Water, Water Everywhere (Including 60 Minutes)

Max Raskin*

If wars in the 21st century will be fought over water, as this 60 Minutes segment begins, then Justice Mahlon Pitney is the Sun Tzu of the upcoming conflict. In his 1909 opinion in Meeker v. East Orange, New Jersey Chancellor Pitney (who later served on the United States Supreme Court) presaged the arms race that 60 Minutes presents between desperate farmers drilling progressively deeper wells amidst severe drought conditions in California. Drawing on these underground aquifers risks a stark case of water depletion in the state, from which it may not recover.

NASA SATELLITES HAVE TRACKED THE SEVER GROUNDWATER DEPLETION IN CALIFORNIA OVER THE LAST DECADE. 

NASA SATELLITES HAVE TRACKED THE SEVER GROUNDWATER DEPLETION IN CALIFORNIA OVER THE LAST DECADE. 

An official from the U.S. Geological Survey gave an accurate recapitulation of California water law when she said that California law puts no limit on drilling and pumping, provided the water is put to a “beneficial use.” California defines agriculture as a per se beneficial use, which incentivizes farmers to plant “thirsty crops”, such as pistachios and raspberries, which need water all year. These incentives gives rise to an arms race where drillers are incentivized to drill ever deeper and pump more, knowing their neighbors are sure to do the same. Business is good for well-drillers like Steve Arthur, who recognized the irony of helping one farmer take water from his neighbor – knowing that he was also scheduled to drill that neighbor’s well.

With no courts to enforce water rights and a lax permitting scheme, California has a de facto groundwater regime that follows the English capture rule as laid out in Acton v. Blundell. This rule essentially says that whoever can capture the water first is the legal owner, such that any incidental burden to others is damnum absque injuria– loss without a legally cognizable claim. This doctrine is contrasted with the American reasonable use regime that finds its clearest articulation by Pitney in his Meeker decision. American reasonable use recognizes that the right to pump water “must be correlative and subject to the operation the maxim sic utere, etc., so that each landowner is restricted to a reasonable exercise of his own rights and a reasonable use of his own property, in view of the similar rights of others.” Abstractly, the maxim sic utere means only that one person should not use his property to harm another. But it takes on concrete meaning when it is used to stop an arms race that might only make sense when the total demands on drilling are so low it is not worthwhile to put in a legal regime to control the conflict.

Under the reasonable use regime, in adjudicating the amount of water a farmer can pump, his needs are weighed against the needs of all others. Adopting this rule would help solve California’s problem because courts would be able to immediately limit over-drilling and set a common level for farmers’ drilling that would allow for sustainable aquifer use by all, without incentivizing overconsumption.

WILL THE WATER RUN DRY IF CALIFORNIA FAILS TO CHANGE ITS GROUNDWATER REGIME?

WILL THE WATER RUN DRY IF CALIFORNIA FAILS TO CHANGE ITS GROUNDWATER REGIME?

It is worth mentioning that the simpler Acton rule is not without its benefits. A clear rule allows farmers and well-drillers to operate without the uncertainty that comes from an evolving jurisprudence. Furthermore, the maligned arms race might lead to new technologies of extraction including a method of “tagging” water so that its owners would be able it to exclude others, turning the fugacious property into a resource that more akin to land. These technical developments could lead to a private calculus of conservation. Ironically, however valuable Meeker is in static technology, it does nothing to incentivize the creation of these new technologies that could make property rights more definite. The current statutory scheme, however, incorporates not the pure Acton rule, but only its worst aspect, overconsumption, without facilitating absolute property rights in water.

On balance therefore, the Meeker rule seems to be the next best thing. One compelling justification for this American reasonable use regime is that because the government has claimed for itself fundamental ownership of all groundwater, and has not allowed for private ownership of the state’s 515 alluvial groundwater basins, the state ought to behave as a trustee of the public when determining who gets the limited use rights in water. Just as the Takings Clause of the Fifth Amendment requires that private property should not be taken without just compensation, the public trust doctrine essentially stipulates that public property should not be given to private parties without just compensation paid to the populace.

A public office is a public trust and on the above account, California has failed to discharge its responsibilities. Sensing its failure as a trustee, the California Legislature and Governor Jerry Brown have just enacted a set of remedial legislation that sets up another regulatory layer, with local water boards drawing up sustainability plans. The analysis of this legislation and the sustainability plans which are not required until the 2020s, is beyond the scope of this op-ed. But it is worth pointing out that this legislative scheme has foreclosed a powerful tool individuals have used to protect their rights – the courts. While many critique political conservatives and libertarians for being anti-environmental, here is an instructive example of how regulatory control leads to overconsumption and conservation is best promoted through private parties litigating in the courts to preserve private rights. Not every problem necessitates a legislative solution and by preempting the judicial decision-making, California has foreclosed a powerful remedy to groundwater depletion. 

*Max Raskin is a J.D. Candidate in the Class of 2016 at New York University and a Staff Editor for the Journal of Law & Liberty.

Playing with Constitutional Fire

Judge Andrew P. Napolitano*

JUDGE NAPOLITANO

JUDGE NAPOLITANO

Earlier this week, President Obama made it clear that he will soon offer some form of limited amnesty to about five million foreign nationals who are currently living illegally in the United States. He will do so by issuing an executive order to federal officials who oversee immigration directing them to undertake a course of action that, if complied with individually by all persons whom he designates as eligible, will cause the federal government to remove the threat of deportation from those who meet the standards he will lay down.

Can he legally do that?

To address that question, we need to start with the principle that a presidential action may be lawful at the same time that it is unconstitutional. The president has the legal power to defer deportations. The power is called prosecutorial discretion. This is a power traditionally recognized as inherent in the presidency that enables him to defer or modify all federal law enforcement.

The theory is that the president needs the ability to allocate resources as the changing times, emergent events and public needs may require. Thus, he can, for example, defer prosecuting bank robbers and aggressively pursue drug dealers. That wouldn’t mean that all bank robbers would go free; it would mean that either state prosecutors would pursue them, or they’d wait for trials until the drug kingpins were caught and convicted. But he could set some free if he wished.

The check on the exercise of prosecutorial discretion is gross abuse, which is typically demonstrated by either improper executive motive or effective nullification of law. I don’t know what the president’s motive is. If it is political, I suspect his efforts will backfire. He cannot grant citizenship or the right to vote.

If his motive is humanitarian or moral, I understand him. Under the natural law, people have the right to travel and live wherever they wish. The existence of our natural rights is not conditioned upon the place where our mothers were at the times of our births. And from a free market and historical perspective, immigrants have enhanced the economy as they move up the demographic ladder.

But the president’s behavior has serious constitutional dimensions that go far beyond the motives in his heart, and his oath is to the Constitution, not to his heart.

If the president nullifies deportations on such a grand scale that the effect is the nullification of federal laws, then he has violated his oath “faithfully” to execute his presidential obligations. The Framers required that every president swear to do his job “faithfully” to serve as a reminder to him that his job requires fidelity to the enforcement of laws with which he may disagree. The American people, Congress and the courts need to know we have a president who will enforce the laws, whether he agrees with them in his heart or not. Without presidential fidelity to the rule of law, we have a king, not a president.

By conferring temporary legal status upon foreign nationals who have not achieved it under the law, providing they meet criteria that he will establish, the president affects huge numbers of persons and produces a result that is the opposite of what the law requires. Can the president’s exercise of his prosecutorial discretion constitutionally nullify a federal statute? No. Can the president’s exercise of his prosecutorial discretion effectively rewrite a federal statute? No.

It is unconstitutional for the president to nullify federal law. It is unconstitutional for him to refuse to enforce laws that affect millions of persons and billions of dollars. It is unconstitutional for him to refuse to enforce laws merely because he disagrees with them -- particularly laws that pre-existed his presidential oaths. And it is unconstitutional for him to rewrite laws, even if he is doing so to make them more just.

Every president since Dwight D. Eisenhower has deferred some deportations. President Reagan deferred deportations for about 100,000 families of foreign nationals in 1987 under his reading of the congressionally authorized 1986 amnesty law, and President George H.W. Bush did so in 1990 for about 350,000 foreign nationals under his reading of the same law. Each of these was based on a principled public presidential reading of the words and purposes of a federal statute. Obama does not purport to read and interpret the current immigration law; rather, he effectively rewrites it.

What can Congress do? Congress can pass legislation to invalidate Obama’s executive actions. Yet even if it did so and overrode his certain veto, it has no assurances that Obama would be bound by the new legislation. He refuses to enforce the plain language of well-established and never judicially altered federal statutes. What assurances does Congress have that he would follow any new statutes that he has vetoed and that regulate his behavior?

Is the blanket refusal to enforce federal laws that profoundly affect five million persons -- and in the process severely straining the social services of all 50 states -- an impeachable offense? The president is playing with constitutional fire, and impeachment is the only constitutional remedy available, short of 25 months of a constitutional conflagration that he has ignited.

*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. 

Hands Off the Web

Richard Epstein*

RICHARD EPSTEIN

RICHARD EPSTEIN

This past week, we witnessed the occurrence of two events with the capacity to reshape the Internet for the worst. First, the White House offered a full-throated endorsement “for the strongest possible rules” in support of “net neutrality,” which would prevent telecommunications suppliers from offering their customers priority services in exchange for higher rates.

The second was the response of AT&T CEO Randall Stephenson that his company was going to step back from investing billions of dollars in building out its own GiGaPower fiber network until it received greater clarity from the FCC as to what the rules of the game will be going forward. Stephenson clearly fears that the President’s call to the FCC will result in heavy new regulations that will reduce the profit potential of the company. AT&T is holding back to see just how badly the new rules will damage its investment prospects.

The company’s concerns are, unfortunately, right on the money. Right now, the President is importuning the FCC to reclassify broadband services from lightly regulated “information services” to heavily regulated “telecommunications services.” Unless it takes that dramatic step, the District of Columbia Court of Appeals recent decision in Verizon v. FCC will prevent the FCC from imposing any version of net neutrality, including any anti-discrimination rules which would prevent broadband carriers from charging higher rates for superior classes of services. The President defends this supposed pillar of the Internet policy by insisting that “an entrepreneur's fledgling company should have the same chance to succeed as established corporations, and that access to a high school student's blog shouldn't be unfairly slowed down to make way for advertisers with more money.”

But why should this be the case when paid prioritization is the norm in virtually all highly competitive markets? A quick trip to the Federal Express website, for example, reveals a wide range of “fast and full of options” like “FedEx Priority Overnight and FedEx Standard Overnight.” There is also two- or three-day shipping and Saturday service for those who want it. The different tiers of services are offered, not surprisingly, at different rates. These differential services are available to all customers. It is simply wrong for the President to assume that any system of paid prioritization entrenches established companies at the expense of new entrants, or greedy advertisers at the expense of high-school bloggers.

It is not preordained that only rich or established companies will take advantage of premium services. Perhaps the new entrant will eagerly take advantage of the higher cost broadband service in order to facilitate its dramatic market entrance. Alternatively, if the mass mailings to particular advertisers are not time sensitive, he may send them out in bulk with slow delivery at low prices. All users of broadband services will try to maximize their expected returns by using the right mix of multiple tiers of service.

That same logic will apply to more aggressive policies whereby a given internet  service provider decides that it will block certain content that is available on other networks. Wholly apart from the threat of government intervention, that strategy will provoke a high level of consumer resentment that could lead to customers going elsewhere in droves. So before imposing tough new restrictions, it is better to wait to see how the industry shakes out. The more innovative the market, the less likely these nightmare scenarios are likely to occur.

Unfortunately, the President assumes that the rejection of net neutrality is an insidious form of industrial policy. Thus, he asserts: “We cannot allow Internet service providers (ISPs) to restrict the best access or to pick winners and losers in the online marketplace for services and ideas.”

His statement is bizarre. On the first point, an ISP must make tough business choices whenever it introduces different tiers of services. Considered abstractly, higher rates could drive away some customers, just as inferior services could drive away others. But considered concretely, that is not likely to be the case. Premium services at the top end of the market could easily attract potential purchasers who think that the superior services are well worth the additional price.

At the same time, the lower cost services could lure into the market new customers who are unwilling to pay a high but uniform blended rate. Price discrimination therefore offers serious efficiency gains, which is why AT&T will be willing to make more extensive investments if allowed the price flexibility now given to Federal Express.

It is equally wrong to denounce price tiers as a form of industrial policy. It is of course highly unwise for any government to subsidize any industry players on the conceit that it knows which technologies or firms are likely to pan out best. That is the rap on the Obama administration’s egregious policies on ethanol, wind, and solar subsidies.

But rejecting net neutrality does not let ISPs pick winners and losers by offering different tiers of service. Any customer can buy what he or she wants. Indeed, it is highly unlikely that firms will choose only one class of service for all of their broadband needs. No firm sends all of its Federal Express packages by priority overnight because slower services often make more sense. The ISP only sets tariffs, and then lets private parties choose. Different tiers of service offer advantages that redound to ISP and customer alike.

To be sure, in some cases, large customers may enjoy the cost advantages from volume purchases. But that practice is perfectly proper on the Internet, just as it is with Federal Express. We want firms in competitive markets to offer lower prices to customers whom they can service at a lower cost. Any government decision blocking these options is an illicit form of economic protectionism that harms consumer interests, both here and in other market settings.

To put the point more generally, recall the economic justification for imposing rate regulation on common carriers and public utilities in the first place. The great concern was to prevent firms from exercising monopoly power that would allow them to restrict output in order to charge supra-competitive prices. Monopoly pricing did not just transfer wealth from customers to the firm and its shareholders. Instead, the price increases resulted in a net social loss, by cutting out any customers willing to purchase those services below the monopoly price, but at or above the competitive price.

Historically, rate regulation let the government set rates high enough for the regulated firm to garner a competitive rate of return, but low enough to prevent it from gathering monopoly profits. Historically, this system worked tolerably well for electrical and power companies, operated in defined territorial limits, at least at times when there were relatively low levels of technical innovation. Indeed the Supreme Court in the early part of the last century did a reasonably good job of curbing monopoly rates without creating wasteful cross-subsidies between regulated firms.

However, even at its best, this system of regulation is fraught with difficulties, for it often induced firms to increase their cost base unnecessarily in order to increase their rate base. Shielded from competition of new entrants, the old telephone companies were slow to innovate lest the rate agency punish them with lower rates.

Andy Kessler, writing in the Wall Street Journal, recently pointed out how AT&T delayed the deployment of transistors because it had to work off its ten-year supply of vacuum tubes. Make no mistake about it: The call for rate regulation under the banner of net neutrality offers no safe harbor from these strong anti-competitive initiatives. Indeed, the system amounts to major folly in an age of rapid technological innovation, which will harm net entrants capable of upending the established players.

At this point, even the defenders of net neutrality have no idea how their system will work in practice. The President gives away much of the game when he notes that his commitment to net neutrality is not absolute, by allows for “clear, monitored exceptions for reasonable network management and for specialized services such as dedicated, mission-critical networks serving a hospital.” But will this exception apply to other medical services? Will it extend also to financial services where rapid trading delays of a second or more can confer a huge advantage over one’s rival? The President makes the unsubstantiated claim that the Internet’s growth depends on a ban of paid prioritization, and insists further that “if carefully designed, these rules should not create any undue burden for ISPs.” But “carefully designed” is a very big “if” on an issue with major stakes.

More fundamentally, thinking that any major form of regulation could do the job ignores the simple point that innovation has to take place in at least two different theaters simultaneously. First, providers must make the best use of any future available bandwidth. Second, they must ensure that this bandwidth will be built out in the first place.

The AT&T decision to hold back on its investment is the canary down the coal mine. Preemptive rate regulation will not do anything other than retard the huge expansion of the Internet that has taken place under current legal regimes. Government regulation of the Internet can, and should, wait until some specific abuse materializes down the road, as might well be the case. Right now, the President and the FCC could do the public great service by sitting quietly on the sidelines. 

*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.

Tenth Annual Friedrich A. von Hayek Lecture

The Tenth Annual Friedrich A. von Hayek Lecture was held on October 16th. The event featured Thomas W. Merrill, Charles Evans Hughes Professor of Law at Columbia Law School on “Possession as a Natural Right.” Trevor Morrison, Dean and Eric M. and Laurie B. Roth Professor of Law, NYU Law, Richard Epstein, Laurence A. Tisch Professor of Law, NYU Law, and Mario Rizzo, Associate Professor of Economics, NYU, delivered introductory remarks. To view a recording of the lecture, watch below or visit http://www.classicalliberalinstitute.org/tenth-annual-friedrich-a-von-hayek-lecture/

Questions for the Nominee

Judge Andrew P. Napolitano*

JUDGE NAPOLITANO

JUDGE NAPOLITANO

Within hours of realizing that his party lost control of the U.S. Senate last week, President Obama nominated Loretta Lynch, the chief federal prosecutor in Brooklyn, N.Y., and an outstanding and apolitical professional, to be the next attorney general. The current attorney general, Eric Holder, resigned last month.

Lynch is sure to be confirmed by either the present Democratic-controlled Senate this fall or by the newly constituted Republican-controlled Senate early next year -- and she should be. But the process of confirming her should capture the interest of all Americans concerned about the loss of personal freedoms in our present-day Orwellian world in which the Obama administration has killed innocent Americans, spied on trillions of conversations and emails without probable cause, and declined to enforce laws with which it disagrees. Republican senators have a duty to ask her probing questions.

Is this just inside-the-Beltway stuff, or should you care who is the chief federal law enforcement officer in the land? You should care, and here is why. When the United States was founded, the essence of the government was the diffusion of power between the states and the federal government. At the outset, state attorneys general were the engines that drove law enforcement, as the U.S. attorney general was involved exclusively with governmental relations between the states and the feds and protecting federal interests -- which included federal property and federal currency. The job came with a small office and a handful of remotely venued prosecutors. The states checked federal law enforcement excess by not cooperating with it or even judicially invalidating it.

Today, the opposite is the case. When the feds want something, they bully the states aside, and when the feds get away with something, the states will soon follow. Today, the states are powerless to check federal excess, and so Attorney General Holder became President Obama’s enabler in some of the most egregious violations of the natural law, the Constitution and federal law in modern American history. Today, the attorney general -- often called “General” by law enforcement -- commands an army of 90,000 lawyers, FBI agents, investigators, clerks, pilots, even troops. There are currently in excess of 4,000 federal criminal statutes for her to enforce, and she sets the tone for law enforcement throughout the country.

Hence, I suggest to members of the Senate Judiciary Committee that they permit Lynch to distinguish herself from Holder by inducing her to answer the following questions:

  • Will you advise the president, as Holder did, that his careful, secret, conscientious deliberations about the legal guilt of some Americans are a constitutionally adequate substitute for due process, such that he can kill uncharged, untried, unsentenced Americans?
  • Do you defend the president's killing two innocent American children, as Holder did?
  • Will you advise the president that he can use his prosecutorial discretion in such a manner that American borders become open as they did for Central American children last summer, and that foreign nationals who are here illegally can legally remain here without complying with the laws Congress has written?
  • Will you tell the president that the NSA can disregard the Constitution and execute general warrants, which permit the bearer to search wherever he wishes and seize whatever he finds, even though the Fourth Amendment was written to prevent general warrants?
  • Can the president decline to enforce laws with which he disagrees without violating his oath to enforce federal laws faithfully?
  • Will you advise the president that he can subpoena the home telephone records and the personal email accounts of Associated Press and Fox News reporters, as Holder did?
  • Will you permit state and local police and the IRS to seize the property of known innocents who have not been charged with criminal behavior, much less convicted of it, and then retain much of the seized property even if the persons from whom it was seized are acquitted?
  • Will you permit law enforcement to break the law in order to enforce it?
  • Will you condone law enforcement using tanks and battering rams to deliver subpoenas?
  • Will you permit law enforcement personnel to create crimes so that they can solve the crimes they created and then boast about the crimes they claim to have solved?
  • Do you accept the presumption of liberty, which means that the government must respect individual choices unless and until it can prove violations of the law to a judge or jury?

It is time for a national debate about the role of law enforcement in our lives, and the confirmation hearings on the nomination of Loretta Lynch to become attorney general can provide an excellent platform. If she agrees that the Constitution is not a neutral instrument as between the people and the government because it was written to keep the government off our backs, she will be an antidote to Obama’s law breaking.

But I think I may be wishing for too much. She is, after all, his nominee.

*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. 

Republicans Won. Now What?

Richard Epstein*

RICHARD EPSTEIN

RICHARD EPSTEIN

In the aftermath of the decisive Republican sweep of the midterm elections, the question on everyone’s mind is how the Republicans will govern now that they control the Senate and have a larger cushion to work with in the House. The overall objective seems clear enough: find ways to whittle down the size of government so as to reverse the current trends, perpetuated by the Democrats, of higher taxes and greater regulation. This objective will also help reverse the decline in household income in the midst of an era of slow economic growth.

The Republicans must consider both the ends and the means. The ends chosen should be determined by a consistent theory of the relationship of the individual to the state. To a classical liberal like myself, this means a limited government focused on social order, national defense, infrastructure improvement, and regulation of private monopoly, while limiting federal programs of wealth transfer and income redistribution. The guiding light in this venture is to reduce government subsidies that alter the balance of competitive forces, and to lighten the burden of regulation across the board by cutting back on the endless sets of permits that must be obtained before engaging in any economically productive activity.

The question of means is far more vexed, because in the world of practical politics, compromises are always required which make these transitions less intellectually coherent than they should be. It is a regrettable truth that people develop reliance interests that cannot be wiped away with the stroke of a pen. One may think, as I continue to, that massive programs like the minimum wage or the President’s Affordable Care Act should never have been passed in the first place, but that is water under the bridge, so that the question is how to minimize the damage in the effort to cut back their influence.

On this score, the first step for the Republicans is to make it explicit that further regulation and new taxes are off the table, period. More specifically, the Republicans should emphatically reject the advice of the forlorn New York Times that writes as if another stimulus program, a living wage, a revitalized labor movement, and further constraints on international trade will produce the needed jolt to grow an economy, which in truth needs more bed rest and less government intervention.

The simple argument here is that all of these misguided progressive interventions reduce the possibility of gains from trade. A stimulus program seeks to reduce interest rates to make it cheap for businesses to borrow. But at the same time, this program reduces the return to capital, which means that equity investors stay at home. The Keynesians only see half of the picture; they ignore two crucial factors. The first is the gratuitous uncertainties attributable to the duration, size, and character of the stimulus program. Its internal uncertainties all weigh down all sides of any market. The second is the high administrative burden of implementing these unwise programs. The stimulus approach may not fuel inflation, but it certainly dampens growth.

We should not double down on past failures by seeking macroeconomic solutions to labor market problems. A slow return to market rates of interest should bring more capital into the market, which in turn will give greater opportunities for increased wages, at least if the federal government backs off its chronic desire to meddle in labor markets. It is always tempting to say that government helps the poor when it shackles the rich, but not so when the two parties seek to trade with each other. Instead, the reduced options for prospective employers result in fewer options for prospective employees. Not surprisingly, labor market restrictions hit the bottom of the income distribution the hardest because the workers with the fewest skills also have the fewest substitutes.

Start with this simple truth. Capital is flexible in a way that labor cannot be. Greater investments in labor-saving equipment or moving operations off-shore are two standard responses to restrictive labor laws that no clever government program can forestall. Perhaps some existing businesses are trapped in their current locations, but foreign investment can remain off-shore and new domestic investment may never take place at all. A stimulus growth agenda will only aggravate the wage and income stagnation that progressives lament.

Just putting labor market regulations off the table should assure both workers and businesses that no fresh surprises lurk around the corner. Greater capital expenditures should then fuel wage increases, for as John Kyl and Stephen Moore remind us, capital and labor are complements as well as substitutes. Increase the total levels of investment, and the new businesses will bid up wages, so long as they are not hassled by a new set of restrictions.

What is true of new regulation is also true of new subsidies. The Obama administration has showered subsidies on solar and wind energy in the futile effort to create good green jobs. Big mistake. The federal government should not be in the business of picking its energy favorites. Its correct role is to adopt policies that minimize the real externalities—like pollution and dead animals—generated by alternative energy sources. The central task is to get an accurate measure of those outputs, and then to allow the individual firms within the various energy sectors to maximize their profits within that overall constraint. The rap therefore against wind and solar is that they are propped up by senseless programs like the Production Tax Credit that has unwisely been lavished on the wind industry, which should not be renewed during the lame duck session or anytime thereafter.

The same fate should await the ethanol subsidies that for too long have distorted relative prices between the agricultural and energy businesses. There has never been an interest group that failed to explain the benefits its members received from largesse. And there has never been an interest group that explicitly acknowledges the losses that these subsidies impose on both their competitors and the public at large. The Republicans can and should take a principled stand on these questions whether they come from Iowa or Maine, which could prove a lot harder than it sounds.

A harder transitional question is what to do about existing programs that have teetered on the brink of failure. The President’s prized Affordable Care Act is one such program. To be sure, it has its beneficiaries, which include millions of individuals who have gotten healthcare at below cost. But transfer programs of this magnitude also have enormous hidden costs, including the loss of insurance coverage by those individuals whose healthcare policies were not deemed rich enough to survive cancellation. The dislocations go even deeper than that. They include the distortions created by the unpopular medical device tax, which has gutted a once-thriving industry, and the serious labor market distortions that result from employers refusing to hire marginal workers for more than 30 hours per week lest they get socked by the $2,000 per employee tax.

Faced with these realities, it seems clear that this massive program should never have been enacted in the first place. But given that it was enacted, Republicans are now faced with the questions of what to do. Are House Speaker John Boehner and incoming Senate Majority Leader Mitch McConnell correct to insist “on renewing our commitment to repeal ObamaCare?” Let’s hope that they mean that as a long-term strategy and not a short-term initiative, which President Obama would veto with great fanfare. A far better approach is to delay the employer mandate by at least one more year, so that its first phase—covering firms with over 100 employees—does not have to go into effect in 2015, and its second stage—covering firms with 50 to 99 workers—can be pushed back beyond 2016.

This phase of the healthcare law carries the risk of economic disruption greater than that from the roll out of the individual mandate in October 2013. Slowing the employer mandate down gives everyone a chance to think hard about its execution. It also allows Congress to soften or remove its key substantive provisions before putting the program into place. That gives Boehner and McConnell a shot at exempting employees who work fewer than 40 hours per week, which would defang the program. But any immediate postponement puts a besieged President in the awkward position of having to veto a popular measure that could easily gain some democratic support. That extra time gives another year of experience with the individual mandate, which might strengthen the case for total repeal down the road.

Some Republicans will, without doubt, push hard for immediate repeal, but if there is one lesson to be learned by comparing the midterm election of 2010 with that of 2014, it is that moving too fast in the right direction is a sure recipe for losing political support. The President has a tin ear when he says his party got clobbered at the polls because he could not “sell” his program to the public. But he is congenitally unable to rethink those policies from the ground up, which might let him cut back on his failed progressive agenda.

The best way for the Republicans to counter animus is to go first after the low-hanging fruit, and then as its first round initiatives prove effective, to broaden the offense. But inviting popular presidential vetoes is the best way to give the Democrats a second lease on life, just in time for the 2016 presidential election, when the clash of governing philosophies will be front and center. 

*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 Seven Biggest Mistakes Salon Writers Make About Libertarianism

Randal John Meyer*

Salon’s ongoing critique of libertarianism stands to do to more harm than good, and to further polarize the American political community for no good reason. This isn't because of the harshness of its critique. It’s because they consistently make the same mistakes about libertarian theory and practice.

Richard Eskow’s The Seven Strangest Libertarian Ideas is the paradigmatic example of the issues I’m talking about. In a generous reading, it’s riddled with mistakes about what mainstream modern libertarians believe and value. In a less generous reading, it portrays libertarians as unpragmatic, misanthropic, anarchist child killers with distaste for democracy. Thus, I've decided to write about the seven biggest misunderstandings Salon writers—and progressives generally—have about libertarian beliefs. My purpose is to engage in useful dialogue that might help progressives understand libertarianism as a movement. The idea being, similar to the one in Ralph Nader’s new book, that it is more fruitful to expound on the large areas of common ground than to quibble over differences.

 

Mistake One: “Libertarianism” Refers to One School of Ideologically Uniform Thought 

Often libertarianism is presented as a uniform and unreasonable ideology. This is a particularly pernicious fallacy. It associates an entire ideological movement with one extreme reading of an extreme idea held by an extreme philosopher. For example, Eskow implies it's a libertarian idea that parents should be allowed to let their children starve. 

A SIGHT YOU ARE LIKELY TO SEE IN ANY FAMILY, LIBERTARIAN OR NOT. 

A SIGHT YOU ARE LIKELY TO SEE IN ANY FAMILY, LIBERTARIAN OR NOT. 

The fact that Eskow represents this as a genuine reading of libertarianism, or an example of something libertarians ever even discuss as relevant, is insane. The overwhelming majority of libertarians would resolve the issue by noting that a child is incompetent to consent to the social compact, and the obligation for the child’s existence rests with the parents. Indeed, no libertarian in a position of power advocates Eskow’s “modern” libertarian notion. In brief, libertarians do not try to justify child starving as a theoretical linchpin.

Libertarianism has conservative veins—no one with a television can deny that—but it has liberal veins as well.  Left-leaning libertarians generally view the social compact as able to encroach more on personal liberties (like property rights) than those in the conservative veins. Between them there are large categories of common ground, and among the various schools of thought there are majority views and (a few) universally held principles. Where they overlap is mainstream libertarianism. That is what is described here: an aim at a minimal, simple, and efficient state that generally allows people to live their lives how they choose. At least to me, nothing seems outlandish about that notion; it seems pragmatic.

 

Mistake Two: Libertarianism is Incompatible With Any Kind of Social Welfare 

Libertarians do not categorically oppose welfare. Two foundational libertarian thinkers, F.A. Hayek and Milton Friedman, were okay with a form of welfare. (Law, Legislation, and Liberty (Volume 3) and Capitalism and Freedom, respectively). Today, the idea that there is a place for welfare in libertarian policy has mainstream momentum:  Just last December, Professor Matt Zwolinski published an article entitled “The Libertarian Case for a Basic Income” on Libertarianism.org. 

Chicago School libertarian Milton Friedman believed that the personal income tax should run into negative percentages so those at the bottom received a check instead of paying taxes. This is commonly called the Negative Income Tax. A model of it could be adapted to the complex American tax scheme.  Hayek advocated a Guaranteed Minimum Income: “minimum income for everyone . . . a sort of floor below which nobody need fall.”

This now debunked association between libertarians and “no welfare ever” comes from three things. The first is the modern Austrian school, a minority economic school within libertarian theory whose followers can be read as denying welfare. In the seventies, there was a split in the old Austrian school. Mainstream economists follow Hayek and the more liberal neoclassical model. Others follow Murray Rothbard and the more conservative, anti-empirical Austrian model. Statistically speaking, despite the disproportionate amount of airtime they get, the Rothbard vein is a minority. Neoclassicism is the dominant economic philosophy in modern libertarianism. This does not speak to the merits of either outlook, simply the dissonance between perception and the numerical representativeness.

Second is the association of libertarianism with the ideas of objectivist Ayn Rand, who is not a libertarian, as I will discuss below. The third reason is the fact that most libertarians want to end (or at least, reform) Social Security and Medicaid. Whatever other reasons may apply, libertarians generally don’t like these systems because they are inefficient. However, that is not to say a libertarian in favor of minimum income wouldn't want to take into account the cost of healthcare (among other basic living costs) in constructing that income. Opposition to inefficiency is typically pragmatic, regardless of ideology.

 

Mistake Three: Ayn Rand is a Libertarian, or Represents Libertarian Philosophy                         

     AYN RAND: AN OBJECTIVIST. 

     AYN RAND: AN OBJECTIVIST. 

Ayn Rand is not a libertarian; she is an objectivist. Just because Rand’s literary work happens to appeal to some libertarians, and her philosophy has a certain degree of overlap, does not make her philosophy libertarian.  The relationship between the two is more akin to the relationship between communism and socialism: similar ideologies with similar precepts and goals—a good bit of overlap—but not the same thing. 

In fact, she hated libertarians. She said she had more common ground with Marxists, called libertarians her enemies and plagiarists, and said that libertarianism isn’t worthy of being used as a means to spread her philosophy. Not that her feelings are dispositive towards the matter, but the philosophies have serious, substantive divisions. 

Here is an example of one serious division, among the many: libertarians are advocates of private charity to replace the functional results of taxes, typically believing taxes to be lawfully justified forcible takings. Ayn Rand advocates against private charity and for replacing taxes with public charity (gifts to the government) because there can never be a justification for taxes. 

I like the Fountainhead and Atlas Shrugged. But to me, these are literary works that happen to touch on a good number of the ideas I hold about business and free markets. They are not philosophical treatises on the specific tenets of objectivism. That I like them is not a wholesale acceptance of her beliefs. I think most libertarians are caught in that trap of agreeing with her on a good bit, but not agreeing with her extreme views

 

Mistake Four: Libertarianism is Incompatible With Democracy and Mainstream Political Theory

In his piece, Eksow wrote that it “isn’t a fringe idea” in libertarian theory that “democracy is unacceptable.” But the mainstream view is that democracy is better at protecting rights than non-democratic forms of government, or anarchy. 

Government acceptability is predicated on its ability to secure freedom. For most libertarians, the foundation of government is the consent of the people. But for the consent of the people, which seems very democratic, there can be no legitimate government. 

Where there are issues is when democratic majorities infringe on what libertarians consider fundamental rights. Here, libertarians seek the refuge of counter-majoritarian and anti-democratic institutions, like the Supreme Court or written constitutions. But this does not mean that libertarians fundamentally reject democracy. They simply place a higher value on fundamental rights than pure majority rule (as does the U.S. Constitution).

 

Mistake Five: There is No Place in Libertarian Theory for Regulation of Business 

Libertarians generally disfavor regulation. However, that should not be mistaken for a lack of diversity of opinion as to the limits and extent of a principle. The government certainly can regulate against the unauthorized use of force, fraud, or theft. Additionally, the concept of market failure is prominent in modern Libertarian theory, and directly allows for government regulation. 

IT MAKES PERFECT SENSE FOR GOVERNMENT TO REGULATE POLLUTION WHEN COLLECTIVE ACTION PROBLEMS MAKE PRIVATE DEALS UNWIELDY. 

IT MAKES PERFECT SENSE FOR GOVERNMENT TO REGULATE POLLUTION WHEN COLLECTIVE ACTION PROBLEMS MAKE PRIVATE DEALS UNWIELDY. 

Market failure is the idea that although the free market is usually efficient, it can have discrete failures that are inefficient and thus a possible target for regulation. The existence of externalities—costs not borne by the person or entity creating them, e.g., pollution—is one example. Modern libertarians thinkers, like Richard Epstein, support regulation of pollution. Many do so on the theory that a person should not be able to impose uncompensated costs on another. 

So, it is possible for a libertarian government to have a role in correcting the market.  Milton Friedman was careful to note, however, that government failure could be, and often is, worse than market failure. Thus, libertarians generally insist that the (not unusual) possibility of government failure be considered in deciding whether to regulate.

                                                                                         

Mistake Six: That “Taxes are Legalized Theft” Is Anything But a Mainstream Idea 

Some commentators decry the fact that some libertarians refer to forced takings as legalized theft. But libertarians merely use the term to refer to the concept of forced takings. This is a mostly semantic dispute, as the concept taxes are forced takings one way or another underlies all American legal philosophy, not just libertarianism. 

To illustrate how semantic this is, take the following example: If the government had no authority to forcibly exact a fee in exchange for providing “security” and basic fairness in business dealings, it would be the Mafia. That would be theft. Instead of accepting that idea, libertarians go to great lengths to find a basis—like a social contract—for government to have taxing authority. The taking becomes legalized by that authority. 

All mainstream philosophies view taxes as forced takings by the government that require a justification—a legitimate public purpose.  Some libertarians use a provocative and paradoxical phraseology, “legalized theft,” as a rhetorical device to stress the requirement of a special justification for taxation. A more neutral vehicle for libertarians that accomplishes approximately the same goal would be “forced taking,” but still, arguments should not rest on largely semantic points.

 

Mistake Seven: Libertarianism Can Be Dismissed as a Fringe Movement 

HI, I'M REASONABLE AND I'M A SERIOUS PRESIDENTIAL CANDIDATE FOR 2016.

HI, I'M REASONABLE AND I'M A SERIOUS PRESIDENTIAL CANDIDATE FOR 2016.

Once they put libertarian Senator Rand Paul on the cover of the New York Times, twice, it was game over. Once libertarian legal scholar Randy Barnett’s interpretation of the Commerce Clause was accepted by the Supreme Court in Sibelius, it was game over. Once the paternalist libertarian Cass Sunstein was appointed to the Obama administration, it was game over. Once the libertarian law professor blog the Volokh Conspiracy was added to the Washington Post . . . you get the idea. Within at least twenty or thirty years, there will be a professed libertarian in the White House—too much of the 18-35 age group associates with it. For progressives who still want America to view libertarianism as extremist and fringe, that day has gone.

Libertarianism, in its mainstream and practical form, must be met out in the open, with intellectual argument and without straw men or picking odd positions. If progressives want modern mainstream libertarian thinkers to criticize, look at Gregory Mankiw, Burt Neuborne and Cass Sunstein on the left, and Richard Epstein, Eugene Volokh, Randy Barnett, and Ilya Somin on the right. The Volokh Conspiracy and Bleeding Heart Libertarians are two great libertarian academic blogs. 

A better approach for progressives would be to make academic arguments about how a Hayekian Basic Guaranteed Income structure or Friedman Negative Income Tax structure could be adapted to America. Also, point out socially progressive ends that libertarians pursue; for instance, the Institute of Justice fights civil forfeiture, for free, on behalf of the poor and underrepresented. Raise the level of debate. Forcing people to eat their own intellectuals’ words is much more effective than calling them crazy.

Randal John Meyer is a Research Fellow at Brooklyn Law School. Randal was born in Rochester, New York. He has a J.D. from Brooklyn Law School, where he was an articles editor on the Brooklyn Law Review, and he has a B.A. in General Philosophy and in Philosophy, Politics, and Law from SUNY Binghamton. He has been cited for his published work on constitutional law, terrorism, and civil liberties, which has appeared in the Brooklyn Law ReviewNew York Journal of Law and Liberty Blog, and Brooklyn Law Review Practicum.

Freedom Friday: Best Links Of Election Week

“Trust not in princes -- in a son of man, for he hath no deliverance.”*

Mario J. Rizzo**

 DR. RIZZO

 DR. RIZZO

The GOP has taken control of the Senate, increased its margin in the House, and gained many state houses. I say, “So what?” or maybe “So what!” To understand my attitude it is important to think in long historical periods. The Republican Party has triumphed before. It has made promises of change before. I do not deny that some good things happened and some bad things were prevented as a result. But, alas, bad things have happened as well, like the Iraq War and the PATRIOT Act to choose only two examples.

The fact of the matter is that, quite simply, the march of statism in the twentieth century has been pretty steady with some temporary slowdowns. What we need is a radical reconsideration of the role of the state in American society. We do not need to recover trust in government; the need is for ever more mistrust, so the “government habit” might begin to be broken. The GOP will not give us this. Obviously, the Democrat Party also will not. Americans do not yet seem ready to embrace another (new) political party.

I am thus pessimistic about the political process insofar as it might be a source of calm, reasoned reform. Nevertheless, I think that continued gridlock and growing incompetence in administration of welfare state programs along with tax-funding problems will put needed additional stress on the system. The welfare state will be reformed only when the state is incapable of delivering the goods in a satisfactory way. I am “optimistic” that this will occur. Remember the Soviet Union collapsed not because of reasoned reform but because of its inner contradictions and tensions.

In the meanwhile we must continue the important process of education in the classical liberal tradition – in economics, law, philosophy and so-forth. When the welfare state finally begins to fall apart we need an abundance of people knowledgeable enough to provide alternatives when they are finally in demand.

So I cannot look to the GOP for hope. Instead I look to organizations like the Cato Institute, the Independent Institute, the Institute for Humane Studies, the Institute for Justice and, of course, to the Classical Liberal Institute at the NYU Law School for my hope. Ideas are the fount of my hope.

*Psalms 146:3 (Young's Literal Translation)

**Dr. Mario J. Rizzo is associate professor of economics and co-director of the Austrian Economics Program at New York University. He currently lectures for the Institute for Humane Studies and is an adjunct scholar of the Cato Institute.

 

More Culture Wars?

Judge Andrew P. Napolitano*

JUDGE NAPOLITANO

JUDGE NAPOLITANO

Because of the way the news business works, I am writing this column before the close of the polls in the so-called midterm elections, and hence as I write, I do not know their outcome. Will the Republicans or the Democrats control the U.S. Senate for the next two years? Will it make a difference?

The two major political parties are more alike than they are different. On the two paramount issues of our day -- war and debt -- they are identical. With the exception of Democratic progressives and Republican libertarians, the two parties stand for perpetual war and perpetual debt. Both stances increase the power of the government, and each invites present and future destruction.

A healthy society should avoid war at all costs, except when immediately vital for its own self-defense. A healthy government should pay its bills and not push them off to the next generation. Do you know any American whose freedom and safety have been enhanced or fortified because of all our empire building in the Middle East? Do you know that the federal government borrowed two trillion dollars to wage these wars and now spends twenty cents of every dollar in interest on its debt? Do you know that the congressional leadership and most of the rank and file of both political parties have brought this about?

There are two great freedoms being assaulted under the radar that will soon come to the fore: the freedom to live and the freedom to speak. Both parties use abortion as a litmus test. You want the Democratic nomination for any federal or state office; you need to support a woman’s right to abortion. You want the Republican nomination for any federal or state office; you better claim that you are pro-life.

I say “claim” because that’s all Republicans need to do to satisfy each other. If Republicans truly were pro-life, they’d have passed a one-paragraph statute when they ran the Congress and George W. Bush was in the White House that legally defined a fetus in the womb as a natural person. Of course, morally and biologically, a fetus is a natural person. The fetus has human parents and possesses a fully actualizable human genome -- all the genetic materials needed to grow and flourish and possess self-directed humanity. But no such legislation ever came.

Since the Supreme Court denied personhood to every fetus in 1973, much as it had done to African-Americans in 1857, more than 44,000,000 babies have met the abortionists’ vacuum and scalpel. Will a newly revived Republican Congress address personhood to the abortionist in chief in the White House? Don’t hold your breath.

After the right to life, the next great freedom under siege is the freedom of speech. Here, too, both parties in Congress have failed us. When Congress in 2001 enacted the Patriot Act, which permits federal agents to write their own search warrants in utter defiance and direct contradiction of the Fourth Amendment, which commands that only judges may do so, it also prohibited the recipients of agent-written search warrants from talking about them. At least a half-dozen federal judges have found this infringement of speech unconstitutional, yet federal agents who serve their own search warrants continue to threaten the recipients against talking to anyone about them. This, too, came about with the support of the leadership of both political parties in Congress.

Not content with commanding silence about search warrants, the Democrats in the Senate attempted to offer an amendment to the Constitution last summer, which, if ratified, would have weakened the First Amendment by permitting Congress and the states to punish the political speech of groups. Three years ago, the Supreme Court, in a case called Citizens United, held that free political speech is such a highly valued and constitutionally protected asset in American society that it may be enjoyed not only by individuals, but also by groups of two or more persons, such as labor unions, foundations, nonprofits, think tanks, partnerships and corporations.

Outraged that corporations can spend money to affect the outcome of campaigns, rejecting the concept that buying an advertisement in a newspaper or on TV is speech, and wanting to remove the word “free” from free speech, the Democrats attempted to circulate to the states an amendment to the Constitution that would have made the government the arbiter of acceptable political speech. Is Vladimir Putin consulting the Democrats?

Yet, did you hear any Republicans in the recent elections call out any Democrats for this stunt? The First Amendment has remained pristine since it was ratified in 1791, and the Democrats want to change that, and the Republicans have gone mute.

A lame duck President Obama facing a Congress he hates and fears may become reckless. We should expect that. But if somehow he facilitates the killing of more babies in their mothers’ wombs or the suppression of more political speech from his critics, what will a Republican Congress do? What is its track record?

*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.