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Relations between the U.S. and China have grown tenser as the latter has developed economically and advanced internationally. Few Americans want to cede their dominant position while most Chinese are determined to regain what they believe to be Beijing’s rightful influence.

The two nations are waging a bitter but so far nonviolent struggle in Burma, or Myanmar. And the U.S. appears to be winning.

For decades Burma’s military ruled ruthlessly. The West responded by isolating and sanctioning the generals, who renamed their nation Myanmar over popular opposition.

The junta turned to China for military cooperation and economic support. Beijing, which desired Burma’s natural resources, including minerals, timber, and water, was happy to oblige. The embrace from Burma’s northern neighbor grew ever tighter—too tight, in the view of many Burmese.

In 2008 the military began a gradual process of carefully limited political reform, which culminated in legislative elections in November. The junta’s members had not undergone a miraculous conversion to liberalism. Rather, an important, though largely unarticulated, objective was to reduce reliance on the People’s Republic of China.

For years Burma was a pariah state almost akin to North Korea. There was only limited interaction with both the U.S. and Europe, the most obvious sources of aid, investment, and trade. While Asian tigers roared, Burma slumbered.

While Burma benefited economically from its ties with the PRC, the costs were high and resentment was palpable. In fact, Burma is not alone in this regard. High-handed Chinese behavior in Africa sparked public protests and turned Beijing’s role into an election issue. North Korea remains tied to the PRC but continues to look for new friends, most recently in Moscow.

For Burma opening to the West was the answer. Sanctions were eased, Western leaders rushed to visit, and business investment flowed in.

Unfortunately, reforms have slowed. Nevertheless, the country has moved dramatically from “the bad ole’ days.” It would be very difficult for the military to reverse democratization even if it wanted to. Which means China no longer is the essential investor.

The PRC has noticed. Policy analysts and university students alike have complained to me that the U.S. was undermining Beijing’s relationship with Burma. Merely being willing to engage Burma has allowed the West to shift the geopolitical balance.

At the same time bilateral problems between China and Burma have multiplied. Four years ago the latter suspended the Chinese-financed Myitsone Dam, whose power was destined for the PRC. Earlier this year 155 Chinese loggers were arrested and prosecuted for illegal activity, before being deported.

Insurgents in Burma’s Kokang area are ethnic Chinese and some 30,000 refugees have crossed into the PRC. In March while targeting Kokang rebels Burmese airstrikes killed five and injured eight Chinese citizens. In May several Chinese were injured by artillery fire. The PRC responded with a live fire exercise along the border. Burma later accused Beijing of discouraging the Kachin and Wa ethnic groups, long engaged in the illicit gem and timber trade, from signing a national ceasefire.

Concerned over relations, Beijing hosted Nobel Laureate Anng San Suu Kyi in June, an extraordinary step by a regime which fears elections and opposes meddling in other nations’ affairs. Although Suu Kyi expressed her desire for better relations, her government is unlikely to be as close to China as was the junta.

India and Japan offer friendship at lower cost. Moreover, she obviously prizes access to the large, sophisticated Western economies, and knows that she would still be under house arrest if China had continued to dominate Burmese affairs.

Burma’s shift demonstrates fistfuls of cash, whether yuan or dollars, are not enough. As I wrote for China-US Focus: “No one likes to be treated as a client state. In Burma the U.S. only had to offer the junta a way to join the global economy. Without deploying a ship or threatening a shot, Washington found an effective balance to the PRC.”

In late October, I blogged about a weird case out of Chicago where the sheriff decided to crusade against online-commerce site Backpage.com (similar to Craigslist). The law wouldn’t allow Cook County Sheriff Thomas Dart to go after Backpage directly, so he sent strongly worded letters to financial institutions in hopes that they would stop processing Backpage’s payments. The tactic worked, so Backpage went to court to save its business.

Well, on Monday, as free-speech advocates returned from their Thanksgiving breaks, the U.S. Court of Appeals for the Seventh Circuit overturned a district court decision to deny Backpage’s request for a preliminary injunction against Sheriff Dart. The opinion, authored by Judge Richard Posner, denounces Dart’s attempts in his official capacity to “starv[e Backpage] by pressuring credit card companies to cut ties with its website.” (The opinion was joined by Judge Diane Sykes, who was Cato’s 2014 B. Kenneth Simon Lecturer, which lecture you can read in the most recent edition of the Cato Supreme Court Review.)

Backpage offers 11 categories of ads, primarily facilitating mundane transactions like used-lawnmower sales and vacation rentals but also with an “adult” section broken down into titillating subcategories such as “dom[ination] & fetish” and “body rubs.” Sheriff Dart had unsuccessfully sued Craigslist over the content of its adult section in 2009 (though Craiglist removed its adult section a year later). Having previously failed with that approach, Dart employed a different technique in his persecution of Backpage, sending a letter on his official stationary to Visa and Mastercard, among others, that suggested that he could use his authority to initiate investigations into “institutions” that “willfully play a central role in an industry that reaps its cash from the victimization of girls and women across the world” unless they ceased to allow their credit cards to be used to purchase ads on Backpage.


Given that the potential brand damage from allegations of complicity in sex trafficking dwarfs the lost revenue from a relatively small website, Visa and Mastercard got the drift and stopped servicing Backpage. Judge Posner described this maneuver as an attempt to “kill a person by cutting off his oxygen supply rather than by shooting him.”

While Dart’s actions are troubling as an abuse of government power beyond the scope of his office, they also present serious First Amendment issues. While government officials are allowed to engage in expressive speech, even if we disagree on what constitutes government speech, they can’t intimidate private citizens or otherwise censor legal speech they find distasteful. Judge Posner asks,

[W]here would such official bullying end, were it permitted to begin? Some public officials doubtless disapprove of bars, or pets and therefore pet supplies, or yard sales, or lawyers, or “plug the band” (a listing of music performances that includes such dubious offerings as “SUPERCELL Rocks Halloween at The Matchbox Bar & Grill”), or men dating men or women dating women—but ads for all these things can be found in non-adult sections of Backpage and it would be a clear abuse of power for public officials to try to eliminate them not by expressing an opinion but by threatening credit card companies or other suppliers of payment services utilized by customers of Backpage, or other third parties, with legal or other coercive governmental action.

Citing a long line of precedent, Posner concludes that “threatening penalties for future speech goes by the name of ‘prior restraint,’ and a prior restraint is the quintessential first-amendment violation.”

Opponents of government overreach – not just free-speech advocates – should celebrate this ruling because it serves as a direct rebuke to attempts by officials to bully organizations to do their bidding, against their best interests.

One further note: While the legal substance of the court’s opinion deals with the aforementioned First Amendment/government-intimidation issues, the nominal impetus behind Dart’s crusade against Backpage is the alleged growth of sex trafficking. Cato, along with frequent collaborators Reason Foundation and DKT Liberty Project, addressed this assumption in ourr amicus brief supporting Backpage. Judge Posner cited the brief, noting that “as explained in an amicus curiae brief filed by the Cato Institute, Reason Foundation, and DKT Liberty Project, citing voluminous governmental and academic studies, there are no reliable statistics on which Sheriff Dart could base a judgment that sex trafficking has been increasing in the United States.”

Perhaps the most interesting development in education policy this year has been Nevada’s adoption of the first education savings account program to offer nearly universal eligibility. Students who attended a charter or district school in the previous year are eligible to have a portion of the state funds that would have been spent on them instead deposited into an account that they can use to purchase a wide variety of educational goods and services. By empowering families with more alternatives to the generally low-performing district schools, the ESA program is also a pressure relief valve for Nevada’s severely overcrowded schools.

However, although low-income families have the most to gain from the ESAs, it appears that higher-income families have been the first to apply for the accounts. The Las Vegas Review-Journal reports:

Overall, half of the nearly 3,100 applications submitted as of Oct. 28 list an address in a ZIP Code among the top 40 percent of median households in Nevada. That’s in contrast to just 10.7 percent of applications from households with median incomes in the bottom 40 percent.

It’s important to note that these are not the final ESA enrollment figures. As Matthew Ladner of the Foundation for Excellence in Education pointed out, these are merely the “earliest of the early adopters.” At the time of the Review-Journal report, Nevada families still had more than two months to apply for an ESA before the program commenced. Nevertheless, opponents of parental choice have seized on the development:

“It’s what we expected,” said Sylvia Lazos, policy director for the education reform group Educate Nevada Now [which is suing to end the ESA program].

The ESA program “was not tailored to low-income parents. It was not tailored to parents with children in (low-performing) schools,” she said. “With every program of this nature, it’s just the reality that affluent and high middle-income families are always in the best position to take advantage of government programs.”

Yet nowhere is this more true than in the government schools. Because the government assigns students to district schools based on the location of the home their parents can afford, wealthier families have access to district schools that are safer and higher quality than those to which low-income students are assigned. It’s not resources that account for the difference in performance – Washington, D.C. spends nearly $30,000 per pupil for one of the worst school districts in the nation. Culture certainly plays an important role, but so does the ability to exit.

Bill Gates can send his children to their assigned district school at no charge (beyond what he already paid in taxes), but he can also afford to enroll them elsewhere. Because Gates and other higher-income families can afford to leave, the district schools have to be responsive to their needs in order to keep them (and the state funds allocated based on their enrollment). By contrast, low-income families often have no financially viable alternative. Their assigned district schools have no financial incentive to be responsive to a captive audience.

Unlike a geography-based school system, a market-based system creates incentives for all schools to be responsive to parents’ wishes and to find ways to provide a better education at a lower cost. That is why it is the poor, not the rich, that that stand to gain the most from a market in education. As Milton and Rose Friedman explained in Free to Choose

Industrial progress, mechanical improvement, all of the great wonders of the modern era have meant relatively little to the wealthy. The rich in Ancient Greece would have benefited hardly at all from modern plumbing: running servants replaced running water. Television and radio? The Patricians of Rome could enjoy the leading musicians and actors in their home, could have the leading actors as domestic retainers. Ready-to-wear clothing, supermarkets – all these and many other modern developments would have added little to their life. The great achievements of Western Capitalism have redounded primarily to the benefit of the ordinary person. These achievements have made available to the masses conveniences and amenities that were previously the exclusive prerogative of the rich and powerful. [Emphasis added.]

A perfect example of this is the $10 smartphone that Walmart is selling that has better specs than the original iPhone:

For less than $10 (plus the cost of data access) the user gets access to the Google Play app store, giving him or her the power to summon transportation at the push of a button, instantly connect with friends, and watch livestreams from all over the world. A bona fide smartphone, in other words.

It’s perhaps even more impressive when you consider that its modest specs—a 3.8-inch display, 3G and Wi-Fi networking, and a 3-megapixel camera—surpass those of the original iPhone, which was referred to in the tech press at the time as the “Jesus phone.”

Higher-income individuals were the early adopters of the iPhone and other smartphones. They paid a premium which allowed tech companies to recoup their investment in research and development and earn a significant profit. Those profits created incentives for them to expand production and for other companies to follow suit. Over time, real prices fell even as quality improved dramatically. The original iPhone models sold for $499 to $599 but later generations already sell for much less, making them accessible to the poor. Indeed, even as of 2012, more than half of American 18- to 24-year-olds earning less than $15,000 per year owned a smartphone. At just $10 a piece, smartphones will be ubiquitous.

Of course, the wealthy still have access to better quality (and much more expensive) smartphones with the latest and greatest features. But as Michael McShane of the American Enterprise Institute has explained, “markets work when the spectrum of relative quality drives improvements in absolute quality.” [Emphasis added.] Wealthier individuals continue to pay a premium for the cutting-edge technology, which later becomes standard and more affordable for everyone. 

Likewise, higher-income families may be the first adopters of ESAs, but expanding the market in education will benefit everyone in the long run. Even in the short run, the initial research on ESA programs shows that low-income families benefitted the most from greater educational opportunity. In 2013, Jonathan Butcher of the Goldwater Institute and I conducted the first parental-satisfaction survey of Arizona families using ESAs. All of the respondents had students with special needs who had previously attended their assigned district schools. Unsurprisingly, low-income families were the least satisfied with their district schools:

By contrast, the lowest-income families were the most satisfied with the education they purchased with their ESA:

This does not mean that educational-choice advocates can remain complacent. If anything, the Review-Journal report shows that greater efforts are needed to inform low-income families about the choices that are available to them. Fortunately, those efforts are already underway.

Senators Benjamin L. Cardin and John McCain will soon get their wish for a U.S. arms sale to Taiwan. Last Wednesday, Josh Rogin of Bloomberg View reported that the Obama administration will formally announce a $1 billion arms sale in December. Congress has not been notified of a new arms sale to Taiwan in four years.

The changing balance of power in the Taiwan Strait warrants a serious examination of the existing U.S.-Taiwan security relationship, which is held up by two pillars: a U.S. commitment to sell “defensive” arms to Taiwan; and the pledge to take “appropriate action” in response to any “threat to the security…of the people on Taiwan.”

The arms sales and vague security pledge have contributed to peace in the Taiwan Strait, but the status quo may not last much longer. A recent RAND report concluded that China is catching up to the United States’ military capabilities to defend Taiwan. America could absorb the rising cost of defending Taiwan, but the reunification of Taiwan and mainland China is a core interest of the Chinese government. Since China has more at stake, it has an incentive to keep raising the costs of confrontation until the United States is no longer willing to absorb them.  

This argues for dropping Washington’s pledge to come to Taiwan’s aid. Supporters of the pledge worry about the message that a reduced commitment would send to allies in East Asia. But there is a significant difference between a formal security commitment defined in a treaty, and an informal one like America’s to Taiwan.

Washington’s formal treaty commitments in East Asia (Japan, South Korea, and the Philippines) are more clearly stated and some are supported by forward-deployed U.S. forces. Failing to come to the aid of a formal treaty ally would be a significant blow to U.S. credibility, but Taiwan does not enjoy such status.

However, arms sales to Taiwan should continue for several reasons. First, the arms sales have not significantly damaged U.S.-China relations. Second, ending both arms sales and the pledge would be unnecessarily disruptive. Third, the United States still has a legitimate interest in a peaceful resolution of the cross-strait dispute, but defending Taiwan’s quasi independent status through military intervention against a nuclear-armed and conventionally powerful China would have high costs for limited benefits. Moreover, the costs of intervention would likely increase over time, while the benefits would remain flat.  

Future arms sales should emphasize weapons systems that allow Taiwan to mount an effective asymmetric challenge to Chinese forces. The United States should also make future arms sales contingent on Taiwan’s investment in indigenously-produced capabilities and increased military spending independent of spending on U.S. arms. Ending the already vague pledge to come to Taiwan’s defense while continuing arms sales is a low-cost policy that reduces the probability of a U.S.-China war over Taiwan while preserving Taiwan’s ability to defend itself.

Former president Kim Young-sam was laid to rest in Seoul. Kim long battled against military rule. In 1992 he was elected president.

His reputation suffered when the Republic of Korea was engulfed by the Asian economic crisis. But Kim may have prevented the Second Korean War.

Early during Kim’s tenure the first nuclear crisis exploded. The so-called Democratic People’s Republic of Korea had embarked on a nuclear program, centered at Yongbyon.

President Bill Clinton, Secretary of Defense William Perry, and Assistant Secretary of Defense Ashton Carter, the current Pentagon chief, decided to strike. War was a truly mad idea.

Carter and Perry later explained that they had “readied plans for striking at North Korea’s nuclear facilities and for mobilizing hundreds of thousands of American troops for the war that probably would have followed.” Nevertheless, they expected to limit deaths to “thousands of U.S. troops and tens of thousands of South Korean troops” due to the allies’ overwhelming military superiority.

However, the two underplayed likely civilian casualties. With mass artillery dug in along the Demilitarized Zone, abundant Scud missiles available for attack, and mass armor poised only a few miles north of Seoul, the casualties and destruction could be enormous. Nuclear radiation also would threaten.

Perhaps most extraordinary, the Clinton administration planned for war without involving Seoul. When informed, Kim argued with Clinton, causing the latter to relent, but only temporarily. Former President Jimmy Carter then visited the North, transmitting Kim Il-sung’s offer to negotiate.

Ashton Carter continued to propose war against the DPRK. In 2002 Carter and Perry coauthored an article for the Washington Post: “Today, just as in 1994, a conventional war would be incredibly dangerous, but not as dangerous as allowing North Korea to proceed with this new [uranium] program,” they wrote. Thus, “North Korea now needs to proceed with the understanding that the United States would not tolerate a North Korean program to build nuclear weapons.”

In 2006 the two were at it again. This time they were worried about the North’s planned missile test. They wrote: “the United States should immediately make clear its intention to strike and destroy the North Korean Taepodong missile before it can be launched.” If the DPRK retaliated, no worries: the U.S. could bolster its forces.

Obviously, it is undesirable for Pyongyang to possess nuclear weapons or missiles. However, while the North’s Kim dynasty gives no evidence of being suicidal. Preserving the peace should be the number one objective on the peninsula given the costs of a Korean War rerun.

Which Kim well understood.

One problem with well-reasoned military proposals counting on the North’s rational restraint is that Pyongyang would be extremely foolish to rely on any assurances. After all, the U.S. has routinely imposed regime change.

Those who know best doubt Pyongyang’s forbearance. A North Korean defector said the military was determined to take the initiative in any war. Gen. Gary Luck, former U.S. commander in Korea, opined: “If we pull an Osirak, they will be coming south.”

The second problem is that the DPRK may well choose a limited military option commensurate with the U.S. attack. An hour long bombardment of Seoul, for instance, accompanied by the demand to expel U.S. forces. What then? It isn’t clear whether the South Korean public would be angrier with North Korea or the U.S.

U.S. war proposals are especially foolish since North Korean threats against the South as well as Japan are not threats against America. Indeed, Washington is of interest to the DPRK mostly because the former has unnecessarily intruded in a struggle between the two Koreas. Given the South’s extraordinary advantages—40 times the GDP, twice the population—there’s no reason for Washington to stay, let alone plot new wars.

As I wrote in Forbes: “Kim was political hero, but his most important legacy probably was preserving peace. Thousands, at least, and perhaps many more South Koreans and Americans have him to thank for their lives. Kim Young-sam, rest in peace.”

Turkey’s rash decision to shoot down a Russian plane for allegedly violating its airspace isn’t likely to trigger World War III. But Ankara demonstrated that it stands with the Islamic State and against the West.

The Obama administration’s war against ISIL is turning into another interminable conflict that serves the interests of other nations far more than America. U.S. policy has been impossibly incoherent.

While Russia’s September entry into the war outraged Washington, Moscow showed clarity and realism. Russia simply sought to bolster Syria’s President Bashar al-Assad against insurgents dominated by radical Islamists. Ironically, this approach is far more likely than the administration’s confused policy to advance America’s core interests.

However, Turkish President Recep Tayyip Erdogan played the fool when his military downed a Russian aircraft for allegedly violating his nation’s airspace. It’s not enough to “discourage any escalation,” as President Barack Obama insisted. Washington should drop the alliance relationship.

Turkey is a growing threat to Western interests and values. Ankara never has been a true friend of the West. Turkey was a useful ally during the Cold War, though it always seemed readier to go to war with Greece than the Soviet Union.

President Erdogan and his Justice and Development Party (AKP) came to power in 2002. Initially then-Prime Minister Erdogan played the liberator. But he eventually gained control of the police and judiciary; conducted multiple mass conspiracy trials; and attacked independent journalists, opposition politicians, and business critics.

President Erdogan also is moving Turkey in a more Islamist direction. Worse, his government has aided the Islamic State. Despite agreeing to assist Washington, the Erdogan government appears to have played the U.S., directing most of Turkey’s fire against America’s Kurdish allies.

Shooting down the Russian aircraft was even more irresponsible. Ankara knew that no attack on Turkish forces was planned. Downing the plane was a direct attack on Moscow for supporting the Assad government.

Turkey demonstrates that NATO is a bad deal for America. Military alliances should serve U.S. interests. But any existential threat against Turkey ended along with the Cold War.

At the same time, the shared interests between Turkey and the West dissipated. The alliance should not be responsible for defending Ankara as the latter promotes Islamist radicals and, even worse, commits a gratuitous act of war seemingly designed only to provoke Moscow.

Indeed, Turkey is merely the latest example of alliance members seeking to drag the U.S. into conflicts of no interest to America. Britain and France largely orchestrated the Libya war, in which Washington helped deconstruct yet another Muslim country without purpose.

Moscow is a better and more reliable partner than Turkey for America in the Middle East. Vladimir Putin is a nasty character. At home he has suppressed the civil liberties and political freedoms Americans value. But President Erdogan differs little from President Putin in this regard.

Where Presidents Putin and Erdogan dramatically diverge is their policies toward radical Islamists. As noted earlier, Ankara has consistently backed the murderous jihadists of most concern to America.

In contrast, as I point out on Forbes online: “in the Middle East U.S. and Russian interests broadly coincide. Exactly why the U.S. feels duty-bound to oust Assad isn’t clear. Both Iraq and Libya dramatically demonstrated that it’s not enough to get rid of the bad guy. You need a good guy as successor. Washington has none in Syria.”

In fact, American policy in the Mideast has failed catastrophically. Yet the Obama administration is committed to doing more of the same in the forlorn hope of achieving a different result.

Cooperating with Russia doesn’t require befriending President Putin. Rather the two governments simply should work together when doing so serves both nations’ interests. That’s more than occurs with Turkey today.

Washington should abandon outdated alliances and stop covering for Ankara. Russia may not be an ally, but at least it is friendlier and less dangerous than Turkey today.

Why does the tax code require more than 10,000,000 words and more than 75,000 pages?

There are several reasons and none of them are good. But if you had to pick one cause for all the mess, it would be the fact that politicians have worked with interest groups and lobbyists to create myriad deductions, credits, exclusions, preferences, exemptions, and other loopholes.

This is a great deal for the lobbyists, who get big fees. It’s a great scam for politicians, who get lots of contributions. And it’s a great outcome for interest groups, who benefit from back-door industrial policy that distorts the economy.

But it’s not great for the American people or the American economy.

Writing for Reason, Veronique de Rugy of the Mercatus Center explains that the net result is a Byzantine tax code that imposes very harsh compliance costs on the productive sector.

According to a 2012 study from the Internal Revenue Service (IRS) and the Treasury Department, …corporations alone spent $104 billion complying with the tax code in 2012. …The cost to individuals may be even higher. According to a 2013 study by Jason Fichtner and Jacob Feldman of the Mercatus Center, Americans face nearly $1 trillion annually in hidden tax-compliance costs. …Why does tax compliance cost so much? The answer is largely that the Internal Revenue Code…is riddled with exclusions, exemptions, deductions, preferential rates, and credits.

And she also points to a solution.

Genuine reform would cut out loopholes that tilt the playing field in favor of those with political connections. It would also aim to provide lower tax rates, fewer tax brackets, and less double taxation of income that is saved and invested. Such measures would be good for growth, but they would also mean taking on the interest groups that benefit from swapping tax preferences for campaign cash.

Since I want to rip up the tax code and replace it with a simple and fair flat tax, this is music to my ears.

Of course, achieving genuine tax reform won’t be easy.

There’s the obvious political obstacle since all the groups that benefit from the current system (politicians, lobbyists, bureaucrats, cronyists, interest groups, and other insiders) will fiercely resist reform.

There’s also a policy obstacle because many people oppose loopholes in theory but they haven’t paid sufficient attention to the nuts-and-bolts details.

With that in mind, let’s set out a set of guiding principles for the elimination of tax loopholes and the creation of a neutral tax system.

1. A loophole exists when income isn’t taxed - In libertarian Nirvana, the central government is so small that there’s no need for an income tax. Until we get to that point, though, we’re stuck with the internal revenue code and the goal should be to collect revenue (hopefully a modest amount) in a way that minimizes the economic damage per dollar collected. And that means a tax code that doesn’t have loopholes, which are best defined as provisions that enable people to avoid any tax based on how they earn income or how they spend income. In a neutral system, all income is taxed one time.

2. The economy performs better without a loophole-riddled tax code - Most people understand that high tax rates are bad for growth because they penalize people for earning income. They also generally understand that double taxation of saving and investment is bad for growth because it creates a bias against capital formation. But there’s not nearly enough appreciation of the fact that loopholes in the code are bad for growth since they are a back-door form of industrial policy that exist for the purpose of incentivizing people to make decisions on the basis of tax rather than on the basis of what makes economic sense. A neutral tax system means less economic damage.

3. It’s not a loophole to protect income from double taxation or to require income to be measured correctly - The bad news is that the current system forces taxpayers to overstate their income and it also imposes multiple layers of tax on income that is saved and invested. The good news is that there are provisions in the tax code - such as IRAs, 401(k)s, deferral, bonus depreciation - that seek to mitigate these biases. These parts of the system oftentimes are needlessly complex and they frequently will alleviate penalties in a discriminatory manner, but they are not loopholes. In a neutral system, all income is taxed only one time.

4. Loopholes should be eliminated as part of a plan to lower tax rates, not in order to give politicians more money - If loopholes are a corrupt and distorting dark cloud, the silver lining to that cloud is that all the special favors in the tax code deprive the government of tax revenue. Even the most egregious of loopholes, such as ethanol, have this redeeming feature. This is why loopholes should only be eliminated as part of an overall tax reform plan that also lowers tax rates and reduces double taxation. A neutral tax system shouldn’t enable bigger government.

There are some important implications that follow from these four guiding principles.

As a practical matter, we can now identify provisions in the tax code that are clearly loopholes, such as the healthcare exclusion, the municipal bond exemption, and the state and local tax deduction (the mortgage interest deduction is misguided, but isn’t technically a loophole since one of the goals of tax reform is to give business investment the same tax-income-only-one-time treatment now reserved for residential real estate).

We also know that the capital gains tax rate isn’t a “preferential” loophole, but instead is the mitigation of a penalty that shouldn’t exist. Similarly, it’s not a loophole when companies deduct expenses when calculating income. And you’re not getting some sort of handout simply because Uncle Sam isn’t imposing double taxation on your retirement account. At the risk of repeating myself, all income should be taxed in a neutral system, but only one time.

Let’s close by looking at a few secondary - but still important - implications of a neutral tax code.

First, getting rid of loopholes won’t put a burden on poor and middle-income taxpayers for the simple reason that an overwhelming share of the benefits of these provisions go to high-income taxpayers.

I’ve already shown how the vast majority of charitable deductions are taken by those making more than $200,000 per year.

The same is true for the state and local tax deduction and the healthcare exclusion.

And the Washington Post just editorialized that the home mortgage interest deduction is a boon for rich taxpayers as well.

The mortgage interest deduction is also a significant cause of after-tax income inequality: The top 20 percent of earners get 75 percent of the benefits; the top 1 percent get 15 percent, according to the Congressional Budget Office. …Specifically, 10 metropolitan “hot spot” counties (among them Los Angeles in California and Fairfax in Virginia) with the greatest number of mortgages larger than $500,000 accounted for 45.1 percent of all such mortgages nationally. Just eight California urban and suburban counties accounted for 40 percent of the national total. Outside of such tony coastal precincts, the only big-mortgage hot spots were resort destinations such as Martha’s Vineyard, Mass., and Vail, Colo. — where many homes are vacation places, not primary residences.

To be sure, the Post is misguided in that it wants to restrict tax preferences in order to finance a larger burden of government spending.

So I’m not expecting the editors to join a coalition for pro-growth tax reform.

The second implication is that a neutral tax system means less corruption.

To cite one example, consider the oleaginous way that politicians deal with so-called tax extenders. Marc Short and Andy Koenig explain in a column they wrote for the New York Times.

Congress will soon take up the so-called tax extenders package, which has more than 50 tax breaks affecting a variety of industries and issues. …this bill mostly helps the wealthy and the well connected.

The fact that rich insiders benefit is no surprise, but what makes “tax extenders” so odious is that what began in 1988 as a supposedly one-time fix now has become a regular part of the process, a scam that gives lobbyists and politicians a way of generating fees and contributions.

The first tax-extender package…opened a door that lobbyists and lawmakers were all too willing to run through. …A 2014 analysis by Americans for Tax Fairness found that more than one out of every 10 lobbyists in Washington focused specifically on the extenders package. Given that this bill comes up about every year or two, special interests constantly have the opportunity to demand new handouts.

By the way, some of the extenders actually are good policy. They’re in the mitigation-of-penalties category I discussed above.

But those good provisions should be made permanent and the bad provisions should be jettisoned.

Unfortunately, that’s not in the interests of the politicians and lobbyists who benefit from an annual extender package, so the problem doubtlessly will fester.

Last but not least, let’s consider the moral component.

For those of us who believe in justice, it is ethically offensive that some rich and powerful taxpayer get better treatment simply because they know how to manipulate the political process.

This violates the important principle that the law should treat everyone alike. Yet another reason to have a simple and fair flat tax.

P.S. At the risk of being a nit-picker about my own writing, I should confess that a flat tax is not a purely neutral tax system. There will still be a penalty on earning income. But the penalty presumably will be modest if there is a low rate and that penalty won’t be exacerbated by penalties and loopholes that distort how people earn income and spend income.

P.P.S. Here, in one image, is all you really need to know about the economics of taxation.

In this post-Thanksgiving atmosphere, here is another installment in Human Progress’s series of posts on incremental (and sometimes revolutionary) ways in which our world is becoming a better place. This week we look at anti-aging drugs, falling maternal mortality deaths and death rates, prosthetic hands with a sense of touch and a potential breakthrough in air travel. 

British Company to ‘Transform’ Air and Space Travel with Pioneering New Engine Design 

BAE Systems has recently bought a minority stake of a small technology company called Reaction Engine. The support of BAE will allow Reaction Engine to continue working on its breakthrough engine, known as Sabre. This versatile engine can be used for both air and space travel, reaching up to five times the speed of sound for air travel and twenty-five times the speed of sound for space travel. Using these high rates of speed, it could be possible to fly anywhere in the world in four hours within the next ten to fifteen years. Reaction Engine hopes that the first Sabre engine will be tested within the decade. 

World’s First Anti-Aging Drug Could See Humans Live to 120 

The aging process is not inevitable. Our cells contain a DNA blueprint that can, theoretically, keep our bodies functioning forever. However, overtime our cells divide rapidly, leading to an increased likelihood of “errors” occurring. These “errors” cause diseases like cancer and dementia. Recently, the FDA approved a human trial for a drug called Metformin, which has been proven to increase the lifespan of animals. The trial contains around 3,000 people who are between the ages of 70 and 80. If similar results occur with humans as with animals, the human lifespan could increase by up to 50 percent. 

Maternal Mortality Falls by Almost 50% - UN Report 

The United Nations has been monitoring maternal mortality, which is defined as the number of mothers who die during pregnancy or shortly thereafter, for a number of decades. According to a recent report, global maternal mortality has dropped from 532,000 deaths in 1990 to 303,000 in 2015. That’s a reduction of 44 percent. Eastern Asia made the most substantial progress, with maternal mortality rates dropping from 95 deaths for every 100,000 live births to 27. Maternal mortality, once ubiquitous throughout the world, is now almost exclusively (99 percent) found in poor countries. Once again, economic development and income growth are the keys to further progress. 

A Prosthetic Hand that Can Feel 

Researchers at Case Western Reserve University have recently created a prosthetic hand that allows the patient to not only grip objects more accurately, but also enjoy a sense of touch. The technology works by creating a connection between the artificial hand and the brain. When the prosthetic hand senses pressure, it sends a neural code to the brain through an artificial pathway. Igor Spetic, who lost his hand about five years ago due to a workplace accident, is one of the first patients to receive the artificial hand. Because of his newly acquired treatment, Igor is now able to cut up fruits and vegetables, confidently grip cups, and open bags and containers. Researchers are currently developing a wireless version of this technology, which they hope to have finished within the next five years.

What might explain this unusual turn of events?

Allow the WSJ to explain: Arizona governor Doug Ducey has come up with a plan to spend $2 billion more on public schools over the next decade–without raising taxes. According to his plan, the money would go directly into the classroom, rather than though the public school bureacracy’s normal funding process.That’s a big deal in Arizona, which spends a smaller portion of its education budget in the classroom (54%) than is typical of other states (61%).

The [negative]reaction to Ducey’s plan seems to be spearheaded by Michael Cowan, the superintendent of Mesa Public Schools, Arizona’s largest district,who launched an email and robocall campaign to turn parents against the proposal.Why? Well, naturally: “for the children.” How preventing an increase in classroom spending might help children may not be obvious to everyone,so the WSJ helpfully offers an alternative explanation for district officials’ opposition: “Mr. Ducey’s plan disrupted the usual coalition of teachers unions and public school districts, leading some in the K-12 establishment—those administrators and union officials who have a way of soaking up dollars while doing little for students—to take the unfamiliar position of objecting to new education funding.” either that, or, somehow(?), “it’s for the children.”™

If only there were a system for organizing economic activity under which revenues are most easily raised by better-serving one’s customers or by attracting additional ones. And if only that system had been shown to work in education  just as in other fields.

Every holiday season, pundits and politicians of all stripes weigh in on how to talk to family members who disagree with you. The Democratic National Committee even runs a website, YourRepublicanUncle.com, which gives useful talking points for your red-state benighted family members. Here’s a different strategy for the holidays: Just say, “let’s stop trying to control each other.”

Here’s how it works:

- “These Republicans, they don’t know anything about how to run a health care program. I think they want people to just die, especially people who vote Democrat. People need low-deductible plans with broad catastrophic coverage and full coverage for all basic daily needs. Just read the studies.”

- “Okay Uncle Kevin, you might be right. Or, alternatively, we could stop trying to control each other and forcing others who disagree to comply just because they’re on the wrong side of 50.01 percent of the population. That’s inevitably going to create strife. Just think about how you would feel when you’re on the losing side of an election.”

- “These Democrats think they know everything. Whatever happened to the family? Whatever happened to good schools that teach good values? A school system that taught family, responsibility, and, yes, even religion would go way further toward solving this country’s problems than anything a Democrat has proposed in 50 years.”

- “Okay Aunt Jane, you might be right. But what if you’re wrong? What if you get your school plan passed, across the whole nation even, and it ends up that your curriculum doesn’t help, especially for families with different needs and goals? Then what? Well, then you’ve subjected the entire nation to your errors, and getting rid of those errors is going to be costly and painful. Alternatively, you could stop trying to control other people simply because your side is temporarily on the right side of an election. You wouldn’t want someone to do that to your kids, right?”

It’s all quite simple, seemingly deceptively so. One of the biggest virtues of limited government is that it places less emphasis on who happens to win a given election because fewer monumental things are at stake. And if we stop trying to control each other, it’s much easier to be friends with your political opponents. Politics makes us worse, and the more it matters the worse it makes us—in fact, it makes us primitive. Few people are at each other’s throats because of a difference of opinion about where the roads should go.

When we start saying “let’s stop trying to control each other,” we also eliminate the need to have public debates over private values. We don’t have a public political debate over Taylor Swift vs. Beethoven because no one is trying to force others to listen. That may seem like a ridiculous example, but that question is not too different from “what’s the best healthcare plan to have?” How can that question be answered when so many competing values and life goals are inexorably in the mix?

In Exit, Voice, and Loyalty, A.O. Hirschmann pointed out that there is a tension between exit and voice. With exit, you can vote with your feet, your dollar, or your radio dial. You don’t need to rise up and “make your voice heard” and deal with all the attendant problems of special interests and democratic mobilization. Instead, you just walk out the door. Markets work because of the right of exit, and politics often doesn’t work because it is so limited in how it can solve collective-action problems.

So many Americans are concerned with how “Washington isn’t listening to them,” and candidates like Bernie Sanders, Donald Trump, and Ben Carson are stoking that outrage. But maybe Washington isn’t listening because it is so big that only mobilized special interests have the resources and incentives to pay attention. Maybe big government will never really pay attention to the people. If this is so, then maybe people should stop trying to control each other so much.

So, the next time Uncle Kevin or Aunt Jane open their big mouths to opine about “how things should be,” maybe you should just suggest that 50.01 percent of the table should fill the plates of the minority. Maybe they’ll get the point. 

The latest polls are clear: Americans want little to do with the 10,000 Syrian refugees President Obama has promised to take in, much less any part of dealing with the more than 4 million refugees fleeing Syria’s civil war. According to Gallup, 60% oppose the United States taking in refugees, compared with just 37% who approve.  As clear as the figures seem, however, there are four good reasons that Obama should avoid following the majority’s lead.

The first reason is that Americans are wildly ignorant about Syria, Islam, and the situation in the Middle East. A Pew survey in 2012 caused a kerfuffle when it revealed that 50% of Americans couldn’t identify Syria when it was highlighted on a map of the Middle East. The same survey found that just 42% could identify the crescent and star as the symbol for Islam from a set of four symbols, one of which was the Christian cross and another was the Star of David (about 34% chose Om, the symbol associated with Hinduism). This ignorance would be bad enough, but at least presidents might be able to count on American opinion, if they could only figure out which half of the people to trust!

What’s worse, however, is the collective ignorance that Americans have shown regarding major political issues over time. Thanks to fear, nationalism, religious and cultural biases, and historical circumstances, American majorities have been wrong about a number of very important issues, often over long periods of time; slavery, the treatment of native peoples, and women’s rights are just a few obvious examples. Regarding foreign affairs, the majority’s track record is very spotty. The public was far too slow to recognize the threat of Hitler, far too acquiescent when Kennedy and then Johnson escalated Vietnam to pointless disaster, and over eager to take on Iraq a second time in 2003. Regarding refugees, in particular, the current hysteria has prompted reminders that very similar majorities opposed accepting Jewish children from Germany in 1939, opposed accepting Hungarian refugees fleeing Soviet control in 1958, and more recently opposed taking in refugees from Kosovo in 1999. None of those episodes seem, in retrospect, to reflect wise counsel from the public.

The third reason the president should ignore public opinion on the refugee crisis is that American attitudes are irresponsible. Even in the best of times, American public opinion does not reflect one of the most critical requirements of policy evaluation: a consideration of trade offs. Since individual Americans are not responsible for making tough decisions between guns and butter, they tend to respond to poll questions in a vacuum, unhindered by the context in which policy decisions must actually be made. When you ask Americans what they want, they want it all – military strength without economic strain, influence without upsetting the allies, and victory without casualties. In the wake of Paris, public attitudes are all the more suspect. Terrorist attacks produce fear and fear produces emotional responses, not rational ones. Of all surveys, presidents should least trust those taken in the middle of a crisis.

The fourth reason to question the will of the majority is that it is the toxic byproduct of the political echo chamber. Whether glued to the television or to Twitter, research shows that the mass public remains dependent on the foreign policy establishment for almost all the arguments and cues necessary to form opinions about foreign policy. Since the Paris attacks we have heard the Republican candidates trip over themselves to take ever more extreme positions on the refugee situation. Senator Ted Cruz has called it “nothing less than lunacy” to take in refugees; Carson called it a “suspension of intellect” to consider accepting refugees. Donald Trump has called accepting refugees “just insane” while suggesting closing mosques and considering the creation of a database of all Muslims living in the United States. In today’s information environment, such outrageous statements not only make news but they spread quickly through social media, pushing aside calmer and more reasoned assessments and proposals. Unsurprisingly, then, 60% of the public – and 84% of Republicans  – oppose Obama’s plan to take in 10,000 Syrian refugees despite the fact that the United States has an extensive and lengthy security review process for screening refugees and despite the fact that the U.S. experience with refugees provides no support for exaggerated perceptions of a terrorist threat.

Given all this, neither President Obama, nor Congress, nor the various candidates for president should put too much stock in today’s majority opinion about Syrian refugees. Instead, Obama should lead a patient and vigorous national debate about the benefits and costs of accepting refugees, working toward a policy that meets the long-run interests of the United States. Over time, as the fear and panic from Paris subside, we should be mindful that today’s “wisdom of the crowd” may eventually look like yesterday’s folly.

Of the demands being made by protesters in the current wave of unrest on American campuses, some no doubt are well grounded and worth considering. Some of them, on the other hand, challenge academic freedom head on. Some would take control of curriculum and hiring out of the hands of faculty. Some would enforce conformity of thought. Some would attack the rights of dissenters. Some would merely gut the seriousness of the university.

Last night I did a long series of tweets drawing on a website which sympathetically compiles demands from campus protests – TheDemands.org – and noting some of the more troublesome instances:

  • From Dartmouth: “All professors will be required to be trained in not only cultural competency but also the importance of social justice in their day-to-day work.”
  • From Wesleyan: “An anonymous student reporting system for cases of bias, including microaggressions, perpetrated by faculty and staff.”
  • From the University of North Carolina at Chapel Hill: “White professors must be discouraged from leading and teaching departments about demographics and societies colonized, massacred, or enslaved under white supremacy.”
  • From Guilford College: “We suggest that every week a faculty member come forward and publicly admit their participation in racism inside the classroom via a letter to the editor” in the college paper.

My series drew and continues to draw a strong reaction. Now I’ve Storified the tweets as a single narrative, including some of the responses. Read it here (cross-posted from Overlawyered).

The Telegraph ran a fascinating collection of photos from different statges of development of the Asian city state of Singapore. The first photo is from 1900, the second is from the 1970s and the last photo is contemporary. The incredible transformation of Singapore from a sleepy outpost of the British Empire to a global commercial and technological hub was partly facilitated by a very high degree of economic freedom. In 1970, the first year for which data is available, Singapore had the third freest economy in the world (behind Hong Kong and Canada). Singapore maintained a high degree of economic freedom over the next 45 years and ranks as the second freest economy in the world today (behind Hong Kong). As late as 1970, per person income in Singapore was 54 percent of the global average. Today it is 321 percent of the global average.

For 122 years, the California Labor Code has said that employees in all industries are “entitled” to a day of rest “one day therefrom in seven.” The statute also provides that “No employer shall cause his employees to work more than six days in seven.” Mendoza, a former Nordstrom employee, is arguing to the California Supreme Court that the Labor Code should be construed as flatly prohibiting employers from allowing an employee to work on the seventh day of a workweek. To make that argument work he must also convince the Court that the Labor Code prohibits employees from voluntarily choosing to work on a day otherwise scheduled for rest. This radically paternalistic argument not only flies in the face of the plain language of the statute, but it would hurt employees who may wish work on the seventh day of a workweek for innumerable reasons. In a brief filed in support of Nordstrom, Cato, joined by the National Federation of Independent Business, the Reason Foundation, and a handful of California employees, argues that there are many legitimate reasons why an employee might want to work on the seventh day of a workweek: to meet financial goals, to accommodate personal schedules, or simply to maintain flexibility to work when he wants.

Mendoza also argues that employers must require written waiver from employees before allowing them to work on the seventh day of a workweek. But nothing in the Labor Code suggests that there is any requirement for a waiver to be in writing, or for employers to maintain records whenever an employee should elect to work on a day otherwise scheduled for rest. We argue that it would be improper to read language into the statute that would impose such burdensome requirements on employers—both because it would violate first principles of statutory construction and because it would open unwitting businesses up to lawsuits. Moreover, such a paperwork requirement would be wholly impracticable when, for example, an exempt employee might choose to check a few emails on a Sunday evening, something that could be construed to violate the day of rest law.

Finally, we argue that the plaintiff advocates a theory that would hold his employer liable for conduct that California state regulators had long permitted in official agency guidance. Just as there would be significant due process concerns with Congress passing a statute to retroactively hold businesses liable for conduct that was permissible at the time, there would be serious constitutional problems with giving a statute a retroactive interpretation that would impose ruinous penalties on individuals or businesses that acted in good faith reliance on best available guidance at the time. The California Supreme Court should not heed Mendoza’s paternalistic arguments and upset 122 years of treating California’s workers like responsible adults.

Whenever North Korea heads to the negotiating table one remembers the traditional description of a second marriage: the triumph of hope over experience. We’ve been here before. Or, more accurately, the two Koreas have.

Still, as Winston Churchill famously said, better to jaw-jaw than war-war. The last Korean conflict left millions of casualties and refugees. Even a minor league war could be catastrophic.

Nevertheless, the Republic of Korea should have no illusions about the latest negotiations, scheduled for America’s Thanksgiving. Nothing much is likely to emerge from that gathering. And nothing that emerges is likely to survive very long.

Diplomatic dialogue requires two parties. The Democratic People’s Republic of Korea prefers a monologue. Kim Jong-un is most concerned about preserving his rule.

To the good, he evinces no suicidal impulses. The Kims always have preferred their virgins in this world. And despite the regime’s consistent rhetoric about destroying enemies near and far, nothing suggests Pyongyang’s leadership actually believes the DPRK to be capable of defeating Seoul backed by America.

However, Kim suffers no liberal sentimentality. Over the last four years his government has executed some 400 officials, including his uncle.

In any talks with the ROK humanitarian concerns will never be more than a gloss for the DPRK. Thus, Seoul’s objectives also should be eminently practical.

Like last August. The South restarted propaganda broadcasts along the DMZ after two of its soldiers were injured by land mines. This triggered a surprisingly ferocious response from the North. The two stepped back from confrontation and agreed in principle to further discussions to reduce tensions. The latest meeting is supposed to help set such talks in motion.

The North almost certainly hopes to persuade the ROK to restart economic aid and investment suspended in 2010 after the sinking of a South Korean warship and bombardment of a South Korean island. While there’s nothing in principle wrong with Seoul attempting to buy good behavior, so far the DPRK never seems to stay bought.

The ROK must decide what it most desires out of Pyongyang. One goal should be continuing dialogue, even if largely inconsequential. In general, North Korea has proved less likely to provoke militarily while engaged diplomatically.

A more substantive objective for South Korea should be to lessen the North’s conventional threat. North Korea’s military is unsophisticated, but its advanced positioning puts Seoul at risk. ROK aid and trade should only follow reduction in the military threat to the South’s industrial, political, and population heart.

To test Pyongyang’s interest, the Park government should indicate that North Korean flexibility would open up topics heretofore off-limits. For instance, reduce the security threat to the ROK and Seoul would consider limiting or eliminating joint military exercises with the U.S., and even America’s troop presence. The U.S. should offer its full endorsement for the talks and indicate its readiness to step forward diplomatically and back militarily.

While little that Pyongyang says can be accepted at face value even paranoids have enemies. America’s propensity for regime change likely unsettles the North. Reducing the threat environment facing the DPRK would offer a good test of the latter’s intentions.

Moreover, Seoul should use the prospect of talks with the North to intensify its dialogue with China. Beijing appears to be increasingly unsettled over the misbegotten behavior of its erstwhile ally.

Nevertheless, the People’s Republic of China has resisted applying more pressure, instead urging the U.S. to engage the North and reduce the North’s insecurities. Following the Chinese script would allow the ROK to request an extra push from Beijing, asking what would be necessary to involve China more directly in resolving the “North Korea problem.”

As I point out in National Interest: “All of this goes well beyond the working-level discussions planned for Thursday. But Seoul should attempt to turn the negotiations into something more substantive and meaningful. That would be something for which all of us could give thanks.”

Back in October, I debated ObamaCare with former Secretary of the U.S. Department of Health and Human Services Kathleen Sebelius. Kansas City Public Television recently aired a package featuring the debate.

Week in Review: Health Care Status Report

Complete footage of the debate is available here: Part 1Part 2Part 3Part 4Part 5, and Part 6.

One memorable moment came after I told the story of Deamonte Driver, a boy from Prince George’s County, Maryland, who died at age 12 because his mother was unable to find a dentist who would accept their Medicaid coverage. An infection that began in an abscessed tooth spread to Deamonte’s brain and ultimately killed him. A dentist could have prevented Deamonte’s death with a simple $80 extraction. But Medicaid pays dentists so little, that only one in six Maryland dentists accepts Medicaid patients. Deamonte’s mother and employees at a local non-profit called dozens of dentists to no avail.

Sebelius responded that Deamonte would have died with or without Medicaid, and besides there is no alternative because “I don’t know any dentists who take uninsured people at all.” This from, as KCPT describes her, “the woman once charged with leading the nation’s health care system.”

Also on the panel were Tarren Bragdon of the Foundation for Government Accountability and Daniel Landon of the Missouri Hospital Association.

In 2011, the Fullerton, California police violently beat Kelly Thomas, a 37-year-old mentally ill homeless man, who later died from his injuries. The arrest was recorded, and Thomas could be heard calling for his father as the officers relentlessly beat him into a coma.

Two officers were fired for the incident but ultimately acquitted of criminal charges in the case. As opening arguments were set to begin in the wrongful death suit, the City of Fullerton agreed to pay the Thomas family $4.9 million as a settlement.

Ron Thomas said at a news conference that while the city acknowledged no wrongdoing in the settlement, it was a clear indication to him of its liability and guilt in the death of his 37-year-old son Kelly Thomas. Thomas said he feels vindicated by the settlement.

It is not uncommon for municipalities to disavow any culpability in settlements like this. But lawsuits are important nonetheless because they bring some measure of closure to the families who do not find justice in the criminal courts and incentivize governments to prevent such incidents from happening in the future.

Over at PoliceMisconduct.net, we track and catalog news stories like this one that take years to make their way through the administrative, criminal, and civil systems. It is vitally important that police officers and municipalities are held accountable for their actions.

On Tuesday, December 1, Cato will host “Policing in America,” an all-day conference dedicated to discussing the policies and impacts of law enforcement around the country. The event will be live-streamed on the Cato website. 

A version of this is cross-posted at PoliceMisconduct.net

Earlier today, Turkey, a NATO ally, shot down a Russian jet, killing at least one pilot, and leaving the other in the hands of insurgents on the ground (and possibly also dead). The Turks claim that the Russian jet was operating in Turkish airspace, and was warned away on numerous occasions. Thus, when its F-16 fighter jet attacked the Russian SU-24 bomber, it was a legitimate act of self defense. The Turks have called for a NATO meeting later today to explain their side of the story, and, presumably, game out next steps.

Russia claims that its plane was operating over Syrian airspace. It initially reported that it was downed by ground fire, but has since changed its story. Putin is calling it “a stab in the back,” but may stop short of using it as a pretext for substantially widening a conflict he may already regret having been dragged into. There are conflicting reports about whether Russian Foreign Minister Sergey Lavrov has canceled a planned meeting in Turkey tomorrow.

This story bears watching, and I’m reluctant to spin out the historical analogies too far. Very few brush fire wars become world wars, and not all allies behave as the allied and entente powers did in July 1914. Plus, technological changes go a long way to explain why the world today is very different from 100 years ago. I have reason to doubt, for example, that a nuclear-armed Germany would have risked war with a nuclear-armed Russia over Austria-Hungary’s ultimatum to Serbia.

But I nervously tweeted this morning that we might soon appreciate the difference between fighting wars against terrorists and wars against nation-states. We’ve avoided having to think seriously about such things for many years, which may explain the apparent enthusiasm for a no-fly zone over Syria (favored by at least 8 of 11 major presidential candidates). The possibility of Russian jets being shot down, and Russian pilots killed, was dismissed as a hypothetical (Though not by everyone).

It isn’t hypothetical any longer.

Among the types of speech that the First Amendment protects is commercial speech, such as advertising. But commercial speech that’s false or misleading isn’t constitutionally protected: you may be liable for defrauding someone through various communications. But what is “false” or “misleading,” and who decides?

The Federal Trade Commission brought claims against POM Wonderful—you may know them as the producer of various pomegranate beverages in distinctive curved bottles—for consumer deceptive advertising. The agency determined that some of POM’s health-supplement ads were misleading. But this decision was appealable only to the FTC itself, which becomes judge, prosecutor, and jury in an arrangement blessed by the U.S. Court of Appeals for the D.C. Circuit. That court declined to second-guess the FTC’s rulings on the ground that the agency should be given broad deference in its adjudicative factual and legal findings.

But when the standard of review for First Amendment claims varies between courts and administrative agencies, constitutional protections become vulnerable to inconsistencies. And even more concerning than inconsistencies are the conflicts of interest inherent in the FTC’s internal hearings, which lack substantial judicial review.

This situation leaves businesses subject to FTC actions with no viable means to check their accuser’s determination that its speech is misleading or fraudulent. It’s no coincidence that over the past two decades, the FTC hasn’t lost a single deceptive-advertising case it has administratively initiated.

To correct this state of affairs, Cato has joined the Alliance for Natural Health-USA on an amicus brief urging the Supreme Court to take POM’s case. The Supreme Court has repeatedly held that determining whether the Constitution protects particular speech is the quintessential function of Article III courts, not federal agencies. Yet this directive has become increasingly observed in the breach with respect to commercial speech, ever since the Supreme Court’s unsatisfying ruling in Bose Corp. v. Consumers Union (1984).

The POM predicament presents an optimal opportunity for the Court to address the question left open in Bose and wrest decisions regarding First Amendment doctrine away from the executive branch. 

The Supreme Court will decide whether to take POM Wonderful v. Federal Trade Commission early in the new year.

Most of the headlines about the large new Pew Research Center survey (6,000 interviews) have focused on the continuing decline in Americans’ trust in government, as depicted in the chart below.

But the survey also asks one of my favorite questions:

If you had to choose, would you rather have a smaller government providing fewer services, or a bigger government providing more services?

As shown in the chart below, the number preferring smaller government rose to its highest point during the 1990s, then reached a low point as President Obama was elected in 2008, and has been rising since then. In the latest survey 53 percent of Americans say they prefer a smaller government, while only 38 percent would rather have a bigger government with more services.

But as I’ve written before, I’ve always thought the “smaller government” question is incomplete. It offers respondents a benefit of bigger government–”more services”–but it doesn’t mention that the cost of “bigger government providing more services” is higher taxes. The question ought to give both the cost and the benefit for each option. The Rasmussen poll does often ask the question that way. In one poll about a decade ago, Rasmussen found that 64 percent of voters said that they prefer smaller government with fewer services and lower taxes, while only 22 percent would rather see a more active government with more services and higher taxes. A similar poll around the same time, without the information on taxes, found a margin of 59 to 26 percent. So it’s reasonable to conclude that if you remind respondents that “more services” means higher taxes, the margin by which people prefer smaller government rises by about 9 points. So maybe the margin in this poll would have been something like 58 to 34 if both sides of the question had been presented.

For now, when voters are given only the benefits and not the costs of bigger government, Pew and other pollsters find these results: