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March 26, 2013 12:05PM

More from Cato Scholars on the Marriage Cases

This morning the Supreme Court hears oral argument in Hollingsworth v. Perry, the Prop 8 case, previewed in this space yesterday and the topic of much past attention at Cato. Over the past 48 hours Cato scholars and friends have been writing up a storm:

  • An editorial in the Wall Street Journal contends that the issue should be left to the political process. In response, Cato constitutional studies director Roger Pilon says the Journal goes fundamentally astray on (among other things) whether the Equal Protection Clause was meant to apply only to some short list of "protected classes," and whether the Perry and Windsor cases resemble Roe v. Wade (they don't).
  • At Reason, Cato's Ilya Shapiro debates Jonathan Adler on whether federalism provides a useful organizing concept for the issue. Plenty of debate on that topic at Volokh Conspiracy.
  • In articles at Hoover's Defining Ideas and Ricochet, Cato adjunct scholar Richard Epstein explains why he finds originalism in tension with liberty on the issue, and has some advice for Justice Anthony Kennedy.
  • Last chance to register for Cato's all-star panel tomorrow with former Republican National Committee head Ken Mehlman (NPR profile), Freedom to Marry founder Evan Wolfson (BuzzFeed profile), and Cato’s Ilya Shapiro (AFF profile). You can also watch live online here, and comment on Twitter at hashtag #CatoEvents.
  • I've got another roundup at Overlawyered noting tomorrow's panel and other upcoming events, and summarizing a panel on related issues held at Cato last week; I also note the paradox in one recent poll in which a non-trivial number of participants took the view both that same-sex marriage is a right under the U.S. constitution, and that states should be left to go their own ways on whether to recognize it.
March 26, 2013 9:22AM

The European Commission’s Silent Power Grab

Last week, the European Commission issued an inconspicuously looking seven-page note on economic policy coordination, addressed to the European Parliament and the European Council. Although its publication has attracted scarcely any attention, the document has far-reaching implications. The introduction states, in an unapologetic tone, that:

the Commission considers it important that national plans for any major economic policy reforms are assessed and discussed at EU-level before final decisions are taken at the national level. (p. 2, emphasis added)

While European institutions have traditionally been involved in economic policymaking, their mandate is limited to policing compliance with the rules of the common market and those of the monetary union—with mixed results, one would hasten to add.

The wording of last week’s paper goes way beyond that narrow mandate. While it stipulates that “the process should fully respect national decision-making powers,” (p. 5) it would effectively empower European institutions to harass prospective European reformers in countries that decide to join the scheme. Not that many countries would have a choice—for Eurozone members, there would be a binding requirement to participate in this process of “ex ante coordination.”

Even under the most charitable reading, this would create an additional layer of slow-moving bureaucracy with the potential of delaying reforms. And if "windows of opportunity" for specific economic reforms are limited, it would necessarily imply that certain efficiency-enhancing reforms would be derailed. Arguably, if Slovak or Estonian finance ministers had to justify their tax reforms to their counterparts from France or Germany, the flat tax revolution in Eastern Europe would have never happened.

And why should economic reforms be coordinated across Europe at all? Here’s one argument given by the paper:

 Product, services and labour market reforms as well as certain tax reforms may affect employment and growth in the implementing Member State, and hence the demand for products and services from other Member States. This is because a reform may also have a positive or negative impact on the reforming Member State's price and non-price competitiveness. (p. 3)

Clearly, cross-border spillovers exist. But the same spillovers exist on a competitive market—whenever a firm changes its strategy or innovates, it can exercise “a positive or negative impact” on sales made by other companies. Yet very few would advocate coordination of innovation or business decisions—partly because the benefits of competition on product or service markets are patently obvious to most people. If anything, the benefits of competition are even more important in the choice of institutions and policies. And that’s why the sneaky power grab by European institutions has to be stopped.

March 26, 2013 9:02AM

Casket Case Shows Economic Liberty to Be Alive and Well

Last week, the Institute for Justice scored a resounding victory for the right to earn an honest living in an unlikely case that pitted woodworking monks against the Louisiana State Board of Embalmers and Funeral Directors.  The New Orleans-based U.S. Court of Appeals for the Fifth Circuit -- where I clerked -- ruled in a final, unanimous decision (including one Obama-appointed judge) that Louisiana violated the St. Joseph Abbey monks' economic liberty when it forbade them from selling the caskets they make to support their religious order.

Significantly, the court ruled that the Constitution doesn't allow the government to enact laws simply to shield industry cartels from honest competition.  Although IJ was already assured of victory, given that Fifth Circuit had issued a divided preliminary opinion in October, that ruling left open some tricky questions that this latest decision definitively settled.  

Last Wednesday's ruling makes clear that laws having no purpose but to enrich certain protected interests are unconstitutional, using reasoning that should be a model for courts across the country.  

Louisiana now has 90 days to seek review in the U.S. Supreme Court -- which supporters of economic liberty should welcome because IJ’s previous litigation created a split in the federal lower courts that can only be resolved, for the nation as a whole, by the Supreme Court. 

For more on St. Joseph Abbey v. Castille, see IJ's case page and this Wall Street Journal op-ed by IJ's Chip Mellor and Jeff Rowes. And if you're a law student interested in using your legal skills to promote liberty this summer, you should apply to IJ's epic public interest boot camp (of which I'm a graduate, though in my day there wasn't any skydiving or aikido).

March 25, 2013 4:56PM

Immigrants Are Attracted to Jobs, Not Welfare

Unauthorized and low skilled immigrants are attracted to America’s labor markets, not the size of welfare benefits.  From 2003 through 2012, many unauthorized immigrants were attracted to work in the housing market.  Housing starts demanded a large number of workers fill those jobs.  As many as 27 percent of them were unauthorized immigrants in some states.  Additionally, jobs that indirectly supported the construction of new houses also attracted many lower skilled immigrant workers.

Apprehensions of illegal crossers on the Southwest border (SWB) is a good indication of the size of the unauthorized immigrant flow into the United States.  The chart below shows apprehensions on the SWB and housing starts in each quarter:

 

Media Name: housing_starts_vs._swb.bmp

Fewer housing starts create fewer construction jobs that attract fewer crossings and, therefore, fewer SWB apprehensions.  The correlation holds before and after the mid-2006 housing collapse. 

What about welfare? 

Here is a chart of the national real average TANF benefit level per family of three from 2003 to 2011 (2012 data is unavailable) and SWB apprehensions:

 

Media Name: tanf_vs._swb.bmp

Prior to mid-2006, TANF benefit levels fell while unauthorized immigration rose.  During the housing construction boom, unauthorized immigrants were attracted by jobs and not declining TANF benefits.  After mid-2006, when housing starts began falling dramatically, real TANF benefit levels and unauthorized immigration both fell at the same time.  If unauthorized immigration was primarily incentivized by the real value of welfare benefits, it would have fallen continuously since 2003.   

The above chart does not capture the full size of welfare benefits or how rapidly other welfare programs increased beginning in 2008.  As economist Casey Mulligan explained in his book The Redistribution Recession, unemployment insurance, food stamps (SNAP), and Medicaid benefits increased in value and duration beginning in mid-2008.  Including those would skew welfare benefits upward in 2008 and beyond, but unauthorized immigration inflows still fell during that time.

In conclusion, housing starts incentivize unauthorized immigration while TANF does not. 

March 25, 2013 4:54PM

GOP Senators Playing With Federal Education Fire

It’s easy to understand why several prominent GOP Senators, including Sens. Lamar Alexander, Mitch McConnell, Rand Paul, and Marco Rubio, are sponsoring federal school voucher legislation. State-level voucher programs have raised student achievement, increased high school graduation rates, and boosted college matriculation. School choice programs are also market-based initiatives that aid and appeal to low-income voters. As Senator Paul argued:

“School choice for low-income parents and students across America is a way out of the poverty cycle,” Mr. Paul said in a statement. “Allowing Title 1 funds to follow the student creates an opportunity for students to get the most out of their education in the best environment possible.”

Moreover, a recent survey from Harvard University’s Program on Education and Governance found a high level of support for expanded school choice programs. All that said, the GOP should resist the temptation of a federal voucher system.

Even setting aside the question of constitutionality (education is not listed in the Constitution as one of the federal government’s enumerated powers), there are practical reasons for being skeptical about increased federal involvement in America’s education system. It is very likely that a federal voucher program will lead to increased federal regulation of private schools over time. While there’s no law of the cosmos that states that federal dollars must come with strings attached, they most often do. And while the GOP legislators proposing the vouchers will likely keep regulations light at the outset, when the political pendulum swings—as it inevitably will—opponents of vouchers might find that it’s politically easier to add regulations to the program than to kill it outright. Once private schools become dependent on the federal money that their students bring with them, the vast majority will accept the new regulations rather than forgo the funding.

Instead of playing with federal fire, the GOP should embrace federalism. As David Boaz wrote in the Cato Handbook for Congress a decade ago, the case against federal involvement in education:

is not based simply on a commitment to the original Constitution, as important as that is. It also reflects an understanding of why the Founders were right to reserve most subjects to state, local, or private endeavor. The Founders feared the concentration of power. They believed that the best way to protect individual freedom and civil society was to limit and divide power. Thus it was much better to have decisions made independently by 13–or 50–states, each able to innovate and to observe and copy successful innovations in other states, than to have one decision made for the entire country. As the country gets bigger and more complex, and especially as government amasses more power, the advantages of decentralization and divided power become even greater.

School choice programs have been expanding rapidly among the states in recent years (albeit not as rapidly as I would like). Supporters of school choice should be encouraging that trend, working hard at the state level to expand educational opportunities. Expanding choice all across the fruited plain in one swoop may be tempting in its immediacy, but it’s not worth the price.

March 25, 2013 4:29PM

Three Cheers for Autonomy

In today’s New York Times, philosopher Sarah Conly gives “Three Cheers for the Nanny State,” specifically, NYC’s famed big soda ban. Invoking aspects of the theory of “nudge,” made popular in a book by Richard H. Thaler and Cass R. Sunstein, Conly argues that, sometimes, the government can rightfully save us from ourselves.

The popularity of “nudge theory” is closely tied to the recent spate of popular science books on the foibles of the human brain. Books such as Predictably Irrational and A Mind of Its Own are part of a new self-help fad: the idea that scientists studying the error-prone human brain can help us understand why we are unable to quit smoking, lose weight, and many other common problems.

It was only a matter of time until government regulators and their champions embraced this new science in order to put a fresh spin on an old impulse—their never-ending desire to save us from ourselves. But despite the valid insights of cognitive neuroscience, both nudge theory and Conly’s editorial are no more defensible than any other paternalism. We should not be deceived into believing that there is any new wine in those old wineskins.

The error at the heart of nudge theory is that scientists and regulators can discover what our true preferences are absent a choice that reveals those preferences. Traditional economics relies on the theory of “revealed preferences”—the idea that our choices reveal what, at that moment, we really want. This is not to say that we might later regret those choices or that some of those choices may be bad for us. Instead, it merely says that, given the information and desires you had at the time, your choice revealed your preference.

Nudge theory holds that “true preferences” can be discovered in a different way: by mapping the conditions under which we are prone to error and then divining our true preferences by asking what our choices would have been but-for those systematic biases. What results is not the traditional type of paternalism that imposes the preferences of regulators upon the citizens; instead it is new type of paternalism that imposes your “true” preferences upon yourself.

Do you constantly say you want to lose weight but never can find the time to exercise, or perhaps today was just a day when you really wanted a cheeseburger? Well, then regulators can help you achieve your true preferences. Do you wish you could quit smoking but the pressures of each day are made easier by cigarettes? Well, they can help you with that too.

The fundamental problem: Is there any reason the “you” who says he needs to lose weight is more “true” than the “you” who has a cheeseburger? Do you even know which preference is your “true” one? Does that question even make sense? The secondary problem: Is there any way for regulators to discover which is the true “you” and any reason for us to believe they have the incentives to do so? Moreover, can we trust them to not succumb to their own cognitive biases as they help nudge you onto the path towards your “true” self?

In Conly’s words, “the crucial point is that in some situations it’s just difficult for us to take in the relevant information and choose accordingly,” therefore “we need help.” And although she admits that it is not “always a mistake when someone does something imprudent,” the “needs of the majority” must be taken into account.

Although it is not explicitly stated, Conly is discussing costs imposed on "the majority" via the medical system, at least in the context of the big soda ban. Without these shared costs, Conly’s argument is much more difficult to make. With these shared costs, however, there is no personal lifestyle choice that cannot, on principle, be regulated under the theory that the “needs of the many outweigh the needs of the few.” And the Affordable Care Act is only increasing the collectivization of our health-care costs.

Conly hopes to avoid this slippery slope problem by invoking the rationality of regulators, which is a particularly odd thing to do in an opinion piece mostly dedicated to the irrationality of human beings. We need not worry, she says, because “successful paternalistic laws are done on the basis of a cost-benefit analysis: if it’s too painful, it’s not a good law.” Yet the painfulness here is, of course, subjective—for example, the pain of not being able to purchase a big soda or a pack of cigarettes. Yet these are exactly the sort of subjective pains that Conly and other proponents of nudge theory are prone to explain away by saying they aren’t “true” preferences.

And even if the slippery slope were true, argues Conly, “Banning a law on the grounds that it might lead to worse laws would mean we could have no laws whatsoever.” Here, again, she misses the point. We can ban laws that have no conceivable limiting principle, are based on faulty assumptions about human nature, and infantilize adults into wards of the state without worrying about undercutting all laws. 

Finally, Conly does not touch upon the broader consequences of having the government treat adults like children who do not know what is best for themselves. There is immense value in having decisional autonomy. John Stuart Mill, who Conly strangely invokes to justify her vein of paternalism, would have found her program abominable. In On Liberty, Mill wrote:

If a person possesses any tolerable amount of common sense and experience, his own mode of laying out his existence is the best, not because it is the best in itself, but because it is his own mode. Human beings are not like sheep; and even sheep are not undistinguishably alike. . . . If it were only that people have diversities of taste that is reason enough for not attempting to shape them all after one model. But different persons also require different conditions for their spiritual development . . . 

In other words, free choice is also valuable because it is your choice. But it is not surprising that Conly disagrees, seeing as she is the author of Against Autonomy: Justifying Coercive Paternalism.

The new paternalists are no different than the old paternalists. By invoking new scientific studies new paternalists hope to make their programs both easier to swallow and harder to see. While we sometimes might need to be saved from ourselves, that’s what family, friends, churches, and community are for. If the new paternalists takeover, however, who will save us from them?     

March 25, 2013 4:26PM

Here’s Your Free Health Care. Would You Care to Vote?

The Washington Examiner's Paul Bedard writes:

The 61-page online Obamacare draft application for health care includes asking if the applicant wants to register to vote, raising the specter that pro-Obama groups being tapped to help Americans sign up for the program will also steer them to register with the Democratic Party.

That may strike some as unseemly. After all, people go to jail for buying votes. But the real problem here is that ObamaCare is paying too much.

According to the Congressional Budget Office, the average subsidy ObamaCare offers for private health insurance will rise from $5,500 next year to more than $8,000 in 2023. But according to the Washington Post:

The price of one bona fide, registered American vote varies from place to place. But it is rarely more than a tank of gas.

Indeed, as a rising furor over voter fraud has prodded some states to mount extensive efforts against illegal voters, election-fraud cases more often involve citizens who sell their votes, usually remarkably cheaply. In West Virginia over the past decade, the cost was as low as $10. Last year in West Memphis, Ark., a statehouse candidate used $2 half-pints of vodka.

At the high end, corrupt candidates in Clay County, Ky., once paid $100. But that was probably too much: It attracted one woman who already had sold her vote. The man who bought it first was outraged, and he beat up the man who bought it second.

ObamaCare overpays for everything.