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On Thursday, Britain will vote on whether or not to leave the European Union (EU). As things stand, the race is too close to call: a week ago, “Leave” were surging in the polls; this week, things have swung back towards “Remain.” But neither side has managed to build a lead beyond the pollsters’ margin for error, and veteran political campaigners suggest it will all come down to turnout. So what is really at stake as Britons submit their “Brexit” ballot papers?

To me, the case for Brexit is rooted in the idea of self-government, and the democratic accountability that goes along with that. The question facing British voters is, fundamentally, whether their parliament should be sovereign and their laws supreme, or whether such powers should continue to be pooled at the European level.

In other words, this is a constitutional referendum. It is not a choice between rival political platforms, or between rival sets of politicians; nor, indeed, does the result of the referendum have any immediate legal consequences. Rather, this is an opportunity for British voters to decide how they should be governed in future. Once the result is in, it will be up to the British government, and to parliament, to determine policy going forward.

This point is important, because it undercuts a lot of the fears people have about Britain leaving the EU. There is no denying, for example, that the Leave campaign has taken some unsavory positions on immigration, and promised unrealistic “bread and circuses” once Britain leaves the EU. But Leave are, emphatically, not a government in waiting.

Then there’s the government-backed Remain campaign, who have scarcely let an opportunity to scaremonger about the economic consequences of Brexit pass them by. From their increasingly shrill and outlandish claims, you would think that a vote for Brexit meant surrounding Britain with naval mines and never letting anything—whether goods, services, capital, or people—cross the border again.

That scenario is, of course, absurd. In reality, post-Brexit Britain is likely to rejoin the European Free Trade Area (EFTA), which it left in 1973 to become an EEC member, alongside Switzerland, Norway, Iceland, and Liechtenstein. These countries participate fully in the EU’s single market, without being subject to its political union. They are also free from the EU’s Common Agricultural Policy (which horribly distorts produce markets), its Common Fisheries Policy (which has helped to deplete European fish stocks), and its Common External Tariff (which prevents EU member states from trading freely with other countries).

The arguments against this “Norway option,” as it is often called, are well-rehearsed, but mostly without foundation. Yes, EFTA members have to contribute to the EU budget—but they do so at a far lower per capita level than full EU members. And yes, EFTA members have to adhere to a lot of EU regulation—but, again, far less than full EU members. More to the point, EFTA members have independent representation on the global trade and standards bodies that inspire most of this regulation in the first place, while EU member states are represented collectively by the European Commission. As a result, EFTA countries arguably have more say over the actual content of EU regulation than individual EU member states do.

There is, inevitably, a flaw in this plan: EFTA members, whether through parallel membership of the European Economic Area, or through a series of bilateral agreements with the EU (as is the case for Switzerland), must accept the free movement of people within the area covered by the European single market. And given how much Britain’s Leave campaign has focused on reducing immigration, that might prove a political tough sell—despite clear evidence that EU migrants are a boon to the British economy.

On the other hand, a YouGov poll commissioned by the Adam Smith Institute suggests that a majority of the British public would back EFTA membership in the event of a Brexit vote. The House of Commons also contains a clear majority in favor of continued membership of the European single market. So I am optimistic that British intransigence on European migration would not scupper a fully-fledged trading relationship in the event of Brexit.

But perhaps this all begs a question: Why am I willing to take the risk, however slight it may be, that Brexit will damage Britain’s trading relationship with Europe? My response comes down to two things. First, even if Britain were denied continued access to the single market, I am certain that a comprehensive UK–EU trade agreement could nevertheless be reached. An independent Britain would, after all, instantly become the EU’s single largest export market.

Such negotiations might prove difficult; their outcome would probably provide less access to the EU market for British agriculture and services; and British banks might lose the right to do business in other EU countries without establishing separate operations there. These would be real losses, to be sure. But they could easily be outweighed by freer trade with the rest of the world. Britain, as it happens, already sends more exports out of the EU than it does into it.

It is also worth highlighting research by Economists for Brexit, whose modelling suggests that a post-Brexit policy of unilateral free trade within the WTO framework could deliver substantial benefits over the status quo, without requiring any bilateral trade agreements whatsoever. That might not be a politically palatable option, but it does suggest that the single market need not necessarily be the be-all and end-all of Britain’s trade policy.

Second—and finally—let me come back to where I started: this referendum isn’t ultimately about trade, or immigration, or even about economics in general; it is about whether Britain should govern itself, or whether it should cede an ever-increasing portion of that responsibility to the institutions of the European Union. There are principled arguments on both sides of that question but, for me, the answer is clear.

Britain’s common law tradition, which asserts our freedoms from government, and which assumes we are at liberty to do anything that isn’t specifically prohibited, sits uneasily alongside the continent’s Napoleonic approach, which tends to create positive entitlements that can be enforced against government, and which often assumes that anything the law does not explicitly provide for must be illegal. Britain’s majoritarian political culture, which prizes above all the ability of voters to get rid of one government and replace it with another, does not chime harmoniously with Europe’s permanent coalitions, technocratic governments, and late-night deals made in proverbial, smoke-filled rooms. Nor does Britain’s laissez-faire, internationalist view of economics marry well with the EU’s dirigiste, fortress-Europe mentality.

In the end, that’s why I believe Britain should be free to rule itself, while also seeking the most open possible trading arrangements with both its European neighbors and the rest of the world. A Brexit vote alone, it must be stressed, will not make those things happen. But it would mark the beginning of a process that could eventually prove very beneficial for Britain—just so long as the right policies are pursued in its aftermath.

If you haven’t heard much from me on these pages of late, it’s because I spent most of the last two weeks traveling back and forth, and so had little time for blogging.

I did, however, participate in some interesting events while I was away.  The first of these was “Futures Unbound,” the second installment so far of Cato’s annual Summit on Financial Regulation, held at the Drake Hotel in Chicago on June 6th.  I gave a talk there on the regulatory role of private clearinghouses.  I also had the pleasure, the night before, of taking part in a speakers’ dinner that was also attended by two distinguished (and very fun!) members of the CMFA’s Council of Academic Advisors, George Kaufman of Loyola University Chicago and Randy Wright of the University of Wisconsin.

After the Chicago event I headed straight to London, where I’d been invited to give the Institute of Economic Affairs’ annual Hayek Lecture.  Before the lecture Philip Booth, the Institute’s Editorial and Programme Director, interviewed me briefly on the necessity of central banks.  The main event took place that evening at Church House, a few blocks away from the IEA’s offices in Westminster; and I was pleased to find that in arranging for that commodious venue the Institute hadn’t overestimated the audience for my topic, which included many good friends from all over Europe.

Alas, much as I would have liked to linger with that crowd, I had to be whisked away, first for some dinner, and thence to a Heathrow hotel, where I could rest a little before catching an early flight to the States, where I took part in the second in what I hope will be a long-lived series of Liberty Fund conferences co-sponsored by them and Cato’s Center for Monetary and Financial Alternatives. This one, on “Liberty and Currency: The U.S. Asset Currency Reform Movement,” took place (appropriately enough) on Jekyll Island, under the direction of CMFA Adjunct Scholar (and occasional Alt-M contributor) Jeff Hummel,  with David Henderson serving as discussion leader.  The other distinguished participants included Rutgers’ Hugh Rockoff and U.C.S.D.’s Lawrence Broz.  Like every other Liberty Fund conference I’ve attended, this one was great fun.  Unfortunately, it’s unbuttoned proceedings were so in part (as is also always the case) because they were both confidential and unrecorded, so I’m unable to share any part of them with you.*

After Jekyll Island it was across the Atlantic again, this time to Zurich, where I took part in the ETH Risk Center’s conference on “Alternative Financial and Monetary Architectures.”  Others who spoke there included William R. White, another member of the CMFA’s Council of Academic Advisors, as well as “Limited Purpose Banking” champion (and write-in U.S. presidential candidate) Laurence Kotlikoff.  Although this event’s proceedings were also not recorded, the ideas I presented were a somewhat modified version of ones I presented at a Cato Monetary Conference a few years ago.

After the Zurich conference, I lingered for a day in Zurich, where I was able, by sheer luck, to dine with Cato Senior Fellow Jerry O’Driscoll, who happened to be on his way to an event in Lichtenstein. That dinner was a splendid and relaxing conclusion to a sometimes taxing itinerary — and the next-best thing to being back home again, with my very best friend.

*Those interested in taking part in future Liberty Fund-CMFA events are encouraged to write to me expressing their interest.  Please note, however, that these events are generally open only to academics and other holders of graduate degrees.

[Cross-posted from Alt-M.org]

Yesterday, the Supreme Court decided the case of Utah v. Strieff, which involved the power of the police to detain and search citizens, and what the courts should do when the police break the law in the course of their investigations.  Washington Post reporter, Robert Barnes, writes, “the low profile case more likely will be remembered for a fierce and personal dissent from Justice Sotomayor, who said the ruling would exacerbate illegal stops of minorities.”  He’s right.

Here’s an excerpt from Sotomayor’s dissenting opinion:

[T]his case tells everyone, white and black, guilty and innocent, that an officer can verify your legal status at any time. It says that your body is subject to invasion while courts excuse the violation of your rights. It implies that you are not a citizen of a democracy but the subject of a carceral state, just waiting to be cataloged. We must not pretend that the countless people who are routinely targeted by police are “isolated.” They are the canaries in the coal mine whose deaths, civil and literal, warn us that no one can breathe in this atmosphere. See L. Guinier & G. Torres, The Miner’s Canary 274–283 (2002). They are the ones who recognize that unlawful police stops corrode all our civil liberties and threaten all our lives. Until their voices matter too, our justice system will continue to be anything but.

Regular visitors to the Cato web site will already be very familiar with many of the points Sotomayor made in her opinion.  We have been trying to draw more attention to the problem of confrontational police stops since the death of Amadou Diallo in 2000.  Sotomayor cites several scholars that have presented their research findings at Cato.  Last year, Professor James Jacobs discussed his book, The Eternal Criminal Record.  In 2014, Professor Alice Goffman, discussed her book, On the Run, at a Cato forum titled Lessons from Ferguson.

To stay ahead of the news, keep following Cato’s work. 

Related items, here, here, and here.

Proponents of America’s foreign policy strategy of primacy insist that its benefits far outweigh its costs. But as last week’s conference at the Cato Institute demonstrated, not everyone agrees. During the first panel of the conference, for example, foreign policy experts challenged the conventional wisdom about the benefits of the United States’ post-Cold War alliances, as I highlighted yesterday. Experts on the second panel continued that critique of primacy by discussing and debunking its myths related to geography, energy, and democracy promotion.

Alexander Downes of George Washington University and Jonathan Monten of University College London started the discussion by arguing that trying to spread democracy through military intervention is generally difficult and often counterproductive. A fact, they point out, that is supported by America’s efforts in Iraq and Afghanistan.

Eugene Gholz of the University of Texas at Austin closed out the panel with a discussion of U.S. energy security. He explained that the United State is energy secure, and that, more broadly, market forces have a stabilizing effect on the world’s energy prices. Indeed, Gholz argues, the world’s energy markets are quite resilient, and do not require protection from the U.S. military.

You can watch the full discussion below. 

             

The latest issue of Regulation magazine has been released on the Cato website.

The cover article, by Christopher Robertson and Jamie Cox Robertson of the University of Arizona, examines the extent of over incarceration in the U.S.  Why are so many innocent people convicted of crimes? They review recent scholarship that concludes that many types of evidence introduced by prosecutors to convince jurors of guilt, such as bite mark, fingerprint, and bullet analysis, are not scientifically reliable. The authors suggest various remedies to the wasteful incarceration problem including public rewards for attorneys who demonstrate that a prisoner should be released.

Researchers John Lott and Gary Mauser explore empirical research on firearms. They found that the findings of such research vary systematically with the disciplinary orientation of the authors.  A large majority of articles written by economists find that expanded legal access to firearms reduces crime and does not increase the suicide rate, and that gun owners who are approved for concealed-carry are less likely to commit crimes than ordinary Americans. In contrast Criminologists were more evenly divided on these questions.

Two articles critique regulatory rationales rooted in behavioral economics. In Infantilization by Regulation law professors Jonathan Klick and Greg Mitchell argue that protecting people from the effects of their choices reduces their ability to think critically about them.  Georgetown ethics professor John Hasnas explores how much liberty is preserved under modern “libertarian paternalism.” He then asks whether the insights of behavioral economics apply to public decisions, argues yes, and concludes that U.S. Constitution is an excellent example of choice architecture.

One of the most disussed topics in higher education policy is the rate of inflation in university tuition. Top William and Mary economists find empirical evidence that highly selective schools reduce financial aid to students who receive federal tuition support.

In our Briefly Noted articles economist Ike Brannon argues that cities harm transit riders by over-providing subsidized parking near street corners. Brannon and the American Action Forum’s Sam Batkins question whether expanded family leave policies would harm workers. University of California, Irvine emeritus professor Richard McKenzie shares the results of his survey that found servers at fast-casual restaurants would not support substituting higher hourly wages for the current tipped-wage system. Finally, University of Michigan professor Thomas Hemphill lays out a practical approach to reforming occupational licensing laws.

Book reviews include Free Market Environmentalism reviewed by Timothy Brennan, Robert Reich’s Saving Capitalism and Robert Gordon’s The Rise and Fall of American Growth reviewed by David R. Henderson, and Phil Murray’s review of Dani Rodrik’s Economics Rules.

 

My Working Papers column describes papers on cigarette taxes and food stamps, e-cigarettes and adolescent smoking, corporate inversions, and public housing and crime.

America remains at war in Afghanistan. After almost 15 years it’s time to bring the last troops home.

In October 2001 George W. Bush sent U.S. forces to destroy Osama bin-Laden’s al-Qaeda terrorist organization and oust the Taliban government which hosted him. Washington then shifted to nation-building.

The 9800-man American contingent was to have been cut in half this year and reduced to 1000 early next year. But last October the administration decided to slow the planned withdrawal. The total now will drop to 5500 in 2017.

Although U.S. participation in combat has formally ended, American troops remain on call. Proposals abound for rejoining the war. For instance, Gen. John F. Campbell, then-U.S. commander in Afghanistan, urged the administration to allow American troops to attack the Taliban even if it did not threaten allied forces and use air support on behalf of Afghan forces until Kabul established its own air force.

In 2012 Afghanistan became America’s longest military conflict, passing the Vietnam War. What is Washington doing there?

There’s an air of desperation about Kabul. James R. Clapper, director of National Intelligence, cited the “serious risk of a political breakdown” in Afghanistan.

The authorities remain generally incompetent, ineffective, and corrupt. Transparency International ranks the country as 166 out of 168 in corruption. There is little tangible to show for the more than $100 billion in aid provided over the last decade.

The economy is crashing as the flow of foreign money ebbs. Only poppy production remains a growth industry.

Since the bulk of foreign troops came home in 2014 fighting has surged. Government forces are on the defensive and the Taliban is believed to hold more territory than at any other time since America’s intervention. Even in Kabul Westerners rarely leave their secure compounds as attacks have become common. Civilian casualties are way up.

Unfortunately, hope for a political settlement has gone a glimmering. The chief threat probably is not a complete Taliban triumph. More likely is a fractured land with a multi-sided conflict continuing for years. That would be a tragedy, but wouldn’t be much different than today.

Former US commander David Petraeus and Brookings Institution’s Michael O’Hanlon claimed that a continued military presence is necessary because Afghanistan is “effectively the eastern bulwark in our broader Middle East fight against extremist forces.” Yet America’s Afghan presence has not deterred Al-Qaeda or the Islamic State from operating in Afghanistan.

Al-Qaeda as well as the Taliban has found sanctuary in Pakistan, and the Islamic State could do so as well. Moreover, al-Qaeda has metastasized in Yemen and ISIL has grabbed sections of Iraq, Libya, and Syria.

As I point out in Business Insider: “Afghanistan is a tragedy. But Washington cannot fix Afghanistan. The U.S. cannot afford the human and financial cost of endless war. It’s well past time to bring home America’s military personnel.”

The rate of growth in a country’s money supply, broadly measured, will determine the rate of growth in its nominal GDP. For Saudi Arabia, the following table presents a snapshot of the relationship between the growth in the money supply (M3) and nominal GDP.

 

The chart below shows the course of M3. Following the oil price plunge of September 2014, the growth in M3 has slowed. The rate of nominal GDP growth will follow.

Why is the money supply growth rate declining? Since the plunge in oil prices, the Saudis’ current account has dipped into negative territory. This has to be financed, and the Saudis have used their stash of foreign reserves to do the financing.

When the Saudi Arabian Monetary Agency (SAMA) sells foreign currency to finance the current account deficit (and maintain the Riyal/USD peg), it debits the reserve accounts (in Riyals) of the Saudi banks at the SAMA. This causes the domestic money markets to tighten, which works its way through the banking system. Not surprisingly then, there has been a marked slowdown in the growth of broad money since the oil price plunge and associated current account deficit.

 

So, a slowdown in Saudi nominal GDP is already baked in the cake. The Saudis should get used to that sinking feeling, which will only abate if oil prices continue to rise.

The Constitution gives the power to declare war to the legislative branch. In recent decades, however, members of Congress have preferred to leave the hard decisions to the president. This constitutional abdication has allowed unilateral war-making.

Even President Barack Obama, who tossed the issue of Syria’s use of chemical weapons to Congress, has relied on the outdated authorization passed after the terrorist attacks of 9/11 to validate multiple military operations today.

Congress could make a bad situation worse. Representatives Scott Perry (R-PA), Matt Salmon (R-AZ), and Cynthia Lummis (R-WY) have introduced H.J. Res. 84,”Authorization for Use of Military Force Against Islamist Extremism.” It would create a long list of target “organizations that support Islamist extremism,” many of which have done nothing against America.

It is a bad bill.

First, a country normally declares war against entities, not philosophies. What matters is not whether a nation or group is Islamist but whether it endangers America.

Second, the threat to the U.S. and other nations is violent extremism, not extremism. It doesn’t particularly matter if people have seemingly kooky ideas on how to live if they do not kill and otherwise harm others.

Third, war should be reserved for responding to threats to America. In World War II Washington declared war on specific countries, most notably Japan and Germany, not on fascism.

Yet Representatives Perry, Salmon, and Lummis came up with numerous new enemies: “the Islamic State, Al-Qaeda, Al-Qaeda in the Arabian Peninsula, Al-Qaeda in the Islamic Maghreb, Al Shabab, Boko Haram, Al-Nusra Front, the Haqqani-Network, the Taliban, Houthis, Khorasan Group, Hamas, Hezbollah, and any substantial supporters, associated forces, or closely related successor entities to any of such organizations.”

The proposed choice of enemies well illustrates the problem of U.S. foreign policy. The Islamic State did not turn to terrorism against America or Europe until Washington and its allies took over the fight against the putative caliphate. Had Washington left the battle to those in the region threatened by the Islamic State—essentially everyone—the group likely would be devoting its terrorist energies elsewhere.

Al-Qaeda remains an enemy, but not much of one after nearly 15 years. Moreover, by supporting Saudi Arabia’s brutal campaign in Yemen, Washington actually has weakened the forces against al-Qaeda and opened space for the Islamic State.

Al-Shabab is essentially a criminal gang operating in Somalia. It has little to do with America. So, too, Boko Haram, the vicious Islamic insurgency in Nigeria. Not every evil doer on earth is America’s problem.

The al-Nusra Front and Khorasan Group are seemingly associated with al-Qaeda but focused on the Syrian civil war. Ironically, they are on America’s “side” in that conflict. Washington should stay out of Syria.

The Haqqani Network and Taliban are America’s opponents in Afghanistan. However, Washington long ago fulfilled dispersed al-Qaeda and punished the Taliban for hosting anti-American terrorists. The U.S. should drop its forlorn attempt at nation-building.

Far from being Islamic extremists, the Houthis were known for religious moderation and are a Shia variant close to Sunnis. The group has never targeted Americans. Intolerant Saudi Arabia has turned the conflict into a sectarian struggle.

Hamas is a malign organization, but has no global ambitions and does not threaten America. Although also no friend of Israel, Hezbollah is not a military enemy of the U.S. Targeting Hezbollah would put America at odds with the Lebanese government—and the nation’s substantial Christian population.

As I wrote for National Interest: “Congress should declare war before the U.S. goes to war, but should approve military action only when Washington has no alternative course to protect America. That is not the case in the Mideast today.”

Since the end of the Cold War, the United States has followed a foreign policy of primacy. The strategy aims to preserve and extend America’s dominant position in the world using its massive military and global network of alliances to spread western values and stop prospective threats before they materialize. Yet, while primacy continues to receive bipartisan support, a growing number of U.S. foreign policy and military experts are now calling for a new grand strategy, one that would make the United States stronger and more secure, and that would better align with the fundamental values at the core of the nation’s founding.

Last Wednesday, the Cato Institute hosted an all-day conference titled “The Case for Restraint in U.S. Foreign Policy” to explore one such strategy. Over the course of the day, four panels of international relations experts explained why a grand strategy of restraint could and should replace primacy.

The first panel challenged the conventional wisdom about the benefits of U.S. alliances formed during the Cold War. The first speaker, Brendan R. Green of the University of Cincinnati, discussed the gulf between the academic literature and the arguments made by primacists on nuclear proliferation, concluding that the advocates of hegemony oversell the role that alliances play in halting nuclear proliferation.

Following Green, Eugene Gholz of the University of Texas at Austin explained how our alliance relationships come at significant costs to American security by exacerbating the security dilemma between the United States and countries like China for the sake of ally interests.

The third and final panel speaker, Joshua I. Shifrinson of Texas A&M University, spoke on behalf of himself and David Edelstein of Georgetown University. Shifrinson and Edelstein argued that the United States faces significant risks of entrapment—getting drawn into a conflict by its allies.

You can watch the full discussion below. 

In this essay on government construction projects, I discuss how promoters use “strategic misrepresentation” to subdue taxpayer opposition and get dubious spending schemes approved. The low-balling of projected costs is a tried and true deception used by infrastructure promoters the world over.

A variation on the strategy was apparently used to gain support for California’s expensive bullet train project. The Los Angeles Times reports that while people were aware that taxpayers would pay the system’s huge construction costs, officials promised that the operating costs would be covered by rail system revenues, not taxpayers. That promise appears to have been a fraud:

When a Spanish firm submitted a bid last year to help build the California bullet train, it cautioned that taxpayer money probably would be needed to keep the system operating.

Having reviewed data on 111 high-speed train lines around the world, construction giant Ferrovial said, it found that all but three could not make ends meet.

“More than likely, the California high speed rail will require large government subsidies for years to come,” the proposal said. 

That warning, however, was expunged from the version of Ferrovial’s proposal posted on the state’s website. The only record of it was on a data disk provided to The Times and others under a public records act request.

The state rail authority repeatedly has asserted that it will not need a subsidy and that every high-speed system in the world operates without taxpayer assistance — despite significant evidence to the contrary. A number of projects around the world have failed financially, others require direct operating subsidies and many more benefit from government taxes and regulations on competing airline and highway systems, according to audits, studies and interviews.

But in asking taxpayers to help build the Los Angeles-to-San Francisco line, officials assured the state would be able to pay the operating costs purely from the system’s revenues — and thus not sap money needed for social services, education or other projects.

When California voters committed the $9 billion in bonds in 2008, the measure stipulated that the system would have to operate without future public funding.

How can citizens fight such deceptions? This episode illustrates the importance of citizen engagement and transparency in government fiscal matters. It was not a state auditor that discovered the operating subsidy cover-up, but a concerned citizen doing some poking around:

The change in Ferrovial’s proposal was first noticed this spring by Morris Brown, a Bay Area resident and former Caltech chemistry professor who closely monitors documents and statements issued by the bullet authority.

    

Terrorism has hijacked American foreign policy. First Al Qaeda and now the Islamic State have come to dominate thinking about international affairs so completely that there is hardly any issue that has not been “terrorized.” Issues that once had significance because they were important in their own right now only matter insofar as they affect the fight against terrorism. Russia? Now discussed primarily with respect to whether their air campaign affects ISIS in Syria. Syria? Important only because of ISIS and other jihadists who want to rule. Iraq? The birthplace of ISIS. Iran? A regional power broker who supports terrorism as whose support for Assad in Syria matters because of…ISIS. Libya, the latest concern du jour? You guessed it: concern for Libya is in fact concern for the growth of ISIS in the country.

The figures below illustrate just how deeply ISIS has infiltrated American foreign policy news. In the first figure, you can see that over the past three years almost every foreign policy topic has taken on a distinct ISIS flavor. As the second figure shows, after reaching a historical high after September 11, news coverage of terrorism dropped steadily in the following years until rebounding in 2013. Attention to ISIS only really took off after June 2014 when ISIS started calling itself ISIS and simultaneously announced the establishment of a global caliphate.

(News data from Factiva’s Top US newspaper file)

(News data from Factiva’s Top US newspaper file)

Why should the United States spend so much time talking about ISIS and terrorism? To be sure, the Islamic State is a disaster for the Middle East, but it presents a relatively modest terrorist threat to the United States. And to keep things in perspective, since 9/11, just 78 Americans have died from Islamist terrorist attacks including the 49 who died in Orlando on June 12. None of those, it should be pointed out, were killed directly by members of either Al Qaeda or ISIS. ISIS and the broader problem of Islamist-inspired terrorism certainly deserve attention from both the government and the news media, but at this point, a case can be made that the current hyper focus on it has become dangerously counterproductive.

First, it seems pretty clear that sustained American intervention in the Middle East – and the news coverage that follows – helps spur attacks like the one in San Bernardino and Orlando. If the United States weren’t so closely linked in people’s minds with ISIS, then self-radicalized jihadists like Omar Mateen in Orlando or Syed Rizwan Farook and Tashfeen Malik from San Bernardino would not have found meaning in killing Americans to further the cause of ISIS.

Second, the size of the government agenda is more or less fixed. Every hour the government spends thinking about ISIS is time not spent dealing with other foreign policy issues. Issues of greater importance to the United States than ISIS include the increasingly dangerous dance with China in the South China Sea, nuclear proliferation, the future of free trade, and global health security, just to name a few. Given how much effort the United States has expended since 9/11 to confront terrorism and most recently ISIS, it is staggering to think how much has been left undone on other critical issues.

Finally, the deafening roar of ISIS-flavored news is creating incentives for political leaders to keep doing stupid things in the name of the war on terrorism. To be clear, the news media did not create the ISIS problem. That blame falls at the feet of the bipartisan Washington foreign policy consensus that has dictated endless intervention since 9/11. Once in motion, however, the news media have dutifully amplified the rhetoric of our political leaders, and by now it is almost impossible for anyone to change the conversation or reframe the foreign policy debate.  This reinforcing spiral of government overreaction and media hype have helped pave the way for a series of failed, unnecessary, and/or counterproductive policies from the 2003 invasion of Iraq through the American support of the current efforts in Yemen and Libya. Most recently it has given rise to Trump’s nativist foreign policy screeds.

Much like communism did during the Cold War, terrorism has proven itself an extremely potent rhetorical resource. Political leaders are no more anxious to appear soft on terrorism than they were soft on communism. Afraid of losing votes for seeming unconcerned about the safety and security of the United States, politicians propose one costly and counterproductive strategy after another. Duly reported by the news media, these strategies and their fallout then start the next cycle, reinforcing the same pattern of behavior. Unfortunately, as with the Cold War, it is difficult to see this problem ending until the fires that stoke Islamist-inspired terrorism have burned themselves out.

One common critique of immigration and multiculturalism is that it will cause Balkanization in the United States. Usually, the evidence that purportedly shows Balkanization in America is underwhelming.  Real Balkanization, in the Balkans, quickly led to terrorism, civil war, genocide, and some of the uglier nationalist movement of recent centuries.  By comparison, there is hardly any ethnic separatist nationalist terrorism in the United States inspired by immigrant groups or their descendants.

The best example of ethnic separatism from a migrant group is terrorism caused by Puerto Rican socialist-inspired nationalists who demanded independence for their island. From 1970 onwards, Puerto Rican terrorist groups like the United Force for Armed Independence (FALN), Armed Forces of the Popular Resistance (FARP), People’s Revolutionary Commandos (CRP), Patriotic Anti-Annexation Committee (COPAAN), Organization of Volunteers of the Revolution of Puerto Rico (OVRP), the Macheteros, and others carried out 232 attacks, killed 15 people, and injured 115 (Chart 1). 

The most notorious and brutal of the FALN’s terrorist attacks was the bombing of Fraunces Tavern on January 24, 1975, that killed four innocent people and injured about 50 others.  Eventually, many FALN members were apprehended as Bryan Burroughs expertly documents in his Days of Rage and the rest of the violent nationalist movement petered out.  According to the RAND Corporation and the University of Maryland Global Terrorism Databases (through 2014), the last reported attack by Puerto Rican nationalists was on that island in 1998.  Their datasets exclude the attempt on President Truman’s life in 1950 and the armed attack on the House of Representatives in 1954

 

Chart 1

Puerto Rican Terrorism

Sources: Global Terrorism Database, RAND Corporation.

 

The Puerto Rican situation is distinguishable from immigrant-produced Balkanization – Puerto Rico was densely populated and conquered by the United States in 1898.  Puerto Ricans who remained on the island did not immigrate to the United States but were forcibly integrated and governed from abroad for a while.  Such situations rarely lead to assimilation in the way that immigration does.  Many of the bombings recorded occurred on the island, although the deadliest ones were on the U.S. mainland.    

Chicanos, mostly Mexicans in the American southwest, were the other big group of immigrant-inspired separatism.  The insignificant number of terrorist attacks committed by self-described Chicano separatists and nationalists show just what a small movement this was (Chart 2).  They committed a total of 39 attacks that were mostly bombing, killed two people, and injured four.  The last such attack was in 1975.

Chart 2

Chicano Terrorism

 

Sources: Global Terrorism Database, RAND Corporation.

The United States conquered the American southwest from Mexico like it conquered Puerto Rico from Spain.  Territory won in the Mexican-American War of 1846-48 formed the states of California, Nevada, Utah, Colorado, Arizona, New Mexico, and parts of Texas, Oklahoma, and Wyoming.  Why didn’t that occupied territory produce more terrorism?  First, there weren’t many Mexicans living in that part of the country at the time – a mere 80,000 by most estimates.  Second, they concentrated in just a few areas.  Third, they were quickly overwhelmed by settlers and immigrants who were not Mexican.  Fourth, the 80,000 Mexicans were immediately granted American citizenship although segregation persisted in some parts of the Southwest into the mid-20th century.  Fifth, Mexican immigrants from Mexico who don’t have many grievances arrived after the war and overwhelmed the small numbers of descendants of the Mexicans who were conquered in 1846-48.   

Other groups besides these ethnic separatists are responsible for the greatest number of attacks (Chart 3), the most fatalities (Chart 4), and almost all of the injuries (Chart 5).  The 1993 and 2001 spikes for injuries are for the first and second attacks on the World Trade Center.  The 1984 spike is from a bioterror attack in Oregon in 1984 where the Rajneeshee cult deliberately spread salmonella by contaminating salad bars.

 

Chart 3

Attacks

 

Sources: Global Terrorism Database, RAND Corporation.

 

Chart 4

Fatalities by Group

 

Sources: Global Terrorism Database, RAND Corporation.

Chart 5

Injuries

 

Sources: Global Terrorism Database, RAND Corporation.

 

It’s worth noting that the spike in terrorist attacks in the early 1970s occurred when the United States had a near-historically low immigrant population and was the most ethnically and racially homogeneous in its history.  Later attacks killed and injured more people but the number of attacks in the early 1970s is unprecedented.   

The most obvious groups excluded from this post are Islamic terrorists, white separatists and supremacists, black separatists, and various left-wing terrorist groups like the Weather Underground that were active in the late 1960s, 1970s, and into the 1980s.  Many of these groups require a different framework as they aren’t really ethnic separatists nor are they recent immigrant or migrant groups.  I’ll address many of these other groups in future blogs or papers.  Terrorism committed by ethnic separatists and independence movements is relatively rare in the United States.

Hunger is very a strong word. It evokes images of famine and destitution in failed nations half a world away. I was hesitant to use it when describing the situation in Venezuela. I had visited that country four times in the last seven years and witnessed its economic decline first hand. During a trip to the industrial city of Barquisimeto in November 2014, I saw for the first time the effects of shortages, with hundreds of people lining up outside of a drugstore to get toilet paper and toothpaste. I knew things had deteriorated further since, with reports of widespread scarcity of food all over the country. But hunger?

I went back to Venezuela last month expecting chaotic crowds and queues everywhere in the city. And that was certainly the case: I saw lines outside supermarkets, drugstores, bakeries, and, tellingly, embassies (people trying to get their paperwork ready to leave the country). But I wasn’t prepared to find out that my friends and colleagues there are struggling to eat properly. They don’t say it openly. After all, Venezuelans are proud people. But after my first interactions with them, I noticed that the number one topic in every conversation was food: when was the last time they ate meat, how long they’ve been without drinking milk, etc.

Admittedly, I didn’t interact much with poor Venezuelans on this trip. My friends and colleagues are middle class, or what is left of them: the minimum wage is just $33 per month, and the salaries of the middle class aren’t much higher than that. Still, I was appalled to realize that if the people I know are struggling to eat properly, the poorest are indeed going hungry.

Today the New York Times has a harrowing account of the depth of hunger in Venezuela. The country that received nearly $1 trillion in oil revenues in the last decade and a half, is now suffering from a humanitarian crisis of significant proportions. Let’s never forget, or let others forget, that this is the end result of yet another failed socialist experiment.

Today, the Supreme Court struck yet another blow against the Fourth Amendment and the exclusionary rule. The case, Utah v. Strieff, involved a man who was illegally stopped outside of a suspected drug house and investigated for possible criminal activity. Mr. Strieff had an outstanding warrant for a minor traffic offense and was arrested. The search that resulted from the arrest turned up drugs. The question at issue was whether the undisputed illegality of the stop would render the drugs found inadmissible as evidence because of the exclusionary rule. In a 5-3 decision written by Justice Clarence Thomas, the Court decided that the “discovery of the arrest warrant attenuated the connection between the unlawful stop and the evidence seized” and thus the drug evidence could be used against Mr. Strieff.

In short, this case incentivizes police officers to break the law to make stops looking for drugs and contraband. As the late William Stuntz discussed in his book, The Collapse of American Criminal Justice, the way police read Supreme Court decisions is similar to a How-To blueprint to get around individuals’ constitutional rights. As Justice Elena Kagan ably notes in her dissent, today’s decision says that so long as there is an arrest on a warrant made from a bad stop, anything officers find as a result of that stop is fair game for prosecution.

Justice Sonia Sotomayor writes in her dissent:

Do not be soothed by the opinion’s technical language: This case allows the police to stop you on the street, demand your identification, and check it for outstanding traffic warrants—even if you are doing nothing wrong. If the officer discovers a warrant for a fine you forgot to pay, courts will now excuse his illegal stop and will admit into evidence anything he happens to find by searching you after arresting you on the warrant. 

This practice isn’t a minor issue affecting a small population. Justice Sotomayor points out that between the federal government and the states, there are over 7.8 million outstanding warrants, a large portion of which appear to be for minor infractions such as unpaid parking tickets or civil fines. It certain areas, the outstanding municipal warrants engulf more than half of the local population. For example, she cited the Department of Justice’s report on Ferguson, Missouri that found 16,000 of the city’s 22,000 residents had outstanding warrants. Justice Sotomayor’s dissent is an impassioned and practical argument against the racial profiling this case will almost certainly encourage across the country.  

Justice Kagan’s dissent is no less damning, though she gives a more technical analysis of the relevant jurisprudence that allows for exceptions to the exclusionary rule. To be kind, she finds the majority opinion wanting. In fact, she goes through the argument with the metaphor of a baseball player at bat, and the majority strikes out under the three-part inquiry in Brown v. Illinois, 422 U.S. 590 (1975). Although the Court’s opinion was written by Justice Thomas, perhaps the metaphor was a thinly veiled jab at the Chief Justice’s famous quip about justices calling balls and strikes in cases rather than, say, going to bat for the team in blue.

Justice Kagan writes:

“The majority chalks up [Officer] Fackrell’s Fourth Amendment violation to a couple of innocent “mistakes.” But far from a Barney Fife-type mishap, Fackrell’s seizure of Strieff was a calculated decision, taken with so little justification that the State has never tried to defend its legality.At the suppression hearing, Fackrell acknowledged that the stop was designed for investigatory purposes—i.e., to “find out what was going on [in] the house” he had been watching, and to figure out “what [Strieff] was doing there.” And Fackrell frankly admitted that he had no basis for his action except that Strieff “was coming out of the house.” [Citations removed]

The upshot of this case will be an increased reliance on the already overused intrusive and investigatory stops. As I recently published in the Case Western Reserve Law Review, such aggressive and inherently antagonistic policing will likely undermine police legitimacy, making policing harder and communities less safe. More people will be arrested and searched because police have been granted a Court-sanctioned way to get into people’s pockets.

You can read the opinion and both dissents here. My law review article, “Thin Blue Lies: How Pretextual Stops Undermine Police Legitimacy” can be read here (PDF).

It isn’t often that an SEC decision involves the star of a best seller, a “magic shoe box,” and fundamental questions about the meaning of words like “immediate” and “fair.”  The SEC made such a decision on Friday. 

Last fall, the trading system IEX applied for designation as a stock exchange.  IEX, and its CEO Brad Katsuyama, rose to fame several years ago with the publication of Michael Lewis’s popular book Flash Boys.  Lewis, ever the artful storyteller, cast Katsuyama as the likeable underdog, exposing and undermining high-frequency traders (HFTs) through the development of IEX.  IEX, an alternative trading system, or in the more colorful industry jargon, a “dark pool,” has allowed investors to trade away from market scrutiny and the HFTs that populate “lit” exchanges.  But there are advantages to being an exchange, and IEX wants in.

At issue in determining whether to approve the application was the meaning of the word “immediate” in an SEC regulation known as Regulation NMS.  Regulation NMS, approved by the SEC in 2005, was intended to increase competition among trading exchanges, resulting in better execution of trades and better prices for investors.  In furtherance of that goal, a part of the regulation requires that trades be made at the best price listed on any exchange and that exchanges make their quotations “immediately” and automatically available.  In the past “immediate” has been defined as “immediately and automatically executable, without any programmed delay.”  Seems clear enough, right?

Well, here’s where we get to the “magic shoe box.”  IEX’s claim to fame is that it slows down the trading process, just a little, just enough to make it impossible for HFTs to get ahead of big orders.  Because for those who dislike HFTs, it’s this very habit that makes them a problem.  The argument is that HFTs see a trade coming and are fast enough to get ahead of it, buy up the shares, and then resell them immediately at a higher price.  IEX introduces a 350-microsecond delay, a short enough time to be unnoticeable to any human, but long enough to make this type of trading unprofitable.  The way that IEX introduces this delay is to run the orders through a long cable, which is kept coiled up in a box.  The magic box is a shoebox-sized box of coiled cable. 

See the problem?  “Immediate” has been defined as “without any programmed delay.”  It seems that running the order through a length of cable with the intent of introducing a delay is, well, a “programmed delay.”  If the delay is only 350 microseconds – less time, Katsuyama has said, than it takes to blink – does it count?  It has to count.  It doesn’t matter whether it’s essentially imperceptible to humans.  If it didn’t make a difference to HFTs, IEX wouldn’t have introduced it via the shoebox.

Well, then that’s clear enough, right?  If intentionally included, a delay is impermissible because it’s a “programmed delay.” Thus, IEX can’t use its magic shoebox and be in compliance with the rules.  The SEC should have denied the application. 

Not so fast.  Other exchanges also intentionally introduce delays through coiled cable.  That’s where IEX likely got the idea.  Except these other exchanges don’t delay everyone.  It may seem that when you send an email to a friend in China, it arrives “instantly” in your friend’s inbox.  But of course, it doesn’t.  It’s really fast, but not instant.  In the trading world, speed has become so essential that the difference between having a server pressed right up against the exchange’s servers means being faster (and better able to make money) than being located just on the other side of the same room.  To even out these differences (entirely imperceptible to humans, but very visible to computers) exchanges will attach all the servers with the same length of cable, coiling the excess cable for the servers located closest to the front of the room.  That is to say that many existing exchanges have their own shoeboxes, also filled with coiled cable.  But those boxes are designed not to slow down the whole exchange, but to even the playing field within the exchange.

What should the SEC have done?  Was it right in approving IEX’s application, allowing them to introduce an intentional exchange-wide delay?  There are those who support that position, for very compelling reasons.  Regulation NMS has caused more problems than it solved.  Former SEC Commissioner Daniel Gallagher has dubbed it the “poster child of unintended consequences,” pointing to the fact it was Regulation NMS that essentially created high-frequency trading.  If IEX’s 350-microsecond delay can starve out the HFTs, it will provide a market-based solution to any perceived problems posed by HFTs.  (I am not, to be clear, saying that HFTs are problematic.  There is evidence that they improve market quality.) 

To make the approval work within the strictures of Regulation NMS, the SEC simultaneously released updated guidance stating that any delay of less than one millisecond will be considered de minimis.  In legal terms, Black’s Law Dictionary defines de minimis as “trifling” or “so insignificant that a court may overlook it in deciding an issue or case.”  As a microsecond is significantly shorter than a millisecond, IEX’s 350-microsecond delay fits neatly into the new guidance. 

But is the solution to bad regulation to create one-off exemptions, essentially regulating by fiat?  Another former commissioner, Paul Atkins, who voted against the regulation when it came up for a vote during his tenure, has argued that the real solution is to fix Regulation NMS.  Not surprisingly, many existing exchanges have also voiced their opposition to approval of the application.  While much of this may be chalked up to their aversion to increased competition, several have raised credible arguments about the unfairness of creating loopholes for specific parties, while also highlighting potential technical problems with designating IEX as an exchange. These technical problems, of course, would not exist but for Regulation NMS.

Ultimately the SEC’s solution is a band-aid, and a poor one at that.  While 350 microseconds, or even 1 millisecond, is truly less than a blink of an eye, no one spending the kind of fortune IEX must have spent in not only its application but in the attendant lobbying efforts would view the delay as de minimis.  The delay is the issue.  Deciding that it’s too trivial to be worth considering is simply disingenuous.  Introducing competition into a marketplace is good.  But creating regulatory carve-outs for special interests is not.  The solution is to fix Regulation NMS.

The Philadelphia City Council has voted to become the second city in the United States to impose a tax on the sale of particular types of sweetened beverages. The tax applies to sugared soda, diet soda, sports drinks and more, while excluding drinks that are more than half milk or fruit, as well as drinks to which sugar is added such as coffee. The tax will be 1.5 cents per ounce, amounting to 18 cents per standard size can of soda or $1 per two-liter bottle.

Public health advocates often propose taxes on sugary drinks, colloquially known as “soda taxes,” as a means of improving public health outcomes. They argue that such beverages disproportionately cause obesity and that consumers of sugary beverages impose external costs on others through higher medical costs associated with obesity.

The evidence supporting the disproportionate effect of sugar beverages on obesity is not powerful.  An article in Obesity Review concluded, “The current evidence does not demonstrate conclusively that nutritively sweetened beverage consumption has uniquely contributed to obesity or that reducing NSB consumption will reduce BMI levels in general.” 

And the externalities of the obese also appear to be minimal.  “The existing literature … suggests that obese people on average do bear the costs and benefits of their eating and exercise habits.”

But for purposes of discussion assume that consumption of such beverages does result in obesity and its health effects, which, in turn, create costs for others.  Are the taxes a good corrective?

An article in Regulation by California Polytechnic State University professors Michael Marlow and Alden Shiers examined the economics of soda taxes.  They find several problems.  First, the tax isn’t on obesity and thus taxes the soda consumption of the majority who are non-obese.  If obesity creates additional health care costs, the first best solution would be for health insurers to price health insurance for the obese higher and then those affected would have incentive to alter all behavior that leads to excessive weight and not just soda consumption.  But under the Affordable Care Act, such pricing is not allowed.  Second, the level of taxation enacted by Philadelphia, while significant in a percentage sense, will have very little effect on weight.  Every percentage point of tax increase is estimated to result in a body mass index decrease of only .003 points.  Coca-Cola on sale at my supermarket is $2.50 for 12 cans of 12 ounces or 1.7 cents per ounce.  The tax of 1.5 cents per ounce is about an 86 percent tax on the price and would decrease BMI by about .26 points (86.4 X .003), “a trivial effect given that obesity is defined as a body mass index of at least 30.”  Finally, the tax encourages substitution of other beverages that are taxed less. Notably, the tax on beer in Pennsylvania stands at only 9 cents per 12-pack, about 4 percent of the new soda tax in Philadelphia.

There are some positives in the Philadelphia case.  The program was not sold to voters as a public health measure, but rather as a means of raising new tax monies. The discussion of the tax and the public spending for which the revenues would be used was explicit.  And the tax is a consumption tax rather than a tax on the rich or corporations.  To be sure, the tax is on a very narrow consumption base and thus is distortionary, but at least the tax is visible. The voters will see the tax and the public services that result and can make an informed decision in the next election about the tax and its uses.

Cato research assistant Nick Zaiac contributed to this post.

Imagine living in a country in which the two major parties had nominated a couple of candidates not to be trusted on the town council. Imagine deciding to stay home on Election Day.

But then imagine government officials showing up at your door, demanding that you accompany them to the polling place to vote for one of the candidates who you can’t stand even to listen speak. That is the world which some high-minded “civic activists” desire.

Every election can be expected to unleash ponderous commentaries bemoaning low voter turnout. Many Americans don’t register, let alone cast ballots. Why, oh why, won’t they get out and participate?

It is so unfair, we are told. The wealthy, elderly, and well-educated disproportionately participate, which “skews policymaking,” complained the Economist. Just think of all the government programs the underrepresented could vote for themselves if only they showed up on Election Day.

Of course, there is another way of looking at the process. Those most likely to follow politics, understand policy issues, watch the news, and know the candidates vote disproportionately. This might “skew” policy, but presumably in a very good way. Those choosing America’s leaders are actually more likely to know something.

For those determined to drive more people to the polls, the options seem few. Civic propaganda and celebrity endorsements don’t do much. Postal ballots actually may reinforce existing voting patterns. Election Day registration has limited effect. Treating Election Day as a holiday is a bust.

So, as one would expect, left-wing minds turn to coercion. Make people vote. Force them to act on their ignorance and prejudice. All that matters is pushing up turnout numbers.

Mandatory voting isn’t a new idea. Both Australia and Belgium penalize non-voters. Down Under you get hit with a roughly $14 fine if you don’t have a good excuse for staying home. (A bit like having a parent’s note for missing a day of school.)

Those in favor of a coerced ballot emphasize that you are free to do what you want once you are in the polling place, including choose no one. At least the authorities don’t look over your shoulder to ensure that you marking an officially approved selection.

Of course, there are worse impositions in life. Governments shoot people for resisting their authority, send people off to die in foolish foreign wars, invade people’s homes to punish them for conduct which threatens no one, confiscate property on the claim that it is drug-related, seize workers’ incomes to spread among political supporters and other influential interest groups, and much more. Requiring you to show up on Election Day appears, well, minor compared to so much else that government does!

However, as I wrote for Fee.org, “seemingly small exactions reinforce the presumption that the state determines and sanctions individual rights. A refusal to vote, thereby encouraging those who compete to dominate and control the lives of others, is a matter of basic conscience.”

Of course, one can argue that such staying home is irresponsible. Voting for a third party also registers dissent, but in most elections the numbers are barely noticed. This election might be different, but who knows? As for choosing the lesser of two evils, the likelihood that any one vote will make a difference is so small as to be a strong argument against wasting time trooping down to the polls.

Moreover, if those committed to liberty are unable to defeat the sort of big-spending, war-friendly candidates nominated of late, the best tactic might be withdrawing legitimacy from those who win. A steadily increasing share of the population abstaining from a process which yields choices between Tweedle Dum and Tweedle Dee might spark a serious conversation about the state of American democracy.

Ultimately, the issue of voting comes down to conscience. Simply saying no and refusing to cast a ballot is a powerful form of dissent. A decision not to vote deserves the same respect as one to participate.

 

I and others have repeatedly questioned the U.S. Department of Justice’s adventurous decision to charge Federal Express with crimes for, in essence, refusing to snoop into its customers’ packages and business. From my post at Overlawyered two years ago:

The federal government has prevailed on a grand jury to indict Federal Express for servicing what it should have known were illicit online pharmacy operations. FedEx says it repeatedly asked the government to supply a list of shippers it considered illicit so that it could cut off service, but that the government refused; the Department of Justice contends that circumstantial evidence should have been enough to alert the package shipment company. …

And last month, quoting Washington Legal Foundation’s Cory Andrews:

“Federal prosecutors have accused FedEx of knowingly shipping illegal drugs in interstate commerce and laundering money by merely doing its job: delivering packages (in this case, from online Internet pharmacies) to their intended recipients and getting paid for the service. …To avoid the very sort of ‘gotcha’ prosecution at issue here, Congress inserted exceptions for common carriers in each of the relevant statutes” authorizing shipment of prescription medications and controlled substances when done in the usual course of business….

Now, this big news from federal court in San Francisco:

A criminal trial nearly two years in the making alleging FedEx knowingly delivered illegal prescription drugs to dealers and addicts ended suddenly Friday when prosecutors moved to dismiss all charges against the shipping giant.

U.S. District Court Judge Charles Breyer, who had been highly critical of the government’s positions as the trial unfolded, granted the motion to dismiss: on Friday he called FedEx “factually innocent” and said the withdrawal of charges was “in the court’s view, entirely consistent with the government’s overarching obligation to seek justice even at the expense of some embarrassment.”

FedEx spokesman Patrick Fitzgerald said in a statement Friday that the company has always been innocent and the case should never have been brought.

“The government should take a very hard look at how they made the tremendously poor decision to file these charges,” he said. “Many companies would not have had the courage or the resources to defend themselves against false charges.”

Many in the field of white-collar legal defense have warned large corporations, particularly those with businesses built upon relationships of public trust, to cut a deal with the federal government rather than try to withstand the full force it can bring to bear in a prosecution. But FedEx, for one, has shown that it is still possible to defy the authorities and win. Mike Koehler at FCPA Professor says that might help lay to rest what has been called the “Arthur Andersen effect” in which indictment is itself seen as tantamount to corporate death.

P.S.: Our friend James Copland of the Manhattan Institute has this observation (via email):

What’s remarkable here is that UPS agreed to a $40 million non-prosecution agreement — and to hire a new corporate officer and an independent auditor looking over their shoulder and reporting to the U.S. Attorney — for the same alleged conduct.

(cross-posted from Overlawyered). 

The feds are yet again trying to have their cake and eat it too, this time regarding constitutional criminal procedure. The Double Jeopardy Clause prevents the government from using its immense resources to prosecute criminal defendants twice for the same crime. Still, if a defendant’s first trial results in a hung jury, or the conviction is reversed on appeal, the trial is a legal “non-event” and the government can seek a new trial. If the defendant is acquitted, however, then no new trial is possible; the acquittal precludes a second try because that would be “double jeopardy.”

In a new case out of Puerto Rico, the government is trying to claim that acquittals can also be “non-events” that allow retrial. Juan Bravo-Fernandez and Hector Martinez-Maldonado received a mixed verdict at trial: they were acquitted on two charges—conspiring and travelling to bribe a member of the Puerto Rican Senate—but convicted of the actual bribery. But the two acquittals necessarily depended on a finding that neither defendant violated the bribery statute. Indeed, the U.S. Court of Appeals for the First Circuit vacated the bribery conviction because the jury’s verdict was improperly based on invalid instructions from the trial judge.

That left one vacated conviction and two acquittals that logically required a finding of “not guilty” on the bribery charge. At that point, double jeopardy should have kicked in; the acquittals precluded a retrial regarding the underlying bribery. As the Supreme Court said in Yeager v. United States (2009), any “apparent inconsistency between a jury’s verdict of acquittal on some counts and its failure to return a verdict on other counts” does not “affect[] the preclusive force of the acquittals under the Double Jeopardy Clause.”

But the trial and appeals courts found that this precedent did not prevent retrial here. The Supreme Court has now taken up the case and Cato has filed an amicus brief supporting the defendants. We argue that the government’s position is contrary to the common law of double jeopardy and misunderstands the effect of a court’s having vacated a conviction that cannot stand given other acquittals.

When a court vacates a ruling in the double-jeopardy context, the effect is to wipe it out as if it never existed. Going back to Sir William Blackstone and English common law, if a “judgment, pronounced upon conviction, [wa]s falsified or reversed, all former proceedings [we]re absolutely set aside, and the party st[ood] as if he had never been at all accused,” for better and for worse: He was “restored in his credit, his capacity, his blood, and his estates,” but he was also “liable to another prosecution for the same offense.” Yet here the government seeks to have the vacated conviction stop the preclusive effect of acquittal.

The government simply should not be able to benefit from the vacating “non-event” that enables a retrial while at the same time arguing that it is also an “event” such that the acquittals don’t count in the double-jeopardy calculus.

Moreover, allowing the First Circuit’s decision to stand would give prosecutors more incentive to overcharge the same underlying conduct with multiple counts, forgive them for pursuing dubious theories of criminality, and permit them to use trials as dress rehearsals for future successive prosecutions—as well as impugning the inviolate nature of jury acquittals.

These concerns strike at the heart of the Double Jeopardy Clause. That’s why the Supreme Court should prevent the government’s attempt to overreach its prosecutorial authority by eviscerating a well-established, logical set of legal doctrines.

The Supreme Court will hear argument in Bravo-Fernandez v. United States this fall at the start of its next term.

The horrific massacre at the Pulse Orlando nightclub has prompted calls for new restrictions on firearms. Those calls are understandable—fight mass murder by restricting some of the tools of mass murder, the thinking goes—but would such restrictions really reduce violent crime? Or, in a country with a robust black market, would gun restrictions merely constrain the lawful, giving violent criminals greater opportunity for mayhem? 

To answer that question, researchers John Lott Jr. and Gary Mauser decided to ask the experts. They surveyed fellow academics who published empirical research on guns and violent crime in peer-reviewed academic journals over roughly the last 15 years. Specifically, Lott and Mauser asked about their perceptions of legal firearms possession’s associations with crime and suicide, and the effects of gun-free zone and concealed carry laws.

The respondents can be divided into two groups: economists (many of whom act as applied statisticians) and criminologists. The two groups differ in an important way: economists are much more mindful of incentives and expectations. This difference in the disciplines’ views of human nature likely explains the difference between the groups’ responses. Economists were highly skeptical of the idea that greater restrictions on legal gun ownership—specifically, concealed carry, gun-free zones, and the presence of a firearm in the home—would reduce violent crime, while criminologists were considerably more mixed, with a lean (that sometimes wasn’t statistically significant) toward skepticism. Importantly for the current gun control debate, neither group supported the notion that more restrictions on legal gun possession would reduce violent crime.

Lott and Mauser present their findings in the summer issue of Regulation. You can read the article online here.

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