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This morning I read an op-ed by Douglas Holtz-Eakin tackling the chasm between what it takes to enroll in college and how ready for college students actually are. It is a yawning gap, and Holtz-Eakin rightly laments it. But then he pulls the ol’, “Common Core is a high standard,” and suggests that it will bridge the college prep divide. He even writes that the Core has been “shown” to be “effective.”  

Not only has there been no meaningful evidence of the Core’s effectiveness, but right after I read Holtz-Eakins’ piece I saw that the latest National Assessment of Educational Progress scores had come out – indeed, for the very 12th grade students on the verge of college – and they had dropped in both reading and math between 2013 and 2015, and some dropped going back to 2009. This was, of course, as Common Core was being implemented nationwide. And not only did aggregate scores drop, but also scores for numerous racial and ethnic groups.

Do these results prove that Common Core is either impotent, or worse, a negative force? Certainly not. For one thing, as presented we can’t even break the 12th grade scores out by state as we were able to do with the 4th and 8th grade scores released several months ago. And even that was only able to furnish slightly more nuanced evidence than looking at aggregate national scores. But all these scores do undermine any proclamations of proven Core effectiveness.

Of course, lots of things affect test scores – federal policies, state policies, local policies, economics, demographic changes, etc. – and we can’t ignore all those things and just declare whatever policy we happen to dislike the undisputed villain. But one thing is clear, no matter how you feel about Common Core or anything else: NAEP tests continue to produce awful results for the students who are about to finish K-12 education, whether it is stagnant 17-year-olds’ scores on Long-Term Trend NAEP exams, or these scores for 12th graders on the “Main NAEP.” And this, as I tackle in a new, big update to the Downsizing the Federal Government K-12 page, despite huge increases in spending over the decades, as well as heavily centralized control.

Do the latest NAEP results prove that the Common Core, or centralization more broadly, are bad for American education? No. But they sure don’t help the narrative that centralization, including the federally driven Core, has helped it.

It may be “cyber incidents” like the US $81 million hack on the Bank of Bangladesh that has SWIFT, the Society for Worldwide Interbank Financial Telecommunication, investigating “Distributed Ledger Technology.” Asked to comment on SWIFT’s program for a CoinDesk reaction piece, I was most interested by the euphemistic language. It reveals something about the state of the Bitcoin ecosystem.

Yes, the folks at SWIFT capitalize the phrase “Distributed Ledger Technology.” It seems meant to create distance from “blockchain.” Of course, talking about “blockchains” was meant to create distance from “Bitcoin,” assumedly for a financial services community that found Bitcoin too uncouth or disruptive.

But Bitcoin is the lodestar. There are contenders, but most everything else is some denigrated system, lacking network effects, that ultimately fails to unite unrelated parties from across the globe in the project of recording transactions on an immutable public ledger. The question is how long it will take for the financial services industry to adopt Bitcoin or for Bitcoin to surpass the financial services industry. Regulator-friendly blockchains are at best a weigh-station on that road.

Enough with the Bitcoin triumphalism, though. The existence of a genius protocol does not guarantee its adoption. For Bitcoin to thrive, there still needs to be a great deal of social and economic change.

Bitcoin’s social capital needs are manifold. To deliver on its promises of global financial inclusion, user-defined privacy, enhanced liberty, and a stable money supply for all the world’s people, the Bitcoin ecosystem needs: a larger and more sophisticated community of software and protocol developers; greater assurance against mining centralization; and a thriving community of node operators. The embrace of the financial services community would speed things along. Bitcoin needs the reality and perception of low volatility; protocols and practices that assure privacy; flourishing, successful marketplaces; a congenial regulatory environment; and a positive reputation. (This list of social capital needs is drawn from my 2014 study of impediments to Bitcoin’s success.)

I’ve saluted the Open Bitcoin Privacy Project for its work on the privacy piece. A lot of effort in a lot of places is going into other dimensions, but the dominant theme in Bitcoin-land remains the “blocksize debate,” which will determine how Bitcoin will add capacity, as it must. I’ve written about the debate a couple of times, framing it as politics in a ‘non-political’ money system and as governance by competition.

In a podcast last August (which holds up adequately well), I said that everyone is going to settle down before too long. It’s taking longer than I thought. That does nothing to undermine Bitcoin’s essential genius. It just means that community members are burning a lot of energy on one dimension of the Bitcoin ecosystem, energy which is not available for developing Bitcoin’s other dimensions. Bitcoin will fail to achieve both its social potential and its potential value while community members use their energies this way.

The problem is particularly acute, though, when the blocksize debate undercuts progress in other dimensions of the Bitcoin ecosystem. When debaters exhibit personal animosity toward others, make churlish comments, and foment derision for the other side among their supporters, they are signaling to observers of Bitcoin in many important segments of society that Bitcoin is not an attractive thing to be involved in. Pursuing victory for themselves (or vanity, or attention), they undercut Bitcoin acceptance among important observers.

A winnowing process is underway to determine who are the good businesspeople, technologists, pool operators, and other ecosystem participants. The needed social capital will develop. But it’s a slow, human process, and the longer it takes, the slower Bitcoin’s promises of global development, liberty, progress, and profit will take to deliver.

When SWIFT uses the phrase “Distributed Ledger Technology” to distance itself from “blockchain” and “Bitcoin,” it might just be a semantic quirk. But it might tell us something about the Bitcoin ecosystem. Bitcoin has a maturity problem.

Volkswagen did a very bad thing: it installed software in hundreds of thousands of cars sold in the United States designed to defeat pollution tests, and then obfuscated when confronted with the evidence.

Last Thursday a U.S. federal court said that the company would either have to fix or buy back some 500,000 cars. The judge also indicated that Volkswagen would have to make a substantial payment to the car owners, regardless of how the problem is finally resolved, to make them whole.

I am all for applying a severe punishment to the company–fraudulently manipulating its equipment to evade a test result is an outrageous act that the government must punish to ensure companies don’t feel emboldened to emulate them. However, the judge lost me when he asserted that the recipients of this essentially tortious payment should be the injured car owners. From my perspective, I’m not that sure that they are victims here.

The drivers undoubtedly saw the resale value of their cars fall owing to the scandal, but that should be something that the car buybacks can account for without too much trouble. However, the higher emissions from the cars didn’t hurt the owners–it damaged the environment, which means it affected all of us, regardless of whether we own a Volkswagen.

The emissions cheating didn’t hurt car performance either–boosting the cars’ performance is why they did this to begin with. In fact, because of the defeat devices the Volkswagen owners got an automobile that performed better than had they bought a comparable vehicle from another company, one that hewed to the emissions standards. They actually benefited from the cheating–at the expense of degrading the environment that we all live in, both VW owners and the rest of us.

Compensating Volkswagen owners illustrates a fundamental chasm between lawyers and economists when it comes to punishing bad behavior. Lawyers tend to argue that tort law serves to provide adequate compensation to a victim, while economists see it as a way to tilt a company’s cost-benefit calculus so that it doesn’t make tradeoffs in risk (or pollution) that society deems unpalatable. The design of the Pinto exposed the gas tank to rupture in a crash because doing so was cheaper than doing a better job of protecting the gas tank. The fines paid by Ford when they were found guilty more than wiped out its cost savings from the engineering choice.

I completely agree with making Volkswagen buy the high-emission cars as well as imposing a fine on the company that goes above and beyond the estimated environmental damage. However, no additional money should not go to the people who bought VW cars, because they’ve not been materially injured, and there’s no societal gain by directing the fine into their pockets.

While simply directing the money to the government’s coffers may be a prescription makes libertarians a bit uncomfortable, in the absence of any real victim there’s no better solution.

Nearly two and a half centuries after Adam Smith vanquished the mercantilists, mercantilism is the beacon of U.S. trade policy.  In descending order of priority, U.S. trade policy is oriented toward three objectives: (1) Accelerating export growth; (2) Limiting import growth; (3) Effectuating a trade enforcement regime that maximally supports the first two objectives. The coexistence of the “exports good, imports bad” philosophy with 41 straight years of trade deficits explains why trade is so often maligned and demagogued (i.e., “We’re getting crushed in trade!”), and why trade liberalization is such a tough slog politically. 

Anyone who reads the press releases from the U.S. Trade Representative’s office, the House Ways and Means Committee, the Senate Finance Committee, or the big business trade associations is familiar with the statistic that 95 percent of the world’s consumers live outside the United States.  That mantra is deployed to promote the importance of exports – to suggest that removing foreign trade barriers is essential to U.S. export growth, which is essential to U.S. economic growth.  But rarely does anyone in official Washington make the valid point that if 95 percent of the world’s potential customers live abroad, so do 95 percent of the world’s suppliers, 95 percent of the world’s supply chain partners, 95 percent of the world’s workers, and 95 percent of the world’s investors.

The fact that the United States accounts for only 5 percent of the world’s population means there are numerous channels through which engagement with the world increases U.S. wealth and living standards, and that U.S. barriers to imports, investment, and immigration are at least as important to surmount as are foreign barriers to U.S. exports. But official Washington considers dismantling foreign market barriers, while fortifying U.S. import barriers, to be its remit.

A brief refresher on business accounting is in order.

Lesson 1:

Profits equal revenues minus costs.

In simple arithmetic terms: P = R – C.

Lesson 2:

With reference to the simple equation above, a business can realize higher profits by increasing R or decreasing C.  To be more precise, higher profits require revenues to increase faster than costs increase or for costs to decrease faster than revenues decrease.

Lesson 3:

For any given firm, revenues equal the value of its domestic sales plus the value of its export sales, and costs equal the materials, labor, and overhead used in production, as well as transportation expenses, selling expenses, taxes, and other expenses incurred in the process of delivering the good or service to the customer.

Lesson 4:

By increasing overall supply and reducing the average price of manufacturing inputs and final end-user products, imports help reduce the cost of production for businesses and the cost of living for American households. For businesses, those lower costs generate greater profits to reinvest or distribute to shareholders or they enable lower prices to help them compete.  For households, those lower costs mean lower prices and more resources to save or spend elsewhere in the economy.

Lesson 5:

The goal of trade policy should not be to maximize business revenues.  The goal of trade policy should be to maximize profits (or put in economic terms: to maximize value-added, i.e. GDP). The equation in Lesson 1, above, shows that reducing costs contributes to profit growth just like increasing revenues contributes to profit growth.

Congress demonstrates occasional, attenuated appreciation of these lessons.  Every few years (8 times since 1982), Congress has passed a Miscellaneous Tariff Bill, which temporarily suspend duties on certain, “noncontroversial” products—usually intermediate goods, such as chemicals, electronic components, and mechanical parts—that are not manufactured domestically but are needed by U.S. producers to generate their own output. Although limited in impact by its temporary nature, by the “no domestic production” requirement, and by the caveat that the suspended duty must not reduce tariff revenues by more than $500,000, the MTB does provide some cost savings to U.S. producers. The last MTB provided an estimated $748 million of import tax relief.

As described in this new paper – released ahead of a House vote tomorrow on legislation to resuscitate the MTB process – Congress should recognize that tariffs are always costs that reduce GDP and act with greater resolve to eliminate all import tariffs permanently.

Bloomberg reports that the Port of Los Angeles is increasing automation with the installation of self-driving cranes and other equipment. The automation is being partly driven by the need to minimize the use of high cost and troublesome unionized labor.

The West Coast longshoremen and their unions have long caused disruptions and slowdowns at the seaports. This is one reason why U.S. seaports have fallen behind the efficiency levels of the best facilities in the world, such as the Port of Rotterdam.

A new incentive for seaport managers to automate is the need to minimize the environmental impact of shipping. The new machines are faster and cleaner than the old human-operated equipment, and so they cut air pollution. For this reason, California’s government is behind the push to automate.

Jon Slangerup, head of the Port of Long Beach, concluded: “Efficiency and the environment go hand in hand … They’re two sides of the same coin.’’

In an upcoming Cato study on privatization, I describe how this theme applies to business activities of the federal government. In government-owned businesses, inefficiencies imposed by Congress and the bureaucracies harm the environment. To cut waste and pollution, we should privatize:

  • A privatized Amtrak would save energy as it ended low-volume and inefficient routes.
  • A privatized U.S. Postal Service would save energy by closing thousands of little-used locations and cutting its fleet of more than 200,000 trucks.
  • A privatized air traffic control system would adopt technologies to reduce flight times and cut fuel use.
  • A privatized Tennessee Valley Authority would likely be a better environmental steward than this mismanaged government utility has been.

While liberals often assume that the environment and profit-hungry businesses are enemies, the opposite is true. Profit-seeking is a friend to the environment because it generates incentives to minimize waste, to recycle, and to discover better ways of producing products with fewer resource inputs.

While private profit-driven recycling is efficient, government recycling tends to be wasteful. And some federal agencies, such as the Department of Energy, have had terrible environmental records. The problem is that governments have incentives to maximize costs, not minimize them.

Politicians talk a good game about saving the environment, but it is markets and private businesses that actually deliver.

Donald Trump is a genius for gaining media attention. Sometimes his opinions also reflect basic common sense.

Consider his complaint that Washington’s prosperous allies in Asia and Europe don’t pay enough in return. Defenders of the status quo contend that it is in America’s interest to subsidize its allies, as if they were defending the United States.

Advocates of the status quo also argue that U.S. allies contribute to U.S. basing costs. That’s true but irrelevant. The fact that countries defended by America help cover Washington’s cost of stationing U.S. troops is notable only because allied free- (or cheap-) riding has been so shameless for so long.

As I pointed out in CNN online: “The most important cost for America is that of creating the forces deployed, wherever they are stationed. Every security commitment requires additional personnel and equipment. America’s oversized military budget reflects America’s many formal and possible security guarantees: 27 NATO members, alliance wannabes Georgia and Ukraine, various East Asian allies and friends, several Middle Eastern and Central Asian nations.”

Washington accounts for roughly 40 percent of the globe’s military outlays in order to project power on behalf of other states. Providing a defense shield for war-ravaged nations originally made sense. But that world has passed away.

Washington should stop defending its prosperous, populous allies. They should pay for their own defense and confront future security threats as equals.

 

President Obama’s Council of Economic Advisers (CEA) has just released a new report, “Economic Perspectives on Incarceration and the Criminal Justice System.”  I attended a briefing on the report this morning at the White House led by Jason Furman, who chairs the CEA.  A panel discussion followed and C-SPAN covered the proceeding.

In this post, I want to excerpt some of the most interesting aspects of the report based on my quick perusal and offer some comments.  Instead of asking the Attorney General and the director of the bureau of prisons to examine the criminal system, Obama asked for an economic analysis.  That was an interesting choice.  From the report:

From an economic perspective, the goal of an efficient criminal justice system is to maximize the safety of citizens and minimize criminal activity while also limiting the direct and indirect costs of criminal justice policies to individuals, communities and the economy. Broadly, debates about the criminal justice system can be framed as a comparison of the system’s societal benefits in terms of reduced crime and its societal costs in terms of direct government spending and collateral consequences for individuals, families and communities. Likewise, any reform should offer an improvement to current practice, through increasing safety, rebuilding communities, improving economic opportunity, or reducing expenditures or other social costs.

One of the panelists, Douglas Holtz-Eakin, joked that many in the room may think that economists may be heartless because of their number crunching ways, but he said cost-benefit analyses can be a very useful framework to organize our thinking.

This is “re-entry week,” which means we’re supposed to focus on how prisoners can successfully transition from life behind bars to a life in civil society.  More than 600,000 prisoners are released each year and over 70 percent of those prisoners are re-arrested within 5 years of release.  A businessperson and an economist might say that the system has a failure rate of 70 percent.  If we could find a way to reverse those numbers–so that less than 30 percent of the prisoners would be re-arrested following release–economists would say we have a superior system (if all other variables remained constant).

The re-entry system in many American jurisdictions is either broken or nonexistent.  Imagine a guy that is 32 years old.  He has just completed a 10-year prison sentence.  He dropped out of school after a year in high school and started transporting drugs between cities–until he got busted.  He has no high school diploma, no job skills, no real job experience, and a criminal record.  In some states, when he walks out of the prison gates, he’ll have a bus ticket and $50 in his pocket.  If he does not have a family to support him, he’s going to get desperate fast.  The government seems to be setting him up to fail–and that makes little sense.

Many things can and should be done to improve the re-entry process.  A lady sitting next to me said there should be more emphasis on “no-entry,” by which she meant there are too many people entering the criminal justice system who shouldn’t be there at all.  Precisely.  The drug war has been a public policy disaster.  Locking up a marijuana dealer or someone who unloads a boat of cocaine is expensive and does almost nothing to improve community safety.  That person is immediately replaced by another small fry.  As we await the government to admit its mistakes in the area of drug policy, it can at least reduce its regulatory barriers to employment for the millions of people who now have criminal records.

Another excerpt from the report:

The American Bar Association National Inventory of Collateral Consequences of Conviction documentsover 46,000 State and Federal laws restricting employment, occupational licenses, and business licenses for people with criminal records (American Bar Association 2016). As discussed above, policies that improve access to employment and sufficient wages for individuals with criminal records not only benefit individuals and their families, but also have the potential to decrease recidivism and increase the economic viability of communities.

Our liberal friends always seem to be searching for regulations that can make things better.  As libertarians, we must try to show them that things might get better if the government would start regulating less.  And our conservative friends might consider subjecting criminal justice policies to cost-benefit analyses to determine if our taxpayer dollars are being misspent.

More here.

 

 

The Middle East has long been hostile to Christians and other religious minorities. Among those at risk are Egypt’s Copts.

During the reign of dictator Hosni Mubarak, the U.S. State Department called the status of Egyptian religious liberty “poor” and noted that Christians and Baha’is faced “personal and collective discrimination.” Attacks on Copts were common, and perpetrators rarely were prosecuted.

Mubarak’s overthrow led Copts to hope for a freer and safer Egypt. But under Mubarak’s successor, President Mohamed Morsi, violence against Copts increased. Morsi was not the only culprit. In one infamous case, the military–then headed by Gen. Abdel Fattah al-Sisi–shot down more than a score of Coptic protesters.

Two years ago, al-Sisi overthrew Morsi and eventually became president. Alas, the military used extreme brutality—killing hundreds of demonstrators on the streets of Cairo—to maintain control.

Coptic Pope Tawadros II publicly supported the coup. But the church remained as vulnerable as it was visible, and was targeted by angry Islamists. Dozens of churches were destroyed.

In January, al-Sisi celebrated Christmas at a Coptic service and promised to rebuild churches that had been destroyed. So far, however, the government has delivered more promises than actions.

Mina Thabet of the Egyptian Commission for Rights and Freedoms complained that al-Sisi was no liberal and “doesn’t care about religious freedom.” Certainly he evidenced no interest prior to the coup.

Nor is the only problem attacks on churches (which have diminished). The State Department noted that Egypt’s government did not recognize conversion from Islam and prosecuted people for religious defamation and blasphemy, including many Copts. In February, four teenage Copts were sentenced to five years in prison for a video directed against the Islamic State but treated as an attack on Islam.

The government failed to respond to attacks on Christians. The State Department added that the lack of accountability “fostered a climate of impunity.”

Even if Copts believe they remain safer under al-Sisi, they may have sold their liberty for what turns out to be a mess of security pottage. Copts live in the same unfree society as everyone else.

Coptic film critic Joseph Fahim wrote two years ago: “more than 40,000 arrests have been made since Morsi’s overthrow, journalists have been prosecuted, artists have been censored, opposition voices have been violently silenced, dissented politicians have been witch-hunted, the Mubarak regime has successfully reassembled itself, institutional corruption has grown more rampant, the country has descended into further chaos and fear has become the prevailing sentiment of the day.”

According to the State Department’s 2015 human rights report: “The most significant human rights problems were excessive use of force by security forces, deficiencies in due process, and the suppression of civil liberties. Excessive use of force included unlawful killings and torture. Due process problems included the excessive use of preventative custody and pretrial detention, the use of military courts to try civilians, and trials involving hundreds of defendants in which authorities did not present evidence on an individual basis. Civil liberties problems included societal and governmental restrictions on freedoms of expression and the press, as well as on the freedoms of assembly and association.”

Many people simply disappear. The latest case to embarrass the government involves a 28-year-old Italian graduate student. The government tried to blame his death on a car accident. His mutilated body showed signs of torture.

Cairo currently is shutting down organizations that report on government abuses, including the anti-torture Nadeem Center. Two years ago, I wrote in Forbes, “I was a member of a delegation of lawyers who visited the Nadeem Center. Co-founder Aida Seif al-Dawla told us that torture was more pervasive then than at any point during the Mubarak era.”

Today Egypt is scary for anyone who dissents. Unfortunately, sustained repression has only encouraged radicalization and more terrorist attacks, leaving Coptic Christians even more vulnerable.

Coptic reliance on Egypt’s al-Sisi increasingly looks like a bad deal. Egyptians need a new approach that doesn’t sacrifice national liberty for sectarian security.

At first glance, it might seem that eagles, net-shooting bazookas, and “death rays” don’t have much in common. However, each has been proposed as a possible way to deal with errant drones that stray where they’re not supposed to be, including airports. The issues surrounding drones at airports re-emerged earlier this month when a drone reportedly hit an Airbus A320 approaching London’s Heathrow Airport. While it is not absolutely clear that the object that hit the plane was a drone, the incident does raise questions about how lawmakers and regulators should deal with drones buzzing around near airports. 

Anti-drone “death ray” machines may sound initially like an effective way to deal with drones hampering flights. Yet, such a device would probably not have been useful in the case near Heathrow. According to the Metropolitan Police, the drone hit the plane at 1,700ft (the legal drone limit is 400ft) above Richmond Park, the largest enclosed space in London. For those unfamiliar with London’s geography, below is a map showing where Richmond Park is in relation to Heathrow Airport.  

Richmond Park and Heathrow Airport are at least 6 miles apart as the crow flies. The “death ray” machine recently discussed as a means to deal with drones obstructing flight paths would probably not have been effective at preventing the recent collision because the drone would almost certainly have been outside of the “death ray’s” range.

Reporting on the recent drone strike the London Evening Standard discussed the Anti-UAV Defence System (AUDS), a joint project involving three companies working on disabling drones by blocking signals from the drone’s operator.

According to the London Evening Standard’s reporting, AUDS can block a signal “from up to six miles [about 9.7km] away, before tracing the owner.” Last year, when the AUDS was unveiled, Blighter Surveillance Systems (one of the three companies working on the project) announced that the system can “detect, track, classify, disrupt and neutralise UAVs at ranges of up to 8 km [about 5 miles].”

As the map above shows, it’s unlikely that the incident involving the Heathrow-bound plane earlier this month could have been avoided by the AUDS. In order for the AUDS to have been effective in this particular case the drone and the AUDS would have to have been at the very edge of Richmond Park and Heathrow’s southeastern perimeter respectively. 

Of course, this isn’t a reason for officials at Heathrow to dismiss the possibility of installing “death ray” machines. But it’s worth noting that the devices will not be able to halt all drones that could potentially be a nuisance to planes approaching Heathrow.

It won’t come as a surprise that drone manufacturers want to avoid collisions near airports. DJI, which produces the Phantom photography drones, introduced an update for some of its drones that restricts flights close to airports. The safety feature ensures that drones within 1.5 miles of a big airport like Heathrow will be unable to take off, and that drones between 1.5 miles to 5 miles away from the airport will gradually descend as they fly closer.

It’s in the interest of drone manufacturers to make safety features like the one developed by DJI. They will make it easier for hobbyists to avoid inadvertently running afoul of local airspace regulations.

However, such features will not necessarily prevent those committed to doing harm from using drones to collide with airplanes. For instance, DJI did revise its no-fly zone software in order to allow self-certified pilots to fly drones in restricted areas. In attempts to prevent malicious drone collisions, airport officials and law enforcement will probably consider a range of technology, including tools like the AUDS.

Fortunately, drone collisions with airplanes are very rare, a fact lawmakers pondering drone regulations should remember. As the Mercatus Center’s Eli Dourado pointed out, from January 1990 to July 2015, 200 turtles collided with airplanes in the United States. In the same time period, there were zero drone collisions with aircraft.

 

I am just as distressed as the rest of America at Prince’s passing, and there’s little I can say that would meaningfully add to his deserved tributes and encomiums: it’s not an exaggeration to say that we may not ever again have an entertainer like that who has the ability to produce music that cuts across race and class and age to be appreciated by everyone.

But the fact that he died just as America put the portraits of Mary Cady Stanton, Sojourner Truth and Harriet Tubman on U.S. currency may be serendipitous, in that it gives us a precedent for the government to honor his accomplishments in a meaningful way.

The tradition of our government naming things after retired–or even active–politicians is noxious. I despise the fact that the playground at the zoo my daughter and I compulsively visit each weekend has a plaque next to it in honor of the Appropriations committee member who put a rider on a bill to allocate a few bucks to spruce it up. Everywhere I turn there are post offices, train stations, airports, roads, bridges, tunnels, bike paths and anything else big enough for a plaque and was paid for by our tax dollars named after some politician. And until last week our currency was reserved for politicians too.

It’s a stupid tradition: there’s nothing that makes politicians more deserving of such an honor than a regular citizen, and patting them on the back with an honor in perpetuity for shoveling tax dollars back to us strikes me as the worst possible incentive possible.

So we should follow up on what the Treasury did in honoring three brave private citizens who literally risked life and limb to extend freedom to all Americans and pass a constitutional amendment that bans naming government property after a politician, living or dead. And to help kick off such a movement we should put our heads together and name something after Prince, a consummate entertainer who brought joy and happiness to millions and left us a dozen songs that will be sung long after the likes of us have passed from this earth. 

The problem with the federal government is not just its vast size but its increasing scope. It has expanded into many areas that should be left to state and local governments, businesses, charities, and individuals. The federal expansion is sucking the life out of the private sector and creating a top-down bureaucratic society.

Many people in Washington seem to think that nothing would ever get done without the help of Uncle Sam. They seem to have no idea that businesses invest, towns and cities grow, people help people, and problems are solved every day in billions of ways across our nation without guidance from central government experts.

Take a look at the new “Rural Development Progress Report” from the U.S. Department of Agriculture (USDA). Rural programs are just $6 billion out of the $150 billion USDA budget, which in turn is just a small sliver of the $4 trillion federal budget. Yet this relatively small USDA division has its subsidy tentacles into everything, as the following giveaways from the 2015 Progress Report show:

  • $10 million to Exela Pharma Sciences in North Carolina.
  • $3.4 million for a sewer system in Geraldine, Alabama.
  • $8.5 million for a college expansion in Pocahontas, Arkansas.
  • $7,500 to a guy in Red Bluff, California, to fix his water well.
  • $200,000 to “one of the largest clam producers in Florida.”
  • $7.5 million to fix a dam in Idaho.
  • $1 million to an automotive shop and other businesses in Du Quoin, Illinois.
  • $63,000 to a biofuels company in Maine.
  • $200,000 for a farmers market in Michigan.
  • $651,000 for an arts center in Bozeman, Montana.
  • $373,000 to a paper company in Nevada.
  • $1.5 million to an apartment developer in Monticello, New York.
  • $2 million for a vet clinic in North Dakota.
  • $1.1 million for street improvements in Pittston, Pennsylvania.
  • $113,000 to fix up an old theatre in Rutland, Vermont.
  • $5.2 million for a fire station in Sweetwater County, Wyoming.

The tone of the Progress Report is triumphant and self-congratulatory: “This has been a year of historic accomplishment for the USDA.” The agency’s broadband investments “have been extremely successful, and offer the potential for exponential rural growth in the future.” Exponential—wow!

With that sort of success, is there any local and private project in the nation that the federal government should not get involved in? And, indeed, the far-flung subsidy activities of the USDA are mirrored in numerous other federal departments, such as HUD.

The thinking seems to be that the federal government has a magical source of money, so federal aid is an automatic boost to society. Of course, all federal aid money ultimately comes from taxpayers who live in the 50 states. So activities such as USDA-Rural are a zero-sum game. Actually, they are worse than a zero-sum game because taxpayers have to pay for all the bureaucrat middlemen who run these money recycling schemes.

For more on the problems and pathologies of federal aid, see here.

Yesterday, the Philadelphia Inquirer published a piece I wrote about pending legislation in Pennsylvania to anonymize officers under investigation for use of force. The legislation is supposed to increase officer safety. A snippet:

Of course, officer safety is important. But there is scant evidence that specific police officers or their families - in Pennsylvania or elsewhere - have been targeted and harmed by criminals because they were named in use-of-force incidents. (While police officers have been the tragic victims of ambushes, including in Philadelphia, the indications are that officers are, as New York City Police Commissioner William Bratton said in 2014, “targeted for their uniform,” not their actions.)

At best, these bills provide a remedy for something that has not been proven to be a problem. At worst, they protect officers with documented histories of violence and, ironically, give the majority of officers a bad rap.

Internal and criminal investigations are by their nature kept from the public eye, and for good reason. But the community should know if its public servants are under investigation for inappropriate violence and who they are. If one officer out of a thousand does something bad, but no one can say who he is, all officers fall under suspicion because the so-called bad apple is indistinguishable from everyone else.

As we saw in the aftermath of the fatal shooting of John Geer in Virginia, when police withhold information from the public about inappropriate uses of force, silence can seem like a cover-up. States and police agencies should look for ways to increase transparency after questionable uses of force, not put up new barriers to information.

Read the whole thing here.

This is cross-posted at PoliceMisconduct.net.

At Overlawyered, I’ve repeatedly covered California Attorney General Kamala Harris’s audacious demand for the donor lists of nonprofits that carry on activities in California, a step likely to lead to both private and public retaliation against individuals and groups revealed to have donated to unpopular or controversial causes. So this is good news: a federal district judge in California has ruled that her crusade violates the Constitutional rights of one such group, Americans for Prosperity Foundation.

As the WSJ notes in an editorial, U.S. District Judge Manuel Real “declared her disclosure requirement an unconstitutional burden on First Amendment rights,” finding that there was scant evidence the disclosures were necessary to prevent charitable fraud, and that, contrary to assurances, her office had “systematically failed to maintain the confidentiality” of nonprofits’ donor lists, some 1,400 of which Harris’s office had in fact published online. As for retaliation against donors, “although the Attorney General correctly points out that such abuses are not as violent or pervasive as those encountered in NAACP v. Alabama or other cases from [the civil rights] era,” he wrote, “this Court is not prepared to wait until an AFP opponent carries out one of the numerous death threats made against its members.”

An ally of the plaintiff’s bar and unions as well as a candidate for U.S. Senate, Harris recently surfaced as a key player in the alliance of state attorneys general intent on using criminal investigatory powers to probe so-called climate denial at non-profit research and advocacy groups as well as at energy companies like ExxonMobil. That makes at least two episodes in which Harris personally has signaled interest in novel, aggressive steps to pry open the internal workings of private advocacy organizations that take positions opposed to hers. 

It’s hard not to see an ongoing pattern here. Aside from the climate subpoenas, which are widely predicted to expand beyond the Competitive Enterprise Institute to other advocacy groups, powerful politicians have been demanding that the Securities and Exchange Commission use its regulatory powers to turn up pressure against advocacy by shareholder-held businesses, and in particular to investigate what they say on issues of regulation and policy – invariably, when they take the opposite side from the politicians’ own views. Earlier this month I covered such a ploy by Sen. Elizabeth Warren (D-Mass.), and New York City official Letitia James recently tried something similar with Sturm Ruger, demanding that the SEC punish the gunmaker for not being more cooperative with the demands of various gun control advocates. 

The pattern here is that the formidable power of law enforcement and regulatory discretion is being openly enlisted to identify, flush out, and punish what remains of dissenting opinion in the business community itself as well as among uncooperative nonprofits. Recall that in 2010 Health and Human Services Secretary Kathleen Sebelius vowed “zero tolerance” for health insurers spreading supposed “misinformation” about ObamaCare, in particular by blaming its provisions for rate increases, no small threat from an official wielding immense regulatory discretion over those insurers.

The WSJ’s Kim Strassel had a great column the other day asking why so few business leaders are willing to speak out against coercive and destructive economic measures. Given the amount of effort that goes into identifying and retaliating against dissenting pro-capitalism opinion these days, should we really be surprised?

[adapted and expanded from Overlawyered]

Besides offering unrealistic tax reform plans, most of the presidential candidates this year made some nod to regulatory reform in their 2016 campaigns. For the most part these involve some sort of wholesale examination of the rules currently in place to determine which can be safely jettisoned to save consumers and businesses billions of dollars. 

Such regulatory reform is counterproductive, though: As Sam Batkins and I point out in a forthcoming piece in Regulation magazine, once companies have spent what is necessary to comply with the new regulations-regardless of whether or not it is cost effective–there’s little to be gained from repealing it. 

However there is one regulation which, if repealed, would enormously improve the well-being of consumers at very little cost to business: the current food labeling rules. 

Originally set forth by the USDA in the early 1990s, the labels list the calories, total fat, saturated fat, salt and sugar in each serving, along with what proportion of a recommended daily allowance in each serving. The idea upon its implementation is that the labels will help guide consumers to eat a well-balanced diet. 

That has not happened, of course: obesity rates have skyrocketed since the implementation of the new labels, and there’s good evidence that the labels themselves are at least partly to blame. The labels gave people a nudge to reduce their caloric intake of saturated fats–which have what we now recognize to be a low daily allowance–and substitute other calories for it instead, most notably breads, sugar, and other carbohydrates. 

Scientists have learned a lot more about caloric intake and weight gain in the last two decades, and it now seems clear that this is the absolute worst thing for a person to do if he wants to lose or maintain weight. Calories are not equal and the high-fat, low carb diets like the Atkins or South Beach diet are more than just fads–they’re a much more sensible way to eat than to hew to our food label recommendations. 

Thus far the Obama Administration has not seen fit to change the food label standards–in fact, until a few months ago it was trying to expand the current regime so that it applied to delis as well, which may constitute the single most senseless rule making in our nation’s history. 

While it’s unrealistic to expect the current administration to correct this problem, it’s one regulation that the next president can repeal–and in so doing benefit tens of millions of Americans by reducing the incidence of obesity.  

UnitedHealth’s enrollment projections provide evidence that healthy people consider Obamacare a bad deal. (AP Photo/Jim Mone, File)

UnitedHealth is withdrawing from most of the 34 ObamaCare Exchanges in which it currently sells, citing losses of $650 million in 2016. A recent Kaiser Family Foundation report indicates UnitedHealth’s departure will leave consumers on Oklahoma’s Exchange with only one choice of insurance carriers. Were UnitedHealth to exit all 34 states, the share of counties with only one or two carriers on the Exchange would rise from 36% to 52%, while the share of enrollees with only one or two carriers from which to choose would nearly double from 15% to 29%. 

The Obama administration dismissed the news as unimportant. A spokesman professed “full confidence, based on data, that the marketplaces will continue to thrive for years ahead.” Like what, two years? Another assured there is “absolutely not” any chance, whatsoever, that the Exchanges will collapse.

ObamaCare hasn’t yet collapsed in a ball of flames. But UnitedHealth’s withdrawal from ObamaCare’s Exchanges is more ominous than the administration wants you to know.

1. UnitedHealth’s departure shows ObamaCare is suffering from self-induced adverse selection. 

Last month, the Blue Cross Blue Shield Association, whose members are the largest players in the Exchanges, reported that Exchange enrollees are costlier than those with employer-based coverage, consuming on average 22% more care.

UnitedHealth generally didn’t have the lowest-cost premiums in the Exchanges. The fact that it still lost money provides further evidence of significant adverse selection. It suggests high-cost patients are shopping for the most comprehensive benefits, regardless of premium; that UnitedHealth offered coverage that was attractive to the sick; and the company thus attracted a particularly costly group of enrollees.

Meanwhile, UnitedHealth’s enrollment projections provide evidence that healthy people consider ObamaCare a bad deal. The company expects enrollment in its ObamaCare plans will fall 18% over the course of 2016, from 795,000 to 650,000. Some of the attrition will be due to people who leave Exchanges when they become eligible for employer-sponsored coverage, Medicaid or Medicare. Presumably, however, people who lose employer coverage, become ineligible for Medicaid, or leave their parents’ plans would offset those losses. Much of that projected attrition is likely healthy people deciding ObamaCare coverage isn’t worth the cost.

2. UnitedHealth’s departure is bad news for other carriers.

Carriers are already suffering “unsustainable” losses under ObamaCare. Even after the government threw all the subsidies it had at Exchange carriers, 70% still reported losses, according to the consulting firm McKinsey. The average profit margin was negative in 41 states.

When UnitedHealth’s apparently sicker-than-average enrollees begin to enroll in whichever of the remaining plans offer the most comprehensive coverage, those carriers’ losses will mount.

3. UnitedHealth’s departure shows ObamaCare premiums will continue to rise.

Analysts are already predicting ObamaCare premiums will rise in 2017. UnitedHealth’s action will cause them to rise even more.

The Obama administration claims the impact on premiums will be small because UnitedHealth accounts for just 6% of Exchange enrollments and didn’t price its products competitively. Yet the KFF estimates that without UnitedHealth, premiums would have been 1% higher in 2016–and that’s before we include the most important effect of the company’s withdrawal.

UnitedHealth’s costlier-than-average enrollees aren’t going away. They will enroll with other carriers. Again, they will choose whatever carriers offer the most comprehensive coverage still on the market. When those carriers see their losses mount, they will have to increase premiums even more.

4. There will be more exits.

If those carriers’ losses are too great, or if the government blocks them from increasing premiums sufficiently, those carriers will exit the Exchanges, just like UnitedHealth has.

I am willing to make a prediction. The next carriers to leave the Exchanges, like UnitedHealth, will not be the ones offering low-priced plans, but those offering the most comprehensive coverage (at moderate or high premiums).

5. UnitedHealth’s departure shows quality of coverage under ObamaCare will continue to fall.

Astute observers will notice what is happening. ObamaCare will keep punishing whatever insurance company offers the best coverage. The law is literally rigged to create a race to the bottom. That’s why so many carriers are offering plans with high cost-sharing and narrow networks.

This is why opponents fight ObamaCare. The law makes it harder, not easier, to have secure, high-quality health coverage.

The First Amendment’s religion clauses state that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” Both of these clauses have been made applicable to the states via the Fourteenth Amendment. The continuing question is how these two clauses interact with one another, particularly in how far a state may go in “separating church and state” before running up against the Free Exercise Clause, or the principle of equal protection, or the Establishment Clause itself.

Take this case: Missouri has a Scrap Tire Grant Program that provides subsidies to construct playground flooring out of recycled old tires. Trinity Lutheran Church runs a daycare center and applied for a grant under the program. The state rated this application highly but nevertheless denied the grant—which would have enabled the purchase of a safe rubber surface for both children in its care and the larger community—solely because Trinity Lutheran is a church.

Missouri defends its position by citing the state constitution’s Blaine Amendment, which says that state funds cannot go to support religion. The U.S. Court of Appeals for the Eighth Circuit upheld the state denial and the Supreme Court agreed to hear the case.

Cato has now filed a brief supporting the church. Under the Supreme Court’s precedents regarding the “play in the joints” between the Free Exercise and Establishment Clauses, Missouri’s arguments should be insufficient to support its religious discrimination. To begin with, the state’s Blaine Amendment cannot be considered in the absence of its dark history of religious bigotry: Blaine Amendments were created nationwide in the late 19th century not simply to more explicitly separate church and state, but to harm minority religious sects, especially Catholics.

Moreover, a state constitutional provision cannot trump the U.S. Constitution, which prohibits discrimination against religion. Even under the Court’s Free Exercise jurisprudence, which since Employment Division v. Smith (1990) has offered less protection to religion against generally applicable laws, Missouri’s denial of the scrap-tire grant would be subject to strict judicial scrutiny because the action was based on Trinity Lutheran’s status as a church—and thus is not the kind of neutral law of general applicability that Smith addressed.

The state’s action also violates the Establishment Clause, which the Court has said numerous times prevents not only state promotion of religion but also state hindrance of it: the government must be neutral. And the Court’s holding in Locke v. Davey (2004) is inapposite here, because that case dealt with the unique scenario in which state funds would be going to train a future minister for his religious work. Here, on the other hand, the church has asked for a grant to buy a safer playground surface. There is simply nothing religious about duck-duck-goose!

Finally, Missouri’s discrimination violates the Equal Protection Clause, under which the state’s action makes a distinction on the basis of the grant applicant’s religion, which is a suspect classification. Missouri is not required to have a scrap-tire grant program, but once it decided to create one, it must open it to all without regard to religious status.

The Supreme Court will hear oral argument in Trinity Lutheran Church v. Pauley this fall.

Harriet Tubman’s forthcoming placement on the U.S. twenty dollar bill is being hailed as a symbolic win for women. Tubman certainly deserves the honor, and Cato’s Doug Bandow called for putting Tubman on “the twenty” a year ago. In celebration of the soon-to-be-redesigned twenty dollar bill, here are 5 graphs showcasing the incredible progress that women have made in the realms of work, education, health, etc.

1. The gender wage gap, which is largely the result of divergent career choices between men and women rather than overt sexism, is narrowing in the United States and in other developed countries. Part of this trend may be explained by more women entering highly paid fields previously dominated by men. For example, there are more women inventors and researchers in developed countries.

2. Around the world, girls in their teens have fewer children and are more likely to complete secondary education. As a smaller share of teenaged girls become mothers, many are better able to pursue education. The gender gap in youth literacyprimary school completion, and secondary school completion are all shrinking, even in many poor areas. Today, there are actually more women than men pursuing tertiary education and earning college degrees

3. In the United States, domestic violence against women has fallen considerably since the 1990s. And the very worst kind of domestic violence—homicide of an intimate partner—has also become rarer in the United States, both for male and female victims. Police also recorded fourteen thousand fewer cases of rape in the United States in 2013 than in 2003—in spite of a population increase. In fact, both rapes and sexual assaults against women have declined significantly in the United States since the 1990s. Evolving attitudes about the acceptability of violence against women may be partially to thank.

4. Dramatically fewer women die in childbirth, once a common cause of death for women. Around the world, more pregnant women receive prenatal care and more births are attended by skilled health staff. Like their mothers, newborn babies are also less likely to die, as are infants and children generally. Between 1990 and 2015, a girl’s likelihood of dying before her fifth birthday fell by about 54% globally. 

5. More and more women hold seats in the world’s parliaments, or hold ministerial level positions. There are also more women legislators, managers, and senior officials. There is some evidence that women are more likely to rise to achieve high positions in the private sector in countries with freer markets. 

 

Arizona state representative Sonny Borrelli (R) remarked that crime rates in his state dropped 78 percent since the passage of that state’s infamous SB1070 in 2010. His remark was thoroughly debunked. Below are a few charts to put Arizona’s crime rates in context. 

It is very difficult to show causality between a law and its effect on crime in later years. Crime rates have trended downward in the United States for over 20 years now. It is difficult to credit any decline after 2010 to a specific Arizona immigration law.  Also, Arizona’s crime rate cannot be considered in isolation. Comparing it to neighboring states and the country as a whole which did not pass an SB1070-type bill is necessary to even get a slight hint of how that law on crime.  Furthermore, there is a vast empirical literature on the effect of immigration on crime. At worst, immigration has almost no effect on crime. At best, immigration decreases crime rates.   

All of the figures are presented as a rate of crime per 100,000. The violent crime rate in Arizona was declining before SB 1070 and continued to decline afterward (Figure 1). From 2009 to 2014, the Arizona violent crime rate declined by 6.3 percent while it dropped 13 percent nationally. There was a decline of 16.3 percent in California, 9.9 percent  in Nevada, and 5.5 percent in New Mexico. 

Figure 1

Violent Crime Rate

 

Source: FBI.

Like the violent crime rate, the property crime rate in Arizona was also declining before SB 1070 and continued to decline afterward (Figure 2). From 2009 to 2014, the Arizona property crime rate decline by 10.9 percent while it dropped 14.6 percent nationally. It declined in every other state: 10.6 percent in California, 14.3 percent in Nevada, and 4.6 percent in New Mexico.

Figure 2

Property Crime Rate 

 

Source: FBI.

Since much of SB1070 was struck down by the courts it should be even more difficult to pinpoint its effect on crime.

In 1960, the Murr family purchased a 1.25-acre lot (Lot F) in a subdivision on the St. Croix River in Wisconsin. They built a recreation cabin on the lot. Three years later, the family decided to purchase an adjacent 1.25 acre lot (Lot E) as an investment. The family did not build on Lot E, and the parents later gave their children the property. When the children began to look into selling Lot E, the government said that they couldn’t. Why? Because regulations passed after both lots were purchased require a bigger “net project area” (the area that can be developed) than either lot had by itself. Because the lots were commonly owned, the government combined them into one unit and, consequently, prohibited the development or sale of what was once Lot E.

Combining the lots essentially eviscerated the independent value that Lot E once had. The Murrs filed suit against Wisconsin and St. Croix County, arguing that the governments’ action violated the Fifth Amendment Takings Clause by depriving the Murrs of the value of the property (Lot E) without just compensation. Regulatory takings cases like this one are analyzed under the Penn Central test, which applies its three factors to “the parcel as a whole,” thus making the definition of “the whole parcel” highly relevant and even determinative, as it was here. The governments’ defense in the Murr case is a tricky mathematical manipulation: By considering Lot E and Lot F together, the government argues that the taking is not unconstitutional because it affects only half of “the parcel.” But, the Murrs argue, if Lot E is analyzed individually, then the government took the whole thing.

Defining “the parcel as a whole” has been a long-disputed issue, so the Murrs, represented by the Pacific Legal Foundation, sought, and received, Supreme Court review after the Wisconsin Supreme Court declined to hear the appeal from the Wisconsin Court of Appeals, which is a pretty unique way for the Court to take a case. This gives property rights advocates hope that the Supreme Court will bring some clarity to the muddied waters that are the Penn Central test’s three factors. The government should not be allowed to combine lots simply because they have a common owner, and it should especially not be allowed to do so in order to avoid paying the “just compensation” required by the Fifth Amendment. The Cato Institute has filed a brief in support of the Murrs urging the Court to clarify Penn Central. Although the Court has attempted in a few other cases to clarify its test, it remains unclear what the factors even mean, how they are to be measured, how they relate to one another, and how they are to be weighted. Despite, or perhaps because of, the muddled nature of the test, the government wins the vast majority of regulatory takings cases.

Adopting a bright-line rule here in the narrow context of determining what constitutes “the parcel as a whole” would bring some clarity to the Penn Central test and help protect property rights. Any rule permitting the combination of adjacent parcels would exacerbate Penn Central’s problems by leaving the lower courts to determine when combination is permissible and when it is not. Already the lower courts disagree on this issue, leading to greater uncertainty and less protection for property rights. This destabilizes property owners’ reliance interests and discourages property investment. State and local governments across the country have been using the vagueness of Penn Central to facilitate taking private property without just compensation. By clarifying the “parcel as a whole,” the Court can curtail one type of eminent domain abuse.

One of the most feared of all model-based projections of CO2-induced global warming is that temperatures will rise enough to cause a disastrous melting/destabilization of the Greenland Ice Sheet (GrIS), which would raise global sea level by several meters. But how likely is this scenario to occur? And is there any way to prove such melting is caused by human activities?

The answer to this two-part question involves some extremely complex and precise data collection and understanding of the processes involved with glacial growth and decay. Most assuredly, however, it also involves a scientifically accurate assessment of the past history of the GrIS, which is needed to provide a benchmark for evaluating its current and future state. To this end, a recent review paper by Vasskog et al. (2015) provides a fairly good summary of what is (and is not) presently known about the history of the GrIS over the previous glacial-interglacial cycle. And it yields some intriguing findings.

Probably the most relevant information is Vasskog et al.’s investigation of the GrIS during the last interglacial period (130-116 ka BP). During this period, global temperatures were 1.5-2.0°C warmer than the peak warmth of the present interglacial, or Holocene, in which we are now living. As a result of that warmth, significant portions of the GrIS melted away. Quantitatively, Vasskog et al. estimate that during this time (the prior interglacial) the GrIS was “probably between ~7 and 60% smaller than at present,” and that that melting contributed to a rise in global sea level of “between 0.5 and 4.2 m.” Thus, in comparing the present interglacial to the past interglacial, atmospheric CO2 concentrations are currently 30% higher, global temperatures are 1.5-2°C cooler, GrIS volume is from 7-67% larger, and global sea level is at least 0.5-4.2 m lower, none of which signal catastrophe for the present.

Clearly, therefore, there is nothing unusual, unnatural or unprecedented about the current interglacial, including the present state of the GrIS. Its estimated ice volume and contribution to mean global sea level reside well within their ranges of natural variability, and from the current looks of things, they are not likely to depart from those ranges any time soon.

 

References

Reyes, A.V., Carlson, A.E., Beard, B.L., Hatfield, R.G., Stoner, J.S., Winsor, K., Welke, B. and Ullman, D.J. 2014. South Greenland ice-sheet collapse during Marine Isotope Stage 11. Nature 510: 525–528.

Vasskog, K., Langebroek, P.M., Andrews, J.T., Nilsen, J.E.Ø. and Nesje, A. 2015. The Greenland Ice Sheet during the last glacial cycle: Current ice loss and contribution to sea-level rise from a palaeoclimatic perspective. Earth-Science Reviews 150: 45-67.

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