A Win on Student Speech in Rhode Island

The government can’t force people to promote messages they disagree with, even when – particularly when – the government actors are public university professors and the speaker is a student who needs to pass certain classes to get a degree.

William Felkner, a self-identified “conservative libertarian,” studied social work at Rhode Island College, a state school. His views unsurprisingly clashed with those of his professors, who consider the social work course – and the profession itself – to be “devoted to the value of social and economic justice.” In keeping with this philosophy, one of his professors assigned him to lobby the state legislature for a progressive bill.

Felkner refused to speak against his beliefs by lobbying in favor of progressive legislation. His term paper instead reflected his honest opinion of the bill. As a result, his professor gave him a failing grade and Felkner ultimately never completed the program.

That incident, in addition to a long string of events in which professors disparaged Felkner’s politics and tried to stifle his opinions, led him to sue the college. He argued, among several claims, that the school infringed on his right to free speech, compelled him to speak against his conscience, and placed unconstitutional conditions on his earning his degree.

Conservatives and libertarians are often pushed out of progressive academic circles by faculty or administrators. For private universities, such behavior is alarming and worth counteracting, but mostly comes down to academic freedom. Public institutions like Rhode Island College are government actors, however, and must afford students the rights guaranteed to them by the Constitution, especially the freedom of speech. The U.S. Supreme Court has long understood that the First Amendment prohibits the government from compelling an individual to express an opinion that violates his or her conscience.

Nevertheless, the lower state court was not convinced that the school compelled Felkner to speak and found that the school’s actions did not violate his constitutional rights. On appeal to the Rhode Island Supreme Court, Cato filed an amicus brief, arguing that students don’t shed their free speech rights at the schoolhouse door.

In a decision released on Monday, the state supreme court agreed, reversing the lower court’s grant of summary judgment for the school on several claims and allowing the case to go to trial. Citing the U.S. Supreme Court’s decision in Hazelwood School District v. Kuhlmeier (1988), the Rhode Island Supreme Court explained that schools and teachers have broad authority to exercise “editorial control” over student speech “so long as their actions are reasonably related to legitimate pedagogical concerns.” However, a teacher can’t limit student speech as a punishment for a student’s political views. The court held that Felkner raised legitimate issues of material fact – meaning that a jury will get to decide whether in fact the professors’ and administrators’ actions were appropriate (unless the college now decides to settle with Mr. Felkner, which is what I would advise if I were its lawyer).

Proponents of free speech should regard this as a win for students’ First Amendment rights on college campuses. The court’s decision here comes not a moment too soon, as schools increasingly attempt to silence students and regulate their speech. As a procedural matter, it also bodes well that state supreme courts still adhere to the “material facts in dispute” standard for summary judgment.

In sum, no person in a public university, whether a student or a teacher, should be forced to say something that they find objectionable, and the case of Felkner v. Rhode Island College stands in recognition of that important principle. 

MMT’s Big Coin Gambit

Modern Monetary Theory has been accused, not always fairly, of more serious shortcomings than you can shake a stick at. Among other things, critics have faulted it for not being all that modern, for passing-off tautologies as profundities, for wrongly assuming that the value of fiat money rests upon the government’s power to levy taxes, and for misunderstanding the causes of inflation while being grotesquely overconfident in fiscal authorities’ ability to control it.

But a shortcoming of Modern Monetary theorists seems to me more irksome than any of the flaws in their theories. I mean their habit of confounding things they would like government officials to do with things those officials are both able and willing to do. They acknowledge legal constraints on public policy options, though only according to their own often strained interpretations of what existing laws allow.  As for other sorts of constraints — political, ethical, psychological, etc. — they brush them aside altogether. Because they wish that policymakers would play by different rules, they claim that the rules are in fact those they’d prefer. In other words, they mix-up normative with positive economics. Then, to add insult to injury, they heap scorn upon their critics for having the brass gall to note particular ways in which the real world stubbornly refuses to conform to their desires.

In a previous Alt-M post, I offered as an example of these habits Stephanie Kelton’s suggestion, in her article “We Can Pay for a Green New Deal,” that Congress can write checks willy-nilly, without ever having to worry about them bouncing, because (she claims) the Federal Reserve is bound to create new money to cover any difference between what Congress spends and the funds it raises though taxation and borrowing. In effect, Professor Kelton assumes that the Treasury has unlimited Fed overdraft privileges. Yet the truth, I pointed out, is that the Treasury has been altogether prohibited from overdrawing its Fed account since 1980. Nor, I added, is there any other mechanism by which the Fed would be automatically compelled to accommodate the Treasury’s needs.

Cuban Credible Fear Asylum Claims Surge After Ending Wet Foot, Dry Foot

In January 2017, President Obama eliminated the decades-long policy of “wet foot, dry foot” that allowed Cubans who made it to the United States to enter legally in order to apply for a green card under the Cuban Adjustment Act of 1966. Prior to the change, the numbers of Cubans had steadily increased to the highest levels since the early 1990s. At the time, I wrote:

Because the normal asylum system is so backlogged, [ending wet foot, dry foot] could result in Cubans filing asylum claims under the normal system, as Central Americans do … The current asylum system, which is already massively backlogged, will only grow more so as a result. At a time when a record number of asylum seekers from Central America are coming to the border, the United States is going to throw the Cuban refugees in with the rest, making a dysfunctional system that much more broken.

While the number of Cuban arrivals did drop precipitously, the numbers have spiked once Cubans understood that they could access the normal asylum process. Figure 1 shows the number of “credible fear” claims—which trigger the start of the asylum process at the border or ports of entry—by Cubans since December 2016, rising from none to more than 1,000 in December 2018 and January 2019. Altogether, Cubans have submitted about 11,000 asylum claims. They first cracked the top 5 nationalities for credible fear claims in April 2017, and they have seen a 708 percent increase since then.

Figure 1: Cuban Credible Fear Claims by Mont

So far in the first four months of fiscal year 2019 (starting in October 2018), Cubans have averaged 11 percent of all credible fear claims, which is remarkable given the surge of Central Americans during this time. In December 2018, they reached 14 percent of all claims and cracked the top 3 nationalities with the most claims for the first time (knocking out Salvadorans). It is clear that the end of wet foot, dry foot has only contributed to further overwhelming the nation’s asylum system.

Figure 2: Cuban Share Credible Fear Claims by Month

Cubans who used to come to the U.S. ports of entry along the Mexican border to seek wet foot, dry foot protection continue to apply for asylum at ports of entry. The Trump administration’s metering policy at ports—which places a hard cap on the number of asylum claims that can be made per day—is actually limiting the growth in the Cuban asylum claims.

The limit is causing long backups at ports of entry as rejected applicants pile up on the Mexican side awaiting their turn. Cubans first tried to enter at ports in the Laredo field office in Texas because it is the shortest trip. But Figure 3 illustrates how the policy of metering—which came into full force in mid-2018—caused Cubans who were pushed back at the Laredo ports to move further west to the El Paso ports and try again there. This increased the share of Cuban claims at El Paso from 1 percent to 54 percent.

Figure 3: Share of Undocumented Cuban Arrivals (Inadmissibles) at Ports of Entry by Field Office

Partly as a result of the metering, the arrivals at ports are still far below the levels in late 2016 (Figure 4). But we don’t have figures for Cuban arrivals between ports of entry, and we know that metering already causes Central Americans seeking asylum to cross illegally between ports. Cubans have such a long tradition of entering through ports and may face fewer cartel threats in Mexico that it is possible that they are still waiting on the other side of the border. On the other hand, homelessness in Mexico is untenable, so it is likely that Border Patrol will witness an increase in crossings between ports by Cuban asylum seekers this year.

Figure 4: Undocumented Cuban Arrivals (Inadmissibles) at Ports of Entry

Whatever the case, ending wet foot, dry foot has exacerbated America’s immigration problems. Yes, the flow of Cubans is lower now, but under the old policy officials could simply parole the arrivals into the country without spending an enormous amount of resources on interviews, transportation, detention, and courts. Forcing Cubans to undergo the formal asylum process has only further burdened the system.

The administration should restore the wet foot, dry foot policy, which worked for this country for decades. The ultimate result was that more than a million Cubans freed themselves from a communist regime under the policy. As I have stated before, Cubans don’t receive special treatment because they are inherently unique but because Cuba was—until Venezuela—the only not free country in the Americas, according to Freedom House. The law states that the Cuban Adjustment Act of 1966 would end only when “a democratically elected government in Cuba is in power.”

This was a sound principle and one that should be expanded to Venezuelans. Taking Cubans and Venezuelans out of the broken asylum system would streamline the process for everyone else and make the asylum process function better than it does under the status quo.

Community Development Block Grant Spending is Poorly Targeted, Part II

Last week the White House budget called for eliminating Community Development Block Grant (CDBG) spending a third year in a row. Similar to political years past, media outlets are running glowing stories in defense of CDBG.

Of course, these articles strenuously avoid mentioning any less-useful activities that CDBG pours money into, and avoid mentioning that if politicians cared about these activities as much as they claim then they would likely be willing to support them with local money in CDBG’s absence.

In reality, CDBG supports crony spending and a variety of activities that cater to high income preferences rather than low-income needs, along with any activities that can reasonably be defended as beneficial to the poor. Additionally, because the mission of the program is broad and ambiguous, and the funding scattershot, results are mostly unmeasurable. As a recent Urban Institute report noted, “it is difficult to measure long-term outcomes and attribute them directly to CDBG.”

The White House budget correctly points out that CDBG is ineffective at targeting funding to need, and the allocation formula HUD uses to allocate funding is dated. New Cato analysis supports this and indicates program dollars are unevenly distributed among U.S. poor (see below).

Figure 1. CDBG spending per person in poverty, 2013-2018

Map: CDBG spending per person in poverty

Data Source: U.S. Department of Housing and Urban Development

The amount of CDBG spending per poor person varies substantially by location, and substantially more spending per poor person is concentrated among locations in the South Central, South Atlantic, and Midwestern states compared to Western, Southeastern, or Southwestern states.

This distribution is at least partly because HUD allocates CDBG money using formulas which prioritize funding to communities with older housing, crowding, and lags in population growth, among other things. Share of poverty is also considered in the allocation process, and constitutes between 30 and 50 percent of the allocation formula, but is often dominated by these other considerations.  

If CDBG were a program that served low-income people’s needs, spending would be allocated based on individual need rather than tenuously-related location-based characteristics. Benefits would be directed to poor people, rather than politicians, businesses, and buildings, and funding would be required to produce clear and measureable results. As the White House points out, that isn’t the CDBG program we know. 

Research assistance provided by Robert Orr.

On Asbestos Blame, Supreme Court is Still At Sea

With Justices Kavanaugh and Roberts crossing over to join the liberals, the Supreme Court ruled 6-3 today in Air & Liquid Systems v. DeVries that federal maritime law permits seafarers claiming asbestos-related ailments to sue manufacturers of ship components such as boilers and turbines that contained no asbestos, on the grounds that they knew that the mineral would be used in conjunction with their product later in such forms as insulation or connective gaskets. Justice Neil Gorsuch, dissenting on behalf of himself and Justices Thomas and Alito, had the better argument: doing so requires stretching traditional bounds of tort liability in a way that imposes unreasonable duties to warn. By requiring makers of components to pay for damages they did not cause in the name of warnings that the U.S. Navy almost certainly would not have heeded, the Court yields to an impulse to round up deep pockets lest a sympathetic set of litigants otherwise go uncompensated.

I wrote about the case in December and quoted libertarian law professor Richard Epstein, who criticized the use of legal doctrine here “to serve as surrogate (and extremely costly) social insurance: ‘the bankruptcy of parties that should be liable [i.e., primary asbestos manufacturers] is no reason to impose onerous liability on parties that should not be liable.’” At the same time I noted the argument, which plaintiffs relied on heavily and seems to have influenced today’s outcome, “that [federal] maritime law takes a particular interest in the welfare of seafarers, and a rule that permits them to win more lawsuits advances their welfare.”

In today’s majority opinion, Justice Kavanaugh purports to steer a middle path between the liberal “foreseeability” rule announced by the Third Circuit below (if the maker of the “bare-metal” component could have foreseen the asbestos use, it had an obligation to warn) and the traditional tort rule (you don’t have to warn of the dangers of other people’s products) by attaching an additional restriction: the integration of the other, dangerous product must be “required” if the overall assembly is to function as intended. In his dissent, Gorsuch points out that this new complication not only has no evident grounding in existing tort doctrine but is not in fact easy to apply or predict. Can we know that asbestos was required when, especially in recent years, other insulation materials were available but were spurned by the Navy as too expensive or inconvenient? Many parts of ships, or other complex systems, can be deemed “required” for the whole. If a type of vehicle is known to flip over too easily, are we sure the victims could not sue the makers of the windshield wipers for not warning of that, even though the wipers did not in any way cause the rollovers?

But it seems almost quaint to ask whether a newly announced legal standard can readily be applied and predicted in the context of asbestos law, a sui generis creation in which the courts regularly extract vast sums from defendants on the basis of legal standards assuredly not recognized in law at the time those defendants acted in the 1950s, 1960s, and 1970s. The implications of assigning retrospective liability to actions lawful at the time loom large and disturbing over continuing expansions of liability like the one announced in today’s case. 

Federal Gas Tax Increase Not Needed

President Trump’s new budget proposes to increase federal spending on infrastructure by $200 billion over 10 years. Many members of Congress are supportive. Some favor raising federal gas taxes to fund more highway spending, and President Trump may be on board.

However, increasing federal gas taxes and federal infrastructure spending is a bad idea. For one thing, the vast majority of government infrastructure is owned by the states, including 98 percent of all U.S. streets and highways. The states have many options to finance their highways and other infrastructure including state gas taxes, sales taxes, debt, user charges, public-private partnerships, and privatization.

A federal gas tax hike makes no sense because states can raise their own gas taxes anytime they want. Indeed, half the states have raised their gas taxes in just the past six years, as the Wall Street Journal reported yesterday:

Ohio Gov. Mike DeWine is pushing for an 18-cent-per-gallon increase in the state’s gas tax after he said he discovered a $1 billion infrastructure spending hole that transportation officials say was masked for more than a decade by borrowing.

The proposal is running into objections from some state lawmakers and sparking debate over how much the state should spend on new transportation projects and how much of that should be borne by taxpayers.

Governors in more than half a dozen states are considering boosting gas taxes. They follow more than two dozen states that have done so since 2013, as rising construction costs and greater fuel efficiency erode revenue generated from the taxes.

The chart shows that while the federal gas tax has been held at 18 cents per gallon, state gas taxes have risen steadily, according to API data. The average state gas tax increased from 21 cents per gallon in 1994 to 34 cents per gallon today, which includes excise taxes and other taxes on gasoline.

More on highways and infrastructure here and here.

Government Can’t Team Up with Your Competitors to Deny You Just Compensation

In the late 1970s, Congress passed the Wright Amendment to encourage the development of Dallas/Fort Worth Airport by restricting a nearby airport, Love Field, to servicing final destinations only in Texas and four contiguous states. Over time, pressure began mounting to “Free Love Field” and allow more interstate air travel. Love Terminal Partners (“LTP”) owned a lease of 26.8 acres of Love Field that gave it access to the runways and the ability to offer air passenger service. In 2000, LTP built a six-gate terminal on its acreage near Lemmon Avenue. Although it could not operate profitably due to the Wright Amendment, LTP invested tens of millions of dollars in this terminal on the reasonable view that that the restrictions would eventually be lifted and cause the terminal’s value to increase significantly.

But in 2006, five interested parties—Dallas (which owned Love Field), Fort Worth, Southwest Airlines, American Airlines, and the Dallas-Fort Worth Airport Authority—joined with the federal government to rewrite the Wright Amendment and wipe out LTP as a viable competitor. Under their “Five Party Agreement,” the parties sought to reduce the total number of gates at Love Field, six of which would be removed from the Lemmon Avenue terminal. Dallas also agreed to acquire and demolish LTP’s terminal. This arrangement was codified in federal law through the Wright Amendment Reform Act (“WARA”), after which LTP stopped paying rent and the City of Dallas evicted the company and demolished its terminal.

LTP brought a takings claim against the United States in the Court of Federal Claims, alleging that WARA resulted in a regulatory taking of its valuable property rights and a physical taking of the Lemmon Avenue terminal. The court found that Dallas’s acquisition and demolition of the Lemmon Avenue terminal constituted a physical taking under the Fifth Amendment. Moreover, it found a regulatory taking under both the Lucas and Penn Central tests—derived from cases in 1991 and 1978, respectively—because WARA limited LTP’s use of its lease such that it rendered it without economic value. The court awarded LTP $133.5 million in just compensation for these takings. The U.S. Court of Appeals for the Federal Circuit reversed that decision, finding that the gates had no economic value before the passage of WARA and thus had lost no value after they were shut down. The court insisted that no compensation was required because LTP could not prove that the gates had any market value before their destruction, even though the lower court found that LTP’s long-term lease was valuable given that the Wright Amendment restrictions on Love Field were unsustainable.

LTP is now petitioning the Supreme Court to review the Federal Circuit’s misguided decision. Cato has joined the National Federation of Independent Business and four other organizations on an amicus brief in support of LTP. We argue that the Court should clarify that courts should consider a property’s prospective economic value when evaluating the just compensation due from regulatory takings.