Topic: Government and Politics

The Future of Dollarization in Ecuador

A new “monetary and finance” law that was approved by Ecuador’s National Assembly in July, is expected to be signed into law any day now. Many suspect that this marks the beginning of the end for dollarization in Ecuador, which began in January of 2000. But the underlying threat to dollarization is the incessant growth of public spending. Losing dollarization would be a sad development, considering it is what has protected Ecuadorians from one of the worst evils of populism: high inflation.

The remarkable contribution dollarization has made to the Ecuadorian economy is worth noting. A 2010 study published by Ecuador’s central bank (BCE) analyzed the first decade of the absence of independent monetary policy and found that average GDP growth increased from -6.3 percent during the 1990s to 4.4 percent during the 2000s; annual inflation decreased from a high of 90 percent in September of 2000 to single digits within a year, and has averaged 3 percent since 2004. Additionally, interest rates went down immediately, thereby reducing the cost of capital. According to the World Bank, the percentage of Ecuadorians living on less than $2 a day (PPP) decreased from 37.7 percent in 2000 to 10.6 percent in 2009.

Of course, there are many problems dollarization cannot solve and the positive outcomes above are not solely due to it. But it probably has been one of the main factors contributing to Ecuadorian growth prior to and during our current “revolutionary” government. In fact, Ecuador owes its superior economic performance today–compared the two most prominent populist nations in the region, Argentina and Venezuela–mostly to dollarization.

Defeat the Islamic State by Allowing Syria and Others to Kill Radicals

Administration officials proclaim the Islamic State’s isolated experiment in 7th Century Islam to pose a dire threat to America.  After promising to strictly limit the military mission in Iraq, the president is preparing to expand the war to Syria, where the administration is working to overthrow the Assad government—which now blocks Islamic control over the entire country.  Instead, the administration should encourage other nations, starting with Syria, to kill ISIL radicals.

Iraq is a catastrophic failure.  Yet the Obama administration risks falling into war there again. 

Gen. Martin E. Dempsey, chairman of the Joint Chiefs of Staff, wants to address the Islamic State “on both sides of what is essentially at this point a nonexistent border” between Iraq and Syria. 

However, Washington’s intelligence capabilities in Syria remain limited.  More important, the Obama administration has spent three years attempting to overthrow Syria’s Assad regime, which possesses an air defense system and warned that it would treat any attacks as “aggression.” 

The administration should reconsider its policy in Syria.  As I point out in Forbes online, “The Assad government is even more committed than Washington to eliminating the Islamic State as a geopolitical force.”

Yet America’s support for the opposition has weakened the Assad government’s ability to fight ISIL.  Washington’s preference for less radical groups also has discouraged Damascus from targeting the Islamic State, whose existence inhibits U.S. involvement. 

Reaching a modus vivendi with Damascus would encourage Assad to focus on ISIL.  Assad is no friend of liberty, but Washington must set priorities. 

The First Amendment Protects Random Ugly Rap Lyrics

To ensure that public discussion remains “uninhibited, robust, and wide-open,” the First Amendment protects speech that is “vituperative, abusive, and inexact.” While nobody will argue that Anthony Elonis’s speech—the subject of a Supreme Court case this coming term—was anything but “vituperative, abusive, and inexact,” there is considerable disagreement over whether his speech should be protected by the First Amendment. 

Elonis’s chosen form of speech was a series of rap lyrics he posted on Facebook under the pseudonym “Tone Dougie.” Many of the lyrics were violent and lurid, and some of those violent images were made in reference to Elonis’s estranged wife, who took them as a threat to her life. As a result of his crude posts, Elonis was fired, his wife obtained a protective order against him, and he was arrested and charged with violating 18 U.S.C. § 875(c), which makes it a federal crime to transmit in interstate commerce “any communication containing any threat to injure the person of another.”

Elonis argued that his rap lyrics were an artistic expression and that because he did not intend them to be a threat, his speech should be protected. The federal district court hearing his case didn’t see it that way. The judge rejected his request that the jury be instructed to consider his actions based on whether he expressed a subjective intent to threaten and instead instructed the jury to judge his speech based on whether a reasonable person would have interpreted the lyrics as a serious expression of intent to inflict bodily injury. Elonis was thus convicted and the U.S. Court of Appeals for the Third Circuit also rejected his argument that a subjective intent to threaten is required before speech loses First Amendment protection.

Now before the Supreme Court, Cato has joined the American Civil Liberties Union, the Abrams Institute for Freedom of Expression at Yale Law School, the Center for Democracy & Technology, and the National Coalition Against Censorship on a brief supporting Elonis’s position. We argue that Supreme Court precedent shows that (1) a subjective intent to threaten is an essential element of a “true threat,” (2) requiring a finding of subjective intent is in line with First Amendment principles, and (3) drawing the line between threat and protected speech carefully is particularly important given the rise of the Internet as a forum of communication—one where it can be easy to take things out of context.

As a matter of most people’s taste, the Internet may well be better off without violent rap lyrics like Anthony Elonis’s. But that shouldn’t matter to this case or how it’s analyzed under the First Amendment, which requires a high standard of proof regarding incitement or threats of violence before individuals can be jailed for their speech. The Supreme Court should take this opportunity to speak that truth freely across all mediums.

Elonis v. United States will be argued at the Supreme Court in November or December.

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

Congress Gets Unlimited Power Because…Slavery?

After engaging in a racially motivated street fight with a black man, Charles Cannon found himself facing—as expected—assault charges and a sentencing enhancement to penalize him further under Texas’s hate crime law. To federal prosecutors, however, this was not good enough, so they charged Cannon under the federal Hate Crimes Prevention Act (HCPA). You see, they had to make a federal case out of a fistfight to stop the return of slavery.

If that sounds odd, it probably should. The HCPA was passed pursuant to Section 2 of the Thirteenth Amendment, which authorizes Congress to enforce the Thirteenth Amendment ban on slavery, which authority the Supreme Court has extended to eliminating the “badges and incidents” of slavery. Defining these “badges and incidents” is naturally left up to Congress, and Congress has determined that racially motivated violence fits into that ever-expanding category. Cannon challenged his HCPA charges, but the federal district and appeals courts upheld the HCPA’s constitutionality, deferring to Congress’s power to “rationally determine” what the badges and incidents of slavery entail.

In petitioning the Supreme Court for review, Cannon argues that the HCPA intrudes on the states’ police power to prosecute local crimes and that Congress can’t be the judge of the limits of its own powers, whether under the Thirteenth Amendment or otherwise. Joined by the Reason Foundation and the Individual Rights Foundation, Cato has filed a brief supporting Cannon’s petition. We argue that the use of hate-crime laws to sweep local criminal activity into federal court has nothing to do with stamping out slavery and that the Court should decide the legitimacy of these laws before a more highly politicized case comes along—Ferguson, anyone?—and makes that task even harder.

Not only are federal hate crime laws constitutionally unsound, but, as George Zimmerman’s trial over the death of Trayvon Martin highlighted, they invite people dissatisfied with a state court outcome to demand that the federal government retry unpopular defendants. Giving Congress unlimited power and impairing the fundamental right to be free from double prosecution are too high and too immediate a price to pay to combat the phantom menace of slavery’s return to the United States.

The Supreme Court will decide this fall whether to take Cannon v. United States. For more on the case, see this description and brief on behalf of two members of the U.S. Civil Rights Commission.

This blogpost, as well as Cato’s brief, was co-authored by legal associate Julio Colomba.

L.A. Considers Giving Away Lottery Tickets To Encourage Voting

Concerned about low voter turnout, the Los Angeles Ethics Commission has floated the idea of using “financial incentives, such as a lottery system” to lure the apathetic to the polls. The Los Angeles Times has the details, while columnist Debra Saunders weighs in with critical commentary here and here.  From Saunders’s second post:

Total prize money is expected to be $100,000, or 1 percent of the $10 mil Los Angeles spent on public financing last year. … While the commission was thinking of giving away 100 $1,000 prizes, [City Councilman Herb] Wesson suggested that the panel consider a bigger takeaway – say a $50,000 prize, and two for $25,000. The measure hasn’t even made it to a City Council vote, and already politicians are trying to figure out how to fatten the prize.

Lottery tickets, paying off in other people’s money, as a reward for voting. That’s a perfect metaphor for the political process, isn’t it?

What If We Applied the IRS’s Reasoning in Halbig & King to the Patriot Act or RFRA, Instead of the ACA?

Over at Darwin’s Fool, I posted a critique of the Fourth Circuit’s opinion in King v. Burwell. Unlike the D.C. Circuit’s ruling in Halbig v. Burwell, the Fourth Circuit held that the IRS has the authority to issue subsidies in states with federal exchanges, despite the fact that the Patient Protection and Affordable Care Act repeatedly says subsidy recipients must enroll in coverage “through an Exchange established by the State.” I reproduce here my response to a commenter to that post, as his argument parallels those of many others who have been critical of these cases.

My commenter objected that a plain-text reading “must include the entire text of the bill,” which “makes clear that the goal of the bill was to provide health care to all Americans who needed it and could not, at that time get it.” Moreover, “It would be illogical for Congress to establish a national health care system that is based on subsidies and then not include those subsidies in all aspects,” thus “it is entirely reasonable to interpret that one sentence to mean that Congress intended the subsidies for all participants.” My reply:

Sir, I’m afraid you have things exactly backward.

The overall context of the PPACA presents no difficulty for the plaintiffs in King v. Burwell, Halbig v. Burwell, or the other cases challenging subsidies in federal exchanges. The text of the eligibility rules for those subsidies clearly and repeatedly limit eligibility to those who enroll in coverage “through an Exchange established by the State.” There is nothing in the broader context of the statute to suggest that Congress understood the words “established by the State” to have any meaning other than their usual meaning. There isn’t even any statutory language that conflicts with that plain meaning. Jonathan Adler and I addressed (almost) all of these supposed anomalies here.

On the contrary, it is the Obama administration and its supporters for whom both the text and context present difficulties. (We can no longer call them supporters of the PPACA, given how adamantly opposed they are to implementing the law as Congress intended.) The subsidy-eligibility rules are the only place where Congress spoke directly to the question at issue. Those rules flatly contradict the administration’s position. Congress did not throw the phrase “established by the State” around loosely. They referred to exchanges “established by the State” when they meant exchanges established by the states. They referred generically to “an Exchange” when they meant either a state-established or a federal exchange. And they referred to state-established and federally established exchanges separately within a single provision, which shows they saw a difference between the two. Congress also did the exact same thing – withholding subsidies from residents of uncooperative states – in the PPACA’s other massive new entitlement program, the Medicaid expansion.<--break->

IPAB Case Coons v. Geithner Dismissed, for Now

Jonathan Adler has a summary at the Volokh Conspiracy.

The Patient Protection and Affordable Care Act’s Independent Payment Advisory Board has been called a “death panel,” though I’ve argued one could just as legitimately call it a “life panel.” Either way, it is the most absurdly unconstitutional part of the PPACA.

Adler’s otherwise excellent summary neglects to mention IPAB’s most unconstitutional feature. Diane Cohen and I describe it here:

The Act requires the Secretary of Health and Human Services to implement [IPAB’s] legislative proposals without regard for congressional or presidential approval. Congress may only stop IPAB from issuing self-executing legislative proposals if three-fifths of all sworn members of Congress pass a joint resolution to dissolve IPAB during a short window in 2017. Even then, IPAB’s enabling statute dictates the terms of its own repeal, and it continues to grant IPAB the power to legislate for six months after Congress repeals it. If Congress fails to repeal IPAB through this process, then Congress can never again alter or reject IPAB’s proposals…

Congress may amend or reject IPAB proposals, subject to stringent limitations, but only from 2015 through 2019. If Congress fails to repeal IPAB in 2017, then after 2019, IPAB may legislate without any congressional interference.

Like I said, absurdly unconstitutional. But that’s ObamaCare for you.