Feed aggregator

As stock markets decline around the world, apparently in response to stalled economic growth in China, one might ask whether China’s difficulties should come as a surprise.  After all, has not China “liberalized” its economy in recent decades, paving the way for the spectacular growth that capitalism can deliver?

Alas, China has liberalized in some dimensions, but its economy remains highly controlled in other dimensions; it  has state capitalism, not true capitalism. In a recent Cato Research Brief, Donghua Chen, Dequan Jiang, Alexander Ljungqvist, Haitian Lu, and Mingming Zhou provide evidence for this claim:

The key function of an economic system is to allocate scarce resources efficiently. Having proved superior to central planning, Western liberal capitalism, based on markets and private enterprise, was in the ascendant following the collapse of the Soviet Union. More recently, however, state capitalism has won adherents as an alternative to Western capitalism.State capitalism, as practiced in China, Russia, and elsewhere, combines the power of the state with capitalist tools: the state controls access to capital, picks winners, and influences investment decisions, while at the same time listing state firms on domestic or overseas stock markets.

In our research, we ask how efficiently state firms allocate capital. Our focus is on China, the country where state capitalism is perhaps most entrenched. Because China’s capital markets are relatively underdeveloped and firms cannot access them without political approval, we focus on firms’ internal allocations of capital, the internal capital markets operating inside business groups. As we show, Chinese firms rely more heavily on capital obtained from fellow group members than on external capital markets.

We investigate the efficiency of capital allocation by contrasting how state business groups and privately owned business groups in China allocate capital across member firms. An efficient internal capital market allocates more capital to units with relatively better investment opportunities. This is exactly how, according to our evidence, private groups in China allocate capital. State groups, in contrast, do the opposite.  …

Our results suggest that state capitalism does a poor job of allocating capital, at least in China’s state business groups. This likely reflects the fact that the objective of the Chinese Communist Party (CCP) is not just maximizing profits or shareholder value but also maintaining a “harmonious society.” Consistent with this, we document that the chairmen of state groups are rewarded with promotions to higher office not only for raising productivity but also for avoiding large-scale job losses. These aims can be in conflict and over time may be incompatible. State group chairmen appear to let their career incentives influence their internal capital allocation decisions. Not only do we find that internal capital allocations are used to prop up large and struggling employers with poor prospects, consistent with the policy aims of the CCP. We also find that capital allocations are particularly distorted when group chairmen are up for promotion and cease to be distorted once a group chairman becomes ineligible for promotion under the CCP’s rules on mandatory retirement.

The surprise, therefore, might be that China’s economy has done as well as it has until now.

The Obama administration’s success in negotiating a nuclear deal with Iran has led to hope that a similar agreement might be reached with North Korea. Halt your program, dismantle some of your capabilities, and accept intrusive inspections in return for “coming in from the cold.”

Unfortunately, there’s virtually no chance of that happening. As I point out in National Interest online: “The North already has a nuclear capability and views preservation of a nuclear arsenal as critical for domestic politics as well as international policy. Moreover, the West’s ouster of Libya’s Moammar Khadafy is seen in Pyongyang as dispositive proof that only a fool would negotiate away missile and nuclear capabilities.”

In word and action the Democratic People’s Republic of Korea has demonstrated its commitment to being a nuclear state. Moreover, even a good offer for denuclearization looks suspect in light of U.S. and European support for the ouster of Libya’s Khadafy, who negotiated away his nuclear, chemical, and long-range missile programs.

President George W. Bush promised that Libya’s “good faith will be returned.” Khadafy was feted in European capitals. Tripoli was cited as a model for Iran and North Korea to follow.

However, four years ago the U.S. and European governments saw their chance. Under the guise of humanitarianism, Washington and Brussels promoted low-cost (to them) regime change.

Alas, the self-satisfied celebration of Libya as a “good war” quickly dissipated after that nation suffered post-war atrocities, loosed weapons across the region, generated rogue militias, spawned two governments, descended into incipient civil war, and became another battleground for Islamic State forces. 

Now Libya also stands as a stark warning against nonproliferation, at least for any government believing itself to be in Washington’s gunsights. Had Khadafy possessed nukes, chemical weapons, and/or missiles, the allies almost certainly would have kept their planes and drones at home.

The North Koreans took immediate note. The Foreign Ministry observed:  “Libya’s nuclear dismantlement much touted by the U.S. in the past turned out to be a mode of aggression whereby the latter coaxed the former with such sweet words as ‘guarantee of security’ and ‘improvement of relations’ to disarm and then swallowed it up by force.”

Pyongyang has no reason to believe that the allies would not take advantage of a similar opening against the Kim dynasty.

Nevertheless, the Iranian negotiations have revived hopes that the DPRK might be enticed into following suit. Undersecretary of State Wendy Sherman suggested that implementation of the Iran agreement “might give North Korea second thoughts about the very dangerous path that it is pursuing.” Chinese Foreign Minister Wang Yi said that the Iranian deal was an “active model” for the North.

Alas, Kim Jong-un took power only a couple months after Khadafy was killed in rather gruesome fashion. That event likely was imprinted upon his consciousness. Kim isn’t likely to give up his most important weapon to deter outside intervention.

After announcement of the Iranian agreement, the North Korean foreign ministry issued a statement explaining that the situation of the North was “quite different” from that of Iran and that Pyongyang was “not interested at all in the dialogue to discuss the issue of making it freeze or dismantle its nukes unilaterally first.”

After all, the DPRK was a nuclear state and faced ongoing threats from the U.S. Thus, its nuclear deterrent was not “a plaything to be put on the negotiating table.”

This should surprise no one. Author Mark Fitzpatrick contended that the Iranian deal showed that the U.S. “treated the Iranians as equal negotiating partners, according them respect and collegiality.” But Washington treated Libyans that way too. Which didn’t stop the U.S. and its allies from ousting the same government a few years later.

It never was likely that the DPRK would yield up its nuclear weapons. But the Obama administration’s Libyan misadventure makes that prospect even less likely. Washington may rue this precedent for years to come.

I have a very straightforward rule when assessing politicians. Simply stated, if they are open to tax hikes, then it’s quite likely that they have no desire to control the size, cost, and power of the federal government.

Based on that rule, I’m skeptical about Donald Trump.

To understand my doubts, here are some passages from a story on the topic in the New York Times.

For years, Republicans have run for office on promises of cutting taxes… But this election cycle, the Republican presidential candidate who currently leads in most polls is taking a different approach… Mr. Trump has…suggested he would increase taxes on the compensation of hedge fund managers. And he has vowed to change laws that allow American companies to benefit from cheaper tax rates by using mergers to base their operations outside the United States.

These policy positions are raising a lot of eyebrows.

“All of those are anti-growth policies,” said David McIntosh, the president of the Club for Growth… “Those aren’t the types of things a typical Republican candidate would say,” said Michael R. Strain, a scholar at the conservative American Enterprise Institute, referring to the candidate’s comments on hedge funds, support for entitlement spending and the imposing of trade tariffs.

And Trump’s failure to sign the no-tax-hike pledge exacerbates the concerns, particularly when combined with his inconsistent statements on tax reform.

Mr. Trump and former Gov. Jeb Bush of Florida are the only leading Republican candidates who have not signed a pledge to not raise taxes. …In an interview with Fox News last week, Mr. Trump said a flat tax would be a viable improvement to America’s tax system. Moments later, he suggested that a flat tax would be unfair because the rich would be taxed at the same rate as the poor.

Byron York of the Washington Examiner writes about Trump’s fiscal policy in the context of traditional Republican orthodoxy.

Trump is preparing a tax proposal that will again set him far apart from the party’s powers-that-be. …Trump has been sending signals that his tax proposal, which he says will be “comprehensive,” will include higher rates for some of the richest Americans, a position generally at odds with Republican orthodoxy. “I want to see lower taxes,” Trump said at an appearance in Norwood, Mass., on Friday night. “But on some people, they’re not doing their fair share.”

And if his campaign manager is accurately channeling Trump’s views, the candidate even equates higher taxes with making America great.

Trump campaign manager Corey Lewandowski would say little about Trump’s intentions, but noted that “Mr. Trump has said that he does not mind paying what is required to make our country great again.” Raising taxes on anyone, even the super rich, has generally been anathema to Republicans for a generation.

Wow, what’s next, a Biden-esque assertion that higher tax payments are patriotic?!?

Though, to be fair, it’s unclear whether Trump actually wants the federal government to have more money.

Perhaps the tax increases that he supports would be offset by tax cuts elsewhere, which is what would happen with major tax reform proposals such as the flat tax.

Though the fact that Trump so far has refused to sign the no-tax-hike pledge obviously makes that a risky assumption.

In his column for the New York Times, Ross Douthat also wonders whether Trump will upend existing GOP thinking.

In movement conservatism, there’s an ongoing, interesting tension between starve-the-leviathan theories and the supply-side vision, exemplified by the Wall Street Journal editorial page among other sources, in which low taxes on high incomes and investment can allegedly make the public coffers fuller. …my own (modest) faction, the reform conservatives, whose preferred tax vision (in its varying forms) basically seeks a rebalancing of conservative tax policy, an approach that’s still responsive to supply-side and pro-growth ideas but also addresses both the anxieties of middle class families… The Republican Party is the limited-government, anti-tax party, and the weird rise of Trumpism isn’t going to change that basic fact. But the way anti-tax sentiment manifests itself, and the policies associated with those sentiments, can alter with time and circumstances, and for the G.O.P.’s sake they need to change right now.

I’m mostly in the starve-the-beast camp, though I like the supply-side approach (perfectly captured in this image) because of the recognition of how good tax policy boosts growth.

And I see the “reform conservatives” as allies even if their ideal version of tax reform has a few warts.

So I’m willing to have a “big tent”…but I want the tax-increase crowd on the outside because they would enable bigger government.

I guess it remains to be seen whether Trump’s in that distasteful group.

P.S. Speaking of distasteful tax increases, keep in mind that when Trump says favorable things about trade protectionism, he’s really saying that he wants higher taxes on American consumers.

P.P.S. One of the reasons Trump may be weak on taxes is because he has no desire to control spending. You don’t have to believe me. These are his own words.

“I’m not going to cut Social Security like every other Republican and I’m not going to cut Medicare or Medicaid,” Trump told The Daily Signal. “Every other Republican is going to cut, and even if they wouldn’t, they don’t know what to do because they don’t know where the money is. I do.”

Huh?!?

Let’s take a look at “where the money is.”

If “The Donald” doesn’t think we need genuine entitlement reform, there are only a few possible explanations.

  • He doesn’t know what he’s talking about.
  • He’s dishonest.
  • Or he wants the status quo and that’s why he’s leaving the door open for massive tax hikes.

If it’s the final option, he’s the GOP version of Bernie Sanders.

Since the Enlightenment, anonymous speech has been an integral component of social change, exemplified by Cato’s Letters, the Federalist Papers, and indeed the Anti-Federalist Papers. Accordingly, the Constitution provides a wide breath for the proper “breathing space” that “First Amendment freedoms need … to survive,” NAACP v. Button (1963), by protecting anonymous-speech rights and requiring judges to be skeptical regarding laws that compel disclosure of identifying information.

California’s attorney general, Kamala Harris, has broken with this tradition in demanding that the Center for Competitive Politics (CCP), an educational foundation and public-interest law firm specializing in the First Amendment and political law, disclose its principal donors to the state. The federal district court determined that the demand for this information in the name of “investigative efficiency” was a valid use of state power, and the U.S. Court of Appeals for the Ninth Circuit affirmed that ruling. Importantly, this rule applies to all nonprofit organizations soliciting donations or otherwise operating in California, so the associational chill reaches into the ability of every nonprofit to exist in California while preserving privacy through anonymity.

Cato, joined by the Competitive Enterprise Institute, has filed a brief supporting CCP’s request that the Supreme Court review the case. The Ninth Circuit failed to give proper solicitude to CCP’s constitutional rights here by not applying what lawyers call “heightened scrutiny” at each turn of its analysis. Instead, the lower court applied a party-specific, “as-applied” exception to the general rule that’s only relevant if the compelled disclosure has already survived a broader, “facial” challenge—and it collapsed the clear distinction between the importance of the government interest in disclosure and the extent of the nexus between the disclosure and the asserted interest.

The court also missed the implications of its decision; not only is the NAACP subject to this disclosure regime—the very organization whose resistance to compelled disclosure culminated in the landmark case of NAACP v. Alabama (1958), which protects the right to anonymous association—but the largest, richest, and most politically active state now has this blanket disclosure regime, chilling First Amendment freedoms. The Supreme Court, from NAACP v. Alabama to Citizens United (2010), has required heightened scrutiny in compelled-disclosure cases—“a substantial relation between the disclosure requirement and a sufficiently important governmental interest.” And it has long “recognized that significant encroachments on First Amendment rights of the sort that compelled disclosure imposes cannot be justified by a mere showing of some legitimate governmental interest,” Buckley v. Valeo (1976), which is exactly what the Ninth Circuit accepted by collapsing the distinction between interests and nexus.

In addition, the Supreme Court’s recent Fourth Amendment decision in Los Angeles v. Patel (2015) requires reexamining the attorney general’s demand—which constitutes an administrative subpoena under California law—because “in order for an administrative search to be constitutional, the subject of the search must be afforded an opportunity to obtain precompliance review before a neutral decisionmaker.”

In short, CCP v. Harris is wrong on many levels and cries out for Supreme Court review.

Thailand long has been the land of smiles, a friendly, informal place equally hospitable to backpackers and businessmen. But politics has gotten ugly in recent years.

As I warn in Forbes online: “Now a cartoonish dictator out of a Gilbert and Sullivan comic opera runs a not-so funny junta which jails opponents and suppresses free speech. The bombing of a popular Hindu shrine in Bangkok demonstrates the danger of terrorism becoming a tactic by the disaffected, in which case life in Thailand could generate far more frowns than smiles.” General Prayuth Chan-ocha seized power, last year, promising happiness, prosperity, and security. But the junta has failed to deliver all three.

Those denied political rights and civil liberties aren’t happy. The generals also found that economic forces do not yield to military dictates. The investigation of the recent Bangkok bombings yielded contradictory official claims, causing the government to threaten the public for circulating “false information.” General-Prime Minister Prayuth suggested that the police watch the New York police drama “Blue Bloods” for help.

The dictator betrays a touch of comic megalomania. On taking power he declared that happiness had returned to Thailand.  Irritated with a journalist’s question, he blustered: “Do you want me to use all of my powers? With my powers, I could shut down all media … I could have you shot.” Hopefully he wasn’t serious. However, the generalissimo often has surrendered to his inner autocrat. Freedom House reported that the coup pushed Thailand backwards from “partly free” to “not free,” with a reduction in civil liberties and especially political rights.

The military cowed the media, ordering TV and radio to avoid politics. Print publications were instructed not to criticize the military. Doing so resulted in threats of prosecution. The junta blocked more than 200 websites and is prosecuting online journalists. The regime has prevented around 70 public meetings, including those intending to discuss human rights violations by the junta.

The Prayuth dictatorship has arrested or detained more than 1,000 people, including student protestors, opposition politicians, independent journalists, and even critical academics. Many arrested have been held incommunicado, which, warned Human Rights Watch, increases “the risk of enforced disappearance, torture, and other ill treatment.” Some 700 have been tried in military courts, noted for neither independence nor fairness.

The government banned anything seen as a political protest, including simply standing and eating. On the coup’s May 22nd anniversary 20 protestors were arrested for simply staring at a clock.
The junta has dramatically increased use of Thailand’s oppressive lese-majeste laws to halt criticism in the name of “national security.” Two recent cases, involving Facebook messages, resulted in sentences of 28 and 30 years after guilty pleas.

Overall, AI warned of “an atmosphere of self-censorship and fear” compounded by legal restrictions, prosecutions, and “informal pressure and public threats by authorities, including the prime minister, against media and civil society who voice criticisms.”

Nothing will change in the future if the generalissimo and his apparatchiks have their way. The proposed constitution is designed to prevent, not advance, democracy. Niran Pitakwatchare, a member of the National Human Rights Commission, complained that the draft “gives the state a firmer grip and deprives people of the rights they earlier enjoyed.”

The proposal would immunize the junta for its crimes, fracture the popular vote, encourage weak coalitions, provide for the possibility of an unelected prime minister, establish a largely appointive Senate, use biased administrative and judicial organs against democratic movements, and allow the armed forces to intervene in a crisis. Yet further repression risks convincing Thais that violence is their only option.

The Obama administration has pressed for a return to democracy. Future efforts would be most effective if coordinated with likeminded Asian and European democracies. It’s tempting not to take Thailand’s blustering generalissimo seriously. But the longer he rules, the less likely Thailand is going to enjoy stable democracy.

Alabama, Arizona, Mississippi, and South Carolina have mandated E-Verify for all new hires in their state (see Table 1), which means that every time an employee is hired the employer must use the E-Verify system to check the worker’s ability to legally work.  In our recent Cato Institute policy analysis, Jim Harper and I document that employers are not using E-Verify despite the mandates in those states.  Washington Examiner reporter Sean Higgins wrote an excellent piece expanding on our findings.

Table 1 

E-Verify Mandate Dates    

Alabama

Arizona

Mississippi

South Carolina

4/1/2012

1/1/2008

7/1/2011

7/1/2010

New data has been released since we sent the policy analysis to the printer, confirming that businesses are continuing to ignore E-Verify in states where it is mandated.  Table 2 shows the percentage of all new hires in each state that are actually run through E-Verify, beginning with the data the mandates became law.  If the law was followed perfectly then those numbers should all be 100 percent but they have all levelled off way below that.  Slightly more than half of all new hires in states with mandatory E-Verify are actually run through the system in those four states.

Table 2

E-Verify Compliance Rates

Year

Alabama

Arizona

Mississippi

South Carolina

2009

 

43.26%

   

2010

 

58.77%

   

2011

 

56.75%

 

73.00%

2012

 

56.52%

44.91%

97.02%

2013

55.22%

58.48%

48.81%

54.92%

2014

56.47%

57.76%

43.70%

54.17%

Sources: U.S. Census, Longitudinal Employer-Household Dynamics, DHS, Author’s Calculations.

If E-Verify is the enforcement tool immigration restrictionists want it to be, it’s going to have to start acting like it.   

National Journal has a new piece out today that highlights the continuing controversy over the Federal Aviation Administration’s failure thus far to publish a final rule governing the operation of drones in domestic airspace (FAA’s current unmanned aerial system (UAS) guidance can be found here). One thing the FAA will not be doing is wading into the commercial sector privacy debate over drones; it has punted that issue to the National Telecommunications and Information Administration (NTIA). But what about federal agencies and their use of UASs?

Federal domestic UAS use has a checkered history.

In December 2014, the Department of Homeland Security’s Inspector General issued a report blasting the Customs and Border Protection (CBP) drone program as waste:

  • The unmanned aircraft did not meeting the CBP Office of Air and Marine (OAM) goal of being airborne 16 hours a day, every day of the year; in FY 2013, the aircraft were airborne 22 percent of the anticipated number of hours.
  • Compared to CBP’s total number of apprehensions, OAM attributed relatively few to unmanned aircraft operations.
  • OAM could not demonstrate that the unmanned aircraft have reduced the cost of border surveillance.
  • OAM expected the unmanned aircraft would be able to respond to motion sensor alerts and thus reduce the need for USBP response, but the IG found few instances of this having occurred.

In 2013 alone, the ineffective CBP/OAM drone program cost taxpayers over $62 million–and CBP had plans to spend $443 million more on additional drones in the coming years. And in the privacy context, the DHS IG did not evaluate what CBP did with all of the video, audio or other sensor data collected by DHS UASs.

The Justice Department has had its own drone controversies.

In March 2015, the DoJ IG issued a long overdue final report on DoJ component use of UASs. The IG found that the Bureau of Alcohol, Tobacco and Firearms (ATF) had spent over $600,000 on UASs that it could not use because of “flight time and maneuverability” issues. However, even after ATF disposed of its initial set of drones, the IG found that another ATF element, the National Response Team (NRT),

purchased five small commercial UAS for about $15,000. NRT officials told [the IG] that although they attempted one brief UAS flight in July 2014 with one of these units to document a fire scene, NRT did not coordinate either the purchase or the flight with ATF’s UAS program office. NRT officials told [the IG] that they have since contacted the program office regarding UAS requirements and grounded these UAS until they receive further guidance regarding their use.

Despite the fact that DoJ and DHS have been operating drones for years, it was not until May 2015 that DoJ actually issued UAS-specific privacy and civil liberties guidance to its components. The data retention policy outlined in the guidance is troubling:

The Department shall not retain information collected using UAS that may contain personally identifiable information [PII] for more than 180 days unless retention of the information is determined to be necessary for an authorized purpose or is maintained in a system of records covered by the Privacy Act.

The formulation “authorized purpose” is not the same as “authorized by statute”–and the current, broader definition potentially gives DoJ components a level of discretion they should not have in deciding what PII-laden drone data to keep. The current policy is an invitation for a repeat of the controversy over access to police body camera footage that is currently playing out at the state and local level. Whether DoJ will revise the policy to make it easier for journalists and the public to get access to DoJ drone footage, and narrow the scope of legitimate data retention purposes, remains to be seen.

If a teacher opts out of her union, but the union refuses to hear it, did she really opt out?

Even where state lawmakers have passed “right-to-work” laws legally enabling teachers to opt out of paying union dues, the practical ability to opt out is far from guaranteed. In Michigan, for example–where dues can cost up to $640 a year–the teachers union surreptitiously created new bureaucratic hoops for teachers attempting to opt out.

In an apparent effort to make it even more difficult or even stop school employees from exercising their right under right-to-work to not pay union dues or fees, the state’s largest teachers union has quietly set up an obscure post office box address to which members must send the required opt-out paperwork. It’s P.O. Box 51 East Lansing, MI 48826.

Based on a letter the Michigan Education Association sent to members who had tried to get out, and discussions with some of them, resignation requests sent to the regular union headquarters address will not be honored.

An extensive search of the union’s websites found references to the post office box address on just one page of MEA’s main website, and on one affiliate union’s website. There is no record of this post office box address existing before this month. In the past, union members who wanted to opt out just had to send notification to the address of the MEA’s headquarters in East Lansing.

The MEA had previously restricted the union dues opt-out period to the month of August until a judge ruled that the restriction was illegal. As reported in Michigan Capitol Confidential, about 5,000 teachers left the MEA last year despite the obstacles.

The MEA’s “Hotel California” policies may be in jeopardy as the U.S. Supreme Court is preparing to consider a challenge to the state of California’s compulsory union dues law, which has the potential to end similar laws across the country. Unions claim they require the legal authority to compel nonmembers to pay dues to prevent them from “freeriding” on the union’s collective bargaining efforts. The U.S. Supreme Court previously upheld state laws granting unions the ability to force nonmembers to pay “agency fees” (the equivalent of dues) to cover their collective bargaining activities, but forbid them from compelling nonmembers to pay their blatantly political activities.

However, as Ilya Shapiro and I explained in July, the collective bargaining activities of public sector unions are inherently political. Compulsory dues laws therefore compel citizens to pay for speech with which they might disagree as a condition of employment. That has clear First Amendment implications which the Court will address in Friedrichs v. California Teachers Association:

As the Supreme Court has held countless times, the freedom of speech includes the right not to support someone else’s speech. Unions shouldn’t be able to force nonmembers to finance their activities just because the union thinks they’ll benefit. As the court noted in Harris, “preventing nonmembers from freeriding on the union’s efforts” is a rationale “generally insufficient to overcome First Amendment objections.”

Even if SCOTUS refrains from striking down compulsory dues laws entirely, at minimum the majority should make the blatantly political portion of the union dues opt-in rather than opt-out. The law should not presume that nonmembers consent to political spending.

For more information, read the Cato Institute’s amicus brief in Friedrichs v. CTA.

As health concerns for former President Carter mount, it’s nice to be able to look back on his time in the White House and see something remarkably positive. Carter’s deregulation of air travel, commercial trucking, rail shipping and oil have delivered substantial and ongoing dividends to Americans. In today’s Cato Daily Podcast (Subscribe: iTunes/RSS/CatoAudio for iOS), Peter Van Doren discusses how those policy changes occurred.

An e-mailer reminds me that Carter’s pen also sealed the deal ending the longstanding prohibition on home brewing of beer for personal consumption. Anyone who appreciates craft beer today owes a small thanks to Carter for getting the feds out of the way of the small-scale tinkerers who eventually became today’s craft beer entrepreneurs.

As the Guardian recently reported, technology has created more jobs than it has destroyed, and the new jobs it has created have been of higher quality. Technology eliminated many difficult, tedious, and dangerous jobs, but this has been more than offset by a rise in the caring professions and in creative and knowledge-intensive jobs, resulting in a net increase in jobs.  The sectors to lose the most jobs have been agriculture and manufacturing, which are both difficult and dangerous, while work opportunities in medicine, education, welfare, and professional services have become more abundant. (For example, there are more teachers per student, improving student-teacher ratios, and there are also more physicians per person than in the past).

In 1980, almost a quarter of the world’s employment was still in agriculture. Now, only around 15% of the world’s workers are engaged in agricultural labor. Yet we are feeding more people, undernourishment is at an all-time low, and food is becoming less expensive. Technological advances liberated humanity from toiling in fields by mechanizing many processes and boosting productivity, allowing more food to be produced per hectare of land, and freeing hundreds of millions of people to pursue less grueling work.

The elimination of so many unsafe jobs in manufacturing and agriculture means fewer worker deaths. According to data from the International Labor Organization, from 2003 to 2013, the number of work fatalities in the world decreased by 61% (i.e., over 20,500 fewer deaths). This occurred even as the world population grew by over 700 million over the same time period. If the most dangerous thing you have to face at work is the threat of a paper cut, you quite possibly have technological innovation to thank for that.

Even if in the future robots steal some jobs, advancing technology will likely make several higher-quality jobs available for every job lost. As the Guardian article cited earlier says, technology has proven to be a “great job-creating machine,” eliminating toilsome work but bringing into existence more—and better—opportunities than it takes away.

But note that behind every machine, there lurks human ingenuity. As Matt Ridley wrote in his book The Rational Optimist:

It is my proposition that the human race has become a collective problem-solving machine and it solves problems by changing its ways. It does so through innovation driven often by the market.

Learn more about what market-driven technological innovation has done to improve the state of humanity at HumanProgress.org.













































































































































/* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman","serif";}

Saying “I do” and calling someone your spouse who legally isn’t shouldn’t be a crime, but it can be in Utah. While polygamy—being lawfully married to multiple people—isn’t legal in any state, due to its unique history, Utah has some of the strictest anti-bigamy laws in the country. Which probably makes starring in a reality TV show based on your plural marriage not the best idea for Utahns.

Nevertheless, TLC’s Sister Wives revolves around Kodi Brown, his four partners (Meri, Janelle, Christine, and Robyn), and their 17 children. While Kodi is only legally married to one of women, he claims he is in a “spiritual union” with each of the others, and describes all four as his wives—and that puts the Browns on the wrong side of Utah’s bigamy law. The day after the show premiered in 2010, local authorities announced they were investigating the family.

Because the potential sentences are quite severe (five years for each of the women, and up to 20 years for Kodi), the Browns took preemptive action, filing a federal lawsuit challenging the constitutionality of Utah’s law. The district court agreed. In granting the Brown’s motion for summary judgment, the court held that because the law criminalizes “spiritual cohabitation” (arrangements where the participants claim to be part of multiple religious marriages, but make no attempt to obtain state recognition), it violated the First and Fourteenth Amendments, and was “facially unconstitutional.” The state has appealed that ruling.

Together with First Amendment scholar Eugene Volokh, Cato has filed an amicus brief urging the U.S. Court of Appeals for the Tenth Circuit to affirm the district court. Whether or not the Utah law violates the Browns’ religious liberty, it’s a clear affront to the First Amendment’s protection of free speech.

In Utah, it’s legal to have an “open” marriage and any number of unmarried consenting adults can live together, have sex with each other, pool their finances, and describe themselves as being in a long-term polyamorous relationship. They just can’t use the “M” word. Kodi Brown could have lived with all four women, legally. He could have legally lived with his “real” wife, and carried on long-term affairs with the other women, legally. It’s only because the Browns took the symbolic step of solemnizing their relationships with religious ceremonies, and held themselves out to the world as a married quintuple (even if only in a strictly spiritual sense) that they face prosecution.

With the Browns’ case, Utah isn’t really criminalizing bigamy—say, procuring multiple marriage licenses from county clerks while already being legally married—it criminalizes speech. The Supreme Court has made clear that there are only a handful of exceptions to the First Amendment’s protection. Only the most heinous and dangerous kinds of speech—things like child pornography and inciting violence—can be criminalized. Telling people you’re married, even if it isn’t legally true, isn’t the kind of harmful speech any government has the right to censor, let alone criminalize.

In fact, it isn’t harmful at all. The Browns and the TV show that brought them to national (and prosecutorial) attention aren’t hurting anyone—not themselves, not their children, and certainly not the public—by merely claiming to be spiritually wed. Whether plural marriages should be granted legal recognition has nothing to do with this case, which involves speech—not conduct—that the state doesn’t like.

The Tenth Circuit will hear oral argument in Brown v. Buhman this fall.

China is implementing its “toughest-ever” mobile phone real-name registration system, according to the Want China Times. The effort seeks to get all remaining unregistered mobile phones associated with the true identities of their owners in the records of telecommunications firms. Those who do not register their phones will soon see their telecommunications restricted.

This policy will have wonderful security benefits. It will make identity fraud, anonymous communication, and various conspiracies much easier to detect and punish—including conspiracies to dissent from government policy.

The United States is a very different place from China—on the same tracking-and-control continuum. We have no official policy of registering phones to their owners, but in practice phone companies collect our Social Security numbers when we initiate service, they know our home addresses, and they have our credit card numbers. All of these are functional unique identifiers, and there is some evidence that the government can readily access data held by our telecommunications firms.

We have no national ID that would be used for phone registration, of course. The Department of Homeland Security says it will begin denying travel rights to people from states that do not comply with the REAL ID Act beginning in 2016.

In today’s Manchester Union-Leader, I explain the eerie resemblance that the health care plans advanced by presidential candidates Gov. Scott Walker (R-WI) and Sen. Marco Rubio (R-FL) bear to ObamaCare:

The centerpiece of both “replace” plans is a refundable tax credit for health insurance. Yet such tax credits already exist, in Obamacare. Also like Obamacare, the Walker/Rubio tax credits would allow Washington to decide how much coverage you purchase, penalize you if you don’t buy that government-defined plan, and conceal massive redistribution of income under the rubric of tax cuts…

How would Walker and Rubio pay for their new spending? Would they keep Obamacare’s tax increases? Raise taxes elsewhere? Would they finance new health care spending by cutting existing health care programs? If so, chalk up yet another way their plans would resemble Obamacare.

I also provide an alternative for reformers who actually want better, more affordable, more secure health care.

Conservatives can offer a better “replace” plan that is politically feasible by expanding a bedrock conservative initiative: health savings accounts, or HSAs, which have already enabled 14.5 million Americans to save more than $28.4 billion for their medical expenses tax-free.

Expanding HSAs would give workers a $9 trillion effective tax cut, without cutting spending or increasing the deficit, and would drastically reduce government control over Americans’ health decisions. Most important, “large” HSAs would spur innovations that make health care better, cheaper, and more secure — particularly for the most vulnerable.

Conservatives need to get this right, lest they repeat the same mistake they made in 1993-94.

For decades, prominent conservatives advocated an individual mandate. The left then picked up the idea and gave us Obamacare. Before they once again fall into the same trap, conservatives should drop any support for the implicit mandate of health-insurance tax credits. Expanding HSAs is more compassionate and provides a direct route toward freedom and better health care.

For more on Large HSAs, see here, here, and here.

As the Trans-Pacific Partnership negotiations enter their final stage, one issue remaining to be resolved concerns rules of origin for automobiles.  Rules of origin determine how much of a product needs to be made within the free trade area in order for it to receive duty-free treatment.  This is a tricky issue for automobiles because automakers rely heavily on global value chains where different parts are made in different countries.

Japan wants very liberal rules of origin because its industry’s supply chains include non-TPP countries like Thailand. Canada and Mexico want very strict rules of origin, because their industries benefit from preferential access to the U.S. market through the North American Free Trade Agreement. 

Canada and Mexico’s position in the TPP talks is protectionist. It’s also a consequence of negotiating trade liberalization through regional agreements. In the same way that industries who benefit from protectionism oppose the reduction of trade barriers, industries that benefit from preferential access through trade agreements oppose the reduction of other trade barriers.

Auto manufacturing investment in Canada and Mexico is driven in part by the fact that Canadian and Mexican content make it easier to import into the United States duty free under NAFTA.  If the United States drops trade barriers with other countries, Canada and Mexico become relatively less attractive places to invest.  Tight rules of origin in the TPP would reinforce Canada and Mexico’s advantage.

If negotiations at the World Trade Organization continue to flounder and regional agreements like the TPP proliferate, rules of origin will become a larger and larger problem for global trade.

Today the Court of Appeals for the DC Circuit issued a ruling in NSA v. Klayman that has almost no practical effect, but is a potent illustration of how excessive secrecy and stringent standing requirements effectively immunize intelligence programs from meaningful, adversarial constitutional review.

Contrary to some breathless headlines, today’s opinion does not “uphold” the NSA’s illicit bulk collection of telephone records—which, thanks to the recent passage of the USA Freedom Act, must end by November in any event. Rather, the court overturned an injunction that only ever applied specifically to the phone records of the plaintiffs. And they did so, not because the judges found the program substantially lawful, but because the plaintiff could not specifically prove that his telephone records had been swept into the database, even though the ultimate aim of the program was to collect nearly all such records.

Together with other similar thwarted challenges to mass government surveillance—most notably the Supreme Court case Clapper v. Amnesty International—the decision sends the disturbing signal that mass scale surveillance of millions of innocent people by our intelligence agencies is, for all practical purposes, immune from meaningful constitutional scrutiny. Even when we know about a mass surveillance program, as in the case of NSA’s bulk telephony program, stringent standing rules raise an impossibly high barrier to legal challenges. Perversely, the only people with a realistic chance of challenging such programs in court are actual terrorists who the government chooses to prosecute. The vast, innocent majority of people affected by bulk surveillance—those with the strongest claim that their rights have been violated—are effectively barred from ever having those rights vindicated in court.

Given the routine refusal of courts to step in to protect our Fourth Amendment rights, it is fortunate that Congress has already acted to bring this intrusive and ineffective program to a halt.

One striking feature of the first debate featuring the top tier GOP presidential candidates was how many of them described Saudi Arabia and its allies in the Persian Gulf as “friends” of the United States.  And clearly that is a bipartisan attitude.  Obama administration officials routinely refer to Saudi Arabia as a friend and ally, and one need only recall the infamous photo of President Obama bowing to Saudi King Abdullah to confirm Washington’s devotion to the relationship with Riyadh.

It is a spectacularly unwise attitude.  As Cato adjunct scholar Malou Innocent and I document in our new book, Perilous Partners: The Benefits and Pitfalls of America’s Alliances with Authoritarian Regimes, Saudi Arabia is not only an odious, totalitarian power, it has repeatedly undermined America’s security interests.

Saudi Arabia’s domestic behavior alone should probably disqualify the country as a friend of the United States.  Riyadh’s reputation as a chronic abuser of human rights is well deserved. Indeed, even as Americans and other civilized populations justifiably condemned ISIS for its barbaric practice of beheadings, America’s Saudi ally executed 83 people in 2014 by decapitation.

In addition to its awful domestic conduct, Riyadh has consistently worked to undermine America’s security.  As far back as the 1980s, when the United States and Saudi Arabia were supposedly on the same side, helping the Afghan mujahedeen resist the Soviet army of occupation, Saudi officials worked closely with Pakistan’s intelligence agency to direct the bulk of the aid to the most extreme Islamist forces.  Many of them became cadres in a variety of terrorist organizations around the world once the war in Afghanistan ended.

Saudi Arabia’s support for extremists in Afghanistan was consistent with its overall policy.  For decades, the Saudi government has funded the outreach program of the Wahhabi clergy and its fanatical message of hostility to secularism and Western values generally.  Training centers (madrassas) have sprouted like poisonous ideological mushrooms throughout much of the Muslim world, thanks to Saudi largesse.  That campaign of indoctrination has had an enormous impact on at least the last two generations of Muslim youth.  Given the pervasive program of Saudi-sponsored radicalism, it is no coincidence that 16 of the 19 hijackers on 9-11 were Saudi nationals.

Riyadh also has shown itself to be a disruptive, rather than a stabilizing, force in the Middle East.  Not only has Saudi Arabia conducted military interventions in Bahrain and Yemen, thereby eliminating the possibility of peaceful solutions to the bitter domestic divisions in those countries, the Saudi government helped fund and equip the factions in Syria and Iraq that eventually coalesced to form ISIS.  Although Saudi officials may now realize that they created an out-of-control Frankenstein monster, that realization does not diminish their responsibility for the tragedy.

In light of such a lengthy, dismal track record, one wonders why any sensible American would regard Saudi Arabia as a friend of the United States.  We do not need and should not want such repressive and untrustworthy “friends.”

No, the “waters of the United States” subject to Clean Water Act regulation do not include things like dry land over which water occasionally flows. That’s the conclusion of a federal judge who just put on hold the Environmental Protection Agency’s latest power grab.

The Clean Water Act empowers EPA and the Army Corps of Engineers to regulate the use of private property that affects “navigable waters,” which the Act defines as “the waters of the United States.” In late June, EPA and the Corps finalized a rule defining that term. This was, they said, a boon to those potentially subject to CWA regulation, because “the rule will clarify and simplify implementation of the CWA consistent with its purposes through clearer definitions and increased use of bright-line boundaries…and limit the need for case- specific analysis.”

In reality, it was yet another step in what the Supreme Court called “the immense expansion of federal regulation of land use that has occurred under the Clean Water Act.” The rule extends federal regulation—and prohibitions on land use—to “tributaries,” which it defines as anything that directly or indirectly “contributes flow” to an actually navigable body of water or wetland and “is characterized by the presence of the physical indicators of a bed and banks and an ordinary high water mark.” The point of that legalese is to reach things like “perennial, intermittent, and ephemeral streams”—in other words, areas that aren’t really “waters” at all. The broader the definition, the more land that is subject to CWA permitting requirements and, ultimately, EPA control.

The problem for the federal government is that the Supreme Court rejected basically the same expansive approach in a 2006 case, Rapanos v. United States. In a separate opinion that some believe to be controlling, Justice Kennedy explained that, to be within the reach of the Act, a water must, at the least, “significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as ‘navigable.’”

Judge Ralph Erickson recognized that the new rule “suffers from the same fatal defect.” It “allows EPA regulation of waters that do not bear any effect on the ‘chemical, physical, and biological integrity’ or any navigable-in-fact water.” That includes “vast numbers of waters that are unlikely to have a nexus to navigable waters within any reasonable understanding of the term.” In other words, EPA is overreaching once again.

This result should not be surprising to the agency; a colleague and I (among many others) helpfully raised the same points in comments on the proposed rule last year.

Judge Erickson also identified other defects. For one, the rule is arbitrary and capricious because it “asserts jurisdiction over waters that are remote and intermittent,” despite there being “no evidence [that] actually points to how these intermittent and remote wetlands” affect the quality of navigable waters. It also “arbitrarily establishes the distances from a navigable water that are subject to regulation,” roping in any damp patch within 4,000 feet—a number that, it appears, was plucked out of thin air.

For the 13 states party to the lawsuit, the rule is now stayed. EPA has said it will apply the rule elsewhere beginning on August 28.

Judge Erickson’s decision will not, of course, be the final word on this matter. In other cases, EPA has argued (with some success) that district courts lack the power to decide this kind of dispute. But Judge Erickson’s decision is notable as an early preview of the way that courts are likely to look at the issues at play in challenges to the rule. And its even-handed application of Justice Kennedy’s “significant nexus” approach from Rapanos suggests that, in the end, the “waters of the United States” rule will be sunk.  

Cleaning up the government’s nuclear weapons sites has become a vast sinkhole for taxpayer dollars. The Department of Energy (DOE) spends about $6 billion a year on environmental clean up of federal nuclear sites. These sites were despoiled in the decades following World War II with little notice taken by Congress. Then during the 1980s, a series of reports lambasted DOE for its lax safety and environmental standards, and federal polices began to change.

Since 1990, federal taxpayers have paid more than $150 billion to clean up the mess from the government’s nuclear sites, based on my calculations. Unfortunately, many more billions will be likely needed in coming years, partly because DOE management continues to be so poor.

A 2003 GAO report (GAO-03-593) found that “DOE’s past efforts to treat and dispose of high-level waste have been plagued with false starts and failures.” And a 2008 GAO report (GAO-08-1081) found that 9 out of 10 major clean up projects “experienced cost increases and schedule delays in their life cycle baseline, ranging from $139 million for one project to more than $9 billion for another.”

The largest of the nuclear clean up sites is Hanford in Washington State. One facility at the site has ballooned in cost from $4.3 billion in 2000 to $13.4 billion today (GAO-13-38). Overall, $19 billion has been spent cleaning up the Hanford site since 1989, and the effort continues to face huge problems (GAO-15-354).

The Washington Post reported yesterday:

A nearly completed government facility intended to treat the radioactive byproducts of nuclear weapons production is riddled with design flaws that could put the entire operation at risk of failure, according to a leaked internal report.

A technical review of the treatment plant on the grounds of the former Hanford nuclear site identified hundreds of “design vulnerabilities” and other weaknesses, some serious enough to lead to spills of radioactive material.

The draft report is the latest in a series of blows to the clean-up effort at Hanford, the once-secret government reservation in eastern Washington state where much of the nation’s plutonium stockpile originated. Engineers have struggled for years to come up with a safe method for disposing of Hanford’s millions of gallons of high-level radioactive waste, much of which is stored in leaky underground tanks.

Obviously this is a complex task, but a former Clinton administration DOE official told the newspaper that DOE:

“has proven to be incapable of managing a project of this magnitude and importance,” Alvarez said. “The agency has shown a long-standing intolerance for whistleblowers while conducting faith-based management of its contractors regardless of poor performance. This has bred a culture in which no safety misdeed goes unrewarded.”

In a series of unilateral moves, the Obama administration has been introducing an entirely new regime of labor law without benefit of legislation, upending decades’ worth of precedent so as to herd as many workers into unions as possible. The newest, yesterday, from the National Labor Relations Board, is also probably the most drastic yet: in a case against waste hauler Browning-Ferris Industries, the Board declared that from now on, franchisors and companies that employ subcontractors and temporary staffing agencies will often be treated as if they were really direct employers of those other firms’ workforces: they will be held liable for alleged labor law violations at the other workplaces, and will be under legal compulsion to bargain with unions deemed to represent their staff. The new test, one of “industrial realities,” will ask whether the remote company has the power, even the potential power, to significantly influence working conditions or wages at the subcontractor or franchisee; a previous test sought to determine whether the remote company exercised “ ‘direct and immediate impact’ on the worker’s terms and conditions — say, if that second company is involved in hiring and determining pay levels.”

This is a really big deal; as our friend Iain Murray puts it at CEI, it has the potential to “set back the clock 40 years, to an era of corporate giants when few people had the option of being their own bosses while pursuing innovative employment arrangements.”

  • A tech start-up currently contracts out for janitorial, cafeteria, and landscaping services. It will now be at legal risk should its hired contractors be later found to have violated labor law in some way, as by improperly resisting unionization. If it wants to avoid this danger of vicarious liability, it may have to fire the outside firms and directly hire workers of its own.
  • A national fast-food chain currently employs only headquarters staff, with franchisees employing all the staff at local restaurants. Union organizers can now insist that it bargain centrally with local organizers, at risk for alleged infractions by the franchisees. To escape, it can either try to replace its franchise model with company-owned outlets – so that it can directly control compliance – or at least try to exert more control over franchisees, twisting their arms to recognize unions or requiring that an agent of the franchiser be on site at all times to monitor labor law compliance.

Writes management-side labor lawyer Jon Hyman:

If staffing agencies and franchisors are now equal under the National Labor Relations Act with their customers and franchisees, then we will see the end of staffing agencies and franchises as viable business models. Moreover, do not think for a second that this expansion of joint-employer liability will stop at the NLRB. The Department of Labor recently announced that it is exploring a similar expansion of liability for OSHA violations. And the EEOC is similarly exploring the issue for discrimination liability.

And Beth Milito, senior legal counsel at the National Federation of Independent Business, quoted at The Hill: “It will make it much harder for self-employed subcontractors to get jobs.” What will happen to the thriving white-van culture of small skilled contractors that now provides upward mobility to so many tradespeople? Trade it in for a company van, start punching someone’s clock, and just forget about building a business of your own.

What do advocates of these changes intend to accomplish by destroying the economics of business relationships under which millions of Americans are presently employed? For many, the aim is to force much more of the economy into the mold of large-payroll, unionized employers, a system for which the 1950s are often (wrongly) idealized.

One wonders whether many of the smart New Economy people who bought into the Obama administration’s promises really knew what they were buying.

New polling from Gallup finds that more Americans view the internet industry favorably than any time since Gallup began asking the question in 2001. Today, 60% of Americans have either a “very positive” or “somewhat positive” view of the industry, compared to 49% in 2014.

Favorability toward the Internet industry has ebbed and flowed during the 2000s, but today marks the most positive perception of the industry. Compared to other industries, Gallup found that the Internet industry ranks third behind the restaurant and computer industries.

Perceptions have improved across most demographic groups, with the greatest gains found among those with lower levels of education, Republicans and independents. It is likely these groups are “late adopters” of technology and have grown more favorable as they’ve come to access it. Indeed, late adopters have been found to be older, less educated and more conservative. Pew also finds that early users of the Internet have been younger, more urban, higher income Americans, and those with more education. Indeed, as Internet usage has soared from 55% to 2001 to 84% in 2014, many of these new users come from the ranks of conservative late adopters.

These data suggest the more Americans learn about the Internet the more they come to like it and appreciate the companies who use it as a tool to offer consumer goods and services.

Please find full results at Gallup.

Research assistant Nick Zaiac contributed to this post.

Pages