Archives: 05/2012

Civil Asset Forfeiture and the ‘Piratical’ State

We at the Cato Institute have warned time and time again of the dangers of civil forfeiture laws, which empower law enforcement authorities to seize cars, money, houses and office equipment alleged (often on a flimsy basis) to have been used to advance unlawful conduct. Even if no related criminal charges are brought – or even if the defendant manages convincingly to beat those charges – the law enforcement agencies often assert a right to keep the property, giving it back, if at all, only after costly litigation. In the mean time, finding a lawyer to fight the process can be difficult because the government has seized the assets that would ordinarily be used to pay that lawyer.

In recent days a crop of especially outrageous forfeiture stories has been making headlines:

  • Nashville’s WTVF exposed a pattern in which some rural Tennessee police agencies stop out-of-state motorists and then seize any large amounts of cash found on the grounds that the motorists could not prove they were not involved in drug trafficking or some other unlawful activity. Read the story and decide whether you would feel more secure driving in Monterey, Tenn. or Monterrey, Mexico
  • It’s hard to top the Tennessee story, but Cato Media Fellow Radley Balko has just published a Huffington Post expose of how Wisconsin police seize cash intended for bail money, on the grounds that police dogs sniffed drug residue on it – even though a victim family was able to establish in one instance that the cash had just come from bank ATMs.
  • George Will, the syndicated columnist and 2010 Friedman Prize keynoter, has a blistering new column (“When government is the looter”) on the combined effort by “piratical” federal officials and police in Tewksbury, Mass. to confiscate the Caswell Motel, whose elderly owner has been charged with no crime but whose inexpensive lodgings have sometimes been used by drug dealers. More in this strongly worded Washington Post editorial.

Imagine a system under which an individual arresting officer stood to become personally wealthy by collaring an asset-rich defendant and railroading him on suspicion of something-or-other. Now imagine instead that it’s the police department as a whole that faces the same corrupting temptation. Why do the courts stand for it?

Joe Barton, Meet Alessandro Acquisti

We were all very excited about the Facebook IPO last week (I guess), and Washington, D.C. wants to have its part in the action. This Politico article, “Facebook IPO Pits Privacy vs. Profits,” is a good illustration. It is the organs of government saying we are relevant, you know.

I was particularly intrigued by the comment of Rep. Joe Barton (R-TX). He’s playing against type—if we’re still to believe that Republicans stand for limited government—where he’s quoted saying: “I believe in free market principles, but there are some things the market can’t put a price on because they lack a monetary value. Privacy is one of those things.”

Aha! Washington does have a role the market can’t provide.

Except that the observation isn’t valid. There are lots of things in markets that “lack a monetary value.” You don’t think that every dimension of every good and service has a price tag on it, do you? Markets still deliver these things through the decision-making of their participants.

Alessandro Acquisti at Carnegie Mellon University has been studying how consumers value privacy for years. Crucially, he’s been studying how they value privacy when confronted with real and simulated trade-offs. (What consumers and politicians say isn’t very informative.) He sometimes puts a price tag on privacy in his studies.

It’s often a low price. Consumers don’t value privacy as much as many of us would like. But markets do implicitly price privacy. You make a little bit more—not a lot—if you deliver privacy. You stand to lose—sometimes a lot—if you don’t protect privacy.

Stand down, Mr. Barton. Stand down, Washington, D.C. You are not relevant to the Facebook IPO. Free market principles suggest leaving markets free to serve consumers’ actual preferences as determined by market processes. This is the case whether you think of privacy as having a “monetary value” or not.

Another ‘Government Shutdown’ Fight in Washington’s Future

One of the big stories from Washington is that there may be another fight over the debt limit, which could mean…gasp, hide the women and children…gridlock, downgrades, government shutdown, default, and tooth decay.

Okay, perhaps not tooth decay, but the DC establishment nonetheless is aghast.

Last year, there were actually two big confrontations between House Republicans and President Obama.

The first fight occurred early in the year and revolved around spending levels for the remainder of the 2011 fiscal year. I explained in February of that year how advocates of smaller government could prevail in a government shutdown fight, especially since the “essential” parts of the government wouldn’t be affected.

But I wasn’t surprised when GOPers buckled under pressure and accepted a deal that – at best – could be categorized as a kiss-your-sister compromise (and, as I noted elsewhere, our sister wasn’t Claudia Schiffer).

Then we had the big debt limit fight later in the year, which led to absurd claims that failure to increase the debt limit would lead to default – even though the federal government was collecting ten times as much revenue as was needed to pay interest on the debt.

Once again, Republicans were unable to withstand the demagoguery and they basically gave Obama what he wanted after agreeing to a “supercommittee” that was designed to seduce them into a tax increase.

Now the game is about to start over. It’s deja vu all over again, as Yogi Berra might say.

Here’s some of what the LA Times reported.

Republicans in Congress are heading into summer much the way they did last year — instigating a showdown with the White House by demanding massive federal budget cuts in exchange for what used to be the routine task of raising the nation’s debt limit to pay the government’s bills. House Speaker John A. Boehner (R-Ohio) is doubling down on the strategy that ended in mixed results last year after the country came to the brink of a federal default before a deal was struck with President Obama. In that go-round, both sides saw their approval ratings with voters plummet and the nation’s credit was downgraded. …The risk for Republicans is not only in presenting another high-stakes showdown at a time when voters have grown weary of the gridlock in Washington.

The reporter’s assertion that the debt limit fight led to the downgrade is a bit silly, as I explain here, but that’s now part of the official narrative.

On a separate matter, I can’t help but shake my head with frustration that GOPers still haven’t learned that America’s fiscal problem is too much spending, and that deficits and debt are symptoms of that problem. Here’s another passage from the L.A. Times story.

“The issue is the debt,” Boehner said Sunday on ABC’s ”This Week With George Stephanopoulos.” “Dealing with our deficit and our debt would help create more economic growth in the United States and it would lift this cloud of uncertainty that’s causing employers to wonder what’s next.”

No, Mr. Speaker. The problem is spending, spending, spending.

Returning to the main issue, the debt limit isn’t the only big fiscal fight that may happen this year. There will also be the spending bills for the 2013 fiscal year, which starts on October 1 of this year. That will mean another fight, particularly since the left has no intention of abiding by the spending limit that was part of last year’s debt limit deal.

And if Republicans hold firm, that means another “government shutdown.” Though it really should be called a “government slowdown” since it’s only the non-essential bureaucrats who get sent home.

In any event, since I’m glum about the likelihood of anything good happening, let’s at least enjoy some good cartoons from Jeff MacNelly. He passed away a number of years ago, but these cartoons from the mid-1990s are just as applicable today as they were then.

These are amusing cartoons, so long as you don’t actually think about the fact that government is bloated in part because Washington is littered with programs, departments, and agencies that are filled with non-essential bureaucrats. And don’t forget that these bureaucrats are overpaid, getting, on average, twice the compensation of workers in the productive sector of the economy.

But I don’t want to end this post on a sour note, so here are some good jokes from the late-night comics about government shutdowns.


Repeat after Me: There Is No Health Reform but ObamaCare

Here’s a poor, unsuccessful letter I sent to the editor of Politico:

An item in Politico’s health care newsletter Pulse [“Today: Christie Vetoes Exchange Or Else,” May 10] told readers that, because I oppose ObamaCare, I am a “health reform foe.”

Is that what Politico gleans from my conversations with its reporters about the need for health care reform, and how I would go about it? From the hundreds of articles and opeds and speeches and blog posts in which I detail my preferred reforms? And from the book I coauthored about how to reform health care? Is it Politico’s editorial policy that one cannot support health reform without supporting ObamaCare?

Other news organizations, moreover, avoid describing ObamaCare as “reform,” a term that connotes improvement. Is it Politico’s editorial policy to convey to readers that ObamaCare is an improvement?

New President in the Dominican Republic: Change or More of the Same?

Danilo Medina of the incumbent Dominican Liberation Party (PLD) beat former president Hipólito Mejía yesterday to become the new president of the Dominican Republic.

The vote was marred by some irregularities such as the use of state resources in favor of Medina, which have been confirmed by the electoral observers of the Organization of American States (OAS). However, former Uruguayan president Tabaré Vázquez, head of the OAS delegation, said that the number of irregularities didn’t affect the outcome of the vote. And Medina’s margin of victory (51.2% versus Mejía’s 46.9%) was well within what the polls predicted in the weeks ahead of the election.

However, the vote irregularities are a painful reminder of the biggest problems that beset the Dominican Republic: corruption and political patronage. The DR ranks 129 out of 182 in the Transparency International index on corruption. According to the World Economic Forum, corruption is the most problematic factor for doing business in the country. The Dominican government is a machine of dispensing favors and political patronage to supporters. For example, the departing administration of president Leonel Fernández has 334 vice ministers distributed among 20 cabinet ministries. The Ministry of Agriculture has 37 vice ministers, Public Health has 34. Each vice minister enjoys a nice salary plus benefits such as a discretionary credit card, travel expenses, car with a chauffeur, staff, etc. The Dominican Foreign Service boasts 113 ambassadors and 1,163 diplomats despite having representation in only 54 countries and 6 international organisms.

The big question then is whether president-elect Medina will break with the past or be more of the same. He comes under the shadow of president Leonel Fernández, who has been in power for 12 of the last 16 years. Medina was twice Fernández’s Secretary of State (equivalent to Chief of Staff), however, he challenged the president in the PLD primaries of 2007 (and eventually was defeated), establishing a reputation of independence from the current president. On the other hand, his vice-presidential candidate is Margarita Cedeño, Leonel Fernández’s wife and current first lady. Medina’s campaign slogan was: “Continue what’s good, change what’s wrong, do what’s never been tried before.”

I spent a week in the Dominican Republic last March on the invitation of the local free market think tank CREES and I could perceive the dissatisfaction that most Dominicans feel towards their political class. An exiled Venezuelan friend even drew parallels between the DR today and his country back in the late 1990’s, when a disaffected Venezuelan population, sick of their corrupted politicians, chose an outsider as president. No strongman appears in the Dominican horizon, though. But there’s an increased feeling that the country needs a dramatic cut from its present.

Perhaps the sentiment is best expressed in the song “Apaga y Vamonos” (meaning something like, “the last one to leave turn off the light”) by renowned Dominican singer Juan Luis Guerra that says:

The same promise, the same CD
The same lie and the same coffee
The same speech and the same cliché
History recycled, all we have is faith

The last one to leave turn off the light
The good men, where are they?

By Edict of King Andrew, New York Employers Will Be Subject to ObamaCare’s Employer Mandate

Here’s a poor, unsuccessful letter I sent to the editor of the New York Times:

When Gov. Andrew Cuomo (D) created a new ObamaCare “exchange” by executive order, it was indeed “A Deft Health Care Move” [Apr. 18].

Really, what was he supposed to do? Let legislators decide whether to commit taxpayers to such an expense? (They had declined.) Sit back and let the federal government pay for its own Exchange? (That was the alternative.) Block a $3,000-per-worker tax on employers? (Had Cuomo done nothing, New York employers would have been exempt from ObamaCare’s “employer mandate.”)

Cuomo brilliantly and single-handedly volunteered New Yorkers to pay for a new government bureaucracy and burdened New York employers with a new, job-killing tax. Who needs a legislature!

Taxes in the European Union Are Going Up

After declining during the prosperous 2000s, taxes in the EU have been going up in recent years. That is not good news – especially if the Europeans are trying to increase their anemic growth rates. It seems to me that a European “growth agenda” should include a tax cut.

So, why have the taxes gone up in Europe? They have gone up, because – contra Krugman - government spending has not, by and large, declined. In order to maintain the current level of expenditure, the EU governments (which are finding it more difficult to borrow in the financial markets) had to increase taxes.

PS: Look at the income tax and VAT rates in places like the UK, where the government first takes 50 percent of your income in taxes (actually that is going to decline to a “mere” 45 percent) and then hits you with a 20 percent tax on everything you buy – from a pack of chewing gum to a car. True, some of that money comes back to the Brits in the form of benefits, but their disposable income (i.e.: freedom to do with your earnings what you want) is quite low.