201710

October 26, 2017 8:44AM

Follow the Leader

The Washington Post sums up the situation:

It was a party scarred by the madness, cruelty and famine that one man had prompted through disastrous policies....

Senior officials lined up, one after the other, to laud what they described as [the leader's] profound, courageous, thrilling, insightful masterpiece of a speech....

And the drumbeat of propaganda about loyalty to his leadership — combined with the constant threat of an unforgiving ... campaign that has taken down several powerful rivals — makes it more difficult for anyone who dares challenge him....

[His] message promotes a nationalist, assertive [country] with a much stronger military — a country that he says will not threaten the world but will resolutely defend its interests.

If you are uncertain about which country and which leader, click here.

October 25, 2017 4:41PM

The Foot in the Door on Internet Speech Regulation

Campaign finance has captured Congress’s attention once again, which rarely bodes well for democracy. Senators Amy Klobuchar, Mark Warner, and (of course) John McCain have introduced the Honest Ads Act. The bill requires “those who purchase and publish [online political advertisements]to disclose information about the advertisements to the public…”

Specifically, the bill requires those who paid for an online ad to disclose their name and additional information in the ad itself or in another fashion that can be easily accessed. The bill takes several pages to specify exactly how these disclosures should look or sound. The bill also requires those who purchase $500 or more of ads to disclose substantial information about themselves; what must be disclosed takes up a page and a half of the bill.

The Federal Election Commission makes disclosed campaign contributions public. With this bill, large Internet companies (that is, platforms with 50 million unique visitors from the United States monthly) are given that task. They are supposed to maintain records about ads that concern “any political matter of national importance.” This category goes well beyond speech seeking to elect or defeat a candidate for office.

Why does the nation need this new law? The bill discusses Russian efforts to affect the 2016 election. It mentions the $100,000 spent by “Russian entities” to purchase 3,000 ads. The bill does not mention that Mark Penn, a former campaign advisor to Bill and Hillary Clinton, has estimated that only $6,500 of the $100,000 actually sought to elect or defeat a candidate for office. It also omits Penn’s sense of perspective:

Hillary Clinton’s total campaign budget, including associated committees, was $1.4 billion. Mr. Trump and his allies had about $1 billion. Even a full $100,000 of Russian ads would have erased just 0.025% of Hillary’s financial advantage. In the last week of the campaign alone, Mrs. Clinton’s super PAC dumped $6 million in ads into Florida, Pennsylvania and Wisconsin.

Still, Congress has criminalized foreign nationals trying to spend any money to influence American elections. You would think the “Russian intervention” would be a matter for the Department of Justice or other federal law enforcement agencies. Instead, everyone has to disclose their political activities, and tech companies have to make “reasonable efforts” to make sure foreign nationals do not buy political ads on any subject whatever. What will constitute “reasonable efforts”? Congress will presumably decide. Meanwhile tech companies will have to guess, and they can hardly be expected to err on the side of free speech. After all, ads that do not appear are hardly a cost to Congress. But unintentionally running an ad by a foreign national could severely damage a tech company. The companies have incentives to make Congress happy. Some protected speech will be excluded.

The bill is not just about Russia and an unexpected election outcome in 2016. It states that “the electorate bears the right to be fully informed” about “political advertisements made online.” What is the source of this right? The Constitution contains no explicit “right to be fully informed.” Perhaps it is a penumbra or emanation of the First Amendment or other parts of the Constitution? Or maybe one of the unenumerated rights alluded to in the Ninth Amendment? No, this is just Congress doing what it wants to do anyway and using the language of the Constitution. The putative “right to be fully informed” is really a sign of how far we have traveled from constitutional government.

Congress finds in this bill that the content of online speech justifies regulation:

Social media platforms…can target portions of the electorate with direct, ephemeral advertisements often on the basis of private information the platform has on individuals, enabling political advertisements that are contradictory, racially or socially inflammatory, or materially false [emphasis added].

Later, the bill laments that information on social media sites is often “uncurated,” “inaccurate,” or “more easily manipulable than in prior eras.”

Those familiar with the struggles over campaign finance in recent decades will recall that Congress often sees regulation of spending as way to improve speech. Unregulated spending supposedly contributed to “negative ads” which in turn harmed our democracy. In truth, negative ads attracted attention and increased voter turnout and knowledge.

The bill’s focus on allegedly “bad speech” raises two issues. First, mandating disclosure of who bought the ad may not improve the speech. Second, and more importantly, the content of speech is protected by the First Amendment. Congress does not have the power to “improve” speech by regulating ad financing or by any other means.

The larger picture here is more disturbing. Congress appears to be using a panic induced by Russian electoral meddling to impose itself on a largely unregulated Internet. Mandated disclosure of ad spending is the first but not the last step toward Facebook and Google becoming public utilities. Anyone who cares about free speech should be skeptical about such disclosure.

October 25, 2017 4:23PM

Give the People What They Want — without Arbitration Clause Restrictions

Last night, the Senate voted (51-50, with Vice President Pence breaking the tie) to repeal one of the most recent rules issued by the Consumer Financial Protection Bureau (CFPB). The rule would have prevented most financial companies from requiring that disputes between a company and its customers be determined through arbitration and without the use of class actions.

Those who support the rule have noted that the majority of contracts between customers and financial firms include clauses that require disputes to be resolved through arbitration, which means no class actions. This is true. Arbitration clauses are fairly standard in these contracts. But, as I said in an earlier post on the rule, the ubiquity of such clauses might just mean that customers are okay with them. If customers really cared about arbitration clauses, financial firms could distinguish themselves from competition by offering arbitration-free contracts. The lack of such options for customers seems to suggest that customers don’t really care.

The response to such an argument may be that these clauses are hidden in fine print and most customers don’t even know they exist. Okay, let’s say for the moment that’s true; that most customers didn’t know arbitration clauses existed. But that shouldn’t be the case now. Not now we’ve had national news about this rule, lots of debate, ample time for the rule’s supporters to educate the public, breaking news drama involving a late night vote in the Senate, and reports tracking the Vice President’s progress to the Hill to cast his deciding vote. My phone was flashing with news alerts all through the evening. If the public was unaware of arbitration clauses before, they have had plenty of opportunities now to become familiar with them.

So now, if the public really wants to be free of arbitration clauses, the next step is obvious, right? A company should emerge announcing that it is offering arbitration-free contracts for all of its customers. If arbitration harms consumers, as proponents of the rule have argued, consumers should clamor for contracts that allow them to go to court and to join together in class actions. Companies, including financial companies, make their money giving customers what they want. If arbitration-free contracts become popular, we will know that this was what consumers wanted. If they don’t become popular, well, we’ll have an answer then, too. But, either way, consumers will get what they want without a new regulation.

October 25, 2017 4:09PM

Are We Safe Enough?

It was on the 16th anniversary of the 9-11 terrorist attack, as it happens, that the Government Accountability Office posted its reply to a request by six members of Congress to review the Transportation Security Commission’s aviation security measures.

The GAO was none too happy with what it found. In particular, it faulted the TSA for failing to set up a coherent system to analyze the cost and effectiveness of its various counterterrorism measures—many of them quite expensive. And it was specifically critical of TSA’s inability to evaluate the degree to which its layers of security deter attacks.

The following day, Elsevier published a book Mark Stewart and I have written, titled Are We Safe Enough? Measuring and Assessing Aviation Security. Among other things, the book tries (successfully, we think) to do exactly what the GAO asked for. A free Google preview of portions of the book is available at the publisher’s website, and further information about the book is posted here.

The TSA, says GAO, has put together a (secret) tool called RTSPA (you don’t want to know what that stands for) to analyze the effectiveness of its security layers. However, the tool only applies to a subset of the layers and is, according to GAO, “resource intensive.”

Ours, by contrast, has a full model of the security system mainly constructed by my co-author, a civil engineer and risk analyst at the University of Newcastle in Australia. It describes the effectiveness, risk reduction, and cost of each layer of security (including a few the TSA doesn’t include), from policing and intelligence, to checkpoint passenger screening, to armed pilots on the flight deck. It is also fully transparent and can be varied and sized-up with just a hand calculator.

Put into action, the model concludes that it is entirely possible to attain the same degree of safety at far lower cost by shifting expenditures from measures that provide little security at high cost to ones that provide more security at lower cost. One modest proposal, for example, would increase security while saving both the taxpayers and the airlines hundreds of millions of dollars every year.

In addition, the model strongly suggests that the PreCheck program not only generates a hundred million dollars a year in efficiency improvement, but billions of dollars of value in passenger satisfaction—all this while actually increasing security slightly.

And the model proves to be extremely robust: you can change the assumptions that make it up substantially without materially altering the conclusions it comes up with.

The book also tackles the deterrence issue—indeed, it is central to the model.

In general, the model is biased to favor the terrorist chances of success. For example, we do not include terrorist amateurishness and incompetence as a security layer—though we do discuss that issue extensively both in this book and in our previous one, Chasing Ghosts: The Policing of Terrorism. But even with that bias in place, a terrorist group’s chance of pulling off a successful on-board bombing is one in 50, while its chances of a successful hijacking are around one in 150.

That is likely to be an effective deterrent—pretty much taking airlines off the terrorists’ target list.

However, it is also important to consider whether there are actually many terrorists out there to deter. As both the GAO and the TSA recognize, terrorists deterred from attacking a hard target like an airliner can only too readily transfer their attention to any one of a nearly infinite number of other potential targets that are anything but secure—congregations of people in restaurants, in offices, at sporting events, or standing in security lines at the airport.

Yet terrorism, however tragic and newsworthy, remains a remarkably rare phenomenon in the United States and in the rest of the developed world—Islamist terrorists have killed a total of six people a year since 9/11 in the United States. If security measures were deterring large numbers of people from attacking airliners we would expect far more mayhem in other places.

Perhaps we are already safe enough.

October 25, 2017 12:22PM

More Visas Reduce Illegal Immigration

In the latest edition of the Cato Journal, economist Bryan Roberts argues that immigration enforcement has significantly diminished the flow of illegal immigrants across the Southwest border. Contra Roberts, sociologist Doug Massey argues that border enforcement had virtually no impact on the flow of unlawful immigrants prior to 2010. This post takes a slightly different approach and uses additional sources of data to look at the causes behind the decline of illegal immigration in the aftermath of the Great Recession. This is especially relevant as the House Judiciary Committee is marking up the Agricultural Guest Worker Act (Ag Act) that would increase the flow of temporary visas for workers in farming and related sectors. An increase in visas like those supplied by the Ag Act will likely further diminish unauthorized border crossings. 

Model and Data

This blog is intended to reveal whether the quantity of Mexican legal immigrants (green cards issued overseas and temporary migrants) or border security is responsible for the decline of illegal immigrants from Mexico. Our dependent variable is the estimated gross annual flow of Mexican illegal immigrants. The American unemployment rate, the difference between Mexican and American GDP per capita (PPP), line-watch hours at the Southwest border, and legal Mexican immigration are our independent variables.

We chose a log-linear OLS model to compensate for non-linearity. OLS is a type of regression that helps identify the relationship between independent variables that we anticipate will explain how dependent variables behave. We then ran an autoregressive model (AR (1)) that will help us account for a particular empirical anomaly, the serial dependence between current and immediate past variables that could affect an OLS regression. We then ran a series of regressions with the yearly aggregates beginning in 1960 and ending in 2009. Data limitations prevented us from going beyond 2009 and prior to 1960.

Technical Note

We also ran numerous OLS, bi-weight, quantile, and AR(1) regressions that we excluded from Table 1 because they did not change the significance or signs of any of the coefficients. We tried sample-specific dummies for the combined datasets that did not change the significance of signs.

Data

Massey and Pren (2012) and Warren and Warren (2013) supply the estimates for the annual gross number of illegal Mexican entries.  Annual Immigration Yearbooks from the Department of Homeland Security and the old Immigration and Naturalization Service supply the number of temporary and permanent visas issued to Mexicans abroad. The Bureau of Labor Statistics supplied the American unemployment rate data and the World Bank supplied the relative U.S.-Mexican GDP per capita PPP.

Results

Table 1 reports results of the OLS regression (with robust standard errors in parentheses) and AR(1) for three datasets: the Massey and Pren (2012) data, the Warren and Warren (2013) data, and a combination of the two. When running AR(1), we included a lagged immigrant flow for the independent variable because immigrant flows tend to be dependent on the flows of the immediate past. We also included a lag of legal visas and GDP per capita PPP where we assume the decision to immigrate is based on the immediate past state of the economy and legal immigration trends. 

Our most robust finding is that more legal visas reduce the flow of illegal immigrants (Table 1). The variable is significant in five out of the six specifications. Line-watch hours are positively correlated with the flow of illegal immigrants in two specifications and negatively so in one. This isn’t surprising as Congress increases border security in response to greater unlawful immigrant flows. A higher unemployment rate is negatively related to illegal immigrant flows in three specifications while the difference between Mexican and U.S. GDP PPP is significant at the 5 percent level in only one.

Table 1

Effects of Legal Visas and Border Security on Gross Illegal Immigrant Flow for Mexicans

  Massey and Pren Combined M&P and Warren & Warren Warren & Warren
  OLS AR (1) OLS AR (1) OLS AR (1)
Legal visas     

 
-1.34     

(.16)***
-.16     

(.06)**
-1.20     

(.15)***
-.08     

(.04)*
-.40     

(.16)*
-.08     

(.13)
Line-watch hours .76     

(.14)***
-.09     

(.05)**
1.28     

(.13)***
-.03     

(.05)
.08     

(.12)
-.04     

(12)
Unemployment USA .15     

(.09)
.02     

(.01)
.06     

(0.8)
-.05     

(.01)***
-.17     

(.03)***
-.05     

(.02)**
USA-Mexico GDP (PPP) .28     

(.38)
-.25     

(.11)**
.24     

(.36)
-.02     

(.08)
-.25     

(.14)
-.01     

(.10)
Observations 49 48 49 48 28 27
 RSQ .59 .98 .67 .95 .59 .88

* significant at 10%; ** significant at 5%; *** significant at 1%.

Standard errors in parentheses.

Figure 1 shows the statistically significant inverse relationship between the number of visas issued to Mexicans and the gross flow of illegal Mexican entries. The early period with a high number of legal entries shows the Bracero program. It is followed by a spike in gross Mexican illegal inflows that occurred when the number of legal entries is very low. The number of gross Mexican illegal entries declines most especially as the number of new entries increases in the 1990s and 2000s. We suspect that this relationship is causal – that more legal immigration reduces the flow of unlawful immigrants.

Figure 1

Annual Flows of Legal and Illegal Mexican Immigrants

Media Name: chart8714sid.jpg

Sources: Massey and Pren (2012), USCIS, and INS.

Conclusion

This simple OLS regression analysis shows an inverse relationship between flows of Mexican legal and illegal immigrants. These findings cry out for additional research to test how the number of visas affects illegal immigrant flows, especially by examining other measures of border security such as budgets, the number of agents, or apprehensions. The findings of this blog are broadly consistent with a small empirical literature on how border security affects immigration flows. Other researchers should use a more complicated model to account for the dynamics of illegal immigration, such as feedback effects that occur between border security and illegal flow. Time-series methods are one way to potentially address these effects. Regardless, this is some evidence that supports the theory that immigration liberalization will reduce illegal immigrant flows.

Special thanks to Jen Sidorova for her superb work on this blog post and the empirics that support it.

October 25, 2017 7:00AM

Benjamin Constant, Eloquent Defender of Freedom

Today is the 250th anniversary of the birth of Benjamin Constant, a prominent French liberal in the postrevolutionary era, whom Isaiah Berlin called “the most eloquent of all defenders of freedom and privacy.” He is perhaps best known in our time as the author of an essay -- actually a speech in 1833 -- called "The Liberty of the Ancients Compared with That of the Moderns." He argued that the ancient concept of liberty as political participation was not suited to modern society, in which people were busy with the production of wealth. Modern people want autonomy, the freedom to live their lives as they choose, more than full-time participation in politics. The essay was enormously influential in the development of Continental liberalism, and in the past few decades has become better known in the English-speaking world thanks to the influence of Berlin. Constant began his speech this way: 

First ask yourselves, Gentlemen, what an Englishman, a Frenchman, and a citizen of the United States of America understand today by the word “liberty.”

For each of them it is the right to be subjected only to the laws, and to be neither arrested, detained, put to death or maltreated in any way by the arbitrary will of one or more individuals. It is the right of everyone to express their opinion, choose a profession and practice it, to dispose of property, and even to abuse it; to come and go without permission, and without having to account for their motives or undertakings.

It is everyone’s right to associate with other individuals, either to discuss their interests, or to profess the religion which they and their associates prefer, or even simply to occupy their days or hours in a way which is most compatible with their inclinations or whims.

Finally it is everyone’s right to exercise some influence on the administration of the government, either by electing all or particular officials, or through representations, petitions, demands to which the authorities are more or less compelled to pay heed. 

By contrast, he said, the liberty of the ancients, meaning Greece and Rome,

consisted in exercising collectively, but directly, several parts of the complete sovereignty; in deliberating, in the public square, over war and peace; in forming alliances with foreign governments; in voting laws, in pronouncing judgements; in examining the accounts, the acts, the stewardship of the magistrates; in calling them to appear in front of the assembled people, in accusing, condemning or absolving them. But if this was what the ancients called liberty, they admitted as compatible with this collective freedom the complete subjection of the individual to the authority of the community. You find among them almost none of the enjoyments which we have just seen form part of the liberty of the moderns. All private actions were submitted to a severe surveillance. No importance was given to individual independence, neither in relation to opinions, nor to labour, nor, above all, to religion. The right to choose one’s own religious affiliation, a right which we regard as one of the most precious, would have seemed to the ancients a crime and a sacrilege. In the domains which seem to us the most useful, the authority of the social body interposed itself and obstructed the will of individuals.

He noted three reasons for the difference: First, that the ancient republics were small enough for individuals to feel influential in public discussions; second, that commerce, the principal activity of moderns, doesn't leave long periods of idleness as war did; third, that commerce inspires a love of individual independence; and fourth, that in the ancient republics "slaves took care of most of the work. Without the slave population of Athens, 20,000 Athenians could never have spent every day at the public square in discussions."

He concluded by exhorting his audience to insist that modern governments respect modern liberty and leave individuals free to make their own decisions:

The danger of ancient liberty was that men, exclusively concerned with securing their share of social power, might attach too little value to individual rights and enjoyments.

The danger of modern liberty is that, absorbed in the enjoyment of our private independence, and in the pursuit of our particular interests, we should surrender our right to share in political power too easily.

The holders of authority are only too anxious to encourage us to do so. They are so ready to spare us all sort of troubles, except those of obeying and paying! They will say to us: what, in the end, is the aim of your efforts, the motive of your labours, the object of all your hopes? Is it not happiness? Well, leave this happiness to us and we shall give it to you. No, Sirs, we must not leave it to them. No matter how touching such a tender commitment may be, let us ask the authorities to keep within their limits. Let them confine themselves to being just. We shall assume the responsibility of being happy for ourselves.

Read more of the essay in The Libertarian Reader. Learn more about Constant at the Online Library of Liberty.

October 24, 2017 5:07PM

A Sad Day for the Republic

Sen. Jeff Flake (R-Arizona) has announced that he will not run for reelection. He announced his decision on the Senate floor in a searing speech about the state of our political culture, especially at the hands of President Trump:

It is time for our complicity and our accommodation of the unacceptable to end.

In this century, a new phrase has entered the language to describe the accommodation of a new and undesirable order -- that phrase being "the new normal." But we must never adjust to the present coarseness of our national dialogue -- with the tone set at the top.

We must never regard as "normal" the regular and casual undermining of our democratic norms and ideals. We must never meekly accept the daily sundering of our country - the personal attacks, the threats against principles, freedoms, and institutions, the flagrant disregard for truth or decency, the reckless provocations, most often for the pettiest and most personal reasons, reasons having nothing whatsoever to do with the fortunes of the people that we have all been elected to serve.

Flake was anticipating a rough 2018 in Arizona. In polls a year ahead of the Republican primary, he was running well behind a former state senator who held a town hall on "chemtrails." And Democrats have a strong candidate in Rep. Kyrsten Sinema, who promptly reached out to Flake supporters and Goldwater Republicans, telling the Arizona Republic, "It’s been an honor to know and serve with Jeff. He is a man of integrity and a statesman who is true to his convictions – an Arizonan through and through."

Despite his political challenges, it's disappointing that another of the few Republicans willing to call out President Trump for his misguided positions, his coarseness, and his damage to "our democratic norms and ideals" will be leaving the Senate. This is precisely the moment when clear-eyed senators such as Flake and Sen. Bob Corker (R-Tennessee) are needed. Flake and Corker do have another 14 months in the Senate. If they use their time well, they will deserve a new chapter in Profiles in Courage, John F. Kennedy's book about senators who suffered criticism and electoral losses after taking a stand on principle.

It's also unfortunate that Trump and Steve Bannon are seeking to drive out of the Republican party Reaganite leaders and replace them with protectionist populists. As Flake said:

It is clear at this moment that a traditional conservative who believes in limited government and free markets, who is devoted to free trade, and who is pro-immigration, has a narrower and narrower path to nomination in the Republican party -- the party that for so long has defined itself by belief in those things. It is also clear to me for the moment we have given in or given up on those core principles in favor of the more viscerally satisfying anger and resentment. To be clear, the anger and resentment that the people feel at the royal mess we have created are justified. But anger and resentment are not a governing philosophy.

He said more on these topics in his recent book with the consciously Goldwateresque title Conscience of a Conservative: A Rejection of Destructive Politics and a Return to Principle, which is well worth reading.

I hope Senator Flake will find ways to serve the cause of limited and republican government over the next 14 months and beyond.