That’s Not a Knife… This Is a Knife!

If a law is so vague that it makes it impossible to know whether what you’re doing is illegal or not, it cannot stand. Especially not when the vague law requires no criminal intent to render an action unlawful. The state of New York ignored this basic point of criminal law with its ban of “gravity knives”—pocket knives capable of being opened by the mere force of gravity or a slight flick of the wrist, as opposed to “switchblades,” which are spring loaded. The legislature both failed to define what a gravity knife is and eliminated any requirement that a person have criminal intent (mens rea) when it made simple possession of a pocket knife that could qualify as a “gravity knife” a crime.

The central problem here is that this law, which imposes strict liability on simple possession of a contraband knife, provides for discriminatory and unpredictable enforcement. The U.S. Court of Appeals for the Second Circuit acknowledged the law’s absence of a mens rea requirement but held that it makes no difference whether the defendant believed a knife was legal or not, whether he actually attempted a “wrist flick” to open the knife, or even if he received advice from a police officer that the knife was lawful. Ultimately, the court below suggested that challenges to such prosecutions could only be raised on an as-applied basis—meaning that when someone is prosecuted under this law for carrying a Swiss Army or other common folding knife, then he may be able to raise this defense. But forcing people who don’t and can’t know how to conform to a vague law to wait until they are prosecuted to challenge it is unreasonable.

John Copeland, who was arrested for possessing a common folding knife, now seeks Supreme Court review, hoping to have New York’s law overturned. Cato has joined a group of criminal-law professors on an amicus brief in which we provide a primer on criminal liability where weapon possession charges should be accompanied by a showing that a defendant has both knowledge of possessing an illegal object and of the object’s unlawful characteristics. Our argument parallels a Supreme Court ruling in an analogous drug case, McFadden v. United States (2015), regarding the defendant’s knowledge of substances he possessed.

 

When a law is vague in a substantial part of its application and provides people no means of knowing whether their conduct is legal, that law is unconstitutionally vague and must either be struck entirely or narrowed to eliminate the infirmity. It is fundamentally (and constitutionally) unfair to impose criminal liability on people who have no way of knowing their conduct is illegal and have no intent to commit a crime.

The Supreme Court will decide later this winter or spring whether to take up Copeland v. Vance.

Wall Emergency, Even If Legal Under Existing Law, Violates the Separation of Powers

Our Constitution divides federal power among three branches of government: the legislative, the executive, and the judicial. One of the powers given exclusively to the legislative branch (Congress) is to spend money, or to appropriate money for the executive branch to spend, in enforcing the law (which is the president’s power and indeed duty). Specifically, Article I, Section 9 (the Appropriations Clause) says that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” And of course, the purposes for which Congress can exercise this “power of the purse” are enumerated in Article I, Section 8, which is why we have legal battles over, for example, whether some federal law fits into the power to regulate interstate commerce (aka the Commerce Clause). So the idea that the executive branch can’t exercise legislative power means that it can neither spend money that hasn’t been appropriated nor create new programs. 

Now, congressional refusals to appropriate that money or create those federal programs don’t give the president more power, even if he thinks it’s really important. This is what got President Obama in trouble: DACA and DAPA, for example, which I generally support as a matter of policy, are new programs that create new immigration statuses—so these executive actions have no constitutional basis, no matter what kind of pen or phone he used to enact them. Stated another way, a presidential failure to get the deal he wants from Congress on a major policy priority doesn’t trigger new executive powers. 

But you know what does trigger certain executive powers? A national emergency. Various presidents have done things as emergency actions—Lincoln during the Civil War most notably, when Congress literally couldn’t be brought back in session—but the first official such declaration was made by Woodrow Wilson (not a promising start), and many presidents would go on to declare emergencies of various kinds, without limiting their scope or duration or citing any statutes. Presidential emergency actions were taken largely without congressional oversight or other checks, though one notable exception was the legal pushback on Harry Truman’s steel-mill seizures during the Korean War, culminating in the Supreme Court’s 1952 Youngstown Steel ruling, which to this day provides the rubric for evaluating executive action in the face of congressional acquiescence, silence, and disapproval. Until the Watergate era, when Congress passed and President Gerald Ford signed the National Emergencies Act. 

The NEA doesn’t actually give the president the power to declare national emergencies. Instead, it acknowledges that power and then restricts it, setting up rules for how it’s to be used. One of those provisions gave Congress power to reject an emergency declaration by a majority vote of both houses. But that sort of “legislative veto” (without which the NEA wouldn’t have passed) was ruled unconstitutional in the 1983 case of INS v. Chadha (which technically involved a one-house veto), so now Congress can override the president only with a vetoproof super-majority. 

But again, the NEA doesn’t give the president powers itself. Instead, it triggers hundreds of other statutes that “unlock” certain executive authorities upon an emergency declaration. The problem is that “emergency” isn’t typically defined in those relevant laws and presidents have declared emergencies in a range of situations that don’t necessarily match the common understanding of that word, which would be something like an immediate (“emergent”) threat requiring urgent attention. In other words, English speakers don’t typically think of “emergency” to be synonymous with “important issue” or “long-time serious problem.” (Think of a hospital ER, where you wouldn’t typically go to treat cancer.)

To wit, from the NEA’s enactment until today’s Wall Emergency, presidents declared 58 emergencies—most of them related to trade restrictions under the International Emergency Economic Powers Act—and 31 have been renewed annually. Did you know, for example, that we still live under Jimmy Carter’s national emergency declaration responding to the taking of hostages in Iran in 1979? Or under George W. Bush’s 2006 “national emergency with respect to blocking property of certain persons undermining democratic processes or institutions in Belarus,” which was declared after fraud allegations in the Belarusian presidential election? So Donald Trump is building on broad congressional delegations and past presidential actions. 

To be sure, President Trump undermines his own litigating position by suggesting that there isn’t a real emergency—“I didn’t need to do this,” he said during the announcement—and by taking this action only after months of negotiations and a government shutdown, and after signing legislation that gave him some but not all of what he wanted. He would have been on firmer ground in this respect had he done this when he first mentioned “the caravan,” or indeed on day 1 of his presidency. Still, I can’t see the Supreme Court either striking down or upholding today’s action because there is or is not a real “emergency.” Lower courts might do so, but I have a hard time imagining the justices ruling that a statutorily undefined term controls. 

Which takes us to the legal provisions on which the wall litigation will actually turn: the three funding statutes triggered by the emergency declaration and from which money will be shifted to wall construction. These are: (1) the Treasury Forfeiture Fund (31 USC 9703); (2) Department of Defense funds for “Support for Counterdrug Activities” (10 USC 284); and (3) Department of Defense military construction projects (10 USC 2808). I’m not going to parse the technicalities here because the focus of this post is executive power under the Constitution (and this post is already too long), but suffice it to say that there are colorable arguments on both sides. Legal rulings will ultimately turn on interpretation and application of relevant terms in this novel context. For example, if the forfeiture provision is interpreted to be usable for anything that “stops drug trafficking,” it’s certainly plausible—and good enough for a judge—that a wall is legitimately intended to do that. But if you read the statute to only authorize the funds to be used for domestic law enforcement purposes, then the wall funding is dubious. Similarly, the DoD provisions turn on whether the emergency project “requires use of the armed forces” or “may require” using them. I could argue it either way, depending on whether I define the purpose as “protecting the border” or “national security” versus “building a wall” or “supporting ICE.”

But even if this wall construction satisfies the legal niceties—a big but not implausible if—there’s something odd and wrong about what’s going on here. Because it looks an awful lot like the executive branch is engaged in legislative activity. So even if today’s action is technically legal under existing law, that law itself may be unconstitutional—at least if it’s read to allow building the wall in this manner. That is, the NEA or the provisions it triggers could be an improper delegation of legislative authority by Congress. Chief Justice John Roberts could do a lot with that in the name of “constitutional avoidance”—shying away from having to find something unconstitutional—but even if he thinks the wall can be justified under, say, the taxing power, that power properly belongs to Congress. (This will be a running theme of my commentary; stay tuned.) 

Even worse, today’s action sets a terrible precedent for future administrations, whose policy goals may be radically different. This action brings us one step closer to enacting major legislative goals—Medicare for all? Green New Deal? gun control?—through executive fiat. Nobody who takes the constitutional separation of powers seriously should support it. 

There Is No National Emergency on the Border, Mr. President

President Trump today declared a national emergency on the border to construct some portion of his promised border fence.  “We’re talking about an invasion of our country with drugs, with human traffickers, with all types of criminals and gangs,” President Trump said during his remarks today.   

Lawyers will spill much ink arguing about the legalities surrounding the law and whether President Trump can declare a national emergency.  Regardless of what the law ultimately means, no reasonable person can look at the southern border and agree that it rises to the level of a national emergency.  Below, I will counter the most common arguments made by President Trump and others in support of declaring a national emergency.

Crime

The most common argument in favor of a national emergency is that there is an epidemic of immigration-induced crime and death on the border.  This is simply not the case.

First, the crime rate in the 23 counties along the U.S. border with Mexico is below that of counties in the United States that do not lie along the Mexican border.  Violent and property crime rates are both slightly lower along the border, but the homicide rate along the border is a whopping 34 percent below the homicide rate in non-border counties.  If the entire United States had a homicide rate as low as that along the border in 2017, then there would have been about 5,720 fewer homicides nationwide that year.  Murder rates in U.S. border states aren’t even correlated with murder rates in neighboring Mexican states.

Second, illegal immigrants apprehended along the border have a low criminal conviction rate.  When Border Patrol apprehends an illegal immigrant, they run their fingerprints through the IAFIS system and other databases to see if the individual is a convicted criminal or if he is wanted for crimes here or abroad. The government then publishes the number of criminal convictions that apprehended illegal border crossers have been convicted of by the type of crime. 

Table 1 shows the raw number of convictions of illegal immigrants apprehended by Border Patrol by year and crime.  Over the entire period, the immigration crime of “illegal entry, re-entry” accounted for 42 percent of the convictions and “other” accounted for 16 percent.  The most serious offense of “homicide, manslaughter” accounted for 0.04 percent of all convictions of apprehended illegal immigrants from FY2015 through August 31, 2018.  

Table 1: Annual Criminal Convictions by Crime for Illegal Immigrants Apprehended by Border Patrol

Table 2 shows the criminal conviction rate by crime for illegal immigrants apprehended by Border Patrol per year.  The immigration offense of “illegal entry, re-entry” is far and away the highest.  In 2018, the “homicide, manslaughter” conviction rate was 0.8 per 100,000 illegal immigrants apprehended by Border Patrol.  Over the entire time, the “homicide, manslaughter” conviction rate was 1.8 per 100,000 illegal immigrants apprehended by Border Patrol. 

Table 2: Annual Criminal Conviction Rate by Crime for Illegal Immigrants Apprehended by Border Patrol

The criminal conviction rates of illegal immigrants apprehended by Border Patrol appear small when compared to their criminal conviction rates in Texas and overall crime rates in the United States.  Those are not ideal comparisons, but I would have to make too many assumptions to estimate the proper numerator for comparison: The number of criminal convictions against people in the United States who are currently outside of prison.

The number of apprehended illegal immigrants who have “homicide, manslaughter” convictions is falling as the percentage of the flow of family units and unaccompanied alien children rose from less than 25 percent of apprehensions in 2015 to just under 40 percent in 2018 (Figure 1).  Those in family units and children are less likely to be murderers.  Regardless, the number of criminal illegal immigrants trying to enter is tiny and many of them are being stopped currently – as they should be.    

Figure 1: Annual Family Unit and Unaccompanied Alien Children Apprehension Rates

Third, resident illegal immigrants are less likely to be incarcerated or convicted of crimes than native-born Americans.  The estimated nationwide illegal immigrant incarceration rate in 2016 was 47 percent below that of native-born Americans, including those in immigration detention.  According to a different measure of illegal immigrant criminals incarcerated in state prisons only, their nationwide incarceration rate is about 28 percent below that of legal immigrants and natives combined.  Texas is the only state that tracks criminal convictions by immigration status.  In 2015 the illegal immigrant criminal conviction rates were 50 percent below native-born Americans while their homicide conviction rate was 16 percent below natives in Texas.  Only about 36 percent of that gap in criminal conviction rates between native-born Americans and illegal immigrants in Texas can be explained by lower illegal immigrant recidivism rates due to deportation.  Other researchers have found that illegal immigrant populations did not drive up non-violent crime rates nor did they increase violent crime rates. 

Fourth, Border Patrol agents are unlikely to be murdered while on the job.  If there was a national emergency on the border, we should at least expect that that would be reflected in a murder rate of Border Patrol agents killed in the line of duty.  From 2003 through the end of 2018, six Border Patrol agents were murdered on the job.  All of those are tragic, but that amounts to a murder rate of about 2 per 100,000 agents per year during that time.  That’s far below the national murder-rate of about 5.1 per 100,000 per year during the same time.  Other police officers (state, county, and local) have an on the job murder rate of about 19.7 per 100,000 per year during that time – about 10 times higher than Border Patrol agents.  Americans and police officers inside of the United States are more likely to be murdered than Border Patrol agents.

Fifth, there is no evidence that the federal government’s construction of a border fence in El Paso, Texas lowered crime rates there.  El Paso was a relatively peaceful city before and after the fence was built, with the exception of a spike in homicides a few years after the fence was finished.  That city’s experience with a border fence is not a good argument for building a wall to reduce crime.

Sixth, gang apprehensions by Border Patrol agents in the Fiscal Year 2018 (through August 31st), account for about 0.2 percent of all apprehensions.  One must take these statistics with a grain of salt, but there is no obvious large-scale crossing of gang members along the border.

Terrorism

The perceived threat of terrorists crossing the border with Mexico has been a major justification for beefing up security, but there is little justification for it.  Those most worried about terrorists infiltrating along the border cannot point to any attack, any conviction for planning an attack, or any plot planned by an illegal immigrant who crossed the border with Mexico from 1975 through the end of 2017.

From 1975 through 2017, a total of nine terrorists entered the United States illegally and only three did so along the Mexican border: Shain Duka, Britan Duka, and Eljvir Duka.  They crossed as children with their parents in 1984 and were arrested as part of the planned Fort Dix terror attack that the FBI foiled in 2007.  The Dukas are ethnic Albanians from Macedonia.  They crossed the border with Mexico illegally, did so as children, and became terrorists decades later.

The majority of immigrants apprehended along the border are from Central America.  Not a single terrorist in any visa category came from Mexico or Central America from 1975-2017.

Disease

Many commentators have recently written and said that members of the migrant caravan and Central American immigrants are bringing diseases, even those that have been extinct for almost 40 years.  However, the vaccination rates in Mexico and Central American countries are either very similar to those in the United States or higher.  Recent measles outbreaks have more to do with clusters of American parents who refuse to vaccinate their children than with immigrants.

Conclusion

There will be a long legal battle over the President’s declaration of a national emergency along the border to build some of his border fence.  Regardless of the outcome, there is no good reason to declare the border a national emergency.

 

Oregon’s Rent Control Bill Would Ultimately Please Nobody

The Oregon Senate has passed a rent control bill that would limit annual rent increases to 7 percent above the annual change in the consumer price index.

This sort of legislation is, in the longer term, likely to please nobody.

In markets where rents are rising faster than earnings, but slower than this cap, groups representing tenants will complain that the price restriction is not tight enough to help tenants financially.

In markets where demand for rental property is growing rapidly relative to supply, the controls will bind and bring the negative effects we’ve seen from rent control historically: reduced incentive to bring new supply to market (and so rising underlying market prices), a misallocation of properties, a lock-in of tenants reducing labor mobility, and a worsening in the quality of properties available.

So why introduce the legislation?

The stated goal of its proponents is that it’s a defense against so-called “economic eviction.” That is, to guard against instances where tenants face steep unforeseen rent hikes, that suddenly makes living in a rented property unaffordable.

To give these tenants more security and certainty, many polities around the world are experimenting with new forms of “rent regulation.” Most common is for the introduction of fixed term tenancies, say for three years, during which rent increases are linked to some inflation measures. Between tenancies, landlords can adjust rents as they wish.

Over time, these forms of regulation allow rent levels to track market fundamentals. They can still have some of the negative effects crude rent controls bring in the short-term, especially in overheating markets. They also tend to have to be coupled with other regulations that ensure security of tenure, restricting landlords’ rights to evict within tenancies. This change in who bears the risk might reduce the supply of available property, as might the perception this type of regulation was a precursor to more stringent regulation.

Overall though, these forms of rent regulation are not as damaging as first-generation price controls. By construction, they cannot improve overall affordability and will likely raise market rents. Their use really entails a trade-off: providing more time-limited security for existing tenants, at the cost of economic inefficiency and lower investment in the rentable housing stock.

The Oregon Senate’s bill - with a high but crude cap on annual rent increases – is quite different. The bill does contain some new restrictions on evictions, including prohibiting a landlord from terminating month-to-month tenancy without cause after 12 months of occupancy.  But the rent control cap proposed suggests policymakers also desire to signal to renters that they are concerned about general affordability within tight city markets too.

The stark truth is this: the only policy means of ensuring that both perceived problems are minimized is to set land-use planning and zoning regulations such that housing supply is responsive to new demand. Fail to recognize that, and the rent controls advocated will either result in disappointment and demands for tighter controls, or else exacerbate the relative scarcity of supply in tight markets.

Oregon is notorious for its land-use regulations. My colleague Randal O’Toole has long explained how extensive urban growth boundaries create severe restrictions on building outside of cities. This leads to demand substitution into the restricted urban areas, driving up the price of land and, ultimately, housing. And in recent decades it has been getting worse:  Vanessa Brown-Calder has noted that between the years of 2000 and 2010, Oregon added more land-use regulations per capita than 43 other states.

Little surprise then that, dividing the median house price by median income in each of Oregon’s three biggest cities, Demographia’s Median Multiple Index finds two to be severely unaffordable (Eugene with a multiple of 5.6 and Portland at 5.2) and the other merely seriously unaffordable (Salem at 5.0). For context, using these calculations there are just 13 severely unaffordable metropolitan markets in the whole of the U.S.

The best way to make housing more affordable and to lessen the prospect of abrupt rent hikes is to reform these cost-inflating rules on land use. In the absence of that, rent control amounts to little more than trying to muffle the message that rental and house prices are screaming about the relative scarcity of land developable for housing.

In Defense of Incrementalism: A Response to Prof. Greve’s Proposal for Administrative Courts

For “anti-administrativists” like myself, what’s the best way to reform the administrative state? In a provocative post at Law & Liberty, Professor Michael Greve rejects our ilk’s dominant approach, which is to focus on judicial deference doctrines—in particular, Chevron deference to an agency’s interpretations of its enabling statute. Chevron is a “great white whale,” Greve argues, because even if it were overturned, it would merely return in another guise. On this point, he borrows Adrian Vermeule’s thesis that courts inexorably will defer to agencies, due to the latters’ relative advantage in subject matter expertise.

In lieu of the mainstream approach to reform, Greve proposes to overhaul administrative law. His iconoclastic idea is to abolish the “appellate review model” system of administrative adjudication, by which he means the process where “agency adjudication comes first, followed by highly deferential, on-the-record judicial review.” According to Greve, “our hidden judiciary,” comprised of “12,000 plus administrative law judges and administrative judges,” is fundamentally broken because “the decisions of ALJ’s and AJ’s are virtually always subject to review and reversal by agency heads.” As a result, “the most one can expect from administrative adjudication is an appearance of impartiality.” Greve wants to raze the current system, and, in its stead, establish “administrative courts that are independent of administrative agencies—say, 100 courts with 1,000 or so judges, spread across the country.” As Greve explains it, “[c]ases brought in the administrative courts would not be appellate actions for ‘review.’” Rather, they would be original actions and the standard of review would be de novo.

Of course, his proposal is a non-starter. The politics will never be there. And, even if they were, it remains a very heavy lift to create a new system of justice from whole cloth. Greve knows this—he’s nobody’s fool. His actual aims are more modest. As aptly explained by R. St. Institute’s Philip Wallach, “[Greve] hopes, plausibly, that he can command that elite’s attention and make its members realize that an institution-building project is the best way to grapple with and discipline the administrative state at this juncture.” For this, Greve deserves praise. He’s trying to start a conversation about how best to reform the administrative state. It’s a conversation worth having.

But before such a conversation is possible, it is necessary to first come to some sort of understanding regarding background assumptions. To my eyes, Greve’s assumptions are significantly off, such that they threaten to lead the conversation astray.  While I agree with Greve that the status quo for administrative adjudication suffers some serious flaws, these issues are idiosyncratic rather than systemic. That is, he overstates the threat, which leads him to overstate the solution.

Greve implicitly concedes much of this point. At a panel on his proposal last week put on by the C. Borden Gray Center, Greve said that he would exempt immigration judges and public benefits regimes (like Social Security Administration) from his plan, for practicality purposes. In response to these concessions, panelist Prof. Jeffrey Lubbers pointed to data collected by the Administrative Conference of the U.S., which demonstrates that that these two types of cases account for at least 95 percent of all administrative adjudications.

Moreover, most of the remaining ~5% of administrative adjudications tend to be mundane. Has the State Department’s Foreign Service Grievance Board ever incited controversy? Does anyone fret over the Railroad Retirement Board’s Bureau of Hearings and Appeals? Or the Black Lung Review Board? It is doubtful that these relatively innocuous tribunals are implicated by Greve’s concerns.

Of the administrative adjudications that are left, many are performed by commissions that do not follow the “appellate review model” script. Indeed, these commissions were created in response to the same concerns being addressed by Greve, albeit almost a half century ago. During the 1950s and 1960s, scholars made identical arguments as does Greve now—i.e., that the concentration of rulemaking, prosecutorial, and adjudicative functions in agencies engenders impermissible bias against regulated parties. Congress responded to these concerns by creating “separate-function” adjudications, where the tribunal is located in a different agency than the rulemaking and prosecution functions. Examples of this legislative response include the Occupational Safety & Health Review Commission (est. 1970) and the Federal Mine Safety and Health Review Commission (est. 1977). In fact, “administrative courts” were the very model for these commissions.

In other regulatory contexts, Congress has bucked the appellate review model by establishing independent tribunals within agencies. Decisions by these tribunals are insulated from further review by the Secretary or commission. Examples include the Departmental Appeals Board at the Department of Health & Human Services and the Administrative Review Board within the Department of Labor.

After you strip away the benefits/immigration programs, the mundane regimes, and the tribunals that don’t follow the appellate review model, there isn’t much left. Basically, it’s the NLRB and a handful of agencies that employ administrative adjudications to impose significant civil monetary penalties (including primarily the SEC, CFTC, FERC, CFPB, OCC, and the DOT). With respect to this subset of agencies, Greve’s criticisms hit the bullseye. They’re all guilty of one or more of the abuses that he identifies, including “the imposition of civil fines by bureaucratic edict; sudden changes of agency policy, accomplished by means of adjudication and without fair warning to the parties; [and] the opportunistic shifting of enforcement proceedings from Article III courts to agency tribunals.”

After accounting for the proper scope of the problems, it is possible to calibrate a response from a menu of incrementalist options. Although Greve seems to set forth a binary choice of reforms—either repeal Chevron or overhaul the administrative state—there are many modest doctrinal and institutional measures that would mitigate his concerns.

First and easiest, Congress could simply amend enabling statutes to resolve the issues identified by Greve. It was only over the last three decades that Congress expanded use of the “appellate review model” for civil monetary penalties, at the goading of the Administrative Conference of the United States. Lawmakers could just as easily reverse course, and return to the model whereby agencies sought relief in an original action before an Article III court.

In a similar manner, Congress could amend enabling statutes to insulate the administrative tribunal from direct review by the agency or commission. As I explained above, this is known as the “separate-function” model, and it is how Congress responded to concerns identical to Greve’s almost a half century ago.

Turning from Congress to the judiciary, the Supreme Court could clarify several inchoate doctrines and thereby check the administrative state, in a manner perhaps exceeding the effect of overturning Chevron deference. Examples include the applicability of the Seventh Amendment to administrative adjudications, and also whether certain administrative adjudications impermissibly share “essential attributes” of the judicial Power.

I can think of other opportunities for doctrinal refinement that would mitigate the potential for abuses of power by the administrative state. For example, the Supreme Court has interpreted APA § 706 to call for courts to take a “hard look” at the reasonableness of agency decision making. To my eyes, it is plainly unreasonable for an agency like the NLRB to swing back and forth between policies, over and over again, due to alternating political parties occupying the White House. At some point, reasonableness requires a court to say: Enough! At which point it becomes Congress’s responsibility to amend the law.

Finally, there’s my preferred institutional reform, one that I think would make mitigate virtually all of the harms associated with the “appellate review model.” Here, I’m talking about building expertise in Article III courts. The Executive Branch has literally millions of employees. The Congress has about 20,000 staffers. The Supreme Court, by contrast, has about 40 clerks, most of whom are brilliant law school grads with no experience in administrative policymaking. This expertise gap is even greater in lower courts, and it goes a long way towards explaining the unfortunate deference dynamic identified by Greve:

[W]ithin the framework of the appellate review model, the case for judicial deference to the executive branch is overwhelming. When judges review policy decisions, they have no comparative advantage over agency administrators. The obvious question—why make the same decision twice?—naturally draws courts back towards deference.

If the reason that Chevron could never go away is the expertise imbalance between agencies and courts, then perhaps it’s time to think about making the courts more expert. Instead of 1,000 judges, maybe the better approach is 1,000 Article III staffers.

In sum, Greve’s grand ambitions may be misguided, but he has done a valuable service by drawing attention to what ills agency adjudications. Rather than tearing it down, a better alternative for reform is to advance the ball on a number of incremental measures.

Government Ownership Sucks

The Wall Street Journal today profiles South Africa’s electric power company, Eskom. What a mess—something we have seen many times with government-owned businesses. Eskom has a bloated workforce, provides terrible service, fails to maintain its facilities, and is transmitting economic damage in every direction. It has rotten management and apparently corrupt dealings with politicians.

Three decades after Margaret Thatcher this should not be happening. Governments should not own businesses that can earn revenues in the marketplace. For citizens, there is no advantage to government ownership—there is only high costs, debt bombs, cronyism, and lousy service. It was same story with Puerto Rico’s government power company. The way ahead for South Africa is privatization.

The word “sucks” is not a technical term, but it is surely what South Africans are thinking and it is the logical takeaway from the WSJ article:

Africa’s most-developed economy this week is experiencing its worst blackouts in years, with households, businesses and key infrastructure left without electricity for up to nine hours a day. The power cuts have hobbled the country’s mining sector, paralyzed traffic behind disabled stop lights and forced people to cook dinner outside on paraffin stoves—less than three months ahead of national elections that will determine whether President Cyril Ramaphosa, who ousted his scandal-battered predecessor last year, can win a full term.

At the center of the shortages is South Africa’s state-owned power utility Eskom, which supplies some 90% of the country’s electricity, but has been rattled by years of mismanagement and alleged corruption involving senior management. On Wednesday, the company warned that it was technically insolvent and would go bankrupt by April unless it gets a multibillion-rand government bailout.

Saddled with some 420 billion rand (around $30 billion) in debt—much of it government guaranteed—Eskom has become Mr. Ramaphosa’s biggest political headache. The company’s failure to generate sufficient electricity is eroding already anemic economic growth, while another bailout would add to the government’s rising debt load.

“Eskom’s current situation is the single biggest risk to South Africa’s economy,” Mike Fraser, chief operating officer of Australian miner South32, said at a Cape Town mining conference last week.

… Government officials and Eskom’s board—installed by Mr. Ramaphosa last year—say the utility is failing on multiple fronts.

Its former chief executive, chief financial officer and a dozen other senior executives have been implicated in a government corruption scandal, in which a family with close ties to former President Jacob Zuma was allegedly handed billions of rand in contracts and other favors. The former executives, Mr. Zuma and the family all deny the allegations, which are being investigated by South African police and a commission of inquiry.

Amid the management failures, Eskom for years neglected maintenance on its aging coal-power stations, which are now breaking down, Pravin Gordhan, the minister in charge of Eskom and South Africa’s other state-owned companies, told parliament. The completion of two new coal plants meant to make up for the generation shortfall, meanwhile, is seven years behind schedule and three times over budget, he said Wednesday.

“The issue of money mismanagement, getting rid of good people, replacing them with compliant people and in particular allowing the level of corruption that took place has all together damaged this very important institution,” said Mr. Gordhan, who was appointed by Mr. Ramaphosa. “Today we are dealing with the cumulative effects.”

Markets and Emissions

In reviewing the Green New Deal, the Wall Street Journal’s Greg Ip says, “Because the private market has no incentive to reduce carbon emissions, government intervention is necessary.”

No incentive? That is obviously incorrect.

In competitive markets, there is relentless pressure on businesses to reduce costs, including the costs of energy and other resource inputs. The production and consumption of just about everything is far more energy efficient today than in past decades because of businesses striving for profits and consumers striving to save money.

Ip’s claim is refuted by another story in the WSJ today regarding airline fuel efficiency.

The industry’s move toward reducing carbon emissions has been slow. Improvements in new airplanes have reduced emissions significantly, but with more airplanes flying more people, overall tonnage of carbon emitted by commercial aviation has been inching higher, not lower, in recent years.

The statement “has been slow” is unfair, as the rest of the article indicates:

Today’s new planes are about 20% more fuel-efficient than the previous generation from the 1990s, Airbus and Boeing say, and 70% more fuel-efficient than early jets of the 1960s. On a per-passenger basis, fuel economy has improved: Airlines now fly with fewer empty seats and more seats packed into each jet. But most of the improvement has come from manufacturers. Engines get more thrust out of the fuel they burn, planes are much lighter today and aerodynamics has reduced drag.

The drive by airlines to save money and keep ticket prices down has led them to push manufacturers to design ever more efficient airplane and engine configurations.

The WSJ article includes a chart showing total fuel consumption by U.S. airlines has fallen from about 18 billion gallons in 2000 to about 17 billion in 2017. What the article does not report is that total U.S. air passenger-miles increased from 700 billion in 2000 to more than 950 billion by 2017.

In aviation, as in many industries, rising consumer demand puts upward pressure on emissions, but businesses and markets have strongly countered that pressure with an endless stream of innovations that have reduced fuel use and thus carbon emissions.

Here is another example of the business drive for efficiency from a Cato study on household appliances. With rising energy prices in the 1970s, markets dramatically increased the energy efficiency of refrigerators even before federal efficiency standards were put in place in 1990. New fridge energy consumption plunged from more than 1,800 kwh a year in 1975 to 976 kwh in 1990—driven by consumers wanting to save money and producers innovating in competitive markets.

Contrary to Greg Ip, private markets have strong incentives to reduce energy use and thus reduce carbon emissions.

 

(A cleaner copy of the chart is in this paper).   

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