Why Fiscal Stimulus Fails

Richard Epstein*

Richard Epstein

Richard Epstein

Over the past several weeks, we’ve once again seen how the Federal Reserve’s stimulus policy has done nothing to help the economy. Fourth quarter growth for 2015 was a disappointing 0.7 percent, and there are no obvious signs of improvement in sight for 2016. Nonetheless, as the U.S. economy continues to smolder, the Fed acts as though pulling levers on interest rates will get us out of this seemingly endless trough.

In December, the Fed thought that the economy was turning around and accordingly raised the federal funds rate from one-quarter to one-half percent, with the prospect of further increases down the road. In January, the Fed let the interest rate remain constant, and there is now an active debate over whether the weak growth numbers will induce the Fed to postpone raising that key rate as widely expected. As usual, the Fed conceives that its mission is to run a delicate balancing act between overall economic activity on the one hand and the job market on the other. Thus the justification offered for the December increase—the first in about seven years—was the “considerable improvement” in the job market, which is in reality far weaker than it appears, given the low labor market participation rate, the rise in part-time employment, and the general stagnation in wages.

Nor is the U.S. exceptional in how it deals with these problems. Labor market problems in Europe are chronic, and the prolonged economic slowdown is of increasing worldwide concern. In late January, nervous central bankers in other major countries adopted stimulus policies more aggressive than the Fed’s. The Bank of Japan, joined by number of European banks, set key short-term interest rates at below zero, in effect charging banks to hold their deposits in order to encourage private lending. Japan’s central bank accomplished this by imposing a 0.1 percent penalty on excess reserves. No longer is there general expectation of a 2 percent inflation rate. Instead the recent central bank decisions presage a new deflationary cycle, which is no recipe for growth.

Clearly something is amiss if the basic stimulus approach of the last seven years has failed to stem the tide of global economic stagnation. In making this claim, I do not think that budgetary austerity will solve most problems either, but think that these poor results, far from being an unexplainable accident, are evidence of systematic blunders and cry out for a top-to-bottom reassessment in the U.S. and elsewhere. Forget the subtle cross-national differences in institutional arrangements. What the world faces today is a basic common mode failure.

The conventional wisdom dubiously holds that a stimulus program is the best way to secure economic growth when the economy falters. The usual story is that low interest rates induce individuals and firms to borrow money, which in turn leads to higher levels of risk-taking, which in turn leads to faster rates of growth—faster, that is, than the anemic growth rates we’ve seen since the financial meltdown of 2008. In a recent speech, Economic Central Bank President Mario Draghi emphasized that although Germany’s low interest rates might encourage excessive risk-taking, he found no indication that these rates have led to financial instability. The boo-birds, Draghi notes, have been proved wrong time and again. The risks of the stimulus program, he concludes, are smaller than the risks of doing nothing.

Draghi’s last sentence is true after a fashion. The key point here is that what needs to be done is not to fiddle with interest rates, but to make major structural reforms in important economic areas, most notably in labor markets. To start with the basic story, there is at best a tenuous connection between the alteration of interest rates and improved productivity in any market in goods and services. Of course, it can be said that the low interest rates will induce people to borrow. But low interest rates reduce incentives for people to lend their money to those potential borrowers. In addition, the low interest rates tend to lead to lower earnings on savings, which means that many people in the economy, especially retirees who depend on the income generated by their basic portfolio, might reduce their consumption today to conserve wealth for consumption tomorrow. These choices between consumption-now and consumption-tomorrow will be made on an individual basis, so it is hard to see any systematic trend toward higher buying today once low interest rates are in place. It goes without saying that retirees and others living on fixed incomes do not have much wealth in reserve to make capital investments. So it looks as though contraction in the supply of available funds should offset the increase in demand.

Indeed if it were otherwise, then why not keep interest rates artificially low in good times as well as bad? To this objection, the Fed answers that the government should only stimulate demand by low interest rates when the private sector is unproductive. Once the private sector roars back, government can take a back seat by letting interest rates slowly rise. That was just the strategy that the Fed embarked on in December before the low growth reports of the fourth-quarter took the air out of the growth balloon.

But why think that the gradualist strategy could ever work? One difficulty with that approach is that short-term improvements have remained below the two-percent increment in gross domestic product for close to a decade. No policy that has failed for so long can become successful overnight. Worse still, this policy faces an irreducible timing risk. Monetary policy cannot rest on some abstract expectation that things will get better soon. It has to make precise judgments as to when. But economies are like large ships that turn slowly in the water, so it is hard to know whether any particular move in one direction counts as a real shift or a temporary aberration. That is exactly the problem that faced the Fed in January when it held off a further rate increase.

There should be no surprise here. The Fed only looks at gross measures of capital market and labor market activity, about which it is easy to make crude guesses that miss the mark. Modifications in short-term interest rates are a form of fine-tuning that neither the Fed nor other central banks can execute with any assurance. It is laudable for the Fed to give advance notice of its intentions. But the benefits of that approach are diminished with each change in course. The constant need to predict what the central banks around the globe will do adds another layer of uncertainty that weighs down the private market. It is one thing for private parties to enter into hedging transactions as part of their overall business strategy. Given that these are voluntary transactions, there is every reason to think that the gains to the two (or more) transactors will exceed the costs of putting them together: otherwise the market would close down. But government efforts to fine-tune interest rates face no such market constraint, so these efforts only feed system-wide uncertainty, which more stable interest rates could effectively combat.

The current policies fail for a second reason. The preoccupation over interest rate fluctuations diverts attention from the urgent reforms needed in regulatory policy. The task here is not to launch a misguided crusade that gets the government out of the business of protecting property rights and voluntary exchanges. These forms of regulation improve market performance at very low cost. Thus the standard forms of verification for many contracts—writings and registration, for example—do not place any constraint on the substantive terms of any contract, whether for the sale of land or the hiring of labor. These simple forms just eliminate a potentially huge back-end uncertainty that bad documentation could produce.

But the whole spate of modern regulation in labor, real estate, and capital markets goes far beyond that modest effort. Far outside the purview of the Fed, a never-ending stream of new regulations and taxes imposes high transactional barriers that kill off voluntary exchange and cooperation. There are many subtleties in each of these markets, but for these purposes, one common element unites them all. The new generation of regulations and taxes are all burden and no benefit. Their consequence is two-fold. They suck out the joint benefits of the transactions that go forward. And they block a whole range of potential sales and exchanges when these associated costs exceed the gains in question. Just that happened when legislative increases to the minimum wage led Wal-Mart to close down 154 retail outlets in the United States at a loss of 10,000 jobs, mostly concentrated at the lower end. Remember that in some markets Wal-Mart has announced wages increases voluntarily. Why use coercion, which fails to differentiate between different local markets?

The same mischief occurs when President Obama signs yet another of his misguided executive orders, this time to require firms to break down wage reports by race, gender, and ethnicity. President Obama claims this burden on employers is designed to combat persistent forms of discrimination, but the method fails to correct for relevant variables such as employment type or hours worked. Statutes like this are bad not only for the harm that they cause, but also for the future enactments that they signal. That message is read not only by large firms, which can cut back on employment, but also by potential entrepreneurs of new or unformed ventures who throw in the towel in light of heavy tax and regulatory burdens that promise to get only heavier.

These direct attacks on particular markets have huge negative effects. It is pie-in-the-sky thinking to suppose that anything that the Fed can do to discharge its jobs mandate can have the slightest effect given all the mischiefs that come at the microeconomic level. But so long as the Fed runs on about job creation, it is an open invitation for federal and state governments to mess up labor markets on the benign assumption that interest rate fluctuations will solve the problem. They cannot. There are major structural flaws that pervade every area of the economy. The Fed’s role should be limited to maintaining monetary stability, broadly defined. The Fed and the ECB should not send the message that their policies can magically improve the economy. Instead, Janet Yellen and Mario Draghi should say something like this:

Sorry folks, you think that we are magicians, but we are only trained in monetary economics. And we are here to tell you that we have shot our wad with a set of stimulus programs that were broken from the outset. Only now the situation is worse. The law of diminishing returns to additional efforts has set in so any measures we take will make our economies worse. The burden is squarely on the political branches to do their part. Deregulation and lower taxation reduces administrative costs and economic burdens. It will allow private firms to increase output. Either your elected officials make structural reforms today, or we shall have another fruitless set of stimulus programs tomorrow.

*Considered one of the most influential thinkers in legal academia, Richard Epstein is known for his research and writings on a broad range of constitutional, economic, historical, and philosophical subjects.

Hillary Clinton's Nightmare

Andrew P. Napolitano*

Judge Napolitano

Judge Napolitano

Hillary Clinton’s nightmare is not the sudden resurgence of Bernie Sanders. It is the fidelity to the rule of law of the FBI.

The recent revelations of the receipt by Clinton of a Special Access Program email, as well as cut and pasted summaries of state secrets on her server and on her BlackBerry nearly guarantee that the FBI will recommend that the Department of Justice convene a grand jury and seek her indictment for espionage. Here is the backstory.

It seems that every week, more information comes to light about Clinton’s grave legal woes. Her worries are in two broad categories: One is her well-documented failure to safeguard state secrets and the other is her probable use of her position as secretary of state to advance financially her husband’s charitable foundation. The FBI is currently and aggressively investigating both. What I will describe below is in the state secrets category. It is apparently not new to the FBI, but it is new to the public.

Among the data that the FBI either found on the Clinton server or acquired from the State Department via its responses to Freedom of Information Act requests is a top-secret email that has been denominated Special Access Program. Top secret is the highest category of state secrets (the other categories are confidential and secret), and of the sub-parts of top secret, SAP is the most sensitive.

SAP is clothed in such secrecy that it cannot be received or opened accidentally. Clinton -- who ensured all of her governmental emails came to her through her husband’s server, a nonsecure nongovernmental venue -- could only have received or viewed it from that server after inputting certain codes. Those codes change at unscheduled times, such that she would need to inquire of them before inputting them.

The presence of the SAP-denominated email on her husband’s server, whether opened or not, shows a criminal indifference to her lawful obligation to maintain safely all state secrets entrusted to her care. Yet, Clinton has suggested that she is hopelessly digitally inept and may not have known what she was doing. This constitutes an attempted plausible deniability to the charge of failing to safeguard state secrets.

But in this sensitive area of the law, plausible deniability is not an available defense; no judge would permit the assertion of it in legal filings or in a courtroom, and no lawyer would permit a client to make the assertion.

This is so for two reasons. First, failure to safeguard state secrets is a crime for which the government need not prove intent. The failure can be done negligently. Thus, plausible deniability is actually an admission of negligence and, hence in this case, an admission of guilt, not a denial.

Second, Clinton signed an oath under penalty of perjury on Jan. 22, 2009, her first full day as secretary of state. In that oath, she acknowledged that she had received a full FBI briefing on the lawfully required care and keeping of state secrets. Her briefing and her oath specified that the obligation to safeguard state secrets is absolute -- it cannot be avoided or evaded by forgetfulness or any other form of negligence, and that negligence can bring prosecution.

What type of data is typically protected by the SAP denomination? The most sensitive under the sun -- such as the names of moles (spies working for more than one government) and their American handlers, the existence of black ops (illegal programs that the U.S. government carries out, of which it will deny knowledge if exposed), codes needed to access state secrets and ongoing intelligence gathering projects.

The crime here occurs when SAPs are exposed by residing in a nonsecure venue; it does not matter for prosecution purposes whether they fell into the wrong hands.

Clinton’s persistent mocking of the seriousness of all this is the moral equivalent of taunting alligators before crossing a stream. SAPs are so sensitive that most of the FBI agents who are investigating Clinton lack the security clearances needed to view the SAP found among her emails. Most FBI agents have never seen a SAP.

Shortly after the presence of the SAP-denominated email was made known, the State Department released another email Clinton failed to erase wherein she instructed her subordinates to take state secrets from a secure venue, to cut and paste and summarize them, and send them to her on her nonsecure venue. Such an endeavor, if carried out, is a felony -- masking and then not safeguarding state secrets. Such a command to subordinates can only come from a criminal mind.

Equally as telling is a little-known 2013 speech that recently surfaced given by one of Clinton’s former subordinates. The aide revealed that Clinton and her staff regularly engaged in digital conversations about state secrets on their BlackBerries. This is not criminal if the BlackBerries were government-issued and secured. Clinton’s was neither. It was purchased at her instructions off the shelf by one of her staff.

Can anyone doubt that Clinton has failed to safeguard state secrets? If her name were Hillary Rodham instead of Hillary Rodham Clinton, she’d have been indicted months ago.

What remains of the rule of law in America? The FBI will soon tell us.

*Andrew P. Napolitano, a former judge of the Superior Court of New Jersey, is the senior judicial analyst at Fox News Channel. Judge Napolitano has written seven books on the U.S. Constitution.

The Other Drug War

Richard Epstein*

Richard Epstein

Richard Epstein

Earlier this month, the Food and Drug Administration rejected the application of Biomarin Pharmaceutical to market its drug KyndrisaTM (drisapersen) for use in the treatment of Duchenne muscular dystrophy. The FDA, as is often the case when it rejects a drug application, listed all sorts of technical reasons why the data presented was not sufficient to establish by respectable scientific means that the drug in question was safe and effective in its intended use. Without question, much evidence from the clinical trials revealed serious complications from the drug’s use, including blood-platelet shortages that were potentially fatal, kidney damage, and severe injection-site reactions. But the no-treatment alternative could prove far worse.

Duchenne is a rare but fatal genetic disorder that attacks only young boys, roughly 1 in 3,500 to 5,000. Typically, it first manifests itself between two and five years of age. With time, it relentlessly weakens the skeletal muscles that control movement in the arms, legs, and trunk. Most of its victims are wheelchair-bound between the ages of seven and 13. By 20, many have died.

The source of the problem is the absence from the cell of the key chemical dystrophin, which is needed to control muscular movement. The proposed treatment is known as “exon-skipping,” which allows the body to produce the needed quantities of dystrophin. At present no drugs are on the market to fix the genetic defect. But other drugs are also under investigation. If the door is closed for drisapersen, it remains ajar for an unnamed drug produced by Sarepta Therapeutics, which will be reviewed by the FDA shortly. But, based on early rumblings from the FDA, it is likely that this drug too will be kept from the marketplace.

As might be expected, the decision by the FDA has left parent groups and their physicians tied up in knots. You can get a sense of their frustration by looking at the desperate petition of a mother whose son has the disease. Tonya Carlone wrote a public letter to the FDA pleading for the drug to be allowed on the market: “This medication has allowed my son, Gavin, to be able to ride a 2 wheel bike, to play on a soccer team, to run and play with his healthy 10 year old peers. Dr. Craig McDonald of UC Davis Medical Center and a Duchenne expert of over 30 years, has stated that he has never seen a boy with Duchenne at the age of 10 have as much function as Gavin.”

All irrelevant, says the FDA. But it’s critical to understand why parents like Ms. Carlone and physicians like Dr. McDonald are right and why the FDA is dead wrong. The FDA thinks the problem lies in the merits of a particular drug when it really lies in its deeply flawed approval process. That process got started in the early 1960s after Thalidomide was taken off the market for causing serious birth defects and deaths among children.

In its rush to judgment after the incident, Congress passed the 1962 Kefauver Harris Amendments, which initiated the modern system of drug review that featured two major reforms. The first changed an FDA rule that was on the books since 1938 that allowed drugs to reach the market if the FDA did not ask to review them within 60 days after they were ready for market. The second required the FDA to review these new drug applications prior to approval not only for safety, but also for effectiveness. Now for a drug to reach market it must be supported by “substantial evidence” which is “evidence consisting of adequate and well-controlled investigations, including clinical investigations, by experts qualified by scientific training and experience to evaluate the effectiveness of the drug involved.” As the Supreme Court observed in 1973, the FDA’s “strict and demanding standards, barring anecdotal evidence indicating that doctors ‘believe’ in the efficacy of a drug, are amply justified by the legislative history.”

The FDA still treats the 1962 law as a triumphant moment that “revolutionized drug development” because its scientific safeguards ensure “that consumers will not be the victims of unsafe and ineffective medications.” And therein lies the problem. The FDA celebrates the supposed advantages of Kefauver-Harris, but it ignores the major monkey wrench that it has introduced into drug development. Its proclamation looks at only the benefits of the drug-approval process, but wholly ignores its attendant costs by tacitly assuming that the only drugs that the FDA keeps off the market are unsafe and ineffective.

Regrettably, in this, as in all other regulatory endeavors, there are two kinds of error. The FDA is keen to note the bad drugs that are kept off the market. But it downplays the good drugs caught inside its web that are kept off the market. In some cases, there are deadly delays in getting good drugs onto the market. As the period for drug review becomes longer, the cost of getting a drug onto the market rises. Taking into account both the time value of money and out-of-pocket expenditures, that cost has beenestimated to be $2.6 billion. That figure, of course, does not include the social losses from drugs that never get through to clinical trials because of the heavy obstacles that the FDA places in the path of their development—nor does it include the number of lives lost or compromised as a result of the FDA’s regulatory hurdles.

To make matters worse, the clinical trial format, which often works well for mainline drugs, like those used to control cholesterol and high-blood pressure, is less effective for drugs aimed to treat certain rare diseases, where too many potential drugs are chasing too few patients. Thus in the Sarepta study, both the treatment and the placebo group each enrolled only 12 patients, which enabled the FDA to challenge the comparability of the two groups, and for both parties to dispute individual patient responses. It doesn’t help that the FDA insists that individual patient and doctor reports do not count as scientific evidence because of their anecdotal nature.

Here too, the FDA errs. Individual variation in drug response is a common feature, and individual patients like Gavin Carlone are well advised to continue using the drug, no matter what the FDA’s overall evaluation of the drug’s features. The two forms of information should always be used in tandem. To be sure, the risk of adverse side effects can never be ignored, but neither can the deadly effects of Duchenne, for which there is no recourse. The FDA’s major blunder in this area is to rely exclusively on the statistical significance of various treatment options, ignoring all evidence from other sources.

Doing so became a true disaster. Under the 1962 law, drug after drug was removed from the market after years of successful use because the FDA decided that well-controlled clinical trials, for all their cost and limitation, were better than the long-term success of various drugs in the marketplace. It is for good reason that children, parents, and physicians are asking a different question from that which the FDA puts to itself: are they better off with the drug than without it? And when there is no alternative remedy, the answer is that they are better off with it.

At this point, the first question has nothing to do with abstract standards of scientific evidence. It has to do with the simple issue of who gets to decide what type of evidence, systematic or anecdotal, is most valid. American law today wrongly vests that power in the FDA on the ground that its expertise is needed on matters of public health. But Duchenne and similar genetic diseases are not communicable, as most public health concerns are. They are individual, not interconnected, tragedies.

It is simply mindboggling that the FDA should extol its naked paternalism in keeping patients from becoming “victims of unsafe and ineffective drugs,” when it is cutting them off from their only chance of salvation. The usual judicial conceit is that FDA regulation just deals with economic matters, as if a child’s fight against a deadly disease is to be treated in the same fashion as a minimum wage or maximum hour law. Both types of regulation are unwise—but, that said, no one should ignore their differential impact, as rich and poor alike are throttled by the FDA.

Fortunately, there are two developments that can help reduce the FDA’s deadly grip on pharmaceutical progress. The first is that it cannot prevent off-label uses of permitted drugs. Under current law, once a drug is approved for any purpose, physicians can prescribe it for any other purpose they please. The FDA is not allowed to regulate the practice of medicine, and thus physicians can put these drugs to use without approval.

Needless to say, by every estimate, off-label uses are common, especially in cancer cases. These uses are not unstructured, as there are many voluntary institutions, such as the National Comprehensive Cancer Network, that collate the clinical experiences that the FDA ignores and make recommendations on which drugs should be used in what sequence and in what combinations to treat various kinds of conditions. The off-label uses commonly set the standard for medical malpractice for physicians in ways that bypass the FDA approval process altogether.

Yet the inability to get that first approval forces desperate people to beg the FDA and drug companies for a compassionate license for experimental use, which often comes too late, even for cancer drugs like Erbitux, which later makes it on the market. Indeed, this off-label process was especially important for thalidomide, for once it was allowed on the market under the brand-name Thalomid to treat leprosy, its effectiveness as a miracle drug for cancer became apparent from its off-label use. Dr. Frances Kelsey of the FDA, who discovered the drug’s harmful side effects on children, should have issued stern warnings on its use in pregnancy. But, in retrospect, the FDA was wrong to ban the drug from the market.

The second major development deals with the ability of drug companies to present truthful information about off-label uses to physicians and patients. The FDA has long vigorously asserted that it is a criminal offense for a drug company to make any statements or distribute any information that tends to promote the use of an approved drug for an off-label use. Its view was that these statements made false representations that the drug had been approved for that purpose. The FDA could not prevent the identical statements from being made in medical journals or by individual physicians, but its ban on truthful company promotion obviously slowed down the adoption of off-label uses. Two recent cases have broken the FDA’s stranglehold on information on off-label uses: one in 2012, dealing with drug promotion by individual sales representatives, and a second in 2015, dealing with a company’s publication of the full record of its futile negotiations with the FDA to get formal approval for a new permitted use for a drug already on the market.

The FDA’s richly deserved defeat on this front is consistent with the general libertarian view that government agencies have ample power to prevent fraud and misbranding, but none to prevent speech that is neither false nor misleading. The current First Amendment law thus breaks down the FDA’s monopoly over information. But it does nothing to break down the FDA’s monopoly over the licensing of new drugs, which are all too often kept in limbo with endless haggling over clinical trials. That situation has to change now.

Congress should strip the FDA of its power to keep individuals from receiving drugs for experimental purposes before they receive FDA approval. If not, the courts should do it on constitutional grounds, holding that the current legal regime is an intolerable interference of personal autonomy. No one would ever let the FDA use its now formidable police powers to force people to take medicines that it thinks appropriate. That same logic should not prevent informed patients, with the aid of their own physicians, from taking medicines that they think offer the best opportunity for their restored health and survival.

*Considered one of the most influential thinkers in legal academia, Richard Epstein is known for his research and writings on a broad range of constitutional, economic, historical, and philosophical subjects.

Killing Babies

Andrew P. Napolitano*

Judge Napolitano

Judge Napolitano

In one week during January 1973, President Richard M. Nixon was inaugurated to his second term, former President Lyndon B. Johnson died, the United States and North Vietnam entered into the Paris Peace Accords, and the Supreme Court legalized abortion. Only the last of these events continues to affect and haunt the moral and constitutional order every minute of every day.

The Court’s decision in Roe vs. Wade is arguably its most controversial in the post-World War II era. Its effect has been as pernicious to human life as was its 19th century intellectual progenitor, Dred Scott vs. Sanford, in which the Supreme Court ruled that African-Americans are not persons.

Roe declares that the states may not ban abortions during the first trimester of a woman’s pregnancy because the states have no interest in or right to protect the baby during that time period. This made-up rule was a radical and unconstitutional departure from nearly 200 years of jurisprudence, during which the states themselves decided what interests to protect, guided since the end of the Civil War by the prohibition on slavery, and the requirements of due process and equal protection.

During the second trimester of pregnancy, the Court declared in Roe, states may regulate abortions but only to protect the health of the mother, not the life or health of the baby, in which, the Court found, the states have no interest. This, too, was a radical departure from well-settled law.

Under Roe, during the third trimester of pregnancy, the states may ban abortions or they may permit them; they may protect the life of the baby or they may not protect it. This diabolic rule, the product of judicial compromise and an embarrassing and destructive rejection of the Civil War era constitutional amendments, permits the states to allow abortions up to the moment before birth, as is the law in New Jersey, where the state even pays for abortions for those who cannot afford them.

The linchpin of Roe vs. Wade is the judicial determination that the baby in the womb is not a person. The Court felt it was legally necessary to make this dreadful declaration because the Constitution guarantees due process (a fair jury trial, and its attendant constitutional protections) whenever the government wants to interfere with the life, liberty or property of any person; and it prohibits the states from permitting some persons to violate the basic human rights of others, as was the case under slavery. As the Supreme Court sometimes does, it ruled on an issue and came to a conclusion that none of the litigants before it had sought.

Roe candidly recognizes that if the fetus in the womb is a person, then all laws permitting abortion are unconstitutional. The Court understood that abortion and fetal personhood would constitute the states permitting private persons to murder other persons. So, in order to accommodate the killing, it simply redefined the meaning of “person,” lest it permit a state of affairs that due process and the prohibition of slavery could never tolerate. George Orwell predicted this horrific and totalitarian use of words in 1949 in his unnerving description of tyranny, “1984.”

Is the fetus in the womb a person? No court has contradicted the Supreme Court on this, and the Roe supporters argue that non-personhood is necessary for sexual freedom. Think about that: The pro-abortion rights crowd, rejecting the natural and probable consequences of ordinary, healthy sexual intercourse, wants to continue to kill babies in the name of sexual freedom.

I take a back seat to no one when it comes to personal freedom. But the freedom to kill innocents violates all norms of civilized society. It violates the natural law. It wasn’t even condoned in the state of nature, before governments existed. It violates the 13th and 14th Amendments. Yet, the Supreme Court and numerous Congresses have refused to interfere with it. It is a grave and profound evil. It is legalized murder.

Is the fetus in the womb a person? Since the fetus has human parents and all the needed human genome to develop postnatally, of course the fetus is a person.

A simple one-line statute could have been enacted when Ronald Reagan or George W. Bush were in the White House and Republicans and pro-life Democrats (the handful that have made it to Congress) controlled the Congress. They could have ended the slaughter by legislatively defining the fetus in the womb to be a person. They did not. Are the self-proclaimed pro-life folks in Congress sincere, or do they march under the pro-life banner just to win votes?

Their failure to attempt to define the fetus in the womb as a person seriously, and the Supreme Court’s unprecedented dance around the requirement of due process and the prohibition of slavery has resulted in 44 million abortions in 43 years. That’s an abortion every minute. Abortion is today the most frequent medical procedure performed in America; and the Democrats have become its champion.

They, and their few Republican allies, have become the champions of totalitarianism as well. The removal of legal personhood from human offspring in order to destroy the offspring is only the work of tyrants. How long can a society last that violates universal norms and kills its babies in the name of “sexual freedom”?

Whose personhood will the government define away next?

*Andrew P. Napolitano, a former judge of the Superior Court of New Jersey, is the senior judicial analyst at Fox News Channel. Judge Napolitano has written seven books on the U.S. Constitution.

Why Democrats Could Win In 2016

Richard Epstein*

Richard Epstein

Richard Epstein

With the hotly contested Iowa primaries only a week away, the level of political polarization is higher than it’s been in decades.Hillary Clinton and Bernie Sanders are veering sharply to the populist left as they each champion a brand of democratic socialism. On the Republican side, the rise of Donald Trump and Ted Cruz reveals the rise of a muscular conservatism that appeals to the far right. By November, this political divide will become more pronounced. No one will be able to say, to quote George Wallace’s oft-repeated remark, that there is not a “dime’s worth of difference” between the two parties.

One area of huge contention is domestic policy. The two Democratic front-runners are responding to a strong anti-market sentiment by pushing for higher taxes, more income redistribution, and more extensive regulation, targeting both large businesses and wealthier individuals. Income inequality is at the center stage. On these issues, though, the Republican candidates offer a more pro-growth agenda, but do so only in muted terms. If Republicans want to win in November, they must boldly articulate an alternative to the policies of Clinton and Sanders.

One of the most interesting political trends of recent years is the rise of progressive populism. These days, the American left uses the term “progressive” much more frequently than the word “liberal” to describe itself—which represents a symbolic shift. The word “progressive” consciously hearkens back to the era between 1900 and the election of Franklin Roosevelt in 1932. The Progressive Movement held that, in an industrial age, markets did not function adequately, that the antitrust laws did not meet the challenges of the modern industrial economy, and that the imposition of a large administrative state, technically expert but politically aware, was needed to contain powerful private sector firms. These are essentially the same claims Democrats make today, even though the economy is more regulated than ever before.

The chief targets of the Progressives were many key Supreme Court decisions that opposed their worldview. The Court’s 1895 decision in United States v. E. C. Knight blocked systematic regulation of the economy by ruling that manufacture, mining, and agriculture fell outside the limits of Congress’s commerce power, so much so that in 1906, the passage of the Pure Food and Drug Act only let the federal government regulate drug manufacture in the territories, even though it could block the shipment of adulterated or misbranded drugs in interstate commerce. Likewise, in the 1905 case of Lochner v. New Yorkthe Supreme Court sharply limited the power of both the state and federal government to impose maximum hours or minimum wage laws on the economy. Three years later, the Court struck down a federal collective bargaining statute in Adair v. United States, and seven years after that it did the same with respect to state collective bargaining law. To top it all off, in Loewe v. Lawlor (1908), the Supreme Court unanimously applied the 1890 Sherman Act to secondary union boycotts. That decision sparked a furious progressive blowback in the 1912 Presidential election, after which Loewe was overturned by Section 6 of the 1914 Clayton Act that explicitly exempted unions from the operation of the antitrust laws.

Each of these decisions contributed to the enormous growth in productivity during the period before the New Deal. But as the ideological battles raged on, the entire edifice of the Old Court was eventually struck down in a series of decisions. Most notable were National Labor Relations Board v. Jones & Laughlin Steel (1937) and Wickard v. Filburn (1942). The two cases expanded the power of the federal government to regulate all economic activities. This meant that the 1938 revisions of the federal drug act allowed Congress to expand its jurisdiction to cover manufacture within the state. In addition, Jones & Laughlin Steel brushed aside all opposition to mandatory collective bargaining at the state and federal level. And any objection to the widespread reliance on administrative agencies to run the new ambitious state was ended by key decisions such as Yakus v. United States, which in 1944 sustained a criminal conviction for a violation of price control laws, and NBC v. United Stateswhich in 1943 upheld the allocation of broadcast frequency under the flaccid standard of the public interest, convenience, and necessity.

The contrast between the progressive and classical liberal views could not be more vivid. Justice Felix Frankfurter blanched at the thought that the Federal Communication Commission could be limited to setting the rules of the road for radio broadcast. He thought their delegated powers allowed them to determine “the composition of that traffic.” A year later in The Road to Serfdom, Friedrich Hayek presented the opposite vision. The genius of a highway system was that it set the rules of the road and allowed private individuals, each in pursuit of their own mission, to enter and exit as they saw fit—a privilege that was denied to commercial carriers under the Motor Vehicle Act of 1935. By the end of World War II, the entire classical liberal synthesis had been decisively rejected.

The New Deal victory ushered in a period of consolidation and retrenchment. The Republicans swept back into power in 1946, and that year saw the passage of the Administrative Procedure Act, still very much alive today, to rein in the widely perceived excesses of administrative power under the earlier New Deal statutes. One year later, Congress passed, over a Truman veto, the Taft-Hartley Act that limited the scope of the original 1935 Wagner Act, but which by no means undid the earlier law. And so the stage was set for a longish period of American legal scholarship where the major task of academic lawyers was to make sure that the new administrative state operated with dispatch and good sense. The enterprise should not be belittled today, given the vast difference between an administrative state that tolerates corrupt union elections and one that seeks to give union members a fair shot at appointing the leaders whom they prefer.

Yet, what was notable about this activity was that Congress set the major parameters of regulation, and the courts took the faithful implementation of the law as their task. The mood of the time was captured in the famous mid-twentieth-century course entitled The Legal Process, led by Harvard professors Henry Hart and Albert Sacks, which taught students the virtues of an incremental adjustment of the legal system to the new challenges that it faced. Moving back to first principles was decidedly second-tier. Instead, both left and right made peace with the major innovations of the New Deal, which they sought to rationalize and understand.

Yet the turn away from theory could not last. Even with the apparent mid-century serenity, the rising pressure on race relations, culminating with the 1954 desegregation decision in Brown v. Board of Education, forced questions of theory to the fore on matters of race. And it was only a short time thereafter that this more reflective mode of inquiry made its way into other areas. The rise of the law and economics movement in the 1960s and 1970s was important because it provided various intellectual tools that mounted a challenge to the unquestioned sway of regulation over large swathes of the economy.

Thus in 1959, Ronald Coase wrote the Federal Communications Commission, which had the temerity to argue that the market could do a better job in allocating spectrum use than the FCC, which never created coherent administrative criteria for frequency allocation. In 1962, James Buchanan and Gordon Tullock wrote The Calculus of Consent, which showed how easy it was for majoritarian institutions to fall prey to faction and intrigue. Writers like Henry Manne stressed the importance of the market for corporate control, which was inconsistent with the cozy relationship between big government and big business exemplified by the legal protection afforded to AT&T before its monopoly was broken up in 1982. And so it happened that competition, not regulation, became the new watchword for the overall legal system.

Today, the classical liberal challenge to the New Deal view of the world is stronger than ever. Underneath any piece of New Deal legislation lays the grubby reality of cartel formation in labor and agricultural markets. Fortunately, the high court is taking halting steps to return to the pre–New Deal state of affairs now that Friedrichs v. California Teachers Association may well undermine coerced union contributions and Horne v. Department of Agriculture has already punctured the invulnerability of the raisin cartel.

Yet the progressives have simultaneously revived New Deal principles by advocating for greater regulation to jump-start the flagging economy. In addition, the rise of “critical legal studies” and an ever-greater concern with race, gender, and inequality has moved much of the legal community further to the left. At the same time the law and economics community fractured, giving rise to strong pro-regulatory movements.

None of this conceals the vulnerability of the progressive agenda. Of course, the economy is in vast need of prompt and powerful improvement. But in order to prescribe a cure, it is necessary to diagnose the underlying ailment. Back in 1935, it was hard to find any coherent intellectual opposition to the ever-greater surge of government power. It was all too common then to confuse the size of a firm with its market power, and to assume that any restriction on the contractual freedom of the employer necessarily improved the position of the employee. Anyone who reads the Findings and Policies of the NLRA should be struck by its misguided and outdated argument that its vast administrative apparatus could increase the efficiency of the economic system or the real income of employees.

The tragic feature of today’s populist revival is that it uses obsolete economic and political philosophy to propel the case for additional layers of regulation. These are likely to prove more counterproductive than the initial New Deal blunders because the second round of regulation comes off a diminished economic base. The current slow growth environment and the reduction of labor market participation only compound the miseries of the poor and the vulnerable, whom the progressives want to protect. Yet as long as the Republican candidates fail or refuse to address this challenge, the odds will only increase that the next president will be deeply committed to policies that will cement the Obama legacy of economic stagnation and political turmoil. The intellectual tools to combat these false hopes are available. Let us hope that the Republican nominee will deploy them to maximum advantage. 

*Considered one of the most influential thinkers in legal academia, Richard Epstein is known for his research and writings on a broad range of constitutional, economic, historical, and philosophical subjects.

Two Smoking Guns

Andrew P. Napolitano*

Judge Napolitano

Judge Napolitano

The federal criminal investigation of former Secretary of State Hillary Clinton’s failure to secure state secrets was ratcheted up earlier this week, and at the same time, the existence of a parallel criminal investigation of another aspect of her behavior was made known. This is the second publicly revealed expansion of the FBI’s investigations in two months.

I have argued for two months that Clinton’s legal woes are either grave or worse than grave. That argument has been based on the hard, now public evidence of her failure to safeguard national security secrets and the known manner in which the Department of Justice addresses these failures.

The failure to safeguard state secrets is an area of the law in which the federal government has been aggressive to the point of being merciless. State secrets are the product of members of the intelligence community's risking their lives to obtain information.

Before she was entrusted with any state secrets -- indeed, on her first full day as secretary of state -- Clinton received instruction from FBI agents on how to safeguard them; and she signed an oath swearing to comply with the laws commanding the safekeeping of these secrets. She was warned that the failure to safeguard secrets -- known as espionage -- would most likely result in aggressive prosecution.

In the cases of others, those threats have been carried out. The Obama Department of Justice prosecuted a young sailor for espionage for sending a selfie to his girlfriend, because in the background of the photo was a view of a sonar screen on a submarine. It prosecuted a heroic Marine for espionage for warning his superiors of the presence of an al-Qaida operative in police garb inside an American encampment in Afghanistan, because he used a Gmail account to send the warning.

It also prosecuted Gen. David Petraeus for espionage for keeping secret and top-secret documents in an unlocked drawer in his desk inside his guarded home. It alleged that he shared those secrets with a friend who also had a security clearance, but it dropped those charges.

The obligation of those to whom state secrets have been entrusted to safeguard them is a rare area in which federal criminal prosecutions can be based on the defendant’s negligence. Stated differently, to prosecute Clinton for espionage, the government need not prove that she intended to expose the secrets.

The evidence of Clinton’s negligence is overwhelming. The FBI now has more than 1,300 protected emails that she received on her insecure server and sent to others -- some to their insecure servers. These emails contained confidential, secret or top-secret information, the negligent exposure of which is a criminal act.

One of the top-secret emails she received and forwarded contained a photo taken from an American satellite of the North Korean nuclear facility that detonated a device just last week. Because Clinton failed to safeguard that email, she exposed to hackers and thus to the North Koreans the time, place and manner of American surveillance of them. This type of data is in the highest category of protected secrets.

Last weekend, the State Department released two smoking guns -- each an email from Clinton to a State Department subordinate. One instructed a subordinate who was having difficulty getting a document to Clinton that she had not seen by using a secure State Department fax machine to use an insecure fax machine. The other instructed another subordinate to remove the “confidential” or “secret” designation from a document Clinton had not seen before sending it to her. These two emails show a pattern of behavior utterly heedless of the profound responsibilities of the secretary of state, repugnant to her sworn agreement to safeguard state secrets, and criminal at their essence.

Also this past weekend, my Fox News colleagues Katherine Herridge and Pamela Browne learned from government sources that the FBI is investigating whether Clinton made any decisions as secretary of state to benefit her family foundation or her husband’s speaking engagements. If so, this would be profound public corruption.

This investigation was probably provoked by several teams of independent researchers -- some of whom are financial experts and have published their work -- who have been investigating the Clinton Foundation for a few years. They have amassed a treasure-trove of documents demonstrating fraud and irregularities in fundraising and expenditures, and they have shown a pattern of favorable State Department treatment of foreign entities coinciding with donations by those entities to the Clinton Foundation and their engaging former President Bill Clinton to give speeches.

There are now more than 100 FBI agents investigating Hillary Clinton. Her denial that she is at the core of their work is political claptrap with no connection to reality. It is inconceivable that the FBI would send such vast resources in the present dangerous era on a wild-goose chase.

It is the consensus of many of us who monitor government behavior that the FBI will recommend indictment. That recommendation will go to Attorney General Loretta Lynch, who, given Clinton’s former status in the government and current status in the Democratic Party, will no doubt consult the White House.

If a federal grand jury were to indict Clinton for espionage or corruption, that would be fatal to her political career.

If the FBI recommends indictment and the attorney general declines to do so, expect Saturday Night Massacre-like leaks of draft indictments, whistleblower revelations and litigation, and FBI resignations, led by the fiercely independent and intellectually honest FBI Director James Comey himself.

That would be fatal to Clinton’s political career, as well.

*Andrew P. Napolitano, a former judge of the Superior Court of New Jersey, is the senior judicial analyst at Fox News Channel. Judge Napolitano has written seven books on the U.S. Constitution.

The Uneasy Legacy Of Henrietta Lacks

Richard Epstein*

Richard Epstein

Richard Epstein

Recently, Rebecca Skloot, author of the major best-seller The Immortal Life of Henrietta Lacks, wrote an impassioned plea in the New York Times, urging people to support sweeping revisions to the Federal Policy for the Protection of Human Subjects, which is now under active review in the Department of Health and Human Services. These revisions are directed to the rules that now govern the collection and use of “clinical biospecimens,” which include all the organic substances that are routinely removed from the human body as a consequence of surgery, childbirth, or even normal testing. At first appearance, these materials look like waste products best disposed of in a safe and sanitary manner. But, in fact, they are invaluable in medical research to treat cancer and a host of other genetic and life-threatening diseases.

Without question, the most dramatic illustration of this process involves the so-called HeLa cell line derived from the cancer cells of Henrietta Lacks, an African American tobacco farmer who died of cancer in 1951 at the age of 31. When she was treated at Johns Hopkins Medical Center, her cancer cells were given to the pathologist Dr. George Gey. Gey found to his amazement that, unlike other cancer cells, Lack’s cells were immortal in that they could be cultured and reproduced indefinitely. Within three years of her death, her cell line helped develop the Salk polio vaccine. In the 65 years since Lacks died, about 20 tons of her cell line have been reproduced and distributed worldwide for medical research.

But just what did Lacks and her family get out of the arrangement? At the time, nothing. In accordance with the then standard practice, the Johns Hopkins researchers collected and used her cells without her knowledge or consent. In more recent years, she has received countless public honors for her contributions to medical research. But, at the same time, the many researchers who worked with her cell line collected substantial royalties from the patented cells and the devices developed with their assistance.

So should Lacks and her family have received some fraction of that wealth? The issue was addressed in Moore v. The Regents of California (1990), in which the California Supreme Court held that John Moore did not have property rights to his distinctive cell line. Moore had hairy-cell leukemia, and that resulted in the removal of his “grossly enlarged” and diseased spleen, which proved to be a veritable treasure trove for medical research. Moore’s case did not involve the mere use of cells drawn from his body after his death. Instead, following his initial surgery, the doctors consistently lied to Moore about the supposedly medical purposes for which they collected his various body cells and fluids, which they then used to create a patented cell line of immense value.

Faced with these novel facts, the California Supreme Court issued a split decision. It held that the doctors who took various bodily materials from Moore had not converted his body to their own use, on the odd ground that he did not own the cells after they left his body. Why they could not assert ownership of them before surgery was left unexplained. But, as a way to offset that decision, the Court held that the doctors did breach their duty of informed consent to him. However, this did not allow Moore to recover any royalties from the doctors or any other downstream parties who benefited from using his cell line.

As Skloot and others insist, there is something deeply odd about letting doctors and hospitals profit from cell lines without paying a single dime to the patient from whose body they were obtained, and without obtaining the patient’s permission.

But what’s the best way to correct this odd state of affairs? To people like Skloot, the answer is that all medical researchers should be required to obtain “informed consent” for any research done with a biospecimen, “even if,” as the government proposal puts it, “the investigator is not being given information that would enable him or her to identify whose biospecimen it is.” Such consent would not need to be obtained for each specific research use of the biospecimen, but rather could be obtained using a “broad” consent form in which a person would give permission for future unspecified research uses. Skloot claims optimistically that these people will “probably” say yes, so that research could go on largely as before—but she thinks, as a matter of fundamental fairness, that they should be asked.

There are, however, some powerful objections against the use of the informed consent standard. The consent requirement will result in a vast increase in administrative costs. At a minimum, the new standard will usher in a huge expansion in the number of forms that have to first be explained and then filled out by every patient whose bodily materials are needed for medical research. This means obtaining consent from many thousands of patients as large-scale genomic research is so common. Informed consent would severely slow down such research.

We already have extensive experience with the nightmarish consent requirements under HIPAA (the Health Insurance Portability and Accountability Act of 1996), which created a massive government apparatus for deciding whose consent is needed and when for the myriad uses of routine medical records. The privacy interest with respect to bodily fluids and liquids, especially after death, is far weaker. Why impose an apparatus that costs billions to implement, when there is no real evidence that the current system is broken? After all, the use of the waste products does not affect the patient’s health, well-being, or treatment, even as it facilitates its groundbreaking research.

A larger issue arises if an individual chooses not to sign a blanket consent form for the use of his or her biospecimens. Can the patient decide to not sign the broad form, and limit the use of his or her biospecimens only to some but not to all purposes? If consent is originally given, can it thereafter be revoked, perhaps on the ground that background disclosures were not sufficiently precise? Can family members intervene and claim that, with minors and unconscious people, the patient is not competent to give consent? Is a hospital or physician entitled to refuse to treat a patient who does not acquiesce? May they impose extra charges on them to offset their research losses from not being able to use their biospecimens?

This complex game is not worth playing. The simple answer to all of these endless complications in the routine cases is this: each patient coming into the hospital gets the benefit of the accumulated knowledge acquired from previous patients whose biospecimens have been put to good medical use. It is not too much to insist that patients in routine cases be required to continue to participate in the virtuous circle. There may not be consent, but just compensation is supplied in-kind to all patients who benefit from the medical advances made possible by the research conducted using biospecimens.

At the same time, this generalized form of compensation does not work well with the unique cases like Lacks or Moore. The magnitude of their individual contributions should be compensated somehow. But nonetheless, it does not follow, as Skloot insists, that individual consent for using these biospecimens should be required. With transactions this large, it seems highly unlikely that most patients who have been informed of the benefits that can be derived from their biospecimens would happily sign them over to a research hospital free of charge. Rather, they or their guardians would be well advised to hold out for remuneration as a condition of allowing any of their biospecimens to be used in medical research. Those patients could receive large windfalls without bearing any of the economic and development-related risks that the research hospitals bear.

Outside the medical area, the law has long been reluctant to allow any party to exert this form of monopoly power without legal constraint. Starting with the writings of the British jurist Sir Matthew Hale in the late seventeenth century, the common law has held that common carriers with a monopoly business were “affected with the public interest,” and thus not free to charge whatever they choose for their services. Rather, they must restrict themselves to reasonable and nondiscriminatory rates, commonly called RAND. The system did not require public utilities to supply their services for free, but allowed them a risk-adjusted competitive return on their initial investments, while denying them a monopoly profit.

In modern intellectual property law, RAND rules have been carried over to standard-essential patents, which allow competing companies to share information over an integrated network system. Choosing the right measure of compensation for these patents is never easy, but it is not impossible—and this inquiry may well be easier for biospecimens, which should be made available for medical research for a reasonable royalty interest on the basic research patents, perhaps fixed as a matter of law at a fraction of, say, five percent. Others may prefer to use compulsory arbitration to resolve disagreements over royalty rates. But, critically, both these proposals explicitly reject Skloot’s consent model, which poses a threat to the entire medical research enterprise.

The problem becomes even more acute when, as with Moore but not Lacks, a live patient is asked to contribute further biospecimens to medical research. Usually, the requested intrusions in this case are no greater than those in which the specimens are collected for normal diagnostic purposes, so it is a close question as to whether these transactions should be done solely on a voluntary basis, given the hold-out risk. Alternatively, it is possible to invoke the same compulsory purchase regime that works best for normal waste products.

For the moment, it’s best to keep in place whatever regime is now used. My fear, however, is that any movement toward demanding consent for using biospecimens will undermine the willingness of ordinary patients to participate in medical research. Of course everyone should be uneasy with forced exchanges, and no one should think that individual consent is not needed for ordinary medical treatment. But when transaction costs get high, and monopoly power becomes a serious risk, the model of just compensation in forced exchanges should prevail. It may seem odd to apply standard industrial organization models to biomedical research. But the parallel is precise. The many doctors and hospitals that have vehemently resisted the new proposals that Skloot endorses may not understand the finer points of monopoly power and rate regulation. But they are right to reject unwise proposals to demand broad consent for the use of biospecimens in medical research.

*Considered one of the most influential thinkers in legal academia, Richard Epstein is known for his research and writings on a broad range of constitutional, economic, historical, and philosophical subjects.

The Constitution, the President and Guns

Andrew P. Napolitano*

Judge Napolitano

Judge Napolitano

“A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.” -- Second Amendment to the U.S. Constitution

In 2008, the Supreme Court laid to rest the once-simmering dispute over the meaning of the Second Amendment. In an opinion written by Justice Antonin Scalia, the court articulated the modern existence of the ancient personal right to keep and bear arms as a pre-political right.

A pre-political right is one that pre-exists the political order that was created to protect it. Thus, the court held, the origins of this right are the ancient and persistent traditions of free peoples and their natural inclinations to self-defense.

The court also characterized the right as fundamental. That puts it in the highest category of rights protected by the Bill of Rights. Though the origins of this right are from an era well before guns existed, the textual language in the amendment -- “arms” -- makes clear, the court ruled, the intention of the Framers that its continuing purpose should be to recognize the right of people to keep and use the same level of technologically available arms that might be used against them.

That, in a nutshell, is the history, theory and purpose of the amendment as the modern Supreme Court has found them to be. But as we have seen, the constitutional guarantees that were written to keep the government from interfering with our rights are only as viable as is the fidelity to the Constitution of those in whose hands we have reposed it for safekeeping.

In our system, principal among those are the hands of the president; and sadly, today we have a president seriously lacking in this fidelity. And that lack is salient when it comes to the Second Amendment.

Earlier this week, President Barack Obama announced that he will sign executive orders that expand the size and scope of federal monitoring of the acquisition and use of guns -- traditionally a matter left to the states -- and he will interpret the laws in novel ways, establish rules and impose obligations that Congress rejected, and prosecute those who defy his new system.

The president has very little room to issue executive orders on guns because the congressional legislation in this area is so extensive, detailed and clear. In addition to ordering your doctor to report to the Department of Homeland Security any mention you may make to the doctor of guns in your home, the president has decreed on his own and against the articulated will of Congress the obligation of all people who transfer any gun to any other person to obtain a federal gun dealer license. This is among the most cumbersome and burdensome licenses to obtain.

He has also decreed that any licensee who fails to perform a background check on the person to whom the licensee has transferred a gun shall be guilty of a felony. Give a BB gun to your nephew on his 16th birthday without a federal license and you can go to prison.

Can the president do that? In a word: No.

Under our system of government, only Congress can write federal laws and establish crimes. The president is on particularly thin constitutional ice here because his allies in Congress have proposed this very procedure as an amendment to existing law, and Congress has expressly rejected those proposals.

The president is without authority to negate the congressional will, and any attempt to do so will be invalidated by the courts. As well, by defining what an occasional seller is, beyond the congressional definition or the plain meaning of the words, the president is essentially interpreting the law, a job reserved for the courts.

By requiring physicians to report conversations with their patients about guns to the DHS, the president will be encouraging them to invade the physician-patient privilege; and I suspect that most doctors will ignore him.

Under the Constitution, fundamental liberties (speech, a free press, worship, self-defense, travel and privacy, to name a few) are accorded the highest protection from governmental intrusion. One can only lose a fundamental right by intentionally giving it up or via due process (a jury trial resulting in a conviction for criminal behavior). The president -- whose support for the right to keep and bear arms is limited to the military, the police and his own heavily armed body guards -- is happy to begin a slippery slope down into the dark hole of totalitarianism, whereby he or a future president can negate liberties if he hates or fears the exercising of them.

We still have a Constitution in America. Under the Constitution, Congress writes the laws, the president enforces them, and the courts interpret them. The president can no more write his own laws or impose his own interpretations upon pre-existing laws than Congress or the courts can command the military.

As troubling as this turn of events is, it is not surprising. The president is a progressive, and the ideology of progressivism is anathema to self-help or individualism. He really believes that the government can care for us better than we can care for ourselves.

Yet he ignores recent history. Any attempt to make it more difficult for people to keep and bear arms not only violates the fundamental liberty of those people but also jeopardizes the safety of us all. Add to this the progressive tendency to use government to establish no-gun zones and you have the recipe for disaster we have recently witnessed. All of the recent mass killings in America -- from Columbine to San Bernardino -- have occurred in no-gun zones, where crazies and terror-minded murderers can shoot with abandon.

That is, until someone arrives with a gun and shoots back. Then the killer flees or is injured or dies -- and the killing stops.

*Andrew P. Napolitano, a former judge of the Superior Court of New Jersey, is the senior judicial analyst at Fox News Channel. Judge Napolitano has written seven books on the U.S. Constitution.

End The 'Agency Shop'

Richard Epstein*

On Monday, January 11, the United States Supreme Court will address in Friedrichs v. California Teachers Association two long-standing issues about the status of public unions that have vexed the Court for at least 60 years.

The first of these questions asks whether the Court’s 1977 decision in Abood v. Detroit Board of Education should be overruled. That case allows for so-called “agency shop agreements,” under which a union is entitled to collect from nonmembers fees that cover the cost of its collective bargaining expenses with the government employer, but not those expenses that are said to be properly chargeable to the political activities of the union.

The oft-stated rationale behind Abood, which has been affirmed on multiple occasions, is that the union should be allowed to collect the first set of expenses in order to make sure that non-union members do not “free ride” on the union’s efforts to improve their working conditions for all members of the bargaining unit. Thus in Lehnert v. Ferris Faculty Association, conservative stalwart Justice Antonin Scalia defended the union case as follows: “Mandatory dues allow the cost of [the union’s bargaining] to be fairly distributed; they compensate the union for benefits which ‘necessarily’—that is, by law—accrue to the nonmembers.”

Under the conventional wisdom, moreover, that union power is offset by the so-called duty of fair-representation under which a union, as the exclusive bargaining agent for workers within a defined bargaining unit, must also protect the dissident workers from whom it collects dues. But that quid pro quo logic, Abood holds, does not apply to general political efforts of unions to change the background law and attitudes. To force dissident workers to contribute to these efforts is to require a form of compulsory speech that is blocked by the First Amendment guarantee of freedom of speech.

The second-tier issue in Friedrichs is more technical but also vital. Right now, the law puts the burden on individual workers who disagree with the union’s political activities to opt out on an annual basis. The petitioners in Friedrich want that burden to be reversed so that the union has, again on an annual basis, to persuade individual members to opt in—that is, to contribute dues. The power of inertia is enormous, as it is always costly to persuade people to move away from any baseline that has been set by legislation. Indeed, we know both from the operation of the right-to-work laws and forms of collective bargaining, such asWisconsin Act 10, that union membership and union behavior are heavily affected by any changes in the overall structure of collective bargaining laws. The vast attention given to Friedrichs reflects the fact that it is a very important case. However it is decided, it will have a huge impact on the future development of American labor law.

There is no question that Abood has been under siege since the Court’s 2012 decision in Knox v. Service Employees International Union, dealing with highly technical issues, which made it clear that many of the conservative members of the court were unhappy with the continued application of Abood in the context of public unions. In figuring out how the Court should respond in Friedrichs, everything turns on the starting point of the analysis. The defenders of the National Labor Relationship Act start by treating collective bargaining as the highest social good and thus work against narrowing any exceptions to its scope. Most of the modern attacks on the law take as given the constitutionality of collective bargaining statutes and then argue that what matters today is not the low level of protection that is afforded to economic liberties, but the far higher level of scrutiny that necessarily attaches to First Amendment claims.

But why start there? The threshold question is: Does it make any sense to allow for exclusive collective bargaining under the auspices of the National Labor Relations Board? To answer that question, it is useful to examine the free-rider assumption that lies at the core of the Abood synthesis that is now under attack. The basic argument of union leaders is that a rising tide raises all ships and does so equally. To union supporters, the ability of workers to engage under Section 7 of the NLRA in “concerted activities for the purpose of collective bargaining or other mutual aid or protection” is an unassailable premise of the modern law.

Unfortunately, that rosy vision is incorrect for two reasons. The first deals with successful unions, namely, those whose concerted activity raises wages and lowers overall consumer welfare. Historically, the dangers of successful union activity were well understood. Thus in the great 1908 case of Loewe v. Lawlor, commonly known as the Danbury Hatter’s Case, a unanimous Supreme Court held that secondary boycotts, i.e. those against firms that did business with any firm that a union wished to organize, were per se illegal contracts in restraint of trade under the 1890 Sherman Act. Progressive politics overturned this by statute in Section Six of the 1914 Clayton Act, which announced that “the labor of a human being is not a commodity or article of commerce.”

But it is not as though the legislation prohibited all contracts. Quite the opposite, it exempted unions from the antitrust law. But to this day, its defenders have not explained why concerted union action is any better than concerted actions by business. Successful union activity should be subject to the same scrutiny as any other horizontal agreement when challenged as a contract in restraint of trade.

A key assumption of modern labor laws relates to the supposed internal cohesion of union membership. Thus the free-rider argument takes as its implicit premise that union workers are not heterogeneous in their preferences, but in fact share the same views on all negotiating issues. Given that strong, but wrong, assumption, the free rider argument makes sense. The union that is attentive to the preferences of its members is necessarily equally attentive to the “identical” preferences of its nonmembers as well. On this stout assumption, the union can only survive if nonmembers are made to bear their fair share of the collective costs. Otherwise workers face a giant prisoner’s dilemma game where everyone loses the benefits of collective action because no one is willing to bear his or her fair share of the cost. (Just this public goods argument motivated Mancur Olson’s immensely influential 1965 book, The Logic of Collective Action, which explains forcefully why taxation is necessary to provide standard public goods like law and order.)

But the argument becomes much more difficult to sustain whenever preferences are not homogeneous. Thus, it is easy to explain why every society enforces prohibitions against murder, but far more difficult to explain whether they should intervene in foreign wars whose merits are subject to intense differences in public opinion. We have to tolerate a collective response to that issue, because the United States can pursue only one foreign policy. But in the labor context, where the same heterogeneity of preferences is evident, there is no need for appointing any union the exclusive representative of all the workers. Union selection takes place through bitterly contested elections. Sometimes, a majority of workers favor unionization, but differ on their choice of two competitive unions. In other situations, many workers may deeply oppose union representation precisely because they believe it will make them worse off.

Looking at the duty of fair representation, which was so critical to the Abood synthesis, brings this point home. The duty was created by the 1944 Supreme Court’s decision in Steele v. Louisville & Nashville Railroad. Why? Because Steele involved racial injustice that occurred once the leadership of a majority-white union, organized under the collective bargaining provisions of the 1926 Railway Labor Act, got some 21 railroads to amend their collective bargaining agreements to exclude black firemen from their traditional jobs. Chief Justice Stone refused to let that action go unchallenged, and by judicial fiat imposed on union leaders a much needed duty to represent their minority workers fairly.

Steele teaches us two important lessons. First, it is a lot easier to announce a duty of fair representation than it is to implement it. Some thirteen years later, the black firemen were back in the Supreme Court again in Conley v. Gibson still seeking fair representation. The blunt truth is that these black firemen were far better off when represented by their black leadership in their traditional all-black union, so great were the conflicts when they were integrated into the other union.

Second, most disputes are not touched by Steele because they have no racial overtones. Thus shortly after the passage of the NLRA, a major conflict emerged between the American Federation of Labor, which favored craft unions, and the newly minted Congress of Industrial Organizations, which wanted negotiations to take place on a plant-wide basis. This protracted conflict was over the distribution of the gains from unionization. Craft unions could hold out for higher wages for their specialties that could be transferred to the large number of unskilled or lesser skilled workers in any plant wide setting. Different voting arrangements led to different outcomes.

The duty of fair representation places no effective constraints on how unions and employers divvy up the benefits among different groups of covered workers. Indeed one of the reasons why unions in the private sector have fared so badly is that they cannot easily overcome these problems. Within the public sector, the dynamic is usually different because state law often guarantees unions their representative status without having to persuade individual teachers to work for them. At this point, the choices left to antiunion teachers are sharply limited when they cannot just opt out. Some of these teachers may wish to free ride on union efforts.

But others do not, for they correctly perceive that they are worse off with union representation. Thus excellent teachers often favor merit raises. They oppose seniority preferences that tie wages and job protection to years of service. They bridle under rules that give weak or incompetent teachers outsized protection against dismissal. Yet these unhappy teachers cannot quit because they know that all other public school systems are burdened with similar rules. It is therefore perfectly sensible for them to prefer no union at all to one that gives them union representation free of charge.

This simple point undermines Abood, insofar as the case rests on the supposed common interests of all workers. As a matter of first principle, unions are the source of two evils: unified, they wreak harm on public services; divided, they offer shabby treatment to their dissident members. In an ideal world, the Supreme Court would use Friedrichs to dismantle mandatory collective bargaining root and branch. But short of that, what the Court should do, and do unanimously, is set dissenting workers free from union domination by striking down all agency shop provisions. 

*Considered one of the most influential thinkers in legal academia, Richard Epstein is known for his research and writings on a broad range of constitutional, economic, historical, and philosophical subjects.

Office Pool 2016

Andrew P. Napolitano*

1) The Republican nominee for president in 2016 will be

          a. Donald Trump by unanimous acclamation of the Republican National Convention.

          b. Ted Cruz by unanimous acclamation of the convention.

          c. Mitt Romney after a contested, bitter, brokered convention.

          d. none of the above.

2) The Democratic nominee for president in 2016 will be

            a. Hillary Clinton.

            b. Bernie Sanders.

            c. Al Gore after a contested, bitter, brokered Democratic National Convention.

            d. not Hillary Clinton, because she will be indicted by a federal grand jury for various crimes.

3) The voters will elect in a landslide

            a. whoever promises to give them the biggest piece of the federal pie.

            b. whoever scares them the most.

            c. whoever comes across as most faithful to the Constitution.

            d. a sleeper candidate not yet on the scene.

4) The 2016 Republican platform will promise

            a. to eradicate the Islamic State group by using ground troops and fighting an all-out war.

            b. to replace Obamacare with a lighter, easier version of it.

            c. to make abortion illegal, except for in cases of rape and incest.

            d. to bring the troops home and let the Russians fight the Islamic State.

5) The 2016 Democratic platform will promise

            a. a 2016 version of "a chicken in every pot and a car in every garage."

            b. free health care for those who want it.

            c. criminalizing hate speech.

            d. all of the above.

6) The Super Bowl will be won by

            a. the Carolina Panthers.

            b. the New England Patriots, but only by cheating.

            c. the New York Jets after the greatest comeback in NFL history.

            d. none of the above.

7) The World Series will be won by

            a. the New York Mets.

            b. the San Francisco Giants.

            c. the Boston Red Sox, but only after they acquire A-Rod from the Yankees.

            d. none of the above.

8) In 2016, climate change

            a. will be embraced by the Republican Party in a dramatic turnabout.

            b. will be defined as an article of faith by Pope Francis.

            c. will be exposed as a fraud.

            d. will leave the public marketplace of ideas.

9) The Supreme Court

            a. will invalidate all spying without a warrant based on individualized suspicion.

            b. will invalidate race as a factor to be taken into account by government-owned schools.

            c. will continue to expand First Amendment rights.

            d. will finally invalidate Obamacare.

10) Congress will

            a. continue to finance the federal government by borrowing money.

            b. will let President Barack Obama declare war.

            c. will impeach President Obama for refusing to enforce federal law.

            d. do none of the above.

11) Pope Francis will

            a. permit divorced and remarried Roman Catholics to receive the Blessed Sacrament.

            b. forgive everyone’s sins during the 2016 Year of Mercy.

            c. remove the requirement for a miracle as a condition for declaring someone to be a saint.

            d. resign and become a simple parish priest in Buenos Aires, Argentina.

12) The Hollywood industry will

            a. offer movies directly to consumers.

            b. suffer its most crippling actor strike in its history.

            c. continue its leftward view of human existence.

            d. leave California because of the drought.

13) The highest taxes in the United States will be in

            a. New Jersey, where they are now.

            b. New York City because Mayor Bill de Blasio will tax the rich at 50 percent of income.

            c. in California.

            d. none of the above.

14) One year from today

            a. Hillary Clinton will be in prison.

            b. Donald Trump will be selling pencils.

            c. Chris Christie will have been in the Olympics.

            d. the president-elect will be someone who did not participate in any 2015 presidential debates.

15) One year from today

            a. the government will be able to take any property from you that it wants.

            b. the Environmental Protection Agency will be able to regulate your use of a lawn mower and a rake.

            c. the National Security Agency will still be able to capture your keystrokes on your computer in real time.

            d. none of the above will be true.

16) In 2016, President Obama will announce

            a. that he will become the president of the University of Chicago.

            b. that he has lost his license to practice law.

            c. that he and Michelle Obama will soon divorce.

            d. that he was not born in the United States.

17) In 2016

            a. Fox News Channel will surpass the broadcast networks in audience share.

            b. Bill O’Reilly will run for public office and lose.

            c. A-Rod will get sexual reassignment surgery.

            d. Madonna will enter a convent.

18) By the end of 2016

            a. the Islamic State will be dead and gone.

            b. the Islamic State will have signed a peace treaty with the West.

            c. Vladimir Putin will be out of office.

            d. none of the above will have happened.

19) One year from today

            a. gasoline will cost less than $1 a gallon.

            b. a Big Mac will cost $10.

            c. half the newspapers presently in the country will be out of business.

            d. Apple will be producing an iPhone that it claims can contact dead relatives.

20) Ultimately

            a. it is better to have loved and lost than never to have loved at all.

            b. that government is best which governs least.

            c. taxation is theft.

            d. all of the above are true.

            My choices: 1d, 2d, 3b, 4a, 5b, 6c, 7d, 8b, 9a, 10a, 11a, 12a, 13a, 14a, 15d, 16c, 17a, 18d, 19c, 20d.

*Andrew P. Napolitano, a former judge of the Superior Court of New Jersey, is the senior judicial analyst at Fox News Channel. Judge Napolitano has written seven books on the U.S. Constitution.