October 17, 2006 3:53PM

Net Regulation Proponent Concedes: Markets Work

Other than the religious devotees of regulation, most observers of the drive for “network neutrality” regulation have recognized that the essential question is whether there is sufficient competition among broadband providers. If there is enough competition, broadband providers can’t use their market power to do bad things to consumers and public utility regulation of broadband is not needed.


Columbia law professor and champion of net neutrality regulation Tim Wu is quoted in the October 14 Economist admitting consumers’ power to influence broadband providers:

“The public reaction has already been as powerful and effective as any law,” says Timothy Wu, a professor at Columbia Law School who is credited with coining the term “net neutrality”. The debate has put the telecoms companies on notice that they are being watched closely, he says, and has forced them to make public pledges not to block or degrade access. “Shame can have more power than litigation,” says Mr Wu. “The market and consumers can control bad practices, but consumers actually have to be aware of what is going on for that to happen.”

It’s an interesting strategic and ethical question whether brandishing the regulation cudgel is appropriate, but as long as it’s agreed that consumers have influence in the broadband marketplace, that question can wait for another day.

October 17, 2006 3:24PM

Christian Toleration

I’ve just seen an interesting new book, The Choice Principle: The Biblical Case for Legal Toleration, by Andy G. Olree, who is a graduate of the University of Chicago Law School, where he studied under Richard Epstein and Michael McConnell, and now teaches law at Faulkner University’s Jones School of Law. The book presents an evangelical Christian argument for a legal framework that tolerates most “sinful” choices by individuals.


Olree writes, “The Choice Principle posits that Christians are called to influence law and government in ways that maximize opportunities for human freedom of choice – that is, for individual autonomy.” And he applies that principle in ways that might surprise critics of the religious right, to issues ranging from prostitution and homosexuality to Social Security.


He criticizes Roy Moore, Jerry Falwell, Pat Robertson, and James Dobson as “fearmongers” who “simplistically reduce complex societal problems to…the age‐​old struggle of good versus evil.” But he also takes on more academically serious defenses of enforced morality, devoting an entire chapter to a critique of Princeton professor Robert George’s book Making Men Moral.


Christians and libertarians could learn a lot about each other from reading this book. Or to be more careful with my language: Christian libertarians will find this book an effective presentation of a principle they likely agree with. Non‐​Christian libertarians and non‐​libertarian evangelical Christians will find it a provocative challenge.

October 17, 2006 11:20AM

It’s Not about Same‐​Sex Marriage

The lead headline in the Washington Post on Tuesday reads “53% of Voters Say They Back Va. Same‐​Sex Marriage Ban.” Slate’s “Today’s Papers,” reporting on that story, says it shows that “Virginia voters [are] supporting a ban on gay marriage.” Washington’s public‐​radio WAMU refers to the upcoming vote as “the proposed ban on gay marriage.”


All these journalists are doing the supporters’ work for them. Bans on gay marriage have passed everywhere they’ve been placed on the ballot. That’s what the supporters of the Virginia amendment want voters to think they’re voting on. But that’s not what the Virginia amendment really does.


Same‐​sex marriage is already prohibited in Virginia, and there’s no prospect of legislative or judicial change in that fact. So this amendment is touted as banning something that is already banned.


The real impact of the amendment can be seen in its second sentence:

This Commonwealth and its political subdivisions shall not create or recognize a legal status for relationships of unmarried individuals that intends to approximate the design, qualities, significance, or effects of marriage. Nor shall this Commonwealth or its political subdivisions create or recognize another union, partnership, or other legal status to which is assigned the rights, benefits, obligations, qualities, or effects of marriage. [emphasis added]

It’s not just about same‐​sex couples, and it’s not just about marriage. The law firm of Arnold & Porter analyzed [pdf] the amendment and concluded:

the [proposed Virginia] Amendment could be interpreted by Virginia courts to have the following effects:

  • Invalidate rights and protections currently provided to unmarried couples under Virginia’s domestic violence laws;
  • Undermine private employers’ efforts to attract top employees to Virginia by providing employee benefits to domestic partners, as the courts and public medical facilities may not be permitted to recognize those benefits; and
  • Prevent the courts from enforcing –

– private agreements between unmarried couples,
 — child custody and visitation rights, and
 — end‐​of‐​life arrangements, such as wills, trusts and advance medical directives, executed by unmarried couples.

The firm went on to say: “This exceedingly broad and untested language is the most expansive such proposal ever to have been put before the voters of any state.”


Journalists should not call this “the proposed amendment to ban same‐​sex marriage.” Rather, they should give readers and listeners a more accurate summary, along the lines of “the proposed amendment to restrict gay rights” or “the amendment on unmarried couples.”

October 16, 2006 4:58PM

Getting Data Breach in Perspective

Indiana University law professor and cybersecurity/​informatics expert Fred Cate wrote sensibly in this weekend’s Washington Post about data security and identity fraud. “The fact is that few if any [data] breaches lead to identity theft or other consumer injuries.”


When a Department of Veterans Affairs laptop with data on 26.5 million veterans was stolen earlier this year, VA notified all of them and asked Congress for $160.5 million to cover the cost of one year of credit monitoring. Even if the laptop had not been returned (the data untouched), this reaction would have been overkill.


Washington has a hard time responding to problems dispassionately and proportionately. If only this failing could be the crisis du jour — even just for a day.

October 16, 2006 11:39AM

Does Big Steel Still Dominate U.S. Trade Policy?

Media Name: ikenson_steel_chart_small.jpg



The chart above depicts the operating performance of the industry that is most protected by U.S. antidumping and countervailing duty restraints. As that chart demonstrates, the U.S. steel industry is in robust health--well outperforming overall manufacturing (i.e., its customers) for the past few years.

Should one conclude that that performance is a reflection of the insulation from competition it has been afforded? That's likely to be one of the steel industry’s arguments before the U.S. International Trade Commission, which is holding a hearing tomorrow concerning the question of whether 13-year old antidumping and countervailing duty restrictions against imported corrosion-resistant steel from six countries should be continued for at least five more years. (This paper explains why revocation in these so-called Sunset Reviews is rare).

But those restrictions, as well as the 160 other trade remedy restraints currently in place to protect the steel industry, date back to the 1990s and earlier, when the industry’s performance was much closer to the first four bars than the last three. If anything, longstanding trade protection delayed the day of reckoning for many inefficient mills by discouraging them from exiting the market and encouraging continued inefficient operation.

From an operating perspective, the year 2004 stands out as a clear dividing line between the steel industry of old, and the new, revitalized industry of today. But the dramatic industry renaissance that has bestowed market power, record profitability, and insulation from any significantly adverse effects of foreign competition on U.S. steel producers began in 2002, after the government assumed $9 billion in the industry’s unfunded pension and health care obligations.

By wiping those liabilities off of the books of several major bankrupt steel producers, that intervention paved the way for mergers and acquisitions and new labor agreements that have enabled the industry to retire inefficient capacity, cut its fixed costs, and consolidate production decisions. In 2003, the top three producers of flat-rolled steel (the steel used in autos, appliances, and construction) controlled 25 percent of flat-rolled steel production capacity. Today, the top three control 70 percent.

That concentration has given the domestic industry a high degree of market power, which enables it to prop up prices and weather downturns in demand by curtailing output. There’s nothing objectionable about that (with the exception of the government-assisted jumpstart) unless, of course, steel is a major component of the products you manufacture. What is objectionable, then, is buttressing this emerging oligopoly with continued trade restraints. Consumers of steel should be expected to adapt to the effects of greater concentration of steel production, but that adaptation requires having access to imported substitutes and supplements.

Taxpayers, steel-using industries, and consumers have subsidized this industry for too long.

The ITC’s decision, expected in December, will speak volumes to the question of whether that agency continues to be a rubber stamp for the steel lobby’s protectionist agenda.

October 13, 2006 4:01PM

Specter’s Signing Statement Bill

Whilst buried by my Cato Supreme Court Review duties, I missed an opportunity to weigh in on the summer blog debate over presidential signing statements (i.e., the president's practice of announcing how a bill will be interpreted by the executive branch).

My general views track Marty Lederman, Walter Dellinger, et al.'s analysis in this post, which concludes that most common complaints about signing statements are overblown.

There is one problem that Lederman et al. don’t mention: the risk that courts will defer to signing statements when the law is ambiguous. Currently, the Court gives deference to agencies’ interpretation of ambiguous laws, under a narrow set of conditions set out in cases like United States v. Mead. In Mead, the Court underscored that judicial deference to the executive is controlled by Congress. Courts defer to the executive when the law is unclear based on a background assumption — a legal fiction, really — that this deference is what Congress wants when it passes an ambiguous law. 

The Court has never decided whether the president deserves the same deference as the agencies under his control. Courts certainly won’t give any deference to presidential constitutional interpretations, just as they don’t give deference to the constitutional interpretations of agencies. But it's possible that future courts might defer to some nonconstitutional signing statements, and the explosion of signing statements in this administration suggests the president is perhaps making a bid for recognition of some such future deference. If that bid is successful, the president’s interpretation would act as a kind of "super-legislative" history, trumping competing legislative history by members of Congress when the text of a law is unclear.

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October 13, 2006 3:41PM

If You Cut the Budget, The Terrorists Win!

Peter Beinart tells readers of this week’s New Republic that the conservative critics of President Bush need to just get over themselves. 

As Beinart writes:

To listen to Bush's critics, you would think that discretionary, nonsecurity-related spending has exploded on his watch. [Note: Emphasis is mine — you’ll see why this is important in a minute]. But it hasn't. As the Center on Budget and Policy Priorities has shown, when you take account of inflation and population growth, it grew a mere 2 percent between 2001 and 2006. And, as a percentage of GDP, it actually fell. What has exploded — rising 32 percent after inflation and population growth — is spending on defense, homeland security, and international affairs. And the people most responsible for those increases are conservatives themselves, who demanded an expansive war on terrorism.*

The first half of the claim boils down to this: If you strip away defense, homeland security, entitlement spending and international aid — what Beinart calls "discretionary, nonsecurity-related spending" — you discover that government hasn’t really grown all that much by historical standards. 

The problem? Those categories account for 80 percent of the entire federal budget.

Call it the “Yeah, but” defense. Yeah, the budget has expanded massively, but if you take away the really big categories — and don’t feel compelled to clarify how you’re defining those big categories — then we come off looking really good! (Of course, as I’ve pointed out elsewhere, the GOP really doesn’t come off looking good. Let’s just assume they do for the sake of argument.) 

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