Feed aggregator

Senator Rand Paul has a column over at CNN, urging Attorney General Jeff Sessions to reconsider his recent memo to federal prosecutors that encourages them to seek serious charges and mandatory minimum sentences.  Here’s an excerpt:

The attorney general’s new guidelines, a reversal of a policy that was working, will accentuate the injustice in our criminal justice system. We should be treating our nation’s drug epidemic for what it is – a public health crisis, not an excuse to send people to prison and turn a mistake into a tragedy.

And make no mistake, the lives of many drug offenders are ruined the day they receive that long sentence the attorney general wants them to have.

Read the whole thing.  To put this latest move into some perspective, several points need to be kept in mind.  First, like his earlier crime-fighting memos, this is consistent with what Republican administrations do.  That is, they reverse the executive orders that the Democrats put in place.  Sessions is reversing the policies of Eric Holder and restoring the charging policies that Former Attorney General John Ashcroft had in place.  Second, media reports that Sessions is bringing back the drug war are exaggerated because, as Professor Doug Berman noted, the war never went away under Obama.  Third, Trump and Sessions do not “oversee” the American criminal justice system.  The criminal system is decentralized among the states.  The federal system has been growing but is around 10 percent of the overall system.  So while Sessions gets a lot of attention, most of the action quietly occurs at the state and local level.

That said, Sessions is definitely moving in the wrong direction.  He is a strong proponent of mandatory minimum sentences, which have the effect of transferring power from impartial judges to ambitious prosecutors.  And they are so rigid that they too often lead to injustice–especially in drug cases where the quantity of drugs can be the primary factor instead of a person’s culpability.  Low-level mules get severe sentences for example driving narcotics from one city to another.

Sessions also conflates drug enforcement with the violent crime that is the primary concern of most Americans.  He believes that more drug busts can have a real impact on violent crime.  He is badly mistaken about that.  When the police lock up a rapist or a mugger, that enhances public safety.  Drug busts have little impact.  The street dealers and mules are quickly replaced and the black market trade continues as before.   

Lately, Sessions has been making the observation that drug dealers have to resort to violence to resolve their disputes.  There is truth to that, but that has always been a part of the conservative/libertarian critique of the drug war policy.  During the days of alcohol prohibition, newspapers reported on the “beer wars” in the cities.  After prohibition ended, no beer wars.  We would see the violent crime rate decline if the drug war were to end. 

Senator Paul is right about the need for sentencing reform, but even modest steps in that direction are likely to be opposed by Trump and Sessions.  State and local leaders have to take the lead on criminal justice reform.

Hal Brands has published a long and thoughtful essay at War on the Rocks on the future of American Internationalism. Despite its length, or perhaps because of it, the piece is worthy of a careful read.

Echoing themes that I have discussed previously (e.g. here and here), Brands foresees two equally plausible scenarios: a return to the liberal international order (LIO) crafted and sustained by a bipartisan foreign policy elite since the end of World War II; or an enduring shift away from internationalism, a process decades-in-the-making, but hastened by Trump’s presidency.

Brands is cautiously optimistic that the former will eventually prevail, provided that U.S. leaders undertake a series of reforms reflecting new geopolitical and domestic political realities. Fearful that Trump’s isolationism and hyper-nationalism will prevail, I have argued for a third way. U.S. leaders should reiterate their commitment to economic openness and international engagement, but call on other wealthy nations to share in the burdens of maintaining it. And they should back up such rhetoric with actions, by renegotiating decades-long alliance relationships, and avoiding intervening militarily in disputes that do not engage vital U.S. security interests. 

Brands does shade the truth from time to time. For example, he claims that U.S. leaders “sought to sustain a global balance of power that favored America and its democratic allies, and to advance liberal concepts such as democracy and human rights.” A not-complete list of the U.S. government’s perilous partners over the past 70 years reminds us that Washington’s commitment to promoting democracy and human rights has been inconsistent, at best.

  • Chiang Kai-shek (Taiwan)
  • Syngman Rhee/Park Chung Hee/Chun Doo-Hwan (South Korea)
  • Ayub Khan/Zia-ul-Haq/Pervez Musharraf (Pakistan)
  • The House of Saud
  • The Shah of Iran
  • Hosni Mubarak/Abdel Fattah el-Sisi (Egypt)
  • Plus a handful (or more) of generals and strongmen in Latin America

And herein lies a deeper point: U.S. foreign policy has often been geared toward advancing U.S. national interests, or, more accurately, how U.S. leaders defined those interests. On the other hand, Washington has wrapped its actions in a veneer of altruism and disinterest, always professing fealty to nobler goals. In his often ham-fisted way, Donald Trump has said publicly what many Americans have always believed: the true object of U.S. foreign policy is to protect U.S. security. When the public grows skeptical that U.S. policy is actually delivering such benefits (e.g. after Vietnam and Iraq), it has pushed for a course correction.

Can Brands’ version of American internationalism square the circle? Can it provide the public what it wants, while allowing U.S. elites to do what they think America, and more importantly the world, needs?

I’m skeptical. Brands calls on U.S. leaders to do at least six things:

1. American leaders will need to aggressively defend U.S. interests and the global order while avoiding the costly quagmires that have left so many Americans disillusioned.
2. They will need to drive harder bargains on burden-sharing and trade.
3. They will need to ensure that the pursuit of an open and profitable trading system does not come at the expense of vulnerable populations at home.
4. They will need to devise ways of better protecting the country’s borders and ensuring homeland security without losing the dynamism and societal rejuvenation that immigration provides.
5. They will need to strengthen the social safety net for those who need it most while also pursuing the reforms necessary to keep those programs — and the U.S. government — solvent over time.
6. They will need to get back to first principles in explaining why America’s global engagement really matters — and what would happen if Washington ceased to play such a role — while also giving more Americans a sense that their foreign policy truly does put them first.

To this list, I would add a seventh:

7. Because maintaining U.S. primacy will cost even more money than the substantial amount that we already spend on the military, U.S. leaders will need to convince Americans that internationalism is worth paying for with higher taxes, lower domestic spending, or, most likely, a combination of both.

I am not aware of any American politician willing to step forward with such a program. And, until that happens, expect Trump’s anti-internationalism to prevail.

 

E-Verify is a government national identification system that employers currently use voluntarily to screen out unauthorized immigrant workers. Members of Congress want to make the program mandatory for all employers with the Legal Workforce Act, which has passed the House Judiciary Committee three times. This legislation would be the largest employer regulation in terms of scale in the history of the United States, applying to every single employer and every single worker in the country and also roping in several agencies to run it. 

The system has already proven remarkably ineffective at its intended purpose—keeping unauthorized workers away from jobs. In fact, in many cases, it does the opposite—keeping authorized workers away from employment. While many have focused on how making it mandatory would increase the number of these errors, E-Verify is already causing headaches and costing jobs for legal workers.  In fact, from 2006 to 2016, legal workers had about 580,000 jobs held up due to E-Verify errors, and of these, they lost roughly 130,000 jobs entirely due to E-Verify mistakes.

Here’s how E-Verify catches innocent people. The system checks information all workers must provide on their I-9 forms against the databases of either the Department of Homeland Security (DHS) for legal immigrants or the Social Security Administration (SSA) for U.S. citizens. If the system fails to verify this information, it will issue a “tentative nonconfirmation” (TNC). People who receive a TNC must challenge it within two weeks or it turns into a “final nonconfirmation” (FNC), and the employer must fire them.

Legal workers can receive an erroneous TNC for a variety of reasons. Employers may have put their information into the system incorrectly. This is especially common for hyphenated names or individuals with multiple last names. It can also happen if someone changes their name, but SSA or DHS has failed to update their entry in the database. Errors can also occur when SSA or DHS employees enter a person’s information into the database.

Whatever the case, the employee has an affirmative duty to fix the issue. They must formally contest the error. If they are a citizen, they need to physically visit a Social Security Administration office to figure out the problem. If they are a legal foreign worker, they need to go to DHS. This process can take months because the worker has no idea what the problem is. In 2012, it took more than 8 days to resolve a TNC for more than a third of all legal workers who received one.

Unfortunately, U.S. Citizenship and Immigration Services (USCIS) data fails to report in more detail how long these took to resolve, which could potentially have taken months. For workers who need to submit a Privacy Act request to obtain their records, it can take more than three months even to obtain a response, let alone fix the underlying problem. As the Table below highlights, from 2006 to 2016, legal workers had to overcome 450,039 tentative nonconfirmations. Under the Legal Workforce Act, employers could condition employment based on an E-Verify confirmation, meaning all of these workers would lose weeks or months of wages. If the job was temporary, they could lose it entirely.

Table: E-Verify Cases and Errors, 2006 to 2016

Year

Total Cases TNC % Overcome TNCs Overcome Erroneous FNC % FNC Errors Total Error % Total Errors

2006

1,743,654

0.78%

13,513

0.50%

8,733

1.28%

22,246

2007

3,271,871

0.63%

20,449

0.33%

10,925

0.96%

31,374

2008

6,648,845

0.45%

29,920

0.20%

13,195

0.65%

43,114

2009

8,717,711

0.30%

26,153

0.13%

11,182

0.43%

37,335

2010

16,458,448

0.30%

49,375

0.09%

13,998

0.39%

63,373

2011

16,612,333

0.28%

46,515

0.08%

13,187

0.36%

59,701

2012

20,205,359

0.26%

52,534

0.07%

14,893

0.33%

67,427

2013

23,937,505

0.22%

52,663

0.05%

10,838

0.27%

63,500

2014

27,074,552

0.19%

51,442

0.04%

11,235

0.23%

62,677

2015

30,538,992

0.18%

54,970

0.04%

11,082

0.22%

66,052

2016

32,815,564

0.16%

52,505

0.03%

10,144

0.19%

62,649

Total

188,024,834

 

450,039

 

129,411

 

579,450

Sources: Total cases (2006-2014): U.S. Citizenship and Immigration Services, “E-Verify History and Milestones,” January 19, 2017. TNC share overcome (2011-2016): U.S. Citizenship and Immigration Services (USCIS), “E-Verify Program Statistics – Performance.” USCIS archived pages. E-Verify Erroneous TNC and FNC rates (2006-2010): Westat, “Evaluation of the Accuracy of E-Verify Findings,” July 2012. (Note FNC error rate in Westat expressed in terms of share of FNCs.)

But that’s not all. Some legal workers lose the opportunity for a job completely due to E-Verify.  Legal workers can receive a FNC that results in them being permanently fired for two reasons. The first is that the person decides not to bother challenging the TNC. This accounted for roughly 17 percent of all erroneous FNCs, according to a study commissioned by USCIS. The other much more common reason is that employers neglect to tell them that they received a TNC. This accounted for 83 percent of erroneous FNCs.

The USCIS-commissioned study provides the erroneous TNC rates since 2006, but only provides the erroneous FNC rate for 2009. As the Table shows, the TNC error rate has improved over time, so this estimate assumes that FNC accuracy improved at the same rate as TNC accuracy. If this held true, then nearly 130,000 legal workers were wrongfully issued TNCs and then subject to wrongful FNCs that likely cost them their jobs.

Proponents of the Legal Workforce Act tout E-Verify’s accuracy, but the fact that the program works as intended for 99.8 percent of workers is less impressive when it is imposed on such a large population. The 0.2 percent equaled more than 62,000 people in 2016 alone. If all employers—big and small, with or without many foreign-born workers—were required to use it, the errors would grow. Indeed, if every new hire went through the system in 2017, at least 120,000 legal workers would have been wrongfully ensnared in the system in that one year alone, implying more than a million errors per decade.

E-Verify is a big government regulation that fails to prevent illegal immigration and harms U.S. workers. A better plan to eliminate illegal immigration would be to make hiring foreign workers legal. Legalize the current unauthorized immigrants and create a large year-round guest worker program. Government regulation has failed time and time again. America should try the free market for a change.

Every time I say something nice about monetary rules, as I did in my last post here, some Alt-M readers wonder why I’m doing that instead of championing free banking and choice in currencies. Have I given up my former views concerning the merits of these alternatives? Am I suffering from a bout of, or even from chronic, “fedophilia”? Might the Fed itself have purchased my apostasy?

Nothing of the sort. Although my views on the Fed, and on free banking, have changed somewhat since I first started writing on these subjects back in grad school (what sort of scholar would I be if they hadn’t?), they haven’t changed in any fundamental way. I still consider the acquiescence of economists in governments’ creation of currency monopolies to have been one of that professions’ greatest blunders; and I still favor freedom in banking, provided such freedom is understood to imply the absence, not just of extraordinary government regulations, but also of extensive government guarantees, whether explicit or implicit. Finally, I continue to oppose laws that interfere with people’s freedom to employ currencies other than the one officially sanctioned by their own government, whether those other currencies be public or private, paper or metallic or digital.

If I still believe all these things, why do I keep saying nice things about monetary rules? So what if a rule might be better than discretion, given the existence of a fiat-money issuing currency monopoly? If currency competition is better still, surely that’s what I ought to be plugging!

Well, yes…and no. I recently put it to my friend Gene Epstein this way. Suppose that the U.S. dollar is like the Titanic, and that all those who are employing U.S. dollars as their principal or sole medium of exchange are like the Titanic’s passengers. Suppose as well that the S.S. Dollar, to christen it so, having already hit an iceberg, is sinking, albeit slowly. (If you’re a stickler for verisimilitude, you are free to imagine that other ocean liners scattered around the seven seas are also sinking, some more rapidly than others. These are the world’s other government-supplied fiat monies.)

Now, there are in principle two ways of trying to spare the S.S. Dollar’s passengers. The first is to do whatever can be done to get other ships to come to their rescue. Besides sending the usual S.O.S. signals, allowing other ships complete freedom of the seas is obviously a good step. So is making it as easy as possible for the S.S. Dollar’s passengers to abandon ship and make their way to other, more seaworthy craft. Having an abundance of lifeboats (currencies that are themselves dollar-based, but at least a bit more seaworthy and maneuverable than the mother ship) also helps.

The other step consists of doing whatever can be done to keep the S.S. Dollar itself afloat, or at least make it sink less rapidly, by manning pumps, patching the hull, or other means.

It ought to be plain that the two options aren’t mutually exclusive, and that prudence dictates that both ought to be pursued. As free as they may be to come to the rescue, other ships and boats may take time getting there; and once they arrive, a last-minute rescue could prove both chaotic and costly, especially given passengers’ inclination to cling to their sinking ship until it takes its final plunge into the deep.

No analogy is perfect, of course; and the U.S. dollar certainly differs from the S.S. Dollar. For one thing, if the U.S. dollar is sinking, it’s doing so very slowly indeed. Moreover, unlike a sinking ship, a slowly sinking currency, insofar as that’s understood to mean one that’s slowly losing value, can go on sinking indefinitely. Finally, the fact that the dollar continues to lose value is perhaps less important than the fact that its mismanagement contributes to macroeconomic instability. Consequently it’s more like an unstable ship than a sinking one. But these particular differences only serve to reinforce the case for making the dollar itself at least a little more reliable and durable than it is now, provided that one can do so without interfering with anyone’s ability to either supply or use dollar alternatives.

As for those alternatives, if it’s prudent to try and keep the U.S. dollar, not only afloat, but sailing as smoothly as possible, it’s no less prudent to encourage discussion and development of superior, if not unsinkable, substitutes. And doing that has, of course, been Alt-M’s purpose all along.

[Cross-posted from Alt-M.org]

On Friday a Kentucky state appeals court ruled in favor of local print shop Hands On Designs, which had declined to print t-shirts promoting the Lexington Pride Festival because the shop’s owners disapproved of the ideological message of the shirts. The ruling, narrower than it might be, may in the end protect the owners against this particular claim under Lexington’s ordinance barring discrimination in public accommodations. It missed the opportunity, however, to make clear—as Cato urged in its amicus brief—that laws violate the First Amendment when they force people to print or utter words in which they disbelieve.

Eugene Volokh, who with UCLA’s First Amendment Clinic wrote Cato’s amicus briefnotes that the three-judge panel split three ways in the course of not reaching the First Amendment issue. The judge who wrote the lead opinion decided that the shop hadn’t breached the terms of the law in the first place, because the ordinance did not set up any protected category based on “message or viewpoint.” (There is no guarantee that courts elsewhere will follow that logic, however, especially since some anti-discrimination statutes, like Seattle’s, do purport to set up political or ideological opinion as a protected class.)

A concurring judge also cited a second reason for the shop owners to win, namely Kentucky’s version of RFRA (the Religious Freedom Restoration Act, which mandates accommodation). He reasoned that the law as interpreted burdened the owners’ religious practice and had not been shown, as required, to have done all it could to minimize burdens in the course of serving a compelling purpose. Again, not all courts in future cases will follow this path; many states do not have RFRAs, and even when they do, judges may rule that a given anti-discrimination law is a closely enough tailored measure for a sufficiently compelling purpose. 

The Hands On case inevitably invites comparison with the series of high-profile cases in which small business people have faced complaints and sometimes hefty damages under state and local public-accommodation discrimination laws for turning down requests to provide supplies and services (photography, floral arrangements, hall rental, cake) for the celebration of same-sex marriages. So far, the courts have mostly been unwilling to recognize the First Amendment issues involved in these cases. That’s one thing that jumps out at you about the Lexington case: it may be a matter of dispute whether the selection of angles and moods in photography is a form of expression, but if printing an opinion on a t-shirt doesn’t count as expression, what does? One landmark Supreme Court case, Cohen v. California, in fact hinged on the status of a garment slogan as expression. And as Ilya Shapiro pointed out in this space a year and a half ago, another important First Amendment case at the Court, 1977’s Wooley v. Maynard, found it an impermissible burden for a citizen to have to put on display a state slogan—New Hampshire’s “Live Free or Die”—with which he disagreed. 

For another viewpoint, see John Corvino at Slate, who agrees that this case is one raising the specter of forced expression, but disagrees with Cato’s analysis on the wedding cases. What remains to be fully confronted by the courts, I think, is the expressive status of ceremony, the fact pattern in most of the wedding cases. If ceremony and ritual are fraught with public message and moral significance, as many religious believers and not a few secularists would hold, then participation therein, even if in the role of an incidental walk-on, might convey expressive significance that is just as intense, or even more so, than the decision to display a license plate or print a message on a garment.

Earlier coverage of the Hands On Design case at Overlawyered herehere, and here.

 

 

A recent Science paper by J-F. Busteri and 30 named coauthors assisted by 239 volunteers found, looking at global drylands (about 40% of land areas fall into this category), that we had undercounted global forest cover by a whopping “at least 9%.” 239 people were required to examine over 210,000 0.5 hectare (1.2 acre) sample plots in GoogleEarth, and classify the cover as open or forested. Here’s the resultant cool map:

This has been the subject of a flood of recent stories, blog posts, tweets, and whatever concerning Bastin et al. But here at the Center for the Study of Science, we’re value added, so here’s some added value.

Last year, Zaichin Zhu and 31 coauthors published a remarkable analysis of global vegetation change since satellite sensors became operational in the late 1970s. The vast majority of the globe’s vegetated area shows greening, with 25-50% of that area showing a statistically significant change, while only 4% of the vegetated area is significantly browning. Here’s the mind-boggling map:

Trends in Leaf Area Index, 1978-2009. Positive tones are greening, negative are browning, and the dots delineate where the changes are statistically significant. There is approximately 9 times more area significantly greening up than browning down. 

Hope you’re sitting down for the money quote:

We show a persistent and widespread increase of growing season integrated LAI (greening) over 25% to 50% of the global vegetated area, whereas less than 4% of the globe shows decreasing LAI (browning). Factorial simulations with multiple global ecosystem models show that CO2 fertilization effects explain 70% of the observed greening trend…

And the other greening driver that stood out from the statistical noise was—you guessed it—climate change.

Now, just for fun, toggle back and forth between the two maps. As you can see, virtually every place where there’s newly detected forest is greening, and a large number of these are doing it in a statistically significant fashion. This may lead to a remarkable hypothesis—that one of the reasons the forested regions were undercounted in previous surveys (among other reasons) is that there wasn’t enough vegetation present to meet Bastin’s criterion for “forest,” which is greater than 10% tree cover, and carbon dioxide and global warming changed that.

References:

Bastin, F-L., et al., 2017. The extent of forest in dryland biomes. Science 356, 635-638.

Zhu, Z., et al., 2016. Greening of the earth and its drivers. Nature Climate Change, DOI: 10.1038/

NCLIMATE30004. 

The Iran deal is working as advertised by containing Iran’s nuclear weapons program. That non-proliferation success creates a greater one: it vastly lowers the odds of a U.S. attack on Iran and pacifies relations. That’s what makes the deal anathema to those on both sides who would preserve enmity to gain in domestic political fights.

The deal’s fate may be sealed in the coming weeks. A presidential election Friday Iran will either re-elect Hassan Rouhani, who pushed for the deal and now defends it, or replace him with a hardliner. The Trump administration recently launched a review of Iran policy and the deal, which could yield a decision to try to undermine the agreement or to truly stay in it.

Under the 2015 deal, officially the Joint Comprehensive Plan of Action, Iran agreed to limit its nuclear program in various ways and allow International Atomic Energy Agency inspections in exchange for relief from some of the sanctions that the United States, the European Union, and the UN Security Council had imposed and the release of frozen funds. The deal leaves in place sanctions on Iran for human rights violations, ballistic missile development, and support for terrorist organizations. The Obama administration also dropped charges against a number of Iranian sanctions violators in exchange for Iran’s release of four American prisoners.

Last fall’s elections put the deal in peril. They matched a Republican Senate majority that had openly tried to undermine the deal’s negotiation with a militaristic president who opposed it as a candidate. Trump made typically contradictory statements about the deal in campaigning but mostly voiced hostility typical of GOP hawks. For example, he told the AIPAC convention, “My number-one priority is to dismantle the disastrous deal with Iran.” Trump’s top foreign policy appointees seemed to share a particular hostility to Iran. Even Secretary of Defense James Mattis, who many saw a lone voice of foreign policy caution, had notably belligerent views on Iran, even bizarrely suggesting that it had created ISIS, despite Iran’s aide for ISIS’s opponents in Iraq and Syria.

Despite this rhetoric, neither Congress nor the administration has raced to dismantle the deal. Congressional leaders have suggested they accept to abide by the deal. Senator Bob Corker (R-Tenn), chairman of the Senate Foreign Relations Committee did join the panel’s ranking member Robert Menendez (D-NJ) to introduce a bill that would heighten sanctions on Iran for missile development, support for terrorist organizations, and human rights abuses. Though adopting the bill would antagonize Iran and make it more difficult for the United States to hold up its end of the bargain, it would not directly violate its terms.

The Trump administration, thus far, has stuck with the deal, while huffing and puffing. Officials say they’ll honor its terms pending a review run by National Security Advisor General H.R. McMaster, who, notably, isn’t a strident proponent of confrontation with Iran, like his predecessor, General Michael Flynn. The State Department recently certified Iran’s compliance but proclaimed Iran’s continued support for terrorism in the same press release. Secretary of State Rex Tillerson knocked the deal for failing “to achieve the objective of a non-nuclear Iran,” seemingly referring to its retention of enrichment facilities. President Trump then claimed that Iran is “not living up to the spirit of the agreement” and called it “terrible.”

These statements are a boon to Iran’s hardliners, who call the deal a capitulation to the United States, which they see as irredeemably hostile. Evidence of that hostility also comes in U.S. policy: the Corker-Menendez bill, Iran’s inclusion in the Trump administration’s legally-fraught travel ban, potentially-heightened U.S. military aid for their rival Saudi Arabia in its brutal bombing campaign in Yemen, and a likely massive arms sale to the Saudis.

Ebrahim Raisi, now the main opponent of Iranian President Hassan Rouhani, says he would abide by the deal, but criticizes its failure to deliver the promised broad economic benefits. In recent debates, Rouhani has defended the deal, suggested he can produce greater economic growth by negotiating further sanctions relief, and even blasted the Iranian Revolutionary Guard for trying to undermine the deal through ballistic missile tests. Hawks on both sides thus unintentionally serve each other’s interests.

The difficulty that U.S. opponents of the deal face is that the case for it grows stronger with time, as the White House review should demonstrate. One reason for that is that the deal clearly aids relatively-reformist forces in Iran. Another is new business openings, which generate political support for the deal on both sides. Boeing, for example, has nearly finalized two agreements with Iranian airlines worth nearly $20 billion and conducive to a lot of U.S. jobs. Another is that addressing Iran’s problematic activities is easier with the deal in place.

The deal’s imperfections aren’t a reason to abandon it, and no deal could have made Iran saintly. Probably the most dangerous impulse in U.S. foreign policy is to try to eradicate problems rather than to manage them. Recent U.S. wars have shown that a bad situation can always get worse.

At 10 AM tomorrow, we’ll be discussing these issues at Cato. Journalist Laura Rozen will interview Ambassador Wendy Sherman, the lead U.S. negotiator in the talks that produced the deal. Cato’s Emma Ashford and Georgetown’s Ariane Tabatabai will provide comments.

The U.S. ambassador to the United Nations, Nikki R. Haley, told George Stephanopoulos on ABC’s “This Week” yesterday that “the president is the CEO of the country,” and thus “he can hire and fire whoever he wants. That’s his right.” Leaving aside the question of whether the president can fire everyone in the federal government, she is wrong on her main point. The president is not the CEO of the country. He can reasonably be described as the CEO of the federal government. The Constitution provides that in the new government it establishes, “The executive Power shall be vested in a President of the United States of America.”

Meanwhile, too many people keep calling the president—this president and previous presidents—”my commander in chief” or something similar. Again it’s important for our understanding of a constitutional republic to be clear on these points. The president is the chief executive of the federal government. He is the commander in chief of the armed forces, not of the entire government and definitely not of 320 million U.S. citizens. Article II, Section 2 of the Constitution provides:

The President shall be Commander in Chief of the Army and Navy of the United States, and of the Militia of the several States, when called into the actual Service of the United States.

Too many people who should know better keep getting this wrong. The highly experienced former first lady, senator, secretary of state, and presidential nominee Hillary Clinton for instance, who declared last year on the campaign trail, “Donald Trump simply doesn’t have the temperament to be president and commander in chief of the United States.” (She had also used the term a year earlier, and in her previous campaign she expressed a determination to be the “commander in chief of our economy,” so this wasn’t just a slip of the tongue.)

And also third-generation Navy man, senator, and presidential nominee John McCain who declared his support for President George W. Bush in 2007, saying, the Washington Post reported: “There’s only one commander in chief of the United States, and that’s George W. Bush.”

Now Donald Trump is getting the same treatment. Perhaps it’s no surprise that the Daily Mail, a popular newspaper in a country still headed by a monarch, would write

President Donald Trump sent a message to ex-FBI director James Comey and his detractors as he told Liberty University graduates that ‘nothing is more pathetic than being a critic’ during his first commencement address as the commander-in-chief of the United States.

But how about Democratic strategist Maria Cardona, writing in a Capitol Hill newspaper to mock President Trump’s historical ignorance:

How apropos that this famous and very fitting quote was likely used by the Abraham Lincoln, the president who actually was the commander-in-chief of the United States when the Civil War happened.

Oops.

And here also Tim Weiner, a Pulitzer Prize-winning reporter and author of “Legacy of Ashes: The History of the CIA”: “Our commander-in-chief has made a serious miscalculation.”

The Military Times should know better than to write, “Business mogul Donald Trump was sworn as the nation’s 45th commander in chief on Friday, promising to return government to the people and return American might to the international stage.”

Even Joy-Ann Reid, who hates Trump, gives him a title he doesn’t possess, declaring that Trump’s “greed and neediness and vaingloriousness have made our commander in chief a national security threat.”

In this time when we worry about threats to the Constitution and our liberal republican order, we need to remember the basics. 

This is a constitutional republic, and we don’t have a commander in chief. 

That’s an important distinction, and it’s disturbing that even candidates for the presidency miss it. Hillary Clinton may well have wanted to be commander in chief of the whole country, of you and me, and to direct us and our economic activities the way the president directs the officers and soldiers of the armed forces. But if so, she would have needed to propose an amendment to the Constitution—an amendment that would effectively make the rest of the Constitution irrelevant, since it was designed as a Constitution for a limited government of a free people.

Donald Trump is not my commander in chief. Neither was Barack Obama. Each was elected president, charged with leading the executive branch of the federal government.

Kenesaw Mountain Landis, the legendary baseball commissioner, once said that every boy builds a shrine to some baseball hero, and before that shrine a candle always burns. Growing up a Baltimore Orioles fan during the franchise’s glory days, my shrine had many heroes, including central figures Cal Ripken (HOF 2007), Eddie Murray (HOF 2003), and John Lowenstein. Not central but still part of the shrine was Doug DeCinces, a good glove/solid bat third baseman who manned the O’s hot corner for nine of his 15 major league seasons.

And so I was saddened to read that last Friday DeCinces was convicted of 14 charges of insider trading.

Back in 2008, his neighbor, James Mazzo, then CEO of an ophthalmic surgical supply company, told DeCinces that the firm was about to be acquired by medical giant Abbott Labs. DeCinces owned stock in the firm and purchased more after he learned of the deal. He also shared the tip (though apparently not its provenance) with some friends, including Murray. DeCinces ultimately profited about $1.3 million on the deal according to press reports.

His maneuver seems inoffensive if shrewd; after all, who wouldn’t buy something that he can then sell at a profit? That is fundamental to the marketplace, and it typically makes all participants better-off.

But in DeCinces’ case it’s a crime, and a very serious one. He can receive as much as 20 years in federal prison for each of the 14 charges he was convicted on.

The question is why. Remember that all an inside trader does is act on private information that more accurately reflects the future value of some financial asset than the current price does. He buys or sells that asset at a price that someone else voluntarily accepts. He does nothing that damages (or falsely props up) the ultimate value of the asset. Nor does he hurt the broader financial marketplace; if anything, his trading slightly pushes the asset price toward a more appropriate value.

In fact, as Villanova law professor Richard Booth has explained in the pages of Regulation, it is the legal pursuit of inside traders that hurts other investors and the broader marketplace. Those prosecutions frighten would-be traders away from acting on—and thereby transmitting—their private information. The prosecutions also usually hurt the firms—which is to say the firms’ many innocent investors—because they end up paying large fines and legal expenses. For institutional investors—pension funds, 401k plans, etc.—those losses far outweigh whatever benefits might come from civil recoveries from insider trading and the phantom benefits of “policing” these activities. Really, the only beneficiaries from these legal actions are the well-heeled lawyers and government employees who participate in them.

DeCinces isn’t the first celebrity to be tripped up by fanciful claims of financial crimes. Recall Martha Stewart (pursued by one James Comey, interestingly) and Michael Milken (pursued by Rudy Giuliani), for just two examples.

According to press reports, upon hearing his conviction on Friday, DeCinces could only shake his head, dumbfounded. We should do the same. There is nothing for society to gain from sending him to prison, ostensibly for the rest of his life, for actions that don’t seem worthy of being deemed crimes, let alone federal felonies. Instead of locking away DeCinces and puffing up a new generation of Comeys and Giulianis, it’s time to reform America’s Kafkaesque finance laws.

There’s a new scholarly journal out there called American Affairs. Eliana Johnson of Politico describes it as “a journal of public policy and political philosophy with an eye toward laying the intellectual foundation for the Trump movement.” Many people in the Trump movement purport to be in favor of “nationalism” over “globalism,” so you can imagine the journal will have some things to say about this topic. In the mission statement, the editors note the following:

We are said to live in a “globalized” world. Yet the most conspicuous global phenomenon of the present time would appear to be the resurgence of nationalism, in the United States as well as in Europe and Asia. What is the future of nations and nationalism, and what are the consequences of further separating political sovereignty from the existing political community of the nation-state? Is further “globalization” both inevitable and desirable? Can nationalism be leavened by justice—or even be essential to it—rather than being abandoned to its worst expressions?

And in the first issue, nationalism vs. globalism gets some prominent discussion. Georgetown political science professor Joshua Mitchell has a piece called “A Renewed Republican Party,” in which he talks about the “repudiation of globalism” in the 2016 election:

What term, then, should Republicans use to name the repudiation of globalism during the recent historic election? There will be a division, I suspect, along the lines we saw during the painful run-up to the 2016 election itself. On the one hand, Republicans who sided with globalists on the issue of commerce or who had a low estimation of American culture will indeed call what has happened a populist revolt. On the other hand, Republicans who think that globalism has not only been a disaster for the whole of the America but also that it is theoretically untenable will—or should—call what has happened a revolt in the name of national sovereignty, not populism.

Now, I’m not convinced that Trump really is the nationalist he plays on the campaign trail, or that his supposedly nationalist advisers are either. (The way they reach out to like-minded people in the UK, France, Germany and Russia seems kind of, well, globalist. Maybe it’s not really a repudiation of globalism they are after, but rather a different kind of globalism.)

Regardless, that’s the narrative going on right now: nationalism vs. globalism. And not suprisingly, this talking point has made the leap to a full-fledged academic fad, as evidenced by the creation of the American Affairs journal.

But what I keep wondering is: where are all these globalists that we are supposed to be afraid of? Mitchell tells us that American citizens want “their towns, counties, cities, states, and country” back. But back from whom? Who exactly has taken these things from us?

Reading the Mitchell piece, I was left without any clear answers to this question. He offered a few suggestions, but nothing concrete. In his view, “global elites” have used “the apparatus of the state” to push globalist initiatives which take power from the nation-state:

The post-1989 experiment with globalism and identity politics demonstrates that Hobbes was correct, so long ago, that supra- and sub-state sovereignty are perennial temptations of the human heart. The post-1989 version of that temptation saw global elites use the apparatus of the state to bolster so-called free trade, international law, global norms, and international accords about “climate change,” the advances towards which purported to demonstrate the impotence of the state itself. In such a world managed from above, the only task left for the Little People was to feel good—or feel permanent shame—about their identities, and perhaps to get involved in a little “political activism” now and again, to show their commitment (on Facebook, of course) to “social justice.” 

This argument fits solidly within the narrative about globalism, but it is almost completely devoid of any factual basis. Here’s the thing about trade agreements, international law, global norms, and environmental accords: they have an extremely limited impact on American sovereignty.

Now, I can understand why someone not familiar with international law and agreements might think there has been some massive loss of sovereignty, as people who don’t know the details often make this claim, and others then repeat it. But if you take the time to read the texts of international agreements, you will quickly see how limited their scope is. Often there is no enforcement mechanism at all in these arrangements, but even where there is, enforcement is pretty weak. The United States has not signed on to any arrangement with an international prosecutor who can put Americans in a global jail. So here’s what those who fear globalism need to understand: globalism has not taken your governing power. You still have it.

Of course, if you want to debate the precise contours of global rules and institutions, that’s fine. We should be careful with delegating power to international or supra-national bodies. But don’t delude yourself into thinking there is some big global power center out there, undermining American sovereignty. It just doesn’t exist.

(Now, if you are European, I can see how the facts are different. The EU involves supra-national institutions that do have a significant amount of power. Europeans should definitely have a vigorous debate about how they want power allocated across various levels of governance.)

Turning back to the Mitchell article, here he is weighing in on what the thinks trade agreements do: 

Trump’s critics have informed us that there is no way to avoid this inevitable consequence of globalization if there is to be “improvement”—Adam Smith’s favorite word in The Wealth of Nations—and a global increase in the standards of living. Protectionism will not solve this problem; it will make things worse. In our own day, however, the seemingly simple opposition between protectionism and “free trade” has become blurry. NAFTA is hundreds of pages long; the TPP is ten times that large. The remarkable thing that has happened in our own day is that these “free trade” agreements are in fact a new form of protectionism. That is, they involve endless stipulations, enforced by the state and often promulgated by self-interested global corporations themselves, which protect those very corporations because smaller enterprises seldom have the compliance staff necessary to adhere to, let alone understand, those stipulations. For us today, so-called free trade is not opposed to protectionism; it is a species of it. Globalization, to put the matter otherwise, involves not the supersession and growing irrelevance of the state, but the close alliance between growing state bureaucracies and large corporations—the name for which is crony capitalism. …

This gets the situation almost completely backwards. Protectionism is, inherently, about crony capitalism. Well-connected companies go to their national government with requests for protection from competition, which the government often grants. This transfers wealth from all consumers to a few corporations and expands the power and role of government as well. Protectionism is the epitome of big and corrupt government.

Trade agreements try to take this on, and overall have done a pretty good job. When governments can agree amongst themselves not to give in to crony capitalism, we the people are much better off.

Now, these agreements are not perfect, and yes, some companies and NGOs have been able to use trade agreements as a tool for pursuing their particular interests (strong intellectual property protection, labor rights, etc). I’m not going to defend these aspects of trade agreements. I’ll just say that we should not let the perfect be the enemy of the good.

So how do we respond to this apparent movement to intellectualize Trumpism, with its argument that nationalism is superior to globalism? My focus here has been putting the burden on this movement to show that globalism actually has an impact on American sovereignty, and to push people to understand what the global governance rules actually say.

By contrast, an approach I would not recommend is the response to Mitchell offered by Anne-Marie Slaughter:

Feelings of being disconnected and despised, however, are powerful emotions, strong enough to twist facts into a dark alternate reality. It is critical to look beyond a simple story of populism, of masses versus elites. A narrative of grounded, connected nationalism versus sanctimonious free-floating globalism is one that will generate support and staying power even among many well-educated people.

The right response is not to deny the existence or legitimacy of a desire to stay grounded amid tumultuous change, or love of country and culture, much less to look down on the less educated. It is to build a new narrative of patriotism, culture, connection, and inclusion. Even if Wilders lost this month and Le Pen loses in May, they and their supporters will not be going away.

I am puzzled by the suggestion that there is an effort “to deny the existence or legitimacy of a desire to stay grounded amid tumultuous change, or love of country and culture,” or “to look down on the less educated.” Perhaps this is happening at the margins, but mainly what I see is outrage over the rise of neo-fascist nationalists around the world. Hopefully, we can at least come together and repudiate this.

Putting that aside, I take her point to be that we need to fight Trumpist nationalism with some other form of nationalism. In my view, however, competing visions of nationalism are not the answer here. Slaughter’s nationalism-lite will not be an effective response to Mitchell’s industrial strength nationalism.

What we need instead is an informed debate about how power should be allocated at the local, national and global level, and a discussion of the proper role of global governance and institutions. What will become clear is that Americans have control over their towns, counties, cities, states, and country. The question is, what do they want to do with that control? So far, the answer from Trump and his purported nationalist supporters has been pretty vague, and also far from unified. To the extent there is anything they actually want to achieve, they may want to start now. Because pretty soon, their supporters will start to realize there aren’t really any globalists out there to fear, and the people they elected are not doing anything for the nation they claim to love so much.

How Smart Web Design Converts Customers To Buyers Converting website visitors to buyers is one of the most challenging things. You can have the most interesting information and the most beautiful design and still score very low conversion rates. The good news is that you can improve it by paying attention to a few web design rules that are meant to entice people into buying your products or services. Web design converts customers to buyers by making use of special elements known as “call-to-action”, which are positioned in a place where most visitors are going to see them. These elements should contain the most important message of the website, the one that should determine viewers to perform a specific action. As a matter of fact, when you design a website, you should start from the course of action you want your readers to follow. Then, you have to choose your graphic elements and text boxes in such a way that they can drive users to follow your sales funnel. You can find some more information from the experts Facebook page Facebook – Colorado Springs SEO . You can also find them if you visit their Search Engine Optimization
This is how you can secure a maximum conversion rate, thus making the most profit out of your website. Doing things at random and hoping they would stick isn’t the best approach to web design. Nonetheless, many business owners pick whatever template they like most, and they fill it with their copy, hoping all those potential customers visiting their web pages are going to become buyers.

Smart digital marketers know that determining how to convert someone into becoming a paying customer may take a lot of effort. This is why they are happy with having website visitors subscribe to their newsletter to start with. Their websites sell nothing, as they are only meant to be lead generating machines. Once you manage to build a big list of email addresses, you can start sending out communication to those people. Some of your messages are going to contain special offers, promotions or various novelties. If you don’t try too hard sell your subscribers, you’re going to make a lot of money, as they are among the best possible leads you can acquire.

All these being said, if you need a website for your business, consider giving your sales funnel a serious thought before you start seeking for templates. If you can afford it, you should hire a web developer to help you create a website that converts. You’ll still need to write compelling copy that attracts people, but it’s going to be much easier to get high-quality leads if your web design is clever. Finding out where to place your most important call to action is easy, as there’s special software that tracks the activity of your readers. You can install one of these programs and run it for a few days, in order to determine the best placement for your most important design elements. Tracking is one of the keys to getting one step closer to online success, as it enables you to tweak your layout until you maximize your conversion rate and your other parameters that measure your success.

The post How Web Design and SEO Help on Page Conversion appeared first on RLCSC Marketing.

Allan Meltzer passed away this week. He was one of the great economists I was lucky to have known and to have occasionally worked with. My colleague Jim Dorn wrote a very nice summary of his scholarship and influence here. Jim also recounts his close work with Cato over the years. Jerry O’Driscoll offers a remembrance here.

My own thinking on economic development benefitted substantially from Allan’s work on international debt, foreign aid, and financial crises. I benefitted even more from Allan’s guidance and interest in my work on those issues. He always took whatever time needed to discuss economic and policy topics with me, and recommend readings and research ideas. When Mexico experienced its 1994-95 peso crisis, Allan was an invaluable and generous resource. At the time, few market advocates in Washington criticized the proposed bailout of Mexico. The country, after all, had been considered a star reformer, and the government there was deemed worthy of U.S. support. We at Cato dissented and published a strong critique against “rescuing” Mexico because we thought it promoted moral hazard, it was a use of public resources that was unfair to ordinary Mexicans and Americans alike, and it supplanted and undermined superior market solutions to the crisis. From his perch at Carnegie Mellon University and the American Enterprise Institute, Allan was one of the few making the same arguments. It was useful to have him on our side and to employ some of the arguments he developed.

A few years later, when the Asian financial crisis erupted and the International Monetary Fund began bailing out not only countries in that region but also Russia, Argentina, and Brazil, the consensus finally started to shift. Allan was one of the more prominent voices in Washington critical of giving the IMF the capital increase it was requesting. The Congress finally did approve an increase, but as part of the deal, it set up a special bi-partisan congressional commission to look into the effectiveness of the leading international financial institutions. Allan headed up the group, which became known as the Meltzer Commission.

The commission’s final report received widespread attention and was influential. Among other things, it found a 55% to 60% failure rate of World Bank projects. As part of its proceedings, Allan asked me to provide an overview paper on the effectiveness of the IMF. (See my testimony here.) I was proud to have contributed analysis that made it into the final report and helped change the debate about IMF effectiveness and even the IMF’s own self-perception. Among my findings was that the IMF, set up to be a temporary lender to countries experiencing short-term economic problems, was in practice a long-term lender. Most countries that began borrowing from it did so for decades at a time—not a sign that it was fulfilling its stated role. My view of the IMF’s role during the Third World debt crisis was also revisionist. I provided evidence to support Anna Schwartz’s observation that official intervention “prolonged and worsened the debt problem.” And by then, experience itself was providing support for the view that massive bailouts were bad policy. Allan provided his moral and intellectual support to all of those arguments.

One time Allan invited Fed Chairman Alan Greenspan to AEI for a small meeting with top economists. He also invited me. Greenspan provided initial comments for about 25 minutes, after which I turned to Anna Schwartz, one of the world’s leading monetary economists who was sitting next to me, and I confessed that I really didn’t understand much of what he said. She looked at me calmly and said, “That’s alright, I didn’t understand him either.” As was my experience with Allan, I was lucky to have known and occasionally worked with Anna on many of the same issues. And as with Allan, Anna never made me feel academically inferior, though that was clearly the case. I could see why Allan and Anna were friends and colleagues.

Over the years, I would see Allan at meetings like the yearly Alamos Alliance gathering of Chicago-tradition economists in Mexico or Cato’s annual monetary conference. I almost always learned something from Allan, and it was always good to see him since he would typically be in good spirits.

The economics profession and those who knew him will miss him. Thank you Allan for being so generous.

In recent years, criminologists, law enforcement organizations, government agencies, and other criminal justice experts have been experimenting with various methods of data collection to improve American criminal justice. For example, some researchers look at recidivism—that is, how likely a person who has been incarcerated will end up back in jail or prison—to stem the tide of mass incarceration. Others have turned to “hot-spot policing” to better focus limited police resources on preventing new crimes in highly specific, high-crime areas.  Each method typically has its strengths and weaknesses, and much can be learned from new techniques.

But more data isn’t always a good thing. After a long battle with the Sun-Times, the Chicago Police Department released its “Strategic Subject List.” From the report:

“We have 1,400 individuals that drive this gun violence in this city,” police Supt. Eddie Johnson said in August, assuring the public his department was keeping tabs on the people on its closely guarded “Strategic Subject List.” “We’ve gotten very good at predicting who will be the perpetrators or victims of gun violence.”

Yet the list is far broader and more extensive than Johnson and other police officials have suggested. It includes more than 398,000 entries — encompassing everyone who has been arrested and fingerprinted in Chicago since 2013.

Nearly half of the people at the top of the list have never been arrested for illegal gun possession. About 13 percent have never been charged with any violent crime. And 20 of the 153 people deemed most at risk to be involved in violent crime, as victim or shooter, have never been arrested either for guns or violence.

What’s more, the data isn’t being used in the way the designer intended. 

“Let’s say you’ve never been shot or been arrested,” [Yale professor Andrew] Papachristos says. “But if your friends have been shot, you are at a greater risk of being shot.”

But Papachristos, a Chicago native, now distances himself from the way the police are using the Strategic Subject List in Chicago, noting that his work focuses on identifying potential victims, not on predicting the chances someone will shoot another person.

It is impossible to know exactly how the CPD uses this information, but if indices of potential victimization are interpreted as reasons to suspect violent behavior, officers may treat those people in the greatest danger as the most dangerous individuals, flipping the protective function of policing on its head. 

Secret lists, especially ones with hundreds of thousands of people on it, will not reduce crime or make the public safer. Data collection and analysis can be very useful in finding better ways to treat hard-to-solve problems, but putting a bunch of names on a list is akin to building a haystack to find a needle. 

There are many more problems with the data and you should read the whole Sun-Times report about it here

If you’d like to learn more about how data can shape what we know about policing, check out this panel I moderated last year at our most recent criminal justice conference.

In education, there is a widespread belief: the federal government ended segregation. This is, of course, based on the Supreme Court’s landmark ruling in Brown v. Board of Education, and subsequent federal efforts to end segregated schooling. But as a sobering new book by the Economic Policy Institute’s Richard Rothstein makes clear, while all levels of government forced, coerced, or cajoled racial segregation through housing policy, the feds may have been the worst, and the crippling legacy of those actions may be much further reaching than even schooling policy.

The Color of Law: A Forgotten History of How Our Government Segregated America is essentially a catalogue of discriminatory housing policies perpetrated throughout the 20th Century, but peaking from the 1930s through the 1960s. It chronicles local injustices including police ignoring or even stoking mobs that tormented African Americans who dared buy a home in a white neighborhood, and states with segregationist intent mandating local referenda to approve low-income family public housing. But it is the federal government that seems to have had the most powerful hand in it all, if for no other reason than only it could sweep every American into the corners where it decided they did—or did not—belong.

Much of the major federal impact started with the New Deal and World War II. As Washington sought to provide housing first for the economically displaced, then for workers at newly opened arsenal-of-democracy factories, racial segregation was the norm. Rothstein examines the case of Richmond, California, not far from uber-progressive Berkeley where he lives. He writes:

From 1940 to 1945, the influx of war workers resulted in Richmond’s population exploding from 24,000 to more than 100,000. Richmond’s black population soared from 270 to 14,000….With such rapid population growth, housing could not be put up fast enough. The federal government stepped in with public housing. It was officially and explicitly segregated. Located along railroad tracks and close to the shipbuilding area, federally financed housing for African Americans in Richmond was poorly constructed and intended to be temporary. For white defense workers government housing was built farther inland, closer to white residential areas, and some of it was sturdily constructed and permanent. Because Richmond had been overwhelmingly white before the war, the federal government’s decision to segregate public housing established segregated living patterns that persist to this day.

Discriminatory poison was spread even more widely by Washington via housing assistance programs, especially Federal Housing Administration-backed loans that were awarded with relative ease for white people moving into white neighborhoods, or developers aiming to build housing for whites, while freezing out African Americans. Levittowns—massive developments of cookie-cutter houses that made thousands of people homeowners—illustrate the crippling consequences of discriminatory aid. While access to good, affordable housing had many immediate benefits, the long-term consequences of such access may have been even greater—accumulation of wealth:

By the time the federal government decided finally to allow African Americans into the suburbs, the window of opportunity for an integrated nation had mostly closed. In 1948, for example, Levittown homes sold for about $8,000, or about $75,000 in today’s dollars. Now, properties in Levittown without major remodeling…sell for $350,000 and up. White families who bought those homes in 1948 have gained, over three generations, more than $200,000.

While white homeowners were living in, essentially, little banks, African Americans were often renters, accumulating no equity, or owners of far less desirable houses. It is a major reason that African Americans typically have only a tiny fraction of the accumulated wealth of whites.

The question this shameful history inevitably leads to, of course, is what can we do to remedy its effects? But many, if not all, of the possible answers carry major unintended consequences, likely one reason that Rothstein is hesitant to propose any in the book. His other reason is that the vast majority of people likely have little if any knowledge of the history he recounts, and knowledge of the disease must precede a cure. Such ignorance may be manifested in the tendency to see Washington as a savior against all discrimination, or my own mental imagery of housing discrimination before reading this book, consisting of hazy apparitions of homeowners entering covenants against selling to African Americans, or realtors redlining neighborhoods, but no concrete government policies essentially requiring such things.

Rothstein only outlines some food-for-thought proposals, including the federal government buying for-sale houses in Levittowns at today’s prices and selling them to African Americans at the price their grandparents would have paid, or ending zoning requiring that homes be built only on large—and expensive—lots.

My own, still embryonic thought is that solutions may have to eschew overtly race-based remedies, even though the wrong we’re trying to right was indisputably grounded in race. Clichéd though it may seem, “two wrongs do not make a right” feels correct: moving from race-based preferences for whites to such preferences for African-Americans, even to ameliorate unquestionable racial injustice, seems unacceptable. We must have preferences for no race under the law, but rather equal treatment for all.

Perhaps more practically, we have seen powerful evidence with policies ranging from affirmative action to forced busing that race-based policies foster resentment and can ignite conflicts that may well make matters worse. We should also be clear-eyed that even if we tear down all barriers to housing integration we may not see much of it, at least not at first. Research has repeatedly found that people are strongly inclined to self-segregate. Indeed, even in schools where physical integration has largely been achieved, friendship groups are often decidedly homogenous.

Perhaps the solution is to focus not on policy prescriptions, but to constantly and powerfully educate the public about the massive injustice that has been done—the primary goal of Rothstein’s volume. Then change efforts should be concentrated on an avenue we too often forget: civil society—individuals voluntarily forming communities that take collective action, such as churches, Kiwanis clubs, Habitat for Humanity, or any other groups people freely choose to form. They could perhaps pool funds to help African Americans purchase homes, or reach out to black communities and say “consider moving where we live, and if you come we will greet you with open arms,” or other potential actions.

Does this feel satisfactory in light of the grave injustice that has been done? No. But it seems crucial that government cease putting its thumb on the scale for any race, both as a matter of principle and of practical effect. No one would be forced to help make things right, but they may well feel compelled. Compelled by the conviction, grounded in knowledge, that African Americans have been grievously wronged, and that we should all strive to set things, as closely as possible, right.

Earlier this week, PBS Frontline ran a documentary titled Poverty, Politics, and Profit discussing major barriers to housing America’s poor. The show centered on the Low Income Housing Tax Credit (LIHTC) program, a federal program that subsidizes low-income housing construction.

Chris Edwards described Frontline’s LIHTC investigation well here. In short, the show found LIHTC costs taxpayers 66% more, but produced 20,000 fewer housing units than 20 years ago. Frontline made the case that the program’s failure is partly due to poor oversight and attendant corruption.

For those unfamiliar with LIHTC, Frontline’s narrative about developers’ outsized profits may sound extraordinary. But PBS does well to highlight a problem that the social sciences have long provided evidence for. For example, in Rethinking Federal Housing Policy, economist Edward Glaeser suggests that LIHTC’s “prime beneficiaries are the recipients of the tax credits, not poor renters …. [there] is little doubt that … a significant portion of program benefits accrue to developers.” And on the issue of LIHTC oversight, the Government Accountability Office flatly stated in a 2015 report that “oversight of the Low-Income Housing Tax Credit (LIHTC) program has been minimal.”

There are additional issues that were not covered in the Frontline piece. For one, the private market would produce the same housing in the absence of LIHTC subsidies. Economists call this phenomenon “crowd-out” and a recent study suggests “the impact of the [LIHTC] program on the [real] number of newly developed rental housing units appears to be small” because of it. In other words, LIHTC’s advocates are disingenuous when they pretend LIHTC-subsidized housing would not exist without government subsidy.

These issues and others provide good reason to reduce or eliminate the program. But despite the program’s many failings, Congress continues to look for ways to expand it. For example, this March Senator Hatch (R-UT) and other Republican legislators co-sponsored a bill to increase state LIHTC allocations. And last year Senator Wyden (D-OR) attempted to create a cousin program, the Middle Income Housing Tax Credit (MIHTC). 

It’s concerning when Republicans and Democrats find common ground in a crony business program, but it isn’t the first time. Some Republicans buy into the idea that tax credits are free (they aren’t) and other Republicans are pro-business rather than pro-market (the Ex-Im bank neatly illustrated this divide). Of course, redistributive subsidies of all stripes appeal to a majority of Democrats.

The point that Frontline makes – and it’s an important one – is that LIHTC isn’t effective even at what it tries to accomplish. Where LIHTC claims to support the poor, it excels at supporting crony business. Where it pretends to create new housing, it actually replaces equivalent, privately-produced housing with publicly subsidized development. Given mounting evidence of LIHTC’s dereliction, Republicans and Democrats should reconsider their support.

And so it begins:

In a move expected to swell federal prisons, Attorney General Jeff Sessions is scuttling an Obama administration policy to avoid charging nonviolent, less-serious drug offenders with long, mandatory-minimum sentences.

Mr. Sessions’s new guidelines revive a policy created under President George W. Bush that tasked federal prosecutors with charging “the most serious readily provable offense.”

Drug War critics have feared this moment ever since President Trump nominated Sessions; now it is a reality.  The effects will be no different than after past escalations: more crime and corruption, with little or no impact on drug use.

 

At a Cato event last week, Sen. Ron Johnson announced that he would be introducing new legislation that day to allow states to sponsor foreigners to live and work in their states. The innovative idea has produced a huge amount of interest and responses. Several business and conservative groups endorsed the bill. Sen. John McCain cosponsored it. Positive write-ups ran online in the Washington Post, The Week, and other outlets. The Wall Street Journal, New York Times, Los Angeles Times, and the Economist have all run articles supporting Congress taking this approach.

However, the organizations that are categorically opposed to all immigration—NumbersUSA and Center for Immigration Studies—as well as a National Review columnist have also responded with some criticisms. I will focus primarily on the criticisms that are specifically related to guest worker programs or state-sponsored visas in particular. Their criticisms arrive primarily from their flawed reading of the bill, assuming that they did read it.

NumbersUSA writes:

Critically, unlike even the most flawed of existing guestworker programs, this new program establishes no uniform rules to offer even nominal protections for American workers.

This criticism is strange, given that the entire point of the legislation is to allow states to decide the conditions under which migrants enter. That said, it’s not even true. Under the bill (p. 5), states are required to allow any worker admitted under the program to leave their initial employer. This is an incredibly important protection for American workers. Under the current federal programs, migrants are often stuck with the employer that sponsored them. This can make them more attractive than U.S. workers because the migrants can’t negotiate fairly for wages.

More from NumbersUSA:

DHS doesn’t have the resources to enforce current immigration law with uniform regulations. Expecting it to juggle as many as 51 new and distinct sets of rules under this program is ludicrous.

This misses the point again. The fact that DHS cannot enforce the current rules is exactly why devolving the rulemaking to the states makes sense. DHS doesn’t have to “juggle” if the states are the ones setting the rules and informing DHS of the violations of their rules, as the bill requires (p. 4). The level of government with the most at stake would conduct the oversight, as opposed to the current system where the level of government with almost nothing at stake is responsible for enforcement.

Center for Immigration Studies (CIS) writes:

There is little reason to think that the state- or regional-system(s) urged by the Cato Institute would be run any better or more honestly than the cornucopia of malfeasance that has attended investor visa programs.

The EB-5 investor program gives permanent residency to immigrants who invest at least $500,000 in a rural area or an area with high unemployment and that investment creates at least 10 jobs. State agencies have a limited role in selecting the areas where investment should go. CIS notes a few dozen cases out of literally tens of thousands of EB-5 investments where investors may have been defrauded. Pinning all of these cases on the states is unwarranted.

The few cases where states may have misused the EB-5 have arisen in part because 1) there’s a disconnect between state decision-making and federal oversight, and 2) the governors have total control over the decision-making. The bill eliminates the first problem—states would set and enforce the rules, having full accountability for the results—and it addresses the second one by imposing democratic oversight—state legislature must enact legislation creating the rules for the programs, not leave it totally to the state agencies.

More from CIS:

If [the migrants left the state], in violation of the terms and conditions of the program, whatever it might be, who would be expected to clean up the mess, find the aliens, and deport them? …the states or their subdivisions would most assuredly hand the mess over to the federal government…. the states and regions would then demand to re-fill the now-vacated jobs.

This criticism comes from ignoring the actual language in the bill. States are responsible for the full cost of apprehending and removing any person that they sponsor. If they fail to pay, they get no more visas. Moreover, the concern that guest workers will overstay and violate their status in large numbers has always been a lie. Lesser-skilled federal guest workers make up barely 2 percent of all overstays, according to the Government Accountability Office (GAO), implying an overstay rate of less than 3 percent. This low rate is due to the powerful incentive guest workers have to stay legal and be eligible to be invited back.

The bill builds in the same incentives, making eligibility for renewals or readmission conditional on compliance. Moreover, it requires states to maintain the same overstay rate or else each migrant would be required to post a $4,000 bond prior to entry, returned only if they exited in compliance with the rules. If this didn’t work, the visas to the state would be cut in half, and in half again, and in half again, and finally eliminated entirely for 5 years (p. 27). Again, these are incentives that the federal government does not have to enforce its rules, but would be imposed by this bill. CIS needs to (re?)read the bill.

CIS concludes:

Finally, let us return to the question of “whether the federal government should maintain its near-complete monopoly over legal immigration”: I thought that question was resolved in 1789 when our founders brought the Constitution into force, specifying in Article I, Section 8, Clause 4, that “The Congress shall have Power To … establish an uniform Rule of Naturalization,” which has repeatedly been construed by the Supreme Court to include immigration generally.

Congress has the power over immigration, but the Arizona v. U.S. and Chamber v. Whiting cases clearly explain that states are limited only to the extent that Congress chooses to limit them in the area of immigration. In any case, the bill does not concede to the states the authority to admit people to the country. It simply allows them to “sponsor” them for visas issued by the federal government and federal rules. States already act as sponsors on behalf of their foreign-born employees or students at their public universities. U.S. employers and U.S. citizens also sponsor workers and immigrants for various purposes. Can the federal government really not take into account the desire of any entity other than itself when deciding who to admit? Obviously not.

National Review writer Fred Bauer writes:

Guest-worker programs drastically undercut civic belonging. It is probably not healthy for a republic to have a large class of residents who are viewed purely as economic resources with no stake in American society.

The argument that noncitizens undermine “civic belonging” is untestable speculation that is the social science equivalent of counting how many angels can dance on the head of a pin. It makes the left-wing argument about the benefit of diversity seem entirely science-based. The left at least makes claims about how objectively measurable facts relate to specific outcomes unlike vague feeling-based claims of “civic belonging.” Mr. Bauer’s same criticism could be levelled at a resident of one state residing in another and not bothering to update his voter registration.

Using Bauer’s reasoning, one could actually make the case that non-citizen residents have a much greater stake in American society. Migrants often come from poorer countries, know the value of prosperity as a result, and truly recognize how unique America is. At the very minimum, they treasure America more than some of our fellow native-born Americans who are apparently content with subsisting off of welfare and languishing in permanent unemployment for lack of a desire to migrate to prosperity in another area.

Perhaps the migrants view the situation differently than Mr. Bauer, believing that employment will better their situation in a land of opportunity. Recognizing that individuals have their own desires is the core of treating them as people, not just economic resources, or as Mr. Bauer prefers, pawns in a collectivist scheme.

National Review’s Mr. Bauer continues:

Minor children are allowed to go with guest workers, and those children will be able to go to public schools, which in part are financed by federal tax dollars. So, when a state chooses to admit guest workers, it is making decisions that very much have a bearing on the federal coffers.

Mr. Bauer neglects to mention that, to begin with, the bill completely walls off the federal welfare state and tax credits from the state-sponsored workers. Thus, they would be paying many taxes for Social Security and Medicare that many of them will never receive, so even if they receive some indirect benefits—roads or education—they would be paying far more in taxes. My recent report conservatively estimated more than $100 billion federal surplus every year from these state-sponsored workers. And states could also choose not to admit the children as well (p. 28).

National Review’s Mr. Bauer continues:

Moreover, an expansive guest-worker program would almost certainly ignite a huge effort to ensure that guest workers and their families have access to at least some federal benefits… If [Republicans] tried to withhold benefits from guest workers, they would be smeared as cold-hearted and “anti-immigrant”…

Even when pro-immigrant members of Congress correct the supposed problems with the system, the opponents of reform always find a way to oppose it anyway, raising the specter of what may happen in the future. Yet federal guest workers have been barred for all means-tested federal public benefits for decades, and the restriction has remained. And while it’s true that Democrats could try to smear them as cold-hearted, public opinion—unlike on mass deportation—is on the side of Sen. Johnson. People oppose welfare for immigrants, so Democrats would most likely lose this (entirely hypothetical) fight.

More from National Review:

Birthright citizenship complicates all guest-worker programs in the United States and means that the nation as a whole would be even less insulated from the consequences of a state-based guest-worker program.

The goal of state-based visas is not to guarantee that there are zero consequences of immigration for the country as a whole, but rather to make the currently positive consequences more positive. As my report about the bill explains, the goal is to build flexibility into our economic migration system in order to allow it to respond to economic changes faster. This is exactly what is lacking in the federal monopoly where changes happen once every three decades. Certainly, there will be some impact nationally, but the net impact will be even more positive than under the sclerotic federal system. 

More from National Review:

The atrocities of optics presented by state-based guest-worker programs would also be legion: tenements swollen with guest-workers and their beleaguered families, young children denied visits to the doctor, [and] companies laying off Americans to hire phalanxes of underpaid guest workers, and tearful U.S. citizens waving goodbye to their guest-worker parents…

It’s amazing how Mr. Bauer can see the future of a program that has never existed. It’s remarkable for a conservative to claim that the only way to succeed in the United States is with government-funded welfare, denying that private charity and individual action could not lead to better outcomes. Yet the evidence indicates that when federal welfare was restricted to immigrants, those in the states that extended state-funded benefits had worse outcomes than in states that didn’t. Conservative Harvard economist George Borjas found that the immigrants in the anti-welfare states had greater reductions in poverty and higher rates of health insurance because they had an incentive to find employment.

His assumption that guest workers would be “underpaid” is pulled from thin air. He has no idea what the regulations for this non-existent program would be. (Retooling old rhetoric to a brand new idea is a common theme in all three of these responses.) 

Some immigrants will have to return to their home countries with their U.S.-born children if they lose their employment. But some states could adopt rules that allow long-term state residents to remain in the states for a period while they look for jobs, especially if they have U.S. children. And again, if they do have to leave, let immigrants make the choice whether they want to come under those conditions. There is no perfect system. There will always be difficult choices. The question for policymakers is which set of policies reduce potential downsides and increase the potential upsides.

More from National Review:

As Nicholas Eberstadt noted in a recent cover story for Commentary — a piece that Senator Johnson himself referenced in his remarks at Cato — the United States has experienced a growing crisis of work over the past 15 years. …Guest-worker programs weaken the viability of the average worker, and in so doing they damage the culture of work.

On my invitation, Nicholas Eberstadt spoke at Cato about his recent book on this topic—not a single word of his book supports the hypothesis that U.S. workers’ problems are caused by immigrants. Indeed, he repeatedly rejects this hypothesis (pp. 70, 76), and as I note in my commentary on his book, if it were true that increased foreign competition was the cause of men dropping out of the workforce, foreign-born men should be leading the way out of the workforce because studies have repeatedly shown that the only clear and large negative wage effect from immigration is on the immigrants already here. Yet they are not. Despite increased competition, they are working more than ever.

More from National Review:

A guiding principle of American policymakers for many decades was that the completely fluid movement of capital, labor, and goods across international borders was a utopian vision, and, like many utopian visions, probably could not be achieved. Instead, it was thought wiser to increase the fluidity of movement within the United States. The absence of trade and immigration barriers between states, the development of federal infrastructure programs, and other efforts were designed to realize that vision of internal fluidity. A radically federalized immigration policy would reverse it, making the internal movement of labor more difficult in order to increase movement across international borders.

This objection is just bizarre. Mr. Bauer is appealing to a principle of policy that he rejects—the fluid movement of labor—as a basis for rejecting reforms in that direction. In any case, the bill would not make internal movement more difficult. For people already here, the bill makes no difference at all on that score, and because the bill contains provisions allowing states to share state-sponsored workers across interstate lines, total movement between states would almost certainly increase under this legislation. It would certainly increase it within states, as the bill guarantees the ability to change employers (p. 5). To the extent that labor fluidity—international or domestic—is a goal of policy, then that is a reason to support this idea. It will increase both.

The idea that this is a “radically federalized immigration policy” is just not true. Its purpose is to federalize a portion of the system to allow faster policy responses and more tailored approaches to develop, not to devolve the entire system. This legislation is a complement to, not a rejection of the current system.

Jeffrey Herbst, the President and CEO of the Newseum, recently released a report about free speech on campus. It is brief and well worth reading.

Herbst believes we are missing the major problem exposed by recent attacks on free speech at universities.

Systematic public opinion polling and anecdotal evidence suggests, however, that the real problem of free expression on college campuses is much deeper than episodic moments of censorship: With little comment, an alternate understanding of the First Amendment has emerged among young people that can be called “the right to non-offensive speech.” This perspective essentially carves out an exception to the right of free speech by trying to prevent expression that is seen as particularly offensive to an identifiable group, especially if that collective is defined in terms of race, ethnicity, gender, or sexual identity. The crisis is not one of the very occasional speaker thrown off campus, however regrettable that is; rather, it is a generation that increasingly censors itself and others, largely silently but sometimes through active protest.

Many people believe university students have adopted a “right to non-offensive speech” under the influence of their leftwing professors who are hostile to libertarian values. But Herbst shows that high school students and their teachers are equally doubtful about protecting speech that offends. He notes, “young adults come to campus with some fairly well-developed views that explain much of what subsequently occurs as they confront challenging speech.”

Jeffrey Herbst notes that young people support free speech in theory but not, as we have seen with Murray and others, in particular cases. In the past polls showed that while the First Amendment in the abstract received near unanimous support, its applications to unpopular speakers sometimes failed to attract a majority. Maybe the boomers were different, and young people now are returning—ironically enough—to views held by pre-boomers.

Herbst shows that millennials in general are less supportive of free speech than older cohorts. I would like to see if this pattern holds controlling for age. Were baby boomers less supportive of free speech in 1974? If so, people may grow out of intolerance. For purposes of argument, let’s assume that in the past people became more tolerant with age. Perhaps the millennials will follow that path too. But might the world have changed? Might some factor now exists that could preclude millennials from following the normal path of increasing toleration and greater support for free speech?

Maybe. Jeffrey Herbst argues that early education now fosters illiberalism:

The approach to diversity in many elementary and secondary schools seems to be little more than ‘Don’t say things that could hurt others.’ While this might be very good life advice, students have come to interpret it as curtailing the First Amendment.

What can be done to counteract this trend? The libertarian answer to most free speech problems is always: more speech. Notice, however, that education is different from most speech situations. In a normal speech situation, two people speak and argue about a topic, and neither has authority about that topic if we understand authority as a presumption of being correct. Teachers, especially teachers of children, do have such authority. And advocates of free speech cannot simply interpose themselves and their arguments between teacher and student. By the time students enter the university (which can approximate the normal speech situation), they apparently have learned to be illiberal in pursuit of “niceness.”

Private schools are another answer to this problem. If most parents want a genuinely liberal education for their children, the authority of teachers will inculcate a respect for free speech even if it offends. But what if parents value virtue or social justice more than free speech? The children of those parents may become illiberal. What then? Of course, for now private schools can only be part of the answer to our problem even if all such schools were libertarian in outlook.

We need teachers who support free speech or specifically teachers who see free speech and diversity as compatible rather than as values in conflict that should be reconciled by limiting speech. Professors and public intellectuals should be working on that reconciliation while defending a strong view on freedom of speech. For example, Cato’s Flemming Rose is thinking hard about the importance of free speech in a multicultural society.

One final point. We live in a world too defined by partisanship and closed minds. Progressives may doubt the case for free speech when it is made by people who otherwise doubt progressivism. On the other hand, progressives who defend free speech will have real authority with those who doubt free speech but are otherwise progressive. The world being what it is, the future of free speech depends crucially on progressive advocates of the First Amendment. But not just them. Perhaps though, especially them.

Law professor Catherine Ross is a leading progressive advocate of free speech. She explores the challenges to the First Amendment in schools in Lessons in Censorship. You can see Cato’s forum on her book here.

Robert F. Bauer is an important progressive defender of free speech. You can read his thoughtful blog here.

The world lost a great champion of liberty with the passing of Allan Meltzer, a longtime Professor of Political Economy at Carnegie Mellon University.  Allan was a prodigious worker who wrote hundreds of articles and more than ten books, including his monumental A History of the Federal Reserve and more recently Why Capitalism?  The latter provides a strong defense of limited government, the rule of law, private property and free markets, which he saw as the surest means to increase the wealth of nations.

A Passion for Ideas and Policy

Allan had a passion for ideas and a desire to influence policy; he sought to make the world a better place by safeguarding economic and personal freedom. He became a major player in the marketplace for ideas — writing, teaching, advising policymakers, serving on editorial boards, co-founding the Shadow Open Market Committee with his close colleague and lifelong friend Karl Brunner, acting as president of the Mont Pelerin Society founded by F. A. Hayek, chairing the International Financial Institution Advisory Commission (also known as the “Meltzer Commission”), and participating in numerous conferences. He continued working right up until his death on May 8, at the age of 89.

A Giant in Monetary Economics

I first met Allan in the early 1980s, when he began to participate in Cato’s Annual Monetary Conference. His paper “Monetary Reform in an Uncertain Environment” was delivered at the first conference, in January 1983, and published in the Cato Journal later that year; it was reprinted in The Search for Stable Money (University of Chicago Press, 1987), a book I co-edited with Anna J. Schwartz.

In that article, Allan examined alternative monetary regimes and their implications for reducing risk and uncertainty. He sought a rule-based regime that would minimize uncertainty and best allow markets to flourish. He preferred, at the time, a quantity rule that would have the monetary base grow in line with the growth of real output adjusted for changes in the velocity of base money. Such a rule, he argued, would anchor expectations regarding the path of nominal income and achieve long-run price stability. However, the rule had to be credible and be supplemented with a fiscal rule that limited the taxing and spending powers of government. He did not want the Fed to finance government deficits or to allocate credit.

It is important to note that Allan was not opposed to private money. At the 1993 monetary conference and in his paper, he held that

individuals or groups should be permitted to issue and use privately produced money or monies… . The objective of policy rules is to reduce the uncertainty that the community must bear, not to prevent voluntary risk taking.

Allan was open-minded and was willing to change his policy advice based on logic and evidence.

He continued to participate in Cato’s Annual Monetary Conference for many years and contributed 15 articles to the Cato Journal (see Table 1). Although he was often critical of Fed policy, he thought Paul Volcker was correct in ending double-digit inflation by slowing the growth of money and credit, and that Alan Greenspan was correct in following an implicit monetary rule to prevent wide fluctuations in nominal income during the “Great Moderation.”

Meltzer, however, was highly critical of the Fed’s unconventional monetary policy and wrote in the Spring/Summer 2012 Cato Journal:

Overresponse to short-run events and neglect of longer-term consequences of its actions is one of the main errors that the Federal Reserve makes repeatedly. The current recession offers many examples of actions that some characterize as bold and innovative. I regard many of these actions as inappropriate for an allegedly independent central bank because they involve credit allocation, fill the Fed’s portfolio with an unprecedented volume of long-term assets, evade or neglect the dual mandate, distort the credit markets, and initiate other actions that are not the responsibility of a central bank.

He kept up his criticism until the end, writing articles for the Hoover Institute, where he was a distinguished senior fellow, with such titles as “Fed Up with the Fed” (Defining Ideas, February 17, 2016), “Fed Failures” (March 9, 2016), and “Reform the Federal Reserve” (October 12, 2016).  His last article in Hoover’s online journal appeared on April 25, less than two weeks before he died.

The last time I saw Allan was in Switzerland, in September 2016, where we had enjoyed many discussions at Karl Brunner’s Interlaken Seminar on Analysis and Ideology. He was in Zurich to commemorate the 100th anniversary of Karl’s birth, sponsored by the Swiss National Bank, and to deliver a paper discussing Karl’s many contributions to monetary theory as well as to political economy in general. In his paper, “Karl Brunner, Scholar: An Appreciation,” he emphasized that Karl

highlighted information, institutions and uncertainty as well as the importance of microanalysis in macroeconomics. Karl Brunner explained that nominal monetary impulses changed real variables by changing the relative price of assets to output prices. And he concluded that economic fluctuations occurred because of an unstable public sector — especially the monetary sector — that disturbs a more stable private sector, a policy lesson forgotten or never learned by many central banks.

Those ideas also were central to Allan’s work — both with Karl and independently — and they are evident in his interpretation of Keynes’s monetary theory.

John Maynard Keynes and Meltzer’s Monetary Rule

In a careful study of John Maynard Keynes’s writings, Meltzer argues that the vast literature on Keynes neglected the importance he placed on credible rules, which he thought would reduce uncertainty and improve economic welfare (see Keynes’s Monetary Theory: A Different Interpretation, Cambridge University Press, 1988).[i]

In particular, Allan was influenced by Keynes’s classic A Tract on Monetary Reform (1923), which discusses rules for domestic (internal) price stability and for international (external) price stability — that is, exchange rate stability. In thinking about a rule to reduce the variability of unanticipated changes in prices and outputs, Meltzer ([1987] 1989: 78–81) draws on Keynes’s distinction and his recognition of the benefits of reducing both internal and external instability.[ii] The problem, of course, is to choose the appropriate institutional framework. Countries operating independently cannot achieve both internal and external stability, argued Keynes, unless a key country anchors its price level by enforcing a credible rule.

Building upon Keynes’s insights, Meltzer (p. 78) notes that if each major trading partner makes domestic price stability a priority, then uncertainty about the future path of prices will diminish and exchange rates among the partners will be more stable. To realize both internal and external stability, Meltzer proposes a simple rule: each major country should set “the rate of growth of the monetary base equal to the difference between the moving average of past real output growth and past growth in base velocity” (p. 83). If each country complies, the rule will reduce the “variability of exchange rates arising from differences in expected rates of inflation.”[iii]

Meltzer’s proposed rule is “forecast free” and adaptable; it is mildly activist but nondiscretionary, similar to Bennett McCallum’s monetary rule.[iv]  By choosing to stabilize the anticipated price level rather than the actual price level, there is no need “to reverse all changes in the price level,” argues Meltzer (1989: 79). Instead, the actual price level is allowed “to adjust as part of the process by which the economy adjusts real values to unanticipated supply shocks.”  In other words, Meltzer’s monetary rule “does not adjust to short-term, transitory changes in level, but it adjusts fully to permanent changes in growth rates of output and intermediation (or other changes in the growth rate of velocity) within the term chosen for the moving averages” (p. 81).

In the current environment — with the Fed paying interest on excess reserves (in excess of  what banks can get on highly liquid assets), no competitive fed funds market, banks subject to uncertainty about future monetary policy and complex macro-prudential regulations, and depositors holding more cash due to ultralow interest rates, Meltzer’s monetary rule would be severely constrained. The link between base money and broader monetary aggregates has weakened significantly since the 2008 financial crisis and the Fed’s unconventional monetary policy.

Before serious consideration can be given to implementing any rule-based monetary regime, the Fed needs to normalize monetary policy by ending interest on excess reserves and shrinking its balance sheet to restore a pre-crisis fed funds market. Once changes in base money can be effectively transmitted to changes in the money supply and nominal income, Meltzer’s rule would reduce uncertainty and spur investment and growth.

The key point, however, is that Allan wanted to explore alternative monetary rules and select those he thought would work best to reduce the variability of prices and output. That comparative-institutions approach was evident in all his work. But he recognized that, ultimately, the choice of a rule would be heavily influenced by the political economy. His careful scholarship was intended to help shape the climate of ideas and public policy in the direction of what Richard Epstein has called “simple rules for a complex world.”[v]

A Breadth of Knowledge

Although Allan was known primarily for his work on monetary theory and history, he was deeply interested in the role of government in a free society; the relation between institutions, incentives, and behavior; the determinants of economic growth; the theory of public choice; the damaging effects of official foreign aid; and the distribution of income.[vi] He wrote many articles for the popular press, including the Wall Street Journal, Los Angeles Times, and Financial Times, and he was always willing to help younger scholars and students understand the complexities of political economy.

A Man of Integrity

Allan Meltzer was a great scholar and teacher, a friend of liberty, a man of integrity who kept his word, and a fine human being. He was persistent in his research and his life. Allan taught at Carnegie Mellon for 60 years and was married to his lovely wife Marilyn for 67 years.

When Allan was five years old, he lost his mother and went to live with his grandmother for several years until he moved to Los Angeles where his family ran a business. Reflecting on his early years, Allan said, “Her most important influence on my career and my outlook was her strongly held belief that, in America (and only in America), there were no real limits other than ability to what one could achieve by personal effort.”[vii]

In his many accomplishments and honors, Allan certainly realized the American Dream, and had a life well lived.[viii] He will be sorely missed, but his work will live on.

_________________

TABLE 1: Allan H. Meltzer’s Articles in the Cato Journal
  1. Monetary Reform in an Uncertain Environment,” Cato Journal 3 (1), Spring/Summer 1983. Reprinted in J. A. Dorn and A. J. Schwartz (eds.) The Search for Stable Money, University of Chicago Press (1987).
  2. The International Debt Problem,” Cato Journal 4 (1), Spring/Summer 1984.
  3. Monetary and Exchange Rate Regimes: A Comparison of Japan and the United States,” Cato Journal 6 (2), Fall 1986.
  4. Comment on “Can Monetary Disequilibrium Be Eliminated?Cato Journal 9 (2), Fall 1989.
  5. Some Empirical Findings on Differences between EMS and Non-EMS Regimes: Implications for Currency Blocs,” Cato Journal 10 (2), Fall 1990.
  6. Karl Brunner: In Memoriam,” Cato Journal 12 (1), Spring/Summer 1992.
  7. Benefits and Costs of Currency Boards,” Cato Journal 12, Vol. 12 (3), Winter 1993.
  8. Asian Problems and the IMF.” Cato Journal, 17, (3), pp. 267-274.
  9. Monetary Policy in the New Global Economy: The Case of Japan,” Cato Journal 20 (1),Spring/Summer 2000.
  10. Argentina 2002: A Case of Government Failure,” Cato Journal 23 (1), Spring/Summer 2003.
  11. A Monetary History as a Model for Historians,” Cato Journal 23 (3), Winter 2004.
  12. New Mandates for the IMF and World Bank,” Cato Journal 25 (1), Winter 2005.
  13. Learning about Policy from Federal Reserve History,” Cato Journal 30 (2), 2010.
  14. Federal Reserve Policy in the Great Recession,” Cato Journal 32 (2), Spring/Summer 2012.
  15. What’s Wrong with the Fed? What Would Restore Independence?”  Cato Journal 33 (3), Fall 2013.

_______________________

[i] When Allan’s book was still being drafted, I organized a conference in October 1986, sponsored by the Liberty Fund, which took place in San Francisco and brought together a number of leading monetary scholars to critique Allan’s arguments and help facilitate completion of his book. Participants included Milton Friedman, Anna Schwartz, Karl Brunner, Leland Yeager, David Laidler, John Whitaker, Lawrence H. White, and Axel Leijonhuvud.

[ii] A. H. Meltzer, “On Monetary Stability and Monetary Reform,” in J. A. Dorn and W. A. Niskanen (eds.) Dollars, Deficits, and Trade, 63–85. Boston: Kluwer (1989).  This paper was originally presented the Third International Conference of the Institute for Monetary and Economic Studies at the Bank of Japan, June 3, 1987.

[iii] Meltzer’s proposal is similar to Brunner’s call for a “club of financial stability.”  See K. Brunner, “Policy Coordination and the Dollar,” Shadow Open Market Committee: Policy Statement and Position Papers (PPS 87-01), 49–51. Center for Research in Government Policy & Business, University of Rochester, March 1987.

[iv] See B. T. McCallum, “Monetarist Rules in the Light of Recent Experience.American Economic Review 74 (May 1984): 388–96.

[v] See R. A. Epstein, Simple Rules for a Complex World, Cambridge, Mass.: Harvard University Press, 1995.

[vi] Meltzer viewed economics as “a policy science, not a branch of applied mathematics.”  He argued that “economics will be poorer if it does not include institutions and the incentives embodied in the rules, institutions or arrangements that we call society.”  See A. H. Meltzer, “My Life Philosophy,” The American Economist 34 (1), Spring 1990, p. 27.

[vii] Ibid., p. 22.

[viii]  Meltzer’s many honors include: Distinguished Fellow, American Economic Association; Irving Kristol Award, American Enterprise Institute; Distinguished Professional Achievement Medal, UCLA; The Adam Smith Award, National Association for Business Economics; The Bradley Foundation Award; The Harry Truman Award for Public Policy; and the Distinguished Teacher Award, International Mensa Foundation.

[Cross-posted from Alt-M.org]

Former House Ways and Means Committee staffer Joanne Butler wrote a recent piece calling for greater use of E-Verify to fight illegal immigration. Like other pieces advocating for the massive expansion of this government-run employment verification program, Butler’s presents a rosy view of E-Verify that is at odds with the reality. E-Verify remains an ineffective program that promises much, accomplishes little, and is dangerous to citizens and non-citizens alike.

E-Verify is still based off of Reagan-era employment verification forms. After collecting I-9 tax forms from employees, the employer enters the information into a government website. The system compares these data with information held in Social Security Administration (SSA) and Department of Homeland Security (DHS) databases. SSA data is then used to check the validity of the Social Security number while DHS checks immigration status.

If both databases decide that the data are valid then it approves the employee for work. A flag raised by either database returns a tentative non-confirmation that requires the employee and employer to sort out the error. These errors can range from the simple (a misspelled name) to the complex (such as the system flagging a Social Security number as fake or already in use). The employer and the employee must correct these errors, eating up valuable labor hours and resources. The current I-9 form costs employers an estimated 13.48 million man-hours each year, while 46.5 percent of contested E-Verify cases took longer than eight working days to resolve. A hypothetical nationwide E-Verify mandate would sacrifice many millions more work hours on the altar of immigration enforcement.

E-Verify’s errors and inaccuracies are far too frequent and notoriously difficult to actually measure. The last major survey of E-Verify’s accuracy rates was published in 2012.  According to that last survey, 54 percent of unauthorized workers were incorrectly found to be work authorized due to E-Verify’s reliance on documents presented by the workers themselves. This makes it easy to fool E-Verify: the system checks the validity of documents but does little to check the veracity of documents.

For example, a blatantly false Social Security number, such as one with the wrong number of digits or an impossible combination of numbers, will be flagged. However, an unauthorized worker utilizing a valid number illicitly acquired will not be flagged by the system. The system will not question why a 44-year-old man in California is using, say, a Social Security number issued to a 5-year-old girl born in Texas or one of the 6.5 million numbers attached to Americans who are 112 years old or older who are not recorded as deceased. Any documents acquired with the valid but illicit number will also fail to trigger the system.

E-Verify also blocks some legal workers.  Around 0.15 percent of E-Verify queries result in a false final non-confirmation, locking out otherwise legal citizens and permanent residents. An SSN “lockdown” feature only makes things worse, as the Social Security Administration can lock a number used multiple times in the system. An American could find their Social Security number “locked” and have to go through a long process to unlock it. The valid number holder is forced to bear the burden of having to prove to the government that they are who they say they are.

Even more absurd, about half of all new hires in states that require mandatory E-Verify for all new hires are not run through E-Verify.  Enforcing E-Verify is about as difficult and expensive as enforcing the current I-9 system except that it adds another layer of bureaucracy for employers and employees to overcome.  Arizona, Mississippi, South Carolina, and Alabama are states committed to immigration enforcement.  If they can’t even make mandatory E-Verify truly mandatory then there is no hope for the federal government accomplishing that goal.

Finally, E-Verify is expensive. Expanding E-Verify through a nationwide mandate would, per the CBO, cost the federal government $635 million from 2018 to 2023. It would additionally impose $10 million in annual costs on state and local governments, as well as a minimum $200 million in costs to the private sector as employers struggle to verify millions of employees. All that cost for a system that doesn’t even work very well – what a bad deal.

Pages