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When Pope Francis visits the United States next week, he is expected to meet with prisoners in Philadelphia and to address the criminal justice system in a speech to members of Congress.

Unfortunately, Pope Francis’ past comments in support of the drug war suggest that he will refuse to acknowledge one of the biggest contributors to American injustice and a primary reason why so many people end up in American prisons in the first place: drug prohibition.

In my book, After Prohibition, I quote a Catholic clergyman, Father John Clifton Marquis, who wrote:

Drug laws are a moral issue.  Fifty years of drug legislation have produced the exact opposite effect of what those laws intended: the laws have created a tantalizingly profitable economic structure for marketing drugs. When law does not promote the common good, but in face causes it to deteriorate, the law itself becomes bad and must change …. Moral leaders have no alternative but to choose between authentic morality, which produces good, and cosmetic morality, which merely looks good. Drug laws look good! But the tragic flaw of cosmetic morality, like all other forms of cosmetics, is that it produces no change of substance …. Authentic moral leaders cannot afford the arrogant luxury of machismo, with its refusal to consider not “winning.” Winning, in the case of drug abuse, is finding the direction and methods that provide the maximum amount of health and safety to the whole society without having a cure that is worst then the disease.

Father Marquis’s concern about the dangers of “cosmetic morality” in drug policy has been substantiated in the 25 years since he expressed it. Hundreds of thousands of people are incarcerated in this country for non-violent drug offenses. Countless innocent people, whether suspects, bystanders, or police officers have lost their lives in the name of prohibition.

And America’s drug policies have not just created these negative outcomes in America. Latin America, toward which the Pope has demonstrated a special affinity given his Argentine roots, has been for decades racked in the violence that inevitably attends the prohibition of such a lucrative market.  Take Mexico, for instance.  Although crime reporting is questionable in Mexico, estimates of the number of people killed in Mexican drug violence over the past decade range from 40,000 to more than 100,000 people.  The entire drug corridor from the Andes to the United States has regularly been gripped by unimaginable violence, creating political and economic instability in addition to waves of drug war refugees.

On the other hand, we now have evidence that decriminalization and legalization are not the disasters that drug warriors insist.  Portugal decriminalized all drugs in 2001.  In 2008, Cato published a study of Portugal’s drug policy by Glenn Greenwald that found, in pertinent part, that:

[D]ecriminalization has had no adverse effect on drug usage rates in Portugal, which, in numerous categories, are now among the lowest in the EU, particularly when compared with states with stringent criminalization regimes. Although post-decriminalization usage rates have remained roughly the same or even decreased slightly when compared with other EU states, drug-related pathologies—such as sexually transmitted diseases and deaths due to drug usage—have decreased dramatically. Drug policy experts attribute those positive trends to the enhanced ability of the Portuguese government to offer treatment programs to its citizens—enhancements made possible, for numerous reasons, by decriminalization.

The empirical evidence supports Father Marquis’s position, and invalidates Pope Francis’s calls for the continued prohibition of drugs. Just as it did during the 1920s and 1930s, drug prohibition has proved to be a cure far worse than the disease.

Pope Francis is one of the most influential moral leaders in the world, but he needs to open his eyes to the misguided “cosmetic morality” that brings about so much harm.

When a police SWAT team raided Andrew Cornish’s home in Cambridge, Maryland at 4:30am, the officers were heavily armed, dressed in black, wearing helmets and goggles, and carrying battering rams. (They were investigating small-time drug possession—seriously.) They stormed the residence without announcing themselves and killed Cornish seconds later as he emerged from his bedroom in his underwear.

Cornish’s estate sued the Cambridge police. At trial, Cornish’s estate claimed that the police violated two Fourth Amendment rules. First, the police violated the knock-and-announce rule when they failed to wait more than five seconds for him to answer the door after knocking. Second, the police violated the prohibition on excessive force when they shot him to death. The jury found for Cornish’s estate on the knock-and-announce violation and against him on the excessive force violation, awarding damages to the estate.

The U.S. Court of Appeals for the Fourth Circuit arrogated to itself the role of the jury—the resolution of questions of fact—and determined that because “the Officers’ illegal entry was not the legal cause of Cornish’s death,” the estate was only entitled to nominal damages to “vindicate the depravation of Cornish’s constitutional rights.” Cornish’s estate has now appealed to the Supreme Court.

The knock-and-announce rule is an ancient one rooted in the English common law. In the early 17th century, Lord Coke noted that if a sheriff “break the house when he may enter without breaking it (that is, on request made, or if he may open the door without breaking), he is a trespasser.” That rule continues to this day: “law enforcement officers must announce their presence and provide residents an opportunity to open the door.” Hudson v. Michigan (2006).

The knock-and-announce rule serves to protect the life, limb, and property of both home occupants and police serving a search or arrest warrant. Cornish’s estate should thus be entitled to due compensation for the unconstitutional deprivation of his right to life.

Indeed, this case is particularly troubling because it represents a growing trend of paramilitary policing in America. The over-deployment of SWAT teams radically enhances the threat of harm to both civilians and officers for what should be ordinary police work. SWAT team deployments have increased more than 1,400% since the 1980s. Between 1980 and 2005, the average annual number of domestic paramilitary raids increased from 3,000 to 50-60,000.

SWAT teams and tactical units were originally created to address high-risk situations, such as terrorist attacks and hostage crises. Today, however, these extreme situations account for only a small fraction of SWAT deployments; they’re used primarily to serve low-level drug-search warrants.

Kane v. Lewis represents an excellent case for the Supreme Court to send the important message that lower courts should respect the role of juries in our constitutional structure, not contort the law to avoid holding the police accountable. Accordingly, Cato filed an amicus brief supporting the petition for review on behalf of Cornish’s estate and calling for summary reversal of the Fourth Circuit.

The “real-bills doctrine” was roundly rejected by postwar monetary theorists of both the Chicagoan and the Austrian perspectives (Lloyd Mints 1945, Ludwig von Mises 1949). But George Selgin (1989) was right to warn us that “it would be a mistake to think of the real-bills doctrine as a ‘dead horse’” because “dead horses of economic theory have a habit of suddenly springing back to life again.”

In recent years no less prominent an economist than Thomas Sargent (2011) has declared that in the debate over alternative monetary regimes, “The real bills doctrine is alive and well today.” Most recently the leading young Spanish economist Juan Ramón Rallo of the OMMA business school and the Juan de Mariana Institute in Madrid has defended propositions that he identifies with the real-bills doctrine. Rallo draws on the writings of Antal Fekete, who has been advancing what he calls “Adam Smith’s real bills doctrine” for more than 20 years. I had the pleasure of an on-stage dialogue with Professor Rallo in Madrid this summer, where we discussed aspects of the doctrine. Fortunately, what Rallo actually defends is mostly free of the shortcomings of the usual versions of the real-bills doctrine.

To begin, let’s identify what is a real bill. To use a common example, a miller sells $1000 worth of flour to a baker and presents a bill for $1000 with payment due in 90 days. The baker endorses the bill, pledging to pay $1000 in 90 days. He plans to pay out of income to be made by producing and selling bread from the flour. The miller need not wait 90 days to get paid but can immediately sell the endorsed bill to a bank (one that considers the baker a good credit risk) at its present discounted value, say $980. The bill is “real” in being “backed” by tangible goods in process. Thus real bills are short-term commercial IOUs that finance goods through stages of production. High-quality real bills are low in default risk and liquid (have a thick secondary market with small bid-ask spreads).

It is crucial to distinguish between two different doctrines that refer to real bills.

(1) The first real-bills doctrine is a norm for money issuing. It says that a banking system will automatically issue the right (equilibrium) quantity of monetary liabilities (banknotes and checkable deposits), and will not over-issue no matter what quantity it issues, if it always issues in exchange for real bills offered to it, and never in exchange for other assets (government bonds, ordinary loans). In some versions it doesn’t matter whether the system is dominated by a central bank or whether it is on a gold standard. Thus the British anti-Bullionists claimed that the Bank of England could not have over-issued while off gold 1797-1819 because the Bank only discounted real bills, a claim endorsed by John Fullarton of the Banking School in the 1840s. The Federal Reserve proclaimed a similar doctrine in the 1920s. A monetary policy guide is clearly what Sargent (2011) has in mind when he contrasts the real-bills doctrine to the quantity theory of money. (As David Laidler (1984) showed, however, what Sargent and Wallace (1982) enunciated wasn’t the traditional money-issuing real-bills doctrine. Neither is the position that Sargent (2011) defends.)

The errors of the monetary policy doctrine are well known. (a) It wrongly takes the nominal quantity demanded of a particular type of credit as a reliable guide to the nominal quantity of money the public wants to hold. Not only are these quantities different but, as Henry Thornton noted back in 1802, a central bank can increase the quantity of credit demanded simply by supplying more money, which lowers its discount rate and raises the price level. (b) It wrongly takes the quality of bank assets acquired as a reliable governor of the quantity of monetary liabilities issued. (c) It makes redeemability of bank liabilities (in gold or otherwise) an inessential “fifth wheel” in the process that determines the quantity of money.

The money-issuing norm is what critics of fractional-reserve banking have in mind when they assert (Hülsmann 1996, p. 20) that modern free banking theorists “are nothing but modern advocates of the real-bills doctrine” or (Baeriswyl 2014, p. 13) that our theory “repeats basically the same error as the real bills doctrine.” Such criticism is completely off the mark, because modern free banking theorists (among which I count myself) have consistently rejected the real-bills money-issuing norm. In particular, Selgin (1989) and White (1995, ch. 5) emphasize its errors and show how it differs from our theory of the self-regulating properties of a free banking system.

In a nutshell, our account of the self-regulation of the quantity of bank-issued money (banknotes and checkable deposits, redeemable on demand) in a competitive free banking system centers on the premise that profit-seeking banks must carefully attend to their reserve positions. Running out of reserves and defaulting is costly. A bank that issues an excessive volume of demandable liabilities will soon experience adverse clearings (will lose reserves to other banks). To lower the risk of payment default it will be compelled to reverse its expansion to stop the outflow and rebuild its reserves. Conversely, a bank that issues less than its clientele wants to hold will gain reserves and find it profitable to expand. These responses to adverse or positive clearings will return the quantity of bank-issued money at an individual bank, and economy-wide (where flows of reserves out of and into the system play an important role), to the quantity demanded. This account does not refer to the type of earning assets that any bank holds, whether real bills or otherwise, as central to the self-regulation of the money stock. Thus it does not share any of the errors of the real-bills money-issuing norm.

While not offering a quantitative guide, selling and buying real bills did offer a convenient means for a bank to contract and expand the volume of its demandable liabilities in response to changes in demand (Glasner 1992), as indicated by changes in its reserves. Attention to reserve surpluses and deficits, not any property of the bills themselves (short duration, low default risk, liquidity) automatically guided a bank (and the banking system) to contract and expand appropriately. The maturation of bills of exchange did not as such compel a commercial bank or a central bank to contract (it did not “close a vent,” contrary to the Banking School’s “law of the reflux”). A bank unconcerned about its reserves could always purchase new bills to replace maturing bills.

Nor did a system-wide reduction in the quantity of bills offered to the entire banking system at a given lending rate – even a reduction associated with fewer goods in process – compel the banking system to decrease the overall quantity of monetary bank liabilities by an equivalent amount to maintain monetary equilibrium. A decrease in the demand for credit is not the same as a decrease in the quantity of bank liabilities that the public wants to hold. Though both are correlated with a decrease in output, the correlation is less than 100%, and the coefficient is not one (the demand to hold bank-issued money does not decline 1:1 with the volume of real bills discounted). Normally a system-wide decrease in the demand for credit in the bill market calls for an equilibrating decrease in the market discount rate.

Conversely an increase in the quantity of bills offered at a given lending rate, associated with more goods in process, does not signal that the entire increased volume of bills can be prudently purchased at the previous discount rate. A rise in the rate is called for to ration the scarce supply of funds that the banks have with which to intermediate. Competition for now-scarcer funds implies a concomitant rise in the deposit rate, which will somewhat increase the quantity of deposits demanded, but again not generally 1:1 with the volume of bills discounted. By contrast the money-issuing norm version of the real-bills doctrine calls for accommodating all offers of real bills for discount, presumably at an unchanged interest rate, and is silent on the need for equilibrating changes in interest rates.

(2) The second real-bills doctrine – and the one that Rallo proposes – is a prudent banking norm. Its origins lie in remarks Adam Smith made in The Wealth of Nations. Smith recommended real bills as a safe commercial bank portfolio asset. (Actually both real-bills doctrines are in Smith, including an erroneous money-issuing norm. But Smith also offered a more correct analysis of money-stock self-regulation, noting correction via reserve losses when a bank or a banking system tries to issue more liabilities than the public wants to hold.) A prudent bank should avoid purchasing unreal bills, Treasury bonds, or mortgages.

The prudent-banking real bills doctrine, which is what I take Rallo to be defending, is basically innocuous with respect to monetary theory so long as it does not contend that a bank purchasing only real bills cannot over-issue its liabilities. It is irrelevant to understanding how redeemability and the adverse clearing process regulate the quantity of bank-issued money.

There is much to commend (in my view!) in Rallo’s writings when he rejects mandatory 100% reserves in banking and when he favors free banking over central banking. [All the quoted passages to follow are my Google-aided translations from the original Spanish.] He rightly observes (Rallo 2013a) that a 100% gold reserve requirement “will provoke such economic inefficiencies that it will inevitably be abandoned.” Thus “the real choice is between a free-market monetary and credit system” and an unfree system. He told an interviewer: “Of course society without monopolistic state organs can soundly self-regulate the value of money and credit,” adding that healthy credit “occurs naturally in a competitive market.”

Clearly Rallo does not want to impose any real-bills requirement by statute or regulation, and he does not view the real-bills doctrine as a set of instructions for central bank policy. Rather, he views (Rallo 2013) the doctrine as a prudent banking norm toward which competition will compel free banks to practice:

A bank without privileges in an environment of freedom is therefore to be prudently managed, which in my view would result in having covered its financing with cash or self-liquidating short-term credits and in counting on abundant capital to absorb losses in relation to the risk assumed in its assets. It is what is known as the Real Bills Doctrine.

Modern free banking theorists would agree that competition in an unprivileged banking system promotes prudent bank management (insolvency and its resolution weed out the imprudent), and everyone can agree that prudence includes adequate liquidity and adequate capital. But I have two concerns about the above statement.

First, contrary to the last sentence quoted and as already noted, a prudent banking norm is not the only or even the main idea known as the real-bills doctrine. Historians of economic thought commonly use the name to refer to the money-issuing norm described above. Free banking theory rejects the real-bills-centered view about the process that regulates the quantity of broad money. Again, Rallo is not defending a money-issuing norm here, but rather talking about prudent bank management.

Second, the concept of “self-liquidating” (autoliquidable in Spanish) credit, which Rallo invokes here and in other writings, is unhelpful to clear thinking. In some authors’ arguments it is part of the magical thinking underlying the notion that real-bills-only discounting will properly regulate the quantity of money.

What does “self-liquidating” mean? Every debt instrument of finite maturity is “self-liquidating” in the sense that it eventually comes due and the borrower ordinarily repays the principal. So that can’t be it. Rallo cannot mean by “self-liquidating” only that the debt will come due soon, because then it would be redundant in the above-quoted phrase “self-liquidating short-term credits.” Instead “self-liquidating” seems to signify an IOU that (like a real bill) finances a batch of goods in process through a stage of production, like the batch of flour in the example above, such that the sale of the goods ordinarily enables repayment of the IOU. (Sometimes “self-liquidating” bills are said to be those financing consumer goods, or goods in high demand.) But business loans of all kinds finance projects that are expected to generate revenues sufficient to repay the loans. Granted, real bills were typically lower-risk assets than ordinary business loans, but of course the repayment of a real bill did not carry zero risk. The bill might not be repaid if for whatever reason the goods were not produced in timely fashion (the flour was not baked into bread within 90 days) or the products did not sell at the expected price.

Rallo has a broader concern about imprudent banking: the danger of banks undertaking “harmful maturity mismatch” by making long-term loans with short-term deposits that might not be rolled over. Holding real bills (or other short-term assets) instead of longer-term loans reduces the mismatch. Maturity mismatch, aka maturity transformation or duration gap, is a practice that does carry risks as well as performing a valued service for which there is normally a reward. The reward for a bank with a positive duration gap (assets longer than liabilities) is that it borrows at a lower rate and lends at a higher rate than with a zero gap in a market where (as usual) long rates are higher than short rates. The risk is capital loss when rates rise. If the bank has to pay unexpectedly higher deposit interest rates to roll over its deposits, before it can roll over its loans, then it suffers a loss in net worth. The US savings banks hugely suffered such losses in the 1980s.

Rallo seems to be of two minds on the extent to which a free banking system would exhibit excessive maturity mismatch. On the one hand he writes (Rallo 2009): “While I can agree with Selgin that a system of free banking would curb credit expansion and tend to remain liquid, I deny that any banking system (free or not) can be kept liquid by borrowing short and investing long. And we should not overlook, however superior free banking is in comparison to central banking monopoly, the risks and trends that exist in the former to artificially inflate credit.” On the other hand, and more accurately I think, Rallo (2012) recognizes that a free banking system will limit undue risk-taking by making imprudent bankers bear the consequences of their own actions:

Fortunately, in a market where the currency and banking develop in freedom and without government privileges, banks have little room for these dangerous operations, because as soon as their creditors stop refinancing them, they fall into receivership. Unfortunately, in our ultra-interventionist and ultra-privileged market, a state institution called the central bank has the monopoly of issuing paper money, allowing it to provide cheap refinancing to private banks that have large maturity mismatches … and perversely to prolong the duration and devastation of economic cycles.”

Note that the US savings banks, which suffered from huge duration gaps when interest rates rose sharply in the early 1980s, were not operating under laissez-faire. They had been specifically compelled by law to keep almost all of their asset portfolios in fixed-rate home mortgages.

To summarize: the characteristic of being backed by goods in process does not endow a bank-owned IOU with any special qualities not equally present in, or make it any more prudent to hold than a differently-backed IOU with equivalent default risk, liquidity, and maturity. An emphasis on real bills as the mark of prudent banking is therefore misplaced, as opposed to an emphasis on the management of default risk, liquidity, and capital risk from duration gap. These properties – not “self-liquidation” or any property of automatically regulating money-issue – explain why prudent banks in a historically competitive system, like Scotland’s held real bills in their asset portfolios.

[Cross-posted at]

The fog of war has removed any sense of certainty regarding developments on the Syrian battlefield. That said, we know that ISIS has captured several towns, and that waves of Syrian refugees are disembarking upon Europe’s shores. But, the picture remains chaotic and hazy.

However, there is one objective indicator of reality in Syria. It is the Syrian pound’s black-market (read: free-market) exchange rate. The Johns Hopkins-Cato Institute Troubled Currencies Project (TCP) tracks and reports this important indicator on a daily basis. With the exception of a plunge in June 2013, the Syrian pound has witnessed an orderly, not chaotic, deterioration. 

From Syria’s black-market exchange, standard economic theory and reliable empirical techniques allow us to produce accurate inflation estimates. Indeed, with the free market exchange-rate data (usually black-market data) reported by the TCP, the inflation rate can be calculated. The principle of purchasing power parity (PPP), which links changes in exchange rates and changes in prices, allows for a reliable inflation estimate, when inflation rates are elevated. To calculate the inflation rate in Syria, all that is required is a rather straightforward application of a standard, time-tested economic theory (read:PPP).

Despite the chaotic battlefield situation, the Syrian economy is, well, less chaotic. It is experiencing a slow and uneventful deterioration. That’s clear. As the charts depict below, both annual and monthly implied inflation rates have been rather stable, aside from the June 2013 hyperinflation scare.

With Russia’s recent ramp-up in Syria, it will be worth paying particular attention to the SYD/USD black-market exchange rate. If the pound stabilizes, or strengthens, we will know that the presence of Russia, from the al-Assad government’s point of view, is paying dividends. 

Growth in the Eurozone has consistently come in under consensus estimates. It missed the mark again in the second quarter of 2015, posting an anemic GDP quarterly growth rate of 0.3%. Europe’s “Big Three”—Germany, France, and Italy—all contributed heavily to the second quarter’s weak performance.

I am not surprised by Europe’s sputtering performance. The growth rate of the broadly determined money supply (M3) is a strong indicator of the economy’s course. Since the collapse of Lehman Brothers Holdings Inc. in September of 2008, the growth of M3 in the Eurozone has been weak. This, in large part, is because of more stringent capital asset requirements for banks (read: Basel III) and new bank regulations. These have held down the growth of bank money, which accounts for the lion’s share of broad money.

Since the ECB adopted quantitative easing (QE) in March of 2015, growth of M3 has accelerated, and the portion of M3 accounted for by state money has expanded, too. In consequence, the future course for Eurozone growth holds some promise. Both state money, as well as bank money are accelerating. This is a positive development.

It is worth reporting that Bulgaria, which is part of the European Union (EU), but not a member of the Eurozone, continue to outperform the average EU member country. This is thanks to its currency board system.

What on earth is Russia doing in Syria? This question has no doubt crossed many minds in recent days, as Russia began to move substantial arms and troops into Syria. There are two possible scenarios: 1) with diplomatic ties at an all time low, and heavy sanctions already in place, Russia has decided it has nothing to lose in defying the West and backing the Assad regime militarily to the bitter end; or 2) Russia is maneuvering to give itself diplomatic leverage in any Syrian settlement by raising the stakes now. Though the latter is more likely, it’s difficult to know which scenario is accurate, further complicating already tortuous US policy towards Syria.

Over the last week, various news sources have reported an increase in Russian arms and troops flowing into Syria. On Monday, the Department of Defense confirmed that the Russians are setting up a Forward Operating Base at Latakia, including prefabricated housing and SA-22 anti-aircraft missiles. Open source researchers have found photos of Russian trucks and T-90 tanks near Latakia, increased shipments to Russia’s Syrian base at Tartus, social media posts showing that Russian troops are headed to Syria, and even satellite photos showing massive expansion of the runways, hangers and housing at Latakia.

In short, it seems that Russia is preparing to substantially increase its military presence in Syria, ostensibly to aid the refugee crisis and fight ISIS, but practically in support of the Assad regime. This doesn’t necessarily indicate an intention to commit ground troops, but certainly raises the possibility of Russian air support for Assad. There is no way to prevent this buildup: though NATO members like Bulgaria have closed their airspace to Russian flights, Iranian and Iraqi airspace remains open.

Russian military support for the Assad regime is nothing new: Russia supplies many of the regime’s weapons, and there have long been suspicions that Russian advisors in Syria may play an active role in combat. Yet direct Russian military involvement in Syria is a major escalation. More puzzling is the fact that Russia’s behavior appears to directly contradict the summer’s diplomatic efforts, which saw the first Russian-Saudi meetings in several years and rumored diplomatic attempts by the US, Russia and the Gulf States to find a negotiated settlement for the Syrian crisis.

With the United States engaged in airstrikes against ISIS, active Russian military involvement in Syria complicates the strategic situation. To start with, it inhibits the creation of an ‘ISIS-free zone’ and makes any form of no-fly zone effectively impossible. This is hardly a loss, given the many good reasons to oppose a no-fly zone inside Syria. Russia’s military support will also prevent the Assad regime from falling any time soon. Likewise, this may be less of a negative than it initially appears. Despite the Assad regime’s brutality, its collapse would likely result in further chaos, potentially strengthening ISIS.

Unfortunately, Russian military involvement in Syria also substantially raises the stakes for all involved. Any Russian air campaign runs the risk of direct conflict between U.S. and Russian forces. With U.S. fighters engaged in daily airstrikes against ISIS, Russian air presence could result in accidental clashes. This risk is especially troubling given the current high state of tension between Russia and the U.S., and the lack of military to military channels for de-conflicting Syrian airspace.

Russia’s military buildup is a complicating factor in the ongoing Syrian strategic morass. Though it remains unclear exactly what the Kremlin hopes to achieve with its military buildup, it seems probable that the increasing Russian military involvement in Syria may in fact be intended to enhance the Kremlin’s bargaining position. Ultimately, the risks raised by Russian military intervention strengthen the case for a diplomatic solution in Syria. Unfortunately, they may make it harder to find a diplomatic solution that is palatable here in Washington.  

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

Over the past couple of days, several articles have caught our eyes that we thought worthy of a mention in these pages.

First up is a pair of papers, one by Swiss researcher Peter Landschützer and colleagues and the other by a team led by University of Colorado’s David Munro, that examined trends in the rate of carbon dioxide uptake in the Southern Ocean.  In each case, the authors report that carbon uptake has been increasing there during the 21st century. This is good news.

Carbon dioxide uptake is basically the opposite of carbon dioxide emissions. As emissions increase and the atmospheric concentration grows, this puts a pressure on some carbon sinks to expand—notably the standing biomass of vegetation (through carbon fertilization) and the carbon content in the oceans (through Henry’s Law). In fact, the proportion of human carbon dioxide emissions that are being taken up by carbon sinks has been pretty constant for the past 150 years—meaning the sinks are expanding to offset a significant portion of our growing emissions.

Even though the behavior found in the new research paper is confirming expectations, it is worth highlighting in that over the past couple of years several papers were published and subsequently rose to prominence suggesting that the rate of carbon dioxide uptake by the Southern Ocean was slowing down and this was an indication that the carbon sink there was saturating.  This had some segments of the climate alarmosphere in a tizzy (google “ocean carbon sink saturating” for some examples). The worry spiral went like this: CO2 emissions were leading to climate changes that were leading to less carbon update by the oceans which was leading to more CO2 in the atmosphere which was leading to more climate change which… you get the point.  Uncontrolled positive feedback.

The new findings pretty much stamp out this overheated concern.

From Landschützer et al.:

Several studies have suggested that the carbon sink in the Southern Ocean—the ocean’s strongest region for the uptake of anthropogenic CO2—has weakened in recent decades. We demonstrated, on the basis of multidecadal analyses of surface ocean CO2 observations, that this weakening trend stopped around 2002, and by 2012 the Southern Ocean had regained its expected strength based on the growth of atmospheric CO2.

And from Munro et al:

Overall, [our results are] suggesting that the Southern Ocean is playing an ever-increasing role in taking up atmospheric CO2.

So it seems that the apparent slowdown in the rate of carbon dioxide uptake in the Southern Ocean was most likely just a passing blip in what is natural variability—the level of which was previously underestimated. No cause for alarm.

Next up is a new paper by hurricane forecasters/researchers Phil Klotzbach, Bill Gray and Chris Fogarty examining the trends and natural variability in a key indicator of Atlantic hurricane behavior.  The Atlantic Multidecadal Oscillation, or AMO, has long been identified as a dominant influence on the frequency of hurricanes that form in the Atlantic Ocean. As its name suggests, the AMO “oscillates” back and forth between its positive and negative states with a time period of several decades. The AMO had been in a “positive” state—one that is conducive for hurricane development–since 1995. In their new paper, Klotzbach and colleagues present evidence that the AMO may have recently switched to a “negative” state—one that tends to hinder hurricane development. This would explain the dearth of hurricanes in the Atlantic Ocean for the past couple of years and would suggest that we are entering a prolonged period of below average activity.

Klotzbach goes into the details of what they found in a great article hosted by Washington Post’s Capital Weather Gang. That article begins:

Floyd, Katrina, Wilma, Ike and Sandy — just a few of the devastating hurricanes we’ve seen in the years since 1995. It’s been an astonishingly active hurricane period of the Atlantic Ocean, costing the U.S. over $500 billion in damages. But there’s evidence to suggest that the painfully memorable, two-decade era that brought some of the most intense hurricanes on record — and some the most active hurricane seasons — is coming to a close.

Not everyone is sold on the idea that the AMO is a real phenomenon and/or that it exerts a major influence on Atlantic hurricane activity. For example, is association with the extremely active hurricane seasons of 2004 and 2005, several research papers were published and subsequently rose to great prominence, that suggested that rising sea surface temperatures caused by human greenhouse gas emissions were the cause of the observed upswing of hurricane activity—with things only to get worse in the future.  The subsequent downturn of hurricane activity, including the on-going (and expanding) record period of time between major hurricane landfalls in the U.S. (which is fast approaching 10 years) has vindicated the AMO and those researchers, like Klotzbach and Gray,  who have identified its influence (although there are still some holdouts, as MIT’s Kerry Emanuel, who told AP reporter Seth Borenstein  in regards to the new study “I think they’re pretty much wrong about this”).

Klotzbach says that time will tell for certain.

And finally, we come across what we think has to be the most unusual suggestions as to how to handle the climate change issue—ask aliens.

Apparently there is something called the Breakthrough Message contest in which a million dollars in prizes will be awarded  for “messages that could be read by an advanced civilization.” The Breakthrough Message sponsors want to “encourage debate about how and what to communicate with possible intelligent beings beyond earth.”   

In response to the contest, a group of U.K. researchers dedicated to the search for extraterrestrial intelligence (SETI) have decided to submit an entry. They have yet to agree on what their message will contain, but the group’s spokesman told the BCC:

“[We] also know that our own civilisation is in a fair bit of trouble. We face some pretty big threats. That means it might be a good idea to gamble, and hope there is someone slightly older and wiser out there. If aliens told us something about how to handle our climate, or artificial intelligence, we might want to listen.”

We resist any comparison to the Papal Encyclical.

Whenever China is mentioned in a presidential campaign, the consequences are rarely good. In 2012 residents of Ohio, where anti-Beijing ads proliferated, might have believed that the campaign hinged on China. This time U.S. policy toward the People’s Republic of China might become a broader election issue, leading to serious damage in the relationship.

Unfortunately, political campaigns generally are not well-suited for the thoughtful discussion of complex international issues. Especially today, when many Republican voters are skeptical of any foreign policy message that does not involve pummeling one nation or another.

One of Beijing’s loudest critics is Donald Trump, though so far he has focused on economic issues, as did Barack Obama and Mitt Romney when they battled for Ohio’s votes three years ago.

Carly Fiorina promised to be “more aggressive in helping our allies … push back against new Chinese aggression.” Marco Rubio denounced the PRC’s “increasingly aggressive regional expansionism” and the administration’s alleged “willingness to ignore human rights violations in the hope of appeasing the Chinese leadership.”

However, Wisconsin Gov. Scott Walker, desperate to revive his flagging campaign, has rushed to become China’s harshest critic. He declared: “Given China’s massive cyberattacks against America, its militarization of the South China Sea, continued state interference with its economy, and persistent persecution of Christians and human rights activists, President Obama needs to cancel the state visit. There’s serious work to be done rather than pomp and circumstance.”

Indeed, Walker explained, “honors should only be bestowed upon leaders and countries that are allies and supporters of the United States.” Finally, he contended: “I think China, as others in the world, would actually respect some leadership once and for all from the United States.”

No country or leader is entitled to a state visit, of course, but Walker’s convoluted reasoning is what one would expect from a governor play-acting as president. U.S. policy toward Beijing can, and perhaps should, be tough. But it should not be stupid.

First, a state visit is a diplomatic tool, not an “honor.” No matter how much Luxembourg might deserve the “honor,” it would be silly to host the reigning grand duke for a state visit. He doesn’t matter geopolitically.

Second, disrespecting another nation’s leadership is a curious way to seek its respect. Cancelling an already scheduled trip would be seen as a studied insult, enough to anger but not coerce. That would make progress on important issues less likely.

Third, everyone believes that “there is serious work to be done” with China. The disagreement is over the best way to do so. Treating other nations seriously is one step in attempting to work through contentious issues.

Fourth, lumping together radically different issues makes serious work less likely to succeed. Fiscally irresponsible Washington is in no position to lecture the PRC on internal economic policy. Christians face persecution, but the situation, though complex, is far better than a few years ago and will be determined by the rising number of Chinese believers, not Washington demands.

There’s no easy answer to cyberwar, but U.S. companies and governments possessing the ability to retaliate as well as defend would be more effective than cancelling a state visit. Resolving conflicting territorial claims is mostly the concern of allied states; telling President Xi he won’t get a state dinner won’t cause his government to gives up its claim to the Senkaku or SpratlyIslands.

Unfortunately, there’s room for a lot more China-bashing in the campaign. But much is at stake in maintaining a civil if not overly warm bilateral relationship. Hopefully any threats and insults will be forgotten by the winning candidate.

However, as I warn in China-US Focus: “the more heated the rhetoric, the more likely the PRC is to respond in kind. And GOP hawks like Walker may turn out to be true believers rather than pragmatic cynics. If so, U.S.-China relations could be heading for stormy times.”

Under new rules in the District of Columbia, residents are allowed to possess, smoke, and grow marijuana, but they are not allowed to sell it. So, as Aaron C. Davis writes in the Washington Post, this presents an interesting question: How is the marijuana grown in D.C. supposed to get to people in the city who want to smoke it? And it turns out that in a few short months the enterprising people of Washington have found several opportunities:

A fitness instructor who took up the hobby six months ago has amassed enough pot to make tens of thousands of dollars selling it. Instead, he’s begun giving away a little bit to anyone who pays for a massage. The instructor asked not to be named out of concern that he or his home, where he sometimes serves clients, could become targets for criminals.

A T-shirt vendor in Columbia Heights who declined to comment may be working in a similar gray area. College students say the roving stand has become known to include a “gift” of a bag of marijuana inside a purchase for those who tip really well. And recently, dozens of people paid $125 for a class in Northwest Washington to learn about cooking with cannabis from a home grower. Free samples were included.

Andrew Paul House, 27, a recent law school graduate, may be the best early test case for whether home growers can find a way to make money from their extra pot.

House has started a corporation and a sleek Web site to order deliveries of homegrown marijuana to D.C. residents’ doorsteps — “free gifts” in exchange for donations to the company, akin to a coffee mug given to donors by a public radio station.

Davis goes on to examine other interactions between the law and natural human activity. The law, for instance, sets a limit on the number of plants people can grown in their homes, but it doesn’t limit the size of plants. Which allows for the production of more joints per month than you might imagine. Other growers have constructed sophisticated growing rooms. But note:

Many have tried to take a more organic approach to growing, using natural light and the ­District’s summer weather to bring plants to maturity. Those growers have generally had less success.

Prohibition of any activity that people want to engage in tends to fail. And however you define failure, it will always have unintended consequences. But in this case it’s pretty clear that the consequences of a confused halfway house between legalization and prohibition are better than the consequences of outright prohibition.

This Thursday, the Cato Institute will release the 14th edition of the Cato Supreme Court Review, covering the Court’s October 2014 and 2015 terms. The lead article, “King v. Burwell and the Triumph of Selective Contextualism,” is by Jonathan Adler and yours truly. Here’s the abstract:

King v. Burwell presented the question of whether the Patient Protection and Affordable Care Act of 2010 (ACA) authorizes the Internal Revenue Service (IRS) to issue tax credits for the purchase of health insurance through Exchanges established by the federal government. The King plaintiffs alleged an IRS rule purporting to authorize tax credits in federal Exchanges was unlawful because the text of the ACA expressly authorizes tax credits only in Exchanges “established by the State.” The Supreme Court conceded the plain meaning of the operative text, and that Congress defined “State” to exclude the federal government. The Court nevertheless disagreed with the plaintiffs, explaining that “the context and structure of the Act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase.” The Court reached its conclusion by disregarding portions of the ACA’s text and considering only selected elements of the ACA’s structure, context, and purpose. The King majority’s selective contextualism embraced an unexpressed congressional “plan” at the expense of the plan Congress actually enacted.

Our article—which is available now at SSRN—quotes Darth Vader more often than any previous Cato Supreme Court Review article. (Probably.)

I Am Altering The Deal

Adler and I will also discuss the King ruling on a panel at Cato’s 14th Annual Constitution Day Conference this Thursday, September 17, from 10:45am-12pm. Click here to register.

The United States ranks 16th in the new Economic Freedom of the World index co-published in the United States by the Cato Institute and the Fraser Institute. The report has been tracking the decline of the country since 2000, when it still retained its decades-long place among the top three countries on the index. The U.S. decline in the five major areas the report measures—size of government; legal system and property rights; sound money; freedom of trade; and regulation—amounts to an overall decline that is greater than three times the average fall in economic freedom of the mostly rich OECD countries. Based on academic research, the authors once again warn that the large drop in economic freedom could cut U.S. long-term growth (3%) by half.

Other countries in the index rank as follows: Hong Kong (1); Singapore (2); New Zealand (4); Switzerland (4); Mauritius (6); Canada (9); United Kingdom (10) tied with Chile (10); Germany (29); South Korea (39); Spain (49); Greece (85); Russia (99); Vietnam (109); China (111); India (114); Egypt (118); Iran (147); Venezuela (157).

The report finds a strong relationship between economic freedom and a range of human development indicators. Economic freedom is unambiguously good for the poor, for example. According to the authors, “the average income of the poorest 10% in the most economically free nations [by quartile] is about 50% greater than the overall average income in the least free nations.”

This years’ report includes a chapter on the relationship between economic freedom and perceptions of life control and life satisfaction. The authors of that chapter (Hans Pitlik, Dulce Redin and Martin Rode) note that past research has found that the more people feel they are in control of their lives, the more satisfied they are with their lives. Furthermore, past research has found that more economic freedom improves life satisfaction over and above its impact on greater per capita income (increases in income improve life satisfaction). The authors now find that economic freedom plays an important role in giving people a feeling of control over their own lives and thus plays a significant role in determining peoples’ levels of happiness.

See those and other findings on the role of economic freedom in our lives here.

Few Republican candidates these days are talking about George W. Bush and Dick Cheney. Indeed, they’ve been avoiding the last Republican administration since 2006. Even Jeb(!) Bush dances around the topic of his unpopular brother.

But this weekend I got an email from “Dick Cheney” – actually a fundraising appeal for the Republican National Committee, sent from its The email promises that if I give the RNC at least $59.99, I’ll get a copy of Cheney’s new book, which “describes the kind of leader we desperately need in the White House.”

The RNC must be sending this appeal widely. I’m not on their general email list. I get lots of unsolicited emails from both Republican and Democratic candidates, but I can’t recall one from So they seem to have acquired a lot of outside lists for their Dick Cheney pitch.

Cheney’s book has garnered widespread criticism, from Carlos Lozada at the Washington Post and Steve Chapman at Reason, for instance. According to Lozada, Cheney and daughter Liz call for

a massive military buildup, including new missile-defense systems, more nuclear weapons and a force prepared to wage war in multiple geographic locations simultaneously… the restoration of National Security Agency’s surveillance authorities, the return of “enhanced” interrogation of terrorism suspects, the deployment of thousands of military “advisors” to battle the Islamic State and a halt to the U.S. withdrawal from Afghanistan… aggressive actions against rival nations, such as sending troops to NATO countries that border Russia, in order to “signal American determination.”

No wonder Republican candidates are not holding public events with Cheney. That’s not a platform candidates would want to ask the voters to endorse. But now the Republican National Committee – which calls itself in the email “the Official Committee in Charge of Taking Back the White House” – is wrapping itself in the arms of Dick Cheney and dangerously interventionist agenda. I wonder if any presidential candidates were consulted on this tactic.

I’m a big fan of fiscal data.

In part this is because I’m a policy wonk, but I also like budget numbers because they generally provide strong evidence for my philosophical belief in small government and spending restraint.

For instance, I enjoy sharing my table showing nations that have experienced great success with multi-year limits on spending growth, particularly since I enjoy putting my leftist friends in an uncomfortable position by asking them for a similar list of countries that have made progress by raising taxes (hint: that’s called the null set).

Given my affinity for budget data, I was excited to learn that the Joint Economic Committee (JEC) just released “An Economic History of Federal Spending and Debt.”

This new publication is filled with fiscal information starting in the late 1700s.

To give you an indication, check out this chart which, in one fell swoop, provides more than 200 years of data on spending, revenue, and debt, along with information on major wars and economic dislocations.

Since that’s an intimidating amount of information, I thought it might be a good idea to break out the most important set of numbers in that chart.

But I warn you that I’m not about to share good news. This chart shows how peacetime federal spending dramatically expanded during the 20th century.

Since I’ve already decided that data on dependency in Denmark was the most depressing powerpoint slide in the world, I guess we’ll call this the most tragic chart in the world.

Especially since it symbolizes a very unfortunate change in the attitude about the proper role of the federal government.

A progressive philosophical shift in federal spending began under President Woodrow Wilson. …George Will—writing on Wilson’s underlying philosophy—succinctly contrasted Wilson with James Madison by noting, “Wilsonian government, meaning (in Wilson’s words) government with ‘unstinted power,’ is hostile to Madison’s Constitution, which, Madison said, obliges government ‘to control itself.’”

And if you want to feel even sadder, check out the projections showing that America will become Greece in the absence of genuine entitlement reform.

Here’s a table from the JEC report that shows how bad attitudes, bad jurisprudence, and bad policy have led to a dramatic expansion in the burden of government spending. The most important column, which I’ve circled, shows that we used to have a very small federal government that consumed, on average, less than 3 percent of economic output. But now we have a Leviathan that diverts more than 20 percent of GDP to Washington programs.

The report isn’t just numbers. There’s also some very useful analysis.

For instance, it notes that FDR’s New Deal did not work (as I’ve repeatedly explained, though it also should have acknowledged that Hoover made the same mistakes).

On balance, empirical research provides little support for the contention that President Franklin D. Roosevelt’s Keynesian policies helped to pull the United States out of the Great Depression.

It also makes important points about the economic impact of government spending.

While more spending and a bigger federal government can mean more federal jobs, these jobs come at the expense of private sector resources, meaning fewer private sector jobs and lost economic opportunities. …there is an inverse relationship between federal spending and private payroll employment.

And it echoes arguments that I’ve made about the progress that was achieved during the Clinton years.

…though spending increased in real dollar terms during this period, as a percent of the economy, spending actually declined. In FY1995, non-interest mandatory spending equaled 9.75 percent of GDP and discretionary spending equaled 7.19 percent of GDP. In spite of the spending increases, by FY2001, mandatory spending amounted to only 9.56 percent of GDP and discretionary spending amounted to only 6.16 percent of GDP.

Perhaps most important, the study endorses Mitchell’s Golden Rule!

…a politically viable path to a balanced budget and fiscal stability: Restrain the growth in federal spending below the rate of economic growth, and a sustainable fiscal environment will follow.

Last but not least, it endorses a spending cap modeled after the Swiss Debt Brake.

The ideal base for a spending cap would be similar to a GDP-cap, but it would provide greater spending restraint in economic booms and greater flexibility in economic downturns. Fortunately, such a measurement, which helps to smooth the business cycle, does exist: Potential GDP. …basing a spending cap on potential GDP is very helpful for budgeting purposes, as it creates a more predictable budget path over an extended period of time.

There is a lot of additional information in the JEC report, so if you have any interest in America’s fiscal history, it’s worth your time to read the whole thing.

P.S. Other developed nations basically have made the same fiscal mistake as the United States. Nations in Western Europe and Japan also used to have very small governments. Once the welfare state began, however, economic liberty morphed into bloated welfare states.

If California were to decline to follow federal driver licensing mandates, would the Transportation Security Administration turn Californians away at our nation’s airports, preventing more than 10% of the nation’s population from flying? Of course not. The outrage would be palpable, and it would be directed at the federal government’s most unpopular agency, TSA.

But the incredibly low risk of federal punishment is apparently what spurred the California legislature to pass A.B. 1465, which now sits on Governor Jerry Brown’s desk. If signed, the bill would move California another step closer to compliance with the REAL ID Act, increasing the burden on California driver’s license applicants just a little more, so that TSA will continue to defer enforcement of the national ID law as to California.

But TSA hasn’t enforced REAL ID for any state since the statutory compliance deadline in 2008. (It’s ongoing mass deferment is disguised by crediting some states with satisfying a “material compliance checklist.” Find a history in our report, REAL ID: A State-by-State Update.) The reason why is not kindness on the part of the feds or good faith progress on the part of states. It’s the fact that the federal government does not have the power to demand compliance from states. State leaders would not be blamed if TSA denied people’s IDs at the airports. TSA would be.

There is no need for California to spend a dime on REAL ID compliance, but the most recent analysis of A.B. 1465 says the California DMV would incur costs of approximately $5.56 million in 2016-17 and $5.4 million each year after that. The legislator most responsible for delay and expense at the DMV is Assemblymember Rich Gordon (D-Menlo Park).

The spending is absolutely unnecessary. The federal government will always back down. There is no reason California should obey federal national ID demands.

Several Cato scholars, such as Walter Olson and Ilya Shapiro, have commented on the religious liberty and rule-of-law aspects of the Kim Davis case. In addition to their arguments, the Davis case is perhaps the clearest in modern times for a state establishment of religion.

Free Exercise is only half of the constitutional package of First Amendment religious protections. There is also the Establishment Clause, preventing the state or its agents from establishing a religion. It is a blanket anti-theocracy clause that is understood to be applicable to the states by the Fourteenth Amendment. As James Madison said on the House floor in 1789, the Establishment Clause seeks to stop a particular religion or sect from “establish[ing] a religion to which they would compel others to conform” or “enforc[ing] the legal observation of [a particular faith] by law.”

The key, under-explored factor in this case is that Kim Davis claimed “[the Christian] God’s authority” in denying same-sex couples the right to marry. By claiming “God’s authority” as the basis for denying the license—rather than any man-made law—Davis effectively established her religion in the Rowan County Clerk’s office and imposed on the religious liberty of those who hold other (or no) faiths.

People who do not ascribe to Davis’s particular brand of Christianity lose substantive rights guaranteed by the Constitution. That includes the right to civil marriage. Moreover, Davis’s establishment directly impinged on the right to freely practice any faith that accepts same-sex marriage, such as the United Church for Christ.

The right against establishment is just as important a protection for religious freedom as the Free Exercise Clause. Imagine if the Roman Empire had an anti-establishment rule. Christians pre-Constantine would have been able to expand Christianity without the threat of gruesome martyrdom. The right to be free from state-imposed religion is thus an important buttress to the Free Exercise Clause; without it, the state would always have a compelling interest in promoting its preferred religious uniformity at the expense of free exercise. That is a particularly undesirable result for a religiously diverse nation.

Regardless of what one thinks of the decision in Obergefell v. Hodges, same-sex couples have the constitutional right to civil marriage. Absent a constitutional amendment it is incumbent upon government officials to obey Obergefell. If that ruling conflicts with state officials’ consciences, their state duty not to establish their religion and impose it on others through state offices still trumps (when it comes to their official capacity—Ilya Shapiro wrote about the distinction between official and civil disobedience here).

The United States is a government of laws, not gods and men. Davis can quit, do her job, or recuse herself and let her office issue licenses without her participation, but she cannot claim God’s law as public authority to use her office to impinge on others’ rights and expect to be protected under the First Amendment. That is precisely the harm to liberty that the Establishment Clause was designed to prevent.

Peter Hannaford, a longtime aide to Ronald Reagan, has died at 82. As the Washington Post puts it, after Reagan’s term as governor ended in 1975, Hannaford “teamed with ex-Reagan aide Michael K. Deaver to handle radio broadcasts, newspaper columns and appearances that kept the presidential aspirant in the public eye” until his election as president in 1980. The Post obituary notes the last time Hannaford recalled sending Reagan an idea, in 1988 near the end of his presidency:

He had come across a saying attributed to a Chinese philosopher: “Govern a great country as you would cook a small fish.” Mr. Hannaford said he knew it would appeal to Reagan’s belief in applying only a light touch to free-market enterprise.

“I knew he would like it,” Mr. Hannaford said. “And sure enough, it was in the State of the Union speech.”

Indeed it was. The ancient Chinese philosopher was Lao-tzu (or Lao-tse, or Laozi). In The Libertarian Mind I write:

The first known libertarian may have been the Chinese philosopher Lao-tzu, who lived around the sixth century B.C. and is best known as the author of the Tao Te Ching. Lao-tzu advised, “Without law or compulsion, men would dwell in harmony.” 

And in The Libertarian Reader I include selections from the Tao. Not chapter 60, which Reagan quoted, but other sections with similar ideas:

Exterminate the sage [the ruler] and discard the wisdom [of rule],
And the people will benefit a hundredfold.

Without law or compulsion, men would dwell in harmony.

All things carry the yin and embrace the yang.
They achieve harmony through their interaction.

The more prohibitions there are,
The poorer the people will be.
The more laws are promulgated,
The more thieves and bandits there will be.
Therefore a sage has said:
So long as I “do nothing” the people will of themselves be
So long as I love quietude, the people will of themselves go
So long as I act only by inactivity the people will of themselves
become prosperous.

The people starve because those above them eat too much tax-grain.
That is the only reason why they starve. The people are difficult to
keep in order because those above them interfere. That is the only
reason why they are so difficult to keep in order.

Professor Joseph Adler of Kenyon, an expert on Chinese religious traditions, wrote about Confucianism and Taoism:

The Tao Te Ching, or the Scripture of the Way and its Power, is one of the foundational texts of Chinese civilization – in particular of the religious and intellectual tradition of Taoism. Taoism is one of the two main streams of Chinese thought, along with Confucianism. They took shape at roughly the same time, from the 5th through 3rd centuries BCE, at a time when China was in a long period of civil war, aptly named the “Warring States” period.

Taoism and Confucianism both attempted to provide a new philosophical underpinning for government and society. Confucius’ theory was that a well-ordered and harmonious society could only be brought about when the ruling classes (the aristocracy and government officials) were composed of virtuous people. Their virtue, he said, would then spread throughout society like a wind rippling through a field of grain, mediated by able officials actively managing society through rational and benevolent means.

The Taoist approach focused not on society and conventional morality but on the individual’s relationship with the natural world. The Taoists had a laissez faire theory of government, although they too said that having a good ruler at the top was crucial. The difference was that for them, the ideal “sage-king” was one who did as little as possible to interfere with the people’s natural wants and needs. Their ideal form of action in the world, for both the ruler and the ordinary person, was called wu-wei, or “actingless action” – i.e. a form of natural action that reacts spontaneously to the flow of events and changing circumstances. The sage-ruler, they said, understands that governing a large kingdom is like “cooking a small fish.” How do you cook a small fish? As lightly as possible.

Two years ago, the Supreme Court’s 7-1 ruling in Fisher v. UT-Austin (Fisher I) made clear that race-conscious college admissions programs must be subject to strict judicial scrutiny, requiring universities to prove that their consideration of race is precisely tailored to serve a compelling government interest. Because Fisher I came to the justices without a developed factual record, the Court remanded the case for further development.

After the lower court essentially rubber-stamped its previous ruling, Abigail Fisher—the applicant who claims that she was denied admission because she’s white—got a second trip to the Supreme Court, which will finally have to determine whether the University’s “holistic” review process passes constitutional muster. Cato has again filed an amicus brief supporting Fisher.

Texas’s program allows application readers to take race into account when assigning applicants a “personal achievement score.” But there’s no oversight of readers’ use of race in assigning these scores, with the result that the university can’t explain how (or how often) race plays a role in admissions decisions. All we’re left with is an opaque, arbitrary, and unaccountable program supported only by the talismanic use of the word “holistic” to evade scrutiny.

But invoking that word should not be the end of judicial review. The Court’s equal-protection precedents establish four distinct requirements that a university employing a race-conscious admissions process must satisfy to demonstrate that its plan is narrowly tailored. The University of Texas has satisfied none of them.

First, the university can’t show that its program is necessary to achieve diversity because it can’t show how or when race affects application decisions. (Moreover, about 80 percent of its freshman class is admitted under the race-neutral Top Ten Percent Law—the top 10 percent of students from each Texas public high school are automatically admitted—which the university hasn’t shown to be insufficient to produce the desired diversity.)

Second, Texas can’t show that its chosen means properly “fit” its ends because it hasn’t offered any evidence that would enable a court to evaluate whether the use of race is narrowly tailored to achieve its purported “qualitative diversity” goal.

Third, the university can’t show that the program provides individualized consideration to every applicant—which the Supreme Court demanded in its 2003 Grutter v. Bollinger decision. This requirement ensures that colleges don’t make race the “defining feature” of the application process, but the black-box nature of Texas’s admissions policy makes it impossible to ascertain whether race amounts to a thumb or a brick on the scale.

Finally, UT-Austin’s program frustrates accountability and transparency because the school wields “holistic review” as a shield to obscure the role of race in admissions and frustrate scrutiny, judicial or otherwise. This opaqueness may create more racial hostility than it remedies. Further, holistic review can serve as a cover for the illegitimate or unnecessary use of race, as statistics from a variety of American universities indicate. Even the Harvard Plan that Justice Powell in Regents of the University of California v. Bakke (1978) assumed would withstand strict scrutiny has a less-than-illustrious history, beginning with its origin as a less-controversial alternative to explicitly capping the number of Jewish students admitted. More recently, evidence suggests that Harvard’s holistic review has facilitated forbidden racial balancing with regard to lowering the number of Asian admittees.

Accordingly, the Supreme Court should review the holistic review regime at the University of Texas with an eye toward curtailing the improper use of race in university admissions nationwide.

For more on our arguments, see this SCOTUSblog essay.

I write at Politico Europe

Charee Stanley, an American flight attendant and recent convert to Islam, just filed a discrimination complaint against her employer, ExpressJet, because it won’t excuse her from serving alcohol to passengers. Stanley’s backers at the Michigan chapter of the Council on American-Islamic Relations (CAIR) say that for a time Stanley worked out an arrangement for other attendants to handle liquor serving duties, but it broke down.

Stanley’s scruples about screwpulls instantly drew the attention of culture warriors, who after a whole week spent bickering about defiant Kentucky clerk Kim Davis — in terms of online controversy, practically a Thirty Years’ War — pivoted deftly to the Stanley case and away from Davis’s refusal to license same-sex marriage as her job requires her to….

Here’s the thing: The EEOC has already sided with Muslim employees who wish to avoid handling alcohol. In 2013 the commission sued the Star Transport Co. in Illinois for failing to provide a reasonable accommodation to two Muslim truck drivers when it dismissed them for refusing to haul booze, a case that appears still to be pending.

More here. With religious accommodation in the workplace so much in the news, I’ve recently written four pieces on the subject, including my post last week in this space about the Kim Davis case (see also Ilya Shapiro’s). I’ve also written a lengthy essay on EEOC v. Abercrombie & Fitch, the hijab-accommodation case, for the forthcoming Cato Supreme Court Review, which I’ll be discussing at Cato’s Constitution Day next week (September 17). Previously in this space I’ve related issues such as government accommodation of religiously-based adoption and foster care agencies, and the wars under state anti-discrimination laws over cake-baking and related wedding services.

Finally, at Newsweek, just out, I’ve written an extended analysis of the problems with what is called the First Amendment Defense Act (FADA), a current social-conservative priority:

FADA as currently drafted isn’t really an accommodation law. It’s an our-guys-win law. It says that even if the government has set you up as the monopoly provider of some service or gatekeeper for some permission, you may use that monopoly or gatekeeper status against same-sex couples and their interests with entire impunity.

Should Republicans really be rushing to endorse this bill?

Dale Carpenter at Volokh Conspiracy has further thoughts on the potential constitutional infirmities of the bill, along with kind words for my article. 

On Monday, my colleague Caleb Brown will sit down with Trevor Butterworth, Director of Sense About Science USA and editor for, for a live discussion as a part of our Cato Connects series.

Sense About Science’s mission is to advocate for the public interest in sound science and evidence as the basis for informed decisionmaking and political engagement. “The challenge,” Butterworth says, “is that science is not always sound and that evidence is often missing — or misinterpreted or manipulated. The opportunities for making poor policy decisions — or cherrypicking the data to fit a belief or policy objective — are enormous.” As a result, discussions on everything from GMOs to medicines to recreational drugs to the environment, and to nutrition have become more and more politicized and less and less insightful.

Tweet your questions about the relationship between governments and science with the hashtag #CatoConnects and join us at 2:00 p.m. on September 14, when Trevor Butterworth will answer live from the Cato Institute. Be sure to share our event invite on Facebook, and follow @CatoCSS and @CatoEvents on Twitter for news on upcoming events!

A new report from the National Association of Criminal Defense Lawyers highlights the myriad inadequacies in the current system of federal indigent defense. 

NACDL identifies “Seven Fundamentals of a Robust Federal Indigent Defense System,” including a system insulated from judicial interference, adequate funding, sufficient training and expertise among indigent defense lawyers, and greater transparency, and finds each of them to be lacking under current circumstances.

The nuts and bolts of how the current system fails to adhere to those fundamentals can be found in the full report here.

Notably, one reform that is entirely absent from the report is the introduction of client choice and free market competition into the indigent defense system. 

As the NACDL report itself notes:

Short of warfare, there is no more awesome use of governmental power than the power to prosecute.  A criminal prosecution can result in life-altering consequences, including the loss of reputation, property, liberty, and even life itself.  For this reason, the founders of this nation recognized that no person should stand alone against a criminal prosecution.

Given the stakes, it seems bizarre that those individuals who have the entire weight of the state brought to bear against their liberty should depend on that very same state to choose the person to represent them.  It’s certainly true that public defenders tend to be undercompensated and buried under incomprehensible caseloads; but it’s just as true that a public defender system fails to respect the agency of the people who have the most at stake.

The introduction of defense vouchers, which would allow indigent defendants to choose their own lawyers rather than have that all-important decision made at random by a judge or public defender, was the subject of a Cato Policy Analysis in 2010 by David Friedman and Stephen Schulhofer. It would allow defendants a say in their representation and force lawyers to compete to serve them. In doing so, it would come closer to ensuring those fundamental principles of indigent defense than any entirely government-run system is likely to.

The voucher idea is not just a theory; a version of it has now been implemented in Comal County, Texas, which you can read about in more detail here.

When the government takes the immense step of putting someone’s life or liberty in jeopardy, why shouldn’t that person have at least some choice in who will defend them?