Topic: Political Philosophy

Enough is Enough

Three years ago the U.S. Supreme Court handed down McConnell v. FEC, a decision that upheld McCain-Feingold’s restrictions on political speech. The future seemed bleak for any limits on government regulation of speech and association.

But things are looking up. Today the Supreme Court handed down its decision in Federal Election Commission v. Wisconsin Right to Life.

McCain-Feingold made it a federal crime for any corporation to broadcast, 30 to 60 days before an election, any communication that mentions a federal candidate for elected office and is aimed relevant voters.  Wisconsin Right to Life (WRTL) is an ideological corporation that accepted funding from other corporations. Its members wanted to run ads in 2004 urging citizens of their state to contact its two senators and urge them to oppose a filibuster of judicial nominees. Sen. Russ Feingold, one of the senators and a co-author of the law in question, was running for re-election. Wisconsin Right to Life’s advertising plans thus constituted a federal crime. At least, they were a crime if the relevant part of McCain-Feingold was constitutional as applied to WRTL. In fact, McCain-Feingold was constitutionally invalid in this case and probably many others.

To understand why requires a quick summary of campaign finance law. Congress long ago prohibited contributions to candidates from the general treasuries of corporations and labor unions. But corporations could fund ads commenting on the issues of the day. However, if those ads directly advocated the election or defeat of a candidate, they became an attempt to circumvent the ban on corporate contributions and thus a federal crime. In Buckley v. Valeo, the Court said such “express advocacy” contained words like “elect” and “defeat.” If an ad did not use the words, it was not express advocacy and hence, not subject to campaign finance regulation.

In the 1990s some businesses and labor unions started funding advertising that met the legal standards for issue advocacy. The ads were legal and often highly critical of vulnerable members of Congress in the run up to an election. McCain-Feingold made such speech illegal. It said corporations could not fund ads that mentioned a candidate for federal office with 30 to 60 days of an election. The McConnell Court went along arguing that the ads in question were the “functional equivalent of express advocacy.” In the WRTL decision, the author of the majority opinion, Justice Roberts, has contracted rather than expanded the scope of government regulation. He has done so by redefining the meaning of express advocacy: “a court should find that an ad is the functional equivalent of express advocacy only if the ad is susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate.” The WRTL ad seemed to a reasonable person to be attempt at grassroots organizing. Hence, WRTL wins.

But this standard implicates more than this case. Many of the ads in the 1990s that were the target of McCain-Feingold might have been free of regulation under this standard. Reasonable people could have believed that the ads were attempts to persuade voters to contact their representatives. The political space free of government regulation seems to have expanded. Indeed, it seems possible that many fewer ads will be judged the “functional equivalent of express advocacy” in the future.

So, the good guys won one at last. “Enough is enough,” as Justice Roberts writes in considering efforts to further expand government control of politics.

But still there is reason to worry. The majority did not declare the relevant part of McCain-Feingold unconstitutional. Justice Alito did suggest a willingness to hear constitutional challenges to the McConnell decision (and hence, to McCain-Feingold). Justice Roberts also set out some criteria for the “express advocacy” that are fairly broad. An ad that mentions “an election, candidacy, political party, or challenger; or [that takes] a position on a candidate’s character, qualifications, or fitness for office” could become express advocacy depending on future judgments by the Court and perhaps, by the Federal Election Commission.

An important battle has been won. The war continues.

The Libertarian Case for Free Software

One of the most interesting trends in tech policy over the last decade has been the emergence of free software as a major force in the computer industry. For example, some of our readers probably use the Mozilla Firefox web browser, which was developed by a team of volunteers collaborating over the Internet. And in fact, you’re using free software right now! Cato’s own web servers use the Linux operating system and the Apache web server to serve up Cato’s website. Both Linux and Apache are free software, developed by volunteers and made available for free to the general public.

Free software has caught some flack among libertarians who fault it for its failure to rely on the traditional mechanisms of the market. In the latest edition of Cato’s TechKnowledge newsletter, I argue that this criticism is misguided.

Free software is precisely the kind of decentralized, voluntary cooperation that libertarians should be holding up as an alternative to the coercive power of the state. Free software is produced by volunteers donating their time, without a government program in sight. If that’s not a libertarian success story, I don’t know what is.

So why do we see so many libertarians criticizing such peaceful, but noncommercial, forms of social organization? Many are taking the bait offered by the subset of free software proponents who have adopted the rhetoric of the left to promote their goals. We’re used to arguing with these people, who advocate using the state to impose communal forms of organization. Libertarians criticize forcing employees to join unions, prohibiting organ donors from becoming organ sellers, and requiring children to attend government schools. In each case, we hold up markets, business, and money as the tools of voluntary alternatives to coercive government programs.

In these arguments, progressives often claim they can use state power to create and nurture the rich social structures that typify civil society. But they’re wrong. State intervention almost always results in bureaucratized and politicized institutions that pit us against one another in bitter struggles. For example, a lot of progressives laud the potential of public schools to create more unified communities. But in practice, the opposite is true: our public schools have become one of the most divisive institutions in American society. They’ve sparked pitched battles over what to teach our children about sex, evolution, religion, and many other topics. The reality is that you can’t create civil society by government fiat.

So libertarians are right to criticize policies aimed at accomplishing communal goals via coercive means. But some libertarians have gotten so used to defending the market against those who want to impose collectivism that they start criticizing purely voluntary efforts to organize people on more communal lines. They are forgetting that libertarianism is not necessarily about increasing the role of for–profit enterprise in every aspect of our lives. Commercial activity is one alternative to statism, and an extremely important one. But it’s just one possible mode of cooperation, and it’s not necessarily the best choice in every situation.

A Reason to be Against Donor Disclosure

Several interest groups (Public Citizen, Common Cause and Democracy 21) have lately been trying to persuade Congress to set up an independent ethics panel to police members. They also want Congress to allow outside groups (like themselves) to file ethics complaints with the panel.

A House task force now proposes to grant them their wish. However, the task force also requires any group filing an ethics complaint to the new panel to disclose its donors.

The interest groups are not amused. Craig Holman of Public Citizen told The Hill:  “you can imagine how upsetting this is to the donor community.”

I do not support an independent ethics panel. However, Holman is correct here. A group that filed a complaint would open its donors to retribution by the named member or by his party or allies in Congress. Disclosure might even discourage donors from supporting these interest groups, thereby burdening the contributors’ rights to association and speech.

In fact, I think we should extend Craig Holman’s point to other donors. People who contribute to the campaigns of challengers to incumbents should also not have to disclose their donations. After all, their contribution (like an ethics complaint) threatens a member of Congress and might well bring about retribution.

Sauces, gooses, ganders. If disclosure threatens the interests of the donors to certain influential interest groups that might irritate people in power, surely it also threatens those who contribute to challengers to incumbents. These donors, like your average Common Cause contributor, should also be free of the burden of revealing their political activities to those who might do them harm.

Seen and Not Seen

The Washington Post Magazine had a detailed profile of the daily activities of freshman House member Joe Courtney (D-CT).

We learn that he spends much of his time raising campaign money, even though the next election is still 17 months ago.

More interesting is how a single business in his district, Electric Boat Corp., seems to dominate his time on Capitol Hill. He meets with the company, he lobbies Democratic Party bosses on the firm’s behalf, and he makes sure to ask questions in congressional hearings related to the company.

Electric Boat makes vessels for the Pentagon and employs 6,000 in Courtney’s Connecticut district. That’s a lot of people, but there at 680,000 people in Courtney’s congressional district — what about all their interests? Does Courtney put any effort, for example, into keeping taxes low for the benefit of all the other thousands of businesses in his district?

The article reminded me of Frederic Bastiat’s “What is Seen and What Is Not Seen.” Unfortunately, most politicians focus only on the immediate, most simple, and most visible effects of government action, and don’t have the imagination or capacity for abstract thought to recognize the unseen but much larger effects of big government.

How do we fix this bias?

Furman on Inequality

Following in my illustrious footsteps as an Economist.com guest blogger, Brookings senior fellow Jason Furman writes thusly of rising income inequality

According to the Congressional Budget Office’s income inequality data, the top 1 percent of households have seen their incomes go up by 7 percent and the bottom 80 percent have seen their income shares go down by 7 percent.  In total that is a $664 billion increase in inequality, representing $7,000 for each household in the bottom 80 percent and nearly $600,000 for each household in the top 1 percent.

That number motivates a Hamilton Project tax strategy paper co-authored by Larry Summers, Jason Bordoff and myself that is being released today.

It is far from obvious what has caused the change; in just the last month alone the National Bureau of Economic Research has released three working papers with divergent explanations:  a reduction in the bargaining power of workers, an increased reward for skills and worker productivity, and the destruction of good jobs by trade.

Regardless of the cause of rising inequality, lefties, utilitarians, Rawlsians and anyone with a deep-seated reverence for markets and the capitalist system should all be concerned.  As Alan Greenspan memorably stated, “income inequality is where the capitalist system is most vulnerable.  You can’t have the capitalist system if an increasing number of people think it is unjust.”

Well, I consider myself a sort of Rawlsian (a Rawlsekian!) with a deep-seated reverence for markets and the capitalist system. Should I be concerned? I agree with the sainted Greenspan that capitalism cannot survive a widespread conviction that it is unjust. And I agree that income inequality is one of those things that some thinkers like wheel out to try to convince us that capitalism is unjust, at least around the edges, in order to build popular support for such things as more steeply “progressive taxes combined with expanded benefits like health insurance,” like Furman wants. But I’m not so worried by rising income inequality as I am by Furman’s facile slide from income inequality numbers, which are meaningless by themselves, to the possibility of a crisis of legitimacy.

It is worth repeatedly and forcefully emphasizing that income inequality may or may not be symptomatic of injustice. The three hypotheses for rising inequality Furman mentions are perfectly consistent with advances in justice. And if they are generating income inequality, then it may vindicate capitalism. For example, the loss of jobs, a decrease in wages, or a decrease in bargaining power for some workers may be a consequence of lifting coercive restrictions on voluntary exchange across borders – restrictions that are themselves a form of injustice. Furman himself notes that protectionist policies could decrease inequality, though he advises against them, and rightly so, since they are unjust. But if protectionist policies are lifted, and inequality increases, that uptick in inequality is a side-effect of justice, not a symptom of injustice.

Inequality may reflect real injustice in our culture and institutions, and some portion of it probably does. But then our focus ought to be on rooting out those injustices, not papering them over with confiscatory redistribution which, in the absence of a reason to do it other than arbitrarily reducing measured inequality, is straightforwardly immoral.

Let’s set aside the matter of the intelligibility of “shares” of “national income” as a subject of justice for another time.  

Here’s to You, Mrs. Swedenburg

Juanita Swedenburg, the Virginia winemaker who took her battle for economic liberty to the Supreme Court and won, died June 9 at the age of 82. Clint Bolick, who argued her case as a lawyer for the Institute for Justice, discussed it in his new book David’s Hammer:

My curiosity was sparked, however, during a visit in the early 1990s to a small winery in bucolic Middleburg, Virginia.  The proprietor was a striking older woman, Juanita Swedenburg, who owned and operated the winery with her husband.  She produced several good wines, including a chardonnay with the toastiest nose I can remember.  We got to talking and Mrs. Swedenburg asked me what I did for a living.  When I told her that, among other things, I challenged regulatory barriers to entrepreneurship, she exclaimed, “Have I got a regulation for you!”          

Most states, it turned out, prohibited direct interstate shipments of wine to consumers.  So that if tourists from another state visited Mrs. Swedenburg’s winery and asked how they could obtain her wines back home, she would have to reply, “You can’t.” …

As a descendant of settlers who fought in the American Revolution, Mrs. Swedenburg was outraged that such a stupid law could exist in a nation with the greatest free-enterprise system in the world. 

Eventually, Bolick writes, the Institute for Justice took Mrs. Swedenburg’s case to the Supreme Court. He argued against a New York law, and Stanford law school dean Kathleen Sullivan (who also spoke recently at the Cato Institute) argued against a similar Michigan law. The Court ruled 5-4 that such laws “deprive citizens of their right to have access to the markets of other States on equal terms.” When Bolick launched his new book at the Cato Institute in April, Mrs. Swedenburg was sitting in the front row.

Juanita Swedenburg was the kind of citizen a free republic needs. After a career in the foreign service, she and her husband “retired” to a Virginia farm that had been in business since 1762. They set up a winery and worked seven days a week to make it a success. As the Washington Post says, “Mrs. Swedenburg did not take the Constitution for granted.” She knew that there was something wrong with a law that prevented willing customers from buying the fruits of her labors, wherever they lived. And when she found a lawyer who shared her enthusiasm for both wine and constitutional liberty, she pressed him to take the case on behalf of her and her customers.

Like John Peter Zenger, Rosa Parks, Allan Bakke, Michael Hardwick, Bill Barlow, and many others, Mrs. Swedenburg made our constitutional rights real by using them. Raise a glass to her memory.