Cato Studies: “China, Russia, and U.S. Postal Service”

September/​October 1999 • Policy Report

The U.S. Postal Service’s new regulations on commercial mail‐​receiving agencies (CMRAs) and private mailboxes “constitute an unwarranted invasion of privacy and an expansion of the Postal Service’s powers,” writes Rick Merritt in “The U.S. Postal Service War on Private Mailboxes and Privacy Rights” (Cato Briefing Paper no. 48). In what it called an attempt to combat mail fraud, the Postal Service required that by June 24, 1999, all CMRAs that offer rental of private mailboxes have collected from their customers confidential information that the Postal Service itself is not allowed to collect. Furthermore, starting as early as October 24, 1999, the USPS will deliver mail only to the private boxes addressed in a format requiring that the acronym PMB (Private Mail Box) precede the renter’s box number on a separate line in the address. Those regulations, Merritt says, violate the privacy rights that cover USPS and could actually facilitate criminal activity. In addition, because it is impossible for box holders to know everyone who might have their private box addresses on file, many otherwise deliverable pieces of mail will be returned to the sender, marked “address unknown.”

Borking Dissent on Campaign Finance

When Senate Majority Leader Trent Lott asked that Bradley A. Smith be appointed to the Federal Election Commission, advocates of “good government” launched a heated attack against the nomination, denouncing Smith as “not fit to serve” because of his “radical” views. In “Mr. Smith, Welcome to Washington” (Cato Briefing Paper no. 49), Cato vice president for legal affairs Roger Pilon notes that “in case after case, the courts have been on [his] side, not on the side of his critics.” The paper says the real question to be answered in the battle over the FEC nomination of Smith is, “Just who is the radical?” Pilon notes that “efforts to vilify prospective appointees are not uncommon in Washington, of course, but they are especially absurd in this case.” Smith, a law professor at Capital University in Columbus, Ohio, and a Cato Institute adjunct scholar, “has established himself, since graduating from Harvard Law School, as one of the nation’s foremost experts on campaign finance.” Why the virulent opposition? Pilon answers: “Smith’s ‘crime,’ it seems, is to have challenged the conventional wisdom that drives today’s campaign finance debate. The thrust of his writing is that much of what has passed for ‘reform’ has in fact made the system worse.” Professor Smith’s nomination threatens to expose the true radicalism of the “good‐​government” groups.

Redefine Mission of Special Operations Forces

The military’s Joint Combined Exchange Training program is being used to advance questionable foreign policy goals, says a new study from the Cato Institute. In “Special Operations Military Training Abroad and Its Dangers” (Foreign Policy Briefing no. 53), authors Ivan Eland and John Rudy argue that JCET, under which Special Operations Forces can be deployed anywhere without congressional oversight or debate, must be redefined to avoid entangling the United States in “petty military conflicts and militarizing U.S. relations with other nations.” Eland and Rudy conclude that “the JCET law should be repealed and replaced by an explicitly limited program with the exclusive purpose of training SOF personnel.”

Gambling Regulation Risks Too Much

“The federal government should resist pressure to involve itself further in gambling,” writes Wall Street analyst Guy Calvert in “Gambling America: Balancing the Risks of Gambling and Its Regulation” (Policy Analysis no. 349). “There may be inherent risks to gambling, but we should remember that government intervention entails risk too.” Calvert points out that the National Gambling Impact Study Commission, created by Congress to study the “social costs” of gambling as well as to examine regulatory options, fails to review the true costs of government regulation. “A coercive effort to eliminate or reduce gambling must compete with that formidable opponent, human nature. Lawmakers need to balance the risks,” he says. He argues that the best remedy for compulsive gamblers is counseling and abstinence, not government intervention to prohibit or limit gambling.

Maintain Normal Trade Relations with China

Normal trade relations with China are too valuable to revoke, write the authors of “Trade and the Transformation of China: The Case for Normal Trade Relations” (Cato Trade Briefing Paper no. 5). China’s opening to the West through trade and economic reforms represents “one of the most remarkable changes in history,” writes Ned Graham, president of the Christian missionary group East Gates International. The authors outline how U.S. engagement with China has led to immense social, economic, and political gains for both countries. Other experts whose views appear in the paper include Robert Kapp, president of the U.S.-China Business Council; the Brookings Institution’s Nicholas Lardy; and Daniel Griswold, associate director of Cato’s Center for Trade Policy Studies. On July 28, 1999, the House voted 260–170 to extend normal trade relations with China for another year.

Plans to “Save” Social Security Deeply Flawed

Plans to “save” Social Security proposed by both President Clinton and the Republican leadership in Congress are deeply flawed, says Darcy Ann Olsen, entitlements policy analyst at Cato. In “Social Security Reform Proposals: USAs, Clawbacks, and Other Add‐​Ons” (Cato Briefing Paper no. 47), Olsen examines participation rates in 401(k) plans with employer contributions to determine probable participation in the president’s proposed Universal Savings Accounts and finds that those accounts are unlikely to benefit low‐ and middle‐​income workers. The study finds that half of workers earning less than $35,000 a year would not participate in USAs. “Workers who are either unable or unwilling to save more will not begin to do so simply because the government opens an account in their name,” she writes. A better way to fund personal accounts is to allow workers to redirect a portion of the current payroll tax to new, individually owned retirement accounts.

Russia Still Socialist, Despite Reforms

“Despite the appearance of reform, in important ways Russia’s financial sector is little changed from the Soviet era,” write Kurt Schuler and George A. Selgin in “Replacing Potemkin Capitalism: Russia’s Need for a Free‐​Market Financial System” (Policy Analysis no. 348). “Russia has not had for decades and does not now have anything close to free trade in money,” the authors contend, pointing out that Russia’s institutions are still fundamentally socialist. “It is grotesque to blame laissez faire for the current financial crisis and Russia’s wider economic problems since the Soviet Union dissolved.” Schuler, a monetary economist, and Selgin, an associate professor at the University of Georgia, argue that U.S. and international lenders should stop supporting current Russian institutions. Instead, they advocate several structural changes to resolve Russia’s current financial crisis. “Russia’s current financial institutions have not worked and will not work well. The sooner people understand that, the better off the Russian public and taxpayers in Western countries will all be,” the authors conclude.

Bring Common Sense Back to Tort Law

Contemporary tort law is hostile to individual liberty, writes Michael I. Krauss, professor of law at George Mason University, in a new Cato study. “Courts regularly resolve disputes by applying tort principles when they should apply the law of contracts. Traditional rules of liability have all too often been replaced by rules, if they can be called such, that are little connected to common‐​sense notions of individual responsibility,” writes Krauss in “Restoring the Boundary: Tort Law and the Right to Contract” (Policy Analysis no. 347). The tort “crisis,” which is most evident in product liability cases and malpractice suits, exists, not because corporations are “oppressing” individuals, but because “our rights have been given increasingly less respect by government,” Krauss argues. The consequences of the “deep‐​pocket principle” that now dominates tort law, says Krauss, are myriad. “Opportunities are forgone, financial disaster is always just around the corner, and the aggregate costs for everyone grow larger.” To remedy the situation, the author argues that states need to reestablish the boundary between contract and tort, allowing private parties rather than courts to decide the terms of their relationships.

This article originally appeared in the September/​October 1999 edition of Cato Policy Report.