Policy Institutes

Twelve states, as well as the District of Columbia and Puerto Rico, currently grant (or will soon grant) drivers’ licenses to unauthorized immigrants. An additional two—Arizona and Nebraska—explicitly grant licenses to immigrants brought to the United States as small children (“Dreamers”). This is a favorable trend, both for public safety and for liberty.

If you want an illustration of the public safety benefits from using drivers’ licenses solely for driving administration, give a read to this Voice of America article which illustrates clearly that illegal immigrants drive even when licensing is unavailable to them. Now that licensing is available, a California applicant who is not legally in this country must first prove residence. “He must also take an eye test to show he can see well, and a written test on driving rules. He must also take a driving test to show he can operate a motor vehicle.” Bringing all drivers up to such minimum standards undoubtedly improves safety outcomes.

For liberty, though, the shift back toward using driver licensing for driving is especially welcome. In 2005, amid a wave of anti-immigrant sentiment stoked by terror fears, Congress passed the REAL ID Act, which requires states to get proof of legal presence if their licenses and IDs are to be accepted by federal agencies. It appeared for a time as though states kowtowing to the federal government would help turn their driver’s licenses into an all-purpose federal tracking and control instrument, a national ID.

It has become increasingly clear that the Department of Homeland Security’s Transportation Security Administration will never follow through on the feds’ threat to turn away air travelers from states that don’t comply with REAL ID (though many are still taken in by DHS talking points). Some states are declining to implement REAL ID at all. Others are producing easy-to-acquire licenses that are labeled “not for federal purposes,” which REAL ID permits.

The states giving licenses to unauthorized immigrants today run the gamut from “liberal” to “conservative”: California, Colorado, Connecticut, Delaware (effective December 2015), Hawaii (effective January 2016), Illinois, Maryland, New Mexico, Nevada, Utah, Vermont, and Washington. For varying reasons—and with varying levels of controversy—they’re re-asserting state authority over a state prerogative: driver licensing policy.

That’s good federalism. It’s good for road safety. And it’s especially good for keeping motor vehicle bureaucrats from being TSA agents and vice versa.

A new Cato Institute/YouGov poll finds a solid majority—58%—of Americans supports the main components of the Iran nuclear deal, in which the United States and other countries would ease oil and economic sanctions on Iran for 10-15 years in return for Iran agreeing to stop its nuclear program over that period. Forty percent (40%) oppose such a deal.

Americans also prefer Congress to allow such a deal to go forward (53%) rather than block the agreement (46%). Support declines slightly when the deal is described as an agreement between the “Obama administration and Iran.”

Full poll results found here

Despite support for the deal, Americans remain skeptical it will stop Iran’s nuclear program. Fifty-two percent (52%) of Americans say the agreement is “unlikely” to “stop Iran from developing nuclear weapons,” including 32% who say it’s “extremely unlikely.” Conversely, 46% believe the deal is likely to achieve its primary goal.

However, Americans are more optimistic the deal will delay Iran from developing nuclear weapons. The poll found 51% of Americans think the deal will likely “delay” Iran’s nuclear development while 47% disagree.

The survey also offered Americans an opportunity to select which one of several policy options would be “most effective” in reducing the likelihood Iran develops nuclear weapons. Doing so found a plurality –40%— think the Iran nuclear agreement would be more effective than taking military action against Iran’s nuclear facilities (23%), imposing new economic sanctions against Iran (23%) or continuing existing sanctions against Iran (12%).

Ultimately, 63% of Americans say it would be a “disaster” if Iran developed nuclear capabilities while 32% say the problem could be managed and 5% say it wouldn’t be a problem. Nevertheless, Americans tend to have confidence that the Iran nuclear agreement may be the next best step toward reducing that possibility.

Partisanship and Religion Polarizes, Youth Gives Confidence

Partisanship polarizes support for the Iran nuclear agreement and the perceived threat.

Fully 80% of Democrats support the deal while 62% of Republicans oppose it. Independents side with Democrats with 55% in favor. Democrats are also far more likely to believe the deal will “stop” Iran from developing nuclear weapons (71%) compared to only 22% of Republicans. Even still, Democrats are 30 points less likely than Republicans to say Iran obtaining a nuclear weapon would be a disaster (49% v 79%).

Young Americans are also far more supportive of the deal, more likely to believe in its efficacy and less likely to fear Iran obtaining a nuclear weapon compared to older Americans.

Fully 68% of Americans 18-29 support the Iran nuclear deal compared to 50% of those over 65. Furthermore, 6 in 10 millennials say the agreement will stop Iran’s nuclear development compared to only 3 in 10 seniors.

Ultimately, young Americans are simply less concerned if Iran gains nuclear capabilities. While 76% of seniors say such an outcome would be a disaster only 48% of 18-29 year olds agree. Instead, 51% of millennials say Iranian nuclear capabilities would be a “problem that can be managed” (39%) or “not a problem at all” (12%). These results comport with findings from Trevor Thrall and Eric Goepner’s recent study of millennial attitudes on foreign policy.

Religiosity plays a role as well: the more someone attends religious services the more they believe that economic sanctions or military intervention will best prevent Iran from obtaining nuclear capabilities and the less likely they are to believe that the Iran nuclear agreement will work.

For instance, among those who often attend religious services, 40% think economic sanctions will best reduce Iranian nuclear development followed by 30% who say the nuclear agreement and 28% who say military intervention. Conversely among those who never attend religious services 47% think the Iran nuclear agreement will be most effective, followed by 30% who think economic sanctions and 19% who think military intervention will work best.

Similarly, Protestants are about 20 points less likely than the religiously unaffiliated to think the Iranian nuclear agreement (28% v. 49%) will work better than economic sanctions or military intervention in reducing Iranian nuclear capabilities.

Sign up for future releases of Cato public opinion studies and insights here.

The Cato Institute/YouGov Poll of 1,004 adults was conducted July 14-16, 2015, using a sample drawn from YouGov’s probability-based online panel, which is designed to be representative of the U. S. population. The margin of sampling error for all respondents is plus or minus 4.3 percentage points. Toplines (.pdf) results can be found here, crosstabs (.xls) can be found here.

I owe a heckuva lot to Friedrich Hayek. Had it not been for him, I might never have heard of “free banking,” meaning the genuine article rather than the phony antebellum U.S. version. Certainly I would never have found myself writing about it. Nor, perhaps, would any other modern economist.

It was two pamphlets that Hayek published in the 1970s — first, Choice in Currency (1976) and then Denationalisation of Money (1978) — that caused the scales to fall off of my eyes and of those of some other economists, thereby encouraging us to reconsider the merits of private and competitive currency systems. That reconsideration in turn led to a revival of interest in former free banking episodes, including those of Scotland and Canada, which monetary economists had previously neglected or overlooked. In short, were it not for Hayek, there’d be no such thing as a Modern Free Banking School.

Yet Hayek himself was no free banker. For starters, his own vision of “choice in currency” had little if anything in common with historical free banking arrangements. In those arrangements, banks dealt in established, precious-metal monetary units, like the British pound and the American dollar, receiving deposits of metallic money, or claims to such, and offering in place their own readily-redeemable liabilities, including circulating banknotes. In Hayek’s scheme, in contrast, competing firms issue irredeemable paper notes, with each brand representing a distinct monetary unit. Far from resembling ordinary commercial banks, Hayek’s “banks” resemble so many modern central banks in that they issue a sort of “fiat” money. But they differ from actual central banks in enjoying neither monopoly privileges nor the power to compel anyone to accept their products.1

Competition, Hayek claimed, would force private issuers of irredeemable currencies to maintain those currencies’ purchasing power, or else go out of business. An overexpanding free bank, in contrast, is disciplined, not by an eventual loss of reputation, but by the more immediate prospect of running out of cash reserves. Hayek’s claims have always been controversial, even among persons (myself among them) who are inclined to favor competitive currency arrangements over monopolistic ones. It isn’t clear that a Hayekian money issuer would ever manage to get its paper accepted, or that it would resist the temptation to hyperinflate if it did.2

But Hayek didn’t merely differ from free bankers in proposing a form of currency competition distinct from free banking. He expressly opposed free banking. Asked, during a 1945 radio interview, whether he considered the Federal Reserve System a step along “the road to serfdom,” he unhesitatingly replied, “No. That the monetary system must be under central control has never, to my mind, been denied by any sensible person.”3 And although by the 1970s he had come to believe it both possible and desirable to have a currency stock consisting of the irredeemable paper of numerous private firms, he also continued to maintain that, so long as government authorities supplied a nation’s standard money, private firms should not be able to issue circulating paper claims denominated and redeemable in that money.

The most explicit, later statement of Hayek’s views on free banking occurs in a lecture he gave at a conference in New Orleans in 1977, just as Denationalisation of Money was in press:

We have indeed given government, and for fairly good reasons, the exclusive right to issue gold coins. And after we had given the government that right, I think it was equally understandable that we also gave the government the control over any money or any claims, paper claims, for coins or money of that definition. That people other than the government are not allowed to issue dollars if the government issues dollars is a perfectly reasonable arrangement, even if it has not turned out to be completely beneficial. And I am not suggesting that other people should be entitled to issue dollars. All the discussion in the past about free banking was really about the idea that not only the government or government institutions but others should also be able to issue dollar notes. That, of course, would not work.4

Actually, governments monopolized the coining of gold and other metals, not for any good reasons, but because doing so gave them the opportunity to manipulate precious-metal standards in pursuit of narrow fiscal ends. But it is the last sentence of this quote that’s most surprising, for what Hayek declares “unworkable” is an arrangement that worked quite successfully in many places, including Canada, where it survived well into Hayek’s own lifetime. Canada’s banking and currency system had in fact been remarkably stable, altogether avoiding the crises by which the U.S. was afflicted in the decades leading to the Fed’s establishment, and weathering the Great Depression far better than the U.S. system did despite having lacked a central bank until after that episode’s nadir.5

That Hayek should have written as if he was quite unaware of the Canadian experience or, for that matter, of the still more famous Scottish free banking episode is extremely puzzling. It was Hayek, after all, who supervised, and signed off on, Vera Smith’s 1935 doctoral dissertation on “The Rationale of Central Banking” (subsequently published by P.S. King & Son, and reprinted by LibertyPress) in which she discusses both the Canadian and the Scottish episodes, as well as some other free banking episodes, in unmistakably favorable terms.

Had Hayek forgotten his own PhD student’s work, if not some of his own early research? Had he simply changed his mind, reverting to conventional wisdom after a brief interval during which he had entertained a more favorable view of free banking? Or had he never accepted Free Banking School arguments?

Larry White, who drew attention to Hayek’s anti free-banking stance some years ago in a History of Political Economy article entitled, “Why Didn’t Hayek Favor Laissez Faire in Banking?,” favors the third hypothesis, tracing Hayek’s position to his unwavering belief that a free banking system would manage the stock of bank money in a procyclical manner. Whereas for Mises, who did favor free banking,6 a cyclical boom was most likely to be set off by a central bank, for Hayek it is the competitive commercial banks that are most likely to overissue. Unlike Mises, Hayek subscribed to the popular view that banks might expand credit without limit so long as they expanded in unison, and that they would in fact be inclined to overexpand, while allowing their reserve ratios to decline, in response to cyclical increases in the demand for loans.

But Hayek was mistaken. The popular view, according to which banks can expand credit all they like so long as they expand it in unison, incorrectly equates a bank’s demand for reserves with its net demand for such — that is, with its need for reserves to cover expected or deterministic outflows. This overlooks banks’ need for “precautionary” reserves, or reserves that serve to protect against an undue risk of stochastic or random reserves losses. Even a well-coordinated, industry-wide expansion of bank credit will involve some increase in banks’ collective demand for precautionary reserves. For that reason such a coordinated expansion isn’t sustainable unless it’s accompanied by an increase in the nominal quantity of bank reserves. That is why, if one examines the record of so-called bank lending “manias,” one finds that they typically involve, not a substantial decline in bank reserve ratios, but a substantial increase in the nominal quantity of bank reserves.

Whether Hayek was right to reject free banking or not, and tempting as it may be for fans of free banking to claim him as one of their own, doing so would hardly be doing justice to that great economist. We may credit him for inspiring us all; but we mustn’t otherwise associate him with opinions that, rightly or wrongly, he flatly rejected.

______________________________________

[1] The modern cybercurrency market, consisting of Bitcoin and its many less well-known rivals (“altcoins”) offers something close to a real-world counterpart of Hayek’s scheme.

[2] For criticisms of Hayek’s scheme, and others like it, see George Selgin and Lawrence H. White, “How Would the Invisible Hand Handle Money?,” Journal of Economic Literature 32 (4) (December 1994), and Lawrence H. White, The Theory of Monetary Institutions, Part XII, “Competitive Supply of Fiat-Type Money” (New York: Blackwell, 1999).

[3] Hayek on Hayek: An Autobiographical Dialogue, ed. Stephen Kresge and Leif Wenar (Chicago: University of Chicago Press, 1994), p. 116; quoted in White, “Why Didn’t Hayek Favor Laissez Faire in Banking?, p. 763 n12.

[4] F. A. Hayek, “Toward a Free Market Monetary System.” Journal of Libertarian Studies 5 (1) (Fall 1979). Whether Hayek, like Friedman before him, imagines that private banks’ circulating paper dollars would be indistinguishable from the fiat dollars issued by the central authority, is unclear from this passage. If so, he committed the crude error of equating free banking with counterfeiting.

[5] On Canada’s decision, despite its monetary system’s good record, to establish a central bank in 1935, see Bordo and Redish.

[6] See Lawrence H. White, “Mises on Free Banking and Fractional Reserves,” in John W. Robbins and Mark Spangler, eds., A Man of Principle: Essays in Honor of Hans F. Sennholz (Grove City: Grove City College Press).

Without government interference, insurance markets will naturally charge higher premiums for riskier individuals. For example, life insurance premiums vary considerably based on factors that increase the likelihood of death, such as age, gender, smoking status, and health.

Under Obamacare, many factors that influence healthcare expenditures are excluded from premiums. For example, premiums make no distinction for obesity, likelihood of having a baby, alcoholism or pre-existing conditions. One notable exception is for smokers, where premiums may be up to 50 percent higher than that for non-smokers. I have collected data on premiums for smokers and non-smokers in 35 states, and the data shows large variation in the extent to which smokers are charged more for their choice.

Smokers are certainly a risker group than non-smokers. Thus, one would expect some actuarial adjustment to premiums. Given the variation across states, it is clear that premiums vary not only due to a smoker’s greater risk, but other factors as well. At least part of the markup for smokers should be viewed as a “smoker’s tax” rather than an actuarial adjustment.

One expects that the detrimental effects of smoking would build over time. You wouldn’t expect to see large risk adjustments for young individuals. Let’s consider a 27-year-old who doesn’t receive subsidies but is mandated to purchase health insurance. If a non-smoker lived in Cheyenne, WY, he or she could purchase Blue Cross Blue Shield of Wyoming - BlueSelect Silver ValueTwo Plus Dental plan for $334 per month. This plan has a $3,000 deductible and an out-of-pocket maximum of $6,600. If the 27-year-old smoked, the same plan would be $417 per month, or 24.9% higher. For a pack-a-day smoker, this represents a $2.72 per-pack increase in expenditure due to Obamacare.

Smoker’s Premium in Wyoming - $2.72 per pack for a pack-a-day 27-year-old smoker

Smoker Non-Smoker

 

However, not all of the $2.72 per-pack is a tax. Smokers are more expensive. Consider a non-smoker in Marquette, MI, who selects Blue Cross Blue Shield of Michigan - Blue Cross Silver Extra with Dental and Vision, a Multi-State Plan. That person pays $335 per month, nearly identical to the premium for the non-smoker in Wyoming. The plan has a $2,000 deductible and an out-of-pocket maximum of $5,500. If the 27-year smoked, the same plan costs $351 per month (4.8 percent higher), or $0.53 per-pack of cigarettes. If 53 cents per pack approximates the actuarial adjustment for young smoker, then much of the mark-up in Wyoming – $2.19 of the $2.72 – doesn’t represent risk, and can be viewed as a smoking tax.

Smoker’s Premium in Michigan - $0.53 per pack for a pack-a-day 27-year-old smoker

Smoker Non-Smoker

 

It might be the case that the numbers above are the exception, not the rule. Yet, in a more comprehensive analysis of premiums, it is clear that the smoker’s premium varies considerably by state. Wyoming has some of the highest mark-ups, while Michigan has some of the lowest mark-ups. The plans presented above are quite similar with respect to premiums and cost sharing for non-smokers, yet the smoker’s mark-up varies greatly. The table below shows average mark-ups for young smokers, restricting the set of plans to Obamacare “Silver” plans for 27-year-olds.

 

If a “pack-a-day” smoker is an overstatement for actual consumption, then Obamacare cigarette taxes are extremely high in some states – in fact, far higher than the explicit excise tax. The median excise tax on cigarettes is $1.36 per pack, and is $0.60 per pack in Wyoming (ranking 40th out of the states) and $2.00 per pack in Michigan (ranking 12th).

Based on this analysis, it is clear that the Obamacare smoker’s tax doesn’t represent risk adjustment in many states. But why are cigarette taxes in Obamacare – above and beyond the actuarial adjustment – a problem? Aren’t smokers are doing something terrible to themselves (and others, through secondhand smoke)? In economics, one of the core assumptions is individual rationality. People weight the costs and benefits of their actions and do what’s best for them. Everyday behavior – from smoking cigarettes, to eating pizza instead of broccoli (or sometimes both), to jaywalking in order to save a few seconds of time, to getting in the car to drive to work – involves risk and rewards. If people understand the inherent risks and rewards, then we respect consumer autonomy even if we wouldn’t make the same choice. The economic argument for taxing behavior like smoking (through excise taxes or Obamacare taxes) is that it creates negative externalities. For smoking, there are in fact negative externalities. These are costs produced but not borne by the smoker, the most obvious of which is secondhand smoke. When such externalities exist, corrective taxation is one of several ways that a more efficient allocation of resources can be achieved. Nonetheless, evidence suggests that cigarette taxes at their current levels more than pay for such negative externalities. As importantly, there’s no reason to think these externalities are much different in Wyoming and Michigan.

With that said, should we be concerned with Obamacare cigarette taxes versus, say, excise taxes? One disadvantage of differing excise taxes across state or city borders is that it encourages smuggling or purchases from low-tax areas. Thus, the tax doesn’t correct the negative externality. That differs, of course, from Obamacare taxes where a person would need to move from Wyoming to Michigan to reduce the tax. Yet, Obamacare cigarette taxes present a host of problems. The vast majority of people do not receive health insurance from Obamacare, so its cigarette taxes do not correct the externalities smoking produces. In addition, the cigarette taxes in Obamacare lack transparency. They are buried in the weeds of Obamacare premiums as hefty smoking taxes, meant to influence or punish the choices of 18 percent of American adults. Perhaps if smoking rates were as high as obesity, they’d have enough political power that bureaucrats wouldn’t punish them.

 

Aaron Yelowitz is an associate professor in economics at University of Kentucky and a Visiting Scholar at Cato Institute.

People who have heard of the Jones Act (Merchant Marine Act of 1920) generally are aware that its stated purpose is to maintain a strong U.S. merchant marine industry.  Drafters of the legislation hoped that the merchant fleet would remain healthy and robust if all shipments from one U.S. port to another were required to be carried on U.S.-built and U.S.-flagged vessels.  Unfortunately, things haven’t worked out very well. 

The protectionism of the Jones Act has given the United States the type of merchant marine that would be expected from a sector that has been cut off from market forces for close to a century.  Instead of being a global powerhouse, the U.S. merchant fleet has become a minor player.  In 1955 the 1,072 ships in the fleet accounted for 25 percent of global tonnage.  Today the 191 vessels account for 2 percent of the world total.  Those vessels primarily carry cargoes from one U.S. port to another, along with government-generated exports, such as military equipment and food aid. 

Not surprisingly, shipping goods on a U.S.-flagged vessel is a high-cost proposition, which explains why the U.S. fleet simply can’t compete in normal global commerce.  A 2011 study by the U.S. Maritime Administration (Marad) showed that the average daily operating costs for American vessels were roughly three times higher than comparable vessels registered in other countries.

Currently there are only three U.S.-flagged dry-bulk vessels of the type used to haul grains, fertilizers, and coal.  Lack of availability of U.S.-flagged vessels to ship grains between U.S. ports helps to explain a news item from last week:  50,000 metric tons of Brazilian corn have been contracted for shipment to Wilmington, NC. 

The decision to bring more grain into North Carolina isn’t hard to understand.  The state ranks second in production of pigs and turkeys, fourth in production of broiler chickens, and ninth in production of eggs.  The state’s livestock industry is large, so its animals require a lot of feed. North Carolina and surrounding southeastern states don’t raise enough corn and soybeans to meet local demand.  The United States as a whole produces plenty of livestock feedstuffs – particularly corn and soybeans – more than any other country.  From a North Carolina perspective, too much of those crops grow in the wrong place.  Des Moines, IA, for example, is in the heart of the Midwest.  It also is well over 1000 miles away from livestock producers in North Carolina. 

A substantial quantity of corn and soybeans (or soybean meal) moves by train from the Midwest to feed mills in the Southeast.  However, rail transport of bulk commodities not only is relatively costly, the timing of shipments also can be unpredictable.  Trains moving from the western Corn Belt need to go through Chicago, the busiest rail junction in the country.  Trains have been known to be delayed for days just trying to transit that city.  It’s not fun to be raising pigs or chickens when the feed you need to keep them from getting hungry is stuck on a train far away.

Several years ago a group of North Carolina livestock producers took steps to deal with the challenge of procuring a steady supply of competitively priced feedstuffs.  They banded together to build a facility for unloading cargoes of grains or soybean meal from ocean-going vessels at the port of Wilmington.  Wilmington Bulk LLC provides a cost-effective entry point for water-borne cargoes, which helps to assure abundant feed supplies for North Carolina farmers.  Instead of being limited to sourcing grains and soybean meal in the Southeast or Midwest of the United States, those products now can be procured from anywhere in the world.

But why not simply ship corn from the Midwest to Wilmington by water?  Waterborne transport of bulk commodities generally is less expensive than moving them via rail or truck.  The United States already has a highly sophisticated system for transporting agricultural commodities from the Midwest to the Gulf of Mexico that uses the Mississippi River and its tributaries.  This country long has been the world’s largest exporter of grains and soybeans.  The majority of those exports move down the river system before being loaded onto ocean vessels near New Orleans.  Why not just contract with an ocean-going dry-bulk vessel to make the relatively short trip (approx. 1600 miles) from Louisiana to North Carolina instead of the much longer trip (approx. 4500 miles) from the port of Santos in Brazil?

Yes, the Jones Act makes the perfectly rational plan of moving Midwestern grain by water to North Carolina economically infeasible.  Recall that there are only three dry-bulk vessels in the U.S.-flag fleet, and that the daily cost of chartering those vessels would be roughly three times higher than international rates.  Under those circumstances, it’s not hard to understand why the operators of Wilmington Bulk find it most cost-effective to obtain their supplies from overseas and have them shipped on foreign-flagged vessels.

The solution to this problem, of course, would be to allow foreign-flagged vessels to carry shipments from one U.S. port to another.  The best way to achieve this would be to repeal the Jones Act.  (Sen. John McCain (R-AZ) has drafted legislation to do so.)  If special maritime policies are needed to meet national security requirements, they should be targeted thoughtfully so that they don’t interfere with commercial shipping.  Until maritime statutes are reformed, though, it can be expected that North Carolina’s pigs and turkeys will continue to enjoy feedstuffs from around the world.

(For more detail on the Jones Act, see this recent article by my Cato colleague, Scott Lincicome.)

Martin O’Malley, the former governor of Maryland and Democratic presidential candidate, is no Bill and Hillary Clinton, who have made more than $100 million from speeches, much of it from companies and governments who just might like to have a friend in the White House or the State Department. But consider these paragraphs deep in a Washington Post story today about O’Malley’s financial disclosure form:

While O’Malley commanded far smaller fees than the former secretary of state – and gave only a handful of speeches – he also seemed to benefit from government and political connections forged during his time in public service.

Among his most lucrative speeches was a $50,000 appearance at a conference in Baltimore sponsored by Center Maryland, an organization whose leaders include a former O’Malley communications director, the finance director of his presidential campaign and the director of a super PAC formed to support O’Malley’s presidential bid.

O’Malley also lists $147,812 for a series of speeches to Environmental Systems Research Institute, a company that makes mapping software that O’Malley heavily employed as governor as part of an initiative to use data and technology to guide policy decisions.

I scratch your back, you scratch mine. That’s the sort of insider dealing that sends voters fleeing to such unlikely candidates as Donald Trump and Bernie Sanders.

These sorts of lucrative “public service” arrangements are nothing new in Maryland (or elsewhere). In The Libertarian Mind I retell the story of how Gov. Parris Glendening and his aides scammed the state pension system and hired one another’s relatives.

In some countries governors still get suitcases full of cash. Speaking fees are much more modern.

The same day three weeks ago that the Supreme Court ruled on same-sex marriage (Obergefell v. Hodges), our friends at the Institute for Justice claimed a strong victory in favor of individual rights and economic freedom in an important case before the Texas Supreme Court (a.k.a. SCOTEX).

In Patel v. Texas Department of Licensing and Regulation, the court was faced with a state constitutional challenge to a licensing requirement that hair threaders acquire cosmetology licenses – to the tune of nearly $9,000 and 750 hours – when such classes “are not related to health and safety or what threaders actually do.”

Threading is a South Asian and Middle Eastern beautification practice whereby a person removes eyebrow hair through the skilled application of taut cotton threads tied in a small loop. Licensing requirements have recently come under scrutiny from both Democratic and Republican leaders, who claim that they unduly restrict trade and burden the poor.

In Patel, SCOTEX interpreted the “due course of law” provision of the Texas Constitution to protect economic liberties. This despite the court’s jurisprudence in this area having been plagued by the application of inconsistent standards. State law had recognized three applicable standards of scrutiny: the “real and substantial relation” test, the rational-basis-plus-review-of-evidence test, and the good ol’ rational basis test. The expansive language of the Texas Due Course Clause would suggest that courts should be more skeptical of state regulations than they are under the rational basis test (which is similar to its federal counterpart in that essentially all laws survive such “scrutiny”). 

And indeed here, the court adopted a more restrictive form of review – apparently yet another new standard – looking at whether “a statute’s effect as a whole is so unreasonably burdensome that it becomes oppressive in relation to the underlying governmental interest.” Applying that test, the court found the cosmetology requirements had “no rational connection to reasonable safety and sanitation requirements” and invalidated the licensing scheme as it applies to hair threaders.

After enjoying the majority opinion, don’t overlook the concurrence by Justice Don Willett, joined by two other colleagues on the nine-member court:

This case concerns far more than whether Ashish Patel can pluck unwanted hair with a strand of thread.  This case is fundamentally about the American Dream and the unalienable human right to pursue happiness without curtsying to government on bended knee.  It is about whether government can connive with rent-seeking factions to ration liberty unrestrained, and whether judges must submissively uphold even the most risible encroachments. 

George Will recently praised Justice Willett’s approach – favorably comparing him to Chief Justice John Roberts (a low bar, to be sure) – particularly for his treatment of Lochner v. New York (1905). Questions of substantive economic liberties always bring about discussion of that famous case, in which the U.S. Supreme Court struck down maximum-hours regulations regarding New York City bakers as an imposition on the constitutional freedom of contract. The New Deal Court effectively overruled Lochner in West Coast Hotel v. Parrish (1937), paving the way for Carolene Products v. United States (1938), which bifurcated our rights and protected so-called fundamental rights more than others (including economic and property rights).

That Lochner was wrong is one of the few points of agreement between conservative and progressive legal scholars, both of which would rather that “unelected black-robed philosopher-kings” stop striking down the people’s laws. (Somehow, progressives have no problem with Brown v. Board of Education, or Roe v. Wade, or indeed Obergefell, all of which invalidated state laws – and conservatives were dismayed when the Supreme Court saved RobertsCare in NFIB v. Sebelius.) Chief Justice Roberts invoked Lochner 16 times(!) in his dissenting opinion in Obergefell.

As Justice Willett notes, “The Lochner bogeyman is a mirage but a ready broadside aimed at those who apply rational basis rationally… . The Constitution does protect economic liberty.” To Justice Willett – the most Twitter-friendly jurist in the land (also a low bar) – the fundamental question in Patel and similar cases is “one of constitutional limitations”: “Should judges blindly accept government’s health-and-safety rationale, or instead probe more deeply to ensure the aim is not suppressing competition to benefit entrenched interests?” Willett would have presumed the question in favor of individual liberty, rather than presuming the constitutionality of the statute as the majority opinion did (before rebutting that presumption) to conclude that “[t]hreaders with no license are less menacing than government with unlimited license.”

So kudos to IJ, to SCOTEX, and to liberty. June 26 was a great day for judicial engagement and judicial review across the land.

After a period of foreshadowing and rumor, the Equal Employment Opportunity Commission has now gone ahead and ruled that employment discrimination on the basis of sexual orientation is forbidden under existing federal civil rights law, specifically the current ban on sex discrimination. Congress may have declined to pass the long-pending Employment Non-Discrimination Act (ENDA), but no matter; the commission can reach the same result on its own just by reinterpreting current law.

It’s not the commission that gets to have the final say on that, however; it’s the federal courts. And there is a fair trail of precedent, including circuit court authority, rejecting the proposition that sex discrimination in this setting can be stretched to cover sexual orientation discrimination. Against that, it will be argued that some recent case law has nonetheless drifted toward the idea; more important, judges will be asked to defer to the EEOC in its (new) expert opinion.

But it’s not easy to think of an agency to whose views federal courts nowadays give less deference than the EEOC. As I’ve noted in a series of posts, judges appointed by Presidents of both political parties have lately made a habit of smacking down the commission’s positions, often in cases where it has tried to get away with a stretchy interpretation of existing law. See, for example, the Fourth Circuit’s rebuke of “pervasive errors and utterly unreliable analysis“ in EEOC expert testimony, Justice Stephen Breyer’s scathing majority opinion in Young v. U.P.S. on the shortcomings of the EEOC’s legal stance (in a case the plaintiff won), or these stinging defeats dealt out to the commission in three other cases. 

My earlier thoughts on the ENDA merits are here.

Four years ago, the U.S. Court of Appeals for the D.C. Circuit ordered the U.S. Department of Homeland Security to consider the public’s input on its policy of using strip-search machines for primary screening at our nation’s airports. The TSA had “advanced no justification for having failed to conduct a notice-and-comment rulemaking,” the court found. It ordered the agency to “promptly” proceed in a manner consistent with its opinion.

Over the next 20 months, the TSA produced a short, vague paragraph that did nothing to detail the rights of the public and what travelers can expect when they go to the airport. At the time, I called the proposed rule “contemptuous,” because the agency flouted the spirit of the court’s order. In our comment on the proposed rule, Cato senior fellow John Mueller, Mark G. Stewart from the University of Newcastle in Australia, and I took the TSA to task a number of ways.

The comment period on that proposal closed more than two years ago, but the TSA has still not proceeded to finalizing its rule. Continuing the effort to bring the TSA under the rule of law—and into the world of common sense—the Competitive Enterprise Institute filed suit against TSA yesterday, asking the court to require the agency to finalize its strip-search machine rule within 90 days.

Once the rule is finalized, it can be challenged in court under the Administrative Procedure Act’s “arbitrary and capricious” standard. This will be an important step toward bringing the TSA to heel. The D.C. Circuit, which is very familiar with health and safety regulation in which lives are at stake may recognize that the Department of Homeland Security does none of the work that other agencies do to cost-effectively protect life and health. The resulting waste of money and loss of privacy for travelers are not costs the American people should have to pay. Given the strip-search machine program’s results—failure 95% of the time in recent tests—a reviewing court may recognize that the TSA is acting incoherently.

Having the TSA under law in this case will pave the way for bringing other TSA policies within the law. Slow going it is, but the strategy I outlined four years ago is continuing to play out.

A better alternative to this time-consuming process, of course, would be for Congress to restore responsibility for air security to airlines and airports, which can do better than any federal agency at balancing safety and security, cost-control, privacy, and customer service. Speaking of long times passing, it’s now been a decade that I’ve been arguing for that very policy. This Reason piece, a debate with Bob Poole from March 2005, has stood the test of time, I think.

Today, President Obama became the first sitting president to tour a federal prison when he went to El Reno federal penitentiary in Oklahoma. This visit comes two days after the president spoke about criminal justice reform to the NAACP, where he focused his remarks on reducing the sentences for non-violent drug offenders. Commendably, Obama also talked about the living conditions of the incarcerated:

“[W]e should not tolerate conditions in prison that have no place in any civilized country. We should not be tolerating overcrowding in prison. We should not be tolerating gang activity in prison. We should not be tolerating rape in prison. And we shouldn’t be making jokes about it in our popular culture. That’s no joke. These things are unacceptable.”

Indeed, the horrific stories that come out of America’s jail and prison systems are repugnant to any sense of fairness and justice. For that and many other reasons, the president’s recent actions on criminal justice are to be lauded, but also critically examined.

Drug offenders make up a significant portion of the federal prison population, but mass incarceration reduction requires reforms beyond the federal level. Most of the people incarcerated in the United States are in local jails and state prisons for violating municipal and state laws, not federal ones. Moreover, as my colleague Adam Bates wrote this week, the president hasn’t done as much as he could to reduce the federal prison population, even in this limited realm where he has sweeping constitutional authority to do so.

Obama said, “If you’re a low-level drug dealer… you owe some debt to society. You have to be held accountable and make amends. But you don’t owe 20 years. You don’t owe a life sentence.”

The underlying problem with Obama’s approach is the continued reliance on the criminal justice system to be the primary tool for handling our nation’s drug habit. In a society that wants to discourage illicit drug use and sale, it’s not at all clear that throwing a low-level dealer in a prison cell for any amount of time, let alone 20-years-to-life, makes the dealer a better citizen or makes society safer. If incarceration does neither of these, and at such high fiscal cost, perhaps non-criminal alternatives should be considered.

The president’s proposed solutions—increased use of drug courts, treatment, and probation programs—are triggered upon contact with law enforcement and presented only as an alternative to criminal punishment. As I’ve written before, due to collateral consequences, that contact with the justice system can make people less employable and thus further marginalizes individuals from productive society. This contributes to cycles of poverty and increases the likelihood of more negative outcomes in the future, even if the individual doesn’t spend any time in jail.

Again, the president is to be commended for his attention to criminal justice reform and, in particular, his speech that humanized the plight of the currently incarcerated. But the nation needs a much larger rethink about what the criminal justice system should–and should not–do. 

According to news reports, the Obama administration is planning to upgrade Malaysia’s ranking in the State Department’s annual Trafficking in Persons Report.  Advocacy groups are complaining that the move is motivated not by an improvement in Malaysia’s practices but by the administration’s desire to include Malaysia in the Trans-Pacific Partnership.  These critics are probably right, and it’s all the fault of anti-TPP legislators who tried to scuttle the TPP by linking it to human trafficking.

The trade promotion authority statute passed by Congress earlier this summer prohibits the President from negotiating fast-tracked agreements with countries listed as Tier 3 in the trafficking report.  This language was added during committee mark up by Senator Bob Menendez (D-NJ).  The ban is a direct and intentional obstacle to the Trans-Pacific Partnership, which includes Malaysia, a Tier 3 country.

The linkage is sorely misplaced.  As I’ve noted before, no one who’s worried about human rights and the TPP has explained how U.S. or foreign tariffs improve human rights.  Will lowering U.S. and Malaysian tariffs increase the incidence and severity of Malaysia’s human trafficking problems?  How so?  No, the linkage appears to be driven more by traditional opponents of trade liberalization than by concern for improving the plight of people in Malaysia.

But rather than stop the TPP from moving forward, the trafficking provision has merely required the President to embarrass himself by upgrading Malaysia’s status in this year’s report.

Headlines from left wing media outlets include: “White House So Desperate To Get TPP Approved, It Agrees To Whitewash Mass Graves & Human Trafficking In Malaysia” and “Obama Won’t Let Some Mass Graves Stop the TPP”.

The Christian Science Monitor, in a story titled, “Has US desire for Asia trade deal trumped slavery with Malaysia’s ranking?” reveals how activists feel about the move:

For some human-rights advocates, any upgrade in Malaysia’s ranking in the annual trafficking report would be a blatant act of putting economic interests over human dignity. And it would be a stain on America’s record of human-rights promotion.

“If Malaysia is upgraded … we see an adulteration of the TIP report for financial gains,” says Agile Fernandez, director of the Malaysian human-rights organization Tenaganita. “If it’s true, it’s very clear that trade is more important to the United States of America than the issue of slavery.”

[R]ights advocates like Human Rights Watch’s Mr. Sifton say the moral authority of US evaluations like the Trafficking in Persons report risks being lost if ratings become subject to presidential priorities. And he says no explanation – except a very “alarming” one – will justify a move up for Malaysia in TIP ratings.

“We will view this decision as so extraordinarily unwarranted,” Sifton says, “that political interference can be presumed.”

And similarly from Senator Menendez:

“If true, this manipulation of Malaysia’s ranking in the State Department’s 2015 TIP report would be a perversion of the trafficking list and undermine both the integrity of this important report as well as the very difficult task of confronting states about human trafficking,”

But Senator Menendez should probably consider his own role in creating the problem.  The TPP would not have impacted U.S. policy toward human trafficking at all if the senator had not insisted that ignoring Malaysia’s situation be a prerequisite for completing the agreement.

TPP opponents took a gamble when they politicized the human trafficking report.  But the President refused to back down, and now they’re stuck with the consequences.

(Last month, the Chilean webzine El Libero interviewed me about Bitcoin and other cryptocurrency topics. Here is the English translation of the conversation with Juan Pablo Couyoumdjian.)

1. Bitcoin is a class of “crypto-currency,” but what, exactly, are these crypto-currencies? How do they emerge? And why?

LHW: Cryptocurrencies — Bitcoin and its competitors — are digital assets, secured by cryptography, that can be circulated from peer to peer like currency.

Like government fiat money, they are not redeemable at a fixed rate for any commodity or other money. Unlike government fiat money, there is no issuer with discretion to increase the quantity at any time. In the case of Bitcoin, the number of Bitcoin units is programmed to increase at slow and known rate. In the case of Ripple, the top competitor, all the Ripple units to be made were made at the start.

Bitcoin originated (and remains) as a public-interest non-profit project by a programmer (who’s identity is not known) who wanted to create a tamper-proof private non-state currency. Some other cryptocurrencies arose similarly, by other groups of programmers who introduced improved designs (faster, more robust, more user privacy). Once Bitcoin rose to prominence and considerable market value at the end of 2013 (the total value of all Bitcoins currently held is about US$3.4 billion), private for-profit competitors like Ripple and BitShares and Nxt came along with advanced designs and full-time development and promotion teams.

2. These currencies are not only used as mediums of exchange, but also represent a sort of speculative investment, am I correct? Is this what leads to their price-swings? In effect, their “price” reflects their purchasing power, doesn’t it?

LHW: Bitcoin can be used at a number of websites, and at some brick-and-mortar businesses, to buy goods and services. Payment processing companies like Bitpay are making it easier for shops to take Bitcoin. But as far as I can tell, most transactions in Bitcoin and other cryptocurrencies are inter-currency speculative trades: US dollars for Bitcoins, Bitcoins for dollars, Chinese yuan for Bitcoins, Bitcoins for other cryptocurrencies, Dollars for Ripples, and so on.

Because the quantity of Bitcoin does not respond to the rise and fall of demand for Bitcoin, the price varies. That is indeed why the price of Bitcoin has been volatile. Although the price has retreated from its December 2013 peak, today’s market value is more than double that of two years ago.

3. What type of regulation do these markets in digital currencies require? What is the current international experience in this sense?

LHW: The most important regulation is by competition. The cryptocurrency issuers provide openly all the information the public needs to trust them. The source code of Bitcoin’s program (and that for other cryptocoins) is available online, as is the “public ledger” that records transactions. Anyone can check to see that the quantity of coins in circulation is exactly what the program calls for.

The exchanges where cryptocurrencies are bought and sold (led by Bitstamp, Coinbase, Cryptsy, and Kraken) compete on fees, convenience, and security. Concern about security has improved since hackers stole millions of dollars’ worth of BTC from the mismanaged exchange Mt. Gox, which was then the third largest, in February 2014.

I don’t see that the markets would benefit from legal restrictions imposed by governments. Although the imposition of legal restrictions is often called “regulation,” it almost never actually makes markets more regular. Cryptocurrency markets are still evolving. They need freedom to discover and pursue the most beneficial technologies.

Restrictions vary across countries. The United States’ government has begun burdening cryptocurrency providers, both Bitcoin exchanges and proprietary cryptocurrency issuers like Ripple, with anti-privacy rules. The US government insists that any business exchanging cryptocurrency with US customers must be licensed as a “money services business” on the grounds that it could be used for funds transmission and thereby (like a bank) for “money laundering.” To comply, a business has to collect identity data on its users (“know your customer” rules) and report “suspicious” transactions to the government. Ripple recently paid a heavy fine for not complying promptly enough.

4. You have been a long-time scholar of alternative monetary institutions. To what extent does this development represent a new market innovation in the monetary field?

LHW: The traditional form of private money, as discussed in my first book, Free Banking in Britain (1984), consisted of banknotes and transferable account balances, which are IOUs (debt claims) for the bank that issues them, redeemable at a fixed rate in a more basic money like gold or silver.

Bitcoins and other cryptocurrencies are not IOUs. I call them IOU-nothings. This is something entirely new. Instead of a value guarantee, backed by a contractual commitment to give the holder a certain amount of basic money on demand, Bitcoin offers a quantity guarantee. The holder knows its value can’t be hyper-inflated away because the number of Bitcoins is governed by a secure program. The assurance is similar to that provided by the numbering of artists’ prints.

But with a quantity that does not respond to demand, the price of Bitcoin (in US dollars or Chinese yuan) must do all the responding to changes in demand. This makes the price of Bitcoin quite volatile. We don’t know yet whether this price volatility will stop cryptocurrencies from catching on as a commonly used means of payment.

5. Price stability has been said to be a fundamental element of any free society. What is, according to your view, the best way to achieve such stability?

LHW: I think this question isn’t rightly posed. In my view a free society means that people can use whatever kind of currency they prefer. We shouldn’t pre-judge that they prefer a currency that produces a stable price level.

Other things equal, most people prefer a currency that better holds its value, but that doesn’t mean that government should try to stabilize the price level. Instead it means that most people are likely to prefer a currency that gains value, over one that merely holds its value roughly unchanged. Historically, the best money we’ve had for holding its value was the classical gold standard in countries without a central bank. Where money was privately provided by multiple private banks, all legally bound to honor their contracts, no one bank could declare the suspension of gold redeemability.

Central banks are notorious for breaking their promises to keep a fixed rate between the local currency and gold, or between the local currency and some external currency. And nobody can sue them for breach of contract, because they have sovereign immunity. So the best way to achieve a monetary system where people have the kind of money they want, I would say, is one where there is free competition among currency issuers. A system of free banking. I would expect the currency banks issue to be redeemable for gold, or dollars, or Swiss francs, or something else, depending on historical context. Or I might be wrong, and something like Bitcoin might emerge as the most popular money.

6. What do you think about Chile’s “monetary constitution”? Chile has achieved monetary stability through an independent Central Bank; do you feel this is a robust institutional design?

LHW: In recent decades Chile has had lower inflation than its neighbors, especially Argentina, which is good for Chileans. But I don’t know how robust the “monetary constitution” will prove itself to be when a fiscal emergency arises.

I note that peso banknotes have many zeroes on them, which suggests that inflation was a problem not too long ago. The independence of any central bank is always limited by the fact that the bank is a creature of the government, which can take back the independence at any time. In a fiscal emergency, especially under fiat money systems, formerly independent central banks tend to lose their independence and begin printing money to pay the government’s bills, more money than is consistent with low inflation. Is your current government dedicated to fiscal prudence?

[Cross-posted from Alt-M.org]

Paul Krugman, “Killing the European Project”, NY Times, July 12, 2015: “The European project — a project I have always praised and supported — has just been dealt a terrible, perhaps fatal blow. And whatever you think of Syriza, or Greece, it wasn’t the Greeks who did it.”

Paul Krugman has always praised and supported the European project? Really? Here’s Prof. Krugman in his own words on the centerpiece of the European project, the euro:

  • Paul Krugman, “The Euro: Beware Of What You Wish For”, Fortune, December 1998: “But EMU wasn’t designed to make everyone happy. It was designed to keep Germany happy - to provide the kind of stern anti-inflationary discipline that everyone knew Germany had always wanted and would always want in future. So what if the Germans have changed their mind, and realized that they - along with all the other major governments - are more worried about deflation than inflation, that they would very much like the central bankers to print some more money? Sorry, too late: the system is already on autopilot, and no course changes are permitted.”
  • Paul Krugman, “Can Europe Be Saved?”, NY Times, January 12, 2011: “The tragedy of the Euromess is that the creation of the euro was supposed to be the finest moment in a grand and noble undertaking: the generations-long effort to bring peace, democracy and shared prosperity to a once and frequently war-torn continent. But the architects of the euro, caught up in their project’s sweep and romance, chose to ignore the mundane difficulties a shared currency would predictably encounter — to ignore warnings, which were issued right from the beginning, that Europe lacked the institutions needed to make a common currency workable. Instead, they engaged in magical thinking, acting as if the nobility of their mission transcended such concerns.”
  • Paul Krugman, “Europe’s Many Economic Disasters”, NY Times, July 3, 2015: “What all of these economies have in common, however, is that by joining the eurozone they put themselves into an economic straitjacket. Finland had a very severe economic crisis at the end of the 1980s — much worse, at the beginning, than what it’s going through now. But it was able to engineer a fairly quick recovery in large part by sharply devaluing its currency, making its exports more competitive. This time, unfortunately, it had no currency to devalue. And the same goes for Europe’s other trouble spots. Does this mean that creating the euro was a mistake? Well, yes.”

When reading Prof. Krugman’s works, it’s prudent to fact check. Prof. Krugman has always been in the Eurosceptic camp. Indeed, the essence of many of his pronouncements can be found in declarations from a wide range of Eurosceptic parties.

Today’s Google Doodle honors Ida Wells, born into slavery in Mississippi on this date in 1862, fearless and tireless anti-lynching activist and heroine of free speech. Writer and owner of several publications, Wells was best known for documenting the post-Reconstruction horrors of “sanctioned violence outside the machinery of the state,” as I described it in this space recently

By the time Wells came to national note in the 1890s, the threat of mob violence had come to be accepted as an endemic part of American life across much of the South and a good part of the North as well. Press freedom, however, was also something real, and Wells could bring the ghastly specifics of lynching practice, as well as the falseness of the arguments used in its defense, to a national audience. Soon a mob in Memphis proceeded to storm and destroy her printing press. But it could not silence her; she was free to carry on from other, safer cities. Is there a better lesson in how civil liberties work to reinforce each other? Because of America’s broad degree of press liberty, Wells could build her case methodically for a right to freedom from mob violence; because mob violence was held in check across enough of the country, Wells could not be prevented from writing, speaking on tour, and soon becoming an internationally known figure of reform and African-American advocacy. 

You can read Wells’ work in many primary sources online: “Lynch Law,” 1893; speech, “Lynch Law in America”; and the pamphlet “Southern Horrors: Lynch Law in All Its Phases,” with a letter of encouragement from Frederick Douglass in Anacostia. Her accomplishments should be of interest to every libertarian and every American. 

A quick notice: The Wisconsin Supreme Court’s much anticipated decision in the long running “John Doe” investigations of alleged campaign finance violations came down this morning, and it’s a resounding rejection of the prosecution’s entire theory of the case. By way of very brief background of a very complex case, here’s the opening paragraph from an April 27 post I wrote for Cato@Liberty:

Just when you thought the long-running “John Doe” prosecution/persecutions in Wisconsin couldn’t get any worse—SWAT teams conducting pre-dawn raids on family homes, gag orders on the victims, and the prosecutor’s recusal motion directed against no fewer than four state supreme court justices, all over politically driven campaign finance allegations—Milwaukee County District Attorney John Chisholm suggested over the weekend that Gov. Scott Walker could be criminally charged for lying. Walker’s “crime”? In Iowa on Saturday, he questioned whether the prosecution’s tactics were constitutional.

You can’t make stuff like this up. Well here’s just a bit of the language this morning from Justice Michael J. Gableman:

[W]e invalidate the special prosecutor’s theory of the case, and we grant the relief requested by the Unnamed Movants. 

To be clear, this conclusion ends the John Doe investigation because the special prosecutor’s legal theory is unsupported in either reason or law.  Consequently, the investigation is closed.  Consistent with our decision and the order entered by Reserve Judge Peterson, we order that the special prosecutor and the district attorneys involved in this investigation must cease all activities related to the investigation, return all property seized in the investigation from any individual or organization, and permanently destroy all copies of information and other materials obtained through the investigation.  All Unnamed Movants are relieved of any duty to cooperate further with the investigation.

Language like that makes one appreciate the importance of an independent judiciary. You can read the whole opinion here

ADDENDUM: Once you get to paragraph 133 of the Court’s opinion, you see this whole matter put in perspective:

Our lengthy discussion of these three cases can be distilled into a few simple, but important, points.  It is utterly clear that the special prosecutor has employed theories of law that do not exist in order to investigate citizens who were wholly innocent of any wrongdoing.   In other words, the special prosecutor was the instigator of a “perfect storm” of wrongs that was visited upon the innocent Unnamed Movants and those who dared to associate with them.  It is fortunate, indeed, for every other citizen of this great State who is interested in the protection of fundamental liberties that the special prosecutor chose as his targets innocent citizens who had both the will and the means to fight the unlimited resources of an unjust prosecution.  Further, these brave individuals played a crucial role in presenting this court with an opportunity to re-endorse its commitment to upholding the fundamental right of each and every citizen to engage in lawful political activity and to do so free from the fear of the tyrannical retribution of arbitrary or capricious governmental prosecution.  Let one point be clear: our conclusion today ends this unconstitutional John Doe investigation.

Here is Paul Krugman the other day, touting President Obama’s efforts to promote clean energy:

Some things I’ve been reading lately remind me that there’s another major Obama initiative that is the subject of similar delusions: the promotion of green energy. Everyone on the right knows that the stimulus-linked efforts to promote solar and wind were a bust — Solyndra! Solyndra! Benghazi! — and in general they still seem to regard renewables as hippie-dippy stuff that will never go anywhere.

So it comes as something of a shock when you look at the actual data, and discover that solar and wind energy consumption has tripled under Obama.

True, it started from a low base, but green energy is no longer a marginal factor — and with solar panels experiencing Moore’s Law-type cost declines, we’re looking at a real transformation looking forward.

You can argue about how much this transformation owes to federal policy. …

I don’t know all the reasons why solar and wind energy consumption has tripled in recent years, but yes, you can argue about the role of federal policy here. The federal policy that I follow most closely is trade policy, and what trade policy has been doing is imposing really high import taxes on solar and wind products, thus raising their costs.  Here’s what my colleague Bill Watson and I wrote about this a while ago:

Over the last couple of years, trade remedy actions on clean energy products have intensified. In the wind industry, the Wind Tower Trade Coalition, an association of U.S. producers of wind towers, brought an AD/CVD complaint against imported wind towers in 2011. The U.S. Commerce Department started an investigation, and announced a preliminary decision in December 2012.

This decision found both subsidization and dumping in relation to Chinese imports and imposed an antidumping tariff of between 44.99% and 70.63%, as well as countervailing duties of 21.86%–34.81%. The Commerce Department also established a separate antidumping duty of 51.40%–58.49% on Vietnamese wind tower manufacturers.

In the solar industry, in October 2011, the Coalition for American Solar Manufacturing, a group of seven U.S. solar panel manufacturers led by Solar World Industries America, accused Chinese solar panel companies of dumping products in the United States. The Commerce Department opened an investigation in 2011 and announced the final ruling in 2012. The decision was to impose antidumping tariffs ranging from 24% to 36% on Chinese producers.

If we wanted to promote clean energy, the first thing we could and should do is stop imposing tariffs on these imports! 

With a potentially historic agreement on Iran’s nuclear program in place, President Obama immediately focused his attention on the fight at home. When he announced the deal Tuesday morning, the president warned Congress that he would “veto any legislation that prevents the successful implementation of this deal.” A few hours later, he sat down with the New York Times’s Thomas Friedman to sell it on its merits.

“We are not measuring this deal by whether it is changing the regime inside of Iran,” the president said. “We’re not measuring this deal by whether we are solving every problem that can be traced back to Iran, whether we are eliminating all their nefarious activities around the globe.”

The aim of the negotiations was on ensuring that “Iran could not get a nuclear weapon.”

And that is where he wants the ensuing debate over the final terms of the agreement to be focused. “What I’m going to be able to say, and I think we will be able to prove,” he told Friedman, “is that this by a wide margin is the most definitive path by which Iran will not get a nuclear weapon, and we will be able to achieve that with the full cooperation of the world community and without having to engage in another war in the Middle East.”

That is what the president would like people to believe. But it may not be so simple.

Congress has 60 days to review the deal for final approval, but many GOP leaders have declared the agreement dead on arrival. Some Republicans, as I noted, lambasted the administration for appeasing the Iranian regime even before the details were announced. Accordingly, the administration will likely focus most of its time on reassuring skeptical Democrats to block the passage of legislation that would undo the deal, or, failing that, to sustain a veto.

An override seems unlikely, but the coming congressional debate will not be limited to the merits of the deal.

As Justin Logan and John Glaser wrote on CNN.com:

The debate over Iran diplomacy was really two debates, in which each side was arguing over something different. On the one side was a strikingly broad consensus of nearly the entire arms control community, which recognizes what the deal can achieve in terms of nonproliferation and regional stability. On the opposing side is the Iran hawk community, which focused less on the nuclear issue than on finding ways to isolate and ultimately destroy Iran’s clerical regime, by military force if necessary, nuclear program or not.

The agreement is a clear success for nonproliferation advocates. Unfortunately, that’s not what matters to some of those who now control its fate. 

I really like Sandusky Register reporter Tom Jackson’s piece responding to my post yesterday about congressional appropriators and our national ID law, the REAL ID Act. Jackson is paying attention to all that is said about Ohio’s congressional delegation. Not just following the herd, he’s looking out for new and different things that might be interesting to the folks back home.

The gist of his argument is that calling Ohio Democratic Rep. Marcy Kaptur 75 percent supportive of REAL ID is unfair because she voted against it when it passed the House as a stand-alone bill in 2005. She did vote against it that once, but she also allowed a voice vote on the rule that attached REAL ID to a later appropriations bill, and she voted for that bill and the conference report, both votes helping to make REAL ID a federal law.

Rep. Kaptur doesn’t stand out as a pro-national-ID legislator—true—but that is precisely how log-rolling in Washington works. Bills that tie controversial matter like a national ID law to broadly supported priorities like military funding and money for tsunami relief allow representatives like Kaptur to vote for a national ID twice without standing out.

I didn’t do a good enough job of explaining the procedure by which REAL ID was passed, and Jackson understood me to be blaming Kaptur for funding REAL ID. In fact, my post focused on votes for passage of REAL ID itself. But Kaptur and other appropriators will be voting soon on the FY 2016 Department of Homeland Security appropriations bill, which year after year provides funds to push state implementation of REAL ID. The bill has lots of other priorities in it, but Rep. Kaptur and her colleagues on the Appropriations Committee’s Homeland Security Subcommittee are responsible for all of the bill’s content. Given that any of them could de-fund REAL ID and the national ID project with a simple amendment, I believe it’s appropriate to hold all of them to account for not doing so.

Treasury Secretary Jack Lew’s proposed degradation of the ten-dollar bill (read: the removal of Alexander Hamilton as the featured figure on the ten-spot) is wrongheaded. In addition to being the first and most distinguished U.S. Treasury Secretary and a renowned journalist, Hamilton also excelled as a lawyer and defender of property rights.

Yes, Alexander Hamilton was a distinguished lawyer. He took on many famous cases out of principle. After the Revolutionary War, the state of New York enacted harsh measures against Loyalists and British subjects. These included the Confiscation Act (1779), the Citation Act (1782), and the Trespass Act (1783). All involved the taking of property. In Hamilton’s view, these acts illustrated the inherent difference between democracy and the law. Even though the acts were widely popular, they flouted fundamental principles of property law. Hamilton carried his views into action and successfully defended — in the face of enormous public hostility — those who had property taken under the three New York state statutes.

Hamilton’s influence on creating a respected national judiciary and shaping American jurisprudence was significant and widely recognized during his lifetime. For example, the Chief Justice of the U.S. Supreme Court John Marshall was known to have said that he was a mere schoolboy next to Hamilton. Indeed, in three of Marshall’s landmark decisions – Marbury v. Madison (1803), Fletcher v. Peck (1810), and McCulloch v. Maryland (1819) – he turned to Hamilton’s legal writings for guidance.

Alexander Hamilton is one of America’s most acclaimed Founding Fathers. He should remain as-is on the ten-dollar bill. Anything else would be an insult, the kind of thing that once engendered a duel.

The Spin Cycle is a reoccurring feature based upon just how much the latest weather or climate story, policy pronouncement, or simply poo-bah blather spins the truth. Statements are given a rating between 1-5 spin cycles, with fewer cycles meaning less spin. For a more in-depth description, visit the inaugural edition.

The headline from a CBS News story read “Study: Climate change may be costing lives in the U.S.” The tone is in perfect keeping with the White House wanting the media to focus on the (negative) health impacts from climate change to help drive home the “moral imperative” of administration’s greenhouse gas emissions regulations.

There is one key problem: the findings from the “study” do nothing to shed light on whether “climate change” is taking lives in New England (the region that the study focused on) or anywhere else in the United States. In fact, taking the literature as a whole (including the results of the new study), the more appropriate headline would have been “Studies: Climate change may be saving lives in the U.S.”

The new study in question appears in the journal Nature Climate Change written by a research team headed by Liuhua Shi from the Harvard School of Public Health. Shi and colleagues examined how temperature and temperature variability during the summer and winter seasons impacts the annual mortality of Medicare recipients (i.e., a population aged 65+) residing in New England.

In general, Shi and colleagues found that warmer summers slightly increased mortality while warmer winters slightly lowered it. They also found that more variable temperature (in either winter or summer) led to increases in overall mortality.

Aside from the very real possibility that the statistical significance of these findings was inflated by the mythological design (over inflation of the number of independent data points), the most obvious flaw is that the study didn’t look for any trends in their results. This means, of course, that they aren’t very applicable when it comes to trying to ascertain future behavior (under climate change or not).

It has been repeatedly demonstrated that adaptation to temperature extremes (especially extreme heat) has been increasing over time such that the population of the United States (including New England) is much less sensitive to heat waves (i.e., fewer people die) now than it was, say, 30 to 40 years ago. While this adaptation is not complete—as evidenced by the results of Shi et al. and other previous studies—it is ongoing.

And partially driving this trend towards lower sensitivity to extreme heat is an increase in the frequency of extreme heat events themselves. In other words, climate change begets adaptation.

As we have shown, it doesn’t take much for the increased awareness of heat-related dangers, spawned in part by a changing climate, to overwhelm the impacts of an increase in heat events resulting from the same climate change. We wrote in a recent paper (which also was published in Nature Climate Change):

Some portion of this response [a declining sensitivity to extreme heat events] probably reflects the temporal increase in the frequency of extreme-heat events, an increase that elevates public consciousness and spurs adaptive response. In this manner, climate change itself leads to adaptation. It is insufficient to ignore this effect when compiling and discussing the impacts of climate change.

This is true state of affairs when it comes to climate change and its impact on temperature-related mortality in the United States (and elsewhere), not the one suggested by the CBS News headline.

Consequently, for the spinning inadequate and incomplete data into headlines suggesting climate change is killing us, we award a Slightly Soiled spin cycle (two spins) to CBS News.  

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