Archives: 06/2012

Apple Users Are Stupid

Wow! That is fun to say! After suffering years under the smug superiority of my Apple-using friends…

The evidence that they’re stupid is not evidence of stupidity at all. It’s evidence that they are willing to pay a premium for luxury/status goods like their Apples. The evidence was gathered by the Orbitz travel web site, which has experimented with pricing hotel rooms consistent with what Apple users are likely to pay: more.

Perhaps we’ll hear wails of outrage from self-styled consumer advocates, the drama heightened by the glow of the apple icons on their Macbooks. Perhaps Congress will look into “unfair” pricing schemes. I’m hard-pressed to see how offering a price based on an indicator of one’s willingness to pay is unfair.

What’s happening here is the articulation of pricing and marketing practices that have been at play probably since commerce began. (Perhaps you’ve heard of haggling.) I’m not saying commerce began around his time, but my dad used to tell me about when he sold suits. If a guy wearing a fancy blue suit came into the store, he would try to sell him a fancy blue suit. If a guy came in wearing something a little downscale, pops steered him over to the sale rack. Now that’s happening with digital data rather than analog data.

Perhaps public reaction will be strongly opposed. A rough sense of pricing “fairness” will threaten differential pricing’s practitioners with too much opprobrium to make it worth the risk. Or perhaps Apple users are relatively indifferent to price and they won’t be able to sustain their outrage. I’m in favor of whichever development the free interaction of sellers and buyers produces.

I hope you gather the negative inference in that last sentence: this is not an issue for politicians to meddle with. If they did, that would be truly stupid.

Update: Kashmir Hill, not befogged with glee at Apple users’ travails, writes with more care, noting, “Mac users can still choose to sort their hotel and flight options by price, and then see the cheap stuff. And PC users can still filter their results so they get four- and five-star hotel options instead of a three-night deal at the Super 8 Hotel.” So it’s not actually differential pricing, though I wish it were…

This Is What Political Judging Looks Like

Today, as I predicted six months ago, the Supreme Court summarily reversed the Montana Supreme Court’s attempt to nullify the controversial 2010 decision of Citizens United v. FEC. The Montana Supreme Court had essentially ruled that Citizens United is a decision based on facts rather than law—that is, that Montana’s situation of corporate corruption in elections was factually unique, thus exempting the state from compliance with Citizens United. In an admirable dissent, Justice James C. Nelson explained precisely where the court went wrong:

Unquestionably, Montana has its own unique history.  No doubt Montana also has compelling interests in preserving the integrity of its electoral process and in encouraging the full participation of its electorate.  And Montana may indeed be more vulnerable than other states to corporate domination of the political process.  But the notion argued by the Attorney General and adopted by the Court—that these characteristics entitle Montana to a special “no peeing” zone in the First Amendment swimming pool—is simply untenable under Citizens United.

Admittedly, I have never had to write a more frustrating dissent.  I agree, at least in principle, with much of the Court’s discussion and with the arguments of the Attorney General.   More to the point, I thoroughly disagree with the Supreme Court’s decision in Citizens United.  I  agree, rather,  with the eloquent and, in my view, better-reasoned dissent of Justice Stevens.  As a result, I find myself in the distasteful position of having to defend the applicability of a controlling precedent with which I profoundly disagree.

That said, this case is ultimately not about my agreement or disagreement with the Attorney General or our satisfaction or dissatisfaction with the Citizens United decision. Whether we agree  with the Supreme Court’s interpretation of the First Amendment is irrelevant.  In accordance with our federal system of government, our obligations here are to acknowledge that the Supreme Court’s interpretation of the United States Constitution is, for better or for worse, binding on this Court and on the officers of this state, and to apply the law faithful to the Supreme Court’s ruling.

Unfortunately, the Supreme Court’s reliably liberal justices did not take the same admirable position as Justice Nelson. In a situation when they should have unanimously asserted the Supreme Court’s position as the final expositor the Constitution and chastised the Montana Supreme Court for its temerity, justices Kagan, Breyer, Sotomayor, and Ginsberg instead decided to re-visit their opposition to Citizens United. All four justices re-registered their dissent with Citizens United, but they did not go so far as to vote to re-hear the case. And given that only four votes are required to grant certiorari, re-hearing the case was an option available to them. It’s good they did not go this far. However, while I am a believer in registering principled dissents, this was not the time to do so. In addition to being constitutionally incorrect, overturning Citizens United after just two years on the books would have severely impaired the legitimacy of the Court.

This is what political judging looks like. While it has become de rigueur to refer to the five conservative justices as being mere pawns of their political opinions, such attacks are hardly ever leveled against the four reliable liberal justices. Here, however, they were driven by their political opinions rather than their duties as Supreme Court justices bound to ensure that the Constitution applies equally in every state.

My colleague John Samples has more here.

NSA Spying and the Illusion of Oversight

Last week, the House Judiciary Committee hurtled toward reauthorization of a controversial spying law with a loud-and-clear declaration: not only do we have no idea how many American citizens are caught in the NSA’s warrantless surveillance dragnet, we don’t care—so please don’t tell us! By a 20–11 majority, the panel rejected an amendment that would have required the agency’s inspector general to produce an estimate of the number of Americans whose calls and e-mails were vacuumed up pursuant to broad “authorizations” under the FISA Amendments Act.

The agency’s Inspector General has apparently claimed that producing such an estimate would be “beyond the capacity of his office” and (wait for it) “would itself violate the privacy of U.S. persons.” This is hard to swallow on its face: there might plausibly be difficulties identifying the parties to intercepted e-mail communications, but at least for traditional phone calls, it should be trivial to tally up the number of distinct phone lines with U.S. area codes that have been subject to interception.

If the claim is even partly accurate, however, this should in itself be quite troubling. In theory, the FAA is designed to permit algorithmic surveillance of overseas terror suspects—even when they communicate with Americans. (Traditionally, FISA left surveillance of wholly foreign communications unregulated, but required a warrant when at least one end of a wire communication was in the United States.) But FAA surveillance programs must be designed to “prevent the intentional acquisition of any communication as to which the sender and all intended recipients are known at the time of the acquisition to be located in the United States”—a feature the law’s supporters tout to reassure us they haven’t opened the door to warrantless surveillance of purely domestic communications. The wording leaves a substantial loophole, though. “Persons” as defined under FISA covers groups and other corporate entities, so an interception algorithm could easily “target persons” abroad but still flag purely domestic communications—a concern pointedly raised by the former head of the Justice Department’s National Security Division. The “prevent the intentional acquisition” language is meant to prevent that. Attorney General Eric Holder has made it explicit that the point of the FAA is precisely to allow eavesdropping on broad “Categories” of surveillance targets, defined by general search criteria, without having to identify individual targets. But, of course, if the NSA routinely sweeps up communications in bulk without any way of knowing where the endpoints are located, then it never has to worry about violating the “known at the time of acquisition” clause. Indeed, we already know that “overcollection” of purely domestic communications occurred on a large scale, almost immediately after the law came into effect.

If we care about the spirit as well as the letter of that constraint being respected, it ought to be a little disturbing that the NSA has admitted it doesn’t have any systematic mechanism for identifying communications with U.S. endpoints. Similar considerations apply to the “minimization procedures” which are supposed to limit the retention and dissemination of information about U.S. persons: How meaningfully can these be applied if there’s no systematic effort to detect when a U.S. person is party to a communication? If this is done, even if only for the subset of communications reviewed by human analysts, why can’t that sample be used to generate a ballpark estimate for the broader pool of intercepted messages? How can the Senate report on the FAA extension seriously tout “extensive” oversight of the law’s implementation when it lacks even these elementary figures? If it is truly impossible to generate those figures, isn’t that a tacit admission that meaningful oversight of these incredible powers is also impossible?

Here’s a slightly cynical suggestion: Congress isn’t interested in demanding the data here because it might make it harder to maintain the pretense that the FAA is all about “foreign” surveillance, and therefore needn’t provoke any concern about domestic civil liberties. A cold hard figure confirming that large numbers of Americans are being spied on under the program would make such assurances harder to deliver with a straight face. The “overcollection” of domestic traffic by NSA reported in 2009 may have encompassed “millions” of communications, and still constituted only a small fraction of the total—which suggests that we could be dealing with a truly massive number.

In truth, the “foreign targeting” argument was profoundly misleading. FISA has never regulated surveillance of wholly foreign communications: if all you’re doing is listening in on calls between foreigners in Pakistan and Yemen, you don’t even need the broad authority provided by the FAA. FISA and the FAA only need to come into play when one end of the parties to the communication is a U.S. person—and perhaps for e-mails stored in the U.S. whose ultimate destination is unknown. Just as importantly, when you’re talking about large scale, algorithm-based surveillance, it’s a mistake to put too much weight on “targeting” in the initial broad acquisition stage. If the first stage of your acquisition algorithm says “intercept all calls and e-mails between New York and Pakistan,” that will be kosher for FAA purposes provided the nominal target is the Pakistan side, but will entail spying on just as many Americans as foreigners in practice. If we knew just how many Americans, the FAA might not enjoy such a quick, quiet ride to reauthorization.

Final Senate Vote on Farm Bill

The Senate passed a nearly $1 trillion farm bill last week that would maintain the farming industry’s dependency on taxpayers and  keep food stamp spending at permanently elevated levels. Although the bill’s supporters claim that it amounts to major “reform,” the reality is that it’s just bipartisan big government business-as-usual.

The vote count was 64 to 35. All but five Democrats joined 16 Republicans in voting to pass the bill. However, it appears that many of the no votes had nothing to do with concerns about the legislation’s burden on taxpayers. Republican Senators John Boozman (AR), Saxby Chambliss (GA), Thad Cochran (MS), Johnny Isakson (GA), and Roger Wicker (MS) and Democratic Senator Mary Landrieu (LA) all issued a press release stating that they voted against the bill because it didn’t sufficiently benefit farmers in their state. It’s possible that others voted against it on grounds that the bill wasn’t big government enough.

Here are the 16 Senate Republicans (members of the so-called “Party of Limited Government”) who voted for the monstrosity:

Lamar Alexander (TN)

John Barrasso (WY)

Roy Blunt (MO)

Scott Brown (MA)

Dan Coats (IN)

Susan Collins (ME)

Mike Enzi (WY)

Chuck Grassley (IA)

John Hoeven (ND)

Kay Bailey Hutchison (TX)

Mike Johanns (NE)

Richard Lugar (IN)

Jerry Moran (KS)

Pat Roberts (KS)

Olympia Snowe (ME)

John Thune (SD)

 

A final note:

Farm subsidies are the quintessential example of special-interest spending. But a Washington Times article shows that even programs like food stamps have moneyed interests working behind the scenes to increase spending:

Coinciding with lobbying by convenience stores, the U.S. Department of Agriculture, which administers the program in conjunction with states, contends that disclosing how much each store authorized to accept benefits, known as the Supplemental Nutritional Assistance Program (SNAP), receives in taxpayer funds would amount to revealing trade secrets. As a result, fraud is hard to track and the efficacy of the massive program is impossible to evaluate…

Profiting from the poor’s taxpayer-funded purchases has become big business for a mix of major companies and corner bodegas, which have spent millions of dollars lobbying Congress and the USDA to keep the money flowing freely. The National Association of Convenience Store Operators alone spends millions of dollars on lobbying yearly, including $1 million in the first quarter of this year. In February, 7-Eleven hired a former aide to House Speaker John A. Boehner, Ohio Republican, to lobby on “issues related to the general application and approval process for qualified establishments serving SNAP-eligible recipients.”

My friend Steve Ellis from Taxpayers for Common Sense nails it:

“USDA hides behind a specious proprietary data argument: The public doesn’t want to know internal business decisions or information about specific individuals’ finances,” he said. “The USDA sees retailers, junk food manufacturers and the big ag lobby as their customers, rather than the taxpayer.”

Ditto the United States Senate.

Arizona and the Supreme Court: Round One

The Arizona v. U.S. decision found that only one of the four provisions under consideration was not trumped by federal law.  The “papers please” provision of the Arizona immigration law, Section 2(B), will be going into effect.  That section requires state and local police officers to attempt to determine the immigration status of people they stop if the officers have “reasonable suspicion” that the person is unlawfully present in the U.S.

That surviving section is already facing at least one legal challenge that will now go forward.  Karen Tumlin is working on such a case – Friendly House v. Whiting.  As one of the lead attorneys, she said, “Whatever happens at the Supreme Court, this is just the first inning in a very long ballgame.”

Her challenge claims the Arizona immigration law violates the constitutional guarantees of equal protection under the law, due process, and protection against unreasonable searches and seizures.  Today’s decision only dealt with the issue of preemption, whether Arizona was infringing on the federal government’s power to regulate immigration, and did not deal with the rights of individuals.  Friendly House v. Whiting will challenge many of the remaining portions of the Arizona immigration law.

Arizona has two major immigration laws.  The first is the Legal Arizona Workers Act (LAWA) which attempts to regulate unauthorized immigrants out of the workplace with very expensive restrictions on business.  This law was found constitutional in last year’s Chamber of Commerce v. Whiting decision.  The second Arizona immigration law, the one the court has occupied itself with today, marshals the power of the state government to force unauthorized immigrants out of Arizona altogether.

In these two decisions, SCOTUS has allowed a very great number of intrusive business regulations to force unauthorized immigrants out of the state but has put some limits on what the state can do outside of the workplace.

As a policy matter, this decision changes very little in the short term.  Arizona’s immigration laws, including LAWA, have already driven about 200,000 people from the state.  As a result the property price decline in Phoenix was the second worse of any metropolitan area in the U.S., the unemployment rate has been consistently higher than its neighbors, business investment has left Arizona, and certain industries, like construction and agriculture, have suffered.

As my colleague Ilya Shapiro has noted, this decision means that neither states nor executive discretion will resolve this immigration conundrum.  The federal government – both Congress and the President – will have to work out a solution.

New Bank Regulations Spawn Doom Loop

Politicians have a genius for creating unintended consequences with each of their new firefighting measures.  Just consider bank regulations.  Today, reportage by Brooke Masters in the Financial Times informs us that the bill for new bank regulations in the EU could balloon to 50 billion euros.  These regulations are intended to make banks “safe.”  But, alas, they will suppress the money supply and economic activity.  In consequence, new bank regulations, in the middle of an economic slump, promise to make banks less, not more, “safe” – a doom loop.  Now is not the time to send in the Boy Scouts.

Supreme Court: Immigration Reform Needs to Come from Congress

Everyone will find something to quibble with in today’s highly technical ruling in Arizona v. United States, which is not an indication of some baby-splitting grand compromise but rather that this is a really complex area of law.  The Court, in an opinion by Justice Kennedy and joined by four other justices including Chief Justice Roberts, upheld (at least against facial challenge) Section 2(B) of Arizona’s SB 1070, which requires law enforcement officers to inquire into the immigration status of those they’ve lawfully detained if they have reasonable suspicion that the person is in the country illegally.  The Court found, however, that federal law trumped (“preempted”) three other provisions: Section 3, which makes it a state crime to violate federal alien registration laws (because Congress so comprehensively “occupied the field” of alien registration); Section 5(C), which makes it a state crime for an illegal immigrant to “knowingly apply for work, solicit work in a public place or perform work as an employee or independent contractor” (because it conflicts with the method of enforcement chosen by Congress – regulating employers rather than employees); and Section 6, which allows law enforcement officers to arrest someone they have probable cause to believe has committed a deportable offense (because questions of removability are entrusted to federal discretion).  Justices Scalia and Thomas wrote partial dissents to say they would’ve upheld the entire law.  Justice Alito also wrote separately to say he would’ve only found Section 3 preempted.

My own view most closely aligns with Judge Alito’s—I would uphold three of the four provisions, though for me 5(C) is the problematic one—but more important than the legal weeds are the two policy guides the Supreme Court has given:

  1. The federal government has significant, near-exclusive powers to regulate immigration and even state laws that merely “mirror” federal immigration laws are on shaky legal ground;*
  2. Although federal lawmaking trumps state lawmaking, federal policymaking does not.  Prosecutorial discretion, resource allocation decisions, and other policy processes do not preempt duly enacted state law.

In short, immigration policy by either state action or executive whim won’t cut it. The federal government—Congress and the president, working out that grand compromise—needs to fix our broken immigration system.

* Note that most of SB 1070 has been in effect since July 2010.  The federal government only challenged six of its provisions, and two (regarding transporting/harboring illegal aliens) were upheld by the district court, without further appeal by the government.  In other words, state laws dealing purely with state prerogatives (such as crime or business regulation) are on much firmer legal ground.