Archives: 11/2008

Gun Control on Trial

Monday afternoon, the Cato Institute will be hosting Brian Doherty, Senior Editor of Reason magazine.  The topic will be his book, Gun Control on Trial: Inside the Supreme Court Battle Over the Second Amendment.  Christopher Rhee, partner at Arnold & Porter, will be on hand for comments as well.  Tim Lynch, the Director of Cato’s Project on Criminal Justice, will be moderating.

Brian’s book tells the inside story of the litigation that overturned the D.C. gun ban, D.C. v. HellerLibertarian and Second Amendment bloggers have already expressed their excitement, and his previous writings have been discussed at the law blog The Volokh Conspiracy.  As a preview to the event, check out Reason TV’s videos of Brian discussing this historic legal battle, both before and after the decision came down. 

For more information on attending or watching the Cato book forum live, click here.

Balko: Three for TSA

Radley Balko has nominated me to head the Transportation Security Agency. It’s a kind compliment. His column this week has some good ideas in it, too.

Fellow nominee Bruce Schneier doesn’t want the job. Of Bruce’s refusal, Radley says:

[I]t sorta’ reminds me of what a retired police chief once told me about how he staffed his SWAT team. He said he’d ask for volunteers, then disqualify every officer who raised his hand. He added, “The guys who want the job are the last ones who should have it.”

That leaves John Mueller, whose excellent 2004 Regulation magazine article “A False Sense of Insecurity?” has stood the test of time. His insight into the strategic logic of terrorism will eventually turn around our country’s maladjusted approach to securing against terrorism.

Libertarians Can’t Win

I was pleased to read Ezra Klein’s reaction to this month’s installment of Cato Unbound, in which he defended libertarians’ honor. Well, sort of:

This also gets at the weird nexus between libertarianism and corporate interests. Anti-state is not the same as pro-corporation, and insofar as a lot of liberals understand libertarians to be simple corporate stooges, they’re not quite right. In certain places – notably tech and patent issues, which is one of those spots where government policy and corporate interests converge – there’s nearly unanimous opposition to the position that’s most closely associated with corporate profits. And so Cato doesn’t get a lot of contributions from the recording industry.

But there are plenty of spaces where corporations or other wealthy economic actors see profit in avoiding or repealing certain regulations and laws – energy is notable here, as is the estate tax – and so libertarians find themselves rather well-funded. And then there are spaces where corporations want to profit from a service the government currently controls – like Social Security – and libertarians are quite happy to create an ideological argument for corporate self-interest. Crucially, it’s not that libertarians are always and everywhere in favor of corporate profits, but that they often are, and corporations find that useful, and so you have frequent marriages of convenience that also end up ensuring that the priorities of professional libertarians priorities are those that most effectively support corporate profits, as those are the projects that get funded.

It sounds to me like what Ezra is saying here, in an extremely back-handed fashion, is that libertarians aren’t corporate stooges at all. When the interests of corporations happen to align with what we regard as good public policy, then corporate interests tend to be our allies. Otherwise, they tend not to be. Which, as far as I can tell, is exactly how it should be.

It’s interesting that this discussion is coming up at a time when the biggest issue on the economic policy agenda is how many more hundreds of billions of dollars the American taxpayer will be forced to give to large corporate interests in Detroit, Manhattan, and elsewhere. Strangely enough, you’ll find people on the left-hand side of the political spectrum cautiously endorsing government handouts to some of the nation’s largest and most dysfunctional corporations, while scholars here at the Cato Institute have been sharply critical of welfare for large corporations.

Now, I don’t doubt for a minute that liberals’ support for government handouts to giant corporations is based on their sober assessment of the policy merits, rather than a dedication to “corporate profits” as such. But it is a little bit frustrating that when libertarians take a firm stance against the interests of large corporations, we don’t get praised for our independence so much as getting attacked for our ideological rigidity. These charges can’t both be right: we can’t both be solicitous corporate shills and inflexible ideologues. If people are going to question our motives, I wish they’d at least get their story straight on exactly which kind of intellectual dishonesty they think we’re engaging in.

Measuring “Success” in the War on Drugs in Mexico

The Economist had a story a few weeks ago on the recent developments of Mexico’s war on drugs. According to the magazine:

“At least 4,000 people have been murdered in violence involving traffickers so far this year. Officials say that is a sign that government pressure [on drug gangs] is having an effect.”

Their measurement of success is quite macabre; more people are dying in Mexico, including innocent bystanders who happen to be in the wrong place at the wrong time. This would be a tragedy in any other scenario, except for the twisted logic behind the war on drugs.

In related news, the head of Interpol in Mexico was arrested today for alleged collaboration with organized crime. I can’t wait to see how the drug warriors present this development as a “success.”

Let’s Read the Federalist — and Constitution — Right

Over at Jay P. Greene’s blog, Greg Forster takes issue with those who say that the Constitution does not permit federal excursions like No Child Left Behind. I address these concerns over at the New Talk discussion underway since yesterday, and encourage you to check that out. I offer only one, I think fairly conclusive, rebuttal to Forster here.

Greg calls on Federalist Papers nos. 47-51 to argue that federal intervention in state authority over education is presumptively okay because the principle behind checks and balances requires that each federal branch have some power over the others. He admits that these argument are not about federal authority over states, but invokes the Federalist nonetheless.

Unfortunately, Greg misses the clear point of both the Federalist and Constitution concerning federal-state relations. The federal government is given only specific, enumerated powers (see Article 1, Section 8) and all others are reserved to the states or people. It’s put that simply in the Tenth Amendment, and Madison was very clear in Federalist no. 41 that no reading of the Constitution, not even the vaunted “general welfare” clause, gives the federal government authority to be involved in anything outside of the specific, enumerated powers.

“For what purpose could the enumeration of particular powers be inserted, if these and all others were meant to be included in the preceding general power?” Madison asks. “Nothing is more natural nor common than first to use a general phrase, and then to explain and qualify it by a recital of particulars.”

There are arguments for why the federal government should be involved in education — though none that are convincing — but they won’t be found in the Federalist Papers.

Peekaboo, I See a Challenge to Sarbanes-Oxley in the Supreme Court

An intriguing case that alleges a high-profile violation of the president’s exclusive power to appoint and remove government officials is winding its way through the courts.  Free Enterprise Fund v. Public Company Accounting Oversight Board challenges the constitutionality of a key part of the Sarbanes-Oxley Act.

Congress passed Sarbox, as the law is called, in the wake of the Enron and WorldCom scandals to protect investors from shoddy accounting practices perceived as being rife in publicly traded companies.  (We now know that Sarbox’s regulatory burden costs the economy much more than the fraud it prevents and detects, but never mind.)  Among other things, the law created the Public Company Accounting Oversight Board – PCAOB, pronounced “peak-a-boo” – a private board exercising government power. Its members are appointed by the SEC, which has limited removal power.  In short, the president has neither any appointment nor removal power, in seeming violation of Article II, section 2 of the Constitution.

On Monday, the D.C. Circuit, now consisting of nine members after Judge Raymond Randolph took senior status as of November 1, split 5-4 in denying en banc review of a panel decision in the government’s favor.  Judges Janice Rogers Brown, Merrick B. Garland, Karen LeCraft Henderson, Judith W. Rogers, and David S. Tatel voted against rehearing while Chief Judge David B. Sentelle and Judges Douglas H. Ginsburg, Thomas B. Griffith and Brett M. Kavanaugh supported it.  Interestingly, the three Clinton appointees and one George H. W. Bush appointee voted in the majority, while both Reagan and two of the three George W. Bush appointees dissented.  The other George W. Bush appointee, Judge Brown, who is considered to be the most libertarian (she gave the B. Kenneth Simon Lecture at Cato’s 2007 Constitution Day conference) but also the most inscrutable, turned out to be the wild card.  (But she won’t be the swing vote for long because President Obama will have two vacancies to fill on the court.)

Lawyers for the Free Enterprise Fund, who include our friends at the Competitive Enterprise Institute, had earlier indicated that if they failed to get en banc review, they would seek certiorari in the Supreme Court. The narrow split in the D.C. Circuit probably enhances the chance that the justices would agree to hear the case, except that the Court this year has shown a reluctance to take on especially newsworthy (i.e., both controversial and significant) constitutional cases.

While the Rest of the World Is Lowering Tax Rates, Obama Plans Punitive Soak-the-Rich Policy

As Chris Edwards and I explain in Global Tax Revolution, nations are competing with each other to lower top tax rates thanks to the liberalizing impact of tax competition. This is confirmed by a new study from KPMG, which finds that the average top personal rate is now less than 29 percent in a survey of 87 jurisdictions. Unfortunately, the United States has a top rate of 35 percent, so we are falling behind.

To make matters worse, President-elect Barack Obama wants to move in the wrong direction. He has proposed a top tax rate of nearly 40 percent, but he wants to compound the damage by also imposing Social Security payroll taxes on income above $250,000 – thus dramatically increasing disincentives for productive behavior. As KPMG notes, this means the U.S. is moving in the wrong direction while the rest of the world moves in the right direction:

The picture that emerges is of a slow global decline in top rate personal income taxes, from an average of 31.3 percent in 2003 to 28.8 percent in 2008. …The highest personal income taxes are paid by citizens of the European Union. But it is here that we have seen the steepest falls in average tax rates, from 41.5 percent in 2003 to 36.4 percent in 2008.

…Perhaps the most significant new development in this period has been the introduction of flat rate taxes into Europe, often introduced at a much lower level than the highest variable personal rate. So far, it has been mainly Eastern European states that have taken this step, notably Estonia, where rates have fallen from 26 percent in 2003 to 21 percent in 2008, Slovakia has gone from 38 percent to 19 percent, Lithuania, which in 2007 fell 6 points to 27 percent and this year a further 3 points to 24 percent, and Romania where rates have gone from 40 percent to 16 percent.

…Overall, it appears from our survey that taxes on personal incomes are in slow decline in many countries around the world. We see the same trend in corporate income tax rates as well.