Archives: 08/2017

Lobbying in Trump’s Washington: New Names, Old Game

In The New York Times Magazine, Nicholas Confessore writes about the new lobbying stars in Washington. A new president always creates opportunities for new players. When that president is a non-politician without an established Washington entourage, there’s a lot of uncertainty. Who knows the new president? Who knows the people who know the president?

Confessore tells great stories about newly famous Trumpists such as one-time campaign manager Corey Lewandowski and about “Washington backbenchers, B-listers and understudies” who suddenly realized they knew somebody who had been part of the Trump campaign.

USA Today has reported on people close to Vice President Pence who have opened or expanded lobbying businesses this year.

It’s a sordid story of how fixers and their handsome fees survive even in an administration that came in promising to “drain the swamp.” But how much has really changed? As Confessore reviews:

There are about 10,000 registered lobbyists in Washington — roughly 20 for every member of Congress — and thousands more unregistered ones: consultants and ‘‘strategic advisers’’ who are paid to help shape government policy but do not disclose their clients. By whatever name, they are the people companies and countries hire to help roll back regulations, unstick bids, tweak legislation or get meetings. Lobbying is at once Washington’s most maligned, enduring and essential industry. Underpaid young politicos and retiring lawmakers depend on Beltway lobby shops — known as ‘‘K Street’’ after the city boulevard that once housed many of them — for the high-six-figure salaries that will loft them into Washington’s petite aristocracy… .  But the private sector needs lobbyists the most. The modern federal government is so sprawling and complex that it practically demands a specialized class of middlemen and -women.

Over the decades, lobbying has evolved from a niche trade of fixers and gatekeepers to a sleek, vertically integrated, $3-billion-a-year industry.

Total reported spending on lobbying peaked in 2009 and 2010, the first two years of President Barack Obama’s administration, when trillions of dollars were being handed out or moved around by the stimulus package, the omnibus spending bill, the Dodd-Frank financial regulation bill, the Affordable Care Act, and an ultimately unsuccessful 1200-page energy bill stuffed with taxes, regulations, loopholes, and subsidies. The Washington Post found that “more than 90 organizations hired lobbyists to specifically influence provisions of the massive stimulus bill.” Well-connected Democratic lobbyists like former House majority leader Richard Gephardt and Tony Podesta, the brother of Obama transition director John Podesta, did especially well.

Legal Battle Between Oil Companies Raises Structural Constitutional Issues

When Oil States Energy Services, LLC filed its patent-infringement suit against Greene’s Energy Group, LLC in federal court back in 2012, the far-reaching negative consequences of the new America Invents Act (AIA) were not yet readily apparent. As the private dispute between these parties has wound its way through the AIA’s legal labyrinth in the subsequent half-decade, however, the structural problems inherent in this new administrative scheme have become increasingly obvious. 

The passage of the AIA has resulted in a substantial transfer of power from the judiciary to the executive branch through the creation of the Patent Trial and Appeal Board (PTAB), an administrative-law body housed within the Patent and Trade Office (PTO) and vested with the extraordinary power to cancel already-issued patents. Although Congress has constitutional authority to determine the kinds of inventions that merit patents, patents themselves (whatever their legislatively determined scope and strength) are and have always been a form of private property. Patents cannot properly be characterized as public rights, as they neither involve the government setting conditions under which it waives its own sovereign immunity nor implicate a statutorily created cause of action that was unknown at common law. Patents are thus necessarily subject to the same protections as a piece of privately held land—and disputes over patents must be handled in the same manner as disputes over other kinds of property, with full judicial review rather than some lesser administrative process. 

This means that the PTAB is fundamentally incompatible with the purposes of Article III of the Constitution, in at least two important ways. First, the PTAB denies patent litigants their right to a fair and impartial adjudication, as the administrative patent judges who comprise the PTAB are fully under the control of the PTO director (a political appointee), and serve at his pleasure. Second, Article III was designed to protect the independence of the judiciary itself, but the creation of the PTAB draws power away from the judicial branch in favor of the executive. The inordinate powers exercised by the PTAB reach far beyond anything previously accepted by the Supreme Court, which concentration of power is further exacerbated by the lack of meaningful judicial review. Such a distortion of the separation of powers creates a sort of unevenness and instability akin to a three-legged stool after one leg has been cut short and then attached to the end of another. 

This tenuous arrangement cannot stand, and so the Cato Institute, joined by the American Conservative Union Foundation, has filed an amicus brief seeking to restore both the proper role of federal courts in patent disputes and the property rights of patent-holders. The Supreme Court will hear Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, this fall.

Congress Risks the Constitution in New Jersey Sports Betting Case

The Professional and Amateur Sports Protection Act (PASPA), which Congress passed in 1992, forbids states from “authorizing” sports betting “by law.” As every middle-schooler learns, however, our Constitution establishes dual sovereignty between the states and the federal government. And as the Supreme Court most recently held in New York v. United States (1992) and Printz v. United States (1997), the Constitution forbids Congress from “commandeering” state officials to serve federal ends, whether by forcing states to enforce federal laws or to pass new state laws (or to refrain from repealing old ones), which is exactly what PASPA does.

In 2011, New Jerseyans voted overwhelmingly—two to one—to legalize sports betting in a 2011 referendum. The next year, the state legislature responded to the will of the people by enacting a law allowing sports wagering at casinos and racetracks. The four major professional sports leagues, plus the National Collegiate Athletic Association (NCAA), sued under PASPA to prevent the state from moving forward and legalizing sports betting. In 2016, the U.S. Court of Appeals for the Third Circuit ruled for the NCAA, reasoning that if the state were to repeal its pre-PASPA sports gambling laws, they would be “authorizing” the activity “by law,” which was forbidden by PASPA. Unwilling to be forced to continue enforcement of a law overwhelmingly rejected by its populace, New Jersey appealed to the Supreme Court.

Cato has now joined the Pacific Legal Foundation and Competitive Enterprise Institute on a brief (written by former Cato intern Jonathan Wood) in support of the Garden State. We argue that PASPA unconstitutionally commandeers state officials and undermines the core concepts of federalism.

If the federal government wants to enforce its chosen policy, it must find a way to do so that doesn’t involve having New Jersey do its dirty work. There are several options: Congress could regulate sports betting itself (at least across state lines) or it could use its spending power to provide incentives to states to adopt more restrictive schemes. Instead, PASPA forces states to enforce and maintain policies which have become outdated and unpopular, against popular and state sovereignty.

PASPA and other overweening federal laws pose a serious problem for accountability because they tie the hands of state officials, forcing them to enforce policies they do not want. The people of the state then blame state officials for bad outcomes, not knowing that their hands are tied by Congress. Moreover, the same issue comes up again and again, in areas ranging from immigration to guns, from health care to marijuana. The federal government should not be forcing one-size-fits-all solutions on a large and diverse country—and indeed the Constitution was designed to prevent such abuse.

The Supreme Court will hear Chris Christie v. NCAA this fall.”

“Lord Keynes” Contra White on the Beginnings of Coinage

I fully expected Larry White’s recent post challenging the state theory of money, and particularly that theory’s understanding of the origins of metallic coinage, to generate some critical feedback. In particular, I expected it to raise the hackles of “Lord Keynes” (henceforth LK), the otherwise anonymous author of the blog, Social Democracy for the 21st Century, who has discussed the same topic on several occasions (e.g. herehere, and here), and who is inclined to favor the alternative, “cartalist” (or “chartalist”) perspective.

Nor was I disappointed. Indeed, within moments of tweeting a link to Larry’s post I found myself in a twitter debate with LK regarding the origins of Lydia’s electrum coins, which are generally considered the world’s earliest. In response to my tweet, LK tweeted in return that “The consensus of modern ancient historians is that coined money in Anatolia and Greece was invented by the state.”

LK has since published a post specifically countering White’s claims, including the claim that, although sovereigns eventually monopolized ancient coinage,

as far as we know coins were already in use among merchants before that happened. Very early coins from ancient Lydia, in what is now Turkey, were not inscribed with human faces but rather animal figures. The Ancient History Encyclopedia states: “It appears that many early Lydian coins were minted by merchants as tokens to be used in trade transactions. The Lydian state also minted coins.” Regarding Lydian coins inscribed with the names Walwel and Kalil, the British Museum comments: “It is unclear whether these are names of kings or just rich men who produced the earliest coins.” Regarding a nearly contemporary ancient Greek coin bearing the legend “I am the badge of Phanes,” the Museum comments: “We cannot be certain who this Phanes was, but it seems that he was placing his badge on coins as a guarantee of their quality.”

According to LK, White here is “clearly asserting that coined money was invented by the private sector in ancient Lydia and Greece.” That seems to me a problematic interpretation, since White’s qualifier, “As far as we know,” makes his statement tentative: to say that X is true “as far as we know” is not to say that X is definitely true. It is merely to observe that we have no good reason for believing that X is not true. Consequently the fact that the positive evidence for the private beginnings of coinage is, as LK goes on to declare, “feeble at best,” doesn’t itself refute White’s claim, for the the positive evidence for kings having been the first coiners could be even more “feeble.”

But is it?

Study the Ideas and History of Liberalism with the Encyclopedia of Libertarianism

In these days when liberalism is again under attack from some of its old enemies in new guises, one way to counter authoritarian threats is to educate ourselves on the fundamental ideas of liberalism. The Encyclopedia of Libertarianism, now available online, offers a wealth of information on the ideas, people, and history of liberalism and libertarianism. Historian David M. Hart, director of the Online Library of Liberty, says that the Encyclopedia “provides an excellent survey of the key movements, individuals, and events in the evolution of the classical liberal movement.” And on his own website he outlines a course of study in classical liberalism that includes a curated list of articles in the Encyclopedia for someone who wants to learn about the ideas, movements, and people of liberalism.

Begin, he says, with the survey article by Steve Davies, “General Introduction” (pp. xxv-xxxvii in the print version). Then read any of the following articles. Or, for a logical and chronological course of study, read these articles in this order:

Key Ideas in the Classical Liberal Tradition

Basic Principles:

Grounds for Belief:

Processes for Creating a Free Society:

Political and Legal Freedoms:

Economic Freedoms:

Social Freedoms:

  • Equality under the Law - “Equality” (of rights)
  • Toleration of different Ideas and Behaviour (see Freedom of Speech & Religion above)
  • Acts between Consenting Adults - “Presumption of Liberty”

Key Movements and People in the Classical Liberal Tradition

 

I might add that Chapter 2 of The Libertarian Mind, “The Roots of Libertarianism,” is a very short guide to many of these movements and people. And The Libertarian Reader collects and curates many of the key texts of liberalism and libertarianism.

Bad Economics and Hurricane Harvey

Disasters seem just about the worst possible time to discuss economic concepts. Ask Forbes columnist Tim Worstall, whose column on “price gouging” in the aftermath of Hurricane Harvey has purportedly been removed from their site.

At times of human suffering, a host of people apparently consider it crude to discuss the best response, if that response incorporates the functioning of a market economy. Yet for those of us who worry about outcomes rather than platitudes, it is incumbent to denounce bad ideas, and seek to propose better ones. Natural disasters such as Hurricane Harvey reap enough destruction, emotional and physical, without compounding it with policies that make things worse.

CNBC reported yesterday that Texas Attorney General Ken Paxton has said 500 complaints about so-called “price gouging” have been made following the storm:

That includes reports of up to $99 for a case of water, hotels that are tripling or quadrupling their prices and fuel going for $4 to $10 a gallon.

Such price increases in emergency situations can lead to significant fines under current Texas law. The traditional justification is that raising prices in emergencies reflects greedy profiteering. Indeed, in reaction to natural disasters and terrorist attacks worldwide it is common for companies to be denounced for heartlessness (here’s something I wrote about criticism of Uber after the Manhattan bomb attack).

The real question we should be concerned with though is surely not moralizing, but whether “price gouging” laws improve outcomes and responses or worsen the situation?

Militarization Makes Police More Violent

When Attorney General Jeff Sessions announced yesterday the Trump Administration’s repeal an Obama-era rule limiting the distribution of certain military equipment (such as tracked vehicles, camouflage uniforms, high-powered rifles, bayonets, and grenade launchers), he dismissed concerns about police militarization as “superficial.”  The evidence suggests otherwise: militarization makes police more violent.

Earlier this year, a study conducted by researchers from Harvard, Stanford, Cincinnati, and Gardner-Webb concluded that the Pentagon’s 1033 weapons transfer program made participating departments more likely to engage in deadly violence.  After receiving 1033 gear, departments were more likely to kill civilians as well as dogs.  The researchers included the number of dog killings by police (which, according to the Department of Justice, number around 10,000 a year) in order to control for possible variations in human behavior during the period of the study.

The study found:

1033 receipts are associated with both an increase in the number of observed police killings in a given year as well as the change in the number of police killings from year to year, controlling for a battery of possible confounding variables including county wealth, racial makeup, civilian drug use, and violent crime.

[…]

[D]ue to concerns of endogeneity, we re–estimate our regressions using an alternative dependent variable independent of the process by which LEAs request and receive military goods: the number of dogs killed by LEAs. We find 1033 receipts are associated with an increase in the number of civilian dogs killed by police. Combined, our analyses provide support for the argument that 1033 receipts lead to more LEA violence.

The researchers pointed to four areas of militarization that drive the increase in violence:

[W]e argue that increasing LEA access to military equipment will lead to higher levels of aggregate LEA violence. The effect occurs because the equipment leads to a culture of militarization over four dimensions: material; cultural; organizational; and operational. As militarization seeps into their cultures, LEAs rely more on violence to solve problems.

It turns out that having a hammer really does make everything look more like a nail.

But what if that increased violence is justified by increased police readiness to deal with emergency situations? 

When asked to justify the push for militarization, many law enforcement agencies are quick to point to terrorist attacks and mass murders as a justification for the equipment. Indeed we can imagine situations in which the police might legitimately need grenade launchers or .50 caliber rifles (though the thousands of bayonets local cops have taken from the federal government may be tougher to explain).

But such events are exceedingly rare, while history proves that the police deployment of militarized weapons and tactics will not be. Police routinely cite rare hypothetical emergencies to justify tactics and policies that end up becoming far more routine and abusive.

SWAT teams were originally designed to handle hostage situations and active shooters. Today they often function as hyper-violent warrant servers, as the number of SWAT raids has ballooned from hundreds per year to tens of thousands and responding to hostage situations has given way to serving search and drug warrants.

Police defend civil asset forfeiture with appeals to “taking the profit out” of terrorist organizations and drug cartels, but black market drug profits remains strong as thousands of regular Americans have their property taken without charge or trial.

Law enforcement agencies purchase military-grade surveillance devices such as Stingray cell phone trackers with terrorism grant money, and justify the outrageous secrecy that shrouds them on national security grounds, but they’re virtually never used for terrorism investigations, instead being deployed thousands of times for routine law enforcement investigations as an end-around the warrant requirement.

In other words, military weapons and tactics are inevitably used far more often in everyday policework than in the rare situations that supposedly justify them.

Contrary to Attorney General Sessions’ dismissal, the damage done by these government policies is not “superficial.” It’s not superficial when a SWAT team throws a flash grenade in a baby’s crib and disfigures the infant’s face, or when a family’s life is ruined by militarized police looking for tea leaves, or when protesters find themselves staring down the barrels of sniper rifles and accosted by masked, camo-wearing, rifle-toting police units.

Combined with President Trump’s recent pardon of Sheriff Joe Arpaio (who is no stranger to overly violent militarized raids and was convicted for repeatedly violating people’s rights in defiance of a court order), this move sends a strong message that police restraint and accountability are taking a back seat in this administration.