December 2020

December 31, 2020 3:44PM

Trump Banned Many H-2B Workers But No More U.S. Workers Applied—Now He May Extend the Ban

The H-2B program allows nonagricultural employers to hire foreign workers when they cannot find U.S. workers to perform temporary jobs. Since 2014, employers have repeatedly hit the H-2B cap of 66,000 visas, so Congress has repeatedly authorized the Department of Homeland Security (DHS) to permit workers to enter above the cap. DHS refused to allow any additional workers to enter above the cap after the unemployment rate spiked in March.

In June, President Trump went even further by banning many H-2B workers until the end of this year, which caused visas under the cap to be wasted. Now Trump is considering extending the H-2B ban into 2021. This is a bad idea. The ban was supposed to free up jobs for U.S. workers, but government data show that almost no U.S. workers applied for H-2B jobs, despite the spike in unemployment.

As I pointed out at the time, it made no sense to ban H-2B workers because every H-2B job must be offered to U.S. workers first. The Department of Labor (DOL) oversees U.S. worker recruitment under the H-2B program, and it will not certify an employer to hire H-2B workers unless it determines that there “are not sufficient U.S. workers who are qualified and who will be available” for the job.

Starting 90 days prior to the job start date, DOL requires that employers request that State Workforce Agencies refer U.S. workers (including those on unemployment insurance) to them. DOL advertises the job on an online site. All jobs must pay an inflated wage—known as the prevailing wage. Within two weeks of applying, employers must also contact former employees and ask them to return for the job. The employer can only stop accepting applicants 20 days before the date of need—after roughly two months of recruitment.

After 15 days of posting the job offer at the job site—a requirement that DOL changed to 30 days during the pandemic—employers will submit proof in a recruitment report that they fulfilled all the requirements. Despite the increased recruitment requirements, President Trump’s H-2B ban, general COVID-19 travel restrictions, and massive increase in unemployment, very few U.S. workers applied for H-2B jobs.

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December 31, 2020 12:29PM

Market Allocation Would Treat COVID-19 Vaccines Like the Valuable Resource They Are

News reports indicate that COVID-19 vaccinations in the United States are happening more slowly than officials promised and in comparison to other countries. Some health care providers are racing — and some are failing — to administer their stock vaccines before they expire. In one case, more than 500 doses spoiled when an employee removed them from a freezer, allegedly on purpose.

These episodes highlight just some of problems inherent to using government rationing rather than market prices to distribute vaccines.

If manufacturers and retailers could charge, and consumers could pay, whatever they like, distribution of COVID-19 vaccines likely would be more rapid than today and likely none of the existing stock would expire.

Photo by Hakan Nural on Unsplash

Anecdotal reports indicate that some consumers are willing to pay $25,000 to receive the vaccine. If retailers could make thousands or even hundreds of dollars in profit from every dose they sell, they would have the incentive and the ability to invest greater resources in securing the vaccines and distributing them quickly. They would take greater steps to protect the vaccines from sabotage by deranged employees. (The law could also do so, if penalties for destroying the vaccines rose with the market valuation of each dose.) They would hire more personnel (e.g., nurses) at higher‐​than‐​usual wages to organize distribution and/​or to administer the vaccines. They could even train more personnel to administer vaccines — and form a lobby to demand that states suspend government regulations that prevent them from doing so.

If manufacturers could make thousands or even hundreds of dollars in profit from every dose they sell, they would have greater incentive and ability to expand production and produce more vaccines faster.

Would market prices guarantee that vaccines would go to the highest‐​value recipients first? Not at all. But market allocation doesn’t have to be perfect. It just has to outperform the alternative of government rationing.

In an earlier post on government vs. market distribution of COVID-19 vaccines, I wrote, “If the government could allocate vaccines in a way that gets more of them to the highest‐​value recipients than market forces would,” then government distribution would be defensible. But, “To improve on market forces, government must actually know who the highest‐​value recipients are[,] actually be able to allocate vaccines on that basis, [and] not detract from whatever good market forces would do on their own, or…diminish the incentives for pharmaceutical companies to boost production.” That does not appear to be happening.

Government rationing is detracting from the good that market forces would do, and slowing the distribution of COVID-19 vaccines, by diminishing the incentives for speed and security on the part of manufacturers and retailers. In many cases, it is resulting in low‐​value recipients receiving vaccinations before high‐​valued recipients do. It is diminishing the incentives for manufacturers to accelerate production. And in some, cases it is costing lives by allowing vaccines to spoil.

December 31, 2020 11:14AM

A Patent Violation of Separation of Powers and Due Process

The American system of government is predicated in large part on just two concepts: separation of powers and due process of law. The separation of powers requires that the execution of laws be done by the executive branch and more specifically by people who are politically responsible. For this reason, the Constitution requires that important executive decisions be made only by individuals who are nominated by the president and confirmed by the Senate, so the public knows whom to blame for the poor performance. The due process of law requires that justice be administered by neutral adjudicators whose job and salary don’t depend on political considerations—which is why most federal judges (and all Article III judges) enjoy life tenure.

But even individuals who are not judges, yet who exercise some judicial functions, enjoy a certain level of job security. In 2014 Congress passed the America Invents Act and created the Patent Trial and Appeal Board (PTAB), an administrative‐​law body housed within the Patent and Trademark Office (PTO) and vested with the extraordinary power to cancel patents.

Congress required the PTAB to be staffed by administrative patent judges (APJs) who are appointed to their position by the secretary of commerce and once appointed cannot be removed except “for cause.” Despite not having gone through the rigor of presidential vetting and Senate confirmation, APJs have the power to speak for the entire executive branch when they adjudicate patent disputes. What’s more, in so doing, they are invested with the power to essentially overrule the PTO director—who did go through the nomination and confirmation process.

Thus we have a situation where important decisions are made not by politically responsible persons but by bureaucrats not subject to anyone’s direct control. The U.S. Court of Appeals for the Federal Circuit, which has exclusive jurisdiction over patent law, correctly recognized that the arrangement where APJs can speak on behalf the entire executive branch without going through Senate confirmation is constitutionally problematic. To “fix” the problem, the Federal Circuit excised the “for cause” protection currently enjoyed by the APJs, thus converting them into “inferior officers” who can be terminated at will by the PTO director ot secretary of commerce.

Instead of solving the constitutional problem, however, the Federal Circuit only compounded it. By making APJs terminable at will, the court is allowing APJs to make executive determinations without review by any “principal officer,” as the Constitution requires. Making matters worse, the Federal Circuit’s solution allows for political actors to exert—through the threat of termination—pressure on individuals who are charged with adjudicating patentees’ private property rights.

This dynamic raises the specter of adjudication being dependent on political connections rather than on the neutral application of law to facts. A PTAB staffed by APJs who are terminable at will is fundamentally incompatible with constitutional due process requirements.

The Supreme Court took up the case to review this arrangement, which Cato argues cannot stand. Our amicus brief seeks to uphold both the proper separation of powers in staffing the Patent Office and the due process rights of patent‐​holders.

The case of United States v. Arthrex, Inc. will be argued at the high court this winter.

December 30, 2020 4:44PM

American Compass Shouldn’t Reject the Economics of Immigration

The American Compass recently published a series of pieces about the economic successes of the Trump administration and whither national conservatism after his defeat by Joe Biden. Several commentators criticized the pieces for arguing that restrictive immigration policies were responsible for wage and employment growth during the Trump administration. Oren Cass, the executive director of American Compass, responded to that criticism with a piece arguing that lower immigration did result in higher wages and lower unemployment.

Cass wrote that those critics “fascinate me, in the same way an old-timey ‘cabinet of curiosities’ might capture the attention,” and responded with an essay that contemptuously dismisses social science on how immigration affects the labor market in favor of anecdotes from news stories. This blog post is a response to one of Cass’s points that fascinates me. He wrote:

The empirical case for the ‘nothing to see here’ approach to immigration economics is paper thin; one can typically guess where the hyperlinks will point before moving the cursor to them. Academics debate endlessly whether a sudden and massive influx of Cuban refugees in Miami in 1980 did or did not depress local wages, as if this deeply unnatural ‘natural experiment’ answers for all times and places the question of how a national economy’s labor market might be affected by the rate at which a given class of workers flows into it.

It is fascinating when someone so casually dismisses a vast body of knowledge. This blogpost will explain some basics about labor economics, dive into the immigration literature, and hopefully explain why Cass and others who ignore economic research do so at their own peril. 

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December 30, 2020 10:55AM

The Great Bucatini Shortage of 2020 and the FDA’s History of Telling Italians How to Make Italian Food

Pasta with tomato sauce. Photo by Yeh Xintong on Unsplash.

Rachel Handler has a delightful piece at New York magazine’s food and restaurant blog Grub Street on how Big Pasta is using government regulation to punish competitors and consumers. The result is that the U.S. Food and Drug Administration, in addition to causing a shortage of COVID-19 diagnostic tests and vaccines, is basically causing a nationwide shortage of bucatini.

On March 30, at the beginning of a pandemic whose supply shocks were making everything from toilet paper to pasta harder to get, the FDA blocked imports of De Cecco bucatini. The FDA found the iron content of the Italian company’s bucatini to be—brace yourself—10.9 milligrams per pound rather than the 13 milligrams per pound the FDA requires. The product in question is perfectly safe. It presents no threat to the public. It is legal to sell throughout the European Union. But since the FDA alleges it does not meet the agency’s arbitrary standard, the agency turned a temporary shortage of bucatini into a…less-temporary one. Handler surmises the FDA took the action at the behest of one of De Cecco’s competitors.

You might think it implausible that the FDA would seize one manufacturer’s inventory at the behest of a competitor. If so, you would be wrong. The Great Bucatini Shortage of 2020 isn’t even the first time the FDA told Italians how to make Italian food. In a similar episode, the FDA once told a native Sicilian he didn’t know what tomato sauce is.

Rosario Raspanti was born in Palermo, Sicily, where his father ran a tomato‐​sauce cannery. After learning the trade from his father, in 1913 the younger Raspanti brought that knowledge to the United States. He established a canning factory in Mississippi, which he claimed made him the first canner of tomato sauce in America. Raspanti used practically the same process and sold practically the same product his father did. By 1942, Raspanti estimated he had sold some 100 million cans of tomato sauce to satisfied customers in Arkansas, Louisiana, Mississippi, and Western Tennessee.

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In 1942, however, the FDA seized 36,144 cans of his tomato sauce. The agency furnished no evidence the sauce was harmful to consumers. Its entire justification for seizing the items was that, in the FDA’s opinion, Raspanti’s sauce was thinner than tomato sauce should be and didn’t have enough seasoning.

At trial, Raspanti testified, reasonably, that his customers preferred tomato sauce that was both unseasoned (so they could then season it to taste) and thinner than his competitors’ (allowing them to consume it as‐​is or reduce it to whatever consistency they prefer). Others testified in Raspanti’s defense. Two food brokers with a combined 42 years of experience testified that wholesalers, retailers, and consumers alike all accepted Raspanti’s sauce as tomato sauce; that the trade accepted it over competing products by a ratio of 10 to 1; that one retailer said it enjoyed as much consumer acceptance as Arm & Hammer Baking Soda; that none complained the sauce was too thin or lacked seasoning; that consumers bought it because they preferred a thinner, unspiced sauce; and that they (the brokers) could easily sell a large amount of this established product if it were available. One of Raspanti’s competitors, another Sicilian who also operated a tomato‐​sauce cannery in Mississippi, testified Raspanti knew perfectly well what tomato sauce is and more important (for legal reasons) so did Raspanti’s customers.

I can’t recall if the FDA’s action stemmed from a complaint by one of Raspanti’s other competitors, but I believe that was the case. Either way, Raspanti’s other competitors helped the FDA convince Judge Harry Jacob Lemley, himself a native of rural Virginia and member of the U.S. District Court for the Eastern District of Arkansas, that Raspanti didn’t know how to make tomato sauce. At trial, witnesses for the government included “chemists employed by FDA and competitors, a plant manager employed by a competitor, a buyer and sales manager of a food wholesaler, a housewife, a chef, [and] a restaurant manager.” Several government witnesses testified, uniformly and with stunning precision, that true tomato sauce contains no less than 8.37 percent tomato solids. Raspanti’s crime was to produce a tomato sauce—the faint of heart should stop reading here—that contained only 6.5 percent tomato solids. Budding tomato‐​sauce expert Judge Lemley personally and thoroughly assessed these claims at trial: “A can of [Raspanti’s sauce] and certain cans of other brands were opened and exhibited to the Court, by whom they were tested by pouring and tasting.”

In ruling for the government, Judge Lemley conceded, “It is true that in…Louisiana, Arkansas, Mississippi, and Western Tennessee, the claimant’s product has been accepted by the consuming public as tomato sauce over a long period of time.” Lemley nevertheless concluded, with similar stunning precision, “There seems to be no question but that dealers in, and consumers of, tomato products generally throughout the United States consider tomato sauce to be a spiced product containing not less than 8.37% of salt‐​free tomato solids.” If Raspanti wanted to sell his tomato sauce in the United States, he would most likely have to relabel it a beverage in accordance with the assessment of one of the witnesses, who was “an expert on beverages, being in charge of the Beverage Section of the Food Division of the Food and Drug Administration.” Lemley ordered the government to re‐​label and sell the 36,144 seized cans of tomato sauce to the government’s benefit or, in the alternative, to release the items to Raspanti provided his company both paid the costs of the seizure proceedings and posted a bond conditioned on the company re‐​labeling the cans prior to sale.

“Government,” Barney Frank reportedly said, “is simply the name we give to the things we choose to do together.” Like tell Sicilians how to make tomato sauce.

December 29, 2020 1:37PM

Trump Cannot Stay In Power By Declaring Martial Law

“There is no role for the U.S. military in determining the outcome of an American election,” Army Secretary Ryan McCarthy and Chief of Staff Gen. James McConville said in a joint statement earlier this month after Michael Flynn, President Donald Trump’s first national security advisor, declared in an interview with Newsmax that Trump could “take military capabilities, and he could place them in those [swing states], and basically re‐​run an election” in those states. Other Trump backers have suggested that he might use a declaration of martial law combined with the powers of the Insurrection Act to overturn Joe Biden’s victory in the November election.

What would happen if a president actually tried these things? The answer, at least in the America we live in today, is that he would fail.

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Mob Rule is No Path to Liberty

The Cato Institute has long worked to encourage people everywhere to better understand and appreciate the principles of government that are set forth in America’s Founding documents. Among these principles is the peaceful transfer of power after free and fair elections. “The assault on the Capitol is a tragic violation of these principles,” writes Cato President and CEO Peter Goettler. “We condemn these actions in the strongest terms, support the rule of law and the Constitution, and reject the attempts to overturn the results of the 2020 presidential election.”

In a recent article, Bonnie Kristian at The Week quotes me at length on these questions. Martial law, I noted, involves a wholesale suspension of civil liberties, so “military commanders can issue orders to civilians” as well as “arrest and mete out punishment based on tactical needs of war rather than the civilian law on the books.” The only time it has been tried on a national scale was when Abraham Lincoln suspended habeas corpus rights during the Civil War to silence dissenters.

But in Ex parte Milligan (1866), the Supreme Court ruled Lincoln had overstepped his legitimate bounds. This ruling is “key” to understanding the president’s martial law powers today, Olson said. It means “the president cannot simply declare martial law at his whim. There must be a state of invasion or insurrection such that ground is actually contested, and resort to conventional civil courts and authority must have collapsed.” Absent those conditions, the court said in Milligan, martial law is “a gross usurpation of power,” and in fact “can never exist where the courts are open.”

The courts are open now, which means any declaration of martial law — including in the six states Flynn targeted — would be illegal. “Courts would not be afraid to recognize this as reason to strike down acts pretending to martial law authority,” Olson said, just as they haven’t been afraid to smack down specious election challenges. That might not stop Trump, Olson allowed, but it would stop many of the people he’d need to execute this plan. And even if their constitutional oaths did not constrain them, there would be “very real personal consequences for both civilian and military administrators should they go along” with such an unlawful proposal, Olson noted, as career bureaucrats and officers undoubtedly realize. (The Army statement is an indicator of this very understanding.)

Martial law has been ordered in some dozens of other instances, typically of brief and localized effect, as in quelling riots. Following the attack on Pearl Harbor, federal officials placed the territory of Hawaii under martial law through much of the war, but the Supreme Court in the 1946 case of Duncan v. Kahanamoku struck down the authority of military tribunals over civilians, ruling that even the very real perils arising from World War Two did not deprive Americans of the protections of the Constitution. “Our system of government is the antithesis of total military rule, and its founders are not likely to have contemplated complete military dominance within the limits of a territory made a part of this country and not recently taken from an enemy.”

More from Bonnie Kristian’s article:

The Insurrection Act gives Trump no additional leeway here. It does provide an exception to the general prohibition (under the Posse Comitatus Act) on using federal troops to enforce domestic law. But those exceptions — which typically involve violent insurrection — aren’t applicable in this scenario. Furthermore, Olson told me, “there is a separate set of laws in which Congress has not only disallowed, but even chosen to make a crime, actions by federal troops or officers that interfere with the right to vote.”

The “thing to remember about the Insurrection Act,” Olson added, “is that it doesn’t allow federal troops to enforce anything but already‐​prevailing federal, state, and local law. It does not authorize martial law in the sense of deprivation of ordinary civil liberties, special tribunals, irregular punishment, street justice, cutting off resort to the courts, etc.” (In 2006, the annual National Defense Authorization Act included a provision which changed that, allowing the president to impose martial law via the Insurrection Act. Uproar was widespread, however, and in early 2008, Congress repealed the change.) So even if the Insurrection Act were applicable (which it isn’t), and even if there weren’t additional legal protections against federal military meddling in state‐​administrated elections (which there are), deploying troops under this authority still wouldn’t result in martial law.

Both Ex Parte Milligan and Duncan v. Kahanamoku are full of the sort of ringing language about liberty that should inspire every patriot and constitutionalist. Writing for the majority in Duncan, Justice Hugo Black quoted the words of the earlier (1879) case of Dow v. Johnson in noting that “the military should always be kept in subjection to the laws of the country to which it belongs, and that he is no friend to the Republic who advocates the contrary. The established principle of every free people is that the law shall alone govern, and to it the military must always yield.”

December 29, 2020 12:38PM

A Proposal to Pay for the Modernization of Congress

Earlier this month in the Washington Post, George Will took aim at the Congress’s institutional weakness. In his first two paragraphs, he empties both barrels:

On Jan 3, the 111th Congress will convene. It’s not clear why.

Presidents make war without congressional involvement. The declare “emergencies” with Congress’s permission, “repurposing” monies for projects did not authorize. The Constitution vests in Congress the power “to regulate commerce with foreign nations,” but Congress has vested presidents with the power to utter “national security,” thereby justifying, on metal imports from Canada, a military ally. And on washing machines. Really. And the power to disburse billions to compensate farmers for injuries a president inflicts by initiating a trade war. Congress thinks it is setting immigration policy, but presidents can substantially alter it by invoking “enforcement discretion.” The Congressional Budget and Impoundment Control Act of 1974 requires Congress to pass a budget resolution by April 15, but it rarely does … Sixty‐​four percent of members of the 116th Congress have never served under a regular budget and appropriations process.

Hear, hear! These are the same criticisms we’ve been leveling at Congress. In The Case for Congressional Regulatory Review, I elaborate on our legislature’s decline, the causes of which are too involved to broach in this post.

Turning back to Will’s column, his ultimate point was to endorse the recommendations rendered by the bipartisan Select Committee on the Modernization of Congress:

Fortunately, the 116th Congress created the 12‐​member bipartisan Select Committee on the Modernization of Congress. Under Chair Derek Kilmer (D‐​Wash.) and Vice Chair Tom Graves (R‐​Ga.) it produced recommendations that could help Congress attract and retain serious members not given to delegating to the executive branch essentially legislative powers.

Will then singles out certain suggestions, including the Select Committee’s recommendation for Congress to invest in itself:

The size of congressional staff has not kept pace with the growth of congressional business.… . Congress’s parsimony with itself—the cost of Congress is 0.08 percent of the federal budget—has costs. Staff pay has declined relative to the private sector, so institutional memory suffers as the typical staffer leaves after four or five years. House committee staff declined about 50 percent between 1991 and 2015.

Libertarians might give pause to a call for more (and better compensated) congressional staff. As a general matter, we’re suspicious of growing government. But I think such skepticism is misplaced. There is a hidden cost to an underfunded Congress—namely, our constitutional system loses a check on growing executive power. As Zach Graves explained as part of the Federalist Society’s Article I Initiative,

Over the past quarter century, committees have lost over 1,000 staff positions, and support agencies have lost over 2,500. Reflecting this capacity loss, sometimes referred to as the “big lobotomy,” Members of Congress can be seen routinely struggling with complex technical issues, and offices have trouble staying on top of their legislative and oversight responsibilities. The end result is that more policy decision making is outsourced to the administrative state, where it is less responsive to democratic forces, and has limited oversight.

Simply put, Congress doesn’t have the tools to oversee the administrative state. This capacity deficit, in turn, facilitates the rise of presidential lawmaking. Without effective congressional oversight, presidents have an easier time pushing the boundaries of executive authority, which is a major reason why our separated powers are so imbalanced at present. And, as Madison explained in Federalist 47, the concentration of power “may justly be pronounced the very definition of tyranny.” The upshot is that building Congress’s oversight capacity can serve the ends of classical liberalism, by balancing power.

Having reflected on the matter, I came up with an idea for how to pay for more and better staff in Congress. Why not fund congressional staff by repurposing fat cut from the budgets of the agencies that lawmakers are supposed to be overseeing? 

Based on my cursory investigation, it would seem there are plenty of easy “savings” that could be reinvested in Congress. The EPA, for example, employs 165 public relations specialists, according to a report by the Government Accountability Office. In comparison, the Senate Environment and Public Works Committee—which has jurisdiction over the EPA—employs 34 staffers in all, according to data compiled by the Brookings Institute. This amazing statistic bears repeating: By itself, the EPA’s PR shop employs about five times as many people as the Senate committee charged with overseeing the entire EPA. This allocation of resources makes no sense! Keep in mind that the Senate Committee has other agencies in its jurisdiction, too, so these 34 staffers aren’t dedicated to the EPA. 

Beyond the EPA, federal agencies spend billions of dollars on public relations every year. To pay for the modernization of Congress, lawmakers should start with the president’s marketing budget.