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“Where do we have tariffs?” President Trump asked yesterday. One obvious answer is on imported clothing and footwear, where tariffs are both substantial and hit low-income consumers hard.

The United States raised $33.1 billion in tariff revenue in 2017, but $14 billion of that came from tariffs on apparel and footwear alone. These items account for 4.6 percent of the value of U.S. imports, but 42 percent of duties paid. That means while the average effective tariff rate for U.S. imports overall is just over 1.4 percent, rates for apparel and footwear are 13.7 percent and 11.3 percent, respectively.[i]

My colleague Daniel Ikenson has previously examined the evolution of clothing and textile protectionism. He concludes that such high tariffs do not protect domestic apparel manufacturing. Data from the U.S. Trade Representative shows that 91 percent of manufactured apparel goods and 96.5 percent of footwear are imported.

Why then are such highly regressive tariffs imposed? The answer appears to be the lobbying efforts of the capital-intensive U.S. textile industry. Textiles are the major input for labor-intensive apparel production, which largely occurs overseas. To quote Ikenson directly:

The U.S. textile industry insists on preserving those tariffs as leverage to compel foreign apparel producers to purchase their inputs. Preferential access [to U.S. markets] is conditioned on use of U.S. textiles. The high rates of duty apply, generally, to all “normal trade relations” partners. But those duties are much lower or excused entirely for trade agreement partners, provided that the finished garment comprises of textiles made in countries that are signatories to the agreement.

U.S. consumers pay the price of this protectionism, and poorer consumers especially. In 2016, the average household in the bottom income quintile spent $860 on apparel and footwear, or 3.4 percent of overall spending—the highest proportion of any income quintile. The average single-parent household put 4.5 percent of total expenditure toward these goods. The poor spend a disproportionate amount on clothing and footwear, and family structures most likely to be recipients of means-tested welfare programs (single-parent households) spend most of all.

But this protectionism is not just regressive because of relative spending patterns. Edward Gresser’s work has shown how, often, luxury clothes and shoes face lower tariff rates than inexpensive products.

Consider Table 3 from my report below (an updated version of Gresser’s work.) Where duties are applicable, a pure cashmere sweater import incurs a 4 percent tariff, a wool sweater a 16 percent tariff, and an acrylic sweater a whopping 32 percent. Men’s silk shirts see a 0.9 percent tariff, cotton shirts a 19.7 percent tariff, and cheaper polyester shirts a 32 percent tariff. Leather dress shoes have an 8.5 percent tariff, whereas cheap sneakers would see a 43 percent tariff. Windbreakers, leggings, tank tops, and other clothes made cheaply from synthetic fabrics face a 32 percent tariff if sourced from countries that the United States does not have a free-trade agreement with. Assuming poorer households tend to buy cheaper products, these differential tariffs have perniciously regressive effects.

The true overall cost of all this to poorer families is difficult to calculate. To get an accurate estimate would require detailed information on the effect on domestic substitute goods’ prices, knowledge of products bought by poor families and their propensity to import in the absence of protectionism.

Nevertheless, we can develop cautious lower-bound estimates. The average household in the poorest income quintile spends $655 on apparel and $206 on footwear per year. Assuming the import propensities for the population as a whole apply to poorer people implies $595 of apparel spending and $199 of footwear spending is on imported goods. Taking average effective tariff rates for apparel and footwear for this spending (13.7 and 11.3 percent) implies a combined direct tariff cost of $92 per year for the average household in the poorest income quintile, or $204 per year for the average single-parent household.

These figures likely underestimate the true burden, because they only represent the direct cost from current spending on imported goods. They assume tariffs do not raise domestically produced goods prices, though in reality the anti-competitive effect of the tariffs would be expected to raise prices here too. It also assumes the same effective tariff rates for apparel and footwear apply for the poorest households as for the whole population, but we have seen that products that the poor are more likely to buy tend to face higher tariff rates. Consumer welfare losses from tariffs, of course, are higher than the implied costs here, since tariffs make consumers less willing to buy imported products that they would otherwise prefer.

In short, next time the President asks where tariffs are applied, someone shout “apparel and footwear.” They are both large and regressive.

[i] U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” at http://dataweb.usitc.gov. Data for imports for consumption, and effective rates calculated using “customs value” and “calculated duties” for 2017.

President Trump has made no secret about his intentions to deport illegal immigrants. His statements as well as administrative actions to remove certain guidelines that focused enforcement efforts on criminals has understandably caused a lot of concern among illegal immigrants, their American families, and those concerned with their plight. They should take comfort that the Trump administration’s efforts to boost arrests, the necessary precursor to a deportation, are stymied by limited local and state law enforcement cooperation with the federal government when it comes to identifying illegal immigrants.

Recently released data on the number of arrests by Immigration and Customs Enforcement (ICE) shows that they are arresting many fewer illegal immigrants under Trump’s administration than under President Obama’s, at least through June of 2018.  During the first full 17 months of the Obama administration, from February 2009 through June 2010, ICE arrested 437,671 illegal immigrants.  For the same first full 17 months of the Trump administration, ICE arrested 226,138 illegal immigrants, about half the number arrested during the same period in Obama’s administration.

Relative to the last full month of the previous administrations, the number of ICE arrests under Trump is up by a whopping 37 percent (Figure 1).  Over the same time, President Obama’s ICE was arresting 25 percent more people than under the last full month of the Bush administration, quite a significant increase on its own.  The increase under Trump is larger as a percentage because it started from a low base, but the increase in the number of arrests under Obama was larger.  For instance, the number of arrests under Obama was 5,803 greater in June 2010 than in December of 2008.  At the same point in the Trump administration in June of 2018, the number of arrests was up 8,965 over December 2016.

Figure 1: ICE Arrests by President

There are two broad categories of arrests by the ICE.  The first is called custodial arrests, which is when ICE picks up an illegal immigrant arrested by another law enforcement agency such as state or local police departments.  The second is called ICE arrests, which is when ICE itself arrests illegal immigrants on the streets.  Figure 2 shows that the number of custodial arrests have fallen dramatically since October 2008 while the number of ICE arrests has stayed relatively constant.  This means that local and state non-cooperation with ICE works to reduce the number of ICE arrests as between 70 percent and 90 percent of those arrests are custodial over the entire time.

Figure 2: ICE Arrests by Type of Arrest

Some states, like Texas, are fully cooperating with ICE when it comes to immigration enforcement while others like California are resisting mightily.  In Texas, there were 3,963 ICE arrests in May 2018 compared to 2,584 in December 2016, a 53 percent increase.  In California, there were 1,587 ICE arrests in May 2018 compared to 1,356 in December 2016, a 17 percent increase.  ICE is more active everywhere in the country, in sanctuary states and non-sanctuary states, but the difference is stark across such jurisdictions. 

The federal government under Presidents Bush and Obama convinced virtually every locality in the United States to sign up for the Secure Communities program that essentially turned over the vast majority of the arrested illegal immigrants to ICE for deportation.  Since President Obama was a Democrat, there was little initial political opposition to the massive increase in states and localities cooperating with the feds via Secure Communities – especially in Democratically controlled states with large numbers of illegal immigrants.  However, political reluctance to cooperate via Secure Communities built rapidly.  In 2011 Massachusetts, Illinois and New York requested to opt out of the program.  States like California then limited statewide cooperation with ICE and then President Obama replaced Secure Communities with a less punitive version called the Priority Enforcement Program that targeted criminals, which was in effect from 2015 to 2017.  Today, most states and localities with large numbers of illegal immigrants are not cooperating with President Trump’s ICE nearly as much as they cooperated with President Obama’s ICE – which is preventing Trump from arresting and, eventually, deporting large numbers of illegal immigrants.

There are other, lesser reasons why the Trump administration is unlikely to reach President Obama’s deportation record.  One is bureaucratic incompetence in the Department of Homeland Security, the Department of Justice, and other executive branch chaos that has so far prevented an orderly and organized deployment of law enforcement resources.  As a partial result of those administrative problems, they are incapable of convincing states and localities to enforce federal immigration laws.  Another reason is that illegal immigrants in 2018 are savvier than they were in the past, are better able to avoid law enforcement, and the few who were criminals were deported over the years, fewer new illegal immigrants have taken their place, and those remaining are less likely to come into contact with law enforcement. 

State and local government reluctance to enforce federal immigration laws and cooperate with the Trump administration has limited its ability to arrest and, eventually, deport large numbers of illegal immigrants.  At the current rate, ICE under the Trump administration will be able to arrest about half a million fewer illegal immigrants relative to the Obama administration even if President Trump serves two full terms.  Those who are dispirited by the Trump administration’s efforts to deport large numbers of otherwise law-abiding illegal immigrants should take some solace that their efforts to block full local and state cooperation with ICE is bearing fruit.

President Trump recently said that he would deploy troops to the Mexican border in response to the 3,000-4,000 Central American migrants and asylum seekers who are walking to the U.S. border.  This follows President Trump’s earlier deployment of about 4,000 National Guardsmen (2,100 troops remain) to the border to respond to another caravan earlier this year.  American Presidents have ordered troops to the border to assist in immigration enforcement several times when the flow of illegal immigrants was significantly greater than it is today.  Deploying additional troops to deal the approaching migrant caravan is unjustified and unnecessary. 

Previous U.S. presidents have deployed troops to the U.S. border to assist in immigration enforcement and drug interdiction.  The first such request after World War II was in 1954 when the old Immigration and Naturalization Service (INS) launched Operation Wetback (yes, that is what the government called it).  Then-Attorney General Herbert Brownell asked the U.S. Army to help round up and remove illegal immigrants.  According to Matt Matthews in his “The US Army on the Mexican Border: A Historical Perspective,” the Army refused to deploy troops for that purpose because it would disrupt training, cost too much money at a time of budget cuts, and it would have required at least a division of troops to secure the border.  Then-head of the INS General Swing remarked in 1954 that deploying U.S. Army troops on the border was a “perfectly horrible” idea that would “destroy relations with Mexico.”  It was also unnecessary. 

In 1954, the 1,079 Border Patrol agents made 1,028,246 illegal immigrant apprehensions or 953 apprehensions per agent that year along all U.S. borders.  For the entire border, Border Patrol agents collectively made 2,817 apprehensions per day in 1954 with a force that was 94 percent smaller than today’s Border Patrol.  In other words, the average Border Patrol agent apprehended 2.6 illegal immigrants per day in 1954.  Neither President Eisenhower nor the Army considered that inflow of illegal immigrants to be large enough to warrant the deployment of troops along the border despite Brownell’s request.   

Earlier in 2018, President Trump ordered about 4,000 troops to help the 16,605 Border Patrol agents on the southwest border apprehend the roughly 1,000 Central American migrants from an earlier caravan.  About 2,100 of those troops remain.  At that time, there were about 16.6 Border Patrol agents for each Central American migrant.  As for the current caravan approaching, assuming the number does not decrease any further, there are 4 to 6 Border Patrol agents for each person traveling from Central America in this caravan.  It’s likely that troops deployed on the border will outnumber the most recent caravan when (if) it arrives.   

In fiscal year 2018, Border Patrol apprehended about 396,579 illegal immigrants or about 24 per Border Patrol agent over the entire year on the southwest border, which works out to one apprehension per Border Patrol agents every 15 days.  By that measure, Border Patrol agents in 1954 individually apprehended an average of 40 times as many illegal immigrants as Border Patrol agents did in 2018.  If the current caravan makes it to the United States border, it would add about one and a half days worth of apprehensions at the 1954 level.  Border Patrol should be able to handle this comparatively small number of asylum seekers and migrants without military aid as they have done so before many times with a much smaller force.

Other Border Deployments

Since 1982, most U.S. military deployments and operations along the Mexican border were intended to counter the import of illegal drugs.  Joint Task Force 6 was deployed to the border in 1989 to aid in drug interdiction.  The regular deployment of troops for that purpose ended in 1997 after a U.S. Marine shot and killed American citizen Esequiel Hernandez Jr.  By July of that year, Secretary of Defense William Cohen suspended the use of armed soldiers on the border for anti-drug missions. 

On May 15, 2006, President Bush ordered 6,000 National Guard troops to the border as part of Operation Jump Start to provide a surge of border enforcement while the government was hiring more Border Patrol agents.  In 2006, there were about 59 apprehensions per Border Patrol agent or one per agent every four days.  Operation Jump Start ended on July 15, 2008.  In that year, there were an average of 41 apprehensions per agent or one apprehension every nine days per agent during the entire year.  President Obama also deployed 1,200 troops to the border in 2010 to assist Border Patrol, but they left in 2012.  In that year, Border Patrol agents on the southwest border individually apprehended an average of one illegal immigrant every 19 days. 

The two recent deployments to assist in enforcing immigration law along the border occurred when there were fewer apprehensions, represented by more days between each apprehension for each agent (Figure 1).  The higher the number for the blue line in Figure 1, the fewer people Border Patrol agents individually apprehend.  From about 1975 through 2006, the Border Patrol faced an annual inflow of illegal immigrants far larger than anything seen in recent years. 

Figure 1

The Average Number of Days Between Each Border Patrol Apprehension on the Southwest Border, 1975-2018

Figure 1: Average Number of Days Between Each Border Patrol Apprehension on the Southwest Border

In years and decades past, the average amount of time between Border Patrol apprehensions of illegal immigrants could be measured in hours while now it is measured in weeks.  The proposed deployment of American troops to the border at a time of low and falling illegal immigrant entries is an unnecessary waste of time and resources.  

Welcome to the Defense Download! This new round-up is intended to highlight what we at the Cato Institute are keeping tabs on in the world of defense politics every week. The three-to-five trending stories will vary depending on the news cycle, what policymakers are talking about, and will pull from all sides of the political spectrum. If you would like to recieve more frequent updates on what I’m reading, writing, and listening to—you can follow me on Twitter via @CDDorminey

  1. This week has been all Intermediate-Range Nuclear Forces Treaty (INF), all the time. If you’re wondering about the potential upsides, check out “Trump Is Right to Leave The INF Nuclear Treaty” by Kori Shake. If you’re wondering about the potential downsides, I suggest this overview by the New York Times’ editorial board, “‘Getting Tough’ Over a Missile Pact Could Weaken America.” If you have no idea where to start on this issue, stay tuned for tomorrow’s Cato Daily Podcast featuring Eric Gomez and yours truly. (Or you could always start at Wikipedia.) 
  2. Funding for Overseas Contingency Operations and Its Impact on Defense Spending,” Congressional Budget Office (CBO). Since 2001, a significant portion of the annual defense budget has been hived off to pay for wartime operations. But the CBO found that since 2006, at least $50 billion  of annual wartime funds (70 percent of the total OCO account) actually went to enduring activities (i.e. what it takes to run a military this size during peacetime). That’s a substantial misuse or misallocation of funds. 
  3. What Can 24 Satellites Do for U.S. Missile Defense?,” Thomas Roberts. This is pretty in the weeds, but if you follow missile defense or satellite aquisition then you’ll find this brief interesting. It offers a rebuttal to a 2011 report that claimed space-based missile systems could be incorporated in the existing force structure without incurring large program costs. 
  4. Here’s The Pentagon’s Initial Plan for Creating A Space Force,” Marcus Weisgerber. DefenseOne got ahold of an internal document on how the Pentagon is planning to organize the Space Force. Not many firm details are included—but coupled with Secretary Heather Wilson’s estimate of 13,000 people and $13 billion over the next five years, things seem to be in motion. 

If someone told you that public high schools have taken people with political and social power and brought them together, to the exclusion of other people, would you celebrate those schools? Probably not. But that is essentially what a new Atlantic article does in extolling public high schools and attacking school choice.

The piece, by English professor Amy Lueck, asserts that public schools—particularly high schools—have been crucial, unifying institutions. After criticizing U.S. Secretary of Education Betsy DeVos for calling public schools a “dead end” (DeVos actually said monopolistic public schooling is a dead end for innovation) Lueck offers the following:

Far from being a “dead end,” for a long time the public school—particularly the public high school—served an important civic purpose: not only as an academic training ground, but also as a center for community and activity in American cities.

The public high school’s unifying importance, especially compared to private schooling, is very much wanting for proof. Lueck talks a lot about public high school football games, dances, yearbooks, and supporting the country in World War II to back her thesis, but says nothing about whether private schools did the same things. Of course, they did. She also says nothing about whether public high schools were especially effective in forming good citizens, while the research suggests that private schools and other schools of choice actually do better jobs than traditional public schools inculcating civic values such as voting, political tolerance, and volunteering in one’s community.  

More important than ignoring what private schools have done, though, is what Lueck concedes in a few welcome but quick admissions: public high schools have a highly discriminatory history. This is not just with egregious segregation of African Americans, which Lueck mentions, but also in some places Mexican Americans and Asian Americans. Public schools have also been demeaning places for immigrants, and from early on in the history of public schooling numerous Roman Catholics felt that they had no choice but to stay out of the often de facto Protestant—and sometimes openly hostile—public schools. Indeed, by 1970 more than 1 million students attended Catholic high schools. But Lueck somehow doesn’t mention Catholics at all, including the recent evidence that Catholic schools are powerful forces for community cohesion. And Catholics have hardly been the only religious dissenters to the coerced uniformity of public schooling.

It is easy to say that public schools are essential unifiers, and that choice threatens cohesion. But what one says, and reality, are not always the same.

Yesterday, President Trump tweeted that “unknown Middle Easterners are mixed in” with the migrant caravan approaching the U.S. border. Vice President Pence later tried to justify President Trump’s comment by arguing that, “It is inconvincible that there are not people of Middle Eastern descent in a crowd of more than 7,000 people advancing toward our border.” Todd Bensman of the Center for Immigration Studies wrote that “the president was obviously referencing … ‘special interest aliens’ … U.S.-bound migrants moving along well-established Latin America smuggling routes from [Muslim] countries.” Perhaps President Trump was referencing special interest aliens but the clear implication is that they are potential terrorists who are using the caravan to sneak into the United States and murder Americans.  

The members of the migrant caravan will either apply for asylum at the U.S. border or try to enter illegally. From 1975 through the end of 2017, 9 Americans have been murdered in attacks committed on U.S. soil by 20 foreign-born terrorists who entered illegally or as asylees. During that time, the annual chance of being murdered in a terrorist attack committed by an asylum seeker or an illegal immigrant was about 1 in 1.3 billion per year. Those estimates are based on this methodology with updated numbers. 

During that time, about 31.3 million illegal immigrants entered the U.S. illegally (most have since emigrated, legalized, or passed away) and about 732 thousand asylum seekers have been admitted. Nine of the 20 terrorists who entered did so as illegal immigrants, meaning that about 1 terrorist entered hidden amongst every 3.48 million illegal immigrants. They killed zero people in domestic terror attacks. The 11 terrorists who entered as asylum seekers murdered 9 people in terrorist attacks or about 1 murder for every 81,000 asylum seekers let in.    

Of those 9 terrorists who entered illegally, only 3 did so along the border with Mexico: Shain Duka, Britan Duka, and Eljvir Duka crossed as children with their parents in 1984. They are ethnic Albanians from Macedonia. They were 3 conspirators in the incompetently planned Fort Dix plot that the FBI foiled in 2007, long after they became adults and more than two decades after they entered illegally. There is no evidence that the Fort Dix plot was more than 23 years in the making. 

As far as we can tell, virtually all the members of the migrant caravan come from Central America while the asylum-seeker and illegal immigrant terrorists who committed or attempted to commit attacks on U.S. soil came from Cuba, Lebanon, Pakistan, Palestine, Canada, Algeria, Somalia, Macedonia, Kyrgyzstan, and Afghanistan. Not a single terrorist in any visa category came from Mexico or Central America during the 43-year period.

None of the above estimates are meant to imply that those asylum seekers or illegal immigrants who committed or attempted to commit attacks were terrorists when they entered. Some, like Ramzi Yousef, obviously did enter as terrorists but the Boston Bombers Dzhokhar Tsarnaev and Tamerlan Tsarnaev entered as children too young to be plotting a terrorist attack years later. My colleague David Bier has shown just how rare it is that a foreign-born terrorist intends to come to the United States and how infrequently the government fails to stop him or her. 

This issue is complicated by the recent statements of Guatemalan president Jimmy Morales, who announced that his government “apprehended close to 100 persons completely involved with terrorists, with ISIS and we have not only detained them within our territory, but they have been deported to their country of origin.” Morales then stated that information about these supposed terrorists (like their names or countries of origin) was classified, which should raise a red flag as governments love to brag about their anti-terrorism actions with specifics even when such bragging is unjustified.

Even if we assume that some members of the migrant caravan are Middle Easterners who might pose a higher terrorism risk, that is still no good reason to bar the Central American migrants from applying for asylum. If some Middle Easterners are in this caravan, they too will be able to apply and face the same terrorism vetting procedures that work so well. There is little evidence that there are Middle Easterners in this caravan, even less that there are actual terrorists, and the risk from terrorists crossing the border has been tiny historically. This time could be different, but there is no real evidence to suggest that it is. Whatever problems may arise due to this caravan, the actual threat of terrorism from its members is very small.

Immigrant criminality and its impact on the United States is one of the most important issues in the public debate over immigration. In order to provide new insight into this topic, my coauthor Michelangelo Landgrave and I have attempted to estimate the illegal immigrant incarceration rate. I have also written a short paper on Texas criminal conviction rates by immigration status and crime based on data provided by the state of Texas. All three papers found that illegal immigrants were less likely to be convicted or incarcerated for crimes than native-born Americans.

My paper on illegal immigrant crime rates in Texas is based on data from the Texas Department of Public Safety (DPS) that I obtained through a Public Information Act request. The Texas DPS data separately show the number of convictions and arrests of illegal immigrants, legal immigrants, and native-born Americans for 44 and 46 different crimes, respectively, in the state of Texas by year from January 1, 2011, to November 15, 2017.

One of the persistent criticisms of my paper on Texas criminal conviction rates is that the DPS data do not record the number of illegal immigrants who commit crimes but are not convicted. Given data limitations, that is probably an impossible question to answer in a satisfactory way for immigrants and for natives.  However, I try to address this criticism in my Texas paper by showing that the gap between the arrest rates and conviction rates for illegal immigrants and the gap between the arrest rates and conviction rates for native-born Americans are similar, indicating that there are few illegal immigrants who are arrested for offenses who then disappear or are deported before their convictions relative to natives who are arrested and then not convicted.

A related criticism is that illegal immigrants flee Texas and then go back to their home countries after they commit crimes, which means that the Texas state conviction data would not count them. Thus, the criminal conviction rate for illegal immigrants is so low because they commit their crimes and flee – an option that few native-born American criminals possess. This argument makes a certain amount of sense in Texas as it shares a long border with Mexico, the source of a majority of illegal immigrants in Texas.

To answer that second criticism, we decided to investigate whether police clearance rates are correlated with the number of illegal immigrants on the state level. According to the FBI’s Uniform Crime Reporting (UCR) Program, law enforcement agencies can clear offenses by one of two means. The first is called “cleared by arrest” whereby a person must be arrested, charged with an offense, and turned over to a court for prosecution.  The second is called “cleared by exceptional means,” whereby the police must identify the offender, gather enough evidence for an arrest and to charge them with a crime, identify the offender’s exact location, and have encountered a circumstance out of law enforcement’s control that prevents an arrest. The death of the offender or the lack of an extradition treaty with the country harboring a suspected criminal are common causes of clearances by “exceptional means.” Mexico and the United States have an extradition treaty. An offense is cleared when the police have taken certain actions to solve the underlying crime short of a criminal conviction.

Landgrave ran many regressions between clearance rates (logged) and the proportion of the population of each state who were illegal immigrants (logged) with state-year and region-year fixed effects. The regressions control for demographic characteristics, the number of police officers for every 100,000 residents, education, and population density. He ran regressions for clearance rates by major crime and the entire crime index. All he found is that motor vehicle theft and burglary clearance rates are positively correlated with the proportion of the population who are illegal immigrants, but only at the 10 percent level for the state-year fixed effects (Table 1, click for larger version). There were no other statistically significant results.

Table 1: Correlation between State Police Clearance Rates and Illegal Immigrant Population

As a quick exercise to test this persistent criticism, these results reveal that there is no nationwide link between clearance rates and the proportion of the population who are illegal immigrants. The only exception is that police clear more motor vehicle and burglary offenses in states with more illegal immigrants as a proportion of their population, but only in one permutation and only at the 10 percent level. Although the theory that illegal immigrants commit crimes and then flee states seems plausible, we see no evidence of that in the aggregate clearance rates.

This cover image in the New Yorker, titled – obviously – “Fat Cats,” is brought to you by Gucci, Fidelity Investments, Gemfields, Northern Trust, Big Pharma, Mastercard Black Card, First Republic Private Wealth Management, Ocean Reef Club, Swann Auction Galleries, Suntrust Private Wealth Reserve, Ike Behar, Wells Fargo, and other purveyors of goods and services to … well, fat cats.

And most especially, on the flip side of this cartoon mocking rich men in suits, as economist Lawrence H. White noted on Facebook, is a two-page spread advertising made-to-measure suits from Giorgio Armani. 

Who was it who first said, “Think left, live right”?

 

 

President Trump’s announcement that he plans to withdraw from the Intermediate-Range Nuclear Forces (INF) Treaty is worrying news for U.S.-Russian relations and for the prospect of effective arms control moving forward.

The INF Treaty was negotiated by President Ronald Reagan and Soviet leader Mikhail Gorbachev. Each party agreed to eliminate their nuclear and conventional ground-launched ballistic and cruise missiles with ranges of 500 to 5,500 km. It was a quite successful arms control agreement, at least until recently. In the last few years, Moscow has tested and deployed cruise missiles that appear to violate INF limits.  

This is the Trump administration’s rationale for terminating the agreement. And the reasoning has a powerful logic. If Russia isn’t going to fully comply with the treaty, why should the United States?

The problem is that simply withdrawing is the most extreme option available and robs us of viable diplomatic solutions while doing nothing to pressure Russia to get back into compliance. Indeed, terminating the agreement is probably the option most likely to generate a new arms race. 

It is worth noting that the Russians claim we cheated first by deploying missile defense systems in Europe that, if used offensively, would violate the terms of the INF treaty. It’s a debatable accusation, but this mutual suspicion is resolvable over the negotiating table. Unfortunately, the Trump administration has barely made an effort to discuss it with Moscow.

Instead of pressuring Moscow to bring itself back into compliance with the treaty, Trump’s planned withdrawal – along with not-so-subtle hints that the administration plans to ramp up production of just the type of missiles the INF prohibits − merely gives the greenlight to Russia to expand their own capabilities in this area.

Ironically, the United States doesn’t have much strategic use for intermediate-range missiles of the kind the INF covers. As the Arms Control Association points out, “The United States can already deploy air- and sea-launched systems that can threaten the same Russian targets that ground-launched missiles that are prohibited by INF Treaty would.”

Withdrawing from the INF could also make extending New START more difficult. New START is a treaty that sets limits on American and Russian deployed strategic nuclear warheads and delivery systems and will expire in 2021 if it is not extended. The Trump administration, and especially national security advisor John Bolton, have shown little interest in extending New START thus far. While there is still time to negotiate an extension, the death of the INF Treaty does not bode well for the future of arms control under the Trump administration.

The other potential target of American INF-range missiles is China. Since Beijing is not a party to the INF it has produced many cruise and ballistic missiles that are banned by the treaty. Supporters of leaving INF argue that adhering to it ties America’s hands in the military competition with China.

While it is true that U.S. cruise and ballistic missiles in Asia would improve operational flexibility, it wouldn’t make a significant enough impact on the military balance with China to warrant the costs of leaving the treaty. The chief military advantage of China’s INF-range missiles is their ability to strike a few large U.S. air and naval bases in the region. American missiles would likely target similar installations in China, but there are many more Chinese bases than American ones. Fielding a U.S. missile force that can threaten enough targets to significantly alter the current balance of power in Asia would be expensive and very time consuming, and China would be able to counter U.S. deployments by growing their own force.

Moreover, there is no guarantee that U.S. allies in Asia will support missile deployments on their territory. In fact, Japan has already cautioned Washington against terminating the treaty. While China is a major source of concern to U.S. allies, their threat perceptions do not neatly line up with the United States’. U.S. allies certainly want to maintain good relations with Washington, but they also want to avoid antagonizing China. 

The long and short of it is that the Trump administration is choosing to initiate a competition in nuclear and missile capabilities (i.e., an arms race) for no good reason. The diplomatic options to bring Russia back into full compliance have not been exhausted. And in any case, even under INF restrictions, the United States currently possesses the capability to hit any Russian or Chinese target. The INF Treaty is simply a low cost way to discourage an arms race and maintain a cooperative relationship on such issues with Russia. Terminating it is short-sighted and will come with serious costs. 

Although the Jones Act’s stated purpose is to ensure that the United States “shall have a merchant marine of the best equipped and most suitable types of vessels sufficient to carry the greater portion of its commerce and serve as a naval or military auxiliary in time of war or national emergency,” this plainly isn’t the case. But don’t take my word for it, just listen to ardent backers of the law such as Rep. John Garamendi (D-CA):

Our military relies on privately-owned sealift capacity and highly trained and credentialed merchant mariners to transport and sustain our armed forces when deployed overseas during times of conflict. But the number of ocean-going U.S.-flag vessels has dropped from 249 in the 1980s, to 106 in 2012, to at most 81 today.

The consequences of this steep decline are not just theoretical. Our military has had to turn to foreign-flagged vessels for sustainment in times of war, and experience shows that can have dangerous consequences. In the 1991 Gulf War, our armed forces relied on 192 foreign-flagged ships to carry cargo to the war zone. The foreign crews on thirteen vessels mutinied, forcing those ships to abandon their military mission. Would foreign flag carriers be any more reliable today, especially for a long-term deployment into active war zones?

But the number of ships is not the only issue: The U.S. Transportation Command and Federal Maritime Administration estimate that our country is now at least 1,800 mariners short of the minimum required for adequate military sealift, even with the Jones Act firmly in place. Without the Jones Act, our nation would be wholly unprepared to meet the labor demands of rapid, large-scale force projection for national security.

The House Coast Guard and Maritime Transportation Subcommittee’s ranking member is absolutely correct about the sad state of the U.S. merchant fleet. Some of his numbers, however, are off the mark. The drop in the number of ocean-going U.S.-flag vessels is even more dramatic than what he states, declining from 737 in 1985 to a current figure of 180. Regarding the 1991 Gulf War, meanwhile, the actual number of foreign-flagged ships used as part of the U.S. sealift was 177 rather than 192. It’s also inaccurate to say that thirteen vessels were forced to abandon their military mission, with eight of those vessels ultimately delivering their cargo after initial hesitations. 

Although an article of faith in pro-Jones Act circles, the congressman’s claim that the United States would be in even more dire straits absent the law is open to question. The Jones Act’s domestic build requirement, for example, forces U.S. carriers to purchase vessels at vastly inflated prices compared to foreign shipyards (4x is a figure used by many observers while a 2017 Congressional Research Service report placed the U.S. price at 6-8x higher). Using basic microeconomics we can intuit that higher prices mean fewer ships, and thus fewer mariners to crew them. 

Linking to a Cato Institute analysis of the Jones Act, Garamendi then turns his attention to accusations that the law is an “outdated protectionist anachronism”:

Opponents of the Jones Act routinely claim that it is an outdated protectionist anachronism that does more harm than good, but nothing could be further from the truth. A comprehensive 2018 survey of seafaring and industrial nations around the world shows that cabotage laws such as the Jones Act, which provide for domestic preference for shipping policies, are the norm, not the exception. Ninety-one U.N. member states comprising 80 percent of the world’s coastlines have cabotage laws protecting domestic maritime trade. The conclusive fact from this survey is clear: seafaring nations understand the importance of their domestic maritime industries, and have laws on the books to safeguard them.

This misses the point. While cabotage laws are indeed common, the Jones Act’s stringent requirements—and in particular its mandate that ships must be built in the United States—place it well outside the mainstream. Indeed, the World Economic Forum calls the Jones Act the world’s “most restrictive example” of cabotage laws, noting that not even China has a domestic build requirement. 

Finally, he addresses the Jones Act’s economic impact on Puerto Rico:

Just as important, a recent nonpartisan economic study found that the Jones Act does not impact consumer prices in Puerto Rico. Rather, the Jones Act has a net positive economic impact, because the certainty of the regularly scheduled coastwise trade allows shippers to invest in state of the art maritime technologies and local port investments. In fact, consumer price comparisons of common household commodities between Puerto Rico and other Caribbean islands found that consumer prices on Puerto Rico are commonly lower.

The referenced study may have been “nonpartisan” but it was hardly the product of disinterested observers, having been funded by the pro-Jones Act American Maritime Partnership. As discussed in a previous blog post the study’s methodology is dubious and its claims should be treated with a great deal of skepticism.

In addition, the logic behind the claim that the Jones Act has a net positive economic impact on Puerto Rico is unclear. State of the art maritime technologies and local port investments are certainly good for the carriers, but it is unclear how this benefits the average Puerto Rican. If the argument is that these confer efficiencies that allow Jones Act carriers to lower transport costs, then they should have little to fear from competing against foreign-flag ships. The fact that they steadily refrain from doing so and instead cling to the Jones Act’s protections, however, is telling. 

It’s also worth noting that regularly scheduled trade with Puerto Rico happens outside of the Jones Act, with Tropical Shipping (whose owner, Saltchuk, also owns Jones Act carrier TOTE Maritime), for example, offering regular service from Halifax, Canada. 

Although the Jones Act’s alleged economic benefits to Puerto Rico are fictional its costs are very real and well documented. A 2012 report from the Federal Reserve Bank of New York, for example, stated that shipping a twenty-foot container of household and commercial goods from the East Coast to Puerto Rico costs roughly twice that of shipping the same goods to nearby Jamaica or the Dominican Republic.

In addition, a 2013 GAO report points out that the high cost of shipping resulting from the Jones Act results in Puerto Rican farmers purchasing grain from Canada instead of New Jersey and jet fuel from countries such as Venezuela rather than the Gulf Coast. The report also highlighted price fixing in the Jones Act trade servicing Puerto Rico, with a federal investigation resulting in three of four Jones Act carriers pleading guilty and fined about $46 million. Six executives were sentenced to a total of more than 11 years in prison.  

All of these points and much more will be discussed during the Cato Institute’s upcoming conference on the Jones Act in December, the culmination of which will be a debate between those who favor and oppose the law.

We invite Rep. Garamendi to participate in this debate and defend the Jones Act in this public setting. 

The end of this month (31 October 2018) will mark the 10th anniversary of the online posting of the now-famous white paper by “Satoshi Nakamoto” outlining the concept of “Bitcoin: A Peer-to-Peer Electronic Cash System.” This is an opportune occasion to compare what Bitcoin has achieved with what Satoshi wanted to achieve. While Bitcoin’s rise to a market valuation of over $100 billion is certainly a remarkable accomplishment of one sort, the founder had other aims.

Three problems with the status quo

In announcing the new project in February 2009 Satoshi emphasized three institutional problems with the status quo payment system that Bitcoin would address. First, inflation from central banks that issue fiat money:

The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.

Second, a lack of privacy and security from commercial banks:

We have to trust them with our privacy, trust them not to let identity thieves drain our accounts.

Third, the high cost of bank-mediated payments:

Their massive overhead costs make micropayments impossible.

How well has Bitcoin addressed these three problems?

Inflation risk and purchasing power volatility

Satoshi wanted to create a currency with less risk of inflation and devaluation. It is of course true that the history of fiat currencies is full of breaches of trust in purchasing-power stability. Central banks issuing fiat money have chronically, and sometime acutely, diluted the value of their currencies by expanding them too rapidly. Bitcoin’s source code, which predetermines the quantity path of the stock of Bitcoins, does solve that problem. There can be no unexpectedly rapid expansion. This code provides a valuable object lesson in how to write a constitutional monetary rule that is fully automatic and free from discretion.

However, Bitcoin’s fixed quantity path creates a different problem that inhibits its widespread use as currency. With the number of Bitcoins unresponsive to demand shifts, all the burden of adjustment falls on the price (purchasing power). As a result the market price of Bitcoin is enormously volatile week-to-week and even day-to-day. This makes it very risky to hold or accept BTC as a payment medium for monthly bills that are denominated in anything other than BTC (e.g. in US dollars, other fiat currencies, or commodity index baskets).

Satoshi recognized that demand growth would cause secularly rising value, but said little about the problem of high-frequency volatility of value. He did not design Bitcoin to have an automatically demand-responsive supply, because he did not know how to do it without creating the need for a trusted authority:

[I]ndeed there is nobody to act as central bank or federal reserve to adjust the money supply as the population of users grows. That would have required a trusted party to determine the value, because I don’t know a way for software to know the real world value of things. If there was some clever way, or if we wanted to trust someone to actively manage the money supply to peg it to something, the rules could have been programmed for that.

What Satoshi didn’t know how to do is still not known. The desirability of a stable-valued cryptocurrency has, however, has stimulated dozens of “stablecoin” projects in recent years.  There are two main types: (a) coin supply managed by an “algorithmic central bank” that automatically (given a data feed) varies quantity to stabilize purchasing power, and (b) coin supply made endogenous by pegging the coin to a relatively stable fiat currency, to gold, or to a commodity basket. A recent report on “The State of Stablecoins” has identified 57 projects, of which 23 are up and running. Tether USD, imperfectly pegged to the US dollar, is by far the largest of the live projects. Of the 57, twelve use the “algorithmic central bank” approach, the remainder being “asset-backed” either by fiat currency collateral or by cryptoassets. The problem remains unsolved of feeding a program with real-world data in a tamperproof way, or of running a currency peg without any risk to customers from dishonesty or incompetence by the party holding the reserves.

Satoshi  suggested—somewhat inaccurately—that Bitcoin would behave like gold under a gold standard:

In this sense, it’s more typical of a precious metal. Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes.

In fact, as I have noted before, the classical gold standard system provided a great deal of long-run elasticity to the quantity of money. A rising purchasing power of gold incentivized the owners of existing mines to dig deeper and increase their output, and encouraged prospectors to seek new sources of gold. The accumulation of increased gold flow over time pushed the purchasing power back to its nearly flat long-run trend. The gold standard thereby historically constrained the inflation rate to near zero in the long term.

F. A. Hayek’s vision of competing non-commodity private monies imagined that issuers would maintain purchasing power stability by actively managing supply. A new project called Initiative Q takes basically this approach: not a cryptocurrency governed by a program, but a private non-commodity money whose quantity is governed by a human board that pledges to stabilize its purchasing power. Full disclosure: I have been a paid consultant on this project.

Satoshi anticipated a feature of Bitcoin’s fixed supply path that has played an important role in its enormous appreciation, and in its high volatility:

As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up, which could attract more users to take advantage of the increasing value.

In this way attracting speculators who want an appreciating store of value (and don’t care much about short-term volatility) is at root incompatible with attracting potential currency-users who want short-term value predictability. Having attracted speculative “hodlers,” it is harder to expand the set of Bitcoin users much beyond them.

Retail use of Bitcoin remains small, from all available indicators. The largest BTC retail payment processor, Bitpay, reported in October 2017 that its merchants are receiving “$110 M+ in bitcoin payments per month,” which multiplies out to $1.32 billion per year. For comparison, VISA reported in June 2018 an annual payment volume of $11 trillion, or $11,000 billion.

Coinmap.org lists 13,365 brick-and-mortar Bitcoin acceptance points worldwide, which is of course a tiny subset of retail establishments. Checking the map for Fairfax County, VA, I find that there are only seven sellers of goods and services listed, plus another 7 Bitcoin ATMs.

Privacy

Satoshi wanted to create a payment system with greater privacy. Bitcoin does enable users to send funds outside the financial panopticon that is the regulated banking system, where “Know Your Customer” and “Anti- Money Laundering” edicts require banks to surveil customer account use and report certain kinds of activity. This escape hatch has allowed ordinary people to protect their wealth from restrictions such as exchange controls and from confiscatory taxes. For example, Bitcoin became suddenly popular in Cyprus when the government imposed controls on international bank transfers and proposed to take 10 percent of bank balances during a banking crisis in 2013.

However, the way Bitcoin’s distributed ledger system shares addresses and size information about every transaction provides less privacy than would a design sharing less information. Bitcoin is not anonymous, only pseudonymous, and the pseudonyms can be pierced. This shortcoming has inspired a number of “privacycoin” projects. The best known live projects are Monero, Dash, and Zcash (for head-to-head contrasts of these and three others see here). Two interesting up-and-coming projects, using a newer-generation blockchain technology called MimbleWimble, are Beam and Grin.

Cheaper payments

As far as making micropayments at negligible cost, the Bitcoin blockchain has turned out to be infeasible for doing so. It becomes quickly congested as it approaches the modest volume of 7 transactions per second. This technological limitation was discussed by insiders (Hal Finney, Nick Szabo) as early as 2010, but did not come to wider attention until massive congestion arose with Bitcoin’s expansion in popularity in 2017, bringing a sharp rise in fees for moving your transaction to the front of the queue. Developers are now working on “sidechains” for small payments—most famously the Lightning Network—that will settle only periodically on the main BTC blockchain. So there may be a technical workaround retaining the Bitcoin standard. The MimbleWimble projects represent another approach: because their blockchains are designed to transmit much less information among miners, they should not only provide greater privacy, but also handle many more transactions per second.

Conclusion

Bitcoin should not be regarded as the last word in private money, but should be appreciated as a remarkable technological breakthrough. Ten years after its launch, we must recognize it as the innovation that has launched financial and non-financial blockchain industries that are still in their early days. Bitcoin has established its value as an asset, and its usefulness as a medium of exchange for a certain subset of transactions. It is the main unit of account and payment medium, preferred to fiat monies, for markets in other cryptocurrencies below the top five. Whether it will achieve common use as a medium of exchange remains doubtful. The inbuilt volatility of its purchasing power makes it unlikely to displace the incumbent fiat currencies barring an inflationary explosion. Even in that case, gold seems likely to prove more popular. Whether a credible stablecoin built on Bitcoin’s shoulders, or some completely different approach, will achieve critical mass as a private money  remains to be seen.

[Cross-posted from Alt-M.org]

University of Massachusetts toxicologist (and Cato adjunct scholar) Edward J. Calabrese has arrived.  On October 3, he testified to the Senate Subcommittee on Superfund, Waste Management, and Regulatory Oversight, a part of the larger Committee on Environment and Public Works, chaired by John Barrasso (R-WY).

Calabrese was asked for his expert opinion on a draft EPA proposal to consider alternative regulatory models, including ditching the “Linear-No Threshold” (LNT) model that it employs, as does almost every other regulatory agency on earth.  You can read about EPA’s proposal here.

The LNT model assumes that the first photon of ionizing radiation (or the first molecule of a carcinogen) is capable of inducing a genetic mutation (i.e. altered DNA) that can be then transmitted to future generations.

Many years ago, Calabrese went looking for the scientific basis for the LNT, for it ran counter to what he was finding in his toxicological research—that low doses of some toxins or ionizing radiation may actually confer benefits. That, of course, is also the basis for much of modern chemical pharmacology.

Try as he could, and he tried for years, he could not locate the seminal science that gave rise to the LNT.  But he did find its progenitor, Hermann Muller, who claimed to have induced heritable point mutations with X-rays in the fruit-fly Drosophila. But where was the data and the peer-reviewed study?  Muller did author a brief article in Science on July 22, 1927, but, as Calabrese notes in his brand new paper, “He made this gene mutation claim/interpretation in an article that discussed his findings, but failed to include any data.”  The Science article said the data would be in a subsequent publication.

In fact, the data underlying what may have been the most important claim in the history of regulatory science, were never published in a peer-reviewed journal. 

Nonetheless amidst public concern about atomic radiation, the National Academy of Sciences formed the Biological Effects of Atomic Radiation (BEAR-1) panel, which reported its findings in Science in 1956.  Muller was obviously highly influential, and the Science report clearly established the LNT:

Any radiation dose, however small, can induce some mutations. There is no minimum amount of radiation dose, that is, which must be exceeded before any harmful mutations occur.

Calabrese documents that Muller’s good friend and another Drosophila geneticist, Edgar Altenberg, confidentially challenged Muller’s interpretation that he was inducing point mutations.  Rather, the very large doses of x-rays that Muller subjected the fruit flies to was simply knocking out wholesale portions of the chromosomes. 

But Altenburg never went public with his criticism.  Perhaps, Calabrese speculates, it was because of personal loyalty and a deep relationship.  When Muller attempted suicide in 1932, rather than addressing his family, his final note was to Altenburg. Muller and Altenburg ultimately lived until 1967, dying within months of each other.

Muller’s Science publication allowed him to claim research primacy, which landed him both prestige and the eventual 1946 Nobel Prize in Physiology or Medicine.

That prize validated Muller’s hypothesis and ultimately enshrined the LNT model as gospel, and it spread beyond ionizing radiation to other carcinogens and mutagens, as well as to many toxic chemicals in which, literally, the dose makes the poison. In Calabrese’s words,

…it has been Muller’s incorrect gene mutation interpretation and its legacy that created the LNT dose response model, leading to its recommendation by the US National Academy of Sciences in 1956…and then subsequently adopted by all regulatory programs throughout the world.

As a result of his recent testimony and publication, Calabrese may be changing the regulatory world. 

Unlinked References:

Biological Effects of Atomic Radiation Panel, 1956. Genetic effects of atomic radiation.  Science 123, 1157-64.

Muller H. J, 1927.  Artificial transmutation of the gene. Science 66, 84–87

 

In America’s strange legal immigration system, every country receives the exact same quota for green cards—7 percent of the number issued—regardless of how populous it is. When immigrants—mainly Indians, Chinese, Filipinos, and Mexicans—hit these “per-country limits,” nationals of other countries may pass them in line. This creates massive wait times for some immigrants, while cutting the waits for everyone else.

In 2018, for example, employer-sponsored immigrants with bachelor’s or master’s degrees waited more than three years for a green card if they were born in China, and about a decade if they were born in India, while those from other countries waited less than a year. Going forward, the Indian wait will stretch on for decades. The system is unfair, and for that reason alone, Congress should end it.

But the per-country limits are also economically senseless. They prioritize the right birthplace over the right skills. In the employer-sponsored categories, businesses could decide to pay Indian or Chinese applicants much more than other immigrants, yet Indian or Chinese employees would still suffer the same pointless discrimination. Discriminating based on nationality, rather than skills, undercuts the productivity of the United States and lowers the average wage of new immigrants to the United States.

To see if this was happening, I reviewed the data on approved labor certifications submitted by employers in the EB2 and EB3 employer-sponsored immigrant classifications to the Department of Labor (DOL). These labor certification applications contain the wage offered to the immigrant as well as their birthplace. Employers with approved labor certifications may petition for a green card on behalf of their workers, but the worker may only apply for a green card once a visa number is available under the quota. The Department of Labor validates the information provided on the labor certification in order to deal with concerns that immigrants are taking jobs from U.S. workers.

I used the latest DOL wage data from fiscal year 2018 to produce the estimates in Figure 1. To produce the weighted average wage with the country cap, I weighted the wages for each nationality by the number of their nationals admitted under the country caps in the EB2 and EB3 employer-sponsored categories. The average wage without the country cap is the average of the approved labor certification wages in 2018.[*] The weighted average wage with the per-country limits was $95,534, while the wage without it would be $107,126. The per-country limits depress the average wage for new employer-sponsored immigrants by $11,592.

Figure 1: Average Wages of EB2-EB3 Immigrants

In other words, the per-country limits strongly discriminate against higher-paid immigrants. Figure 2 shows the average offered wage for immigrants from India, China, and the rest of the world. The wages were $118,071 for Indian immigrants, $111,172 for Chinese immigrants, and $90,422 for the rest of the world. Indian and Chinese applicants have wage offers that are $27,649 and $20,750, respectively, more than other applicants. Yet Chinese and Indian immigrants must wait much longer than immigrants from the rest of the world.

Figure 2: Average Wages of EB2-EB3 Immigrants by Country of Origin

The per-country limits strongly discriminate against higher-paid immigrants. Immigrants who are offered higher wages actually wait longer under the U.S. legal system than other immigrants. That said, all employer-sponsored immigrants command much higher wages than the average income for all Americans (about $48,000).

Indian and Chinese immigrants are also more likely to be offered positions that require more experience and skills than other employer-sponsored immigrants. The Department of Labor categorizes jobs into five different “zones,” with Zone 5 commanding the most skills and experience. The average job zone was 4.1 for a position offered to an Indian immigrant, 4.0 for China, while all other immigrants were offered jobs with an average job zone of just 3.7.

Certainly, at least some of these differences come from forcing Indians and Chinese applicants to wait longer. They certainly do obtain higher wages and more experience while they wait longer for green cards. But whatever the reason for this difference, it makes no economic sense to continue to use country of birth as a factor in determining who receives a green card first.

The United States needs immigrants of all different skill and wage levels, but this diversity should emerge naturally from the free market, not from government attempting to micromanage America’s ethnic ancestry. According to a new study, the arbitrary delays are encouraging Chinese and Indian immigrants to leave the United States and take their talents elsewhere. Congress should repeal the per-country limits, and after that, it should revise or eliminate the arbitrary quotas on employer-sponsored immigrants, which have not been updated in nearly 30 years. The market—not government bureaucrats—should determine who will benefit the United States the most economically.

Table1

[*] Notes on methodology: Approved labor certifications include expired ones because they may still have been used to obtain a green card. At the high end of the wage distribution, there were some erroneous entries where wages were listed as hourly, weekly, or monthly when they should have been listed as yearly. As a data integrity measure, I excluded all labor certifications with listed wages of more than $1 million annually as well as anyone making more than $500,000 annually with a job zone of less than 5. This excluded about 30 people of a population of nearly 110,000. The offered wage of immigrants was annualized and, if necessary, was determined by taking the midpoint in any salary or wage range provided by the employer. EB2-EB3 employer-sponsored immigrants include all EB2-EB3 immigrants except for those who receive “national interest waivers,” but these immigrants do not need a sponsoring employer. Job zones were obtained by comparing Standard Occupation Classifications in DOL data to the relevant job zones.

Reuters reports (“French lawmaker proposes bill to outlaw mockery of accents”) that lawmaker Laetitia Avia of Emmanuel Macron’s ruling party intends to introduce a bill adding discrimination based on accent or pronunciation (“glottophobia”) to the list of banned discrimination categories. This came after an exchange between leftist party leader Jean-Luc Mélenchon and journalist Véronique Gaurel, born in Toulouse, in which he appeared to make fun of Gaurel’s southwestern accent and then called for the next question to be in “comprehensible French.”

I thought of researching whether France has enacted other vaguely framed laws aimed at soothing the sensibilities of the Toulouse region. But since there is no way to search for vague laws as a category in themselves, I soon realized that might set me off on — if you will excuse the expression — a Too-Loose-Law Trek.

The Fifth Amendment’s Takings Clause provides that the government may not take private property without giving just compensation to property owners. It was woven into the thread of our founding document to ensure that the government will always be held accountable for its actions—or omissions—which result in landowners losing their property. Today, however, the government constantly attempts to circumvent its duty to compensate landowners, and too often courts let lend it a helping hand.

In the 1950s, the U.S. Army Corps of Engineers began constructing the Mississippi River Gulf Outlet (MRGO) navigational canal in Louisiana, turning a 650-foot channel into a half-mile wide waterway. To construct the canal, the Corps destroyed wetlands that were protecting the St. Bernard Polder, an expansive stretch of low-lying land, from hurricane flooding and resulting property damage. The Corps then failed to armor the banks of the canal from erosion or take any action to guard against the known risk of catastrophic damage to St. Bernard Parish (“parish” is the Louisiana name for a county).

When Hurricane Katrina struck Louisiana in 2005, a 25-foot storm surge went directly up the MRGO, destroying the levees and devastating St. Bernard Parish. Parish residents suffered unimaginable property loss, as their homes were utterly decimated by the storm. When the people of St. Bernard tried to hold the federal government responsible for its inaction, the U.S. Court of Appeals for the Federal Circuit denied their claim.

Still, the Supreme Court has established that if the government floods private property, it is a taking for which the Fifth Amendment requires just compensation. Cases such as Arkansas Game & Fish Commission v. United States (2012) consistently stand for this important principle. Numerous state courts agree on this issue and hold that when government inaction causes flooding and property loss, it constitutes a compensable taking.

The Federal Circuit, on the other hand, has tried to create a distinction between government action and inaction. The court’s opinion in this case is an attempt to rewrite takings jurisprudence, providing the government with a convenient escape route by which it can avoid the constitutional responsibility to compensate landowners for taking their property by not taking reasonable steps to prevent damage.

This loophole cannot be allowed to fester, so St. Bernard Parish has asked the Supreme Court to settle this issue definitively. Cato and ensemble cast of organizations and professors have filed an amicus brief supporting that petition. We argue that when the government, whether through action or inaction, takes private property, it has a distinct, well-established responsibility to compensate landowners.

The ongoing controversy surrounding the murder of a dissident Saudi journalist and Saudi Arabia’s brutal bombing campaign of a largely defenseless neighboring Yemen, which has come with an enormous human toll, have elicited increased scrutiny over the U.S.-Saudi alliance. The White House remains supportive of Riyadh, both diplomatically and with continued military aid. Republicans have offered mildly critical words for the Saudi regime, while an increasing number of Democrats are calling for a fundamental reassessment of the U.S.-Saudi relationship.

Such a reassessment is long overdue. Washington’s partnership with Riyadh has often been treated as sacrosanct, at least here in the nation’s capital. It should have been clear long ago that the Saudis are not good allies. In fact, they often act in ways that undermine U.S. interests. Backing one of the world’s most appallingly tyrannical regimes to the hilt has actually not been a net positive for U.S. national security or for stability in the region.

With any luck, the unfolding drama over the U.S.-Saudi partnership will extend beyond merely this troubled bilateral relationship to U.S. policy in the Middle East as a whole. The United States is deeply entangled in this region, with roughly 50,000 boots on the ground, dozens of permanent military bases and deployed assets, and a staggering sum of taxpayer dollars, essentially wasted. We are engaged in active combat operations in at least five countries across the Middle East and North Africa, bogged down in endless counter-insurgency campaigns, grisly counter-terrorism operations, and inglorious proxy wars. Washington also tasks Central Command with the responsibility of supporting, training, arming, and stabilizing various corrupt dictatorships, while we also try to put the squeeze on Iran.

A well-timed paper  by Chatham House’s Micah Zenko clarifies the failure of U.S. regional objectives, despite the gargantuan resources devoted to them. Zenko lists four primary objectives: (1) enhancing regional security and reducing political instability within Middle East governments; (2) preventing the emergence of terrorist safe havens; (3) ensuring the free flow of energy resources; and (4) enabling allies to build enough military capacity to defend themselves.

We have failed at each of these. Indeed, far from serving a stabilizing role, U.S. policy has rather plainly destabilized the region. The Iraq War upended the Middle East, empowered Iran, and fueled a new generation of jihadist terrorists. Washington bungled a series of changes in the Egyptian regime and helped (along with other external actors) fuel Syria’s civil war. The Obama administration’s Libya war created anarchy and new refugee flows. And our longstanding support for Saudi Arabia as a balance to Iran has not only failed to roll back Iran’s regional activity, but it has also emboldened Riyadh to act aggressively and pick fights with several of its neighbors.

Second, the effort to prevent terrorist safe havens is based on a false premise that territorial safe havens matter much at all. But even accepting the flawed premise, U.S. policies have multiplied the number of “ungoverned spaces” as incubators for terrorist groups. As Zenko points out, “troops maintained in foreign countries to prevent terrorism actually increase the probability that those troops’ home countries and global interests will experience terrorism.”

Third, there is good reason to believe that U.S. efforts to ensure the free flow of oil actually address a problem that largely solves itself. Each state has a strong interest in maintaining the flow of oil through the Persian Gulf, and Saudi Arabia is not the juggernaut it once was. Global energy markets have evolved over the last 40 years and are much more resilient and able to overcome supply shocks than in the past. At best, patrolling the Persian Gulf waterway deters a scenario - an attempt by Iran or some other party to close to Strait of Hormuz - that is already an extremely low probability event.

Fourth, the United States has certainly provided numerous authoritarian regimes in the Middle East with the military capability and know-how to protect themselves, but whether that has redounded as a benefit to U.S. interests and regional stability is another question entirely. Much of what we provided to Iraq ended up in the hands of ISIS. American made weapons have been used to ruthlessly suppress peaceful protesters, from Egypt to Bahrain. And U.S. military support for Saudi Arabia is currently enabling unspeakable war crimes in Yemen, in a conflict that has actually bolstered the position of Al-Qaeda in the Arabian Peninsula (AQAP).

Washington is terrible at self-evaluation. Our record in the Middle East is one of abject failure. Strangely, even when we have presidents that agree with that assessment to one degree or another, policy doesn’t change. President Obama wanted to shift U.S. focus and resources away from the Middle East to East Asia. It didn’t happen. Trump, in April 2018, said, “We’ve spent $7 trillion in the Middle East and we’ve got nothing for it. Nothing, less than nothing, as far as I’m concerned.” And yet his administration has increased overall troop levels in the region, doubled down on backing traditional allies, and revived an anti-Iran posture that harkens back to the Bush era neocons.

A real reevaluation of U.S. policy toward this region is imperative. After decades of trying, Washington has failed in its primary objectives. A new and enlightened policy framework for the region should appreciate the dearth of serious threats to core U.S. security emanating from the region and should emphasize diplomacy as a way to manage relations with regional actors, rather than apply heavy-handed military solutions to every conceivable problem in the area.

Yesterday, WBUR in Boston reported on a simple technology that could reduce the number of opioid deaths: fentanyl test strips. The strips can be used by drug users to test for the presence of fentanyl in drugs they buy on the street. A Brown University study found that,

Sixty-two percent of young adult drug users who participated in the study in Rhode Island dipped the thin, pliable strips into the cooker where they heated the powder, or into their urine sometime after injecting. Half reported a positive result — a single dark pink line emerging on the strip — signaling fentanyl.

Most changed their routine as a result in at least one of these ways: 45 percent said they used a smaller amount of the drug; 42 percent slowed down their use; 39 percent used with someone else who could help if they ODed; and 36 percent did a test amount before injecting the full syringe.

While these routine changes aren’t as effective at preventing overdose as not taking the drugs at all, they do reduce the risk of a fentanyl overdose. So why aren’t more of these potentially lifesaving strips in the hands of those who could use them? As WBUR recounts,

But few drug users have access to fentanyl test strips. They are not FDA-approved, so are not for sale in drugstores or other outlets in the U.S. A handful of harm reduction groups fund distribution through private contributions. Other groups say they’d like to order the strips from the Canadian manufacturer but can’t afford the cost: about $1 per strip.

As federal and state officials are scrambling to come up with policy responses to the opioid epidemic it seems they are ignoring one easy measure: get out of the way and let the market provide low-cost harm reduction tools to those who can benefit from them.

Written with research assistance from David Kemp.

If the Democrats take the House, they’ll impeach Justice Kavanaugh, President Trump warned at a mass rally in Iowa last week. “Impeach, for what? For what?” Trump demanded. For perjury, most likely: “If we find lies about assault against women,” says Rep. Luis Gutierrez (D.-Ill.) one of several House Judiciary Committee members calling for renewed investigation, “then we should proceed to impeach.” 

I’m not the newly-minted Justice’s biggest fan. From the start, I thought Kavanaugh was a lousy pick for the Court: weak on the Fourth Amendment and unreasonably fond of extraconstitutional privileges for the president. I’ve also argued, at great length, that we ought to impeach federal officers more frequently than we do. That goes for Supreme Court Justices as well. The Framers thought impeachment could serve as a valuable check on abuses of judicial power: that we’ve managed to impeach just one member of the “high court” in 230 years is pretty anemic. 

All that said, I find the case for impeaching Justice Kavanaugh uncompelling, for the reasons that follow.

It’s true that there’s ample precedent for impeaching federal judges for perjury. Our last five judicial impeachments were based on charges of lying under oath. 

Here’s a brief rundown of each case: in 1986, the House impeached, and the Senate removed, Judge Harry E. Claiborne (D. Nev.) for filing false tax returns under penalty of perjury (Claiborne had been convicted of those offenses earlier that year, becoming the first sitting federal judge to be incarcerated). Three years later, the Senate removed two more judges for lying under oath. One, the inauspiciously surnamed Walter L. Nixon (S.D. Miss.), was serving five years in prison for lying to a federal grand jury about his attempt to influence a drug smuggling prosecution. The other, Alcee L. Hastings (S.D. Fla.), had been prosecuted for soliciting a $150,000 bribe in exchange for reducing the sentences of two mob-connected developers who’d robbed a union pension fund. He beat the rap in court, but lost his post when the Senate voted to remove him for the bribery scheme and perjuring himself at trial. (Hastings bounced back pretty quickly, however, winning election to the U.S. House of Representatives in 1992. He currently represents Florida’s 20th congressional district.)

More recently, we have the grotesque behavior of Judge Samuel Kent (S.D. Tex.), impeached in 2009 for sexually assaulting two court employees and lying about it to federal investigators. (Kent resigned before completion of his Senate trial.) Finally, there’s Judge G. Thomas Porteous (E.D. La.), impeached and removed in 2010 for “a longstanding pattern of corrupt conduct,” including kickbacks from attorneys, perjury in his personal bankruptcy filing, and “knowingly ma[king] material false statements about his past” to the Senate Judiciary Committee “in order to obtain the office of United States District Court Judge.” 

In principle and in practice, then, perjury is an impeachable offense. That obviously includes lying under oath to gain confirmation to higher office. In Monday’s Wall Street Journal, David Rivkin and Lee Casey insist that “Justice Kavanaugh cannot be impeached for conduct before his promotion to the Supreme Court,” including “any claims that he misled the Judiciary Committee.” But that’s nonsense. Misleading the Judiciary Committee about prior conduct was precisely what was at issue in the Porteous impeachment. 

And yet, the cases outlined above differ from Brett Kavanaugh’s in at least one crucial respect: in each of them, Congress had overwhelming evidence of impeachable falsehoods. Claiborne, Nixon, and Kent were already in federal prison when the House voted to impeach. Hastings and Porteous were removed after exhaustive investigations pursuant to the Judicial Conduct and Disability Act convinced their colleagues impeachment referrals were warranted. Indeed, despite Hastings acquittal in his criminal trial, a Judicial Investigating Committee concluded there was “clear and convincing evidence” he lied and falsified documents in order to mislead the jury.

When it comes to the central charge against Kavanaugh, however, clear and convincing evidence is unlikely to emerge. I don’t know if he’s lying about whether he sexually assaulted Christine Blasey Ford in the early ‘80s, and neither do you. It’s hard to imagine that further investigation, however exhaustive, will lead to dispositive proof one way or the other. 

Members of Congress are, of course, free to adopt a less stringent burden of proof—and maybe they should. The Constitution’s impeachment provisions nowhere specify clear and convincing evidence, proof beyond a reasonable doubt, or any particular evidentiary standard. That recent judicial impeachments have mirrored criminal-law standards is a result of the post-1980 statutory regime for disciplining federal judges and the “Overcriminalization of Impeachment” more generally. Since the purpose of impeachment is less to punish bad actors than to expel unfit officers, looser standards are arguably warranted. 

But unless members of Congress are willing to proceed on something closer to reasonable suspicion, any attempt to impeach Justice Kavanaugh would have to focus elsewhere, where the evidence for false statements is stronger. Did he testify falsely “regarding what he knew about emails stolen from the Senate Dems by a Republican operative” in judicial confirmation fights in the early 2000s? Did he attempt to mislead the Senate about his high-school yearbook?

In fact, I strongly suspect Kavanaugh lied about several items on his yearbook page. Was the reference to “Renate Alumnius” really just “intended to show affection” toward a female student at a nearby school? Was “boof[ing]” meant to indicate “flatulence”? I went to high school in the mid-Atlantic in the ‘80s, several years after Kavanaugh graduated, and I remember the term being a corny euphemism for sex. That usage better fits what Kavanaugh actually wrote—“Judge—Have You Boofed Yet?”—unless we credit him with unusual concern about his drinking buddy’s intestinal discomfort. 

But just going through the “boof-sleuthing” exercise in the prior paragraph cost me several IQ points and a soupcon of self-respect. The Framers viewed impeachment as a solemn and serious affair. Hamilton described “the awful discretion which a court of impeachments must necessarily have, to doom to honor or to infamy the most confidential and the most distinguished characters of the community.” A Kavanaugh impeachment inquiry would be awful in a different way: a spectacle proving mainly that high school never ends.  

“Imagine what it would look like,” writes Stephanie Mencimer in Mother Jones:

Hours of testimony from Squi, Timmy, and PJ over whether a Devil’s Triangle is really, as Kavanaugh testified, a drinking game. Expert debates over the definition of “boofing.”…. Michael Avenatti could figure prominently. It’s the kind of stuff that could end up making former House Oversight Committee chairman and Benghazi conspiracy theorist Rep. Jason Chaffetz (R-Utah) look like an elder statesman.

Really, must we? Sure, it might be entertaining to hear Rep. Alcee Hastings (D-Fla.), impeached for lying about participation in a gangland bribery scheme—and lately dogged by his own sex scandal—justify a vote to impeach over “Renate Alumnius.” But the proceeding as a whole would hardly be edifying. 

 A much-discussed recent survey puts two-thirds of Americans into a category the authors dub “the exhausted majority”—voters who are “frustrated and fed up with tribalism.” A Kavanaugh impeachment effort seems tailor-made to exhaust them even further.  

 

Max Gulker of the American Institute for Economic Research has a great short paper out summarizing the problems with a federal jobs guarantee. It echoes many of the issues that I raised about such a program on this blog.

One thing that is often underappreciated is just the sheer scale of the programs proposed. For reasons I outlined, the true numbers could potentially be much higher than the Levy Institute and Center on Budget and Policy Priorities (CBPP) worked proposals. But even taking their numbers as given, the estimated 10.7 million participants according to CBPP and 12.7-17.5 million from Levy would make the federal program by far the world’s largest employer, if thought as a single firm or entity.

Consider the striking chart below.

At the Levy report’s upper-bound estimate, the numbers employed would exceed the world’s nine largest employers combined. Even the CBPP’s lower estimate would only be marginally below the employment level of the world’s five largest employers combined.

When is it appropriate to privatize the work of public prosecutors? And does it make things better or worse when “cause” lawyering is at issue? As Jeff Patch reports at Real Clear Investigations, a project called the State Energy & Environmental Impact Center at New York University supplies seasoned lawyers to the offices of nine state attorney general offices, plus D.C. They serve there in such roles as special assistant attorney general while being paid by the NYU project, which is funded by and closely identified with former New York City Mayor Michael Bloomberg. The catch, which explains why the program is not likely to hold appeal for AGs in some other states: “Under terms of the arrangement, the fellows work solely to advance progressive environmental policy at a time when Democratic state attorneys general have investigated and sued ExxonMobil and other energy companies over alleged damages due to climate change.” 

Private funding of lawyers inside public prosecutors’ offices is not a new idea. Iowa’s AG office, for example, told Patch that it has employed legal talent from an American Bar Association-supported program. In another variation, it is not unusual for prosecutors to accept funding from the insurance industry for efforts to combat insurance fraud. Undergirding the political viability of these schemes is the (perhaps wobbly) premise that the state office is not farming out influence over politically or ideologically sensitive policy matters to outside groups that may have their own agenda.  

The AG offices participating in the program (Illinois, Maryland, Massachusetts, New Mexico, New York, Oregon, Pennsylvania, Virginia, and Washington state, as well as the District of Columbia) might plausibly argue that the projects they’re paying the Bloomberg embeds to work on are mostly ones they’d want to pursue zealously in any case, such as suing the EPA and other federal agencies over alleged lapses. Critics point to the ideologically fraught nature of the work and say the arrangement could violate some states’ ethics rules or generate improper conflicts of interest, as through an obligation to report activities back to the Bloomberg center. 

The spotlight on backstage doings at state AG offices arises from reports by Chris Horner of the Competitive Enterprise Institute based on public records requests that were fought tooth and nail by various AGs. (Besides the CEI report on attorneys general, Horner’s written a companion report on governors.) CEI is anything but a disinterested party in all this, of course, having been hit with a AG subpoena (later beaten back in court) over its supposedly wrongful advocacy on climate issues. That was itself part of a subpoena campaign targeting more than 100 research and advocacy groups, scientists, and private figures on the putatively wrong side of climate debates, which we and others decried at the time as a flagrant attack on rights protected by the First Amendment. 

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