The Pax Americana is Dead

Richard Epstein*

RICHARD EPSTEIN

RICHARD EPSTEIN

Thomas Friedman, the respected New York Times columnist, tried to do a beleaguered President Barack Obama a favor by publishing a summary of an extended interview between the two men, which was grandly entitled “Obama on the World.” Friedman tried to present the President in a positive light, by calling his weak responses “feisty.” Yet there is no denying that Obama’s rudderless foreign policy has been a disaster. The international order has rapidly deteriorated since Obama entered the Oval Office. The current situation is so perilous that so long as Obama remains President, the phrase “presidential leadership” will continue to be an oxymoron.

The President suffers from two fundamental flaws. The first is that he is unwilling to make decisions. He much prefers to play the role of a disinterested observer who comments on a set of adverse events that he regards himself as powerless to shape, of which Assad’s carnage in Syria is the prime example. The second is that he fundamentally misunderstands the use of force in international affairs. He handicaps himself fatally by imposing unwise limitations on the use of American force, such as his repeated declarations that he will not send ground troops back into Iraq.

To put these points into perspective, it is important to address two issues that Friedman never raises with the President: military strength and American influence. Regarding the first, Freidman fails to discuss President Obama’s conscious decision to reduce the budgets for, and hence the size of, American military operations throughout the world. In the President’s view, cutting down on the size of the military reduces the American temptation to intervene in disputes around the globe, and thus prevents misadventures such as our interventions in Iraq and Afghanistan that have sapped American strength with little or nothing to show for it.

The second issue Friedman never addressed is the deterioration in world peace that has happened since President Obama became president. No one can claim that Iraq was at peace when George W. Bush left office, but the violence had been curbed. Since Obama has taken over, relative tranquility yielded to factional squabbling, followed by vicious aggression that caught the President woefully off guard. Iraq is not alone. The number of hotspots in the world—including Gaza, Syria, Libya, Nigeria, Ukraine and the China Sea—is increasing. The President wrings his hands over how difficult it has become to find credible allies in the world to address these problems without ever asking why no one trusts him. So he resolves to hold back on the use of American force overseas. Armed with that certainty, every tin pot dictator and terrorist group thinks it has an open field in which to run.

The President’s blunders remind us that we need Pax Americana in international affairs. If the United States maintains a large military force and is prepared to use it, the threat of American force could snuff out a large number of troublemakers and help decent people organize their own affairs. It was this policy that made NATO such a success in the immediate post-war years. It will also allow the United States to use force effectively when needed. But once our commander-in-chief neutralizes America’s military might, weaker but more determined nations and groups know that they have a free hand to follow their own aggressive agendas. Worse still, this passive policy invites new thugs like Abu Bakr al-Baghdadi to propel themselves into regional prominence.

When Friedman asked the President about how his hapless policies created the current tinderboxes, Obama said he "is only going to involve America more deeply in places like the Middle East to the extent that the different communities there agree to an inclusive politics of no victor/no vanquished.” This noble sentiment gets the causation backwards. So long as we remain on the sidelines, we can be quite sure that the various factions in Iraq will continue to take what Obama termed “maximalist positions,” without the spirit of compromise.

The President wants “to speak to the Sunni majority,” but how is that possible in parts of Iraq under the thumb of extremist groups? He also chides the wretched and untrustworthy Prime Minister Nuri Kama al-Maliki for missing opportunities to share power with his mortal enemies. Yet chastising current Iraqi officials won’t get the job done. Left to their own devices, the Sunni, Shiite, and Kurdish factions in Iraq have such well-earned mutual distrust that they will never be able to agree upon a workable long-term power sharing arrangement when each party wants 60 percent of the available power in a world where majority vote rules.

The United States cannot hunker down on the sidelines until those groups reach an agreement. It cannot announce in advance that it will not step in to be the Iraqi or Kurdish air force “in the absence of a commitment of the people on the ground to get their act together and do what’s necessary politically to start protecting themselves and to push back against ISIL.”

There is only one way for this to happen. It is for the United States to put real resources on the table, and to announce in advance it will stay for the duration. It is not a question of putting “a lid” on the problem. Seeking a status of forces agreement that would allow 10,000 American troops to remain in Iraq is hopeless. The warring Iraqi factions will never commit themselves to an American presence that they regard as puny and ineffective. What is needed is American backing with force and determination. As confidence grows, we can pull back some of our commitments. But it will be a long and expensive process, without which the Yazidis will be driven out of Erbil and stranded on Mount Sinjar, both places that no one heard of before the Iraqi meltdown.

Obama knows the dangers of his half measures, given his own regrets on Libya. Friedman writes: “Intervening in Libya to prevent a massacre was the right thing to do, Obama argued, but doing it without sufficient follow-up on the ground to manage Libya’s transition to more democratic politics is probably his biggest foreign policy regret.” When it now comes to salvaging the wreckage in Northern Iraq, he has stressed repeatedly that he prefers months of inconclusive air attacks to placing some boots on the ground that could rout the ISIL forces in a short fraction of that time. It is hard to know how many people will starve or be killed in the interim. But we do know that tens of thousands of people have already been forced from their homes, some of whom have already lost their lives while the President dithered because he wanted the Iraqi government to repair its own internal relations. Half measures do not a great President make.

A record as dismal as Obama’s does not happen by accident. It stems from some fundamental conceptual error, which in this instance is one that is shared by the hard-line libertarian wing of the Republican Party, led by Rand Paul, which is deeply suspicious of the use of force in international affairs. The root of the difficulty is this: a strong libertarian believes that the primary wrong is the use or threat of force. It’s clearly wrong for a powerful nation such as the United States to commit aggression against its weaker neighbors. But the intellectual slogging for libertarians gets a lot tougher when the question is how to respond to both the use and threats of force by others. In these cases, the principle of self-defense reveals how difficult it is to decide when to respond and with how much force even in simple disputes between ordinary individuals. The issues only get tougher in the international arena as the stakes get higher and the overall uncertainty increases.

Obama, like the hard-core libertarians, is skeptical about the use of force in international affairs. Imprudence is of course unwise in any area, but one cannot rule out the extensive use of force in corners of the world where the ends sought—the control of the aggression of others—is indubitably legitimate. The point is true even in cases in which nations act in defense of third parties who are incapable of defending themselves. Of course, intervention is costly and can easily backfire. But less intervention is not always less costly than more intervention.

In many cases, the only effective way to deal with aggression is with a strong and decisive response. Our overly intellectual President has failed to deliver one. He sees himself as a deep thinker who sees issues that lesser minds just miss. He would do a lot better in international affairs if he would stop his philosophical musings and start being the President of the United States and the leader of the free world.

*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.

Spying, Lying, and Torture

*Judge Andrew P. Napolitano*

            In some respects, the recent admission by CIA Director John Brennan that his agents and his lawyers have been spying on the senators whose job it is to monitor the agency should come as no surprise. The agency’s job is to steal and keep secrets, and implicit in those tasks, Brennan would no doubt argue, is lying.

            Yet in another respect, this may very well be a smoking gun in the now substantial case against President Barack Obama that alleges that much of his official behavior has manifested lawlessness and incompetence. It is hard to believe that the president did not know about this but not hard to believe he would look the other way.

            About four months ago, California Democrat Dianne Feinstein, the chairwoman of the Senate Select Committee on Intelligence, went to the Senate floor and accused the CIA of committing torture during the presidency of George W. Bush and of spying on the committee that she chairs as it was examining records of that torture. Brennan responded by denying both charges and leveling his own -- that investigators for the Senate Intelligence Committee had exceeded their lawful access to CIA records and that that constituted spying on the CIA.

            Brennan even got his predecessor, George Tenet, under whose watch Feinstein claimed the torture had occurred and the attacks of 9/11 took place, to deny vehemently that his agents had committed torture. With this mutual finger-pointing, both the CIA and the Senate Intelligence Committee reported each other to the Department of Justice, which promptly punted.

            How did all this come about? Under federal law, the CIA gets to do what the president permits and authorizes only when it reports its deeds and misdeeds truthfully to two congressional committees, one of which is the Senate Intelligence Committee. (The other is the House Permanent Select Committee on Intelligence.) None of this is constitutional, of course, seeing as the CIA fights secret wars; the Constitution mandates that only Congress can declare war, and Congress cannot delegate its constitutional authority to committees. This system of secret government is so secret that 90 percent of our elected congressional representatives are kept ignorant of it.

            But last week, on a sleepy Friday afternoon in the middle of the summer, Obama admitted that the CIA had tortured people, and shortly thereafter, Brennan admitted that the CIA had spied on the Senate. Then the president said he still has confidence in Brennan.

            This is approaching a serious constitutional confrontation between the president and Congress. Can the president’s agents lawfully spy on Congress? Of course not. Can the CIA lie to Congress with impunity? Only if Congress and the Department of Justice let it do so.

            Yet this administration thrives on lies. Brennan’s boss, James Clapper, who is the director of national intelligence, lied to the same Senate Intelligence Committee when he denied that the National Security Agency is collecting massive amounts of personal data on hundreds of millions of Americans. And now we have the CIA director lying in secret to his congressional monitors, who were formerly his congressional protectors, and a Justice Department unwilling to do its legal duty by enforcing the law.

            Do you remember former Yankee great Roger Clemens? He was indicted and tried twice for lying to a congressional committee about the contents of his urine. He was acquitted, yet this should tell you about the government’s priorities. It is more interested in chastening a baseball player about a private matter than it is in being truthful to the American people about torture. It apparently thinks that government employment is a defense to lying.

            So where does all this lead us? The president’s agents have lied to Congress and have spied upon it. If Brennan did not know about this, he should be fired for incompetence and for failing to control his agents. If he did know about this, he should be indicted for lying to Congress, because he denied it at a time when he had a lawful obligation to be truthful, and he should be fired for his failure to communicate a violation of the Constitution to the president. If he did tell the president that his agents were about to spy on Congress and the president failed to stop it, the president has committed a serious violation of his oath to uphold the laws and violated the separation of powers by invading the privacy of a coequal branch of the government -- and that is an impeachable offense.

            So, what shall we do about this? House Speaker John Boehner will say, “Let’s sue the president.” That’s a joke. How about subpoenaing the president to testify under oath and asking him what he knew and when he knew it? Now you’re getting warmer. How about impeaching him and calling him as the first witness in his own impeachment trial? His Department of Justice has argued that the Fifth Amendment privilege against self-incrimination applies only in criminal cases. Now you’re getting hot.

            But wait. All this requires moral courage, righteous indignation and fidelity to the rule of law; and the Congress has none of those traits. In the post-9/11 world, Congress has become a potted plant, ready to give any president whatever he wants, lest it appear less than muscular in the face of whatever danger the president says is lurking in the dark. And presidents know that if the kitchen gets hot, all they need to do is foment a foreign crisis in the dark, and the country will unite behind them.

            I am not so sure that unity behind the president will happen this time.

           *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.

"Middle-Out" Economics?

Richard Epstein*

RICHARD EPSTEIN

RICHARD EPSTEIN

This past week I appeared on the PBS News Hour on a segment hosted by Paul Solman. The segment was titled, “Top-down or middle-out? Debating the key to economic growth.” The show focused on the work of Nick Hanauer, an American entrepreneur and venture capitalist with a net worth of $1 billion, who appeared opposite me on television. Hanauer gave a talk on TED that went viral, receiving over a million views on YouTube, in which he advanced a middle-out thesis for economic growth: “The fundamental law of capitalism is, if workers don’t have any money, businesses . . . don’t have any customers.”

I was asked to comment on his thesis. The exchange was hard to get off the ground. His remarks were made without reference to anything that I said. I directed sharp criticism to his populist creed and argued that the middle class creates wealth through its demand—not the capitalist through his innovation.

Top, Middle, or Bottom?

When you appear on television, it’s hard to control how the central issues are framed. In this instance, the title chosen by PBS bought into Hanauer’s conception of the world with its middle-out perspective. But the phrase “top-down” does not reflect my views, as the segment’s title suggests. I take the classical liberal position on wealth creation.

The first source of difficulty is that a top-down approach frequently implies that wealth is created through central planning. That is, the government coordinates all forms of social investment. Following Friedrich Hayek, I cannot think of a worse way to plan the operation of any economy. The classical liberal view on this subject is that of bottom up wealth creation, which operates as follows.

The initial assumption is that the state is not regarded as the creator of rights, but as their protector. Individual rights in labor and intelligence belong to an individual as a matter of birth, not via a grant from the state. Claims to particular property are initially created by occupying land, capturing animals, or grabbing things that are otherwise unowned. Once individuals own property, the key office of the legal system is two-fold: First, to stop aggression, and second, to allow for coordinated activities, which includes the use of public funds to create the needed infrastructure over which private transactions take place.

At this point, the relationships between consumption, production, and growth are not determined by some magical law that favors a top-down, middle-out, or bottom-up position. What happens is that individual decisions to collaborate on various ventures drive all aspects of the wealth cycle from innovation to implementation. There is no privileged position for either middle class consumption or capitalist innovation. Hanauer is, of course, correct to say that unless consumers have income they cannot buy the services, both new and old, that capitalists produce. But the relationships are reciprocal, so that entrepreneurs must be there to provide goods and services that consumers want, and to pay wages to workers which they then spend in their roles as consumers. All sides of the relationship constantly feed each other.

At this point, any claim of priority no longer makes any sense. Indeed a claim to focus on aggregate consumption for the middle class makes no sense either. Let each individual decide how much of his income or wealth to consume or invest. Let each person also decide whether to direct his or her investments into new or old technologies. Each person makes his or her choices with some knowledge of the plans of others. Their decentralized choices will yield a more informed set of outcomes on both production and consumption than either a state-imposed top-down or middle-out version of the world.

The Problem With Middle-Out Economics

The decision by Hanauer to stress his so-called middle-out position carries with it dangerous policy implications, which are evident in how he treats both labor and taxation policy.

One supposed implication of Hanauer’s consumer-driven account is that efforts to pump out aggregate demand depend on boosting up income for the middle class by devices targeted to that end. This policy goes back as far as the 1930s when one of the rationales for mandatory collective bargaining under the National Labor Relations Act stemmed from the supposed belief, as its statutory findings announced that “the inequality of bargaining power” between employers and employees “depresses the purchasing power of wage earners,” for which the higher wages wrought by concerted union action was the appropriate policy response.

Yet the NLRB miscarried for multiple reasons. First, its pro-union policies only address the union members, not overall consumer demand. If unions get more through industrial action, other workers could easily get less, so that no confident claim can be made about the aggregate effects of unionization. In addition, the shift in market arrangements increases bargaining costs and results in monopoly dislocations, including strikes, lockouts, and other interruptions in production, that offset any supposed gains from more aggregate consumption. Rather than rig markets, the better approach is to secure open competition in all markets, so that wages are bid up as productivity increases, wholly without government intervention.

Hanauer does not grasp these fundamentals. He repeats a common mistake when he writes: “But there is this upper limit on what we can spend. I drive a very nice car, but it’s only one car. I don’t own 1,000, even though I earn 1,000 times the median wage.” True enough. But the point only shows that he has a diminishing marginal utility for one form of consumption, which means that his consumption expenditures will switch to fine wines and private jets, while his unspent wealth is used to fund investments in new businesses or charitable operations. Think of it this way: people who earn huge amounts, but take very little out by way of consumption are doing a public service. Others gain from the increased supply of capital.

Unfortunately, Hanauer does not see matters this way, and thus makes counterproductive recommendations for both labor policy and taxation. On the former, he is an active backer of the $15 minimum wage law in Seattle on the ground that it will put money in workers’ pockets so that they can buy more goods. But that assumes that the jobs will remain after the wages are increased—that the wage increase won’t unleash collateral damage.

Indeed, his defense of major wealth transfers is condemned by his own example: “Wal-Mart earned $27 billion in profit last year. They could afford to pay their bottom million workers $10,000 more a year, raise all of those people out of poverty—save taxpayers billions of dollars, and still earn $17 billion in profit, right?” Not so fast. He speaks as if the huge transfer of wealth is fully captured by subtracting $10 billion from $27 billion. But huge hits generate counterstrategies as management has to find a way to stop the decline in share prices when net earnings drop by close to 40 percent. The cost of capital increases; capital to fund internal investments diminish. The firm looks at ways to cut workers to save labor costs, so that we see more outsourcing and greater automation. By the same token, it may have to raise prices to boost revenues, but only at the risk of lost business, given that its core customer base includes a large percentage of price-sensitive lower-middle class people.

My approach was the opposite. Repeal the minimum wage and let people work for $.02 per hour. Let, not make, of course. This claim does not rest on some ludicrous assumption that anyone can “survive” on that nominal wage. Indeed, one reason that Solman was incredulous at my suggestion lay in his failure to understand why it sometimes makes sense for workers to take a low or nominal wage, namely, in order to improve their ability to earn more money a year later. Gary Becker called this investing in human capital, and clearly any individual who takes this strategy should have some other source of short term income, whether from savings, a second job, family support, or in kind payments of room and board. The constant talk of the living wage should not blind us to the importance of life-cycle earnings, which could be undercut by a high minimum wage that keeps people out of the labor market

A similar criticism can be lodged against Hanauer’s proposal to tax the rich to fund the middle class. It won’t work. The tax increases under the Obama administration have not stopped the slide in median income in the United States, because they do nothing to ease the ever-rising burden of labor regulation, a topic that Hanauer never mentions. Today, the combination of taxation and regulation eliminates job opportunities, especially for workers at the bottom of the market.

The same logic applies to taxation targeted to the rich, which creates political uncertainty, drains investment income, and leads to wasteful albeit legal strategies of tax avoidance, including the now-popular tax inversions that drive companies overseas. Adam Smith was right to insist that low, flat taxes increase stability and spur growth.

The conventional wisdom holds that classical liberals like myself are ideologues untouched by human emotion and uneducated by practical experience. Many believe that to oppose the minimum wage is to tolerate pollution and abandon a public highway system. But that is a false caricature of laissez-faire, which has never once licensed nuisances against strangers or prevented the state construction and maintenance of infrastructure.

Laissez-faire economics is in retreat. Today, the progressive mindset drives much of public policy. So the populist skeptics of laissez-faire have to ask themselves a simple question: How can the decline in median income and the slow growth rate over the past six years be attributable to policies that have not been in place for a long time? The source of our current malaise is the populism of people like Hanauer who fail to understand the negative, but quite real, unintended consequences of their policy prescriptions.

*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.

Should Ebola Patients Be Allowed Into the U.S.?

It was announced yesterday that two Americans sick with Ebola would be brought to Georgia for treatment. While the State Department is certain that the strict isolation protocols will defuse any chances of the public being exposed (while helping the patients), others are convinced that this is not a wise decision, as it exposes the public to a risk that has so far existed only in Africa. We want your vote - do you think these patients should be brought back to America?

Should Ebola patients be allowed in the U.S. for treatment?
  
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Is the President Incompetent or Lawless?

Judge Andrew P. Napolitano*

JUDGE NAPOLITANO

JUDGE NAPOLITANO

It has been well established under the Constitution and throughout our history that the president’s job as the chief federal law enforcement officer permits him to put his ideological stamp on the nature of the work done by the executive branch. The courts have characterized this stamp as “discretion.”

Thus when exercising their discretion, some presidents veer toward authority, others toward freedom. John Adams prosecuted a congressman whose criticism brought him into disrepute, an act protected by the First Amendment yet punishable under the Alien and Sedition Acts, and Thomas Jefferson declined to enforce the Acts because they punished speech, and pardoned all those convicted. Jimmy Carter asserted vast federal regulatory authority over the trucking and airline industries, and Ronald Reagan undid nearly all of it.

 The president has discretion to adapt law enforcement to the needs of the times and to his reading of the wishes of the American people. Yet that discretion has a serious and mandatory guiding light -- namely, that the president will do so faithfully.

 The word “faithfully” appears in the oath of office that is administered to every president. The reason for its use is to assure Americans that their wishes for government behavior, as manifested in written law, would be carried out even if the president personally disagrees with the laws he swore to enforce.

 This has not always worked as planned. President George W. Bush once famously signed into law a statute prohibiting federal agents without a search warrant from reading mail sent to persons other than themselves -- and as he was literally holding his pen, he stated he had no intention of enforcing it. That was a rejection of his presidential duties and a violation of his oath.

 But today, President Obama has taken the concept of discretion and so distorted it, and has taken the obligation of faithful enforcement and so rejected it, that his job as chief law enforcer has become one of incompetent madness or chief lawbreaker. Time after time, in areas as disparate as civil liberties, immigration, foreign affairs and health care, the president has demonstrated a propensity for rejecting his oath and doing damage to our fabric of liberty that cannot easily be undone by a successor.

 Item: He has permitted unconstitutional and unbridled spying on all Americans all the time, and he has dispatched his agents to lie and mislead the American people and their elected representatives in Congress about it. This has resulted in a federal culture in which the supposed servants of the people have become our permanent and intimate monitors and squealers on what they observe.

 Item: He has permitted illegal immigrants to remain here and continue to break the law, and he has instructed them on how to get away with it. His encouragement has resulted in the flood of tens of thousands of foreign unaccompanied children being pushed across our borders. This has resulted in culture shock to children now used as political pawns, the impairment of their lives and the imposition of grievous financial burdens upon local and state governments.

 Item: His agents fomented a revolution in Libya that resulted in the murder of that country’s leader, the killing of the U.S. ambassador and the evacuation of the U.S. embassy. His agents fomented a revolution in Ukraine that resulted in a Russian invasion, an active insurgency, sham elections and the killing of hundreds of innocent passengers flying on a commercial airliner.

 Item: He has dispatched CIA agents to fight undeclared and secret wars in Yemen and in Pakistan, and he has dispatched unmanned drones to kill innocents there. He has boasted that some secret reading of public positive law permits him to kill whomever he wishes, even Americans and their children.

 Item: His State Department has treated Hamas -- a gang of ruthless murderers whose stated purpose is the destruction of Israel -- as if it were a legitimate state deserving of diplomatic niceties, and this has encouraged Hamas to persist in attacking our only serious ally in the Middle East.

 Item: His Department of Veterans Affairs has so neglected patients in government hospitals that many of them died, and it even destroyed records to hide its misdeeds. His Internal Revenue Service has enforced the law more heavily against his political opponents than against his friends, and it has destroyed government computer records in order to hide its misdeeds.

 Item: He has relieved his friends of the burdens of timely compliance with Obamacare, and he has burdened his enemies with tortured interpretations of that law -- even interpretations that were rejected by the very Congress that enacted the law and interpretations that were invalidated by the Supreme Court.

 He has done all these things with a cool indifference, and he has threatened to continue to do so until the pressure builds on his political opponents to see things his way.

 The Framers could not have intended a president so devoid of fidelity to the rule of law that it is nearly impossible to distinguish between incompetence and lawlessness -- and I am not sure which is worse. Archbishop Fulton Sheen often said he’d prefer to deal with a smart devil than a stupid one.

 But the Framers did give us a remedy, and the remedy is not a frivolous lawsuit that the federal courts will no doubt reject as a political stunt. The remedy is removal from office. This is not to be undertaken lightly, as was the case when this remedy was last used. But it is the remaining constitutional means to save the freedoms the Constitution was intended to guarantee.

 The choice is between two more years of government by decree or two years of prosecution. It is a choice the president has imposed upon us all.

 *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. 

House Proposes Border Bill, But Is It Sensible?

*Thomas Warns

House Speaker John Boehner (R-OH).

House Speaker John Boehner (R-OH).

Yesterday, House Speaker John Boehner introduced a $659 million immigration bill in the House. The bill is an attempt to address the humanitarian and national security crisis occurring at the southern border, but so far it has been received with mixed press. Is it a reasonable bill?

Let’s start with the raw statistics. The bill would provide $405 million to the Border Patrol and Immigration and Customs Enforcement and another $197 million to the Department of Health and Human Services to care for children in U.S. custody, with the remaining amounts going towards hiring more judges for deportation hearings and transportation to reunite families in their home countries. It would also tweak a 2008 law, and allow unaccompanied minors from Central America to be deported more quickly.

One criticism that bill has received is that it is not even close to the amount that the President requested. President Obama initially requested $3.7 billion, while the Democratic Senate introduced a bill with $2.7 billion in funding. There is a reasonable explanation for this, however; the Republican bill only funds the border operations through the end of the fiscal year (which ends September 30th), while the President wanted funding for the next fifteen months.

The House’s funding amount is prudent, considering how fluid the circumstances are along the border. No one knows how long this crisis will last, or how serious it will become. In fifteen months, the flow of minors into this country might ebb to a trickle, or explode into a deluge; in short, no one knows. A lot of that will depend on whether or not President Obama attempts to use his executive powers; some have suggested that he plans to grant temporary work permits to illegal immigrants already in the country, which will undoubtedly cause more people to come to America. It should be noted, however, that the President himself has not tipped his hand about a potential executive order, and that many of the allegations that amnesty is coming soon have been advanced by Republicans looking to hurt the Democrats politically (this is in much the same vein as the fantasy that Republicans are trying to impeach President Obama, which has almost exclusively been advanced by Democrats in order to aid fundraising).

The House bill also deserves praise because it does not require new funding, but rather moves money primarily from FEMA in order to pay it. The Senate has responded by beefing up its own bill to $3.5 billion – it added funding for fighting wildfires in the west as well as money for Israel. While that cattle-trading is common place in Congress, it will not be enough to appease Senate Republicans, who also want to change the 2008 law which slows the deportation process down for illegal immigrants. President Obama has also asked for that change, and the Republican bill sensibly gives it to him, leaving only Senate Democrats in opposition. It seems that House Speaker Boehner is at least trying to find common ground on substantive problems, rather than trying to slide a greased-up pork-barrel bill through the Senate.

As conditions in shelters grow worse, children either need better care or to be sent home.

As conditions in shelters grow worse, children either need better care or to be sent home.

For practical reasons as well, the House bill is virtuous. Congress adjourns on Thursday for their August recess, making it imperative that some sort of resolution be reached before then. If nothing is done before the recess, it is likely that more children will suffer and the country will remain vulnerable to the small but significant minority of illegal immigrants who enter the country with serious illnesses or criminal records. A short term, low cost fix which grants the President more flexibility in deportations is more likely to pass through Congress and receive the President’s signature under a compressed time frame than a much larger, more contentious bill. Yet despite this, Senate Majority Leader Harry Reid is trying to jam immigration reform into the House bill, which would be difficult to pass at all and utterly impossible to pass in two days.

If Senate Democrats are truly interested in addressing the humanitarian crisis along the border, they will vote in favor of the stopgap House bill, and get back to work in September on a longer-term solution. But what if they refuse, because it might look bad in November? What does that say about their agenda?

* Thomas Warns is a J.D. Candidate in the Class of 2015 at New York University, and the Editor-in-Chief for the N.Y.U. Journal of Law & Liberty.

What If Democracy Is a Fraud?

Judge Andrew P. Napolitano*

JUDGE NAPOLITANO

JUDGE NAPOLITANO

What if you were allowed to vote only because it didn’t make a difference? What if no matter how you voted the elites always got their way? What if the concept of one person/one vote was just a fiction created by the government to induce your compliance?

What if democracy as it has come to exist in America today is dangerous to personal freedom? What if our so-called democracy erodes the people’s understanding of natural rights and the reasons for government and instead turns political campaigns into beauty contests? What if American democracy allows the government to do anything it wants, as long as more people bother to show up at the voting booth to support the government than show up to say no?

What if the purpose of contemporary democracy has been to convince people that they could prosper not through the voluntary creation of wealth but through theft from others? What if the only moral way to acquire wealth is through voluntary economic activity? What if the government persuaded the people that they could acquire wealth through political activity? What if economic activity includes all the productive and peaceful things we voluntarily do? What if political activity includes all the parasitical and destructive things the government does? What if the government has never created wealth? What if everything the government owns it has stolen?

What if governments were originally established to protect people’s freedoms but always turn into political and imperialist enterprises that seek to expand their power, increase their territory and heighten their control of the population? What if the idea that we need a government to take care of us is a fiction perpetrated to increase the size of government? What if our strength as individuals and durability as a culture are contingent not on the strength of the government but on the amount of freedom we have from the government?

What if the fatal cocktail of big government and democracy ultimately produces dependency? What if so-called democratic government, once it grows to a certain size, begins to soften and weaken the people? What if big government destroys people’s motivations and democracy convinces them that the only motivation they need is to vote and go along with the results?

What if Congress isn’t actually as democratic as it appears? What if congressional elections don’t square with congressional legislation because the polls aren’t what counts, but what counts are the secret meetings that come after the voting? What if the monster Joe Stalin was right when he said the most powerful person in the world is the guy who counts the votes? What if the vote counting that really counts takes place in secret? What if that’s how we lost our republic?

What if the problem with democracy is that the majority thinks it can right any wrong, write any law, tax any event, regulate any behavior and acquire any thing it wants? What if the greatest tyrant in history lives among us? What if that tyrant always gets its way, no matter what the laws are or what the Constitution says? What if that tyrant is the majority of voters? What if the majority in a democracy recognizes no limits on its power?

What if the government misinforms voters so they will justify anything the government wants to do? What if the government bribes people with the money it prints? What if it gives entitlements to the poor and tax breaks to the middle class and bailouts to the rich just to keep everyone dependent on it? What if a vibrant republic requires not just the democratic process of voting, but also informed and engaged voters who understand first principles of human existence, including the divine origin and inalienable individual possession of natural rights?

What if we could free ourselves from the yoke of big government through a return to first principles? What if the establishment doesn’t want this? What if the government remains the same no matter who wins elections? What if we have only one political party -- the Big Government Party -- and it has a Democratic wing and a Republican wing? What if both wings want war and taxes and welfare and perpetual government growth, but offer only slightly different menus on how to achieve them? What if the Big Government Party enacted laws to make it impossible for meaningful political competition to thrive?

What if the late progressive Edmund S. Morgan was right when he said that government depends on make believe? What if our ancestors made believe that the king was divine? What if they made believe that he could do no wrong? What if they made believe that the voice of the king was the voice of God?

What if the government believes in make believe? What if it made believe that the people have a voice? What if it made believe that the representatives of the people are the people? What if it made believe that the governors are the servants of the people? What if it made believe that all men are created equal, or that they are not?

What if the government made believe that it is always right? What if it made believe that the majority can do no wrong? What if the tyranny of the majority is as destructive to human freedom as the tyranny of a madman? What if the government knows this?

What do we do about it?

*Andrew P. Napolitano, a former judge of the Superior Court of New Jersey, is the senior judicial analyst at Fox News Channel.

Obama's LGBT Blunder

Richard Epstein*

  RICHARD EPSTEIN

  RICHARD EPSTEIN

Earlier this week, President Barack Obama signed a much anticipated executive order that prohibits all government contractors from discriminating against their gay, lesbian, bisexual, or transgender employees. This anti-discrimination requirement will be set down in the contracts between the government and the contractors. After fierce lobbying from both sides, the President also decided that he would not exempt religious groups from this order. His order comes hard on the heels of the highly divisive Supreme Court’s decision in Burwell v. Hobby Lobby, where the Supreme Court, by a five-to-four vote, struck down the healthcare law’s contraceptive mandate under the Religious Freedom Restoration Act (RFRA).

The Government Goes Too Far

The President’s executive order creates a two-tier system whereby any firm that wants to do business with the United States government—and only those firms—must abide by the mandate; the Obama administration cannot impose the mandate by regulation on all businesses generally. But this raises a key normative question: should the government be able to impose by contract mandates on businesses that it could not impose on them by legislative action?

The popular acclaim that the President’s action has received from many gay rights activists should not be allowed to conceal the serious difficulties in this two-tier regime. No President should be allowed to do by executive order what he is unable to do by way of regulation, unless it can be shown to be essential for the operation of the government system, which is manifestly not the case here. Put otherwise, the prohibitions of RFRA should apply as much to executive orders as to regulations more generally, particularly on explosive subjects like religious freedom.

A great irony in this debate is how many people are defending the executive order: the president, they say, has greater degrees of freedom in imposing conditions by contract than he does in doing so by legislation. A common principle of contract law is that each party is the master of its own offer, and can therefore set the terms and conditions on which it is prepared to do business. The government in this sense is treated like just another person, entitled to impose whatever conditions it sees fit on its trading partners. The executive order that extends the reach of the anti-discrimination provision only extends the rule that is already in place for direct hiring by the United States. So why, the defenders ask, oppose the executive order?

This line of argument has serious intellectual difficulties. The United States government is not just another private party that should be allowed to do what it will with its resources. The United States raises revenues by taxation from all of its citizens, some of whom are passionately in favor of the executive order, and some of whom fiercely oppose it. It is not sufficient for the defenders of the new employment mandate to say that their tax dollars should not fund bigoted behaviors thinly veiled by dubious religious precedents. Nor, by the same token, is it sufficient for other taxpayers to insist that their tax dollars should not fund the activities of those whom they regard as activists bent on their destruction.  

It is therefore dangerous for the President to resolve this moral dispute in favor of the activists, just as it would be for a socially conservative president to come down the other way. In both cases the preferences of the dominant party become the norm, while those of its opponents are wholly disregarded. Funding now comes from all, but it is only spent on those groups in sync with the dominant political sentiment. All-or-nothing politics is a sure way to inflame political and social divisiveness. The President’s mandate is no more acceptable than one intended to implement the reverse goal of excluding gays and lesbians from firms that do business with the government. After all, if this is a raw political struggle, then why should one side, but not the other, be able to reap the harvests of war?

A Middle Way

 There is a better way, which reveals the proper place of the principle of neutrality in dealing with these explosive issues. The government should not take sides in these debates. Any individual, regardless of sexual preference or orientation should be eligible to apply for any government position, period. In dealing with public employees, members of rival political factions have to accept the foibles of their future coworkers, with whom they must work side by side. Neither side has the moral high ground from which it can exclude the other. Under this arrangement, the exact composition of the government workforce will then depend in the long run on the moral attitudes in society. As the case for non-discrimination based on sexual orientation gains traction, as it surely has, the mix of people in government employment should shift gradually in their direction—an approach that rightly puts both sides of the debate at risk of losing social support over time.

The same logic should apply to government contractors. All of these contracts should be opened up to all firms on equal terms. This position means that any firm that hires workers of all backgrounds is welcome to bid, and so to any group that has highly specialized employment requirements, including those firms that only hire gay, lesbian or transgendered workers, or those that hire co-religionists.

There are two advantages to this position. The first is that the government hiring decisions are now made exclusively on the basis of the quality and price of the goods and services supplied to the government. Every citizen, regardless of their religious or political views stands to gain from high-quality services supplied at the lowest possible cost. Any effort by government to exclude objectively qualified firms from bidding on government business imposes a financial cost borne by all in order to create gains reaped solely by the winning faction. The losers in this struggle lose both ways: they get a smaller share of a smaller pie.

The Racial Precedent

It is said in response that the issue of discrimination on the basis of sexual preference and sexual orientation is the same as discrimination on the basis of race, and that the President’s action here is little different from that which Lyndon Johnson took in 1965 under Executive Order 11246 whose key provision stated: "The contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex or national origin.”

There are two general responses to this point. The first is that this executive order, at least in its original formulation, tracked the language of the Civil Rights Act of 1964. It did not seek to impose by contract that which could not be imposed by legislative regulation, as with the current executive order, whose legitimacy is therefore drawn into doubt. Second, in my minority view, Johnson’s executive order is fully appropriate even if Title VII of the 1964 Civil Rights Act were repealed today. The argument about freedom of contract articulated above has real traction for private firms working in competitive labor markets, whereas the target of Title VII of the 1964 Act were the trade unions that received monopoly power under the collective bargaining provisions of the National Labor Relations Act.

At this point, the most efficient solution does not impose any government mandates on private firms that hire in a competitive labor market. As I have long argued, anti-discrimination laws should be used in private markets only to counter monopoly positions in public utilities and transportation, or as a way to break down the intolerable abuses of a state-imposed segregation system. The more competitive the marketplace, the weaker the case for these laws.

The Dangers of Consensus

In response, some will argue that in dealing with the question of race, the overwhelming social consensus in favor of the law is the strongest reason for its continued adoption. But the point on consensus actually cuts in the opposite direction. If 90 percent of society thinks that certain forms of discrimination are out of bounds, they can operate just as they please even if the other 10 percent operates under different principles. Certainly, the extensive practice of affirmative action programs in labor markets (which are a sensible exception to any color-blind principle) can work well even if some fraction of firms sticks to the more traditional color-blind and sex-blind employment regimes. The outsiders in these labor cases do not engage in the threat or use of force that is capable of disrupting the lives of everyone else. Having a labor market where different firms cater to different subgroups avoids the sharp discontinuities that come with political action. It also opens up a greater array of opportunity for all persons in a world rid of the heavy compliance costs that always come with the enforcement of the next anti-discrimination rule.

The more modest view of government power also prevents dangerous extensions of executive orders and administrative regulations. Thus, should the President also issue an executive order that keeps out of national parks businesses that do not  hire gay and lesbian workers? Or an order that keeps these firms from participating in general job training programs? Just that position was suggested after the Boy Scouts’ victory in Boy Scouts of  America v. Dale when the Boy Scouts were allowed to exclude gay scouts from leadership positions. But all public facilities, from parks to roads, should be open to all groups whatever their private views may be. The great danger of the President’s position is that it represents a creeping expansion of power whose dangers are forgotten in the activists’ rush to judgment against those with whom they disagree. 

*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.

Understanding the Obamacare Subsidy Rulings

*Richard Epstein

Richard Epstein

Richard Epstein

The battle lines over the Affordable Care Act were drawn sharply yesterday over an exotic question of statutory interpretation that has vast implications for the survival of the ACA as we know it. The two key decisions are Halbig v. Burwell, where Judge Thomas Griffith and Senior Judge Ray Randolph of the D.C. Circuit held that individuals who purchased their health insurance through the federal exchanges were not entitled to the subsidies for those who purchase their coverage through exchanges established by the states. Senior Judge Harry Edwards saw in this decision a “not-so-veiled attempt to gut” the ACA.

 In the parallel Fourth Circuit decision in King v. Burwell, a unanimous court thought that the case was indeed close, but then deferred to the decision of HHS on the scope of the provision, relying on the time-honored proposition of the Supreme Court in Chevron USA v. National Resources Defense Council (1984), which holds that, when a statutory text lacks a plain meaning, the courts should defer to the statutory administrator to resolve the ambiguity between the two rival interpretations.  

The issue has momentous significance because in some 36 states — through which over half the present enrollees have obtained their coverage — the exchanges are owned and operated by the federal government, not the states. Any judicial decision that knocks out these subsidies will lead to a two-tier system, which in turn will lead to a collapse of the overall program (not to mention a huge level of unpardonable dislocation to those individuals who thought they had coverage but now discover that after the fact they do not).  Today’s split decisions create an intolerable level of uncertainty that will only end when the United States Supreme Court decides the case, which it should do on an expedited basis.

These long and learned opinions should not obscure the fact that at the root of the case is a simple question: Do the words an “exchange established by a State” cover an exchange that is established by the federal government “on behalf of a state”? To the unpracticed eye, the two propositions are not synonyms, but opposites. When I do something on behalf of myself, it is quite a different thing from someone else doing it on my behalf. The first case involves self-control. The second involves a change of actors. It is not, moreover, that the federal government establishes the exchange on behalf of a state that has authorized the action, under which case normal principles of agency law would apply. Quite the opposite: the federal government decides to act because the state has refused to put the program into place. It is hard to see, as a textual matter, why the two situations should be regarded as identical when the political forces at work in them are so different. Under the so-called “plain meaning approach”, there is no need to look further. The text does not authorize the subsidies for these transactions, so it is up to Congress to fix the mess that it created in 2010.

The states in orange could lose federal subsidies.

The states in orange could lose federal subsidies.

Or so the argument of the majority in Halbig goes. Administrative law, however, is a strange subject in which deference is given to the administrator in the case of ambiguity, which can arise, it is commonly claimed, when the statutory language is placed into its larger context. In this case, that context includes a phrase that allows the federal government to set up “such exchange,” from which the inference might be drawn that any exchange that the federal government sets up should be treated for all purposes as if it were a state exchange—a proposition that leaves it unclear why the specific language that relates to the subsidies does not incorporate that understanding. One of the sad features of the original Chevron decision was that it imported ambiguity into a statute whose operative provision was clear by using precisely this tactic: find a different section that can be read in tension with the operative position and allow the administrator to pick between inconsistent readings.

The first criticism, therefore, of the government’s position is that it is too driven by the Chevron precedent. An issue of this magnitude should not be decided one way in a Democratic administration only for it to be fair game for reversal in a Republican administration. This is a question of law that should be decided by courts, which resolve the ambiguity the best that they can. The administrators are themselves inevitable partisans in these cases, so it makes no sense to defer on questions of legal interpretation where they do not have access to any materials that are not fully available to judges.

Yet the Chevron rule is so ingrained that no circuit court judge would be prepared to depart from that rule if it turns out that the statute does not have a plain meaning. Ultimately, the position of Griffiths is that the meaning was plain (enough) to carry the day. On balance, he was right — notwithstanding the strong counterassault, which comes in three parts.

The first argument is that the context and structure of the act suggests another meaning. This position is derived from Justice O’Connor’s excellent opinion in FDA v. Brown & Williamson, where the question was whether tobacco should be treated as a drug subject to FDA regulation under a statutory provision that stated any substance counted as a drug if was “intended to affect the structure or any function of the body.” That phrase is really broad; indeed, nonsensically so. Justice O’Connor reached the conclusion that was consistent with FDA precedents on the point that it is absurd to sweep into this literal definition any substance for which “there was no claim of therapeutic or medical benefit,” which no one made for cigarettes. Indeed, it would be absurd to think that the FDA should conduct clinical trials to see how tobacco cures cancer. 

Yet we are light years from that situation here because it is not incoherent to run a more limited program with the intent to drive states to form these exchanges. Indeed, that was just what was done with respect to the Medicaid mandate, where the effort was to cut out all benefits from pre-existing Medicaid programs if the states did not sign up for the new program—a position that was ultimately rejected by the Supreme Court in NFIB v. Sebelius (which also upheld the individual mandate — which now, of course, has been waived without clear executive authority). 

A second point of contention concerns the interaction of legislative history with text. On that subject, there was stunningly little material to go on: only a single statement by Max Baucus in the Senate hearing that the legislation “conditions” the willingness of the state to set up the exchange. What is striking about the defenders of the government is that they do not cite any language that cuts in the opposite direction, but only claim that there is nothing in the legislative history that demonstrates the point. In this connection, however, the single statement by Baucus looms large, both because of his central role in the design of the statute and because there is nothing written on the other side of the issue.

Next it is said by Judge Edwards that the ACA had as its central purpose the extension of coverage to virtually all Americans, which could not be done if the subsidies were denied to people who enrolled on the federal exchange. But the difficulty with that argument is that legislation has multiple purposes, and, although he derides, he does not refute the alternative view: the statutory design was intended to give the states a strong incentive to create their exchanges so that the federal government did not have to expend its resources to do so. There is, again, little in the debates to resolve this question, but, by the same token, there is no explanation as to why this provision was inserted if it was not intended to have that effect. It would have been simple enough to draft a provision saying that everyone gets the subsidy no matter whether they enroll on the state or federal exchanges. 

It is with decidedly mixed emotions that I conclude that the supposed ambiguity is not strong enough to displace the textual simplicity of the Griffith argument. It is really intolerable to first drive people out from private coverage and then pull out the rug from their federal coverage. What a miscarriage of justice. Sadly, however, those issues are not decisive on this question of statutory interpretation. On balance, I have to conclude that Judge Griffith’s opinion looks correct. The text seems to be clear and nothing else seems strong enough to displace it. It is an open question whether the Supreme Court will agree, as its precedents are sufficiently muddy that we live in a world of “anything goes.” My guess is that Griffith’s position will prevail 5-4 in the Supreme Court on a straight conservative-liberal split. This is, to be sure, an odd and unhappy way to make public policy.  

*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.

Uber Caps Surge Pricing, and Consumers Suffer

*Thomas Warns

Last week, Uber announced that it was capping surge pricing during emergencies, following mounting public pressure. CNET reported the following related to the story:

In addition to riders complaining about running up bills totaling hundreds of dollars on New Year's Eve, people criticized Uber for initiating surge pricing during Hurricane Sandy.

Attorney General Eric T. Schneiderman said Uber will now limit surge pricing during incidents the government defines as "abnormal disruptions of the market." Typically, these are emergencies and natural disasters, according to a press release from Schneiderman's office. Uber is expected to extend this policy nationally, the office said.

"This policy intends to strike the careful balance between the goal of transportation availability with community expectations of affordability during disasters," Uber CEO Travis Kalanick said in the release.

Uber clarified that surge pricing will remain in effect for holidays and during rain storms, but that during widespread emergencies surge prices will be capped at 2.5 times the normal price (during emergencies, prices formerly went as high as 4.5 times the normal). The decision, however, is a mistake for both Uber drivers and customers.

It is obvious that the decision will hurt Uber drivers. During times when demand is high and supply is low, such as during an emergency like Hurricane Sandy, a free market will produce a price that is higher than the normal price, when demand is lower and supply is more plentiful. In other words, drivers would be able to earn more money by ferrying customers around following emergencies if surge pricing was not capped. By capping the multiplier at 2.5, the government has unethically forced a private company to redistribute the surplus of trade from the drivers to the complaining customers.

While Uber did voluntarily agree to cap “surge” pricing, it only did so only because the government threatened to regulate (i.e. meddle). Still, Uber may have made a shrewd business decision, even though they share in the revenue which Uber drivers rake in. Uber most likely hopes that by agreeing to cap surge pricing, they can avoid the grasping hands of regulators (for now) and the taxi cab lobby who want to destroy their competitive advantage under the guise of protecting the public from the non-existent threat their business poses. Unfortunately, drivers are undoubtedly getting the short end of the stick.

The less obvious fact is that customers are losing out too. The CNET article mentions consumer complaints over large bills during New Year’s Eve and following Hurricane Sandy; the comments are indicative of the primitive morality which instructs everyone that any price hike during a time of increased “need” is morally wrong. When trying to argue that surge pricing is actually better during times of high demand, the standard response from critics is that “only the rich will be able to get Ubers.” That of course is rubbish.

In a free market, resources should be allocated most efficiently by distributing them to the people who are willing to pay the most for them. If two people value the same car ride at $10 and $20, the person who is willing to pay $20 for the ride should receive the ride. The driver and customer both receive a greater benefit than if the $10 customer rode. By capping surge pricing, the efficiency of the market no longer operates after a certain point. If the same two customers both want that one cab during an emergency, there is in essence a lottery to determine who will actually be picked up, with just a 50% chance that the customer who values the ride most will be picked up.

When will free market ideas, the true protectors of consumers, have their day in the sun?

The free market however will best provide for the $10 customer as well. Most critics of surge pricing are incensed if only the $20 customer receives a ride – the rich, it seems, get their way, while the poor are left out to dry. But that is not so. If the emergency drives the Uber price multiplier high enough, more drivers will undertake the efforts needed to get back on the road and drive more people, as they are enticed by the profits available. As more drivers return to the roads, supply increases and drives prices down, until the $10 and $20 passenger can both be served. With surge pricing capped during emergencies, incentives are not properly aligned for as many drivers to get back on the road, and only the winner of the Uber lottery will get an affordable ride. Uber’s CEO said he wanted to balance driver availability with affordability, but he has failed on both fronts by caving into the Attorney General’s demands.

Thus, the threat of government intrusion forced Uber to adopt a change to its business model that hurts Uber, its drivers, and customers. When will free market ideas, the true protectors of consumers, have their day in the sun?

* Thomas Warns is a J.D. Candidate in the Class of 2015 at New York University, and the Editor-in-Chief for the N.Y.U. Journal of Law & Liberty.