February 29, 2012 3:53PM

When Your Representatives Choose Representatives for You

David B. Rivkin, Jr. and Andrew M. Grossman have an excellent op-ed at National Review Online about Harris v. Quinn and the deep constitutional issues it raises concerning the forced unionization of home health-care workers. We are now awaiting the Supreme Court’s decision on whether it will hear the case. Cato filed a brief urging the Court to take the case, and Mr. Rivkin and Mr. Grossman were two of the counsels of record on that brief.

Harris is an important case that has seemingly flown under the radar. In 2003, Illinois unionized home health-care workers who get paid out of the Medicaid stipends given to the patients they care for. Home-care workers are now required to pay a portion of their monthly earnings to the Service Employees International Union, which amounts to approximately $3.6 million per year. To make matters worse, the SEIU is essentially unable to better their working conditions. The patients who use home health care retain the ability to hire and fire the workers, as well as control nearly every other part of the working environment. In short, the traditional arguments for why unions are needed—to protect workers and to monitor the working conditions—are explicitly not available for bargaining through the SEIU. The only terms that are available for bargaining are those under the state’s control which, for all intents and purposes, mostly means money.

So why did the SEIU even get involved? Money and power. Not only is $3.6 million annually nothing to scoff at, but public-sector unions are now the only growth area for unions. The advent and growth of public-sector unions has been called "labor's biggest victory in over 60 years." By applying their considerable political power to state legislators or governors, the SEIU can simply get workers designated as “public employees” and thus receive the right to some of their wages. It’s a win-win situation for them.

But it is decidedly not a winning situation for either the workers or the citizens of Illinois. Public-sector unions are organized interest groups that are in favor of one thing: more. More government and government services, more taxes, more benefits, and a generally greater presence of government in nearly every part of our lives. The growth of public-sector unionization also creates a vicious cycle: new workers are unionized and the union then garnishes some their wages; the union spends that money to push for larger government and more government services; the new government employees are then unionized and more wages are garnished, thus giving more political power to the unions. Lather, rinse, repeat.

These agreements turn democracy on its head: our elected representatives are choosing representatives for us. These “representatives” then go to the table to bargain over taxpayer money, decisions about our health care, and other important services. If you’re not at that table, you can be sure that you’re on the menu.

Without some limit on who can be forcibly unionized via executive order or legislation, the situation is likely to get even worse. The unions will certainly not voluntarily stop until someone, such as the United States Supreme Court, tells them that they’ve gone too far. Otherwise, anyone who receives government money (an increasingly large number of people) will be susceptible to forced unionization. At some point this practice violates the core rights of freedom of association and freedom to petition the government for a redress of grievances that are guaranteed by the First Amendment. Sooner rather than later, the Supreme Court needs to define that point, and Harris v. Quinn is an excellent vehicle for doing so.

As Greece’s problems continue, we should remember one of the biggest reasons Greece got to where it is today: a bloated and inefficient public-sector workforce. Greece’s public-sector workers are now resisting any attempt to roll back government programs and spending. With 10 states having unionized home health-care workers, the Supreme Court should act quickly to ensure we don’t go further down the same road.

February 29, 2012 3:26PM

Owning a Gun in Washington May Get Easier

The DC City Council's Committee on the Judiciary has just issued a 27-page "Report on Bill 19-614, 'Firearms Amendment Act of 2012,'" which purports to liberalize the city's notoriously draconian firearms registration laws. I haven't had a chance yet to carefully review this report or the complex bill itself, written like most such bills ("replace subsection (b)(ii) with the following language"), but it seems clear from the guarded early language ("Bill 19-614 maintains core aspects of the District's gun control law") that the council is responding to the threat of further litigation, to say nothing of congressional intervention, while at the same time trying to assuage its local gun-control constituency. Indeed, that early language has a grudging air about it: after all, it was in June 2008 that the Supreme Court decided District of Columbia v. Heller, which found that the Second Amendment protects the right to possess a firearm for self-defense within the home -- no small matter in Washington -- and here we are nearly four years later, still with no proper regulatory response to that ruling.

As with so much legislation, however, the devil will be in the details and in the administration of any such regulations, assuming the council approves them. The report notes, for example, that "In order for an individual to purchase a handgun outside the District and register that handgun in the District, the transfer of the firearm to its purchaser, pursuant to federal law, must occur through a Federal Firearms Licensee (FFL)." Currently, however, there is only one individual in the District operating an FFL (for which "market forces are largely to blame," we're invited to believe), and recently that licensee temporarily lost his license. In such circumstances in the future, the report continues, "the District government may seek a license to operate as an FFL" -- not "shall," but "may."

Long guns, too, come under these regulations -- the kinds of guns that sportsmen around the country have owned for centuries without having to go through any such procedures as are outlined in this detailed report. All of which is to say that it will be a while longer before we know just how the rights guaranteed by the Second Amendment will be honored in the nation's capitol. One more reason for District residents to read Cato's new study, "Tough Targets: When Criminals Face Armed Resistance from Citizens," if only to spur their City Council members to allow them to better protect themselves.

February 29, 2012 2:59PM

Why Corporate Speech Rights But Not Corporate Liability for Violating the ‘Law of Nations’?

Yesterday the Supreme Court heard argument in Kiobel v. Royal Dutch Petroleum, the case (which I've discussed before and in which Cato filed a brief) that asks whether, under the Alien Tort Statute, the “law of nations” can be applied against an entity that is not a natural person: a corporation.  As the majority of the Court seemed to think, and as I wrote in the New York Times online, the answer is no because Congress never gave U.S. courts the power to entertain lawsuits alleging corporate malfeasance involving foreign actors abroad.

It seems like a discrete enough issue -- does this statute contemplate corporate liability? -- one that international law junkies and the "human rights" establishment are passionate about, but not one that should have much broader purchase.  Yet the blogosphere, not least the response to my Times piece, is up in arms about organizations like Cato saying that "corporations are people" when it gets them political speech rights (Citizens United) but not when it subjects them to liability for their dastardly deeds (Kiobel).

But to make this charge -- whether labeled shilling for corporations or just plain hypocrisy -- is to misunderstand both Citizens United and Kiobel.

Before explaining why, let me just reiterate that I agree with the keen point that corporations are not human beings.  But that brilliant observation is legally irrelevant.  Corporations are formed by individuals as a means of exercising their constitutionally protected rights.  Corporate personhood is simply a convenient legal fiction that we use to enable that rights-pooling for all sorts of purposes.  If using the word "person" in relation to an inanimate entity is confusing or offensive, you could try calling it something else (but then nobody you're talking to would understand you, so we're stuck with the word, for better or worse).  In any event, as I explain in my recent law review article -- "So What If Corporations Aren't People?" -- none of this changes how the law treats corporations.

Now then, I'm not saying that corporate personhood is operative for purposes of political speech but not for purposes of liability for malfeasance.  Instead, I'm clarifying two areas of law as they relate to corporate actors.  First, the First Amendment guarantees that rights-bearing individuals don't forfeit their rights (to speak about politics or anything else) when they associate in groups, whether in corporate form or otherwise.  Second, the Alien Tort Statute -- a peculiar law by which Congress gave federal courts jurisdiction over "law of nations" violations alleged by foreigners against other foreigners -- doesn’t recognize corporations as a type of party that can in that manner be haled into our courts.  That is so because the “law of nations” doesn’t extend to corporate actions (for reasons explained in our brief and elsewhere that I won't repeat here).  

Kiobel has nothing to do with corporate liability in general -- e.g., liability for manufacturing defective products, dumping chemicals, etc., in violation of U.S. or even foreign law -- but rather only concerns corporate liability for human rights abuses and other violations of the "law of nations" by foreign corporations in foreign countries.

The law can surely be "a ass," but you have to understand what law you're discussing to understand what type of ass it might be.

February 29, 2012 2:49PM

How to Burn a Quran

In today’s Cato Daily podcast, I talk with Caleb Brown about the fallout from the Quran burning incident in Afghanistan. I also wrote about the situation here. Nevertheless, there is one point I missed in the podcast that I want to address.

One narrative emerging from this whole fiasco is that some Afghan prisoners had defaced the Qurans before their incineration; they were allegedly using the holy books to distribute radical messages. The evidence on this remains fragmentary at best; however, even if Islamic scholars argue that burning is the proper way to dispose a defaced Quran, one would expect that after more than a decade at war, the coalition would have a less incendiary protocol to handle such a situation: hire an Afghan, not a Christian foreigner, to burn the Qurans.

According to this handy informational guide put together by Colonel Chet Lanious, a chaplain at and the director of the Center for World Religions at Fort Jackson, South Carolina, if one decides to dispose of “unwanted religious and Islamic literature,” one either casts it “into a flowing river” or buries it. Alternatively, one can burn it, but “only after erasing the names of Allah, His Angels and His Messengers.” I would assume that NATO did not do that. I’m also prepared to believe that some Afghans would protest regardless of whether NATO followed that protocol.

I’m not a scholar on Islam. So leaving standard operating procedure aside, the fact that the Qurans were defaced would imply that NATO had a motive for having them deliberately destroyed, which would contradict the established narrative that the incineration was a mistake. More to come...

February 29, 2012 2:42PM

North Korea: Déjà Vu All Over Again!

North Korea wants to deal. Or, more likely, North Korea wants to be paid to deal. Washington has reached another agreement with the Democratic People’s Republic of Korea (DPRK). The North promises to—again—halt nuclear tests and uranium enrichment, and the U.S. will—again—provide Pyongyang with food aid. The so-called Six Party talks, which also include China, Japan, Russia, and South Korea, are—again—expected to resume.

It is better for the U.S. and Northeast Asia if North Korea is talking rather than shooting, as it was two years ago, when it sank a South Korean naval vessel and bombarded a South Korean island. However, Washington should have at most modest expectations: the DPRK has given no indication that it desires to yield the only weapons which allow it to command the world’s attention. Moreover, the ongoing leadership transition in Pyongyang makes it unlikely that anyone has either the desire or authority to challenge military priorities.

The U.S. should step back as it encourages resumption of negotiations. Other than following through with its promised food shipments, Washington should leave aid to private NGOs and the North’s neighbors. More important, American officials should inform both the Republic of Korea and Japan that the United States will be phasing out its forces in both countries, leaving them with responsibility for their own security. They should plan accordingly.

Removing America as the focus of regional attention would highlight the roles of other nations. Reaching a peaceful settlement on the peninsula would be primarily an issue between South and North Korea. Encouraging the DPRK to avoid confrontation would be primarily a responsibility of China. Supporting any new security and economic regimes that might result would be primarily a task for Japan and Russia, which are historically involved and geographically near.

The latest U.S.-North Korean agreement is more cause for skepticism than celebration. It could lead to denuclearization of the Korean peninsula, but is more likely to trigger a repeat of history: interminable talks with only minimal practical results. That would still be better than a war, but still would warrant only minimal effort by Washington.

February 29, 2012 2:36PM

Congress Poised to Escalate the U.S.-China Trade War

U.S. policymakers hold the key to vastly improved economic relations with China.  They also have the key to the vehicle that will take the bilateral relationship over the cliff, which appears to be the route that has been chosen. Republican House Ways and Means Chairman Dave Camp will introduce legislation this afternoon that makes explicit the applicability of the U.S. Countervailing Duty (anti-subsidy) law to imports from countries considered to have “Non-Market Economies” (i.e., China and Vietnam). 

Maybe that’s not as obvious an example of escalation as Nixon’s bombing of Cambodia during the Vietnam War, but it is very likely to accelerate the deterioration of U.S.-China economic relations.  Costs will rise and life will become more difficult for U.S. companies trying to do business in China, as well as for U.S. producers and consumers who rely on imports from China.

Those pushing the legislation don’t want the public to understand the issues, which are highly technical and legalistic (and, quite frankly, too much trouble for our legislators to think through, particularly when there’s only political upside in China-bashing). But the consequences will be felt broadly – and there’s danger in that – so let me attempt to boil the matter down to a few salient points.

The U.S. government considers China a non-market economy for purposes of how it applies the antidumping law.  Certain outdated assumptions about prices, wages, and interest rates being unreliable and fictitious in non-market economies result in China being subject to a punitive antidumping calculation methodology – the NME methodology – by the U.S. Commerce Department.  Under the terms of the treaty by which China joined the World Trade Organization back in 2001, the United States must end the NME designation by no later than December, 2016, which means that China will then be subject to the still-onerous, but less-punitive, market-economy methodology.

The United States also has a Countervailing Duty law, which for 22 years up until 2007 had not been applied to imports from countries that, for purposes of the antidumping law, were deemed NMEs.  In not applying the CVD law to NMEs during that period, the Commerce Department was being consistent: if prices and other market signals are unreliable or fictitious in Country A for purposes of antidumping determinations, then they cannot be reliable of useable for purposes of measuring the benefits of subsidies in Country A in CVD cases. 

For political purposes, that logic suddenly ceased to apply in 2007, when Commerce changed its policy and began initiating CVD cases against NMEs.  Today, the U.S. government has 24 separate CVD orders in place on various imports from China (in addition to 5 cases pending determinations).  In December, the U.S. Court of Appeals for the Federal Circuit ruled that it is illegal for the United States to apply its countervailing duty law to NMEs because Congress’s intent had been subsumed in the policies of multiple administrations to not apply the law to NMEs, and reinforced by the fact that there had been substantial revisions to the trade laws during that 22-year period – a period during which Congress did not make CVD application to NMEs explicit. (Scott Lincicome is the authority on the background and legal interpretation of the "GPX" case.)

Excluding legal appeals (which take us to the same decision tree if the CAFC decision is upheld), the Obama administration has three choices.  First, it can abide the CAFC decision, revoke the 24 existing CVD measures, drop the pending cases, and initiate no more CVD investigations against NME countries. Second, it can do what it is doing: work with Congress to pass a new law making CVD explicitly applicable to NMEs, which will be perceived by Beijing as taking extraordinary measures to punish China, which will invite blatant and subtle forms of retaliation from the Chinese government against U.S. interests and produce numerous lawsuits over the myriad legal issues stemming from the acts of preserving 24 CVD measures imposed under a law that has been found to be illegal.  Third, it can graduate China to "market economy" status now, instead of waiting until 2016.  Option three requires no legislative action whatsoever, preserves domestic industry access to both the AD and CVD laws, and wins enormous amounts of goodwill from Beijing.

From the perspective of a free trader, the first option is best.  But its likelihood can be measured in terms of hundredths of a percentage point.  The second option, which leaves use of the CVD law as well as applicability of the NME methodology of the AD law to China in tact, is the worst.  The third option preserves access to the CVD law, as well as the antidumping law, for U.S. protection-seekers, but requires the Commerce Department to use the market economy methodology in cases involving China.

Option three is the great compromise.  It makes antidumping actions against China slightly less onerous for U.S. consumers and Chinese producers, but domestic industries still have access to both laws.  That’s not great for consumers, consuming-industries, or free-traders on its face, but it would be considered a sufficiently decent gesture of good will by Beijing that it could stop and possibly reverse declining relations.  And that could head off a destructive trade war and be the catalyst for considerably more trans-Pacific cooperation resolving issues that adversely affect consumers, producers, workers and investors in both countries, and beyond.

Unfortunately, dark clouds are gathering as pursuit of that path seems less likely this afternoon.

February 29, 2012 2:11PM

Here Come the Disabled‐​Employee Quotas

I've got a new op-ed in the Daily Caller about one of the most significant employment-law initiatives out of Washington in years (also reported on by Melanie Trottman in today's WSJ): the Obama administration is preparing to order federal contractors to comply with a quota (sorry, "required...hiring goal") of disabled employees, perhaps as high as 7 percent. Businesses have flooded the Regulations.gov comments site with negative reactions to the idea, but to no seeming avail. As I explain, one of the scheme's maddening aspects is that you're supposed to achieve the quota even though you're not allowed to ask employees whether or not they're disabled:

So the rules contemplate a fan dance of “invited self-identification” in which workers are given repeated chances at successive stages of the hiring process to announce that they are disabled. Unfortunately for quota compliance, even after getting the job an employee may be too shy to offer such a self-identification, which means the employer may lose any “credit” for the hire. Perhaps equally frustrating, an employee hired with the quota in mind may turn out not to have any disability at all (“Dang it! And she looked so disabled!”).

The employment provisions of the Americans with Disabilities Act (ADA) and its associated Rehabilitation Act are already rife with absurd results. Last week, after a Colorado school bus driver who hit three middle school students turned out to have been hired though recently in rehab, a spokesman for the school district explained that the law was at work: "It is illegal under state and federal disability laws to deny employment solely on the basis of a history of treatment for alcohol or substance abuse." Non-discrimination against school bus drivers with a taste for booze is bizarre enough, but not bizarre enough for Washington. Time for preference!