According to Paul Krugman, the government shutdown amounts to a potentially big libertarian experiment. 

With nine departments and multiple agencies closed, maybe for months, the New York Times columnist and Nobel laureate envisages a coming test of whether the country can live without the Food and Drug Administration, the Small Business Administration and farm subsidies. 

So are those of us at Cato who believe in the abolition of these programs celebrating? Not quite. 

As the vast majority of the U.S. population go about their daily lives, barely noticing that 25 percent of federal discretionary spending has been paused, it’s certainly possible many will wonder why debt is being racked up for programs that have no noticeable effect on their well-being. Who knows, many employees, businesses and farms may also reconsider the wisdom of placing their livelihoods at the whims of the political process. 

Better still, the shutdown may bring attention to these otherwise rarely-scrutinized programs. If major columnists continue identifying Cato as proponents of scrapping things such as farm subsidies and small business cronyism, linking to our research on the damaging economic, political, and social consequences of existing provisions, the shutdown could serve a useful public education role too! 

But, the truth is, most libertarians aren’t cheering current events because shutdowns appear not to change much in regards the size and scope of government in the long term, yet bring chaos, ill-feeling and uncertainty in the short. 

Markets are powerful precisely because they allow people to interact in voluntary ways to fulfil wants and needs. Necessity, as they say, is the mother of invention. 

Libertarians are indeed confident that, as in countries such as New Zealand, scrapping agricultural subsidies would deliver a more efficient industry, taxpayer savings, and a bigger economy. 

But it’s obvious, as Krugman acknowledges, that temporary suspension of promised support is not an environment conducive to farmers making long-term crop or farm ownership decisions, private companies banding to form market-based food safety certification agencies, or small businesses sourcing new finance. 

Yes, economic actors will take steps to mitigate the effects of disruption. But knowing government will eventually reopen, there is little to no incentive for the new institutions to develop or businesses and farms to undertake the structural change we would see if government absented from these roles. Instead, businesses and individuals are temporarily crippled in their forward planning and paralyzed by the uncertainty promises made to them being broken. 

The natural priority for those farms, businesses and federal employees right now is to lobby successfully for the government to reopen and their payments to start flowing again. Hence the newspaper stories we see already about their difficulties, indicating precisely the diffuse costs yet concentrated benefits associated with much government spending. 

That doesn’t mean libertarians are any less supportive of removing government from these activities. In fact, as Chris Edwards shows, a host of other areas likely to be noticeably affected by a sustained shutdown – security screening at airports, air traffic control, and the management of national parks – are better managed in other countries with more private sector involvement. If the shutdown brings attention to this, then great. 

Overall though, libertarians are fully aware that for the real policy experiments we desire, the public and/​or politicians must be convinced of the necessity or desirability for permanent policy change in a market-based direction. The best chance for success with that is in an environment where those affected can adjust in an orderly manner, and replacement private-sector institutions have time to develop. 

Krugman knows it is disingenuous to suggest that the current chaos is some libertarian policy experiment. But as some Republicans do make the case that the programs above are vital for the health of the economy, and libertarians continue to make the case for their abolition, perhaps he will finally cease lumping Republicans and libertarians together in his columns.

From WAPO:

IN THE name of securing the border and keeping out illegal immigrants, President Trump has opted for a partial government shutdown. Irony of ironies, that shutdown has paralyzed the nation’s immigration courts, shuttering many of them and allowing several hundred undocumented immigrants to dodge deportation orders each day the shutdown continues. They are among many hundreds of others whose cases will be postponed for years — or, in effect, indefinitely — for every day the closure lasts.

Quoting the Post’s headline, “Oh, the irony.”

In the Washington Post, Josh Rogin warns us that “Rand Paul is quietly steering U.S. foreign policy in a new direction.” Indeed, the Post’s overwrought headline is 

Welcome to the world of President Rand Paul

Rogin goes on:

Several U.S. officials and people who have spoken directly to Trump since his Syria decision tell me they believe that Paul’s frequent phone conversations with Trump, wholly outside the policy process, are having an outsize influence on the president’s recent foreign policy decisions. The two golf buddies certainly are sounding a lot alike recently.…

Paul told CNN on Dec. 23 that he had talked to Trump about Syria and was “very proud of the president.” That night on Twitter, Trump quoted Paul as saying, “It should not be the job of America to replace regimes around the world… The generals still don’t get the mistake.”

If Paul did in fact persuade the president to withdraw U.S. troops from one of the seven military conflicts we’re currently engaged in, Bravo. He tried to keep us out of the Syrian conflict back in 2013. That’s not Rogin’s view, though. He grumbles:

Of course, there’s nothing wrong with a senator advising the president on foreign policy. Hawks such as Sen. Tom Cotton (R‑Ark.) and Lindsey O. Graham (R‑S.C.) do it all the time. But the Trump-Paul bromance is troubling because Trump may be taking Paul’s word over that of his own advisers. 

Well, presidents are allowed to choose their own advisers. But how is it “troubling” that Trump might take advice from Senator Paul, but it’s fine to take advice from Senators Cotton and Graham? And by the way, check the quote above: how is a president’s conversation with a member of the Senate Foreign Relations Committee “wholly outside the policy process”?

Of course, Paul isn’t responsible for the fact that Trump is unable or unwilling to set a clear policy, implement it in an orderly manner, articulate a defense of it without using “alternative facts” and words like “suckers,” and make an inspirational, presidential speech to troops in a combat zone. It’s better to withdraw from unnecessary wars inarticulately than to stay in them with a 500-page report.

Rogin concludes by bemoaning “dangerous … isolationism [and] retreat.” “Isolationism” is a term that the foreign policy establishment throws around any time anyone questions whether all seven wars are actually wise. The New York Times also uses the term, reporting that the Syrian withdrawal “has been condemned across the ideological spectrum,” “with the exception of a few vocal isolationists like Senator Rand Paul.” And a few realists and noninterventionists like my colleagues John Glaser and Christopher Preble. And about half the American people.

Trying to stay positive in this season of rising trade tensions and plunging stock markets, I return to a Washington Post story from a few weeks ago by Jenna Johnson from Ohio, where a General Motors plant is likely to close in 2019. That’s obviously not positive news for workers, suppliers, and others affected by the plant closing. What was encouraging was the attitudes Johnson found when she interviewed people at an auto-parts store:

Eight miles northwest of the General Motors assembly plant expected to close next year, two workers and a customer at an auto-parts store pointed fingers: Americans just don’t want to drive small cars like those produced at the plant. Gas prices are low, making big vehicles even more attractive. And GM can get cheaper labor elsewhere.

But none of the three men pointed a finger at President Trump, who had promised residents here and throughout the industrial Midwest that he would stop the closure of factories. At one political rally in the area last year, he even urged residents to stay put and not sell their homes.

“It’s a company. Why should the president of the United States be allowed to tell a company what to do?” said Michael Hayda, 64, a former factory worker and a driver at the store who is registered as a Democrat and voted for Trump in 2016.

We sometimes forget that many Americans retain that old American regard for free enterprise and limited government. Others in the store had the same attitude:

His co-worker Bill McKlveen, another Democrat who voted for Trump, agreed and noted that auto-industry workers have been getting pink slips for decades, long before Trump took office.

And even a customer who would like to see Trump impeached said he doesn’t fully fault the president.

“There’s only one law we all obey, and that’s the law of supply and demand,” said Paul Niemi, 68, who fixes wood pallets for a living and was motivated by Trump to vote for the first time earlier this month, selecting a straight Democratic ticket in the midterm election.

Not everybody agreed. Factory worker Tara Gress complained, “It’s a big company. They don’t care. . . . It’s a business. We’re numbers. It doesn’t matter. All of the begs and pleads for this community, it’s not going to make a difference.” Still, those attitudes — plants are closing because of supply and demand, and it isn’t the president’s business to tell companies what to do — are part of what has given us the world’s most dynamic economy for most of the past two centuries. 

For all the talk about socialism, Americans still prefer free enterprise. It’s not good that 37 percent of Americans told Gallup they had a positive image of socialism, but 79 percent had a positive view of free enterprise and 86 percent of entrepreneurs.

In 2017 Gallup found that 67 percent of Americans believed big government was a bigger threat to the future than big business was. Only 26 percent picked big business, and 5 percent said big labor. And when it comes to presidents telling companies what to do, well, almost no one in the new Gallup poll thinks the federal government has too little power: just 8 percent, about where it’s been since 2002.

The men the Post interviewed in Warren, Ohio, display an American sense of life – an attitude of individualism, self-reliance, economic opportunity, and skepticism toward power and government. Something to appreciate in this season.

A restriction of free speech by any other name is still unconstitutional. No matter how much the Missouri government wants to regulate alcohol it may not do so by restricting the freedom of speech. Cato joins the ACLU and the Freedom Center of Missouri on an amicus brief supporting a challenge to a Missouri law prohibiting alcohol producers from advertising alcohol prices unless the prices are displayed inside a retailer—and they may not advertise who their retail partners are unless they list more than one. This both limits and compels speech.

The government argues that advertising is “commercial speech” and therefore not afforded the same protections under the First Amendment as every other type of speech. The “commercial speech” doctrine traces back to Valentine v. Chrestensen, an infamous case from the 1940s in which the Court arbitrarily decided commercial advertising wasn’t constitutionally protected. The Court has slowly been hacking away at this arbitrary rule, eventually creating an intermediate protection for commercial speech in under the Central Hudson Gas & Electric Corp. v. Public Service Commission (1980), where courts must balance four factors before deciding whether to nullify a restriction on commercial speech.

The Central Hudson test requires courts to determine: (1) whether the speech is false or misleading, (2) whether the government has a “substantial interest” in regulating the speech at issue, (3) whether the censorship directly advances the government’s interest in regulating the desired object, and (4) whether the government’s speech-regulation is no more restrictive than necessary. As reasonable as the words may seem in the abstract, the test has sprouted a thicket of arbitrary rulings contrary to the original meaning of the First Amendment.

What exactly qualifies as a “substantial interest” for a government has never been particularly clear. Nor has the Court been able to demonstrate where in the First Amendment some types of speech are afforded greater protections than others. Justices from John Paul Stevens to Clarence Thomas have criticized the Central Hudson test for its arbitrary factors and lack of grounding in the text of the First Amendment.

Our brief argues that alcohol advertising is just as much a form of speech as literature and political speech, deserving of protection from arbitrary government restrictions. The Central Hudson test should be eliminated in favor of the standard First Amendment protection for any kind of speech—which of course isn’t absolute, but is also not subject to government whim.

Despite the “commercial speech” doctrine’s emergence seemingly over night, and that the Central Hudson test still stands after nearly 30 years, Cato once more opposes this impediment to both the freedom of speech and economic liberty in the hope that, as Shakespeare put it in Henry VI, Part III, “many strokes, though with a little ax, hew down and fell the hardest timbered oak.”

Last night, the Senate passed the Formerly Incarcerated Reenter Society Transformed Safely Transitioning Every Person (FIRST STEP) Act, a bill which could provide relief to thousands of federal inmates and an untold number of future defendants for federal drug crimes. The Senate was widely considered to be the biggest hurdle to the bill’s success, and so activists and other supporters are celebrating in a way seldom seen in Washington criminal justice circles. With the president’s vocal support of the bill, it is likely to pass the House and be signed into law.

Although most news stories about FIRST STEP feature the “unlikely allies” from across the political and ideological spectrum that supported this bill, such language downplays the many years of tireless effort organizations on the left and right have put into bipartisan reform. Previous efforts have come up short, in one instance painfully close to the finish line, so the relief and elation many advocates are expressing are well-earned. While Cato policy precludes its scholars from endorsing legislation, my most sincere congratulations to the many organizations and individuals who fought so hard to make yesterday’s passage happen.

All that said, the FIRST STEP Act is aptly named because it only serves a small segment of the nation’s incarcerated population and thus cannot be the endpoint in the ongoing struggle for criminal justice reform. The United States holds over two million people in jails and prisons, mostly at the state and local levels. To the eligible prisoners who will be affected by FIRST STEP, the law may be a godsend, but for the vast majority of inmates, nothing will change when the president signs the bill into law. Taking nothing away from the achievements of FIRST STEP’s proponents, so much more needs to be done at every level of our criminal and carceral system.

Law enforcement officers continue to harass and over-police neighborhoods, bringing more people into the correctional system than need to be there in the first place. Prosecutors overcharge and over-sentence offenders, particularly those that exercise their constitutional rights to jury trials. Judges are still hamstrung by mandatory minimum sentencing laws that remove discretion and mercy in favor of punishment that may do more damage than good to the community.

Again, congratulations to our friends on the left, the right, and those in between who worked so hard to pass FIRST STEP. Cato is already working with some of these organizations on the next steps to making our criminal system fairer and less punitive.

This story from WAPO sent a chill down my spine:

Until quite recently, Zamira Hajiyeva was living the high life, according to British authorities. She had a $15 million townhouse in London’s tony Knightsbridge neighborhood, a golf club in the English countryside and a gold-plated shopping habit at Harrods.

That was before a British court this year asked the 55-year-old from Azerbaijan an impertinent question: How did she afford those purchases?

That query is at the heart of a bold British push to try to reverse what the government believes is a flood of foreign investment stemming from overseas corruption and criminality.

In other words, the U.K. is shifting the burden of proof onto foreign investors; they must now prove their wealth is legitimate.

No doubt, some foreign investestments into the U.K., U.S., and elsewhere are attempts to launder ill-gotten gains.

But the slippery slope implications of the U.K.‘s new approach are terrifying.

To start, governments can expand this “presumption of guilt” to its own citizens, not just foreign investors. Can you prove all your wealth is from legitimate sources? Unless you have kept scrupulous records your entire life, probably not. And even if you can, doing so is likely an accounting and legal nightmare.

And where would this presumption of guilt stop? Will we someday have to prove we do not use outlawed drugs?

The presumption of innocence is fundamental to a free society. The U.K. is playing with fire.