Archives: 12/2016

Thank You, John Stossel

Stossel bookSeven years ago tonight John Stossel’s show debuted on Fox Business. This week he announced that the show will end next week. 
 
Some years ago – I’m not sure whether he was still on ABC’s “20/20” then or had moved to Fox – I introduced John at a Cato event as “the most visible, most valuable libertarian in America.” That’s still an accurate assessment.
 
I first noticed John’s interest in freedom at the end of 1989 when he did a “20/20” piece on “The Positives of Deregulation,” reporting on the new and improved products and services that deregulation had delivered during the 1980s. I remember especially the afterword, when John sat at the anchor desk with Barbara Walters and Hugh Downs, and Downs said, “That was very interesting. It had never occurred to me that there was anything good about deregulation.” I thought to myself, “Really? I understand why some people favor regulation. You just thought deregulation was delivered by space aliens or Mr. Potter of Potterville?”
 
Then in 1994 John got to do his first hour-long special on ABC, “Are We Scaring Ourselves to Death?” I had the good fortune to attend a taping of a late-night followup where people with varying views watched the show and then discussed it with John. As the segments were shown, I could hear the gasps in the audience around me. Environmentalists and others had never seen a major network program question their claims. But on ABC and later on Fox, he went on doing hour-long investigations of such topics as “Freeloaders,” “Greed,” “Stupid in America,” “Whose Body Is It Anyway?” and “Is America Number 1?” (featuring Cato senior fellow Tom G. Palmer).
 
I was proud to appear on his shows many times, including this 2015 special on spontaneous order
 
John Stossel isn’t retiring. Reportedly, he’ll continue appearing on Fox shows and will also work with Reason.tv and other libertarian organizations on video projects. Meanwhile, much of his work is made available to teachers and students by Stossel in the Classroom, and lots of his specials and regular shows can be found online.
 
From “The Positives on Deregulation” in 1989 through last night’s “Death by Socialism” and no doubt next Friday’s final show, John Stossel has been bringing a needed dose of reality – and a lot of libertarian scholars and activists – to network television.
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The Role of States, as States, in the Electoral College

Of all those whose predictions were dashed by this year’s presidential outcome (“Trump is headed toward a major loss” his Oct. 19 headline blared), few have been more exercised than the Washington Post’s E.J. Dionne (“white identity politics and male self-assertion triumphed” he railed the day after). Yesterday, in a piece titled “America will soon be ruled by a minority,” he joined the chorus now condemning the “undemocratic” Electoral College—in the name of the Founders, no less, the very men who created it. Ever the good progressive, he fails to appreciate the role states were meant to play in ordering our public affairs.

This round, of course, it’s the disparity between the Electoral College vote and the popular vote that animates Dionne: “For the next two and probably four years,” he writes, “a majority of Americans will be governed by politicians largely elected by a minority of us.”

Another Crazy California Law

Imagine that you’re a small business owner getting ready to go into your busy season, when several protestors come onto your property and begin disrupting your workers. Ordinarily, you would call the police and have the trespassers removed so that you could continue with your operations. But in California, that’s not an option for some property owners.

Cedar Point Nursery—a strawberry farm near the Oregon border—didn’t have to imagine that scenario. In fall 2015, union protesters entered Cedar Point’s property at five o’clock in the morning, moving through trim sheds—where hundreds of employees were preparing strawberry plants during the final stage of the six-week harvesting season—with bullhorns, distracting and intimidating its workers.

This is where you would think you could appeal to the authorities to have unwanted visitors removed, but in 1975, California’s Agricultural Relations Board (ALRB) promulgated a regulation that promotes trespassing! This law—known as the “Access Regulation”—grants a right of access by union organizers to the premises of an agricultural employer for up to three hours a day and 120 days a year. In other words, California has granted an easement for unions to enter onto private property, extinguishing the owner’s right to exclude others.

The Fourth Amendment, however, protects private businesses (and everyone else) from such an invasion of their property rights. Indeed, the Fourth Amendment was drafted as a bulwark against the rampant government oppressions—invasions of people’s houses and businesses without a warrant—that existed before the Founding. The right to exclude was a fundamental aspect of the protection of property at common law, and has continued to be recognized as such throughout our nation’s history. Yet the Access Regulation essentially deputizes trespassers who, through their disruptive presence, are allowed to seize private property.

Cedar Point brought a civil rights suit against the ALRB and United Farm Workers, but the district court ignored the importance of property rights in determining whether the Fourth Amendment was implicated and upheld the law. Cato has now filed an amicus brief in the U.S. Court of Appeals for the Ninth Circuit, supporting Cedar Point and other property owners and asking that the district court be reversed.

California’s Access Regulation granted outsiders a gratuitous easement and extinguished the important right to exclude others, thus creating a classic seizure of property that violates the Fourth Amendment. 

Corporate Welfare and Corruption

President-elect Donald Trump says that he will cut wasteful spending and “drain the swamp” in Washington. The first thing he should target is business subsidies in the federal budget. Such “corporate welfare” spending attracts corruption like garbage dumps attract rats.

A Cato study estimated that there is $100 billion of corporate welfare in the budget. That spending harms the economy, but the incoming administration should be aware that such spending also spawns damaging scandals. That pattern goes all the way back to the 19th century. Federal subsidies for the first transcontinental railroad led to the Credit Mobilier scandal of the 1870s, which involved dozens of members of Congress.

More recently, corporate welfare has spawned these scandals: 

  • HUD Subsidies under Reagan. President Ronald Reagan’s Department of Housing and Urban Development overflowed with corruption in the 1980s under Secretary Sam Pierce. Pierce routinely dished out grants, loans, and other subsidies to friends, business associates, and Republican Party contributors.
  • Commerce Subsidies under Clinton. President Bill Clinton’s Commerce Secretary, Ron Brown, used business subsidies as a fund-raising tool for the Democratic Party in the 1990s. Corporate executives who played the game were given access to export promotion trips and federal export loans. In his investigations, U.S. District Judge Royce Lamberth determined that Commerce officials concealed and destroyed documents relating to the trade mission scandal, and he compared officials to “con artists.”
  • Enron Subsidies under Clinton and Bush. Enron Corporation lobbied federal officials to expand export subsidy programs, and it received billions of dollars in aid for its risky foreign schemes. During the Clinton and Bush administrations, high-level officials went to great lengths to aid Enron on an Indian power plant deal. Federal aid induced Enron to make misguided foreign investments, and the resulting losses helped cause the company’s implosion.
  • Green Subsidies under Obama. The Washington Post found that “Obama’s green-technology program was infused with politics at every level.” The $535 million loan guarantee for the failed Solyndra is a prime example. The Department of Energy approved the loan after pressure from the White House. A main Solyndra investor was a billionaire Obama fundraiser. The New York Times found that Solyndra “spent nearly $1.8 million on Washington lobbyists, employing six firms with ties to members of Congress and officials of the Obama White House.”

American businesses have a right to lobby the federal government. But Congress throws fuel onto the corruption fire by funding business subsidy programs. The Trump administration should work to eliminate corporate welfare, including green subsidies, export subsidies, and housing subsidies. Corporate welfare undermines honest governance, and one message of the election is that Americans are sick and tired of the resulting scandals. 

What Carson Can Do as HUD Secretary

Ben Carson was nominated secretary of the Department of Housing and Urban Development (HUD) on Monday and his appointment will be debated endlessly over the coming months, with critics quickly honing in on his lack of housing policy and government experience. No matter, though; the naysayers need not stop him from doing an excellent job as HUD’s top administrator. The job can be done well if the following ideas remain front and center.

High-cost housing is a product of government regulation

Carson would be wise to remind everyone that cities do have control over sky-high housing prices: in fact, if cities relax zoning and land use regulations and simplify developer approval processes they can decrease the cost of housing across the board, no exceptions. Zoning regulations are the real culprit in places like Manhattan, where research demonstrates that regulations price the poor, the young, and the unestablished out of high opportunity areas. Local regulation also hampers innovation in the housing market, just look at the sad demise of low-cost micro-housing in Seattle.

HUD is not the nation’s urban planner

We can be quite certain that Carson will move away from the social-engineering-of-cities model advanced under HUD Secretary Julian Castro. Specifically, Carson should dig his heels in on the Affirmatively Furthering Fair Housing rule promulgated last year, a rule that allows HUD to oversee where people live locally based on their race. Fortunately, Carson has voiced opposition to the rule, and President-Elect Trump agrees, so it seems that Carson may have the support that he needs to remind the agency that not every local municipality’s land use and zoning regulations are under HUD’s jurisdiction.

Trump’s Ban on Immigration from Certain Countries Is Illegal

Angelo A. Paparelli contributed to this post. 

This week last year, Donald Trump proposed prohibiting all Muslim immigration to the United States. He altered the proposal this year to specify “suspending immigration from nations tied to Islamic terror.” He told CNN that this was actually intended as an expansion of the Muslim ban. Last week, he said, “People are pouring in from regions of the Middle East,” but that he would “stop that dead, cold flat.” He has also made clear that this would be one of the actions that he takes as president during his first day in office. This promise implies that he has the power to do so under current law, but that is not the case. It is illegal to discriminate against immigrants based on their national origin.  

Even while delegating to the president broad powers to exclude immigrants, Congress also expressly forbade banning immigrants based on their race or national origin. President Trump will almost certainly run into legal difficulties if he attempts to carry out his promise.

Text of the law bans discrimination based on national origin

At first blush, it would seem that the president can ban people based on their nationality or country of residence. The Supreme Court has granted Congress extensive leeway under the plenary power doctrine to limit immigration based on criteria—such as race or national origin—that would be considered unconstitutional in other contexts, and proponents of Trump’s plan claim that Congress authorized such bans by pointing to a provision of section 212(f) of the Immigration and Nationality Act (INA), the law that controls most U.S. immigration policies:

Whenever the President finds that the entry of any aliens or of any class of aliens into the United States would be detrimental to the interests of the United States, he may by proclamation, and for such period as he shall deem necessary, suspend the entry of all aliens or any class of aliens as immigrants or nonimmigrants, or impose on the entry of aliens any restrictions he may deem to be appropriate.

This seems to hand unequivocal authority to the executive branch to determine who it may admit to the United States. However, another section of the law clearly bans discrimination against certain classes. Section 202(a)(1)(A) of the INA states that except in cases specified by Congress in section 101(a)(27):

…no person shall receive any preference or priority or be discriminated against in the issuance of an immigrant visa because of the person’s race, sex, nationality, place of birth, or place of residence.

While section 212 grants the president a general power to exclude certain immigrants, section 202 limits this power. Note that this section does not prevent discrimination based on religious affiliation, political belief, or ideology, but Trump’s new policy would run afoul of at least one if not all three of those last three restrictions—nationality, place of birth, or place of residence—depending on how it was applied. “Place” of birth is actually a broader restriction than nationality, meaning that even if Trump’s ban applied to subnational or regional levels, it would still be illegal.

Section 202 does not protect all types of people who wish to come here from discrimination based on national origin. It is limited only to immigrants or so-called green card holders. Legally, immigrants are foreigners who enter on visas granting legal permanent residency in the United States as well as noncitizens whom the U.S. Citizenship and Immigration Services has adjusted their status to that of a permanent resident. The most common types of immigrants are immediate relatives of U.S. citizens—parents, spouses, and their minor children—who have no numerical limit. Other types include employees sponsored by U.S. businesses, adult children of U.S. citizens, their siblings, and immediate relatives of legal permanent residents. Refugees and asylees who have already entered the United States and held status for a year are eligible for immigrant visas, making discrimination against them at that stage also illegal.

Refugees outside of the United States, however, could still be excluded based on nationality before they enter as they do not enter on an immigrant visa. Obviously all nonimmigrants—guest workers, tourists, and other temporary visitors—could conceivably be subject to this discriminatory policy. It could also apply to those who are claiming asylum in the United States, but at the same time, the law prohibits deporting people who face a likelihood of persecution in their home country, which could leave such people in limbo.

Trump Is Right & His Critics Are Wrong: Let Consumers, Employers Buy Insurance Across States Lines

An important part of Donald Trump’s health care agenda is his pledge to let consumers and employers avoid unwanted regulatory costs by purchasing insurance licensed by states other than their own, a change that would make health insurance both more affordable and more secure. The Congressional Budget Office has estimated that allowing employers to avoid these unwanted regulatory costs would reduce premiums an average of 13 percent. That’s a nice contrast to what Bill Clinton calls ObamaCare’s “crazy system where…people [who] are out there busting it, sometimes 60 hours a week, wind up with their premiums doubled and their coverage cut in half.”

A reporter recently wrote to me: “I’ve talked to many people – health policy experts, regulators, industry leaders – and none of them think it is a good idea. They worry that the policy would promote a race to the bottom, with insurers consolidating in states with the most lenient regulations. They say state regulators would lose their power to protect consumers. They argue that healthy people may save money by selecting cheaper plans, but sick people would end up paying more and/or have trouble accessing care.” Below is my response.

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What you have stumbled across is a grand conspiracy against consumers by industry, regulators, and left-wing ideologues.

The big, incumbent insurers like banning out-of-state purchases, because that protects them from competition.

Providers and patient groups like government mandates that force consumers to buy coverage for their products (mental health coverage, contraceptives coverage, acupuncture coverage, etc.). The freedom to purchase insurance licensed by other states would allow consumers to avoid those unwanted costs.

State insurance regulators like banning out-of-state purchases, because they are in the business of providing consumer protections, and the ban gives them a monopoly. Little wonder they produce what monopolies always produce: a high-cost, low-quality product.

The ideologues want to impose Gruber-style hidden taxes on consumers. The freedom to purchase insurance licensed by other states would allow consumers to avoid those hidden taxes.

It would be embarrassing if these groups said any of this explicitly, so they describe the prospect of losing their privilege as a “race to the bottom.”

Nonsense. There would be no race to the bottom. It would be a race to what consumers want: affordable, secure health coverage.

If letting people purchase insurance licensed by other states would lead to a vastly different health-insurance market than we have right now, it merely illustrates how far astray these groups have led us from the sort of health insurance consumers want.

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