when it “took the stance that pro-tobacco advocacy could amount to a legal offense.”

Now there are further signs that a concerted campaign is under way. “Letter To President Obama: Investigate Deniers Under RICO” is the headline over a letter from twenty scientists, most at respected institutions, endorsing the Whitehouse idea and calling for the federal government to launch a probe under the racketeering (RICO) law. The letter was soon being widely promoted around the web, even at BoingBoing, often regarded as a pro-free-speech outlet.

It is not clear that all the scientists who signed the letter have thought carefully about the tension between what they are asking and the continuing freedom to pursue lines of inquiry in public debate that the government may find unwelcome or unreasonable.  “I have no idea how it affects the First Amendment” says one Vermont scientist who backs the probe, quoted by Bruce Parker of Vermont Watchdog. In a companion piece, Parker interviewed me about the constitutional implications of this extremely bad idea. (I should note that when I discuss RICO in the interview transcript, I’m referring to the civil-litigation side of the law, so-called civil RICO, which seems to be the part of the law the advocates hope to use.)

It is remarkable how many advocates of this scheme seem to imagine that the First Amendment protects only truthful speech and thus (they think) has no application here because climate skepticism is false. 

That’s not the way it works. As Cato and many others (compare ACLU of Ohio) argued at various stages in the case of Susan B. Anthony List v. Driehaus, which reached the Supreme Court on a different issue last year, controversial speech need not be true to be protected. In practice an “only truth has rights” approach chills advocacy generally and gives the state (or sometimes private litigants and complainants) a dangerous power to stifle advocacy in debates that it considers settled.

It is certainly strange to see many supporters of the Whitehouse approach suggest that the speech they dislike is actionable because they find in it half-truths, selectively marshaled data, scientific studies that spring from agendas, arguments whose ultimate sincerity is open to question, evasion of telling points made by the other side, and so forth. Those are the common currency of everyday debate in Washington (and not just in Washington). Nothing could be more common than to find both sides in an argument using these argumentative techniques. Hawks and doves do it; protectionists and free traders; labor interests and business interests. The same techniques are also accepted as standard currency within the adversary process itself, in which the law takes such pride, which makes it particularly absurd to propose defining it as unlawful racketeering to (quoting one paraphrase) “use dubious information to advance a cause.” The interview, again, is here.

[adapted from two recent posts at Overlawyered] 


Data from the Tax Policy Center show that 45 percent of U.S. households (“tax units”) will pay no federal income tax in 2015. That figure has risen in recent decades.

In raw numbers, 94 million households will pay some income tax in 2015, while 78 million will pay none. As the TPC table shows, virtually all higher-income households pay income tax, while the nonpayers are mainly in the bottom half.

Presidential candidate Donald Trump says that he would take another 31 million off the tax rolls, in addition to what he says are 42 million current nonpayers. As you can see, the Trump and TPC data do not match regarding the current number of nonpayers.

Let’s go with the TPC data. Adding tens of millions more nonpayers would push the total number over 100 million. There would be more “tax eaters” in America than taxpayers, at least in terms of the federal income tax.

To be fair, not all 100+ million nonpayers would be tax eaters. If someone paid no income tax, but also received no subsidies from the federal government, she could be called tax neutral. However, millions of moderate-income people receive the earned income tax credit (EITC), which is “refundable.” Those folks pay no income tax but get a check from the government when they file their tax return. They are tax eaters.

So a missing detail from the Trump proposal is his plan for the EITC. By zeroing out income tax for 31 million additional tax filers, he would automatically be boosting spending through the EITC. The refundable, or spending, part of the EITC is already $60 billion a year. Would Trump push that spending even higher?

I like many features of Trump’s overall tax plan. But taking more people off the tax rolls is not a good way to keep the government limited. If something is “free,” people will demand more of it. Under Trump, 31 million more households would have an incentive to demand more spending from Washington.

If WIRED magazine was looking to get the attention of the heads of American and British intelligence agencies, it has a story today that is sure to do the trick.

The magazine’s Andy Greenberg has a major piece about a new non-profit organization dedicated to encouraging morally troubled intelligence officers to resign and go public with any allegations or information they have that prove waste, fraud, abuse or criminal conduct at NSA or it’s UK equivalent, GCHQ. Known as, the organization has a professionally produced “resignation pitch” video featuring nationally-known security researcher and author Bruce Schneier and former NSA senior executive-turned-whistleblower Thomas Drake. The website of the Berlin-based organization provides a resignation letter generator, an FAQ on how and why to leave the intelligence business, and advice on how to use secure messaging means like Tor and PGP to communicate with staff. 

The launch of comes just over a year after the Institute for Public Accuracy, in conjunction with the Freedom of the Press Foundation, launched, a journalism project designed to encourage whistleblowers to use the SecureDrop system to submit classified or otherwise senstive or embarrassing government documents for review and possible publication by established media outlets. advisory board includes former Pentagon Papers whistleblower Daniel Ellsberg, former Associated Press journalist Robert Parry, and former State Department official Matthew Hoh, among dozens of others.

I have written previously about the rise of a “digital resistance movement” to the kinds of government mass surveillance programs exposed by Edward Snowden over two years ago. In the immediate wake of Snowden’s revelations, a number of public interests groups and civil liberties advocates renewed their calls for the public to adopt personal encryption technology to help shield themselves from warrantless, mass electronic surveillance by NSA. The establishment of and are a clear sign that opponents of mass surveillance are taking the conflict with the American and UK governments on this issue to a new level. Only time will tell whether those behind will succeed in motivating a current intelligence officer to become the next Edward Snowden.

In recognition of private philanthropy’s role in promoting human wellbeing, has just added a new category of data: charity.

Most people agree that charity is a good thing, but laws may restrict or dis-incentivize philanthropic action. Higher tax rates, for example, may negatively impact charitable giving. State-run welfare may also discourage charity, replacing “a welfare system of mutual aid based on reciprocity to one of paternalistic dependency based on hierarchy,” as David T. Beito has argued in his book, From Mutual Aid to the Welfare State.

In the United States, the structure of the welfare system may contribute to generational cycles of hardship. Jo Kwong of the Philanthropy Roundtable eloquently summarized the situation, describing how private philanthropy can be used to help people escape generational cycles of poverty and welfare-dependency, and make their way in the free enterprise economy.

How charitable is your country? Explore the data.

Chaos is spreading from the Middle East outward as hundreds of thousands of Syrian refugees pour into Europe. Over the last decade millions of Iraqis and Syrians have fled their homes. Western governments are proving far better at assigning blame than finding solutions.

The Republican Party meme is that every problem, including in the Middle East, is Barack Obama’s fault. According to the GOP, George W. Bush left America and the world secure. The feckless Obama administration allowed the collapse of Iraq and rise of the Islamic State.

These claims are self-serving, a political fantasy. The George W. Bush administration created many of today’s worst geopolitical problems.

First, President Bush used a terrorist attack conducted by Saudi citizens trained in Afghanistan as an excuse to invade Iraq, a long-time objective of neoconservatives as part of their plan to reorder the Middle East. Administration officials justified preventive war based on the claims of a dishonest informant provided by a crooked émigré hoping to rule Iraq.

War advocates planned to establish a liberal government aligned with the West, governed by an American puppet, and home to bases for U.S. military operations against its neighbors. These deluded plans came to naught.

Second, after ousting the Sunni dictator whose authoritarian rule held the nation together, the administration mishandled the occupation at every turn. The administration established a sectarian regime in Iraq as conflict flared and Iraq disintegrated. The administration underwrote the “Sunni Awakening,” through which Sunni tribes turned against al-Qaeda in Iraq, but Washington failed to achieve its objective of sectarian reconciliation.

Al-Qaeda in Iraq survived, mutating into the Islamic State. The Bush administration then became one of the Islamic State’s chief armorers when Iraqi soldiers fled before ISIS forces, abandoning their expensive, high-tech weapons which U.S. aircraft had to destroy last year.

Third, President Bush failed to win Iraqi approval of a continuing U.S. military presence and governing Status of Forces Agreement. Retired Army Chief of Staff Gen. Raymond Odierno explained: “us leaving at the end of 2011 … was always the plan, we had promised them that we would respect their sovereignty.” Attempting to stay would have been much worse.

Washington would have had leverage only by threatening to withdraw its garrison. U.S. troops would have had little impact on Iraqi political developments, unless augmented and deployed in anti-insurgency operations, which Americans did not support. And a continuing military occupation would have provided radicals from every sectarian viewpoint with a target.

The Obama administration has played a malign, but secondary, role. For instance, President Obama continued to back Iraq’s Maliki government despite the latter’s sectarian excesses. In Syria Washington inadvertently discouraged a negotiated compromise between Bashar al-Assad and the peaceful opposition by insisting on the former’s departure. Then, according to former Finnish president Martti Ahtisarri, the administration rejected a Russian initiative to ease Assad out of power.

The Obama administration turned Libya into another fulcrum of conflict.  Murderous Islamic State acolytes recently filled the void.

President Obama also put U.S. credibility on the line by making ISIS’s sectarian war in Iraq and Syria America’s own. The Obama administration became a source of weapons for the Islamic State after “moderate” insurgents backed by Washington repeatedly surrendered both personnel and arms to more radical forces.

Unfortunately, inadvertently promoting war rather than peace did not begin with the George W. Bush administration. In 1992 Washington torpedoed the Lisbon Agreement, negotiated by Britain’s Lord Peter Carrington and Portugal’s European Commission mediator Jose Cutileiro to end Bosnia’s civil war by providing extensive regional autonomy.

It is impossible to ignore the tragedy now overwhelming the Middle East. As I pointed out in National Interest online: “Washington bears substantial responsibility for the catastrophic conflict. George W. Bush made the most important decisions leading to the destruction of Iraq and rise of ISIL. No candidate unable or unwilling to learn from their disastrous mistakes is qualified to sit in the Oval Office.”

The notion that domestic regulations can have discriminatory impacts on imports (amounting to protectionism) isn’t controversial. Nor is it a revelation that having to comply with different sets of regulations in different jurisdictions that are intended to achieve the same safety or health or environmental outcome is superfluous and costly to businesses. Reducing or eliminating those kinds of costs could produce enormous saving. Indeed, many observers have suggested that the greatest gains from a TTIP agreement would come from a robust “regulatory coherence” outcome.

In today’s Cato Online Forum essay, trade scholar Simon Lester offers some much needed clarity about the substance and process of TTIP’s so-called regulatory coherence negotiations, while providing suggestions on how best to proceed.

Simon’s essay is offered in conjunction with a Cato Institute conference on the TTIP taking place October 12.  Read it. Provide feedback.  And please register to attend the conference.

It’s been a challenge to assess Donald Trump’s fiscal policies since they’ve been an eclectic and evolving mix of good and bad soundbites.

Though I did like what he said about wanting to pay as little tax as possible because the government wastes so much of our money.

On the other hand, some of his comments about raising tax burdens on investors obviously rubbed me the wrong way.

But now “The Donald” has unveiled a real plan and we have plenty of details to assess. Here are some of the key provisions, as reported by the Wall Street Journal. We’ll start with the features that represent better tax policy and/or lead to lower tax burdens, such as somewhat lower statutory tax rates on households and a big reduction in the very high tax rate imposed on companies, as well as a slight reduction in the double tax on capital gains.

…no federal income tax would be levied against individuals earning less than $25,000 and married couples earning less than $50,000. The Trump campaign estimates that would reduce taxes to zero for 31 million households that currently pay at least some income tax. The highest individual income-tax rate would be 25%, compared with the current 39.6% rate. …Mr. Trump also would cut the top capital gains rate to 20%, from the current 23.8%. And he would eliminate the alternative minimum tax. …For businesses, Mr. Trump’s 15% rate is among the lowest that have been proposed so far.

But there are also features that would move tax policy in the wrong direction and/or raise revenue.

Most notably, Trump would scale back certain deductions as taxpayers earn more money. He also would increase the capital gains tax burden for partnerships that receive “carried interest.” And he would impose worldwide taxation on businesses.

To pay for the proposed tax benefits, the Trump plan would eliminate or reduce deductions and loopholes to high-income taxpayers, and would curb some deductions and other breaks for middle-class taxpayers by capping the level of individual deductions, a politically dicey proposition. Mr. Trump also would end the “carried interest” tax break, which allows many investment-fund managers to pay lower taxes on much of their compensation. …The Trump plan would raise revenues in at least a couple of significant ways. It would limit the value of individual deductions, with middle-class households keeping all or most of their deductions, higher-income taxpayers keeping around half of theirs, and the very wealthy losing a significant chunk of theirs. It also would wipe out many corporate deductions. …The plan also proposes capping the amount of interest payments that businesses can deduct now, a change phased in over a long period, and would impose a corporate tax on future foreign earnings of American multinationals.

Last but not least, there are parts of Trump’s plan that leave current policy unchanged.

Which could be characterized as “sins of omission” since many of these provisions in the tax code - such as double taxation, the tax bias against business investment, and tax preferences - should be altered.

…the candidate doesn’t propose to end taxation of individuals’ investment income… Mr. Trump would not…allow businesses to expense all their new equipment purchases, as some other Republicans do. …All taxpayers would keep their current deductions for mortgage-interest on their homes and charitable giving.

So what’s the net effect?

The answer depends on whether one hopes for perfect policy. The flat tax is the gold standard for genuine tax reform and Mr. Trump’s plan obviously falls short by that test.

But the perfect isn’t the enemy of the good. If we compare what he’s proposing to what we have now, the answer is easy. Trump’s plan is far better than the status quo.

Now that I’ve looked at the good and bad policies in Trump’s plan, I can’t resist closing with a political observation.  Notwithstanding his rivalry with Jeb Bush, it’s remarkable that Trump’s proposal is very similar to the plan already put forth by the former Florida Governor.

I’m not sure either candidate will like my interpretation, but I think it’s flattery. Both deserve plaudits for proposing to make the internal revenue code less onerous for the American economy.

P.S. Here’s what I wrote about the plans put forth by Marco Rubio and Rand Paul.

There may be no sadder political spectacle than a Republican governor running for president. He knows nothing about foreign policy. But he panders to Neocons who dominate the GOP and expect the nominee to advocate perpetual war. Then his presidential campaign collapses.

So it was with Rick Perry. Now it is with Scott Walker, who last week abandoned his presidential bid.

The Wisconsin governor won some significant domestic political victories. He tried to compensate for his nonexistent foreign policy credentials by claiming to be tougher and meaner than any other Republican presidential candidate.

Walker assumed that to prosper “we need a safe and stable world.” Which was simple nonsense. When has the earth been “safe and stable”?

Naturally, Walker lauded Ronald Reagan, who deployed the military in only three limited actions. Reagan was appalled by the possibility of war. Neocons denounced him as an appeaser for dealing with the Soviet Union’s Mikhail Gorbachev and withdrawing from Lebanon’s civil war.

Walker contended that “America is not safer” than seven years ago. True, but mainly because of the dangerous military interventions he and other Republican candidates reflexively supported.

The Wisconsin governor talked in clichés: “We just need to lead again,” he declared. The U.S. did lead in Iraq, with disastrous results.

On the Islamic State Walker declared: “I’d rather take the fight to them than wait for them to bring the fight to us.” Alas, Walker confused ISIS with al-Qaeda. The latter attacked the U.S. The former wanted to create a state, which gave ISIS reason not to attack America—until the U.S. joined the Mideast’s latest sectarian war. Yet, argued Walker: “we have to be prepared to put boots on the ground.”

Walker wanted the U.S. to jump into the Syrian quagmire: train more “moderate” guerrillas, establish a no-fly zone, and create “a broader, U.S.-led regional coalition, with real buy-in and iron-clad guarantees from our allies that they will help us shoulder the burden.” The first has been a bust. The second would trigger much deeper American military involvement. The third is a joke.

The governor promised to tear up President Obama’s nuclear agreement on his first day in office. Then, he said, he would apply “crippling economic sanctions and convince our allies to do the same.”

How? America’s friends would be less than pleased with Washington leaving them high and dry. Nor would Tehran be likely to yield to American pressure, having responded to every previous U.S. rebuff by expanding its nuclear activities.

Walker also pledged to continue treating American defense policy as welfare. He echoed other GOP contenders in arguing that “we need to stand with our friends” since “our allies are among our greatest source of strength.” In fact, Washington collects allies like Facebook Friends. The Europeans, South Koreans, and Japanese all could defend themselves but don’t.

Of course, Walker wanted to spend more on the military, even though very little of the Pentagon’s effort actually goes for America’s defense. The bulk is devoted to defending wealthy allies, rebuilding failed societies, propping up dictatorial allies, engaging in foreign social engineering, and undertaking other similarly dubious tasks.

Being a superpower means America has interests everywhere, but few of them are vital or even important. Being a leader means distinguishing between critical and minimal interests.

 “America will not be intimidated,” Walker insisted. But that’s not the issue. Avoiding involvement in unnecessary wars is the issue. He claimed: “we can no longer afford to be passive spectators while the world descends into chaos.”

But as I pointed out for Forbes online, “there is little the U.S. can do to create order out of chaos. Far more often Washington inadvertently delivers disaster. It would be far better to stay out of foreign imbroglios instead.”

Other candidates likely soon will follow Walker out of the presidential race. Posing as uber-hawks is likely to work no better for them than for Scott Walker.