There’s plenty of criticism flying around about the new farm bill. It spends unprecedented amounts of money to prop up one of the most successful industries in the country. It uses Soviet-style central planning to maintain food prices and make rich farmers richer. Its commodity programs distort trade in violation of global trade rules. 

But this year’s the farm bill had the potential to mitigate some these sins by repealing a number of high-profile protectionist regulations. Despite a few close calls, however, the final version of the bill kept these programs in place, exposing the United States to possible retaliation.

COOL

One of those programs is the mandatory country-of-origin labeling (COOL) law. This requirement was first imposed by the 2002 farm bill. Ostensibly designed to increase consumer awareness, the true impact of the program is to push foreign-born cattle out of the market. The law requires meat packers to keep track of, and process separately, cattle that was born and/​or raised for some time in Canada. The added expense benefits a portion of U.S. cattle ranchers at the expense of meat industry as a whole.

The negative impact on the Canadian and Mexican cattle industries was enough to prompt a complaint at the WTO. After the United States lost that case, the administration amended the regulation. But the new regulation, rather than bringing the United States into compliance, actually makes the law even more protectionist. Canada has made clear its intention to impose barriers on a wide range of U.S. products in retaliation.

Repealing this disastrous regulation through the farm bill was discussed during numerous stages of the legislative process, but no language on COOL was ever added to the bill.

Catfish

Another program that could have been fixed by the farm bill was a bizarrely redundant and purely unnecessary catfish inspection regime. The new system would cost an estimated $14 million per year to administer and (by the USDA’s own admission) do nothing to improve the safety of catfish. However, the new institutional requirements imposed on catfish farmers to comply with the new regime would all but eliminate Vietnamese competitors from the market. The U.S. catfish industry and their allies in Congress are all for it.

Even though both house of Congress had at one point or another passed bills that repealed the new catfish regime, the final bill that came out of conference kept the redundant system in place.

The inspection issue has complicated negotiation of the Trans-Pacific Partnership, of which Vietnam will be a member, and could become the basis of a complaint at the World Trade Organization. 

In the words of Sen. Mike Lee, the farm bill is “a monument to Washington dysfunction, and an insult to taxpayers, consumers, and citizens.” It is also the most popular vehicle for imposing protectionist regulations that serve a small set of businesses at the expense of the national economy. 

There was hope that this bill could roll back some of the damage done in the past, at least for a handful of odious regulations. That hope was sorely misplaced.

John McGinnis has some kind words for work I oversee here at Cato in a recent blog post of his entitled: “The Internet–A Technology for Encompassing Interests and Liberty.”

As he points out, the information environment helps determine outcomes in political systems because it controls who is in a position to exercise power.

The history of liberty has been in no small measure the struggle between diffuse and encompassing interests, on the one hand, and special interests, on the other. Through their concentrated power, special interests seek to use the state to their benefit, while diffuse interests concern the ordinary citizen or taxpayer, or in William Graham Sumner’s arresting phrase, The Forgotten Man. When the printing press was invented, the most important special interests were primarily the rulers themselves and the aristocrats who supported them. The printing press allowed the middle class to discover and organize around their common interests to sustain a democratic system that limited the exactions of the oligarchs.

But the struggle between diffuse and special interests does not disappear with the rise of democracy. Trade associations, farmers’ associations and unions have leverage with politicians to obtain benefits that the rest of us pay for. As a successor to the printing press, however, the internet advances liberty by continuing to reduce the cost of acquiring information. Such advances help diffuse groups more than special interests.

The Internet is the new printing press, and we’re generating data here at Cato that should allow it to have its natural, salutary effects for liberty.

My favorite current example is the “Appropriate Appropriations?” page published by the Washington Examiner. It allows you to easily see what representatives have introduced bills proposing to spend taxpayer money, information that—believe it or not—was hard to come by until now.

In John McGinnis, we have a legal scholar who recognizes the potential ramifications for governance of our entry into the information age. Read his whole post and, for more in this area, his book, Accelerating Democracy: Transforming Governance Through Technology.

Last week, the Supreme Court of Michigan rejected a legal challenge to the Michigan Medical Marihuana Act (MMMA). Although limited to the state of Michigan, this precedent helps to build momentum for other states to move in the direction of marijuana legalization.

By way of background, in 2008 Michigan voters approved a state initiative that would allow medical marijuana for certain qualifying patients. In 2010, the City of Wyoming enacted an ordinance that essentially prohibited marijuana (no medical exceptions). John Ter Beek is a resident of the City of Wyoming and he claimed that he was a qualified patient under the state law and he argued that the state law preempted the city ordinance. Lawyers for the City of Wyoming responded with the argument that the state law was itself invalid because it violated the supremacy clause of the Federal Constitution. That is, since federal law (the Controlled Substances Act (CSA)) prohibits the possession of marijuana, no state can change its law to allow marijuana sales, or even possession.

The Supreme Court of Michigan unanimously sided with John Ter Beek. Writing for the court, Justice McCormack said, “[The MMMA] provides that, under state law, certain individuals may engage in certain medical marijuana use without risk of penalty…while such use is prohibited under federal law, [MMMA] does not deny the federal government the ability to enforce that prohibition, nor does it purport to require, authorize, or excuse its violation.” Thus, there is no violation of the federal supremacy doctrine.

Recall that after Colorado and Washington approved initiatives to legalize marijuana, some former DEA administrators argued that those initiatives were invalid under the federal supremacy clause. (One even said it was a ‘no-brainer.’) The Obama administration declined to bring such a challenge and we will be hearing it less and less as these precedents pile up.

The Cato Institute joined an amicus brief that urged the Michigan Supreme Court to rule in Mr. Ter Beek’s favor. More here.

Over at Dar​wins​Fool​.com, I summarize a lengthy report issued by two congressional committees on how the Treasury Department, the Internal Revenue Service, and the Department of Health and Human Services conspired to create a new entitlement program that is authorized nowhere in federal law. Here’s an excerpt in which I summarize the summary:

Here is what seven key Treasury and IRS officials told investigators.

In early 2011, Treasury and IRS officials realized they had a problem. They unanimously believed Congress had intended to authorize certain taxes and subsidies in all states, whether or not a state opted to establish a health insurance “exchange” under the Patient Protection and Affordable Care Act. At the same time, agency officials recognized: (1) the PPACA plainly does not allow those taxes and subsidies in non-establishing states; (2) the law’s legislative history offers no support for their theory that Congress intended to allow them in non-establishing states; and (3) Congress had not given the agencies authority to treat non-establishing states the same as establishing states.

Nevertheless, agency officials agreed, again with apparent unanimity, to impose those taxes and dispense those subsidies in states with federal Exchanges, the undisputed plain meaning of the PPACA notwithstanding. Treasury, IRS, and HHS officials simply rewrote the law to create a new, unauthorized entitlement program whose cost “may exceed $500 billion dollars over 10 years.” (My own estimate puts the 10-year cost closer to $700 billion.)

The full post includes details some pretty stunning examples of how agency officials were derelict in their duty to execute faithfully the laws Congress enacts.

Manhattan U.S. attorney Preet Bharara claimed another victory in his crusade against “insider trading,” a practice he once called “pervasive.” Last week he won a conviction against Mathew Martoma, formerly at SAC Capital. 

Another big scalp was hedge fund billionaire Raj Rajaratnam, convicted in 2011 and sentenced to 11 years in prison. A decade ago Martha Stewart was convicted of obstruction of justice in an insider trading case.

Objectively, the insider trading ban makes no sense. It creates an arcane distinction between “non-public” and “public” information. It presumes that investors should possess equal information and never know more than anyone else. 

It punishes traders for seeking to gain information known to some people but not to everyone. It inhibits people from acting on and markets from reacting to the latest information. 

Martoma was alleged to have gotten advance notice of the test results for an experimental drug. Martoma then was accused of recommending that SAC dump its stock in the firms that were developing the pharmaceutical.

If true, SAC gained an advantage over other shareholders. But why should that be illegal? The doctor who talked deserved to be punished for his disclosure. However, Martoma’s actions hurt no one.

SAC avoided losses suffered by other shareholders, but they would have lost nonetheless. Even the buyers of SAC’s shares had no complaint: They wanted to purchase based on the information available to them and would have bought the shares from someone else had SAC not sold.

Of course, some forms of insider trading are properly criminalized—typically when accompanied by other illegal actions. For instance, fraudulently misrepresenting information to buyers/​sellers. However, because of the usual anonymity of stock market participants in most cases it would be impossible to offer fraudulent assurances even if one wanted to.

The government has regularly expanded the legal definition of insider trading. For instance, in 1985 the government indicted a Wall Street Journal reporter for leaking his “Heard on the Street” columns to a stockbroker before publication. 

As I pointed out in my latest Forbes online column: 

Doing so might have violated newspaper policy, but that was a problem for the Journal, not the U.S. attorney. The information was gathered legally; the journalist had no fiduciary responsibility concerning the material; there was nothing proprietary about the scheduled columns.

Other cases also have expanded Uncle Sam’s reach. Information is currency on Wall Street and is widely and constantly traded. Punishing previously legitimate behavior after the fact unfairly penalizes individual defendants and disrupts national markets.

As applied, the insider trading laws push in only one direction: they punish action. It is virtually impossible to penalize someone for not acting, even if he or she did so in reliance on inside information. This government bias against action, whether buying or selling, is unlikely to improve investment decisions or market efficiency.

Indeed, it is impossible to equalize information. Does anyone believe that such markets ever will be a level playing field? 

Wall Street professionals are immersed in the business and financial worlds. A part-time day trader knows more than the average person who invests haphazardly. Even equal information is not enough. It must be interpreted. And people vary widely in their experiences and abilities as well as access to those better able to do so. 

A better objective for regulators would be to encourage markets to adjust swiftly to all the available information. Speeding the process most helps those with the least information, since they typically have the least ability to play the system. 

Regulators speak of the need to protect investor confidence. But is there really any small investor who believes that imprisoning Martoma makes him or her equal on Wall Street? How many people put more money in their mutual fund because of the war on insider trading?

Enforcing insider trading laws does more to advance prosecutors’ careers than protect investors’ portfolios. Information will never be perfect or equal. However, adjustments to information can be more or less smooth and speedy. Washington should stop criminalizing actions which ultimately yield more benefits than costs to the rest of us.

If logic decided policy in Washington, federal spending would be low, the budget would be balanced, the benefits of regulations would exceed the costs, and policymakers would guard against unintended consequences. Unfortunately, the nation’s capital is largely impervious to logic, and the tragic results are obvious for all to see.

Emotion and intention seem to have become the principal determinants of government policy. People are poor. Increase the minimum wage. Not everyone can afford a home. Create a dozen housing subsidy programs. 

As I wrote in the Freeman:

Never mind the consequences as long as the officials involved mean well and their ideas sound good. No need to detain our leaders on white horses, who have other crusades to lead.

This widespread inability to compare consequences to intentions is a basic problem of humanity. In fact, it’s one of the reasons the Founders desired to limit government power and constrain politicians. 

For instance, the newly created federal government possessed only limited, enumerated powers. Even if you had weird ideas for transforming the American people, it wouldn’t do you much good to get elected president or to Congress. The federal government wasn’t authorized by the Constitution to engage in soul-molding.

Moreover, there would be strong resistance to any attempt to expand federal power. The constitutional system preserved abundant state authority. Three federal branches offered “checks and balances” to abusive officials or majorities. 

Most important, the majority of Americans shared the Founders’ suspicions. At the end of the 19th century a Democratic president still was willing to veto unemployment relief because he believed Congress had no authority to approve such a bill.

However, over the following century and more virtually every limitation on Washington was swept away. Equally important, as faith in religion ebbed faith in politics exploded. Today those who think with their hearts rather than their minds have largely taken control of the nation’s policy agenda.

No where has this been more destructive than in the area of poverty. How to deal with the poor who, Christ told us, would always be with us?

As Charles Murray demonstrated so devastatingly three decades ago in his famous book, Losing Ground, ever expanding federal anti-poverty initiatives ended up turning poor people into permanent wards of Washington. Worse, unconditional welfare benefits turned out to discourage education, punish work, inhibit marriage, preclude family formation, and, ultimately, destroy community. It took the 1996 reforms to reverse much of the culture of dependency.

Similar is the minimum wage, which may become a top election issue this fall. Unless businesses are charities, raising the price of labor will force them to adjust their hiring. How many low-skilled workers will be hired if employers are told to pay more than the labor is worth? There isn’t much benefit in having a theoretical right to a higher paying job if you are not experienced or trained enough to perform it.

There are similar examples in the regulatory field. No one wants to take unsafe, ineffective medicines. So the Food and Drug Administration was tasked with assessing the safety and efficacy of new compounds before they can be released. The intention is good, but ignores the inescapable trade-off between certainty and speed. 

The rise of AIDS brought the problem into stark relief, as people faced an ugly death while the bureaucratic, rules-bound FDA denied them the one effective medicine, AZT, in order to make sure it didn’t have harmful side-effects. Years before the agency held up approval of beta-blockers, killing people lest they suffer some lesser harm from taking the drug.

Few people in politics fail to claim to be acting for the public good. In many cases they really believe it. But good intentions are never enough. Consequences are critical. What you intend often doesn’t matter nearly as much as what you actually accomplish.