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On June 23, Britain voted by a margin of 52 to 48 percent to leave the European Union (EU). Much ink has already been spilled on the policy implications of that vote and, indeed, its long-run consequences may prove quite profound. When it comes to financial regulation, however, it is difficult to see any significant changes emerging in the short- to medium-term. There are a couple of fundamental reasons for this.

The first stems from the fact that the British financial sector is desperate to maintain its current access to the European Economic Area (EEA), also known as the “single market.” As things stand, a process known as “passporting” allows British financial firms to do business throughout the single market, whether on a cross-border basis or by establishing branches, without having to get separate regulatory approval in every jurisdiction. This arrangement is important to the industry and — given that financial services produce 8 percent of the UK’s output — the British government is likely to make its continuation after Brexit a priority.

But how can they bring that about? The most straightforward path is for Britain to leave the EU, but remain a member of the EEA. This approach, often referred to as the “Norway option,” would see Britain exit the EU’s centralized political institutions, while still participating fully in its “four freedoms” — that is, the free movement of goods, services, capital, and people. There is much to commend such a settlement, as I’ve written before. But if it did come to pass, Britain’s financial sector would clearly be subject to EU rules in much the same way as it is now.

There’s also a political problem with EEA membership: namely, it wouldn’t allow the British government to pursue its stated aim of controlling immigration from the EU. That suggests that the obvious alternative — a bilateral, post-Brexit trade treaty — might be the more likely outcome of Britain’s eventual withdrawal. Such a treaty could, theoretically, protect the British financial sector’s passporting rights. However, the quid pro quo for market access of that sort would undoubtedly be regulatory equivalence — that is, the European Commission would have to deem British regulation equivalent to EU rules before any passporting could take place. The handful of existing EU directives that provide “third country” financial firms access to the single market work in precisely this way. Ultimately, then, there are unlikely to be any major reforms to British financial regulation so long as the British financial services industry maintains access to the single market.

What if the Brexit negotiations do not result in single market access for British financial firms? This is by no means an improbable outcome: the UK will have to give something up if it wants to restrict EU immigration, and EU negotiators may consider financial services trade the best area in which to extract their pound of flesh (not least because Paris, Amsterdam, and Frankfurt are ready to capture any business that Britain loses). In those circumstances, the British government might just consider a program of regulatory reform, designed to make the City of London more competitive against light-touch financial centers like Hong Kong and Singapore.

But I wouldn’t count on that, because it’s not just the desire for continued single market access that suggests British financial regulation is unlikely to change much after Brexit. In fact, one of the most important — and perhaps least remarked upon — developments in post-crisis financial regulation is that it increasingly starts at the global level. Take the EU’s Capital Requirements Directive IV (CRD IV), which sets out prudential rules for banks, building societies, and investment firms: prima facie, that’s EU legislation, which the UK might no longer be bound by after Brexit; in reality, though, CRD IV mostly implements the Basel III agreement, which means the essence of that directive would continue to apply to Britain whatever happens at the EU level. And CRD IV is just the tip of the iceberg: from insurance to accounting standards, more and more financial regulation is coming from global institutions.*

Britain, moreover, has been an enthusiastic participant in the globalization of financial regulation—so much so that Mark Carney, the governor of the Bank of England (and Britain’s de facto chief financial regulator), is also the chairman of the G20’s Financial Stability Board, which coordinates the regulatory work of national authorities and international standard-setting bodies. As a House of Lords report on the post-crisis EU financial regulatory framework put it, “it is likely that the UK would have implemented the vast bulk of the financial sector regulatory framework had it acted unilaterally, not least because it was closely engaged in the development of the international standards from which much EU legislation derives.” None of this bodes well for those hoping Brexit will lead to liberalization.

There is, however, a larger point to be made here, and that’s that it isn’t at all clear globalized financial regulation is a good thing. There’s nothing wrong with regulators sharing best practices, of course, and still less to object to in efforts to eliminate regulatory barriers to trade. Nevertheless, the global harmonization of financial regulation may actually pose a threat to financial stability, since it tends to impose a single view of risk on financial firms around the world, and therefore encourages herding around particular investments and business strategies. If the regulators’ view of risk turns out to be wrong (let’s imagine that globally-agreed rules encourage banks to invest in, say, mortgage-backed derivatives, or Greek sovereign debt), you may end up with a systemic, global crisis on your hands—precisely the opposite of what regulatory harmonizers set out to achieve. Financial regulators would do better, I think, to let a thousand flowers bloom — both domestically, and internationally.

Sadly, I wouldn’t bank on Brexit doing anything to advance that point of view.


*Chapter 16 of “Flexcit: A plan for leaving the European Union” offers a helpful analysis of the extent to which EU financial regulation has international origins. This report, originally authored by Richard A. E. North, is also where I discovered the quote from the House of Lords European Union Committee that I have reproduced and linked to above.

[Cross-posted from]

Cato adjunct scholar Flemming Rose who recently won the 2016 Friedman Prize for Advancing Liberty has been disinvited from speaking at the University of Cape Town in South Africa. The academic freedom committee of the university had asked Rose to give the annual TB Davie Academic Freedom Lecture. The Vice Chancellor of the university rescinded the invitation. He argued that Rose’s lecture might divide the campus leading to protests and even violence. He also said having Rose “might retard rather than advance academic freedom on campus”. The last statement will remind many people of Doublespeak.

Fortunately, this injustice has prompted several principled defenses of free speech.

Kenan Malik, an English writer and broadcaster, who gave the TB Davie lecture last year, makes the case for open debate and defends Rose.

Nadine Strossen, a former ACLU president and current law professor at New York University, quickly provided a comprehensive critique of the decision. Professor Strossen adds her comments about Flemming Rose that she gave at the Friedman Prize dinner.

Ronald K.L. Collins, a law professor at the University of Washington who runs the First Amendment News blog, has challenged an administrator at the University of Cape Town to reply to these critiques. Collins has done the right thing: a bad decision has led to critical speech which now invites a response.

Finally, Flemming Rose himself has replied, citing his recent defense of free speech for radical imams: “A more diverse society needs more free speech, not less.” He continues:

It’s really a sign of poor judgment and bad academic standards to disinvite me on the basis of what other people say about me, when I have published a book that covers my own story, which tells how my views on politics were formed and analyses the history of tolerance and free speech. The book is not only focusing on Islam. I write about the Russian Orthodox’ Church silencing of criticism, Hindu-nationalists attacks on an Indian Muslim artist and so on and so forth. Why use second-hand sources when you can read the primary source in English and make up your mind?

Why not indeed? Rose’s book, The Tyranny of Silence: How One Cartoon Ignited a Global Debate on the Future of Free Speech published by Cato in 2014 may be found here or at your local bookseller.


Last year, a company called Flytenow was poised to revolutionize air travel by allowing private pilots already going to a destination to share their costs with would-be travelers—kind of like a college rideshare bulletin board, but on the Internet. The service would pair pilots with potential passengers, for a small fee no greater than the cost of fuel. It’s been called “Uber in the sky.” But in December, Flytenow shut down after the U.S. Court of Appeals for the D.C. Circuit upheld the Federal Aviation Administration’s determination that the service must obtain the highest levels of licensing, akin to what major airlines and their pilots secure.

The FAA decided that these pilots were not simple private individuals sharing cost, but were “common carriers,” subject to heightened liability and expensive professional licensing. Common carriers—like buses, trains, and commercial airlines—have been treated specially in the law since medieval times, and they differ from Flytenow’s online bulletin board.

As Flytenow seeks review in the Supreme Court, Cato Institute, joined by TechFreedom, has filed an amicus brief in support.

First, “common carriage” is a term defined by common law, stretching back to way before the founding of the FAA—indeed hundreds of years before the Wright Brothers—and the FAA’s interpretation here directly contravenes that established meaning. One glaring consistency across the last 600 years of common law is that the carrier must hold itself out for indiscriminate public hire. Flytenow pilots, as a matter of right, can turn down any passenger for any reason (or no reason) and thus are by definition not common carriers. This alone is reason enough to reverse the court’s decision and overturn the FAA ruling.

But second, and more basically, the D.C. Circuit granted very broad deference to the FAA’s interpretation of what constitutes common carriage, despite that being a term defined at common law. Courts often defer to an agency’s expertise in a particular subject matter—which essentially means that the agency’s decision is usually upheld under some “deference” framework. But according to the Supreme Court’s ruling in Texas Gas Transmission Corp. v. Shell Oil Co. (1960), when an agency interprets the common law, a reviewing court shouldn’t simply defer to the agency’s interpretation.

That makes perfect sense: there is no greater expert in the common law than the courts, and the FAA lacks the expertise to engage in judicial decisionmaking. But instead of applying any existing law on the negligible deference that is due to agencies interpreting common-law terms, the D.C. Circuit went off on a doctrinal frolic entirely of its own invention. The lower court thereby not only contravened Texas Gas, but also went far beyond what little latitude any other circuit court had given agencies interpreting common-law terms.

By doing so, the court plainly delegates to the FAA what is “the province and duty of the judicial department,” which is to “interpret” the common law and “say what the law is.” Marbury v. Madison (1803). Such a delegation offends constitutional order and the separation of powers. Because the D.C. Circuit has neatly packed an abdication of the judicial role into a decision that contravenes 600 years of established law, we urge the Supreme Court to take up the case.

The justices will decide early in the new term this fall whether to review Flytenow, Inc. v. FAA.


The recent abortive military coup in Turkey has led not to a restoration of democracy and the rule of law in that country, but to an acceleration of already worrisome trends toward a dictatorship with Islamist overtones.  When the would-be junta made its play for power, the Obama administration quickly expressed support for President Recep Tayyip Erdogan’s beleaguered government, as did most of Turkey’s NATO partners.  When the coup attempt collapsed, leaders of those governments breathed a sigh of relief that the Alliance did not have to confront the embarrassment (or worse) of a member state governed by a military dictatorship.

That sense of relief was short lived.  In a matter of days, Erdogan purged not only hundreds of high-ranking military officers, (a step for which there was at least reasonable justification), he went after other institutions that had long impeded his attempts at increasingly autocratic rule.  Nearly 3,000 judges were removed and arrested.  He even fired 21,000 teachers from the country’s school system.  The extent and speed of the systematic purge confirms that Erdogan simply used the attempted coup as a pretext for a plan long in place.  The United States now confronts the problem of a NATO ally that is a dictatorship in all but name.

The frustrations with Turkey should have been building for years, if not decades.  After all, U.S. officials were under pressure to look the other way as Turkey invaded Cyprus in 1974 and continued to illegally occupy the northern portion of that country ever since.  Washington offered no more than feeble protests when Ankara established the puppet Turkish Republic of Northern Cyprus in the occupied territories and moved in tens of thousands of settlers from the Turkish mainland.  Such indifference makes U.S. expressions of outrage over Russia’s annexation of Crimea seem more than a little hypocritical.

More recently, Erdogan has systematically eroded the foundations of not only Turkey’s democratic institutions, but even the secular orientation put in place by modern Turkey’s founder, Mustafa Kemal Ataturk, after World War I.  The crackdown on a free press and the harassment of political opponents has grown steadily worse over the past two or three years.  Even before the post-coup purges, those authoritarian trends had reached alarming levels.  Today’s Turkey more closely resembles Putin’s Russia than it does a genuine Western democracy.

When the nation’s vital security interests are truly imperiled, it is sometimes necessary to make common cause with even sleazy allies.  Britain and the United States had to cooperate with Josef Stalin’s murderous Soviet Union to counter Adolf Hitler.  But such moral compromises need to be extraordinary exceptions, not done casually.  As Turkey sinks into blatantly authoritarian rule, the primary justification for retaining a close security relationship is Ankara’s relevance in sustaining Washington’s hyper-interventionist policy in the Middle East.  Since the evidence is overwhelming that that policy is a disaster and should be rescinded, U.S. officials also ought to reconsider its ties to Turkey. 

As part of that process, Washington should, as it applies to Turkey, immediately repudiate the provision in article 5 of the North Atlantic Treaty that considers an attack on one member as an attack on all and obligates the United States to render assistance.  It is bad enough for U.S. leaders to risk the lives of the American people to defend a liberal democratic ally that is not essential to the security of the republic.  It is much worse to incur such a risk to defend a thinly disguised dictatorship that is not essential to America’s security.  Yet that is the situation we now face with Turkey.  We need to adopt a much more cautious relationship with an increasingly unsavory regime. 

In an act of extreme tangent tying, former New Mexico governor Bill Richardson just penned an op-ed linking Donald Trump’s wall-building immigration stance to his attacks on the Common Core national curriculum standards. The message Richardson may be trying to send: bigots don’t want Hispanics in the country, or able to access “high academic standards” when they’re here.

I’ll let others debate Trump’s motives, but I can speak for myself—and probably the vast majority of Core opponents—that none of my opposition to the Core is based on anti-Hispanic sentiment or a desire to keep anyone down. It is rooted only in the concerns I have constantly expressed: having a single, federally driven set of standards would stifle innovation; makes little sense considering that all children are unique individuals; and has no meaningful research backing. Others believe that the Core simply is not a good enough set of standards.

Richardson offers no evidence to refute any of the highly substantive objections that have been made for years and have helped render the Core a largely bipartisan pariah. He just pronounces that the standards “equip students with the critical thinking and problem-solving skills that are essential to success in the 21st-century economy.” Then he attacks Trump again.

Far too often Core defenders have ignored powerful, important objections—and dodged serious debate—in favor of caricaturing Core opponents. Awkwardly tying Core opposition to anti-Hispanic animus seems to be more of the same.

The Pentagon awaits authority from Congress to repurpose military bases. Fears of the potentially harmfully economic effects on local communities when bases close largely explain Congress’s intransigence. The Base Realignment and Closure (BRAC) process was created in the late 1980s to allow closures to occur without forcing individual members to vote for them. It was a dodge, to be sure, but it worked: in five successive rounds, the military was able to eliminate some of its excess infrastructure and overhead.

But the problem hasn’t gone away. The Pentagon estimates that its physical footprint will exceed its needs by more than 20 percent by 2019.

A few Democrats in Congress are trying to help.

“We need to provide the Department of Defense flexibility to find savings and efficiencies wherever it can in order to support our warfighters,” explained Rep. Adam Smith (D-Wash.), top Democrat on the House Armed Services Committee. “That is especially true now, as Congress continues to strain the military by funding it through short-term budget agreements. We should not be making the military cut training and supplies while at the same time refusing to let DOD save money that we know is not being used productively.”

Smith has a point. But base reuse is about much more than allowing the military to allocate its resources wisely. Transitioning bases to non-military uses allows local communities to do so, too.

While the Democrats are in Philadelphia this week for their nominating convention, they should take a trip to visit one of the bases closed during the BRAC process – now known as The Navy Yard. POLITICO has a great profile of the place here. I wrote about it in this new book.

As I explain over at The Skeptics:

the C in BRAC is misleading. Bases aren’t closed. Properly managed, and with a little bit of luck, most former military facilities are repurposed for other chiefly nonmilitary pursuits. And some make the transition quite quickly.

Of the fifteen instances of defense conversion that I’ve studied so far, Philadelphia’s Navy Yard is one of the most impressive….


Philadelphia has a lot of things going for it, but I hope city officials make a point of bragging to visitors from the nation’s capital this week about what has happened to their former military base. They might even give them a tour. If they do, it could weaken opposition in Congress to another round of base closures, which is so desperately needed. Indeed, the opponents might come around to the view that the opening of a nearby base is precisely the boost that a flagging local economy needs.

Here’s an idea. Six other Democrats co-sponsored Rep. Smith’s latest bill that would allow a new BRAC: Reps. Sam Farr (Calif.), Susan Davis (Calif.), Jim Cooper (Tenn.), Madeleine Bordallo (Guam), Jackie Speier (Calif.) and Beto O’Rourke (Texas). I’ll bet that a few of them will be in Philly.

Last month, Rep. O’Rourke tried to attach an amendment to the National Defense Authorization Act that would have lifted the ban on base closures, but it was soundly defeated, 263-157. 53 Democrats, listed below, voted no. I’m guessing that they’ll be at the convention, too.

Perhaps Smith and his six co-sponsors could escort a few of them down to the Navy Yard? I think they’ll all like the trip.

Does the American Dream exist? Are poor but highly skilled individuals able to achieve their full potential? These questions are at the heart of recent episodes of Malcom Gladwell’s new podcast, Revisionist History.

In “Carlos Doesn’t Remember,” Gladwell examines the idea of “capitalization,” or how well America makes use of its human potential. Americans typically believe people are able to climb the ladder to success through hard work and determination, but Gladwell uses the story of one smart, low-income student to express doubts about American meritocracy.

“Carlos” is a bright but low-income student in Los Angeles, who secured a spot at an elite private school thanks to entertainment lawyer Eric Eisner’s YES program. The episode is a stark reminder that low-income students—even the most talented ones—face large barriers to success. Gladwell calls Carlos’ journey a “one in a million shot.” He identifies two large obstacles that smart, low-income students must overcome, but fails to discuss the best solution to these problems: school choice. The public education system traps students like Carlos in underperforming schools that Gladwell likens to concentration camps, but choice policies could help more poor students like Carlos access good schools.

The first barrier to success is a lack of advocates for talented, low-income students. But must it take an Eric Eisner to discover such kids and help them capitalize on their potential? The underlying assumption is that advocates will not be parents or teachers, but only rare, outside forces.

Really? Most parents want the best for their children, and work hard to give them opportunities for success. The problem may well be that wealthier families can access private institutions or choose expensive homes zoned for high-quality public schools, while low-income families are relegated to cheap addresses assigning them to subpar schools. Low-income parents, as Gladwell and others imply, are not necessarily uninformed or uncaring. They just lack the resources of wealthier families.

School choice policies help to give parents those resources. In The School Choice Journey, Thomas Stewart and Patrick Wolf show that given choices, low-income parents transition from passive clients to active consumers, seeking out information on options for their children.

Carlos’ situation is different: his parents were not in a position to advocate for him, and he spent time in foster care. But choice also benefits students like him by spurring quality improvements in public schools. Thirty-one of 33 studies found that the competition from school choice had positive effects on neighboring public school performance. Moreover, as more talented students take advantage of choice programs, there remain fewer students for the Eric Eisners of the world to discover. Gladwell’s narrative suggests the capitalization issue is predominantly about students like Carlos, but Carlos’ case is extreme, and school choice has the potential to greatly improve capitalization for the majority of low-income students.

Teachers can also serve as advocates for low-income students, but underperforming public schools are less likely to staff and retain good quality teachers. In a study of in-school inputs and educational achievement, Eric Hanushek identified teacher quality as the most important factor to student success and upward mobility. By empowering low-income students to access schools with superior teachers, school choice would position students to capitalize on their potential.

The second barrier to success that Gladwell identifies is geographic location. Carlos had to travel long distances to find the best school. This anecdote squares with research suggesting a negative relationship between urban sprawl and upward mobility. The odds of economic success vary by neighborhood, with the best opportunities for success largely in relatively wealthy neighborhoods. However, residential income segregation is at least partially a result of assigning schools based on home address, with well-to-do families choosing districts with good schools. School choice policies have the potential to sever this link, enabling economic integration in urban areas. Thomas Nechyba sums it up: “To the extent that a voucher causes someone who previously chose public schools to switch to private schools, the same price incentive to settle in the poor rather than the rich district applies.”

Gladwell ends by saying, “Don’t call this story inspirational, because it’s not. It’s depressing.” Carlos was lucky, but Gladwell cites a disheartening study estimating that there are 35,000 smart, poor students every year who don’t apply to top colleges. They don’t have the resources and information to access top schools, and there aren’t enough Eric Eisners to help them all. School choice policies could set such kids on a successful track from an earlier age, giving them the tools to capitalize on their talent.

The story Gladwell tells is depressing, but school choice could make it inspirational.

Why is government so often dysfunctional? Why is it, in contrast to the voluntary sector of society, so often slow, inefficient, wasteful, and counterproductive? Peter Schuck explored the question at length recently in his book Why Government Fails So Often. Chris Edwards offers a shorter and more libertarian analysis in a recent Cato policy study. But maybe these two new stories from the past few days shed some light on the question, first from Washington, D.C.:

Metro officials fired a senior mechanic just weeks after the L’Enfant Plaza smoke incident last year, alleging that he failed to properly inspect a tunnel fan, falsified an inspection report, and later lied about it to investigators.

But now, the largest union representing Metro workers is fighting the transit agency to have the mechanic reinstated.

Seyoum Haile, a 13-year Metro veteran, was terminated one month after the January 2015 incident that resulted in the death of a passenger — but arbitrators said he should be suspended instead, and now the Amalgamated Transit Union Local 689 is suing to get him back on the job.

Meanwhile, in Miami:

National condemnation has been swift today after video showed Charles Kinsey, an unarmed black behavioral tech trying to help an autistic patient, holding his arms in the air before a North Miami Police officer shoots him. But Miami’s two most prominent police union chiefs have now leaped to the officer’s defense. 

John Rivera, who leads the Dade County Police Benevolent Association, says the officer was actually trying to protect Kinsey because he believed the autistic man, who was holding a toy truck, had a gun — but then he accidentally shot Kinsey instead. 

For more on the consequences of government employee unions, see here and here.

Presidential candidate Hillary Clinton has named Senator Tim Kaine as her running mate. Kaine was governor of Virginia from January 2006 to January 2010. I assessed Kaine on Cato’s fiscal report card in 2008, and he received a low grade of “D.”

I found:

Governor Kaine has campaigned vigorously to raise taxes and fees to fund higher transportation spending. In 2007, Kaine helped pass a large revenue package that included tax and fee increases, higher penalties for driving infractions, and the creation of regional taxing authorities within Virginia. The Virginia Supreme Court struck down the unelected tax authorities, and citizens hated the new driver penalties so much that they were repealed. Kaine supported a few tax cuts in 2007, including an increase in the bottom threshold of the individual income tax and a repeal of the estate tax. But in 2008, he is promoting an even bigger transportation plan that would increase taxes and fees by $1.1 billion annually, and he is advocating higher state borrowing to fund education and transportation. On spending, Kaine promoted a big increase in his first budget, but has favored greater restraint since then.

In Kaine’s first year, general fund spending jumped a remarkable 17 percent. But spending was flat the second year, and then declined 14 percent during Kaine’s final two years as the economy entered recession. Richmond Times-Dispatch columnist Bart Hinkle gives Kaine credit for the spending cuts, but notes, “it’s clear that Kaine would much rather have preferred to balance the state budget by raising taxes.”

That was probably true of many governors at the time facing declining revenues from the sour economy. But thanks to balanced budget requirements, general fund spending across the 50 states was cut 9 percent those two years that Kaine was cutting.

Politifact says that Kaine tried unsuccessfully to raise taxes by $4 billion, which is a lot of money for a mid-sized state. Researching Kaine two and half years into his term, I included net proposed tax increases of $1.1 billion in my report. I included only one of his proposed transportation funding packages because I didn’t want to double count. Politifact may have included multiple transportation packages in its tally. Also, my report did not cover Kaine’s $1.9 billion proposed income tax increase in 2009, which the Washington Post discusses here.

Hinkle calls Kaine an “affable ideologue.” That’s a good description of Trump running mate Mike Pence as well, whose fiscal ideology of spending restraint and tax cutting earned him an “A” from Cato.

Now a study has attached numbers to what we’ve known for a long time: giving attention to terrorists encourages terrorism. A study by Michael Jetter, professor at the School of Economics and Finance at Universidad EAFIT in Medellín, Colombia, and research fellow at the Institute for the Study of Labour in Bonn, Germany, finds a clear link between the number of news articles devoted to an initial terrorist incident and the number of follow-up attacks. A New York Times article about an attack in a particular country will increase the number of ensuing attacks in the same country by between 11 percent and 15 percent.

The simple solution is disallowed by our fundamental law of free speech. But consumers can demand less aggrandizement of terror incidents from the media and politicians. The practice in journalism of declining to name rape victims could be extended in modified form to terror organizations and leaders.

There is no reason to keep information about terrorists and terror groups secret, but more muted references to them will decrease the success of attacks by reducing the awareness of potential recruits, for example. Potential terrorists are susceptible to discouragement through diminished public information because many have a room temperature IQ (on the Celsius scale).

In our edited volume, Terrorizing Ourselves, Chris Preble, Ben Friedman, and I included two chapters that relate to this topic: “The Impact of Fear on Public Thinking about Counterterrorism Policy: Implications for Communicators,” by Priscilla Lewis, and “Communicating about Threat: Toward a Resilient Response to Terrorism,” by William Burns.

Several senators recently introduced a bill that would delay the hiring of H-1B high skilled foreign workers in order to give Americans extra time to apply, saying it would make the program “consistent with Congress’s original intent.” But the lack of this provision was no oversight. The authors of the H-1B law wanted the visa to be able to rapidly respond to U.S. labor market needs, not get bogged down in regulatory red tape.

The Immigration Act of 1990 created the H-1B visa. Previously, there was just one H-1 category for skilled professionals that was uncapped and had no labor restrictions. The 1990 act imposed a cap for the first time and required that H-1Bs be paid the “prevailing wage” for their occupation in the area of employment. The theory was that U.S. businesses would have no reason to prefer foreign workers if they had to pay them as much as they paid Americans.

Although the bill did have several restrictive measures, the absence of a recruitment mandate was intentionally left out for a very good reason. 

Just 3 years prior to the introduction of the 1990 Immigration Act, Congress created the H-2A visa for seasonal farm workers and mandated that H-2A employers make “positive recruitment efforts” of U.S. workers prior to hiring foreign workers. Regulators translated this to mean that a farmer needed to spend 60 days advertising and accepting referrals of U.S. employees from state employment offices.

If H-1B crafters wanted to impose a recruitment requirement, they knew how. Indeed, the lead cosponsor of the 1990 bill, Sen. Alan Simpson, was also the author of the H-2A language. “Congress also expressly determined,” wrote immigration attorney Angelo Paparelli just after the enacting regulations were announced in 1991, “that the H-1B ‘attestation-like’ procedures… should be a speedy streamlined process with no recruitment requirement.”

The senators who drafted the 1990 act had a very specific reason in mind when they declined to include such language. Unlike the H-2A, H-1B jobs are not limited to “seasonal” positions, meaning that any recruitment would typically have to take place while the job was open. This means that an H-1B recruitment requirement would have guaranteed that companies would be losing productivity throughout the period.

For example, if Facebook, Amazon, Microsoft, Apple, or Google misses out on a higher-skilled worker for 60 days, the economic damage would be a sixth of the person’s annual salary, and since their typical H-1B worker’s annual salary is more than $100,000, that’s more than $16,600 in losses that such a mandate would automatically impose per hire. In recent years, Microsoft has submitted about 4,000 H-1B applications each year. That would be $66 million in guaranteed losses every year for a single company.

This lost productivity translates into fewer innovations and higher prices for American consumers. That’s why the Senate Judiciary Committee’s report on the 1990 bill emphasized that “the H(i)(b) ‘specialty occupations’ are subject to a modified attestation without a recruitment requirement, or challenge except after the attestation is in effect and the alien has entered the country” (emphasis in original).

This concern about delays for high skilled immigrants was widespread. Sen. Arlen Specter noted at the time, “Those waiting [for a green card] have to wait a full year to come in. The United States is deprived of their talents for a full year.” Sen. Slade Gorton joined him, bemoaning “time delays in transferring highly skilled or professional personnel to U.S. businesses.”

Sen. Jesse Helms added that “it is frankly embarrassing to hear foreign business leaders tell of the uncertainty and frustration they encounter when applying for permission to transfer key managers to our country.” On these grounds, Sen. Specter’s amendment to increase employment-based green cards passed overwhelmingly.

While it is true that those green cards required a labor market test, the bill authors included a provision specifically intended to allow companies who needed workers immediately to use the H-1B while they worked through this process. The provision, known as dual intent, allows H-1B workers, unlike all other temporary workers, to adjust their status to permanent residency while already working in the United States.

The H-1B authors constructed a system where it was difficult to obtain a green card, but specifically wanted to prevent businesses from losing money while they met its requirements, so they designed the H-1B as a temporary “bridge” to a green card for a limited number of workers. Today 95 percent of all skilled immigrants use this bridge to adjust from temporary status to permanent residency.

In 1998, Congress revisited the idea of a recruitment requirement in the American Competitiveness and Workforce Improvement Act, and rejected it for all companies that were not “H-1B dependent,” meaning that they had a low proportion of H-1Bs. In explaining his opposition to a blanket recruitment requirement, the author of the bill, Senator Spencer Abraham, excoriated the proposal:

We have…a recruitment process in place for permanent workers. It takes 2 years before the various hoops and regulations can be met. I am not saying that is wrong, but I am saying it is unworkable in the context of temporary workers….We cannot wait 2 years to bring in additional workers to cure the year 2000 problem [for example] because we will already be in the year 2000. In a similar sense, we simply cannot take the existing program and undermine it with these complicated bureaucratic Department of Labor regulations…

An increase in the cap would be meaningless and totally nullified if these kinds of labor provisions are included. They go too far. They would undermine the whole program… This is not a situation where we are dealing in a zero sum game. People coming in under the H-1B program are not taking jobs away from Americans…. they are creating more opportunities. That is the evidence we had before us in the committee.

That is indeed what the evidence continues to show in the vast majority of cases. But whatever the right policy, the idea that a recruitment rule would make the law “consistent with Congress’s original intent” is utterly false. Congress specifically intended to allow companies to use the H-1B to quickly respond to labor market needs. There are actions, consistent with this intent, that would help American workers compete, but a recruitment rule simply is not one of them.

Presidential candidate Donald Trump says that he will balance the federal budget while also cutting taxes. Given that the gap between federal spending and revenues is more than $500 billion and rising, he is going to need lots of spending cuts to make that happen.

In his big speech last night Trump said:

We are going to ask every department head in government to provide a list of wasteful spending projects that we can eliminate in my first 100 days. The politicians have talked about this for years, but I’m going to do it.

That’s great. Here are 10 “wasteful spending projects” (with annual costs) that Trump should put in his 100-day elimination plan:

  • Farm subsidies, which enrich wealthy landowners and harm the environment, $29 billion.
  • Energy subsidies, which have been one boondoggle after another for decades, $5 billion.
  • The war on drugs, which wastes police resources and generates violence, $15 billion.
  • Federal aid for K-12 schools, which generates huge bureaucracy and stifles innovation, $25 billion.
  • Excess pay for federal workers, especially gold-plated retirement benefits, which should be cut 10 percent to save $33 billion.
  • Housing subsidies, which distort markets and damage cities, $37 billion.
  • Community development and rural subsidies, which is corporate welfare used for buying votes, $18 billion.
  • Urban transit and passenger rail funding, which is properly a local and private responsibility, $15 billion.
  • Obamacare exchange subsidies and Medicaid expansion, which should be repealed along with the overall law, $200 billion a year by 2023.
  • TSA airport screening, which Trump said last night is “a total disaster,” and which should be devolved to local and private control, $5 billion.

In November 2008, President Obama promised to “go through our federal budget – page by page, line by line – eliminating those programs we don’t need.” He did not follow through, and neither do most politicians on such promises, as Trump noted.

Would Trump be any different? I have no idea. But I do know that the next president—whether Trump, Clinton, or Johnson—will face huge budget pressures as deficits soar and the economy possibly descends into another recession.

Federal spending cuts would help avert a fiscal crisis and boost growth by reducing economic distortions. We’ve got plenty of reform ideas at and, and the Heritage Foundation has an impressive new study on budget reforms as well. So think tank experts know how to balance the budget—the real question is whether the next president will want to make it happen.

Economics appears to be a neutral tool, but it often subtly embeds values that we are better off surfacing and discussing. In a recent post henceforth to be known as “Economics Will Be Our Runiation I,” I pointed out how, by preferring to measure the movement of dollars, orthodox economics treats leisure as a bad thing and laments advances in technology-based entertainments.

This installment of EWBOR focuses on an interesting and insightful article recently published in the University of Pennsylvania Law Review, “An Economic Understanding of Search and Seizure Law.” In it, George Washington University Law School professor Orin Kerr shows that the Fourth Amendment helps increase the efficiency of law enforcement by accounting for external costs of investigations. Here is his model:

The net benefit of any particular investigative step can be described as P*V – Ci – Ce, where P represents the increase in probability that the crime will be solved and successfully prosecuted, V represents the net value of a successful prosecution resulting from deterrence and incapacitation, Ci represents the internal costs of the investigative step, and Ce represents its external costs.

Ci means things like the cost of training and equipping police officers and paying their salaries, as well as their own use of their time. Ce, external costs, “include privacy harms and property losses that result from an investigation that is imposed on a suspect. They also include the loss of autonomy and freedom imposed directly on the subject of the investigation (who may be guilty or innocent) as well as his family or associates.” Kerr rightly includes in Ce more diffuse burdens such as community hostility to law enforcement.

The model helps reveal interesting things. “In conducting Fourth Amendment balancing,” Kerr notes, “courts often compare absolute costs to marginal benefits or marginal costs to absolute benefits.” An example is In re Terrorist Bombings of U.S. Embassies in East Africa, 552 F.3d 157 (2008). In that case, the Second Circuit Court of Appeals found surveillance of a particular target reasonable because of “the self-evident need to investigate threats to national security presented by foreign terrorist organizations.” The court should have compared the costs of this particular instance of surveillence to the potential benefits of this particular instance of surveillance.

Kerr illustrates the merits of his model with a hypothetical in which a stolen necklace is in one of ten houses. Thirty utility units are on offer to this small society if the necklace can be found and the thief locked away. It costs five “utils” to forcibly search each house, far fewer to get consent or a warrant. The model shows that the Fourth Amendment curtails law enforcement’s inclination to impose excessive costs on the public. The public interest is served by the Fourth Amendment’s welfare-enhancing rules.

But here’s what’s hidden in this otherwise interesting and helpful thought experiment: Kerr has developed an economic model of the the Fourth Amendment as a group right. An incautious reader might be lead to believe that enhancement of the general welfare is the sine qua non of the Fourth Amendment.

You only have to tweak the numbers in Kerr’s example to see how it can be used to undercut the Fourth Amendment. Change the stolen necklace to a terrorist and up the “utils” in finding him to fifty-five. For the public good, the police can now break into and search each and every house.

The Fourth Amendment is not a group right. The sine qua non of the Fourth Amendment is “a man’s home is his castle,” with similar treatment given to his or her person, papers, and effects. The Fourth Amendment gives people an individual right against unreasonable searches and seizures, public welfare be damned. Searches and seizures must be reasonable as to that person in that particular instance, not on the whole. The Fourth Amendment allows individuals to impose inefficiency in law enforcement on society as a whole in service to the greater good of letting each individual live in a free society. There’s probably a way to model that, but I don’t know what it is.

A good defense to my criticism is that Professor Kerr’s model is intended for strictly rational assessment of V (the value of apprehension, etc.). You wouldn’t get a benefit from catching a terrorist that is greater than the cost of searching all homes. But that begs the question that the Fourth Amendment is there to answer. It’s a counter-majoritarian protection because our society and government can be expected to calculate the benefits of searching and seizing us and our things wrongly.

In the name of liberty, beware the embedded values in economics and economic models! They might not be yours!

The 2016 GOP platform states that:

“In light of the alarming levels of unemployment and underemployment in this country, it is indefensible to continue offering lawful permanent residence to more than one million foreign nationals every year.”

The GOP platform statement assumes that those on green cards take jobs from Americans, an assumption that is incorrect (see here, here, and here for more information). 

What’s actually indefensible about our green card system is how few of them come here for work purposes.  First, legal immigrant inflows to the U.S. as a percent of our population are small compared to other developed countries (Figure 1).  The only countries with fewer immigrant inflows as a percent of their populations are Portugal, Korea, Mexico, and Japan.  The United States does allow more immigration as an absolute number than any other country but we also have a very large population, making these annual flow figures seem small.

Figure 1

Immigrant Inflows as a Percent of Population, 2013


Sources: OECD, EuroStat, E-Stat, Citizenship and Immigration Canada.

These relatively small immigrant flows have only produced an immigrant percentage of our population that is midrange among the OECD countries (Figure 2).  New Zealand has the highest at 28.4 percent of their population while Mexico has the lowest at 0.84 percent of theirs.  The United States is in the middle at 13 percent.  Our legal immigration system is so restrictive that without unauthorized immigrants the U.S. population of the foreign-born would only be about 9.5 percent of our population – a 28 percent reduction in present numbers.

Figure 2

Immigrant Stock as a Percent of the Population, 2013

Source: OECD.

Green card workers admitted as a percentage of the total annual immigrant inflow are far lower here than in other countries (Figure 3).  Only about 7.7 percent of all green cards annually issued by the U.S. government are for workers – virtually all of them high skilled.  The employment-based green card system allowed about 140,000 green cards to be issued annually but that number also includes the family members of those workers.  In 2014, 56 percent of green cards set aside for skilled workers actually went to family while 44 percent were for the workers themselves.  The GOP platform wants to decrease this already small number of green cards for skilled workers even further.  

Figure 3

Immigrant Workers as a Percent of All Immigrants, 2013


Source: OECD.

To put the silliness of the GOP platform into further context, the 2013 inflow of green cards for workers was equal to 0.04 percent of all native-born workers (Figure 4).  In Australia, the annual inflow of immigrant workers as a percent of native Aussie workers is 12 times as great.  In 2013, native labor force participation rates in Australia were 6.6 percentage points higher than in the United States according to the OECD.  Do you still think immigrant workers cause unemployment?   

Figure 4

Immigrant Workers as a Percent of Native Workers, Annual Flow, 2013


Source: OECD.

Immigrants issued green cards for working purposes are not the only immigrants who work, of course.  Most immigrants in the United States arrive as relatives of Americans or other immigrants, more than in any other country (Figure 5).  However, about half of those family immigrants work even though they didn’t receive and employment-based green card.

Figure 5

Immigrant Family Members as a Percent of All Immigrants, 2013


Source: OECD.

Australia, New Zealand, Canada and most of the other countries with more open immigration policies emphasize skilled immigration.  The current U.S. green card system also emphasizes skilled immigration among the workers it lets in but by setting aside most green cards for families, our system ends up skewing them toward lower-skilled workers related to Americans.  Ultimately, the United States should liberalize the immigrationoorf both lower and higher-skilled foreign workers.  The GOP platform wants to go in the opposite direction, further shrinking the already paltry quantity of skilled immigrant workers allowed in. 

Immigration is not like a budget that must eventually be balanced.  The United States government can allow in more skilled immigrant workers, more family-based immigrants, and more lower-skilled foreigners – no numerical offsets are required.   The number of immigrants allowed in annually, roughly one million, is neither set by legislation nor is it determined by the laws of economics as the complex legal quota system has naturally settled at an equilibrium of about that number.  Liberalizing high skilled worker immigration has the most political support and will have the greatest impact, per immigrant, for the U.S. economy.  That seems like an easy place to start.

Conservatives across the country, from—Michigan to Arizona—are challenging burdensome occupational licenses. “Insiders use the false cover of consumer protection to get laws enacted that keep out new competitors,” Minnesota Republican state Senator Chris Gerlach recently said, explaining his reform bill. While a welcome development, conservatives should extend this logic to an even more pervasive form of anti-consumer protectionism: work visa restrictions.

Work visas are licenses for foreign workers and entrepreneurs to practice their professions in the United States. And just as other occupational licenses artificially inflate prices for consumers, arbitrary visa quotas prevent consumers from accessing services that immigrants would provide. It’s protectionism, and it harms Americans every bit as much as unnecessary occupational licensing.

Yet even while the new Republican Party platform calls “excessive licensing requirements” a “structural impediment which progressives throw in the path of poor people,” it claims that it is “indefensible” that the U.S. government allows a million immigrants to live and work in the United States each year. The two positions are at odds. Occupational licenses limit the choices of American consumers in a few industries, while visa restrictions do so in every industry.

Indeed, the research on this point is clear: immigration generally lowers prices, especially for labor-intensive goods. National Research Council’s canonical report found that “the benefits of immigration from lower prices are spread quite uniformly across most types of domestic consumers.” Likewise, economist Patricia Cortes’s acclaimed 2008 study found that for every 10 percent increase in low-skilled immigrants, the price of immigrant-intensive services fell by 2.1 percent.

Economists Robert Lipsey and Birgitta Swedenborg quantified how labor restrictions harm consumers in the end. “Countries in which prices of labor-intensive services are very high, such as the Nordic countries, consume much less of them,” they wrote in a 2007 paper, meaning that people in those places simply cannot access the same range of products and services that Americans can, thanks in large part to immigration.

Visa restrictions make people in those countries poorer.

Naturally, opponents of immigration still claim that immigration restrictions are good for Americans because it protects their jobs from competition. And it’s true that new work visas will create more competition for current U.S. residents—just as fewer occupational licensing laws will result in more competition for those people who currently have the licenses.

But that doesn’t mean Americans will be worse off. Here’s why: it’s certainly nice to have a monopoly, but it’s only nice so long as you are the only one with one. If your industry can inflate its prices, that’s great for you. But if every industry can, then everything you buy becomes more expensive, and you become poorer no matter what privileges your industry happens to receive.

That’s the situation in immigration. Every industry is “protected” more or less equally, which results in a general increase in prices for everyone. We all get poorer—even the cronies who asked for these regulations.

That’s why economists, even noted immigration skeptic and Harvard economist George Borjas, agree that immigration makes natives better off. When immigrants—or other new workers, ideas, or technologies—enter a market and lower prices, consumers (i.e. all of us) can buy more or different products and services, creating new and better opportunities for employment in other industries. This is how economic growth happens.

Conservatives point to absurd examples of licensing laws—interior decorating, hair braiding, and cosmetology licenses that require years of training—as a reason to oppose licensing requirements. Yet in these cases, there is at least some process. For many immigrants, there is none at all.

For lower-skilled foreign workers, for example, the U.S. government issues not a single visa for non-seasonal jobs. Even foreign workers already here on work visas, such as H-1B workers, can face absurd restrictions on work. They cannot, for example, start or own a business while they wait in line for a permanent visa.  

America’s immigration laws are a web of protectionist regulations worse than any licensing regime. Even a moderate reform of these laws to allow more foreign workers and entrepreneurs to enter and contribute to the U.S. economy would greatly benefit Americans and immigrants alike.

A month ago Politico reported:

Donald Trump is trying to win over a skeptical Republican donor class, but they’ve closed their wallets — and they’re angry.

Today the New York Times reports a different view:

G.O.P.’s Moneyed Class Finds Its Place in New Trump World

In his unlikely rise to the Republican nomination Donald J. Trump attacked lobbyists, disparaged big donors and railed against the party’s establishment. But on the shores of Lake Erie this week, beyond the glare of television cameras, the power of the permanent political class seemed virtually undisturbed.

Though Mr. Trump promises to topple Washington’s “rigged system,” the opening rounds of his party’s quadrennial meeting accentuated a more enduring maxim: Money always adapts to power.

At a downtown barbecue joint, lobbyists cheerfully passed out stickers reading “Make Lobbying Great Again” as they schmoozed on Monday with Republican ambassadors, lawmakers and executives. At a windowless bar tucked behind the Ritz-Carlton hotel, whose rooms were set aside for the party’s most generous benefactors, allies of Mr. Trump pitched a clutch of receptive party donors on contributing to a pro-Trump “super PAC.”

To be sure, a number of individual and corporate donors stayed away from the Republican convention and seem to be unwilling to support Donald Trump. Still, the reconciliation of so many principled conservatives, prudent donors, and former targets of vicious personal attacks puts me in mind, again, of the following headlines that may have appeared in a Paris newspaper, perhaps Le Moniteur Universel, in 1815 as Napoleon escaped from exile on Elba and advanced through France:

March 9


March 10


March 11


March 12


March 13


March 14


March 18


He has been fortunate enough to escape his pursuers

March 19


March 20


March 21


March 22

HIS IMPERIAL AND ROYAL MAJESTY arrived yesterday evening at the Tuileries, amid the joyful acclamation of his devoted and faithful subjects

So far, those last few headlines have not been replicated, but those who wish to be near power have already begun rallying around.

Even when government has good intentions, it manages to muddle things up.

The U.S. Housing and Urban Development Department (HUD) has been applauded for its latest revision to its largest housing assistance program, the Housing Choice Voucher program. The new-and-ostensibly-improved program will provide larger housing subsidies to individuals that decide to live in wealthier neighborhoods, and smaller subsidies to individuals who decide to live in poor neighborhoods. The adjustment has already been piloted in five locations, and would be widely expanded (although HUD demurs on how widely).

On the surface, it sounds like a clever solution to an age-old concern. HUD is worried that dense concentrations of urban poverty – the type that often occurs in inner cities and historically occurred as a result of government housing projects – trap generations of residents in cycles of perpetual poverty.

In fact, the housing voucher program was devised to target this precise problem by providing individuals with a ticket they could use to rent housing anywhere in the United States. But through the years, HUD realized that although the voucher program provided choices, voucher recipients weren’t making the choices that HUD wanted – namely, moving out of low-income neighborhoods. The revised program will create the incentives required to make the choice for voucher recipients more … straightforward, shall we say… and redistribute low-income families across geographies.

Of course, the analysts at HUD aren’t the only ones worried that lack of residential mobility further entrenches low-income residents in poverty. The idea is at least as old as the fall of public housing in the 1970’s. But when it gets down to brass tacks the academic literature on the topic is less-than-satisfying, as described by the Moving to Opportunity study and the follow-up analysis by Katz, Kling, and Liebman and Clampet-Lundquist. Raj Chetty’s most recent work was hailed as proof that moving to wealthier neighborhoods has positive long-term impacts on children, but even it leaves something to be desired.  

Meanwhile, the evidence that HUD cites to support its latest proposal is essentially meaningless. Rather than grapple with the real question – whether a change of neighborhood can lift a family out of poverty – HUD cites early evidence that giving the poor money to move to wealthier neighborhoods helps them move to wealthier neighborhoods. Surprising no one.

But the discussion of evidence ignores one of the more fundamental concerns – basic equity issues. First, seventy-five percent of Americans that qualify for housing assistance don’t receive it. And housing assistance is worth thousands of dollars annually to the lucky few who are selected, generally through a lottery or multi-year waitlist. Under the revised program, those that do receive assistance will be provided an even more oversized benefit (as compared with their ill-fated, voucherless peers) than they were before, assuming they decide to live in the wealthier neighborhood.

Second, individuals in the lower-middle-class that can’t obtain a housing voucher at all, but live effectively the same lives as qualifying voucher recipients, are bound by an economic reality that looks even less appealing than before. It seems likely that this type of policy is precisely what hollows out the middle class by essentially giving them nothing to fight for: if they work, they will continue to live in a humble home in a less-desirable neighborhood. And they’re still working. If they reduce their hours, they could be eligible to live in an upmarket neighborhood that would otherwise be wholly out of reach.

But it isn’t just the revised voucher program that suffers from horizontal and vertical equity issues. Housing benefits across the board suffer from these problems – the difficulty in equitable distribution, the lower utility of housing benefits as compared with cash, and high implicit tax rates are commonplace for in-kind benefits.

So what can be done to confront the issues inherent to housing assistance and, more broadly, in-kind benefits? Edward Pinto, a scholar at AEI, suggested today that housing supply is the real obstacle to housing affordability, and we should focus our resources on improving housing supply rather than subsidizing housing demand. The premise is one that I agree with, although some of the particulars – Congress withholding funds from states that fail to comply, or providing tax credits to first-time homebuyers, strike me as alternately autocratic, or more of the same.  

Alternatively, shifting in-kind housing benefits to cash benefits would improve utility and provide for equitable distribution of resources among qualifying recipients. This strategy, combined with relaxing inane NIMBY (or “Not In My Backyard”) urban design and zoning regulations – not through federally-sponsored blackmail – could provide exactly the demand-side-supply-side solution that affordable housing policy enthusiasts have long advocated for.

Here’s an exchange between David Sanger of the New York Times and Donald Trump:

SANGER: You’ve talked about building the wall of course. Would you amend or change Nafta?

TRUMP: Oh, without question.

SANGER: Tell us how.

TRUMP: Without question. Nafta ——

SANGER: Would you pull out of Nafta?

TRUMP: If I don’t get a change, I would pull out of Nafta in a split second. Nafta is signed by Bill Clinton, perhaps the worst trade deal ever signed in the history of this country. It’s the worst trade deal ever signed in the history of this country and one of the worst trade deals ever signed anywhere in the world. Nafta is a disaster. You have to understand, I just campaigned, as you probably read, and I won all these states, and one of the reasons was because of Nafta. Because Nafta has drained manufacturing out of New York State, out of Pennsylvania, out of Ohio, out of so many different places. It’s drained. And these companies have gone to Mexico, and they’ve gone, they’ve left with the jobs. David, I have statisticians, and I know, like if I went to Pennsylvania, I say, “Give me the statistics on what is going on with respect to manufacturing.” Numbers — 45, 55, 65, I have states that are so bad. New England. Look at New England, what happened. Nafta has been a disaster for this country. And a disaster for the worker and Nafta is one of the reasons that, you know, there are people that haven’t had a wage increase 18 years in real wages. Actually, they’re lower, some are working two jobs, working much harder, then making less and they’re older. It’s supposed to work the opposite. You’re making more, you’re making more I hope.

HABERMAN: What kind of change could you make in terms of Nafta without fully withdrawing from it? How could you?

TRUMP: You’ve got to be fair to the country. Everyone is leaving. Carrier just announced they’re leaving. Ford is building a massive plant. So I have a friend who builds plants and then I have to go. I have a friend who builds plants, that’s what he does, he’s the biggest in the world, he builds plants like automobile plants, computer plants, that’s all he does. He doesn’t build apartments, he doesn’t build office space, he builds plants. I said to him the other day, “How are you doing?” He goes, “Unbelievable.” Oh, great, that’s good, thinking about the United States, right, because he’s based in the United States. So I said, “Good, so the country is doing well.” He said, “No, no, not our country, you’ve got to see what I’m doing in Mexico.” He said: “The business there is unbelievable, the new plants we are building. People moving from the United States.” That’s what he does. One-story plants. You understand?

Sanger asked some very clear questions about how Trump would change or amend NAFTA, and as you can see from the rambling answers, Trump doesn’t have anything specific to offer in response.  That may be because, in order to respond, he would need to have some idea of what’s in NAFTA, and it’s not at all clear that he does.

Heather MacDonald, who is based at the Manhattan Institute, has a new book out titled, The War on Cops.  Is there a war?  John Stossel notes that the “war on cops” narrative is overblown: “ ‘War’ means killing.  The attack on officers in Dallas was despicable, but, even including those five deaths, it is still safer to be a cop today than in years past.  According to FBI records, 2015 was one of the safest years ever recorded.”

MacDonald seems to recognize that.  Her primary aim is to push back against the critics of the criminal justice system.  She says we need more proactive policing and stricter incarceration practices to protect our cities from what she calls “mass destruction.”  I have a review of the book over at Reason and outline several problems with MacDonald’s thesis.

Here’s an excerpt:

In 2013, a federal district court ruled that the NYPD’s [stop & frisk] tactics were unconstitutional. The court noted that cops were evaluated by their “productivity”—that is, finding contraband and making arrests. Officers were not disciplined for stops that turned up nothing, and innocent persons had no practical legal recourse for brief detentions and patdowns of their clothing. Thus, the police had job pressures to stop a lot of people, suspicious or not, to see what might turn up. That helps to explain why, of the 4.4 million police stops between January 2004 and June 2012, there was no further action taken, such as an arrest or summons, in a whopping 88 percent. Mac Donald does not address these points.

That 88 percent might actually be an underestimate, because the police do not necessarily file the proper paperwork where a questionable stop turns up nothing. Recall that when NYPD officers roughed up former tennis pro James Blake last year in a case of mistaken identity, they did not report the encounter. As far as police records showed, it never happened. Fortuitously, the incident was captured by a hotel security camera and Blake’s wife urged him not to drop the matter, arguing that it would highlight a type of abuse that black men had been complaining about.

Read the whole thing.  Related items here, here, and here.

Cross-posted at Cato’s Police Misconduct web site.

Drought is a natural hazard that climate models have predicted will increase in the future in consequence of CO2-induced global warming. One way to gauge the validity of such predictions is by examining long-term historic trends in drought to see if there is anything unusual about their occurrence over the past few decades, during which time climate alarmists claim the Earth has experienced unprecedented global warming due to rising atmospheric CO2 emissions. And that is exactly what the seven member research team of Bi et al. (2015) did in assessing drought variability for southwest China over the past three-and-a-half centuries. 

To accomplish their objective, Bi et al. analyzed 39 tree ring cores obtained from 23 Picea likiangensis trees growing on Jade Dragon Snow Mountain (27.14°N, 100.23°E), located at the southern part of the Hengduan Mountains, southwest China, to reconstruct a historical spring season Palmer Drought Severity Index (PSDI) for this region. The resulting series is presented in the figure below.

Figure 1. Reconstructed spring PDSI (from March to May) for Jade Dragon Snow Mountain, southwest China. The thin line represents the annual value, while the thick line is an 11-year smoothing average. Adapted from Bi et al. (2015).

As shown above, there have been multiple wet (positive PSDI values) and dry (negative PSDI values) periods over the 361-year record. And with respect to extremely wet or dry years (more than 2 standard deviations above or below the mean), Bi et al. note such events occurred in 1674, 1712-1714, 1728, 1824-1827, and 1941-1942 for extremely wet years and in 1736-1737, 1758, 1762, 1766, 1768-1769, 1819, 1969 and 2008 for extremely dry years. They also report that although the 2000s was a relatively dry decade, “our study reveals that spring drought events during this period were not as extreme as in some other periods within the time scope of our study.”

Consequently, given the findings presented above, there appears to be nothing unusual, unnatural or unprecedented about the recent drought history of the Jade Dragon Snow Mountain region, suggesting rising atmospheric CO2 has had little, if any, measurable impact on this hazard phenomenon. And since it has had no remarkable impact on the past, there is no compelling reason to conclude that it will have any measurable impact in the future.



Bi, Y., Xu, J., Gebrekirstos, A., Guo, L., Zhao, M., Liang, E. and Yang, X. 2015. Assessing drought variability since 1650 AD from tree-rings on the Jade Dragon Snow Mountain, southwest China. International Journal of Climatology 35: 4057-4065.