Topic: Law and Civil Liberties

Poker and Sausage

Forbes today posts a terrific article looking at many of the peripheral issues surrounding the online gambling debate that I touched on yesterday. A few key passages:

Big credit-card associations MasterCard and Visa have allowed issuing banks to prevent payments from going through to Internet gambling sites for several years by using specially coded computer software that identifies a vendor as an online gambling site. American Express also blocks transaction with gambling sites. The online payment service PayPal actually got into hot water over the issue and had to pay $10 million to the federal government two years ago to settle charges it helped facilitate illegal online gambling.[…]

But with billions of such payments made every year, compliance with a new set of monitoring laws will be difficult at best and financially onerous to say the least. Smaller banks would be hit harder than larger banks, which have the resources to build the compliance technology that would be needed to track payments and block them if need be. Smaller banks are already struggling with the additional costs of complying with stricter anti-money laundering rules under the Patriot Act.

[…]

Blocking wire transfers through banks would force people to be more creative if they still wanted to use the online sites–for example, opening accounts in foreign banks or using non-U.S. Internet payment services.

Certainly, the House bill, should it become law, would be a boon to PayPal because it essentially eliminates all other online payment service competitors from the U.S. market. That would include Neteller, a U.K.-based online payment service, whose stock was down 15% on the London Stock Exchange’s alternative investment marketplace, and Firepay, owned by FireOne Group, whose stock was off nearly 20% on London’s AIM market. Both those companies would have to give up their online gambling site customers if they wanted to do business in the U.S. “It’s a protectionist bill for PayPal,” says Cato Institute’s Radley Balko.

Not surprisingly PayPal, owned by eBay, enthusiastically supported last week’s legislation. Its only remaining competitor in the U.S. market would be Google’s fledgling Internet payment service.

But other financial firms have been supportive of the effort to clamp down on Internet gambling. In a statement Tuesday, MasterCard said the vast majority of its cards deny authorization for Internet gambling. “MasterCard will continue to work aggressively with all appropriate parties to combat illegal Internet gambling,” it said.

It isn’t surprising that the credit card companies are supporting the ban. They already agreed to block their customers’ access to gambling sites and offshore payment services years ago, under threats from the Justice and Treasury Departments, as well as from aggressive state attorneys general, particularly New York’s Elliott Spitzer. It’s a similar story with the larger banks, who can absorb the costs associated with the news legislation. Probably doesn’t hurt that it’ll deliver a blow to their upstart competitors, who will have to spend a higher percentage of operating costs to comply with the law than will the bigger banks.

And neither banks nor credit card companies want to incur the wrath of the ban’s supporters in Congress, who some insiders I’ve spoken with say have made clear that how these industries approach the gambling ban might well effect the outcome of what the banking and credit card industries consider to be higher-priority issues.

All of which means banks and credit card issuers are supporting the online gambling bill, even though it will raise the cost of doing business, and require them to infringe on the privacy of their customers.

Sausage-making at its finest.

Conscientious Objectors

Can pharmacists have a conscience? Activists are demanding that Congress and state legislatures pass laws forcing pharmacists and other health workers to act against their own conscience in such matters as abortion, morning-after pills, and gay parenting.

Some doctors say it violates their conscience to perform abortions or provide artificial insemination for unmarried or gay people. Some pharmacists believe that the morning-after pill is a form of abortion, and their religious commitment forbids them to dispense it.

And now some patients and activists are demanding laws to force health professionals to dispense the care the patients want, no matter how it violates the health worker’s conscience. Activists who march for a woman’s right to choose want the government to overrule a pharmacist’s right to choose.

I was reminded of Arnold Kling’s question “Is Bioethics an Oxymoron?” when I read in the Washington Post the comments of official bioethicist R. Alta Charo: “As soon as you become a licensed professional, you take on certain obligations to act like a professional, which means your patients come first.” As I wrote in an online debate for Legal Affairs magazine,

this is an example of how one state intervention generates the demand for additional interventions. We say you can’t be a pharmacist unless you get a state license, and now you want to say that that license should empower the state to impose morally offensive obligations on those who were required to get the license.

Similarly, we require a prescription to get many drugs, including some forms of contraception. Why should a woman need a prescription for contraception? Why not just grant access to contraception by allowing it to be sold over the counter? Here we’ve created one intervention—the requirement that people get a prescription from a licensed doctor, which they must take to a licensed pharmacist—and it has led to a situation you don’t like, in which some tiny number of pharmacists are refusing to dispense a particular prescription. So you say we should have another rule, another regulation, another intervention.

As philosopher Loren Lomasky of the University of Virginia puts it in the Post article, “Freedom of conscience has been central to our political notions since even before the United States existed. People should not be forced into doing things that they find morally odious.”

Do the people who want doctors and pharmacists to be forced to provide abortions and morning-after pills want anesthesiologists to be forced to participate in executions? I’d bet not. These activists want their moral values enforced by law, they don’t want a neutral rule that all doctors must obey the laws of the state. If they did take such a consistent position, of course, I’d still disagree: anesthesiologists shouldn’t be forced to participate in what they may regard as murder, any more than gynecologists should.

This seems like such a clear issue to me. Yet most of the people in the Post’s online chat about the issue were insistent that health workers must be forced to do as they’re told, regardless of their own conscience. Whatever happened to the liberal claims of individual autonomy, of the right of conscience, of the individual exercising his or her own mind? Gone with the wind, it seems, when liberals have the power to impose their values on other people’s consciences.

In a country of 290 million people and 14 million businesses, we should let these issues sort themselves out in the marketplace. Chances are that major drugstore chains like CVS and Walgreen’s are going to insist that their stores fill all prescriptions. If they have more than one pharmacist on duty at a time, then they may be willing to tolerate pharmacists who avoid filling certain prescriptions. If they do insist that all pharmacists be prepared to fill any prescription presented by a customer, then pharmacists who can’t accept such rules will have to look for jobs elsewhere. And if customers encounter a pharmacy that won’t give them what they want, then they will have to find another pharmacy.

A prime reason for freedom is pluralism. In the modern world we don’t all share the same moral and religious perspectives. The fact of moral diversity is a good reason for toleration and allowing people to sort themselves out in society according to their own moral choices. Freedom in a pluralistic society should mean that individuals get to make their own choices. Sometimes other people aren’t willing to do what we want them to do. But frankly, it’s involuntary servitude to force other people to work for us when they prefer not to. And it’s appalling that 141 years after the Thirteenth Amendment, some people still want to hold others to involuntary servitude.

U.K. Gambling CEO Arrested at U.S. Airport

Details are still sketchy, but it looks as if David Carruthers, a U.K. citizen and CEO of the U.K.-incorporated, U.K.-traded public company BetOnSports.com, has been detained at a Fort Worth airport while switching flights between the U.K. and Costa Rica. He will now apparently be charged in the U.S. for running a company that’s legal in just about every Western country except America.  Reuters reports:

The U.S. Department of Justice said on Monday that BetOnSports was among 11 individuals and four corporations facing various charges of racketeering, conspiracy and fraud.

The founder of BetOnSports, Gary Kaplan, 47, was also charged with 20 felony violations, and a warrant has been issued for his arrest, the Department of Justice added.

“BetOnSports.com and other gambling Web sites operated by Gary Kaplan and his co-defendants offered gamblers in the United States illegal wagering on professional and college football and basketball,” said a copy of the indictment seen by Reuters.

It’s probably worth noting that Carruthers is an outspoken advocate for legalizing online gambling in the U.S. He recently debated Rep. Jim Leach on the issue in the Wall Street Journal. If Carruthers is being held solely because U.S. customers illegally do business with his legal, U.K.-based company, that’s disturbing enough.

But things could get even more interesting.

Carruthers was careless enough to have step foot on U.S. soil, even if only to switch planes. But as the Voluntary Trade Council’s Skip Oliva explains, the U.S. and the U.K. have also entered into some curious extradition treaties since September 11, and the U.S. has exploited those treaties to effectively kidnap British citizens who broke no British laws, and extradite them to the U.S. for trial on charges of violating U.S. law.  It’s worth noting that the cases Oliva writes about are iffy white collar crimes that have nothing to do with terrorism.

And let’s not forget the Mark Emery case, in which the DEA’s zealous persecution of medical marijuana users led them to extradite a medical marijuana activist from Canada for charges of marijuana distribution in the U.S..  It was inarguably a purely political arrest. The DEA bullied Canadian and British Columbia law enforcement officials – where marijuana laws are lax, if enforced at all – into doing its bidding.

The jihad against online gambling spilling out from Congress these last few months portends a showdown between the U.S. and the U.K. What’s interesting is that this time, the U.K. is unlikely to back down.  Britain has embraced Internet gambling and gets a substantial amount of tax revenue from the $12 billion U.S. consumers spend gambling online each year, much of it with U.K.-incorporated gaming sites.  You have to think U.K. officials would have an interest in maintaining those revenues, not to mention in protecting their citizens, and in the integrity of the tech sector of their markets, which took a spill after Carruthers’ arrest.

Might the U.S. try to enforce its gambling ban by extraditing gambling executives in other countries? Would those countries comply? What are the implications of either scenario?

If Congress succeeds in pushing through its farcical, ill-considered ban on online gambling, these are just a few of the issues that’ll inevitably pop up down the road. I’ve written before about some possible free trade entanglements the bill presents. But here’s another: One way U.S. consumers may get around the bill’s deputizing U.S. banks to enforce the gambling ban would be to simply open accounts in banks based overseas. Will Congress then attempt to ban wire transfers between U.S. banks and overseas banks that allow transactions with gaming sites? I wouldn’t put it past them.

The heartening side of all of this is that it shows how technology, trade, and commerce can work together to circumvent heavy-handed government meddling. The distressing part is just how far some in the U.S. government will go to impose their values on American citizens.

I guess nobody ever said moral crusading was easy.

Downside of Disclosure

The Washington Post reports today about the emergence of the Democratic Alliance, a group vetting organizations for wealthy, liberal contributors. The group has an interesting rule:

The alliance has required organizations that receive its endorsement to sign agreements shielding the identity of donors…The group requires nondisclosure agreements because many donors prefer anonymity…Some donors expressed concern about being attacked on the Web or elsewhere for their political stance; others did not want to be targeted by fundraisers.

Of course, the United States has a long tradition of anonymous speech and political activity, including The Federalist Papers. The donors to the Democratic Alliance continue in that tradition. Their desire for anonymity proves that mandatory disclosure of money in politics imposes costs on participation.

Those same costs affect donors to political campaigns who do not have a right to anonymous speech. In fact, a donor who gives to a challenger threatening an incumbent member of Congress faces a greater risk than that confronted by the donors to the Democracy Alliance.

Given their experience with the downside of disclosure, perhaps the donors to the Democratic Alliance (or the organizations they fund) will lead the way toward liberalizing or eliminating mandatory disclosure of campaign contributions.

Overkill

balko_whitepaper_300x394.jpgToday, my paper on SWAT teams and paramilitary tactics is finally released. It’s been the thrust of my research for nearly a year, now. It offers a history of SWAT teams, legal background, analysis and criticism of their increasingly frequent use and abuse, and an appendix of case studies that documents more than 150 botched raids.

You can download it for free [pdf]. If you want a slick, bound copy, you can order one for $10, and you’ll also get a copy of Gene Healy and Tim Lynch’s paper on the constitutional record of George W. Bush.

We’re also launching an interactive map to accompany the paper. The map plots every botched raid I’ve found in my research, with a description of what happened and a list of sources. You can sort the map by type of incident. So, for example, if you want to see only those raids where an innocent person was killed, it would look like this. If you want to see raids where a nonviolent offender was killed (a recreational gambler or potsmoker, for example), it would look like this. If you want to see all of the “wrong door” raids where no one was killed, it would look like this.

The map is also searchable by year, state, and type of incident.

Cato’s news release on the paper is here.

Why 527s May Survive for the Long Term

The drive to eliminate 527 groups appears to have failed for this year. That is good news for free speech. But maybe the story is even better. Maybe Congress won’t eliminate 527s next year or the year after. Let me explain.

First, a little history. 527s rose to prominence in the 2004 presidential campaign. The Democrats used 527s to raise several hundred million dollars to help the Kerry campaign. The Republicans by and large did not use 527s. Party leaders wanted to keep control of the GOP campaign. For reasons of partisanship and control, Republican leaders wanted Congress to “close the 527 loophole.”

They have failed to do that. Democrats were willing to filibuster to block the legislation, and seven Republican senators were unwilling to support the effort to end 527s.

However, things could change. To succeed in the Senate, the 527 ban will need more unified Republican support plus a few stray Democrats (say, about 10 of them) voting contrary to the wishes of their party’s leaders. The latter could happen. An endangered incumbent of either party values his re-election more than party discipline. Twenty percent of the GOP in the House voted for McCain-Feingold, the wishes of their leaders notwithstanding.

If the Democrats use 527s to attack Republican incumbents, the GOP might be more unified on this issue. If the GOP in turn uses 527s to effectively threaten vulnerable Democratic senators, those incumbents might consider voting with the GOP to “close the 527 loophole.” (It’s free speech, not a loophole, but you get my point).

But the GOP leadership does not want to use 527s. They highly value retaining control over campaigns. As long as that remains true, vulnerable Democrats will not be threatened by 527s and will not provide the necessary votes to override a filibuster in the Senate.

In sum, 527s will probably survive so long as Karl Rove runs the Republican show.

There’s No Fixing the FBI’s Computers

While Congress and the Department of Justice consider mandating that ISPs retain data about all of our communications, the FBI, it seems, can’t keep its own IT systems up to date. Putting aside the irony to focus on practical matters, what will bring the FBI up to snuff? I told the reporter in the article linked just above that nothing will.

The problem is institutional; when an organization’s membership doesn’t enjoy feast or famine based on the success of the organization, very little can bring it into focus and create success. … Congressional and public oversight is a weak, weak substitute for competitive pressure.

But the FBI’s computer systems have to be fixed, don’t they? They do. And to get there, you might have to shrink the FBI and law enforcement generally — especially federal law enforcement.

Because of the nature of bureaucracies, I don’t think there is an effective management solution to the FBI’s problems with IT. The better answer occurs at a higher level of abstraction:

Too many risks and threats are being treated as public problems to be dealt with through law enforcement when they should be treated as private problems to be dealt with through security.

To illustrate: Imagine that the nation’s garages had been designed without garage doors. People finding that their lawn mowers and garden tools were being stolen could call the cops (public/law enforcement) or design and install garage doors (private/security). Much going on in Internet security and online anti-fraud these days equates to people without garage doors calling the cops. There should be more personal and corporate responsibility, less government and law enforcement.

Another example: Starting more than 30 years ago, the U.S. government started taking responsibility for airline security (public/law enforcement) rather than leaving it with airlines (private/security). In fact, President Nixon announced expansion of the air marshals program on September 11, 1970, 31 years to the day before 9/11.

Mixed responsibility allowed both the public and private sectors to avoid ownership of the risk that a flight would be commandeered and used as a weapon. After 9/11, the government took further control over airline security and absolved airlines of the liability that might have accrued to them in the courts. (I don’t think they should have been liable for the full consequences of 9/11 or would have been found liable in well-functioning courts, except perhaps for the lives of their passengers.)

The lesson that private owners of critical infrastructure across the country learned is: Failure to secure themselves will bring them protection from liability, subsidies, and government-provided security services. In other words, they have been shown that leaving their garage doors open and calling the cops is better for them than taking responsibility. (In insurance economics, this is called “moral hazard.”)

“How do you fix the FBI’s computers?” You don’t. And you won’t. That’s the best answer I know.

Does it come off as too ideological to argue that the FBI should be smaller? Consider that the management problems at the FBI are merely part of a different ideological choice: having a large federal law enforcement apparatus. It doesn’t have to be this way, and the management problems are a product of the fact that it is.

Does it come off “soft on crime” to argue that federal law enforcement should be reduced? The opposite tack — “tough on crime” — means accepting incompetent law enforcement, which is the best friend crime ever had.