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Just before the annual rush to get out of town for the August District Work Period, the Senate Intelligence Committee passed its annual Intelligence Authorization bill by a 14-1 vote. The lone dissenter was Democrat Ron Wyden of Oregon, a recent guest at Cato and arguably the most articulate and well-informed member of Congress on Intelligence Community oversight issues. Almost a month after the vote, Wyden explained to The Hill why he elected to oppose the bill, which includes language aimed at Wikileaks and its founder and leader, Julian Assange:

“My concern is that the use of the novel phrase ‘non-state hostile intelligence service’ may have legal, constitutional, and policy implications, particularly should it be applied to journalists inquiring about secrets,” said Wyden.

“The language in the bill suggesting that the U.S. government has some unstated course of action against ‘non-state hostile intelligence services’ is equally troubling.”

 The specific language in the bill reads as follows:

SEC. 623. SENSE OF CONGRESS ON WIKILEAKS.

It is the sense of Congress that WikiLeaks and the senior leadership of WikiLeaks resemble a non-state hostile intelligence service often abetted by state actors and should be treated as such a service by the United States.

“Sense of Congress” provisions are legislative puffery—they have no legal force or effect. This is a political messaging and propaganda exercise aimed at the press and the Intelligence Community workforce, not a serious assault on Wikileaks or Assange. To claim otherwise trivializes the real threats that actual investigative journalists and their news organizations face from the U.S. government—such as attempted prosecutions for leaks under the Espionage Act or Congressional efforts to eradicate public encryption technologies journalists and their sources use to communicate securely. 

Genuine hostile intelligence services are not passive recipients of purloined secrets that they subsequently publish for all the world to see. Real spy services employ real human beings to actively seek out the secrets of other state-level actors or non-state entities like terrorist organizations, and they do everything possible to keep their successes—and failures—secret, for what should be obvious reasons. Wikileaks may be many things, but the notion that it is a stateless equivalent to the FSB or Mossad is laughable. 

Instead of obsessing about Assange and his organization, the Senate and House Intelligence Committees would do well to focus on real problems and real bad actors inside the American Intelligence Community—especially those who seem so intent on retaliating against IC employees and contractors trying to expose waste, fraud, abuse, or criminal conduct by IC officials. 

The Cato Institute’s Libertarianism.org web site has released a new, online version of The Encyclopedia of Libertarianism.

The Encyclopedia offers “a general guide to the social and political philosophy that today goes by the name of libertarianism,” including several chapters of interest to health policy scholars:

There’s been some talk this week about a few people who once called themselves libertarians and have now turned up in alt-right circles, at the Charlottesville march or elsewhere. As I told the Daily Beast, “People change ideologies all the time. Some libertarians become conservatives, some become welfarist liberals, a few drift into creepy extremes.” And of course it’s not just libertarians. Hillary Clinton says she was a Goldwater Girl, a lot of ex-communists became the original neoconservatives, and Nobel laureates in economics have tended to move toward classical liberalism (libertarianism). But since the topic has come up, let me just agree with Nick Gillespie that “The alt-right—and Trumpism, too, to the extent that it has any coherence—is an explicit rejection of foundational libertarian beliefs in ‘free trade and free migration’ along with experiments in living that make a mess of rigid categories that appeal to racists, sexists, protectionists, and other reactionaries.” And add my own commentary, excerpted from my 2015 book The Libertarian Mind:

The dignity of the individual under libertarianism is a dignity that enhances social well-being. Libertarianism is good not just for individuals but for societies. The positive basis of libertarian social analysis is methodological individualism, the recognition that only individuals act. The ethical or normative basis of libertarianism is respect for the dignity and worth of every (other) individual. This is expressed in the philosopher Immanuel Kant’s dictum that each person is to be treated not merely as a means but as an end in himself.

Of course, as late as Jefferson’s time and beyond, the concept of the individual with full rights did not include all people. Astute observers noted that problem at the time and began to apply the ringing phrases of Locke’s Second Treatise of Government and the Declaration of Independence more fully. The equality and individualism that underlay the emergence of capitalism and republican government naturally led people to start thinking about the rights of women and of slaves, especially African American slaves in the United States. It’s no accident that feminism and abolitionism emerged out of the ferment of the Industrial Revolution and the American and French revolutions. Just as a better understanding of natural rights was developed during the American struggle against specific injustices suffered by the colonies, the feminist and abolitionist Angelina Grimké noted in an 1837 letter to Catherine E. Beecher, “I have found the Anti-Slavery cause to be the high school of morals in our land—the school in which human rights are more fully investigated, and better understood and taught, than in any other.”

The abolitionist movement grew logically out of the Lockean libertarianism of the American Revolution. How could Americans proclaim that “all men are created equal … endowed by their Creator with certain unalienable rights,” without noticing that they themselves were holding other men and women in bondage? They could not, of course, and had they tried, they would have been reminded by people such as the great English scholar Samuel Johnson, who wrote in 1775, “How is it that we hear the loudest yelps for liberty among the drivers of Negroes?” The world’s first antislavery society was founded in Philadelphia that same year. Jefferson himself owned slaves, yet he included a passionate condemnation of slavery in his draft of the Declaration of Independence: “[King George] has waged cruel war against human nature itself, violating its most sacred rights of life and liberty in the persons of a distant people who never offended him.” The Continental Congress deleted that passage, but Americans lived uneasily with the obvious contradiction between their commitment to individual rights and the institution of slavery.

Although they were intimately connected in American history, slavery and racism are not inherently bound together. In the ancient world the act of enslaving another person did not imply his moral or intellectual inferiority; it was just accepted that conquerors could enslave their captives. Greek slaves were often teachers in Roman households, their intellectual eminence acknowledged and exploited.

In any case, racism in one form or another is an age-old problem, but it clearly clashes with the universal ethics of libertarianism and the equal natural rights of all men and women. As Ayn Rand pointed out in her 1963 essay “Racism,”

Racism is the lowest, most crudely primitive form of collectivism. It is the notion of ascribing moral, social or political significance to a man’s genetic lineage … which means, in practice, that a man is to be judged, not by his own character and actions, but by the characters and actions of a collective of ancestors.

In her works Rand emphasized the importance of individual productive achievement to a sense of efficacy and happiness. She argued, “Like every other form of collectivism, racism is a quest for the unearned. It is a quest for automatic knowledge—for an automatic evaluation of men’s characters that bypasses the responsibility of exercising rational or moral judgment—and, above all, a quest for an automatic self-esteem (or pseudo-self-esteem).” That is, some people want to feel good about themselves because they have the same skin color as Leonardo da Vinci or Thomas Edison, rather than because of their individual achievements; and some want to dismiss the achievements of people who are smarter, more productive, more accomplished than themselves, just by uttering a racist epithet.

And as I wrote when a group of newsletters seemed to connect racist ideas to the libertarian movement:

Libertarians should make it clear that the people who wrote those things are not our comrades, not part of our movement, not part of the tradition of John Locke, Adam Smith, John Stuart Mill, William Lloyd Garrison, Frederick Douglass, Ludwig von Mises, F. A. Hayek, Ayn Rand, Milton Friedman, and Robert Nozick. Shame on them.

More on libertarianism, individualism and race – and feminism and gay rights – in The Libertarian Mind.

Accountability to the people is a cornerstone of our republic.  The Constitution provides for the creation of certain offices that may be filled by appointment, but the law has been clear: the line between appointed officers and the electorate may not become too attenuated or else accountability will be lost.

The line between certain administrative judges and the people has reached well past this point.  Administrative law judges (ALJs) are individuals who serve as adjudicators presiding over hearings within federal agencies.  In most cases, they wear long black robes just like judges, and preside over a hearing process that, to a layperson, would appear to be very similar to a trial.  In some agencies, they determine what benefits the government should give to certain person.  But in others they determine the outcome of actions the government has taken against individuals.  They hear witness testimony, determine witness credibility (i.e., whether a witness is lying), decide what evidence can be presented, and ultimately rule on the case and decide the punishment.

And yet these ALJs are not selected either through presidential appointment, as federal judges are, or through election, as many state judges are.  They are not even considered at present to be “officers” under the appointments clause of the Constitution.  Instead, they are deemed mere employees and are hired through a complex process involving both the federal Office of Personnel Management and the heads of the agencies in which they serve. 

It is ludicrous that someone vested with so much power is deemed a mere employee and not an officer.

Today, Cato filed a brief urging the Supreme Court to accept the case of Lucia v. SEC, and to find that the ALJs who preside over cases at the Securities and Exchange Commission are officers.  There are broader questions as to whether ALJs should be used in enforcement actions at all.  But to the extent that they are, they should at least adhere to the basic principles of accountability provided by the appointments clause.

Recently the University of California, Berkeley, took down online lecture and course content that it had offered free to the public, rather than risk liability for not modifying them so as to be conveniently usable by members of the public with hearing, visual, or manual disabilities. Harvard and M.I.T. had already been sued on similar grounds.

Now imagine the Berkeley take-down times 10,000 — a world in which private commercial, educational, and non-profit entities alike have legal incentive to de-publish any web content they do not think bulletproof against claims of lack of ADA accessibility. That’s not just imagining. It’s the world we’re looking at as a number of federal courts, setting aside years-old precedent, have begun to accept plaintiffs’ arguments that the ADA applies broadly to the web. As freelance lawsuits against private defendants proliferate, the choice is plain: either act to stop this trend, or expect widening disruption and takedown of formerly free web content.

In a much noted June case against the Winn-Dixie supermarket chain, a federal court accepted the notion that the store could be sued under the ADA because its website was a “place” of public accommodation, like a brick and mortar store. As Frank Cruz-Alvarez and Rachel Canfield observe in a Washington Legal Foundation paper, “the court found that the website was ‘heavily integrated’ and a ‘gateway’ to the physical stores, notwithstanding that the website limits customer participation to acquiring in-store coupons, refilling existing prescriptions for in-store pick-up, and utilizing a store locator function.” Since then federal courts have ruled favorably on ADA-for-the-web claims in more than one other case, including a decision by Judge Jack Weinstein of the Eastern District of New York in a case against Blick Art Materials.

I’ve been warning for a long time that web accessibility has the potential to be one of the most damaging and onerous regulatory initiatives in memory. It’s true that with courts split on the issue there is a chance that at some point the U.S. Supreme Court will take a case allowing to resolve the uncertainty and — if we are lucky — uphold earlier precedents such as that in a 2002 case in which a court dismissed a lawsuit against Southwest Airlines. In the mean time, entrepreneurial lawyers have been filing hundreds of lawsuits against local and national businesses over their websites, many of which settle for money out of court, and on the current momentum will soon be suing thousands more. Millions of existing web presences are uncompliant and easy targets for litigation. The real answer is for Congress to step in.

Robert Rector of the Heritage Foundation recently argued that the RAISE Act, a bill introduced by Senators Cotton (R-AR) and Perdue (R-GA), would save taxpayers billions by reducing lower-skilled immigration.  Below I will argue that the RAISE Act does no such thing mainly because it does not actually increase skilled immigration, does not much alter the current education level of immigrants in the United States, and would result in removing at least 500,000 H-1B visas within a year of passage.  Using the National Academy of Science (NAS) fiscal estimates, the RAISE Act is more likely to increase deficits over the next 75 years than to decrease them.

Rector makes two main claims in his post.  The first is that “[b]ased on the National Academy of Sciences’ estimates, the average low-skill immigrant (with a high school degree or less) who enters the country imposes a net present value on taxpayers of negative $142,000.”  A fiscal net present value (NPV) means that each immigrant in this education range would have to deposit $142,000 upon arrival that would earn 3 percent compounded annual interest to cover the full cost of social services that he or she will be expected to consume over the next 75 years.  The second claim is that the RAISE Act could save taxpayers at least $1 trillion by cutting the flow of immigrants with a high school degree or less.  The sections below will analyze these claims by using the National Academy of Sciences’ estimates and information from the Current Population Survey of the U.S. Census (CPS).

The Fiscal Net Present Value of Individual Low-Skilled Immigrants and Their Descendants

An immigrant’s education and age of immigration are the two most relevant characteristics used by the NAS to estimate his fiscal NPV.  The more educated and younger the immigrant is, the more positive his fiscal impact.  Table 8-14 in the NAS shows that age is very important—as almost every fiscal estimate looking at immigrants alone or immigrants plus their descendants has a positive fiscal NPV for those who immigrated between ages 0 and 24.  However, all immigrants have a negative NPV if they entered at age 65 years or older, regardless of education.  There is variation here, of course, as it is more fiscally positive for a high school graduate to immigrate at age 19 than age 17 as it will save taxpayers at least one year of public schooling, but those numbers are not reported in the averages for NAS’ broad age ranges.

Despite Rector’s first claim, the NAS does not have a 75-year fiscal projection that finds a fiscal NPV of -$142,000 per immigrant with a high school degree or below for the local, state, and federal governments.  It is unclear how he calculated that figure based on the NAS findings.   

My analysis uses the total impact results for immigrants and their descendants for the consolidated federal, state, and local governments in NAS table 8-14 that excludes public goods, just as Rector recommends, and adjusts for the age and eventual education of the new immigrants.  The adjusted NAS 8-14 table is displayed here in Tables 1–3.   This exercise is carried out under the same two budget scenarios provided by the Congressional Budget Office (CBO) and an additional unrealistic scenario that assumes that current budgets, benefits, and tax rates will continue with no adjustment despite the looming entitlement crisis.    

Roughly 62 percent of immigrants with less than a high school education are younger than 18.  Tables 1–3 make two adjustments.  First, they conservatively estimate that those under the age of 18 will eventually be as educated as older immigrants who arrived in the same years.  Second, they adjust for the immigrant age of arrival based on 2013-2016 CPS data.  Those two minor adjustments produce an average NPV of -$24,233 per dropout immigrant in the best CBO estimate (Table 1).  Those adjustments mean that an immigrant with only a high school education has an NPV of +$14,988.  According to this calculation, the fiscal NPV for the average immigrant with a high school degree or less is -$9,244—94 percent below Rector’s estimate of -$142,000.

Averaging results over the three different budget scenarios mentioned above barely worsens the outcomes.  The average fiscal NPV of an individual immigrant falls to -$27,700 for dropouts and +$7,275 for high school-only graduates.  The average fiscal NPV for dropouts and high school graduates across these three budget scenarios is -$20,426—86 percent below Rector’s estimate. 

Table 1

NPV Fiscal Impact on Federal, State, and Local Government, CBO Long-Term Budget Outlook, by Age and Eventual Education at Arrival.

 Total

0-24

25-64

65+

Total

$2,975

-$23,444

-$3,764

-$24,233

HS

$20,700

-$4,820

-$892

$14,988

SomCol

$32,755

$11,481

-$665

$43,571

BA

$45,749

$80,142

-$854

$125,038

>BA

$24,508

$116,256

-$157

$140,607

Total

$126,687

$179,615

-$6,332

$299,971

          Taxes

0-24

25-64

65+

Total

$66,131

$35,426

$557

$102,114

HS

$81,589

$54,511

$180

$136,280

SomCol

$89,524

$48,189

$172

$137,885

BA

$107,117

$155,514

$283

$262,914

>BA

$59,787

$169,004

$122

$228,913

Total

$404,148

$462,645

$1,313

$868,106

          Benefits

0-24

25-64

65+

Total

$63,156

$58,870

$4,321

$126,346

HS

$60,975

$59,331

$1,072

$121,378

SomCol

$56,851

$36,636

$832

$94,319

BA

$61,461

$75,372

$1,136

$137,969

>BA

$35,224

$52,631

$281

$88,135

Total

$277,667

$282,840

$7,642

$568,148

Sources: NAS Table 8-14, Current Population Survey, Author’s Calculations.

 

Table 2

NPV Fiscal Impact on Federal, State, and Local Governments, CBO Long-Term Budget Outlook with Deficit Reduction, by Age and Eventual Education at Arrival.

 Total

0-24

25-64

65+

Total

$4,760

-$22,089

-$3,720

-$21,049

HS

$22,779

-$3,213

-$881

$18,685

SomCol

$34,879

$12,724

-$648

$46,955

BA

$48,244

$83,482

-$838

$130,888

>BA

$25,937

$119,648

-$152

$145,432

Total

$136,599

$190,550

-$6,239

$320,911

          Taxes

0-24

25-64

65+

Total

$67,236

$35,947

$557

$103,740

HS

$83,062

$55,200

$180

$138,441

SomCol

$91,158

$48,847

$172

$140,177

BA

$109,151

$157,740

$283

$267,174

>BA

$60,886

$171,577

$124

$232,587

Total

$411,492

$469,312

$1,314

$882,118

          Benefits

0-24

25-64

65+

Total

$62,476

$57,932

$4,277

$124,685

HS

$60,369

$58,413

$1,061

$119,843

SomCol

$56,279

$36,124

$824

$93,227

BA

$60,814

$74,259

$1,126

$136,198

>BA

$34,949

$51,929

$276

$87,154

Total

$274,887

$278,657

$7,563

$561,107

Sources: NAS Table 8-14, Current Population Survey, Author’s Calculations.

 

Table 3

NPV Fiscal Impact on Federal, State, and Local Government, No Budget Adjustment, by Age and Eventual Education at Arrival.

 Total

0-24

25-64

65+

Total

-$10,030

-$24,069

-$3,720

-$37,819

HS

$1,126

-$12,050

-$925

-$11,849

SomCol

$9,557

$2,559

-$699

$11,417

BA

$15,897

$45,001

-$944

$59,953

>BA

$7,693

$73,333

-$188

$80,837

Total

$24,242

$84,774

-$6,477

$102,539

          Taxes

0-24

25-64

65+

Total

$43,690

$26,882

$542

$71,115

HS

$53,353

$40,396

$163

$93,912

SomCol

$58,485

$35,027

$150

$93,662

BA

$68,947

$111,945

$251

$181,142

>BA

$38,081

$119,882

$100

$158,063

Total

$262,557

$334,131

$1,206

$597,895

          Benefits

0-24

25-64

65+

Total

$53,636

$50,951

$4,262

$108,849

HS

$52,227

$52,561

$1,088

$105,876

SomCol

$48,928

$32,467

$849

$82,245

BA

$53,050

$66,944

$1,195

$121,190

>BA

$30,333

$46,432

$290

$77,055

Total

$238,174

$249,356

$7,685

$495,215

Sources: NAS Table 8-14, Current Population Survey, Author’s Calculations.

 

Cut Benefits for Immigrants

Robert Rector is famous for his work on America’s bloated means-tested welfare state.  Although the benefits sections in Tables 1–3 include more than welfare, a mere 10 percent cut in the NPV of benefits for only immigrants (not for their descendants) slashes the average fiscal NPV for immigrant dropouts in Table 1 by 52 percent and increases the surplus by 80 percent for high school-only graduates.  This 10 percent cut in the NPV of immigrant benefits adjusts the average fiscal NPV for each dropout and high school-only graduate is +$15,441—a whopping $157,441 more positive than Rector’s estimate. 

The average fiscal NPV across all three budget scenarios for high school graduates and below when the NPV of immigrant benefits is cut by 10 percent is -$12,197—a mere 9 percent of Rector’s estimate.  That number includes the wildly unrealistic assumption that government spending can continue at its present unsustainable growth rates for the next 75 years.  Reducing government benefits for immigrants, or everybody for that matter has a large and immediate positive fiscal impact on the future flow and the stock of immigrants already living in the United States. 

Fiscal Net Present Value of the Current Immigration System, the RAISE Act, and Increased Legal Immigration

My simple analysis in this blog post misses many details about the RAISE Act. For example, the RAISE Act would have a negative fiscal impact by shrinking the stock of skilled foreign workers by forcing at least 500,000 H-1B workers out of the current green card backlog and out of the country in its second year.  H-1B workers can extend their work permit on an annual basis if they are currently in line for a green card.  Since RAISE would boot them out of the green card line after a year, H-1B workers will be unable to extend their work visas on an annual basis and will be forced to leave.  If they have enough points for a green card then they will have to wait overseas.  Those 500,000 workers have about as many spouses and minor children who are likely to be either highly educated or to become so.  Removing so many skilled workers on H-1B visas would have a large and immediate negative fiscal impact that is not captured in this simple model. 

This section uses the NAS Table 8-14 CBO Long Term Budget Outlook for Immigrants and their descendants to look at the impact on budgets for the combined state, local, and federal governments for a single year of legal green card immigration.  I make the same assumptions as in the above section for looking at the current immigration system, how the flow of immigrants would change under the RAISE Act, and under a hypothetical doubling of immigrants with at least a college degree combined with a 25 percent increase in immigrants with some college education or less.  The last scenario is a skills-boosting legal immigration reform that provides an alternative policy point as a comparison.  In those two scenarios, I assume that any shift in future immigration is proportional to the age ranges that are currently entering so that any percent shift in the number of immigrants under one scenario is applied proportionately across all ages in every other scenario.  This section does not look at the stock of current immigrants as that would remain unchanged under each iteration. 

Some of the following numbers may seem huge but they are actually small in comparison to the 75-year NPV of $320.3 trillion for local, state, and federal budgets, assuming a 1.5 percent growth rate in budgets at a 3 percent discount rate.

Current Immigration Policy

This section assumes a million green cards is the current policy.  Although that number is not set in law, that is about the average over the last several years.  The fiscal NPV of all immigrants that year is +$299.9 billion (Table 4).   

Table 4

Current Immigration System, One Year, NPV Fiscal Impact on Federal, State, and Local Government, CBO Long-Term Budget Outlook, by Age and Eventual Education at Arrival.

Age

0-24

25-64

>65

Total

$2,975,031,678

-$23,443,874,882

-$3,763,992,049

-$24,232,835,254

HS

$20,700,441,632

-$4,819,960,247

-$892,143,530

$14,988,337,855

SomCol

$32,754,803,413

$11,480,594,204

-$664,818,496

$43,570,579,122

BA

$45,748,978,458

$80,142,274,296

-$853,645,779

$125,037,606,975

>BA

$24,508,107,780

$116,256,093,734

-$156,920,180

$140,607,281,334

Total

$126,687,362,960

$179,615,127,105

-$6,331,520,033

$299,970,970,031

Sources: NAS Table 8-14, Current Population Survey, Author’s Calculations.

 

RAISE Act

For future annual flows under the RAISE Act, I assume a proportional 50 percent increase in immigrants with at least a college education and a corresponding drop in those with a high school degree and below.  Even with that, the number of new immigrants with at least a college education under RAISE would be more than 100,000 below what it is under the current system.  Thus, the annual fiscal NPV for the RAISE Act is +$222.9 billion—$77.1 billion below the current system (Table 5).  Any fiscal gains from decreasing the low-skilled immigrant flow would be overwhelmed by fiscal losses from the RAISE Act’s indirect decrease in the number of skilled immigrants from cutting family reunification

The RAISE Act’s NPV of these annual flows is +$6.7 trillion over the next 75-years discounted at 3 percent—a staggering $2.3 trillion below the current system’s 75-year fiscal NPV of just over +$9 trillion. 

Table 5

RAISE Act, One Year, NPV Fiscal Impact on Federal, State, and Local Government, CBO Long-Term Budget Outlook, by Age and Eventual Education at Arrival.

Age

0-24

25-64

>65

Total

$678,821,775

-$2,777,487,185

-$1,539,203,892

-$3,637,869,301

HS

$7,066,903,686

-$1,181,922,795

-$381,734,491

$5,503,246,400

SomCol

$16,377,401,706

$5,740,297,102

-$332,409,248

$21,785,289,561

BA

$34,311,733,843

$60,106,705,722

-$640,234,334

$93,778,205,231

>BA

$18,381,080,835

$87,192,070,300

-$117,690,135

$105,455,461,000

Total

$76,815,941,846

$149,079,663,145

-$3,011,272,100

$222,884,332,891

Sources: NAS Table 8-14, Current Population Survey, Author’s Calculations.

 

Double Skilled Immigration and 25 Percent Increase in Lower Skilled Immigration

Congress could also decide to increase legal immigration with a heavy emphasis on more skilled workers without cutting family reunification or other immigrant categories.  Using the same tools and assumptions employed above, a 50 percent increase in the number of skilled immigrants and a 25 percent boost in the number of low-skilled immigrants produces the most positive fiscal effects:  A one-year fiscal NPV of $574.2 billion (Table 6).  The fiscal NPV in one year under this scenario is $274 billion above the current system and $351 billion above what would exist under the RAISE Act.

Table 6

Pro-Skill Immigration Increase, One Year, NPV Fiscal Impact on Federal, State, and Local Government, CBO Long-Term Budget Outlook, by Age and Eventual Education at Arrival

Age

0-24

25-64

>65

Total

$3,718,789,597

-$29,304,843,603

-$4,704,990,062

-$30,291,044,068

HS

$25,875,552,040

-$6,024,950,309

-$1,115,179,412

$18,735,422,319

SomCol

$40,943,504,266

$14,350,742,756

-$831,023,120

$54,463,223,902

BA

$91,497,956,915

$160,284,548,593

-$1,707,291,558

$250,075,213,950

>BA

$49,016,215,560

$232,512,187,467

-$313,840,360

$281,214,562,667

Total

$211,052,018,378

$371,817,684,904

-$8,672,324,511

$574,197,378,771

Sources: NAS Table 8-14, Current Population Survey, Author’s Calculations.

 

Wages

Another claim made in Rector’s piece is that “Low-skill immigration reduces the wages of similar U.S.-born workers. An immigration-induced increase in the low-skill labor force of 10 percent can reduce the wages of low-skill non-immigrant labor by 3 to 10 percent.”  The last paper that found that a 10 percent increase in immigration reduces wages by about 10 percent is a working paper by George Borjas and Joan Monras.  Much of that paper is an extension of Borjas’ other work on the wage-effect of the Mariel Boatlift.   

In addition to the finding that Rector reported, Borjas and Monras also found cross-skill complementarities whereby a 10 percent increase in the number of dropout immigrants increased the relative wages of native high school-only graduates by 7 percent.  Since high school graduates earn about $180 per week more than dropouts do and there are about three times more of them (9.4 percent to 28.6 percent), the net wage increase is actually positive—as I re-discovered when re-creating Borjas’ results.  Immigrants have a net positive effect on native-born American wages—especially on Americans with more skills.  Anything more than a back-of-the-envelope fiscal analysis should consider those wage effects.

Conclusion

The RAISE Act will increase the deficit relative to current immigration policy when updated CPS data on new arrivals are applied to the findings of the National Academy of Sciences.  A doubling of skilled immigrants, even if it is accompanied by a modest 25 percent increase in the flow of lower-skilled immigrants, almost doubles the fiscal benefit.  Small cuts in benefits received by immigrants increase the fiscal benefits by large amounts.  

The federal government faces a severe budget crunch in the near future due to the cash shortfalls in Social Security and Medicare.  Immigration has increased net-revenues but not by nearly enough to offset the cost of the looming entitlement crisis.  Tinkering with immigration flows is not a serious way to address government debt as only fiscal reforms to means-tested welfare schemes, entitlement programs, and other government expenditures can do that.  The RAISE Act would worsen the federal government’s fiscal position even without considering how removing 500,000 skilled immigrant workers on H-1B visas within two years of enactment would affect revenues. 

Republicans control both Houses of Congress and the Presidency.  If they are serious about reducing the budget deficit then they need to tackle spending head on rather than playing around with the future flow of foreign workers through complex RAISE Act-like schemes that will actually make things worse.  Furthermore, it is more likely that Congress will be able to reduce these benefits than pass the RAISE Act.  Conservatives should jump at the opportunity to use immigration as a reason to cut the welfare state rather than using welfare as a reason to cut immigration.  

From The American Spirit, Simon & Shuster, 2017:

Why do some men reach for the stars and so many others never even look up? Thomas Jefferson reached for the stars.

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness, –That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed…”

Never, never anywhere, had there been a government instituted on the consent of the governed.

Was Jefferson including women with the words “men” and “mankind”?  Possibly he was.  Nobody knows.  Was he thinking of black Americans when he declared all men are created equal?  Ideally, yes, I think.  Practically, no.  He was an eighteenth-century Virginia planter, it must be remembered, as the slave quarters along Mulberry Row… attest. He was an exceedingly gifted and very great man, but like the others of that exceptional handful of politicians we call the Founding Fathers, he could also be inconsistent, contradictory, human.

And more important than how he interpreted his ringing words, is their sustaining power to inspire, beyond influences of time and place.

“All honor to Jefferson,” wrote Abraham Lincoln on the eve of the Civil War, “[all honor]to the man who, in the concrete pressure of a struggle for national independence by a single people, had the coolness, forecast, and capacity to introduce into a merely revolutionary document, an abstract truth, applicable to all men and all times.”

All honor to Jefferson in our own world now… Indeed, we may judge our own performance in how seriously and what effect we take his teachings to heart.

As part of a yearly tradition, the Cato Institute and Heritage Foundation co-host a debate in which interns of both think tanks debate whether conservatism or libertarianism is a better ideology. Following this year’s debate, the Cato Institute conducted a post-debate survey of attendees to ask who they thought won the debate and what they believe about a variety of public policy and social issues.

The survey finds that millennial conservative and libertarian attendees agree on matters of free speech and religious liberty, the size and scope of government, regulation, health care and what to do about climate change. However, striking differences emerge between the two groups particularly on matters of immigration, the temporary Muslim travel ban, gender pronouns and bathrooms, government’s response to opioid addiction, the death penalty, religious values in government, domestic surveillance, foreign policy, as well as evaluations of the Trump administration.

Full LvCDebate Attendee Survey results found here

Priority Differences and Similarities

Examining conservative and libertarian millennial attendees’ issue priorities offers a quick overview of their similarities and differences. The survey asked attendees how concerned they are about 21 different issues:

 

As the chart shows above, conservative millennials are more concerned about morality in society, abortion, terrorism, national security, drug use, and immigration. Libertarian millennials are more concerned about government domestic surveillance, the criminal justice system, and trade. Top priorities shared by both groups include the size and scope of government, free speech, government spending and debt, the economy, and taxes. Notably, libertarians and conservatives share their lowest priority: few are concerned about income inequality.

Voting in 2016

Although 88% of conservative millennial attendees identify as Republican (and 100% do if you include independent leaners), only 51% voted for Donald Trump in 2016. Nevertheless, this is considerably higher than the 20% of libertarian millennial attendees who voted for Trump. Among both sets of Trump voters, fully 7 in 10 said their vote was against Hillary Clinton rather than a vote for Trump. Thus, President Trump received few enthusiastic votes among this group of politically engaged millennial conservatives and libertarians.

While a majority of conservative attendees ultimately voted for Trump, a majority (55%) of libertarian attendees voted for Libertarian candidate Gary Johnson instead. Few voted for Democratic candidate Hillary Clinton (3%).  In fact, more said they did not vote (19%) than voted for Clinton.

Party Identification

Conservative millennials overwhelmingly (88%) identify as Republicans, while most libertarian attendees identify with the Libertarian Party (42%) or as politically independent (36%).

However, after asking independents and libertarians if they lean toward a political party, 100% of the conservative millennial attendees leaned with the Republican Party. A majority (58%) of libertarian millennial attendees did as well, while a third said they are truly independent, and 6% identified as Democrats.

Evaluations of Trump and Key Political Figures

Although few of the libertarian and conservative millennial attendees were enthusiastic supporters of Trump during the election, 64% of conservative attendees approve of Trump’s job performance. In stark contrast, 80% of libertarian attendees disapprove. Nevertheless, conservative approval is “soft” with only 12% “strongly” approving.  Libertarians are more ardently opposed, with 53% who “strongly disapprove” of President Trump.

Major differences also emerge in evaluations of key political figures. Notably, while 8 in 10 conservative millennial attendees have a favorable opinion of Attorney General Jeff Sessions, 8 in 10 libertarian attendees have an unfavorable view of him. Libertarian aversion likely stems from disagreements about the criminal justice system, policing, and drug policy. Conservative attendees also have favorable views of Kellyanne Conway (62%), former campaign manager and now Counselor to President Trump, while libertarian attendees do not (22%). Conversely, libertarian millennial attendees have positive views of former Gov. Gary Johnson (61%), while conservatives do not (18%). Conservative attendees are also about twice as likely as libertarians to have positive views of Senators Ted Cruz (88% vs 50%) and Marco Rubio (91% vs 48%).

Libertarian and conservative millennial attendees come together in their shared favorable views of Senator Rand Paul, Education Secretary Betsy Devos (likely due to their shared support of school choice), and writer George Will. They also share unfavorable views of Steve Bannon, Milo Yiannopoulos, and Ann Coulter, figures more closely associated with the “alt-right.”

Where Do They Get their News?

Conservative and libertarian millennial attendees share similar news consumption habits, sharing five of their top six news outlets: the Wall Street Journal (85%, 86%), the New York Times (66%, 75%), the Washington Post (68%, 72%), CNN (50%, 48%) and National Review (76%, 61%). However, conservatives are about 30 points more likely to regularly watch Fox (74% vs 45%) and 44 points more likely to read the Federalist (51% vs 36%). Conversely, libertarians are 53 points more likely to read Reason (24% vs 77%).

Culture Wars and Transgender Issues

Conservatives and libertarian millennials are starkly at odds when it comes to what pronouns to use when referring to transgender people.  When referring to a transgender person, 68% of libertarian millennial attendees choose to use the person’s preferred gender pronouns. In contrast, 67% of conservative millennial attendees say they use the pronouns corresponding with the transgender person’s biological sex.

This difference extends to bathroom access as well. Eight in 10 conservative millennials say transgender people should be required to use the restroom corresponding with their biological sex. Conversely, 70% of libertarian millennials say transgender people should be allowed to use the restroom of the gender they identify with.

Most conservatives (81%) disagree that we as a society need to do more to ensure LGBT people feel fully accepted.  Meanwhile, libertarians are split, with 50% believing more should be done for LGBT people to feel accepted and 47% agreeing with conservatives that no more needs to be done.

Despite these differences, conservatives and libertarians agree on religious liberty: 99% of conservative and 87% of libertarian respondents believe that businesses should be allowed to refuse service to same-sex weddings.

Immigration

Conservative and libertarian millennials diverge dramatically on questions of illegal and legal immigration.  While 79% of libertarians support increasing the number of immigrants allowed into the country each year, only 20% of conservatives agree. Instead, most conservatives would prefer to decrease the number (35%) or keep it the same (45%).

When it comes to handling illegal immigration, a majority (52%) of conservative attendees support deporting illegal immigrants and 24% wish to bar them from citizenship. In contrast, 70% of libertarian attendees want to allow illegal immigrants to stay in the US and be able to eventually apply for citizenship.

Finally, 69% of conservatives favor building a wall along the Mexican border, but 90% of libertarians oppose. However, conservatives are less intensely in favor of the wall than libertarians are opposed to it: only 14% of conservatives “strongly favor” while 67% of libertarians “strongly oppose” its construction.

When it comes to passing a temporary ban on Muslims immigrating to the United States, conservative attendees are evenly divided, while 86% of libertarian attendees are opposed.

Opioid Epidemic

While most likely share concerns about overuse of prescription painkillers, conservative and libertarian attendees starkly disagree about what government should do about it. Eight in 10 conservatives agree “government needs to do more” to combat prescription painkiller addiction, but 8 in 10 libertarians disagree that government should take on this role.

Organ Donations

It is currently illegal to buy or sell human organs. However, 92% of libertarian attendees believe such a market should be legal; 8% agree with the status quo. Conservatives are ardently opposed with 72% who think such a market should remain illegal, while 28% would favor legalization.

Foreign Policy and National Security

Conservative and libertarian millennials sharply disagree on questions of foreign policy. Nearly 90% of conservative attendees support either increasing (38%) or maintaining (51%) our military presence around the world, while 84% of libertarians support decreasing this presence.  Moreover, 92% of libertarian respondents support cutting defense spending to help balance the federal budget, while 72% of conservatives oppose such cuts.

Conservative and libertarian attendees also make different trade-offs between national security and privacy. Seven in 10 conservatives say they’d be willing to give up some personal freedom and privacy for the sake of national security. In contrast, 9 in 10 libertarians say they would not be willing to give up more freedom and privacy for security.

In line with such priorities, 60% of conservative attendees approve of government collection of domestic telephone and Internet data, while 92% of libertarians disapprove of this collection.

Health Care

On matters of health care, conservatives and libertarians are often aligned—particularly when it comes to repealing the Affordable Care Act/Obamacare (99%, 95%). However, similar to what’s playing out at the Congressional level, libertarians and conservatives disagree about how to improve the health care system in the country. Three-fourths (76%) of libertarians say the health care system “needs to be completely rebuilt.” However, conservatives are evenly divided with 49% agreeing that the system should be rebuilt, but 46% who think the system “needs major reform but doesn’t need to be completely rebuilt.” Less than 5% of either group think the current system works well and only needs minor changes.

Climate Change

Libertarian and conservative millennial attendees disagree about the causes of climate change but they agree on a solution. Conservatives are more likely to believe climate change is a natural phenomenon, with 54% believing increases in Earth’s temperature are either mostly or entirely due to natural causes. Meanwhile, 62% of libertarians think climate change comes partially, mostly, or entirely from human activity. Despite these different underlying beliefs, 99% of conservative and libertarian attendees agree that technological innovation in the free market will better solve climate change than government regulation.

Criminal Justice

Majorities of conservatives and libertarians reach consensus on several criminal justice issues. Both agree that police departments using military weapons and drones are not necessary for law enforcement purposes. But libertarians (92%) agree more than conservatives (61%). Both groups also favor eliminating mandatory minimum prison sentences for people convicted of selling drugs (64% conservative, 84% libertarian).

However, conservative and libertarian attendees diverge on the death penalty: a majority (56%) of conservatives favor it while a majority (75%) of libertarians oppose it.  Respondents also diverge in their perception of racial equality before the law, with 54% of conservatives saying that African Americans and other minorities “receive equal treatment with whites” in the criminal justice system and 73% of libertarians believing that minorities do not receive equal treatment.

Free Markets and the Welfare State

Despite the variety of policy differences between libertarian and conservative attendees outlined above, the two groups largely agree about economic issues, the benefits of free markets, and trade.

For instance, 100% of both groups say they favor a smaller government providing fewer services and low taxes. Nearly 100% of both oppose raising taxes on wealthy households and also agree that regulation too often does more harm than good. Eight in 10 conservatives and nearly 100% of libertarians believe free trade must be allowed even if domestic industries are hurt by foreign competition.

Religion

Conservative and libertarian millennials have different ideas about the role of religion in society. An overwhelming majority (83%) of libertarian attendees say religious values should not play a more important role in government. But, 62% of conservative attendees disagree and think such values should play a more important role. Conservatives also believe that it’s important for kids to be brought up with religious values. Libertarians are divided, but tend to disagree (56%).

Much of this contrast may stem from differences in religious affiliation and habits.  While 95% of conservative respondents have a religious preference, 38% of libertarians describe themselves as “non-religious.” Moreover, conservative millennial attendees are twice as likely as libertarians to attend church weekly or monthly (80% vs 41%).  A majority (58%) of libertarian respondents either never or rarely attend a religious service.

Who Won the Intern Debate?

Who won the intern debate depends on whom you ask. Among conservative millennial attendees: 53% said the conservative team won and 44% said the libertarian team won. Among libertarian millennial attendees, 94% said the libertarians won while 5% said the conservatives won. Among the moderates, liberals and progressives in the audience, 83% felt the libertarian team won and 12% thought the conservatives won.

Implications

This survey provides a useful snapshot of young politically engaged conservatives and libertarians who are interested enough in politics and public policy to intern in Washington or attend an event for Washington interns. Thus, this data offers an idea of the direction young activists may take public policy as they age and the cleavages that may animate policy debates into the future. 

Full LvCDebate Attendee Survey results found here

David Kemp contributed to this report.

Rumors are swirling that mortgage interest deduction reform is “on the table” for the White House and House Republicans. Is that a good thing or a bad thing? In order to answer that question it is first necessary to determine whether the deduction works as intended.

In our forthcoming chapter on international homeownership in The Routledge Handbook of Housing Policy and Planning, Mark Calabria and I discuss the deduction’s impact on homeownership rates. For years, the mortgage interest deduction has been justified under the pretense that it supports homeownership.

Spoiler alert: empirical evidence suggests it does not. Most studies find the mortgage interest deduction has no impact on homeownership rates, and at least one study finds that eliminating the deduction would boost homeownership.

People generally find this counterintuitive. Why wouldn’t a subsidy for homeowners increase the amount of homes owned? A simple way of thinking about it is that some people are like Person A: they are both financially qualified and want to buy a home. People like Person A will buy a home with or without the subsidy.

On the other hand, some people are like Person B: they are not financially qualified to buy a home or do not desire homeownership. The mortgage interest deduction does not address the reasons Person B is financially unqualified (income instability, weak credit, or poor savings) or the reasons that Person B doesn’t desire homeownership (maintenance, debt, reduced geographic mobility).

A more economically sophisticated way of understanding the mortgage interest deduction is that it reduces the cost of housing for existing homeowners, but increases the price of homeownership for non-homeowners. In other words, any positive impacts on homeownership rates are canceled out by the negative impacts.

So what does the deduction do, if it doesn’t boost homeownership? Research indicates the deduction encourages people to buy larger or more expensive homes. In other words, it motivates homeowners to over-consume housing. Studies indicate that mortgage subsidies distort the allocation of saving and investment across OECD countries and redistribute income “from new entrants in the housing market to insiders.”

What does the path forward look like? House Republicans have a proposal for reform; Paul Ryan’s A Better Way plan suggests doubling the standard deduction and reducing use of the mortgage interest deduction, though not eliminating it. Theoretically, under his plan taxpayers will have more money in their pockets they can use that to pay mortgage interest or something else. 

There are also other possibilities for reform, like capping, limiting, and phasing the benefit out. Great Britain did so over a twenty year period (1974-1994), and far from a housing market catastrophe, Great Britain’s homeownership rates rose during this time period. Although the rise in homeownership was partly attributable to the privatization of public housing stock in the 1980s, it’s still notable that market turmoil was avoided.

Whatever shape reform ultimately takes, Republicans are smart to flag the opportunity. Since the mortgage interest deduction disproportionately benefits high-income blue states while also redistributing to the wealthy, the politics of reform could unite some unlikely rivals. That might be just what tax reform needs.

I’ve begun working on a new book on the gold standard. In the first chapter I plan to discuss the origin of money, as a preliminary to discussing how silver and gold became the world’s dominant commodity monies.

The topic of the origin of money has become controversial in recent years. The dominant view among economists (for good reason), suggested by Adam Smith in the eighteenth century and fleshed out by Carl Menger in the nineteenth, is that money is a market-born institution. Convergence on one or two commodities as the common media of payment emerged from the actions of barterers seeking more effective trading strategies, without anyone aiming at the final result. But this view has lately been challenged by a resurgence of the “state theory of money,” also known as Cartalism, which argues that governments played an essential role in the establishment of money.

Money’s Origins: A Cartalist View

Cartalists have made the valid point that extensive specialization in production could not have preceded the development of commonly accepted media of exchange; rather, greater specialization and wider acceptance of media of exchange must have developed together. But this is a useful expositional caveat rather than a refutation of the Mengerian theory. While a lecturer spelling out the Mengerian theory (and I have done this myself) may ask the listener to imagine a highly specialized producer (say, an asparagus farmer) entering a moneyless market and meeting frustration in attempts to trade directly (say, for a plaid shirt) in order to dramatize the difficulty of direct barter, this should not be taken to suggest that, as a historical matter, societies developed extensive specialization and trade before the emergence of money. Indeed, because it starts from the premise that finding a well-matched trading partner (who “has what you want and wants what you have”) is very difficult, Menger’s theory implies the opposite. As Adam Smith himself emphasized, the division of labor is limited by the extent of the market, and the extent of the market is limited by the ease of trade.

The classic source of the Cartalist view is The State Theory of Money (1924) by the German economist George Friedrich Knapp. Knapp’s rejection of a market evolutionary account, it appears on close inspection, is more a matter of wordplay than of substance. Rather than regarding “money” in the conventional way as any medium of exchange commonly accepted in the market, and so viewing the explanatory challenge as how to account for a particular commodity coming to play that role, Knapp focuses his attention on what he calls public money. The test of a public money, in his words, is that “the money is accepted in payments made to the State’s offices,” namely in tax collections. Knapp (1924, p. 95) declares: “State acceptation delimits the monetary system.”

A market process cannot endow a payment medium with state acceptance; only the sovereign state can do that. Mengerians would reply: True enough, but this does nothing to contradict Menger’s logical evolutionary account of how a commonly accepted means of payment arises without state action.

The anti-Mengerians, in the words of sympathetic economist Charles Goodhart, “are those who argue that the use of currency was based essentially on the power of the issuing authority (Cartalists) — i.e., that currency becomes money primarily because the coins or monetary instruments more widely are struck with the insignia of sovereignty.” The claim that state power or sovereignty is essential or primary for any currency to become a commonly accepted medium of exchange, however, is plainly at odds with the historical fact that privately issued banknotes without sovereign backing were the dominant media of exchange in the eighteenth and nineteenth centuries where they were allowed. And with the fact that privately minted silver and gold coins were widely accepted when and where they were allowed (which was much rarer), as in gold-rush California.

While Knapp (1924, p. 134) recognized the fact of the widespread use of private banknotes, he simply classified them — by definition — as outside the system of public money. A note-issuing private bank and its customers “form, so to speak, a private pay community; the public pay community is the State.”

Why Did Precious Metals Become the Dominant Commodity Monies?

Turning from the question of origins to the question of why silver and gold became the most popular commodity monies, out of a large set of contenders that included salt, cowrie shells, and oxen, one naturally wonders what the Cartalists have to say on the second question. The answer turns out to be: nothing helpful.

Menger’s approach lends itself to a decentralized account of why silver and gold emerged as the most commonly accepted, pushing other candidates to the margins. Put yourself in the position of a trader in a market where there are a variety of commodity exchange media (the market has not yet converged). You sell your produce for a physical payment medium which you then carry around with you until you spend it away in purchases. In this situation it pays you not only to consider which media are most popular with other traders, but also which media involve the least cost or hassle in acquiring, carrying to the next transaction, and trading away.

As textbooks during the nineteenth century emphasized, the precious metals have a number of properties that make them superior media of exchange in such a setting. Compared to other commodities, silver and gold score high on (1) portability or preciousness, allowing you to carry around high purchasing power with little bulk; (2) durability, not spoiling between the date of acquisition and a later date of spending; (3) divisible and fusible, like any metal, allowing pieces to be made in a range of sizes to suit a range of transactions, and allowing small change to be given; (4) stable in value across the seasons, unlike foodstuffs that are cheap right after the harvest but dear six months later. These properties enhance their widespread acceptance.

An important technical advance came with the introduction and spread of coinage in Turkey and Greece during the 7th to 5th centuries BCE. Unlike raw nuggets straight from the mine or variously refined precious-metal bars, coined pieces of silver and gold gained a major additional advantage: they became (5) uniform in size and quality, so that traders need not incur the cost of testing (or the risk of not testing) each piece for its weight and its fineness (percentage of pure silver or gold content). Early coining entrepreneurs could have profited, as later mint masters in California did, by charging for the service of converting raw silver or gold into easier-to-spend uniform coins. With the spread of coinage to India, the Middle East, and Europe, merchants found silver and gold payments easier to make and to accept. The use of bulky commodity monies like shells and salt dwindled. Market convergence on the precious metals in coined form reflected a “survival of the fittest,” namely of the most convenient media for hand-to-hand exchange.

The Cartalist approach, by contrast, doesn’t provide a distinct theory as to how silver and gold came to dominate other commodity monies. In the Cartalist view the sovereigns of various lands must have chosen to preferentially accept silver and gold, of course, but why? It seems reasonable to suppose that sovereigns made the choice because they, like other transactors, were aware that coined pieces of silver and gold score high on the five useful properties listed above. If so, then sovereigns did not alter but merely reinforced the market process already underway.

Leading Cartalists have made other suggestions, however. Anthropologist David Graeber, author of Debt: The First 5000 Years, states in an interview that:

… coinage seems to be invented or at least widely popularized to pay soldiers — more or less simultaneously in China, India, and the Mediterranean, where governments find the easiest way to provision the troops is to issue them standard-issue bits of gold or silver and then demand everyone else in the kingdom give them one of those coins back again.

The economist L. Randall Wray (2000, p. 46) likewise states: “Coins appear to have originated as government ‘pay tokens’ (in Knapp’s colourful phrase), as nothing more than evidence of debt.” Silver and gold coins, in other words, should be understood as state-issued tax-anticipation tokens, their value resting on a state-imposed obligation to pay them back.

This account fails to explain, however, why governments chose bits of gold or silver as the material for these tokens, rather than something cheaper, say bits of iron or copper or paper impressed with sovereign emblems. In the market-evolutionary account, preciousness is advantageous in a medium of exchange by lowering the costs of transporting any given value. In a Cartalist pay-token account, preciousness is disadvantageous — it raises the costs of the fiscal operation — and therefore baffling. Issuing tokens made of something cheaper would accomplish the same end at lower cost to the sovereign. (By the way, note also Graeber’s equivocation “invented or.” Proposing that governments enlarged the acceptance of coins, after the market economy had already begun using them, is categorically different from proposing that governments invented coinage. Menger himself had no problem with the former proposition, but he rejected the latter as an unfounded prejudice.)

Wray offers in passing (p. 46) the conjecture that kings likely minted coins “in the form of precious metal to reduce counterfeiting.” But a sovereign imprint on silver or gold coins is not in any obvious way harder to counterfeit than the same imprint on iron or copper coins. So the bafflement remains.

The notion that full-weight silver and gold coins are mere tokens, deriving their value from the future tax liabilities they discharge, is in clear conflict with the historical experience that large-value silver and gold coins issued by (say) the Spanish national mint circulated well outside the set of Spanish taxpayers. (Small-value silver coins, which sovereigns debased and did treat as overvalued tokens, were another and more Cartalist story.) Large-value coins were used as media of exchange among participants in an international trade network that operated beyond any one nation’s boundaries. They were valued by holders who had no tax obligations to the state of the issuing mint. In the international market, coins issued by various national mints were valued against one another in proportion to their precious metal content, not in proportion to the nominal values at which national tax offices accepted them, where the two values differed. These facts indicate a market source of the moneyness of large-value silver and gold coins, not a tax-acceptance source.

Wray denies that coins were valued according to their precious metal content, as it conflicts with his maintained view that even full-weight precious metal coins were merely tokens. He even denies (p. 47), rather surprisingly, that kings debased their coins, i.e. reduced their precious metallic content below the standard, since “it would make no sense” when they are mere tax-discharging tokens to begin with. The histories of state-issued Roman and medieval silver coins, however, shows repeated debasements.

Once sovereigns monopolized the mints they took advantage of the propaganda value of stamping their own faces on the coins, of course. But as far as we know coins were already in use among merchants before that happened. Very early coins from ancient Lydia, in what is now Turkey, were not inscribed with human faces but rather animal figures. The Ancient History Encyclopedia states: “It appears that many early Lydian coins were minted by merchants as tokens to be used in trade transactions. The Lydian state also minted coins.” Regarding Lydian coins inscribed with the names Walwel and Kalil, the British Museum comments: “It is unclear whether these are names of kings or just rich men who produced the earliest coins.” Regarding a nearly contemporary ancient Greek coin bearing the legend “I am the badge of Phanes,” the Museum comments: “We cannot be certain who this Phanes was, but it seems that he was placing his badge on coins as a guarantee of their quality.”

It is possible, of course, that in surveying the literature I have overlooked a more plausible Cartalist account of why sovereigns chose very expensive materials, silver and gold, for their tax-anticipation tokens. If anyone can point me to such an account, I would be grateful.

[Cross-posted from Alt-M.org]

In 1979, Leslie Gelb and Richard Betts released a book on U.S. involvement in Vietnam, entitled “The Irony of Vietnam: The System Worked.” Unlike most previous treatments of the conflict, Gelb and Betts didn’t argue that the U.S. failure in Vietnam was the result of a poor foreign policymaking process. Nor did they argue that policymakers had been misinformed or misled about the conflict. They didn’t even argue that policymakers were under any illusions about how unlikely success in Vietnam was.

Instead, Gelb and Betts argued that – while the war in Vietnam itself was an abject failure for American foreign policy – the U.S. decision-making system actually functioned as it was meant to throughout the period of increasing U.S. involvement in the war. As they describe:

 “With hindsight, it seems evident that the costs of the strategy of preventing defeat were incalculable. But at the time of the crucial decisions, the costs of accepting defeat appeared to be incalculable. The system in this case coped as democracies usually do: by compromising between extreme choices, satisfying the partisans of neither extreme of opinion within the government but preventing the total alienation of either.”

As the authors show, the central question about American involvement in Vietnam wasn’t why U.S. involvement in Vietnam happened, or why policymakers chose to deepen it over time, but rather why U.S. policymakers considered it vital that Vietnam not be lost to communism in the first place.

At each key decision point, policymakers chose to do the minimum possible to avoid a communist victory. Their basic argument is simple: the U.S. decision-making system was uniquely suited to fiddle with tactical choices while enabling policymakers to avoid hard strategic questions.

Stop me if this sounds familiar.

Donald Trump’s speech on Monday night carried strong echoes of Gelb and Betts’ work, as he recommitted the United States to an open-ended, ill-defined military mission in Afghanistan.

Much has been made of Trump’s flip-flop on Afghanistan policy, shifting from his campaign rhetoric – which promised that the United States would be getting out of the nation-building business – to a policy scarcely different than that pursued by his two predecessors. But it makes sense in the context of Gelb and Betts’ Vietnam argument.

Trump advisors – the ‘generals’ he is so proud of – were able to convince him that all the other Afghanistan options were worse. Even though a continued U.S. commitment in Afghanistan is unlikely to produce success, he agreed to an approach which largely hopes to prevent losses.

Just as policymakers did in Vietnam, Trump is fiddling with tactics without asking the broader strategic questions. To be precise: Is it actually a key U.S. interest today to stabilize Afghanistan and prevent further Taliban gains?

Certainly, it would be better for everyone if Afghanistan were stable, prosperous and democratic. But it is substantially harder to argue that it is a core U.S. interest. The key arguments in support of this proposition – laid out once again in Monday night’s speech – are questionable. 

Indeed, the idea that an Afghanistan without U.S. military presence will result in future terror attacks is so misleading that scholars have described it as the ‘safe haven myth.’ Terror groups operating out of ‘safe havens’ have been responsible for only 1% of the terrorist attacks on the United States; 9/11 is an extreme outlier.

Others focus on past U.S. commitments, arguing that we’ve spent too many lives and too much effort to withdraw now. Yet as behavioral economists would note, this is a sunk-cost fallacy, biasing policymakers to continue existing commitments lest the previous efforts be ‘lost.’

Rather than question how to avoid losing in Afghanistan, policymakers should compare the potential costs of losing to the costs of continuing our commitment.

Unfortunately, while Gelb and Betts’ arguments can help us understand how even good policymaking institutions can result in poor foreign policy outcomes, they offer no real solution for how to short-circuit this process.

In the case of Vietnam, popular discontent with the war ultimately made it so costly for policymakers that they were forced to reconsider their options. In the case of Afghanistan, where an all-volunteer force has replaced a popular draft, the 16-year war is largely invisible to public opinion.

As a result, America’s forever war looks set to continue for a long time. 

Ripping into President Trump on “Morning Joe” last week, historian Jon Meacham invoked FDR: “the presidency is preeminently a place of moral leadership.” When I heard that, I thought, man: if that’s right, then we are well and truly…er, doomed. But is it right?

A lot of people seem to think so, including some conservatives. In his Washington Post column this week, Michael Gerson laments “the sad effects of President Trump’s renunciation of moral leadership on American politics and culture.” And in a piece titled “Conservatives Need to Remember, Presidents Affect Culture,” National Review’s David French writes that “In 1998, Bill Clinton damaged the culture for the sake of preserving his political hide”; now, “a GOP president is inflicting even deeper wounds.” Instead of minimizing President Trump’s morally blinkered response to the murder at the neo-Nazi rally in Charlottesville, French argues, “it’s time for conservatives to remember the cultural power of the presidency” and recapture the moral clarity they had in the Clinton years. 

Back then, French argues, conservatives were right to insist that “adultery and perjury matter.” Fair enough: the latter may even have been reasonable grounds for impeachment, though there were better ones, as the great Nat Hentoff noted at the time. Still, where’s the evidence that Clinton’s transgressions “damaged the culture”?

Remember Bill Bennett’s Index of Leading Cultural Indicators? First published in 1994, it armed conservative Cassandras with charts showing the world going to hell on multiple metrics: marriage, sexual license, abortion, drug use, crime, etc. Then a funny thing happened on the way to the Oughties: in the era of Monica Lewinsky and Gennifer Flowers, most of those trends started heading in the right direction.

Toward the end of ‘90s, when the second edition of the Index was being readied, declinism had become a much tougher sell, leaving Bennett harrumphing that: “conservatives are going to have to face the fact that there is some good news on the landscape.”

Declining divorce rates, lower birth rates for unmarried women, and decreased tolerance for adultery were just a few of the trends complicating the narrative of Clinton-induced cultural rot. Oddly enough, Bill’s extracurricular hijinks didn’t lead Americans to take their marriages less seriously. The number of Americans who believe that “marital infidelity is always wrong” actually went up.

The taboo against adultery, as measured by the answer to that question, began weakening again around 2008. Whatever drove that trend, it couldn’t have been the examples set by George W. Bush and Barack Obama. They were lousy presidents, but worthy enough role models as far as marriage goes. Maybe the “cultural power of the presidency”—for good and for ill—isn’t as vast as French imagines.

How could it be? There’s abundant political science evidence casting doubt on the notion the Bully Pulpit moves the needle much when it comes to public policy. Transforming the nation’s moral landscape by word or example is a harder job by far.

That doesn’t mean the example Trump sets is irrelevant. His rise to power has obviously had what might be called a “cretin mobilization effect,” emboldening some truly vile people, as French himself has experienced firsthand.

However, when public intellectuals frame Trump’s norm violations in religious terms—”sacrilege” by America’s “high priest and chief unifier,” according to Jonathan Haidt—it makes me itch. We don’t need the president to be a “consoler-in-chief,” a “theologian-in-chief,” or any of the various extraconstitutional roles lately proposed for him. This atavistic, quasi-mystical orientation towards government is notably absent from the Federalist, where the president is described as a figure who will have “no particle of spiritual jurisdiction.”

The chief executive officer of the federal government isn’t the Great Helmsman of our culture, but he has, in the corporate jargon, an “outward-facing role.” By default, he’s the head of state in our system, and Americans have a right to demand some minimum standards of conduct. There are remedies for behavior “grossly incompatible with the proper function and purpose of the office.”

But will Trump’s tenure—however long it lasts—result in what French fears: the widespread triumph of “hate, division, and rage”? Here, I’m skeptical. The overwhelming majority of Americans aren’t so far gone as to take their cues about right and wrong from any president—let alone this one. A good thing too, given that, in living memory, presidents have conducted themselves abominably in their personal relationships, lied us into war, and used “the available federal machinery to screw [their] political enemies.” Anyone looking for a personal role model might do better by randomly selecting a professional athlete or reality-show star (some exceptions may apply).

Sure, “presidents affect culture,” but the biggest effect they have is by influencing how we think about the presidency—often in ways they don’t intend. Watergate obviously had an enormous impact on American attitudes toward the office. Nixon’s lawlessness helped puncture the myth of “the implicit infallibility of presidents,” by revealing that the man in the Oval Office could be a petty, paranoid, foul-mouthed little crook.

In a less dramatic fashion, Bill Clinton also helped demystify the presidency. As Judge Posner correctly predicted in his book on the Clinton impeachment, that episode’s “most abiding effect… may be to make it difficult to take Presidents seriously as superior people.” If we needed a refresher course in that lesson, we’re certainly getting one right now.

Last night President Trump informed the nation that he is escalating America’s war in Afghanistan. That means that our longest war will continue for at least four more years, and likely longer. It also means that more Americans will be sent across the globe to fight – and die – in the pursuit of unclear objectives, and in a conflict that is not vital to U.S. national security.

But Trump assured Americans that he had the strategy for “winning.” While specifics about the new strategy are sketchy, it seems to be more of the same, and more of the same will not improve reality in Afghanistan; it may, in fact, make things worse. At this point, one could be forgiven for seeing America’s efforts in Afghanistan as a sign of insanity: doing the same, but expecting different results.

Cato’s Trevor Thrall and Erik Goepner note that Trump’s strategy is “only a slightly more muscular version of the policy he inherited from Obama. …[but] remains a much less forceful version of Obama’s surge.”

They also point out that Trump’s rhetoric, “like that of previous administrations, makes it sound as though this is America’s war to win or lose. …However, the U.S. has very little control over how the Afghan government will govern or how the Afghan security forces will fight. America, therefore, has little power to affect the outcome of Afghanistan’s civil war.” 

In fairness, it’s difficult to envision a strategy that would. But that is an argument to end America’s involvement in Afghanistan’s civil war, not for more of the same. Trump chose the latter, in part, because it is the easier political decision than withdrawal.

Christopher Preble notes that: 

Few presidents are criticized for using military force. More often, they are hit for not intervening often enough. Or trying hard enough. Or long enough. Withdrawal without victory is a particularly odious sin.

Therefore, when Donald Trump was presented with an opportunity to redirect U.S. attention and resources, he ignored both the reasonable and well-considered suggestions to withdraw, as well as the foolish and quixotic proposals. Instead, he chose to kick the can down the road. 

Cato scholars had much more to say following the president’s primetime address to the nation, including several articles detailing the many false assumptions that undergird Trump’s rationale for escalating the war. They also addressed the false promises the president made to the nation.

You can read the articles in full by clicking on the links below:

Trump Goes from Afghanistan War Skeptic to True Believer by Christopher Preble

The Slim Chances That President Trump’s Afghanistan Policy Will Succeed: Let’s Look Honestly at Recent History by Trevor Thrall and Erik Goepner

‘New Strategy,’ Same Results by Trevor Thrall and Erik Goepner

Afghanistan Is President Donald Trump’s War Now: Fighting Without Purpose Or End by Doug Bandow

What links the solar eclipse, Brexit, female labor market decisions and the border adjustment tax? 

Discussion of all these issues seems to confuse or conflate measured economic activity (GDP) with general economic welfare.

Take the eclipse first. On 18th August, NBC News ran a story headlined “Solar Eclipse Will Cost America Almost $700 Million in Lost Productivity.” For starters this is a bizarre headline. Productivity is usually measured as output per worker-hour, so it is unclear why taking a break to watch the sun disappear would affect the amount you produce in the hours you do work.

Most likely the authors really meant total output, or GDP. Even then it is not clear that this need be true. Workers may have become more productive before or afterwards to compensate for their “time off.” They may also have worked longer in other periods to compensate for the break.

But let’s suppose workers all really did take the time off without any compensating effort or hours elsewhere, and as a result total output fell across the US. Would this matter and would it be “bad for the economy”?

The point of free markets is that they allow us as individuals and groups to make decisions to fulfill our own objectives. Clearly, many of us make decisions not to maximize our lifetime productivity or measured output, and thus do nor maximize GDP. Think of the lawyer who decides to change career and become a teacher, or those with marketable skills who decide to use their time for voluntary work or family life.

If in the process of making free decisions we decide to dedicate more time to activities that reflect our own preferences, then we are maximizing our own welfare. Though the measured economy may be marginally smaller as a result of the eclipse, the fact that many individuals decided it was worth their while to take time out to view suggests their lives were enriched by the experience.

The nature of free choice also gets downplayed in the debate about female labor force participation. Often we hear how much of an economic boost there would be if more women worked, or female productivity improved, and certainly this might boost measured GDP and even improve the public finances. But if decisions to spend a period out of the labor force, or else to pursue an occupation with more time for family-related activities, reflects personal preferences (for either sex), then allowing these free decisions raises economic welfare. It doesn’t “hurt the economy.”

Another example of this arose in the debate about the proposed border-adjustment tax. A new paper by Seth Benzell, Laurence Kotlikoff and Guillermo LaGarda modeled the effects of the Republican “Better Way” plan on taxation, and found a significant overall boost to the US capital stock, wages and GDP. Yet by 2100 they found that GDP would actually be lower. Bad news for the US economy, right? No, because (as the authors argue) this would be a reflection of higher wages leading to more people deciding to spend time on leisure. In economic welfare terms, they would still be better off.

Similar reasoning applies in other areas. Several UK economists criticized a report by the Economists for Free Trade group last week for adding the savings from not having to make net contributions to the EU budget to other growth benefits to obtain a total GDP boost. This critique was right as a matter of arithmetic – after all, a £ saving to taxpayers is not the same as the overall effect of that saving on the economy. But undoubtedly a reduction in the burden on UK taxpayers would increase their economic welfare, because they would be free to make more individual decisions about how to spend their money.

All this is not to say that GDP is not, in many cases, a good overall proxy for welfare. Bad policies can both curb reduce GDP and overall economic welfare. Of course, there are other known limitations to its use too including that it includes the production/consumption of goods with negative externalities, leaves out illegal or domestic activity, and often cannot keep up with the improvements in quality of goods.

What the above examples show, however, is that we should be particularly wary when people start talking about how people’s free decisions “hurt the economy.” We value leisure and the ability to fulfill our own desires too.

The past couple years have been rough for free traders in the United States – not only did an avowed protectionist win the White House for the first time in decades, but he did so while claiming that protectionism has been an effective policy throughout the nation’s history.  Even worse, President Trump and his advisers were far from alone in perpetuating and repeating the view that past restrictions on foreign competition were unequivocally successful in achieving their stated policy objectives: decreased imports, increased jobs, industrial revival, opened foreign markets, and American economic prosperity more broadly.

For us trade policy wonks, Trump’s revisionist history – and a lack of a vocal response to it from his political opponents, pundits and journalists – was both surprising and depressing because it seemingly ignored a vast repository of academic analyses of and contemporaneous reporting on the periods and policies in question.  Then again, one could hardly blame most laypeople for not digging into and regurgitating the academic work because at the time there really wasn’t an easily searchable survey of the many failures of American trade protectionism.  Early this year, I set out to change that, and the result is a new paper for Cato out today.  In it we see that the actual scholarship demonstrates how American protectionism—even in the periods most often cited as “successes”— not only imposed immense economic costs on American consumers and the broader economy but also failed to achieve its primary policy aims and fostered political dysfunction along the way.

The paper surveys academic literature from three periods of American history, demarcated by milestones in the evolution of the U.S. and multilateral trading system: (1) from the founding to the U.S. entry into the General Agreement on Tariffs and Trade (GATT) in 1947; (2) from the GATT’s early years to the creation of its successor, the World Trade Organization (WTO), in 1995; and (3) the current WTO era. These surveys show that, contrary to the fashionable rhetoric, American protectionism has repeatedly failed as an economic strategy:

  • Pre-GATT. U.S. history from the Founding through the early 20th century shows protectionism decreasing in effectiveness and increasing in costs for consumers and the economy more broadly. Multiple academic studies of the period between the Civil War and the Great Depression—often argued to be a golden era of American tariffs and industrial prosperity—show protectionism to have inhibited, rather than encouraged, industrial and broader economic growth. Instead, other economic factors—particularly rapid population expansion—drove American growth during this era. The protectionism of this era is also shown to have fostered modern American lobbying and rent seeking and, as a result, to have been closely associated with political corruption. Overall, however, pre–20th century U.S. trade policy provides few real economic lessons for modern policymakers because of the stark social, legal, and economic differences between that period and today.
  • From GATT to WTO. The findings from numerous studies of protectionist measures during the GATT period of general trade liberalization are unequivocal: U.S. protectionism not only produced far higher total economic costs than benefits, but also more often than not failed even to achieve its intended objective, whether that be the rejuvenation of an ailing American industry and its workforce or the opening of new U.S. export markets. In particular, these studies show the high economic costs of U.S. protectionism. For example, studies of specific U.S. import restrictions between 1950 and 1990 found that the measures cost U.S. consumers an average of $620,000 in current dollars per job supposedly saved in the protected industry at issue. By contrast, at the current hourly U.S. manufacturing wage of $20.69, a typical factory worker makes a little over $41,000 per year.

    Studies also found that protectionist measures failed in most cases to prevent further increases in imports or declines in U.S. jobs, finding only one instance—the bicycle industry—in which protectionist measures apparently resuscitated the industry in question. One analysis found that threats of retaliation through section 301 of U.S. trade law, again in the news last week, failed to achieve even partial success more than half the time, with actual retaliation working less than 20 percent of the time. Even the most heralded examples of American protectionist successes during this era—motorcycle safeguards that supposedly saved Harley-Davidson and the U.S.-Japan Semiconductor Trade Agreement—have been revealed to have imposed immense costs on U.S. consumers and companies for very little, if any, actual gains.

    These outcomes would likely be worse if similar policies were implemented today, owing to increased American integration into the global economy, the proliferation of global supply chains, the rise of other economic powers, and the creation of the WTO. Thus, protectionism today would yield even more pain for even less gain.

  • WTO. Following the advent of the World Trade Organization in 1995, American unilateral protectionism retreated—relegated to relatively few trade barriers on politically sensitive goods and services dating back decades and to narrow administrative actions under U.S. “trade remedy” laws, which govern antidumping, countervailing duties, and safeguards. The results of this protectionism, however, were no better than the previous eras and arguably worse given the U.S. participation in the WTO and further integration of the U.S. and global economies. Both created tangible ramifications (i.e., new prospects of retaliation and greater harms to import-dependent U.S. companies) that did not previously exist.

    Macroeconomic studies continue to show that U.S. protectionism imposes significant harms on American consumers and the broader economy. Examinations of trade remedies in specific sectors—steel, high-tech goods, lumber, paper, and tires—show massive consumer costs and the failure to revive the companies seeking protection. U.S. antidumping law has repeatedly been found not only to hurt U.S. consumers and many large American exporters, but also to only rarely improve the state of the protected industry. Instead, what often lies in the wake of protection is bankruptcy for the very firms that lobbied for protection. Other nontariff barriers, such as those on meat labeling, sugar, and maritime shipping, have proven no better and, in many cases, have led to foreign retaliation or the threat thereof.

In recent years, academic work and political commentary have focused on whether the “free trade consensus” view in America may have underestimated the disruptions to the U.S. economy caused by heightened import competition. This discussion, while worthwhile, has spawned troubling suggestions from scholars, pundits, and politicians that the U.S. government should be more willing to experiment again with protectionism to help American workers and the economy, particularly the manufacturing sector. My paper should help disabuse them of such ideas.

With little doubt, the United States has struggled in recent years to adapt to significant economic disruptions, whether due to trade, automation, innovation, or changing consumer tastes. How we should respond to these challenges warrants discussion and consideration of various policy ideas. What should not be up for debate, however, is whether protectionism would help to solve the country’s current problems. History is replete with examples of the failure of American protectionism; unless our policymakers quickly relearn this history, we may be doomed to repeat it.

The paper - “Doomed to Repeat It: The Long History of America’s Protectionist Failures” - is available for download here.

A Maryland statute prohibits ownership of “assault weapons,” the statutory definition of which includes the most popular semi-automatic rifles—one bullet per trigger-pull without reloading—in the country, as well as magazines capable of holding more than 10 cartridges (bullets). Stephen Kolbe, a small business owner, among others, sued to overturn the law. The U.S. Court of Appeals for the Fourth Circuit upheld Maryland’s ban.

The Fourth Circuit extrapolated from a shred of the landmark 2008 District of Columbia v. Heller case, suggesting that weapons “most useful in military service—M-16 rifles and the like” could be banned. From that squib, the court decided that the test for whether or not a class of weapons could be banned was whether it was “like an M-16.” That not only contravened the core of Heller—that all weapons in common lawful civilian use are constitutionally protected—but raised a host of other issues.

Accordingly, Kolbe is now asking the Supreme Court to review his case. Cato, joined by the Second Amendment Foundation, Independence Institute, and National Sheriffs’ Association—a law enforcement organization!—has filed a brief, co-authored by Georgetown law professor Randy Barnett, supporting that petition. We point out that the Maryland law classifies the common semi-automatic firearms used by police officers as “weapons of war,” alienating officers from their communities and undermining policing by consent.

Where for generations Americans needed look no further than the belt of their local deputies for guidance in selecting a defensive firearm, Maryland’s restrictions prohibit those same arms to their citizens. Those weapons selected by law enforcement specifically for their reliability, accuracy, and overall utility as defensive weapons would be unavailable for the lawful purpose of self-defense. Maryland considers them weapons of war, best suited for inflicting mass carnage.

At a time and place where tensions between police and policed are a sensitive issue, the law sets up a framework where the people of their state could be fired upon by police with what the state restricts as “weapons of war,” a principle that only serves to drive a wedge between police and citizenry.

Further, arms falling within the scope of Maryland’s ban were not only in common use at the time of the law’s enactment, but have existed since the 16th century. By the time of the Constitution’s ratification, the state of the art in shoulder arms was a 22-shot repeater. Thus, it cannot be said that repeating arms were beyond the contemplation of the Second Amendment. Moreover, by the time the Fourteenth Amendment was enacted—through which the right to keep and bear arms is enforceable in the states—repeating arms holding 11 or more cartridges were available and in common use worldwide.

Today, the majority of firearms sold in the United States for self-defense are prohibited in Maryland. The Fourth Circuit erred in upholding this denial of Marylanders’ constitutionally protected arms. This law was particularly egregious in its outright banning of common semi-automatic arms—and there exist no similar laws in other jurisdictions which are longstanding or traditional.

Maryland’s law is unconstitutional on its face and the Fourth Circuit’s reasoning in upholding it lacks legal or historical foundation. The Supreme Court should take up Kolbe v. Hogan when it returns from its summer recess.

Over the past week and in response to the recent clash in Charlottesville, Virginia between neo-Nazi/white supremacist fanatics and those opposed to them, some elements on the American political left are now clamoring for the Trump administration to restart a long-ago discredited Department of Homeland Security (DHS) program known as “Countering Violent Extremism” (CVE). This action alert from CREDO Mobile is representative:

DHS established the Counter Violent Extremism (CVE) program to protect communities from domestic hate groups. It provides funding and resources to help communities develop and sustain local prevention efforts. Life After Hate, a group that focuses on breaking down white supremacy, was the only organization of its kind that DHS had approved for CVE federal funding before Trump took office. Just weeks before the terror attack in Charlotteville, anti-Muslim Trump aide Katharine Gorka, wife of known Nazi sympathizer and Trump adviser Sebastian Gorka, pushed the CVE to eliminate Life After Hate’s grant. Now, no CVE funding supports groups that exclusively confront white supremacy. Trump’s administration is planning to refocus the CVE program on extremism connected to Muslim groups only. That is blatantly discriminatory and completely unacceptable.

Tell DHS and key congressional leaders: Restore federal funding to stop Nazis, white supremacists and other right-wing extremists engaging in domestic terrorism.

Yesterday, a Huffington Post headline blared “It’s Not Just Trump, Federal Law Enforcement Is Not Very Focused On Far-Right Extremism.” As I noted last week, a 2014 survey conducted by Duke University in concert with the Police Executive Research Forum (PERF) found exactly the opposite. Indeed, as I noted in that same piece, multiple governmental entities over the course of the last decade have continued to highlight the threat posed by neo-Nazi/white supremacist groups.

Just last year, a bipartisan collection of groups sent a letter to then-President Obama denouncing CVE programs, especially those that target Arab/Muslim-Americans. I’ve also had extremely harsh things to say about federal CVE programs vis a vis their targeting of the Arab/Muslim-American communities. Any federal program that targets people or groups for increased surveillance or other repressive measures because of their political or religious beliefs is, by definition, unconstitutional. It’s also operationally counterproductive.

In his 2007 book Thinking Like A Terrorist, FBI veteran Mike German offers this warning (p. 153):

…when law enforcement officers arrest the white supremacist terrorist his beliefs are featured prominently in the media and in his subsequent prosecution. The prosecutor takes advantage of the community’s disdain for his beliefs to paint him as an evil person. After his conviction the prosecutor asks the judge to sentence the white supremacist more harsly because of his beliefs. The legislature will step in as well, passing hate crime laws to enhance penalties for such race-motivated crims. What these prosecutors and legislators forget is that while this political cause is unpopular, it does have a following. Their reaction is going to be exactly the same as if their cause was popular. When the prosecutors and legislators emphasize the politics rather than the crime, that small following will begin to feel they are being oppressed for their political beliefs, and rightfully so. They would now have a more legitimate reason to resist the government, and a more effective recruiting campaign.

Reviving the discredited CVE framework would only confirm the prevailing white supremacist narrative—in exactly the way it confirmed the ISIS narrative when CVE targeted Arab/Muslim-Americans. 

The authoritarian streak in the American political psyche—which I attribute to Federalists like Hamilton, and to their modern successors who populate and cheer on our gargantuan National Security State—has repeatedly led to efforts to silence speech and ideas deemed by the majority to be at best objectionable, and at worst a threat to the prevailing political and economic order. From the Alien and Sedition Acts to the Anarchist Exclusion Act to the McCarran Act and beyond, attempts to suppress unpopular speech or ideas have been fought in the streets, in legislatures, and in the courts. And it is that last institution, in the form of the United States Supreme Court, that has made it clear that no matter how much you or I may detest a David Duke or a Richard Spencer or any of their adherents, their right to speak their mind—no matter how hateful or repellant their words or ideas may be—is foundational to our republican form of government.

As Justice Douglass noted in his concurrence to the Court’s decision in Brandenburg v. Ohio:

One’s beliefs have long been thought to be sanctuaries which government could not invade. Barenblatt is one example of the ease with which that sanctuary can be violated. The lines drawn by the Court between the criminal act of being an “active” Communist and the innocent act of being a nominal or inactive Communist mark the difference only between deep and abiding belief and casual or uncertain belief. But I think, that all matters of belief are beyond the reach of subpoenas or the probings of investigators. That is why the invasions of privacy made by investigating committees were notoriously unconstitutional. That is the deep-seated fault in the infamous loyalty-security hearings which, since 1947 when President Truman launched them, have processed 20,000,000 men and women. Those hearings were primarily concerned with one’s thoughts, ideas, beliefs, and convictions. They were the most blatant violations of the First Amendment we have ever known.

James Fields crossed the line from a hateful belief to a criminal act—murder—and that is why he will face a jury of his peers for his monstrous conduct, and deservedly so.

So long as America holds to the standard set by the Bill of Rights, the chance to maintain a society that values open debate over even the most repellant of ideas remains. Indeed, forcing the David Dukes and the Richard Spencers of the world to defend their bigoted, fact-free philosophy is the best way to ensure they are discredited and have no chance of ever gaining any power to implement them. This should be the main lesson of Charlottesville, and the main reason why federal CVE programs in any form should be a thing of the past.

The Frederick News-Post has run my opinion piece on Maryland Gov. Larry Hogan’s decision to support relocation of the statue of Chief Justice Roger Taney from its previous conspicuous spot in front of the State House in Annapolis. Excerpt:

…Taney did many things in an illustrious legal career but is remembered for only one: the disastrous Dred Scott decision, which served to entrench slavery….

Change in the display of public memorials is natural and inevitable. Cemeteries may aspire to present an unaltered face over centuries. Both cemeteries and battlefield sites appropriately look backward rather than forward. But much-used public places are meant for the living and are ordinarily under tougher scarcity constraints.….

No one has erased him from the history books—the Dred Scott case itself makes sure of that….

Some conservatives now cry that we are on a slippery slope. What next—take Jefferson off the nickel, rename the city and state of Washington?

But each and every modern society chooses to live partway down the slippery slope of “not remembering history.” (Unless you believe that Warsaw, Prague and Budapest should have left their statues of Lenin in place.) Like Europe, America can take advantage of big, comfortable stopping points short of tearing down and renaming everyone and everything. For example, few if any memorials to Jefferson honor him for being a slaveholder. On the other hand, most statues of Confederate leaders do honor their service to that specific cause. Writes libertarian law professor Ilya Somin: “government should not honor people whose principal claim to fame was fighting a war in defense of the evil institution of slavery.”

On one big point, conservatives are very right: Mob actions and vandalism seldom end well….

Whole thing here, plus some thoughts from Andrew Stuttaford. From Atlas Obscura, displaced statues as a subject of historic preservation. Related, from @david_tanenhaus on Twitter: “My favorite Civil War era monuments are the 13th, 14th, and 15th Amendments.” [cross-posted and adapted from Overlawyered]

I see that my colleagues are referring to the new online Encyclopedia of Libertarianism as “a Wikipedia for libertarianism.” I suppose that’s sort of true, in that it’s an online encyclopedia. But it’s not exactly Hayekian, as Jimmy Wales describes Wikipedia. That is, it didn’t emerge spontaneously from the actions of hundreds of thousands of contributors. Instead, editors Ronald Hamowy, Jason Kuznicki, and Aaron Steelman drew up a list of topics and sought the best scholars to write on each one – people like Alan Charles Kors, Bryan Caplan, Deirdre McCloskey, George H. Smith, Israel Kirzner, James Buchanan, Joan Kennedy Taylor, Jeremy Shearmur, Leda Cosmides and John Tooby, Norman Barry, Richard Epstein, Randy Barnett, and Vernon L. Smith, along with many Cato Institute experts. In that regard it’s more like the Encyclopedia Britannica of libertarianism, a guide to important topics by top scholars in the relevant field.

The Britannica over the years has published articles by Albert Einstein, Sigmund Freud, Marie Curie, Leon Trotsky, Harry Houdini, George Bernard Shaw, Bertrand Russell, Milton Friedman, Simon Baron Cohen, and Desmond Tutu. They may have slipped a bit when they published articles by Jimmy Carter, Bill Clinton, and Lee Iacocca. And particularly when they chose to me to write their entry on libertarianism.

Was it a typo or a Freudian slip? The Washington Post reports:

As president-elect, for instance, Trump took Boeing to task for cost overruns when he tweeted that the Air Force One program’s $4 billion expenditures were “out of control” and suggested the contract be canceled….

Trump was more complementary on Feb. 17, when he made appearance at a Boeing factory in South Carolina and concluded his remarks by saying, “May God bless you, may God bless the United States of America, and may God bless Boeing.”

The reporters meant “complimentary.” But indeed the point of the article is just how “complementary” big government and its big contractors are. Headlined “Why America’s biggest government contractors balked at criticizing Trump,” the article explores how CEOs started jumping off President Trump’s advisory councils after his disappointing remarks about white supremacists marching in Charlottesville – but not “the four government contractors on the president’s advisory councils — Lockheed Martin, Boeing, Harris Corp. and United Technologies.” After all, 

In many ways, contractors such as Boeing and Lockheed Martin are more dependent on government decision-making than other companies that took part in the councils.

Indeed, if a large part of your business comes from government contracts, you’d better be very careful about criticizing the president of the United States. Especially a president who has little sense of the proper limits of presidential authority:

Those negotiations [over a new fighter plane] were marked by unusually close interactions between Trump and the business executives involved. Bloomberg later reported that Trump allowed Boeing chief executive Dennis A. Muilenburg to listen in on a call with a key government manager for the F-35 program as Trump sought information on the two planes.

President Trump’s tweets, legal problems, chaotic White House management, and other high-profile troubles may have diverted attention from a problem that many of us pointed out before he was elected: his “economic nationalism” that seems to mean in practice protectionism, crony capitalism, and a promise that he’ll personally run the U.S. economy.

Government contractors understand this. Even before he was elected, Trump intervened to “persuade” Carrier to keep a plant open in Indiana. How? Was it the state tax credits? Or something less public? The CEO of Carrier’s parent company United Technologies, Greg Hayes – who was later on the president’s manufacturing council – acknowledged that the deal to keep the plant open probably wasn’t really economic. But:

I was born at night, but it wasn’t last night. I also know that about 10 percent of our revenue comes from the U.S. government.

When companies get in bed with government, that’s the bargain they make. And as we’ve just seen, that bargain not only leads to economic decisions that make us all poorer, it stifles the free speech of those dependent on government decisions. And that’s a problem when government is the biggest landlord, employer, arts patron, and purchaser of goods and services in society.

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