I’ll be speaking at Free Minds 2010, along with Nathaniel Branden, Anne Heller, David Kelley, Tibor Machan, Henry and Erika Holzer, Nigel Ashford, and two dozen more scholars and practitioners of Ayn Rand’s ideas and other libertarian thinkers. The conference will be held in Alexandria, Virginia, near Washington and Reagan National Airport, June 30 to July 8. If that’s too long, you can register for either the pre-July 4 or the post-July 4 half of the seminar. Either way, you can spend July 4 wandering the city the Founders established and wondering what they would think.

Check it out.

Since I first issued my challenge to debate “anyone anytime anywhere” on the (un)constitutionality of Obamacare, a lot has happened. For one thing, Randy Barnett and Richard Epstein, among many others, have published provoctive articles looking at issues beyond the Commerce Clause justification for the individual mandate — such as the argument that Congress’s tax power justifies the mandate penalty and that the new Medicaid arrangement amounts to a coercive federal-state bargain. (Look for to a longish article from yours truly due to come out in next month’s issue of Health Affairs.) For another, as Michael Cannon noted, seven more states — plus the National Federation of Independent Business and two individuals — have joined the Florida-led lawsuit against Obamacare. Perhaps most importantly, such legal challenges are gaining mainstream credibility.

Here’s a brief look at some important legal filings from the past 10 days:

1. On May 11, the U.S. government filed a response to the Thomas More Center’s lawsuit asking a federal court in Michigan to enjoin Obamacare on various grounds, including, distinct from other suits I’ve seen, religious liberty violations from having to pay for abortions. The government argues that the plaintiffs lack standing because it’s unclear whether the individual mandate will harm them and in any event this provision doesn’t go into effect until 2014 at the earliest. The government also predictably argues that the mandate is a valid exercise of Congress’s power to regulate interstate commerce and to provide for the general welfare. There is nothing surprising here and we now await the court’s preliminary ruling.
2. On May 12, the U.S. Citizens Association (a conservative group) and five individuals filed a new suit in Ohio, as Jacob Sullum notes. In addition to the government powers arguments that are being made in most Obamacare lawsuits (most notably the state suits), this suit claims a violation of: the First Amendment freedom of association (the government forces people to associate with insurers); individual liberty interests under the Fifth Amendment; and the right to privacy under the Fifth Amendment’s liberty provision, Ninth Amendment retained rights, and the rights emanating from the First, Third, Fourth, Fifth, and Ninth Amendments (such is the Court’s convoluted jurisprudence in this area). I’ll add that the attorney filing this suit, Jonathan Emord, worked for Cato over 20 years ago.
3. On May 14, Florida filed an amended complaint that, along with adding seven states, two individuals, and the NFIB — so all potential standing bases are covered — beefs up relevant factual allegations and, most importantly, shores up a few legal insufficiencies to the previous claims. This is a solid complaint, and alleges the following counts: (1) the individual mandate/​penalty exceeds Congress’s power under both the Commerce Clause and taxing power and, as such, violate the Ninth and Tenth Amendments; (2) the mandate violate’s the Fifth Amendment’s Due Process Clause; (3) the mandate penalty is an unconstitutional capitation or direct tax because it is unapportioned; (4) the Medicare expansion constitutes a coercive federal-state bargain that commandeers state officials; (5) a different formulation of coercion/​commandeering; and (6) interference with state sovereignty and functions under the Tenth Amendment. After further briefing, oral arguments on the government’s expected motion to dismiss are scheduled for September 14 in Pensacola.
4. At least one enterprising analyst has determined that the 2,400-page bill lacks a severability clause. This means that if one part of the bill is struck down as unconstitutional, the whole thing falls! — and would mean that the drafters committed legal malpractice of the highest order. I guess it goes to show that nobody has read the whole thing.

Finally, if anybody is reading this is in Seattle, I’ll be debating Obamacare at the University of Washington Law School next Thursday, May 27 at 4:30pm. This debate, sponsored by a number of groups, including the law school itself and the Federalist Society, is free and open to the public. For those interested in other subjects, I’ll be giving a different talk to the Puget Sound Federalist Society Lawyers Chapter the day before at 6:30pm at the Washington Athletic Club ($25, rsvp to Michael Bindas at mbindas@​ij.​org). The title of that one is “Justice Elena Kagan? What the President’s Choice Tells Us About the Modern Court and Confirmation Process.” Please do introduce yourself to me if you attend either event.

Indur Goklany’s great book, The Improving State of the World: Why We’re Living Longer, Healthier, More Comfortable Lives on a Cleaner Planet, has been cited this week by both John Tierney and Andrew Revkin in the New York Times.

But neither of them really says much about it. Don’t bother with the articles, just go buy the book. It’s a compelling, comprehensive case — with more than 100 charts and tables — for the case made in the title, which deserves to be bullet-pointed. It shows that the state of the world is improving because

• We’re Living Longer,
• Healthier,
• More Comfortable Lives
• on a Cleaner Planet

Check out the evidence.

In honor of World Trade Week—and for its decreed purpose of educating Americans about trade—this post is about U.S. trade policy working at cross-purposes with other policies or goals of the administration. So numerous are these examples of trade policy dissonance, that a committed wonk could devote an entire website to the task of documenting them.

If the administration were serious about making trade policy work—rather than just paying it lip service—it would compile its own exhaustive list of laws, regulations, policies, and practices that actually undermine its stated objectives of facilitating economic growth, investment, and job creation through expanded trade opportunities. Then, it would make the changes necessary to ensure that our policies are paddling in the same direction. But that is not happening—at least as far as I can see.

At the beginning of the year, President Obama announced his goal of doubling U.S. exports in five years. He even formalized the goal by granting it an official name—the National Export Initiative. Well, I see no imminent harm in setting the ambitious goal of reaching $3 billion in exports by 2015 (although I am wary of the tactics under consideration and the evocation of Soviet Five-Year Plans). But it betrays a lack of true commitment to that goal when nothing is being done to reduce the competitive burdens imposed on U.S. exporters by our own myopic, anachronistic trade remedies regime. The president exhorts U.S. exporters to win a global race, yet he overlooks the fact that Congress has tied many of their shoes together.

The costs of the U.S. Antidumping and Countervailing Duty laws on U.S. exporters are manifest in various forms, but this post concerns the burdens imposed on U.S. producer/​exporters who rely on the raw materials and other industrial inputs that are subject to AD and CVD measures. Indeed, most of the products subject to the 300 U.S. AD and CVD orders currently in effect (like steel and chemicals) are, in fact, inputs to downstream U.S. producers, many of whom compete (or try to compete) in foreign markets. (Just take a look at this list and decide for yourself whether these are products that you’d buy at the store or if they are inputs a U.S. producer would use to produce something else that you might buy at a store.)

AD and CVD duties squeeze these U.S. producer/​exporters’ profits, first by raising their input costs and then by depriving them of revenues lost to foreign competitors, who, by producing outside of the United States, have access to that crucial input at lower world-market prices, and can themselves price more competitively. This is not hypothetical. It is a routine hindrance for U.S. exporters. And one that has eluded the president’s attention, despite his soaring rhetoric about the economic importance of U.S. exports.

Consider the case of Spartan Light Metal Products, a small Midwestern producer of aluminum and magnesium engine parts (and other mechanical parts), which presented its story to Obama administration officials, who were dispatched across the country earlier this year to get input from manufacturers about the problems they confronted in export markets.

Beginning in the early-1990s, Spartan shifted its emphasis from aluminum to magnesium die-cast production because magnesium is much lighter and more durable than aluminum, and Spartan’s biggest customers, including Ford, GM, Honda, Mazda, and Toyota were looking to reduce the weight of their vehicles to improve fuel efficiency. Among other products, Spartan produced magnesium intake manifolds for Honda V‑6 engines; transmission end and pump covers for GM engines; and oil pans for all of Toyota’s V‑8 truck and SUV engines.

Spartan was also exporting various magnesium-cast parts (engine valve covers, cam covers, wheel armatures, console brackets, etc.) to Canada, Mexico, Germany, Spain, France, and Japan. Global demand for magnesium components was on the rise.

But then all of a sudden, in February 2004, an antidumping petition against imports of magnesium from China and Russia was filed by the U.S. industry, which comprised just one producer, U.S. Magnesium Corp. of Utah with about 370 employees. Prices of magnesium alloy rose from slightly more than $1 per pound in February 2004 to about $1.50 per pound one year later, when the U.S. International Trade Commission issued its final determination in the antidumping investigation. By mid-2008, with a dramatic reduction of Chinese and Russian magnesium in the U.S. market, the U.S. price rose to $3.25 per pound (before dropping in 2009 on account of the economic recession).

By January 2010, the U.S. price was $2.30 per pound, while the average price for Spartan’s NAFTA competitors was $1.54. Meanwhile, European magnesium die-casters were paying $1.49 per pound and Chinese competitors were paying $1.36 per pound. According to Spartan’s presentation to Obama administration officials, magnesium accounts for about 40–60% of the total product cost in its industry. Thus, the price differential caused by the antidumping order bestowed a cost advantage of 19 percent on Chinese competitors, 17 percent on European competitors, and 16 percent on NAFTA competitors.

As sure as water runs downhill, several of Spartan’s U.S. competitors went out of business due to their inability to secure magnesium at competitive prices. According to the North American Die Casting Association, the downstream industry lost more than 1,675 manufacturing jobs–more than five-times the number of jobs that even exist in the entire magnesium producing industry!

Spartan’s outlook is bleak, unless it can access magnesium at world market prices. Its customers have turned to imported magnesium die cast parts or have outsourced their own production to locations where they have access to competitively-priced magnesium parts, or they’ve switched to heavier cast materials, sacrificing ergonomics and fuel efficiency in the face of rapidly-approaching, federally-mandated 35.5 mile per gallon fuel efficiency standards.

And to add insult to injury, the Obama administration recently launched a WTO case against China for its restraints on exports of raw materials, including magnesium. Allegedly, since January 2008, the Chinese government has been imposing a 10 percent tax on magnesium exports. How dissonant, how incongruous, how absolutely imbecilic it is that, in the face of China’s own restraints on its exports (which the U.S. government officially opposes), the U.S. antidumping order against imported magnesium from China persists! How stupid. How short-sighted.

Spartan’s is not an isolated incident. Routinely, the U.S. antidumping law is more punitive toward U.S. manufacturers than it is to the presumed foreign targets. Routinely, U.S. producers of upstream products respond to their customers’ needs for better pricing, not by becoming more efficient or cooperative, but by working to cripple their access to foreign supplies. More and more frequently, that is how and why the antidumping law is used in the United States. Increasingly, it is a weapon used by American producers against their customers—other American producers, many of whom are exporters.

If President Obama really wants to see exports double, he must implore Congress to change the antidumping law to explicitly give standing to downstream industries so that their interests can be considered in trade remedies cases. He must implore Congress to include a public interest provision requiring the U.S. International Trade Commission to assess the costs of any duties on downstream industries and on the broader economy before imposing any such duties.

The imperative of U.S. export growth demands some degree of sanity be restored to our business-crippling trade remedies regime.

One quick addendum to my previous commentary on this week’s decision in Graham v. Florida the use of foreign law by U.S. courts: Toward the very end of Justice Kennedy’s majority opinion, in part D where he gratuitously nods to world opinion about juvenile life-without-parole (LWOP) sentences, he takes issue with one of the lesser arguments we make in our brief, that no international treaty prohibits such sentences. (See page 31 of the Graham opinion — note that Cato itself is not mentioned because we were one of 13 groups signing the brief — and pages 14–16 of our brief.) Kennedy says that the issue of whether international law prohibits the United States from imposing the juvenile LWOP sentences is beside the point, that the proper question to ask is whether such sentences are “cruel and unusual.” 

Well, yes, that’s the correct standard under the Eighth Amendment, and I’m glad that Justice Kennedy did not side with opposing amici and those in the legal academy who argue that various international conventions (or customary international law) do require such a prohibition. But Kennedy’s point here raises a further question: why is what someone in France or Japan or Brazil or Saudi Arabia says on the matter relevant to what is cruel and unusual under U.S. law?

First, they came for the sex offenders. I am not a sex offender, but I opposed the civil commitment of sex offenders by the federal government because it is not an activity within the enumerated powers of Congress. The Supreme Court decided otherwise in Comstock, with the exception of Justices Thomas and Scalia.

Next, they will come for suspected terrorists. As Dahlia Lithwick (who I rarely agree with – here is her commentary on the Heller case) points out, the Supreme Court’s decision in Comstock may have some frightening implications for domestic preventive detention of terrorism suspects in lieu of criminal prosecution.

I saw this firsthand last summer when I attended a scholars meeting with the Obama administration’s Detention Policy Task Force (the same one that Andy McCarthy publicly refused to attend). I gave my views on where detention policy should go, as did a conference room full of experts on the laws of armed conflict and criminal justice (who shall remain anonymous, as this meeting was off the record). I was dismayed to hear a law professor from a prestigious university propose a system of preventive detention as the logical solution to countering terrorism. Worse yet, to make this law less provocative, the professor further proposed that preventive detention should be applied in other criminal contexts, so that the department of pre-crime would not be seen as unfairly targeting only enemy combatants overseas. This professor had taught many of the Department of Justice staffers in the room, and I looked around to see heads nodding at the suggestion.

I responded forcefully that such a system is antithetical to American traditions of due process. Battlefield detention is necessary to incapacitate insurgents and terrorists overseas, and is often employed in lieu of killing them. Broad powers of detention without trial in the criminal context do not make Guantanamo less controversial; they bring it on to our shores and in to our courtrooms. If we have enough information to show that someone is a threat by a preponderance of the evidence in order to detain them, we probably have enough to indict them for conspiracy. One of the reasons that few people turn to political violence in the United States is that the Bill of Rights bars the government from telling the citizenry how to worship, what to think, and what they can say. Generally speaking, you have to actually be a criminal to get charged as one.

Would the votes in Comstock translate into a Supreme Court ratification of such a system? Probably not, since Kennedy and Alito stressed in their concurrences that the circumstances in Comstock are unique. And Hamdi showed us that Scalia takes habeas corpus rights seriously when it comes to citizens. Unfortunately, only Stevens shared this view and he looks to be replaced by Elena Kagan, who argued that civil commitment in Comstock was an extension of Congress’ power to create and run a prison system (not an enumerated power). But this isn’t about counting the noses currently on the Court; it’s about creating a new normal where the people in prison are detainees, not defendants.

Unfortunately, there are more than a few people in favor of such a system. Jack Goldsmith and Neal Katyal (now the acting Solicitor General) propose a terrorism court. Sens. McCain and Lieberman want to treat all terrorism suspects as enemy combatants. Sens. Lieberman and Brown want to strip the citizenship of terrorism suspects and try them by military commission. Sens. Graham and McCain plan to close Guantanamo by creating a preventive detention court. Take a conservative plan to deal with enemy combatants captured on the other side of the world, strap on some liberal angst over tea parties and militia groups, and you’ve got a bipartisan plan for wholesale degradation of everyone’s liberties.

And when the proposal comes, the first thing they’ll say is that this is how we already deal with sex offenders.

In a Cato paper released earlier this month, I argued that the glacial pace of America’s economic recovery and its growing public debt juxtaposed against China’s almost uninterrupted double-digit annual economic growth and its role as Congress’s sugar daddy have bred insecurity among U.S. opinion leaders, many of whom now advocate a more strident approach to China, or emulation of its top-down approach.

I cite, among others, Thomas Friedman of the New York Times, who is enamored of autocracy’s capacity to facilitate China’s singularity of purpose to dominate the industries of the future:

One-party autocracy certainly has its drawbacks. But when it is led by a reasonably enlightened group of people, as China is today, it can also have great advantages. That one party can just impose the politically difficult but critically important policies needed to move a society forward in the 21st century. It is not an accident that China is committed to overtaking us in electric cars, solar power, energy efficiency, batteries, nuclear power, and wind power. China’s leaders understand that in a world of exploding populations and rising emerging-market middle classes, demand for clean power and energy efficiency is going to soar. Beijing wants to make sure that it owns that industry and is ordering the policies to do that, including boosting gasoline prices, from the top down.

Friedman’s theme—but less googoo eyed and more all-hands-on-deck!—is echoed in an op-ed by China-expert James McGregor, which ran in yesterday’s Washington Post. McGregor conveys what he describes as an emerging sentiment within the U.S. business community in China. That is: the Chinese government is hell bent on creating national economic champions; is using its increasing leverage (as global financier and fastest-growing market) to impose its own interpretations of the global rules of economic engagement in support of its comprehensive industrial policy, and, ultimately; the United States must wake up and rise to the challenge by crafting some top-down industrial policy of its own.

I don’t dispute some of McGregor’s premises. China’s long process of market liberalization has slowed down, halted, and even reversed in some areas. Policies are proliferating that favor local companies (particularly state-owned enterprises), hamper the operations of foreign-owned firms, and impede market access for imports. Indeed, many of these policies are likely the product of industrial planning. 

But McGregor’s conclusion is extreme:

The time has come for a White House-led, public-private, comprehensive examination of American competitiveness against a clear-eyed view of China’s very smart and comprehensive industrial development policies and plans…What technology do we protect? What do we share? What are our commercial strategic imperatives as a nation? How do we retool the U.S. government’s inadequate and outdated trade bureaucracy to provide thoughtful strategic focus and interagency coordination? How do we overcome the fundamental disconnect between our system of scattered bureaucratic responsibilities and almost no national economic planning vs. China’s top-down, disciplined and aggressive national economic development planning machine?

Central planning may be more en vogue in Washington than usual nowadays, but to even come close to reaching his conclusion requires disregarding many facts, which is how McGregor gets there sans tongue in cheek.

First, in an effort to preempt any suggestion that China’s protectionism is nothing exceptional and can be remedied through the World Trade Organization and other channels, McGregor offers this blanket statement: “Chinese policymakers are masters of creative initiatives that slide through the loopholes of WTO and other international trade rules.” I realize that op-ed writing forces one to economize on words, but that statement, which serves as McGregor’s springboard to socialism, cannot suffice for an analysis of the facts. One of those facts is that the United States has been successful in compelling changes in China’s protectionist practices in all of the formal WTO disputes it has lodged that have been resolved thus far (6 of 8 formal cases have been resolved). If China violates the agreed rules of trade, and its actions impair benefits or impose costs on U.S. interests that are too large to ignore, pursuing a WTO case is a legitimate and proven channel of resolution. Chinese protectionism can be addressed without the radical changes McGregor counsels. 

But I think McGregor—sharing the tactics of other in the media and politics—exploits public angst over a rising China to promote his idea as the obvious and only solution to what he sells as a rapidly-metastasizing problem. McGregor argues that China is aiming to create national champions through subsidies and other preferential policies, while charging foreign companies admission to its market in the form of technology transfer, joint-venturing requirements, and local content rules. McGregor claims, that this appropriation of foreign technology will be used to “create Chinese ‘indigenous innovations’ that will come back at us globally.” Ultimately, McGregor fears that “American technology companies could be coerced to plant the seeds of their destruction in the fertile China market.”

It is telling that McGregor doesn’t consider U.S. government expropriation of those companies’ technology assets as planting the seeds of their own destruction. Indeed, it is nothing short of expropriation when technology that is owned by individual companies in the private sector, making unique decisions to improve their own bottom-lines on behalf of their own shareholders is suddenly subject to the questions McGregor wants answered: What technology do we protect? What do we share? What are our commercial strategic imperatives as a nation? Those questions, let alone the answers, imply that the U.S. government should have at least de facto ownership and control over these privately-held technology assets.

What is wrong with allowing each of these companies to decide for themselves whether they want to license or transfer some of their technology to Chinese companies, as the price of doing business in China? Some will, some won’t, but the presupposition that those who do are selling the golden goose is not based on fact. Let companies decide for themselves how to use their resources, and don’t treat industry as a monolith, as in “What are our commercial strategic imperatives as a nation?” 

Had we tried to answer and implement the answer to that question in the face the Japanese “threat” two decade ago, we’d be bereft of some of the most ingenious technological breakthroughs and the hundreds of industries and thousands of products that “our system of almost no national economic planning” has yielded.

When we peel away the chicken-little rhetoric, when we dispense with neo-Rahm Emanualism (“Never manufacture a good crisis and then let it go to waste”), when cooler heads and analytical minds prevail, the economic question boils down to this: What has been more successful at creating growth, central planning or decentralized dynamism? For both China and the United States, it has been the latter. 

My bet is that China’s re-embrace of greater central planning will be brief, as it wastes resources, yields few ‑if any- national champions, and limits innovation. For similar reasons, U.S. opinion leaders will eschew central planning, as well.