Topic: Law and Civil Liberties

National School Choice Week Roundup

This week is National School Choice Week, the annual celebration of policies that empower families to choose the education that best meets the individual needs of their children. There have already been several important school choice developments this year, not all of them positive. Below is a roundup of the good, the bad, and the ugly.

Florida expands its education savings account program

It will be hard to top 2015 (the Year of Educational Choice), but 2016 has already seen a flurry of legislative activity. Last week, Florida Governor Rick Scott signed legislation expanding the number of students with special needs who can receive education savings accounts. The bill also renamed the Personal Learning Scholarship Accounts to honor their legislative champion, Senator Andy Gardiner. 

Does Drug Prohibition Inhibit Economic Development?

Even the most dedicated opponent of drug prohibition might not guess that this policy harms economic development.

Yet claims in a recent WSJ story, combined with research on the relation between banking and development, suggests just such an impact.

The reason is that drug prohibition fosters anti-money laundering laws; which then discourage U.S. banks from doing business in Mexico; which then impedes Mexican banking; which then negatively impacts development.

The WSJ story says,

U.S. banks are cutting off a growing number of customers in Mexico, deciding that business south of the border might not be worth the risks in the wake of mounting regulatory warnings.

At issue are correspondent-banking relationships that allow Mexican banks to facilitate cross-border transactions and meet their clients’ needs for dealing in dollars—in effect, giving them access to the U.S. financial system. The global firms that provide those services are increasingly wary of dealing with Mexican banks as well as their customers, according to U.S. bankers and people familiar with the matter.

And why are U.S. banks worried about regulation?  Because 

U.S. financial regulators have long warned about the risks in Mexico of money laundering tied to the drug trade. The urgency spiked more than a year ago, when the Financial Crimes Enforcement Network, a unit of the Treasury Department, sent notices warning banks of the risk that drug cartels were laundering money through correspondent accounts … Earlier, the Office of the Comptroller of the Currency sent a cautionary note to some big U.S. banks about their Mexico banking activities.

As for evidence that banking is important for economic development, see this paper by Scott Fulford of Boston College (featured soon in a Cato Research Brief).  Fulford writes:

Do banks matter for growth and how? This paper examines the effects of national banks in the United States from 1870–1900. I use the discontinuity in entry caused by a large minimum size requirement to identify the effects of banking. For the counties on the margin between getting a bank and not, gaining a bank increased production per person by 10%. National banks in rural areas improved agriculture over manufacturing, moving counties towards geographic comparative advantage. Since these banks made few long-term loans, the evidence suggests that the provision of working capital and liquidity matter for growth.

Bad policies (drug prohibition) breed more bad policies (anti-money-laundering laws), which have additional adverse consequences that few could plausibly have forseen.  This is one reason why any government interference with liberty, no matter how well intentioned or seemingly well justified, should face extreme skepticism.

What the President Should Do: Civil Asset Forfeiture

As President Obama counts down the days of his last year in office, one positive step he could take for his legacy would be to halt the federal government’s use of civil asset forfeiture and make the suspension of the equitable sharing program permanent.   

Civil asset forfeiture, which allows the government to seize your cash and property without ever charging you with a crime, is rife with abuse and violates many cherished principles such as due process, separation of powers, federalism, and private property rights.  The predatory practice has become so prevalent that in 2014, for the first time on record, law enforcement officers took more money from Americans under federal forfeiture law than burglars stole from their victims.  More than $5 billion was deposited into the Treasury Department and Justice Department forfeiture funds, and that astonishing figure doesn’t include seizures that were purely state-based.
 
Further compounding the abusive nature of civil forfeiture is the federal government’s equitable sharing program, which allows state and local cops in states with restrictive forfeiture laws (or none at all) to circumvent their state laws and seize property under more-permissive federal law in exchange for an 80% kickback of the proceeds.  The Department of Justice recently suspended the equitable sharing program, citing a budget shortfall, but it’s clear from the suspension statement that the Justice Department plans to restart the program in the future.
 
Civil asset forfeiture creates an inappropriate profit motive for predatory policing, it distorts the priorities of law enforcement, and it tramples our constitutional principles.  President Obama should take the time to end these practices before he leaves office.
  
For more information about civil asset forfeiture, check out our civil forfeiture explainer on PoliceMisconduct.net.
 
And for an updated version of the Institute for Justice’s fantastic national survey of civil forfeiture practices, check out Policing for Profit, 2nd Edition.

The Presumption of Innocence and ‘Making a Murderer’

In response to the wild popularity of the Netflix series, Making a Murderer, the Washington Post is running a series this week about the presumption of innocence for those readers who are hungry to learn more about the American criminal justice system. The Post invited me to submit a piece for the series and it is now available online.  Here’s an excerpt:

Casual observers of our legal system will sometimes say that they would never plead guilty to a crime if they were innocent. An easy claim to make — but it is another thing when your freedom is actually on the line.

Imagine learning that the government has a “witness” who is willing to tell lies about you in court. And then your own attorney tells you that his best advice is for you to go into court, say you’re guilty and accept one year in prison instead of risking a 10-year prison sentence should the jury believe the lying witness. It’s an awful predicament for innocent people who get swept up in criminal cases. As William Young, then chief judge of the U.S. District Court in Boston observed in a 2004 opinion: “The focus of our entire criminal justice system has shifted away from trials and juries and adjudication to a massive system of sentence bargaining that is heavily rigged against the accused.”

Everyone is generally aware that some criminal cases go to trial and others are resolved by plea bargains, but most folks have no idea how lopsided the American criminal justice system has become.  Only about five percent of the cases go to trial.  One law professor says that finding a jury trial is about as likely as finding a hippopotamus in New York City.  It’s not impossible…you just have to know where to look.

For related Cato work, go here, here and here.

Campbell-Ewald: SCOTUS (Still) Doesn’t Resolve Class Action “Pick-Offs”

In this morning’s 6-3 ruling in Campbell-Ewald v. Gomez, the Supreme Court, with Justice Ruth Bader Ginsburg writing for the majority, ruled that a defendant’s offer to settle in full the claim of a named plaintiff did not in itself avail to moot the claim and thus (its goal) knock-out the associated class action. The case, which John Elwood and Conor McEvily previewed in their contribution to the latest Cato Supreme Court Review, is the latest in a series–notably Genesis Healthcare Corp. v. Symczyk three years ago–raising the question of when and whether defendants can end a group action by “picking off” named plaintiffs. While this case on its face is a win for the liberal side and embraces the analysis argued previously by Justice Elena Kagan in her Genesis dissent, it still leaves important elements of the wider question unresolved, while giving Justice Clarence Thomas the chance to write an interesting concurrence asking whether either camp of justices is asking the right questions. 

Dissenting Chief Justice John Roberts (joined by justices Antonin Scalia and Samuel Alito) argues that an individual lawsuit that has been met with a fully adequate offer of settlement has ceased to be a “case or controversy,” the only sorts of disputes our courts may adjudicate. (Because the federal law that underlies the suit – the Telephone Consumer Protection Act, or TCPA – has a statutory maximum for damages, it is reasonably knowable what constitutes full relief for plaintiff Gomez.) By contrast, the majority points out with some force that a valid claim countered with a full offer of settlement is not in quite the same posture as a grievance that never became a valid claim in the first place. Ginsburg, Kagan, et al. would apply principles of contract to an offer of judgment made under federal Rule 68 and, under such principles, a contract offer–handsome or otherwise–need not be accepted. 

Justice Clarence Thomas, concurring separately, disagrees with both sides’ approach. He is not satisfied with the conservatives’ somewhat Legal Realist approach (if one may call it that) as to when a case or controversy has ceased, but is equally wary of the liberals’ resort to contract principles (laying a legal controversy to rest is not quite the same thing as contract-making, even if they have much in common.) Instead, he would look to the early common law of tenders, which preceded (and led up to) what is now Federal Rule 68 on offers of settlement. Thomas concludes that in this particular case common law analysis would lead to the same destination as reached by the majority. 

While this morning’s outcome is being hailed in some quarters as a huge victory for class actions, note well the narrowing language on pages 11 and 12 of Justice Ginsburg’s opinion, which suggests a concern to keep courts rather than the parties or their lawyers in final control: 

We need not, and do not, now decide whether the result would be different if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount. That question is appropriately reserved for a case in which it is not hypothetical. 

Taking (Tax) Credit for Education

One of the most promising recent developments in education policy has been the widespread interest in education savings accounts (ESAs). Five states have already enacted ESA laws, and several states are considering ESA legislation this year. Whereas traditional school vouchers empower families to choose among numerous private schools, ESAs give parents the flexibility to customize their child’s education using a variety of educational expenditures, including private school tuition, tutoring, textbooks, online courses, educational therapies, and more.

Today the Cato Institute released a new report, “Taking Credit for Education: How to Fund Education Savings Accounts through Tax Credits.” The report, which I coauthored with Jonathan Butcher of the Goldwater Institute and Clint Bolick (then of Goldwater, now an Arizona Supreme Court justice), draws from the experiences of educational choice policies in three states and offers suggestions to policymakers for how to design a tax-credit-funded ESA. Tax-credit ESAs combine the best aspects of existing ESA policies with the best aspects of scholarship tax credit (STC) policies. Like other ESA policies, tax-credit ESAs empower families to customize their child’s education. And like STC policies, tax-credit ESAs rely on voluntary, private contributions for funding, making them more resistant to legal challenges and expanding liberty for donors.

Here’s how it would work: individuals and corporations would receive tax credits in return for donations to nonprofit scholarship organizations that would set up, fund, and oversee the education savings accounts. There’s already precedent for this sort of arrangement. In Florida, the very same nonprofit organizations that grant scholarships under the state’s STC law also administer the state’s publicly funded ESA. Moreover, New Hampshire’s STC law allows scholarship organizations to help homeschoolers cover a variety of educational expenses, similar to ESA policies in other states. 

For more details on how to design tax-credit ESAs, how they would work, and the constitutional issues involved, you can read the full report here. You can also find a summary of the report at Education Next.

An Article V Convention To Amend the Constitution?

Some constitutional conservatives, including Texas Gov. Greg Abbott and Rob Natelson for the American Legislative Exchange Council, have been promoting the idea of getting two-thirds of the states to call for an Article V convention to propose amendments to the U.S. Constitution. Florida senator and presidential candidate Marco Rubio recently made headlines by endorsing the notion. But I fear that it’s not a sound one under present conditions, as I argue in a new piece this week (originally published at The Daily Beast, now reprinted at Cato).  It begins:

In his quest to catch the Road Runner, the Coyote in the old Warner Brothers cartoons would always order supplies from the ACME Corporation, but they never performed as advertised. Either they didn’t work at all, or they blew up in his face.

Which brings us to the idea of a so-called Article V convention assembled for the purpose of proposing amendments to the U.S. Constitution, an idea currently enjoying some vogue at both ends of the political spectrum.

Jacob Sullum at Reason offers a quick tour of some of the better and worse planks in Gov. Abbott’s “Texas Plan” (as distinct from the question of whether a convention is the best way of pursuing them).  In using the phrase “Texas Plan,”  Gov. Abbott recognizes that in a convention scenario where any and all ideas for amendments are on the table, other states would be countering with their own plans; one can readily imagine a “California Plan” prescribing limits on campaign speech and affirmative constitutional rights to health and education, a “New Jersey Plan” to narrow the Second Amendment and broaden the General Welfare clause, and so forth. Much more on the convention idea in this Congressional Research Service report from 2014 (post adapted and expanded from Overlawyered).

Cato has published often in the past on the difficulties with and inefficiencies of the constitutional amendment process including Tim Lynch’s 2011 call for amending the amendment process itself and Michael Rappaport’s Policy Analysis No. 691 in 2012 with proposals of similar intent. This past December’s Cato Unbound discussion led by Prof. Sanford Levinson included a response essay by Richard Albert describing the founding document as “constructively unamendable” at present, although as a consequence of current political conditions and “not [as] a permanent feature of the Constitution.” And to be fair I should note also Ilya Shapiro had a 2011 post in this space with a perspective (or at least a choice of emphasis) different from mine.