Learning the Limits of American Military Power

Christopher A. Preble

An apparent terrorist attack downs an aircraft en route to Cairo. Bomb blasts rip through several Baghdad neighborhoods, killing at least seventy. An Afghan police officer turns his gun on his colleagues, killing eight. Saudi Arabia wages war in Yemen. Nearly five million Syrians are registered as refugees by UNHCR, with perhaps six million more displaced internally by the five-year long civil war raging there. According to some reports, 470,000 Syrians have been killedISIS still holds Mosul.

The DC foreign-policy establishment has a cure for what ails the Greater Middle East: more U.S. intervention. More (illegal) support for the Egyptian regime. An open-ended U.S. troop presence in Afghanistan. More advisers for the Iraqi government in Baghdad. More bombs and missiles for the Saudis. More air strikes and special ops troops to take on ISIS, perhaps with a full-scale ground offensive not far behind.

This interventionist impulse is not new. In his opening remarks before the “Advancing American Security” conference hosted earlier this week by the Charles Koch Institute, Andrew J. Bacevich produced a slightly tattered cover from the New York TimesMagazine, dated March 28, 1999. A clenched fist, painted in the stars and stripes in vivid red, white, and blue accompanied the headline: “What the World Needs Now.” The subtitle “For globalism to work, America can’t be afraid to act like the almighty superpower that it is.” The article by Tom Friedman concludes “The global system cannot hold together without an activist and generous American foreign and defense policy.”

The case for restraint in U.S. foreign policy is strong, but someone still has to make it, and they need venues for doing so.

Bacevich and many of the fourteen other speakers over the course of the day offered a different take. They pointed out that U.S. intervention—especially military intervention—was at least partly to blame for the chaos consuming the region. And they suggested—sometimes delicately, sometimes less so—that the use of even more force would offer few solutions. Oftentimes, it makes manageable problems worse—though the effects are mostly felt by peoples elsewhere, not by Americans here at home.

Former ambassador Chas Freeman noted that policymakers rarely ask the question “and then what?” when contemplating whether or not to use force. As we have seen in Iraq, Libya and elsewhere, military victories often merely reveal underlying political problems that the U.S. military cannot solve. The RAND Corporation’s Gian Gentile, drawing on his own experiences as a combat commander in Iraq, observed that the intricacies of nation-building—i.e. COIN—would not be easily be mastered, even by a military as skilled and adaptable as our own. And COIN is still likely to fail, given the myriad impediments that obstreperous partners and irreconcilable foes can put up before even a determined military’s path. The scale of the undertaking necessary to achieve success is rarely outweighed by the benefits. And then there are the opportunity costs: more than one speaker at the CKI conference pointed out that our attempts at nation building abroad had drawn needed resources away from nation building at home; even the out-of-towners had heard the stories about DC’s failing Metro.

But Bacevich was particularly well-placed to start the conversation about the broad contours of U.S. foreign policy. His latest book, a military history of America’s adventures in the Greater Middle East, is filled with reminders of the limits of military force.

As he surveys the seemingly endless series of campaigns and minor interventions, all the way up to full-scale land wars, such as the liberation of Kuwait in 1991, and the invasion of Iraq in 2003, the one idea that emerges repeatedly is that U.S. military operations were often ineffective, and sometimes pointless. Even apparently clear-cut military victories have failed to produce equally decisive strategic gains for the United States.

For example, Reagan’s assault on Muammar Qaddafi, operation El Dorado Canyon, “had a transitory impact at best.” Clinton’s Operation Determined Force, a bombing campaign to degrade Serb forces, and halt attacks on Bosnian civilians, “offered much to admire,” in terms of planning and execution. “As a practical matter, however, it was largely superfluous.” Similarly, Operation Infinite Reach, the cruise missile strikes on suspected al Qaeda facilities in Afghanistan and Sudan in August 1998, were “a well-executed but largely pointless expenditure of high-tech weaponry.”

But the most egregious instance in which U.S. government officials failed to accurately assess the effectiveness of military operations, a failure that has misinformed U.S. foreign policy in the Greater Middle East ever since, occurred after Operation Enduring Freedom drove al Qaeda leaders out of Afghanistan, and their Taliban hosts out of power there.

A number of Bush administration officials, cheered on by hawkish pundits, believed that “Enduring Freedom had demolished any need for the United States to constrain the use of force.” For Charles Krauthammer, “Afghanistan demonstrated that America has both the power and the will to fight, and that when it does, it prevails.”

Bacevich offers a crucial corrective, and compels us to question anew the purpose of military power in the first place. CENTCOM Gen. Tommy Franks and others, he explains, “confused partial operational success with permanent mission accomplishment.” U.S. forces had managed to outdo the Soviets, unleashing “upon Afghans the forces of anarchy” while remaining “oblivious to what the restoration of order was now likely to require.”

But American officials, and the senior military officers who advise them, have failed to appreciate such facts. They retain their faith in the military’s “ability to mete out punishment with micrometer-like precision.” Others cling fast to even more grandiose objectives, believing that the United States should “shape the world in conformance with our interests and our principles.”

We can’t be certain that an alternative approach would have achieved even less satisfactory results, but our uneven track record in the Greater Middle East should, at a minimum, force us to reconsider some of the enduring truthsunquestioned assumptions that have guided U.S. foreign policy for decades. A greater appreciation for the limits of military power should restrain our willingness to use it.

So too should our favorable geostrategic position. As the world’s largest economy protected physically by wide oceans to the east and west, and peaceful and friendly neighbors to the north and south, we do not need to wage war frequently in order to be safe, prosperous and reasonably free. Our willingness to do so, especially since the end of the Cold War, has often had the opposite effect.

But we will not arrive at these conclusions if we fail to reflect seriously upon our foreign-policy aims, and the actual results. The case for restraint in U.S. foreign policy is strong, but someone still has to make it, and they need venues for doing so.

Christopher A. Preble is vice president for defense and foreign policy studies at the Cato Institute.

Revoke Obama’s Nobel Peace Prize

Nat Hentoff and Nick Hentoff

Last week, President Obama passed an important historic milestone. The occasion was not marked with ceremony, and no statements were issued by the White House. In spite of its significance, most of the national media allowed the occasion to pass with little comment or in-depth analysis. Which is why you may not be aware that Obama now has the ignominious distinction of being continuously at war longer than any other American president in U.S. history.

The New York Times noted the irony that the longest-serving wartime president was awarded the Nobel Peace Prize only nine months into his first term in office. Yet the article characterized Obama as a reluctant warrior laboring under a heavy burden inherited from his predecessor. The article also focused on Obama’s efforts to transform the nature of how the United States wages war, relying more on drone strikes and targeted special forces operations than traditional intervention with ground forces. But in doing so, the Times told only half of the story.

The Norwegian Nobel Committee said it awarded the 2009 Peace Prize to President Obama because “(h)is diplomacy is founded in the concept that those who are to lead the world must do so on the basis of values and attitudes that are shared by the majority.”

Four years later, Christof Heyns, the United Nations special rapporteur on extrajudicial killings, summary or arbitrary executions, told a conference in Geneva that President Obama’s drone strike program threatens 50 years of international law by encouraging other states to violate long-standing human rights standards.

The extent to which Obama’s drone strike program has institutionalized the practice of extrajudicial killings — in violation of international law — is documented in The Assassination Complex: Inside the Government’s Secret Drone Warfare Program, a new book by Jeremy Scahill and the staff of the online news publication The Intercept.

Appearing on Democracy Now! to discuss the book, Jeremy Scahill rejected the Obama administration’s absurd claim that drone strikes are a cleaner, more humane way of waging war.

“Obama has codified assassination as a central official component of American foreign policy,” Scahill said. “This is a global assassination program that is authorized and run under what amounts to a parallel legal system … where the president and his advisers serve as the judge, jury and executioner of people across the globe.”

One of the most startling revelations in The Assassination Complex involves the disclosure of secret government documents on Operation Haymaker, a drone strike program operating in northeastern Afghanistan. According to the government’s own documents, nearly 90 percent of the people killed in U.S. airstrikes during one five-month period were not the intended targets.

The New York Times also reported that President Obama has taken military action in a total of seven countries — Iraq, Afghanistan, Syria, Libya, Pakistan, Somalia and Yemen — without the authorization of Congress. If you include covert military actions taken by special operations forces, the list is longer and the impact much broader.

The metastasizing of U.S. military force under the Joint Special Operations Command was first documented in Scahill’s 2013 book and documentary film Dirty Wars: The World is a Battlefield.

Nick Tursa has done additional reporting on the issue for The Nation magazine.

“During the fiscal year that ended on Sept. 30, 2014, U.S. Special Operations forces (SOF) deployed to 133 countries — roughly 70 percent of the nations on the planet — according to Army Lt. Col. Robert Bockholt, a public affairs officer with U.S. Special Operations Command (SOCOM),” Tursa reported in a January 2015 article in The Nation. “This capped a three-year span in which the country’s most elite forces were active in more than 150 different countries around the world, conducting missions ranging from kill/capture night raids to training exercises.”

In a second article, published in April 2015, Tursa reported that “(i)n 2014, the United States carried out 674 military activities across Africa, nearly two missions per day, an almost 300 percent jump in the number of annual operations, exercises, and military-to-military training activities since U.S. Africa Command (AFRICOM) was established in 2008.”

Awarding a Nobel Peace Prize on the basis of expectations was unprecedented. But after eight years of continuous warfare, the Nobel Committee should take another unprecedented action: It should revoke Obama’s peace prize and demand repayment of the prize money.

Nat Hentoff is a nationally renowned authority on the First Amendment and the Bill of Rights. He is a member of the Reporters Committee for Freedom of the Press, and the Cato Institute, where he is a senior fellow. Nick Hentoff is a criminal defense and civil liberties attorney in New York City.

A Libertarian Ticket Sane Republicans Can Get Behind

David Boaz

Lots of Republicans are looking for a sane alternative to Donald Trump and Hillary Clinton, and it looks like the Libertarian Party has just given it to them, now that former Massachusetts Governor William Weld has joined former New Mexico governor Gary Johnson’s ticket.

It’s the first time two governors have shared a presidential ticket since Republicans Thomas E. Dewey of New York and Earl Warren of California narrowly lost to incumbent President Harry Truman in 1948.

Many observers think experience as a governor is the best preparation for the job of president. Johnson and Weld would bring 14 years of gubernatorial experience to the White House, while neither Trump nor Clinton has ever served as governor or even mayor.

An opportunity to pick a positive good, not just the lesser of two evils.

Johnson and Weld were both elected and re-elected in Democratic states, and dealt with heavily Democratic legislatures.

Neither Johnson nor Weld is a purist libertarian, and both have come under fire within the Libertarian Party, which will nominate its candidates in Orlando over Memorial Day weekend. Johnson displeased many libertarians (including me) by saying that government should ban discrimination on the basis of religion, including requiring a Christian baker to bake and decorate a cake for a same-sex wedding. Weld has supported some gun control measures.

But they will present a clear alternative to Trump and Clinton: strong and coherent fiscal conservatism, social liberalism, drug-policy reform, criminal-justice reform, reining in mass surveillance, ending executive abuse of power, and a prudent foreign policy that is neither promiscuously interventionist nor erratic and bombastic — all grounded in a philosophical commitment to liberty and limited government.

They acted on those ideas as governors, with the usual accommodations to political reality. Johnson was called “America’s boldest governor” by the Economist for his push for school choice. And that was before he came out for legalizing marijuana and moving away from the war on drugs. He vetoed more than 700 spending and regulation bills and left the state with a $1 billion surplus. Weld cut taxes, constrained state spending, and created a domestic partners program for gay state employees.

In the Cato Institute’s biennial Fiscal Policy Report Card on America’s Governors, both Johnson and Weld earned A’s and B’s each time they were graded. Cato’s fiscal policy analysts are tough graders, and very few governors ever get an A.

Leading Republicans such as Mitt Romney and Sen. Ben Sasse of Nebraska have declared Donald Trump unfit for the presidency and called for an alternative independent or third-party candidate to run for president. No one has stepped forward, and ballot deadlines are looming.

But now there’s an alternative they could support.

Libertarians are not conservatives. They’re not just Republicans repulsed by Trump’s racial and religious scapegoating and megalomania. The Libertarian Party platform has supported drug legalization and gay marriage for decades, and the party opposes most U.S. wars. But given what Sasse, Romney, and other serious Republicans think of Trump and Clinton, is it hard to imagine that they would prefer Johnson and Weld in the White House?

The same might well be true of Sen. Dean Heller of Nevada, Gov. Charlie Baker of Massachusetts, a protégé of Weld, as well as former governors Tom Ridge of Pennsylvania and Christie Todd Whitman of New Jersey and former senators Norm Coleman of Minnesota, Tom Coburn of Oklahoma, and Mel Martinez of Florida.

None of this means there’s a real path to the White House for Johnson and Weld. I suspect that in their fantasies, Libertarian party strategists imagine the Johnson-Weld ticket carrying Johnson’s New Mexico, Romney’s Utah, and maybe libertarian-leaning states such as Alaska, Idaho, and New Hampshire. Add in Maine, where Weld is well known and voters have elected independents as governor and senator, and you could imagine the race being thrown into the House of Representatives. Where rational Republicans just might prefer an experienced governor to the unpredictable and threatening Trump.

But neither Johnson nor Weld is a celebrity on the order of Trump or Ross Perot, the businessman who got 19 percent of the national vote running as an independent in 1992. Neither has the money of Perot, the Koch brothers, or Tom Steyer—the kind of money that can buy national television ads and large staffs. Johnson has not yet shown an ability to draw huge crowds, as Bernie Sanders has this year and Ron Paul did in 2008.

Without those things, you can’t become a serious candidate. Johnson has already hit 10 percent in a couple of polls, but right now that’s probably a “none of the above” vote. He still has to convert it into actual support.

The Libertarian Party’s most successful campaign, in 1980, featured an accomplished and articulate candidate, a relatively large and professional staff, and a vice presidential candidate, David Koch, who put millions of dollars into the campaign. And they still only got 1 percent. Johnson and Weld have a steep hill to climb.

But Trump and Clinton are the least popular major-party nominees in memory. In some polls a majority of voters say they’d like to vote for someone else. That’s the golden opportunity awaiting some alternative candidate, and it looks increasingly as if Gary Johnson will be the only alternative on all 50 ballots.

David Boaz a native of Kentucky, is executive vice president of the Cato Institute and author of “The Libertarian Mind.”

Health-Care Reform and the Candidates

Michael D. Tanner

No one really expects this year’s presidential campaign to be decided on issues. But in fact, we are heading toward a new record for vacuousness. To see how far we’ve drifted from any connection with the real world, consider just one issue: health-care reform.

Exhibit 1: A new study from the liberal Urban Institute estimates that Bernie Sanders’s pet proposal for a single-payer health-care program would cost $32 trillion over the next decade. That’s right: $32 trillion! It’s hard to even get your head around that number. It’s eight times more than the entire federal budget this year. It’s more than the federal government has spent on everything since 2007. Yes, Sanders would hike taxes to pay for his plan, by some $15 trillion over ten years. But even the largest tax hike ever considered in the United States wouldn’t come close to covering the cost.

Sanders calls his plan “Medicare for all.” Given that Medicare is running some $40 trillion in the red, that might not be the best model, but Sanders is undeterred. In fact, his plan would actually cover far more services than Medicare ever dreamed of, including long-term care. In addition, he would do away with all of Medicare’s modest cost-sharing components, like co-payments, deductibles, and premiums.

It would be helpful if, just for a little bit, we all paid attention to actual issues.

When Bernie Sanders promises “free health care,” he means it. Except for everyone who will have to pay for it.

Exhibit 2: Continuing her strategy for bankrupting America just a little more slowly than Senator Sanders, Hillary Clinton is now calling for a Medicare “buy-in.” Under her proposal, Americans not currently eligible for Medicare — initially those aged 50 to 65, but eventually, who knows? — could enroll in the program if they wished. To do this, they would have to “buy in” — that is, pay a premium that would supposedly cover most of their expected costs.

But since Medicare currently pays on average some $300,000 more in benefits for a median-income couple than they pay in taxes and premiums, the chances of the proposal’s being revenue-neutral are slim at best. Back in 2008, the Congressional Budget Office estimated that a similar plan would cost roughly $7,600 per year per enrollee. Given the rise in health-care costs since then, today’s annual cost would likely exceed $8,000. If premiums are truly cost-neutral, healthy people will find them excessive, meaning that most enrollees will be sicker and more expensive to treat than average. Hello, adverse selection!

Let us not forget that $40 trillion in unfunded liabilities facing Medicare. Adding more people to a bankrupt program seems a little like crowding more passengers onto the Titanic.

And let us not forget that $40 trillion in unfunded liabilities facing Medicare. Adding more people to a bankrupt program seems a little like crowding more passengers onto the Titanic.

It is also worth pointing out that Medicare under-reimburses doctors and hospitals for the services they provide; by some estimates, it pays as little as 63 cents on the dollar. Doctors and hospitals offset some of those losses by charging extra to those of us with private insurance. That drives up our premiums and/or out-of-pocket costs. Crowding more costly and sick people into Medicare will make such cost-shifting even worse.

No matter what, we can expect to pay more.

Exhibit 3: And Donald Trump’s plan for health-care reform is — well, who the heck knows? Trump has supported single-payer health care in the past, and even in the primary campaigns he has waxed rhapsodic about the Scottish and Canadian health-care systems. We know that he thinks Medicare is mostly just fine as is. He says that he won’t touch it — except by negotiating lower prescription-drug prices, something the CBO says can work only if you restrict (ration) which drugs are available in each therapeutic class.

But as for health care more generally, Trump’s plans are somewhere between vague and nonexistent. We know he wants to repeal Obamacare and replace it with “something great.” We know he believes that it is the federal government’s responsibility to “cover everybody.”

He did issue a white paper on health-care reform, but it provides little guidance. He calls for “removing the lines around the states,” by which he means allowing interstate sale of health-insurance plans, a longtime goal of free-market health-care reformers. But only a plan that “complies with state requirements” would be allowed, which would undermine one of the goals of such proposals: escaping state mandates and regulations that drive up premiums. Trump also says he would “allow individuals to use Health Savings Accounts.” That’s a good thing, of course, but it’s hard to tell exactly what he means, since HSAs are already legal. Beyond that, a Trump health-care plan would be a roll of the dice.

In the celebrity culture of this campaign, the media seem obsessed with issues like whether Trump’s objectification of women is more troubling than Bill Clinton’s predatory behavior, or whether Hillary’s dishonesty around Benghazi and her e-mail server outweighs Trump’s courting of racists and anti-Semites. But it would be helpful if, just for a little bit, we all paid attention to actual issues.

Then again, given these three candidates and their proposals, maybe it’s bad news no matter what.

Michael Tanner is a senior fellow at the Cato Institute and the author of Going for Broke: Deficits, Debt, and the Entitlement Crisis.

Why Voting for the Lesser of Two Evils Is a Waste of Your Vote

Jeffrey A. Singer

Although my personal political philosophy is libertarian, like most people, over the years I have surrendered to the binary choice our two-party system gives us when casting my vote in presidential elections. I almost always find myself settling for a “lesser of two evils,” but the “evil” is not so great as to prevent me from rationalizing what amounts to, by my vote, an endorsement or affirmation of the candidate.

Because at least rhetorically, the Republican party candidate promises a greater commitment to limited, constitutional government, entitlement reform, tackling the national debt, and a belief in the benefits of free trade, I have voted for the Republican candidate for president ever since Ronald Reagan. The Republicans repeatedly disappoint on matters of foreign policy, seeing the US as world policeman. But the Democrats fare little better on foreign policy—sometimes even worse. So foreign policy as a vote-determining factor between the two major parties tended to be a wash for me. I often profoundly disagree with the Republicans on many of the “culture war” and so-called social issues, but I have had confidence that our Constitution and judiciary will defend against any overreach by Republicans in that area.

I offer my line of reasoning as a guide to others who might be agonizing over their decision this year.

So as a matter of practicality, I have tended to base my vote on the differences between the two major party candidates on matters of economic liberty and commitment to the principles of federalism and limited government. I recognize the politicians in both political parties have differing promises but similar results: bigger government, greater debt, less individual liberty. But I use the party platforms and the candidates’ rhetoric to help in my rationalization (some would say self-delusion) that I am voting for someone who will, at best, move things in a better direction or, at worst, be a lesser of two evils that I can live with.

Not so this year. The 2016 offerings of both major parties are so flawed, so authoritarian, so inclined to disregard the Constitution, the Bill of Rights, and expand executive power, that even “pretzel logic” will not allow me to rationalize a choice between them.

I still wish to participate in the electoral process. Choosing not to vote is always an option. But I prefer to express my opinion in a less passive manner. Not voting certainly provides the satisfaction of knowing that I did not sanction or legitimize the offerings of the two major parties. But that satisfaction is only personal and private. I want to more actively make my views known. Using the following chain of logic, I have found a positive way to express myself through, what I believe, is the most effective allocation of my vote in November:

1) According to Professor Ilya Somin in Democracy and Political Ignorance, my vote has, on average, a roughly 1 in 60 million chance of being the decisive vote in the Presidential election. (It might be a great as 1 in 10 million in my relatively small state of Arizona. It would have a roughly 1 in a billion chance of being decisive if I lived in California.)

2) If I vote for the lesser of evils and hold my nose, my vote is blended in with millions of others—there is no way to register my dissatisfaction with the choices the two major parties have given me. There is no way to separate those who voted for a lesser of two evils from those who voted because they actually LIKED the candidate.

3) If I vote for the Libertarian party candidate, I am directly affecting the vote total of that candidate. Because that candidate will get fewer total votes than the major party candidates, when all votes are totaled up, I will have had a greater effect on raising the total percentage of votes for the Libertarian candidate. If the Libertarian candidate garners say, 5 percent of the vote as opposed to 1 percent, then my vote made a greater impact in making a statement than it would have if it was folded in with the 40 or 50 million voters who voted for a major party candidate.

4) If the Libertarian candidate gets say, 5 percent of the vote, then that clearly means that 5 percent of the voters chose a candidate that they KNEW had absolutely no chance of winning, rather than choosing the lesser of two evils. What’s more, they chose the candidate with the most pro-freedom, pro-Constitution, pro-Bill of Rights program. That sends a clear message.

Therefore:

5) By casting my vote for the Libertarian presidential candidate, my vote is actually more meaningful and makes more of a statement.

My conclusion: Voting for the lesser of two evils is statistically and strategically wasting my vote. I will vote Libertarian for president this year. This rationale does not necessarily apply to how I will vote in the down ballot races, where my vote has a greater numerical impact, I have a greater ability to directly communicate my views, and I might have less marked dissatisfaction with many of the candidates.

I offer my line of reasoning as a guide to others who might be agonizing over their decision this year.

Dr. Jeffrey A. Singer practices general surgery in metropolitan Phoenix and is an adjunct scholar at the Cato Institute.

The Crowdfunding Catch: Government Regulations

Thaya Brook Knight

Pop quiz: Your college roommate wants to start a restaurant and puts up a post on her Facebook page asking friends to contact her if they’re interested in providing startup cash in exchange for a share of the profits.

Remembering the great meals she whipped up in your apartment, you eagerly offer to invest.

The question is: Was any of this illegal? 

The answer’s yes.

People trying to start a business with a little help from their friends shouldn’t have to hire a lawyer and jump a raft of legal hurdles just to get the company off the ground.

Your friend conducted an unregistered public offering of securities and now could face an enforcement action by the Securities and Exchange Commission (SEC), as well as other liability.

Crazy? Some people thought so and lobbied Congress to create an exemption under the securities laws to allow small-scale offerings like your friend’s. And they were successful. In 2012, President Barack Obama signed into law the Jumpstart Our Business Startups Act, or JOBS Act, which includes a securities crowdfunding provision.

Like other crowdfunding efforts, the JOBS Act allows companies to solicit small amounts of money online from a number of individuals. Unlike other types of crowdfunding, such as campaigns conducted on sites like Kickstarter, this new type would allow companies to actually offer a return on investment.

(This is a key bit of securities law. If you and some other people give money to someone for them to use in a way that you hope will result in getting a return on your investment, the law views that as a sale of securities, no matter what you may have called it.)

This is important because registering an offering of securities with the SEC is more than just filing a simple form. There are a number of disclosures, financial and other, that a company must make and a complex filing process a company must follow that has been estimated to cost in the millions of dollars.

For this reason, few companies register a first public offering of securities—an initial public offering or IPO—unless they need to raise tens or even hundreds of millions of dollars.

Starting today, May 16, 2016, four years after the JOBS Act was signed into law, this type of crowdfunding will finally become legal. Does that mean your friend will be able to solicit investment on Facebook? Not really.

Despite the fact that securities crowdfunding was intended to be a vehicle for this kind of grassroots capital raising, and despite the fact that it was supposed to be a no-frills, low-cost way for small businesses to leverage the internet, the final version that came out of Congress, and the final set of rules that came out of the SEC have created a very different process than its proponents initially envisioned. And asking for investment directly on Facebook is still not allowed.

To raise capital using the new crowdfunding rules, a business must provide a number of disclosures both at the time it sells its securities and on an ongoing basis. If it misses a filing, it might have to register the offering (that is, do a very expensive IPO) or risk violating the securities laws.

Given that a company can only raise $1 million under this new rule, this means taking on a big risk for what is not a very big amount of capital. It also can’t use social media to directly solicit investment; it can only direct investors to a special online platform designed to list offerings.

The reason that securities crowdfunding looks the way it does is that it’s built into an old and complex set of laws and regulations that were designed for large companies, and that were designed in the 1930s, long before the internet ever existed.

There is an easier way. Why not just say that the registration requirement does not apply to very small offerings, like the restaurant owner?

The 1933 law states that its registration requirements should not apply to offerings where registration is not in the public interest. It seems that an entrepreneur asking a few people she knows for investment in her very small business would be just such an offering.

If regulators are concerned about such an offering getting out of hand, they could limit the amount an entrepreneur can raise to $500,000 and limit investors to those personally known to the entrepreneur.

People trying to start a business with a little help from their friends shouldn’t have to hire a lawyer and jump a raft of legal hurdles just to get the company off the ground. The crowdfunding law was supposed to do this but fell far short.

Instead of getting tied up in knots trying to make an old law do new things, the better solution is to use the law as it was intended and leave out these very small transactions that pose no risk to our economy or our stability. Anything else limits the growth of (job-producing) small businesses and exposes Americans to unnecessary risk of bureaucratic entanglements.

Thaya Brook Knight is associate director of financial regulation studies at the Cato Institute.

The ‘Bombshells’ That Could Be in Trump’s Taxes

Daniel J. Mitchell

Donald Trump is getting pressured to publicly divulge his tax returns. He’s resisting these demands, and there are five potential reasons why the presumptive Republican nominee has qualms about sharing this information.

First, he may resent the idea of letting the world look at his tax returns for reasons of personal privacy, which is an understandable sentiment. I wouldn’t want my neighbors, much less total strangers, to know about the level of my income and the sources of my income. And I suspect many other Americans feel the same way.

Then again, most Americans aren’t running for President, and there now is an expectation that voters will be able to see the personal financial details of candidates.

There are five potential reasons why the presumptive Republican nominee has qualms about sharing this information.

Can Trump get away with stonewalling on his returns? Perhaps. President Barack Obama refused to release his college transcript and didn’t seem to suffer any political damage, so there is a successful precedent for telling voters that there’s a limit to how much personal information they can see.

Second, Trump’s tax return will probably show a surprisingly low level of income, and he might be concerned that such a revelation would erode the super-successful-billionaire aura that he has created.

To be sure, a tax return showing “only” millions of dollars of annual income doesn’t mean that Trump isn’t a billionaire when measuring his total stock of wealth. But voters would probably think they had been misled.

Third, to the degree that Trump’s return shows a lower-than-expected amount of taxable income, this will probably be because his accountants and tax lawyers have carefully plumbed the 75,000-page internal revenue code for deductions, credits, exemptions, exclusions and other preferences that enable upper-income taxpayers to lower their tax exposure.

Since we all seek to legally minimize our tax liabilities, that shouldn’t be a political problem. Indeed, Trump has even bragged that “like every single taxpayer out there, I try to pay as little tax as possible, and again, one of the big reasons is I hate what our country does with the money that we pay.”

That normally would be a persuasive answer, but voters may look askance when they learn that Trump is taking advantage of mysterious provisions dealing with things they don’t understand, like depreciation, carryforwards, foreign tax credits, muni bonds and deferral.

Even though most of these rules in the tax code have legitimate purposes, voters won’t know the details, and I imagine the Trump campaign will be concerned that he’ll be perceived unfavorably.

And the perception problem might get even bigger when reporters start comparing how much Trump earns from various companies with how much those companies report in their financial statements. There almost surely will be big discrepancies, if for no other reason than the mutually inconsistent rules imposed by different agencies of the federal government. So there probably won’t be anything dodgy, but it may seem that way to ordinary voters.

Fourth, for very wealthy individuals and large companies, the complexity of the tax code means there’s no way of knowing if a tax return is accurate. So those taxpayers have considerable leeway to be cautious or aggressive, with the understanding that the IRS is more likely to push back if a return is in the latter category.

Given Trump’s persona, he presumably pushes the envelope. And it would be a safe guess that the IRS has in the past required upward adjustments in his taxable income. Again, that doesn’t mean he’s done anything the rest of us wouldn’t do if we had a similar financial profile. But because the rest of us have no clue what it’s like to operate on that level, we may jump to negative conclusions.

Fifth, it’s highly likely that Trump does business with so-called tax havens. For successful investors and entrepreneurs with cross-border economic activity, this is almost obligatory because jurisdictions like the Cayman Islands have ideal combinations of quality governance and tax neutrality.

Bill ClintonJohn KerryJacob Lew and many other wealthy Democrats have utilized the Cayman Islands in their international business dealings, incidentally and such actions are both sensible and legal. But in a political environment where the left has tried to demonize “offshore” tax planning, any revelations about BVI companies, Panama law firms, Jersey trusts and Liechtenstein accounts will be fodder for Trump’s many enemies.

At the end of the day, Trump presumably will make a political calculation based on what will maximize his chances of winning. So if he ultimately chooses to stonewall on his tax returns, we can safely assume that he wants to hide something that will be embarrassing even if it’s completely legal.

Daniel Mitchell is a senior fellow at the Cato Institute who specializes in tax reform.

Free Speech Is Going to the Dogs

Nat Hentoff and Nick Hentoff

In most of the developed world, criminal “hate speech” laws are common and frequently applied. People are routinely arrested, prosecuted and even imprisoned for offensive speech that provokes racial or religious hatred, or offends members of an ethnic or religious group.

In Canada, Maclean’s magazine was put on trial for publishing a series of articles arguing the rise of Islam threatened Western values. In France, the actress Brigitte Bardot was criminally charged with provoking racial hatred for criticizing the ritual slaughter of animals by Muslims. In Germany, France and Canada anyone questioning the Holocaust can be imprisoned.

In a 2008 New York Times column, Adam Liptak reported that the United State is practically the only developed country that prohibits criminal prosecutions based on hate speech. “Under the First Amendment, newspapers and magazines can say what they like about minorities and religions — even false, provocative or hateful things — without legal consequence,” he explained.

The column also noted that America’s tradition of protecting offensive speech is under assault by legal scholars who advocate for a more European approach to regulating free speech.

According to a 2015 poll conducted by the website YouGov.com, a plurality of Americans and a majority of Democrats agree with them. The poll revealed that 41 percent of Americans, including 51 percent of Democrats, support the adoption of a hate speech law that would “make it a crime for people to make public comments intended to stir up hatred against a group based on such things as their race, gender, religion, ethnic origin or sexual orientation.” Only 26 percent of Democrats, 41 percent of independents and 47 percent of Republicans opposed passing such a law.

Eugene Volokh, writing in his Washington Post blog, correctly argues that “calls for a new First Amendment exception for ‘hate speech’ shouldn’t just rely on the undefined term ‘hate speech’ — they should explain just what viewpoints the government would be allowed to suppress, what viewpoints would remain protected, and how judges, juries and prosecutors are supposed to distinguish the two.”

Free speech absolutists have argued for years that carving out exceptions to the First Amendment is a slippery slope that will lead to absurd results. Which is exactly what has happened in Europe. The arguably outrageous hate speech prosecutions of the past have been eclipsed by prosecutions that are patently absurd.

A case in point is the arrest last week in Scotland of a man who posted a video of a dog he trained to watch videos of Hitler’s speeches and give a stiff-armed salute in response to the command “Sieg Heil!”

The dog in question is a peaceful pug named Buddha, owned by the man’s girlfriend. The video depicts the training of Buddha to respond excitedly to the mere whisper of the question: “Do you want to gas the Jews?”

“The clip is deeply offensive and no reasonable person can possibly find the content acceptable in today’s society,” Detective Inspector David Cockburn told The Telegraph.

Every dog owner knows that if you speak in a high-pitched voice, your pet will react with as much excitement to the question “Do you want some bacon?” as “Do you want to tear my throat out?” Which begs the question whether a satirical video that compares Nazis to a dog’s Pavlovian tendency for unthinking repetition can reasonably be regarded as offensive to anyone but Nazis.

The man clearly states in the video that he is not a racist and his only motivation was to “piss off” his girlfriend by turning her adorable little pug into a Nazi. But the thought police are rarely concerned with intent, since preventing offense is their raison d’etre. Giving offense has been the raison d’etre of satirists for centuries and their right to do so should be protected.

“Caricature and satire are (an) expression and barometer of an enlightened, liberal society,” writes Gisela Vetter-Liebenow, director of Wilhelm Busch Museum of Caricature and Graphic Arts in Hanover, Germany. “(Y)ou don’t have to approve of them, you have the right to be annoyed by them — but the right to free speech must be defended at all cost.”

Nat Hentoff is a nationally renowned authority on the First Amendment and the Bill of Rights. He is a member of the Reporters Committee for Freedom of the Press, and the Cato Institute, where he is a senior fellow. Nick Hentoff is a criminal defense and civil liberties attorney in New York.

The Label You Give School Choice Programs Doesn’t Change the Facts

Jason Bedrick and Will Flanders

Recently, Mike McCabe of the Wisconsin Democracy Campaign argued in the Beloit Daily News that “truth in labeling” requires labeling the Wisconsin Parental Choice Program the “nation’s first scholastic welfare program” because the taxpayers are “picking up the tab.”

Of course, following this logic, the Parental Choice Program can’t be the first “scholastic welfare program” because it was long predated by our taxpayer-funded district school system. Taxpayers subsidize attendance in district schools in the same way they subsidize students in the school voucher program.

Are we all welfare recipients now?

We should not let half-truths and silly rhetoric destroy a program that helps the kids who need and want it most.

For that matter, we can see that “voucherization” of other government welfare programs has generally been a positive force. Although not without their flaws and unintended consequences, welfare programs that provide recipients access to greater choices in the market are superior to the government-provision programs that they replaced.

For example, housing vouchers allow people to decide where they live rather than forcing them into notoriously run-down and dangerous “projects.” Food vouchers allow recipients to shop in the same grocery stores as everyone else rather than waiting in line for barely edible “government cheese.” And unlike our shamefully broken VA system, where veterans frequently suffer and die on wait lists to get care from government-run hospitals, Medicaid vouchers allow recipients to choose where to receive their healthcare.

Though imperfect, these programs introduce market forces into places where they were previously absent, and they are generally seen as an improvement.

Likewise, school choice programs give parents more control over where to send their children based on their particular needs. It’s no wonder that so many parents are embracing the ability to choose schools that have been shown to be safer and higher performing.

That’s right. Contrary to McCabe’s claim that voucher students are “doing somewhat worse” than their district school peers in Wisconsin and elsewhere, the near-consensus of high-quality research finds that school choice programs improve student outcomes, including improving performance on standardized tests, increasing rates of high school graduation and college matriculation and even reducing rates of criminality.

five-year longitudinal study of Milwaukee’s school voucher program found that voucher students performed as well or better on standardized tests than students from similar backgrounds attending district schools. More important, Milwaukee voucher students enrolled and persisted in four-year colleges at a rate 4 to 7 percentage points higher than similar district school students. And earlier this year, researchers found students who exercised choice through the voucher program for a sustained period of time—especially young males—were about 42% less likely to be convicted of any crime than their district school peers.

Moreover—again contrary to McCabe’s assertion—the voucher program produces these results at a lower cost per pupil than district school students.

For example, the state provides Beloit more than $9,300 per district school student, according to the most recent figures from the Department of Public Instruction. Taking local revenue into account, the average expenditure per student in Beloit is $12,880. This exceeds the cost of a voucher by more than $5,000 per student.

Beloit is not unique. Statewide, vouchers cost $7,200 per pupil for K–8 and $7,856 for high school, while the average per-pupil expenditure at Wisconsin district schools is $12,705. Once local, state and federal revenue is taken into account, there is not a single district in the state where vouchers cost more per pupil than district school students. Indeed, a recent Friedman Foundation study determined that the Milwaukee Parental Choice Program saved taxpayers more than $238 million from its inception through the 2010–11 academic year.

Simply put, Wisconsin taxpayers save money when students accept a voucher rather than attend their assigned district school. In fact, the funds saved could be reinvested into the state’s public schools, but that same Friedman Foundation study found the state of Wisconsin actually does not track where those savings go.

District school students benefit from choice as well. When students have the option to leave, district schools are more responsive to their needs.

Five studies of the competitive effects of Milwaukee’s voucher program found that the increased choice and competition had positive effects on district school performance. A 2009 study by Dr. Jay Greene and Ryan Marsh of the University of Arkansas concluded, “It appears that Milwaukee public schools are more attentive to the academic needs of students when those students have more opportunities to leave those schools.”

As shown in a recent literature review by Dr. Patrick Wolf and Dr. Anna Egalite, these findings are in line with the results of numerous studies on the effect of school choice programs on district-school student performance:

Thirty of the 42 evaluations of the effects of school-choice competition on the performance of affected public schools report that the test scores of all or some public school students increase when schools are faced with competition. Improvement in the performance of district schools appear to be especially large when competition spikes but otherwise, is quite modest in scale.

School choice is about expanding opportunities for our children to receive the best education that they can. We should not let half-truths and silly rhetoric destroy a program that helps the kids who need and want it most.

Call it a basic human right. Call it welfare. Call it what you like—school choice works.

Jason Bedrick is a policy analyst with Cato’s Center for Educational Freedom. Will Flanders is the education research director at the Wisconsin Institute for Law & Liberty.

Political Ignorance Haunts 2016 Campaign

Ilya Somin

A specter is haunting this year’s presidential election: political ignorance. Both Democrats and Republicans love to accuse the other party’s supporters of that sin. Sadly, both are often right.

The presumptive GOP nominee Donald Trump has raised exploitation of ignorance to new heights. Many of the main themes of his campaign prey on it. Trump’s campaign first took off when he claimed we are being inundated with Mexican immigrants, who increase the crime rate because many are “criminals” and “rapists.” In reality, net migration from Mexico has been close to zero for the last 10 years. Yet few Americans seem to know that. And while studies consistently find that immigrants have lower crime rates than native-born Americans, a 2015 Pew Research Center study found that 50% of Americans (and 71% of Republicans) believe immigration is making crime “worse.”

Trump’s claim that nations such as China, Mexico and Japan are “killing us on trade” because we have trade deficits with them also relies on ignorance. As economists across the political spectrum recognize, free trade benefits the economy, and a bilateral trade deficit between two nations is no more an indicator of economic failure than is my trade deficit with my local supermarket. Unfortunately, studies show that trade is one of the areas where there is the greatest gap between general public opinion and informed opinion.

Trump is far from the only candidate to exploit ignorance this year, merely the most successful.

Trump is far from the only candidate to exploit ignorance this year, merely the most successful. Bernie Sanders, the “democratic socialist” who has mounted an unexpectedly strong challenge for the Democratic nomination, shares some of Trump’s demagoguery on trade.

Like Trump, Sanders has also put forward budget projections that most experts, even in his own party, regard as fantastical. Surveys consistently show that most Americans greatly underestimate the percentage of federal spending devoted to big entitlement programs, such as Medicare and Social Security, which are among the largest areas of federal spending. As a result, many voters accept Trump and Sanders’ claims that we can not only deal with our serious fiscal problems without reforming them, but also pile on enormous spending increases (Sanders) or tax cuts (Trump). A survey of Sanders supporters by Vox found that the vast majority are unwilling to pay more than a fraction of the tax increases that even Sanders’ own projections say would be required to fund the new health care and education programs he proposes. Most likely do not realize the true cost.

The problem of ill-informed voters is certainly not confined to Trump and Sanders, or to the 2016 election; more conventional politicians often manipulate ignorance, as well. It is also not limited to specific issues, instead extending to the basic structure of government.

An October Farleigh Dickinson survey found that only 34% of Americans can name the three branches of government, and 30% cannot even name one. Studies routinely find that large numbers of voters do not know which officials are responsible for which issues, a circumstance that makes it hard to hold them accountable for their performance. All too often, voters reward and punish incumbents for outcomes they do not control, including such things as droughts and even victories by local sports teams.

The biggest determinant of most electoral outcomes is the very recent performance of the economy, even though experts recognize that incumbents usually have little control over short-term economic trends. Such ignorance weakens political accountability, and incentivizes politicians to pursue dangerously misguided policies that prove popular with poorly informed voters.

What is behind this public ignorance?

It is not that the voters are dumb, but that they have little incentive to learn. Because there is only an infinitesimally small chance that any one vote can influence the result of an election, even most smart people usually have little motivation to follow politics closely. That helps explain why political knowledge levels have remained low for decades, in spite of rising IQ scores and educational attainment, and despite the increasing availability of information on the Internet.

There is no easy solution to the problem of political ignorance. But we can at least mitigate it by limiting and decentralizing government. If you are like most people, you probably spend more time considering information when you decide what smartphone to buy than when you decide who to support for president. Similarly, people are far more discerning when they “vote with their feet” to decide what state or local government to live under than when they vote at the ballot box. That is because they realize that inpidual foot voting decisions are actually likely to make a difference, whereas inpidual ballots are not.

Devolving more issues to the private sector or to the state and local level can enable us to make more of our decisions in a setting where we have strong incentives to be well-informed. Although it is easy to think otherwise in the year of Trump, most of the public is not stupid. They just need better incentives to make smart choices.

Ilya Somin is a law professor at George Mason University, an adjunct scholar at the Cato Institute, and author of “Democracy and Political Ignorance: Why Smaller Government is Smarter.”