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One of the main arguments proponents of Medicaid expansion make, at least on the fiscal side, is that it would save money as people gaining Medicaid coverage would reduce their use of expensive visits to the Emergency Department (ED). An earlier study from the Oregon Health Insurance Experiment threw some cold water on that theory, as it found that getting Medicaid actually increased the number of ED visits by 40 percent. Some analysts postulated that this increase was only temporary because it was due to either pent-up demand for health care services, or because new enrollees did not have established relationships with doctors. The thinking was that after enrollees became familiar with their coverage or addressed long-gestating health problems, the reductions in ED use and the associated cost savings would materialize.

A new report analyzing a longer time horizon finds that this is not the case, and there is “no evidence that the increase in ED use due to Medicaid coverage is driven by pent-up demand that dissipates over time; the effect on ED use appears to persist over the first two years.” This is another blow to the oft-repeated claim that Medicaid expansion will lead to significant savings from reduced Emergency Department utilization, and the effect actually seems to work in the other direction.

The Oregon case is important because it is one of the few instances of random assignment in health insurance, as the state wanted to expand Medicaid but had funding constraints, so it employed a lottery to determine who would get coverage. 

In this new update, the researchers see if there are any time patterns or signs of dissipation when it comes to the impact of Medicaid percent of the population with an ED visit or the number of ED visits per person. They expand upon the earlier utilization study to analyze the two years following the 2008 lottery and break up into six-month segments to see if there are any signs of the effects dissipating.

As they explain, “there is no statistical or substantive evidence of any time pattern in the effect on ED use on either variable.” In the first six-month tranche Medicaid coverage increased the number of ED visits per person by about 65 percent relative to the control group, and the estimates for the following three periods were similar and mostly statistically indistinguishable from each other. They also find that Medicaid increases the probability of an ED visit in the first period by nine percent, and the impact in the subsequent periods does not differ significantly. 

Estimated Effect of Medicaid Coverage on Emergency Department Use over Time

Source: Finkelstein et al., New England Journal of Medicine (2016).

A similar analysis for hospital admissions comes to the same result: “no evidence statistically or substantively of a time trend in the impact of Medicaid on having a hospital admission or on the number of days in the hospital.”

They also fail to find evidence that Medicaid coverage makes doctor’s visits and ED use more substitutable, and again, if anything the effect works in the other direction. The authors suggest that this could be due to differences in how people respond to gaining access to Medicaid, or it could be that Medicaid increases the complementarity of these different dimensions of health care.

Whatever the underlying mechanism, there is no evidence here that Medicaid coverage leads to reductions in utilization in other dimensions. In fact, Medicaid coverage makes people more likely to visit the Emergency Department, and increases their number of visits relative to their baseline. This new study confirms that these effects were not temporary and do not dissipate, at least over the two year period they were able to analyze. Expanding Medicaid coverage will not lead to reductions in inefficient, inexpensive Emergency Department visits, and there will be no associated cost savings, undermining one of the common fiscal arguments for expansion. 

The Seattle Post-Intelligencer says it has found the best Seattle homes for Millennials. Judging by the former paper’s suggestions, Seattle Millennials should move to Houston. Houston may not have Mt. Rainier, but it has beautiful lakes, a sea coast that is just about as nice as Washington’s (though not as nice as Oregon’s), and most important, it doesn’t have urban-growth boundaries which means it has much more affordable housing.

Click any photo to go to the listing for that property.

The P-I’s first suggestion is a 720-square foot, two-bedroom, one-bath home on a 5,000-square-foot lot. On the plus side, the living room has hardwood floors. On the minus side, the asking price is $259,950–and if Seattle’s housing market is anything like Portland’s, it will go for more than that. At the asking price, the cost is $361 per square foot.

As an alternative, allow me to suggest this 720-square-foot home in Houston’s University Area, not too far from downtown. It has new paint and an updated kitchen and, like the Seattle home, it is on a 5,000-square-foot lot. Unlike the Seattle home, the cost is just $86,500, just under a third of the Seattle house. That’s just $120 per square foot–and the sellers will probably accept a little less.

The P-I’s next suggestion is this cute little home in North Seattle. At 770 square feet, it is only a little larger than the first one, but has hardwood floors throughout, plus a covered patio and a firepit in the backyard. The lot is about 6,500 square feet. The owners are asking a mere $349,000, which–if you can get it for that–is $453 a square foot.

As an alternative, consider this 3-bedroom, one-bath home in East Houston that is 902 square feet and sits on a 8,265-square-foot lot. At $108,000, it is less than $120 per square foot.

If 770 square feet isn’t going to do it for you and you really do have $350,000 to spend, how about this beautiful 4-bedroom, 3-1/2-bath, 3,458-square-foot home in Humble, a suburb just north of Houston? Sitting on a 9,000-square-foot lot that is just steps away from Lake Houston, the owners are asking $349,000, or $101 per square foot.

Or perhaps you don’t mind living in a smaller house, but like the idea of getting away to a lake now and then. If so, buy a smaller home in Houston for $100,000 or so and then also buy this home on Lake Tristan, which is about two hours from downtown Houston–perfect for weekend getaways.

The house is 716-square-feet with two bedrooms and two baths and has its own dock on the lake, as shown above. While it looks like the gazebo over that dock could use a little work, the house itself is in great shape and being offered for just $99,500, or $139 per square foot. This plus either of the less expensive home in Houston would cost far less than the least expensive home suggested by the P-I.

The Post-Intelligencer has one more suggestion, this condominium that has been carved out of what looks like a remodeled apartment building in the popular Capitol Hill neighborhood. It has hardwood and tile floors, and it includes a free exercise program: since it is on the top floor, you get to do stair climbs every day. The 1-bedroom, 1-bath condo is just 499 square feet, so you won’t have to do a lot of housekeeping, and it comes with a parking space–for your bicycle. The price is only $285,000 ($571 per square foot), plus annual maintenance fees of $356.

If you like the idea of a condominium near downtown, let me suggest this beautiful loft in Houston’s Eado (east of downtown) neighborhood, which claims to be the “Art & Soul of the City.” At 1,449 square feet, plus carport parking that’s actually big enough for your car, the two-bedroom, two-bath loft is nearly three times as big as the one on Capitol Hill. The kitchen features granite and stainless steel while the bathroom is also granite. Maintenance fees are slightly higher at $403 per year, but that’s more than offset by the lower price of $249,500 ($172 per square foot).

The good news is that Seattle Millennials don’t have to move to Houston to find affordable housing. All they have to do is convince the Washington legislature to repeal the state’s growth-management law and King County to repeal its growth-management plan and urban-growth boundary. Once that is done, Seattle prices will soon be as affordable as Houston’s.

Puget Sound Millennials who don’t want to wait the millennium or so that it will take for that to happen but who just have to live near the mountains might consider Boise, Colorado Springs, or another Rocky Mountain location. According to Coldwell Banker, a 4-bedroom, 2-bath, 2,200-square-foot home in Houston costs about $274,000, while in Seattle it is $726,000. The same-sized home in Boise would be $273,000; Colorado Springs is $252,000; and Logan, Utah is $188,000. For about the price of the 770-square-foot house in Seattle, you could buy a $179,000 home that is three times that large in Casa Grande, Arizona and another in Great Falls, Montana, and enjoy Montana winters and Arizona summers, or, if you prefer, the other way around.

As Donald Trump doubled down on his anti-immigration message in last night’s debate, Republican candidates for Senate across the country are not adopting his lines. In fact, they are overwhelmingly going the other way, rejecting mass deportation and endorsing legal immigration and various forms of legalization for those immigrants illegally in the United States. Here are what the candidates in the tightest races are saying:

1. Arizona – John McCain

It comes as little surprise that Sen. McCain, a longtime proponent of immigration reform and coauthor of the Senate 2013 reform bill, should be running on an openly pro-immigrant platform. He touted his accomplishment at his Senate debate last week. “I was able to get immigration reform through the United States Senate,” he said. “That is the very big difference between having working groups and talking about it and legislative accomplishment, and I promise you that the Dreamers were part of immigration reform.”

2. Florida – Marco Rubio

Sen. Rubio also coauthored the 2013 reform bill that passed the Senate. Although he has backed away from that approach, he continued to take a pro-immigration position at his debate. “I personally know people, children included, who are in this country out of status, illegally brought here at a very young age, and I see the sadness that they’re going through. I want to fix the problem,” he said. “The second step would be to modernize our legal immigration system so that it’s not as bureaucratic, and it works better. … Republicans would support doing something very reasonable with people that are not criminals, that have been here a long time.”

3. Illinois – Mark Kirk

Sen. Kirk who voted for the 2013 reform bill defended his pro-immigrant position during his campaign. In a campaign ad in Spanish, he said, “When Donald Trump says bad things about immigrants, I have spoken out against him. I don’t support Trump. I’ve worked with Republicans and Democrats to reduce gang violence in Chicago. And I support immigration reform so families can stay together.”

4. Indiana – Todd Young

Rep. Young has previously endorsed a form of legal status for the unauthorized immigrants in the country. In his race, he appears to have backed off this position a bit, while still taking a much more pro-immigrant position than Trump. “Immigration should be attractive to Americans so long as immigrants come to our country to contribute to our economy and society. I strongly support legal immigration,” he said in response to questions from a local news outlet. “I would consider proposals which require those who have entered the U.S. illegally to apply for their visas from their home countries and not from within the US…. Congress should work to find a rational middle ground between granting an automatic path to citizenship for every illegal immigrant and a program of mass deportation.”

5. Nevada – Joe Heck

Congressman Heck supported a form of legalization during the 2013 immigration reform debate and has maintained his pro-immigration stance in his current race for Senate. “When someone goes through the legal system,” he said at his debate, “they shouldn’t have to wait ten to twelve years to bring their spouse or family over.  Let’s develop a robust guest worker program…. Dreamers… should get a path to citizenship…. I have never talked about deportation, and I believe that when we talk about the 11 to 12 million undocumented, outside of the dreamers, those that have a criminal past should be deported. However, those who have been working should be given some kind of path to legal status.”

 6. New Hampshire – Kelly Ayotte

Sen. Ayotte also voted for the reform bill in 2013 and has continued to tout her record during her race. “I supported the bipartisan immigration bill in the Senate because I want to solve this problem,” she said at her debate last month. “For the people who want to be part of this country to work… have a better legal system that is fair…. Sometimes I take some heat because of this from my own party, but I’m for solving this.” 

7. North Carolina – Richard Burr

Sen. Richard Burr voted against the Senate immigration reform bill in 2013, but in this election, he has endorsed expanding legal immigration and giving temporary visas (which may or may not be renewable) to unauthorized immigrants. “Immigration reform… starts with fixing the legal system,” he said at his Senate debate last week. “Individuals who haven’t committed a crime in this country should have a legal status that’s temporary.”

8. Ohio – Rob Portman

Sen. Portman also voted against the Senate bill in 2013 due to enforcement concerns, but he has also favored a form of legalization and an expansion of legal immigration at the time. “We do need to do something with people who are here, who are living in the shadows. It’s wrong,” he said at the Senate debate this week. “We’re a country of immigrants. For those who are here, who have roots in the community, and are willing to come forward, pay a fine, and pay any back taxes – and if they have any criminal record of course they should be deported – but the others should have a path to legalization…. We ought to continue to bring refugees and immigrants who enrich our country.”

9. Pennsylvania – Pat Toomey

Sen. Toomey voted against the reform bill in 2013, but is a long-time proponent of expanding legal immigration. In this race, he appears to have maintained a broadly pro-immigration stance and rejected mass deportation, while staying vague on how he’d keep immigrants here. According to CBS Pittsburgh’s voter guide, “Toomey supports a guest worker program and increasing spending on border security. Toomey says Donald Trump’s proposal to build a wall along the U.S.-Mexico border is simplistic and says Trump’s plan to deport every immigrant living illegally in the United States is not realistic.”

10. Wisconsin – Ron Johnson

Sen. Johnson who voted against the 2013 bill but has favored giving work permits to unauthorized immigrants since 2013 continued to advocate for this approach during his race. “My concept of a border security bill would have a robust guest worker program pretty well governed by the states. They can set the number of people,” he said at his debate. “My guest worker program would actually address the people in this country, in Wisconsin milking cows…. Until you secure the border, you’re not going to have the public willingness to accept some kind of legalization, and I’m happy to do that. Once we secure the border, we will treat the people… with real humanity.”

Other Members

Roy Blunt of Missouri appears to be the only candidate in a close race that had virtually nothing positive to say about immigration in his recent debate. For members in less competitive races, it was harder to get details on their views. There are eight other incumbents running for reelection this year who voted against the 2013 reform bill and have not—as far as I could tell—adopted a pro-legalization stance for unauthorized immigrants, although that doesn’t mean they are anti-legal immigration.

On the other side, Sens. Lisa Murkowski in Alaska and John Hoeven of North Dakota voted for the 2013 bill, and Sens. James Lankford of Oklahoma and Rand Paul of Kentucky have advocated for legalization since 2013, and Sen. Paul has done so even during his presidential run this year. Chris Vance, the GOP candidate in Washington, also touts support for immigration reform on his website.

Overall, most serious GOP candidates are taking much more pro-immigration positions in the 2016 election despite the rise of Trump. As I explained during the week in which Trump considered reversing his immigration stance, this could be because Trump lost the argument with voters, even with Republican voters, a majority of whom favor legalization over deportation.

This weekend, I sat down with Senator Mike Lee (R-UT) for the Cato Daily Podcast. We discussed executive power, criminal justice reform, the Electoral College and this strange, disappointing election year. Here’s a portion of our discussion:

Caleb Brown: President Obama has said he’s concerned, and I have a bit of a hard time taking some of what he says seriously, he’s concerned about leaving a loaded gun around in the White House for the next President, which is, it’s almost comical.

Senator Mike Lee: That’s wonderful. If that is a deathbed repentance, it’s better than no repentance at all. I would like to see what he means by that. I hope he means the same thing that you or I would mean if we made that kind of a statement, which people like you and I do, say things like that all the time. Look, this President has, in fact, taken a lot of steps in the direction of consolidating power in the Executive Branch. And this has been one of the consistent refrains that you’ve heard from some members of Congress. One of the consistent themes that I’ve tried to follow, is pointing out to Republicans and Democrats alike, in both Houses of Congress, look, regardless of how you feel about this President’s policy, regardless of how you feel about this President’s political orientation, this is a bad practice. This is something that ought to scare the daylights out of any Republican or any Democrat or Libertarian or person of any other political stripe, because this is not American. This is not how we do things.

We don’t live in a kind of government where Presidents can appropriately say if Congress won’t act, I will. That’s kind of scary. Scary because of what it says about the consolidation of power in the minds of the chief executive, in the minds of the American public as far as they regard the executive, it’s also scary for the simple reason that in many respects the law allows them to do precisely that. Because we’ve got so much buildup from so many decades of broad, amorphous, quasi lawmaking, where we basically say we shall have good law in area X, and we hereby delegate to department or agency Y the power to make good law in area X. Well guess who controls department Y? The President, and those he chooses, who normally serve at the pleasure of the President. So, in many respects, Congress has enabled this. Congress has created this monster. And it’s time for Congress to tame the monster once again.

Brown: Is there any appetite to do that this year?

Lee: There is a strong appetite on the part of some members of Congress to do that. I don’t, frankly, sense a lot of appetite from the White House. In fact, aside from this statement which was made very recently and has yet to be followed up by anything substantive that I’m aware of, you don’t ever hear that from the White House. And shockingly, you don’t hear it very much from very many members of Congress. That is starting to change, and I’m going my best to change that, but most members of Congress have become strangely, bizarrely content with allowing for this delegated lawmaking trend to continue. And in fact I wrote a book called Our Lost Constitution, it just came out in paperback, and in Our Lost Constitution I explain that even though our Founding Fathers thought that each branch of government would have a strong, compelling interest to guard jealously its own power, what we see is that in the last few decades the opposite has been true for Congress. Congress has been eager to delegate more and more.

Why? Well, as I explain in Our Lost Constitution, I think it has a lot to do with the fact that the Holy Grail for most politicians, most members of Congress in particular, is to avoid criticism, avoid negative publicity, and take credit for doing good things, avoid credit for doing hard things. And so when we attack a law by saying we shall have good law in area X and let’s delegate the task of deciding what that means to commission Y or agency or department Y, we take credit for what’s good and we avoid criticism for what’s hard. That’s wrong and we’ve got to turn that around.

On the Electoral College …

Brown: Do you believe that presidential electors in the Electoral College are bound by anything except their own conscience?

Lee: No. There are some states that have these faithless elector laws. The constitutionality of them has been called into question and the constitutionality of them has not really been upheld or challenged or tested in court. Basically, electors have some discretion. Now, I think they are honor bound to do what’s right. I don’t think they ought to depart from what they are expected to do for light and transient reasons, but I think one of the reasons why our Founding Fathers put in place the Electoral College was to put an additional layer of protection there in case something really bad was going to happen. That’s how I read it.

Listen to or subscribe to the Cato Daily Podcast.

Wednesday’s Wall Street Journal contains a great page 3 article on how stricter land use regulations are slowing the growth of housing in areas that need it most. Laura Kusisto reports on a developer’s fight to build middle-class housing in downtown San Francisco, but she notes that similar problems can be seen in wealthy communities from New York and Connecticut to San Diego and Portland, Ore. She also cites academic research on the topic:

According to research by Daniel Shoag, an associate professor of public policy at Harvard University, and Peter Ganong, a postdoctoral fellow at the National Bureau of Economic Research, a decadeslong trend in which the income gap between the poorest and richest states steadily closed has been upended by growth in land-use regulations.

Moving to a wealthier area in search of job opportunities has historically been a way to promote economic equality, allowing workers to pursue higher-paying jobs elsewhere. But those wage gains lose their appeal if they are eaten up by higher housing costs. The result: More people stay put and lose out on potential higher incomes.

For on-the-ground reporting, you need newspapers. But you could have read about that paper twice in Cato Institute publications. Regulation magazine editor Peter Van Doren wrote about it in Winter 2013-2014 in his “Working Papers” column on new research (page 78). 

And just two months ago a summary version of the paper appeared in the Research Briefs in Economic Policy series edited by Jeff Miron, director of economic studies. 

I hope state and local policymakers will take note of the findings in this paper.

Stay tuned to the Cato Institute for more ahead-of-the-curve ideas.

Obama administration officials were outraged when Russian and Syrian government planes recently attacked rebel positions in and near the city of Aleppo.  Such raids were a humanitarian atrocity, President Obama charged, when they struck civilian targets.  But Washington had little patience even for assaults directed against military targets.  Those attacks, U.S. officials contended, played into the hands of ISIS by damaging insurgent elements opposed to that extremist group and even creating incentives for moderates to make common cause with ISIS.  The regime of Bashar al-Assad and its Russian allies responded with the assertion that they were not targeting moderates, but were in fact attacking either ISIS units or other “terrorists.

Whatever the merit of Washington’s criticism in that case, it has been severely undermined by the latest action of America’s “loose-cannon” NATO ally, Turkey.  The Turkish military just launched attacks against forces of the YPG, the Kurdish People’s Protection Units, in positions north of Aleppo.  According to Turkish authorities, the raids killed some 200 Kurdish fighters.  Ankara insists that the YPG is affiliated with the outlawed Kurdistan Workers Party (PKK), a violent separatist movement in Turkey itself.  YPG leaders deny such a connection, and Washington continues to regard Kurdish forces as a crucial component of the anti-ISIS coalition.

This latest incident underscores three points.  First, Turkey is an increasingly unreliable ally that pursues its own narrow agenda regardless of Washington’s wishes.  Second, regardless of Ankara’s probable motive, which apparently was to stem growing Kurdish power in both Syria and Turkey, the attack objectively strengthened ISIS by damaging one of its most effective military adversaries.  Third, the Syrian civil war is incredibly complex.  It is not a simple melodrama featuring the evil Assad regime versus noble, freedom-seeking rebels.  The insurgents themselves are extensively fragmented, with agendas ranging from genuine Western-style democracy to Saudi-style Islamic fundamentalism.  Outside parties, especially Russia, Turkey, Iraqi Kurdistan, Iran, and Saudi Arabia, all back certain Syrian factions to advance their own geopolitical objectives. 

To its credit, the Obama administration has refrained from full-scale involvement—a “big footprint” military intervention–in Syria’s civil war.  But U.S. efforts to encourage Assad’s ouster helped create the ongoing tragedy, and even Obama’s “light footprint” strategy has entangled the United States far too deeply in a murky and ultimately unwinnable struggle.   One hopes that the next president will have the wisdom to extricate the United States from this beckoning quagmire and let the Turks, Russians, Saudis, and others deal with the headache of the Syrian civil war.  

In last night’s third and final presidential debate we were treated, finally, to a brief discussion of what should have been a central issue in these debates—the meaning of the Constitution and the role of the Supreme Court under it. Unfortunately, the discussion got off on the wrong foot right from the start when moderator Chris Wallace asked Secretary Clinton, “Where do you want to see the Court take the country?”

It’s not the role of the Court, of course, to take the country anywhere. Its role, rather, is to correctly read the law—constitutional, statutory, or regulatory—and apply it to the cases that come before it, period. Wallace quickly recovered, however, by asking how the Constitution should be interpreted—by reading the Founders words for what they say, or by reading it as a living document to be applied flexibly according to changing circumstances? That’s been the great jurisprudential question since Progressives prevailed on the New Deal Court to follow the second course, resulting in the Leviathan that surrounds us today.

Ever the Progressive, Clinton answered that “the Supreme Court needs to stand on the side of the American people, not on the side of the powerful corporations and the wealthy.” Read our basic legal document as carefully as you wish, you will find no such opposition between the people and the powerful. Clinton’s populist appeal was a prelude, of course, to her attack on the Court’s 2010 Citizens United decision, which upheld the First Amendment right of corporations and labor unions to make independent political expenditures—in that case, let’s remember, the right of a nonprofit corporation to advertise “Hillary: The Movie” in broadcasts within 30 days of the 2008 Democratic primaries. It’s personal.

For his part, Trump rambled, as usual, but when he finally got to the point, he at least called it correctly, promising that the judges he would “appoint” (the president nominates, not appoints; and Trump can hardly promise for others) “will interpret the Constitution the way the Founders wanted it interpreted.” Unfortunately, the discussion that followed—warring arguments over guns and abortion—was more politics than law, as doubtless is to be expected at this point in our constitutional history, when even extended judicial confirmation hearings reflect politics more than law, to say nothing of the Court’s Obamacare opinions, among others. We’re far removed from the Federalist Papers.

Class actions play a vital role in our legal system. These lawsuits are often the only vehicle for injured plaintiffs to receive compensation when a defendant’s wrongs are widely disbursed and it would be impractical for a single individual to sue.

Yet the process of settling these suits is subject to perverse incentives on the part of the lawyers representing the injured parties. Class counsel often will seek the largest portion of the settlement award for themselves—structuring the settlement to maximize attorney fees—at the expense of class members.

Sadly, this sort self-dealing on the part of class counsel is exactly what happened in Blackman v. Gascho. The case centers on a consumer class action filed against Global Fitness Holdings LLC, alleging that the between 2006 and 2012, the company sold gym memberships and incorrectly charged fees pertaining to cancellation, facility maintenance, and personal-training contracts. A group of plaintiffs sued Global Fitness over the fees, and the parties entered into a “claims-made” settlement.

This type of settlement allows the defendant to make a large amount of money “available” to class members, but in order for the members to collect, they must jump through the hoops of correctly filing claims. Because of the low response rate in such settlements, the defendants will end up paying much less than the funds made available. Indeed, of the $8.5 million made available to the class members, Global Fitness only paid $1.6 million—a payout of approximately 10 percent of the settlement funds. Despite this low payout to plaintiffs, class counsel are still paid a certain rate based on the funds that were made available—not the funds that were actually paid out—in some instances giving them attorney fees larger than the class members’ damages award!

The class counsel here were paid $2.4 million, nearly $1 million more than the class members collected. Josh Blackman, also a Cato adjunct scholar, just happened to be one of the class members. He challenged the settlement, arguing that the agreement was giving the class attorneys preferential treatment over the class members who did not collect. The district court approved the settlement, however, and the U.S. Court of Appeals for the Sixth Circuit agreed with the district court by a 2-1 vote.

Cato has now filed an amicus brief urging the Supreme Court to review the case. Federal Rule of Civil Procedure 23(e)(2)—and fundamental tenants of due process—require that a settlement that binds class members be “fair, reasonable, and adequate.” In this case, the Sixth Circuit upheld approval of a settlement that provided zero compensation for over 90 percent of class members, and in the process broke with the Third, Seventh, and Ninth Circuits. 

The Supreme Court will likely decide by the end of the year whether to take up Blackman v. Gascho.

The Saudis have just completed peddling their new $15bn bond issue (with more to come). One thing that’s been swept under the rug is a smoking gun. A smoking gun because it’s an indication of just how much trouble the Kingdom is in.

The most telling sign of the depth of the Saudi welfare state’s troubles is the fact that they switched from the lunar-based, religious Hijri calendar to the western Gregorian calendar on October 1, 2016. The reason for this radical change is simple economics.

The Gregorian calendar has 10.9 more days than the Hijri calendar, meaning that the public sector can cut costs through the dilution of wages—same pay spread over more working days. In another move that touches on sensitive religious matters, the Kingdom has announced that it will increase visa charges for people completing their religious pilgrimage, the Hajj. Even in the Kingdom of Saudi Arabia, economics has trumped religion.

If the Saudis really wanted to embrace a calendar without any religious implications, and one that is superior from a logical, economic point of view, they should adopt a permanent calendar (read: the Hanke-Henry Permanent Calendar). The Hanke-Henry Permanent Calendar (HHPC) provides a comprehensive template for revising the contemporary Gregorian calendar. It adheres to the most basic tenet of a fixed (read: permanent) calendar—each year, each date falls on the same day of the week, and every year begins on Monday, January 1st.

The year is then divided into four three-month quarters. Each month begins on the same day (and date) each year. The first two months of each quarter are made up of 30 days; the third is made up of 31. So, each quarter contains 91 days, resulting in a 364 day year that is comprised of 52 seven-day weeks. This is a vital feature of the HHPC, because, by preserving the seven-day Sabbath cycle, the HHPC avoids the major complaints from ecclesiastical quarters that have doomed all other attempts at calendar reform.

Moreover, the HHPC accounts for the disparity between the necessary length of the HHPC (364 days) and the astronomical calendar (roughly 365.24 days, the duration of one full orbit of the Earth around the Sun) by simply tacking one additional full week to the end of every fifth or sixth year (specifically 2020, 2026, 2032, 2037, 2043, 2048, and so on). This keeps the calendar in line with the seasons — serving the same function as the leap year in the present Gregorian system.

If you wish to determine the day of the week your birthday will fall on forever under the HHPC, just look at the calendar below.

Hillary Clinton says that “we are dramatically underinvesting” in infrastructure and she promises a large increase in federal spending. Donald Trump is promising to spend twice as much as Clinton. Prominent wonks such as Larry Summers are promoting higher spending as well. But more federal spending is the wrong way to go.

To shed light on the issue, let’s look at some data. There is no hard definition of “infrastructure,” but one broad measure is gross fixed investment in the BEA national accounts. 

The figure below shows data from BEA tables 1.5.5 and 5.9.5 on gross investment in 2015. The first thing to note is that private investment at about $3 trillion was six times larger than combined federal, state, and local government nondefense investment of $472 billion. Private investment in pipelines, broadband, refineries, factories, cell towers, and other items greatly exceeds government investment in schools, highways, prisons, and the like.

One implication is that if policymakers want to boost infrastructure spending, they should reduce barriers to private investment. Cutting the corporate income tax rate, for example, would increase net returns to private infrastructure and spur greater investment across many industries.

Let’s drill down on the federal portion of infrastructure investment. The largest piece is investment in intellectual property at $88 billion, which mainly includes research spending by agencies such NIH and NASA. Terence Kealey argues against government research spending, but let’s put that aside for this blog.

The rest of federal investment spending is on structures and equipment, which includes direct federal investment of $32 billion (for items such as post office buildings) and aid to the states of $72 billion (for items such as highways). Note that total state and local investment spending would include the $72 billion plus the $280 billion that state and local governments funded themselves.

Now let’s switch to OMB data, which is more detailed but is measured a bit differently. The table below shows federal spending on “physical capital investment” broken out between direct spending and aid to the states.

I contend that most federal spending on physical infrastructure should be instead funded by state and local governments and the private sector. In the table, I indicate that about three-quarters of federal nondefense investment in 2016 ($92 billion out of $121 billion) should be handed over to the states and private sector.

Why devolve infrastructure funding? Experience shows that federal investments are often misallocated and mismanaged. Decentralized decisionmaking in the states and the marketplace is superior to central planning from Washington. Infrastructure investment has both costs and benefits, and so trade-offs need to be made. Those trade-offs can best be made by local decisionmakers directly responsible for both the financing and spending sides of the investment process.

These themes are explored in essays at Downsizing Government, such as here and here.

Whoever wins the election, we are likely to have a debate on infrastructure next year. I hope that we can get beyond simple cheerleading for more federal spending. Improving America’s infrastructure is about more than spending. It’s about efficiency, innovation, and sound management of investments, and when you consider those factors, a decentralized approach is the best way to go.  

ATLANTA - Support may be building in Congress for another round of military base consolidation. Some believe that leaders will reach agreement with the incoming administration early next year. It’s overdue. The Pentagon says it will have 22 percent excess capacity by 2019. But, of course, for many communities, base closure is a frightening prospect.

Some communities in and around former bases have begun the process of repurposing these properties. At the Association of Defense Communities’ Installation Reuse meeting here in Atlanta, attendees had a chance to visit two such examples: former Army bases Fort Gillem and Fort McPherson. Both have a pathway toward a successful transition to non-defense use since winding up on the 2005 BRAC commission’s cut list, but they have opted for quite different approaches.

Fort Gillem, an Army logistics hub opened in 1941, is now Gillem Logistics Center. It is already home to a 1-million square foot distribution center for Kroger, the popular food retailer. Proximity to a major highway, Interstate 285, proved a key selling point, and enabled Kroger to consolidate operations from five buildings into one. The new facility includes freezers and cold storage for everything from ice cream to fresh cut flowers, and employs about 1000 people. Kroger invested $243 million in the project, part of a 30-year commitment to the property, and they have room to expand.

There are other massive warehouses under construction elsewhere at the former Army base, including an 850,000 square foot facility that is nearing completion. Long-term plans call for 7–8 million square feet of warehouse space, plus another 1 million square feet of mixed-use and retail development. Atlanta boasts some of the lowest real estate costs of any major metropolitan area, and this makes it an attractive location for logistics hubs.

Fort McPherson is located about 11 miles away, northwest of Gillem, and situated between downtown Atlanta and the busy Hartsfield Jackson Airport. The base dates back to the late 19th century, and struggled in the first few years after closure. But it now has a unique and creative future. Tyler Perry, the actor, writer, director, and producer of a string of Hollywood and television hits, paid $30 million for 330 acres at the former site in June last year. His company wasted no time in converting the property. The portion of Tyler Perry Studios now housed in a former army headquarters building includes a variety of sets, everything from hospital rooms to bars to the Oval Office. We weren’t allowed to take pictures, but the Los Angeles Times took readers on a virtual tour here. On our driving tour of the rest of the property, we saw a few single family homes that looked like any typical American subdivision, except that they were built in the span of a few weeks, and can be quickly modified to look like any other typical American neighborhood. There’s a massive yacht perched awkwardly on a rise of land near the entrance to the property. It doesn’t float in real life, but can be made to look like it’s in the middle of the ocean through the magic of movie making. Tyler Perry Studios’ plans for the rest of the sprawling property include sound stages as well as open space. Perry’s forthcoming film “Boo: A Madea Halloween” was filmed at Fort Mac, including in and around the old base’s parade grounds. One of the brick homes featured in the movie, Quarters 10, was the base commander’s home (Colin Powell, among others, once lived there).

A major movie studio could be a big draw for the rest of Fort Mac. The McPherson Implementing Local Redevelopment Authority, more popularly known as the Fort Mac LRA, retains 145 acres of the former base, with frontage along two major thoroughfares, Lee Street and Campbellton Road. They are in negotiations to construct a new facility for a charter school, which could be a key draw for area residents. Brian Hooker, executive director of the Fort Mac LRA, explained to me that there are 250 employees at a Veterans Administration medical clinic and they have plans to expand. The key for future development will be to attract a mix of retail and commercial activity that will make this property a destination for more than movie extra zombies and grips. But the possibilities for this attractive plot of land seem promising. 

Regardless of whether Congress authorizes a round of base closures in the coming year, or pushes it down the road, the issue of over-capacity will be addressed, one way or another. But a base closing can mean businesses opening, if local policymakers and communities let go of the past and embrace the future. Look no further than Fort Gillem and Fort Mac for evidence of that.

A new report from the ACLU and Human Rights Watch details many of the harms associated with the criminalization of drug possession. The most striking finding from the report is that police in the United States arrest more people for marijuana offenses than for all violent crimes combined. The title of the report, “Every 25 Seconds,” refers to how often police arrest someone for drug possession in this country.

The full report can be found here, but other key findings include:

  • More than one out of every nine state-level arrests are for drug possession, amounting to 1.25 million arrests per year.
  • Nearly half of those arrests for marijuana possession.
  • While drug usage rates are roughly the same across racial lines, black adults are more than two-and-a-half times as likely as white adults to be arrested for possession.
  • More than 99% of drug possession convictions were the result of guilty pleas, rather than trial verdicts. The authors of the report describe this as “rendering the right to a jury trial effectively meaningless.”
  • The average bail amount for drug possession defendants was $24,000, meaning that poor defendants typically remained incarcerated while awaiting trial and had a strong incentive to plead guilty even if they believed they were innocent.
  • Defendants often did not understand the multitude of collateral consequences of a drug conviction.

When it comes to actual policy recommendations, the report urges legislators, judges, prosecutors, and police officers to de-emphasize the policing and prosecution of drug possession crimes, effectively calling for decriminalization of drug possession across the board.

While the authors stop short of recommending full legalization, even the decriminalization recommendation would be a positive step. We know this because in 2000, Portugal decriminalized all drugs. Despite predictions from critics that decriminalizing drug use would lead to massive spikes in addiction and prove a disaster, a 2009 Cato study by Glenn Greenwald put that speculation to rest. Decriminalization in Portugal has been a success, and there is no substantial movement today to return the country to prohibition.

Similarly, state experiments with legalized recreational marijuana in the U.S. are proceeding well. And the tide in favor of ending marijuana prohibition continues to grow. Next month, five more states (Arizona, California, Nevada, Maine, and Massachusetts) will vote on whether to legalize marijuana. Those states would join Alaska, Colorado, Oregon, Washington state, and Washington D.C. as jurisdictions that have renounced prohibition for marijuana.

Last month, a U.S. federal judge declared that the “principle casualty” of the war on drugs has been the U.S. Constitution. The ACLU/HRW report sheds new light on the truth of that declaration. It’s well past time to admit the failure of the drug war, allow the police to focus on actual crimes, ease the mounting tensions in over-policed communities, and restore our individual liberty.

I recently wrote a piece about the increase in guest workers and the remarkably consistent level of entries, legal and illegal, of workers and new lawful permanent residents. The main choice the U.S. government faces is whether the migrants who come here are legal or unlawful.  Excluded from my previous blog were J-1 visas for researchers, au pairs, and the like. 

About a third of unauthorized immigrants worked in service jobs in 2012, as well as 28 percent of foreign-born residents who are not naturalized, compared to just 16.7 percent of natives. Au pairs and child care are an important component of these economic sectors so including them is important to understand the shift from unlawful to lawful immigration (Figure 1).  

Figure 1: Guest Worker Visas Issued, Green Cards for New Arrivals, and Gross Illegal Immigrant Inflows


Sources: State Department, Department of Homeland Security, Bureau of Labor Statistics, and Pew.

The biggest decline in unlawful immigration has come from Mexico but the surge in Mexican J-1s by itself cannot possibly explain that. In 1997, 3,633 Mexicans were issued J-1 visas while only 9,044 were issued the same visa in 2015. Regardless, the change in the number of Mexican apprehensions since 1997 explains virtually all of the change in the total number of apprehensions with a correlation coefficient of 0.994. The inclusion of J-1s does not change the conclusion from my previous post. 

Rising wages in Mexican states that sent migrants to the United States, lackluster U.S. economic growth, and increased border security all played a role in shrinking Mexican unauthorized immigration. The increase in border patrol from 1997 to 2015 is closely correlated with the number of new guest worker visas issued to Mexicans and the unemployment rate. The numbers of Mexicans apprehended is negatively correlated with all three—with the number of border patrol agents coming in on top at -0.95, Mexican guest workers at -0.78, and the U.S. unemployment rate at -0.68. The adjusted R-squared for all the variables is 0.86. 

There is an impressive trade-off between the number of Mexican guest workers and apprehensions of them attempting to enter unlawfully (Figure 2). Figure 3 shows the same figures in a more dramatic, less technical graph. Increasing the number of guest workers for Mexicans is also much cheaper than hiring new border patrol agents. 

Figure 2: Guest Worker Visas for Mexicans and Mexican Apprehensions

Sources: State Department and Department of Homeland Security.

Figure 3: Guest Worker Visas for Mexicans and Mexican Apprehensions

Sources: State Department and Department of Homeland Security.

The number of guest worker visas issued to Hondurans, Salvadorans, and Guatemalans has flattened since 2005 while the number of apprehensions of them at the border has more than doubled. Expanding the number of guest worker visas and making more of them available to Central Americans would be a cheap, effective, and economically beneficial way to diminish the flow of unlawful immigrants from those countries and to expand control over the border.  

Guest worker programs do not have to replace every would-be unlawful entrant with a legal work visa. Each visa issued during the Bracero program of the 1950s and 1960s replaced about 3.4 Mexican unauthorized immigrants, on average. Legal migrant workers are preferred by American employers, the migrants themselves, and should be favored by policy makers too. 

On November 2nd, Cato will host a debate over whether libertarians should vote. On the “no” side will be me and my colleague Aaron Ross Powell. On the losing side will be our colleagues Jim Harper and Michael F. Cannon. You should come, that is, of course, unless you’re sensitive to the sight of public executions.

But Jim wants to start the debate early. Yesterday, he criticized the standard economist’s argument for why people (including libertarians) shouldn’t vote. “Given the exceedingly low likelihood that one person’s vote will sway the outcome,” as Jim describes the argument, “the time and effort spent on voting is pure waste.”

This is true under most circumstances: if you’re voting solely to change an election, then your voting is irrational. If you get no pleasure out of voting, if casting a vote gives you no sense of a duty fulfilled, yet you still wake up, stand in line on a cold November morning, and cast your vote merely because you want to change the outcome of the election, then you are behaving irrationally.

In nearly every circumstance, your vote doesn’t matter. It won’t change things. Every election that you’ve ever voted in or not voted in would have come out exactly the same if you had done the opposite. This is not an opinion, it is an inescapable mathematical truth.

Jim argues that this is only half the story. What the standard, voting-is-irrational model “really fails to account for is the effect that margins of victory have on the many, many political and social actors that will consume vote information after election day.” This is still wrong, and for the same reasons.

At the risk of creating a more difficult debate opponent on November 2nd, I must inform Jim that he’s consistently equating two fundamentally different concepts: 1) the trivially true idea that voting, en masse, matters; and 2) the idea that a single vote matters. Aaron and I will not be arguing that voting, en masse, doesn’t matter in the sense that it affects the world. Of course it does. And we will not be arguing that margins of victory, which are just an emergent phenomenon of en masse voting, don’t matter. That would be silly. But, under most circumstances, a single vote doesn’t meaningfully contribute to either an electoral victory or to the margin of victory. No winning politician has ever said, “well, I won by 4.000006 percent, but if I won by 4.000007 percent, that would have really been a mandate for action.”  

Finally, I told Jim in an email that I could refute him in a single sentence. Here it is:

A single vote’s contribution to a margin of victory is nearly as infinitesimal as its contribution to a victory, and, if margins of victory have consumable value as “vote information,” then so does voter turnout, so you’re better off staying home in order to marginally contribute to that data point.

Maybe that’s all Jim needed to soothe his troubled soul: a reason to not vote that will make him feel he is contributing to the system. Apparently Jim has a deep-seated need to be a part of a percentage, to be counted by some egg-head political data consultant. So stay home Jim, but do it with gusto rather than apathy. Know that you’re making a marginal contribution to the voter turnout numbers. On November 8th, stand up—or sit down, or sleep in—and get counted!

Come to the debate, or watch it online. It’ll be fun.

Cato scholars pose a few suggested questions ahead of tonight’s final debate between Hillary Clinton and Donald Trump. Enjoy.

(This post is an ad for the upcoming debate: Should Libertarians Vote? It’s sure to rock the world of liberty. Sign up at the link.)

The first and second parts of my “Economics Will Be Our Ruination” series highlighted how putatively neutral economic analysis often subtly embeds non-neutral values. Economists tend to prefer human activity that’s measurable using dollars over non-monetary trade or leisure, for example. An economic model of the Fourth Amendment can easily place group interests ahead of individual rights. In this installment I’ll highlight weaknesses in the practice of economic modeling, using the example of voting.

Creating a theoretical construct to depict common transactions or interactions, then assessing such activity as abstracted, is essential to economics. But it is also a profound weakness of that form of analysis, because failing to model accurately will send one’s economic assessment off the rails.

An example of this is economic assessment of voting. Many economists, both professional and amateur, are ineluctably drawn to modeling voting as a process solely for selecting the officials that will serve in a representative government. Given the exceedingly low likelihood that one person’s vote will sway the outcome, the time and effort spent on voting is pure waste. So economists conclude that voting is irrational.

That model of voting is hugely over-simplified, omitting even down-ballot electoral and initiative races, which somewhat increase the still-small odds of casting a decisive vote. But what the model really fails to account for is the effect that margins of victory have on the many, many political and social actors that will consume vote information after election day. As I wrote a few months ago in a piece called Don’t Not Vote, “Votes are a dazzling roman candle of information supplied to elected officials, their staffs, political parties, journalists, opinion leaders, and future candidates, to name a few. All these witnesses to elections incorporate vote information—not just outcome, but win/loss margins—into their actions and assessments well beyond election and inauguration day.”

Michael Cannon agrees, adding that the custom of voting signals solidarity and commonality of purpose with your neighbors. If you want to have influence with them, “you obey the local customs.”

The upshot of over-simplified economic modeling of the vote is that it causes libertarian economists and economic thinkers to undercut the adoption of libertarian ideas. If libertarians don’t vote their preferences, their relevance is underweighted by all the election observers noted above, and on top of that they alienate themselves from nearby persuadable audiences, remaining odd political and social separatists instead. Thinking different is fun, but if you want to live in a more libertarian society, you might want to go out and vote.

It’s not economists that will be arguing the wrong side of the voting question at our upcoming debate on the topic. It will be philosophers Aaron Ross Powell and Trevor Burrus concocting delightfully amusing but still wrong, ivory-tower reasons why voting is a waste or even a harmful practice. And if present practice is any indication, some debaters are going to be throwing some shade! It should be a good time, followed by adult beverages to “pre-mourn the outcomes of the forthcoming election.” Register now!

The days are long past when a person worked from 9 to 5 at the same company for the entirety of their working lives. The ways people earn money are changing, and understanding these new dynamics is key to developing a policy environment that allows new business models and innovations to thrive. A new survey from the McKinsey Global Institute sheds some welcome light on this issue, and in addition to helping to answer who is in the growing independent workforce, they help explain how and why these people participate.

Researchers surveyed roughly 8,000 people from the United States and some European. They excluded what they call “fissured workers” or the people involved when  companies use vendors or subcontractors to fulfill non-core functions like technical support or security, because these individuals “are expected to keep regular work schedules with little autonomy, and they have a continuous relationship with their employer.”

Focusing on the independent workers who do meet their criteria, their survey estimates that there are 68 million independent workers in the United States alone, accounting for 27 percent of the working-age population. Perhaps unsurprisingly, young people are the demographic group most involved in independent work: they make up almost a quarter of the independent workforce, and this designation applies to more than half of all earners in this age group. Low-income households with income below $25,000 account for more than a fifth of this workforce, and almost half of earners here participate in some form of independent work.

Segmentation of Independent Workers in the United States


Source: McKinsey Global Institute, October 2016.

The largest segments in the U.S. are the casual earners and the free agents accounting for 72 percent of the total, which the McKinsey team dubs as participating “by choice” as opposed to “by necessity.” They enjoy being able to take advantage of the new options in independent work, and might be attracted to the autonomy and flexibility that it offers relative to a traditional job. The “free agents” who choose these non-traditional ways to earn, report higher satisfaction that those who choose traditional jobs on 12 of 14 measures, and are equally satisfied when it comes to income security and benefits like health care. They report being more engaged in work, enjoy having control over hours, and the opportunities for learning, among other aspects. Casual earners who use independent work to supplement their other income also report higher satisfaction compared to people in traditional jobs by choice in things like independence, work atmosphere, and flexibility.

Reported Satisfaction of Independent Earners vs. People in Traditional Work


Source: McKinsey Global Institute, October 2016.

Unlike their peers who are in the independent workforce “by choice,” Reluctants and the Financially Strapped would either prefer finding a traditional job instead or a situation where their other sources of income proved sufficient, so they are in their situation “by necessity.” Even for this group, these independent work options do provide an outlet that can be an important way for them to get by while they explore ways to pursue their preferred path. Compared to people in traditional jobs “by necessity,” these people are less satisfied with income security and level of income, but do express higher satisfaction with flexibility, independence, and work atmosphere. For some of the people in this group, this is a temporary solution to bridge a tumultuous time, as illustrated by the fact that among independent workers 27 percent had such a spell in the preceding year, compared to only 15 percent among traditional workers.

Some of the recent growth in the independent workforce has been the rise of new digital platforms, and the authors suggest developments in that sphere could further transform the market for independent work by allowing for larger scales, richer information signals, and lower barriers to entry for new participants.

We don’t know what the future of work will look like, but we do know it won’t look the same as it did last century. Our public policies were designed to function in the traditional labor market, and many of them are misguided or already have serious flaws. With these new developments, they are also at risk of becoming increasingly out of date.

Recent reports that infants now die at a higher rate in Venezuela than in war-torn Syria were, sadly, unsurprising—the results of socialist economics are predictable. Venezuela’s infant mortality rate has actually been above Syria’s since 2008.


The big picture, fortunately, is happier. The global infant mortality rate has plummeted. Even Syria and Venezuela, despite the impact of war and failed policies, saw improvements up to as recently as last year. From 1960 to 2015, Syria’s infant mortality rate fell by 91% and Venezuela’s by 78%. This year (not reflected in the graph above or below), Syria’s rate rose from 11.1 per 1,000 live births to 15.4, while Venezuela’s shot up from 12.9 to 18.6. Meanwhile, infant mortality rates have continued to fall practically everywhere else, and have declined even faster in countries that enjoy more freedom and stability. Consider Chile.


Chile’s infant mortality rate in 1960 was actually above that of both Venezuela and Syria. It managed to outperform Syria by the mid-1960s, but was still woefully behind its richer northern cousin, Venezuela.  In the early 1970s, Chile’s progress slowed to a crawl as its elite flirted with socialist policies. Once its government abandoned socialism and began economic reforms in the mid-1970s, the pace of progress sped up again, and soon Chile’s infants were safer than Venezuela’s. Today, Chile’s infant mortality rate is similar to that of the United States.

There is a lesson to be learned from these data points: economic policy matters. While Venezuela’s socialism has managed to kill more infants than a full-blown war in Syria, Chile’s incredible success story shows us that by implementing the right policies, humanity can make rapid progress and better protect the youngest, most vulnerable members of society. Today it is hard to believe that infants in Chile were once more likely to die within a year than their contemporaries in Venezuela and Syria.

What about your country? For every 1,000 infants born, how many die and how many live to see their first birthday? Explore the data for yourself, and consider using’s new tool, Your Life in Numbers, to see your country’s progress in infant survival and other areas since you were born.

Nigeria’s President, Muhammadu Buhari, and his government have lost control as Nigeria’s economic crisis sends that African nation into a doom-loop. Everyone, including the President’s wife, Aisha, knows that Nigeria is going down the tubes. But not the International Monetary Fund (IMF). As is often the case, the IMF doesn’t have a clue. The IMF’s October 2016 World Economic Outlook projects Nigerian inflation to average 15.4 percent for 2016.  This number is in sharp contrast to my Johns Hopkins-Cato Institute Troubled Currencies Project’s inflation estimate for Nigeria. We estimate that the year-over-year inflation rate is currently 104.8 percent (see the chart below). 

Why is the IMF so far off base? Because it is doing what it often does: it is taking the Central Bank of Nigeria’s (CBN) official inflation data at face value. That official rate averaged 14.3 percent from January to August of this year. For the IMF forecast to materialize, official annual inflation in Nigeria would need to average 17.6 percent for the September through December period.  What did the latest inflation report from the Central bank of Nigeria show?  According to the CBN, annual inflation was 17.9 percent in September. The IMF’s blind acceptance of the CBN’s data is a big mistake.


Driving Nigeria’s surging inflation is the collapse of its currency, the naira (NGN). Indeed, many of Nigeria’s recent economic troubles are reflected in the rapid depreciation of the naira.  For over a year, the CBN held the official exchange rate at about 200 NGN/USD, with the aid of exchange controls.  During this period, dollar shortages raised their ugly heads and caused foreign investment in Nigeria to deteriorate. The shortages even forced airlines to stop flights into Lagos. Simultaneously, a black market (read: free market) for foreign currency developed and the actual value of the naira deteriorated rapidly (see the chart below).

In June 2016, the CBN introduced a managed “float” and claimed that the resulting NGN/USD rate was a purely market driven exchange rate. After a massive one-day depreciation of the official NGN/USD rate, the naira has traded at about 315 NGN/USD while the black market rate plunged to over 450. The sharp contrast between official and black market rates is evidence that the CBN is spreading disinformation (read: lying) about its embrace of a free market for foreign exchange. 

Reports have emerged claiming that Nigerian businesses cannot access FX from the banks officially tasked with providing it, so they are turning to bureaux de change (BDCs) and black market dealers. On October 16, 2016 the black market rates and the BDC rates were both 460 NGN/USD, and the official rate was 315 NGN/USD.  The CBN brushes off the existence of the black market, claiming these rates don’t reflect the true value of the naira and only account for a small portion of FX transactions.  This is nonsense.  If this were true, stories of businesses struggling simply to access foreign exchange would not be so common.  The CBN’s claim to embrace a purely free market determined Naira is a lie.  Take what the Central Bank of Nigeria says with a grain of salt.


Nigeria is in a doom loop – one that the government and the CBN lie about and the IMF blindly repeats.

Last month, I wrote about a case challenging medical-licensing rules that prevented an innovative health-services company, Teladoc, from using advanced technology to provide care to hard-to-reach patients. The Texas Medical Board, which isn’t supervised by any branch of state government, oversaw the restrictions, which a district court threw out on antitrust grounds. After the board appealed, Cato filed a brief supporting Teladoc. And we weren’t alone; the range of briefing was impressive, particularly for a case that hadn’t yet reached the Supreme Court.

Well, today the Texas attorney general’s office filed an unopposed motion to dismiss the state’s own appeal. That should be the end of this case. Although I’m sure Teladoc and its fellow plaintiffs would’ve loved to finish litigating the appeal and get a favorable Fifth Circuit ruling, it’ll take this win all the way to the economic-liberty bank.

It’s always hard to know what impact an amicus brief has – even when you’re cited, it might be for a tangential point, or indeed to counter your argument – and this case illustrates that lesson: there’s not even a court ruling here, but the quality of amicus briefs certainly contributed to Texas’s decision to abandon the medical board’s appeal.

Congrats to Teladoc, its counsel, and the people of Texas!