August 4, 2020 4:43PM

The Surgeon General Restates and Reemphasizes His Support of Syringe Services Programs

In the most recent issue of Public Health Reports, the official journal of the U.S. Public Health Service, Surgeon General Jerome Adams restated his strong support of syringe services programs (SSPs). While most people know of them as “needle exchange programs,” “syringe services programs” more accurately describes them because they actually provide a much wider array of services in addition to providing clean needles and syringes to people who inject drugs.

As Dr. Adams pointed out when he spoke at the Cato Institute last January, such programs distribute opioid overdose antidote naloxone, offer screening tests and treatment referrals for HIV and hepatitis C, and have brought many users with substance use disorder into rehab programs. With the advent of the COVID-19 pandemic SSPs can also provide COVID-19 testing.

Dr. Adams’ commentary in Public Health Reports detailed the long and proven track record of SSPs in reducing the spread of HIV and hepatitis. Now that they are distributing naloxone, they are likely to reduce overdose deaths.

The federal government does not prevent states from legalizing SSPs, and the Surgeon General along with the National Academy of Sciences, Engineering and Medicine are encouraging states to allow them to proliferate. Unfortunately, state‐​based drug paraphernalia laws make them illegal in 20 states. My state of Arizona is one of them.

Hopefully, if the Surgeon General continues to promote them, lawmakers in the holdout states will soon come to their senses.

August 4, 2020 10:21AM

Maryland Governor Reverses County’s Decree Against Private School Reopening

Invoking its public health powers, Montgomery County, Maryland, late Friday announced that it was banning private and religious schools “from physically reopening for in‐​person instruction” through October 1, no matter what combination of precautions (outdoor instruction, ventilation, small numbers only, masks, distancing) they might have been planning to manage risk.

The move sparked an instant furor in the Washington, D.C. suburban community. Gov. Larry Hogan was among the first to voice criticism, and on Monday he signed an executive order withdrawing from county health boards the authority to order school closings, saying that school districts themselves should make that decision for public schools, and that counties should not force private/​religious schools to close so long as they are operating within state and federal safety guidelines.

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COVID-19 Permanent Private School Closures

The COVID-19 crisis is wreaking havoc on all schools, but private schools are in especially grave danger. Many have long been on a precarious financial footing, forced to keep tuition as low as possible to remain viable against “free” public schools. That razor‐​thin financial model is proving very difficult to sustain as the coronavirus has led to school and church shutdowns—and hence big fundraising drops—and as tuition‐​paying families face their own virus‐​related financial problems.

See the stats  

I’d been puzzled about why, in its now‐​overturned order, Montgomery County had selected a particular date, October 1, two months out—did that reflect some sort of public health or scientific insight? Then someone pointed out that September 30 is the cutoff date in Maryland to count official public school enrollment. Many real‐​world consequences, including but not limited to the magnitude of state and federal grants, depend on the count as of that date.

Note also that at a press briefing July 22, Montgomery County Public Schools (MCPS) Superintendent Dr. Jack Smith said MCPS enrollment of new students was coming in well below expectations, with only about 300 K-12 new students enrolled as of the beginning of July compared with the more than 2,500 that had been projected by the end of August.

The safety issues here are complex and I don’t know what the right answers are, or whether there is exactly one such answer right for all kids and schools. While Montgomery County and nearby areas have had a lot of success getting COVID-19 transmission levels down, both the local prevalence of the virus and the state of knowledge about transmission and risk change constantly.

But I can see why there’s a problem in leaving an arbitrary power to shut down private and religious schools in the hands of their biggest competitor.

August 3, 2020 4:47PM

If Only Senator Hawley Could Legislate Away Unintended Consequences

Seeking to prove the old adage about roads and good intentions, Missouri Senator Josh Hawley has recently introduced legislation, The Slave‐​Free Business Certification Act of 2020, that would impose steep fines and other penalties on large companies doing business in the United States, unless they regularly audited their global supply chains and certified that they and their suppliers did not utilize “forced labor.” The bill’s presumed intent is to discourage slave labor around the world – a goal that’s both laudable and, given troubling reports out of China and elsewhere, still quite important. Unfortunately, good intentions don’t usuallynecessarily make good policy, and in this case recent history shows how Hawley’s bill would likely make things worse, not better, for the world’s most vulnerable people.

The Mercatus Center’s Tyler Cowen helpfully summarized the bill’s theoretical flaws in a recent Bloomberg column, noting that the onerous supply chain regulations would most likely cause companies – worried about high compliance costs, bad publicity, and scary penalties – simply to move their supply chains “from the poorest and neediest” countries to wealthier places clearly free of “forced labor” (which, as Cowen helpfully adds, the Hawley bill defines more broadly than slavery). Sadly, forced labor remains somewhat common around the world, but an exodus of multinational capital and business practices from these places would likely lead to worse, not better, labor conditions. And, like most forms of regulatory protectionism, the law also would likely boost largest corporations (i.e., the ones with the in‐​house lobbying, legal and accounting resources to shoulder new compliance burdens) and increase prices for U.S. consumers. This is Trade Econ 101.

We needn’t, however, rely on wonky economic theory to see the likely consequences of Hawley’s legislation. In fact, recent experience with a similar policy – the “conflict minerals” reporting requirements in Section 1502 of the 2010 Dodd‐​Frank Act – shows that, contrary to some some claims that onerous supply chain reporting mandates are easy and effective, their end result would most likely be more, not less, of the very thing the mandates are trying to discourage. Section 1502 was similar to Hawley’s proposal in that it required multinational manufacturers like Apple and Intel to audit and disclose whether their supply chains utilized “conflict minerals” (tantalum, tin, gold or tungsten, which are commonly found in smartphones and other consumer electronics) sourced from the Democratic Republic of the Congo (DRC) or an adjoining country. Section 1502 also had similar intentions: the mining of these minerals reportedly funded warlords and fueled violence in the region, so a supply chain disclosure rule would force multinationals to scrutinize their suppliers and weed out the bad actors, and thus cut off the warlords’ funds.

Unfortunately, the Section 1502 rules proved to be a huge mistake. Shortly after the law entered into force, reports emerged that, instead of complying with the new regulations, global corporations simply abandoned the DRC – and its poor miners and small‐​scale purchasers – entirely. This effective embargo on the region not only devastated it further, but it actually benefited “some of the very [DRC warlords] it was meant to single out,” allowed less‐​scrupulous Chinese manufacturers to move in, and undermined civil society groups working to end horrific violence and poverty in the DRC.

Things didn’t improve in the following years, either. In fact, Hawley’s fellow Republicans in 2013 held a hearing before the House Subcommittee on Monetary Policy and Trade on “The Unintended Consequences of Dodd-Frank’s Conflict Minerals Provision,” at which several participants from across the spectrum advocated for Section 1502’s reform or elimination due to its harmful impact on the DRC. In 2014, dozens of human rights activists and academics called for the provision’s repeal because, while a few industry giants had resumed business in the DRC, most mines remained off limits and millions of Congolese miners remained unemployed (or worse). Meanwhile, armed groups and smugglers continued to thrive.

Subsequent academic work has confirmed these anecdotes – and the activists’ worst fears. A 2016 study found that Dodd‐​Frank conservatively “increased infant mortality from a baseline average of 60 deaths per 1,000 births to 146 deaths per 1,000 births over this period—a 143 percent increase,” likely by reducing mother’s consumption of infant health care goods and services. A separate study from 2016 found that the “legislation increased looting of civilians and shifted militia battles toward unregulated gold‐​mining territories” in 2011 and 2012. Another paper from 2018 found that the policy also backfired in the longer run (2013–2015): “the introduction of Dodd‐​Frank increased the incidence of battles with 44%; looting with 51% and violence against civilians with 28%, compared to pre‐​Dodd Frank averages.” Finally, in late 2019 economist Jeffery Bloem found that “the passage of the Dodd‐​Frank Act roughly doubled the prevalence of conflict in the DRC,” and “[v]iolence against civilians, rebel group battles, riots and protests, and deadly conflict all increase within the DRC due to the passage of the Dodd‐​Frank Act.”

In short, a U.S. law seeking to discourage conflict and suffering in the DRC ended up breeding more it.

It’s a depressing tale of Unintended Consequences that puts a real face on Cowen’s theory and crystallizes the flaws in Hawley’s plan to stop forced labor around the world. It also shows why alternative policies, such as the Xinjiang boycotts and targeted sanctions that Cowen suggests, are a better approach to attacking the serious issues of slavery and human trafficking. Of course, as I noted last year, arguably the best way to improve working conditions for the world’s poorest people is freer trade with least developed countries:

The lowering of U.S. trade barriers, along with American leadership in creating agreements and institutions such as the WTO, has produced immeasurable benefits for the world’s poorest people. As the World Bank noted in its Report on the Role of Trade in Ending Poverty, since 1990, “a dramatic increase in developing‐​country participation in trade has coincided with an equally sharp decline in extreme poverty worldwide,” and the number of people living in extreme poverty has collapsed. Trade has also “helped increase the number and quality of jobs in developing countries, stimulated economic growth, and driven productivity increases.”

A new report from the International Labor Organization provides jaw‐​dropping stats in this regard: Between 1993 and 2018, the share of individuals in low‐ and middle‐​income countries working in extreme poverty fell from almost 42 percent to less than 10 percent — a decline of around 600 million people. Most moved from subsistence farming to formal wage or salary work, providing themselves with first‐​time access to health care and other benefits. And, contrary to popular belief, the job creation in developing countries did not happen primarily in “sweatshop” manufacturing: The share of industrial workers in low‐ and middle‐​income countries almost did not change between 1991 and 2018, with job growth instead coming from sectors such as construction and retail trade; between 1999 and 2017, inflation‐​adjusted real wages in these countries tripled. Child labor is also disappearing: The overall number of child workers (ages five to 17) decreased by approximately 94 million between 2000 and 2016 (from 246 million to 152 million) and is projected to decline by tens of millions more by 2025. These improvements have been especially strong among women and girls, who in many countries faced truly horrible social conditions (hunger, arranged marriages, etc.) before these new jobs existed.

I can’t say I’m optimistic that the Senator – who has elsewhere demonstratedquestionable understanding of trade and forced labor (which U.S. law already restricts) – will learn this economic lesson or the unfortunate history of Dodd‐​Frank and the DRC. Hopefully, his colleagues in Congress will learn about it before millions of the world’s poorest suffer a similar fate.

August 3, 2020 9:54AM

Occupational Licensing Reform Moves Forward

By Michael D. Tanner and Kelly Lester

With an unemployment rate currently over 10 percent and many businesses permanently closing due to the pandemic, policymakers should make it as easy as possible for unemployed workers to find new opportunities.

State policymakers have tools at their disposal that could help put the unemployed back to work by eliminating barriers that prevent workers from moving between careers. Despite a wave of deregulation early in the COVID-19 crisis, many states still have occupational licensing requirements on the books that are hindering economic recovery by choking off access to new jobs, hindering interstate mobility for workers, and increasing costs for consumers.

The often lengthy and costly process involved in getting a license to practice hair‐​braiding, nail care and many other trades represent a significant barrier to would‐​be small business owners who cannot afford the time or expense involved. Nearly two million jobs are lost annually due to licensing requirements — a burden that falls hardest on low‐​income communities.

Despite claims by licensing proponents, studies looking at a wide variety of professions have found that the licensing process does not significantly protect public health and safety. Some research has even found that licensing has a slightly negative effect on quality. But, while quality remains unchanged, prices to consumers increase. According to economist Morris Kleiner, licensing can raise prices anywhere from 5 to 33 percent depending on the type of occupation and location. It is estimated that consumers pay, in total, $200 billion annually in extra costs due to licensing.

And forget easily moving your business from one state to another. Most states will not recognize an occupational license from another state, requiring entrepreneurs to go through the costly hassle all over again.

As a result, both the current and previous administrations have called for licensing deregulation. Licensing reform is one of the major aspects of President Trump’s Governors’ Initiative on Regulatory Innovation.

States have slowly begun to act. In signing legislation that allows his state to recognize licenses from other states, Missouri Governor Mike Parson said, “Eliminating governmental barriers to employment and allowing citizens to become licensed faster is an impactful, commonsense step that we believe will have a positive impact in the lives of a lot of Missourians.”

Arizona enacted similar reforms last year. Iowa has also created a universal licensing system with hopes of increasing migration into the state. Several more states, including California, Florida, and Missouri, have made it easier for people with criminal records to receive licenses. Florida has loosened other licensing requirements as well, as has South Dakota.

While those reforms are a good first step, all states can and should go further, reviewing all current occupational licensing requirements with an eye toward standardizing requirements, reducing costs, and eliminating restrictions that are not related to public safety.

The pandemic has created a unique window of opportunity for reform, forcing states to reevaluate the impact of regulations on jobs and poverty. States should seize on this opportunity to expand the freedom to work.

July 31, 2020 4:24PM

Problems and Insights within NBC’s Report on H-2A Abuses

The H-2A visa program exists to provide U.S. farmers with legal foreign workers when they cannot find U.S. workers as an alternative to illegal immigration and illegal employment. The government requires H-2A employers provide —among other benefits—high wages, free housing, free transportation, and three meals or a kitchen. Despite these requirements, a lengthy NBC News report released this week details a story of horrific abuse of a group of H-2A workers and concludes that “as the H-2A program has expanded, it has left more guest workers vulnerable to abuse.”

Unfortunately, while highlighting important issues and one person's dramatic criminal behavior, the report has several flaws and inaccuracies that incorrectly create the impression of widespread, systematic abuse of H-2A workers. In general, nearly all H-2A workers benefit greatly from working in the United States.

Problems with NBC’s reporting

This post will criticize the use of certain data in this reporting, but I want to be clear at the outset that the narrative component of the story has journalistic merit that does illustrate real issues that can arise with the H-2A program. However, the report grounds its narrative in a couple data points delivered at the top of the piece (along with the graphic) that are problematic:

Last year, the Labor Department closed 431 cases with confirmed H-2A violations — a 150 percent increase since 2014; the agency found about 12,000 violations under the program, with nearly 5,000 H-2A workers cheated out of their wages, according to federal data.

NBC Graphic
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July 31, 2020 2:38PM

How Strict Would “Strict Scrutiny” Be Online?

My last post set out the case that the International Covenant on Civil and Political Rights (ICCPR) offered strong protections to online speech on social media. Let's turn now to assessing that case. That case depended on Article 19 of the ICCPR which established both a broad right to free speech and a tripartite test for restrictions on speech by governments. Some have argued that the vagueness prong of the tripartite test would invalidate many “hate speech” restrictions. Let’s imagine social media companies adopt ICCPR in total. Would Article 19’s tripartite test in fact invalidate restrictions on speech rights online?

The “would” in my question reflects a subjunctive mood. I am assuming that ICCPR is not in fact now applied to speech on social media. But that may be a false assumption.

In 2019, the U.N.’s Special Rapporteur on the Promotion and Protection of the Right to Freedom of Opinion and Expression argued that social media companies should apply international human rights on their platform including the tripartite test. David Kaye, the Special Rapporteur in question, has extensive knowledge of social media content moderation; he has published a well-regarded book on the topic. His normative call for action to the companies suggests they have not in fact adopted the tripartite test in their internal moderation. The experience of social media cannot tell us much about the empirical success or failure of the tripartite test.

The Special Rapporteur also notes the tripartite test obligates states that ratified the ICCPR. Accordingly, governments should have extensive experience applying the tripartite test. Apparently they lack such experience since the Special Rapporteur and the UN Human Rights Committee continue to note failures by national governments to abide by international human rights. Indeed the Special Rapporteur and the UN Human Rights Committee evaluate how well governments follow international human rights law. But they are not courts enforcing rights against recalcitrant as well as compliant malefactors.

Perhaps we can find something similar to the tripartite test in an individual nation. The test does look somewhat like the “strict scrutiny” test in American constitutional law. Courts apply “strict scrutiny” when the government restricts speech based on its content. Such restrictions may be valid only if they further a “compelling government interest” and are narrowly tailored to achieve that end. Is that a stringent test? The renowned law professor Gerald Gunther once claimed strict scrutiny was “strict in theory, fatal in fact.” In other words, when judges applied the test, they had in effect decided to strike down a government law or action. Was Gunther right?

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July 31, 2020 1:07PM

No More State Aid

In response to the crisis, federal policymakers have passed a series of aid packages providing hundreds of billions of dollars to state and local governments. Legislation, here and here, has provided $150 billion in flexible aid to the states plus more than $280 billion in other state and local aid for health care, education, housing, transit, food stamps, and other programs.

Congress and the administration are working on yet another bailout package. The House plan includes $1.1 trillion further aid to the states, while the Senate plan includes $105 billion for schools and colleges.

Federal aid to the states is harmful for many reasons. When tax revenues fall during recessions, state governments should tap their rainy day funds, cut low‐​value programs, freeze salaries, furlough workers, postpone new initiatives, and sell assets. The federal government can help by repealing rules that block the states from cutting spending on activities that receive federal money. Millions of American businesses are tightening their belts, so why not governments? Today’s lean budget climate is an opportunity to improve efficiencies in state and local agencies.

Even if some crisis aid to the states made sense, further aid would be too much. The aid already passed would mainly cover budget gaps if states were allowed maximum flexibility with the funds.

During the last recession, state tax revenues fell 10 percent from the 2008 peak and then began bouncing back. Recent projections suggest a decline this recession of no more than that. Tax Foundation surveyed current forecasts for a dozen states, and found that tax revenues are expected to fall about 4 percent in fiscal 2020 and 7 percent in fiscal 2021 from the fiscal 2019 peak. Tax Policy Center recently surveyed 27 states and found similar estimated declines, as did a recent study by economists Christos Makridris and Robert McNab. The budget gaps were larger when compared to a no‐​recession baseline of rising revenues.

In the chart, the red line is Census data showing state tax revenues rising for a decade and peaking at $1.09 trillion in calendar 2019. Then the red dashed line assumes a 10 percent drop in 2020 and recovery in 2021 and 2022. Tax revenues would be down $109 billion in 2020 and $55 billion in 2021 compared to the 2019 level, for a two‐​year loss of $164 billion. The losses would be somewhat larger measured against a no‐​recession growth baseline. But either way, the aid handed out already would mainly fill state budget gaps if states were allowed to use the money flexibly.

The blue line in the chart shows total federal aid to state governments. The projection, 2020 to 2022, is based on regular aid growing per the pre‐​virus federal budget, plus the $150 billion in flexible crisis aid already provided. The media has focused on how much state tax revenues might fall, but even if the federal government provided no crisis aid, the large part of state budgets funded by federal dollars would chug along with steady increases.

Lastly, note that while state‐​level tax revenues may fall 10 percent this year, local government tax revenues may not fall much, if at all. During the last recession, overall local tax revenues were flat for a while and then began rising again.

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