Criminal Justice on a Hunch

Jonathan Blanks

On Wednesday,
Attorney General Jeff Sessions announced
the reinstitution of a
federal program that allows local police officers to seize personal
property without so much as a criminal charge. The program is
intended to increase the use of civil asset forfeiture in the
never-ending War on Drugs. Federal “adoption,” as it’s referred to,
allows local police to seize property without criminal charge
— which is forbidden or limited under some state laws —
and turn it over to the federal government. Then, under what is
known as the “equitable sharing” provision, up to 80 percent of the
value of that seized property is returned directly to the local law
enforcement agency for certain purposes such as paying for overtime
or buying law enforcement equipment. Attorney General Eric Holder

suspended most federal adoptions in 2015
because of stories of
abuse — one department used funds to buy a margarita
machine
— and of innocent owners losing their property to
overzealous police departments.

Today’s announcement stands in stark contrast to bipartisan
efforts on the state and federal levels to curb this too
often-abusive practice. Although the attorney general paid lip
service to protections for innocent property owners, the
reinstitution of federal adoption incentivizes police to employ
tactics that will likely ensnare presumptively innocent people and
place burdens on them to prove their property is legal. Moreover,
this may have a disparate impact on ethnic minorities by
incentivizing racial profiling and skewing police priorities away
from public safety.

Today, asset forfeiture is a process by which the government
seizes property — cash, automobiles, real estate, etc.
— that allegedly was produced by, or used in, the furtherance
of a crime. For example, if a person led an investment scam for
several years and made millions of dollars from that fraud, the
state could seize his home, bank accounts, and other proceeds that
can be tied to the underlying fraud. Assets connected to drug
transactions can likewise be seized, such as the car the offender
was driving, any cash in the car, or the house from which the drugs
were alleged to have been sold.

In too many cases,
calling civil asset forfeiture “highway robbery” is not hyperbole,
and Jeff Sessions just made it worse.

Before the 1980s, the most common forfeiture used by domestic
law enforcement was criminal asset forfeiture. In a criminal
forfeiture case, the asset must have been related to a crime that
was proven in court, either in a trial or admitted in a guilty
plea. Importantly, in criminal forfeiture, the burden is on the
government to prove that the seized property had a direct
connection to the underlying criminal act.

However, in 1984, Congress amended the Comprehensive Drug Abuse
Prevention and Control Act of 1970 and established the Department
of Justice’s Asset Forfeiture Fund (AFF) that allowed the
Department of Justice (DOJ) to keep the funds it seized, sparking
the resuscitation of the once-arcane practice of civil asset
forfeiture. Many states followed suit with similar provisions that
allowed their agencies to self-fund through property seizures, and
they too saw an expansion of civil asset forfeiture.

Unlike criminal forfeiture, civil forfeiture requires no arrest
or criminal proceeding for the government to seize and liquidate
property that the government claimed was connected to a crime.
While there are administrative procedures that must run their
course between the time the property is seized and when the
government may liquidate the asset, the burden is usually on the
property owner to prove that the asset is licit and not tied to a
criminal act, turning due process completely upside down.

In many jurisdictions, police don’t have to assert more than a
hunch to meet the probable cause standard to take a person’s money
under civil forfeiture. Officers have seized cash not because there
were drugs or contraband present, but because it
was “way, way” more than a “normal person would carry.”
The
amount of money does not have to be large, however. A simple wad of
cash in a person’s pocket can be confiscated under some state laws
if the officer says he suspects drug activity. That person then has
to go to court to get it back. The process to reclaim the money or
property can be time-consuming and expensive, making it truly not
worth it for many individuals — particularly poor people
— to go to court to recover the asset that was taken by a
police officer. Thus, in too many cases, calling civil asset
forfeiture “highway robbery” is not hyperbole.

According to the Institute for Justice’s
extensive study of state and federal forfeiture practices
,
between 2000 and 2013, the DOJ paid state and local agencies $4.7
billion in all forfeiture proceeds, the vast majority of which were
obtained through civil forfeiture. To put the growth of federal
forfeiture in context, the AFF’s net assets were $93.7 million in
1986. In 2014, the number was $4.5 billion: a 4,667 percent
increase.

In 2012, the City of Tenaha and Shelby County, Texas
settled an ACLU class action lawsuit
that alleged that the
department was stopping drivers and, under civil asset forfeiture
law, coercing them to sign over cash and property or face arrest on
baseless charges. Officers threatened parents with taking custody
of their children for non-cooperation, and on one occasion, seized
a 16-month-old child from a restauranteur who refused to sign away
his rights to $50,000 in cash he was carrying to make a legitimate
business purchase. Horrifying as this is, the practice is worsened
because the restaurateur and most of the other people the agencies
were shaking down were
black and Hispanic
.

Although the ACLU suit is a particularly egregious example, the
racial disparity in stopping presumably innocent drivers with the
intent to search them is not limited to Texas. Virtually everywhere police

stops are counted
and measured
demographically
, black and/or Hispanic drivers are
over-represented in those pulled over and subsequently searched for
contraband. The
vast majority of searches of drivers across ethnicities come up
empty
, and statistics show that black and Hispanic drivers who
are searched are less likely to be carrying contraband than whites
who are similarly searched.

Stopping drivers to search for drugs and drug proceeds is much
cheaper than developing leads and building cases against large drug
organizations through buy-and-bust operations or long-term stings,
making interdiction through traffic stops all the more appealing.
For that reason, while the disparity in stops almost certainly
exists independent of asset forfeiture laws, increasing the use of
forfeiture will likely result in an increase of racial
profiling.

Due to the challenges of data collection and the lack of
transparency about collection practices, it is impossible to know
the full extent to which asset forfeiture drives aggressive
policing. But profit motives certainly can distort priorities,
perpetuating these disparities.
One investigative report in Tennessee
uncovered that drug
interdiction task force officers were ten times more likely to
stop, search, and seize drivers on the westbound side of an
east-west highway. This seemingly innocuous detail is relevant
because the officers were apparently set up to catch the cash from
allegedly Mexican-connected drug couriers. That is, instead of
setting on the eastbound lanes where they could try to catch the
drugs and guns before they got into the community, the police would
look for the cash after the transaction took place.
Waiting until the guns and drugs have entered the community to
interdict trafficking is the opposite of policing for public
safety, it is the definition of “policing for profit.”

Recognizing some of these problems, a growing number of state
legislatures have been trying to rein in civil asset forfeiture
abuse,
curbing officers’ ability to seize property under state law without
a conviction
, or
limiting seizures to high dollar amounts
in order to protect
the state’s most vulnerable citizens from the arbitrary
confiscation of their property. But the new DOJ guidance provides
an end-run around some state limitations on asset forfeiture and
incentivizes departments with direct payments of cash.

Expanding the already profligate use of civil asset forfeiture
is a giant step in the wrong direction for effective criminal
justice policy. Indeed, civil asset forfeiture incentivizes police
abuse of innocent people — abuse that falls
disproportionately on the poor and racial minorities — and
undermines good police work and public safety. In light of today’s
news, Congress should move to end federal civil asset forfeiture
entirely and make sure that federal law enforcement officers secure
criminal convictions before seizing property from individuals they
suspect of criminal wrongdoing. “Innocent until proven guilty” is
the touchstone of the American criminal justice system. It’s about
time our government lived up to it.

Jonathan Blanks is a research associate at the Cato Institute’s Project on Criminal Justice and managing editor of PoliceMisconduct.net.

Why You Shouldn’t Knock ‘Sweatshops’ If You Care about Women’s Empowerment

Chelsea Follett

Factories producing Ivanka Trump-brand clothing have recently
drawn “sweatshop” accusations. Of course, the United
States had its own sweatshops once, often with worse conditions
than factories in poor countries today.

Those who imagine Industrial Revolution factory work in the
United States as a dark and oppressive moment in history might
benefit from reading the words of those who lived through it.
“Farm to Factory: Women’s Letters, 1830-1860,”
published by Columbia University Press, provides a collection of
first-hand accounts revealing a more nuanced reality.

The letters do indeed reveal abject misery, but much of that
misery comes from nineteenth-century farm life. To many women,
factory work was an escape from this backbreaking agricultural
labor. Consider this excerpt from a letter a young woman on a New
Hampshire farm wrote to her urban factory-worker sister in 1845.
(The spelling and punctuation are modernized for readability.)

Between my housework and dairying, spinning, weaving and raking
hay I find but little time to write … This morning I fainted away
and had to lie on the shed floor fifteen or twenty minutes for any
comfort before I could get to bed. And to pay for it tomorrow I
have got to wash [the laundry], churn [butter], bake [bread] and
make a cheese and go … blackberrying [blackberry-picking].

By contrast, cities often offered somewhat better living
standards. Far more women sought factory work than there were
factory jobs available.

Factory Work Could Mean Freedom

A closer look at the letters in the book reveals the incredibly
varied lives of the “factory girls.” Consider the life
of Delia Page. With a substantial inheritance, she was never in
need of money. But at age 18, Delia decided to move away from her
rural home and work in a factory in New Hampshire. She did that
despite the dangers of factory work. A mill in nearby Massachusetts
collapsed in a fire that killed 88 people and
seriously injured more than 100 others. Delia’s foster family
wrote to her about the tragedy and their fears for her wellbeing.
But she defiantly continued factory work for several years.

What led well-to-do Delia to seek out factory work in spite of
the danger and long hours? The answer is social independence. In
their letters, her foster family repeatedly urges her to break off
what they saw as an indecent affair with a scandal-ridden man,
implores her to attend church and subtly suggests she come home.
But by working in a factory, Delia was free to live on her own
terms. To her, that was worth it.

Today, across the
developing world, factory work continues to serve as a path out of
poverty and an escape from agricultural drudgery, with particular
benefits for women seeking economic independence.

The unique story of Emeline Larcom also emerges from the
letters. Emeline’s background could not have been more
different from Delia’s. Her father died at sea, and her
mother, widowed with twelve children, struggled to support the
family. Emeline and three of her sisters found gainful employment
at a factory and sent money home to support their mother and other
siblings. Emeline, the oldest of the four Larcom factory girls,
essentially raised the other three. One of them, Lucy, went on to
become a noted poet, professor, and an abolitionist against
slavery. Her own memoirs cast mill work in a positive light.

Of the diverse personalities captured in the letters, only one
openly despises her work in the mill. Mary Paul was a restless
spirit. She moved from town to town, sometimes working in
factories, sometimes trying her hand at other forms of employment
such as tailoring, but never staying anywhere for long. She loathed
factory work, but it enabled her to save up enough money to pursue
her dream: buying entry into a Utopian agricultural community that
operated on proto-socialist principles.

She enjoyed living at the “North American Phalanx” and working only three
hours a day—while it lasted. But as with all such
communities, it ran into money problems, exacerbated by a barn
fire, and she had to leave. She eventually settled down, married a
shopkeeper, and—her letters seem to hint—became
involved in the early “temperance” movement to ban
alcohol (another ultimately ill-fated venture).

Factory Work Is a First Step Towards a Better
Future

Delia, Emeline, and Mary provide a glimpse of the different ways
that factory work affected women during the Industrial Revolution.
Wealthy Delia gained the social independence she sought and Emeline
was able to support her family. Even Mary, who detested factories,
was ultimately only able to chase her (ill-advised) dream through
factory work.

Although the Industrial Revolution is commonly vilified, it was
an important first step toward increasing women’s
socioeconomic mobility and ultimately brought about prosperity
unimaginable in the pre-industrial world. The pace of industrial
economic development may even be speeding up. In South Korea, Taiwan, Hong Kong,
and Singapore, the process of moving from sweatshops to First World
living standards took less than two generations as opposed to a
century in the United States.

Today, across the developing world, factory work continues to
serve as a path out of poverty and an escape from agricultural
drudgery, with particular benefits for women seeking economic
independence. In China, many women move on from factories to
white-collar careers or start their own small businesses. Very few choose to return to subsistence farming.

In poorer Bangladesh, factory work has increased
women’s educational attainment while lowering
rates of child marriage. The country’s garment industry has
also softened the norm of purdah or
seclusion that traditionally prevented women from working or even
walking outside unaccompanied by a male guardian.

Women factory workers are often thought of as “undifferentiated,
homogenous, faceless and voiceless” passive victims, but even
a cursory examination of their words and lives reveals unique
individuals with agency. Today, just as in the nineteenth century,
industrialization not only spurs economic development and reduces
poverty, but also expands women’s options.

Chelsea
Follett
is the managing editor of HumanProgress.org, a project
of the Cato Institute.

Unintended Impacts of Regulations on the Quality of Schooling Options

Corey A. DeAngelis

When the first random-assignment study ever to find a negative
effect from a voucher program was released more than two years ago,
a debate broke out over what role, if any, the Louisiana
Scholarship Program’s regulations played. Some argued that Louisiana’s onerous
regulatory environment — particularly its open admissions
requirement and state test mandate — drove away
better-performing private schools from participating in the
program. Others dismissed such claims, arguing instead
that such regulations were necessary to guarantee quality in the
long run.

The debate has reignited with last month’s release of the
third year LSP reports, which found no statistically significant
difference between voucher students and the control group.
Louisiana’s superintendent of education, John White, argued that the results proved that concerns
about over-regulation were unfounded. Whereas “conservative
ideologues paraded around the idea that regulation is somehow
anathema to choice, and is driving away the elite schools that
otherwise would have magically served these kids better than the
schools that participated,” White argued that instead,
“it may very well be the regulation itself — the
accountability system — that is the thing that has promoted
the performance.”

In fact, the available evidence suggests that regulations did
indeed drive away higher-performing private schools. One of the
three reports released by the School Choice Demonstration Project
at the University of Arkansas addresses exactly this question.

These findings strongly
suggest that more onerous regulations are more likely to drive away
better schools.

In Supplying Choice, my colleagues and I
examined the quality levels of private schools that decided to
participate in voucher programs in Indiana, D.C., and Louisiana. We
found a consistent negative relationship between several proxies
for school quality and private schools’ likelihood of
participating in the voucher program. Moreover, we found that
private schools in D.C. and Louisiana, the two states that have
higher regulatory burdens, are less likely to participate in
voucher programs. While these findings are not conclusive, they do
offer compelling evidence that regulations drove away better
schools from participating in the voucher programs.

Theory

The theory is rooted in basic economics. Private school leaders
decide whether to partake in a given voucher program based on the
costs and benefits associated with participation. The benefit comes
from additional funding which is limited in Louisiana to a maximum
of 20 percent of total enrollment for private schools that have
been in operation for under two years. The costs associated with
participation come in the form of red tape. Participating private
schools in Louisiana must administer the state standardized test,
prohibit parental copay for families using vouchers, report
finances to the government, and surrender their admissions process
over to the state. As an American Enterprise Institute survey found, private schools are concerned
that such regulations could threaten their character or identity,
would force them to change what and how they teach, and bog them
down in paperwork. In other words, they feared that the regulations
would hamper their ability to carry out their educational
missions.

If the expected benefits exceed the expected costs, a given
private school will participate in the program. The types of
schools that will be more likely to find additional benefits in
excess of additional costs are the ones that value financial
resources more than a loss of autonomy. Of course, schools
desperate for enrollment and funding will have a stronger incentive
to accept the state requirements. Indeed, if a school is about to
close down due to financial constraints, it would likely choose to
participate regardless of the magnitude of the costs.

Consequently, we expected to find the strongest negative
association between quality and participation in the most-regulated program: Louisiana.

Results

As shown in Figure 1 below, we observed that only a third of
eligible private schools in the state decided to participate in the
LSP, while between 70 and 78 percent participated in D.C. and
Indiana. This follows intuition, as the regulatory costs are the
highest in the LSP.

In our main analyses, we used enrollment and tuition levels as
proxies for school quality. Economists would view tuition level as
the price of schooling and enrollment as the quantity demanded.
These two measures are the strongest measures of quality that
exist, as they capture the sum of all of the quality-based
decisions of individual parents.

If we believe price to be the most informative measure, we would
not want to control for anything in the analysis. Such an analysis
produces the expected result: higher quality private schools are
the least likely to participate in highly regulated voucher
environments.

As shown in Figure 2 below, a one-thousand dollar increase in
tuition level is associated with a 3.5-percentage point decrease in
the likelihood of participating in the LSP. The association is not
statistically different from zero for Indiana, the least regulated
program, and is only marginally significant in D.C.

When we controlled for factors such as school racial
composition, grades served, and religiosity, the coefficient on
tuition became insignificant in Louisiana, but remained highly
significant for the enrollment measure. As shown in Table 5 from
the original report — a 100 student increase
in enrollment was associated with a 28-percent decrease in the
likelihood of participation in the LSP. The enrollment coefficient
was not statistically different from zero for D.C. or Indiana.

These findings strongly suggest that more onerous regulations
are more likely to drive away better schools. Researchers and
policymakers should take them into account when considering what
sort of regulatory environment to construct for school choice
policies.

Even well-intended policies can produce negative consequences.
White and others like him no doubt have noble intentions when they
support imposing regulations on private schools. They want to make
it impossible, or at least very difficult, for disadvantaged
families to make bad choices. It remains possible that the
regulation-heavy approach they prefer will lead over time to
quality improvements among private schools that decide to
participate in choice programs. However, our research suggests that
the same regulations can also reduce the quality of educational
options available to children in need by leading some schools not
to participate at all.

Corey A.
DeAngelis
is an education policy analyst at the Cato
Institute’s Center for Educational Freedom.

This Group Hopes to Push America toward Regime Change in Iran

Ted Galen Carpenter

American policymakers and pundits have an unfortunate history of
embracing odious foreign political movements that purport to be
democratic. During the Cold War, embarrassing episodes included
Washington’s support for the Nicaraguan Contras and Jonas Savimbi’s
National Union for the Total Independence of Angola. The post-Cold
War era provides ample evidence that influential Americans have not
learned appropriate lessons from those earlier blunders. The
Clinton administration made common cause with the Kosovo Liberation
Army, which proceeded to commit numerous war crimes during—and
following—its successful war of secession against Serbia.
Both the Clinton and George W. Bush administrations allied with
Ahmed Chalabi’s Iraqi National Congress (INC). The INC’s false
intelligence regarding Saddam Hussein’s alleged weapons of mass
destruction, which the New York Timesand other prominent
media outlets reflexively circulated , was one of the major
factors that prompted the United States to launch its ill-starred
military intervention in Iraq.

There is mounting danger that the Trump administration is
flirting with committing a similar blunder—this time in Iran . Secretary of State Rex Tillerson was
asked explicitly by Rep. Ted Poe whether the United States
supported a policy of regime change in Iran when he testified before
the House Foreign Affairs Committee in June 2017. Poe argued that
“there are Iranians in exile all over the world. Some are
here. And then there’s (sic) Iranians in Iran who don’t
support the totalitarian state.” Tillerson replied that the administration’s policy
toward Iran was still “under development,” but that
Washington would work with “elements inside Iran” to
bring about the transition to a new government. In other words,
regime change is now official U.S. policy regarding Iran.

President Trump should
learn from the follies of his predecessors who backed the agendas
of foreign groups that purported to be democratic but turned out to
be nothing of the sort.

That strategy entails numerous problems. An especially troubling
one is that the most intense opposition force (inside and
especially outside Iran) is the Mujahedeen Khalq (MEK). Although
Tillerson did not explicitly mention the MEK, any U.S. promotion of
dissidents would almost certainly have to include that faction.
More moderate reformists have repeatedly rejected an American
embrace, justifiably concerned that such an association would
destroy their domestic credibility. Indeed, a significant segment
of Iranian moderates endorsed President Hassan Rouhani and were a major
factor in his decisive reelection victory over a hard-line opponent
in the 2017 election.

The MEK’s history should cause any sensible U.S.
administration to stay very, very far away from that organization.
The MEK is a weird political cult built around a husband and wife
team of Massoud and Maryam Rajavi. It has been guilty of numerous
terrorist acts and was on the U.S. government’s formal list of
terrorist organizations until February 2012. The group did not even
originate as an enemy of Iran’s clerical regime. It began long before that regime came to power, and its
original orientation seemed strongly Marxist. The MEK was founded
in 1965 by leftist Iranian students opposed to the Shah of Iran,
who was one of Washington’s major strategic allies. And the United
States was very much in the MEK’s crosshairs during its early
years. During the late 1960s and throughout the 1970s, the MEK
directed terrorist attacks that killed several
Americans working in Iran.

The MEK’s worrisome track record has not deterred
prominent Americans from endorsing the organization. In the months
preceding the State Department’s decision to delist the MEK,
dozens of well-known advocates—primarily but not exclusively
conservatives—lobbied on behalf of the group. Vocal supporters included former CIA directors R. James
Woolsey Jr. and Porter Goss, former FBI director Louis J. Freeh, as
well as Tom Ridge and Michael Mukasey, both cabinet secretaries in
George W. Bush’s administration. Several members of Congress,
including Rep. Dana Rohrabacher, were also prominent advocates.
Rohrabacher stated confidently that the MEK seeks “a
secular, peaceful, and democratic government.” Other
proponents included former New York City Mayor Rudy Giuliani,
former House Speaker Newt Gingrich and Sen. John McCain. Gingrich
has been especially enthusiastic about the MEK over the years,
describing it as the vanguard of “a
massive worldwide movement for liberty in Iran.” More
recently, Gingrich showed up along with former Democratic senator
and former vice president nominee Joe Lieberman at a conference in
Paris to laud the MEK.

Such enthusiasm has increased since its delisting as a terrorist
organization. The House Foreign Affairs Committee even invited
Maryam Rajavi to testify at a hearing on strategies for defeating
ISIS. The decision to give Rajavi a platform for her broader agenda
was not that surprising. Many of the committee’s members
(especially GOP members) are staunch advocates of a regime-change
strategy toward Iran. The MEK serves the same function for such
hawks as Chalabi and the INC did in the prelude to the U.S.
invasion of Iraq.

Americans have reason to be wary when prominent advocates of an
extremely hard-line policy toward Iran also want “vigorous
support for Iran’s opposition, aimed at regime change in
Tehran,” as former U.S. ambassador to the United Nations
John Bolton recommends. Given his vocal
cheerleading for the MEK in recent years, there is little doubt
that he is not referring to the moderate, anti-clerical
“Green coalition” inside that country, but to the
MEK.

Therein lies the principal danger of Tillerson’s embrace
of a regime-change strategy toward Iran. Granted, he referred to
U.S. support for peaceful regime change, but the MEK’s
American backers show no signs of making that distinction. The MEK
has spent hundreds of thousands of dollars cultivating their
support, and such gullible (or venal) Americans continue to tout
the organization as a genuine democratic movement with strong
support inside Iran. The extent of the financial entanglements is
deeply troubling. Many prominent American supporters have accepted
fees of $15,000 to $30,000 to give speeches to the group. They also
have accepted posh, all-expenses-paid trips to attend MEK events in
Paris and other locales. Former Pennsylvania Gov. Ed Rendell
confirmed in March 2012 that the MEK had paid him a total of
$150,000 to $160,000, and it appeared that other
“A-list” backers had been rewarded in a similar fashion. Needless to say,
accepting such largesse from a highly controversial foreign
political organization—and one that was still listed as a
terrorist organization at the time—should raise justifiable
questions regarding the judgment, if not the ethics, of the
recipients.

U.S. opinion leaders are playing a dangerous and morally
untethered game by flirting with the likes of the MEK. Daniel
Larison, a columnist for the American Conservative,
recently highlighted the problem with their approach. “I have marveled at the willingness of numerous former
government officials, retired
military officers
, and elected representatives to embrace the
MEK,” he wrote . “There’s no question
that they are motivated by their loathing of the Iranian
government, but their hostility to the regime has led them to
endorse a group that most Iranians loathe.” The last point is
not mere speculation. The MEK aided Saddam Hussein’s war
against Iran in the 1980s, and even Iranians who detest the
clerical regime regard the MEK as a collection of odious
traitors.

President Trump should learn from the follies of his
predecessors who backed the agendas of foreign groups that
purported to be democratic but turned out to be nothing of the
sort. There are ample warning signs about the real nature of the
MEK. The administration needs to avoid that organization like the
plague.

Ted Galen
Carpenter
, a senior fellow at the Cato Institute and a
contributing editor at the National Interest, is the author of ten
books, the contributing editor of ten books, and the author of more
than 650 articles on defense, foreign policy and civil-liberties
issues.

The Market Doesn’t Corrupt Morals – Socialism Does

Ryan Bourne

Delivering the Keith Joseph Memorial
Lecture
last week, Matt Ridley highlighted a common, yet
unfounded, attack on free markets: that they encourage us to be
greedy and selfish, and erode moral values.

This has been a frequent lament from the Left, who pivoted in
the 1980s from claiming Margaret Thatcher and Ronald Reagan’s
free market agenda would slow growth to saying that it encouraged
us to want too much.

The US philosopher Michael Sandel has argued that the infusion
of markets into many areas of life has led to the crowding out of
virtues such as altruism, generosity and solidarity. The Pope has
said that “libertarian individualism … minimises the
common good”. Bizarrely, even UK Conservatives appear to
agree. The 2017 Conservative manifesto declared: “We do not
believe in untrammelled free markets. We reject the cult of selfish
individualism”.

There appears to be a
robust and strong relationship between levels of prosperity and
economic freedom.

The weird thing about all these assertions is that no hard
evidence is ever offered to prove that free markets encourage
greed. That may be because the evidence — and logic —
suggest that the opposite is true.

First, let’s state an obvious truth. There appears to be a
robust and strong relationship between levels of prosperity and
economic freedom. Natural experiments, such as East and West
Germany, North and South Korea, and Hong Kong and mainland China,
have shown that market economies tend to be much more prosperous
than non-market economies. This results in more resources for
compassionate causes, whether through individual activity or
socialised through the collection of tax revenue. It can be said
quite clearly that free market economies facilitate the opportunity
to be more compassionate. As a British Prime Minister once said, “no one would remember
the Good Samaritan if he’d only had good intentions; he had
money as well.”

But opportunities need not be taken, of course. So what does the
empirical literature suggest on whether markets facilitate greed
and lead to selfish immoral behaviour?

In a famous paper in 2013,
Armin Falk and Nora Szech purported to show that markets norms did
in fact damage us. They ran experiments involving cash, giving
participants in the experiment the option of paying to save a mouse
from being killed. They found that people were more likely to
enable the killing when the decision came about as a result of
bargaining between buyers and sellers (which made the mouse a third
party), rather than someone making an individual decision based on
the mouse-cash trade-off alone. They concluded that “market
interaction displays a tendency to lower moral values, relative to
individually stated preferences,” perhaps because of the
ability to spread the guilt between trading parties, or because of
the “competition” for money.

This study went around the world as “proof” that
markets eroded our humanity. But closer examination of the results
suggested something quite different. In this game, there was no
clear good being traded, except the abstract thought of a mouse
dying. In the real world, most transactions are more like the
individual judgment rather than bargaining. We walk into a store or
market as a price-taker and decide whether or not to buy a product.
This would suggest the interpretation given by Falk and Szech could
be the the opposite of what the results suggest. As Breyer and
Weimann concluded in their critique of the original paper,
“in typical market situations, moral norms play a more
prominent role than in non-market bargaining situations” that
tend to be zero-sum.

This alternative interpretation is backed up by the experimental work of
Herbert Gintis
, who has analysed the behaviours of 15 tribal
societies from around the world, including “hunter-gatherers,
horticulturalists, nomadic herders, and small-scale sedentary
farmers – in Africa, Latin America, and Asia.” Playing a host
of economic games, Gintis found that societies exposed to voluntary
exchange through markets were more highly motivated by
non-financial fairness considerations than those which were not.
“The notion that the market economy makes people greedy,
sel?sh, and amoral is simply fallacious,” Gintis
concluded.

This makes sense. Considering the broad sweep of history, one
can observe that the rise of market economies and the greater
material wealth they have brought has largely coincided with a
greater tolerance of others, including less willingness to exploit.
As Gintis again summarises, “movements for religious and
lifestyle tolerance, gender equality, and democracy have ?ourished
and triumphed in societies governed by market exchange, and nowhere
else.”

In other words, we might expect greed, cheating and intolerance
to be more prevalent in societies where individuals can only fulfil
selfish desires by taking from, overpowering or using dominant
political or hierarchical positions to rule over and extort from
others. Markets actually encourage collaboration and exchange
between parties that might otherwise not interact. This
interdependency discourages violence and builds trust and
tolerance.

Now, at this stage, I’m sure that many people who consider
themselves moderate socialists would object. Of course, they might
say, there is a role for markets. But modern economies are mixed,
compromising some relatively free markets and other areas with
extensive government intervention.

Most countries have different cultures too, so comparing whether
more “free market” or “socialistic”
countries are likely to promote and encourage greed is very
difficult. Gintis’s experiments are interesting, but do they
really inform us about whether shifting the balance from markets
towards state provision would lead to negative effects in terms of
a less trusting or more greedy society?

Well, we cannot say for sure. But sometimes natural experiments
arise which give us suggestive insights, and the most obvious
recent example was the split of Germany into a broadly capitalist
West and the socialist East.

In a 2014 paper,
economists tested Berlin residents’ willingness to cheat in a
simple game involving rolling die, whereby self-reported scores
could lead to small monetary pay-offs. Participants presented
passports and ID cards to the researchers, which allowed them to
assess their backgrounds. The results were clear: participants from
an East German family background were far more likely to cheat than
those from the West. What is more, the “longer individuals
were exposed to socialism, the more likely they were to
cheat.”

All of which suggests that the conventional trendy wisdom is
wrong. Free markets do not make us greedy and immoral. But
embracing socialism may well do.

Ryan Bourne
holds the R. Evan Scharf Chair for the Public Understanding of
Economics at the Cato Institute.

A Climate Roadmap for President Trump

Patrick J. Michaels

This week, President Trump is likely getting an earful in Paris
over his extrication of the U.S. from the Paris climate agreement
earlier this year. But our withdrawal will be meaningless unless he
follows up with two important actions before he leaves office.

First, the administration must vacate the Environmental
Protection Agency’s 2009 “Endangerment Finding” from carbon
dioxide. Under the 2007 Supreme Court case Massachusetts v.
EPA
, this finding is required for the Agency to regulate
carbon dioxide emissions under the Clean Air Act. No finding, no
policy.

Second, the U.S. must pull out of the 1992 United Nations
Framework Convention on Climate Change. This treaty, which was
ratified by the Senate, is the document that enables subsequent
emissions agreements, such as the Kyoto Protocol (not ratified) and
the Paris agreement (an executive agreement).

Our withdrawal from the
Paris agreement will be meaningless unless Trump follows up with
two important actions before he leaves office.

As long as we are a party to the Framework Convention, a new
president with different views on climate policy could simply sign
us right back into the Paris agreement.

From the periphery, and certainly from reading the headlines,
canceling out these two elements of climate policy might seem like
a tall task. Certainly, the climate science used to justify the
EPA’s endangerment finding and U.S. entry into the U.N. framework
is seen as beyond reproach.

One of the foundational documents for the Endangerment Finding
is the 2009 “National Assessment” of climate change. Its next
iteration, in 2014, claimed it was “the most comprehensive and
authoritative report ever generated about climate change,” as well
as being “a key deliverable of President Obama’s Climate Action
Plan.”

The problem is, these “assessments” rely solely upon computer
climate models for their future scenarios of gloom and doom. As it
turns out, climate modeling (or forecasting) isn’t necessarily
climate science, because the modeler gets to choose a preferred
answer, and then tune the internal equations to get there.

The forecast models are known as “general circulation models,”
or GCMs, and are generated by various government research groups
around the world. Every six years, the U.S. Department of Energy
supervises a “model intercomparison” project. For the most recent
one, in 2013, 34 modeling teams sent in a “frozen code” model to be
compared with the predictions from other groups. These form a
community of base models, which the researchers feel are their
“best” version, and after this point the code cannot be changed
until the inter-comparison is done.

According to an Oct. 2016 news story in Science magazine, the
modeling team from Germany’s Max Planck Institute was finalizing
their inter-comparison version when the team leader, Erich
Roeckner, became temporarily unavailable to participate in the
work. As the team tested the model before submitting it, they found
it now predicted twice as much warming (7 degrees Celsius) for
doubled carbon dioxide as it had in its previous iteration. Science
reported that Roeckner had a unique ability to tune the model’s
cloud formation algorithm, and so in his absence, the model
produced heating way outside the norm. Roeckner’s team eventually
got the warming down to a level that was within the range of the
other models.

Enter Frederic Hourdin, who headed up the French modeling
effort. He rounded up modelers from 13 other groups and recently
published “The Art and Science of Climate Model Tuning” in the
Bulletin of the American Meteorological Society. All of the climate
models the world uses to create and justify things like the U.N.
Framework Convention, the EPA endangerment finding, and the Paris
agreement, are “tuned” to arrive at parameters forecast within an
“anticipated acceptable range,” to quote Hourdin. But the big
question is, acceptable to whom? One of Roeckner’s senior
scientists, Thorsten Mauritsen, told Science, “The model we
produced with 7 degrees [Celsius] was a damn good model.” But in
his opinion that was too hot, so it had to be tuned.

The EPA’s determination that carbon dioxide needs to be more
strictly regulated is based entirely on the GCM’s future climate
projections, in which the subjective modeler — not the
objective model — determines what is “acceptable.” That’s not
science. It’s an educated guess. It is akin to the “herding”
phenomenon seen among election pollsters when they adjust
unexpected (but still possibly correct) results to appear more
plausible based on others’ results and expectations.

It will be a considerable task to document the tuning problem.
But if the Trump administration does this, it will have sufficient
justification to warrant vacating the Endangerment Finding, which
itself will justify getting the U.S. out of the U.N. Framework
Climate Convention, and out of Paris for good.

Patrick J.
Michaels
is the director of the Center for the Study of Science
at the Cato Institute.

Our Politicians Would Be to Blame for a Post-Brexit Food Price Fiasco

Ryan Bourne

Will Brexit mean breakfast is more expensive? Those who fear the UK’s exit from the EU’s customs union believe it will. According to them, a failure to achieve a free-trade deal with the EU and the UK “crashing out” of the EU’s collective tariff wall will see food prices shoot up. Why? Because our government will be duty-bound to impose import tariffs on EU foodstuffs for the first time.

Actually, there are many ways Brexit might affect food prices overall. Uncertainty and changed judgments on the economy’s prospects may affect the exchange rate. A new post-Brexit migration policy might change farmers’ labour costs. The extent and shape of farming subsidies and new domestic regulation will likely alter prices too. But there is nothing inevitable at all about the UK slapping new tariffs on to EU goods if we leave the customs union. That would be a pure policy choice made by our governing politicians.

Uncertainty and misinformation in this area arises because the UK Government has committed publicly to adopt the EU’s tariff schedules at the World Trade Organisation (WTO) to smooth our EU exit. Many wrongly interpret that as saying the UK will maintain all the EU’s existing tariffs on third countries, plus apply them to the EU too, due to the WTO’s non-discrimination principle. The author Peter Crosskey, for example, concludes we must prepare for duties of around 41p on Irish or Danish butter and a 14pc increase in the cost of potatoes crossing into the UK. Cutting tariffs, he says, would take several years and would entail mind-bogglingly complex negotiations with 163 other WTO members.

But this is a misunderstanding. Saying you will “adopt the EU tariff schedules” at the WTO means accepting restrictions on the maximum tariffs you can charge for each product. It says nothing about reducing rates. The UK Government, in other words, is perfectly at liberty to cut tariffs straight away, or even to completely zero them out, so long as these product tariffs are applied equally across countries. There is nothing difficult about this at all, and it entails no negotiations (unlike the more difficult exit negotiation on how to disentangle the UK from EU-wide quotas).

Slashing tariffs is precisely what a nation that wants to, in the words of Theresa May, be “the strongest and most forceful advocate for free trade”, should be doing. Far from increasing food prices, a Brexit where the UK exits the customs union and does this could lower them substantially. It is up to our politicians to deliver.

This would be a boon for our consumers, who would not merely still enjoy the freedom to purchase French cheese or Italian prosecco tariff-free, but also see the price of imported South American steak tumble too. The benefits would not just come in the form of the direct impact on prices either. In the longer term, we would expect a more productive economy, as resources shift towards products where we have a comparative advantage under the discipline of enhanced global competition.

It is all the more baffling to hear the anti-Brexiteers continually pushing this scare story about food prices, given the EU is well known to be heavily protectionist in this area. It currently imposes average agricultural tariffs of 22.3pc on products from the rest of the world, subsidises EU-wide agricultural production through the Common Agricultural Policy, and enforces expensive regulations to try to keep out non-EU competition. No wonder then that between 2002 and 2011 food prices within the EU were, on average, 15pc above general world prices.

Just as with tariffs, a UK Government with repatriated powers post-Brexit could undo the damaging effects of EU policy in these other areas. We could follow the example of New Zealand in phasing out farming subsidies over a five-year period.

This led to a significantly more productive, diversified agricultural sector and improved farming techniques to increase efficiency. We could alter too the significant environmental regulations and abandon the precautionary principle which underpins EU agriculture decisions. These currently restrict the development of GM crops, disable yield-enhancing pesticide use and have a chilling effect on agricultural innovation more broadly.

Farmers are understandably nervous about the Government’s stated aim of restricting net migration and less access to EU low-skilled workers as we exit the single market. But even here the Government would be able to reinstate a variant of the old Seasonal Agricultural Workers Scheme. This saw a supply of migrant workers from Bulgaria and Romania doing short-term, low-skilled agricultural work prior to those countries becoming full members of the EU. One could imagine a similar scheme operating with new countries outside.

The long and short of it is that many Remainers talk as if food prices rising post-Brexit is inevitable. As if the EU is the pinnacle of free trade and cheap food and the UK is totally passive and must accept its fate. In fact, leaving the single market and customs union gives the UK Government considerable power to pursue a supply-side agenda that would benefit consumers substantially. Reducing tariffs on imported foods, reassessing agricultural subsidies and regulations, and setting a migration policy in line with what the agricultural sector needs, could reduce food prices substantially.

Should our politicians choose to do the opposite and maintain or enhance protectionism, it will be they who are to blame for rising shopping bills, and not the constitutional decision taken by voters.

As with so many other areas of policy, the UK’s destiny post-Brexit will be determined by her elected government’s choices.

Ryan Bourne holds the R Evan Scharf Chair for the Public Understanding of Economics at the Cato Institute.

Illegal Immigrant Crime Wave? Evidence Is Hard to Find

Alex Nowrasteh

The House of Representatives recently passed two laws to crack
down on illegal immigrants in the United States — Kate’s Law
(H.R. 3004) and the No Sanctuary for Criminals Act (H.R. 3003).
Both were prompted by the tragic 2015 murder of Kate Steinle by an
illegal immigrant named Juan Francisco Lopez-Sanchez, and by the
perception that illegal immigrants have created a crime wave.

That perception is simply untrue.

Illegal immigrants are not all criminals, as most immigration
offenses are civil violations and not criminal ones. Civil
violations in immigration law are punished with deportation, while
criminal violations are punished with jail time. The Center for
Migration Studies estimates that 66 percent of illegal immigrants who entered in
2014 did so by overstaying a visa, which is not a crime. It’s
difficult to prove in court that the other 36 percent committed a
crime by entering illegally.

Regardless, fear of an illegal immigrant crime wave is not
sparked by the specter of people breaking administrative
immigration rules, but by fear that they are overwhelmingly
murderers, rapists, and thieves. In reality, illegal immigrants
have lower incarceration rates and live in places with lower crimes
rates than native-born Americans. Far from perpetrating a crime
wave, immigrants actually decrease crime rates.

Those who think illegal immigrants are unusually crime-prone
tend to make several errors when making their case. The most common
is to only look at non-citizen incarcerations in federal prisons.
First, that is a bad measurement because non-citizens includes
illegal immigrants and also legal non-citizens, so it is an over
count. Second, federal prisons only hold about 10 percent of all
prisoners, with the other 90 percent incarcerated in state and
local prisons and jails.

Federal prisons hold prisoners convicted of federal crimes or
crimes committed while crossing a border, including immigration
offenses and drug smuggling, which disproportionately lead to
foreigners being imprisoned. In May 2017, the last month for which data are
available, 46.3 percent of federal inmates were incarcerated for
drug offenses and 8.2 percent for immigration crimes. Imprisonment
of non-violent drug and immigration offenders is not the hallmark
of a crime wave.

Fear of an illegal
immigrant crime wave is sparked by the fear that they are
overwhelmingly murderers, rapists, and thieves. In reality, illegal
immigrants have lower incarceration rates and live in places with
lower crimes rates than native-born Americans.

Looking at all incarcerated prisoners in state, federal, and
local adult correctional facilities provides a more accurate picture of illegal immigrant
criminality. Based on census data, the numbers show that illegal
immigrants are about 44 percent less likely to be incarcerated than
native-born Americans. Focusing on prisoners between the ages of 18
and 54, 1.53 percent of all native-born adults are incarcerated,
compared with 0.85 percent of illegal immigrants in the same age
range — including those incarcerated for immigration crimes
and in immigration detention. Excluding those particular crimes
brings the illegal immigrant incarceration rate down to 0.50
percent — one third of the native rate.

This holds true even when you take race into account. Whereas
white, native-born Americans are incarcerated at a rate of 0.90
percent, illegal immigrants of every race and ethnicity are still
less likely to be incarcerated, at a rate of 0.85 percent.

American cities with more illegal immigrants do not have higher
crime rates. Even immigration restrictionists like Representative
Steve King, R-Iowa, admit that legal immigrants
are less crime-prone than natives, but they also live in the same
cities as illegal immigrants. This makes it difficult to estimate
how illegals affect crime rates on the local level.

However, the evidence strongly suggests that they at
least
don’t worsen them. A study of recidivism rates in Los Angeles
conducted by two RAND Corporation scholars discovered that there
was no difference between rearrest rates over a 30-day period
between illegal and legal immigrants. While not perfect, this study
is still broadly consistent with the others.

Federal and state governments do not consistently record the
number of incarcerated illegal immigrants — they should start
doing so immediately. Regardless, the available evidence
overwhelmingly shows that illegal immigrants are incarcerated at
lower rates than native-born Americans. As for the supposed illegal
immigrant crime-wave, the evidence for that remains to be seen.

Alex Nowrasteh is the immigration policy analyst at the Cato Institute’s Center for Global Liberty and Prosperity.

“America First” Ethos Emboldens Boeing to Battle Bombardier, Benefiting White-Collar Washington

Daniel J. Ikenson

It turns out that President Trump’s “America
First” trade policies arecreating jobs right here in
the United States. The administration’s enforcement-friendly
agenda has inspired a record number of trade cases this year,
priming demand for white collar professionals at Washington’s
bustling law firms and lobbying shops. But any modest gains in
employment in the industries granted “protection” are
dwarfed by the jobs lost in U.S. industries that use those now
costlier imports for their own production.

The U.S. aircraft manufacturing industry’s demand for
tariffs pursuant to domestic trade remedy laws provides a case in
point. First, the industry consists of only one firm: The Boeing
Company. Boeing is no stranger to taxpayer largesse and its pursuit
of government assistance to thwart import competition evokes the
famous Gilded Age adage: “The tariff is the mother of the
trust.” Boeing is asking the government to impose duties on a
certain class of airplanes: 100-to-150 Seat Large Civil Aircraft
from Canada.

In April, Boeing’s lawyers—advancing arguments that
can only be made with tongues planted firmly in cheeks—filed
both antidumping and countervailing duty (anti-subsidy) petitions
at the U.S. International Trade Commission (ITC) and the U.S.
Department of Commerce (DOC). Under the antidumping law,
“relief” in the form of antidumping duties is available
if the domestic industry can demonstrate that it is materially
injured or threatened with material injury by reason of imports
sold at prices that are determined to be less-than-fair-value
(LTFV). Relief in the form of countervailing duties is available
when material injury or the threat of material injury exists by
reason of subsidized imports.

The ITC is tasked with determining whether material injury or
the threat of material injury exists and, if so, whether that
injury is by reason of LTFV or subsidized imports. To determine
whether there is injury, the ITC staff looks at trends in industry
performance metrics, such as production, prices, volumes,
shipments, profits, investment, return on investment, employment,
capacity utilization and other factors that speak to the state of
the industry. The DOC obtains sales, cost, and subsidy information
from the foreign producers subject to the investigations and
performs analyses of the data to determine whether and to what
extent there is dumping or countervailable subsidization.

Boeing, which has received tens of billions of dollars in
federal, state, and local subsidies over the years and whose sales
abroad are famously facilitated by taxpayer subsidized loans
through the U.S. Export-Import Bank to foreign airlines, claims
that it is threatened with material injury, by reason of sales from
Canadian manufacturer Bombardier to Delta Airlines. What makes
Boeing’s argument especially audacious is that the sales that
allegedly threaten the domestic industry with material injury
haven’t yet been made. Those transactions will begin to take
place no sooner than mid-2018. And those sales will involve a class
of airplanes that Boeing doesn’t even produce and is
technically incapable of producing for several years because of a
backlog of orders for its larger aircraft. The monopolist is doing
quite well, thank you.

Boeing’s argument requires an impossibly expansive
definition of what constitutes a threat of material injury. Under
U.S. law, the ITC is directed to evaluate a “threat of
material injury” by analyzing whether “further dumped
or subsidized imports are imminent and whether material injury by
reason of imports would occur unless an [antidumping or a
countervailing duty] order is issued…”

Trade remedy laws are
weapons deployed primarily by U.S. companies to obtain commercial
advantages over other U.S. companies.

But that analysis is precluded in this case because there
hasn’t been a single sale—dumped, subsidized, or
otherwise—in the United States. The language in the statute
would seem to preclude an affirmative threat of material injury
finding if there haven’t been any import sales, which seems a
reasonable stopgap against this particular path to abuse of the
trade remedies laws.

The aircraft that Bombardier plans to sell to Delta (CS-100s)
are smaller than Boeing’s, and have 109 seats. Boeing chose to stop
making aircraft in this class (Boeing 717s) in 2006, originally
shifting its focus to the 126-seat Boeing 737-700. It’s more
recent emphasis has been the even larger, 138-seat 737 MAX 7.

Delta (and other carriers) requires aircraft of different sizes
and seating capacities so that it can cost-efficiently serve higher
demand and lower demand routes. Boeing’s larger planes are
not good substitutes because the carriers risk flying with empty
seats, which means higher costs per seat, lower returns for
shareholders, and increased ticket prices. For airlines to operate
efficiently, it is essential that aircraft seating capacities and
route demand be matched optimally. Airlines cannot profitably fly a
138-seat aircraft on a route where there is demand for only 100
passengers.

By filing these cases, Boeing is effectively asking the
government to misappropriate the trade remedies laws to compel its
own customers to use aircraft that are uneconomical to fly. That
seems a highly suspect strategy for both Delta’s and
Boeing’s long-term success.

The thrust of Boeing’s argument is that the ITC should
conclude that sales by a foreign company of aircraft in a product
class from which Boeing chose to withdraw in 2006 threatens Boeing
with material injury because, if it wanted to, Boeing could choose
to return to competing in that space. That argument is equivalent
to claiming that foreign producers’ U.S. sales in any
market—large aircraft, small aircraft, flying cars,
jetpacks—can constitute a threat of material injury because
Boeing might decide at some point in the future that it wants to
compete in that market.

This is logically incoherent and comports with the definition of
brute discriminatory protectionism that is not permitted under U.S.
law or the World Trade Organization agreements.

As summarized in a legal brief submitted by Delta to the
ITC:

Boeing has not demonstrated a reasonable indication of an
imminent threat of material injury to the domestic industry.
Instead, Boeing has built its case around a single sale it did not
lose, for an aircraft it does not produce, in a market segment it
ceased serving in 2006.

The Canadian government, in a submission to the ITC, wrote:

The Commission has never before addressed such a case, with (1)
zero subject imports during the period of investigation, (2) no
domestic shipments during the period of investigation, and (3) no
near term subject import or domestic shipments expected…The
argument that Boeing is somehow going to suffer injury in 2020 and
beyond is the very definition of the type of ‘conjecture or
supposition’ that the statue prohibits.

The antidumping and countervailing duty laws are portrayed by
its defenders as tools necessary to protect upstanding U.S.
companies and their workers from predatory foreign firms and their
enabling governments. That has an appealing rhetorical ring to
policymakers. After all, who’s not for fair trade and level
playing fields?

But in reality, the laws are used for more nefarious purposes.
Often, U.S. companies pursue trade remedy actions to obtain
commercial advantages over their domestic competitors by, for
example, subverting their supply chains. A notorious case from last
decade concerning wooden bedroom furniture from China is a good
example. The petitioners in that case were U.S. producers who were
supplementing their domestic production with imports from their
factories in the Philippines, Vietnam, and Brazil. Their target was
a second group of U.S. producers, who were supplementing their
production with imports from their factories in China. The
petitioners invoked unfair trade and suggested that duties, once
imposed, would enable them to bring jobs back to the U.S.
furniture-making industry, but their plans were really to import
more once they had knocked out their domestic competition with
duties on imports from China.

A second and far more prevalent motive is for U.S. producers of
industrial raw materials or other intermediate goods to file cases
for the purpose of cutting off their own customers’ access to
foreign sources of supply. A 2011 Cato Institute study found that
80 percent of all U.S. antidumping investigations launched in the
10-year period between 2000 and 2009 were on upstream products,
such as steel, that are consumed by downstream industries, such as
appliance manufacturers. Imposing duties on steel may help steel
producers in the short run, but they raise the cost of production
for the appliance manufacturers, putting them at competitive
disadvantages relative to foreign appliance manufacturers.
Remarkably, the ITC is statutorily prohibited from even considering
the adverse impact of trade remedies duties on downstream
industries.

The aircraft case features these characteristics. Boeing is an
upstream producer. It manufactures aircraft, which are production
inputs for commercial airlines. Airplane prices artificially
inflated by antidumping or countervailing duties represent higher
costs and lower profits to the airlines, which usually translates
into higher ticket prices and higher freight rates, which tend to
raise the cost of business travel and air delivery, which both
reduce business profits, investment, and employment.

Boeing and Delta have danced this dance before. During the
arduous policy debate over whether or not Congress should renew the
charter of the Export-Import Bank, Delta proved to be a real thorn
in Boeing’s side. Delta presented a compelling argument that
extending tax-payer subsidized, less-than-market-rate loans to
companies like Air India or Etihad enables these Delta competitors
to obtain aircraft at lower total cost than would be the case in
the absence of those loans. Given that airplane costs represent a
significant portion of total costs in the commercial airline
industry, U.S. taxpayers—through these loans—are
subsidizing Delta’s competition, essentially putting
Boeing’s well being ahead of Delta’s and all other
domestic carriers, for that matter.

Similarly, by seeking duties on aircraft that Delta wants to
purchase from Bombardier, Boeing’s actions will raise
Delta’s costs in absolute terms and relative to carriers,
such as Air India and Etihad, who will remain free to purchase
Bombardier’s aircraft without the added duties.

Although characterized by proponents as legal tools to protect
U.S. manufacturing jobs from predatory foreign firms and their
enabling governments, in reality the trade remedy laws are weapons
deployed primarily by U.S. companies to obtain commercial
advantages over other U.S. companies. Any jobs created or saved in
the process tend to accrue to the Washington law firms and lobby
shops that craft the cleverest legal and political arguments, while
the collateral damage to downstream industries and their workers
gets swept under the rug.

Daniel J.
Ikenson
is the director of Cato Institute’s Herbert A. Stiefel
Center for Trade Policy Studies.

The Failure of Private School Choice Was Greatly Exaggerated

Corey A. DeAngelis

Over the last year or so, many tales of woe have spread that
seized on a few, preliminary studies that appeared to show negative
effects for students in school choice programs. Just three
days before the release of those studies, newspaper columnist Kay
McSpadden myopically used the  studies to conclude
that ”the evidence is clear, vouchers don’t
work
.”

But two new studies looking at standardized test scores—as
well as additional studies by me and my colleagues at the
School Choice Demonstration Project —were just released
last month. It turns out the failure of choice was greatly
exaggerated.

Louisiana Scholarship Program (LSP) report indicates that the voucher program had
large negative impacts on student math test scores for the first
two years of the program. Nonetheless, these same students caught
up to their peers in traditional public schools by the end of year
three. In addition, researchers at the School Choice Demonstration
Project found that this program also improved racial integration while
increasing student achievement in traditional public schools
through competitive pressures.

Although the “failure” of
private school choice is continuously echoed by education reporters
across the nation, the scientific evidence largely suggests
otherwise.

The Indiana Choice Scholarship Program (CSP) study revealed a similar, but perhaps more
encouraging trend. Students using the program performed on par in
mathematics and even made gains in English language arts by the
fourth year.

This upward trend is not unusual. The recent review of 19 experimental
voucher studies around the world conducted by researchers at the
University of Arkansas shows that private school choice programs
need a few years to start improving test scores. This is likely
because children need to adjust to their new educational settings
and private institutions must respond to the environmental shift in
the market for schooling.

The positive test score trend can be interpreted in two
different ways. One is that private schools in voucher programs
adjust and improve after a few years of participation. The other
possibility is that incentive structure for private schools shifts
from a focus on character education towards a focus on test scores,
since most states use test scores as their preferred educational
accountability measure.

So what does the scientific evidence have to say?

There have been 17 experiments, including the one in
Louisiana, on the effects of private school choice on student
achievement in the United States. Out of these studies, only two
have shown negative impacts on student test scores, four have found
no effects and eleven have found positive effects overall or for
subgroups of students.

The scientific evidence on essential long-term outcomes is more
hopeful for private school choice programs. University of
Arkansas’s Dr. Patrick J. Wolf led an experiment on the D.C. Opportunity Scholarship
Program (OSP) which found that winning a random lottery to use a
private school voucher increased students’ likelihood of graduation
by 21 percentage points. The University of Wisconsin —
Madison’s Dr. Joshua Cowen led a quasi-experimental study on the Milwaukee
Parental Choice Program, finding an increase in the likelihood of
graduation by four percent.

Another experiment examined charitable giving and found that
Ohio voucher students are more likely to donate. And the only quasi-experimental study
examining impacts on criminal activity, conducted by me and Patrick
J. Wolf, found that Milwaukee voucher students are around half as
likely to become criminals as adults than their traditional
public school peers.

Although the “failure” of private school choice is continuously
echoed by education reporters across the nation, the scientific
evidence largely suggests otherwise.

Corey A.
DeAngelis
is a Policy Analyst at the Center for Educational
Freedom at the Cato Institute and a Distinguished Doctoral Fellow
in Education Policy at the Department of Education Reform at the
University of Arkansas.