Archives: 01/2013

Driver’s Licenses for Unauthorized Immigrants

Yesterday Illinois approved a law allowing unauthorized immigrants to obtain temporary driver’s licenses.  The rationale for the law is that it would increase public safety by allowing many unauthorized immigrant drivers to get proper training and to buy auto insurance.  A similar law passed in New Mexico in 2000 likely resulted in a slight decrease in the percent of uninsured drivers on the road in that state but the effects were negligible.    

Economic benefits are a better rationale for allowing unauthorized immigrants to obtain driver’s licenses.  Many who were deterred from driving either to work or as part of their job will soon be able to do so legally.  The types of jobs available to some unauthorized immigrants and, consequently, their productivity will improve because of this law.

As columnist Ruben Navarrette pointed out, a driver’s license is the most coveted piece of government issued paper besides a work permit or a green card.  The ability to drive is inseparable from the ability to work in many parts of the country.  The Illinois law will likely have a bigger positive impact on the lives and productivity of unauthorized immigrants than any other government issued piece of paper besides a work visa or green card. 

James M. Buchanan, RIP

James M. Buchanan, Nobel laureate in economics and Distinguished Senior Fellow of the Cato Institute, has died at the age of 93. We join his family, his many students, and scholars around the world in mourning his loss. 

I’m sure my more scholarly colleagues will have more to say about his work. For now, I’m going to post the complete short text of a brilliant little article he wrote in the Cato Institute’s Literature of Liberty in 1982. Don Boudreaux describes it as “Word for word, the most insightful thing I’ve ever read.” Buchanan makes the point, contrary to the way some economists describe the market process, that there is no end-state or perfect order which the market approaches. Rather, ‘the “order’ of the market emerges only from the process of voluntary exchange among the participating individuals. The “order” is, itself, defined as the outcome of the process that generates it.” The market process best serves human needs, but those needs are always changing, and even a perfectly free market would never “reach” some perfect satisfaction of needs.

You can find the article, along with other short essays on spontaneous order, here. But it is presented in its entirety here:

This Month’s Cato Unbound: Opportunities for Copyright Reform

Republican Study Committee staffer Derek Khanna made a splash in November when he authored a memo recommending simplification of our copyright system and a significant reduction in its term lengths.

His ideas didn’t sit too well with some folks, apparently, because the RSC removed the memo from its website and let him go.

Well. We kinda liked that memo, so we invited him to discuss its contents at Cato Unbound. He has just done so in this month’s lead essay.

Cato adjunct scholar Timothy B. Lee has written a thoughtful response detailing the dangers of civil asset forfeiture in copyright cases. And two more replies will be out in the next few days – one by Ryan Radia of the Competitive Enterprise Institute, and one by Mark Schultz of Southern Illinois University School of Law. Each will discuss practical, near-term ways to improve copyright policy, an area of ever-increasing commercial and legal importance.

As always, Cato Unbound readers are encouraged to take up our themes, and enter into the conversation on their own websites and blogs, or on other venues. We also welcome your letters. Send them to jkuznicki at cato dot org. Selections may be published at the editors’ option.

End Gas Tax? Yes! Pay for Roads with Sales Tax? No!

Virginia Governor Bob McDonnell wants his state to be the first to end the gas tax. This is a good idea because gas taxes are an imperfect user fee.

However, McDonnell proposes to replace the gas tax with a 0.8-cent sales tax that he says will generate more revenue than the gas tax. If your only goal is to make government bigger, then generating revenue is a good idea. However, if your goal is to have better roads, then even a gas tax makes more sense than a sales tax.

The key to the success of the free is feedback. As imperfect as the gas tax is, it generates feedback to highway agencies: if they build roads no one uses, they get no gas taxes. Sales taxes generate no feedback at all; the agencies get money whether anyone uses the roads or not.

We know from the transit industry what happens when transportation agencies are funded out of sales taxes and other general taxes rather than user fees. First, they build expensive monuments that please ribbon-cutting politicians but do little to solve transportation problems. Then they fail to adequately maintain those monuments or the rest of their transportation systems. That’s hardly a sound prescription for our highway systems.

Boehner’s Bogus Debt Ceiling Line in the Sand

Speaker Boehner says that the House will not pass another increase in the debt ceiling unless the White House and congressional Democrats agree to cut spending by an equal or greater amount. That’s the same line in the sand that Boehner drew during the previous debt ceiling showdown in 2011.             

As I noted in a recent piece, the 2011 agreement to increase the debt ceiling accomplished no such thing: 

The deal that Republicans ultimately agreed to — The Budget Control Act of 2011 — promised to reduce the growth in spending over the next ten years by $917 billion. In exchange, the president got to increase the debt ceiling by $900 billion. According to the House Republican leadership, the trade was a victory because the debt increase was smaller than the spending cuts. Of course, that’s nonsense. Not only were there no real spending cuts, the federal debt has proceeded to jump another $1.8 trillion since the president signed the bill less than a year and a half ago. 

The other part of the deal hasn’t turned out any better. The BCA created a “Super Committee”, tasked with achieving $1.2 trillion in deficit reduction over ten years. When the committee inevitably failed, the agreement stipulated that the deficit reduction instead be achieved through a combination of automatic cuts to defense and non-defense spending (“sequestration”). Republicans and Democrats promptly made it clear that they would figure out a way to avoid the spending cuts. 

The sequestration spending cuts that Republicans and Democrats want to avoid allowed the president to raise the debt ceiling by another $1.2 trillion. In sum, the federal debt will have gone up $2.1 trillion in exchange for no spending cuts in the present and a promise to increase spending at a lower rate over the next ten years. 

There is zero chance that the Democrats would (or will) agree to a deal that seriously cut $1 for every $1 increase in the debt ceiling. Heck, I’d be shocked if a majority of Republicans would support it. The House Republican leadership obviously knows this—and it’s not like the GOP is prepared to “shoot the hostage” to begin with—so expect another debt ceiling increase with no substantive spending reforms.  

Using Eminent Domain to Personally Benefit the Mayor Is Unconstitutional

One of the biggest dangers of not providing adequate constitutional protections for private property is that public officials can misuse their power to take property for private gains. Government actors, after all, have an incentive to act in a way that maximizes political gains and minimizes costs, so without adequate protection from the courts, they can be expected to use eminent to take private property for political (or even personal) benefit.

In 2005, in the now infamous case of Kelo v. City of New London, the Supreme Court unfortunately eroded the protections of the “public use” portion of the Fifth Amendment’s Takings Clause — “nor shall private property be taken for public use without just compensation” — by ruling that the potential for increased tax revenue from a large corporation can count as a “public use.” Suzette Kelo’s house was thus taken and given to Pfizer (which ended up not doing anything with the land).

It’s hard to imagine that government abuse of the Takings Clause could get any worse than that, but one such unfortunate case has arisen in Guam — which, as a U.S. territory, is covered by the Constitution. Artemio Ilagan owns and operates an apartment building in Agana, Guam. His neighbors, Engracia and Felix Ungacta, own an adjoining, residential lot that once lacked access to a road. Unfortunately for Mr. Ilagan, Mr. Ungacta was also the mayor of Agana when the city took a parking lot from Mr. Ilagan and gave it to Mayor Ungacta.

When challenged, the city claimed that the taking was done in accordance with a post-World War II “economic development” plan — the “Agana Plan” — that was enacted to reconfigure irregular lot lines in Agana. At the time of the taking (1981), the Agana Plan had not been used for seven years and, during the years it was used, was never used to take any lots. Moreover, the Plan has not been used in the 30 years since the taking of Mr. Ilagan’s lot.

The Guam trial court held the taking unconstitutional, but Guam’s Supreme Court reversed the holding by purportedly applying Kelo’s standard of judicial deference. Mr. Ilagan is now petitioning the U.S. Supreme Court to review his case, asking the Court whether it wants to allow other courts to use Kelo to cross the final bridge in eviscerating the Takings Clause — the blatantly pretextual taking of private property to give it to a public official.

Cato has joined the National Federation of Independent Business, 10 other organizations, and a group of constitutional and property law professors, on an amicus brief arguing that the Court should take the case in order to clarify, if not overrule, the broad language of Kelo. Kelo itself says that the government may not “take property under the mere pretext of a public purpose, when its actual purpose was to bestow a private benefit.”

In Kelo, taking the property as part of an “economic development plan” was held to constitute a public purpose. Here, however, the “economic development plan,” was clearly a pretext to take property to benefit a known private party who just “happened” to also be the mayor. We point out that, despite the Court’s distaste with “pretextual takings” articulated in Kelo, courts across the country are split over what a pretextual taking is. Some courts have even ruled out the possibility of their existence. Yet, from the misuse of “blight” condemnations—a designation often used to tear down old neighborhoods for the purposes of gentrification—to situations like Mr. Ilagan’s, pretextual takings occur far too often.

The egregious case of Ilagan v. Ungacta is a perfect vehicle for the Court to clarify the concept of a pretextual taking and to bring some semblance of coherence back to a vital constitutional provision. More on our brief from Ilya Somin at the Volokh Conspiracy.

Climate Impact of the Keystone XL Pipeline

After a couple of months during which larger issues were grabbing headlines, the Keystone XL pipeline is back in the news again.

Recall that in the fall of 2011, Congress attempted to force the Obama Administration to come to some sort of a decision on the pipeline—a project that would deliver oil from Canada’s Alberta tar sands to a pipeline junction in Steel City, Nebraska and then ultimately on to refineries in Illinois and along the Gulf Coast. President Obama rejected the pipeline application in January 2012, citing the Congressional deadline as being too tight to allow for a thorough assessment. TransCanada Corporation, the pipeline’s operator, last September proposed a new route through Nebraska which avoided the environmentally sensitive Sand Hills region which was one the largest local environmental concerns of the originally proposed pipeline route.

The rumors were that this new proposed route, and the promise of new jobs and economic activity, were now tipping the administration in favor of the giving the go ahead to the pipeline.

Last Wednesday, the New York Post reported that EPA head Lisa Jackson (a vocal opponent of the pipeline) was stepping down in a huff because she was convinced that Obama was soon going to green-light the project.

Last Friday, Nebraska’s Department of Environmental Quality released its study of the new route and proclaimed that it could have “minimal environmental impacts in Nebraska” if properly managed and that construction of the pipeline would result in “$418.1 million in economic benefits and would support up to 4,560 new or existing jobs in the state,” (though some jobs would be temporary) and annual local property tax revenues of between “11 million and 13 million” for the first year of evaluation. The U.S. State Department is conducting its own report because the pipeline will cross the U.S./Canada border. That report is expected any day now.

Yesterday, a group of protestors stormed the TransCanada offices in Houston, Tx, chaining their ankles, and for added measure, apparently supergluing their hands together. A statement from the group said that they were “representatives of a desperate generation who have been forced into this position by the reckless and immoral behavior of fossil fuel corporations such as Transcanada.” Bill McKibben’s 350.org is organizing a much larger-scale protest for Washington, D.C., and the White House next month.

The outcry is not really about local environmental concerns, but as NASA’s James Hansen (who himself was arrested outside the White House back in 2011 protesting the pipeline) put it, if the pipeline is built it will be “game over” for the climate.

With all this outcry, just how bad for the climate do you think the pipeline (or rather it contents) will be?