Topic: Government and Politics

Reflections on Schuette v. Coalition to Defend Affirmative Action

Right on cue, the New York Times editorialized this morning against yesterday’s Supreme Court decision upholding the right of Michigan’s citizens to amend their constitution to prohibit the state from engaging in affirmative action, which they did in 2006 by passing, by a large margin, a proposition prohibiting racial, gender, ethnic, and national origin preferences in public employment, education, and contracting. The Times was not alone, of course. NPR’s lament this morning was a solo interview of Lee Bollinger, president of my undergraduate alma mater, Columbia University, and the defendant in the 2003 Gratz and Grutter affirmative action decisions when he was president of the University of Michigan.

It was a bad day for affirmative action, but a good day for the Constitution. Yet neither of those commentaries, nor any of the five opinions that issued from this split decision, came to terms with the discrimination that is inherent and hence inescapable in government undertakings as such, and is at the core of this problem today.

Among other things, the editorialists at the Times note that “the justices disagreed about whose rights were at issue: the minorities who would be affected by the ban or the majority of the state’s voters who passed it.” Justice Kennedy, writing for a three-judge plurality, sided with the voters, taking no position on the constitutionally of race-conscious public practices. Justice Sotomayor, joined by Justice Ginsburg in dissent, wrote that “Our Constitution places limits on what a majority of the people may do,” such as when they pass laws that “oppress minorities,” the Times adds.

The Progressive Income Tax Enriches the Envious and Greedy

Most Americans dislike the income tax, now more than a century old. The rates are too high. The provisions are unfair. The record-keeping is onerous. The revenues are wasted.

But there are fans, certainly, such as the politicians of both parties. What good would it do to serve in Congress if you didn’t have money to spend? 

The beneficiaries of the politicians’ largesse also share in the income tax lovefest. Uncle Sam needs money to write checks. He can borrow, but there’s a limit to the credulity of investors. Borrow too much and they might doubt Washington’s ability to repay. 

Then there are the fans of expensive and expansive government. Never mind the endless mess created by Uncle Sam. Something he does must work!

More dangerous may be the social engineers. For instance, Yale economic professor Robert J. Shiller suggested using the income tax to mitigate “some of the worst consequences of income inequality.” He proposed indexing taxes to income inequality.

It’s a genuinely nutty idea. Inequality measures are sensitive to data distortion. Moreover, they incorporate no moral judgment as to how the inequality arose. Were opportunities obstructed and systems manipulated, or did a generally free society operate naturally and deliver ever-changing income and wealth patterns? 

Washington Should Focus on Protecting Americans, Not Reassuring Allies

The United States is busy in the world, but no function seems more important than acting as the world’s universal comforter, constantly “reassuring” friends and allies no matter the location.

For instance, after Russia’s annexation of Crimea, the administration undertook what Secretary of State John Kerry termed “concrete steps to reassure our NATO allies.”  The Military Times reported that Washington dispatched aircraft “to reassure NATO partners that border Russia.”

The process continues.  The Wall Street Journal entitled an article “U.S. Tries to Help Ukraine, Reassure Allies Without Riling Russia.”  Gen. Philip Breedlove said the transatlantic alliance would maintain new security measures throughout the year “to assure our allies of our complete commitment.” 

Beijing’s assertiveness has resulted in another gaggle of friendly states clamoring for reassurance.  Defense Secretary Chuck Hagel visited Asia in early April; the Washington Post reported that he sought “to reassure allies in Asia amid questions about U.S. commitment.”  The president headed to Asia in mid-April, explained Voice of America, “in a bid to reassure allies in the region.” 

As I point out in my new Forbes online column:  “Washington’s obligation always is to give.  The U.S. not only is supposed to guarantee the security of assorted friends and allies.  It also must constantly reassure them.  Americans must not only be prepared to die for anyone and everyone who wants protection, but Americans must always and in every way demonstrate that willingness.”

It’s a bizarre policy.  First, the overriding responsibility of Washington officials is to safeguard America—its people, territory, constitutional liberties, and prosperity.  The Department of Defense is not a charity created to protect the world, subsidize the improvident, calm the nervous, or save the indifferent.

Second, America’s broader foreign policies should be directed at advancing the interests of Americans.  The national government is the agent of those who fund, staff, and support it, the American people.  Their welfare is primary.  Washington should look after their interests, not those of some imaginary “international community” that exists only in the minds of social engineers who desire to escape even minimal national restraints.

Moreover, the tendency of political organizations to live out Lord Acton’s famous warning that “power tends to corrupt and absolute power corrupts absolutely” requires the U.S. government to build limits into its own institutions and especially those beyond its borders.

The notion that America has an obligation to constantly “reassure” others is particularly pernicious when applied to the military.  Washington’s principal obligation is to protect the American people, not those who desire to be defended by the world’s greatest military power.

There are occasions when it is in America’s interest to aid other states, but only rarely.  Today Washington collects allies like most people accumulate Facebook friends.

Unfortunately, almost all U.S. allies expect to be defended by America rather than to help defend America.  Some contribute small troop contingents to Washington’s unnecessary wars elsewhere, such as in Iraq, but that is not worth promising to face down nuclear-armed Russia on their behalf.

One of the worst consequences of America’s defense guarantees is discouraging prosperous and populous states from defending themselves.  Europe has eight times Russia’s GDP—why is it relying on America at all? 

Similarly, why is Japan, a wealthy state which until recently had the world’s second largest economy, expecting Washington’s help to assert control over contested islands?  Why does South Korea, with 40 times the GDP of North Korea, presume the U.S. will forever maintain military forces in the peninsula?

Now Washington is sending Cabinet secretaries and military forces hither and yon to “reassure” these same nations that it will continue to subsidize their defense.  Why should governments in Asia and Europe inconvenience their peoples when Washington is willing to burden Americans to pay for everyone’s defense?

It is time for Washington to start reassuring Americans.

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.

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.”

Virginia Is for Gay Lovers Too!

In an attempt to prove that Virginia is indeed for lovers, two couples have recently gone to federal court to get their marriages recognized in their home state. One of the couples has been together for more than 20 years and the other got married in California and have a teenage daughter together, yet the Commonwealth of Virginia will not recognize their marriages because the couples are—you guessed it—same-sex.

These couples don’t see why their sexual orientation should keep them from enjoying the equal right to marry a partner of their choice, so they filed suit in federal district court to challenge the Virginia’s anti-gay-marriage state constitutional amendment. They argued that the provision violates both equal protection and the fundamental right to marriage, as protected by the Fourteenth Amendment. This February, the district court agreed with them, and now they’re defending that ruling before the U.S. Court of Appeals for the Fourth Circuit.

Following on the heels of last term’s Supreme Court ruling in United States v. Windsor—which struck down the part of the Defense of Marriage Act that denied federal benefits to lawfully married same-sex couples—this case adds Virginia to the list of states (which now includes Utah, Oklahoma, Texas, Kentucky, Michigan, and Ohio, and seems to grow with each passing week) that have the constitutionality of their marriage laws before a federal appeals court. 

Reprising our collaboration in Perry v. Hollingsworth—the California Prop 8 case in which the Supreme Court avoided ruling on the merits—and the Tenth Circuit gay marriage cases Kitchen v. Herbert and Bishop v. Smith, Cato and the Constitutional Accountability Center have filed a brief supporting the plaintiffs’ fight for equality under the law in the Old Dominion. We argue that the Fourteenth Amendment’s Equal Protection Clause protects against the arbitrary and invidious singling-out that the Virginia gay marriage ban effects, that the clause’s original meaning confirms that its protections are to be interpreted broadly, and that the clause provides every person the equal right to marry a person of his or her choice.

We believe that the Virginia constitutional amendment conflicts with the equal rights of those same-sex couples whose unions are treated differently than those of opposite-sex couples. To the extent that states recognize marriage, every person has the right to choose whom to marry and to have that decision respected equally by the state in which they live.

Especially in the wake of Windsor, it is becoming clearer that laws that force same-sex unions into second-class status have no place in a free society. After the Fourth Circuit hears argument in Bostic v. Rainey later this spring, it should affirm the district court’s decision.