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Yesterday Immigration and Customs Enforcement (ICE) announced that eighteen counties in Texas are taking part in the 287(g) program. The program allows police departments to enter into agreements with ICE, thereby permitting their officers to carry out certain federal immigration enforcement functions. The news from Texas is the latest evidence that President Trump’s campaign pledge to “expand and revitalize” 287(g) was a serious commitment, not political bluster. The expansion of 287(g) is a worrying development. The program has been widely criticized for harming police-community relationships and prompting racial profiling. It also grows the power of the federal government, which traditionally has not played a major role in state and local law enforcement.

287(g) was, until a few years ago, a program that had three models: Jail, Task Force, and a Jail/Task Force hybrid model. The Jail agreements allow participating officers to check an individual’s status in a detention facility and issue detainers. Using detainers, officers can hold individuals 48 hours longer than they usually would so that ICE can pick them up. The Task Force model allowed officers to carry out immigration enforcement in the field such as questioning and arresting people suspected of violating immigration law. At the end of 2012 the Obama administration announced that the Task Force 287(g) model would be scrapped, with ICE declaring that other programs “are a more efficient use of resources for focusing on priority cases.”

The Department of Homeland Security (DHS) Office of Inspector General (OIG) raised concerns related to 287(g) in a 2010 report, which stated:

NGOs critical of the 287(g) program have charged that ICE entered into agreements with LEAs that have checkered civil rights records, and that by doing so, ICE has increased the likelihood of racial profiling and other civil rights violations.

Claims of civil rights violations have surfaced in connection with several LEAs participating in the program. Two LEAs currently enrolled in the program were defendants in past racial profiling lawsuits that they settled by agreeing to collect extensive data on their officers’ contacts with the public during traffic stops, and adopt policies to protect the community against future racial profiling. Another jurisdiction is the subject of (1) an ongoing racial profiling lawsuit related to 287(g) program activities; (2) a lawsuit alleging physical abuse of a detained alien; and (3) a DOJ investigation into alleged discriminatory police practices, unconstitutional searches and seizures, and national origin discrimination.

The DHS OIG report was correct to point out the criticism leveled at 287(g). As I’ve noted before, the American Immigration Council found that “287(g) agreements have resulted in widespread racial profiling.” According to the ACLU of Georgia, “The 287(g) program in Cobb and Gwinnett has encouraged and served as a justification for racial profiling and civil and human rights violations by some police officers acting as immigration agents.”

In 2010 Wade Henderson, then-President and CEO of The Leadership Conference on Civil and Human Rights, testified before the House Subcommittee on the Constitution, Civil Rights, and Civil Liberties, saying, “the facts show that many local law enforcement agencies repeatedly use 287(g) agreements to stop, frisk, detain, arrest, question, harass, terrorize, and otherwise target individual Latinos and entire Latino communities in a broad way to enforce federal immigration laws, for no reason other than that they appear to be Latino and thus are profiled as potential illegal immigrants.”

But nonprofits are not the only organizations that have criticized the 287(g) program. The Department of Justice’s Civil Rights Division issued two reports on 287(g). One, published in 2011, focused on the Maricopa County (Arizona) Sheriff’s Office (MCSO), the other, published a year later, examined the Alamance County (North Carolina) Sheriff’s Office (ACSO).

For the MCSO report the DOJ had a racial profiling statistics expert examine traffic stops. This expert “found that Latino drivers were between four to nine times more likely to be stopped than similarly situated non-Latino drivers.” The same report noted that one Maricopa deputy “was told by his supervisors to expect that he would encounter hostility from people who believed they were being stopped because of their ethnicity.”

In ACSO, the DOJ found a “pattern or practice of unconstitutional policing.” The report also noted the impact ACSO’s policing practices had on Latinos (including citizens) with the sheriff unequivocally encouraging officers to target Latino neighborhoods.

The most recently announced 287(g) agreements are not Task Force agreements. All of the current 287(g) agreements are Jail agreements. However, in February, Trump’s then-DHS Secretary John Kelly announced in a memo (emphasis mine):

The Commissioner of CBP and the Director of ICE should consider the operational functions and capabilities of the jurisdictions willing to enter into 287(g) agreements and structure such agreements in a manner that employs the most effective enforcement model for that jurisdiction, including the jail enforcement model, task force officer model, or joint jail enforcement-task force officer model.

In March, Milwaukee County Sheriff David Clarke signed a 287(g) letter of intent, explicitly stating that he is seeking a hybrid Jail/Task Force 287(g) agreement with ICE. The president’s own rhetoric, one of his executive orders, and DHS’ statements suggest that Clarke isn’t being overly ambitious in seeking a hybrid agreement.

The news from Texas represents the largest expansion of 287(g) in years. As ICE notes, between 2012 and 2016 there were only six new 287(g) agreements. At the end of 2016 there were 32 law enforcement agencies with 287(g) agreements in 16 states. Today, there are 60 law enforcement agencies with 287(g) agreements in 18 states.

State and local law enforcement should not be involved in enforcing federal laws. Immigration enforcement is a federal responsibility and, as has been noted, 287(g) has a poor track record when it comes to effective and constitutional policing. The recent expansion of 287(g) is unfortunate, but it’s hardly surprising. This is exactly the kind of immigration policy the president promised us.

Yesterday’s fraudulent and illegitimate vote to install a constituent assembly in Venezuela is the definitive step towards consolidating a de jure dictatorship in that country.

The constituent assembly will enjoy supra-constitutional powers, which means that its prerogatives go beyond writing a new constitution and include, inter alia, dissolving and removing all existing institutions—including those controlled by the opposition or held by critics of the regime, such as the National Assembly and the Attorney General’s Office—and calling off scheduled elections, which the government would certainly lose. In the hours after the vote, Nicolás Maduro openly stated that the constituent assembly will strip opposition assembly members from immunity and will discharge Maria Luisa Ortega, the Attorney General.

Several myths regarding the crisis need to be addressed:

Venezuela is on the brink of a civil war: In order to have a war, both sides need to be armed. In the case of Venezuela, only one side—the government—has the guns: the Maduro regime enjoys the full support of the armed forces, the National Guard—which is responsible for brutally repressing the protests—and the colectivos, which are armed thugs that terrorize the population in motorcycles with the assistance of the police and the National Guard. Of the more than 120 people killed since the protests began four months ago, almost all have been protestors or other civilians murdered by the security forces.

The army could withdraw its support for Maduro at any moment: This is wishful thinking. For over a decade, the armed forces have been carefully purged of officials that do not support the authoritarian project of Hugo Chavez and his successor Nicolás Maduro. The Maduro government is a military regime, even though its head is technically a civilian: 13 members of the Cabinet (out of 32) are military officials, as well as 11 of the 20 Chavista governors. The armed forces are profiteering from the status quo; they are deeply involved in smuggling and drug trafficking.

The alternative to supporting the regime for the rank and file members of the military is not serving under a new democratic government or retiring with a government pension but rather being prosecuted for massive corruption or being extradited to the United States for drug trafficking. Moreover, even though there are reports of growing dissatisfaction at the troop level, the Cuban security services have infiltrated the armed forces and can easily detect and prevent any uprising from taking place. It is the perfect setup for the consolidation of a dictatorship.

A negotiated solution is the only alternative: This is without a doubt the ideal scenario. However, the Maduro regime is not interested in giving up power. Any acceptable agreement for the opposition necessarily involves calling for free elections, which Maduro would certainly lose. For Maduro and his henchmen, losing power means seeking political asylum (probably in Cuba) or ending up in prison in Venezuela. There have been several efforts to mediate a compromise between the government and the opposition. In every single case, the government has used the negotiations to buy time and divide the opposition, while increasing the number of political prisoners, stripping the powers of the legislature, and calling off scheduled elections. It is no wonder that most of the opposition has given up on the idea of a negotiated solution and seeks the immediate departure of the regime.

The country is deeply polarized: This was definitely the case when Hugo Chávez died in 2013. But since then, the rapidly deteriorating economic situation and the humanitarian crisis besieging the country have undermined support for the regime. Surveys indicate that up to 80% of Venezuelans want Maduro gone. Even though many former Chavistas still distrust the opposition, they recognize the need for regime change.

Cuba can play a positive role in the solution of the Venezuelan crisis: This is utter nonsense. Cuba is not a just an ally of Venezuela, Cuba is the puppet master of the Maduro regime. Since the days of Hugo Chávez, the Cubans have been closely advising the Venezuelan government on how to dismantle democratic institutions. Cuban agents control many agencies within the Venezuelan government and are deeply ingrained in the armed forces. In exchange, Cubans get cheap Venezuelan oil, a subsidy that at some point amounted to 20% of the island’s GDP. Cuba has made it clear in recent weeks that it won’t allow its colony to slip from its control.

What then? Nobody knows for sure what the end game is. International pressure is growing along with more active protests in the streets. Targeted economic sanctions to individuals within the regime certainly hurt. It is difficult to conceive the successful installation of a full-fledged dictatorship when you have millions of Venezuelans adamantly opposed to such a move, and thousands of them protesting daily in the streets. However, the regime—with the collaboration of Cuba—has firm control over the armed forces and the National Guard. As long as that is the case, it is difficult to foresee any positive changes in the near future. The consolidation of a Cuba-style dictatorship remains a possibility.

Here’s some genuine good news for both individual liberty and harm reduction: the Food and Drug Administration has granted a four-year reprieve to e-cigarettes (“vaping”). In particular, it is extending from November 2018 to August 2022 the requirement to obtain regulatory clearance for, or else withdraw, vaping products now on the market. As I noted last year, under the “deeming” regulations proposed under the Obama administration 

even products currently sold on the market will have to be withdrawn unless their makers, mostly small companies, care to venture on an FDA approval process that can cost $1 million and up per item. Any resulting applications will result in permission to sell only if the agency decides the product is a net safety improvement on current offerings. And that permission will be at best chancy because the FDA, following [then-CDC head Thomas] Frieden’s lead but in contrast with the views of many others in the public health field, refuses to acknowledge vaping as a safer alternative to tobacco smoking, even though large numbers of smokers turn to vaping with exactly that goal in mind. 

While it is likely that many smokers save their life or health by switching from a cigarette habit to the less injurious electronic alternative, every such switch cuts into revenues from conventional cigarette sales—and thus the coffers of state governments and other beneficiaries of the 1998 tobacco settlement. Some of these groups, as well as some components of the tobacco business, had quietly backed the FDA’s plan to close down vaping except perhaps for the very biggest players. 

Notably, and shrewdly, the Trump White House chose to associate itself with the Friday FDA announcement: 

A spokesman for the White House told The Daily Caller News Foundation President Donald Trump “supports the FDA’s new initiative,” and noted it as an example of his administration’s efforts to give relief to small businesses across the country.

“Public health is a priority and anything that will help protect kids and assist individuals to stop smoking is a worthy cause,” the White House spokesman told TheDCNF. “The President and his administration have taken historic action to eliminate unnecessary and burdensome regulations.”

Meanwhile, new Food and Drug Administration head Scott Gottlieb says his agency will look into the possibility of limiting nicotine levels in conventional cigarettes with the aim of making them less addictive. The obvious problem with that, the incursion on liberty aside, is that if cigarettes are made to contain less nicotine, many users will choose to maintain an existing level of intake by stepping up the number of cigarettes they smoke per day, thus boosting their intake of associated tar and noxious gases. But at least there’s time to argue over the flaws of a proposal that’s down the road. The vaping regs were bearing down quickly. 


I realize that I am a bit late to this party and that many of Nancy MacLean’s strange claims and factual errors have already been exposed and debunked by people much more familiar with her work, the intellectual history of libertarianism and the Nobel Prize-winning economist James Buchanan, than I am. However, there is one aspect of MacLean’s conspiracy theorizing in Democracy in Chains: The Deep History of the Radical Right’s Stealth Plan for America (i.e., “the attempt by the billionaire-backed radical right to undo democratic governance” in America) that, I think, needs further comment.

Specifically, it would appear that in her “thoroughly researched” book, as Publishers Weekly calls it, MacLean has not bothered to talk to many actual libertarians, including, apparently, her colleague at Duke University, Michael C. Munger. Had she done so, MacLean would have realized that libertarians have come to their views for a plethora of reasons—only one of which may be the generosity of the libertarian businessman, billionaire and bête noire of the progressive left, Charles Koch. (I shall return to Charles Koch below.) But that would have, I am afraid, undermined her view of the libertarian movement as a racist (what else?) conspiracy.

At the risk of seeming self-indulgent, I would like to like to offer a personal perspective on becoming a libertarian. Growing up in 1980s Czechoslovakia, I witnessed communism’s final decade. The people around me were still afraid of eavesdropping by the secret police, jail time for anti-socialist activities, professional ruin, and social ostracism. But communism no longer inspired terror in the way it had in the early years after the Czechoslovak communist putsch in 1948.

As such, I cannot claim some sort of a victimhood status. My generation did not associate communism with firing squads and starvation. Rather, communism meant annoying, but manageable, food shortages and the grey monotony of everyday life under a dictatorship. Why do I revisit 30-year-old memories? I do so, because appreciation for political and economic freedoms, which is what I understand libertarianism to mean, often comes from personal experiences that are unconnected to (imagined) conspiracies.

Perhaps it is the realization that interactions with businesses, like the local Whole Foods, are more pleasant and satisfying than interactions with government agencies, like the local DMV. Perhaps it is the desire to consume food, drink, and drugs without an input from an all-knowing government official. Perhaps, as was the case with me, it is looking at the economic and social ruins of socialism. Hundreds of millions of human beings have learned to appreciate freedom during communism and many, far too many, still yearn for it in places like Cuba, North Korea, and Venezuela.

We have, in other words, acquired libertarian tendencies without James Buchanan, Charles Koch or, for that matter, the Cato Institute.

Buchanan helped us to understand why communism fell, not to realize that it had failed. Wealthy libertarian donors enable people like me to proselytize on behalf of freedom and we appreciate them, in part, because we worry that socialism, like the tardigrade, is never truly dead. Had MacLean picked up the telephone and talked to one of the many American libertarian activists with weirdly sounding names, she would have realized that to be libertarian, one does not have to be a part of a vast and nefarious conspiracy. She would have saved us a lot of time spent on debunking her thesis and she would have saved herself a bucket-load of embarrassment.

A common fear about lower-skilled immigrants is that they will push native-born Americans with similar skills out of the labor market. In recent years, this argument focuses on the harm to native-born teenagers who are most substitutable with lower-skilled immigrants—especially those on the H-2B visa for seasonal non-agricultural work. This effect is supposed to be greatest in the summer time when American teenagers are on school vacation. 

Teenagers are working less than they used to but the U.S. labor market has changed in myriad ways that are unrelated to immigration, especially when it comes to the opportunity cost of teenagers. In responding to an op-ed by Senator Ben Sasse (R-NE) that lamented the loss of teenage work ethic (an oxymoron if my personal observations and experience as a teenage worker is representative), economist Ernie Tedeschi showed that increased enrollment in summer school can explain virtually the entire decline in their summer employment, at least for the month of July (Figure 1). The data allowed Tedeschi to separate part-time and full-time school enrollment after 1989. Years ago, I noted that increased summer school enrollment explained much of this decrease by leaning heavily on this Chicago Fed Letter that stated:

[w]e find no compelling evidence that associates the recent decline in teen participation with greater labor market competition due, for example, to larger cohorts of teens or an increase in the numbers of unskilled workers entering the labor market because of the 1996 welfare reform or changes in immigration.

Figure 1

Labor Force Participation & School Enrollment in July: 16-19 Year Olds


Source: Ernie Tedeschi’s calculations from IPUMS monthly CPS Extract.

Although Tedeschi does not mention immigration in his blog, his findings are broadly consistent with estimates of how immigration affects teenage employment and wages. Figure 1 is consistent with economist Peter McHenry’s finding that “low-skilled immigration to an area induces local natives to improve their performance in school, attain more years of schooling, and take jobs that involve communication-intensive tasks for which they (native English speakers) have a comparative advantage.” Another finding by economist Christopher L. Smith found that native-born American teenagers do compete with low-skilled immigrant workers because both are relatively unproductive but also that such competition incentivizes teens to acquire more education so that they do not have to compete directly with immigrants in the future. Thus, low-skilled immigrants do push some teens out of the labor market temporarily while they upskill. 

Upskilling is also consistent with research by economists Giovanni Peri and Chad Sparber that finds increased lower-skilled immigration induces lower-skilled natives to specialize in jobs that require communication in English while the immigrants specialize in jobs that are more manual-labor intensive, an effect called task specialization. They estimate that task specialization reduces immigration’s downward wage pressure because natives react by adapting and specializing in more highly paid occupations, not by dropping out of the job market. This effect decreases wage competition between lower-skilled natives and immigrants by around 75 percent.

It could be that teenagers find school enrollment more fulfilling because competition with immigrant workers has lowered wages in that segment of the labor market. There is a lot of academic evidence that that effect is hard to find and, if it does exist, extremely small. However, if such a negative wage effect from immigration does impact a large cohort of American workers then we should expect to find it among teenagers. Furthermore, even if teenage wages do decline because of immigrant competition, curtailing low-skilled immigration may not have any effect on wages or employment as employers mechanize low-skilled jobs in response—a more expensive production method relative to hiring immigrants but less expensive than paying natives a higher wage. The more likely explanation is that the long-run monetary return for the teenager from education if greater than working a summer job, especially since states now subsidize summer school.

I’m delighted to learn from Eric Boehm at Reason that a $35 million stadium subsidy is “pretty close to dead” after Potomac Nationals owner Art Silber pulled the matter from the Prince William Board of County Supervisors consideration ahead of a planned vote July 18. However, taxpayers in other Northern Virginia counties may still be at risk, as the Nationals search for a less fiscally responsible county board nearby. 

I wrote about the Nationals’ attempt to milk the taxpayers last month:

The county found a consulting firm to produce, as it has done for many governments, an optimistic economic analysis: It suggests that a new stadium would generate 288 jobs, $175 million in economic impact, and $4.9 million in tax revenue over a 30-year lease. Similar studies have proven wildly optimistic in the past. In 2008 the Washington Post reported that Washington Nationals attendance had fallen far short of what a 2005 study predicted. As Dennis Coates and Brad Humphreys wrote in a 2004 Cato study criticizing the proposed Nationals stadium subsidy, “The wonder is that anyone finds such figures credible.”…

Silber and the board of supervisors want the taxpayers to know that this time is different; their $35 million bond issue isn’t a government giveaway:

In Prince William, the board of supervisors is considering a proposal in which it would use bond money to build the stadium. The team would then reimburse the county the entire cost over the course of a 30-year lease.

“We’ve all read about certain professional sports teams threatening to leave if a local government doesn’t buy them a new stadium. The exact opposite is happening here,” said Tom Sebastian, a senior vice president with JBG. “The Potomac Nationals have agreed to pay 100 percent of the cost to construct a new stadium so that they can stay in Prince William County.”

I will gladly pay you Tuesday, 30 years from now, for a hamburger today.

Congratulations to Americans for Prosperity, Supervisor Pete Candland and his colleagues, and especially to the taxpayers of Prince William County. 

On Tuesday, the Senate Finance Committee will hold a hearing to discuss affordable housing. The committee will debate whether to expand the Low-Income Housing Tax Credit (LIHTC), a program that ineffectively subsidizes affordable housing. A bill co-sponsored by Senator Cantwell and Senator Hatch would expand the program by 50%.

Unfortunately, the program usually sidesteps scrutiny because it is not part of the discretionary budgeting process. But the Senate Finance Committee has a unique window of opportunity to ask hard questions of LIHTC during the hearing. As a result, Tuesday’s hearing is arguably more important than usual.

What questions should the senators ask? Below are a list of ten questions to get the conversation started:

  1. Does LIHTC subsidize units that would be provided by the private market in its absence? How will the program improve the real number of affordable housing units produced?

  1. Why should Congress expand a program that GAO reports is not well managed? How does this bill increase oversight?

  1. Is LIHTC a band-aid solution for destructive local zoning and land use regulation policies? Should states be required to reduce local land use and zoning regulation in order to qualify for LIHTC?

  1. How will the bill reduce the amount that developers benefit from LIHTC?

  1. How does the bill improve the cost-effectiveness of LIHTC? Is LIHTC the most cost-effective way to subsidize housing? (Research suggests it is not.)

  1. Why must LIHTC be used in conjunction with other subsidies?

  1. Will non-profit developers continue to be provided preferential treatment in the credit allocation process? Even if they are less efficient at building affordable units?

  1. Given finite federal resources, why does LIHTC subsidize moderately low-income individuals rather than extremely low-income individuals?

  1. Why aren’t Housing Finance Authorities (HFAs) required to monitor project compliance during the latter half of the 30 year “extended use” period?

  2. How will the bill reduce corruption and fraud?

It’s essential that LIHTC is given the scrutiny it deserves. The Senate Finance Committee should make sure it happens.

In a speech about criminal gangs before police officers on Long Island, New York today, the President of the United States openly encouraged police officers to abuse people they arrest and take into custody. Daniel Dale of the Toronto Star tweeted that President Trump explained that he didn’t want officers to protect suspects’ heads when putting them in police cars, saying “You can take the hand away,” which drew the officers’ loud approval. Concurrent reporting from Asawin Suebsaeng of the Daily Beast confirmed that the call for police brutality drew “wild applause.”

The president’s comments are disgraceful and anathema to responsible policing and the Rule of Law. Causing intentional injury to a handcuffed suspect is not only against police procedure, but is a federal crime for which police officers have been sent to prison. What’s worse, the reaction of the crowd of officers should strike fear into the heart of every parent on Long Island, particularly those of black and Hispanic young men, who fit the stereotypical description of the gang members President Trump described.

In the name of law and order, the president made a mockery of the Rule of Law in his call for illegal violence against presumptively innocent suspects. It is a shameful day for the presidency and police agencies across the country should condemn the president’s irresponsible and indefensible comments in the strongest possible terms.


This is cross-posted from

Pew Research Center surveys of American Muslims have consistently shown a trend toward growing acceptance of mainstream American views, as I have written before. Pew’s latest poll reveals the same pattern as those in the past. Despite the most hostile political environment for Muslims in many decades, U.S. Muslims continue to adopt the social views of other Americans.

Over the latest decade, the share of Muslim immigrants and their children has grown by 60 percent, from 1.7 million in 2007 to 2.6 million in 2017. The share of third generation or more Muslims has actually fallen from 28 percent in 2007 to 24 percent in 2017, which indicates that Muslim immigrants are taking part in this shift toward more liberal views. Muslim immigration, which is large in relative terms, is not retarding Muslim assimilation.

Figure 1
U.S. Muslims By Generation in the United States

Source: Pew Research Center (2017). Pew has no surveys before 2007, but the best survey estimate for year 2000 placed the total Muslim population at 1.9 million (Smith (2002)).

Perhaps the most notable shift revealed in the Pew data is the change in Muslim American opinion toward homosexuality. The share that reports society should accept homosexuality has nearly doubled in 10 years from 27 percent in 2007 to 52 percent in 2017. As Figure 2 shows, 61 percent of U.S. Muslims in 2007 supported “discouraging” homosexuality. Since then, this share has fallen almost in half, dropping from 61 percent to 33 percent. As I have discussed before, 87 percent of Muslims in Pew polls in non-U.S. countries oppose the toleration of homosexuality, which indicates a rapid change in views.

Figure 2
Pew Poll: Society Should Discourage Homosexuality (Percent Agree)

Source: Pew Research Center (2017).

Muslim Americans are simply not the fundamentalists that certain critics portray them to be. Pew found that almost two-thirds of Muslims stated a belief that there is “more than one true way to interpret the teachings of my religion.” This share has risen somewhat over the last decade, while the general public share has fallen slightly to the point where there is no statistical difference between the two groups on this issue. Unfortunately, the most recent Pew survey did not repeat a question it asked in 2007 and 2011 about whether more than one religion can lead to eternal life, but as I reported before, the trends were moving in the liberal direction.

Figure 3
Pew Poll: There is more than one true way to interpret the teachings of my religion

Source: Pew Research Center (2017), Pew Research Center (2008)

This assimilation process is likely associated with the growing integration of Muslims into society. According to Pew, 95 percent of Muslims have at least some Muslim friends, compared to 88 percent in 2007 (Figure 4). Moreover, there is now a large majority that say that most of their friends are non-Muslim—up 12 percentage points since 2007.

Figure 4
Pew Poll: How many of your close friends are Muslim?

Source: Pew Research Center (2017).

The most important question for many people, however, is their support for intentional violence against civilians—or terrorism. In past polls, Pew asked a different question about support for violence against civilians in defense of Islam. In this poll, they asked a more general question to allow for comparison between Muslim and non-Muslim responses. It reveals that three quarters of Muslim Americans think it is never permissible to target and kill civilians for a political, social, or religious cause—17 percentage points higher than the general public (Figure 5). Muslims and the general public were roughly equal in their support for such violence “sometimes” or “often.”

Figure 5
Pew Poll (2017): Can targeting and killing civilians for a political, social, or religious cause be justified?

Source: Pew Research Center (2017)

This poll confirms the findings of a 2011 poll by Gallup, which asked two very similar questions—one was whether it can be justified for “an individual person or a small group of persons to target and kill civilians” and the other “for the military.” U.S. Muslims were again by far the most opposed to such violence in either scenario. The results in the Pew poll are most similar to the Gallup results for the military scenario. This could indicate that Muslims and the general public were thinking of that scenario, or it could be that Muslims are assimilating Americans’ more permissive attitudes to civilian killings.

Figure 6
Gallup 2011 Poll: Targeting and killing civilians is never justified 

Source: Gallup (2011)

One reason why Muslim Americans are less likely to support violence against civilians is because Muslims worldwide are the most likely victims of terrorism and misguided military interventions. For this reason, they are much more resistant to the idea of exceptions to the normal moral impulse against this type of killing. A substantial portion of the U.S. Muslim population were refugees and personally targeted for persecution and violence. More than 300,000 Muslims have entered as refugees since 2002, when U.S. interventions in the Middle East, Africa, and Asia led to, as my colleagues’ recent paper explains, a rise in civilian deaths and more terrorist activity.

This could imply to some that Muslims are less patriotic, since people sometimes wrongly conflate patriotism with support for government policies. My colleague Alex Nowrasteh calls this phenomenon “patriotic correctness.” But Muslim Americans apparently can separate government policies and their devotion to their country. They are even more proud to be Americans than the general public—66 percent “completely agree” with the statement “I am proud to be an American” compared to 60 percent of the general public. Only 6 percent disagree compared to 7 percent of the general public. Muslim Americans are patriotic, just not patriotically correct.

Figure 7
Pew Poll: Do you agree with the statement: “I am proud to be an American”? 

Source: Pew Research Center (2017)

Whenever I have written about Muslim polling, some people tell me that we cannot believe Muslims because they have a religious concept called “Taqiyya” that compels them to lie. First of all, Taqiyya is mainly a Shia Muslim concept—which account for just 15 percent of U.S. Muslims—and it justifies lying only “where there is overwhelming danger of loss of life or property and where no danger to religion would occur thereby.” Moreover, the tradition of justified lying in both Sunni and Shia Islam state that there is no obligation to lie even in the face of persecution. Like Christians, Muslims also celebrate martyrs who refused to recant under threat.

Moreover, some Jewish and Christian traditions both occasionally celebrate noble acts of deception—for example, the Egyptian midwives protecting Jewish children, Rahab protecting the Israeli spies at Jericho, and Elisha protecting Israel from invasion. Last month, Muslims and Christians collaboratively used this defensive use of deception to allow Filipino Christians to escape Islamic militants.

Regardless, the thoroughly unfalsifiable theory that Muslims are lying to pollsters cannot explain the facts. For example, if the “right answer” on homosexuality is obvious, why are their deceptive answers not “better” than Americans? This theory also fails to explain why they have suddenly become more willing to lie today than 10 years ago and why they are less likely to “lie” to Pew and Gallup researchers in the United States than anywhere else in the world.

The Taqiyya excuse to dismiss valid polling on Muslims appears more like intellectual laziness or simply bigotry than a serious social science theory. Throughout history, people pushed similar theories about lying and untrustworthy Jews, perhaps most famously Protestant leader Martin Luther. It is hardly surprising that the same thing happens today with a similarly small minority in the United States, but it’s just as wrong.

The recent deaths of ten illegal immigrants in San Antonio, Texas are a gruesome example of the human costs of severe immigration restrictions. The immigrants wanted to be smuggled into the United States and, presumably, paid somebody for that service. They had no way to enter lawfully because the United States government allows in few temporary migrants to work in a handful of occupations and there is essentially no green card category for low skilled workers. Many of these people face the choice of continued poverty in their home countries or taking a risk at a better life working in the American black market. Attempting to work in the United States is risky and sometimes leads to deaths because of immigration enforcement and more enforcement will result in more deaths. 

These immigrants did make the choice to break American immigration laws but it does not follow that they are the ones to blame for their own deaths, despite what some restrictionists think. Immigration laws are primarily designed to stop Americans from voluntarily hiring, contracting, or selling to willing foreigners. If the immigration laws were concerned primarily with protecting the rights of Americans and those illegal immigrants who died in the Texas heat intended to do harm, had serious criminal records, or there was another excellent reason to think they would have hurt people here, then their deaths could be a defensible cost of a rational system that does more good than harm. At the very minimum, one could claim that the law that incentivized them to enter the black market at great risk was intended to protect people. But nobody familiar with our immigration laws or the net-positive effect of immigrants on Americans can make that argument with a straight face. These illegal immigrants died because of an international labor market regulation.    

Those who die from the heat in shipping containers are only a fraction of all deaths crossing the border. From 1998 through the end of 2016, 6,915 people died crossing the Southwest border. The number of deaths is somewhat up over that time even though the number of apprehensions is way down meaning that the inflow of illegal immigrants does not primarily drive the number of deaths (Figure 1). 

If the number of border crossers doesn’t determine the number of deaths, what does? We have a clue in the fact that the number of apprehensions per border death is way down from about one death for every 6,000 apprehensions in 1998 to about one death for every 1,000 apprehensions in 2016 (Figure 2). That means it is much more dangerous. A greater proportion of border crossers die as the number of Border Patrol agents increases which is evidence that more immigration enforcement leads to more deaths.

Figure 1

Border Deaths and Apprehensions on the Southwest Border


Source: Customs and Border Protection.

Figure 2

Apprehensions per Death and Border Patrol Agents

Source: Customs and Border Protection.

This is not surprising as research shows more border enforcement leads to more smuggling and higher smuggling prices – both of which increase the riskiness of crossing and, for instance, dying in a shipping container in the Texas summer. 

The government’s primary means of halting illegal immigration is through deterrence – creating so much fear in the minds of would-be illegal immigrants that they do not even try to enter. However, deterrence does not work on everybody. One effect of so much deterrence is that some people try different and riskier ways of entering the United States, such as in a shipping container in the Southwest in the heat of summer. The result is more danger and more death. 

Those extra deaths, tragic as they are, might be worth it if the immigration laws save more lives in the United States by preventing criminals or terrorists from entering – but they clearly do not, and few serious people are trying to make that case. The deaths of people who mean no harm to others is a predictable result of immigration laws intended to protect the American labor markets, culture, or the other justification de jour. It’s time that people start weighing human cost when considering legal reforms.

“Fed Up” is the name of a progressive initiative that describes itself as a coalition of “community-based organizations, labor unions, policy experts, and faith leaders…united in our call for a strong economy that works for everybody and a more transparent and democratic Federal Reserve.” Its main organizer is the Center for Popular Democracy, with support from the AFL-CIO, and the Economic Policy Institute, among others.

Fed Up has two main causes. First, it raises an important issue when it questions the current governance structure of the regional Federal Reserve Banks. Ironically, while it calls for greater diversity of backgrounds among FRB directors, Fed Up never seems to notice that FRB presidents are today the main source of diversity of thinking on the Federal Open Market Committee. Between 1995 and 2013, Dan Thornton and David Wheelock have found, “there were just two dissents by governors compared with 67 by presidents.” Since 2006 there have been zero dissents by members of the Board of Governors.

Fed Up secondly offers advice to the Federal Open Market Committee, the monetary policy body whose voting members consist of the Board of Governors plus a rotating subset of Reserve Bank presidents. It urges the FOMC to pursue a secularly more expansionary monetary policy, in the erroneous hope that this would bring greater prosperity to workers. In its wishful view “The Fed should target real wage growth that is higher than economy-wide productivity growth, in order to combat inequality and boost workers’ share of income.”

To say that “the Fed should” do x is to imply that the Fed can do x. Regrettably, however, the Fed has no policy tool with which to target real wage growth. Nor does any agency have a tool to raise real wage growth above productivity growth. The Fed can print money faster, which generates higher inflation, but this does not sustainably increase real wages or employment. The Fed cannot improve the productivity or demand for labor by generating 4% or 5% rather than 2% inflation in the long run. (Raising inflation even further to double digits would clearly harm workers by deranging economic coordination).

Nor does faster money growth sustainably lower the real interest rate. It is an elementary proposition of monetary theory that the real interest rate is independent of monetary policy in the long run. Faster money growth only raises inflation and thereby the nominal interest rate, which is determined by the real interest rate plus the expected inflation rate. For the Fed to secure lower nominal interest rates in the long run it must lower the inflation rate, and so must pursue a less expansionary monetary policy.

In June, Fed Up organized and published a letter calling on the Fed to commit explicitly to higher inflation by raising its official inflation target above the current 2% rate. Twenty-two professional economists signed the letter, including Nobel laureate Joseph Stiglitz; former Minneapolis Fed President Narayana Kocherlakota; and several former Obama administration economists. Prominent academic signers included Justin Wolfers, Laurence Ball, and Brad DeLong. The letter can be read in its entirety here.

The letter’s argument does not turn on the above-mentioned confusions between nominal and real variables, or confusions between short-run and long-run effects of monetary policy. On the contrary, it implicitly rejects them. Its argument is more sophisticated: two percentage points in higher secular inflation, by raising the secular nominal interest rate two percentage points farther above its zero lower bound, would allow the Federal Reserve temporarily to reduce the real interest rate (the nominal rate minus the given inflation rate) by two more percentage points when it lowers the nominal rate to zero in a recession. The Fed would thereby be able to deliver more stimulus.

Kocherlakota spelled out the logic in a blog post:

The inflation target helps define how much stimulus the Fed can deliver when it lowers interest rates to zero (a boundary below which the central bank has been unwilling to go). In a higher-inflation environment, a nominal fed funds rate of zero results in a lower real, net-of-anticipated-inflation rate — the rate that economists typically see as most relevant for consumer and business decisions. If, for example, people expect inflation to be 3 percent, then a zero nominal rate translates into a negative 3 percent real rate — a full percentage point lower than the Fed could achieve if expected inflation were 2 percent. Experience suggests that the Fed could use the added ammunition.

Or as David Beckworth and Ramesh Ponuru boiled down the argument: “During a recession, central banks usually cut interest rates in order to stimulate the economy. The higher the interest rate is at the start of the recession, the more they can cut it.”

Kocherlakota conceded that “there’s also a case against raising the inflation target,” although he didn’t spell it out. He concluded: “That’s why the more important part of the letter is its call for ‘a diverse and representative commission’ to re-examine the monetary policy framework.”

The argument has been around for years that a 4% or 5% inflation target would be better than a 2% or 0% target. Its lineage goes back at least to a 1996 paper by Akerlof, Dickens, and Perry, which emphasized wage stickiness rather than the zero lower bound. (George Akerlof, by the way, is the husband of Fed Chair Janet Yellen.) More recently Olivier Blanchard in 2010, while IMF Chief Economist, suggested with co-authors that central banks should consider raising their inflation targets and thus nominal interest rates to create more space above the zero lower bound (hereafter ZLB). Laurence M. Ball, a co-signer of the Fed Up letter, argued explicitly for raising the inflation target to 4% in a 2014 IMF working paper emphasizing the ZLB.

The Fed Up letter argues that the ZLB has become a more frequent constraint on policy in light of a secular fall in the equilibrium real interest rate toward zero, citing an argument to this effect by San Francisco FRB president John Williams. In the words of the letter, although a 2% inflation target “seemed to give ample leverage with which the Fed could lower real interest rates” once upon a time, zero rates for seven years after the financial crisis failed at “sparking any large acceleration of aggregate demand growth.”

The most straightforward objection to raising the inflation target is that a higher secular inflation rate raises the well-known costs of inflation. It means a higher and more distortive tax on money-holding, reducing consumer welfare. It means greater “menu costs” of more frequently changing nominal prices. Higher inflation rates are associated with higher variability in relative prices, increasing noise in the price system. But these costs alone are not enough to counter the claim that the welfare costs of a more frequently binding ZLB are even greater. (The letter simply dismisses the costs of increasing the inflation rate by few percentage points, asserting a “lack of evidence that moderately higher inflation would harm Americans’ standard of living.”)

An effective challenge to the proposal for a higher inflation target requires a challenge to the underlying claim that the ZLB prevents an effective anti-recession monetary policy. The underlying claim rests on the New Keynesian or Taylor Rule conception that monetary policy is recession-fighting if and only if it lowers the nominal interest rate. But this is a mistake. The problem of recession, to the extent that monetary policy can relieve it, is an unsatisfied excess demand to hold money (the quantity demanded exceeds the quantity supplied at the current price level and nominal interest rate). Sales and employment are depressed because an excess demand for money corresponds to an excess supply of goods and services in general: consumers don’t buy when they are trying to build up their money balances. Monetary policy can in principle remedy the problem by expanding the quantity of money in the right amount at the right time.

But wait, you might say, didn’t quantitative easing fail to improve anything in the last recession? No. In the relevant sense – increasing the quantity of money in the hands of the public – quantitative easing wasn’t even tried. As I have emphasized in a previous article, in the face of a large 2009 increase in the holding of M2 balances relative to income (a large drop in the velocity of M2), the Fed did not raise the path of M2 growth. Its QE programs did raise the path of M0, the monetary base, but the Fed prevented that M0 growth from fueling faster M2 growth by paying banks to sequester the additional M0 (it paid them interest on excess reserves for the first time).

Absent offsetting higher interest on excess reserves, quantitative easing is capable in principle of providing all the monetary “looseness” needed. The ZLB is no obstacle to expanding M2. Consequently a higher secular inflation rate brings with it higher costs, but no offsetting benefit of enlarging the power of monetary policy to do the needful in a recession.

Finally, it should be noted that Chair Yellen, after having rejected the idea of raising the Fed’s inflation target on many previous occasions as a threat to the credibility of the FOMC, responded more positively to the idea after the Fed Up letter. At her June 14 press conference, she echoed the letter’s argument:

[A]ssessments of the level of the neutral likely level currently and going forward of the neutral Federal funds rate have changed, and are quite a bit lower than they stood in 2012 or earlier years. That means that the economy is, has the potential where policy could be constrained by the zero lower bound more frequently than at the time that we adopted our 2% objective. So it’s that recognition that causes people to think we might be better off with a higher inflation objective. That is an important set, this is one of our most critical decisions and one we are attentive to evidence and outside thinking. It’s one that we will be reconsidering at some future time. And it’s important for our decisions to be informed by a wide range of views and research, which is ongoing inside and outside the Fed.

The day after Yellen’s press conference, as the below chart shows, a leading market measure of the expected inflation rate stopped falling. It has since risen, and is now 12 basis points higher.

[Cross-posted from]

The impact of global warming on temperature-induced human mortality has long been a concern, where it has been hypothesized that rising temperatures will lead to an increase in the number of deaths due to an increase in the frequency and intensity of heat waves. Others claim that rising temperatures will also reduce the number of deaths at the cold end of the temperature spectrum (fewer and less severe cold spells), resulting in possibly no net change or even fewer total temperature-related deaths in the future.

The largest study—by far—on temperature-related mortality was published by Gasparrini et al. in the journal Lancet in 2015. They examined over 74 million (!) deaths worldwide from 1985 to 2012 and found that the ratio of cold-related to heat-related deaths was a whopping 17 to 1. Moreover, the temperature percentile for minimum mortality was around the 60th in the tropics and “80–90th” in the temperate zones. Based upon real-world data, it is obvious that global warming is going to directly prevent a large number of deaths.

One of us (Michaels) co-authored a peer-reviewed literature article showing that as heat waves become more frequent, heat-related deaths decrease because of adaptation. Given that our cities are heating up on their own—without needing a push from greenhouse gases—under our hypothesis, heat-related mortality should be dropping, which it is.

But what about morbidity (sickness), as opposed to mortality? For that, we should be looking at emergency room visits, where people go because they are really feeling crummy or have a physical injury. Turns out everyone has been looking at death, but few at debilitation.

Now comes a new paper from Zhao et al. (2017). They examined the association between daily mean ambient temperature and emergency department visits in twelve Chinese cities over the period 2011–2014. Two were in the cool north, six from the central region and four in the hot and humid south.

As represented by the pooled national data as shown in the figure below, the relative risk of emergency department visits increases as temperatures become both warm and cold. However, the risk is far greater for cold temperatures, where the cumulative relative risk is 1.80 (nearly twice as likely compared to average temperatures) versus a much smaller 1.15 (a 15% increase in prevalence) that was associated with hot temperatures. Additionally, Zhao et al. determined that the effects of cold spells on emergency department visits were much more persistent, lasting a full 30 days compared to the more acute, but short lived, effects of warm spells that lasted a mere three days, or one-tenth of the time.


Figure 1. Pooled national level cumulative association between temperature and emergency department visits over a lag of 0–32 days during 2011–2014. Adapted from Zhao et al. (2017).

Other important findings included the observation that the temperature percentile associated with the least amount of emergency department visits was 64. Given that the average climate in China varies from tropical to pretty darned cold, it’s probably somewhat more tropical than temperate. Their optimum temperature is very consistent with what was found in the Gasparrini et al. study. At 14 percentage points higher than 50, this fact (along with Gasparrini et al.) suggests that humans are much better adapted to warmer temperatures than cold. Zhao et al. also found that the temperature effect on emergency department visits varied by latitude; the effect of extreme cold was higher in the southern cities and declined northward, whereas the effect of extreme heat was higher in the northern cities and declined southward, which suggests a form of regional adaptation to temperature, similar to what we (Michaels) found for U.S. cities in our work on urban heat-related mortality.

In stratifying their analysis by gender and age, the thirteen researchers report that the temperature/emergency department visit relationship was unaffected by gender but was attenuated with increasing age, which contradicts other, more speculative work on Chinese urban heat-related mortality. At the national level, the relative risk of emergency department visits due to cold declined from 2.27 for the youngest age group (0–14 years) to 2.17 for ages 15–34, 1.60 for ages 35–64 and 1.41 for the elderly aged 65 and older. Similarly, the risk of emergency department visits due to hot temperatures also declined from 1.51 for 0–14 years to 1.19 from ages 15–34, 1.14 for ages 35–64 and 1.08 for those over age 65. Children of ages 0–14 were the most vulnerable to cold spells and heat waves over the period of study.

In considering all of the above findings, plus those reported in numerous other studies of the subject, it is clear that the impact of cold weather on human health is much more severe and longer lasting than that caused by heat waves. The truth be told, as shown by real-world numbers, humanity has much more to gain in terms of physical heath from rising, as opposed to falling, temperatures.



Gasparrini, A., et al. (2015) “Mortality risk attributable to high and low ambient temperature: a multicountry observational study.” The Lancet 386 (9991): 369–375.

Davis, R.E., Knappenberger, P.C., Michaels, P.J. and W. Novicoff (2003) “Changing heat-related mortality in the United States.” Environmental Health Perspectives 111 (14): 1712–1718.

Zhao, Q., Zhang, Y., Zhang, W., Li, S., Chen, G., Wu, Y., Qui, C., Ying, K., Tang, H., Huang, J., Williams, G., Huxley, R. and Guo, Y. (2017) “Ambient temperature and emergency department visits: Time-series analysis in 12 Chinese cities.” Environmental Pollution 224: 310–316.

Police militarization and excessive force have become increasingly pressing issues in American society. Fortunately, the Denver-based U.S. Court of Appeals for the Tenth Circuit – Justice Neil Gorsuch’s old stomping ground – held yesterday that innocent victims of improper police procedures during dynamic drug raids have some protections. Even if the court didn’t fully address the issues Cato raised in our brief, the ruling in Harte v. Board of Commissioners of Johnson County, Kansas is a step forward.

In 2011, Robert Harte and his two children visited a garden store to buy tomatoes for his 13-year old son’s school project. Little did they know that Sergeant James Wingo of the Missouri State Highway Patrol was watching the store and recording the license plate numbers of the visitors, assuming that they were there to buy marijuana despite little evidence for that assumption. The Johnson County Sheriff’s Office then examined the Hartes’ trash on two occasions, finding about an ounce of “saturated plant material.” Because they evidently couldn’t tell the difference between tea and marijuana, they field-tested the substance, which tested positive for marijuana.

In an inspiring display, the police launched a military-style raid the Hartes’ home. At 7:30 in the morning, they pounded on the Hartes’ door, forced Mr. Harte to the ground when he answered, and searched their home for three hours. As it became increasingly clear that there was no marijuana in the house, the police started to search for “any kind of criminal activity,” a far greater sweep than what a warrant to search for “marijuana” and “drug paraphernalia” allows. Heaping further indignities on the family, the officers also left canine units in the house longer than necessary to give them extra training. The police apparently wanted to turn lemons into lemonade by retroactively turning an early-morning drug raid – that didn’t find any drugs, lest we forget – into a training exercise.

After the district court granted summary judgment for the police, the Hartes appealed and Cato filed an amicus brief. We argued that the police violated an important Fourth Amendment rule that goes back to the roots of English common law by failing to knock and announce their presence in anything but a literal sense. They also exceeded the scope of their warrant to look for “any criminal activity” instead of just drugs. We urged the Tenth Circuit to reverse the district court, clarify the Fourth Amendment standard for assessing police raids, and remand for further proceedings.

The Tenth Circuit mostly agreed with Cato on the Fourth Amendment issue. Two judges on the three-judge panel found that the district court had been wrong to grant summary judgment to the police on the search and seizure issue, with Judge Carlos Lucero alluding briefly to the knock-and-announce requirement. It was a convoluted opinion that took a long time to produce because of each judge writing separately and different sets of judges coming together on different parts of the ruling. Most importantly, Judge Gregory Phillips, joined by Judge Lucero, found that “what the deputies learned early on in the search dissipated any probable cause to continue searching.” 

Ultimately, the judges only discussed in passing the police-militarization and general-warrant concerns raised by Cato and sided with the police on the excessive-force claims. Nevertheless, the court held that what the Hartes experienced qualified as unreasonable search and seizure – and also let them continue with their state-law claims – so Harte v. Board of Commissioners represents a positive development in the jurisprudence surrounding dynamic police raids.

Is the Trump-run Pentagon a hostile workplace for Defense Department whistleblowers? Or is there simply an anti-whistleblower organizational tradition at the Pentagon that stretches back decades? An examination of recent events and the historical record suggests it’s both, and the implications for taxpayers and American national security are serious. I’ll start with the latest developments.

As the Project on Government Oversight (POGO) first reported in December 2016, a three-member interagency Inspector General External Review Panel concluded in May 2016 that the then-Inspector General of the National Security Agency (NSA), George Ellard, had, according to POGO, “previously retaliated against an NSA whistleblower”—apparently during the very same period that Ellard had claimed that “Snowden could have come to me.” The panel that reviewed Ellard’s case recommended he be fired, a decision affirmed by NSA Director Mike Rogers. But there was a catch: the Secretary of Defense had the final word on Ellard’s fate. Outgoing Obama administration Defense Secretary Ash Carter, apparently indifferent to the magnitude of the Ellard case, left office without making a decision.

In the months after Donald Trump’s assumption of the presidency, rumors swirled inside Washington that Ellard had, in fact, escaped termination. One source, who requested anonymity, reported that Ellard had been seen recently on the NSA campus at Ft. Meade, Maryland. That report, it turns out, was accurate.

On July 21, in response to the author’s inquiry, the Pentagon public affairs office provided the following statement:

NSA followed the appropriate procedures following a whistleblower retaliation claim against former NSA Inspector General George Ellard. Following thorough adjudication procedures, Mr. Ellard continues to be employed by NSA.

In a separate email to the author today, Terrence O’Donnell of the firm Williams and Connolly—Ellard’s counsel in the case—released a lengthy statement on behalf of his client:

The Office of the Assistant Secretary of Defense (ASD) examined and rejected an allegation that former NSA Inspector General, George Ellard, had retaliated against an NSA employee by not selecting that employee to fill a vacancy in the OIG’s Office of Investigations.

In a lengthy, detailed, and well-reasoned memorandum, the ASD concluded that Dr. Ellard had not played a role in that personnel decision or, in the terms of the applicable laws and regulations the ASD cited, Dr. Ellard “did not take, fail to take, or threaten to take or fail to take any action” associated with the personnel decision.

This judgment echoes the conclusion reached by the Department of Defense’s Office of the Inspector General.  An External Review Panel (ERP) later came to the opposite conclusion, leading to the ASD review.  The ASD concluded that “the evidence cited in the ERP report as reflective of [Dr. Ellard’s] alleged retaliatory animus toward Complainant … is of a character so circumstantial and speculative that it lacks probity.”

In assessing Dr. Ellard’s credibility and in rendering its decision, the ASD also considered Dr. Ellard’s “distinguished career of public service, spanning more than 21 years of service across the executive, legislative, and judicial branches, culminating in almost 10 years of service as the NSA IG.”  Dr. Ellard, the ASD noted, has been “entrusted to address some of our nation’s most challenging national security issues”; successive NSA Directors have consistently rated Dr. Ellard’s performance as “Exceptional Results” and “Outstanding”; and he has been “commended by well-respected senior officials with whom [he has] worked closely over the years for [his] ability and integrity.”

Dr. Ellard is serving as the NSA Chair on the faculty of the National War College, a position he held prior to the ERP review.

The Pentagon itself offered no explanation as to why a senior DoD official chose to overrule the IG External Review Panel and NSA’s current director in Ellard’s favor, but the message is abundantly clear: if you work in Pentagon management and are charged credibly with whistleblower retaliation, there’s a good chance you’ll keep your government job. And if you are a prospective whistleblower, the message is equally clear: you blow the whistle at your own risk.

Unfortunately, the Ellard case is not unique within the Pentagon. And as a series of these cases demonstrate, when the internal watchdog function breaks down at the Defense Department, not only are taxpayers ripped off, but intelligence failures costing the lives of thousands of Americans can result.

Thanks to help from the law firm of Loevy & Loevy, as well as the Government Accountability Project, an ongoing lawsuit I filed earlier this year is shedding new and disturbing light on these problems at NSA and elsewhere in the national security establishment. The events that eventually motivated the lawsuit are straightforward.

In the late 1990s, a small team of NSA employees—Bill Binney, Kirk Wiebe, Ed Loomis, and senior manager Tom Drake—came up with a revolutionary digital intelligence collection and analytical system called THINTHREAD. The system would’ve allowed NSA to, in real time, sift through the trillions of digital communications passing over the airwaves and the internet, find any bad actors in communication with Americans, segregate and encrypt that traffic for further analysis (and where necessary additional collection or legal action), and discard the remaining digital junk.

The system was cheap—the prototype cost around $3 million, made possible by then-GOP House Intelligence Committee staffer Diane Roark—and could be deployed NSA-wide quickly. Preliminary testing showed that THINTHREAD was developing actionable intelligence not discovered by any other NSA systems.

The THINTHREAD team was convinced that their system could spot threats far enough in advance to allow the U.S. to thwart attacks at home or abroad. There was just one huge problem: then-NSA Director Michael Hayden vehemently opposed the system.

Hayden preferred to go with a completely unproven, outsourced, contractor-produced and run system called TRAILBLAZER, spearheaded by defense contractor behemoth SAIC. But throughout its existence, TRAILBLAZER was plagued by repeated delays and huge cost overruns, producing zero actionable intelligence. The internal battle over the programs led Hayden to retaliate against the THINTHREAD team for briefing Roark and other House Intelligence Committee staffers on their success, even as TRAILBLAZER foundered.

Hayden’s subordinate, Maureen Baginski, officially killed THINTHREAD development just three weeks before the 9/11 attacks. By the end of October 2001, the original THINTHREAD development team had left NSA, motivated to leave upon learning that key THINTHREAD technology—minus the Constitutional safeguards built into it—was being misused to conduct warrantless mass surveillance against the American people.

Furious at TRAILBLAZER’S waste of taxpayer money and Hayden’s refusal to field THINTHREAD—which the developers believed could have prevented the 9/11 attacks—in September 2002 Binney, Wiebe, Loomis, and Roark filed a whistleblower complaint with the Pentagon Inspector General (DoD IG). Drake remained at NSA to support the complaint, providing IG investigators with key documents and reports showing clear malfeasance by senior NSA officials.

And according to Drake, as revealed in the new documentary on this episode, A Good American, post-9/11 application of the existing THINTHREAD system against NSA databases not only discovered evidence of Al Qaeda’s attack plans that other NSA systems and analysts had missed, but other parts of the plot that had been attempted but failed. The implication was clear: THINTHREAD could’ve prevented the September 11, 2001 attacks on America. Drake said NSA management ordered that study to be buried.

Indeed, being right and raising a stink over the lethal intelligence failure backfired on Drake and his former colleagues.

Ten years ago today, on July 26, 2007, the FBI raided the homes of the former THINTHREAD team members, along with that of Diane Roark. All were alleged to be suspects in an ongoing leak investigation that had exposed the largest acquisition and intelligence failure in the history of NSA. But the allegations that led to those FBI raids were bogus, as subsequent legal proceedings would demonstrate over the next several years.

Drake initially faced multiple charges under the draconian Espionage Act, but as the illegitimate nature of the case became clear, all those charges were dropped. Drake, in an effort to end the case and avoid total poverty, pled to a single count of misuse of a government computer. But none of the NSA managers or SAIC contractors responsible for the TRAILBLAZER fiasco, or those responsible for Drake’s vindictive and bogus prosecution, were ever charged with a crime.

While working as a House staffer for then-Rep. Rush Holt (D-NJ) in 2013, I had the chance to review that classified DoD IG report and became determined to get it out. It completely validated all the core allegations of the THINTHREAD team and Roark. In my view, NSA was misusing the classification system, especially an obscure 1959 law, to prevent the public from learning the truth about the episode.

This past week, the Pentagon provided to me a less redacted version of the DoD IG report that was originally released in 2011. While well over half of the report given to me remains redacted (and the subject of ongoing litigation), enough of it has been released to show beyond all doubt that the IG validated the whistleblowers’ allegations—and that fear of NSA management retaliation for exposing the fraud was pervasive among the many NSA employees interviewed by the DoD IG.

The report found that THINTHREAD, “…a less costly and more capable solution…” than TRAILBLAZER, “was already operationally available and ready for deployment. As a result, the National Security Agency is inefficiently using resources to develop a digital network exploitation system that is not capable of fully exploiting the digital network intelligence available to analysts from the Global Information Network” (p. ii).

The IG report also noted that Hayden had ignored multiple internal reviews that showed THINTHREAD superior to his moribund TRAILBLAZER, and that he delayed deployment of THINTHREAD to multiple NSA collection sites, in violation of Congressional direction to do so (p. 4). Hayden’s mismanagement of NSA and insubordination with Congress cost taxpayers hundreds of millions of dollars and arguably the lives of nearly 3,000 Americans on 9/11.

Sadly, the misconduct of Pentagon officials didn’t end with the publication of that DoD IG report over a decade ago.

After his trial was over, Drake filed a whistleblower reprisal complaint with the Office of Special Counsel (OSC), the federal watchdog responsible for investigating whistleblower reprisal cases. In 2016, OSC concluded that DoD IG officials engaged in evidence destruction during Drake’s trial, and referred the matter to the DoJ IG for action. Those revelations came to light through yet another whistleblower, former DoD IG Assistant Inspector General John Crane, who has filed his own whistleblower retaliation claim with OSC. Drake confirmed to the author in June 2017 that DoJ IG investigators had interviewed him last summer but that he’s heard nothing since.

As the foregoing post-9/11 history of the Pentagon demonstrates, Ellard’s case is just the latest example of the anti-whistleblower culture at NSA and the DoD IG that Ellard’s nominated replacement, Robert Storch, will have to end if NSA employees are to believe that fraud or criminal complaints can be reported without fear of retaliation.

At Storch’s all-too-brief confirmation hearing last week before the Senate Intelligence Committee, he was not asked about the status of the Drake or Crane cases, or the reported misconduct of Ellard—amazing omissions by one of NSA’s chief Congressional oversight bodies. Unless Congress invests the time to thoroughly investigate, in open session, these past episodes of whistleblower retaliation and programmatic misconduct, we risk still more of the same—more taxpayer money squandered, and more Americans needlessly killed in avoidable intelligence failures.

In a series of cases of which Dotterweich v. U.S. (1943) is emblematic, the U.S. Supreme Court has upheld the idea that a business executive can be criminally convicted over underlings’ violation of public welfare regulations, with no need to show that an executive facing charges knew of the violation, participated in it, intended it, or was negligent in failing to prevent it. This idea of vicarious criminal liability without a showing of mens rea (guilty intent) was controversial at the time, and the “responsible corporate officer” doctrine, as it is called, continues to be controversial today. Yet despite requests (as in this Cato amicus brief) that they consider scaling the doctrine back, the courts have generally declined to do so. 

Now Craig Lerner of George Mason/Scalia Law School has written an important working paper analyzing the origins of the doctrine in the trial of Joseph Dotterweich, general manager of a pharmaceutical company whose employees had allegedly shipped drugs that were misbranded and adulterated under FDA definition. From the abstract:

…with respect to Dotterweich as the corporation’s general manager, the government argued that he was strictly liable because he stood in “responsible relation” to the company’s acts. The government never tried to prove that the company, Buffalo Pharmacal, was negligent, nor did it try to prove that Dotterweich was negligent in his supervision of the employees of Buffalo Phamacal. The prosecutor and judge were candid about this theory throughout the trial, although the judge conceded that it seemed bizarre and unfair. The defense lawyer repeatedly sought to inject what became known throughout the trial as “the question of good faith,” but was circumvented at almost every turn. What would thus seem to be the crux of any criminal trial — the personal fault of the defendant — was carefully shorn from the jury’s consideration. …

The article argues that the “responsible corporate officer” doctrine can never enjoy a secure place in our legal system. First, the doctrine is at a minimum in tension with, and often in direct opposition to, basic principles of the criminal law; and second, the doctrine fails, when followed to its logical conclusions, to accord with basic notions of fair play. The article concludes that the responsible corporate officer doctrine is either unnecessary, in cases in which the evidence establishes personal fault, or unjust, in cases in which it creates liability in the absence of personal fault through the unspecified notion of “responsibility.” …

I call the responsible corporate officer doctrine “ripe with potential for injustice,” and discuss its relation to criminal laws that are ambiguous or not ascertainable by persons at risk of criminal liability, in my (newly written) chapter on white-collar prosecution in this year’s Cato Handbook for Policymakers.

A couple of news stories about Rep. Cedric L. Richmond (D-La.):

In a historic act of protest, Democratic members of the U.S. House of Representatives refused to observe the regular order of the House, staging a sit-in protest over the lack of legislation on gun control….

In sharp comments pointed directly at House Republicans, Reps. Maxine Waters (D-Calif.) and Cedric Richmond (D-La.) directed blame at the National Rifle Association and the cowardice of GOP members….

“You are doing what you are doing because you don’t have the guts to stand up to the gun lobby,” said Richmond in a speech at the start of the House-floor sit-in, with comments addressing what he viewed as GOP obstruction.

If you shoot a police officer, you’re going to make the 5, 6 and 10 o’clock news. But if you shoot a congressperson you’re going to make the world news,” said Rep. Cedric L. Richmond (D-La.)….

Some lawmakers are carrying firearms or installing security systems at their homes and offices. Some have decided not to hold town hall meetings at all — restricting voters from meeting their elected leaders. Some are demanding that the government pay for a security detail for every member of Congress….

It’s another reason to continue protecting themselves, several said.

“I definitely know where my firearm is at all times,” Richmond said.

So I’m curious: Does Rep. Richmond have a firearm in the District of Columbia? Does he have a valid permit for it, which is extremely difficult to get despite the Supreme Court’s Heller decision? Does he support the proposal by Rep. Barry Loudermilk (R-Ga.) to give members of Congress a special exemption from the strict D.C. rules? Does he believe that members of Congress should obey the same laws that apply to everyone else?

There is likely to be confusion over many issues in the upcoming NAFTA renegotiation, but one particular area where I already see some misunderstandings is the NAFTA dispute process. To illustrate this, here’s a recent statement by Canadian Prime Minister Justin Trudeau:

as our ambassador said just last week to the Americans, a fair dispute resolution system is essential for any trade deal that Canada signs on to and we expect that to continue to be the case in any renegotiated NAFTA.

In context, it is clear he was talking about a particular type of NAFTA dispute, rather than the more general proposition that there must be a dispute system in place.  But there are actually several dispute provisions in NAFTA, and I’ve seen a number of people get them mixed up.  As a result, I thought it was worth explaining the key distinctions in a blog post, which I can then link to whenever the issue comes up in the future.

There are three main types of NAFTA disputes, set out in separate chapters: Chapter 11 (litigation over the treatment of foreign investment), Chapter 19 (appeals of anti-dumping/countervailing duty decisions), and Chapter 20 (government complaints about compliance with NAFTA obligations).

Chapter 11 is part of the investor state dispute settlement (ISDS) debate. Under Chapter 11, a foreign investor of one NAFTA party can sue the government of another party (e.g., a Canadian company who has invested in the U.S. can sue the U.S. government) on the basis that it has been treated worse than its American competitors, or that it has been treated badly in general (e.g., it did not receive treatment that was “fair and equitable”). I have questioned the value of such procedures, but they are strongly supported by business groups. As far as I know, the Canadian and Mexican governments favor their inclusion in NAFTA, and the Trump administration’s NAFTA negotiating objectives seem to envision including them (although I can imagine some members of the Trump administration who worry about sovereignty will be pushing to take them out).

Next up is Chapter 19, which sets out a special appeals process related to the imposition of anti-dumping and countervailing duties. This is the dispute procedure Trudeau had in mind. Anti-dumping and countervailing duties are imposed on the basis of decisions by domestic agencies (in the U.S., it is the Department of Commerce and the International Trade Commission), and the decisions of these agencies can be appealed to domestic courts (in the U.S., appeals go to the Court of International Trade, then the Court of Appeals for the Federal Circuit, and then the Supreme Court). NAFTA Chapter 19, however, sets up a special appeals process which allows Canadian and Mexican respondents in U.S. proceedings to appeal the agency decision to an ad hoc NAFTA panel (i.e., private lawyers who act as judges in a particular case) instead of to domestic courts.  (The process is also available in relation to Mexican and Canadian anti-dumping and countervailing duty cases, taking appeals out of their domestic courts).  When reviewing U.S. agency decisions, a NAFTA Chapter 19 panel acts like the Court of International Trade, in the sense of reviewing the agency’s interpretation and application of U.S. law, and remanding to the agency if necessary. Unlike the Court of International Trade, NAFTA Chapter 19 panel rulings cannot be appealed.

It’s not clear to me that this process is constitutional (a law review article discussing the predecessor provision in the Canada-U.S. FTA is here), and I’m not sure at this point how different the results are as between U.S. courts and the NAFTA process (this is something I plan to look into further). The Canadians insist they want to keep Chapter 19, while the Trump administration says it wants to take it out, which means this could be a major hurdle in the negotiations.

Finally, there is NAFTA Chapter 20. This is the core state-to-state NAFTA dispute process, where one government can allege that another is not complying with its obligations. Chapter 20 has not worked that well in practice, in part due to problems with getting panelists in place. I am working on an article that proposes some fixes.

My hope is that these basic explanations can cut through some of the confusion. All of these provisions set out NAFTA dispute procedures, but the policy implications and the politics of each are very different.

Private school choice is the work of racists. That message, it seems increasingly clear, is going to be a major weapon wielded by opponents of educational freedom for the foreseeable future. It is the explicit contention of a new Center for American Progress report, The Racist Origins of Private School Vouchers, and of Randi Weingarten, President of the American Federation of Teachers, who has been proclaiming that modern choice programs are “only slightly more polite cousins of segregation.”

As I and others have written, the assertion that school choice originated in racism, or somehow has a more repellant history than public schooling, would be laughable if the implications of the charge were not so serious. Remember, Brown v. Board of Education was about massive, mandated segregation in public schools, the schools that defenders love to tell us serve the vast majority of students. Segregation in them meant—and means—segregation for huge swaths of people. Perhaps that is why a response to my critique of the CAP report from the Century Foundation’s Kimberly Quick focused not on history, but my pointing out that private school choice is popular with African Americans.

According to Quick this is not so, and by the way, on what grounds does someone at Cato speak “on behalf of the black community”? Cato has no African American policy scholars.

I never wrote that I speak on behalf of African Americans. I do not presume to speak for anyone other than myself. But the survey literature—African Americans speaking for themselves—is overwhelmingly on my side.

To demonstrate what polls do not show majority African American support for private school choice, Quick cites the oft-used question from the annual Phi Delta Kappa poll, which employs wording notoriously loaded against choice: “Do you favor allowing students and parents to choose a private school to attend at public expense.” “At public expense” sounds like freeloading, and “choose a private school” rather than to choose among schools minimizes the empowerment of families. Not surprisingly, this wording garners only 33 percent African-American support, though that outpaces the general public.

What is much more telling is that the polling reveals when the question is more neutral, which excludes surveys that get both high negative and positive numbers. What follows is not an exhaustive list, and there are other ways to game survey outcomes such as question order, but there have been many, more neutrally worded surveys that have shown that African Americans want private school choice.

The journal Education Next has for several years asked questions both neutral and not so neutral to gauge school choice support. As I noted in my initial response to the CAP paper, the 2016 survey found “a whopping 64 percent of African Americans supported ‘a tax credit for individual and corporate donations that pay for scholarships to help low-income parents send their children to private schools.’” The 2015 survey revealed that 58 percent of African Americans favored a program “that would give all families with children in public schools a wider choice, by allowing them to enroll their children in private schools instead, with the government helping to pay the tuition.” 66 percent supported a similar program just for low-income families, and even when using wording closer to PDK’s, pluralities of African Americans supported it. In 2016 EdChoice asked three forms of a question about vouchers, and the composite average was 61 percent of African Americans favoring them.

The Black Alliance for Educational Options has also conducted polling, with very straightforward wording, such as “do you support or oppose parent choice,” and “do you support school vouchers/scholarships?” Asking African Americans in New Jersey, Tennessee, Alabama, and Louisiana these questions, in 2015 BAEO reported support ranging from 61 percent to 65 percent, depending on the state.

Of course, EdChoice and BAEO advocate for school choice, and Education Next features many choice proponents. But some of the longest running evidence of African-American support for choice comes from the Joint Center for Political and Economic Studies, “a non-partisan, non-profit public policy organization that supports elected officials and policy experts who serve communities of color across the country.” Over many years it has consistently found plurality to significant majority African-American support for choice. Its most recent poll of which I am aware, conducted in 2008, reported that 63 percent of respondents said “yes” when asked if they “support vouchers.” At least in 2000, the exact question asked was, “Would you support a voucher system where parents would get money from the government to send their children to the public, private, or parochial school of their choice?” (I haven’t been able to confirm the question for other years.)

Perhaps all of this is why Quick’s colleague Richard Kahlenberg recently said in answer to a question I asked about black support for school choice, his understanding of the polling was the same as mine: African Americans want choice. (Or so I recall—I’m not sure if event video will be up to confirm this.) Indeed, Quick herself concedes that “it makes sense that black and brown families, too often lacking options beyond segregated, under resourced, and underperforming schools, would want alternative options for their children.”

Now, about Cato for a moment. Again, I claim no insight based on personal experience into what African Americans individually or collectively want, and I certainly wish there were more black libertarians. But when I first started working at Cato, a major player in the fight for choice in Washington, DC, was Casey Lartigue, an African American Cato scholar. Similarly, Jonathan Blanks, a Cato researcher, who is African American and recently wrote that libertarians must not downplay racism or think it will be overcome just by free markets, but school choice is nonetheless important for the black community. Of course, none of this makes choice right or wrong, nor does it make Cato any more or less a spokes-tank for African Americans.

I’ll let the evidence, and individual African Americans, speak and act for themselves. Indeed, empowering the formerly powerless to act for themselves is exactly what school choice is about.

The District of Columbia has suffered another defeat in its decades-long effort to restrict gun rights.

Today the D.C. Circuit Court of Appeals struck down the District’s “good reason” requirement, which obliges individuals to demonstrate a special need before being allowed to carry a gun.

Some background: the District banned all handgun possession, including in the home, in 1976.  That policy was ruled unconstitutional in the Heller I decision in 2008, which held that the 2nd Amendment protects an individual right to have a handgun in the home for self-defense. The District responded to Heller I by banning the public carrying of handguns.  That ban was ruled unconstitutional in Palmer v. District of Columbia in 2014 (Cato’s own Tom Palmer was the named plaintiff in that case). The District was undeterred, and responded to the Palmer ruling by requiring permit applicants to provide a “good reason” why they should be allowed to carry.

The “good reason,” as defined by the D.C. government, is incredibly narrow. Simply being concerned about crime, or living/working in a crime-ridden area of the city does not suffice. Effectively the only people capable of meeting the D.C. test are those working in extraordinarily high-risk occupations or people who have received substantive, specific threats against them.

Two different District Court judges ruled against the “good reason” requirement (one ruling was set aside due to a bit of a procedural morass), and those two cases were combined on appeal to the D.C. Circuit. In a 2-1 decision, a panel of the Court of Appeals struck the “good reason” rule down as unconstitutional.

Judge Griffith of the D.C. Circuit writes:

At the Second Amendment’s core lies the right of responsible citizens to carry firearms for personal self-defense beyond the home, subject to longstanding restrictions. These traditional limits include, for instance, licensing requirements, but not bans on carrying in urban areas like D.C. or bans on carrying absent a special need for self-defense. In fact, the Amendment’s core at a minimum shields the typically situated citizen’s ability to carry common arms generally. The District’s good-reason law is necessarily a total ban on exercises of that constitutional right for most D.C. residents. That’s enough to sink this law under Heller I.


We are bound to leave the District as much space to regulate as the Constitution allows - but no more. Just so, our opinion does little more than trace the boundaries laid in 1791 and flagged in Heller I. And the resulting decision rests on a rule so narrow that good-reason laws seem almost uniquely designed to defy it: that the law-abiding citizen’s right to bear common arms must enable the typical citizen to carry a gun.


It’s important to note that this case is not over.

The District can appeal this ruling back to the D.C. Circuit in order to have it reheard en banc. The case could also ultimately end up in front of the United States Supreme Court which, since its rulings in Heller (2008) and McDonald (2010), hasn’t seen fit to offer further guidance to lower courts on whether the 2nd Amendment applies outside the home. With various federal courts coming to different conclusions on that question, this case represents a great opportunity to finally get a definitive answer from the high court.

If you haven’t seen much of me on these pages lately, that’s because I’ve spent most of the last few weeks feeding and grooming my favorite hobby horse: that’s right, the Fed’s policy of encouraging banks to hoard reserves by paying above-market rates on their Fed reserve balances.

Well, last Thursday morning I rode the old gal to Capitol Hill, where I put her through the paces before the House Financial Services Subcommittee on Monetary Policy and Trade, at its hearing on “Monetary Policy v. Fiscal Policy: Risks to Price Stability and the Economy.” Mickey Levy of Berenberg Capital Markets, Eric Leeper of Indiana University at Bloomington, and Jared Bernstein of the Center on Budget and Policy Priorities, also took part.

Below I reproduce my five-minute spoken testimony, in which I attempt to summarize the twenty-two thousand word written testimony I submitted beforehand.  All four written testimonies, including my screed, can be read here.  Those who wish to see the entire show, including my and the other participants’ replies to members’ questions, will find a video embedded further below.


Chairman Barr; Ranking member Moore; distinguished committee members: In October, 2008, the Federal Reserve began paying interest on banks’ reserve balances with it. My testimony today concerns the economic consequences of that step.

The Fed was originally supposed to start paying interest on reserves in 2011, to reduce the implicit tax burden reserve requirements placed on banks. But as the 2008 crisis worsened, the Fed received Congress’s permission to start paying interest on reserves immediately. Its goal then was, not to relieve banks of a required reserve burden, but to get them to hoard reserves it was creating by its emergency lending, so that that lending wouldn’t result in increased bank lending and inflation.

To make interest on reserves serve this role, the Fed set the rate on reserves above comparable market rates, where it has kept it ever since. It thereby ignored the laws’ stipulation that the rate was “not to exceed the general level of short-term rates.”

As an anti-stimulus measure, interest on reserves worked very well: so well that within weeks the Fed did an about-face. Now it hoped to stimulate the economy by purposefully creating large quantities of fresh bank reserves.  All told, the subsequent three-rounds of “Quantitative Easing” created another $2 trillion of additional bank reserves. Yet because reserves still paid an above-market rate of interest, banks just kept on accumulating them, as they had done — and as the Fed had wanted them to do — before QE, when it was worried about inflation.

If  “insanity is doing the same thing over and over again but expecting different results,” then I fear it must be said that at least some Fed officials were not quite in their right minds.

Although the QE stimulus was disappointingly small, the Fed’s actions had other, big consequences. By acquiring trillions of dollars worth of Treasury and mortgage-backed securities, and borrowing from banks to pay for them, the Fed dramatically increased its footprint on the U.S. credit system. Before IOR and QE, bank reserves were less than 1% of bank deposits; bank loans, in contrast, were almost 100% of bank deposits. Today bank reserves are 20% of deposits, and loans are just 80% of deposits. Before IOR and QE, the Fed’s assets were  7% of commercial bank assets. Today the figure is 27%.

Commercial banks are expected to invest the public’s deposits productively, subject to certain regulatory guidelines. Central banks aren’t. They’re tasked instead with regulating the scale of commercial bank lending and deposit creation. According to the Fed’s own guidelines, as set forth in a pre-crisis publication, it is supposed to “structure its portfolio and … activities so as to minimize their effect on… credit allocation within the private sector.” The reason for this, the same guidelines state, is that hard-earned experience shows that “in general…market-directed resource allocation fosters long-run economic growth.”

In fact there’s a vast economics literature on what’s known as “financial repression.” The term refers to the harmful consequences of policies — mainly in less-developed countries — that divert savings from commercial banks to central banks, and thus from more to less productive uses. That literature blames such policies for much of the world’s poverty.

The Fed’s current operating system, with its above-market interest rate on reserves and bloated balance sheet, is very financially repressive. That is one reason for the continuing post-crisis “productivity slowdown.” Yet the same system, far from at least improving basic monetary control, has prevented the Fed for 5 years running from meeting the 2% inflation target it set in 2012.

Distinguished committee members, Chairman Barr, a central bank that cannot control inflation, and especially one that cannot make inflation go up, is a central bank that is unable to perform its most fundamental duty.

To close, the Fed’s new operating system, based on above market interest on reserves, has had disastrous consequences. Yet despite these consequences, the Fed’s current plan for “normalization” would keep much of the current arrangement in place. I hope, for the general public’s sake, that Congress will not let that happen.

[Cross-posted from]