Policy Institutes

The problems of the teacher tenure system, especially in big cities where powerful unions defend members against dismissal, are familiar enough. Less well known is the newer, parallel–and arguably more alarming–rise of police and prison-guard tenure under what are known as Law Enforcement Officers Bill of Rights (LEOBR or LEOBOR) laws. 

Baltimore Mayor Stephanie Rawlings-Blake, for example, has blamed Maryland’s LEOBR law for frustrating the investigation into the death of Freddie Gray while in police custody. Maryland’s law provides that after an incident superiors cannot question an officer without the presence of a lawyer of the officer’s choosing, and that officers have 10 days to line up such representation. Critics say that by the time those suspected of misbehavior have to commit to a story, they will have had ample opportunity to consult with others about what to say. Most of the officers present have cooperated with the investigation of Gray’s death, the city says, but at least one has not. 

While the details of LEOBR laws vary from state to state, Mike Riggs’s 2012 account in Reason (“Why Firing a Bad Cop Is Damn Near Impossible”) cites these features as typical: 

Unlike a member of the public, the officer gets a “cooling off” period before he has to respond to any questions. Unlike a member of the public, the officer under investigation is privy to the names of his complainants and their testimony against him before he is ever interrogated. Unlike a member of the public, the officer under investigation is to be interrogated “at a reasonable hour,” with a union member present. Unlike a member of the public, the officer can only be questioned by one person during his interrogation. Unlike a member of the public, the officer can be interrogated only “for reasonable periods,” which “shall be timed to allow for such personal necessities and rest periods as are reasonably necessary.” Unlike a member of the public, the officer under investigation cannot be “threatened with disciplinary action” at any point during his interrogation. If he is threatened with punishment, whatever he says following the threat cannot be used against him.

What happens after the interrogation again varies from state to state. But under nearly every law enforcement bill of rights, the following additional privileges are granted to officers: Their departments cannot publicly acknowledge that the officer is under investigation; if the officer is cleared of wrongdoing or the charges are dropped, the department may not publicly acknowledge that the investigation ever took place, or reveal the nature of the complaint. The officer cannot be questioned or investigated by “non-government agents,” which means no civilian review boards. If the officer is suspended as a result of the investigation, he must continue to receive full pay and benefits until his case is resolved. In most states, the charging department must subsidize the accused officer’s legal defense.

A violation of any of the above rights can result in dismissal—not of the officer, but of the charges against him.

Maryland was the first state to pass a LEOBR, in 1972, and by now many states have followed, invariably after lobbying from police unions and associations. Often the bills are sponsored by Republicans, who seem to forget their normal skepticism of public employees as an interest group when uniformed services are involved.

Prison and jail guards are often covered by these laws as well, and scandals of corrections administration (the state-run Baltimore jail had a huge one in which the Maryland LEOBR was implicated) are often hard to investigate because of the law’s barriers. Union contracts often add further layers of insulation from discipline. In its coverage of abuse allegations at New York’s notorious Attica prison, for example, the New York Times reported, “Under their union contract, corrections officers are obligated to answer questions only from their employers and have the right to refuse to talk to outside police agencies. State Police investigators attempted to interview 15 guards; 11 declined to cooperate.”

Aware of Baltimore’s long (and still-unfolding) history of police misconduct, Mayor Rawlings-Blake and the state ACLU and other groups have called for a partial rollback of Maryland’s LEOBR. Yet its defenders are well organized, and reform bills never made it out of committee in the now-concluded state legislative session.

Meanwhile, Pennsylvania’s House unanimously voted last year to enact a “Correctional Officers’ Bill of Rights”–as if this all were completely uncontroversial. It shouldn’t be.

A century ago this week, one of the most important battles in the Great War began. Allied forces landed in what is typically called the Gallipoli or Dardanelles Campaign. The campaign went badly almost from the start, with heavy casualties on both sides. Ultimately London admitted defeat and withdrew its forces eight and a half months later.

The fight offered another horrid highlight to the insane paroxysm of violence eventually known as World War I.

More than 30 cemeteries fill the Gallipoli Peninsula. As many Turkish and allied troops died in this one extended battle–perhaps 120,000(though Turkish figures are incomplete and probably low)–as did Americans in the entire conflict.

For reasons that seem sadly frivolous today, all of Europe’s major powers, including the Ottoman Empire—the tottering “Sick Man of Europe”—went to war in 1914. No conflict is pretty, but World War I was particularly dreadful.

The Entente forces decided to attempt to force the Dardanelles, seize Istanbul, and open the Bosphorus Straits into the Black Sea. The battle commenced in February 1915. The British fleet first tried to push through the Straits but was halted by shore batteries and mines.

The allies then commenced an amphibious operation. Although soldiers from Britain, France, and India (a British colony at the time) were involved, men from Australia and New Zealand, grouped in the Australian and New Zealand Army Corps, played a leading role.

By January 9, 1916 the allied forces had been withdrawn. In a war noted for bloody futility, Gallipoli stood out as an example of purposeless killing.

The battle was the Ottomans’ greatest victory in a losing war. Only a sideshow for Britain and France, Gallipoli was a searing experience for Australia and New Zealand.

Gallipoli’s Anzac memorial displays the words of Mustafa Kemal, a 34-year-old divisional commander and later founder of modern Turkey (when he added the name Ataturk): “You are now lying in the soil of a friendly country. Therefore rest in peace. There is no difference between the Johnnies and the Mehmets to us where they lie side by side here in this country of ours.”

As I wrote in Forbes, “For an American, Gallipoli provides the same haunting feeling as visiting Antietam or Gettysburg, or Arlington Cemetery. It is the scene of heroism and tragedy, the formative experience in the destruction of one nation and creation of another.”

The cemeteries, big and small, give Gallipoli its majesty and tragedy. For instance, the Beach Cemetery is the final resting place to 379 allied soldiers. Most of the dead were in their early 20s, cut down with most of their lives before them.

Turkish mothers and fathers lost children too. Among Alcitepe’s dead was a 15-year-old, Hasanoglu Ahmet, from nearby Canakkale.

The battle settled nothing militarily. After the allied withdrawal the conflict went on for almost another three years.

First Lord of the Admiralty Winston Churchill lost his job as a result of the ill-fated campaign, and departed to command a battalion on the Western Front, where the war eventually was decided with American aid. Britain went on to spur an Arab revolt against the Ottoman Empire. Out of the wreckage emerged a new Turkish state headed by Ataturk, as well as a gaggle of artificial nations, some of which are dissolving before our eyes today.

Not only was the Gallipoli campaign futile, so was the entire conflict. The entry of the United States was particularly mad, a reckless act by an arrogant President Woodrow Wilson, who believed that he had been anointed from above to reorder the globe.

As a result, tens of thousands of Americans died to enable the Europeans to plunder the defeated, including the Ottomans. The Versailles Treaty became but an armistice for a generation, leading to the far more destructive World War II.

Today Gallipoli is peaceful, a place for study, reflection, even reverence. The momentous events of the Dardanelles remain alive even though a century has passed.

After one of the longest confirmation processes in the history of the Attorney General’s office, Loretta Lynch was confirmed by the Senate today as Eric Holder’s successor.

From a criminal justice perspective, whether Lynch will embrace or abandon Holder’s position on state-level drug legalization and his announced commitment to reforming civil asset forfeiture are two questions that spring immediately to mind.

Loretta Lynch zealously defended civil asset forfeiture during her confirmation hearings, and was a devoted practitioner of it as a U.S. Attorney in New York.  One of her seizure cases, that of the Hirsch brothers [$], garnered widespread attention and condemnation, and helped spur the nationwide calls for reform to which Eric Holder responded.

As previously discussed here:

In May of 2012 the Hirsch brothers, joint owners of Bi-County Distributors in Long Island, had their entire bank account drained by the Internal Revenue Service working in conjunction with Lynch’s office. Many of Bi-County’s customers paid in cash, and when the brothers made several deposits under $10,000, federal agents accused them of “structuring” their deposits in order to avoid the reporting requirements of the Bank Secrecy Act. Without so much as a criminal charge, the federal government emptied the account, totaling $446,651.11.

For more than two years, and in defiance of the 60-day deadline for the initiation of proceedings included in the Civil Asset Forfeiture Reform Act of 2000, Lynch’s office simply sat on the money while the Hirsch brothers survived off the goodwill their business had engendered with its vendors over the decades.

That case, which was handled by the Institute for Justice, finally ended […] when Lynch’s office quietly returned the money, having found no evidence of any wrongdoing. The Hirsch brothers and their business survived, but just how many law-abiding small businesses can afford to give the government a 33-month, interest-free loan of nearly half a million dollars?

 Indeed, Holder’s recent policy memo on structuring offenses explicitly forbids precisely the behavior exhibited by Lynch’s office during that case.  

There have been positive reforms to civil asset forfeiture at the state and federal levels over the last several months. Lynch’s tenure comes at a pivotal time in the national debate over forfeiture laws. Whether Lynch embraces those reforms or attempts to stem the tide in favor of more expansive government power remains to be seen.

Meanwhile, perhaps Holder’s most important decision as Attorney General was his order to “de-prioritize” marijuana prohibition enforcement in states that have voted to legalize recreational or medical marijuana.  While Holder’s commitment to that policy has occasionally been questioned, the potential impact of the decision by the federal government to allow states to create their own drug policies cannot be overstated.

Loretta Lynch is a staunch opponent of marijuana legalization and spoke against President Obama’s position on marijuana.  But when pressed, Lynch gave answers during her confirmation hearings that implied that she would not upset current policy (even if some might bicker with her description of current policy): 

“I can tell you that not only do I not support the legalization of marijuana, it is not the position of the Department of Justice currently to support the legalization. Nor would it be the position should I become confirmed as attorney general.” 

Attorney General nominee Loretta Lynch rebuffs Obama’s opinion on marijuana

So, what will her policy on state-level drug legalization look like? Technically speaking, those participating in state-legal drug markets in states like Colorado and Washington are in plain violation of federal law.  Their ability to operate thus far has been solely due to the grace of the Obama Administration.  Will Lynch’s confirmation threaten that executive grace?  Anti-prohibition advocates are confident that Lynch will maintain Holder’s priorities, but Lynch has thus far refused to tip her hand from a policy perspective.

America has a new Attorney General, but precisely what that means for federal criminal justice reform remains an open question.

The U.S. Constitution vests the legislative, executive, and judicial powers in separate branches of the government that are supposed to police each other. But what if one of those branches violates the law in a manner that personally benefits the members of another branch? That’s what has been happening since the day ObamaCare became law in 2010. For more than five years, the executive branch has been issuing illegal subsidies that personally benefit the most powerful interest group in the nation’s capital: members of Congress and their staffs. A decision today by the Senate Small Business & Entrepreneurship Committee not to investigate those illegal subsidies shows just how difficult it can be to prevent one branch of the government from corrupting members of another branch.  

It is no secret that executive-branch agencies have broken the law, over and over, to protect ObamaCare. King v. Burwell challenges the IRS’s decision to offer illegal premium subsidies in states with federally established health-insurance Exchanges. University of Iowa law professor Andy Grewal recently revealed the IRS is illegally offering Exchange subsidies to at least two other ineligible groups: certain undocumented immigrants and people who incorrectly project their income to be above the poverty line. Treasury, Health and Human Services, and other executive-branch agencies have unilaterally modified or suspended so many parts of the ACA, it’s hard to keep count – and even harder to know what the law will look like tomorrow. Even some of the administration’s supporters acknowledge its actions have gone too far

The longest-running and perhaps most significant way the administration has broken the law to protect ObamaCare is by issuing illegal subsidies to members of Congress.

When congressional Democrats passed the Patient Protection and Affordable Care Act (ACA), they were so desperate to pass a health care law that the ACA did not receive the scrutiny most bills do. Many members of Congress and their staffs were therefore surprised to learn that, as of the moment the president signed the ACA, that very law threw them out of their health plans. The ACA prohibits members of Congress and their staffs from receiving health coverage through the Federal Employees’ Health Benefits Program. They remained free to purchase health insurance on their own, but they would have to do so without the $10,000 or so the federal government “contributed” to their FEHBP premiums. In effect, the ACA gave members of Congress a pay cut of around $10,000.


Big deal, you say. ObamaCare made lots of people take a pay cut and threw millions out of their health plans. Ah, yes, my friends. But those were little people. This is Congress. 

Rather than risk Congress reopening the ACA to restore their lost health coverage – because who knows what other changes Congress might make in the process – the administration simply pretended that that part of the law didn’t exist. The Office of Personnel Management announced that members of Congress and their staffs could remain in the FEHBP until the ACA’s Exchanges launched in 2014. The president thus stuck to his promise, if you like your health plan, and you’re a member of Congress, you can keep your health plan

That still didn’t solve the president’s problems, however. The ACA says that as of 2014, the only coverage the federal government can offer members of Congress in connection with their employment is coverage created under the Act. In effect, that means Exchange coverage. But the law still cut off that $10,000 “employer contribution” to their health benefits. According to Politico, “OPM initially ruled that lawmakers and staffers couldn’t receive the subsidies once they went into the exchanges.” After the president intervened, OPM just ignored that part of the law and started issuing (illegal) subsidies on the order of $10,000 to hundreds of individual members of Congress and thousands of individual congressional staffers.

Note that I label these illegal payments to members of Congress subsidies, rather than compensation. When an employer pays part of a worker’s health premiums as a condition of that worker’s employment, that’s compensation. But these payments are not a condition of employment. In fact, under the ACA, a condition of their employment is that they not receive these payments.

Note too the eerie parallel to King v. Burwell: an executive-branch agency ignores the clear language of the ACA to issue health-insurance subsidies to people that just happen to have the effect of preventing Congress from reopening the law. The OPM’s illegal subsidies are thus indistinguishable from personal bribes to members of Congress.

Offering these subsidies to members of Congress violates the ACA in at least one other way as well. The ACA prohibits employers from making contributions to their employees’ coverage through the Exchanges that serve individuals. (The law’s technical term for them is “American Health Benefits Exchanges.”) So the administration let members of Congress enroll through the ACA’s Small Business Health Options Program Exchanges, or “SHOP Exchanges,” where employers can make contributions to coverage their workers’ premiums. The problem here is that the “S” in “SHOP” stands for small business – i.e., firms with fewer than 50 employees. Yet the OPM and the D.C. SHOP Exchange, where thousands of members of Congress, their staffs and their dependents have purchased coverage, are pretending that Congress is a small business with fewer than 50 employees

Which brings us back to the Senate Small Business & Entrepreneurship Committee. Committee chairman David Vitter (R-LA) has been waging a lonely battle to end these bribes. After suffering numerous setbacks, Vitter now seeks to shine sunlight on how these bribes happened. He wants to subpoena documents relating to OPM’s claim that Congress is a small business. You would think Republicans, who outnumber Democrats on the committee 10-9, would gladly join Vitter in exposing the administration’s malfeasance. Ending Congress’ special ObamaCare exemption – i.e., the bribes individual members of Congress and their staffs are receiving not to reopen ObamaCare – polls off the charts. More than 90 percent of voters believe this exemption is unfair. I mean, c’mon. The rap against congressional Republicans is that they are hyper-partisans who will do anything to take down President Obama and/or ObamaCare. You would think this would be too good an opportunity for those rabid partisans to miss.

You would be wrong.

Today, five committee Republicans voted with all nine Democrats to quash Vitter’s subpoena effort. Someone should ask the 14 senators who voted to keep the truth hidden whether they are personally receiving one of those illegal subsidies, and if so, the precise dollar amount.

I was not all that surprised by the result. I have spoken to many GOP staffers, including leadership staff, about how these illegal subsidies are immoral and standing in the way of ObamaCare repeal. Their faces freeze the moment I raise the subject. Often, they don’t say another word and leave the room as quickly as they can. I understand their fear. They have families. Mortgages. Illnesses. To them, ending these illegal subsidies seems like a $10,000 hit to their annual income.

Fortunately for them, they are mistaken. If those subsidies disappeared, Congress would reinstate them so quickly your head would spin. Congress would even provide back pay that would make members and staff completely whole. The absolute certitude of that outcome is exactly why the administration chose not to enforce this part of the ACA in the first place. They knew that members of Congress – Republicans and Democrats alike – would be so desperate to serve their own interests by reinstating that employee benefit that Republicans could insert important changes to ObamaCare and possibly still have enough support to override a veto. 

But more important, members of Congress and their staff should suffer that pay cut because that’s the law. The ACA has caused millions of Americans to lose their health plans and take pay cuts of similar magnitude. Why should people who work in Congress get a special exemption while people who work in auto repair do not? Is there a class of Americans who are above the law?

For all the talk in Washington about the corrupting influence of money in politics, remarkably few people seem to care that the executive branch is promiscuously issuing illegal taxpayer subsidies that not only personally benefit members of Congress but that also directly affect how members of Congress vote. Vitter deserves credit for taking the lead in trying to expose and put an end to those bribes. The framers of the Constitution did an admirable job, but sometimes the checks and balances they created are not enough to prevent the corruption of one branch of government by another.

John Hinderaker at the powerlineblog posted immigration polling data from the Republican Senate staff.  You can read the poll results here.  According to the top Gallup poll reported by the staff, 60 percent of Americans are dissatisfied with the current immigration system while 33 percent are satisfied.  Of those dissatisfied, 39 percent wanted less immigration and 7 percent wanted more, a subgroup wants less immigration is hardly a ringing endorsement of more restrictions. 

However, here is another poll question that Gallup has asked periodically since 1965 that shows public opinion becoming more supportive of increasing immigration as the annual number of green cards climbs.  The question is: “In your view, should immigration be kept at its present level, increased, or decreased?”  Surprisingly, Americans have become more supportive of liberalizing immigration over time.  In 1965, only 7 percent of respondents wanted to increase immigration while 24.5 percent did in 2014 (average of two polls in that year).   

  Respondents Who Say “Increase Immigration”              


Sources: Gallup Survey and U.S. Citizenship and Immigration Services


Those who say that immigration should be decreased were at a low point of 33 percent in 1965, peaked at 65 percent in 1993, and have since decreased to 38.5 percent in 2015.  Populist demand to limit legal immigration is decreasing.   


Respondents Who Say “Decrease Immigration”

Sources: Gallup Survey and U.S. Citizenship and Immigration Services


Support for the same level of immigration has been more constant over time.


Respondents Who Say “Same Level of Immigration”


Sources: Gallup Survey and U.S. Citizenship and Immigration Services


Combining the respondents who wanted more immigration with those who support the same level shows a near-constant improvement in opinion since the early 1990s. 


Respondents Who Say “Increase Immigration” and “Same Level”

Sources: Gallup Survey and U.S. Citizenship and Immigration Services


The last time Congress seriously tried to restrict legal immigration was in 1996 - and that effort failed despite the then popularity of such a measure. Such a bill in today’s political environment with substantially less support for restricting legal immigration will be dead upon arrival.  Immigration-restrictionists may like to pretend that they are fighting on the side of public opinion against an “elite consensus” that supports further liberalizing immigration.  They are really fighting against public opinion that is less hostile to immigration than it used to be.

On the floor of the Senate last night, on the eve of Earth Day, Rhode Island Sen. Sheldon Whitehouse went after the Cato Institute—among others, including the Washington Times and the Wall Street Journal—for our having accused the senator and his friends in the environmental movement of “having a widespread faith in the government’s ability to solve problems.” We plead guilty. Not only do we believe those folks are of that faith—the evidence is plain, even if the evidence supporting the faith is lacking—but we believe also that it is a self-serving faith, because it drives them to find ever more problems to solve, problems most of us never knew we had.

But it’s a letter that then-Cato President John Allison recently sent to Sen. Whitehouse and others in Congress that seems most to exercise the good senator. As the C-SPAN transcript puts it:

cato also sent us a letter in response to our inquiry, telling us we cannot use the awesome power of the federal government to cow cato and others. cow? according to the “wall street journal” editorial page, which, sadly, has become a front for the fossil fuel industry, we were – quote – “trying to silence the other side.” although i have to confess, mr. president, it is not clear how the other side would be silenced by simply having to reveal whose payroll they’re on, which is all we asked. let’s be clear our letter didn’t suggest that industry scientists should be silenced, just that the public should know if those scientists are being paid by the very industries with a big economic …

Ah. There we have it. We’re in the pockets of Big Oil. Never mind that the facts show otherwise, that Cato’s donor base is wide and composed almost entirely of individuals animated by the idea of a free society under limited government.

But that’s not the main point, not really. Rather, it’s the assumption of Sen. Whitehouse and his friends that they, whose outlook depends so much on government funding, fairly dripping with the taxpayers’ blood, have the cleanest of hands and the purest of motives. Yet why should we believe that the avaricious individuals these folks call-on government to check, suddenly become virtuous when they have the monopoly power of government in their grasp, to say nothing of the public till at their disposal? If ever scrutiny were warranted, I should think it on that side of the ledger.

War has become Washington’s panacea for any international problem. Since the end of the Cold War, no other state has attacked as many countries or threatened as many countries as has the United States.

The most persistent threat to use force has been against Iran, which is said to endanger the United States. Yet Iranians likely believe differently.

In 1953, Washington supported a coup against the democratic Iranian government. Through 1979, every American administration backed the repressive Shah. In the1980s, the United States supported Iraq’s aggressive war against Iran. Presidents George W. Bush and Barack Obama ostentatiously kept “all options on the table.”

Military threats continue to rain down on Tehran. For instance, since Iran will not negotiate away its bomb, in the view of Bush administration aide, John Bolton the United States must attack:  “Time is terribly short, but a strike can still succeed.”

SAIS’s Joshua Muravchik recently argued that “we can strike as often as necessary.” Sen. Tom Cotton (R-Ark.) explained, “we have to be willing and we have to make the leadership of Iran realize that we are willing to take military action.”

The belief that war would be quick, simple, and sure reflects either simple-minded naiveté or criminal arrogance. Virtually every military action Washington has taken in the Middle East has resulted in unintended consequences. Bombing Iran would be no different.

Former General Anthony Zinni warned:  “I think anybody that believes that it would be a clear strike and it would be over and there would be no reaction is foolish.” Former Defense Secretary Leon Panetta predicted that “we could possibly be the target of retaliation from Iran, striking our ships, striking our military bases.” Another former Pentagon chief, Robert Gates, warned of possible “catastrophic” consequences, including making “a nuclear-armed Iran inevitable.”

Treating one of the most important Middle Eastern states as a permanent enemy would rally the Iranian public around the regime, set back the cause of democracy, encourage Tehran to proceed with nuclear weapons, and create another Islamic grievance. An attack on Iran could spark a violent reaction among Arabs as well as Muslims elsewhere in the world.

American actions also should be constrained by morality. War can be justified in self-defense, but Iran poses no meaningful threat to the United States. For instance, Sen. Cotton noted that Tehran “can’t challenge us,” including America’s Mideast allies.

The case for war comes down to preventing Iran from becoming a nuclear power. There are lots of good reasons to want Tehran to remain free of nuclear weapons. But absent a suicidal impulse, which so far has been absent from Iran’s leaders, there is no chance that Tehran would launch an attack on either America or Israel (which possesses upwards of 200 nukes).

Israel has particular reason to feel uncomfortable with an Islamic bomb, but one already exists in unstable Pakistan. Senior Israeli policymakers in Mossad and other security and military agencies routinely dismiss claims of Iranian irrationality.

The region’s Muslim leaders also oppose an Iranian bomb and other nations conceivably could join Tehran in a nuclear race. An undesirable outcome, no doubt, but one not warranting America to initiate war against a state which has not attacked or even threatened to attack the United States.

One of the oddest arguments for bombing Iran is that if America doesn’t bomb Iran now, possession of a nuclear weapon would allow Tehran to deter America in the future, preventing America from bombing Iran then. War thus goes from means to end: The United States should kill and destroy to protect its ability to kill and destroy.

As I wrote in Forbes:  “War is not just another policy option. It should be a last resort, reserved for the most important interests and most moral causes.”

None of these is at stake in the case of Iran. The mere fact that America is able to war against every nation on the planet does not justify it doing so.

Global Science Report is a weekly feature from the Center for the Study of Science, where we highlight one or two important new items in the scientific literature or the popular media. For broader and more technical perspectives, consult our monthly “Current Wisdom.”

In the process of writing our upcoming book, The Lukewarmer’s Manifesto, we wandered into the funhouse of the 2014 National Climate Assessment (NCA).

Recall that the NCA is a product of the federal government’s U.S. Global Change Research Program, whose motto isThirteen Agencies, One Mission: Empower the Nation with Global Change Science.”

In their case, “empower” is synonymous with “indoctrinate.”

Here is a good example:

The section on hurricanes in Chapter 2 (“Our Changing Climate”) caught our eye. The NCA has a sidebar on the history of the hurricane “power dissipation index” (PDI), a well-known cubic function of the wind velocity. The NCAs graphs  begin in 1970 and end in 2009 (a full four years before the NCA was released). They include a trend line through the PDI data beginning in 1980 that’s going up for whatever reason and that is apparently convenient for drawing an association with human-caused global warming. But had the NCA authors consulted a longer record, say, from 1920 to 2013 (the last year data was available for the 2014 NCA) they could have readily ruled out any role of global warming.


Figure 1. From page 42 of the hardcopy of the 2014 National Assessment Report form the USGCRP (available here).

The NCA’s reason for not using a longer record is that “there is considerable uncertainty in the record prior to the satellite era (early 1970s).”

On the surface, that’s true, but it is disingenuous. According to Dr. Chris Landsea who helped developed the National Hurricane Center’s Atlantic hurricane history data (known as HURDAT2):

…some storms were  missed, and many intensities are too low in the preaircraft reconnaissance era (before 1944 in the western half of the basin) and in the presatellite era (before 1972 for the entire basin). [emphases added]

In other words, the earlier PDI data prior to 1972 could be an underestimate, but it certainly isn’t an overestimate.

Dr. Ryan Maue was kind enough to provide us with the PDI record based upon the National Hurricane Center’s  HURDAT2 data back to 1920. There’s no significant trend when this record is examined, despite a warming of approximately 0.75°C in the earth’s surface temperature history. In this context, the NCA’s trend line (indicated in our figure in red) seems nothing but absurd.


Figure 2. Atlantic Basin Power Dissipation Index calculated from HURDAT2 by Ryan Maue. The NCA could have used this data, which, for its 2014 volume, ended in 2013. The trend in 1980-2009 is shown as per the NCA.

A voluminous literature supports the notion that periodic changes in the north-south temperature gradient in the Atlantic Ocean (known, not surprisingly, as the Atlantic Multidecadal Oscillation (AMO)), are related to hurricane activity in the North Atlantic.

According to Dr. Maue, the trend line drawn in the NCA basically starts during the negative phase of the AMO cycle (which promotes low hurricane activity) and ends during a positive phase (which is favorable for high levels of hurricane activity). A more accurate assessment of hurricane activity would begin in 1950 (reducing the influence of the cyclical nature of the AMO) and indicates a trend of zero (similar to the one beginning in 1920).

But such data apparently is a distraction when trying to paint an administration-preferred picture of the influence of anthropogenic climate change.


Landsea, C. W., and J. L. Franklin, 2013. Atlantic Hurricane Database Uncertainty and Presentation of a New Database Format. Monthly Weather  Review, 141, 3576-3592.

Ever since Ron Paul first introduced it in 2009, the “Federal Reserve Transparency” Act, calling for the elimination of the Federal Reserve System’s exemption from certain kinds of GAO audits, has been the subject of vigorous debate between proponents of greater government accountability and champions of an independent Federal Reserve.

But that debate has for the most part produced more heat than light, with hyperbole on both sides obscuring rather than shedding light on the debate’s central questions—questions like, “What could the proposed Fed Audits possibly reveal that existing audits and Fed testimony do not?,” and “To what extent would such audits pose a threat to the Fed’s independence?”

To get some honest answers to these questions, the Cato Institute’s Center for Monetary and Financial Alternatives recently held a Policy Forum, “Should the GAO Audit the Fed?” The forum’s participants, representing several important perspectives, were former GAO Comptroller General David Walker, Pulitzer Prize-winning author David Wessel, who also directs Brookings’ Hutchins Center on Fiscal and Monetary Policy, and our very own Mark Calabria, Cato’s director of Financial Regulation Studies.

Thanks to our participants’ expertise and also to the seamless moderation of their remarks by Wall Street Journal reporter Josh Zumbrun, the event turned out to be the most informative discussion of the issue to date!

OK, so I’m not exactly an unbiased critic. But watch the video and see if you don’t agree!

If this sample only leaves you yearning to hear more from these experts, check out Calabria’s piece on the actual content of the bill and David Wessel’s assessment of the motives behind and risks entailed in the proposed audits. For more on the GAO’s perspective, finally, have a look at this David Walker article.

[Cross-posted from Alt-M.org]

Here, courtesy of Cato’s www.HumanProgress.org, is the quintessence of Earth Day’s anti-humanism. Botswana and Burundi started off as equally poor. In 1962, their GNI per capita was a paltry $70 per person.

By 2012, Botswana’s income per person rose by some 10,829 percent to $7,650. Burundi’s rose by mere 243 percent to $240. Botswana is an African success story, while Burundi is a failure–that is, if you judge the two countries by their income and, consequently, their standards of living.

If, however, you judge the two countries by their CO2 emissions per person, Burundi is the clear winner. Between 1972 and 2010 (the maximum number of years for which data on CO2 emissions per capita is available for both countries), CO2 emissions per person in Burundi increased only 62 percent. In Botswana it skyrocketed by 8,847 percent.

As my colleague Pat Michaels noted earlier, growing wealth necessitates higher carbon emissions in the short or medium term, but greater prosperity enables people to become both greener and more energy efficient in the long term. Denying cheap energy to the developing world will trap hundreds of millions of people in poverty and lead to more humanitarian disasters.


Our friends over at the George Mason University Law School have a new dean this morning—and he’s one of their own, Henry Butler, Foundation Professor of Law at George Mason and Executive Director of the law school’s Law & Economics Center. Late last evening, George Mason Provost and Executive Vice President S. David Wu sent out a notice of the appointment to a wide circle of the law school’s friends.

Over the years, Henry has contributed more than once to Cato’s work.  And in 2009 we filed an amicus brief with the Supreme Court on behalf of Henry and the late Professor Larry Ribstein, challenging, among other things, the method through which members of the Public Company Accounting Oversight Board were removed under the 2002 Sarbanes–Oxley Act. In 2010, citing a violation of the separation of powers, the Court would find that method unconstitutional.

Following in the footsteps of Dean Daniel Polsby—and especially, before that, of his mentor, the late Henry Manne—“Henry II” has a great foundation on which to build. The first Henry brought the law school into national prominence. Dean Polsby secured that accomplishment by adding stellar members to an already impressive faculty, many of whom we have worked with and published. With Dean Butler now at the helm, we look forward to more such cooperation in the future. Congratulations Henry.

On Earth Day, it’s worth reflecting on the fact that planetary stewardship and affluence go hand-in-hand around the world. At the national level, the world’s poorest nations are environmental disasters, while the most affluent—the United States and Australia come to mind—are among the cleanest and most efficient.

We weren’t always this way. In the 1950s, the air in Pittsburgh resembled that of modern Beijing, where the rush for economic development demanded by the populace trumps air quality—for the time being. When a certain level of affluence is reached, as is beginning to occur in Beijing, people will be willing to pay to clean things up. 

In the United States, the scrubbing of Pittsburgh was just the beginning, followed by tighter regulation of water quality, increasing affluence and (“The Population Bomb” notwithstanding) a major drop in resident fecundity. Free Europe, a bit behind us economically, followed about ten years later. When they have the green, people get green.

The opposite is also apparent. The relative inefficiency of communism resulted in some of the most god-awful air and water on earth. Tourists riding the rails to East Berlin didn’t need to be told when they crossed the Iron Curtain—it was obvious looking out the window at the dilapidated infrastructure and the smoke-belching two-stroke Trabants (when they were running), communist Germany’s edition of the people’s car.

Then there’s Haiti. Centuries of corruption simply stopped economic development. But people need to cook and clean, so they chopped down pretty much every mature tree within reach. When a hurricane comes by–thanks to the environmental degradation wrought by poverty–hillsides, buildings, and people wash into the sea. Across the midline of Hispaniola is the Dominican Republic—no economic paradise, but certainly better off than Haiti. The same storm will cause fewer problems.

Environmental protection is fractal—meaning its relative dimensions are the same regardless of size. Like countries, clean states are rich. On the other hand, if you need to see abandoned cars, washing machines, and giant satellite dishes (often serving as a tether for Fido) just go to rural West Virginia or New Mexico.

How about within cities? The nomenklatura residents of Northwest Washington D.C. drive Priuses, are paid handsomely with other people’s money, and their neighborhoods are wonderfully pretty. A trip across the Anacostia to the poor Southeast quadrant saves time and gas if you need to see environmental degradation, beater cars, and the society the nomenklatura bought for others.

At the continental level, an environmental comparison between North and South America, or between Europe and Africa says enough.

It’s kind of obvious: The fastest way to environmental protection is a free economy, greening the earth by producing green. 

I’m seeing a lot of support for the Trans Pacific Partnership (TPP) on the basis of reasoning along the lines of “we must stop China from dominating Asia.”  Here are two recent examples.

First, an analyst with the Third Way think tank says:

The Chinese economy is built on low labor standards, and they want to export these standards to the world.

This analysis of Chinese and U.S. trade deals demonstrates that, in the area of worker rights, there is an immense cost to ceding trade and commerce rules to China. And with China trying to impose those standards on the rest of the world, policymakers need to be extremely concerned with the effect on American workers.

Second, the Washington Post editorial board says:

the TPP would ensure that the Pacific Rim plays by U.S.-style rules and regulations, rather than by China’s neo-mercantilist ones

There are two arguments here: (1) China is imposing low labor standards on the rest of the world; and (2) China is spreading mercantilism through its trade agreements. Neither is true.  As I explain in this Free Trade Bulletin, China does not care what labor standards its trading partners use, and it is not trying to impose its standards on anyone through trade agreements.  In addition, Chinese trade agreements liberalize trade in goods and services, just as other countries’ trade agreements do; China is not using trade agreements to push for its trading partners to have more interventionist economic policy.

I conclude:

Chinese free-trade initiatives in Asia and the Pacific region should give the United States an incentive to get its own free-trade act together, but not for the reasons suggested by some. Chinese free trade is not a threat to American free trade. The justification for U.S. trade agreements is that free trade is good, not that China is somehow bad. Thus, the TPP should succeed or fail on its economic merits. The concerns about letting China write the rules are misguided. China’s trade rules are not a version of state-led capitalism. They are the removal of protectionist trade barriers, just as our trade rules are.

On April 30th, Cato will host an event exploring the future of the Syrian conflict, with particular emphasis on the role of the United States. Fighting in Syria recently entered its fifth year, and there is no clear end in sight. The conflict has resulted in an estimated 191,000 deaths and has produced more than 9.5 million refugees.

The civil war is chaotic. There are hundreds (if not thousands) of rebel groups currently operating in Syria, many of whom have devoted more time to fighting each other than the regime. Foreign funding and weapons flow freely to all sides. The rise of ISIS and its spread to Iraq, along with the increasing prominence of other extremist groups like al Nusra has further complicated the situation. This map, recently released by the Department of Defense, illustrates some of the complexity:


American involvement in Syria was minimal prior to September 2014, when the Obama administration initiated airstrikes to ‘degrade and destroy’ ISIS in Iraq and Syria. This campaign is ongoing, and the United States is also funding and training Syrian rebels to fight against ISIS. 

Unfortunately, these actions are not matched with strategic goals. Though airstrikes have been somewhat successful in killing ISIS fighters, the group receives a consistent flow of new recruits.  Moreover, airstrikes will not yield a viable political solution, and are ultimately useless without some form of ground support. President Obama has rightly stated that there should be no American troops deployed to Syria, but other options are also challenging.

Rebel groups in Syria remain fragmented, and extremist groups are now dominant. The U.S. training program for moderate rebels has been unsuccessful in recruiting its hoped-for numbers. And while U.S. leaders have backed away from their opposition to the Assad regime, which is now a viable ally in the fight against ISIS, the focus of most rebel groups, and of some U.S. allies, is still on fighting the regime.

Diplomatic attempts to end the crisis are also on life support. The Geneva process peace talks collapsed over a year ago, and no firm plans for new peace talks have emerged since. The difficulty of achieving a consensus between rebel groups, regional actors, and western states, each of which has different goals in Syria, cannot be overstated.

Next Thursday’s event focuses on these issues. Our panelists will discuss what the United States is trying to achieve in Syria, and how such goals might be achieved. In addition to myself, the event features Erica Borghard, Assistant Professor at the U.S. Military Academy (West Point), whose research focuses on the dynamics of proxy warfare in Syria and elsewhere; and Nicholas Heras, Research Associate at the Center for a New American Security, and author of the recent report “How This Ends: A Blueprint for De-Escalation in Syria.” The event begins at noon on April 30th; you can register for it here

If the House Judiciary Committee keeps to its current schedule, on Thursday it will meet to consider the third version of the USA Freedom Act in the last two years. I’ve seen a very recent draft of the bill, and from my perspective in its current form the bill effectively acts as if the Snowden revelations and several independent reviews of the PATRIOT Act Sec. 215 metadata program never happened.

The bill ignores the fact that both the Congressional Joint Inquiry into the 9/11 attacks and the 9/11 Commission itself found that the attacks happened because of information sharing and analytical failures, not because of intelligence collection shortfalls. The bill claims to end the controversial telephone metadata program, but a close reading of the bill reveals that it actually leaves key PATRIOT Act definitions of “person” or “U.S. Person” intact—and under 50 U.S.C. sec. 1801(m) of the PATRIOT Act, “person” is defined as “any individual, including any officer or employee of the Federal Government, or any group, entity, association, corporation, or foreign power.” It’s the “group, entity, association or corporation” language that leaves open the possibility of continued mass telephone metadata surveillance under the PATRIOT Act.

The bill also grants the government sweeping “emergency” collection authority not tied to an imminent threat of death or bodily harm, which has generally been the standard for such programs in the past. The bill allows the government to retain U.S. Person call detail records if the government alone determines such records are “foreign intelligence information”. The bill’s FISA court revisions include the creation of amicus curiae (previously called “special advocates” in earlier version of the USA Freedom Act) that in theory would help the court work its way through particularly thorny cases potentially involving major interpretations of law. But there are two key caveats to this provision: the FISA court has sole discretion to appoint—or not appoint—these amicus curiae and the government still retains the ability to invoke the “state secrets” privilege, which would render the presence of the amicus curiae moot.

What is missing from the bill is at least as significant as what it contains.

The bill does not address bulk collection under EO 12333 as reported by former State Department official John Napier Tye. Further, not only does the bill fail to address bulk collection and retention of US Person records under Sec. 702 of the FISA Amendments Act, but the bill pushes the sunset date for Sec. 702 back from December 2017 to December 2019—without any intervening review of this mass surveillance program.

The bill lacks mandatory US Person data destruction and audit compliance provisions for information previously collected on US Persons not currently the subject of a criminal investigation. It contains no protections for national security whistleblowers; has no bar on the government imposing “back doors” being  built into electronic devices, software or hardware; does not bar the USG from targeting U.S. Persons solely on the basis of their use of internet anonymizing technology such as Tor; and does not address the recently revealed DEA telephony metadata program.

Whether supporters of the far more sweeping Surveillance State Repeal Act will be able to get a hearing on that bill or have the chance to take provisions of the SSRA and offer them as amendments to the USA Freedom Act—either in committee or on the House floor—remains to be seen. One thing is certain: the fight over reforming our nation’s surveillance laws is about to get much more intense, and quickly.

KUWAIT CITY, KUWAIT—Seventy-eight nations plus 40 non-governmental organizations recently gathered to raise money for the relief of Syrian refugees. Kuwait’s Emir opened the Third International Humanitarian Pledging Conference for Syria with a plea for funds.

The small Gulf nation has carved out an international humanitarian role. “This is our baby,” one Kuwaiti official told me.

Kuwait opened the proceedings with a promise of $500 million, matching last year’s donation. The U.S. won the number one position with an offer $507 million, but many participants offered little more than good will. Overall the conference generated $3.8 billion of the $8.4 billion which aid agencies were seeking.

Antonio Guterres, UN High Commissioner for Refugees, warned that “We are at a dangerous tipping point.” The vulnerability of those caught in the conflict’s crossfire was highlighted by the Islamic State’s advance to the Yarmouk camp for Palestinian refugees on the outskirts of Damascus.

Alas, virtually no one in Syria has escaped the impact of four years of civil war. More than 200,000 Syrians are thought to have died; another million have been injured. The economy has imploded. UN Secretary General Ban Ki-moon added: “Four out of five Syrians live in poverty, misery and deprivation.”

Some 12.2 million people, more than half of the population, are estimated to need humanitarian assistance. A similar number have been displaced—between 6.5 million and 7.8 million within Syria and three to four million on to neighboring states.

Surrounding countries are ill-equipped to handle the exodus. Jordan has around 1.2 million refugees and Turkey some 1.8 million. Fragile, divided Lebanon hosts more than 600,000. A quarter million Syrians have fled to Iraq, another country ravaged by civil strife and war.

Among the Gulf States only Kuwait has given generously and fulfilled its promises. Kuwait’s ambassador to America explained that “The message from Kuwait to our friends in the Gulf and the region is: We need to do something, and quickly.”

One of the best ways to help those suffering from the Syrian conflict is through private relief groups. Indeed, the crisis has spawned a variety of relief efforts by NGOs around the world, many of which were represented in Kuwait.

Private organizations obviously face challenges as well, including, paradoxically, some being heavily reliant on public support. But they tend to be more diverse and flexible than public agencies.

Many groups have a religious orientation. For instance, I have met dedicated staffers with the International Orthodox Christian Charities, respected by Muslims and Christians alike. The IOCC works with Syrians in Syria as well as those who have fled to Iraq, Jordan, and Lebanon. Many other NGOs provide welcome relief throughout the region.

Governments around the world also should relax immigration rules to allow vulnerable people, especially those targeted by either the Assad regime or radical insurgents, to resettle, including in America.  Between October 2011 and December 2014 the U.S. accepted just 284 Syrian refugees, a pitiful total. The U.S. should be generous, especially to religious minorities who are being wiped out and have nowhere else to go in the Middle East.

Of course, “there is no strictly humanitarian solution to this problem,” noted Guterres. However, with war still raging there is much to do to assist the Syrian people. The latest international aid conference in Kuwait has helped highlight the great need.

As I noted in Forbes online:  “Americans can’t be expected to make Syrians’ war their own. But they are an ever generous people who should do what they can to help other peoples in desperate need. There’s no reason for them to wait for politicians to act.”

On Earth Day the op-ed pages remind me of “Groundhog Day.”  Environmentalists argue we need stricter environmental regulation.  Business interests argue such regulations reduce economic growth and cost the economy jobs.  Each also invokes “sound science” as an adjudicator of the conflict.  Environmentalists invoke “science” in the case of CO2 emissions and effects while business interests invoke “science” in the case of traditional pollution emissions.  Each year we wake up and the same movie plays out.

The scientific validity of people’s preferences plays no role in the market’s delivery of private goods.  Markets can and do supply organic lettuce regardless of whether it is really “better” for your health.  The scientific validity of people’s preferences is irrelevant.

Air- and water-quality environmental disputes are more challenging to analyze than the supply of organic lettuce for two reasons.  First, while property rights exist for lettuce, they often do not exist for air and water.   Thus, environmental politics involves continuous struggle over implicit property rights and the wealth effects that flow from such rights.  Second, both conventional air and water quality are “local” public goods (club goods) rather than private goods, thus individual differences in consumption, the primary method of reducing conflict associated with private goods, are not possible.  Instead, everyone’s varied preferences for environmental goods can only result in one jointly consumed outcome.

One possible impediment to the implementation of market-like solutions to air and water quality is that the initial ownership of property rights to air or water emissions not only has wealth but also efficiency effects.  That is those particular property rights (the right to a pristine environment) are so valuable relative to other assets that their initial allocation alters the willingness of people to pay for them and thus affects how much pollution exists.  In such cases the initial distribution is the whole ballgame because it determines the resulting air- and water- quality levels.

Under many circumstances the initial allocation of property rights does not affect the evolution of trades and thus does not affect efficiency.  For example, analog cellular phone licenses were given away by the FCC in a lottery.   The licenses that were won by non-telecom companies were quickly sold to telecom companies that then built cellular phone networks.  The wealth distribution rather than the efficiency of the cellular phone market was affected by the arbitrary initial allocation of property rights.

But air quality may be different from the cellular-phone example.  Initial ownership by environmentalists of air and water quality rights might reduce activity in industrial society significantly because the environmentalists would not accept money in return for allowing Los Angeles to exist (or at least L.A. with its current air quality) because the Sierra Club members value environmental quality much more than other people and much more than the other assets that they possess.

Conversely, if polluters had unlimited rights to pollute, pollution levels might remain much larger than they would in the Sierra Club scenario because the willingness of environmentalists to pay polluters to restrict emissions could be much less than the compensation they would demand if they owned the initial rights.  Thus the initial allocation of air- and water-quality rights may have large consequences on the resulting level of air and water quality.

Although scientific studies and cost-benefit analyses do not resolve environmental policy disputes, they do serve an important function.  They demonstrate the possibility of large gains to trade.  For example, let us consider studies that demonstrate that cleaning up Superfund sites or arsenic contamination of water supplies is very expensive relative to the number of lives saved (valued at the conventional estimate of a statistical life) and not worth the benefits.

The conclusion that one should draw from such studies is not that the preferences of environmentalists (who want contaminated abandoned industrial sites to be cleaned up or arsenic removed from water supplies) should be different.  Instead one should conclude that the implicit property rights given to environmentalists by Superfund and arsenic regulation have created the possibility of large gains to trade.  Because compliance with Superfund or arsenic regulations is so expensive relative to the benefits, those who bear the costs of the regulation would pay a large amount to avoid cleanup, and the alleged “victims” of pollution may well accept such a payment rather than accept the regulated status quo in which litigation is much more common than clean up.

The initial allocation of cellular phone rights also was “irrational” because rights were given away to people who did not know how to build a cellular phone system, but the irrationality only affected the wealth distribution rather than the development of cell phones because the rights were easily traded to phone companies.  No scientific studies were commissioned to demonstrate that the allocation of cellular phone rights wasn’t “sound science” because trading eliminated the irrationality of the initial allocation.

Thus the main impediment to the resolution of environmental policy disputes may be the unwillingness of the participants to accept any definition of initial property rights.  Instead they prefer to use the political system to engage in continuous wealth and property rights disputes.  The difficult task is to channel the energies of environmentalists and polluters into creating and then trading emission rights rather than publishing pamphlets and lobbying.

A driver with the ridesharing company Uber put a stop to a potential mass shooting in Chicago over the weekend.

According to the Chicago Tribune:

A group of people had been walking in front of the driver around 11:50 p.m. in the 2900 block of North Milwaukee Avenue when Everardo Custodio, 22, began firing into the crowd, Quinn said.

The driver pulled out a handgun and fired six shots at Custodio, hitting him several times, according to court records.  Responding officers found Custodio lying on the ground, bleeding, Quinn said.  No other injuries were reported.

The driver will not be charged:

The driver had a concealed-carry permit and acted in the defense of himself and others, Assistant State’s Attorney Barry Quinn said in court Sunday.

Chicago was home to some of the most draconian gun laws in America until a 2010 Supreme Court ruling, McDonald v. Chicago, found Chicago’s gun regulation regime unconstitutional. That ruling applied the Court’s previous landmark 2nd Amendment ruling, District of Columbia v. Heller, to state governments. While those rulings dealt with the right to bear arms for self-defense in the home, some circuit courts (including the 7th Circuit, which governs in Chicago) have extended the Heller/McDonald logic to certain public places as well as the home.

Under the previous regime in Chicago, the driver would have had  to choose between saving lives and avoiding a lengthy, potentially life-ruining prison sentence.  It’s safe to assume that both the hero in this case and the potential victims of Everardo Custodio are thankful that unconstitutional burden has been erased.

That is, of course, not to say that the struggle for gun rights is over.  Some circuits maintain a more limited view of Heller and McDonald, granting the government far more discretion in denying the right to bear arms outside the home.

For every hero Uber driver there are still far too many Shaneen Allens and Brian Aitkens: law-abiding, peaceful citizens who have their livelihoods and even their lives threatened for exercising their Constitutional rights.

We can only hope that stories like this, of which there are many, receive the attention they deserve and bolster the case for individual liberty and the right to bear arms.

Discussions of economic inequality are common nowadays thanks to Thomas Piketty’s new book Capital in the Twenty-First Century.  There are several good critiques of Piketty’s book and at least one wonderful podcast.  I’m not convinced that economic inequality in a (mostly) free-market economy matters one way or the other for economic growth, social stability, or political stability (ceteris paribus), so this blog is a response to those concerned that liberalized immigration could exacerbate wealth inequality.   

Papers on how immigrants affect the wages of Americans almost uniformly present the results as relative gains or losses compared to the wages of other workers.  While that work is valuable, below I will only discuss papers that focus exclusively on economic inequality caused by immigration. 

Borjas et. al. found that immigration (along with trade) only modestly affects earnings inequality – a role not substantial enough to account for more than a small percentage of the change.  Instead, he attributes the growth in income inequality to the acceleration of skills-biased technological change (SBTC) and other institutional changes in the labor market. 

David Card failed to find a substantially causal relationship between increased immigration and growth in wage inequality.  He discovered that immigration explains about 5 percent of the rise in overall wage inequality between 1980 and 2000.  An important distinction is between the wage inequality effects of immigration on natives and the effects on wage inequality for immigrants and natives.  While 5 percent of the growth in overall wage inequality can be attributed to immigration, immigration’s effect on native wage inequality is negligible.  Immigrants tend to have either very high or very low wages compared to natives, meaning that immigrants have a naturally higher residual level of income inequality than natives do.  Thus, immigration causes the economy-wide level of wage inequality to increase without changing native wage inequality.  Immigration has little, if any, effect on native wage inequality according to Card.

A colloquium of experts held at the Federal Reserve Bank of New York, as reported in the 1997 Economic Report of the President, attributed almost half of the increased income inequality in the 1980s and 1990s to SBTC but only assigned between 5 and 10 percent of the blame to immigration.

Source: Federal Reserve Bank of New York

Economists Brian Hibbs and Gihoon Hong found that immigration is responsible for about 24 percent of the increase in income inequality among U.S. metropolitan areas between 1990 and 2000 – the biggest impact in my reading of the academic literature.  They used the Gini index as their measure of inequality.  A 1 percent increase in immigrants relative to the population of a metropolitan area increased the Gini coefficient by 0.66 points. 

A 1999 paper by Deborah Reed focused on explaining the exceptional rise in household income inequality in California.  She found that SBTC and immigration accounted for about half of the increase in income inequality from the late 1960s to 1997.  She attributed between 17 percent and 40 percent of the increase in income inequality during that time period to immigration, depending on the assumptions in different models.  If immigrants were spread evenly throughout the income distribution, they would have no effect on income inequality in California.  However, since many of the immigrants were concentrated in lower-income brackets, the income of the state’s workforce became more unequal. 

To introduce another wrinkle, economist Robert I. Lerman attempted to account for rapid immigrant wage gains into any measurement of immigration induced inequality.  He undertook this by two means.  First, he excluded recent immigrants, who have the lowest wages, from the base and end years of his analysis so he could track the wage inequality of the same group of people over time while ignoring additional workers added to the labor market.  Second, he included the immigrant wages in their home countries prior to immigration in his measure of income inequality.  This second method takes their massive economic gains into account.  Lerman’s first method of excluding the recent immigrants eliminated 20 percent to 25 percent of the standard estimates of the growth in wage inequality.  Lerman’s second method eliminated most of the estimated rise in income inequality.

The resulting increase in wage, income, and wealth inequality from immigration appears to be small inside of the United States – if it even exists.  Globally, rapid economic growth in Asia has probably reduced income inequality.  No doubt immigration affects inequality but it is likely not the primary driver. 

Inequality itself does not matter.  What matters is how the inequality is produced.  If inequality increases because highly skilled workers earn a pay premium due to SBTC, then inequality is a beneficial result of complementary capital investments that will increase economic growth.  On the other hand, if inequality increases because the government has decided to expropriate all of the property owned by one group and turn ownership over to another group, then political instability and other perverse economic incentives will emerge that will diminish economic growth.  The source of inequality, not the inequality itself, determines whether economic inequality is a problem.  In the United States, inequality is only a problem in so far as it is caused by government redistribution.  Immigration, as the voluntary movement of people to the United States for economic opportunity, fits into the former positive-sum economic arrangement rather than the latter negative-sum expropriation. 

Thanks to Kristina Pepe for her excellent research assistance on this piece.

A Wall Street Journal story today looks at government spending through the lens of the national income and product accounts (NIPA). The article says that as government spending rises, it is “no longer dragging on growth.” Unlike recent years when spending was supposedly cut, the government today “has ceased to be a drag on growth.” But that is an unwarranted conclusion from the NIPA data, which are produced by the Bureau of Economic Analysis (BEA).

The BEA includes government output within overall gross domestic product (GDP). The first thing to note is that measuring government output is guesswork because most of it is not sold in the marketplace. The BEA solution “is to value government output in terms of the input costs incurred in production.” So if the government hires a worker for $80,000 to administer food stamps or impose new regulations, government “output” would rise by $80,000. That seems rather optimistic.

More importantly, NIPA data does not tell us the overall effect of government spending on growth. Let’s say defense spending rises $10 billion from added weapons purchases. NIPA would show government output rising $10 billion. The Wall Street Journal would have you believe that overall GDP would rise as well, but that ignores the effect of the spending on private output. Higher defense spending ultimately requires higher taxes, which are resources sucked out of the private sector. Also, Pentagon contractors would hire engineers and other skilled workers to produce the new weapons, drawing those people away from private goods production. As government output rose, the output of private goods would fall.

In the long run, private GDP would probably shrink more than $10 billion, and thus overall GDP would also shrink. One reason is that extracting taxes to fund federal spending generates “deadweight losses” as people reduced their working, investing, and other productive efforts. Another reason is that added government output is likely to be worth less than the private output replaced. That’s because government spending decisions are based on guesswork, whereas private spending decisions are guided by the price system, which helps direct resources to the highest-value uses.

So in the Wall Street Journal chart reproduced here, the reporter implies that when the blue line (government output) rises, the red line (overall output) is pushed upwards. But that ignores the negative relationship between the blue line and the yellow line (private output). The reality is that as the blue line rises, the yellow line would be dragged down, and that in turn would tend to drag down the red line over time.

For more on measuring the government in GDP, see here.