Larry Tribe was in great form in yesterday’s New York Times.
Nothing in his hands, nothing up his sleeve, now pay close attention as the law professor takes the interstate commerce clause and the American citizen sitting at home doing nothing at all and a federal mandate compelling Americans to purchase health insurance policies and magically causes the last two to fit within the former.
[P]redictions of a partisan 5-4 split rest on a misunderstanding of the court and the Constitution. The constitutionality of the health care law is not one of those novel, one-off issues, like the outcome of the 2000 presidential election, that have at times created the impression of Supreme Court justices as political actors rather than legal analysts.
Since the New Deal, the court has consistently held that Congress has broad constitutional power to regulate interstate commerce. This includes authority over not just goods moving across state lines, but also the economic choices of individuals within states that have significant effects on interstate markets. By that standard, this law’s constitutionality is open and shut. Does anyone doubt that the multitrillion-dollar health insurance industry is an interstate market that Congress has the power to regulate?
Mr. Tribe fails to consider that perhaps key New Deal era decisions, like Wickard v. Filburn, which reached beyond actual interstate activity to assert federal authority over private activity which might affect interstate commerce, were unfaithful to the intent of the framers, casuistical, and wrong to begin with.
Mr. Tribe also simply discounts as irrelevant the fact that in recent years, the modern court has become considerably more serious and more respectful of the Constitution. The United States v. Lopez decision in 1995 represented a major change of direction.
Liberal constitutional jurisprudence has an interested double-joined quality. The actual language, meaning, and intent of the Constitution are to be looked upon as inherently factually unknowable, as cryptic apothegms from a distant and fundamentally alien civilization, open to creative interpretation and subject to being overruled by the privileged moral insights of the contemporary elect at will. But the windy and vaporous decisions of the New Deal court, ah! they are sacred and immovable compass points of Constitutionality. As Robert H. Jackson writes, so it must be forever.
Larry Tribe is clearly whistling in the dark, repeating a happy liberal fantasy offered by Sam Stein over at HuffPo last week, that Antonin Scalia will apply the same statism that went into his concurrence with the decision in Gonzales v. Raiches upholding federal criminalization of home-grown marijuana. Personally, I think Messrs. Stein and Tribe are mistaken.
Even if the Necessary and Proper clause can be adduced to support a federal system of interstate regulation in the case of marijuana prohibition, a federal law prohibiting a particular activity like the use of marijuana differs distinctly from a federal law imposing an obligation to perform an affirmative act, from a law making Americans purchase something. Upholding a federal power to forbid does not necessarily imply a belief in a further federal power to compel.
Mr. Tribe, I suspect, apprehends himself that distinction, since he finds it desirable to use his literary powers to transform the passive state of American citizens living their lives prior to the imposition of Obamacare into an active assertion of an innovative right.
Only a crude prediction that justices will vote based on politics rather than principle would lead anybody to imagine that Chief Justice John Roberts or Justice Samuel Alito would agree with the judges in Florida and Virginia who have ruled against the health care law. Those judges made the confused assertion that what is at stake here is a matter of personal liberty — the right not to purchase what one wishes not to purchase — rather than the reach of national legislative power in a world where no man is an island.
It would be asking a lot to expect conservative jurists to smuggle into the commerce clause an unenumerated federal “right” to opt out of the social contract.
In reality, Americans have a social contract. It is a written one called the Constitution of the United States. That social contract forbids Obamacare.
Where was the cost/benefits analysis on all the new regulations Barack Obama already signed?
Dan Mitchell argues that Barack Obama’s new alleged centrism, as manifested by his WSJ column about deregulation, is not sincere, was accompanied by his usual factual misstatements, and is flagrantly contradicted by his policies.
The President garnered some attention for his January 18 column in the Wall Street Journal, in which he said we need to control the regulatory burden.
Let’s start with the insincere part. He praised capitalism.
America’s free market has not only been the source of dazzling ideas and path-breaking products, it has also been the greatest force for prosperity the world has ever known. That vibrant entrepreneurialism is the key to our continued global leadership and the success of our people.
I’m not really sure how to analyze this passage. Let’s just say it is akin to George W. Bush talking about the need for small government and fiscal responsibility.
Obama then talks about the need for balance, saying that regulations sometimes are too onerous, but then he gets to the inaccurate part.
…we have failed to meet our basic responsibility to protect the public interest, leading to disastrous consequences. Such was the case in the run-up to the financial crisis from which we are still recovering. There, a lack of proper oversight and transparency nearly led to the collapse of the financial markets and a full-scale Depression.
I don’t know whether to laugh or cry at this statement. A part of the government, the Federal Reserve, creates far too much liquidity with an easy-money policy. Other government-created entities, Fannie Mae and Freddie Mac, then create enormous subsidies for bad housing loans. These combined policies lead to a bubble that bursts, and Obama wants us to believe it was a problem of inadequate regulation?!? For those who are interested, here’s a good article from the American Enterprise Institute explaining how government caused the financial crisis.
Now let’s get to the hypocritical part, where the President issues a new executive order, asserting we need to balance costs and benefits.
As the executive order I am signing makes clear, we are seeking more affordable, less intrusive means to achieve the same ends—giving careful consideration to benefits and costs. This means writing rules with more input from experts, businesses and ordinary citizens. It means using disclosure as a tool to inform consumers of their choices, rather than restricting those choices.
I suppose we should give the President credit for chutzpah. Less than one month ago, his Administration proposes an IRS interest-reporting regulation that, in a best-case scenario, will drive tens of billions of dollars out of the U.S. economy. That regulation does not even pretend there are any offsetting benefits, yet Obama says his Administration will be diligent in applying cost-benefit analysis. This is sort of like a kid murdering his parents and then asking a court for mercy because he’s an orphan.
Anonymous official sources have spilled enough to the New York Times to allow it to put the pieces together (and to give an opportunity to US and Israeli Intelligence to take a few public bows and indulge in a bit of gloating at Iran’s expense). And, what do you know! it was another of those George W. Bush policies that Barack Obama decided to continue, just like detentions at Guantanamo.
The Dimona complex in the Negev desert is famous as the heavily guarded heart of Israel’s never-acknowledged nuclear arms program, where neat rows of factories make atomic fuel for the arsenal.
Over the past two years, according to intelligence and military experts familiar with its operations, Dimona has taken on a new, equally secret role — as a critical testing ground in a joint American and Israeli effort to undermine Iran’s efforts to make a bomb of its own.
Behind Dimona’s barbed wire, the experts say, Israel has spun nuclear centrifuges virtually identical to Iran’s at Natanz, where Iranian scientists are struggling to enrich uranium. They say Dimona tested the effectiveness of the Stuxnet computer worm, a destructive program that appears to have wiped out roughly a fifth of Iran’s nuclear centrifuges and helped delay, though not destroy, Tehran’s ability to make its first nuclear arms.
“To check out the worm, you have to know the machines,” said an American expert on nuclear intelligence. “The reason the worm has been effective is that the Israelis tried it out.”
Though American and Israeli officials refuse to talk publicly about what goes on at Dimona, the operations there, as well as related efforts in the United States, are among the newest and strongest clues suggesting that the virus was designed as an American-Israeli project to sabotage the Iranian program. ...
Many mysteries remain, chief among them, exactly who constructed a computer worm that appears to have several authors on several continents. But the digital trail is littered with intriguing bits of evidence.
In early 2008 the German company Siemens cooperated with one of the United States’ premier national laboratories, in Idaho, to identify the vulnerabilities of computer controllers that the company sells to operate industrial machinery around the world — and that American intelligence agencies have identified as key equipment in Iran’s enrichment facilities.
Siemens says that program was part of routine efforts to secure its products against cyberattacks. Nonetheless, it gave the Idaho National Laboratory — which is part of the Energy Department, responsible for America’s nuclear arms — the chance to identify well-hidden holes in the Siemens systems that were exploited the next year by Stuxnet.
The worm itself now appears to have included two major components. One was designed to send Iran’s nuclear centrifuges spinning wildly out of control. Another seems right out of the movies: The computer program also secretly recorded what normal operations at the nuclear plant looked like, then played those readings back to plant operators, like a pre-recorded security tape in a bank heist, so that it would appear that everything was operating normally while the centrifuges were actually tearing themselves apart.
The attacks were not fully successful: Some parts of Iran’s operations ground to a halt, while others survived, according to the reports of international nuclear inspectors. Nor is it clear the attacks are over: Some experts who have examined the code believe it contains the seeds for yet more versions and assaults. ...
Israeli officials grin widely when asked about its effects. Mr. Obama’s chief strategist for combating weapons of mass destruction, Gary Samore, sidestepped a Stuxnet question at a recent conference about Iran, but added with a smile: “I’m glad to hear they are having troubles with their centrifuge machines, and the U.S. and its allies are doing everything we can to make it more complicated.”
In recent days, American officials who spoke on the condition of anonymity have said in interviews that they believe Iran’s setbacks have been underreported. That may explain why Mrs. Clinton provided her public assessment while traveling in the Middle East last week.
By the accounts of a number of computer scientists, nuclear enrichment experts and former officials, the covert race to create Stuxnet was a joint project between the Americans and the Israelis, with some help, knowing or unknowing, from the Germans and the British.
The project’s political origins can be found in the last months of the Bush administration. In January 2009, The New York Times reported that Mr. Bush authorized a covert program to undermine the electrical and computer systems around Natanz, Iran’s major enrichment center. President Obama, first briefed on the program even before taking office, sped it up, according to officials familiar with the administration’s Iran strategy. So did the Israelis, other officials said.
You can hear the champagne corks popping at Langley all the way out here in Fauquier County.
Some commentators thought the Supreme Court’s failure to grant cert in Alderman v. US, a 9th Circuit case involving possession of body armor by a felon, testing the reach of the Commerce Clause, may have evidenced an inclination on the part of the Court to decline to consider the same kind of issue as it applies to a federal mandate to purchase health insurance as part of Obamacare.
Well, now that half of all the states in the Union are in court asking that the democrat Health Care Reform Bill be struck down as unconstitutional, it seems to me increasingly less likely that the Supreme Court will feel able to shirk making a historic decision.
[T]he newly elected governors of Ohio, Oklahoma, Maine, and Wisconsin have all decided to sue the Obama administration in hopes of stopping Obamacare. Specifically, Gov. Mary Fallin of Oklahoma has announced that the Sooner State will pursue its own case against the law, while Govs. John Kasich® and Scott Walker® (of Ohio and Wisconsin respectively) will add their states to Florida’s multi-state suit. And yesterday, newly sworn-in state Attorney General William Schneider announced Maine would also join the the Florida litigation. That brings the number of states on the Florida suit to 23 and the total number of states suing to stop Obamacare (which includes Virginia and Oklahoma) to 25.
In 2010, the Democrats passed ObamaCare by a 7 vote margin. In 2011, the Republicans passed the bill to repeal ObamaCare with a 55 vote margin.
Three out of four democrats voting for repeal were members of the 26 member Blue Dog Coalition: Dan Boren (2-OK), Mike McIntyre (7-NC), and Mike Ross (4-AR). Larry Kissel (8-NC), who also voted for repeal, is not a member.
It is a bit ironical, but there can be no doubt that the Obama Administration has been taking a much tougher line with leakers of National Security information than the Bush Administration ever did.
A former CIA officer involved in spying efforts against Iran was arrested Thursday on charges of leaking classified information to a reporter, continuing the Obama administration’s unprecedented crackdown on the flow of government secrets to the media.
Jeffrey A. Sterling, 43, of O’Fallon, Mo., was charged with 10 felony counts, including obstruction of justice and unauthorized disclosure of national defense information. A federal indictment made public Thursday in the Eastern District of Virginia accuses Sterling of leaking secrets after he was fired from the CIA and the agency refused to settle a racial discrimination claim he made.
The intensified campaign against leaks comes as the U.S. government is confronting a potent new threat to its ability to keep secrets from public view. Over the past year, the WikiLeaks Web site has posted and shared with multiple media organizations thousands of classified U.S. military records and State Department cables.
The indictment, returned under seal last month, does not identify the alleged recipient of the classified information. But former U.S. intelligence officials and lawyers familiar with the case said that the journalist is New York Times reporter James Risen.
The officials said Sterling has long been suspected within the agency of providing Risen with extensive information about CIA efforts to sabotage Iran’s nuclear program, material that is believed to have formed the basis for a prominent chapter in Risen’s 2006 book, “State of War.” ...
Other cases brought during the Obama administration include the indictment in April last year of Thomas A. Drake, a former executive at the National Security Agency accused of leaking information to the Baltimore Sun; as well as a State Department contractor indicted last August on charges of leaking information to Fox News.
The latest indictment includes details about dozens of phone calls and e-mails exchanged between Sterling and a journalist identified in the document only as Author A, beginning in 2002.
Sterling was the subject of a lengthy New York Times article by Risen in March of that year that reported Sterling’s assertion that his career had been repeatedly derailed by racial discrimination within the CIA.
Sterling was described in the piece as the “sole black officer” assigned to the Iran Task Force in January 1995. He handled Iranian sources, was subsequently trained in Farsi and was sent to a station in Germany to recruit Iranian spies.
Sterling asserts in the article that he was undermined in that job and that he was passed over for others by senior CIA officials who considered him a liability because of his skin color. At one point, he said, a supervisor told him that he couldn’t function as a spy because “you kind of stick out as a big black guy.”
Sterling, a lawyer who also sparred with senior CIA officials over his plans to publish a memoir, filed a complaint with the CIA’s antidiscrimination office in 2000 and subsequently sued the agency.
According to the indictment, about two weeks after the CIA rejected a third settlement offer from Sterling, he “placed an interstate telephone call” from his home in Herndon to the Maryland residence of Author A.
In subsequent calls and e-mails, the Justice Department alleges, Sterling shared details of sensitive CIA operations against Iran. Among them was a classified effort code-named Merlin that was designed to degrade Iran’s alleged nuclear weapons program by sabotaging materials and blueprints being acquired by Iran.
The indictment indicates that Risen planned to write about the program, which Sterling portrayed as deeply flawed. The New York Times did not publish a story, but details about the Merlin operation appeared in Risen’s book.
One chapter describes a CIA plan to employ a Russian agent to offer Iran nuclear weapons blueprints that contained fatal flaws. But because the flaws were obvious and possible to overcome, the plan risked providing useful information that could “help Iran leapfrog one of the last remaining engineering hurdles blocking its path to a nuclear weapon,” according to the book.
The indictment says that a description of the plan also appeared in drafts of a memoir that Sterling submitted to CIA reviewers. CIA spokesman George Little declined to comment on the case, except to say that the agency “deplores the unauthorized disclosure of classified information.”
Federal authorities pressured Risen at least twice to testify before a grand jury investigating the case. Kelley, Risen’s attorney, said that the reporter declined to comply and that he does not expect Risen to be called as a witness if there is a trial.
According to the indictment, Sterling was aware by 2003 that the FBI was investigating him for alleged illegal disclosure of classified information. In 2004, he filed for bankruptcy protection, listing debts of $150,000.
Sterling was arrested Thursday in St. Louis. U.S. officials said he will remain in custody pending a detention hearing scheduled for Monday. He faces six charges of unauthorized disclosure and retention of national defense information, each carrying a maximum penalty of 10 years in prison. Potential penalties on the remaining four charges include a 20-year prison sentence and a fine of up to $250,000.
EmptyWheel explains that Sterling has sued the CIA twice, and has a timeline.
[The first lawsuit was] an employment discrimination suit filed in NY on August 2, 2000. On April 18, 2002, the CIA first invoked state secrets in his case. On March 7, 2003, the judge in NY granted the CIA’s venue complaint and moved the case to Alexandria, VA–basically the CIA’s very own district court. On March 3, 2004, the case was dismissed. And on September 28, 2005, the Appeals Court rejected Sterling’s appeal.
Sterling’s second suit was filed on March 4, 2003 (that is, the day after his employment discrimination suit was dismissed in VA). It charges that Sterling submitted his memoirs for pre-publication review in 2002. His second submission was held up, not least to give CIA’s Office of General Counsel a review. Sterling claims that OGC got involved to give them an advantage in the NY employment discrimination suit. In December 2002, the CIA told him some of the information was classified (after having earlier said that similar information was not). Upon rejecting his submission on January 3, 2003, the CIA not only told him some of the information was classified, but they “informed Sterling that he should add information into the manuscript that was blatantly false.”
When journalists diffidently inquired a few months back about the Constitutional basis for mandated health insurance purchases, the response of democrat party Solons typically varied between blank incomprehension and clear indignation at the effrontery of anyone suggesting that any kind of limits on their power might exist.
Walter Olson remarks on a recent demonstration for the need of remedial high school civics lesson for US senators.
Last Tuesday, despite warnings of regulatory overreach, the Senate voted 73-25 in favor of S. 510, the Food Safety Modernization Act, which would greatly expand the powers of the federal Food and Drug Administration and impose extensive new testing and paperwork requirements on farmers and food producers. Almost at once, however, the bill was derailed — whether temporarily or otherwise remains to be seen — by what the New York Times called an “arcane parliamentary mistake” and the L.A. Times considered a purely “technical flaw“. Roll Call put it more bluntly: “[Senate] Democrats violated a constitutional provision requiring that tax provisions originate in the House.” While the New York Times weirdly cast Senate Republicans as the villains in the affair, other news sources more accurately reported that it was the (Democratic) House leadership that was standing up for its prerogatives:
“Unfortunately, [the Senate] passed a bill which is not consistent with the Constitution of the United States, so we are going to have to figure out how to do that consistent with the constitutional requirement that revenue bills start in the House,” [House Majority Leader Steny] Hoyer said.
According to Hoyer, this has happened multiple times this Congress, causing severe legislative angina.
“The Senate knows the rule and should follow the rule and they should be cognizant of the rule,” Hoyer scolded. “Nobody ought to be surprised by the rule. It is in the Constitution, and you have all been lectured and we have as well about reading the Constitution.”
To those familiar with the history of the U.S. Constitution, the Origination Clause should hardly count as arcane or technical. It stands as the very first sentence of Article I, Section 7: “All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.” ...
With its two-year terms of office and less populous constituencies, the House of Representatives was of course designed to be the legislative branch closest to the people, most readily thrown out of office when it strays from the public mood. Those considerations aside, the Constitution is rightly celebrated for the way its framers made the House and Senate different from each other precisely in order to ensure jealousies and dissensions between the two, those jealousies and dissensions serving as a safeguard against hasty or ill-considered legislation. In this case it worked exactly as planned, and the self-regard of the House leadership will serve as the reason for another round of scrutiny for a bill that could badly use some. Somewhere up above the spirit of James Madison may have heard the scolding words of Rep. Hoyer, and smiled.
Things, of course, are not really different among House democrats either. Remember Alcee Hastings’ analysis of the legal dynamic behind the operations of American government?
When I was a boy, in most parts of the United States outside the largest and most intensely regulated metropolitan areas, if you owned some land and wanted to build something, you could go right ahead and build it. Over the years, the empire of government has grown unceasingly, zoning regulations, infinitely detailed building codes, environmental regulations, and complex systems of permits and permissions have spread across America like kudzu.
Your tax dollars support what the Declaration of Independence referred to as “a multitude of New Offices, and… swarms of Officers to harass our people and eat out their substance.” Every one of those officials feels obligated to see to it that the American property owner conforms to every item and detail of the regulatory regime which represents the entire raison d’etre of his career and livelihood.
Roland Toy, at American Thinker, describes his own, perfectly typical encounter with the system Americans have enthusiastically created to protect them from themselves.
133 days earlier I had submitted plans for my house to the county building department. A month later, the department sent a letter explaining that the proposed septic system had to be relocated 60 feet to the east of a location the county had approved earlier. However, in recent months a bald eagle’s nest had been spotted in adjacent public lands, and the county now required a buffer between the nest and any development on my property. Fine. I had seen a bald eagle soaring overhead—once with something that looked like a small animal it its claws. Anything for the symbol of America. And the septic system relocation was less than trivial, a few steps in one direction in the midst of millions of acres of sandy wilderness that was already officially sanctioned for a septic system.
The problem arose when the relocation required a new permit application, complete with fresh paperwork, hefty fees, a two-week waiting period for public input, and a new soil study by a professional soil engineer on a county-approved list.
I called the man who had signed the letter and appealed to his common sense, to his engineering acumen, and finally to his decency. Any moron could see that the septic system could be nudged a few feet with zero environmental impact—the approved sand dune was the same whether 8’ or 80’ or 8000’ feet from the property line. What could possibly be accomplished by breathing life into a new bureaucratic tangle? But in the end, my entreaties failed and the conversation amounted to mutual declarations of war. I backed off when he began making vague references to a possible environmental assessment report. Thus began a slow-motion shell game in which a bureaucrat, after extracting an extortionate fee, transferred irrelevant paperwork from one file folder to another. Some highlights of that loony process ($2,831.00, 103 days) are shown below:
Submit plans to county ($450.00).
County disapproves plans, requires variance.
Variance request submitted ($125.00).
Request denied. New application and soil study required.
At an arbitration meeting ($250.00), the arbitrator rules for the county. Not technically a county employee, he’s on a chummy first-name basis with the county representatives.
Start new application ($125.00) and commission a second soil study ($1,350.00) by an engineer on the county-approved list .
Plan reviewers fail to show for a meeting. They’re at a ‘team-building’ retreat. In an unpleasant scene, two customer service representatives complain about my attitude after I tell them that for the non-meeting I had to drive 180 miles over winding mountain roads.
County approves new septic system location.
Craig makes site visit for percolation test ($541.00).
Back at the percolation test, all that was history. I understood it and wasn’t destined to repeat it. But Craig had been leafing through his papers for a long while. “Is there a problem?” I asked.
“Your soil engineer isn’t on the new approved list.”
“He’s gotta be there. You guys gave me his name.”
Craig pulled out his cell phone and spoke intently with his superiors. Eventually he hung up and said, “It’s probably nothing serious. But something’s screwy with the new list and I can’t do the inspection until the paperwork is right.”
“What’s the problem?”
“We’re not sure yet, but your engineer just isn’t on the list.”
“So you don’t know how long it’s going to take to fix or if it can be fixed?”
Craig muttered abjectly, “I’m sorry. I’m still on probation and they audit me.”
Like contentious litigation, every interaction with the building department had a tendency to take on an unpredictable life of its own. This was a moment of truth. God may have understood the SNAFU that had kept my engineer’s name off the list, but I didn’t. When does reasonable accommodation become craven appeasement? Would I continue working with the totalitarians who were polluting my life? Would I start another round of telephone tag, being stood up at meetings, preparing for rigged arbitrations, and paying the fees? Would I have to commission yet another soil assessment, the third one that would reiterate what everybody already knew? Or would I draw a line in the literal sand and rebel against the yoke of tyranny? A crazy image flashed through my mind. I was in the percolation test hole with a rifle, holding off swarms of g-men in bulletproof vests as helicopters and a lone bald eagle circled overhead.
Someone leaked to Ed Whelan, NR’s legal issues blogger, a pre-SCOTUS-nomination “Dear Mr. President” letter from Larry Tribe at Harvard discussing appointment strategy containing some very candid and interesting observations on the “wise Latina.”
As Jon Adler observed over at Volokh, leftwing Larry Tribe has essentially the same point of view on Sotomayor that Jeffrey Rosen expressed in New Republic.
If you were to appoint someone like Sonia Sotomayor, whose personal history and demographic appeal you don’t need me to underscore, I am concerned that the impact within the Court would be negative in these respects. Bluntly put, she’s not nearly as smart as she seems to think she is, and her reputation for being something of a bully could well make her liberal impulses backfire and simply add to the fire power of the Roberts/Alito/Scalia/Thomas wing of the Court on issues like those involved in the voting rights case argued last week and the Title VII case of the New Haven firefighters argued earlier, issues on which Kennedy will probably vote with Roberts despite Souter’s influence but on which I don’t regard Kennedy as a lost cause for the decade or so that he is likely to remain on the Court.
Matthew Ridley, in the Saturday Wall Street Journal Review section, offers a summary of a new and valuable article on the biases fueling endless government expansion and bad policy.
Slavisa Tasic, of the University of Kiev, wrote a paper recently for the Istituto Bruno Leoni in Italy about [the psychology and neuroscience of government]. He argues that market participants are not the only ones who make mistakes, yet he notes drily that “in the mainstream economic literature there is a near complete absence of concern that regulatory design might suffer from lack of competence.” Public servants are human, too.
Mr. Tasic identifies five mistakes that government regulators often make: action bias, motivated reasoning, the focusing illusion, the affect heuristic and illusions of competence.
In the last case, psychologists have shown that we systematically overestimate how much we understand about the causes and mechanisms of things we half understand. The Swedish health economist Hans Rosling once gave students a list of five pairs of countries and asked which nation in each pair had the higher infant-mortality rate. The students got 1.8 right out of 5. Mr. Rosling noted that if he gave the test to chimpanzees they would get 2.5 right. So his students’ problem was not ignorance, but that they knew with confidence things that were false.
The issue of action bias is better known in England as the “dangerous dogs act,” after a previous government, confronted with a couple of cases in which dogs injured or killed people, felt the need to bring in a major piece of clumsy and bureaucratic legislation that worked poorly. Undoubtedly the rash of legislation following the current financial crisis will include some equivalents of dangerous dogs acts. It takes unusual courage for a regulator to stand up and say “something must not be done,” lest “something” makes the problem worse.
Motivated reasoning means that we tend to believe what it is convenient for us to believe. If you run an organization called, say, the Asteroid Retargeting Group for Humanity (ARGH) and you are worried about potential cuts to your budget, we should not be surprised to find you overreacting to every space rock that passes by. Regulators rarely argue for deregulation.
The focusing illusion partly stems from the fact that people tend to see the benefits of a policy but not the hidden costs. As French theorist Frédéric Bastiat argued, it’s a fallacy to think that breaking a window creates work, because while the glazier’s gain of work is visible, the tailor’s loss of work caused by the window-owner’s loss of money—and consequent decision to delay purchase of a coat—is not. Recent history is full of government interventions with this characteristic.
“Affect heuristic’” is a fancy name for a pretty obvious concept, namely that we discount the drawbacks of things we are emotionally in favor of. For example, the Deepwater Horizon oil spill certainly killed about 1,300 birds, maybe a few more. Wind turbines in America kill between 75,000 and 275,000 birds every year, generally of rarer species, such as eagles. Yet wind companies receive neither the enforcement, nor the opprobrium, that oil companies do.
If lawmakers are to understand how laws get applied in the real world, they need to know and understand the habits of mind of their officials.
Ever have a personal experience of some irrational and unnecessary federal regulation?
I can remember, decades ago, when I was still a student working at factory jobs during the summer, spending weeks and weeks installing OSHA-mandated improvised barriers on machine tools of every sort.
The activity was pointless. The rods, bars, and pieces of sheet metal I was attaching were simply nuisances that would only get in the way. No one wanted them. No one needed them. No one thought they were desirable. But someone in Washington, undoubtedly someone who had never operated a machine tool or worked in a factory, had decreed that a symbolic sacrifice of convenience and efficiency to the safety gods must be performed, and every factory and machine shop in the land was obliged to genuflect and sacrifice.
Nicole V. Crain and W. Mark Crain, in the Wall Street Journal explain that regulations have continued to increase over the years, by now amounting to a serious portion of our national income.
The annual cost of federal regulations in the United States increased to more than $1.75 trillion in 2008, a 3% real increase over five years, to about 14% of U.S. national income. This cost is in addition to the federal tax burden of 21%, for a combined cost of 35% of national income. One out of every three dollars earned in the U.S. goes to pay for or comply with federal laws and regulations, and new policies enacted in 2010 for health care and financial services will increase this burden.
Talk about exercising your First Amendment rights in this country and if you’re threatened by the Saracens, government will march its forces up the hill and down again and then send you a bill for protecting you.
The city of Gainesville, Florida, plans to send a bill estimated at more than $180,000 to Pastor Terry Jones for security costs surrounding his controversial threat to burn Qurans on the anniversary of the September, 11, 2001, attacks, a police spokeswoman said Friday.
Police agencies spent more than a month working on security plans to ensure the community surrounding Jones’ Dove World Outreach Center—the planned site of the burning—was safe, according to Gainesville police spokeswoman Cpl. Tscharna Senn. ...
The Gainesville Police Department said it spent more than $100,000 while the Alachua County Sheriff’s Office spent an estimated $80,000 during the weekend of the planned demonstration.
“We have 286 sworn officers and almost everyone was working either at the Dove Center or at other soft targets,” Senn said. “Unless you were sick or injured you were working” the day the burning was to take place.
Officers secured malls in the region, the University of Florida’s football stadium and areas around the church in the days leading up to the planned event.
Jones said Friday that the church was “not aware that we would be billed for security.”
“If we had known this in advance, then we would have refused to have security,” he said.
Most living Americans, including now approaching geezerhood Baby Boomers, have never seen anything like the current economic hard times. When I go out out of doors, I sometimes feel a bit surprised that the world is actually in color, not in black and white, and no one is dressed in 1930s styles.
But, on the whole, most of us have been facing current adversities with grim good humor. It’s our turn, we tend to reflect. We’ve had it good for so long. Sooner or later, government was bound to screw things up seriously.
But, we shrugged, we can survive. Our parents did. And the world has changed. We have vastly more education, more skepticism and sophistication. The peasant mentality that permitted the Great Depression to drag on for over a decade as the result of one socialist monkey wrench after another thrown into the engine of the economy and the Smoot Hawley Tariff just can’t happen today.
We’ve learned a lot. The policy errors of the New Deal have been exposed and its economics debunked. Today’s American population will not sit passively by and let Washington drive the economy into the ground year after year after year. The democrats will get slaughtered in 2010 and our Kenyan Caliban will be sent packing in 2012. A conservative Republican will take office in 2013 and the land will heal.
But, I have just read two news items in the Wall Street Journal which give me pause.
1) Despite the fact that the newspapers are full of foreclosure auction notices, and we all know people moving and abandoning homes to the banks, we tend inevitably to think that real estate disaster is well along and that we can look forward to the end of all that within an endurable interval.
We may be wrong.
This WSJ article from yesterday ends, I think, with whistling in the dark.
Housing markets began to stabilize early last year as low prices and government interventions broke the downward spiral. Policy makers spurred demand for homes by holding down mortgage rates, offering tax credits for buyers, and extending low-down-payment loans through the Federal Housing Administration.
The government also attacked the supply problem. Regulators relaxed mark-to-market accounting rules, giving banks more flexibility in valuing certain real-estate assets and removing some of the impetus for banks to quickly foreclose. Meanwhile, the Obama administration put in place an ambitious program to modify mortgages.
The Home Affordable Modification Program has fallen short of its goals. So far, fewer than 500,000 loans have been modified, below the target of three million to four million. Yet the program served as a “closet moratorium” on foreclosures that stanched the flow of bank-owned homes to the market, said Ronald Temple, portfolio manager at Lazard Asset Management.
The result: The share of distressed sales fell by November to 25% of home sales, and prices stabilized. After rising in the winter, the distressed share fell to 22% in June, before bouncing to 30% in July.
The problem is that these measures are wearing off. Demand plunged this summer after tax credits expired, and unsold homes are piling up. More foreclosures could move onto the market as borrowers fall out of the loan-modification program.
“We see the perfect storm brewing with rising supply and falling demand,” said Ivy Zelman, chief executive of research firm Zelman & Associates and one of the first to warn of trouble five years ago. She estimated that distressed sales could account for half of the market by year-end if traditional sales didn’t rebound.
The market does have some tailwinds: Housing starts are at all-time lows. Banks have hired more staff to manage problem loans and government entities such as Fannie Mae and Freddie Mac that own a growing share of foreclosures are less likely to deluge the market.
The next leg down in prices “isn’t going to be the foreclosure-induced freefall where you just had inventory coming out the wazoo, and it was going to be sold one way or the other,” said Glenn Kelman, chief executive of Redfin Corp., a real-estate brokerage.
Prices also have come down so much already they have less distance to fall. During the housing boom, prices inflated much faster than incomes rose, thanks to speculation and lax lending. The ratio of home prices to annual incomes reached 1.6 at the end of June, which is below the ratio of 1.88 from 1989 to 2003, according to Moody’s Analytics.
By those metrics, prices are actually undervalued in markets that have already seen huge declines, such as Las Vegas, Phoenix and Los Angeles. But Moody’s data show that prices remain “significantly overvalued” elsewhere, including Boston; New York; Seattle; Orange County, Calif., and Charlotte, N.C. Markets in both camps face supply imbalances that will pressure prices for years.
What I see is houses being offered for sale at significantly lower prices which are not selling, and a huge, absolutely enormous backlog of not-yet-foreclosed, not yet fallen out of the Home Affordable Mortgage Program houses yet to hit the market.
Who would be crazy enough to buy at any price in the current, totally unpredictable circumstances?
It is easy to find experts venturing predictions that home prices may fall another 10%. Why not another 30%, another 50%, or even 90%?
The market is flooded with homes. An enormous number more are somewhere in the pipeline headed for distress sale. Money is tight. People are still out of work, still losing jobs. Mortgage rates are low, but it is very difficult to get a mortgage. And, in the final analysis, who is going to buy now? Who will not believe that the market is still going down?
How low can we go? No one knows. People my age have lived through a period in which government policies lifted home prices into the stratosphere by arranging for 30 year financing for everyone. When I was a boy, working class families bought $5000-$12,000 houses, paying cash or arranging for two or three years of seller financing. The same kind of homes were selling for as much as $500,000 near Eastern cities a few years ago, and for $1,000,000 or $1,200,000 near San Francisco.
There is a very long way down between the prices of homes decades ago and recent prices. And deleveraging is just not happening. That backlog of unliquidated defaulted properties is sitting there, still unprocessed, like a ticking bomb.
2) Then, I read in the same WSJ of internationally-designed new banking rules intended to reduce risk by reducing liquidity and dramatically raising banks’ capitalization requirements.
The focus of the agreement is on the amount of “capital” banks are forced to hold. Capital is what banks use to absorb losses. Regulators and analysts typically believe that banks with more capital have a lower risk of failure or insolvency.
Regulators agreed to require banks to hold a specific level of a basic type of capital known as “common equity.” Common equity is considered the most effective type of capital because it is used to directly absorb losses. Officials agreed large, internationally active banks will have to hold levels of common equity equal to at least 7% of their assets, much higher than the roughly 2% international standard or 4% standard for large U.S. banks.
Who said governments in our time would not undertake “reforms” that reduce credit, constrict economic growth, and preclude recovery?
Remember Japan? Back in the late 1980s, everyone was afraid that Japan was going to replace the United States as the world’s leading economic power. Then along came recession, and Japan responded with the same kind of policies we see being applied right here today. Japan is still in recession, and nobody has been afraid of Japanese economic performance in years and years.
We have been saying to ourselves that housing prices may drop another 10% and that the real beginnings of the recovery may take another year, or maybe two, to arrive. We could be wrong.
