Archives: April, 2014

More Drinking Hours, Fewer Accidents

Does restricting access to alcohol reduce traffic accidents? Not necessarily, according to a recent study by economists from the University of Lancaster: 

Recent legislation liberalised closing times with the object of reducing social problems thought associated with drinking to “beat the clock.” Indeed, we show that one consequence of this liberalization was a decrease in traffic accidents. This decrease is concentrated heavily among younger drivers. Moreover, we provide evidence that the effect was most pronounced in the hours of the week directly affected by the liberalization; late nights and early mornings on weekends.

The authors also suggest that the restrictive closing times caused more traffic congestion (everyone left the pubs at the same time), increasing the scope for accidents.

So more freedom seems to generate better outcomes, presumably because most people use increased freedom sensibly.

BLM vs. the Nevada Rancher

The battle between Nevada rancher Cliven Bundy and the Bureau of Land Management (BLM) might be viewed as an overly aggressive federal bureaucracy enforcing misguided environmental regulations vs. an oppressed individual and his overly enthusiastic supporters with guns.

However, like the ongoing battles in California between farmers and environmentalists over water, the Nevada story is more complex than that. The issues are not divided neatly along left-right political lines. In both cases, the property rights issues are complicated, and the federal government has long subsidized the use of land and water resources in the West. The first step toward a permanent solution in both cases is to revive federalism. That is, to transfer federal assets to state governments and the private sector.

To understand the Nevada situation, it is useful to consider the history of federal land ownership in the West. From an essay by Randal O’Toole and myself:

“From the founding of the nation, the federal government began accumulating large tracts of land … As the federal government was accumulating land, it was also trying to unload it. The government’s general policy for more than a century was to sell or transfer its western lands to settlers, railroad companies, and state governments … With the rise of the Progressive movement at the turn of the 20th century, federal policy began to change toward land retention and land additions. Progressives believed that federal agencies would manage western lands better than states, businesses, or individuals.”

It turned out that the Progressives were dead wrong. In his book Public Lands and Private Rights, Robert H. Nelson describes how the Progressive ideas of scientific management and federal land planning have failed repeatedly. The last century of federal land management has been “filled with laws that had lofty purposes and achieved dismal results,” he concludes. He also notes that “federal ownership of vast areas of western land is an anomaly in the American system of private enterprise and decentralized government authority.” Federal policymakers should start fixing that anomaly.

The BLM faces a complex task in juggling all the competing uses of its timberlands, rangelands, minerals, watersheds, wildlife, water, and other resources located across a huge area. Livestock grazing, timber cutting, and mineral extraction all potentially conflict with wildlife habitat, watershed protection, and outdoor recreation.

The situation is made worse by BLM officials operating in a nonmarket environment. Essentially, they run a giant socialist enterprise in trying to centrally plan vast lands and resources. The decisions the agency makes are often infuriating to Westerners because they are made by unaccountable officials on the other side of the country.

The solution is to transfer most federal lands in Nevada to the State of Nevada. Charges for the use of the land—such as grazing fees—should be set in the marketplace. Where feasible, environmentally significant land should be owned and managed by private non-profit land trusts, as discussed here. But these sorts of decisions should be made by the Nevada legislature. Politicians in Washington lack the knowledge to make the crucial land-use decisions that affect the lives of people such as Cliven Bundy, and they are far too distracted with all the other issues on the federal agenda.

Freedom of Association in the Docket

I’ve got a piece just up at the Daily Caller, drawing on two brief stories earlier today that capture nicely the growing intolerance of the Left for people and groups holding views with which they disagree. One arises from a decision by Yale’s Social Justice Network (SJN) of Dwight Hall to deny membership to the school’s Choose Life at Yale (CLAY) group. The second concerns a proposed ban on judges affiliated with the Boy Scouts in California. Both illustrate how a bedrock American principle, freedom of association, is increasingly being gutted by the Left’s anti-discrimination agenda.

The Yale case is straightforward. As blogger Katherine Timpf writes, although CLAY was provisionally admitted to the network over the past year, during which its members did voluntary work with a local non-profit organization helping pregnant women, CLAY was voted out last week because, said the chair of the Yale chapter of the ACLU (itself a member), admitting CLAY would “divert funds away from groups that do important work pursuing actual social justice.”

That’s par for the course on today’s campuses. It’s training for the real world, as seen in the California case. Here, blogger Patrick Howley writes:

The California Supreme Court Advisory Committee on The Code of Judicial Ethics has proposed to classify the Boy Scouts as practicing “invidious discrimination” against gays, which would end the group’s exemption to anti-discriminatory ethics rules and would prohibit judges from being affiliated with the group.

Such a change in status could not be limited to the Boy Scouts, of course, but it’s a good start. That point was made in a letter to the committee from Catherine Short, legal director of the pro-life group Life Legal Defense Foundation. The Girl Scouts, numerous pro-life and religious groups, even the military practice “discrimination” of one kind or another, she wrote.

Years ago, when I was a scout leader as my son was growing up, I read a lengthy insert in the handbook meant for leaders. It concerned sexual exploitation and the need for scout leaders to take it seriously, prompted doubtless by experience. Given the nature of scouting activities, often isolated in the wild, and the need to assure both boys and their parents concerning the potential for abuse, even if the BSA had never taken an express position on sexual orientation, its decision to disallow gay scout leaders would not be gratuitous.

Go to the Daily Caller piece for a fuller discussion of the principles at stake here and a glimpse at how the distinction between private and public and the further distinction between reasonable and unreasonable discrimination are being undermined by a political agenda that has the freedom of private association as its ultimate target.

Federal Judge Says Thousands of Innocent Americans Behind Bars

Judge Jed Rakoff delivers a lecture.Federal Judge Jed Rakoff:

“The criminal justice system is nothing like you see on TV — it has become a system of plea bargaining,” Rakoff said.

Today, only 2 percent of cases in the federal system go to trial, and 4 percent of cases in the state system go before a jury. As a result, accepting a deal from prosecutors — despite one’s guilt or innocence — has become a common choice for individuals accused of a crime.

“Plea bargains have led many innocent people to take a deal,” Rakoff said. “People accused of crimes are often offered five years by prosecutors or face 20 to 30 years if they go to trial. … The prosecutor has the information, he has all the chips … and the defense lawyer has very, very little to work with. So it’s a system of prosecutor power and prosecutor discretion. I saw it in real life [as a criminal defense attorney], and I also know it in my work as a judge today” …

Until extraordinary action is taken, Rakoff said little will change.

“We have hundreds, or thousands, or even tens of thousands of innocent people who are in prison, right now, for crimes they never committed because they were coerced into pleading guilty. There’s got to be a way to limit this.”

For related Cato work, go here.

California Shouldn’t Be Able to Impose Regulations on Businesses Outside of California

One of the several failures of the Articles of Confederation was the incapacity of the central government to deal with trade disputes among the states. The Constitution resolved this problem by empowering the federal government to regulate interstate commerce. It has since become a basic principle of American federalism that a state may not regulate actions in other states or impede the interstate flow of goods based on out-of-state conduct (rather than on the features of the goods themselves).

That principle was axiomatic until the U.S. Court of Appeals for the Ninth Circuit upheld one particular extra-territorial California regulation. California recently established a Low Carbon Fuel Standard (“LCFS”) that attempts to rate the “carbon intensity” of liquid fuels, so that carbon emissions can be reduced in the Golden State. California considers not only the carbon emissions from the fuel itself being burnt, however, but also the entire “lifetime” of the fuel, including its manufacture and transportation.

This has led to complaints from Midwestern ethanol producers, whose product—which is in all other ways identical to California-produced ethanol—being severely disadvantaged in California’s liquid fuel markets, simply because it comes from further away. Groups representing farmers and fuel manufacturers sued, arguing that the LCFS constitutes a clear violation of the Commerce Clause (the Article I federal power to regulate interstate commerce) by discriminating against interstate commerce and allowing California to regulate conduct occurring wholly outside of its borders. The Ninth Circuit recently upheld the LCFS, finding the regulation permissible because its purpose was primarily environmental and not economic protectionism (although judges dissenting from the court’s denial of rehearing pointed out that this is the wrong standard to apply).

The farmers and fuel manufacturer groups have now submitted a petition to have their case heard by the Supreme Court. Cato has joined the Pacific Legal Foundation, National Federation of Independent Business, Reason Foundation, California Manufacturers & Technology Association, and the Energy & Environmental Legal Institute on an amicus brief supporting the petition.

We argue that the lower court’s ruling provides a template for other states to follow should they want to evade Supreme Court precedents barring obstruction of interstate commerce and extraterritorial regulation. As the Founders fully recognized, ensuring the free flow of commerce among the states is vital to the wellbeing of the nation, and California’s actions—and the Ninth Circuit’s endorsement of them—threaten to clog up that flow. Not only does the appellate ruling allow California to throw national fuel markets into disarray, it invites other states to destabilize interstate markets and incite domestic trade disputes—precisely the type of uncooperative behavior the Constitution was designed to prevent.

The Supreme Court will likely decide whether to take Rocky Mountain Farmers Union v. Corey before it recesses for the summer. For more on the case, see this blogpost by PLF’s Tony Francois.

This blogpost was co-authored by Cato legal associate Julio Colomba.

Should Companies Do What’s Best for Government, or Should They Do What’s Best for Workers, Consumers, and Shareholders?

I’m in favor of free markets. That means I’m sometimes on the same side as big business, but it also means that I’m often very critical of big business. That’s because large companies are largely amoral. Depending on the issue, they may be on the side of the angels, such as when they resist bad government policies such as higher tax rates and increased red tape. But many of those same companies will then turn around and try to manipulate the system for subsidies, protectionism, and corrupt tax loopholes.

Today, I’m going to defend big business. That’s because we have a controversy about whether a company has the legal and moral right to protect itself from bad tax policy. We’re dealing specifically with a drugstore chain that has merged with a similar company based in Switzerland, which raises the question of whether the expanded company should be domiciled in the United States or overseas.

Here’s some of what I wrote on this issue for yesterday’s Chicago Tribune.

Should Walgreen move? …Many shareholders want a “corporate inversion” with the company based in Europe, possibly Switzerland. …if the combined company were based in Switzerland and got out from under America’s misguided tax system, the firm’s tax burden would drop, and UBS analysts predict that earnings per share would jump by 75 percent. That’s a plus for shareholders, of course, but also good for employees and consumers.

Folks on the left, though, are upset about this potential move, implying that this would be an example of corporate tax cheating. But they either don’t know what they’re talking about or they’re prevaricating.

Some think this would allow Walgreen to avoid paying tax on American profits to Uncle Sam. This is not true. All companies, whether domiciled in America or elsewhere, pay tax to the IRS on income earned in the U.S. 

The benefit of “inverting” basically revolves around the taxation of income earned in other nations.

Why Worry About Conspiracy When Incompetence Will Do?

Last week, the New York Times reported that the Census Bureau would be significantly changing the questions and methods it uses to determine who has health insurance. The redesign is an attempt to address some of the flaws in the current design that have long troubled the agency. A working paper from the Census Bureau had found that it provided an “inflated estimate of the uninsured” and was prone to “measurement errors” that diminished the reliability and usefulness of the measure.

The timing of this change could hardly be worse. The massive coverage provisions of the health care reform have just taken effect, and these new changes could make comparisons to past years difficult, or meaningless. Another document from the agency explains that the questions would elicit such different responses that “it is likely the Census Bureau will decide that there is a break in the series for the health insurance estimates.”

As the Times reports, the differences in responses between the two sets of questions are significant; in a trial run last year, the percentage of people without health insurance was 10.6 percent with the new questionnaire, compared with 12.5 percent using the old version, with similar effects across all demographic groups.

Some defenders of the decision have pointed out that these new questions will also give data for 2013, so there will be at least one year of pre-ACA data to compare to. This is true, and having at least one data point will be helpful to some extent, but what we really want to evaluate when analyzing the law would be the longer term trend, for two reasons. One, there is a decent amount of variation in these surveys that make single data points less informative. Two, while the major coverage provisions of the law take effect in 2014, the law has already been influencing the insurance market in smaller ways since its passage, and more than half of the reduction in the uninsured will occur after 2014, according to the Congressional Budget Office. This is why having a stable baseline would be useful, so we could examine the longer term trends in insurance coverage, and why now is close to the worst time to incorporate this change. The Census Bureau acknowledged as much in a paper, admitting that “[i]deally, the redesign would have had at least a few years to gather base line and trend data.”