Archives: 02/2009

New Podcast: ‘Paul Krugman’s Nostalgianomics’

Expanding on his February 9th White Paper, “Paul Krugman’s Nostalgianomics: Economic Policies, Social Norms, and Income Inequality”, Cato Vice President for Research Brink Lindsey discusses the problems with the 2008 Nobel laureate’s analysis of income inequality in today’s Cato Daily Podcast.

[Krugman] has a clear ideological incentive to portray the ‘50’s and ‘60’s as this enlightened period of governance. Liberals were in charge, it was a time of very activist government, lots of intervening in markets, and yet the economic numbers were stellar. Growth was fantastic, income growth in particular was great, and these egalitarian values of income compression were being fulfilled as well. To him, it looks like a wonderful model for liberals of today. ‘Look back at what liberals did in the 50s and 60s and we can do that again.’ But to reach that kind of ideologically satisfying, for him, conclusion I think he has to be very selective about what was actually going on back in the 50s and 60s. He has to cherry-pick policies he likes.

Trying Al-Marri

The Washington Post is reporting that the Obama administration is planning to charge Ali Saleh Kahlah al-Marri with providing material support to Al Qaeda.  Al-Marri is an alleged sleeper agent for Al Qaeda, and the FBI intercepted him while he was an exchange student in Illinois.  Prior to his trial, the Bush administration moved him into military custody and dropped the charges with prejudice, meaning that they could not be re-filed.  Apparently, there is enough evidence to file a fresh indictment.  The ACLU statement is available here.  My prior posts on the topic are available here and here.

This is probably an attempt to remove the case from the Supreme Court’s docket and avoid the constitutional controversy of keeping someone out of the criminal justice system.

The Supreme Court should not be deterred from hearing the case.  Cato filed an amicus brief with the Constitution Project and the Rutherford Institute in al-Marri’s case.  We were not alone, as virtually every civil liberties organization weighed in.  A group of retired military officers filed an amicus brief arguing that the Posse Comitatus Act and associated statutes specifically prohibit the “direct participation by a member of the [Armed Forces] in a search, seizure, arrest, or other similar activity unless participation in such activity by such member is otherwise authorized by law.”

It is time to drive a stake through the heart of domestic military detention.  The Bush administration moved detainees into military custody and to different jurisdictions to avoid judicial review.  In 2006 the Supreme Court denied certiorari to convicted Al Qaeda operative Jose Padilla’s habeas petition.  He had just been moved to civilian custody and indicted in Florida, so he was no longer detained by the military.  The prospect of returning to military custody was taken seriously enough by three justices that they voted to grant certiorari - one shy of the requirement for the Court to hear the case.

Kennedy was sufficiently unnerved by domestic military detention that, although he voted not to grant certiorari, he wrote separately.  “In light of the previous changes in his custody status and the fact that nearly four years have passed since he was first detained, Padilla, it must be acknowledged, has a continuing concern that his status might be altered again.”  Chief Justice Roberts and Justice Stevens joined him.

As I have said before, the line between the civilian criminal justice system and the military is in many ways the line of liberty.  The Court should take up this case and put that line back in place.

Calling All Harvard Alumni

As my colleague Dan Mitchell has noted, Harvard is about to hold a conference about how the “free market ideology has dominated  legal discourse and lawmaking the last few decades.”  That’s a dubious narrative (to say the least (pdf)).

In any event, Harvard alums who read this blog should know that Cato adjunct scholar Harvey Silverglate  is running for a position on Harvard’s Board of Overseers.  Pass the word to all the Harvard alumni you may know.  Additional background here.

New Mandatory Savings Plan?

I haven’t seen any media attention paid to it yet, and I don’t recall the president mentioning it in his speech Tuesday night.  Regardless, p.37 of today’s budget blueprint calls for “Making Saving for Retirement Easier as the Economy Recovers.” Although it sounds innocuous, I believe the contents could be cause for alarm:

“Over the long-term families need personal savings, in addition to Social Security, to prepare for retirement and to fall back on during tough economic times like these. However, 75 million working Americans—roughly half the workforce—currently lack access to employer-based retirement plans. In addition, the existing incentives to save for retirement are weak or non-existent for the majority of middle and low-income households. The President’s 2010 Budget lays the groundwork for the future establishment of a system of automatic workplace pensions, on top of and clearly outside Social Security, that is expected to dramatically increase both the number of Americans who save for retirement and the overall amount of personal savings for individuals. research has shown that the key to saving is to make it automatic and simple. Under this proposal, employees will be automatically enrolled in workplace pension plans—and will be allowed to opt out if they choose. Employers who do not currently offer a retirement plan will be required to enroll their employees in a direct-deposit IRA account that is compatible with existing direct-deposit payroll systems. The result will be that workers will be automatically enrolled in some form of savings vehicle when they go to work—making it easy for them to save while also allowing them to opt out if their family or individual circumstances make it particularly difficult or unwise to save. Experts estimate that this program will dramatically increase the savings participation rate for low and middle-income workers to around 80 percent.”

Here are my concerns just off the top of my head:

Obviously, it represents yet another government encroachment upon individual liberty.  While employees would be “allowed” to opt out, employers would not.  More ominously, while there is no mention of government subsidization of individual plans or forced contributions by employers, how long will it take for activists and their congressional allies to go down those roads?  I can already envision hordes of politicians bemoaning the inability of low- and moderate-income workers to direct any portion of their wages toward their accounts.  And don’t just think this will be limited to leftist politicians.  When I worked for the U.S. Senate a conservative senator once asked me to design a mandatory savings plan for all citizens in which the government and employers would “contribute.”

I guess the bright side here is that the administration is implicitly acknowledging that Social Security isn’t the wonderful retirement nest egg defenders have wanted us to believe.  I also can’t help but chuckle at the political reintroduction of savings as being beneficial.  Over the past year we’ve been repeatedly warned that savings is bad and spending is good.  Anyhow, this issue is going to be one to watch going forward.

New on YouTube: Juan Carlos Hidalgo on Obama’s Latin American Policy

Appearing on HITN’s “Destination Casablanca,” Cato analyst Juan Carlos Hidalgo discusses Latin American policy, Cuba and the future of the drug war under the Obama administration.

“It’s not Washington’s business to try to impose or suggest an agenda for Latin American countries,” Hidalgo says.

For more videos, subscribe to Cato’s YouTube channel.

“It Is a Sordid Business, This Divvying Us by Race”

Yesterday Cato filed a brief in what will be one of the most talked-about cases in the current Supeme Court term, Ricci v. DeStefano.

In Ricci, the City of New Haven, Connecticut developed an exam for firefighters seeking promotion to command positions. The city went out of its way to ensure that the exam was race-neutral and tested only relevant skills and abilities. When the exam results came down, however, white candidates had done better than their African-American and Hispanic peers. Given the few command positions available and the city’s rule that the highest scorers on an exam be promoted first, few minority firefighters would thus have been eligible for promotion. After a series of meetings and political machinations, the city refused to certify the results of the exam and promote anyone. Several of the firefighters who would have been eligible for promotion filed a lawsuit, claiming racial discrimination under Title VII.

The district court, affirmed by the court of appeals, granted summary judgment for the defendants, holding that the City’s alleged fear of an adverse impact claim (a different type of racial discrimination claim under Title VII) – based merely on the fact that the exam results yielded a racial disparity – was a legitimate reason for its decision not to certify the exams.

Cato’s brief, joined by the Reason Foundation and the Individual Rights Foundation, points out the absurd incentives at play: if the lower court’s ruling stands, employers will throw out the results of exams (or other criteria) that produce racial disparity, even if those exams are race-neutral, entirely valid, and extremely important to the employer and (as in this case) the public.

The Case will be argued April 22.