Archive for June, 2010
George Will Has Questions for Elena Kagan
George Will has some excellent questions for Supreme Court nominee Elena Kagan.
Here’s an excerpt:
• The government having decided that Chrysler’s survival is an urgent national necessity, could it decide that Cash for Clunkers is too indirect a subsidy and instead mandate that people buy Chrysler products?
• If Congress concludes that ignorance has a substantial impact on interstate commerce, can it constitutionally require students to do three hours of homework nightly? If not, why not?
• Can you name a human endeavor that Congress cannot regulate on the pretense that the endeavor affects interstate commerce? If courts reflexively defer to that congressional pretense, in what sense do we have limited government?
• In Federalist 45, James Madison said: “The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the state governments are numerous and indefinite.” What did the Father of the Constitution not understand about the Constitution? Are you a Madisonian? Does the doctrine of enumerated powers impose any limits on the federal government? Can you cite some things that, because of that doctrine, the federal government has no constitutional power to do?
It is unfortunate that Will’s column did not make the hard copy of today’s Washington Post. (The column is dated today, but it’ll likely appear in his regular Sunday space.) Senators on the Judiciary Committee need to read this stuff.
1940: The Birth Year of Liberal Anti-Communism?
We sometimes talk about 1943 as the year that the libertarian movement really started, with the publication of three passionate books by Ayn Rand, Rose Wilder Lane, and Isabel Paterson. In his review of a new biography of Arthur Koestler, Paul Berman makes 1940 sound like a crucial year for books of liberal anti-communism (that is, of course, anti-communism by modern liberals, not classical liberals, who were always opposed to socialism). Perhaps it took 20 years for liberals and anarchists to realize what was happening in Russia and organize their thoughts about it. Libertarians got there a bit sooner, from Mises’s theoretical critique in Socialism in 1922 to Rand’s firsthand experiences that led to the publication of We the Living in 1936.
Koestler’s book Darkness at Noon was completed in 1940, then smuggled out of Vichy France and published the next year. Also in 1940:
A talented little group of intellectuals in the 1930s was keen on Promethean myths, and the center of that impulse was the United States, where the talented group pictured the Communist movement in the light of Prometheus and his struggles. Edmund Wilson devoted his masterwork To the Finland Station to the Promethean theme—it, too, came out in 1940, by the way….
By the time Wilson completed his own manuscript, he knew very well that, in Russia, Marxism had pretty much failed. And he attributed this failure largely to a philosophical error on Marx’s part, back in the nineteenth century. Marx had thoughtlessly incorporated into his own doctrine a whiff of mysticism, drawn from Hegel. The mystical whiff had transformed Marx’s movement from a sober, progressive-minded, social-science action campaign into a movement of religious inebriates. A religious frenzy had produced a hubris. Under Lenin and the Bolsheviks, hubris led to despotism. And to crime—to the deliberate setting aside of moral considerations. To the dehumanization of humanism.Such was Wilson’s argument in To the Finland Station. Here was the Promethean myth, twisted into tragedy: a story of rebellion and counter-rebellion. Freedom and its betrayal. Fire and self-immolation. Wilson’s philosophical mentors were Max Eastman and Sidney Hook, and in that same year each of those redoubtable thinkers came out with his own variation on the same interpretation—Eastman in an essay in Reader’s Digest (which later appeared in his book Reflections on the Failure of Socialism) and Hook in a volume called Reason, Social Myths, and Democracy. In the United States in 1940, tragic Prometheanism was more than an argument. It was a school of thought.
And somehow Koestler, composing his novel under European circumstances inconceivably more difficult than anything his American colleagues would ever experience, arrived at roughly the same interpretation.
Has Biddle Given Up on Karzai?
Stephen Biddle
During the discussions in 2009 over what to do in Afghanistan, Stephen Biddle of the Council on Foreign Relations emerged as an influential voice for staying in the country and ramping up a counterinsurgency campaign. In a widely-read article titled “Is It Worth It?” the author answered in the affirmative but warned that an expanded war would be “costly, risky and worth waging—but only barely so.”
In support of the administration’s Afghanistan policy, Biddle has argued repeatedly that our cart is hitched to Hamid Karzai’s horse. In January of this year Biddle declared that winning the war “is going to require, among other things, a conscious decision by Hamid Karzai to…implement reforms. If we cannot persuade him to do that, we are not going to succeed.“ In a 2009 interview making the case for staying in Afghanistan, Biddle had argued that
The key issue is whether or not the governance reform campaign can succeed. I tend to think that’s co-equal with security provision. Both are necessary; neither is sufficient for success.
So Biddle’s basic plan then was to lean on Karzai to support necessary political change in the national government and to support this objective with an expanded population-centric counterinsurgency campaign.
Now Biddle and two co-authors have an article in the current Foreign Affairs promising to “define success in Afghanistan.” In the new piece, Biddle et al. argue for acceptance of pretty radical decentralization—seemingly marginalizing Karzai, relative to Biddle’s previous writings—and for supporting this decentralized approach with…well, more population-centric counterinsurgency.
Fifth Anniversary of Kelo v. New London
With all the property rights news coming out of the Supreme Court and New York Court of Appeals in the last week, I almost missed Wednesday’s fifth anniversary of the dreadful Kelo v. New London decision. Justice Stevens’s opinion in Kelo sanctioned a transfer of private property from homeowners to a big company in the name of (promised but, as we’ve seen, never realized) job creation and increased tax revenue.
This was a Pyrrhic victory for eminent domain abusers, however, given:
- 9 state high courts have limited eminent domain powers;
- 43 state legislatures have passed greater property rights reform;
- 44 eminent domain abuse projects have been defeated by grassroots activists;
- 88 percent of the public now believes that property rights are as important as free speech and freedom of religion.
To learn about these and other fascinating developments that turned a property rights lemon into at least some type of lemonade, see the Institute for Justice’s new report and video.
Creating Stimulus Jobs, One at a Time
From ArtsAndScience, the magazine of Vanderbilt University’s College of Arts and Science:
Assistant Professor of Chemistry John McLean has been awarded a $2.7 million Grant Opportunity grant from the National Institutes of Health as part of the American Recovery and Reinvestment Act of 2009.
The Supreme Court’s Decision in Skilling
This morning the Supreme Court issued its long awaited decision in the case of Jeffrey Skilling. The most important aspect of the case concerned the so-called “honest services” statute. That law has been an amorphous blob that federal prosecutors could suddenly invoke against almost anyone. All nine justices acknowledged the law had problems, but only three–Scalia, Thomas, and Kennedy–said the law was unconstitutionally vague. The other six justices bent over backwards to “save” the law from invalidation–they ruled that the law should be narrowly interpreted. Here is, I think, the most telling passage from the majority’s ruling:
“As to arbitrary prosecutions, we perceive no significant risk that the honest services statute, as we intrepret it today, will be stretched out of shape.”
Instead of strict rules and limits on government power, the Court is content to offer leeway to the prosecutors–some risk of arbitrary prosecutions is acceptable you see.
The burden ought to be placed on the government–legislators and prosecutors ought to be able to justify every single case. Instead, this Court needs to be persuaded that a significant risk of abuse exists. Here is a passage from a Supreme Court case from years ago that gets it right:
“A criminal statute cannot rest upon an uncertain foundation. The crime, and the elements constituting it, must be so clearly expressed that the ordinary person can intelligently choose, in advance, what course it is lawful for him to pursue. Penal statutes prohibiting the doing of certain things, and providing a punishment for their violation, should not admit of such a double meaning that the citizen may act upon the one conception of its requirements and the courts upon another.”
The second issue in the case concerned Skilling’s right to an impartial jury trial. And it came as no surprise that the Court embraced a prosecutor-friendly view of the Sixth Amendment. Skilling argued that the climate in Houston following the collapse of Enron was so hostile that he should have been granted a change in venue. He’s right about that. The prosecution should be indifferent as to whether they present their incriminating evidence in Houston or another city. Instead, the Court shifts the burden to the accused and sniffs, “sorry, you have not clearly proven to us that you were prejudiced by biased jurors. If someone could prove beyond a reasonable doubt that they had a biased jury, well that would be another story.”
Here’s a modest proposal: This summer each justice should represent some persons accused of crimes.
For additional background, go here.
Business Roundtable: We Love/Hate Big Government
What is surprising, however, is that representatives of that organization now have the chutzpah to complain about a “hostile environment for investment and job creation.” Equally galling, the group has published a document called “Policy Burdens Inhibiting Economic Growth.” We’ve all heard the joke about the guy who murders his parents and then asks the court for mercy because he’s an orphan. The Business Roundtable has adopted that strategy, except this time taxpayers are the butt of the joke. Here’s an excerpt from the Washington Post report:
The chairman of the Business Roundtable, an association of top corporate executives that has been President Obama’s closest ally in the business community, accused the president and Democratic lawmakers Tuesday of creating an “increasingly hostile environment for investment and job creation.” Ivan G. Seidenberg, chief executive of Verizon Communications, said that Democrats in Washington are pursuing tax increases, policy changes and regulatory actions that together threaten to dampen economic growth and “harm our ability . . . to grow private-sector jobs in the U.S.” …The final straw, said Roundtable president John Castellani, was the introduction of two pieces of legislation, now pending in Congress, that the group views as particularly bad for business. One, a provision of the administration’s financial regulation overhaul, would make it easier for shareholders to nominate corporate board members. The other would raise taxes on multinational corporations. The rhetoric accompanying the tax proposals has been particularly harsh, Castellani said, with Democrats vowing to campaign in this fall’s midterm elections on a platform of punishing companies that move jobs overseas. …Seidenberg polled the members of the Business Roundtable and a sister organization, the Business Council. The result was a 54-page document, delivered to Orszag on Monday, chock full of bullet points about actions taken or considered by a wide array of executive agencies, including the White House Middle Class Task Force and the Food and Drug Administration. We believe the cumulative effect of these proposals will help defeat the objectives we all share — reducing unemployment, improving the competitiveness of U.S. companies and creating an environment that fosters long-term economic growth,” Seidenberg wrote in a cover letter for the document, titled “Policy Burdens Inhibiting Economic Growth.”
No One’s Property Is Safe in New York
Sad to say, but as expected, New York State’s highest court, the New York Court of Appeals, has just upheld yet another gross abuse of the state’s power of eminent domain, exercised by the Empire State Development Corporation on behalf of my undergraduate alma mater, Columbia University, against two small family-owned businesses, one of them owned by Indian immigrants. Details can be found in the press release just issued by the Institute for Justice, which filed an amicus brief in the case and has been in the forefront of those defending against such abuse across the country.
IJ has had success in obtaining eminent domain reform in over 40 states, but New York remains a backwater, where collusion between well-connected private entities and government is rampant, and the courts play handmaiden to the corruption by abdicating their responsibilities. Just one more example of why New York is an economic basket case, with a population that continues to flee to more hospitable climes. I’ve discussed the property rights issues more generally here.
Meet the New Minerals Management Service
In a move reminiscent of the George W. Bush administration, the Obama administration is cracking down on the Minerals Management Service…by changing the agency’s name.
The MMS has fallen into disrepute because, well, as E&ENews PM put it, “employees accepted gifts from oil and gas companies, participated in ‘a culture of substance abuse and promiscuity,’ and considered themselves exempt from federal ethics rules.” The “drug and sex abuse [occurred] both inside the program and ‘in consort with industry.’ “ The New York Times reports that MMS employees “viewed pornography at work and even considered themselves part of industry.” Yet this government agency somehow failed to prevent the oil spill in the Gulf of Mexico.
So the Obama administration is giving MMS a makeover. The agency formerly known as the Minerals Management Service will hereafter be known as the Bureau of Ocean Energy Management, Regulation, and Enforcement.
That’s exactly how the Bush administration dealt with the unpopularity of the Health Care Financing Administration, the agency responsible for Medicare and Medicaid: by changing its name to the Centers for Medicare & Medicaid Services. With candor and humor — two scarce commodities in such circles — Bush’s HCFA/CMS administrator Tom Scully explained the rationale:
The health care market . . . is extremely muted and extremely screwed up and it’s largely because of my agency. For those of you who don’t follow CMS, which used to be called HCFA, we changed the name because it was so well loved. I always say it’s kind of like when Enron comes out of bankruptcy, they’ll probably change their name. So, HCFA—Secretary Thompson and I decided to confuse everybody. We changed the name to CMS for a couple of years so people wouldn’t realize we’re actually HCFA. So far, it’s worked reasonably well.
For more on the pervasive cozy relationship between big business and big government, read Tim Carney’s Obamanomics.
For even more candor and humor concerning Medicare, read David Hyman’s Medicare Meets Mephistopheles.
The Unbearable Vagueness of “Honest Services Fraud”
Cato adjunct scholar Tim Sandefur, who authored an amicus brief in the case of Skilling v. U.S., writes on his home blog:
Today, the Supreme Court decided the case of Jeffrey Skilling, the CEO of Enron, who had been convicted of the crime of “honest services fraud.” The statute, however, is so vague, that nobody knows what the term “honest services fraud” actually means. Pacific Legal Foundation (joined by our friends at the Cato Institute) filed a brief in the case arguing that statutes that are so vague violate the constitutional guarantee of due process of law—and that the constitutional protection against vague laws should apply in the business realm the same as anywhere else. Vague laws are dangerous because you cannot know what they prohibit and cannot therefore avoid breaking the law. It is unfair and unconstitutional to hold vague statutes over their head in such a way.
Unfortunately, the Court has in the past been reluctant to apply it outside the regular criminal context, on the theory that businesses are wealthier and can afford expert legal advice. But in a case like this, even the experts have no idea what the statute actually means. The federal circuit courts are in disarray as to what it means. And nobody should be convicted under a statute that is so broadly and vaguely worded, that even the prosecuting lawyer can’t tell you what that law actually means.
As they say, read the whole thing.
ObamaCare Regs’ Effect on Uncompensated Care Overblown
An Obama administration “fact sheet,” released alongside the interim final rules for several of ObamaCare’s cost-increasing mandates, claims those mandates will reduce the “hidden tax” imposed by uncompensated care:
By making sure insurance covers people who are most at risk, there will be less uncompensated care and the amount of cost shifting among those who have coverage today will be reduced by up to $1 billion in 2013.
According to research by the Urban Institute, that “hidden tax” isn’t very large:
Private insurance premiums are at most 1.7 percent higher because of the shifting of the costs of the uninsured to private insurers in the form of higher charges.
As the Congressional Budget Office repeatedly lectures Congress, “Uncompensated care is less significant than many people assume.”
Likewise, these mandates’ effect on uncompensated care will be less significant than the Obama administration would like you to think. Using data from the Centers for Medicare & Medicaid Services and a reasonable assumption of 6-percent annual growth, total private health insurance premiums in 2013 will be in the neighborhood of $1.1 trillion. So the administration is boasting that these mandates will reduce the 1.7-percent “hidden tax” imposed by uncompensated care to 1.61 percent.
Indeed, the whole of ObamaCare may not do much to reduce the “hidden tax” of uncompensated care. After Massachusetts enacted a nearly identical law, the Urban Institute reports, “high levels of emergency department (ED) use have persisted in Massachusetts. Specifically, ED use was high in Massachusetts prior to health reform and has stayed high under health reform.” A lot of uncompensated care comes in through the ED.
Finally, notice how a 1.7-percentage-point premium surcharge is a bad thing if President Obama is ostensibly rescuing you from it, but a good thing if he’s imposing it on you.
Uncertainty More Than Anecdotal
During a recent CNBC debate on federal spending, I argued that government policies are creating uncertainty in the business community. Businesses are reluctant to invest or hire because they’re concerned that the president’s big government agenda will mean higher taxes and more onerous regulations.
I mentioned that every business owner I’ve spoken with has expressed this concern. In fact, the owner of the TV studio I was in told me that he wants to hire more employees but is afraid he may have to turn around and fire them later on thanks to Washington. My debate opponent dismissed my argument on the basis that “you cannot conduct macroeconomic policy by anecdote.”
Unfortunately, there is plenty of evidence to support my concern beyond what I’ve heard from folks in the business community. Yesterday, the chairman of the Business Roundtable, which the Washington Post calls “President Obama’s closest ally in the business community,” said that the president and his Democratic allies are creating an “increasingly hostile environment for investment and job creation.”
From the article:
Ivan G. Seidenberg, chief executive of Verizon Communications, said that Democrats in Washington are pursuing tax increases, policy changes and regulatory actions that together threaten to dampen economic growth and “harm our ability . . . to grow private-sector jobs in the U.S.”
“In our judgment, we have reached a point where the negative effects of these policies are simply too significant to ignore,” Seidenberg said in a lunchtime speech to the Economic Club of Washington. “By reaching into virtually every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses.”
Big businesses aren’t the only ones complaining. Surveys of small businesses conducted by the National Federation of Independent Business continue to point to government taxes and regulations as their single biggest obstacle.
Even the Washington Post’s editorial page is now acknowledging that government-induced uncertainty is an issue:
But as analysts ponder the mystery of weak private-sector hiring despite signs of economic growth, it’s worth asking what role is played by government-induced uncertainty. With the federal government promoting major changes in health care, financial regulation and energy law, it wouldn’t be surprising if some companies are more inclined to wait and see than they might otherwise be. And that’s especially true when they look at looming American indebtedness and the effect that could have on long-term interest rates.
The uncertainty caused by expanding government that we are facing today isn’t a new phenomenon. Economist Robert Higgs coined the phrase “regime uncertainty” in a study that showed that FDR’s anti-business policies prolonged the Great Depression. Had the Roosevelt administration heeded the “anecdotes” from the business community in the 1930s, perhaps the country could have been spared some pain. Let’s hope history doesn’t repeat itself.
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