Topic: General

The Real Scandal of ‘Tariff Suspensions’

Two weeks ago (yes, I know, an eternity in blog time, but I’ll explain in a moment), the Washington Post published a gotcha front-page expose on a long-established if little noted congressional practice of suspending miscellaneous tariff duties. The article, headlined “A Quiet Break for Corporations” (September 20, 2006), supposedly uncovered yet another pork-barrel scandal. The real scandal of the story, however, is not that U.S.-based producers seek relief from damaging tariffs, but that those tariffs exist in the first place.

For years, Congress has voted regularly on miscellaneous tariff bills that suspend a hodgepodge of duties on obscure products that often are not even made by companies in the United States. In those cases, the tariffs don’t even perform the dubious duty of “protecting” domestic producers.  They only make it more expensive if not impossible for consumers and producers to import certain products.

The Post article emphasized the potential revenue lost to the government by suspension of the duties, while downplaying the costs to consumers and importing producers from the artificially higher prices imposed by the tariffs. Economics 101 teaches that with almost any tariff, the damage to the economy from higher prices and less efficient production will outweigh the duties collected by the government.

The story implied a scandal in the fact that some American companies would actually be hurt by suspension of tariffs on their foreign competition. But since when is it the duty of the government to protect certain producers against their competition? Should the same government that harasses U.S. companies with anti-trust laws be shielding other U.S. companies from the same competitive forces that anti-trust laws supposedly promote? If Americans can buy dog collars more cheaply from a foreign producer, the federal government should keep its nose out of the deal.

One example in the story involves the proposed suspension of duties on basketballs and volleyballs imported by the sporting-goods company Spalding. Again, the real scandal is why the government imposes any duties at all on such goods. The federal government should not be raising revenue with a special “basketball tax,” in the process making basketballs more expensive for American kids while hurting the sales of an American company.

Supposedly adding to the scandal is that fact that many of the “beneficiaries” of the suspended duties would be foreign-owned affiliates located in the United States, especially German and Swiss chemical companies. That fact does not make the special duties any less damaging to the U.S. economy. Foreign-owned affiliates in the United States employ nearly six million Americans (one out of eight manufacturing workers), pay domestic taxes, and serve American customers.

The story tried to clinch the scandal thesis by citing campaign donations and lobbying expenses by the companies seeking removal of the damaging tariffs. Again, the real scandal is not that these companies are trying to change laws that damage them, but that they need to seek specific relief in the first place.

Import duties invite corruption by giving the government power over a range of otherwise innocent and private transactions. A policy of free trade, without arbitrary duties aimed at punishing foreign producers and protecting domestic ones, would eliminate any need to lobby the government over the imposition or suspension of duties. The latest Economic Freedom of the World  report shows that nations with relatively free and open economies are generally less corrupt than those with closed and government-dominated economies. (Check out the chart on page 26.)

By repealing targeted tariffs that damage our economy and that should never have been imposed in the first place, the proposed miscellaneous tariff bill would make our system a bit less corrupt, not more so.

P.S. So why am I blogging about all this two weeks after the fact? I did not want to jeopardize the chances of the Washington Post actually publishing an edited version of this critique in its letters to the editor section. My patience was rewarded this morning with publication of an edited version of my letter.

Health Care Innovation

Tyler Cowen does two nice things in today’s economic scene column on health care spending.  First, he makes the case that the U.S. system is the leader in innovation:

[T]he American health care system may be performing better than it seems at first glance. When it comes to medical innovation, the United States is the world leader. In the last 10 years, for instance, 12 Nobel Prizes in medicine have gone to American-born scientists working in the United States, 3 have gone to foreign-born scientists working in the United States, and just 7 have gone to researchers outside the country.

The other nice thing is that he cites Crisis of Abundance:

The economist Arnold Kling in his “Crisis of Abundance: Rethinking How We Pay for Health Care” (Cato Institute, 2006) argues that the expected life span need increase by only about half a year for the extra American health care spending to be cost-effective over a 20-year period. Given that many Americans walk less and eat less healthy food than most Europeans, the longevity boost from health care in the United States may be real but swamped by the results of poor lifestyle choices. In the meantime, the extra money Americans spend to treat allergy symptoms, pain, depression and discomfort contributes to personal happiness.

Debating Darwin

Michael Shermer, a leading skeptic and bestselling author, will speak at Cato on October 12 on his new book, Why Darwin Matters: The Case against Intelligent Design. Providing highly critical commentary will be Jonathan Wells, author of The Politically Incorrect Guide to Darwinism and Intelligent Design. Shermer, once a creationist himself, argues that evolutionary theory is the foundation of modern biology. He concludes, “Darwin matters because evolution matters. Evolution matters because science matters. And I liked this line: “Of the three intellectual giants of that epoch–Darwin, Marx, and Freud–only Darwin is still relevant for the simple reason that his theory was right.” Join us next Thursday, or watch it on the web.

“Reprehensible” Is Right

If the facts that gave rise to this lawsuit (reg. req.) are as described in the complaint, then it’s pretty disturbing. Last June, a Colorado man named Steven Howards approached Vice President Cheney in a public place, and told him “I think your policies in Iraq are reprehensible,” or “words to that effect.” A few minutes later, a Secret Service Agent cuffed Howards and had him hauled off to jail. (The charges were later dropped).

There’s not much in the news coverage to suggest that Howards, who was taking his eight-year-old son to piano practice at the time, behaved in a threatening manner, unless one thinks that telling public officials what they don’t want to hear is inherently threatening.

There is quite a bit of evidence, however, that that’s exactly what the Secret Service thinks. Some of it is documented in this study, under the heading “Free Speech Zones.” The agency has evolved from a necessary protective detail for the president to a sort of palace guard with apparently very little regard for those not under its protection. That’s the fault of the agency’s leadership, to be sure, but ultimately the buck stops with the people they answer to.

Is the Military Commission Act Constitutional?

Jack Balkin and Jonathan Hafetz have thoughts here and here.

There are a number of complicated questions to unpack:

1. Does the Constitution guarantee some minimum amount of habeas protection? Justice Scalia says no in his dissent in INS v. St. Cyr. Others say yes.

2. If it does require some minimum habeas protection, what does the constitutional minimum look like? The 1789 version of common law habeas that applied in the King’s Bench? Or something more robust?

3. Does constitutional habeas, if it exists, extend to aliens?

4. When can Congress suspend constitutional habeas and for how long?

5. Relatedly, does due process inform what constitutes “constitutional habeas” and, at the same time, limit Congress’s suspension power?

Balkin avoids addressing due process and equal protection arguments against the MCA, noting they require much more heavy lifting than a blog post allows. I’m undeterred by his common sense, however, and below I raise a set of preliminary questions about these claims:

1. Equal Protection. One argument against the MCA’s suspension provisions is that they apply to aliens, but not to American citizens, thereby violating the aliens’ Fifth Amendment equal protection rights. However, its an open question whether equal protection applies extraterritorially to nonresident aliens. It would odd if it did, since foreign policy by nature must prefer and protect the interests of citizens at the expense of those beyond our borders.

That intuition is confirmed by case law. In the Insular Cases, which arose out of legal challenges to Congress’s disposition of conquered territories acquired in the Spanish-American War, Justice Brown said that “the power to acquire territory by treaty implies not only the power to govern such territory, but to prescribe upon what terms the United States will receive its inhabitants, and what their status shall be.”

To be sure, the Court suggested that there “are certain principles of natural justice inherent in the Anglo-Saxon character which need no expression in constitutions or statutes to give them effect or to secure dependencies against legislation manifestly hostile to their real interests.” And in Rasul v. Bush, the plurality indirectly referred to this dictum (by citing Justice Kennedy’s reliance on it in his United States v. Verdugo-Urquidez concurrence), suggesting the plurality believed some fundamental unenumerated constitutional rights may apply to Guantanamo.

Even so, by recognizing that Congress is entitled to prescribe the “status” of noncitizens in treaty-acquired territory, the Insular Cases imply that heightened equal protection review (i.e. strict scrutiny)—which presumes that classifications are strongly disfavored—doesn’t apply in Guantanamo. Moreover, the Insular Cases’ emphasis on the rights of “inhabitants” suggests that those rights attach not to territory but to pre-annexation residents of the territories—suggesting that even minimum “rational basis” equal protection principles might not apply to those who merely transit through or are forcibly detained in Guantanamo, but who have not voluntarily chosen to reside there. Finally, past Courts have repeatedly cast doubt on claims that the Constitution extends to nonresident enemy aliens in In re Yamashita and Johnson v. Eisentrager.

The equal protection claims of lawful resident aliens are equally problematic. Beginning with the Alien Enemy Act of 1798, Congress has granted resident aliens far fewer rights against executive detention than citizens. And, at a minimum, any equal protection claim must contend with the Court’s own haphazard approach to strict scrutiny of resident alienage classifications, which does not apply to deportation proceedings or to certain “constitutional prerogatives” of a democratic government (see, e.g., Sugarman v. Dougall), among which includes the conduct of foreign relations. See Harisiades v. Shaughnessy, 342 U.S. 580, 588-589 (1952) (“any policy toward aliens is vitally and intricately interwoven with … the conduct of foreign relations, the war power, and the maintenance of a republican form of government. Such matters are so exclusively entrusted to the political branches of government as to be largely immune from judicial inquiry or interference”).

2. Due Process. Another argument against the MCA is that it violates due process by denying persons an independent pre-trial judicial hearing determining whether they are a citizen or an alien.

In Verdugo, Justice Kennedy, writing in concurrence, suggested that due process is among the principles of “natural justice” that apply to aliens abroad. After Yamashita and Eisentrager, that may be dubious when applied to alien prisoners of war. But Hamdi v. Rumsfeld held that due process also requires that a “citizen-detainee seeking to challenge his classification as an enemy combatant must receive notice of the factual basis for his classification, and a fair opportunity to rebut the Government’s factual assertions before a neutral decisionmaker.” That may imply that not only citizen-detainees but detainees asserting citizenship status have a due process right to an independent hearing on their classification.

The force of this argument, though, is undercut by the fact that the Hamdi Court took care to underscore that habeas hadn’t been suspended before reaching the due process claim—suggesting, in turn, that the Court believed suspension authorizes detention without any process.

3. The Non-punishment/Punishment Distinction. While it grants limited appellate review of Combatant Status Review Tribunal’s determination of status, the MCA and Detainee Treatment Act forbid any review of the CSRT’s factual findings, which the MCA purports to make conclusive.

It might be argued that while the Suspension Clause authorizes Congress to suspend challenges by citizens or aliens to detention (the issue in Hamdi), a remedy must remain available to challenge the threshold factual determinations of who may be subject to military trial. The theory is that the Suspension Clause allows the executive to preventatively detain people without judicial process—but not to put them on trial without some minimum process.

The theory finds some support in Ex parte Milligan, which held that suspension doesn’t entitle the executive to try and punish citizens in an unlawful way. See, e.g., Ex parte Milligan, 71 U.S. 2, 125 (1868) (“Unquestionably, there is then an exigency which demands that the government, if it should see fit … should not be required to produce the persons arrested in answer to a writ of habeas corpus. The Constitution goes no further. It does not say after a writ of habeas corpus is denied a citizen, that he shall be tried otherwise than by the course of the common law.”). See also Hamdi v. Rumsfeld, 542 U.S. 507, 593 (2004) (Thomas, J., dissenting) (the “punishment-nonpunishment distinction harmonizes” the suspension precedents). Milligan recognizes, in effect, that Congress can’t suspend the use of a habeas to challenge certain features of executive trials.

However, Quirin, Yamashita, and Eisentrager have subsequently limited Milligan’s application to enemy combatants, by rejecting claims that enemy alien combatants and enemy citizen combatants are generally protected by the Bill of Rights or federal statutory law. However, a narrow bit of Milligan may survive. The combatants in Quirin and Eisentrager admitted they fell within the class of individuals that the political branches had determined to try; instead, they challenged the constitutionality of the trials themselves. Hence these cases don’t squarely extinguish a claim that due process requires a minimal, non-suspendable, habeas review of facts on which jurisdiction of military commission trials are premised.

To sum up, its arguable, based on a synthesis of Milligan and subsequent cases, that Congress (1) cannot limit detainee’s use habeas to challenge his citizenship status when—and only when—(2) the detainee is to be put on trial before a military court, and (3) citizenship of the detainee precludes the military court’s legal jurisdiction to try and punish. This argument is probably best framed as a due process right that belongs to citizens, that informs the constitutional core of habeas, and that imposes an external limit on Congress’s suspension power.

The claim is complicated a number of questions, including about how to define the constitutional core of habeas. Some argue that core extends no farther than eighteenth century common law practice, which forbid courts from determining the facts giving rise to detention. See, e.g., INS v. St. Cyr, 533 U.S. 289, 343 (2001) (Scalia, J., dissenting) (“in this country, until passage of the Habeas Corpus Act of 1867, and in England, the longstanding rule had been that the truth of the custodian’s return could not be controverted”). If that were true, then Milligan was wrong and the MCA—which permits detainees to appeal of pure questions of law to the D.C. Circuit–does not “suspend” the constitutional “core” of habeas at all.

The upshot: The Military Commission Act is not patently unconstitutional—but it is hardly on uncontrovertible constitutional footing, either.

Are Environmentalists Stark Raving Mad?

You might think so by reading the daily environmental trade press. Case in point – in today’s Greenwire (subscription required), we’re informed of a new study published in the Proceedings of the National Academy of Sciences (apparently, not yet posted online) about fish farms. The authors of the paper believe that sea lice from farmed salmon caused a 9 percent to 95 percent mortality rate in wild juvenile salmon populations in British Columbia. The National Oceanic and Atmospheric Administration, however, is not persuaded, and notes that the study does not prove the point and that plenty of other studies have found to the contrary.

Now, set aside any doubts. Let’s just assume that sea lice from farmed salmon migrate to wild salmon and that it may – but may not – kill them. How do you feel about that? Now, my reaction is “Hmm. OK. I’ll keep an eye on that. Now, what’s for lunch?” But I’m an enviro policy wonk and I’m paid to care. Most people would probably not give a damn one way or the other. After all, there’s a lot of things in this world to worry about, and sea lice on salmon just isn’t something worth spending more than, say, a minute on at most.

But for environmentalists, the new report is an excuse for political road-rage. “This is an atrocity, this should just piss people off,” claims Prof. John Volpe, co-author of the study.

An atrocity? You mean, like what happened in Lancaster the other day, or what is going on today in Darfur? That’s a little extreme, isn’t it? And how reasonable is it to go to the water cooler with teeth grinding and nostrils flaring after hearing of salmon and sea lice?

“What’s the matter, Jerry? You look pretty mad.”

“I’ll tell you what’s the matter! Sea lice from commercial aquaculture is finding its way to wild salmon populations, and, by God, it REALLY TICKS ME OFF!!”

To quote Jerry Seinfeld, who are these people? Well, Greenwire has an answer to that too (but you will need a subscription to read it). According to “The American Environmental Values Survey,” a new report released by ecoAmerica (an environmental research firm), environmental groups reach out to roughly the same 3 million people, which represent about 1 percent of the population, and surveys repeatedly show the environment is a top priority for roughly the same small percentage of the public. Only 44 percent of people are willing to label themselves “environmentalists,” only 48 percent think that environmentalists are “practical,” and 44 percent described environmentalists as “self-righteous” (ONLY 44 percent??).

Keep this in mind as we enter the political season. The Greens are a pretty weird – and a pretty overrated – voting block.