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The rise of new business models in online platforms and the sharing economy have inevitably been met with calls for more regulations. In his most recent budget, President Obama proposed to expand funding for efforts to “crac[k] down on the illegal misclassification of some employees as independent contractors.” Policymakers at the state and local levels have also called for more stringent regulations on these new business models.

Over the weekend, voters in Austin failed to overturn the city council’s ordinance that would impose a series of new regulations on ride-hailing companies operating in the city, from requiring drivers to go through fingerprint-based background checks, to restrictions detailing where drivers can stop for drop-offs and pickups. In response, Uber and Lyft announced that they had suspended operations in the city. In light of this rush to regulate, it is important to consider the people who rely on the opportunities made available by the new online platform economy. People utilize these platforms in different ways. Some participants offset fluctuations in traditional income to maintain their standard of living, while others use the platforms to rent out assets to supplement earnings from their traditional jobs. People from every age cohort and across the income distribution earn money through these new business models. New regulations that obstruct the development of the online platform economy could harm the many different people who choose to utilize those opportunities.

In one report from the JPMorgan Chase Institute, the authors analyzed anonymized data from 260,000 customers with earnings from any of 30 established online platforms and found that a growing number of people are participating, but that their reliance on these platforms has not increased. In other words, more people are using these new models, but not as full-time jobs. Earnings represented 33 percent of monthly income in labor platforms, in which participants are connected directly to customers, like Uber or Lyft. In the capital platforms where participants rent or sell to customers, like Airbnb, earnings represented only 20 percent of monthly income. So in neither component are most participants relying on earnings from these platforms as the majority of their income, for most people these aren’t full-time jobs.

Participating in the labor platform allows people to weather variations in their monthly income, as they can choose to work more hours to offset dips in other earnings. In months participants actively used the labor platform, those earnings accounted for an additional 15 percent of income, offsetting the 14 percent shortfall in non-platform income in those same months. As the authors note, this is in most cases a more attractive option than the old ones: look for a supplemental traditional job, reduce spending, or take on more credit. The capital platform is slightly different, in that those earnings tended to supplement traditional income, rather than replace it. So participants generally used the capital platform to try to increase their monthly income and raise their standard of living by utilizing the assets available to them. 

In a related report released last week, the authors find that while the percentage of adults with earnings from the online platform economy is fairly consistent across income quintiles, participants in the lower income quintiles are more reliant on these earnings, at least in the labor platform. Labor platform earnings account for more than 28 percent of total annual income for participants in the lowest quintile, compared to roughly 20 percent in the highest. Capital platform earnings, on the other hand, represent between 10.5 and 11 percent of annual total income across all quintiles.  

Percentage of Annual Income Earned Through Open Platform Economy, by Income Quintile and Type of Platform

Source: JPMorgan Chase Institute

Somewhat surprisingly, the authors find that while young people 18-24 were most likely to participate (5.2 percent), participants 55 and older are actually the group that derived the largest share of total income from these earnings. This suggests that workers in or near retirement could also be turning to these new business models as a supplemental source of income in lieu of continuing traditional work.

People of all ages and across the income distribution participate in the online platform economy. These business models have given these people new options and opportunities: some people use these platforms to replace unexpected reductions in other income that could otherwise cause serious problems. Older participants are turning to these platforms as a way to supplement their earnings and maintain their standard of living as they transition out of the workforce. Imposing more regulations on the online platform economy could limit or take away these opportunities.

 

America’s international position is distinguished by its alliance networks. Presidential candidates fear today’s dangerous world, but the United States is allied with every major industrialized power, save China and Russia. It is a position that Washington’s few potential adversaries must envy.

Yet as I pointed out in National Interest: “littering the globe with security commitments is costly. The U.S. must create a much bigger military to project force abroad to protect countries that often matter little for this nation’s security. Moreover, while policymakers hope to prevent war with treaty guarantees, the resulting tripwires ensure involvement if deterrence fails.”

Equally important, America’s involvement tends to turn friends and allies into dependents. The principle is the same as domestic welfare: Why should they do for themselves if they can get someone else to do so?

In his recent interview in the Atlantic, President Barack Obama complained: “Free-riders aggravate me.” Unfortunately, Washington has created a world filled with free- or at least cheap-riders.

The president recently visited one of the targets of his ire: Saudi Arabia. The royals long ago assumed the U.S. military would act as their de facto bodyguard. The first Gulf War was more about the Kingdom of Saudi Arabia than Kuwait. More recently, the “alliance” has dragged the U.S. into the KSA’s war in Yemen, which has gone from local civil war to regional sectarian conflict.

Content to spend barely one percent of its GDP on the military throughout the Cold War while facing the Soviet Union and Maoist China, Japan has started to do a bit more. It appears Tokyo is worried that Washington might not go to war with Beijing over the Senkakyu/Diaoyu Islands. Japan only recently passed legislation allowing its military to aid U.S. forces under attack. For decades, Japan’s only responsibility as an ally was to be defended.

Since the Korean War, the Republic of Korea has raced ahead of the North, with an economy as much as 40 times as large, a population twice as big, and a dramatic lead in technological prowess, international influence, and most every other measure of national power. Yet the ROK, facing a supposed existential threat, spends a lower percent of its GDP on the military than does America.

Then there are the Europeans. Foreign policy should be based on circumstances. After World War II, Western Europe was prostrate and Eastern Europe had been swallowed by the Soviet Union. Today the Europeans not only vastly outmatch Russia, their only potential antagonist, but they possess a larger economy and population than America.

Yet Washington’s desperate, even humiliating pleas for its allies to do more continue to fall on deaf ears. In fact, in all of these cases, the United States has variously insisted, demanded, and requested that its friends do more. When they did not, it often turned to begging and whining, with no greater success.

One could at least argue during the Cold War that it was in America’s interest to defend countries even if they would not protect themselves. No longer.

Yet the alliances commit America to go to war in defense of other nations’ interests. At the same time, such guarantees dissuade friendly states from doing more on their own behalf. If deterrence fails, as it often has throughout history, the good times will come to a dramatic and bloody end.

Washington has tolerated allied free-riding for far too long. It’s time for America to engage in burden-shedding rather than hope for burden-sharing. In its quest to maximize its number of allies, the United States has needlessly created a gaggle of dependents.

Should a federal court in Washington be guessing what common-law property rights a person has in New York, when there is a procedure in place that allows the federal court to ask the state’s highest court what the state law actually is? In Romanoff Equities v. United States, that’s exactly what the Court of Federal Claims (CFC, a special court that deals with monetary claims against the federal government) did, a “guess” that was subsequently affirmed on appeal.

The Romanoff family, as predecessors-in-title to a 1932 common-law right-of-way easement, had granted New York Central Railroad the right to “construct, operate and maintain” an elevated viaduct for the purpose of removing trains from pedestrian traffic in New York City. By the 1980s, however, the railroad no longer maintained the structure and, under the terms of the easement, the land and title were to revert to the Romanoff family. But the City of New York—wanting to convert the abandoned railroad viaduct into a recreational area (the High Line) that now includes taco trucks, salsa dancing, stargazing, retail shops, and other activities entirely unrelated to operating a railroad—asked the federal government to invoke the National Trails System Act and convert the easement into a public park.

The federal government granted the request, so the Romanoffs filed a lawsuit, arguing that converting the railroad right-of-way into a public park is a compensable taking under the Fifth Amendment. The Justice Department argued, and the CFC agreed, that the government’s conversion of the easement was not a taking because New York property law recognizes an “easement for anything” (!), allowing the City to use the property however it liked in perpetuity.

The Romanoffs took their case to the U.S. Court of Appeals for the Federal Circuit—a court of national jurisdiction that handles certain special appeals, including from the CFC—asking for “certification” to the New York Court of Appeals (the state’s highest court) for a proper interpretation of the easement. They argued that New York courts have never recognized an “easement for anything” and federal courts shouldn’t be inferring one. The Federal Circuit’s three-judge panel ignored the Romanoffs’ request that the court send the question to the state judiciary and instead upheld the CFC’s guess as to how a New York court would construe the easement.

The Romanoffs have now petitioned the Federal Circuit to hear the case en banc (all the judges on the court). In an amicus brief supporting that petition, Cato argues that novel or unsettled questions of state law, as in this case, should indeed be sent to a state’s highest court. When the Federal Circuit refused to certify the legal issue here, it made new law for the state of New York, violating principles of judicial federalism.

This case also has enormous consequences for property owners who have to litigate their constitutional claims in the CFC, a court of national jurisdiction. There are vast differences in how individual states treat property rights. Federal judges in Washington—who (understandably) have little familiarity with this varied jurisprudence—should not be fashioning state law with no basis in state-court precedent.  

Thanks to legal intern (soon to be legal associate) Frank Garrison for help with this blogpost, and our brief in the case.

[Reprinted with permission from Alan Reynolds, “What Do We Know about the Great Crash?National Review, November 9, 1979]

 Many scholars have long agreed that the Smoot-Hawley tariff had disastrous economic effects, but most of them have  felt  that  it could  not have caused the stock market collapse of  October  1929, since the tariff was not signed into law  until the following June. Today we know that market participants do not wait for a major law to pass, but instead try to anticipate whether or not it will pass and what its effects will be.

 Consider the following sequence of events:

 The Smoot-Hawley tariff passes the House on May   28, 1929.  Stock prices in New   York   (1926=100) drop   from 196 in March to 191   in June.   On June   19, Republicans   on the Senate Finance Committee   meet   to   rewrite   the   bill. Hoping for improvement, the market rallies,  but  industrial production  ( 1967 = 100)  peaks  in  July,  and  dips  very  slightly through  September.  Stocks  rise  to  216  by  September,  hit­ting their peak on  the  third  of  the  month.  The  full  Senate Finance Committee goes to   work  on  the  tariff  the  following day,  moving  it  to  the  Senate  floor  later  in  the   month.

 On October 21, the Senate rejects, 64 to 10, a move to limit tariff increases to agriculture. “A weakening of the Democratic-Progressive Coalition was evidenced on October 23,” notes the Commercial and Financial Chronicle. In this first test vote, 16 members of the anti-tariff coalition switch sides and vote to double the tariff on calcium carbide from Canada. Stocks collapse in the last hour of trading; the following morning is christened Black Thursday.   On  October 28,  a  delegation   of   senators   appeals   to   President   Hoover to help push a tariff  bill  through  quickly  (which  he  does  on the 31st). The Chronicle  headlines  news  about  broker  loans on  the  same  day:  “Recall  of  Foreign  Money  Grows  Heavier-All Europe  Withdrawing  Capital.” The following day is stalemate. Stocks begin to rally after November 14, rising steadily from 145 in November to 171 in April. Industrial production stops falling and hovers around the December level through March.

On March 24, 1930, the Senate passes the Smoot-Hawley tariff, 222 to 153. Debate now centers on whether or not President Hoover will veto. Still, stocks drop 11 points, to 160, in May. On June 17, 1930, despite the vigorous protests of a thousand economists, Hoover signs the bill into law, noting that it fulfills a campaign promise he had made, and stocks drop to 140 in July.

 The Commercial and Financial Chronicle dated June 21, 1930 led off  with  the major  events  of  the  week –”the signing by the President of  the  Smoot-Hawley  tariff  bill” and “a renewed violent collapse of the stock market.” Without ever quite linking the two events, the Chronicle did observe that “if the foreigner cannot sell his goods to us he cannot obtain the wherewithal to buy our goods.” Other sections noted  that  international  stocks  were  particularly hard hit, that 35 nations had vigorously  protested  the tariff and threatened retaliation, and that Canada and other  nations had already hiked their own tariffs “in view of the likelihood of such legislation in the United States.”

 It may be hard to realize how international trade could have so much impact on the domestic economy.  For years, in explaining income movements in the Thirties, attention has instead been focused on federal spending and deficits. Yet on the face of it, trade was far more important: exports fell from $7 billion in 1929 to $2.5 billion in 1932; federal spending was only $2.6 billion in 1929 and $3.2 billion in 1932. In 1929, exports accounted for nearly seven percent of our national production, and a much larger share of the production of goods (as opposed to services). Trade also accounted for 15 to 17 percent of farm income in 1926-29, and farm exports were slashed to a third of their 1929 level by 1933.

 Even these numbers, however, understate the significance of trade. Critical portions of the U.S. production process can be crippled by a high tax on imported materials. Other key industries are heavily dependent on exports.  Disruptions in trade patterns then ripple throughout the economy.  A tariff on linseed oil hurt the U.S. paint industry, a tariff on tungsten hurt steel, a tariff on casein hurt paper, a tariff on mica hurt electrical equipment, and so on. Over eight hundred things used in making automobiles were taxed by Smoot-Hawley. There were five hundred U.S. plants employing sixty thousand people to make cheap clothing out of imported wool rags; the tariff on wool rags rose by 140 per cent.

 Foreign countries were flattened by higher U.S. tariffs on things like olive oil (Italy), sugar and cigars (Cuba), silk (Japan), wheat and butter (Canada).  The impoverishment of foreign producers reduced their purchases of, say, U.S. cotton, thus bankrupting both farmers and the farmers’ banks.

It should be obvious that an effective limit on imports also reduces exports. Without the dollars obtained by selling here, foreign countries could not afford to buy our goods (or to repay their debts). From 1929 to 1932, U.S. imports from Germany fell by $181 million; U.S. exports to Germany fell by $277 million. Americans also had little use for foreign currency, since foreign goods were subject to prohibitive tariffs, so the dollar was artificially costly in terms of other currencies. That too depressed our exports, which turned out to be particularly devastating to farmers-the group that was supposed to benefit from the tariffs.

 There had already been some damage done (particularly to farm exports) by the tariff legislation of 1921 and 1922. As Princeton historian Arthur Link points out, however, “its only important changes were increased protection for aluminum, chemical products, and agricultural commodities.” Smoot-Hawley broadened the list to include 3,218 items (including sauerkraut), and 887 tariffs were sharply in­creased, on everything from Brazil nuts to strychnine. Clocks had faced a tariff of 45 percent; Smoot-Hawley raised that to 55 percent, plus up to $4.50 apiece. Tariffs on corn, butter, and unimproved wools were roughly doubled. A shrinking list of tariff-free goods no longer included “junk,” though leeches and skeletons were still exempt.

 A crucial consideration is that many tariffs were a specific amount of money per unit rather than a percentage of the price. As prices of many traded goods fell by half (or more) from 1929 to 1933, the effective rate of tariff doubled. If imported  felt  hats  sold  for  $5,  including  a tariff  of  $2.50, a fall in  price to $2.50 would confiscate the entire revenue from selling in the U.S. market. Without the dollars from selling in the U.S. market, the foreign hat manufacturer couldn’t buy anything here.

A number of seemingly separate explanations of the Great Crash fit together quite well once the importance of anticipated tariffs is acknowledged.  Charles  Kindleberger, in Manias,  Panics,  and  Crashes,  describes  some  structural collapse in the financial system: “Lending on  import,  for example, seems to have come to a  complete  stop.” But refusal to finance imports makes perfect sense if lenders were correctly anticipating steep tariffs ahead. There were early cancellations of import orders in 1929 that likewise reflected rational expectations, and import prices were among the first to fall.

A lot of stock was being bought on margin-that is, the buyer put up 25 to 50 per cent of the price and his broker went to the bank to borrow enough to cover the rest temporarily. The chairman of the Federal Reserve Board had warned the banks to curb these broker or “call” loans as early as February 1929, and the Fed nearly doubled the discount rate from 1927 to August 1929, partly in the hope of curbing stock market “speculation.” Most of the  broker loans in  1928-29 were not from the banks themselves,  how- ever, but were instead re-lent to brokers  on  behalf  of  domestic business and  foreign  banks,  businesses,  and  individuals.

 The massive withdrawal of foreign lenders from the broker-loan market in early October probably   reflected the correctly anticipated decline in the value of the collateral for those loans (stocks), and the fear among foreign capitalists that they would have to liquidate such assets to stay solvent in a world of high tariffs.  The process contributed to the crash as both cause and effect. There was a scramble for liquidity by both the lenders and the owners of stocks. As stock prices fell, brokers required that their customers put up more money to meet the margin requirement. If stockholders couldn’t come up with the cash, brokers could sell the securities to raise the money.  Either way, owners and brokers were pressed to unload stocks, thus perhaps accelerating (but not causing) the stock market decline.

The market suffered continual policy assaults after 1930. In early April of 1932, the Commercial  and  Financial Chronicle  reports  “the  market  fell  into  a complete  collapse . .  .  owing  to  the  approval  by  the  House  of  Representatives of an increased tax on stock  sales.”  The  Dow  bottomed  on July 8, when (as  the  Chronicle  of  the  following  day  reported)  there  had  been  some  good   news –the  Tariff   Commission  had  trimmed  18   tariffs,   and   a   House   subcommittee was looking into ways to cut  taxes  by  eliminating  duplication with states.  On  Tuesday,  September  19,  candidate Roosevelt  called   the  tariff  “the  road   to  ruin”  and  pledged to negotiate reductions in tariffs  as  soon  as  he  took  office. The following Saturday, the Chronicle was   astounded  that the “market again sharply reversed its course, and on Wednesday prices suddenly surged upward in a most sensational fashion.”

 

 

 

 

“A deeper reason for the failure of progressives to unite ideologically in the 1920’s was what might be called a substantial paralysis of the progressive mind… .[They] fought so hard all through the 1920’s against Andrew Mellon’s proposals to abolish the inheritance tax and to make drastic reductions in the taxes on large incomes. [Yet] the progressives were hard pressed to justify the continuation of nearly confiscatory tax levels.”

–Arthur S. Link, “What Happened to the Progressive Movement in the 1920s?” American Historical Review 64 (1959): 851-883. http://www.jstor.org/stable/1905118

You Ought to Have a Look is a feature from the Center for the Study of Science posted by Patrick J. Michaels and Paul C. (“Chip”) Knappenberger.  While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic.  Here we post a few of the best in recent days, along with our color commentary.

We sign in this week with a look at how this year’s global temperature is evolving as the big Pacific El Niño begins to wane. The temporary rise in global temperature that accompanies El Niño events is timed differently at the surface than it is in the lower atmosphere. Thus, while El Niño-boosted warmth led to a record high value in the 2015 global average surface temperature record, it did not fully manifest itself in the lower atmosphere (where the 2015 temperatures remained well below record levels).

But now that warmth is being fully felt aloft. The figure below is the satellite-measured global average temperature history of the lower atmosphere as compiled from the University of Alabama-Huntsville (UAH). The El Niño-spiked temperatures are clearly obvious in the first four months of 2016 (the rightmost points in the graph).

Figure 1. Global average satellite-based temperatures of the lower atmosphere from January 1979 through April 2016, as compiled by researchers at the University of Alabama-Huntsville.

Dr. Roy Spencer, who along with Dr. John Christy, curates the UAH satellite temperature record, has this to say on his blog regarding what to expect for the rest of the year and how the 2016 annual temperatures may ultimately rank:

I expect average cooling to continue throughout the year as El Nino weakens and is replaced with La Nina, now expected by mid-summer or early fall. Nevertheless, 2016 could still end up as a record warm year in the satellite record…it all depends upon how fast the warmth from the El Nino dissipates and La Nina sets in.

Early indications are also that global average surface temperature are continuing to feel the effect of the big, but dying, El Niño, and remain elevated into record territory.

So, it won’t be too surprising to be reading headlines the end of the year screaming “2016 Hottest Year Ever”—but it’s probably too much to hope that the authors of the underlying story correctly attribute the cause. But, we’re sure their memory will be jogged, and they’ll be full of excuses, when the La Nina cooling sets in and post-El Nino temperatures drop below record levels in 2017 (and likely many years thereafter).

Next up is a quick look at the updated numbers from the United Nations in regards to just how much global greenhouse gas emissions will be impacted if all nations of the world abide by the emissions reductions scheduled promised in their Intended Nationally Determined Contributions (INDC) that they submitted under the Paris Climate Agreement. There is only a slim possibility that these schedules will be adhered to—for instance, in the U.S., all indications are that we overpromised. Unkept promises aside, the U.N. reports that total global emissions of greenhouse gases will be 55.0 Gt (Metric gigatons) CO2eq (equivalent emissions scaling all greenhouse gas absorption to the value for carbon dioxide) in 2025 and 56.2 GtCO2eq in 2030. 

In the figure below, we superimpose those expectations on the U.N.’s Intergovernmental Panel on Climate Change (IPCC) depictions of business-as-usual (“baseline”) projections described by the IPCC as “projections of GHG [greenhouse gas] emissions and their key drivers as they might evolve in a future in which no explicit actions are taken to reduce GHG emissions.” It should be clear from this graph, that, as we have been fond of saying all along, the sum total of all the INDCs under the Paris Climate Agreement amounts to little more than business-as-usual expectations. But now, to make it look like everyone is “doing something” about climate change, the expected evolution of economic systems is being rebranded as “climate action.” Maybe that makes everyone feel better.  In reality, only the US and the EU have proposed significant (and significantly expensive) reductions.

Figure 2. Greenhouse gas emissions expected under the Paris Climate Agreement (red) superimposed upon IPCC business-as-usual expectations.

 

Next we turn to an enlightening piece by a team of analysts at the Mercatus Center at George Mason University examining the cumulative cost of government regulations—and it isn’t pretty. They calculate that that federal regulations retard economic growth in the U.S. by about 0.8% per year—or to the tune of a GDP that is $4 trillion less in 2012 than it would have been absent new regulation imposed since 1980, adding that “[i]f the cost of regulatory accumulation were a country, it could have the 4th largest GDP in the world.” Here is an excerpt from the summary: 

Using a 22-industry dataset that covers 1977 through 2012, the study finds that regulation—by distorting the investment choices that lead to innovation—has created a considerable drag on the economy, amounting to an average reduction in the annual growth rate of the US gross domestic product (GDP) of 0.8 percent.

Federal regulations have accumulated over many decades, piling up over time. When regulators add more rules to the pile, analysts often consider the likely benefits and compliance costs of the additional rules.

But regulations have a greater effect on the economy than analysis of a single rule in isolation can convey. The buildup of regulations over time leads to duplicative, obsolete, conflicting, and even contradictory rules, and the multiplicity of regulatory constraints complicates and distorts the decision-making processes of firms operating in the economy. Firms respond to both individual regulations and regulatory accumulation by altering their plans for research and development, for expansion, and for updating equipment and processes. Because of the important role innovation and productivity growth play in an economy, these distortions have consequences for the growth of the economy in the long run.

Economic growth in the United States has, on average, been slowed by 0.8 percent per year since 1980 owing to the cumulative effects of regulation:

● If regulation had been held constant at levels observed in 1980, the US economy would have been about 25 percent larger than it actually was as of 2012.

● This means that in 2012, the economy was $4 trillion smaller than it would have been in the absence of regulatory growth since 1980.

● This amounts to a loss of approximately $13,000 per capita, a significant amount of money for most American workers.

The gory details are provided in the full report authored by Bentley Coffey, Patrick A. McLaughlin, and Pietro Peretto.

And, finally, before signing off, we want to make sure that if you are looking for rational looks at the allegations of climate change-driven catastrophes in the news this week, you’ll know where to find them. Here is a good story from the A Chemist in Langley blog that throws water on the claims that anthropogenic climate change is behind Canada’s Ft. McMurray fire, and here’s some good background from the New Orleans Geological Society on the myriad of non-climate forces behind the drowning Isle de Jean Charles (telling the story that the New York Times didn’t).

You ought to have a look!

It’s legacy-polishing season for the Obama administration, with the president making himself available for “articles that will allow [him] to showcase his major achievements,” the New York Times reports. Over at Time.com, I have a piece on what I think will turn out to be Obama’s lasting legacy: the evisceration of virtually any remaining legal limits on the president’s power to wage war abroad.

As I note in the column, it’s unlikely that “history” will judge our 44th president harshly because of that. After all, “when it comes to presidential legacies, ‘history’ has lousy judgment.”

More specifically, the academics charged with evaluating presidential legacies have lousy judgment. A look at the presidential rankings reveals that the scholars who fill out the scorecards hardly subscribe to the historian-as-“hanging-judge” theory. Bill Kauffman’s arch description of the rankings is more accurate: “polls by which court historians reward warmarkers and punish the peaceful.” The odious Woodrow Wilson is a perennial top 10 favorite, while his normalcy-securing successor, Warren Harding, is nearly always dead last. Say what you will about Wilson’s brutality and contempt for civil liberties at home, his senseless waste of life abroad–at least the man dreamed big! Teapot Dome, however? Unforgivable. 

During the last presidential election cycle, CNN asked some leading presidential historians to opine on the theme “What is ‘presidential greatness’?” Their answers reveal a perverse favoritism toward activist, warrior presidents.

 

  • “In good times or bad, a president is expected to do something!” says presidential biographer Richard Reeves: sometimes, as with the Cuban Missile Crisis, “he does the right thing and becomes great for it.” The “right thing” in this case, apparently, was bringing the world to the brink of thermonuclear war over a missile deployment that Kennedy knew had no strategic consequence, but would have made him look bad politically.

 

  • Aida Donald, author of Lion in the White House: A Life of Theodore Roosevelt, informs us that “Harry Truman was also a great president, because he was commander in chief in a great war.” That would be Truman’s “police action” in Korea, launched without congressional authorization, in which over 33,000 U.S. servicemen died.

 

  • And historian H.W. Brands, while noting that “being a good president” should be “good enough,” squelches that sensible point with another atrocious example: “James Polk broke the impasse over expansion to the Pacific.” Polk did that by “unnecessarily and unconstitutionally” launching a war—as a young congressman named Abraham Lincoln pointed out—to steal land from Mexico.

 

Presidential scholars tend to wax messianic when they mull “presidential greatness.” In their book on the subject, the scholars Marc Landy and Sidney Milkis write that the great ones demonstrate the wherewithal “to engage the nation in a struggle for its constitutional soul.” 

The president described in the Federalist Papers is a humbler figure, possessing “no particle of spiritual jurisdiction.” His actual job description, contained in Article II’s oath of office, is to “preserve, protect and defend” the nation’s fundamental law.

If historians used that metric, Obama would have reason to worry about his legacy. As it stands, though, he’ll probably do just fine. 

Writing for FT.com’s “The Exchange” blog, economists Diane Coyle and Jonathan Haskel suggestthat Britain’s regulators — namely, the Competition and Markets Authority and the Bank of England — have got it wrong on competition in banking.  The authors argue that “the CMA and the BoE” have overlooked “the ruinous effect on competition of the ‘too big to fail’ subsidy” in their recent reports and policy announcements, and that, if anything, it is becoming “harder than ever for new entrants to gain a foothold” in the banking market.

In my view, Coyle and Haskel are right, but their argument doesn’t go far enough.

Let’s start with the basics: what is the too-big-to-fail subsidy, and how does it affect competition in banking?  The fundamental idea is that the bigger a bank is, the more likely it is to be bailed out if it runs into trouble.  The events of the 2008 financial crisis seem to confirm this, as do the assumptions of government assistance that some rating agencies build into their “support” ratings.  And as the 2011 report of Britain’s Independent Commission on Banking points out:

If one bank is seen as more likely to receive government support than another this will give it an unwarranted competitive advantage.  As creditors are assumed to be less likely to take losses, the bank will be able to fund itself more cheaply and so will have a lower cost base than its rival for a reason nothing to do with superior underlying efficiency.

The result is that small banks struggle to compete against larger rivals, while market entrants have difficulty establishing themselves against privileged incumbents.  All of this makes the banking sector less dynamic — and more comprehensively dominated by large, established firms — than it might otherwise be.

As Coyle and Haskel see it, however, Britain’s CMA thinks the problem has already been solved: that the competitive playing field has been leveled by the Bank of England’s proposed “systemic risk buffer,” according to which larger banks must hold more equity capital against their risk-weighted assets than smaller competitors.  In consequence, the CMA’s October 2015 provisional report on Britain’s retail banking market mostly ignored the too-big-to-fail problem, focusing instead on the rather more mundane question of how consumers can be encouraged to switch bank accounts more often.

Yet the CMA’s position is mistaken, say Coyle and Haskel, for three reasons.  First, switching bank accounts doesn’t always make sense for consumers: in the UK, at least, one bank account is pretty much the same as another, so consumers’ status quo bias is often quite rational.  Second, the level of additional capital big banks must hold as a systemic risk buffer is not high enough to outweigh the funding benefits that accrue from being too-big-to-fail.  Third, the stepped schedule of systemic risk buffer requirements outlined by the Bank of England might make big banks less likely to compete with each other, by effectively creating high marginal tax rates when banks move from one “systemic risk buffer” tier to another.  As Coyle and Haskel say, “This might restrain the emergence of gargantuan banks, but the purpose of competition is to promote rivalry, not hold up expansion at arbitrary regulator-determined thresholds.”

So far, so good.  But there’s a bigger picture here that Coyle and Haskel don’t see, or at least fail to mention.  For one thing, it isn’t just lower funding costs that make too-big-to-fail such an anti-competitive doctrine.  In fact, the very act of bailing out a failing institution itself constitutes a powerful strike against market competition.  As Europe Economics’ Andrew Lilico has put it, “company failure is an essential and ineliminable part of the competition process.  One of the most important obstacles to new entry in the banking sector, impeding competition, is that failing banks are saved by the government.”  If you want smaller banks to grow, and new banks to prosper, in other words, you can’t keep saving their bigger rivals from the consequences of bad investments.

More important still are the grounds upon which banks compete.  And it’s here that our financial regulatory authorities have the most to answer for.  Yes—of course—banks should compete with one another to provide the best possible service at the best possible price.  In an ideal world, however, banks would compete on something else as well: namely, their safety, stability, and reliability.  That banks do not tend to compete on these grounds today is testament to the fact that their depositors, bondholders, and shareholders do not see the need to pay attention to such things.  “Regulatory badging,” that illusory sense that banks must be safe because they are subject to regulators’ oversight, means that people seldom ask how highly-leveraged their banks really are.  Deposit insurance means they might not care about the answer, even if they ask the question.  And too-big-to-fail compounds the problem: if your bank is going to be bailed out, why worry about its risk profile?  No amount of regulatory oversight can compensate for this loss of competitive market discipline.

Ultimately, then, Coyle and Haskel are right to stress the importance of competition: if financial stability is the goal, then competition must be central to any banking reform agenda worthy of the name.  But before regulators can be part of the solution, they must understand the ways in which they are part of the problem.  And that, alas, has yet to happen.

[Cross-posted from Alt-M.org]

On the heels of a National Transportation Safety Board (NTSB) report that found that Washington Metro “has failed to learn safety lessons” from previous accidents, Metro general manager Paul Wiedefeld will announce a plan today that promises to disrupt service for months in an effort to get the lines safely running again. While ordinary maintenance can take place during the few hours the system isn’t running every night, Wiedefeld says past officials have let the system decline so much that individual rail lines will have to be taken off line for days or weeks at a time to get them back into shape.

The Washington Post blames the problems on “generations of executives and government-appointed Metro board members, along with Washington-area politicians who ultimately dictated Metro’s spending.” That’s partially true, but there are really two problems with Metro, and different parties are to blame for each.

First is the problem with deferred maintenance. The Metro board recognized that maintenance costs would have to increase as long ago as 2002, when they developed a plan to spend $10 billion to $12 billion rehabilitating the system. This plan was ignored by the “Washington-area politicians who ultimately dictated Metro’s spending” and who decided to fund the Silver and Purple lines instead of repairing what they already had.

Second is the problem with the agency’s safety culture, or lack of one. According to the NTSB report, in violation of its own procedures, Metro used loaded passenger trains to search for the sources of smoke in the tunnels. Metro at first denied doing so, then said it wouldn’t do it any more. But Metro’s past actions sent a signal to employees that passenger safety isn’t important.

The safety problem can be blamed on the executives and board. So it’s no surprise that Secretary of Transportation Anthony Foxx has replaced three board members with people who, he hopes, will place a higher priority on safety than the board members he fired.

Transit unions, meanwhile, deny that they are responsible for any of the problems. Yet demands for high pay, sorting of employees into different categories that sometimes rival one another, and other union-led practices probably contributed to both the safety problems and the funding shortages. Four track workers were killed by trains in 2005 and another in 2009, suggesting that train operators were careless with the lives of fellow employees, which probably discouraged track workers from effectively doing their jobs.

Ultimately, both the safety and maintenance problems can be traced to the fundamental flaws of socialized transportation. Where systems funded out of user fees would build no more than people are willing to pay for, political decisions led Washington and other regions to build hundreds of miles of expensive rail lines they can’t afford to maintain.

Where managers of systems funded out of user fees tend to do a better job at maintenance, political decisions failed to provide Metro with the money it needed to keep trains operating. Where user-fee driven systems learn quickly to motivate their employees to work safely and efficiently, political decisions put people on the Metro board who were more in love with their transit fantasies than the reality of managing more than 10,000 employees.

General manager Wiedefeld may be able to correct some of the maintenance problems by disrupting service over the next year, but it is unlikely that he will have the funds to fix all of them. Even if he had all the money he needed, it will take more than money to create a system that is more responsive to user needs than to contractors, unions, and politicians.

Contrary to the judiciary’s reputation as the least dangerous branch, judges exercise almost every executive and legislative power other than going to war. This is why the battle over Antonin Scalia’s successor is so bitter.

That wasn’t the Constitution’s original plan. The courts were important but were not to supplant the other branches. Rather, judges were expected to constrain the executive and legislative branches.

Alexander Hamilton expected the judiciary to play a “peculiarly essential” role to safeguard liberties and act as an “excellent barrier to the encroachments and oppressions of the representative body.” Judges were to “guard the Constitution and the rights of individuals” from “the people themselves.”

James Madison, intimately involved in drafting the Constitution, explained that: “independent tribunals of justice will consider themselves in a peculiar manner the guardians of [Bill of Rights guarantees]; they will be an impenetrable bulwark against every assumption of power in the legislative or executive; they are will be naturally led to resist every encroachment upon rights expressly stipulated for in the constitution by the declaration of rights.”

The judges who assert these vast powers enjoy lifelong immunity from accountability. This means that whoever succeeds Scalia still could be writing opinions at mid-century.

Unfortunately, actuarial accident determines who serves. Scalia’s death gave President Barack Obama an opportunity to shift the Supreme Court leftward, unless the Senate stops him. The Constitution gives the Senate the power to advise and consent. That body is empowered to say no.

The most important qualification for judicial office is philosophical. Put simply: does the nominee believe the Constitution means anything apart from the jurists’ personal preferences? If not, then the Senate should reject the nomination.

Of course, Democrats are demanding Senate approval of Judge Merrick Garland, despite some disquiet among left-wing activists. Yet, as a senator, Barack Obama opposed (and backed a filibuster against) George W. Bush’s nominees. Sen. Chuck Schumer (D-NY) advocated refusal to accept any Bush II nominee.

Nevertheless, no one really benefits from politicizing judicial nominations and refusing to fill vacancies for partisan reasons. There is an obvious answer: appoint jurists for a set term in office, perhaps ten years. No longer would the state of American medicine typically determine which president gets to fill the high court.

Jurists still would be independent. And bad justices could be gone in ten years. Set terms also would ensure a steady stream of new justices. That likely would result in a more diverse membership in terms of career, background, and perspective.

Most important, there might be more philosophical variety. Unfortunately, “mainstream” justices generally back the steady expansion of the state, treating the Constitution as creating only small islands of liberty in the midst of a vast ocean of government power.

While term limits would not guarantee better jurisprudence, a larger number of appointees would increase the likelihood of at least a few advocates of an active court dedicated to enforcing the Constitution’s liberty guarantees.

Finally, fixed terms would moderate battles over Supreme Court appointments. Losing the fight over Scalia’s replacement would not mean the possibility of 30 or more years of hostile decisions.

Appointees also might improve. Today, presidents look for safe and confirmable choices with nondescript views or no paper trail. With limited tenure, presidents could take greater risks in who they nominate.

Judicial terms would require a constitutional amendment. However, the issue could unite right and left. As I argued on American Spectator: “Fixed terms for jurists is the best way to both preserve independence and impose accountability.”

Today the FDA issued new rules regarding the sale and production of e-cigarettes and e-cigarette “juice” (the nicotine solution that e-cigs vaporize). The regulations will severely hamper a thriving and highly competitive market, and “big tobacco” is jumping for joy.

It is often difficult to explain to non-free-market types how and why big business loves big government. The song is always the same: we need big government to stop and control big business. Today’s rule offers a great lesson in why that isn’t always the case.

Like most big companies, big tobacco is stuck in a rut–namely, traditional tobacco. When billions of dollars are invested in infrastructure to produce a single product, it is very difficult to shift that behemoth to a new line of production when the product becomes obsolete or unpopular. Thus, small businesses are often, if not usually, the first movers when it comes to innovation. Blockbuster Video, with a costly commitment to brick and mortar video stores, could hardly have been expected to change its entire business model to rental-by-mail or streaming. By the time the threat of  Netflix became existential, it was too late. Many times, when big businesses are in such a situation, one of their last ditch efforts will be to use government to prohibit or hamstring their competitors.

Big tobacco has had a similar problem for some time now. They’ve seen smoking rates fall precipitously, and all future projections show smoking rates continuing to fall. Imagine running a business where the demand to “grow, grow, grow” is belied by an inevitable and irresistible decline. So what do you do? Well, you try to expand into new products such as snus and e-cigarettes.

Yet big tobacco had the same problem that Blockbuster had with Netflix. They weren’t the first movers on e-cigarettes. As they continued to try to plow a field that had grown barren, small companies began to produce e-cigarettes, and people began to use them.

Full disclosure: I’m one of those e-cigarette smokers. What some have pejoratively called a “wild west” situation in desperate need of top-down regulation is actually a thriving market concerned with safety, innovation, and satisfying rapidly changing consumer preferences. There are sub-ohm vapes (huge clouds of smoke), vaporizers that look like lightsabers, vaporizers with variable voltages, and many others, not to mention the proliferation of juice flavors. My preferred vaporizer company, Halo Cigs, is constantly altering its products for better consumer satisfaction and safety.

There are more companies than I can even name. “Vapers” compare their gear, discuss battery life, trade flavors, mix flavors, and generally engage in a highly informed and oddly passionate consumer market.

With today’s rule, that will almost assuredly stop. We will be telling our kids stories about how people used to be “allowed” to just vaporize “anything.” They will look at us quizzically and laugh, unable to comprehend such a silly thing because the FDA–starting today–will begin building up an apparatus of control and prohibition that will make it nearly impossible for future generations to imagine what it was like. “Doctors used to make house calls,” my grandma once told me, and I didn’t believe her.

But big tobacco is jumping for joy. Like many big businesses, they were slow to see the wave of change that was coming. But once they saw it, they jumped on it. Altria (Philip Morris) only recently purchased a prominent e-cig manufacturer, and they’ve long supported the FDA’s regulation of “tobacco products” because “an increasing number of scientists and public health officials are advocating for more clear communications about the relative risks of tobacco products so adult tobacco consumers can make informed choices about them.”

Language like that is just an anti-competitive catechism. They say “consumer choice and confidence,” but it is really about putting competitors out of business through onerous regulations and requirements that only big tobacco has the resources to satisfy. According to the American Vaping Association, under the new rules “submitting an application to get a product approved would take more than 1,700 hours and cost more than $1 million.” With the stroke of a pen, the FDA will eventually put hundreds of e-cigarette producers out of business. 

What we’ve seen is a traditional bootleggers and Baptist coalition: anti-smoking crusaders team up with big tobacco to heavily regulate an emerging market. As Jonathan H. Adler, Roger E. Meiners, Andrew P. Morriss, and Bruce Yandle recently wrote in Regulation magazine:

A Bootleggers and Baptists coalition favors the regulation of e-cigs. The coalition is composed of the tobacco companies (Bootleggers) that see their market threatened by a new product, health advocates (Baptists) who oppose e-cigs and wish to see them strictly regulated or prohibited, and state governments (Bootleggers) that have sold bonds backed by tobacco tax revenue that are threatened by the decline in cigarette sales.

In addition, as Jacob Sullum at Reason writes, e-cigarettes are harm-reducers, and making them harder to get could likely result in more cigarette smokers. Personally, I’ve reduced my traditional smoking by about 90 percent with e-cigarettes. I’ve crafted a flavor and become fond of a vaporizer that meets my needs. Yet my preferred company, and hundreds others, are unlikely to weather this storm.

Welcome back, big tobacco.     

Two years ago Russia detached Crimea from Ukraine. Since then the Western allies have imposed economic sanctions, but to little effect. No one believes Crimea, Russian until six decades ago, is going back to Ukraine.

Yet the European Union called on other countries to join its ineffective boycott. However, most nations have avoided the controversy. They aren’t going to declare economic war on a faraway nation which has done nothing against them.

Although Washington, with less commerce at stake, remains among the most fervent advocates of sanctions, Europe is divided over the issue. Opposition has emerged to routine renewal in July of restrictions on Russia’s banking, energy, and military industries. Particularly skeptical of continued economic war are Cyprus, Greece, Hungary, and Italy.

Sanctions supporters insist that Russia more fully comply with the Minsk peace process and end support for the separatist campaign in Ukraine’s east. “Today Russia faces a choice between the continuation of economically damaging sanctions and fully meeting its obligations under Minsk,” contended Secretary of State John Kerry.

Yet the armed conflict has ebbed, political crisis fills Kiev and some Ukrainians aren’t sure they want the separatists back. Indeed, Oksana Syroyid, Deputy Speaker of Ukraine’s Rada, has blocked passage of a constitutional amendment providing autonomy for the Donbas region, explaining: “We need to stop thinking of how to counter Putin, or how to please all our partners.”

Brussels faces the unpleasant possibility of Russia fulfilling its responsibilities while Ukraine breaks the deal. “Both sides need to perform,” complained Germany Foreign Minister Frank-Walter Steinmeier.

Targeted sanctions against named individuals and concerns have a certain appeal. However, there is little evidence that they are more effective than broader measures.

The latter have hurt the Russian public without turning many of them against their government. Moreover, Western penalties have discouraged, even reversed, liberalization of the Russian economy, as businesses have grown even more dependent on government support.

The belief that imposing sanctions a little longer will force Moscow to capitulate reflects the triumph of hope over experience. Rather than reflexively continue sanctions, the Western states should rethink their policy toward Russia.

Vladimir Putin isn’t a nice guy, but that hardly sets him apart from other authoritarians. Geopolitically Ukraine matters far more to Moscow than to Europe or America. Russia always will spend and risk more to protect its perceived security interests next door.

And the West did much to challenge Moscow, including encourage a street revolt against a democratically elected president. That still didn’t justify Russia’s brutal actions to dismember its neighbor, but Putin acted predictably and rationally. He is neither Hitler nor Stalin reincarnated, but a traditional Tsar. Putin has never demonstrated a desire to swallow non-Russian peoples.

Thus, I argued in Forbes, “the allies should negotiate their way out of the sanctions box in which they are stuck. They could drop economic war, promise to stop expanding NATO along Russia’s border (most importantly, to Ukraine), reduce military support for Kiev, and encourage Ukraine to look both ways economically. Moscow could drop support for Ukrainian separatists, cooperate with restructuring Kiev’s unsustainable debts, accept Ukrainian economic ties with the EU, hold an internationally monitored status referendum in Crimea, and accept whatever outcomes emerge from the messy Ukrainian political system.”

Of course, Kiev is independent and free to decide its own future. But Ukrainians should choose their own course while fully aware that no one in the West is prepared to initiate all-out economic war, let along military conflict, with nuclear-armed Russia over Kiev’s status.

The U.S. and Europe shouldn’t allow the perfect to be the enemy of the good in policy toward Russia. At most economic sanctions act as a moral statement, but one better made through other means.

At the same time, there are many important issues in which the West would benefit from Russian assistance. After two years, it’s time to make a deal with Moscow.

 

In 2014, a militant group calling itself the Islamic State, or ISIL, but more generally known as ISIS, burst into official and public attention with some military victories in Iraq and Syria in the middle of the year—particularly by taking over Iraq’s second largest city, Mosul.

Cries of alarm escalated substantially when ISIS performed and webcast several beheadings of defenseless Western hostages. Democratic Senator Dianne Feinstein was soon insisting that “The threat ISIS poses cannot be overstated”—effectively proclaiming, as columnist Dan Froomkin suggests, hyperbole on the subject to be impossible. Senators John McCain and Lindsay Graham de­emed the group to present an existential threat to the United States, and the media quickly became canny about weaving audience-grabbing references to the arrestingly diabolical ISIS into any story about terrorism.

The challenge presented by ISIS has become perhaps the most important and consequential foreign policy issue for the United States today. And a poll conducted a few weeks ago asked the 83 percent of its respondents who said it closely followed news stories about ISIS whether the group presented “a serious threat to the existence or survival of the US.” Fully 77 percent agreed, more than two-thirds of them strongly.

Unlike other groups designated as terrorist organizations, ISIS actually seeks to hold and govern—and then expand its control over—territory. ISIS obtains finances by selling oil and antiquities and by extorting, or taxing, people under its control. Key to its success or failure is whether it will be able to fund itself through such activities and whether its social and economic viability can be undermined.

It is this issue that will be central to a discussion by two experts at 4pm on May 18, 2016, hosted by Cato (a reception will follow). Howard Shatz is a senior economist at the RAND Corporation, and Jacob Shapiro is Associate Professor of Politics and International Affairs at Princeton University and the author of the prize-winning The Terrorist’s Dilemma: Managing Violent Covert Organizations. I will be moderating the discussion.

There seems little doubt that since its advances of 2014, the vicious group’s momentum has been substantially halted, and its empire is currently under a form of siege. And, by holding territory, it presents an obvious and clear target for airstrikes and other methods by military opponents.

Even by late 2014, it was finding that its supply lines were overstretched and its ranks of experienced fighters were being thinned. Over the course of the next year, it lost some 40 percent of the territory in Iraq that it had held at its peak in 2014. In late 2015, it tried to push back by launching three offensives in northern Iraq using, among other things, “armored bulldozers.” The offensives were readily beaten back.

By 2016, ISIS was in retreat in many areas, and frontline commanders were observing that “They don’t fight. They just send car bombs and then run away. And when we surround them they either surrender or infiltrate themselves among the civilians….Their leaders are begging them to fight, but they answer that it is a lost cause. They refuse to obey and run away.”

ISIS is finding that actually controlling and effectively gov­erning wide territories is a major strain. And it has to work hard to keep people from fleeing its brutal lumpen Caliphate.On close examination in fact, its once highly-vaunted economic capacity—selling a lot of oil and antiquities, for example—may be proving to be illusory.

Even in late 2014, there were reports indicating that ISIS was experiencing major problems with providing services and medical care, keeping prices from soaring, getting schools to function, keeping the water drinkable. And by the end of 2015, in part because the territory it controlled had diminished so much—thereby reducing the number of people it could tax (or extort)—ISIS was forced to reduce the salaries of its fighters by half. Those salaries, it appears, constitute two-thirds of the group’s operating budget.

By 2016, there were increasing reports of financial strain and clashes among senior commanders over allegations of corruption, mismanagement, and theft. Not only was the tax, or extortion, base much reduced and oil sales disrupted, but the huge cash windfall from the seizure of banks during the group’s season of expansion in 2014 was now reportedly mostly gone.

Does this indicate that ISIS is being fatally degraded as a threat? Can it maintain itself despite these setbacks? What might be required to break its still-substantial control over wide areas and large cities in Iraq and Syria? What are the best options for the United States and its allies to pursue? These questions will be very much on the agenda on May 18.

Yesterday my colleague Alex Nowrasteh wrote an extensive list of reasons why Donald Trump, the presumptive Republican Party presidential nominee, is the nativist dream candidate. The list leaves little doubt that if Trump makes it to the White House he will seek to violate the Constitution, create a police state, put citizens’ privacy at risk, and build a border wall (despite its estimated $25 billion price tag) all in the name of reducing legal and illegal immigration to the United States.

Trump’s immigration plan ought to worry civil libertarians because, as Alex points out, he supports mandatory E-Verify, the ineffective employment eligibility verification program that puts privacy at risk. Trump’s disregard for effective policy and privacy rights can be seen not only in his views on E-Verify but also his support for 24/7 border drones.

Last month Trump told Syracuse.com that he would order the 24/7 surveillance of the U.S. borders, adding, “I want surveillance for our borders, and the drone has great capabilities for surveillance.”

What Trump might not know is that drones on the U.S. border don’t have a great track record. At the end of 2014 the Department of Homeland Security’s Inspector General released an audit of the Custom and Border Protection’s Unmanned Aircraft System Program. The program includes MQ -9 Predator B drones (also called “Reapers”), perhaps best known for its combat missions abroad, as well as the Guardian, the Predator B’s maritime variant. The program’s audit was unambiguous:

The program has also not achieved the expected results. Specifically, the unmanned aircraft are not meeting flight hour goals. Although CBP anticipated increased apprehensions of illegal border crossers, a reduction in border surveillance costs, and improvement in the U.S. Border Patrol’s efficiency, we found little or no evidence that CBP met those program expectations.

Unsurprisingly, cartels at the southern border are taking part in an arms race with CBP, using jamming devices on patrol drones. Almost a year after the inspector general’s audit Timothy Bennett, a science-and-technology program manager at the Department of Homeland Security, explained how the cartels hinder CBP operations:

DHS was unable to say just how often smugglers tried to jam or spoof border-watching UAVs. But Bennett said the attacks are hindering law enforcement abilities to map drug routes. “You’re out there looking, trying to find out this path [they’re] going through with drugs, and we can’t get good coordinate systems on it because we’re getting spoofed. That screws up the whole thing. We got to fix that problem,” he said.

The ineffectiveness of drones on the border is not the only concern. CBP drones also pose privacy concerns. Predator B drones carrying out combat missions abroad have been outfitted with Gorgon Stare, a wide-area surveillance technology that allows users to track objects within an area at least 10 square kilometers in size. Almost two years ago it was reported that once incorporated with Autonomous Real-Time Ground Ubiquitous Surveillance Imaging System (ARGUS-IS), another wide-area surveillance tool, Gorgon Stare can monitor 100 square kilometers. A video outlining ARGUS-IS’ capabilities is below.

I’m not aware of any reports of CBP drones equipped with ARGUS-IS, but given American law enforcement’s history of using equipment originally designed for the battlefield, such as Mine-Resistant Ambush Protected vehicles (MRAPs) and Stingrays, it is reasonable to be concerned about military wide area surveillance equipment making its way to domestic patrol drones.

Not that Trump would find that at all concerning. For Trump  it seems like any policy, no matter how ineffective or damaging to our civil liberties, is worth trying as long as it seeks to reduce immigration.  

It’s increasingly clear that attacks on academic freedom from within the academy are only growing. I was recently invited to give two major speeches on the subject, one on academic freedom as such, the other more broadly on tolerance in a free society. And just a week ago I blogged here on the breaking news about the uproar at George Mason University over the GMU administration’s decision to rename its law school after the late Justice Antonin Scalia.

Just yesterday the Manhattan Institute and Wall Street Journal’s Jason Riley recounted in the Journal his recent “disinvitation” to speak at Virginia Tech. It seems that faculty members were “concerned” that Riley’s writings on race in the Journal “would spark protests.” On today’s campus, we can’t have those—unless, of course, they’re politically correct protests, as at GMU. There, the protest only grows, with a lengthy report about it in today’s Washington Post and a sharp op-ed against the uproar in today’s Journal by GMU law professor Lloyd Cohen.

As Prof. Cohen outlines developments there, they arose from the university’s announcement in late March of a $10 million gift from the Charles Koch Foundation to expand law-school scholarships and $20 million from an anonymous donor to rename the law school in honor of Justice Scalia. In response, “a vocal group of professors, none of whom teaches at the law school itself, is now attempting to convince the university administration and the State Council of Higher Education for Virginia to reject the grant and abandon the school’s new name.” In late April the faculty senate passed a condemnation resolution. And just yesterday it voted in favor of a nonbinding resolution to delay any changes in the law school’s name.

In opposing the resolution, Prof. Cohen took the gloves off at the meeting—where, he reports, “several of my faculty colleagues interrupted me by calling for me to be prevented from speaking, a sad commentary on their tolerance for open debate and intellectual inquiry.” It’s worth citing in full the portion of his remarks that the Post highlights:

Consider the irony of this body’s proposed resolution: In purporting to take a stand in favor of academic freedom this body would adopt a statement that constitutes one of the most egregious attacks on academic freedom not only in the history of this university but in higher education in this country.

This body is prepared to accuse the faculty and administration of the school of law of selling out its integrity, independence, and academic values for a pottage — all while hiding under the gutless guise of expressing “concerns” about public perceptions and other weasel words designed to disguise what this really is — an unprecedented assault on the academic freedom of one unit of this university by a mob of faculty from the rest of the university.

And let’s not kid ourselves — the whole world knows what is going on here. If this were a gift from George Soros to create the Harry Blackman Law School we would not be here today.

The political agenda of this body is transparent.

And it is the transparency of this political agenda to attack academic freedom cloaked in the garb of a purported defense of academic freedom that leads me to call on every Senator to think about the principle that you would be voting for today if you go along with this statement.

Indeed, if this assault is in the name of defending academic freedom, then that concept has lost all meaning.

ERBIL, IRAQ—Kurdistan in the north of Iraq has become a refuge for Christians and other religious minorities in the midst of the Islamic State’s murderous rampage. The abundant crimes of Daesh, as it also is known, constitute an unprecedented religious war against members of minority faiths who until recently largely lived in peace with their Muslim neighbors.

As ISIS expanded it attacked most everyone, especially Christians, Yazidis, and other religious minorities. Hence the brutal campaign detailed in the nearly 300-page report, “Genocide against Christians in the Middle East,” issued by the Knights of Columbus and In Defense of Christians, a group which focuses on the Mideast.

The report argued simply: “ISIS is committing genocide” against Christians in Iraq, Libya, and Syria. The words of Daesh are clear.

The organization publishes a magazine named Dabiq, the place where the movement expects to destroy the “Crusader army,” meaning Christians. Explained the Islamic State: “We will conquer your Rome, break your crosses, and enslave your women, by the permission of Allah, the Exalted.”

To describe the Islamic State’s crimes in generalities does not adequately communicate the truly horrific nature of its campaign. The NGO Shlomo recorded 1131 Christians murdered between 2003 and 2014 in Iraq’s Nineveh Plain, with more than 100 more since then.

Patriarch Ignatius Youssef III Younan of Antioch, Syria believed more than 500 Christians in Iraq and more than 1000 in Syria were killed. The Archbishop of Aleppo, Syria, Jean-Clement Jeanbart, said that hundreds of Christians have been executed or kidnapped in his city and perhaps thousands in Syria as a whole. Others have been slaughtered in Libya and elsewhere.

While widespread murder is the Islamic State’s most odious crime, the group inflicts grievous harm on those it does not kill. Those interviewed for the report cited all manner of bodily harm: “Choking, beatings with guns and electrical cords, mock executions, and withholding of food and water in the extreme heat are commonplace.”

Rape also is widespread, with more than “1500 Yazidi and Christian girls” taken as sex slaves. As in ancient times, they are sold and shared like chattel.

Moreover, the Islamic State coerced religious conversion. This process might seem unimportant to nonbelievers but, reported the authors, “the violation of conscience—the spiritual rape—involved in a conversion through force works a state of mental and spiritual unrest that is difficult to put into words.”

Finally, there is religious cleansing. For instance, “Christians were rounded up into busses and driven out to a remote place to fend for themselves.” Left without food and water, many had to walk for hours to reach safety.

What to do about widespread genocidal persecution of religious minorities?

Many who pushed for the designation of “genocide” hoped to force a response from Washington. But there is little military option. After all, foolish U.S. intervention triggered the crises in Iraq and Libya and exacerbated the conflict in Syria.

Indictments under the International Criminal Court would provide moral satisfaction, but the Islamic State must be defeated for any prosecutions to occur. Indeed, defeat itself is the most important way to stop ISIS, and is primarily the responsibility of the Middle Eastern nations under attack from Daesh.

Americans can help religious minorities directly. The group HardWired brought me to Kurdistan, where it was working with people of all faiths to promote religious liberty and tolerance.

As I pointed out in Forbes: “The U.S. also should accept additional refugees. Despite security fears, the Islamic State is unlikely to attempt to use refugees, who typically wait years for resettlement, to attack America. In particular need are Christians, Yazidis, and other religious minorities. Only Lebanon is hospitable to non-Muslims, and it is overwhelmed with refugees of all faiths.”

The slaughter of Middle Eastern Christians and other persecuted faiths is one of the great tragedies of our age. Americans should act even when their government does not.

Over at Cato’s Police Misconduct web site, we have selected the worst case for the month of April.  It was the case involving a Michigan man by the name of James King.

 

 

King was minding his own business when he was confronted by two menacing men.   King didn’t know these men and he wanted to get away from them, but they chased him down and beat him up.

Turns out the men were police officers working on a fugitive task force.  They thought King was one of their fugitives, but they were mistaken about that.  They were out of uniform when they confronted King and, according to King’s lawsuit, they did not identify themselves as police officers.  Worried about his own safety, King ran away from them.

One of the officers put King in a chokehold till he lost consciousness.  When King came to, he again feared for his own safety, thinking that these men were criminal attackers, so he bit the arm of one of the officers in a gambit to get away from them.  The bite infuriated the officer, who then unleashed a torrent of punches on King’s face and head.

Bystanders were alarmed by what they were witnessing and they called 911.  The responding officer, for his part, told the witnesses to delete their cell phone videos of the incident.  He was worried about the safety of the officers, who had undercover jobs.  He said they shouldn’t be recorded.

When things settled down, and the police realized their mistake, they decided to arrest King anyway.  He fought back during his arrest–that’s a crime.

Prosecutors evidently agreed that King needed to be punished–so they charged him with three felonies.

King declined to plea bargain and insisted on a jury trial.  After hearing all the arguments and evidence, the jury acquitted him of all charges.

A civil lawsuit is now pending.  There’s no indication of any discipline for the officers involved.  They’re apparently still out there policing.

Writing as background for their work, the six-member research team of Koweek et al. (2015) cite several concerns about the future of Earth’s corals that have been projected to result from the so-called twin evils of global warming and ocean acidification, including “coral bleaching (Glynn, 1993; Hughes et al., 2003; van Hooidonk et al., 2013), increased dissolution and bioerosion (Andersson and Gledhill, 2013; Dove et al., 2013; Reyes-Nivia et al., 2013), decreased biodiversity (Fabricius et al., 2011), and shifts toward algal-dominated reefs (Hoegh-Guldberg et al., 2007; Kroeker et al., 2010; 2013).” However, despite these concerns, which have captured the attention of scientists and policy makers for more than two decades now, such worries may well be overestimated and overplayed.

The reason for such growing optimism has to do with the corals themselves, which along with other marine organisms appear to have an inherent ability “of controlling their own biogeochemical environments.” Such biologically-mediated controls, if they are of sufficient magnitude, could potentially offset future changes in the marine environment brought about by rising atmospheric CO2 (projected ocean warming and pH decline). It is therefore of considerable importance for scientists to continue investigating these biological feedbacks in order to better ascertain the future of these precious marine species, for as noted by Koweek et al., “the paradigm of coral reefs as passive responders to their biogeochemical environments is rapidly changing.”

In further expanding the scientific knowledge on this important topic, the six American researchers set out to conduct a “short, high-resolution physical and biogeochemical pilot field study” on the back reefs of Ofu, American Samoa, where they measured a number of hydrodynamic and biogeochemical parameters there over a seven-day period in November, 2011. The specific study location was Pool 100 (14.185°S, 169.666°W), a shallow lagoon containing 85 coral species and various kinds of crustose coralline algae and non-calcifying algae. Koweek et al. selected Pool 100 because, as they state, shallow back reefs “commonly experience greater thermal and biogeochemical variability owing to a combination of coral community metabolism, environmental forcing, flow regime, and water depth.”

Results of their data collection and analysis revealed that temperatures within the shallow back reef environment were consistently 2-3°C warmer during the day than that observed in the offshore environment. In addition, and as expected, the ranges of the physical and biogeochemical parameters studied in Pool 100 greatly exceeded the variability observed in the open ocean. Inside Pool 100, the pH values fluctuated between a low of 7.80 and a high of 8.39 across the seven days of study, with daily ranges spanning between 0.5 and 0.6 of a unit (Figure 1). What is more, Koweek et al. report that the reef community in Pool 100 spent far more time outside of the offshore pH range than within it (pH values were between 8.0 and 8.2 during only 30 percent of the observational period, less than 8.0 for 34 percent of the time and greater than 8.2 for the remaining 36 percent of the observations). Additional measurements and calculations indicated that these fluctuations in pH were largely the product of community primary production and respiration, as well as tidal modulation and wave-driven flow.

Figure 1. Time series of pHT (top panel) and pCO2 (bottom panel) in Pool 100, Ofu, American Samoa from November 16-20, 2011. Vertical blue and orange lines show the occurrence of high and low tides, respectively. Gray vertical shading shows the period from sundown to sunrise. The different colored circles represent data that were collected from different locations in Pool 100 and the dashed horizontal black lines represent the mean value of each parameter in the offshore ocean. Adapted from Koweek et al. (2015).

Commenting on these and other of their findings, Koweek et al. write that “our measurements have provided insight into the physical–biogeochemical coupling on Ofu.” And that insight, they add, “suggests a significantly more nuanced view of the fate of coral reefs” than the demise of global reef systems that is traditionally forecast under the combined stresses of climate change and ocean acidification.

Indeed, if these ecosystems presently thrive under such variable (and more severe) environmental conditions than those predicted for the future—which conditions are largely derived and modulated by themselves—why wouldn’t they persist?

 

References

Andersson, A.J. and Gledhill, D. 2013. Ocean acidification and coral reefs: effects on breakdown, dissolution, and net ecosystem calcification. Annual Review of Marine Science 5: 321-348.

Dove, S.G., Kline, D.I., Pantos, O., Angly, F.E., Tyson, G.W. and Hoegh-Guldberg, O. 2013. Future reef decalcification under a business-as-usual CO2 emission scenario. Proceedings of the National Academy of Sciences, USA 110: 15342-15347.

Fabricius, K.E., Langdon, C., Uthicke, S., Humphrey, C., Noonan, S.H.C., De’ath, G., Okazaki, R., Muehllehner, N., Glas, M.S. and Lough, J.M. 2011. Losers and winners in coral reefs acclimatized to elevated carbon dioxide concentrations. Nature Climate Change 1: 165-169.

Glynn, P.W. 1993. Coral reef bleaching: ecological perspectives. Coral Reefs 12: 1-17.

Hoegh-Guldberg, O., Mumby, P.J., Hooten, A.J., Steneck, R.S., Greenfield, P., Gomez, E., Harvell, C.D., Sale, P.F., Edwards, A.J., Caldeira, K., Knowlton, N., Eakin, C.M., Iglesias-Prieto, R., Muthiga, N., Bradbury, R.H., Dubi, A. and Hatziolos, M.E. 2007. Coral reefs under rapid climate change and ocean acidification. Science 318: 1737-1742.

Hughes, T.P., Baird, A.H., Bellwood, D.R., Card, M., Connolly, S.R., Folke, C., Grosberg, R., Hoegh-Guldberg, O., Jackson, J.B.C., Kleypas, J.A., Lough, J.M., Marshall, P., Nystrom, M., Palumbi, S.R., Pandolfi, J.M., Rosen, B. and Roughgarden, J. 2003. Climate change, human impacts, and the resilience of coral reefs. Science 301: 929-933.

Koweek, D.A., Dunbar, R.B., Monismith, S.G., Mucciarone, D.A., Woodson, C.B. and Samuel, L. 2015. High-resolution physical and biogeochemical variability from a shallow back reef on Ofu, American Samoa: an end-member perspective. Coral Reefs 34: 979-991.

Kroeker, K.J., Kordas, R.L., Crim, R.N. and Singh, G.G. 2010. Meta-analysis reveals negative yet variable effects of ocean acidification on marine organisms. Ecology Letters 13: 1419-1434.

Kroeker, K.J., Kordas, R.L., Crim, R.N., Hendriks, I.E., Ramajo, L., Singh, G.S., Duarte, C.M. and Gattuso, J.-P. 2013. Impacts of ocean acidification on marine organisms: quantifying sensitivities and interaction with warming. Global Change Biology 19: 1884-1896.

Reyes-Nivia, C., Diaz-Pulido, G., Kline, D.I., Hoegh-Guldberg, O. and Dove, S.G. 2013. Ocean acidification and warming scenarios increase microbioerosion of coral skeletons. Global Change Biology 19: 1919-1929.

van Hooidonk, R., Maynard, J.A. and Planes, S. 2013. Temporary refugia for coral reefs in a warming world. Nature Climate Change 3: 508-511.

Donald Trump’s win in Indiana has practically clinched the Republican nomination.  Since July 2015, Trump has led in most polls of GOP candidates.  Immigration restrictionism is his most popular policy position.  That position and the way he’s talked about it have defined his candidacy and set him apart from the get go.  Trump is the nativist dream candidate – virtually whatever happens now can be blamed on his anti-immigration position. 

Here’s a list of Trump’s anti-immigration credentials:

You can read more about Trump’s immigration policies in his plan – which Ann Coulter called “the greatest political document since the Magna Carta.”

Trump is the real anti-immigration candidate that nativists have been praying for.  He owns the anti-immigration label no matter what he does or says to distance himself from it in the general election.  He spouts their ideas and appeals to their biases on a national stage.  He is the perfect spokesman in tone and style for such a policy position.  The political failure of immigration restrictionists in the past was always blamed on their moderation.  Now they have a real anti-immigration radical to test their theory – so we should give them appropriate credit for Trump’s failure in November.

Donald Trump keeps winning Republican Party primaries. He could be America’s next president. It’s a sobering thought.

But Trump is not alone. Europe is filled with populist parties, old and new.

It’s too simple to decry a proto-fascist wave, as feared by some alarmists. In fact, most of his Republican competitors were far more aggressive and irresponsible on foreign policy than Trump. Normal folks simply are tired of being viewed as problems to be solved rather than citizens to be engaged.

In the U.S. it doesn’t much matter who people vote for. Government will expand. New regulations will be issued. More tax dollars will be spent. Additional wars will be started. The only certainty is that the views of those who vote will be ignored. Much the same governing consensus dominates Europe.

At the same time, the governing class protects itself. The response of this ruling class to public challenge only increases popular anger and frustration.

This doesn’t mean the principles under attack in America and Europe are illegitimate. I rather like advanced industrial capitalism, globalization, diversity, immigration, and much (though certainly not all) of the modern liberal catechism. At issue is the ruthless campaign to not just defeat political opponents but delegitimize contending viewpoints.

Real tolerance requires hearing and debating ideas despite disagreeing with them. While there are some beliefs which appropriately fall beyond the bounds of normal discourse, the number in that category must be kept extraordinarily small. Fear of economic and cultural change does not qualify.

If opinions are barred from civil debate, they will emerge in uncivil action. If it proves impossible to debate issues in the usual political channels, advocates will push their views more loudly and offensively in other ways. The result is Donald Trump in America and a gaggle of dubious, sometimes creepy politicians across Europe.

What to do now, after the forces of populism, nationalism, and more have been unleashed?

First, popular concerns need to be acknowledged and addressed. While globalization, immigration, and trade are economically beneficial, the advantages are not shared equally. All have a stake in what their nation is and what it becomes.

Second, the political process needs to be made more responsive to popular concerns. While populism tends to be undemocratic in its expectation of overriding all competing interests, it arises at least in part in response to the normal political system’s refusal to consider disfavored interests. That doesn’t mean turning republicanism into majoritarianism, but protecting republicanism from elitism.

Third, parties within the legitimate realm of debate—say populist, not fascist—should be brought into government when appropriate. Matthew Goodwin of the University of Nottingham explained that stigmatizing disfavored parties discouraged moderation and compromise. In contrast, “parties that were not excluded but were allowed to participate in the wider party system tended, over time, to move away from more extreme positions.”

Fourth, policies should be adapted to assuage strong public pressures without abandoning fundamental principles. For instance, to encourage public acceptance of immigration “reform” compromise is necessary, such as legalizing work by undocumented aliens while setting aside citizenship as an option.

Fifth, issues should be depoliticized and withdrawn from the electoral process. People should be left alone whenever possible. Government should not be used as a tool to remake a recalcitrant public.

Sixth, expanded economic opportunity is essential. As I point out on Forbes, “Lesser educated and skilled people are suffering. American policymakers must confront public schools which don’t teach, revamp federal taxes which cut U.S. competitiveness, and eliminate business subsidies which reward political rather than economic entrepreneurship.”

Seventh, people need to find new venues for dialogue. As the center disappears from politics and contending parties grow more estranged, people need other forums to be reminded of their common humanity and interests.

No one knows when the latest populist political wave will break. It is essential to respond to the concerns animating the angry middle.

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