August 4, 2017 9:42AM

A ‘Venezuela’ Gas Price Spike?

Talk of oil sanctions is in the air. Some would like the Trump administration to ban the importation of crude oil from Venezuela in response to that country’s recent fraudulent election. And some are predicting that if such a boycott were implemented, gasoline prices would increase by 10–15 percent, or 25–30 cents a gallon.

Venezuelan production is about 800,000 barrels a day, approximately 1 percent of the 80.4 million barrels a day world output. If 1 percent of world output were suddenly and permanently removed from the world market, then a 10 to 20 percent increase in price would certainly be a reasonable prediction, given what economists know about the relationship between reduced quantity and increased price in oil markets in the short run.

But boycotts are not true supply reductions; they are supply rearrangements. The United States and Venezuela both purchase and sell oil on a world market. In such a large market, country-of-origin and country-destination information quickly become blurred as crude oil and its refined products slosh from buyers to sellers, oftentimes via third parties. And even if the United States could somehow be a stickler at tracking and avoiding Venezuela-originated products, they would simply get re-routed to some other buyer—perhaps China or India—while other oil products would reroute to the United States.

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August 3, 2017 5:34PM

The Curious Case Of Ex‐​NSA Inspector General George Ellard

On August 3, The American Conservative ran a lengthy piece of mine dealing with the whistleblower protection nightmare that is the Department of Defense. One of the subjects of that piece is now former NSA IG George Ellard, and because I had even more on his case than I could fit into the TAC piece, I wanted to share the rest of what I know--and don't know--about the allegations against Ellard, the final disposition of the case, why the Obama administration's whistleblower retaliation "fix" is itself broken, and what might be done to actually provide meaningful protections for would-be national security whistleblowers in the Pentagon and elsewhere in the national security establishment.

Regarding what little we know about the specifics of Ellard's case, I had this to say in the TAC piece:

As the Project on Government Oversight first reported in December 2016, a three-member interagency Inspector General External Review Panel concluded in May 2016 that the then-Inspector General of the National Security Agency (NSA), George Ellard, had, according to POGO, “himself had previously retaliated against an NSA whistleblower[.]” This apparently occurred during the very same period that Ellard had claimed that “Snowden could have come to me.” The panel that reviewed Ellard’s case recommended he be fired, a decision affirmed by NSA Director Mike Rogers. 

But there was a catch: the Secretary of Defense had the final word on Ellard’s fate. Outgoing Obama administration Defense Secretary Ash Carter, apparently indifferent to the magnitude of the Ellard case, left office without making a decision.

In the months after Donald Trump became president, rumors swirled inside Washington that Ellard had, in fact, escaped termination. One source, who requested anonymity, reported that Ellard had been seen recently on the NSA campus at Ft. Meade, Maryland. That report, it turns out, was accurate.

On July 21, in response to the author’s inquiry, the Pentagon public affairs office provided the following statement:

“NSA followed the appropriate procedures following a whistleblower retaliation claim against former NSA Inspector General George Ellard. Following thorough adjudication procedures, Mr. Ellard continues to be employed by NSA.”

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August 3, 2017 4:09PM

D.C. Metro: Silver Line Slump

For years, Randal O’Toole has warned governments that urban rail systems usually make no economic or practical sense. They are more expensive and less flexible than bus systems. But cities keep making wildly optimistic assumptions about rail costs and ridership, and new lines keep getting built. It is a triumph of politics over experience.

The other day, the Washington Post reported ridership data on phase 1 of D.C. Metro’s Silver Line:

But of the five stations that opened in July 2014, only the end‐​of‐​line Wiehle‐​Reston station has come close to projected ridership. At three stops in Tysons — McLean, Greensboro and Spring Hill — ridership is a mere fraction of what planners projected in a 2004 environmental impact report. In May of this year, for example, average daily weekday ridership was 1,618 at the McLean station, slightly below the 1,634 in May 2015 and well below the 3,803 the Silver Line was projected to serve in its first year of operation, according to the 2004 report.

So actual ridership on some parts of this Northern Virginia line are less than half of the original estimate. By the way, the cost of the project ended up almost doubling from what the planners and politicians had promised. Federal taxpayers picked up part of the tab.

Phase 2 of the project is under construction, and it will extend the Silver Line to Dulles Airport, 28 miles from D.C. The project never made sense to me. The airport already has the dedicated and congestion‐​free Dulles Access Road that connects the airport to the inner suburbs and downtown.

Let’s say you are a NYC businesswomen flying into Dulles for some lobbying in D.C. If you take the rail system, it will probably take you much longer to get downtown than if you took a taxi along the Access Road. Then when you get off the Metro downtown, you may still need a cab to get to your final destination.

Or let’s say you are a Virginia family flying out of Dulles on vacation. Would you want to drive to a Metro station with all your bags, leave your car parked there, and then risk missing your plane by taking the unreliable rail system? I don’t think so. I’ll bet ridership on Phase 2 of the Silver Line will come in low as well.

For decades, federal subsidies have induced state and local officials to build costly and inefficient light‐ and heavy‐​rail systems when bus systems and highway expansion generally make more sense. Congress should end the bias in favor of rail by ending federal aid for urban transit, as discussed at Down​siz​ing​Gov​ern​ment​.org.

August 3, 2017 4:05PM

Venezuela’s Opposition: Divided They (Still) Stand

One reason why the Venezuelan regime has been so effective in slowly—but surely—installing a full-fledged dictatorship is because of the internal divisions of the opposition. Unfortunately, those divisions are once again coming to the fore, even now that Nicolás Maduro’s fraudulent constituent assembly has revealed the regime’s ultimate goal beyond reasonable doubt.   

The opposition boycotted the legislative elections of 2005 in protest of the lack of independence of the Electoral National Council (CNE), which granted the government total control of the National Assembly for five years. It only decided to participate again in elections once it perceived it could beat Chavismo in the polls. However, as the popularity of the government began to wane—once the economy started to deteriorate—the regime became more ruthless in its approach: disqualifying candidates, jailing opponents, blackmailing voters, rigging the electoral registry, calling off scheduled elections, and engaging in massive voter fraud. Even when Chavismo accepted some electoral defeats, such as some gubernatorial elections or the legislative election of 2015, the government swiftly moved to strip those offices held by the opposition of meaningful power or resources.

In 2013, Maduro was elected president in a highly questionable election that undoubtedly involved CNE sanctioned voter fraud—enough to tip the election for Maduro. However, the opposition continued to insist on pursuing an electoral path forward. After winning an absolute majority in the legislative election of 2015, the opposition saw how the government-controlled Supreme Court systematically stripped powers from the National Assembly effectively rendering it useless. Even then, the opposition insisted in getting rid of Chavismo through democratic means. Last year, the opposition triggered the mechanism calling for a recall referendum on Maduro. Polls indicated that the vote would have gone in the opposition’s way with a comfortable margin. Unsurprisingly, the CNE arbitrarily suspended the process, leaving the opposition with no alternative other than civil resistance.

Sunday’s fraudulent vote to elect the members of Maduro’s constituent assembly exemplifies the glaring corruption in the CNE. According to its authorities, 8.1 million people voted in the election. Yet, Reuters reported that at 5:30 pm—just a couple of hours before the polls closed—only 3.7 million people had voted. Moreover, the software company that set up the country’s voting system denounced yesterday that the government had rigged the vote by “at least” one million votes. No wonder that the head of the CNE, Tibisay Lucena, is one of the 13 senior officials of the Venezuelan regime recently sanctioned by the U.S. government.

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August 3, 2017 3:56PM

Should the Koala Bear the Brunt of Censorship?

Courts in modern times are generally protective of the First Amendment, specifically our freedoms of speech and press. On the whole, they vigorously oppose any attempt by government to minimize those essential liberties; they recognize that a free press is critical to any society that values expression and intellectual diversity. The Supreme Court's 1983 ruling in Minneapolis Star v. Minnesota Commissioner of Revenue (1983), striking down certain taxes on ink and paper, shows that attempts to regulate the media as a group, even when broadly applied, are considered unacceptable if they crowd out certain viewpoints.

The University of California San Diego (UCSD), a public university, attempted to do something similar when it defunded certain student organizations in a thinly veiled attempt to censor one organization’s opinions. The Koala, a satirical newspaper funded by student activity fees, published an article mocking “safe places” that sparked controversy on campus and debate in the school’s student government. In response, the student government enacted a “Media Act” that defunded all student-printed media organizations, in order to prevent the The Koala from publishing further articles that contradicted the student government’s political sensibilities.

The Koala sued in an attempt to restore its funding, but the federal district court remarkably ruled against them. Cato has joined the Foundation for Individual Rights in Education on an amicus brief supporting its claim.

There is a longstanding, constitutionally based tradition of public universities' serving as conduits for freedom of expression, a tradition that UCSD has unceremoniously abandoned. By providing funding to certain groups and not others, the university is effectively restricting certain members of the public from a public forum, in blatant violation of the First Amendment.

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August 3, 2017 11:39AM

New Anti‐​Legal Immigrant Bill’s Bizarre Details

With President Trump’s backing, Senators Tom Cotton (R‑AR) and David Perdue (R‑GA) introduced the RAISE Act, which would reduce legal immigration by 50 percent over 10 years. See here, here, here, and here for our earlier commentary about why this goal makes little sense and the justifications for it are spurious. But how it would achieve this goal is also revealing.

  • The senators no longer consider parents of U.S. citizens “immediate family” (p. 7). Such is these senators’ view of family relations in 2017.
  • Through an opaque formula — see here for an explanation — it eliminates virtually all hope for legal immigrants to sponsor their spouses and minor children for visas. Immigrants, I suppose, don’t deserve “immediate family.”
  • They end all of the current green card categories and void all applications from all legal immigrants (p. 16) despite them having waited in line in many cases for decades. This is so cruel that it’s almost impossible to imagine putting the idea on paper.
  • Their new point‐​based “merit” system has no more visas for employment‐​based immigrants than current law and counts the family of the workers against the quota, meaning that half will not even be “merit‐​based” (p. 17).
  • Its “merit” track would assign points in the following scheme. You need 20 points:
    • simply being age 26 is worth nearly twice as much (10) as being an entrepreneur who invests $1.4 million in their U.S. business (6).
    • Being fluent in English is worth as much as being an entrepreneur who invests $1.8 million in their U.S. business (12).
    • A 30‐​year‐​old fluent in English with any bachelor’s degree (28 points) is better off than a 36‐​year‐​old foreign STEM master’s degree holder with 10 years of work history with limited English (17).
    • It downgrades qualified applicants with spouses who are less qualified. Such that:
      • a 46‐​year‐​old Nobel laureate with a doctorate in a non‐​STEM field who is proficient in English and invests $1.4 million in a new business start‐​up but has a 46‐​year‐​old wife with a high school degree and no English gets fewer points (35.9) than a couple of bachelor degree holders who get jobs for $70,000 in Mississippi and who can speak English (36).

This strange ill‐​conceived proposal should go nowhere for many other reasons, but this bill’s cruelty toward legal immigrants who tried to come to the country the right way and its nonsensical “merit” system are good enough.

August 3, 2017 11:31AM

Fresh Thinking on Occupational Licensing

Occupational licensing started with the idea that jobs with serious consequences -- doctors being the prototypical example -- require some sort of government certification and oversight. But that rather innocuous motivation has ballooned into a harmful and unsustainable state of affairs.

From laws requiring licenses to braid hair to ones requiring licenses for floral design and casket manufacturing, occupational licensure has put barriers in the way of people who wish to do non-dangerous jobs and has done little to protect consumers. Instead, it's frequently used as a way for politically well-connected people and state licensing boards to freeze out their competition, a textbook example of regulatory capture. The end result makes it harder for people to find fruitful employment, particularly low-income workers who often don’t have the time or money to get licenses.

Fortunately, the Supreme Court has offered some hope for those who don’t want needless barriers thrown their way when they want to make a living. In 2014, the Court held in North Carolina State Board of Dental Examiners v. Federal Trade Commission that a licensing board that had banned non-dentists from offering teeth-whitening services had violated federal antitrust laws -- and that all licensing boards do the same when they engage in anticompetitive practices. (This was incidentally the first and only case in which Cato filed a brief supporting the federal government.) The Court further clarified that licensing boards have antitrust immunity if they're subject to “active supervision” by the state in question.

States can get around this requirement by simply rubber-stamping everything done by the licensing boards, undermining the intended procompetitive effects of the decision in the process. In addition, there are valid concerns that the decision undermined state sovereignty in light of the fact that under Parker v. Brown, 317 U. S. 341 (1943), the Sherman Antitrust Act doesn't apply to state government agencies.

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