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Results of last week’s DC voucher study, showing some significant negative effects on standardized math tests, has school choice opponents in overdrive writing voucher obituaries. But at least some commentators, like the New York Times’ David Leonhardt, concede that choice works, but only if it is shackled to regulations they like. That choice works if carefully managed is perhaps an inevitable concession with the broad notion of school choice clearly in ascendance. However, the idea that regulated choice produces better outcomes flies in the face of basic economic theory and choice research.

Negative Impacts of Regulation

State requirements often come in the form of standardized test scores or restrictions on the types of teachers that may be employed. These regulations force schools to focus narrowly on state tests, which do not appear to matter in the long-run, and limit the supply of teachers, lowering educational quality while increasing costs.

As I illustrate below, programs with less restrictive voucher laws lead to more impressive experimental evaluations of student math achievement, perhaps because the costs of regulation ward off high quality private institutions:

Vouchers > Charters

In “free” public charter schools, bureaucrats decide how much education ought to cost per child, and each charter school is limited to accepting that amount, even if it is a high performing institution.  The lack of price differentiation in charter schools is detrimental since it does not give institutions the incentive, nor the information, necessary to innovate or excel.

Unsurprisingly, the empirical evidence supports economic theory.  While the DC Opportunity Scholarship has mixed results on test scores, the effects are clear for long-term outcomes: a massive 21-percentage point increase in graduation rates.  Perhaps more importantly, private school choice programs in the United States have significantly improved communities overall through decreased criminal activity, reduced state expenses, and racial integration.

It should not astonish us that families are selecting schools that do not specialize in producing obedient test-taking machines. Naturally, it is likely that parents care less about standardized tests than the overall development of their children. In that sense, the recent evidence only reinforces the fact that markets behave as expected, even in the realm of education. If we really want to ensure that children have access to high quality schools, we ought to use the most powerful form of regulation that we have: parental choice.

Police shootings are back in the news. Michael Slager has pleaded guilty to federal charges involving the killing of Walter Scott. Federal officials have declined to bring charges against the officers involved in the shooting death of Alton Sterling. Meanwhile Texas officer Roy Oliver has been fired in the wake of the shooting death of 15 year old Jordan Edwards.

Each shooting incident has to be considered separately to take account of all the surrounding circumstances. There are a range of possibilities—from self-defense on the part of the officer, to tragic accident or mistake, to manslaughter or even first degree homicide. To ensure just outcomes, one of the most important things is to have independent, impartial investigations whenever there is a questionable shooting, especially where someone is killed or injured. Preferably, this will be done by a completely separate police department or the state attorneys general office, rather than the federal government. Another best practice for police shootings involves transparency. Police departments should identify the shooter and disclose his or her record, such as previous involvement in shootings or previous lawsuits alleging wrongdoing. Authorities should also make videos available. Mayor Rahm Emanuel tried to make the Lacquan McDonald case go away with a quiet legal settlement. It was only when a reporter went to court to seek the release of the video that the scandal was exposed and real movement for police reform could begin. 

For related Cato work, go to our police misconduct web site. Still more here, here, and here.

At the contentious interface of climate science and policy, there’s one thing that people of all flavors agree upon: if Greenland were to shed all its ice in a century that would be an unmitigated catastrophe, raising sea levels an average of 22 feet simply from the sheer volume of water contained thereon.

It therefore stands to reason that a melting Greenland makes for good copy, and The Economist’s witty scribes have just published two alarming articles (here and here). Alarming, that is, because they left out a few pertinent facts.

“The most worrying changes are happening in Greenland, which lost an average of 375bn tonnes of ice per year between 2011 and 2014.”

This is a finely selected cherry that The Economist plucked. 2012 was an exceedingly warm year averaged of the island-continent. Had they included all the recent data, they would have shown that accumulation of ice on Greenland recently reached a record high compared to the previous three decades:

Source:  Danish Meteorological Institute

“This is equivalent of over 400 massive icebergs measuring 1km on each side disappearing each year.”

At the turn of this century, the U.S. Geological Survey reported the volume of Greenland’s ice at 2,600,000km3. The maximum melt of 400km3 is a grand total of 1/5000th of its ice.

The United Nations’ Intergovernmental Panel on Climate Change (IPCC) projects that melting of Greenland’s ice will raise sea level a bit under one-tenth of a meter, or three inches by 2100. 

“Even if current emissions remain stable, the consensus is that global sea levels will rise 74cm [29 in] by the end of the century.”

Nope. The same IPCC science summary projects around 38cm [15in] for this scenario.

With regard to the much-feared sudden loss of Greenland’s ice, we read that “little is known about how Greenland’s vast ice sheet will react to future warming.”

Well, when it comes to the big one, no, not really. A 2013 ice core got all the way back to the beginning of the previous interglacial, when there was a 6,000 year period of very warm summer temperatures. Prior to this work by Dorthe Dahl-Jensen and her colleagues, it was thought summer temperatures in this period, called the Eemian, were about 2⁰C warmer than the 20th century average over northwest Greenland, where the core was drilled. 

Instead, Dahl-Jensen found that it averaged a whopping 6⁰ warmer. She estimated this was associated with a maximum loss of about 30% of Greenland’s ice. That may be charitable because where she drilled, in the cold northwestern region, the ice core revealed that the thickness of the ice was reduced by about 10%. Another, more recent study also found 6⁰C of warming, this time at Summit, where Greenland’s ice cap reaches maximum elevation. That work did not use the ice itself to estimate the Eemian altitude, but a computer model, which showed around a 70% loss of total Greenland ice.

So this much heat rained down on Greenland during the Eemian: 6⁰C X 6,000 summers, or 36,000 degree-summers. And let’s say, maybe, humans could warm it 5⁰C for 500 summers, or 2,500 degree-summers. That would only knock 2500/36000 of the maximum 30% of the ice off, or two percent. This works out to five inches of sea-level rise from the melting of Greenland in the first study and 13 in the second one. 

Most readers likely will not click through the links and read the journal article behind the headlines, nor have a friendly local climatologist to debunk these sort of stories. No wonder so many are so worried.

Writing in The Wall Street Journal on April 27–making another last-ditch pitch for a 20% border tax on business imports–Martin Feldstein asserts that unless corporate tax rate cuts are “offset” by tax increases on imports or payrolls then larger projected deficits would crash the stock market by raising long-term interest rates. “The markets’ current fragility,” he writes, “reflects overpriced assets–the S&P 500 price/earnings ratio is now 70% above its historical average–after a decade of excessively low long-term interest rates engineered by the Federal Reserve.” 

The odd notion that the Fed could somehow depress bond yields for a decade is an irrelevant ambiguity, since the whole point of Feldstein’s story is to claim budget deficits raise bond yields and higher bond yields threaten “overpriced” stocks.

In a recent blog, I found no evidence to support the dogma that bond yields rise and fall with rising or falling budget deficits (actual or projected). Wall Street Journal columnist Greg Ip opines that “interest rates haven’t responded to deficits lately because private investment has been so lackluster.” But that excuse makes interest rates dependent on private investment, not deficits, and leaves us tangled in circular illogic. If interest rates depend on private investment and deficits “crowd out private investment,” then interest rates could never respond to deficits because private investment would always be lackluster when deficits were large (which would also make deficits the opposite of a “fiscal stimulus”).

Switching from bonds to stocks in this blog, I find no evidence that the S&P 500 stock index is “overpriced” relative to long-term interest rates (which is the only meaning of “overpriced” that relates to Feldstein’s argument about deficits and bond yields).

Feldstein claims stocks are “overpriced” because “the S&P 500 price/earnings ratio is now 70% above its historical average.” But there is no reason to expect the p/e ratio to revert to its long-term average unless bonds yields revert to their long-term average.

The graph illustrates this connection by inverting the trailing S&P 500 price/earnings ratio and expressing it as an earnings/price ratio. This became known as “The Fed Model,” though I prefer to call it “The Reynolds Model,” because I first used it in March 1991 (to suggest bonds, rather than stocks, were overpriced). From 1970 to 2016, the average e/p ratio was 6.52 (equivalent to a p/e ratio of 15.2) while the average yield on 10-year bond yield was almost identical at 6.57%. That connection between stocks and bonds has been quite close over the long haul (though not before August 1971 when the dollar was convertible into gold).

An oversimplified thumb rule from Investopia says, “If the earnings yield is less than the rate of the 10-year Treasury yield, stocks as a whole may be considered overvalued.” In 2016, the earnings yield of 4.17 was about twice as high as the 10-year Treasury yield of 1.84, which suggests the earnings/price ratio was then too high and therefore the price/earnings ratio (or bond yield) was too low

On May 1, 2017, the p/e ratio was 25.26, which is equivalent to an e/p ratio of 3.96 (=1/25.26). Since an earnings yield of 3.96 is obviously much higher than recent bond yields of 2.3%, the market is still “undervalued”–not “fragile.”

If bond yields rose to 3.96% (much less to the historical average of 6.57%), that might indeed pose a risk to stocks–unless there was an offsetting rise in expected earnings. However, Feldstein wouldn’t dare to predict that U.S. bond yields may approach 4-7% in the foreseeable future regardless what happens to budget deficits. And his assumed connection between deficits and bond yields is pure conjecture, without credible empirical support.

Feldstein’s latest argument for adding new import or payroll taxes relies on budget deficits pushing up bond yields and thus threatening “overpriced” stocks. Unfortunately, those claims about deficits, bonds, and stocks all rest on faulty theories and nonexistent evidence. 

Border apprehensions of illegal immigrants are substantially down in the first few months of the Trump administration. In fact, the border apprehension figure for the month of March is only 16,600, the lowest monthly figure since 2000. Apprehensions are an important proxy metric for the inflow of illegal immigrants. Many are giving credit to the Trump administration for this rapid and seemingly historical collapse in illegal immigration.

There was another historical decline in border apprehensions that was even quicker, more dramatic, and far cheaper than the decline in border apprehensions that began in 2006 and has trended downward to the Trump administration. It occurred in the 1950s when the government streamlined the Bracero guest worker visa program and allowed more legal migration. These two periods of time lasted about the same number of years and provide an easy comparison between two means of diminishing illegal immigration: by making it legal or doubling down on enforcement.

The border patrol apprehended virtually the same number of illegal immigrants in 1954, when the deregulated Bracero program began operation, as in the year 2006. The deregulated Bracero program lasted from 1954 to about 1965 and the 2006 decline has lasted until today. Apprehensions fell after both of those but they fell further and much more rapidly in the 1950s (Figure 1). Apprehensions declined by 93 percent from 1954 to 1956 but only by 34 percent from 2006 to 2008. Figure 2 shows the same numbers indexed to 1 in the first year. Clearly, the Bracero Era witnessed a much more rapid and complete decline in illegal immigrant entries than the crackdown from 2006 to today.

Figure 1
Border Patrol Apprehensions

Sources: USCIS, CBP, and INS.

Figure 2
Border Patrol Apprehensions, Indexed

Sources: USCIS, CBP, and INS.

There are more border patrol agents in the 2006-2017 period than during the Bracero Era. The 2006-2017 period began with 11.4 times as many agents as in the Bracero Era and ended with 13.3 times as many while the decline in apprehensions was slower and less complete (Figure 3). From the beginnings of the two periods, the number of border patrol agents climbed by 38 percent in the Bracero Era and by 61 percent in the 2006-2017 period. The indexed number of border patrol agents shows that the agency grew more under the 2006-2017 period (Figure 4).

Figure 3
Border Patrol Officers

Sources: USCIS, CBP, and INS.

Figure 4
Border Patrol Officers, Indexed

Sources: USCIS, CBP, and INS.

These two periods are not perfectly comparable. The decline in border apprehensions since 2006 was aided by the housing market collapse, the Great Recession, the 61 percent increase in the number of border patrol agents, the relative demographic decline in Mexico, numerous state-level laws immigration enforcement laws, Secure Communities, and the increase in interior deportations under Presidents Bush and Obama. The Bracero Era collapse in illegal immigration occurred during an expanding domestic economy, a 38 percent increase in the number of border patrol agents, accelerating Mexican fertility, and a fiercely named but relatively moderate interior immigration enforcement scheme that also legalized many illegal workers. Although imperfectly comparable, many natural, political, and macroeconomic factors conspired to lower illegal immigration since 2006 while most of those factors pushed in the opposite direction during the Bracero Era–providing further evidence that Bracero was more effective than enforcement-only.

The Bracero Era’s immigration enforcement policy was called “Operation Wetback,” a nasty immigration enforcement operation begun in 1954 that removed almost two million illegal Mexican migrants. While brutal and unnecessary, many of the migrants rounded up under Operation Wetback were legalized on the spot, a process derogatorily referred to as “drying out” illegal migrant workers, and given a Bracero work visa. The number of migrants “dried out” is not well recorded but 96,239 were processed thusly in 1950. The Department of Labor actually preferred legalized illegal migrants over newly-admitted Braceros. Other apprehended illegal immigrants were made to “walk around the statute”–basically taking a single step into Mexico and then returning under the watchful eye of a border patrol agent who then handed him a work visa and drove him back to his farm. The government did not tolerate illegal immigration but they made it simple for migrants to get a guest worker visa and used the border patrol to funnel the migrants into the legal system. Many border patrol agents and other officials testified to what a success Bracero was in reducing illegal immigration.

The main goal of modern immigration policy is to end illegal immigration. The government should choose the cheapest way to accomplish that task–which is by expanding guest worker visas. Border patrol agents and walls are expensive, they decrease economic growth, and have never completely stopped illegal immigration. Guest worker visas are cheap, they increase economic growth, and they reduced illegal immigration far more rapidly and effectively than the modern enforcement-only method. If it was easier for would-be illegal immigrants to instead earn a legal work visa similar to Bracero then almost all future and current illegal immigrants could be funneled into the legal market without increased enforcement. This was the policy followed in the Bracero Era and it worked quicker, more efficiently, more completely, and more cheaply than the modern enforcement-only approach.

If the Trump administration really wants to end illegal immigration then they should copy Eisenhower’s policy of enforcement and liberalization toward guest worker visas rather than Obama’s enforcement-only approach.

Private school choice programs have been proposed in state legislatures all across the nation, and public interest in the term “school choice” reached an all-time high earlier this year. Since school choice programs create accountability to parents and children, education scholars have discussed whether state-driven accountability is on the wane. While robust accountability to the state is essential in traditional public schooling institutions, it is inferior to accountability to every single family.

Necessary in Involuntary Settings

Accountability to the public is necessary in schools with compulsory attendance based on age and zip codes. What would happen if state officials did not set minimum standards? Public schools could serve children inadequately and even harm them to a certain degree before parents were forced to decide whether to pay out of pocket for a private institution or move. In many cases, parents would not be able to afford to opt out of the free school due to income constraints.

Suppose you were required to send your child to a residentially assigned public restaurant until they were eighteen years old, because, after all, nutrition may be the most basic right of them all. If your child becomes sick from food poisoning, you may still decide to keep them there based on income restrictions and perceived differences in quality. Of course, the state would need to intervene in order to keep the compulsory public restaurants accountable to minimum safety and, perhaps, taste standards.

Political Process Problems

While state accountability is necessary in the public sphere, we should recognize the shortcomings. First, who is deciding what the standards ought to look like, and how do we keep those people accountable? The commonly cited answer is that state officials are held accountable to the public through the political process. The main problem with that argument is that it assumes that the political process is efficient in holding bureaucrats accountable. 

Inefficiency runs rampant in the political sphere because voters do not have an incentive to become politically knowledgeable. If I am voting in a presidential election, for example, I have around a 1 in 60,000,000 chance of determining the outcome. On the other hand, it is extremely costly to gain information on every policy that a given politician talks about and influences. The counterintuitive result is that voters actually make a rational decision to be politically irrational.

Even if all voters were completely rational, we would still face the problems associated with majority rule. Policies around educational standards result from the most politically powerful groups in society. The consequence is that children from disadvantaged groups are harmed by the uniform set of standards decided by the elites. 

Similarly, suppose we went into the grocery store and voted on the cart that we received. Even if we were in the majority and got the cart that we preferred, we would still end up with some of the things we wanted, and much of what we did not care to have. 

Consequences of Central Planning

I have sat in many rooms filled with intelligent people attempting to determine what educational accountability systems ought to look like. What measures should we focus on? What weights should we assign to each measure? What do we do to schools that do not meet goals? Each individual truly tries their best to improve the educational experiences of all children. However, it is sadly an impossible problem to solve, especially given the constraints of the traditional system of schooling.

Perhaps most importantly, something as small as altering the weight of a certain accountability measure is likely to change the life trajectory of many children. Should character skills assessments count as 11% or 10%? If we arbitrarily decide on 10%, rather than 11%, we may very well harm children at the margin that desperately needed behavioral development. The result? Moving the needle in the wrong direction could mean that one more child, at the margin, ends up in prison for the rest of their life.

We should not force children to suffer the consequences of the political process. Instead, we should allow all families to get what they want through voluntary educational choices, regardless of income level or political power.

There was–perhaps still is–a Cuban aphorism that “Sugar is made with blood.” Few other people were better situated to actually comment on what went into producing sugar (consumed all the way from England to India) than those whose labor created it. None knew more intimately than the slave just how much human misery was squeezed into every cup. Sugar and tobacco were the New World’s primary cash crops because their stimulating and addictive chemistries gave European aristocrats incredible amounts of wealth and power. Factory workers dumped sugar into their tea to up calorie counts and make it through the day while corporatists and slave masters reaped a harvest of stimulated profits. The slave’s blood fed the production of cane, and cane fed the new generations of drudge workers. Sugar, in many regards, was made with blood, and history is much the same. But to find out just how sanguine our cup is, we have to be willing to ask disturbing questions. To enjoy tales about the good times and the pleasant things, the heroes and victories, we have to be direct and honest about our past.

Libertarianism.org’s newest podcast, Liberty Chronicles, will present listeners with a humane history of Liberty and Power, neither romanticizing the present nor failing to bluntly analyze the past. The saga of human history is incredibly painful and, often, not terribly inspirational. In many ways, it is a long train of cautionary tales each of which has failed to adequately instruct successive generations. Despite the constant stream of evidence that prosperity requires peaceful cooperation, we consistently fail to improve ourselves. We ignore our true histories–the painful catalog of who exercised violence against whom–to tell myths that temporarily bandage any serious wounds.

To understand more fully who did what to whom and why, we have to be willing to jettison our preconceived notions about the world we know and love. We have to stop trying to justify history and begin really listening to its record. We have to break from the nationalistic, hopeful narratives of an ever-improving synthesis and recognize that the past offers us no nice, neat little lessons or predetermined end-points. Having done these ideological exercises, we can commit ourselves to exploring the past from the perspectives of those actual human beings who created and lived it. With a bit of practice, we can start training ourselves to practice empathy and sympathy by straining to understand people so radically different from ourselves.

Liberty Chronicles combines libertarian methodology with a variety of historical theories and perspectives. We will help listeners eschew academic gatekeepers and propagandizers, taking up Carl Becker’s famous invitation that “Everyman” become “His Own Historian.” We begin today with a discussion of H.L. Mencken’s history of the bathtub and over the next several weeks we will broaden our ideological toolkit to prepare for investigations of our own. Having covered history from above, history from below, Marxism vs. Classical Liberalism, methodological individualism, and conspiracy theory, we will move to the Early Modern period and the development of Liberty and Power in colonial America. From there and then, the battle between those seeking liberty and those seeking power has remained an open contest. Subscribe on your favorite podcatcher, add us on Facebook and Twitter, send us your questions, share the news far and wide all across the land! The history of libertarianism and its war on power is more relevant and necessary now than perhaps ever before.

I heard a report this morning on BBC Newshour on the shortage of dentists in Ivory Coast (Cote d’Ivoire). I can’t find the report at the Newshour website, but here’s something similar from CNBCAfrica, coauthored by a Unilever representative. It’s a sad story of disease, pain, and school absenteeism.

But stories like this miss the point. Why does Ivory Coast have so few dentists? Why does the Gates Foundation need to buy mosquito nets for African countries? It’s not because there’s something special about dentists and mosquito nets. It’s because African countries are poor. And they’re poor because they lack freedom, property rights, markets, and the rule of law.

Take Cote d’Ivoire. In the 2016 Economic Freedom of the World Report, Cote d’Ivoire ranks 133rd in the world for economic freedom. On page 66 of this pdf version, we see that it rates particularly badly on “Legal System and Property Rights.” You can’t generate much economic growth if you don’t have secure property rights and the rule of law. It also rates badly on regulatory barriers to trade and capital controls. 

On the broader Human Freedom Index, we see on page 63 that Cote d’Ivoire also rates low for freedom of domestic movement, political pressure on the media, and procedural, criminal, and civil justice.

African countries have severe tariff and nontariff barriers to free trade, reducing the benefits they can gain from specialization and the division of labor, even among sub-Saharan countries themselves.

The long-term way to get more dentists and mosquito nets in Africa is not Western aid or charity, it’s freedom and growth. Those who want Africa and Africans to have better lives need to encourage African countries to move toward the rule of law, free trade, property rights, and open markets. 

The American Public Transit Association (APTA) has a new report on the economic impact of President Trump’s proposal to stop wasting federal dollars on digging holes and filling them up. Actually, the report is about Trump’s proposal to stop wasting federal dollars building streetcars, light rail and other local rail transit projects, but the two have almost exactly the same effect.

The APTA report says that digging holes and filling them up would provide about 500,000 jobs (though it really means job-years, that is, 500,000 jobs for one year). Since APTA says it would take ten years to dig and fill the holes that Trump wants to stop funding, that’s 50,000 jobs a year.

However, nobody wants a job digging holes and filling them up. What they want is income. Since there is no market for refilled holes, the only source of income for digging and filling holes is tax dollars. So what APTA really wants Congress to do is take money away from workers and then give it back to them and call it jobs. That’s not very productive.

The APTA report also says that refilled holes create economic development that will generate another 300,000 more jobs (which again really means job-years). Supposedly, people like living, shopping, and working next to refilled holes and so they will clamor to have homes, stores, and offices built next to those holes.

I don’t believe that’s true, but let’s say it is. If we don’t dig and refill the holes, people will still need to live, shop, and work somewhere. So the homes, stores, and offices will still be built, though (if you believe in the hole-location theory) they might be built in some part of the city other than next to the undug holes. Thus, digging holes creates zero net secondary jobs.

In fact, digging and refilling holes probably creates negative secondary jobs for the cities digging them because someone has to pay for those holes. The federal capital grants program only pays half the cost of digging and refilling the holes, and the locals have to pay for the rest. After the holes are dug, local taxpayers have to pay most of the cost of maintaining the refilled holes as settling is likely to occur. The local construction and maintenance costs put a huge burden on the local tax base, and some businesses are likely to locate in a city that isn’t obligated to pay for such holes.

In comparing streetcars, light rail, and other forms of rail transit to holes, some people might think I am unfair to holes. After all, holes don’t require annual operating costs like rail transit, and their maintenance costs are also a lot lower. For example, Washington DC used federal dollars to dig some holes and put trains in them, and now it faces a $25 billion maintenance backlog. If they had just left the holes empty, or filled them with dirt–or better yet not dug them at all–they wouldn’t have to worry about who is going to pay for that backlog.

As Will Rogers once said, “If you find yourself in a hole, stop digging.” The rail transit construction of the past 50 years has dug a huge hole that has cost taxpayers hundreds of billions of dollars and coincided with (and arguably contributed to) a decline in per capita transit ridership.

Whether we are talking about holes or building rail transit, the effect is the same. APTA wants Congress to take money from taxpayers so it can give it back to them and claim it is giving them jobs. APTA also wants local governments to take money from taxpayers so they can claim they are making cities more productive. But neither holes nor rail transit produce the income needed to sustain jobs nor do they make urban areas more economically productive. All they do is enrich a few contractors while adding to the overall tax burden. That’s why I think Trump’s policy of ending federal support to holes and other strictly local projects is a good idea.

The northern end of the Antarctic Peninsula is Warming Fast
BBC, August 23, 2012

No, it’s not. When BBC reported this, the Northern Peninsula hadn’t on average warmed a lick in thirty years.

In the 1990s and early part of this century, news reports about the dramatic warming of the northernmost Antarctic Peninsula—the tip of the 800-mile dagger pointed at the heart of Tierra del Fuego—were a common staple. And, while scientists wouldn’t write this in the literature, they were happy to blame it on dreaded carbon dioxide on television, as paleoclimatologist Robert Mulvaney did in the 2012 BBC feature.

The story has become increasingly curious. Marc Oliva of the University of Lisbon recently examined the high quality weather stations over the northern peninsula and the nearby South Shetland Islands. There is a decent warming trend, averaging around 1.5⁰C, from the beginning of the data in 1957 (the year when Antarctica was instrumented as a part of the International Geophysical Year) to the early 1980s, or about a quarter-century. That’s a warming, if it continued (and surely it would!), of 6⁰C per century. The warming that gets huge attention is actually only from a single station, Faraday (now renamed Vernadsky), which warmed roughly 2.5⁰C during the same period. If that continued (and surely it would!), that’s 10⁰C/century!

Oliva et al. wrote that the “Faraday/Vernadsky warming trend is an extreme case, circa twice those of the long-term records from other parts of the AP.” The variability in the Faraday/Vernadsky record is also huge—around three times as much as other stations in the area, probably because it is often at the edge of the sea-ice.

Satellite data show that sea-ice around Antarctica grew from when satellite data began in 1978 through early 2016, especially after 2000. Last April, the satellite’s sensor started sending back bizarre data. The University of Illinois people who archive this at Cryosphere Today have been using backup sensors that are giving completely strange stuff, such as a huge crash in Antarctic sea ice—larger and faster than anything in the record—followed by an even larger gain. That seems impossible, so recent sea ice data are just plain suspect.

The data shown below are from Olivia et al. What is obvious is since the early 1980s—over three decades ago—there’s no net change of which to speak. And if you want to be picky about it, there a net decline in temperature that begins in the late 1990s, the same time the infamous “hiatus” in global warming started.

Last year, John Turner published a paper in Nature providing evidence that the lack of recent warming is consistent with natural variability as well as the previous warming. To wit:

Therefore all of these [nearby ice-core] studies suggest that the rapid warming on the AP [Antarctic Peninsula] since the 1950s and the subsequent cooling are both within the bounds of the natural decadal-scale variability of the region.  

 

But that’s not what the public hears.

References:

Oliva, M, et al.,  2017.  Recent regional climate cooling on the Antarctic Peninsula and associated impacts on the cryosphere.  Sci. Total Environment  580 210-223.

Turner, J. et al., 2016.  Absence of 21st century warming on Antarctic Peninsula consistent with natural variability.  Nature  535 411-415.

Mulvaney, R., et al., 2012. Recent Antarctic Peninsula warming relative to Holocene climate and ice-shelf history. Nature  489, 141-144.

In a column in today’s  New York Times, Steven Rattner attacks Trump’s tax plan for being unrealistic. Since I also think the proposal isn’t very plausible, I’m not overly bothered by that message. However, Rattner tries to bolster his case by making very inaccurate and/or misleading claims about the Reagan tax cuts.

Given my admiration for the Gipper, those assertions cry out for correction. Starting with his straw man claim that the tax cuts were supposed to pay for themselves.

…four decades ago…the rollout of what proved to be among our country’s greatest economic follies — the alchemistic belief that huge tax cuts can pay for themselves by unleashing faster economic growth.

Neither Reagan nor his administration claimed that the tax cuts would be self-financing.

Instead, they simply pointed out that the economy would grow faster and that this would generate some level of revenue feedback.

Which is exactly what happened. Heck, even leftists agree that there’s a Laffer Curve. The only disagreement is the point where tax receipts are maximized (and I don’t care which side is right on that issue since I don’t want to enable bigger government).

Anyhow, Rattner also wants us to believe the tax cuts hurt the economy.

…the plan immediately made a bad economy worse.

This is remarkable blindness and/or bias. The double dip recession of 1980-1982 was the result of economic distortions caused by bad monetary policy (by the way, Reagan deserves immense credit for having the moral courage to wean the country from easy-money policy).

But even if one wants to ignore the impact of monetary policy, how can you blame the second dip of the recession, which began in July 1981, on a tax cut that was signed into law in August 1981?!?

Moreover, while Reagan’s tax cut was adopted in 1981, it was phased in over several years. And because of previously legislated tax increases, as well as inflation-driven bracket creep (prior to 1985, households were pushed into higher tax brackets by inflation even though their real income did not rise), the economy did not enjoy a tax cut until 1983. Not coincidentally, that’s when the economy began to boom.

Rattner even wants us to believe the Reagan tax plan caused higher interest rates.

…the Reagan tax cut increased the budget deficit, helping elevate interest rates over 20 percent, which in turn contributed to the double-dip recession that ensued. The stock market fell by more than 20 percent.

The deficit jumped mostly because of the double-dip recession, just as red ink always climbs when there is an economic downturn.

And interest rates were high largely because inflation was so high (lenders don’t like to deliberately lose money).

But the most amazing part of the above excerpt is that Rattner wants us to believe the Reagan tax cuts caused the part of the double-dip recession that occurred in 1980, when Jimmy Carter was still president.

That’s sort of like Paul Krugman trying to imply that Estonia’s 2008 recession was caused by spending cuts that took place in 2009!

You also won’t be surprised to learn that Rattner selectively likes Keynesianism.

Big deficits can sometimes be advisable, as they were in aiding recovery from the 2009 recession.

I guess he wants us the applaud Obama’s so-called stimulus and be impressed by the very anemic recovery that followed.

But we’re supposed to overlook the booming economy of the Reagan years.

Last but not least, it’s noteworthy that Rattner - in spite of his bias - endorses part of the Trump tax plan.

I understand our need to lower the corporate tax rate to compete with other countries and adjust other provisions to keep companies and jobs here. Critics are correct that our business-tax structure encourages companies to ship jobs and even themselves overseas.

And when even folks like Rattner realize that the current corporate tax system is indefensible, that explains why I’m semi-hopeful that we’ll get a lower rate at some point in the near future.

Now let’s look at broader lessons from the Reagan tax cuts.

Lesson #1: Lower Tax Rates Can Boost Growth

We can draw some conclusions by looking at how low-tax economies such as Singapore and Hong Kong outperform the United States. Or we can compare growth in the United States with the economic stagnation in high-tax Europe.

We can also compare growth during the Reagan years with the economic malaise of the 1970s.

Moreover, there’s lots of academic evidence showing that lower tax rates lead to better economic performance

The bottom line is that people respond to incentives. When tax rates climb, there’s more “deadweight loss” in the economy. So when tax rates fall, output increases.

Lesson #2: Some Tax Cuts “Pay for Themselves”

The key insight of the Laffer Curve is not that tax cuts are self-financing. Instead, the lesson is simply that certain tax cuts (i.e., lower marginal rates on productive behavior) lead to more economic activity. Which is another way of saying that certain tax cuts lead to more taxable income.

It’s then an empirical issue to assess the level of revenue feedback.

In the vast majority of the cases, the revenue feedback caused by more taxable income isn’t enough to offset the revenue loss associated with lower tax rates. However, we do have very strong evidence that upper-income taxpayers actually paid more to the IRS because of the Reagan tax cuts.

This is presumably because wealthier taxpayers have much greater ability to control the timing, level, and composition of their income.

Lesson #3:Reagan Put the United States on a Path to Fiscal Balance

I already explained above why it is wrong to blame the Reagan tax cuts for the recession-driven deficits of the early 1980s. Indeed, I suspect most leftists privately agree with that assessment.

But there’s still a widespread belief that Reagan’s tax policy put the United States on an unsustainable fiscal path.

Yet the Congressional Budget Office, as Reagan left office in early 1989, projected that budget deficits, which had been consistently shrinking as a share of GDP, would continue to shrink if Reagan’s policies were left in place.

Moreover, the deficit was falling because government spending was projected to grow slower than the private sector, which is the key to good fiscal policy.

Lesson #4: Lower Tax Rates Are Just One Piece of a Larger Puzzle

Having just disgorged hundreds of words on the importance of lower tax rates, let’s close by noting that fiscal policy is just one of many factors that determines an economy’s performance.

Indeed, tax and budget issues only account for 20 percent of a nation’s economic performance according to Economic Freedom of the World.

So it’s quite possible for a nation to be relatively free even with a bad tax system, and it’s also possible for a country to be economically repressed if it has a good tax system.

And this explains why economic freedom increased in America during the Clinton years, notwithstanding the 1993 tax hike. Simply stated, it’s the overall policy mix that matters.

I’ll conclude by noting that aggregate economic freedom in America increased during the Reagan years.

And the biggest reason for the increase was better fiscal policy.

It’s possible that we may also get more economic freedom during the Trump years. Indeed, I gave him a decent score for his first 100 days.

But it takes a lot of political courage to consistently fight for economic liberty in a town that cheers statism. And even though there’s a strong case to be made that there are political benefits to good policy, I’m not overly optimistic that Trump will be another Reagan.

In a recent article for City Journal titled, “How Trump Can Help the Cops,” Heather MacDonald offers about a dozen recommendations to the White House.  In this post, I want to scrutinize a few of those proposals and some of the arguments behind them.

Let me begin, however, by saying that Heather MacDonald was recently threatened by a crowd of protestors (I use that term very loosely here) while visiting a college campus to deliver a lecture.  That was outrageous and inexcusable.   I have met Ms. MacDonald several times, and while we have some strong disagreements on certain subjects, she has always been friendly and courteous.  She holds strong views and makes forceful arguments, but her claims should be answered with better arguments, not intimidation.  As many others have already noted, it is a sad commentary on the state of our universities that such incidents keep happening.  (Thanks to Harvey Silverglate and his colleagues for what they do at FIRE).

Returning now to MacDonald’s article, she says “Sanctuary cities, counties, and states must be severely penalized. These scofflaw jurisdictions, numbering about 300, refuse to cooperate with Immigration and Customs Enforcement (ICE) efforts to deport convicted illegal-alien criminals.”  She continues, “Over just one week in late January 2017, ICE found 206 criminal aliens who had been released back to the streets in defiance of a detention request.”  Okay, so far this is the standard public safety argument against sanctuary cities.  But here’s the claim that is problematic: “Such disobedience of lawful federal requests undermines the constitutional system.”  This is very misleading.

Last week’s ruling, County of Santa Clara v. Donald J. Trump, summarized the law succinctly:

 

An ICE civil detainer request asks a local law enforcement agency to continue to hold an inmate who is in local jail because of actual or suspected violations of state criminal laws for up to 48 hours after his or her scheduled release so that ICE can determine if it wants to take that individual into custody. See 8 C.F.R. § 287.7; Neusel Decl. ¶9; Marquez Decl., Ex. C at 3 (SC Dkt. No. 29-3). ICE civil detainer requests are voluntary and local governments are not required to honor them. See 8 C.F.R. § 287.7(a); Galarza v. Szalczyk, 745 F.3d 634, 643 (3d Cir. 2014) (“[S]ettled constitutional law clearly establishes that [immigration detainers] must be deemed requests” because any other interpretation would render them unconstitutional under the Tenth Amendment). Several courts have held that it is a violation of the Fourth Amendment for local jurisdictions to hold suspected or actual removable aliens subject to civil detainer requests because civil detainer requests are often not supported by an individualized determination of probable cause that a crime has been committed. See Morales v. Chadbourne, 793 F.3d 208, 215-217 (1st Cir. 2015); Miranda-Olivares v. Clackamas Cnty., No. 3:12-cv-02317-ST, 2014 WL 1414305, at *9-11 (D. Or. Apr. 11, 2014). ICE does not reimburse local jurisdictions for the cost of detaining individuals in response to a civil detainer request and does not indemnify local jurisdictions for potential liability they could face for related Fourth Amendment violations. See 8 C.F.R. § 287.7(e); Marquez Decl. ¶¶ 21-15 & Exs. B-D.

By using the term “request,” MacDonald seems to concede that ICE detainers are not lawful orders.  The requests are voluntary.  And yet MacDonald uses the word “disobedience” to describe jurisdictions that choose to decline some requests from ICE.  Again, this is quite misleading.  Let’s say one of my neighbors knocked on my door and said he had changed his mind about hosting a party for his son’s soccer team and wanted to know if I would be willing to host the 30 players and their parents in my home instead.  Let’s say that I resisted the temptation to close the door in his face, but merely declined the peculiar, but lawful request.  Would anyone say that I was disobedient to my neighbor’s lawful request?  No—because disobedient means a refusal to obey a rule or lawful command.  If a homeless person asks you for $10 and you walk on by, would MacDonald say that you were “disobedient” to the homeless person’s lawful request?  I doubt it—and for the same reason it is wrong to say that sanctuary cities and counties are disobedient.  (MacDonald does not explain her additional claim that that by opting to decline an ICE request, cities would be “undermining our constitutional system.”  As the passage above notes, cities might well be violating the Constitution by keeping a person locked up without probable cause.)

Next, MacDonald writes that community members have an obligation to “obey police commands and not resist arrest.”  According to MacDonald, “the vast majority of questionable police shootings over the last several years, as well as the justified police shootings, were triggered by the noncompliance of the victims.”  There are several problems here.  First, noncompliance cannot excuse brutality.  If a shoplifter keeps running after a police officer yells “Halt!” the officer would not be justified in shooting the thief in the back.  When Eric Garner was accused of selling illegal cigarettes on the streets of New York City, he should have put his hands behind his back to be handcuffed, but his noncompliance did not justify the chokehold that led to his tragic death

Second, the police are trained to get people to waive their constitutional rights by blurring the distinction between a command and a request.  So if an officer says, impatiently, “Would you empty the contents of your purse on the hood of the car for me?”  We can’t know whether that is a request or a command.  The Courts say citizens have to assert their rights or they may be deemed waived. To assert our rights against self-incrimination and against consensual searches necessarily entails some degree of “noncompliance” with what the police want.  MacDonald ignores these very serious legal dynamics by telling us to “Comply now, Complain later.”   I hosted a book forum with author James Duane last year in which he lays these issues out in some detail.  Go here for his terrific talk.

MacDonald claims the “vast majority of questionable shootings over the past several years, as well as the justified police shootings, were triggered by the noncompliance of the victims.” This assertion is not supported by data, a reference to another work, or extended argument.  Recall that South Carolina Officer Sean Groubert ordered Levar Jones to produce identification.  When Jones moved to retrieve paperwork from his vehicle to comply, the officer shot him.  Recall also the case from Minnesota involving Philando Castile.  When Officer Jeronimo Yanez pulled over Castile’s girlfriend for a traffic stop, Castile, in the passenger seat, volunteered that he had a concealed firearm and had a lawful permit.  When Castile calmly explained that he wanted to produce his identification and permit, the officer shot at him seven times and killed him. 

Last week, Supreme Court Justice Sotomayor highlighted the case of Ricardo Salazar-Limon, who was pulled over by a Houston police officer for suspected DUI.  Salazar-Limon got out of his car, reluctantly, at the officer’s direction.  When the officer made a move to handcuff him, he started to walk away.  According to Salazar-Limon, within seconds of hearing the officer’s command to “halt,” he was shot.  All agree that police have every right to defend themselves, but we also know that police will be dealing with situations where people do not understand English, where people have hearing problems, where people like Salazar-Limon have had too much to drink.  We can’t have officers using deadly force against people when there is noncompliance with their orders.  As Sotomayor noted, Salazar-Limon’s claim of excessive force was dismissed prior to trial.  The officer may have prevailed at trial with his self-defense claim, but the jury should have been able to hear Salazar-Limon’s side of the story.  Instead a judge dismissed the brutality claim by granting the officer immunity. 

To be clear, I am sure there are shooting cases in which officers shouted instructions, such as “keep your hands where I can see them,” or “get down on the ground,” and the suspect did something else, which might have prompted a reasonable officer to fire in quickly unfolding circumstances.  However, the proposition is whether such scenarios are in fact the “vast majority,” as MacDonald claims.  The point here is that no support is offered for the claim.  We should have more information about police shootings than we do.  Thanks to the Washington Post and the Guardian, we are finally getting a better understanding of these cases.

Last, MacDonald claims that “drug enforcement play no role in disproportionate black incarceration rates.”  Another bold claim, but, again, misleading.  MacDonald draws the attention of readers to incarceration rates, but is that the only place to consider?  When the prisons are filled to capacity, the system starts backing up.  The river of drug cases has to be dealt with somehow.  Officials start scrambling.  Put 4 men in cells designed for 2.  Stack bunk beds in the cafeteria.  Use the county jail, instead of the state system.  Send some cases to drug court. Send more cases to the federal system.  Use supervised probation when necessary. 

The drug trade offers young minority men a chance to make some money.  The police are told to make drug busts.  These dynamics result in constant clashes between police units and young minority men.  Of course, they don’t go to state prison for the first offense of selling or transporting drugs—especially if they’re still in their teens—but the rap sheet starts growing.  After a while, bail will be denied.  If the young men don’t get killed in a turf dispute, they will eventually get a prison sentence.  The Manhattan Institute’s own John McWhorter has put it well: “If the War on Drugs were terminated, the main factor keeping race-based resentment a core element in the American social fabric would no longer exist.  America would be a better place for all.”   MacDonald misses this important insight as to how the drug war harms black Americans.

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

This Sunday, French voters will return to the polls to decide the country’s next president. Last month’s first-round vote reduced the field to two unconventional candidates: Emmanuel Macron, formerly a top official of the left-wing Parti Socialiste and now leader of the fledgling En Marche! party; and Marine Le Pen, until recently the leader of the nationalist-right Front National.

Both candidates are unconventional not just because their parties have never held political power, but because the candidates have fashioned themselves as populist/outsider champions of downtrodden workers. Granted, sans-colluttes appeals are standard fare in French politics, but they have renewed force in this election, following a half-decade of French unemployment hovering around 10% and with youth unemployment (under age 25) well above 20%.

French employment and the country’s overall economy have sagged before, of course. U.S. observers often attribute those downturns in part to France’s labor laws, which they say (with irony) protect current workers by discouraging employers from creating new jobs. But French employment and the country’s economy have also surged before; typically France is Europe’s 2nd largest economy, after Germany. The past several decades have heard many predictions that France has reached “the end of the road” (to borrow from Ronald Reagan in 1964) unless it reforms its labor, entitlements, and other domestic policies, but neither economic doom nor dramatic reform has occurred.

Université du Québec en Outaouais economist Pierre Lemieux explored this in last fall’s cover story for Regulation magazine. It’s a great read if you want to learn more about what has led to France’s current conditions and what may lie ahead.

Friday afternoon, US Secretary of Commerce Wilbur Ross announced a new White House Executive Order to study “violations and abuses” of US trade agreements. The EO itself is hardly remarkable – President Trump’s first 100 Days have featured numerous executive demands for studies, investigations and reports on various international trade issues (without any actual anti-trade actions, so far) – but what was remarkable was the substance of Ross’ speech itself, which appeared to be unaware of certain basic facts about US trade agreements. In this regard, Ross’ statements raise questions about not only the White House’s basic research competence, but also what they’ll eventually produce in their final “trade agreement abuses” report.

A full accounting of the errors and omissions in Ross’ press briefing is beyond the scope of this short blog post, but the four most basic are below. (My Cato colleague Simon Lester handles some of Ross’ confusion surrounding basic World Trade Organization rules and procedures in a separate blog post, so be sure to check that out too.)

ROSS: And as far as I can tell there has never been a systematic evaluation of what has been the impact of the WTO agreements on the country as an integrated whole.

Actually, the US government has produced dozens of studies on the impact of US trade agreements, including the WTO Agreements, over the last decade or so.  Indeed, just last year both the US International Trade Commission and Congressional Budget Office produced comprehensive reviews of how our trade agreements have affected the US economy as a whole, each finding that our trade agreements have produced small but significant net benefits for the US economy in terms of GDP, employment, wages and so forth.  Furthermore, the Government Accountability Office has repeatedly examined the specific issue of US trade agreement enforcement – see, for example: here, here and here – finding limited concerns, while the USDA has often examined the benefits of US trade agreements for the American farm sector.  I could go on, but I think you get the idea.

ROSS: But there are those problems that I mentioned, then there’s also the structural problem of the [WTO] dispute resolution mechanism.  Takes a very long time, and given the composition of the WTO panels, often we’re defeated when people come and appeal it.  Because if the people on the panel are mostly people who are doing the same thing as what you’re complaining about, it’s a little bit hard to get them to vote for you.

WTO dispute settlement does, indeed, suffer from delays – a problem brought about by high use and a staffing crunch – but it’s beyond a stretch to imply, as Ross does here, that it harbors some sort of institutional bias against the United States.  In fact, the United States is very successful in WTO dispute settlement –more so than most other Members.  As my colleague Dan Ikenson noted recently–

The “WTO” doesn’t file complaints at the WTO. WTO members do. And they do so when they are aggrieved and when they are as close as possible to 100% certain that they will prevail if the matter goes all the way through dispute settlement. As a result, complainants prevail almost all of the time – on 90% of adjudicated issues. When the United States has been a complainant (as it has in 114 of 522 WTO disputes over 22 years – more than any other WTO member) it has prevailed on 91% of adjudicated issues. When the United States is a respondent (as it has been in 129 cases – more than any other WTO member), it has lost on 89% of adjudicated issues.

Just as importantly, the United States’ win/loss records in dispute settlement are also good in comparison to other WTO Members.  According to a recent Bloomberg analysis, the United States actually wins more often than average and loses less often than average and has a far better “loss rate” (i.e., we successfully defend more often) than the EU, Japan and China.  Furthermore, the United States itself has a less-than-stellar record of non-compliance with the WTO Agreements and adverse WTO dispute settlement decisions.  How these hard numbers can possibly reflect, as Ross asserts, a “structural problem” with the WTO is beyond me.

ROSS: And I think that points out one of the issues with our current relationship with the World Trade, namely Mexico and others have had very big external tariffs on many, many goods.  U.S. is the least protectionist country.  Many goods come in totally free, and others have little, tiny tariffs, like 2.5 percent.  Countries like Mexico frequently have 15, 20 percent, even more than 20 percent tariffs.

By no conceivable measure is the United States “the least protectionist country” in the world. As I noted last fall, for example, “according to a recent analysis by Credit Suisse, when you add up all forms of trade barriers imposed between 1990 and 2013, the biggest protectionist in the world isn’t China or Mexico but none other than… the United States.”  This includes the 370+ protective duties – often over 100%! – through our trade remedy (antidumping and countervailing duty) laws and our “Buy American” rules for federal procurement – measures that the Trump administration has expressly targeted for expansion.  Even the United States’ basic tariff rates aren’t the world’s lowest – not even close, actually.  As Ramesh Ponnuru recently noted, “[t]he World Bank reports that we have higher average tariff rates than Canada, Israel, the European Union, Japan, and many other countries. Our average tariff level is just slightly below the developed-world average.”  (Using a different tariff metric, the WTO also finds that the United States is not the best.) We also are about average when it comes to restrictions on trade in services.

ROSS: What are some of the problems under WTO?  Its 160-some-odd countries are participants in the WTO, and the vast majority of those are countries that export to us, and in most cases, export more than they buy from us.

The Trump administration’s obsession with trade deficits and balanced trade is well-known at this point, so I won’t rehash all of that here.  Nevertheless, calling the US trade balance a “problem under the WTO” defies the most basic of economics.  In particular, I highly recommend this recent (very short!) explainer from the San Francisco Federal Reserve on what drives the US trade balance and whether trade deficits are really a “problem” per se.  (Spoiler: it’s not the WTO Agreements and no).

There are plenty of substantive questions surrounding the alleged “violation and abuse” of US trade agreements.  Of the top of my head: Are such violations and abuses really pervasive?  Do they actually harm the economy? Either way, what should we do about them? And, finally, is the United States really so innocent here? As such, an assessment of international trade agreement violations and abuses is, in theory, worthy of undertaking.  If the aforementioned errors are any indication, however, the result of the new US investigation won’t provide many good answers.

Congress passed the Fair Labor Standards Act (FLSA) in 1938 to regulate certain employment practices between employers and employees. In order to put the law into effect, Congress delegated authority to the Department of Labor (DOL) to enforce the statute’s provisions. It’s a fundamental legal principle, however, that an executive-branch agency may only regulate those provisions that Congress has actually put into its authorizing statute. Where Congress has not address a certain practice, the agency has no authority to regulate and the practice is presumptively legal.

Fast forward almost 80 years. E.I. Du Pont De Nemours and Co. (better known as DuPont), following standard industry practice, paid their employees for otherwise noncompensable meal breaks, using that compensation as credit towards the time employees spent performing certain work duties (especially “donning and duffing” special clothing and gear) before and after their shifts. The employees sued DuPont in federal court, arguing that the FLSA forbids this type of crediting and that they must be paid overtime pay for the donning/duffing time.

The district court disagreed, finding that the statute was silent about the practice and so DuPont had done nothing illegal under the FLSA. On appeal, the U.S. Court of Appeals for the Third Circuit invited DOL to file an amicus brief regarding whether DuPont had violated the law—essentially allowing it to regulate. DOL admitted in its brief that the FLSA was silent on the issue, but argue that the statute implicitly forbade the practice. The Third Circuit then adopted that view by granting DOL Skidmore deference (by which judges defer to agency interpretations according to their persuasiveness), and reversed the district court’s ruling.

Cato has now filed an amicus brief supporting DuPont’s petition for Supreme Court review. We argue that Third Circuit ignored the basic administrative-law and constitutional axiom that agencies can only exercise the powers delegated to them. Indeed, under Supreme Court separation-of-powers precedent, Congress must give executive agencies at least some “intelligible principle” to follow. The Third Circuit, however, would give any agency a virtually unlimited power to write any regulations it thinks a statute should cover, without any congressional authority.

Moreover, when the court accorded Skidmore deference to the DOL amicus brief, it violated DuPont’s due process rights for two reasons. First, this was the first time in the FLSA’s long history that DOL had ever interpreted the statute to forbid the practice at issue—and two other circuit courts had already ruled that the practice was legal—so DuPont was denied fair notice. Second, by inviting a nonparty government agency into the litigation and deferring to its view, the court decided the case with bias towards one of the parties before it.

The Supreme Court should take DuPont v. Smiley and explain that the Constitution’s separation of powers does not allow such judicial enabling of executive mischief. Administrative agencies simply cannot take it upon themselves to rewrite duly enacted legislation and then thrust their statutory revisions on private litigants for the first time in litigation.

Following Trump’s electoral success in rustbelt states, the spotlight has been on white, rural, post-industrial poverty. J.D. Vance, author of the now-famous memoir Hillbilly Elegy, discussed some possible explanations for rural poverty yesterday in a podcast. In the interview, he suggests that geographic (im)mobility is partly to blame for the erosion of areas like Appalachia: the poor simply aren’t migrating to jobs. 

Vance is right that Americans have limited interest in relocating, and are relocating less than before. According to calculations[1] using University of Chicago data, the proportion of individuals unwilling to relocate for work is high: 42% of Americans say they will not move within the United States for work, and 68% of Americans will not move outside the country for work. A full quarter (25%) of Americans would not consider traveling further for a job, even if the decision resulted in unemployment. Meanwhile, Census data suggests that relocation—whether inter-state, inter-county, or intra-county—is down (Figure 1). 2016 had the lowest relocation rate in seventy years (Figure 2).

Figure 1. Type of Move, 1948–2016

Figure 2: Number of Movers and Mover Rate, 1948–2016

 

Why are people relocating less than ever? One explanation Vance misses is that government policy gets in the way. For example, research provides evidence that land use regulations put pressure on housing prices in high-opportunity areas, which in turn eliminates the fiscal rewards of relocation for the poor and unskilled. Tragically, this means low-income Americans are trapped in job deserts with little in the way of opportunities, amenities, or hope.

You can listen to more of Vance’s interview regarding the causes of white, rural, post-industrial poverty, here.

[1] Author’s own.

Donald Trump’s first 100 days in office have set U.S. foreign policy on a dangerous course. Trump’s actions and rhetoric have raised the profile of America’s military power while weakening other sources of U.S. influence. Such an approach is in line with the “peace through strength” formula Trump espouses. However, the deepening militarization of U.S. foreign policy carries a host of risks and costs that may cause more headaches than victories.

The growing role of the military in U.S. foreign policy is not a new phenomenon. Barack Obama’s presidency was hardly peaceful. This was especially true in the Middle East, where the “light footprint” approach reduced the on-the-ground U.S. military presence but made extensive use of air power to conduct foreign policy by precision strike. However, Obama also spearheaded multilateral initiatives that relied on other sources of American power and influence, such as the Iran nuclear deal and the Trans Pacific Partnership (TPP). Not all of these initiatives were successful, but they demonstrate a foreign policy approach that places value on non-military tools.

Thus far into his presidency, Trump does not seem to share Obama’s appreciation for the value of non-military tools for dealing with foreign policy problems. One of Trump’s first executive orders withdrew the United States from the TPP, a key component of American economic engagement in East Asia. The TPP and a growing American military presence were the two key pillars of the Obama administration’s “pivot to Asia,” with the TPP emblematic of the softer side of U.S. policy. Granted, the TPP was not yet in force when Trump withdrew from it, which mitigates the diplomatic downside of withdrawal. But the loss of economic and diplomatic influence associated with withdrawing from the TPP leaves military power as the primary means for the administration to implement U.S. policy in East Asia. 

Greater reliance on U.S. military power in East Asia is already evident in the Trump administration’s policy toward North Korea. The administration wants to apply “maximum pressure” to Pyongyang in order force them to negotiate on Washington’s terms. As former defense official Van Jackson points out, this theory of victory depends heavily on U.S. military signaling and is more aggressive than previous administrations. Jackson argues, “the Trump administration appears to be a much more permissive—even enabling—environment for such coercive beliefs” due to “the prominence of the Pentagon in President Trump’s national security policy to date.”

Staring down North Korea through displays of military might and rhetoric hinting at military action fits with “peace through strength,” but probably won’t stop North Korea from testing new missiles or accepting the maximal conditions the United States has placed on negotiations.

Relying heavily on U.S. military power in matters of foreign policy is by no means exclusive to East Asia. Trump’s cruise missile strike against Assadspecial forces raid in Yemen, and loosening of the rules of engagement for counterterrorism missions point to a growing role for the U.S. military in Middle East policy. Recently, Trump said that Iran was “not living up to the spirit” of the nuclear deal, despite the fact that the State Department confirmed that Iran is complying with the deal. What the administration will do with the Iran deal remains uncertain, but the deepening militarization of U.S. foreign policy in the Middle East combined with a general hatred of the deal by President Trump point to growing tensions.

Fortunately there are things that Trump can do to rein in the militarization of U.S. foreign policy, if he is so inclined. Filling vacancies at State and Defense with civilian experts would provide additional, non-military voices in the policymaking process. These appointees may not be able to match the influence of the retired and active generals in Trump’s administration, but the current absence of civilian appointees ensures that the generals will heavily influence Trump’s foreign policy.

Congress could also fight back against the militarization of U.S. foreign policy through its control of the budget. Trump’s planned cuts to agencies like USAID and the State Department would devastate two non-military tools of U.S. influence. After the proposed cuts were announced, several prominent Republican senators spoke out in opposition. Congress could also demand that Trump obtain new authorizations for the use of military force if he wants to get the United States more directly involved in Yemen or Somalia.

The deepening militarization of U.S. foreign policy is Trump’s most worrisome “achievement” of his first 100 days. Valuing military power so highly over diplomatic and economic tools limits policy options and can make military conflict more likely, as peaceful avenues for resolution are shut down. Hopefully Trump will recognize that there are other tools at his disposal for conducting U.S. foreign policy, and the warlike first 100 days prove to be a fluke—and not the trend. 

The White House denounced a federal judge this week that enjoined the president’s executive order denying certain federal grants to sanctuary cities, and it raised the case of Kate Steinle to illustrate why sanctuary cities are such a problem. Almost two years ago, Steinle, a 32-year-old medical device sales rep from California, was shot and killed on a San Francisco pier. City police have charged an unauthorized immigrant named Juan Francisco Lopez-Sanchez who has confessed to killing her. Her death led Donald Trump to denounce sanctuary cities such as San Francisco and call for tougher border security and deportations. But in reality, the facts of this tragedy do not support these policies:

  • Lopez-Sanchez did not end up in San Francisco due to lax border security, and the case actually shows the opposite. In recent years, Border Patrol caught him each time he attempted to cross.
  • Lopez-Sanchez only ended up in the city because the Justice Department ignored an Immigration and Customs Enforcement (ICE) request to take custody. The department has since changed its policies.
  • ICE sent a request to the city to detain Lopez-Sanchez knowing that the city would only hold a person subject to a federal warrant. Yet ICE chose not to seek a warrant. Yet it has refused to change its policies.
  • San Francisco’s Sheriff’s Department could not legally hold Lopez-Sanchez who had no history of violence. Investigators have since shown that he was not trying to kill Steinle.
  • Lopez-Sanchez’s mental illness is the relevant cause of the tragedy, not his immigration status. Yet even after a federal judge instructed that he receive care, none was apparently provided.
  • This case is a tragic anomaly. Undocumented immigrants generally are half as likely as other people in the United States to commit these types of serious crimes.

Case highlights improving border security

Lopez-Sanchez is a Mexican national who had resided illegally in the United States on and off since at least 1991. In the early 1990s, he compiled various drug convictions in Arizona, Washington, and Oregon. Immediately following his conviction for imitation drugs in Oregon in June 1994, the federal government took custody and deported him to Mexico. A month later, he returned to Arizona and was arrested for violating his probation there. After the state released him, San Francisco arrested him for a $20 marijuana purchase charge, but he failed to appear in court, and seven months later, Washington convicted him of another felony drug charge. In April 1997, the federal government took custody and deported him again.

This period reflects the relative lack of border security in the 1990s. But after his first two deportations, he appears never again to have successfully snuck into the United States. After his deportation in 1997, Border Patrol agents apprehended and deported him in January 1998. They caught him again in February 1998 at which point he was imprisoned for felony illegal reentry until his fourth deportation in March 2003. In July 2003, Border Patrol apprehended him again, and he was imprisoned for felony reentry a second time until his fifth deportation in June 2009. Less than three months later, Border Patrol caught him a fourth time, and he was imprisoned until March 2015.

Thus, from 1997 to 2015, Lopez-Sanchez probably never crossed the U.S.-Mexico border without being caught. The case is hardly an example of the lack of border security. Indeed, he highlights the myth of border insecurity.

Case led to changes in federal prisoner policies

In March 2015, the Federal Bureau of Prisons (BOP) under the Department of Justice (DOJ) had custody of Lopez-Sanchez. DOJ told San Francisco that Lopez-Sanchez was due to be released, and San Francisco Sheriff’s Central Warrant Bureau sent a request to pick him up from the prison for prosecution of his 20-year-old marijuana charge. Lopez-Sanchez was arrested for his $20 marijuana buy in 1995. In 2006, the San Francisco Board of Supervisors made marijuana the “lowest enforcement priority” and called for the state to legalize it. By 2015, the sheriff’s department should have known that the city district attorney would decline to prosecute the 20-year-old marijuana charge.

DOJ could have referred Lopez-Sanchez to Immigration and Customs Enforcement (ICE) for deportation, but inexplicably, DOJ decided to honor the San Francisco request instead of a request from ICE that DOJ detain him for deportation. This is even stranger because DOJ never contacted San Francisco before Lopez-Sanchez’s three other deportations. On March 26, 2015, the transfer occurred, and DOJ sent an automated notice to ICE, which immediately sent a request to the city to detain him until they could pick him up, and the following day, the San Francisco Superior Court predictably dismissed the charges against him. San Francisco never should have sent the request, nor should DOJ have transferred him.

The DOJ decision was the only reason that Lopez-Sanchez came to San Francisco in 2015, not a lack of border security or insufficient interior enforcement. Attorney General Loretta Lynch announced in February 2016 that DOJ would no longer release individuals who may be deportable to localities without going through ICE first. In a letter, DOJ told the House Appropriations Committee, “Now, BOP offers ICE, instead of the states and municipalities, the first opportunity to take into custody and remove an individual.” This is appropriate because ICE is best able to assess the immigration implications of a transfer. Committee Chairman John Culberson responded by declaring, “Had that policy been in effect last summer Kate Steinle would still be alive.”

San Francisco’s policy was legal

In 2015, San Francisco’s Administrative Code prohibited “use of any city funds or resources to assist in the enforcement of federal immigration law or to gather or disseminate information regarding the immigration status of individuals” unless “such assistance is required by the federal or state statute, regulation, or court decision.” (Section 12H.2) That section has since been amended to change “immigration status” to “release status.” In a March 2015 memo, the Sheriff’s department interpreted the law to ban officers from providing “access to inmates in jail” or “release dates or times” to ICE unless the ICE request is supported by a court-issued warrant or a signed court order.

One big myth in this case is that San Francisco did not detain Lopez-Sanchez after it dismissed the marijuana charge. In fact, the city continued to hold him for nearly three weeks based, the Sheriff’s department claimed, on a confusion over whether his federal prison term was complete. It claimed that “federal transportation orders reflected two conflicting release dates.” This confusion is baffling because DOJ had literally just released him to San Francisco custody. In any case, during this time, it contacted DOJ to confirm that he had completed his federal prison time and was not the subject of any active warrants. Finally, on April 15, the Sheriff’s department released him without informing ICE.

Steinle’s family filed a wrongful death lawsuit against San Francisco for its decision not to inform ICE of Lopez-Sanchez’s release. A district court judge dismissed the claims against the city because it found, in part, that they did “not plausibly allege that Steinle‘s death resulted from a violation” of law. The only possibly relevant federal statute bans any policy that would prevent city employees from transmitting information regarding the immigration status of the individuals, not their release dates. “Given that ICE issued a detainer request for Lopez-Sanchez well before his release, there is no question that ICE was aware of Lopez-Sanchez‘s immigration status,” the court concluded. Thus, San Francisco could not have been in violation of the law.

Case highlights flawed ICE detainer policy

San Francisco has pointed to two court decisions on detainers that, if courts in San Francisco followed the same logic, could make the city liable for damages if it honored ICE detainers. First, a federal district court decision in Oregon found that ICE detainers cannot be the basis of further detention of a noncitizen and that the county violated the detainee’s Fourth Amendment rights by detaining her without probable cause. Second, in allowing a suit by a wrongfully detained U.S. citizen to proceed, the Court of Appeals for the Third Circuit has also found that “immigration detainers do not and cannot compel a state or local law enforcement agency to detain suspected aliens subject to removal.” The First Circuit issued a similar ruling on a preliminary manner a similar case.

In light of the fact that this area of law is so fraught—as a recent Congressional Research Service review found—San Francisco explicitly stated that it would honor any judicial warrant. In this case, ICE would have had no difficulty providing a judge with probable cause that Lopez-Sanchez was in the United States illegally if it had sought a warrant. Moreover, ICE already knew San Francisco’s policy—it had refused 98 percent of all ICE detainer requests the year before and the sheriff had met with ICE officials to tell them that it would not honor their detainers—yet the agency still chose not to seek a warrant in this case. The city held Lopez-Sanchez for three weeks after the initial detainer, so the agency cannot claim that it had insufficient time to seek a warrant.

ICE has simply chosen not to seek warrants because it believes it should not have to, even if they know that the person will be released. That was a mistake. Throughout the 19 days that Lopez-Sanchez was detained, as the judge in the Steinle lawsuit put it, “ICE took no further action to detain or deport Lopez-Sanchez other than issuing the detainer request.” Unlike DOJ, ICE has still not altered its policies in response to the Steinle death.

Killer’s mental health is more relevant than his criminal history or immigration status

When San Francisco released Lopez-Sanchez, he had no history of violence. His earlier convictions were nonviolent drug offenses, and his only offenses in almost two decades were immigration violations. While Lopez-Sanchez is a clearly unstable person, he was not a serious criminal. His first conviction was for huffing toxic chemicals. He then attempted to sell heroin and was caught in less than a month. Then he was convicted for selling fake drugs. After each of his last three deportations, he was almost immediately caught at the border. Neither the city nor the federal government had any reasonable basis for concluding that Lopez-Sanchez posed a threat to anyone other than himself.

The White House’s statement claims that Lopez-Sanchez “gunned down innocent Kate Steinle.” But the public facts indicate that the shooting was an accident. Lopez-Sanchez claims to have found the gun, which was stolen, and to have taken sleeping pills and been shooting at sea lions. Witnesses observed him “acting bizarrely” before the shooting, and investigators determined that the gun was “clearly aimed at the ground,” and the bullet ricocheted off the pavement and travelled at least 90 feet before hitting Steinle.

Lopez-Sanchez’s mental health is much more relevant than his criminal history or his immigration status. Indeed, a federal judge who sentenced him recommended that the government send him to “a federal medical facility as soon as possible.” That apparently never happened.

Undocumented immigrants do not increase crime

The key question is whether states and localities should—even if they don’t have to legally—aid the federal government in removing people who are not violent criminals. The president believes that the Steinle case proves that a general crackdown on unauthorized immigrants is warranted. But the reality is that, as a recent Cato Institute report found, unauthorized immigrants are much less likely than other people in the United States to commit these types of serious crimes. We know this because they are three times as likely to be incarcerated in state or federal prisons as native-born Americans, excluding those who are jailed solely for immigration offenses.

This conclusion fits with a lot of other research finding that increases in immigration are correlated with lower crime rates. Moreover, research has shown that when crackdowns on immigrants occur—even when it is targeted at those with contact with law enforcement—it has no positive effect on crime rates. For example, multiple researchers found that when Secure Communities—a program that automatically contacted ICE after an FBI background check by local police—was rolled out, the areas where it was implemented first saw no greater reduction in crime than areas where it was not implemented. This means that the deportees were no more crime-prone than the population at large—probably because the actual criminals were already being deported.

As I have written before, a crackdown on undocumented immigrants could actually increase crime because immigrants help reduce crime in various ways, including through intervening to stop crimes as they are happening or acting as witnesses against criminals. Given the complicated relationship between police and their communities, the research supports allowing localities the opportunity to decide how to handle immigration status and release information about immigrants they encounter.

Yesterday, Federal Communications Commission Chairman Ajit Pai announced his intention to reverse Obama administration “net neutrality” rules governing the internet that were put in place in 2015. Some commentators are criticizing the announcement as a give-away to large telecom companies and an attack on consumers. But the Obama rules create some serious problems for consumers—problems that Pai says he wants to correct.

Under the Obama rules, internet service providers (ISPs) were subject to “rate-of-return” regulations, which the federal government previously applied to AT&T’s long-distance telephone service back when it was a monopoly more than 50 years ago. Ostensibly, rate-of-return regulation gives government officials the power to review and approve or reject ISP rates. In reality it basically guaranteed ISPs government-enforced market protection and profitability, in exchange for regulators ensuring that ISPs won’t be too profitable.

As I explained in a 2014 post, rate-of-return regulation involves more than just telecom. It basically is an attempt to settle fights between “producers” and “shippers”—whether those are farms, mines, and factories on one side and railroads and shipping lines on the other, or Netflix and Hulu on one side and ISPs on the other. In all those cases, the producers and shippers need each other to satisfy consumers, but they fight each other to capture the larger share of consumers’ payments. If shippers charge more, then farmers, factories, and Netflix must charge less in order to maintain the same level of sales.

The political resolution of these issues was the Interstate Commerce Act of 1887 and its ensuing rate-of-return regulations, which were initially written with railroads in mind. Similar efforts were later extended to trucking, air transportation, energy, and telecom. It took about 100 years for policymakers to accept that those efforts hurt consumers much more than it helped them, forcing on consumers too many bad providers with high prices and poor quality.

Since 2007 Regulation has published seven articles on traditional telephone regulation and why such regulation would be inappropriate for the internet.

  • Bruce Owen explicitly makes the link between the concerns of traditional transportation common carrier regulation and the contemporary notion of “internet neutrality.”
  • Hal Singer and Christopher Yoo argue that the one-size-fits-all architecture that policymakers envision of the internet has been a myth for some time. Network providers employ an array of business arrangements and prices to manage congestion and maintain quality of service, but that diversity will be weakened by net neutrality rules.
  • Yoo also notes that traditional rate-of-return telecom regulation assumes a monopoly service. The expansion of wireless high-speed internet has allowed multiple competitive providers to offer service to a large majority of American consumers while restraining capital costs.
  • Gerald Faulhaber explains that service quality will suffer to the extent that internet access providers can’t charge more for streams that impose greater costs on the system.
  • Dennis Weisman points out that internet regulation will likely protect competitors from competition rather than serve consumer interests, just like the old telephone regulatory scheme did.
  • And Larry Downes argues that the movement to re-regulate telecom is propelled by some firms’ quest for rents under new regulation, and by the FCC wanting to regain its former political power and the benefits that come with it.

Hopefully, Pai’s efforts will mean that bad regulations on internet service will be thwarted before they have been allowed to take hold. However, the news isn’t entirely good. Back in June 2016 I wrote about how an appeals court approved the Obama rate-of-return regulation even though previous attempts to regulate the internet under different provisions of the Telecommunications Act had been rejected by the courts. This approval may complicate Pai’s attempt to reverse course.

The beauty of the United States where policy is concerned is that state variations allow for lots of decent analysis. Nowhere is this more clear than on the minimum wage, where a fascinating new empirical paper by Terra McKinnish from the University of Colorado Boulder adds further light as to whether Econ 101 holds in regards to raising statutory pay rates.

Remember, there are (to simplify) two main theoretical stories of the labor market. In an ordinary competitive model, imposing a minimum wage above the equilibrium wage rate leads to an increase in the quantity of labor supplied (more people want to work at the higher wage) and a reduction in the quantity demanded (employers want fewer worker hours at the higher price). The difference between the two is the increase in “unemployment” – i.e. the difference between the worker hours people are willing to work and the demand for worker hours at that wage rate. Raising the minimum wage in a competitive labor market is said to have “disemployment effects.”

In the past decade though, some academics have posited a different theory of the labor market, implying that all or many employers have “monopsony power” - monopoly power but in the purchase of labor. Profit maximization would lead firms to pay less than the value of the marginal product of labor and employ less labor-hours than would be the case in a competitive market. The implication is that when there is a strong element of monopsony in the labor market, the imposition of a higher minimum wage can lead to both an increase in pay per hour and an increase in hours of employment. Workers would gain unequivocally from the minimum wage, while previously exploitative employers would lose.

Let’s put aside for a second that in reality the labor market is complex, dynamic, and there could be elements of both. Empirically, the question is which provides a better explanation of the real labor market we see.

Here’s where McKinnish’s new study comes in. She seeks to exploit the variation in minimum wage rates between states and the compressing effect of the 2009 federal minimum wage increase to analyze whether a relative increase in a minimum wage within a state led to more commuting into that state to work for under 30s or more commuting out of the state to work.

Suppose I’m residing and working in a state whose minimum wage is unchanged and a neighboring state increases its minimum wage relative to the one I am in. A result of more commuting from my state to the neighboring state would be consistent with the monopsony story that a higher minimum wage could support more employment or at least the idea that the disemployment effects of higher minimum wages were small. On the other hand, if the higher minimum wage in the neighboring state resulted in more commuting out of the state then this would signify the disemployment effects of Econ101, and thus the competitive labor market story.

McKinnish employs difference-in-differences techniques to try to find the answer, using commuting records of people earning both low and modest hourly rates to control for other factors which could influence commuting, such as the health of the economy.

Upon doing all this, three key findings arise from her work:

  1. Prior to the 2009 federal minimum wage increase, there is no evidence that low-wage workers commuted at higher rates (relative to moderate-wage workers) to neighboring states with a higher minimum wage.
  2. After the federal minimum wage increase, low-wage workers modestly increased out-of-state commuting out of states most affected by the federal minimum wage increase.
  3. Moderate-wage workers reduced the rate at which they commuted out of states most affected by the federal increase following the rise in the rate (consistent with the idea that increasing minimum wages leads to employers replacing low productivity workers with higher productivity ones).

The implications of this finding are 3-fold. First, it directly refutes the narrative presented by some in the media that people commute towards states with higher minimum wages. Second, it suggests that the real labor market looks much more like the competitive model than the monopsony one. Third, it suggests that studies which seek to examine the effects of minimum wage increases using data based on the residential location of the worker will tend to understate the disemployment effects of the wage rise.

In all, this study is further evidence to support the Econ 101 view of minimum wages. See here and here for more.

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