Archives: 07/2017

Does the Seventh Amendment Mean What it Says?

James Madison once wrote: “Government is instituted to protect property of every sort … . This being the end of government, that alone is a just government, which impartially secures to every man, whatever is his own.” Because the power of eminent domain so readily runs the risk of violating private property rights, you would think that those individuals subjected to it would be afforded every procedural protection the Constitution has to offer, including the right to a trial by jury. But according to the federal government, you would be wrong.

When a group of 20 Michigan landowners contested the feds’ use of eminent domain, they asked for a jury trial. By doing so, they challenged a provision of the Tucker Act that says suits against the government for over $10,000 must be brought in the Court of Federal Claims (a legislative tribunal rather than an Article III court). This goes against the Seventh Amendment’s guarantee of a right to trial by jury, argued the landowners. The district court in Michigan sided with the government, however, and dismissed the case for lack of jurisdiction, holding that Congress is within its powers to override the Seventh Amendment’s guarantee of the right to jury trial when the federal government is the defendant (because of “sovereign immunity”).

The district court effectively shielded the government from constitutional checks and balances that protect individuals’ property rights, which is why Cato joined the National Federation of Independent Business on an amicus brief in the next stage of the case, before the U.S. Court of Appeals for the Sixth Circuit. Unfortunately, a three-judge Sixth Circuit panel agreed with the district court that the Seventh Amendment has no force against the United States, and the court is now weighing whether to rehear the case en banc, which means all the judges on the court will hear the case rather than just a three-judge panel. Cato, joined by the National Federation of Independent Business and the Southeastern Legal Foundation, is supporting the en banc petition

We argue that the Seventh Amendment’s guarantee of a trial by jury is one of the oldest rights recognized in Anglo-American law. In City of Monterey v. Del Monte Dunes (1999), the Supreme Court held that, because the claimants in takings cases are seeking compensation, such claims would have been heard by a court of law (rather than, say, an admiralty court or other specialized tribunal) at the time the Seventh Amendment was passed. Accordingly, whenever plaintiffs ask for a determination of just compensation, the right to a jury trial always attaches. Indeed, takings cases are exactly the sort of cases that should be resolved by a jury trial, because they involve factual determinations with which members of the local community are likely best acquainted.

The panel’s opinion was based on dicta in a case that said there was no right to a trial by jury in a suit brought under a federal statue. Suits under statutes are very different than suits that seek to vindicate a constitutional right. The Supreme Court has not once held that the federal government can hide behind the doctrine of sovereign immunity in this manner, picking and choosing when it wants to exempt itself from the Seventh Amendment when citizens are seeking to enforce another constitutional right. Historically, not even the king of England could exempt the crown from private-property suits—and the U.S. government does not have greater powers to deprive individuals of their private property without the just compensation that a jury determines is due. The Sixth Circuit should rehear the case to correct this error. 

Are US Bases in Asia Vulnerable? Time to Rethink Force Posture

A recent study from the Center for a New American Security (CNAS) looks at how China’s military capabilities in Asia make forward-deployed U.S. bases there vulnerable. The report warns, “the growing capability of China to threaten U.S. bases in the region” may represent “the greatest military threat to U.S. vital interests in Asia.”

“In the event of an unforeseen U.S.-China crisis,” the report explains, “a preemptive missile strike against the forward bases that underpin U.S. military power in the Western Pacific could be a real possibility…particularly if China perceives that its attempts at deterrence of a major U.S. intervention—say in a cross-strait Taiwan crisis or in a brewing dispute over the Senkaku Islands—have failed.”

Two important points need to be made in response to this assessment. First, it explores a scenario—an outbreak of war between the U.S. and China—that is extremely improbable. While it is true that Chinese strategic planners have discussed striking U.S. bases in the unlikely scenario that inadvertent escalation results in an outbreak of conflict, deterrence remains robust in Asia. China in particular has little interest in getting into a shooting war with the United States. Not only do both countries have conventional capabilities devastating enough to make any war too costly to contemplate, but nuclear deterrence and economic interdependence make a military clash not even close to being worth the fight.

Furthermore, the Defense Department describes China’s posture as “strategically defensive” and “rooted in a commitment not to attack, but to respond aggressively once an adversary decides to attack.” Indeed, China has been far less assertive than often depicted. As MIT’s M. Taylor Fravel puts it, Beijing “has compromised more frequently than it has used force,” and “has been less belligerent than leading theories of international relations might have predicted for a state with its characteristics.”

Second, even with the understanding that an all-out Chinese attack on U.S. bases in Asia is a very low probability event, it seems to me, as I argue in a recent Cato Policy Analysis, that this is a good reason to withdraw from U.S. bases in Asia, thereby making American military assets and troops less vulnerable. Granted, this would mark a truly dramatic change in U.S. foreign policy, but it wouldn’t undermine the core economic and security interests of the United States.

The authors of the CNAS report have a very different view. They recommend spending billions of dollars on missile defense systems to better protect U.S. bases. Notably, they concede this would be an extremely expensive way to not even solve the problem: this “admittedly expensive investment in several billion dollars of missile defense forces” would only marginally reduce the damage done to U.S. bases and troops. These new missile defense systems, they admit further, would still be “overwhelmed by sheer numbers” of Chinese ballistic missiles.

A far wiser, and cheaper, solution would be to withdraw U.S. bases from the region and encourage allies to build up some of the same surveillance, targeting, and missile defense technology China possesses. Another Pentagon boondoggle to inappreciably shore up America’s outdated strategic force posture in Asia is not the way to go.

I Beg My Pardon?

If you’re looking for an upside to the Trump presidency, there’s this at least: it promises to be endless fun for executive-power geeks. That “this is not normal” means there’s plenty of opportunity to consider constitutional questions that rarely come up in periods of relative normalcy.

Case in point: the current debate over whether the president has the power to pardon himself, sparked by Friday’s Washington Post report that President Trump “has asked his advisers about his power to pardon aides, family members and even himself” in connection with the special prosecutor’s Russia investigation. Trump himself chimed in over Twitter Saturday:

 

 

On ABC’s “This Week” Sunday, Trump attorney Jay Sekulow denied that any such discussion had taken place, but told George Stephanopolous that “with regard to the issue of a president pardoning himself…. from a constitutional, legal perspective you can’t dismiss it one way or the other.” 

It’s true that the president’s power to self-pardon isn’t clear. What is clear, however, is that if he misuses the pardon power, he can be impeached for it. 

Compare Medical and College Inflation with Services, not Goods

A Wall Street Journal report, “Colleges Pull Back Tuition’s Long Rise,” includes a graph showing the cumulative increases in consumer price indexes (CPI) since 1990 for College Tuition, Medical Care, and All Consumer Prices.

Adding up nearly three decades of increases looks dramatic, but doesn’t show when various prices changes accelerated or slowed. More important, prices for college tuition and medical care are dominated by skilled human services, so they should be properly compared with service prices in general rather than with all items. 

All Consumer Prices (shown as an erratic black line in the graph) includes falling quality-adjusted prices for such tech products as computers and televisions, for example, and cyclically-volatile prices of internationally traded commodities such as oil, steel, and grain.

Service prices largely reflect wages and benefits for skilled labor, which (unlike commodity prices) almost never fall. If service prices did not increase faster than the CPI in general, then real compensation in service sectors could never rise.

Medical care prices compared to other services & CPI

This graph omits college tuition because that CPI item is particularly problematic due to averaging large differences in quality and “financial aid” (selective discounts from sticker prices). The Bureau of Labor Statistics explains some of the difficulties:

“The inclusion of financial aid has added to the complexity of pricing college tuition. Many selected students may have full scholarships (such as athletic), and therefore their tuition and fixed fees are fully covered by scholarships. Since these students pay no tuition and fees, they are not eligible for pricing. In addition, there are other students who pay a very small fee to the college since the majority of their tuition and fixed fees are covered by scholarships. When these situations are priced by BLS Field Staff, normal increases in tuition/fees and minor declines in scholarship awards can provide extremely large changes for entry in the CPI index. For some of these same quotes, minor tuition declines or minor scholarship award increases can actually result in negative prices, which make the quotes ineligible for use in the CPI.”

The graph compares two decades of year-to-year price increases for Medical Care and Services in general. The CPI for medical services alone (not shown in the graph) has actually increased somewhat less than the CPI for all Medical Care, which suggests prices of drugs and medical devices increased faster than physician and hospital fees. There have been major improvements in the quality of drugs and medical devices, however, and economists doubt the CPI adequately adjusts for quality improvement. As a BEA report notes, “If there are unobserved attributes that change over time (e.g. perceived efficacy or experience with the drug), these indexes will count any price increases associated with these changes as increases in price, not quality.”

Have Medical Care prices risen faster than Services prices in general? Yes, but the difference in annualized price increases was typically smaller than one percentage point except in 2002 and 2010, when recession’s aftermath depressed other services prices more than (heavily-subsidized) medical care prices. 

Recessions’ impact on commodity prices pushed the year-to-year overall CPI below zero at times, which underscores the inaptness of comparing prices of medical or educational services to any price index such as the CPI which is heavily weighted by goods.

Pelosi Complains About Procedure Surrounding, Not Substance Of, Intelligence Bill

As I reported over the weekend, today the House will take up the FY 2018 Intelligence Authorization Act (HR 3180) under an expedited consideration mechanism known as suspension of the rules. The announcement was made Friday, but late on Sunday, House Democratic Leader Nancy Pelosi complained about the fast-tracking of the bill. POLITICO quoted a letter from Pelosi to House Democrats:

“The Republican move to place this intelligence bill on Monday’s suspension calendar would deprive Democrats of the ability to have a full and open debate on critical intelligence issues at this sensitive time in our nation’s history…This is unacceptable when critical intelligence decisions are being made that impact America’s national security, and while the House and Senate Intelligence Committees are leading investigations into Russia’s continued efforts to undermine our democracy.”

Pelosi then when on to say that the substance of the bill itself is “not problematic.” 

The lead Democrat on the House Intelligence Committee, Adam Schiff of California, is the co-sponsor of the bill. Schiff issued no statement of protest on Friday when the voting schedule for the week of July 24 was announced. And in her own comments to POLITICO, Pelosi offered no list of potential Democratic amendments to the bill. Indeed, Pelosi made no mention at all of the fact that key bipartisan surveillance reform amendments to the National Defense Authorization Act were disallowed earlier this month—amendments that would absolutely be germane to the Intelligence Authorization bill.

It appears that for Pelosi, substance-free procedural sniping is more important than actually making a case for protecting the constitutional rights of Americans to be free from unwarranted surveillance by NSA and other intelligence agencies.

FY18 Intelligence Authorization Bill Calls For New Russian Meddling Assessments

On Monday, July 24, the House will consider the Fiscal Year 2018 Intelligence Authorization Act under suspension of the rules in an attempt to fast-track the legislation, which contains some significant “Russiagate”-related provisions. 

Section 501 calls for a new Intelligence Community assessment “of the most significant Russian influence campaigns, if any, conducted during the 3-year period preceding the date of the enactment of this Act, as well as the most significant current or planned such Russian influence campaigns, if any.” Significantly, the classified report, which is due 60 days after enactment, is to also have an unclassified summary, meaning the public may learn still more about exactly when alleged Russian efforts to influence the 2016 presidential election began.

What may be lacking, as was the case with the IC assessment published in January 2016, is any new or meaningful, specific declassified intelligence that actually validates IC claims that the Russians were, in fact, responsible for the interference. Ironically, it has been yet another IC leaker—Reality Winner—who has provided us with the most interesting technical assessment of alleged Russian election-related activities. 

Section 502 of the bill mandates interagency reports on potential future threats:

(1) IN GENERAL.—As provided in paragraph (2), for each Federal election, the Director of National Intelligence, in coordination with the Under Secretary of Homeland Security for Intelligence and Analysis and the Director of the Federal Bureau of Investigation, shall make publicly available on an internet website an advisory report on foreign counterintelligence and cybersecurity threats to election campaigns for Federal offices. Each such report shall include, consistent with the protection of sources and methods, each of the following:

(A) A description of foreign counterintelligence and cybersecurity threats to election campaigns for Federal offices.

(B) A summary of best practices that election campaigns for Federal offices can employ, in seeking to counter such threats.

(C) An identification of any publicly available resources, including United States Government resources, for countering such threats.

To be truly effective, such an approach would almost certainly require the declassification of some fairly specific intelligence on alleged or actual Russian practices. It will very interesting to see exactly how much push-back this provision gets from the ODNI, DHS, and FBI.

Section 503 calls for a classified report on “containing an assessment of the financing of threat activity by the Russian Federation” which is also due 60 days after enactment.

Given how legislatively dysfunctional Congress has been this year overall (the annual National Defense Authorization Act was nearly two months behind its usual House floor schedule this year), it’s unclear whether the House and Senate will be able to agree on these provisions and actually get the Intel Auth bill to Trump for his signature before the year is out—or whether Trump will threaten a veto over any Russia-related provisions in any final bill. One thing is clear: that this bill is on the suspension calendar means that GOP House Intelligence Committee “Russiagate” investigative lead Mike Conaway (R-TX) and his Democratic counterpart, Adam Schiff (D-CA) are apparently on the same page about these issues. And for a president desperate to move past the “Russiagate” quagmire, that’s bad news indeed.

Sexist Price Discrimination?

“Are Shoe Brands Charging You More Based On Your Gender?” asks Footwear News. The website cites data compiled by Datafiniti showing that high-end footwear brands tend to price women’s shoes higher than men’s. As examples, the median price of a Gianvito Rossi pair of women’s shoes was $750 versus $469 for the gent’s.

Such data has become increasingly of interest following the New York City study entitled “From Cradle to Cane: The Cost of Being a Female Consumer,” which was then replicated by The Times newspaper in London, both purporting to show that women were discriminated against in pricing terms for a range of everyday products. Particular examples in the surveys included children’s scooters, women’s hair products and razors. This comes alongside previous studies from the University of Central Florida and Consumer Reports, which found that women tended to pay significantly more for deodorant, haircuts, and dry cleaning.

Does all this show “sexist” pricing and discrimination against women?

Here’s some economics to bear in mind which might explain why the prices of goods might differ in these types of surveys:

  1. There can be cost of production differences in some cases: often men’s clothes and shoes tend to be more standardized than those targeted at, and bought by, women. This explains why both women’s clothing and dry cleaning of that clothing can be more expensive too, given the clothes cannot be handled in the same way. It does not seem a stretch of the imagination to suggest that women’s hair cuts tend to be more expensive as a function of length, time, and the variety of tastes as well.
  2. Though things like different colored razors have the same functional uses, the branding and designs are themselves part of the product. It might be that many women place inherent value on some products being branded as “for women” or else enjoy the scent, colors etc. Indeed, there is nothing to stop women buying male or unisex branded products (some women I know do), suggesting the continued existence of gendered variants is evidence of demand. Prices that maximize profits will be higher for women than men if women are less responsive to price (i.e. have more inelastic demand). This might be because of greater attachment to brand, or because women perceive products tailored to women as being of higher quality.
  3. For some products targeted at women, women may buy fewer units of any given brand relative to men (on products where women prefer variety), which would (other things given) lead to higher prices too.
  4. The surveys themselves may be biased towards standardized products with male and female versions. Tyler Cowen speculates, for example, that women might (on average) have a relative taste for variety and quality on these type of low value products, whereas men tend to spend more cheaply on these but more on products not differentiated by gender (such as automobiles, electronic sound systems etc).
  5. The example of nightclub cover charges, where women frequently obtain “free” entry, shows that for some goods and services men tend to pay more than women. Even in the shoe study, the data shows that the median price for moderately priced sneakers tends to be higher for men than women’s shoes. A pair of Nike women’s shoes was $80 vs. $85 for men. Some of the above economics might explain this (particularly the elasticity explanation), but with things such as nightclub nights the charge may help cover for probability of externalities – i.e. drunken violent behavior. Another example of this is vehicle insurance, where men tend to pay more than women for near identical products due to higher costs associated with a tendency towards more risky behaviors for men.

As seen then, there are many different rational explanations for why different prices might be charged for products targeted at different genders. This is certainly not an area where there are obvious “market failures” which justify government intervention.

The implicit criticism by some of this practice seems to be opposition to the mere existence of “gendered” products at all. Indeed, in a debate I had on the subject in the UK, my female opponent claimed that women did not want products to be “gendered.” If this is true, it suggests there is an exceptional entrepreneurial opportunity for companies to develop more unisex products. 

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