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Yesterday, Senator Tom Cotton (R-AR) gave a speech on the floor of the Senate about “putting an end, once and for all, to chain migrations.”  The main argument that Senator Cotton made is that immigrants lower the wages of blue-collar American workers.  Senator Cotton said:

That means that you have thousands and thousands of workers with absolutely no consideration for what it means for the workers who are already here … The wages of people who work with their hands and work on their feet hold the type of jobs that require you to take a shower after you get off work, not before they got to work.  Blue-collar workers have begun to see an increase in their wages over the last year for the first time in decades and that is in no small part because of the administration’s efforts to get immigration under control.

There is vast empirical evidence that contradicts Cotton and shows that the wage effect is minuscule, concentrated on only high school dropouts, or that immigration actually increases the wages of lower-skilled Americans.  Even worse for Cotton’s argument, the wages for low-skilled American workers actually rose less slowly the last time the government cut low-skilled immigration to raise wages.  I’ve provided evidence pushing against Cotton’s position in previous posts but this one will present new evidence from the Mariel Boatlift. 

The last major academic debate on the wage effects of immigration concerned the Mariel Boatlift when about 125,000 Cuban refugees surged into Miami over a few months in 1980.  Indeed, this debate was so important that even Trump Administration White House aide Stephen Miller cited it in a press conference in 2017

The Mariel Boatlift a wonderful quasi-natural experiment that economists have exploited numerous times to estimate the effect of immigrants on wages.  David Card wrote a paper in 1990 showing that the effect of Mariel on wages and employment was near zero.  Recently, George Borjas of Harvard wrote another paper that found Mariel actually had an enormously negative effect on wages – a result that has been challenged by Giovanni Peri and Vasil Yasenov and Michael Clemens and Jennifer Hunt.  Professor Borjas responded here.  I added a bit to this debate by pointing out that under Borjas’ methods, the wages of Miamians with only a high school degree rose at the same time as the Boatlift and that wages for Hispanic dropouts in Miami rose rapidly shortly after the Boatlift, a perplexing result for the most-substitutable workers. 

The rest of this blog will ignore the criticisms of Borjas’ Mariel Boatlift paper and instead use his methods to show that the wages of blue-collar Miamians were not negatively affected relative to the placebo cities.  This will use some of the most recent and relevant economics research to see whether Senator Cotton can make a convincing case that immigrants lower the wages of blue-collar American workers.  We used the same CPS dataset that Borjas used for the full empirical exercise of 1977-2003.  The placebos are comparison sets of cities.  They are all cities that aren’t Miami (labeled as “Miami”), those selected by David Card, those that are similar to Miami in terms of employment prior to 1980, and those with similar low-skilled work forced prior to 1980.  I define blue-collar workers in two ways.  The first is all workers with less than a college degree.  The second is all workers who have at least a high school degree but less than college. 

The first group of blue-collar workers is those with less than a college education.  We ran a differences-in-differences model that shows a statistically significant decline in average wages by around 2.5 percent that is significant at the 1 percent level in Miami, relative to all other cities, after the Boatlift. (Table 1).  This finding is much smaller than Borjas’ negative finding.  For the employment and Card placebos, native employment and wages increased at the 10 percent and 1 percent level in Miami.  There were no statistically significant effects on the wages of Miamians compared to the low-skill placebo.  According to Borjas’ paper, this group of workers includes 86.9 percent of the Marielitos and 81.2 percent of native Miami workers.

The second group of blue-collar workers is those who have at least graduated high school but don’t have a college degree.  Their wages increased by 5.5 percent in the Miami placebo and by 4.7 percent in the employment placebo, both at the 1 percent level, after the Boatlift (Table 2).  The effect of the Mariel Boatlift on the wages of blue-collar workers in the Card and low-skill placebos are statistically insignificant.  According to Borjas’ paper, this group of workers includes 29.1 percent of the Marielitos and 54.4 percent of native Miami workers.  For both tables, the percentages are large enough that we should see a negative wage impact but we do not.  The cross-skill complementarities likely cancel it out.

 

Table 1 

Less than College Workers

 

 

Miami

Card Placebo

Employment Placebo

Low-Skill Placebo

Diff in Diff

-.025***

0.009*

0.055***

0.004

 

(0.009)

(0.005)

(0.017)

(0.007)

          Table 2 

Workers with High School Degree and Less than College

 

Miami

Card Placebo

Employment Placebo

Low-Skill Placebo

Diff in Diff

0.055***

0.007

0.047***

0.003

 

(0.010)

(0.005)

(0.018)

(0.006)

The dependent variable is the natural log of weekly wages.  Each specification includes city and year fixed effects.  Standard errors clustered by the city. 

Significance levels denoted *** p < 0.01, ** p < 0.05, *p < 0.1.

 

This quick exercise is further evidence that the wages of blue-collar Americans, most of whom have at least a high school education, are not much affected by immigrant workers.  If the goal is to bolster working class wages, cutting legal immigration will not do it.    

Andrew Forrester provided substantial and important assistance for this blog post.      

The National Center for Health Statistics reported last month that a record 63,600 deaths occurred in 2016 due to overdoses. Digging deeper into that number shows over 20,000 of those deaths were due to the powerful drug fentanyl, more than 15,000 were caused by heroin, and roughly 14,500 were caused by prescription opioids, although it has been known for years that, in most cases of prescription opioid deaths, the victims had multiple other potentiating drugs onboard. The rest of the deaths were due to methamphetamines, cocaine, benzodiazepines, and methadone.

Drugs Involved in U.S. Overdose Deaths* - Among the more than 64,000 drug overdose deaths estimated in 2016, the sharpest increase occurred among deaths related to fentanyl and fentanyl analogs (synthetic opioids) with over 20,000 overdose deaths. Source: CDC WONDER

* Provisional counts for 2016 are based on data available for analysis as of 8/2017.

In its end-of-year report, the National Center for Health Statistics noted deaths from fentanyl increased at a steady annual rate of 18% per year from 1999-2013 and then shot up 88% from 2013-2016.

Fentanyl is not routinely prescribed in the outpatient setting, and when it is, it most commonly is in the form of a skin patch for slow, transdermal release, unsuitable for abuse or nonmedical use. The evidence shows it is being smuggled into the country, often by mail, in powdered form from factories in China and elsewhere, where it is used to fill counterfeit prescription opioid capsules or to lace heroin to enhance its potency.

In the case of heroin, NCHS found the death rate steady from 1999-2005, then it increased 10% per year from 2005-2010, 33% per year from 2010-2014, and has been increasing at a rate of 19% per year since 2014.

Meanwhile, after increasing 13% annually from 1999-2009, the death rate increase from prescription opioids has remained steady at 3% per year since 2009.

For nearly a decade, policymakers have bought into the misguided narrative that the opioid overdose crisis is a result of careless doctors and greedy pharmaceutical companies getting patients hooked on prescription opioids and condemning them to the nightmarish world of drug addiction. As a result, the Drug Enforcement Administration has ordered decreases in prescription opioid production. There was a 25 % reduction in 2017 and a 20% reduction is ordered for 2018. States have set up monitoring programs that put doctors and patients under surveillance leading to a dramatic reduction in the prescription of opioids since 2010. In fact, high-dose prescribing fell 41% since 2010. The popular opioid OxyContin was replaced with an abuse-deterrent formulation in 2010 (that could not be crushed for snorting or dissolved for injecting), and, since then, several other such formulations have come online.

This focus on the supply and prescription of opioids makes many patients needlessly suffer in pain. Some, in desperation, turn to the illicit market to get relief, where they find heroin and heroin-laced fentanyl often cheaper and easier to get. Some resort to suicide.

Policymakers mistakenly focus on doctors treating their patients in pain. By intruding on the patient-doctor relationship they impede physician judgment and increase patient suffering. But another unintended consequence is that, by reducing the amount of prescription opioids that can be diverted to the illicit market, they have driven nonmedical users to heroin and fentanyl, which are cheaper and easier to obtain on the street than prescription opioids, and much more dangerous.

Data from the Centers for Disease Control and Prevention show that from 2006 to 2010 the opioid prescription rate tracked closely with the opioid overdose rate, at roughly 1 overdose for every 13,000 prescriptions. Then, after 2010, when the prescription rate dropped and it became more difficult to divert opioids for nonmedical use, the overdose rate began to climb as nonmedical users switched over to heroin and fentanyl. There is a dramatic negative correlation between prescription rate to overdose rate of -0.99 since 2010.

The overdose rate is not a product of doctors and patients abusing prescription opioids. It is a product of nonmedical users accessing the illicit market.

The problem will not get better—it will probably only get worse—as long as we continue to call this an “opioid crisis.” The title is too nonspecific. This is a crisis caused by drug prohibition—an unintended consequence of nonmedical drug users accessing the black market in drugs. Policymakers should stop harassing doctors and their patients and shift the focus to reforming overall drug policy. A good place to start would be to implement harm reduction measures, such as safe syringe programs, making Medication Assisted Treatments like methadone and suboxone more readily available, and making the opioid antidote naloxone available over-the-counter, so it can be easier for opioid users to obtain. Even better would be a sober reassessment of America’s longest war, the “War on Drugs.”

Renaming the problem a “heroin and fentanyl crisis” might be a way to trigger a refocus.

In an op-ed published today on The Hill, trade policy analyst Colin Grabow shows that President Trump has not, in fact, raised a single tariff in his first year in office. Although Trump took the momentously disruptive steps of withdrawing the U.S. from the Trans-Pacific Partnership and has threatened to withdraw the U.S. from the North American Free Trade Agreement, “U.S. trade policy  … is largely in the same place it was when President Obama left office.” 

Have saner voices inside the White House prevailed, or is this just the calm before the storm? The answer should be apparent in the coming months, and possibly even weeks, as a series of trade-related deadlines will force the president to show his hand.

Grabow discusses the inflection points in 2018 that may give Trump an opportunity to reverse course and start imposing tariffs, including ongoing investigations into the national security implications of steel and aluminum imports; an investigation into alleged trade violations committed by China related to technology transfer, intellectual property and its innovation policies; and the U.S. International Trade Commission’s recommendations for tariffs on imported solar cell and washing machine. Finally, NAFTA renegotiations and the recent kickoff of renegotiations for the Korea-U.S. Free Trade Agreement may also shed light on Trump’s intentions for trade policy in 2018.

He concludes:

The trade story could very well still end in tears, with plenty of opportunities in the New Year for Trump to choose a protectionist path.

But a more optimistic scenario exists: Amid record stock market highs and an unemployment rate trending toward 4 percent, Trump could be swayed by arguments senior administration officials are reportedly making

Namely, that tariff increases would amount to throwing a monkey wrench into an economic machine that is nicely humming along. For the sake of the country, let’s hope they prevail. 

You can read the full op-ed (“Tariffs would throw a monkey wrench into humming economy”) here, and click here to see more of Colin Grabow’s writing, along with other scholars from Cato’s Herbert A. Stiefel Center for Trade Policy Studies. 

International travelers, citizens and foreigners alike, enjoy reduced privacy protections at ports of entry. Thanks to the “border exception” to the Fourth Amendment, Customs and Border Protection (CBP) officers do not need reasonable suspicion or probable cause to search electronic devices at airports. This regrettable authority made headlines last year after CBP officers searched phones belonging to innocent American citizens. CBP has updated its electronic device search policy via a new directive. While the directive does include a welcome clarification, it states that CBP can search anyone’s electronic devices without probable cause or reasonable suspicion.

The CBP’s new directive begins by outlining the unfortunate state of the Fourth Amendment at the border and ports of entry. The Fourth Amendment protects “persons, houses, papers, and effects” from “unreasonable searches and seizures.”

Yet, as Justice Rehnquist wrote in his majority opinion in United States v. Ramsey (1977):

[S]earches made at the border, pursuant to the longstanding right of the sovereign to protect itself by stopping and examining persons and property crossing into this country, are reasonable simply by virtue of the fact that they occur at the border.

In 1985, Rehnquist reiterated this point, writing in his United States v. Montoya de Hernandez (1985) majority opinion:

Routine searches of the persons and effects of entrants are not subject to any requirement of reasonable suspicion, probable cause, or warrant.

CBP conducted numerous warrantless searches of electronic devices last year. Perhaps most notable was the January 2017 case involving Sidd Bikkannavar, an American citizen, member of the CBP Global Entry program, and NASA Jet Propulsion Laboratory engineer. After arriving from Chile (not exactly a hotbed of international terrorism), a CBP officer at Houston’s George Bush Intercontinental Airport asked Bikkannavar to unlock his smartphone, which happened to be NASA property. Despite Bikkannavar pointing out that the phone contained sensitive information, the officer persisted, and Bikkannavar eventually gave up the phone’s passcode.

A month after CBP needlessly interrupted Bikkannavar’s travel, agency officials reportedly stopped another American citizen, Haisam Elsharkawi, from leaving Los Angeles on his way to Saudi Arabia. According to Elsharkawi, CBP officers put him in handcuffs and pressured him into unlocking his phone. The officers released Elsharkawi without charge hours after his plane had left.

Searches of electronic devices at the border are on the rise. According to CBP’s own figures, the number of international travelers processed with electronic device searches in the 2017 fiscal year increased almost 60 percent compared to the 2016 fiscal year. While the number of travelers subjected to these searches represents a small fraction of total international travelers, it’s clear that these warrantless searches have targeted innocent Americans and are unlikely to stop. At a time when the smartphone is an increasingly integral part of modern life, containing most of our intimate and private details, this authority is of acute concern.

The directive distinguishes between “Basic” searches and “Advanced” searches. During a Basic Search, officers may—with or without suspicion—”review and analyze” information found on the electronic device. If CBP officers conduct an Advanced Search they may connect the electronic device to equipment that can review, analyze, and copy its contents. The new CBP directive states that the reasonable suspicion standard applies to “Advanced” searches.

The directive makes clear that CBP officers still have the authority to seek technical assistance for any device if it cannot be accessed thanks to encryption or passcodes.

The directive also clarifies what information CBP officers can access. Last year, Senator Ron Wyden (D-OR) wrote to then Department of Homeland Security Secretary John Kelly, asking a range of questions about CBP’s search of electronic devices. CBP Acting Commissioner Kevin McAleenan responded.

According to McAleenan, CBP officers conducting an electronic device search only examine information that is “physically resident” on the device and do not access “information found only on remote servers.”

What information is found “only on remote servers” is not exactly clear cut, as Ars Technica’s Cyrus Farivar explained:

After all, many modern apps—notably social media, e-mail, or messaging apps—keep data on remote servers, but a smartphone often also keeps a local copy of the message or relevant data.

Late last year, McAleenan answered questions presented by the United States Senate Committee on Finance. In answering these questions he clarified the steps CBP officers take to ensure remote data is not accessed (emphasis mine):

Border searches of electronic devices extend to searches of the information residing on the physical device when it is presented for inspection or during its detention by CBP for aborder inspection. To ensure that data residing only in the cloud is not accessed, officers are instructed to ensure that network connectivity is disabled to limit access to remote systems.

The new CBP directive includes this policy:

To avoid retrieving or accessing information stored remotely and not otherwise present on the device, Officers will either request that the traveler disable connectivity to any network (e.g. by placing the device in airplane mode), or, where warranted by national security, law, enforcement, officer safety, or other operational considerations, Officers will themselves disable network connectivity.

This is a welcome clarification, but even with airplane mode enabled revealing details are still visible on a phone. Facebook group membership, emails, contact details, and photos are some of the information that’s available on a phone in airplane mode. Even if all of this information was hidden from CBP officers conducting a “Basic” search, the apps someone has downloaded can be revealing. You don’t have to be Sherlock Holmes to infer details about someone who has Coinbase, TinderDiabetes and Blood Glucose Tracker, and Muslim Pro apps on their phone.

CBP officers should have to secure a warrant before scouring our most intimate communications and details. A few years ago, the Supreme Court held in Riley v. California (2014) that police cannot search the digital information found on phones belonging to arrested persons without a warrant. In a brief for one of the cases considered in Riley v. California, the United States argued that searching information on phones is “materially indistinguishable” from searching wallets and purses. In his Riley v. California majority opinion Chief Justice Roberts correctly characterized this argument as “like saying a ride on horseback is materially indistinguishable from a flight to the moon.”

The modern smartphone is an essential feature of modern life. Almost every American adult owns a cell phone, with 77 percent owning a smartphone. Americans use these devices to contact family and colleagues, organize their finances, find love, publish their thoughts, find transport, play games, track their eating habits, listen to music, and much more. Allowing CBP officers warrantless access to devices that house this information risks needlessly violating Americans’ privacy.

Lawmakers in the House and Senate have introduced legislation requiring CBP to have warrants before searching phones. Until such legislation is passed or the Supreme Court revises the border exception to the Fourth Amendment, privacy at ports of entry will be dependant on CBP’s policies. Sadly, the new CBP directive shows that we should expect continued privacy violations at ports of entry for the foreseeable future.

The city of Seattle has now put its stiff new 1.75 cents per ounce tax on sugary beverages into effect, and Costco managers in the tech city, much to their credit, have not hesitated to post signs informing shoppers of its impact. According to a reporter’s photo, the sign atop a Gatorade Frost Variety Pack lists the regular Costco price of $15.99 along with $10.34 in newly added Seattle tax for a total of $26.33. Helpfully, an adjacent sign advises shoppers that the same item “is also available at our Tukwila and Shoreline locations without City of Seattle Sweetened Beverage Tax.”

Following KIRO7 News coverage of the story, Scott Drenkard of the Tax Foundation wrote a funny Twitter thread on the positions taken by the various advocates:

  • “First they interview people at the Costco who are rightfully shocked at how high prices on soda and sports drinks are now (they are almost doubled).”
  • “Then they interview a public health advocate who says ‘that’s right! We want these prices to change people’s behavior and slow sales!’”
  • “Then they talk to the consumer, ‘think you’ll change your behavior, maybe even shop somewhere else?’ And she’s like, ‘ya the Tukwila store is close enough.’ Then they ask a city council member if this will hurt local biz, who says ‘there is no data’ suggesting that.”
  • “Then the SAME public health advocate says that people won’t respond to price increases, shopping elsewhere because it isn’t ‘worth their while.’”
  • “You can’t have it both ways people! The tax is either big enough to elicit behavior change, which would slow sales and hurt local biz and potentially reduce calories, or it isn’t. Get your stories straight!”

In 2016 I wrote about Philadelphia’s soda tax that “while all taxes are evaded to some extent, excise taxes are especially subject to evasion based on local geography”, and followed up on the Philly measure’s possible openings for unlawful evasion and eventual public corruption. Seattle authorities intend to use the hoped-for $15 million revenue stream to fund various causes and organizations including an effort to bring fresh fruits and vegetables to urban neighborhoods, even though the once-voguish “food deserts” theory blaming dietary choices on the retail environment has suffered one debunking after another in recent years.

It is not surprising that so many Americans believe President Trump has spent the past year erecting tariff walls around the United States. From Trump’s bombastic, anti-trade rhetoric to media’s and social media’s conflation of that rhetoric with real protectionist actions, hardly a day has passed without publication of an analysis or editorial about how especially protectionist this administration has been. The facts are quite different.

Despite promising 45 percent duties on imports from China, 35 percent duties on re-imports from Mexico, tighter restrictions to limit access to U.S. government procurement markets to U.S. firms and workers, requirements that oil pipeline builders use only American-made steel, and more, the Trump administration has not undertaken any of those actions. There has been no discretionary protectionism imposed by President Trump. None. Not yet anyway.

Certainly, President Trump’s instincts are protectionist. He’s already inflicted incalculable damage by withdrawing the United States from the Trans-Pacific Partnership, playing loose with his aggrandized sense of U.S. indispensability to the trading system, and deliberately throwing sand in the gears of the World Trade Organization’s Dispute Settlement Body. His view of trade as a zero-sum contest played between national monoliths (i.e., Team America vs. Team China), where winning means achieving a trade surplus by way of policies that maximize exports and minimize imports, certainly provides fertile ground for protectionism to take root and flourish. But when it comes to actually imposing tariffs or other trade restrictions, so far Trump has been remarkably circumspect. Why?

First of all, the president’s trade policy actions are constrained legally, politically, and practically. The U.S. Constitution gives Congress, not the president, authority to regulate foreign trade. However, at various points and for various reasons over the past century, Congress delegated—through legislation that became statute—some of its authority to the president. For example, the president can impose tariffs without need of congressional action or consent under several different laws.

Since Trump took office, his administration has initiated investigations under five different statutes: Section 201 of the Trade Act of 1974 (i.e., the “Safeguards” Law); Section 301 of the Trade Act of 1974; Section 232 of the Trade Expansion Act of 1962; the Antidumping Law; and the Countervailing Duty Law. Under each of those laws, certain conditions must be met before restrictions can be imposed. Determining whether those conditions are met normally involves an investigation subject to formal procedures and statutory or regulatory timetables. And, if and once imposed, those tariffs are generally time-limited and usually subject to judicial review. So, while the president has conditional authority to raise tariffs, he does not have carte blanche, which seems to be a popular misconception.

Second, tariffs may benefit the protected industry temporarily, but they usually impose financial burdens on domestic producers in downstream industries. There are inevitably trade-offs to consider, with economic and political implications. Thus, while the president can puff out his chest and direct the public’s attention to the tariffs he imposed to help steel producers or solar cell manufacturers, for example, those actions exact direct and indirect costs on companies and workers in steel-using industries and the solar panel producing and installing industries, respectively. In many of the pending trade cases, workers in the downstream industries that will bear the brunt make up Trump’s base of political support.

Third, while national governments are permitted to resort to temporary protectionist measures under certain circumstances without violating the rules of the global trading system, in other circumstances trade protection measures can lead to authorized retaliation against U.S. exporting interests. Trump may like to talk tough, but will he really want to impose measures that could hurt the economy?

Certainly, 2018 will offer more opportunities than previous years for protectionist measures. But so far, despite the media frenzy, Trump has been restrained.

In two new posts at the Health Affairs blog, I lift the fog of economic jargon to show ObamaCare’s preexisting-conditions provisions are reducing quality, are wildly unpopular with voters, and are indeed the law’s greatest political vulnerability:

Public opinion surveys show voters support ObamaCare’s preexisting conditions provisions by a two-to-one margin. If those provisions have the effect of reducing quality, however, that initial support flips to two-to-one opposition. The biggest shift is among Democrats, who swing from 82 percent in favor to 55 percent opposed. Voters turn against those provisions whether the erosion in quality comes in the form of less access to medical tests and treatments, longer waits for care, more surprise medical bills, or less access to top-rated treatment centers…

In “Is ObamaCare Harming Quality? (Part 1),” I explain that new research shows that ObamaCare is not working how it is supposed to work in theory: the law’s preexisting conditions provisions create perverse incentives for insurers to reduce the quality of coverage; those provisions are reducing the quality of coverage relative to employer plans; and the erosion in quality is likely to accelerate in the future.

In “How To Ensure Quality Health Coverage (Part 2),” I explain why regulators cannot fix this problem, and why providing sick patients secure access to quality health care requires allowing consumers to purchase health plans not subject to ObamaCare’s preexisting conditions provisions.

Part 2 also explains how expanding the definition of “short-term” health insurance to include policies that include guaranteed-renewability riders, a change the Trump administration can make on its own via regulation, would free consumers from ObamaCare and pressure Democrats to come to the negotiating table.

Tonight is the college football championship, an all-SEC affair between the Bulldogs of the University of Georgia and the Alabama Crimson Tide. Going into it, however, even these programs have something to lament: the end of the 80 percent federal tax deduction season ticket holders would get for providing mandatory “gifts” to the schools’ athletics departments. It went away with the recently enacted tax reform package.

Yes, the tax code treated it as charitable giving when one made a required donation, on top of actual ticket costs, to get into college football games. That included the $4,000 per-seat, per-year, needed to obtain Ivory Club seating at the University of Alabama, and the $2,250 required for Champions Club views at Georgia. Presumably the justification was that market failure—season ticket buyers thinking only of the private good of attending games—would have undervalued Alabama head coach Nick Saban’s, or Georgia coach Kirby Smart’s, contribution to the public good, and absent Saban’s roughly $11 million annual compensation, and Smart $3.8 million, the public would have been hurt by these guys (and lots of assistant coaches) doing something other than coaching football. (To be fair, both figures include such provisions as payments for apparel use and media appearances.) Meanwhile, outside the Power Five, the National Champion* Knights of the University of Central Florida were demanding a $1,500 per-seat donation for Tower Club seats, but nonetheless lost head coach Scott Frost to Nebraska. Frost was only earning $2 million at UCF, which was presumably a failure to subsidize correctly.

Of course, big-time college football and basketball are not about the public good. Yes, schools often argue that their football and basketball programs make big bucks that support other sports, but not only is there little justification for sports at all as a public good, many of these programs lose money as they compete in the uber-expensive college sports arms race. And there is no reason that season ticket holders should get tax deductions for attending games they thoroughly enjoy, or that colleges that do make big football and hoops bucks can’t use those profits to subsidize other sports without tax incentives.

Much more important, these programs are just the shiniest parts of widely gold-plated American higher education, a system that costs taxpayers hundreds-of-billions of dollars a year, while producing rampant price inflation, cruise ship-like facilities, greatly devalued credentials, and massive non-completion. So tonight, let’s all cheer the arrival of a little rationality in the wacky world of college sports, but tomorrow focus on all the rest of the far larger, crazily counterproductive subsidies going to America’s Ivory Tower.

* Self-declared for having had an undefeated season and beating a team that beat Alabama. And the college football playoff system is unfair to non-Power Five schools. And a whole lot of other things no doubt all intimately connected to serving the public good, as higher education purely exists to do.

Donald Trump tried to prevent the publication of Michael Wolff’s Fire and Fury: Inside the Trump White House. The President has no case. The Constitution properly makes prior restraint of the press or of speech very difficult. Speech can also be punished after it is uttered, thereby preventing more speech. But, as Mr. Trump has noted, the libel laws protect most criticism of public figures including, of course, the President.

As the Wall Street Journal points out, Mr. Trump’s main rival in the 2016 election, Hillary Clinton, supported amending the Constitution to overturn the Citizens United decision. The 2016 election thus offered the country two potential presidents, both hostile to free speech. That’s a sign of political decay, but perhaps also a potential lesson to be relearned.

Critics of President Trump should value the First Amendment. Those who would have been critics of President Hillary Clinton (including current supporters of the President) should do likewise. Mr. Trump’s supporters should also keep in mind that one day they too will want to criticize a public official without being punished for doing so.

Holding political power seems to induce a loss of memory. When they have power, everyone forgets how valuable the First Amendment is. When they don’t have power, everyone takes shelter under its broad protections. Let’s resolve early in this New Year to always remember that freedom of speech benefits everyone, sooner or later. 

This small news bite from the Washington Post yesterday caught my eye:

Moving costs: Booz Allen Hamilton, the McLean, Va., consulting and government contracting giant, is receiving a $750,000 loan from a Maryland economic development fund and a grant of $250,000 from Montgomery County to relocate 750 Maryland workers from offices in Rockville to a new 65,000-square-foot workplace in Bethesda by the end of 2019.

This strikes me as absurd.

The economy is growing strongly, and yet one of the highest-income states is dishing out “economic development” subsidies to a big, profitable company in one of the nation’s wealthiest counties. The move is entirely in-county, so officials can’t even claim they are attracting new jobs to the area.

Booz Allen Hamilton lives high on the hog from government contracts, receiving about $4 billion a year. It is a true Beltway Bandit, ranking as one of the largest federal contractors, and gaining almost all of its growing revenues from governments. One of the great things about the government as a client is that you can make tens of millions of dollars even when projects fail.

Why would Maryland and Montgomery County want to fatten Booz Allen’s bottom line with subsidies to cover its routine expenses? Are they going to pay moving expenses for every local business, or is the idea to give this Beltway Behemoth an advantage over smaller firms with less lobbying power?  

Shame on Maryland officials for wasting taxpayer money, and shame on Booz Allen for taking it. 

In a December 28, 2017 column for the Washington Post entitled, “Opioid Abuse in the US Is So Bad It’s Lowering Life Expectancy. Why Hasn’t the Epidemic Hit Other Countries?,” Amanda Erickson succumbs to the false narrative that misdiagnoses the opioid overdose crisis as being primarily a manifestation of doctors over-prescribing opioids, goaded on by greedy, unethical pharmaceutical companies. The National Survey on Drug Use and Health revealed less than 25% of people using opioids for non-medical reasons get them through a prescription. A study reported in the Journal of the American Medical Association found just 13% of overdose victims had chronic pain conditions. Multiple Cochrane analyses show a true addiction (not just dependency) rate of roughly 1% in chronic pain patients on long-term opioids. Yet despite the 41% reduction in the prescription of high-dose opioids since 2010, the overdose rate continues to climb, and for the past few years heroin and fentanyl have been the major causes of death, as death from prescription opioids has stabilized or receded.

In actual fact, the rise in drug abuse and overdose is multifactorial, with socioeconomic and sociocultural components. This helps explain the Washington University study reporting 33% of heroin addicts entering rehab in 2015 started with heroin, as opposed to 8.7% in 2005.

It also helps explain why, contrary to Ms. Erickson’s reporting, opioid overdoses have reached crisis levels in Europe, despite a European medical culture that historically has been stingy with pain medicines, and has encouraged stoicism from patients. And the overdose crisis in Canada, ranked second in the world for per capita opioid use, has alarmed public health authorities there. But at least the Europeans and Canadians have the good sense to emphasize harm reduction measures to address the crisis, such as safe injection rooms and medication-assisted treatment, rather than focusing on inhibiting doctors from helping their patients in pain.

 

 

President Trump began 2018 by tweeting about Pakistan. He wrote that over the last 15 years, the United States has “foolishly” given $33 billion in aid to Pakistan for “nothing but lies & deceit” in return. He ended his tweet by saying, “They give safe haven to the terrorists we hunt in Afghanistan, with little help. No more!” The tweet was followed by UN Ambassador Nikki Haley’s announcement that the United States would be withholding $255 million in military assistance to Pakistan because of the “double game” they have been playing for years by harboring terrorists that attack U.S. troops in Afghanistan. 

Pakistan’s reaction was predictable: there was official outrage, with the Pakistani government summoning U.S. ambassador David Hale to the foreign office to explain the tweet. Foreign Minister Khawaja M. Asif tweeted that the world would soon find out the “difference between fact and fiction,” while the Ministry of Defense tweeted that Pakistan has been an ally to the United States, giving free access to “land & air communication, military bases & intel cooperation that decimated Al-Qaeda over last 16yrs.” Riots broke out in Karachi, with protestors shouting anti-American slogans and burning the U.S. flag. Finally, this morning, Foreign Minister Asif stated that Pakistan no longer sees the U.S. as an ally.

Is Pakistan overreacting? What impact will all of this have on the war in Afghanistan and future U.S. troop withdrawal?  

Despite the ostentatious barbs from both sides, it isn’t all that clear yet what kind of assistance, and how much of it, is actually being withheld. Pakistan has received aid through several programs, such as the coalition support fund (CSF), a reimbursement program in which the United States pays Pakistan for using its military bases, and foreign military financing (FMF), a loan or grant that allows countries to purchase U.S. defense equipment, services, and training. The Trump administration is currently withholding the FMF, not the CSF. Considering how lucrative the CSF has been for Pakistan, Islamabad’s response to Trump’s tweets is an overreaction, which also explains why Pakistan’s National Security Committee has decided not to take any retaliatory actions against the United States.

Like sanctions, cutting foreign aid rarely changes state behavior. With respect to Pakistan, in 2013 the Obama administration did cut the Pakistan Counterinsurgency Fund, which was established in 2009 to provide training and equipment to Pakistan’s military and paramilitary force for domestic counterinsurgency operations in the Federally Administered Tribal Areas. Yet, here we are again with a new administration, a new year, and the same discussion: the United States wants Pakistan to stop aiding and abetting the Haqqani Network and Afghan Taliban.

While U.S. military assistance to Pakistan needs to be evaluated, cutting the CSF outright will hurt U.S. troops in Afghanistan more than changing Pakistan’s militant sponsorship for one main reason: the most efficient supply routes to Afghanistan are through Pakistan. If the CSF is eliminated, Pakistan could simply shut down the routes as it has done in 2010, 2011, 2012, and 2014. In fact, Pakistan’s parliament discussed shutting down the supply routes again this past summer. Professor Christine Fair’s suggestion of using Iran’s Chabahar Port as an alternative route is interesting, but as she points out, highly unlikely given U.S.–Iran relations. Basically, the U.S. is stuck with Pakistan, especially so long as U.S. troops remain in Afghanistan.  

Without Pakistan, the United States will have an even harder time achieving a feasible and practical political resolution in Afghanistan, which will involve both Pakistan and the Afghan Taliban. The CSF, therefore, still provides the United States with some leverage with the Pakistanis despite its problems.

I remain optimistic about diplomacy, and think it can work. Both the United States and Pakistan want the Afghanistan war to end and U.S. troops to withdraw. But today, that’s about all they can agree on. They have very different visions of what a post-conflict Afghani government will look like. Pakistan has always thought that the Taliban will be an active player and that they can’t be defeated so they want to make sure that when the Americans leave (regardless of when), they have a strategic ally in Kabul. The United States doesn’t want to reconcile/negotiate/talk (etc.) with the Taliban, which is a mistake—and something the U.S. is beginning to realize. Basically, for a successful U.S. withdrawal, it needs to be done hand-in-hand with diplomacy.

Therefore, if the president wants Pakistan to change its behavior, he has to learn about the kinds of military assistance Pakistan has been receiving over the years, and then use diplomacy to meet U.S. interests in Afghanistan. But first, he needs to stop tweeting. 

Did we experience heavenly peace in public schools this December? No, but the month tends to be more peaceful than most. With schools typically out for about the latter third of the month, there’s just less time to fight. We also, though, observed something that was out-of-the-ordinary peaceful for the month: no conflicts over Christmas in schools hit our radar. The last time that happened was in 2010. Every other year going back to 2005 we catalogued at least one, and typically three or four, battles over Christmas displays, singing religious carols in concerts, or other Christmas-related flaps. (The Map, by the way, lists years going back to 2001, but we only started collecting in 2005, and any years before that are there because conflicts we found in 2005 or later originated in those years.) Is this absence of acrimony because President Trump ended the war on Christmas? It’s just as likely that he sucked up so many headlines that less reporting was directed at Yuletide tiffs, but it could also be there just weren’t any significant Christmas battles in public schools this year.

Of course, there were some battles, including a couple of trends:

  • Dress Codes: This was also a trend in November, and in December it included an Iowa district dress coding a cancer patient who wore a knit beanie after a round of chemotherapy, and a girl in Kentucky who was sent home for an exposed collarbone.
  • Teacher Language: In New York City, a teacher who is also a comedian, and whose act is about her experiences as an educator, came under fire because part of her show involved her quoting an unidentified child saying, “Yo, n—a. What’s poppin’?” Meanwhile, a Colorado teacher was placed on administrative leave for writing on the classroom whiteboard, “I want to kill children but I am a loving Christian man who never would hurt a flee (sic) so please sit down and read.” Some parents believed it was a joke and supported the teacher.

Perhaps the biggest headline-grabbing incident of the month was the firing of a teacher in Utah for, he says accidentally, allowing grade school children to see some famous nude paintings, setting off a dispute over where art ends and indecency—or age inappropriateness—begins. This does not constitute a trend—there are no similar fights over nude paintings in the Battle Map database—which is perhaps a bit of a surprise. It could be, like teaching rigorous evolution, that most art teachers skip nudes to avoid controversy. Or perhaps most art taught in schools simply never reaches that level of sophistication. Or maybe people just aren’t that uncomfortable with nude paintings.

No matter what the reason for the dearth of art vs. decency battles, our newest (unscientific) poll on the Battle Map Facebook page asks whether schools should show nude paintings or sculptures in class. (By the way, you’ll love Venus’s shirt.) Vote now! Earlier December polls found 79 percent of respondents opposing corporal punishment in schools and 21 percent supporting it; 65 percent saying public schools should “formally recognize Christmas with displays, songs, or parties” and 35 percent opposing; and 74 percent believing that 2018 will be even more contentious in public schools than was 2017.

Will that 74 percent be correct? Stay tuned!

Today, Attorney General Jeff Sessions announced that the Department of Justice rescinded the “Cole Memo,” and other internal enforcement guidelines from the Obama Administration that de-prioritized enforcement of federal marijuana prohibition against individuals and businesses complying with state laws regarding recreational marijuana. This move endangers state-legal businesses and violates the principle of federalism that has been central to the Republican Party for decades.

This was made possible, in part, by the failure of the judiciary to rein in the power of an overzealous federal government. The Supreme Court has twice approved of this type of overreach. In Wickard v. Filburn (1942) and Gonzales v. Raich (2005), the Court ruled that individuals growing crops exclusively for personal consumption—wheat and marijuana, respectively—could be regulated by the interstate commerce clause of the U.S. Constitution despite the crops never entering a market of any kind, let alone across state lines.

While the average marijuana consumer is not going to be targeted or arrested by the federal government, business owners directly and indirectly involved in state-legal recreational marijuana distribution may see their freedoms and livelihoods threatened by this action. Put simply, the DOJ is using the criminal law to trample on state prerogatives and individual rights.

My colleague Jeffrey Miron has also commented on this unfortunate development. For more on how Republicans could more responsibly handle federal marijuana policy, see here and here.

From President Donald Trump to the rise of new nationalist political parties in Europe to a general resurgence of the term in recent years, nationalism seems to be on the march.  Nationalism is a political movement that has made major inroads in recent years while preaching a message of immigration restrictionism, trade protectionism, and a stronger government devoted to defending citizens from (mostly) imaginary harms.  But besides some policy positions and a style of governance, there is not a good working definition of nationalism widely used in popular discourse and there is almost no attempt to distinguish it from patriotism.  My base assumption was that nationalism must be something more than crude jingoistic tribalism, but few ventured beyond that.  Those reasons prompted me to read several thousand pages on the topic – and I learned quite a bit.  Below are some lessons I learned and a useful taxonomy of different types of nationalism.

The first thing I learned is that most research on nationalism is terrible.  Most writers on this subject poorly define their terms or define them so broadly that they are meaningless.  I wish I could go back in time and tell an earlier version of myself to skip lots of papers and books.  Even worse, many scholars of nationalism are either critics or supporters of the concept, which forces them to make absurd statements like claiming that the National Socialist German Workers Party wasn’t a nationalist political party.  This makes it difficult for lay outsiders like myself to figure out what nationalism is.

The second thing I learned is that there is no simple division between patriotism and nationalism, but George Orwell’s division probably comes closest when he wrote:

Nationalism is not to be confused with patriotism. Both words are normally used in so vague a way that any definition is liable to be challenged, but one must draw a distinction between them, since two different and even opposing ideas are involved. By ‘patriotism’ I mean devotion to a particular place and a particular way of life, which one believes to be the best in the world but has no wish to force on other people. Patriotism is of its nature defensive, both militarily and culturally. Nationalism, on the other hand, is inseparable from the desire for    power. The abiding purpose of every nationalist is to secure more power and more prestige, not for himself but for the nation or other unit in which he has chosen to sink his own individuality. 

In other words, patriotism is love of country while nationalism is love of country combined with dislike of other countries, their peoples, or their cultures.  Nationalism also extends to dislike of fellow citizens who are different, which is why nationalists frequently support nation-building campaigns of government schooling to assimilate citizens to a state-determined norm, national languages, and other means of creating ethnic, religious, or other forms of uniformity.    

The third thing I learned is that there are at least five types of nationalism.  Obviously, the nationalism of Edmund Burke or George Washington is different from the blood-worshipping nationalism of Adolf Hitler, but only the late American historian Carlton J.H. Hayes divides these types of nationalism into a useful five-part taxonomy:

  1. Humanitarian Nationalism:  An outgrowth of Enlightenment philosophy influenced by Henry Bolingbroke, Jean-Jacque Rousseau, and Johann Gottfried Herder, who all emphasized local self-rule through democratic forms of government based on the peculiar characteristics of each nation (body of people), as opposed to the large multi-ethnic empires that then dominated Europe.
  2. Jacobin Nationalism:  A state ideology adopted by the revolutionary French government to solidify its hold on power.  Its four characteristics were suspicion and intolerance of internal dissent, heavy reliance on force and militarism to attain government goals,  fanatical support for the state, and a missionary zeal to spread their nation. 
  3. Traditional Nationalism:  A brief nationalist reaction to the Jacobins in favor of the status quo ante bellum.  This is the most conservative type of nationalism.  Edmund Burke, Friedrich von Schlegel, and Klemens von Metternich were the most well-known supporters of this brief style of nationalism.  This form of nationalism did not survive long, as the cultural changes begun by the Industrial Revolution undermined it. 
  4. Liberal Nationalism:  This style of nationalism is midway between the Jacobin and Traditional varieties.  It emphasizes the absolute sovereignty of the national state but, in seeming contradiction, also seeks to limit the power of the government to interfere with individual liberty by proclaiming the goal of the state to be to protect individual liberty and provide public goods.  If you have ever taken an economics class, the ideal of liberal nationalism comes closest to what economists think of as the proper role of the state.  If you also see the tensions between absolute sovereignty and the protection of individual liberties, then the next phase of nationalism should be unsurprising.    
  5. Integral Nationalism:  This stage of nationalism centers the nation and its state in the life of all citizens.  Instead of a state being committed to supplying public goods to citizens, this form of nationalism emphasizes individual sacrifice for the benefit of the nation and its government.  It also frequently embraces blood-worship (the Latin root of nationalism is natio, meaning tribe, ethnic group, or division by birth) and seeks to expand the state to include all co-ethnics living in other territories.  Hayes summarized this form of nationalism as intensely “anti-individualistic and anti-democratic”, where all other loyalties are absorbed into loyalty to the national state and a right-makes-right ideology.   

The third thing I learned is that imperialism is the highest stage of nationalism (not capitalism as Lenin thought), and is inseparable from Jacobin Nationalism, Integral Nationalism, Traditional Nationalism, and probably from the other varieties as well.  Nationalists seek to expand their nations, and imperialism was one way to accomplish that goal.  Many of the liberal nationalists of the 19th century expanded their colonial empires, while the integral nationalists went even further.

The fourth thing I learned is how linked the French Revolution is to the rise of nationalism.  Most writers, especially conservatives, write off the French Revolution as a mad left-wing Jacobin craze that swept away institutions and traditions in favor of worshipping reason.  Those things were part of the French Revolution and its chaotic aftermath, but it was also a deeply nationalistic revolution and movement, honed by the Ancien Regime’s creation of a “cult of the nation” in an attempt to lower the cost of military conscription in the 17th and 18th centuries.  It is entertaining to see modern conservatives criticize the French Revolution on one hand while embracing an eerily similar form of Jacobin Nationalism on the other in their recent flirtations with populism. 

The fifth thing I learned is that nationalism is the second deadliest political ideology of the 20th century after communism.  The late political scientist RJ Rummel estimated the number of people killed by different governments over time.  Communist governments killed about 150 million people in his estimation.  Nationalists killed about 92 million.  Those 92 million include those killed by the Chinese Nationalists, Japanese Nationalists, Turkish Nationalists, and by the European Nationalists in the colonial era.  I excluded slaughters committed by pre-communist Russians, Mexicans, and Pakistanis, as they were less outwardly nationalistic than the other regimes.  American conservatives and libertarians frequently, loudly, and rightly criticize Communists for their ideology’s legacy of slaughter.  It’s time we all start criticizing nationalists for their ideology’s not-as-bad-but-still-evil legacy of brutality. 

Some nationalists, like Thierry Baudet, are seeking to redefine nationalism is nonsensical ways such as claiming that nationalists can’t be imperialists which, if true, would mean that the age of European nationalism could not have begun until about 1997, when decolonization was largely complete.  Regardless, the brutal humanitarian legacy of nationalist governments is something that serious nationalist thinkers must grapple with, rather than attempting to change definitions as communists do when they claim that the Soviet Union wasn’t really communist in an attempt to excuse its crimes.        

Nationalism is a simple and relativist political ideology that holds tremendous sway with millions of voters and many governments.  Nationalism’s adaptability to most local conditions allows it to thrive, especially when supported by a government intent on expanding its own power domestically and internationally.  It’s an attractive ideology for political leaders, as it provides a ready-made and widely-believed justification for increased political power in order to Make the Nation Great Again.       

From the AP:

Attorney General Jeff Sessions is going after legalized marijuana. Sessions is rescinding a policy that had let legalized marijuana flourish without federal intervention across the country.

That’s according to two people with direct knowledge of the decision. They were not allowed to publicly discuss it before an announcement expected Thursday and spoke on condition of anonymity.

The move will leave it to U.S. attorneys where pot is legal to decide whether to aggressively enforce federal marijuana law. The move likely will add to confusion about whether it’s OK to grow, buy or use marijuana in states where it’s legal, since long-standing federal law prohibits it.

The decision comes days after California began selling recreational marijuana.

Sessions compares marijuana to heroin and blames it for spikes in violence.

While not unexpected, this is terrible news.   

Marijuana liberalizations (decriminalization, medicalization, and legalization) have generated none of the negatives asserted by Sessions; in fact, the evidence shows minimal impact on use, health, traffic safety, education, or crime. 

The one consistent impact of legalization has been a modest bump in state tax revenue.  Libertarians might have mixed feelings about this, but it’s a far cry from Sessions’ baseless assertions.

At my Cato blog Overlawyered I’ve been pulling together month-by-month highlights of stories from last year. I’m currently up to May in the series. Here’s a small sampling of my favorites: 

Read the whole series here.

When does 32,200 – 60,000 = 109,000? That seemingly inaccurate equation represents the estimated number of Islamist-inspired terrorists when the war on terror began, how many the U.S. has killed since 2015, and the number that fight today. And it begs the question of just how can the terror ranks grow so fast when they’re being depleted so rapidly.

As early as 2003, then-Secretary of Defense Donald Rumsfeld hinted at the potential mathematical problem when he asked, “Are we capturing, killing, or deterring and dissuading more terrorists every day than the madrassas and the radical clerics are recruiting, training and deploying against us?” In his memo, Mr. Rumsfeld correctly identified that both sides have a vote: the U.S. can deplete the terror ranks, while the terror groups and their supporters can replenish them.

What Rumsfeld had not yet imagined, however, was the possibility that military force might inadvertently benefit terror recruitment efforts. Specifically, he ignored the blowback a marauding U.S. military might engender among the Muslim world.

In 2009, General Stanley McChrystal pushed the conversation in that direction. He pointed to the counterintuitive aspects of terror recruiting. Calling it “COIN Mathematics,” he laid out his argument. “Let us say that there are 10 [insurgents] in a certain area. Following a military operation, two are killed.  How many insurgents are left?  Traditional mathematics would say that eight would be left, but there may only be two, because six of the living eight may have said, ‘This business of insurgency is becoming dangerous so I am going to do something else.’ There are more likely to be as many as 20, because each one you killed has a brother, father, son and friends, who do not necessarily think that they were killed because they were doing something wrong. It does not matter – you killed them.  Suddenly, then, there may be 20, making the calculus of military operations very different.” 

Though McChrystal did not explicitly connect U.S. military operations to the perceptions of the broader Muslim community, Osama bin Laden and his number two, Ayman al-Zawahiri, certainly did. Five years before 9/11, bin Laden railed against the presence of the U.S. military in Saudi Arabia, home to the two holiest sites of Islam. On other occasions he spoke of the “American crusader forces” and “American occupiers.” His recurring theme of grievance centered on the U.S. waging war with Islam. Later, in 2005, al-Zawahiri put an exclamation point on it. In a letter to the leader of al Qaeda in Iraq, he reminded him, “The Muslim masses…do not rally except against an outside occupying enemy, especially if the enemy is firstly Jewish, and secondly American.”

Polling indicates that bin Laden and al-Zawahiri’s strategy has significant traction throughout Muslim-majority countries. When asked if “the United States’ interference in the region justifies armed operations against the United States everywhere,” more citizens agreed than disagreed among the 11 nations surveyed. That staggering trend even held true among the populations of supposed allies like Kuwait, Jordan and Iraq. Only in Egypt did more disagree than agree, though 39% still expressed support for attacks on Americans everywhere.

The implication is clear: it is time to stop focusing on killing terrorists. The seventeen-year American military campaign against terrorism, which began in Afghanistan but spread to Pakistan, Iraq, Yemen, Libya, Syria, Somalia, and most recently to Niger, has failed to stem the jihadist tide and has created more problems than it has solved. It has also cost the United States nearly 7,000 lives, more than 52,000 wounded, and an estimated 5 trillion dollars.

The idea that the United States should kill fewer terrorists may strike some as heresy and others as simply foolish. But as General McChrystal said, “I have found that the best answers and approaches may be counterintuitive; i.e. the opposite of what it seems like you ought to do is what ought to be done.” 

So if killing terrorists isn’t working, what will? We do not pretend to have all the answers. But the time-honored military practice of “murder boarding” may help provide inspiration. Despite its ghoulish name, “murder boards” have been successfully used throughout America’s military history. The process, as the name implies, is meant to be merciless. The privilege of military rank gets set aside, as does the pride of those assembled. The goal is to assess – as objectively as possible – through all that has happened to avoid repeating mistakes and to ensure mission success.

Sixteen years in, the President and Congress should finally “murder board” the war on terror and consider new strategies. Until then, counterinsurgency math will continue to frustrate the country’s lacking strategy.

Rumors abound that the Trump administration will soon pursue “significant” retaliatory actions in response to alleged Chinese intellectual property rights (IPR) violations, pursuant to “Section 301” of U.S. trade law. While Chinese government IPR policies are indeed cause for concern and while Section 301 does permit the U.S. executive branch to act unilaterally in response to certain foreign trade actions, there is a smart and a not-so-smart approach to these issues, with the latter likely to be unintended by Congress, inconsistent with U.S. trade agreement obligations, ineffective, harmful for U.S. consumers and exporters, and met with a legitimate rebuke from not only China but also other U.S. trading partners. The alternative, on the other hand, would present the President with a golden opportunity to pursue a smart U.S. trade policy response to a serious issue that could achieve the same objectives as the other option, but in a more strategic and effective manner.

If reports are to be believed, the President is unfortunately not inclined to take the smart approach.

Section 301 of the Trade Act of 1974 provides the U.S. executive branch with the authority to enforce U.S. rights under international trade agreements and to respond to certain foreign “unfair” practices not covered by trade agreements. Section 301 is the principal statutory mechanism under which the President may unilaterally (1) determine that a foreign country has violated existing trade agreements or has engaged in acts that are “unjustifiable” or “unreasonable” and burden U.S. commerce; and (2) take retaliatory action to enforce U.S. rights under a trade agreement or to obtain the elimination of the foreign country act in question. The United States Trade Representative (USTR) makes determinations, initiates and conducts investigations, and implements any retaliatory action under Section 301.

Prior to the advent of the World Trade Organization (WTO) dispute settlement system in 1995, USTR frequently invoked Section 301 to seek to eliminate “unfair” foreign government trade practices. The mechanism’s frequent use was in large part due to the fact that the WTO’s predecessor – the General Agreement on Tariffs and Trade (GATT) – provided for less coverage and less accountability than the new WTO system. With the WTO now online and with new WTO rules against Members’ unilateral retaliation (more on this below), Section 301 fell into disuse, with only a few actions since the late 1990s.

In August of last year, however, USTR initiated an investigation of China under Section 301, which sought “to determine whether acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation are unreasonable or discriminatory and burden or restrict U.S. commerce.” USTR’s notice of initiation lists four types of conduct that were to be examined in the investigation (emphasis mine):

  1. The Chinese government reportedly uses a variety of tools, including opaque and discretionary administrative approval processes, joint venture requirements, foreign equity limitations, procurements, and other mechanisms to regulate or intervene in U.S. companies’ operations in China, in order to require or pressure the transfer of technologies and intellectual property to Chinese companies;
  2. The Chinese government’s acts, policies and practices reportedly deprive U.S. companies of the ability to set market-based terms in licensing and other technology-related negotiations with Chinese companies and undermine U.S. companies’ control over their technology in China;
  3. The Chinese government reportedly directs and/or unfairly facilitates the systematic investment in, and/or acquisition of, U.S. companies and assets by Chinese companies to obtain cutting-edge technologies and intellectual property and generate large-scale technology transfer in strategic industries; and
  4. The investigation will consider whether the Chinese government is conducting or supporting unauthorized intrusions into U.S. commercial computer networks or cyber-enabled theft of intellectual property, trade secrets, or confidential business information.

USTR’s findings are officially due by August 2018, but various media outlets report that the Trump administration’s USTR has already completed the Section 301 investigation and is now considering whether to impose steep tariffs on a large swath of Chinese imports. Inside U.S. Trade[$] says that “the 301 remedies against China would include what some called ‘significant’ tariffs covering retaliatory action in the trillion-dollar range,” with USTR arriving “at such a high number by calculating the cumulative damage the U.S. believes China’s IP and tech transfer policies have caused over the past 10 years.” Private groups are expecting tariffs because, as one source put it, “[Trump] seems to like tariffs, not because they’ll do much good.” Axios generally agrees, noting that it’s likely Trump in January will “put tariffs on Chinese consumer electronics as retaliation against the country’s widespread theft of American companies’ intellectual property.”

A massive unilateral tariff response by the United States would be a big mistake rife with legal and economic problems. This is unfortunate because there is widespread, bipartisan agreement in the United States that Chinese IPR practices are a problem – a concern shared by many U.S. trading partners – and because, as noted below, there’s a far smarter approach to this problem under Section 301.

On the other hand, tariffs of the sort mentioned above raise at least four serious concerns:

  • First, they could defy the will of Congress, which has delegated through Section 301 its constitutional authority over U.S. trade policy but has expressly directed USTR to take unilateral action under Section 301 for only those foreign trade barriers that fall outside of the WTO Agreements. The binding Statement of Administrative Action (SAA) for the Uruguay Round Agreements Act, which implemented the WTO Agreements into U.S. law, states that USTR “will” (not “may” or “could”) invoke the WTO’s dispute settlement procedures for any “alleged violation of a Uruguay Round agreement or the impairment of U.S. benefits under such an agreement”; the SAA adds that “[n]either section 301 nor the DSU will require the Trade Representative to invoke DSU dispute settlement procedures if the Trade Representative does not consider that a matter involves a Uruguay Round agreement.”

    The SAA thus makes clear that USTR cannot act unilaterally against foreign trade policies falling under the WTO Agreements and instead must bring a WTO dispute (and, if necessary, retaliate after receiving the WTO’s agreement that a trade violation indeed exists). This is precisely what the Obama administration did in a 2010 Section 301 investigation of China’s green energy subsidies, which resulted in a WTO dispute (subsequently joined by the EU and Japan) and China’s voluntary elimination of the subsidies at issue. The SAA also list certain policies, such as anti-competitive practices and IPR actions that “fall outside the disciplines of [the applicable WTO] agreements,” for which unilateral Section 301 retaliation would remain viable.

    USTR retains the sole discretion as to whether an issue falls under the WTO Agreements – a potential excuse for the Trump administration’s unilateralism in the current case. However, USTR’s decision may be subject to challenge at in U.S. courts, and there is a very strong argument that most of the Chinese practices that USTR has targeted are actually covered by the WTO – either through the WTO Agreement on Trade Related Intellectual Property Rights (which the U.S. successfully invoked in a 2007 WTO dispute that, again, led to China’s voluntary elimination of the IPR measures found to be inconsistent with the Agreement) or through the “WTO-plus” commitment that China made as part of its accession to the WTO. In particular, China’s WTO Accession Protocol (Article 7.3) requires China to ensure that “the distribution of import licenses, quotas, tariff-rate quotas, or any other means of approval for importation, the right of importation or investment by national and sub-national authorities, is not conditioned on…performance requirements of any kind, such as local content, offsets, the transfer of technology, export performance or the conduct of research and development in China.” USTR could attempt to argue that China’s technology transfer or licensing requirements (i.e., allegations 1-3 above) don’t implicate this commitment, but the breadth of Article 7.3 (and USTR’s own characterization of the investigation as focusing on “technology transfer”) would make that a real stretch – one that Congress or U.S. companies might not be willing to accept.

  • Second, and relatedly, broad retaliatory tariffs under Section 301 would almost certainly be challenged by China at the WTO and could actually result in a WTO panel ruling that both the tariffs and the law itself were inconsistent with the United States’ WTO obligations. A core tenet of the WTO, carried out in the SAA, is that each Member will not act unilaterally in response to a foreign trade action that supposedly violates the WTO Agreements and instead will pursue formal dispute settlement through the WTO. In the late 1990s, the EU challenged Section 301 as inconsistent with this fundamental rule, but a WTO Dispute Settlement Panel found that, although unilateral action taken by the United States pursuant to Section 301would constitute a prima facie violation of the WTO Agreement, the SAA and representations by the U.S. government during the dispute removed the threat of a violation and thus the aforementioned inconsistency. If the Trump administration were to depart from the U.S. representations made to the Panel by unilaterally adjudicating Chinese IPR practices that fall under the WTO Agreements and by imposing remedies (i.e., tariffs) that also fall under the WTO Agreements, this finding of consistency may no longer be warranted.

    WTO rulings against the Trump administration’s Section 301 action could provide China with authorization to retaliate against American exports – but unlike the U.S., under the cover of international respectability and lawfulness (cover that might also obscure the Chinese government’s own, more “creative” unilateral retaliation against American companies). Even worse, other WTO Members would likely join China in condemning the United States’ chest-thumping unilateralism, perhaps even joining in on the underlying WTO dispute challenging the overall lawfulness of Section 301. So, in one fell swoop, the Trump administration could expose its exporters to WTO-consistent foreign retaliation, kill the remaining legitimacy of Section 301, and paint the United States as a global scofflaw (and China as the law-abiding victim). That’s a trifecta of bad, totally-avoidable outcomes.

  • Third, if history is any guide, these Section 301 tariffs probably won’t result in actual changes in Chinese Government policy. As I wrote last summer, past (pre-WTO) efforts to remove foreign-trade barriers unilaterally through Section 301, produced, at best, mixed results: U.S. negotiating objectives were “successfully” achieved less than half the time (35 cases, or a 48.6 percent “success ratio”), most often when the targeted country was dependent on the U.S. market. Even more damning, retaliation (tariffs, suspension of preferential access, etc.) under Section 301 achieved U.S. negotiating objectives only 17 percent of the time it was used.  These dismal results stand in stark contrast to the United States’ impressive (well over 80 percent) success rate at the WTO – and, as indicated by the examples above, China’s eventual compliance in response to U.S. WTO challenges. It beggars belief that, given China’s domestic political situation and the fact that the United States accounts for only 18.3 percent of all Chinese exports, Trump’s loud unilateralism under Section 301 would actually push China to change course on IPR.
  • Finally, it must be noted that U.S. tariffs “in the trillion-dollar range” could impose significant costs on American families and businesses. As I wrote for National Review in 2016:

    The consumer gains from trade disproportionally accrue to America’s poor and middle class. A 2015 study by Pablo Fajgelbaum and Amit Khandelwal finds that these groups, because they concentrate spending in more-traded sectors such as food and clothing, enjoy almost 90 percent of the consumer benefits of trade. These benefits are even more concentrated for Chinese imports, since poor and middle-class American consumers are more likely than their richer counterparts to shop at “big box” stores such as Target and Walmart that carry a lot of made-in-China goods.

    American businesses, of course, also benefit. More than half of all imports (including those from China) are inputs and capital goods consumed by other American manufacturers to make globally competitive products. Raising these firms’ costs via tariffs would mean fewer employees, if not outright bankruptcy — a particularly bad outcome given that downstream industries (e.g., steelmakers) typically employ far more workers than their upstream counterparts (e.g., steel users). Non-manufacturers benefit, too — whether they be retailers such as the Gap, transportation and logistics companies such as FedEx, or multinational firms such as Apple, which assembles iPhones in China but generates most of their final sale price through marketing, design, engineering, and even manufacturing done in the United States. (Chinese manufacturers themselves earn only a few dollars from an iPhone’s assembly.)

If Trump does indeed slap high tariffs on a large swath of consumer electronics from China, that means pain for lower-income Americans (right before the Super Bowl and peak HDTV season!), U.S. companies involved in the targeted products’ supply chain, and struggling U.S. retailers. Ouch.

In sum, broad retaliatory tariffs under Section 301 in this case would likely impose high political, economic and legal costs, while likely failing to achieve needed policy changes in China. These problems do not mean, however, that the Trump administration is powerless to act here. Instead, a smart course of action could entail both unilateral and multilateral responses that would be more consistent with U.S. law and WTO rules, more likely to achieve Chinese policy changes, and less likely harm U.S. economic and geopolitical interests. In particular: (1) a broad WTO dispute following the procedures set forth in Section 301 and the SAA and joined by other WTO Members with similar complaints against Chinese IPR practices; and (2) a targeted unilateral response for those Chinese government acts (e.g., allegation 4 above on state-sponsored hacking) that clearly fall outside the WTO Agreements. The first U.S. action would reassert the United States’ leadership on an important global trade issue and deny China that same position, while the second U.S. action would let President Trump brag about his strong unilateral response to Chinese “economic aggression” (though he’d need to use something other than tariffs to be perfectly consistent with WTO rules).

If the latest reports are to be believed, however, it’s unlikely that the President will pursue this course and will instead demand big, broad tariffs. If so, the costs will likely be significant – not just for U.S. consumers and exporters, but for the future of U.S. trade policy more broadly.

The views expressed herein are those of Scott Lincicome alone and do not necessarily reflect the views of his employers.

Democracy in America can only work when members of the public are free to participate in the political process. That’s exactly what Fane Lozman was trying to do when a Riviera Beach, Florida, city official ordered him arrested 11 years ago.

Lozman sued the city, arguing that his arrest was in retaliation to his First Amendment-protected criticism of city policies and corruption. Before this arrest, city council members were on record suggesting “intimidating” him due to his opposition of the city’s redevelopment plan. The city had also made Lozman “the target of a string of legal pressures,” including attempting to evict him from the local marina (which a jury found to be retaliation for Lozman’s First Amendment expression), arresting and removing him from a different council meeting, and much more.

Despite all that, the U.S. Court of Appeals for the Eleventh Circuit ruled that Lozman was barred from suing the city because there may have been probable cause for his arrest, and further that the existence of probable cause categorically barred a claim for retaliatory arrest. What’s worse is that the crime for which “probable cause” the city relies on—“disturbance of a lawful assembly”—wasn’t mentioned or identified until trial eight years later.

The Supreme Court agreed to hear the case. Because a categorical bar on First Amendment retaliation claims for arrests supported by probable cause would deal a serious blow to our First Amendment freedoms, Cato joined the Institute for Justice on an amicus brief supporting Lozman. Under the lower court’s approach, courts would be forbidden from looking into the government’s motives in retaliatory-arrest cases the way they do with ease in other First Amendment retaliation cases. This would encourage local governments simply to arrest dissenters, knowing endless justifications could be manufactured after the fact and virtually eliminating any constitutional check on their retaliation.

For example, the offense that was ultimately claimed as the basis for Lozman’s arrest—“disturbing a lawful assembly”—requires only that one act with reckless disregard for whether one’s conduct will “impede the successful functioning of the assembly.” That vagueness could include anyone who speaks passionately at a public meeting. The result is to insulate arresting officials from liability even where, as here, the circumstances of the arrest strongly indicate a retaliatory motive.

Whether your First Amendment rights are protected should not be predicated on how the government infringes them, but that is the result of requiring judges and juries to close their eyes to the reasons for arrests. In these cases, there’s no reason to keep a jury from assessing that motivation and holding the government liable if the arrest was in retaliation for protected speech.

Retaliation forces the intolerable choice of speaking out and facing personal jeopardy or keeping silent. Faced with that choice, all but the most courageous will keep quiet—undermining the “uninhibited, robust, and wide-open” debate on public issues that the First Amendment protects. If the Supreme Court lets the lower court’s decision stand, local governments seeking to silence political activists will be empowered to abuse them. 

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