Archives: 09/2009

Beach v. Florida

Cato Adjunct Scholar and Pacific Legal Foundation Senior Staff Attorney Tim Sandefur published an excellent op-ed in the National Law Journal this week on the upcoming Supreme Court case Stop the Beach Renourishment v. Florida Department of Environmental Protection:

The case involves a Florida statute determining the boundaries of oceanfront property. Under a 1961 law, the state drew a brand-new line separating public and private land on certain beaches, meaning that some land that would have been privately owned would belong instead to the state. A group of property owners filed suit, arguing that the law deprived them of property without just compensation, violating the state and federal constitutions.

Last December, Florida’s highest court rejected their arguments. It held that, while the new boundary gave the state ownership of the beach land, the former owners actually had no such right to begin with. Despite more than a century of Florida law to the contrary, the court announced that the owners actually only had a right to “access” the ocean, and because the state promised to allow them to keep crossing the land to reach the water, it actually hadn’t taken anything away when it seized the land itself.

Thus, by simply reinterpreting state property law, the court allowed the state to take property without compensation with a mere stroke of a pen. Yet the U.S. Constitution forbids states from confiscating property - even through legal legerdemain - without payment.

[.]

[T]he U.S. Constitution also guarantees every American’s right to due process of law and to protection of private property. If state judges can arbitrarily rewrite a state’s property laws, those guarantees would be meaningless. More than four decades ago, Justice Potter Stewart warned that, without a constitutional limit on the states’ power to determine the nature of property, states could “defeat the constitutional prohibition against taking property without due process of law by the simple device of asserting retroactively that the property it has taken never existed at all.”

It is well-worth a full read here.

Despite the dreadful decision in the Kelo case several years ago, the fight to maintain the fundamental right to private property continues in our courts and legislatures. Tim and PLF have been doing yeoman’s work in the fight for property rights, and I am proud to team Cato up with them and the NFIB Legal Center in filing an amicus brief on behalf of the rightful property owners in this case. You can download the PDF of the brief here.

Tuesday Links

  • Paul Krugman claims a victory for Big Government, which he says “saved” the economy from an economic depression. Alan Reynolds debunks his claim and shows why bigger government  produces only bigger and longer recessions.
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Bailouts Make Money, If You Ignore Losses

Just when you think the headlines could not get any more absurd, the Wall Street Journal declares today that the “Bailouts Yield Returns Amid Risk.” while yesteday’s Financial Times lets us know that the Federal Reserve is turning a profit on its lending programs.

What is missing from these headlines is that while some loans and investments have provided a positive return to taxpayers, the overall programs themselves are estimated to cost the taxpayers hundreds of billions.  Overall the government has received about $30 billion in dividends, premiums for guarantees, and interest payments:  $7 billion in TARP dividends from banks, $14 billion for the Federal Reserve from purchases of mortgage-backed securities and other investments, and $9 from the FDIC’s bank debt guarantee program.

While $30 billion may sound like a substantial amount of money, it is less than a tenth of the $356 billion that the Congressional Budget Office tells us we will never see back from TARP.  And the Fed’s income from purchasing Fannie and Freddie securities will also amount to about a tenth of the ultimate losses we are likely to suffer from bailing out those entities.  In regard to the FDIC’s debt guarantee program, premiums are paid up front, making that look like income, while the guarantees will remain outstanding for several years.  Given that there is currently almost $340 billion in FDIC guaranteed bank debt outstanding, all it would take is a loss rate of 2.6% on that debt to wipe out any premiums collected so far.

Before Washington starts to spend all its newfound earnings, we should all stop and remember that these bailouts continue to leave the taxpayer in a pretty big hole.

Turning Our Back on Torture

NRO’s Rich Lowry just weighed in on the torture debate with some false assumptions and already-debunked assertions. He says that the Obama administration turned its back on “life-saving intelligence-gathering” techniques.

In point of fact, the United States turned its back on “Enhanced Interrogation Techniques” (EIT’s) a long time ago. American soldiers used waterboarding to gain intelligence in the Philippines occupation immediately after the Spanish-American War. The response? President Roosevelt, who led the Rough Riders up San Juan Hill, demanded that the soldiers employing the “water cure” be prosecuted. American soldiers who employed waterboarding in Vietnam were likewise court-martialed. A previous post at NRO’s The Corner makes this clear.

The bottom line? The Geneva Conventions apply to the modern battlefield, asymmetric or not. The Supreme Court said so in 2006, so a new memorandum from the OLC finding that the Geneva Conventions do not apply is out of the question. Re-authorizing EIT’s is a legal impossibility. While the Right tries to argue their efficacy in a partisan fight to prevent prosecution, this is an argument limited to a political rehabilitation, not a legal one.

Lowry also exaggerates the importance of corroborating information that Khalid Shaykh Mohammed (KSM) gave under EIT duress:

According to the IG report, KSM’s cooperation led to the arrest of a truck driver in the U.S. named Iyman Faris who was plotting attacks on New York landmarks; of a sleeper operative in New York named Saleh Almari; of an operative named Majid Khan who had easy entree into the U.S.; and of two Pakistani businessmen whom KSM “planned to use to smuggle explosives into the United States.”

“Saleh Almari” appears to be Ali Saleh Kahlah al-Marri. I’ve written extensively about al-Marri, who was apprehended in December, 2001, long before KSM was in custody. Here is the indictment.

As Peter Bergen points out, Iyman Faris won’t make the terrorist all-star list any time soon. “In 2002 he researched the feasibility of bringing down the Brooklyn Bridge by using a blowtorch, an enterprise akin to demolishing the Empire State Building with a firecracker.”

Bergen also sheds some light on the collars of Majid Khan and the Parachas (the “two Pakistani businessmen”):

The Parachas are a father-and-son team; the former, arrested in Thailand in the summer of 2003, is being held at Guantánamo and has yet to face trial, while his son was convicted in 2005 of providing “material support” to al Qaeda.

Majid Khan was arrested in Pakistan only four days after KSM was captured, suggesting that this lead came not from interrogations but from KSM’s computers and cell phones that were picked up when he was captured.

The only valid criticism that Lowry levels is with regard to the limitation of the new High-Value Detainee Interrogation Task Force, but not in the way you might think. While limiting interrogations to the techniques in the Army Field Manual keeps brutality off the table, certain law enforcement techniques such as the Prisoner’s Dilemma are valid and ought to be used. Terrorist networks are more like crime syndicates than an infantry battalion in organization; if promises of reduced sentences can get terrorists to talk about their comrades then by all means use them.

Who Will Bail Me Out of a Mexican Jail?

Greetings from the OECD Global Tax Forum in Mexico City.

Our erstwhile friends at the OECD are not very tolerant of dissent, and this trip is a good example. First, they bullied the hotel in Cabo into canceling my reservation. Apparently, my mere presence would create a disturbance to their plans for one-size-fits-all taxation. But then the conference got moved to Mexico City because of the hurricane and the bureaucrats did not have the ability – at least on short notice – into coercing the new hotel into denying me the ability to get a room (not that it would have been a big deal to register someplace else, but it is somewhat galling that petty bureaucrats seem so intent of throwing roadblocks in the way of the folks who pay their bloated – and tax free - salaries).

Today, however, the OECD upped the ante. I have been hanging out in the public lobby outside of the OECD’s conference room. This location makes it easy to communicate with the delegates from low-tax nations. This apparently irritates the bureaucrats, so they sent one of their security officials to ask me to leave. I asked what right he had to make such a request, especially since I was in a public area. He claimed that the lobby – which also serves as the entrance to a restaurant and the business center – was reserved for the conference. I said that was absurd and would like to see the hotel management. Perhaps more important, I turned to the reporter next to me and started explaining that this was a typical example of the OECD’s reprehensible strong-arm tactics. This flustered the security guy and he backed down.

But I suspect that this is not the end of the story. And since I’m not overly confident that the Mexican government respects the rule of law, I do have visions of getting carted off to an unpleasant jail. If you don’t see anything in this space tomorrow morning, that won’t be a good sign.

For those interested in more background on the issue, read this memo and/or watch my videos on tax competition and tax havens.

Fire! Fire! Fire!

fireIt’s summer again, which means it is the time of year for the obligatory photos of wildfires in Southern California. This particular fire, known as the Station Fire, nearly doubled in size in the last 24 hours from 98 to 164 square miles. So far, it has burned at least 18 buildings and cost the lives of at least two firefighters.

The fire began in the Angeles National Forest, and Congress will no doubt respond by giving the Forest Service even more money to suppress such fires in the future. In fact, as I show in my Cato Policy Analysis, The Perfect Firestorm, the Forest Service has, in effect, a blank check to put out fires.

It freely uses that blank check. It has so far spent about $14 million fighting the Station Fire, which supposedly threatens 12,000 homes. But it has also spent $2.5 million on Oregon’s Canal Creek Fire, which is less than half a square mile in size and does not threaten any homes or other structures. Better safe than sorry — as long as you have a blank check.

Southern California forests are extremely fire prone — their natural fire regime is to completely burn over every 50 to 100 years. Building homes in such an area might seem foolish, so naturally there have been calls for “fire plain zoning,” similar to flood plain zoning, that would restrict such construction.

FlintridgeIn fact, properly designed homes and landscaping can easily withstand such fires. Most homes destroyed by wildfires are ignited either by burning embers landing on flammable roofs or by the radiant heat from trees or   grasses burning nearby.  Building homes with nonflammable roofs and eves, and landscaping with well-tended lawns and a minimum of flammable trees essentially makes homes fireproof.

Most civilian deaths from wildfire take place during evacuations, not from the fire itself. Homes that are designed to withstand wildfires are known as “shelter-in-place” homes because the residents will be safer in the homes than trying to evacuate.

In 2007, CBS News reported that a fire swept through two San Diego suburbs built to shelter-in-place standards, and “not one home was even touched by flames.” Perversely, the reporter concluded that people should not be allowed to build to those standards because it would just encourage them to live in fire-prone areas.

In reality, the lesson is that it would be a lot less expensive to promote shelter-in-place construction standards and retrofitting and then simply let the fires burn at their normal frequencies. The homes would be safe, the forests would be “natural,” and fewer firefighters would be at risk.

Why doesn’t this happen?

Simple: money. The Forest Service gets a blank check for putting out fires, but almost no money for helping people fireproof their properties. So it continues to spend billions on fire suppression, mainly to protect people’s homes, when a lower-cost strategy is readily available.

Photo credit: MB Trama and DisneyKrazie on Flickr.

State Government Job Security

In his recent rebuttal to critics of his finding that the average federal employee makes a lot more in salary and benefits than the average private sector employee, my colleague Chris Edwards notes:

A final consideration is to look at a “market test” of the adequacy of compensation in the public sector–the quit rate. The voluntary quit rate in the federal government is just one-third or less the quit rate in the private sector (Table 16 near the bottom here).  That is strongly suggestive of ”golden handcuffs” in federal employment. While many federal workers probably grumble about their jobs (as many private sector workers do), they know that the overall package of wages, benefits, and extreme job security (Table 18 here) is very hard to match in the competitive private market, and so they stay put.

Looking at that Table 16 of government employment data shows that the “quit rate” in state and local government is similar to the federal figure, and in some years, even lower.  A Stateline.org story from this past Thursday notes:

In the face of unrelenting gloom, Indiana personnel director Daniel Hackler says the recession offers a few bright spots. The state’s poor private-sector job market – worse than the national average – has lowered voluntary turnover and made state government the employer of choice. Financial worries have also stanched a retirement boom that had threatened to drain the state of much of its institutional knowledge.

As I mentioned a couple weeks ago when the Rockefeller Institute announced that state and local government employment has gone up since the beginning of the recession while the private sector has bled jobs, state government “as the employer of choice” is bad news for the economy as government jobs are inherently parasitic.

And while we’re on the subject, I can’t help but take a shot at Stateline’s characterization of Indiana’s employee performance review system as “rigorous.”  Having worked in Indiana’s Office of Management and Budget, I certainly don’t recall anything “rigorous” about the state’s management of its studs and duds (to say there was a lot more of the latter would be an understatement). I also knew more than a few apparent “studs” pulling in nice incomes and benefits who really deserved pink slips instead of pay increases. But then again, most of the these “make government run like a business” initiatives like “pay for performance” and “performance metrics” are really just serious sounding gimmicks that politicians employ when they don’t have the desire or stomach to actually cut government or reduce its role in our lives.