Archive for June, 2011
Ricardo Paging Alan Blinder
I almost hesitate to suggest that anyone actually read Alan Blinder’s defense of Keynesian economics in today’s Wall Street Journal, except that the piece lays out clearly in my mind why Blinder is so wrong. The only part you really need to read is:
In sum, you may view any particular public-spending program as wasteful, inefficient, leading to “big government” or objectionable on some other grounds. But if it’s not financed with higher taxes, and if it doesn’t drive up interest rates, it’s hard to see how it can destroy jobs.
So in Blinder’s world, deficits are explicitly not future taxes, despite what I believe is a fairly strong consensus among economists that some form of Ricardian equivalence holds (see John Seater’s literature review and conclusion, “despite its nearly certain invalidity as a literal description of the role of public debt in the economy, Ricardian equivalence holds as a close approximation.”). Perhaps Blinder is blind to the fact that deficits are so much a part of the public debate today because households absolutely see those deficits as future taxes.
I also think Blinder misses that fact that crowding out can occur without raising interest rates. As Cato scholar Steve Hanke points out, the Fed’s current policies have basically killed the interbank lending market, which has encouraged banks to load up on Treasuries and Agencies, rather than lend to the productive elements of the economy. While I sadly don’t expect most mainstream macroeconomists to focus on the link between the banking sector and the macroeconomy, Blinder has no excuse; he served on the Fed board.
As I have argued elsewhere, banks are indeed lending, but to the government, not the private sector. The simplistic notion that crowding out can only occur via higher interest rates, as if price is ever the only margin along which a decision is made, has done serious harm to macroeconomics. But then if macroeconomists actually understood the mechanics of financial markets, then we might not be in this mess in the first place.
Harold Koh and the Temptations of Power
So for three months now, we’ve been at war in a country that the president’s own secretary of defense admits is “not a vital interest for the United States.” Turns out, it’s also a war that the president’s own attorney general believes to be illegal.
That’s what I get from Charlie Savage’s recent reporting on how the White House “forum-shopped” its way to its current position on the War Powers Resolution, to wit, you’re not engaged in “hostilities” if you’re hitting someone but they can’t hit you back.
As the WPR’s 60-day deadline approached, the Pentagon’s general counsel and, more importantly, the head of the president’s Office of Legal Counsel, Caroline D. Krass, advised Obama that bombing Tripoli—even if done remotely, with little risk of immediate retaliation—counted as engaging in “hostilities” under the WPR, which meant that the president would have to terminate U.S. involvement or radically scale it back after the 60-day limit. As Savage reports, “Attorney General Eric H. Holder Jr. supported Ms. Krass’s view, officials said”—in other words, that if the president continued bombing Libya, he’d be violating the WPR.
Ordinarily OLC’s opinion would have the greatest weight here, but President Obama went with the advice given by White House Counsel Robert Bauer and State Department Legal adviser Harold Koh—who told him what he wanted to hear.
My Washington Examiner column today focuses on Harold Koh as an object lesson in the corrupting potential of power:
Harvard’s Jack Goldsmith notes that “for a quarter century before heading up State-Legal, Koh was the leading and most vocal academic critic of presidential unilateralism in war.” On the strength of that reputation, Koh rose to the deanship of Yale Law School in 2004.
And Koh seemed to take the War Powers Resolution pretty seriously. In 1994, for example, he wrote to the Clinton Justice Department to protest the planned deployment to Haiti, which was carried out without a single shot being fired:
“Nothing in the War Powers Resolution authorizes the President to commit armed forces overseas into actual or imminent hostilities in a situation where he could have gotten advance authorization.”
Who could have predicted that his legacy at State would be reading the WPR practically out of existence?
On Thursday, Koh took point at a press conference selling the administration line. The next day, he went before the American Constitution Society, the progressive alternative to the Federalist Society, to give a strikingly self-congratulatory speech about maintaining one’s integrity in “public service.” The relevant part starts at around 33:00 in. Highlights: “I’ve lived the life I wanted to live; I’ve said the things I wanted to say”…”I still believe in my principles”…”I never say anything I don’t believe”…”if you hear me say something, you can be absolutely sure that I believe it [including "the administration’s position on war powers in Libya"]“…”if I say it, I believe it, and I intend to stand by it”…”For what is a man?/what has he got? If not himself/then he has not…” (OK, not the last bit).
As I note in the column:
John Dean, who served prison time for his role in the Watergate cover-up as a young White House counsel to Richard Nixon, once said that young people should be kept away from top executive posts.
They lacked the life experience and independence needed to resist falling under the spell of presidents who want them to bend or break the law.
Koh was in his mid-50s when he joined the administration, coming off a distinguished career built on opposition to the Imperial Presidency. Yet the lure of being “in the room” when the big decisions are made seems to have turned him into the Gollum of Foggy Bottom.
Oh, and by the way, Charlie Savage reports today that piloted strikes continued past the 60-day time limit, so even if Koh’s legal rationalization could pass the laugh test, it wouldn’t fit the facts we have.
Miss USA Contestants: America in Glamourcosm?
A rabid fan of both Cato’s Center for Educational Freedom and The Miss USA Pageant (some may know him as Jim Harper) just sent me a link to this YouTube video. In the vid, all the contestants in the just-completed, aforementioned pageant discuss whether the theory of evolution should be taught in schools.
I didn’t tally their responses, but just listening to the contenders it seems their consensus answer represents America in microcosm: Most seem to have serious doubts about evolution, but support teaching it along with other viewpoints. It reflects both the overall split within the American public—40 to 50 percent of Americans are creationists, and roughly the same segment evolutionists—as well as the consensus view on teaching human origins: About 60 percent of Americans support teaching both evolution and creationism in public schools.
Of the most interest to us here at CEF is whether public schooling can even handle a hot-button issue like human origins. Is a government system of schools that all diverse people must support capable of dealing with a controversial subject like this, or will it spark conflict that ultimately ends with no side getting the view it wants taught?
The existing evidence shows that government schooling generally can’t handle controversy, but that is almost never even mentioned in the seemingly endless war between creationists and evolutionists. And the same is true for the aspiring Miss USAs. While a few appeared to conclude that the nation is too diverse for public schools to deal with this topic—see Miss Kentucky at the 5:07 mark, and Miss Utah at 12:36—the majority made no mention of the problem. Fortunately, only one gave the answer libertarians should fear most: Miss Indiana ( 4:25 ) said “I think we should leave that up to the government.” (In the Hoosier rep’s defense, she did eventually conclude that we should “just leave that out of the equation” because it would be too controversial).
At least when it comes to the teaching of human origins in schools, Miss USA contestants really do appear to represent their country.
Poll Finds a Libertarian Shift
Polling wizard Nate Silver of the New York Times today points to a couple of poll questions that David Kirby and I have often employed and finds some welcome new results, along with a great graph:
Since 1993, CNN has regularly asked a pair of questions that touch on libertarian views of the economy and society:
Some people think the government is trying to do too many things that should be left to individuals and businesses. Others think that government should do more to solve our country’s problems. Which comes closer to your own view?
Some people think the government should promote traditional values in our society. Others think the government should not favor any particular set of values. Which comes closer to your own view?
A libertarian, someone who believes that the government is best when it governs least, would typically choose the first view in the first question and the second view in the second.
In the polls, the responses to both questions had been fairly steady for many years. The economic question has showed little long-term trend, although tolerance for governmental intervention rose following the terror attacks of Sept. 11, 2001. The social libertarian viewpoint — that government should not favor any particular set of values — has gained a couple of percentage points since the 1990s but not more than that.
But in CNN’s latest version of the poll, conducted earlier this month, the libertarian response to both questions reached all-time highs. Some 63 percent of respondents said government was doing too much — up from 61 percent in 2010 and 52 percent in 2008 — while 50 percent said government should not favor any particular set of values, up from 44 percent in 2010 and 41 percent in 2008. (It was the first time that answer won a plurality in CNN’s poll.)
And then he offers this graph:
Check out that green line! Kirby and I used those same two poll questions in our studies beginning with “The Libertarian Vote” (see p. 9). Like Gallup, we combined responses to the two questions in a matrix, finding in 2009 (in “The Libertarian Vote in the Age of Obama“) that 23 percent of the public held libertarian views. Adding them, as Silver has done, seems much more fun.
Memo to Robert Reich: Rewrite Your Brief
Robert Reich posted a letter in June 20 Wall Street Journal responding to my article of June 16, “Why 70% Tax Rates Won’t Work.”
He argues that I distort his proposal (though I wasn’t talking about his proposal) and ignore his argument that, “Giving the middle class more purchasing power by lowering its rates while raising the rates at the top will help spur [economic] growth.”
This strikes me as a futile effort to change the subject. Since I proved that past tax rates of 50-70% on relatively modest incomes raised less revenue than a top tax rate of 28%, how could Reich’s proposal of 50-70% rates at incomes above $500,000 raise more revenue? And if 50-70% tax rates would not raise more revenue, then how could he possibly promise “substantial rate reductions [actually a refundable tax credit] for people with incomes under $100,000”?
The original draft of my article was not focused on Reich, but included others − including two of his Berkeley colleagues (Brad DeLong and Emmanuel Saez) who recently suggested a tax rate of 70% would be “revenue-maximizing.” The details of Reich’s proposal were not in the blog I quoted, but such details have no relevance to any points I made.
Only after top tax rates came down, I noted, were we able to afford very substantial reductions in taxes for people with incomes under $100,000. Since President Reagan took office the average income tax rates have become negative for the bottom 40% and were cut in half for the “middle class.” In 1980, when top tax rates were 70% and nearly 40% on capital gains, such rates brought in so little revenue that the Feds were compelled to tax low and middle-income families quite heavily to bring revenues up to the normal 8% of GDP.
At his blog, Reich argues that, “Reynolds bends the facts to make his case. The most important variable explaining the rise and fall of tax revenues as a percent of GDP has been the business cycle, not the effective tax rate. In periods when the economy is growing briskly, tax revenues have risen as a percent of GDP, regardless of effective rates; in downturns, revenues have fallen.”
For that to work as an explanation of why individual tax revenues were higher when the top tax rate was 28% than when it was 70-91%, Reich is logically obligated to argue that the economy was growing more briskly when the top tax rate was 28% than when the top tax rate was 70-91%. Contradicting his own logic, however, Reich instead claims that “Giving the middle class more purchasing power by lowering its rates while raising the rates at the top will help spur growth.”
Reich is not proposing to add new tax rates to 50-70% on salaries, dividends and capital gains because he believes it will raise more revenue (my data show otherwise), but because he believes it will raise the growth of real GDP. This is breathtaking. Reich should be glad that I ignored his “central argument” about super-high tax rates boosting economic growth by taking income from those who earned and giving it to those more likely to squander it. I was just being too polite.
Within his hyper-Keynesian lawyer’s brief, Reich is logically required to argue that top tax rates of 70-91% (1) raised revenue, and that (2) this imaginary added revenue allowed imaginary tax reductions on poorer people with a lower propensity to save. He must then arrive at the logical conclusion, which is that (3) the average savings rate must have been much lower when top tax rates were 70-91% than since 1988 when to tax rates have frequently been 28-35% and as low as 15% on capital gains and dividends. A low savings rate, in Reichian theory, is what makes the economy grow.
My article proved the first two premises are false. High statutory tax rates on the rich generated less revenue, and the poor and middle classes paid much higher taxes as a result.
The third premise of Reich’s brief is key to the Keynesian fable about growth depending to incentives to consume rather than incentives to produce. Once again, the facts are the exact opposite of what Reich imagines. The personal savings rate was 9% from 1959 to 1981 when top tax rates were 70-91%, and 4.5% from 1988 to 2007 when top tax rates were 28-39.6%.
Reich’s comment that “the richest 1% of Americans got 10% of total [pretax, pretransfer] income in 1980, and get more than 20% now” refers to income reported on individual tax returns, assembled by Thomas Piketty and Emmanuel Saez. When top tax rates went way down, particularly in 1988, 1997 and 2003, the amount of reported income and capital gains went way up. As Saez explained in the 2004 issue of Tax Policy and The Economy (MIT Press, p.120): “Top income shares . . . show striking evidence of large and immediate responses to the tax cuts of 1980s, and the size of those responses is largest for the topmost income groups.” That is why revenues from high-income households went way up rather than down, and why it then became feasible to hand out refundable credits to the bottom 40% and cut tax bills in half for those earning less than $100,000.
Reich would apply his 50-70 % tax rates to reported capital gains and dividends, which is a surefire way to make taxable capital gains and dividends vanish from tax returns. No high-income taxpayer can be compelled to sell property or financial assets for the sheer joy of paying 50-70 % of the gain to the IRS. No investor can be compelled to hold dividend-paying stock rather than tax-free bonds.
With the enormous amount of revenues lost under the Reich tax proposal, we would have no choice but to revert to the pre-1986 stingy personal exemptions and standard deductions while also repealing the Bush child credit and the vastly expanded earned income tax credit.
Capitalist Acts between Consenting Adults
“Even Robert Nozick gave up on libertarianism,” says Stephen Metcalf, more or less. “So what’s wrong with you?” (Aside, of course, from the fact that Nozick didn’t give up.)
I probably should hesitate before declaring my allegiance to the evil league of evil. But you’re reading this at the Cato Institute, so it may be too late for that. Metcalf’s piece falls into a large and (sadly) growing category for me, one labeled “People Condemning Libertarians for Strange Things That Never Occurred to Anyone, Let Alone to Us.”
It never occurred to me, for example, that by citing Wilt Chamberlain as someone who became wealthy in a morally blameless way, Robert Nozick was playing the race card. Metcalf writes:
“Wilt Chamberlain” is an African-American whose talents are unique, scarce, perspicuous (points, rebounds, assists), and in high demand. We feel powerfully the man should be paid, and not to do so—to expect a black athlete to perform for (largely) white audiences without adequate compensation—raises the specter of the plantation.
Raises the specter of the plantation? Does it now? Let’s generalize: Your forcing anyone to perform without what they consider adequate compensation should raise that same specter. If someone is going to perform for you, they must do it for a wage that they consider adequate, whether their “performance” is a show of basketball prowess or just working on an assembly line.
If they don’t like the wage, they should be free to seek a better one. If the employers pay a giant wage, and if they do so because they really, really like the work, then that’s also their right.
Those who want to interfere — to tax wages, to restrict entry or exit, or to prohibit whole lines of work — they are the ones who bear the burden of proof. Not the willing buyers and sellers of labor. That’s what Wilt Chamberlain’s example is supposed to show.
Maybe you’re not ready to go whole-hog and declare that taxation is theft. Eh, fine. Still, taxation should make all of us pretty uncomfortable, especially when we look at its philosophical implications. The arguments that justify taxation might actually be unavoidable—truthfully, I wouldn’t know how to run a government without them—but that doesn’t make them any less dangerous.
Of the many errors in a long and error-ridden article, I think the worst has to be the idea that libertarians hold all concentrations of wealth to be good. As long, I infer, as we gather it in sufficiently large heaps. Metcalf writes:
But being a star athlete isn’t the only way to make money. In addition to earning a wage, one can garnish a wage, collect a fee, levy a toll, cash in a dividend, take a kickback, collect a monopoly rent, hit the superfecta, inherit Tara, insider trade, or stumble on Texas tea. For each way of conceiving wealth, there is at least one way of moralizing its distribution. The Wilt Chamberlain example is designed to corner us—quite cynically, in my view—into moralizing all of them as if they were recompense for a unique talent that gives pleasure; and to tax each of them, and regulate each of them, according to the same principle of radical noninterference suggested by a black ballplayer finally getting his due.
This is simply wrong. For a libertarian, it’s only Wilt Chamberlain’s particular type of wealth that is morally blameless, not all the rest. Which kind is his? The kind acquired through voluntary transactions, without coercion or fraud. The kind that comes from Nozick called capitalist acts between consenting adults.
Some wealth is blameless. Some isn’t. And yes, some cases are truly hard to judge: Is Wal-Mart a free-market success story? Wellll…. kind of. But what about all those special tax privileges? What about that eminent domain abuse?
Wilt Chamberlain makes a good example not because he’s a black man struggling sympathetically in a white man’s world. His example is useful because it strips away every possibility of force, fraud, corporate welfare, and government favoritism. When we do that, we can see that it’s still possible to grow wealthy through honest, voluntary methods. That’s a valuable insight, even if you don’t necessarily agree with everything else Robert Nozick ever wrote. (Don’t sweat it; I don’t either.)
Finally, Metcalf strangely neglects Chamberlain’s fans. When we talk about Wilt Chamberlain’s right to collect a paycheck, it’s partly because he’s highly visible. But we should not forget that when we take away that paycheck, we also take away an entertainment choice for millions of ordinary people.
If we remove enough choices like these, we won’t merely have made life less cushy for the talented. We’ll also have made it a lot poorer for the rest of us. We could be taking away not just basketball, but breakthroughs in science, technology, and the arts. And why? Because someone found someone else’s voluntary transfer of wealth distasteful. That shouldn’t be much of a reason.
The Treaty Clause Doesn’t Give Congress Unlimited Power
In 1920, the Supreme Court decided an obscure case concerning the implementation of a treaty between the United States and Canada regarding migratory birds. Tucked into Justice Oliver Wendell Holmes’s five-page decision in Missouri v. Holland was a sentence that expressed a truly startling idea: that Congress can transcend its enumerated powers via its power to implement treaties.
That is, although Congress has no enumerated power to pass, say, general criminal laws, if a ratified treaty with France demands that we pass such laws, then Congress’s power expands to allow for such legislation. Thus, foreign nations and the executive branch are given the power to change, almost at will, one of the most hotly debated and carefully crafted sections of the Constitution, the scope of Article I congressional power!
Now an equally obscure case relating to copyrights gives the Court an opportunity to revisit Missouri v. Holland‘s starkly erroneous proposition and reaffirm the Framers’ vision of Congress’s powers as “few and defined.” Golan v. Holder concerns a law Congress passed after the president signed and the Senate duly ratified the “Uruguay Round” general trade agreement, which in part amended the 1971 Berne Convention on intellectual property. This new law reinstated copyright protection to works that were previously in the public domain.
A number of orchestra conductors, educators, performers, film archivists, and motion picture distributors who depend on the public domain for their livelihood challenged the law on two grounds: 1) that it violates the “promote progress in Science and the Useful arts” limitation on the congressional power to pass copyright laws (the Copyright Clause), and 2) it violates the First Amendment. Cato and Georgetown law professor Nicholas Quinn Rosenkranz filed a brief that supports this challenge by highlighting the problems with an expansive interpretation of the treaty power.
We argue that, as a matter of constitutional structure, history, and logic, a treaty cannot increase Congress’s legislative powers. Not only is the power to “make treaties” distinct from the power to execute treaties already made, but such an expansive interpretation of the treaty power would allow Congress and the Executive to circumvent the Article V amendment process. Even more shockingly, it would allow foreign governments to have control over the scope of congressional power. In sum, Missouri v. Holland is a structural and doctrinal anomaly in tension with other precedent and based on a misreading of constitutional history. It should be overruled.
The Supreme Court will hear argument in Golan v. Holder this fall.
Wal-Mart v. Dukes: The Court Gets One Right
In today’s decision in Wal-Mart v. Dukes, the Supreme Court unanimously found that the Ninth Circuit had jumped the gun in certifying what would have been one of the largest class actions in history, a job-bias action against the giant retailer on behalf of female employees. A five-justice majority led by Justice Scalia found that the plaintiffs had clearly not met the requirements needed to have the case certified for class treatment; four dissenters led by Justice Ginsburg would have sent the case back for more consideration.
While some press commentary simplistically treated this case as a “Which Side Are You On” parable of workplace sexism, both the majority and the dissent spend much time grappling with more lawyerly issues specific to class actions as a procedural format, such as the exact role of “common questions,” whose implications will inevitably be felt in litigation far removed from the employment discrimination context. To sweep hundreds of thousands of workers (or consumers or investors) into a class as plaintiffs even if they personally have suffered no harm whatsoever — to use sexism at Arizona stores to generate back pay awards in Vermont, and statistical disparities to prove bias without allowing defendants to introduce evidence that a given worker’s treatment was fair — bends the class action mechanism beyond its proper capacity. Also to the point, it is unfair.
Because both class action law and employment discrimination law are in the end creatures of federal statute, the elected branches will have the last word. Advocates of expansive employment litigation can be expected to introduce legislation in Congress to overturn key elements of today’s decision, a strategy that has worked well for them in the past on issues like back pay, “disparate-impact” law and the scope of coverage of the Americans with Disabilities Act (ADA). While we will soon be hearing a drumbeat to that effect, Congress should resist it, because the majority’s opinion today is to be preferred as a matter of policy, fairness, and liberty.
In particular — to take just one of the policy issues in employment law brought to center stage by today’s case — plaintiffs seek to establish that Wal-Mart’s policy of decentralized manager discretion over pay and promotions is itself an unlawful practice because (they argue) it allows too wide a scope for (unconscious or otherwise) bias on the part of store managers, notwithstanding the company’s adoption of overall policies banning sex bias. The majority led by Scalia marveled that Wal-Mart’s corporate non-policy — that is, its decision not to micromanage its local executives on personnel choices — would wind up being legally interpreted as amounting to an affirmative centralized decision to discriminate. But it’s not — and we should be glad lawyers at every big company aren’t yet insisting that every local HR decision be sent to a distant headquarters for fear of liability.
Here We Go Again: ObamaCare’s Preventive-Care Subsidies Aren’t ‘Free’
In press release, a new video, and an elusive new report, the Obama administration is boasting about the “free” preventive services that ObamaCare provides to Medicare enrollees.
Here we go again.
First, these preventive-care subsidies are not “free.” They are costing taxpayers dearly by adding to America’s $14 trillion national debt. There is no such thing as a free lunch. And there is nothing “free” about ObamaCare.
Second, ObamaCare supporters have claimed that more preventive care would reduce health care spending, but research shows that it will not.
Third, I hope someone is keeping track of all the taxpayer dollars this administration has wasted trying to convince the American people that they’re wrong to dislike ObamaCare.
Finally, if the $250 checks that ObamaCare sent to millions of Medicare enrollees didn’t make this law popular among seniors, I doubt these indirect subsidies will.
Misunderstanding Nozick, Again
Someone called Stephen Metcalf writes at Slate of his horror at finding in “an otherwise quite groovy loft” in New York’s SoHo “not one but two copies of something called The Libertarian Reader.” Given that he manages to lump not just Paul Ryan and South Park but Sarah Palin into the libertarian basket, you can appreciate his dismay.
Metcalf puts Robert Nozick at the center of his argument, understandably enough. My colleague Tom Palmer says that academic critics almost always cite one chapter of one book, Nozick’s Anarchy, State, and Utopia, and declare that they have grappled with libertarian ideas. Still, it’s a good book and worth grappling with, and it did have an impact, as Metcalf notes:
I like to think that when Nozick published Anarchy, the levee broke, the polite Fabian consensus collapsed, and hence, in rapid succession: Hayek won the Nobel Prize in economics in 1974, followed by Milton Friedman in ’75 [1976], the same year Thatcher became Leader of the Opposition, followed by the California and Massachusetts tax revolts, culminating in the election of Reagan, and … well, where it stops, nobody knows.
I’ll leave it to my more learned colleagues to analyze how successfully Metcalf actually deals with Nozick’s arguments. I just want to note one thing here. Like many other critics of libertarianism, Metcalf triumphantly announces:
How could a thinker as brilliant as Nozick stay a party to this? The answer is: He didn’t. “The libertarian position I once propounded,” Nozick wrote in an essay published in the late ’80s, “now seems to me seriously inadequate.”
Yes, yes, yes. It gets repeated a lot: “Even Nozick renounced libertarianism.” If it were true, it’s not clear what it would mean. Libertarianism is true, or not, whether or not Paul Krugman or Russell Kirk believes it, and whether or not Robert Nozick believes it. The idea stands or falls on its own. But as it happens, Nozick did “stay a party” to the libertarian idea. Shortly before his death in 2002, young writer Julian Sanchez (now a Cato colleague) interviewed him and had this exchange:
JS: In The Examined Life, you reported that you had come to see the libertarian position that you’d advanced in Anarchy, State and Utopia as “seriously inadequate.” But there are several places in Invariances where you seem to suggest that you consider the view advanced there, broadly speaking, at least, a libertarian one. Would you now, again, self-apply the L-word?
RN: Yes. But I never stopped self-applying. What I was really saying in The Examined Life was that I was no longer as hardcore a libertarian as I had been before. But the rumors of my deviation (or apostasy!) from libertarianism were much exaggerated. I think this book makes clear the extent to which I still am within the general framework of libertarianism, especially the ethics chapter and its section on the “Core Principle of Ethics.”
So Nozick did not “disavow” libertarianism. Indeed, Tom Palmer adds a point that
David Schmidtz told at a forum about Schmidtz’s book from Cambridge University Press, Robert Nozick, held October 21, 2002 at the Cato Institute. According to David, Nozick told him that his alleged “apostasy” was mainly about rejecting the idea that to have a right is necessarily to have the right to alienate it, a thesis that he had reconsidered, on the basis of which reconsideration he concluded that some rights had to be inalienable. That represents, not a movement away from libertarianism, but a shift toward the mainstream of libertarian thought.
Metcalf’s criticisms of libertarianism will have to stand on their own, as will libertarianism itself. He doesn’t have Nozick on his side. As for Metcalf’s final complaint that advocates of a more expansive state have been “hectored into silence” by the vast libertarian power structure, well, I am, if not hectored, at least stunned into silence.
P.S. Matt Welch notes that if Metcalf doesn’t have Nozick on his side, at least he has Ann Coulter.
In Global Warming Case, Supreme Court Reaches Correct Result But Leaves Room for Mischievous Litigation
In the important global warming case decided today, American Electric Power Co. v. Connecticut, the Supreme Court unanimously reached the correct result but one that still leaves room for plenty of mischievous litigation. While it’s clearly true that, as the Court said, the Clean Air Act and the EPA exist to deal with the claims the plaintiffs made here—that the defendants’ carbon dioxide emissions are pollutants that cause global warming—the Court left open the possibility of claims on state common-law grounds such as nuisance. And it unfortunately said nothing about whether any such disputes, whether challenging EPA action or suing under state law, are properly “cases and controversies” ripe for judicial resolution.
The judiciary was not meant to be the sole method for resolving grievances with the government, even if everything looks like a nail to lawyers who only have a hammer. This case is the perfect example of a “political question” best left to the political branches: The science and politics of global warming is so complex and nuanced that there simply isn’t a judicial role to be had.
As Cato’s amicus brief argued, the chain of causation between the defendants’ carbon emissions and the alleged harm caused by global warming is so attenuated that it resembles the famed “butterfly effect.” Just as butterflies should not be sued for causing tsunamis, a handful of utility companies in the Northeastern United States should not be sued for the complex (and disputed) harms of global warming. Even if plaintiffs (here or in a future case) can demonstrate causation, it is unconstitutional for courts to make nuanced policy decisions that should be left to the legislature. Just as it’s improper for a legislature to pass a statute punishing a particular person (bill of attainder), it’s beyond courts’ constitutional authority to determine wide-ranging policies in which numerous considerations must be weighed in anything but an adversarial litigation process.
If a court were to adjudicate claims like those at issue in American Electric Power and issue an order dictating emissions standards, two things will happen: 1) the elected branches will be encouraged to abdicate to the courts their responsibilities for addressing complex and controversial policy issues, and 2) an already difficult situation would become nearly intractable as regulatory agencies and legislative actors butt heads with court orders issued across the country in quickly multiplying global warming cases. These inevitable outcomes are precisely why the standing and political question doctrines exist.
Dissatisfaction with the decisions and pace of government does not give someone the right to sue over anything. Or, as Chief Justice Marshall once said, “If the judicial power extended to every question under the laws of the United States … [t]he division of power [among the branches of government] could exist no longer, and the other departments would be swallowed up by the judiciary.”
FATCA Law Is a Nightmare for Cross-Border Economic Activity
One of the tax increases buried in Obamacare was an onerous and intrusive “1099″ scheme that would have required businesses to collect tax identification numbers for just about any vendor and then send paperwork to the IRS whenever they did more than $600 of business.
- Send one of your sales people to New York for a couple of nights? They would have to get the tax ID for the hotel and submit a form to the IRS.
- Buy a printer for the office? The printer company would need to provide a tax ID and the purchaser would have to submit a form to the IRS.
- o Have a retirement dinner for somebody in the accounting department? Get the restaurant’s tax ID and submit another form to the IRS.
This system was seen as a nightmare, even leading to rather amusing cartoons mocking the law and showing how it would expand an already abusive IRS. And in a rare fit of common sense, the 1099 requirement was repealed earlier this year.
That’s the good news. The bad news is that an international version of Obamacare’s 1099 scheme also was enacted early last year. But since the burden is largely falling on foreigners, there’s no groundswell among voters to repeal the law — even though it will impose far more damage on the American economy.
Known as the FATCA (the acronym for the Foreign Account Tax Compliance Act), this law was included as a revenue-raising provision to pay for one of Obama’s failed stimulus bills.
But while the bill didn’t create jobs, it has created a giant nightmare for all sorts of people and firms — including foreign financial institutions that may now decide that it’s no longer worth the trouble to invest in America.
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