Thursday, May 31, 2012

On the Legality of Congressionally-Authorized Drone Strikes

Understood the Nature of Wartime "Due Process"

In a house editorial today the New York Times criticizes President Obama for what it calls "unilateral" decisions to kill terrorists "without the consent of someone outside his political circle."  According to the Times:

"No one in that position [a President running for re-election] should be able to unilaterally order the killing of American citizens or foreigners located far from a battlefield — depriving Americans of their due-process rights — without the consent of someone outside his political inner circle. . . . .It is too easy to say that this is a natural power of a commander in chief. The United States cannot be in a perpetual war on terror that allows lethal force against anyone, anywhere, for any perceived threat. That power is too great, and too easily abused, as those who lived through the George W. Bush administration will remember."  President Obama, the Times says, believes that "the shadow war on terrorism gives it the power to choose targets for assassination, including Americans, without any oversight."

The Times editorial follows other "Progressive" commentary critical of the President's use of drone strikes to kill suspected terrorists.

The Times and other Progressives are wrong on at least three counts.  First, there is no indication that the Obama Administration is claiming the right to kill any and all purported "terrorists."  Instead, all published reports indicate that the Administration is targeting members or affiliates of Al Qaeda, the organization responsible, by its own admission, for several attacks on the United States, and an organization that has not surrendered to the United States.   Thus, any "war on terror" is in fact a "War on Al Qaeda."   Second, neither President Obama, nor President Bush before him, initiated this war "unilaterally."  Instead, both have simply carried out the will of the people as expressed by the Congress of the United States shortly after the September 11 attacks.  Third, drone strikes that kill individuals the President believes to be members of Al Qaeda do not violate "due process."

Congress could have responded to the September 11 attacks by authorizing more aggressive law enforcement activity, whereby the FBI would arrest (or attempt to arrest) suspected members of Al Qaeda for trial in U.S. Courts.  Instead, and as previously explained on this blog, Congress rejected the "law enforcement" approach taken during the 1990s, an approach which had failed to prevent numerous terrorist attacks on the United States and its interests.  That is, Congress, on September 18 2001, exercised its war powers and passed the "Authorization to Use Military Force," ("AUMF") reproduced in full below.   That Resolution empowers the President, as "Commander-in-Chief of the Army and the Navy of the United States," to employ "force" against those  "nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons."   As previously explained on this blog, the AUMF contains no geographic limitation, but instead authorizes the President to employ "force" against any individual that "he determines" (without any requirement of additional process) to be in the identified class, whether or not they are on or near any battlefield.  (In the same way, the December 9, 1941 Declaration of War against Germany contained no such geographic limitation.)  Nor does the AUMF purport to immunize from attack American citizens who join Al Qaeda.    So far as this blogger is aware, no one has alleged that either President Obama or President Bush has targeted individuals, even suspected terrorists, outside the class identified in the AUMF.  President Obama no more needs "outside consent" for such strikes than FDR needed such consent before ("unilaterally") ordering the invasion of France.

To be sure, one can imagine scenarios in which  a hypothetical President abuses and exceeds the power that Congress has granted, whether the AUMF or the formal Declaration of War against Germany.  However, as Joseph Story explained nearly two centuries ago, the fact that a power may be abused is no argument against it.  So long as the President merely exercises the authority that Congress has granted him, suspected members of Al Qaeda have received all the "process" they are due.  As Colonel Kirby (pictured above), played by John Wayne noted in the Green Berets "[o]ut here, Due Process is a bullet."  Today he might add "or a Congressionally-authorized drone strike."

Update (June 1, 2012).  Two comments take issue with my assertion that Congress may authorize military force against American citizens whom the President determines have taken up arms against the United States.  I appreciate the opportunity to provide some additional elaboration on my views.

1.  The Due Process Clause does not distinguish between American citizens and other "persons." In any event, the Constitution itself apparently contemplates the use of military force against American citizens.  Article I, Section 8 empowers Congress to "provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections, and repel Invasions." (emphasis added)   Suppression of an insurrection can entail the use of lethal force, without a pre-deprivation hearing, against citizens who have taken up arms against the United States and participated in the insurrection.  President Washington suppressed such a (short-lived) insurrection in 1794 --- the so-called "Whiskey Rebellion" --- exercising the authority to employ the militia for this purpose that Congress had granted him in the Militia Act of 1792.  President Lincoln suppressed a rebellion from 1861-65, and he ordered an invasion of several Southern states to do so.  In my view, an American citizens who joins the army of a foreign power is, as a constitutional matter, indistinguishable from an American citizen who joins a domestic insurrection.  

2.  The conduct of war necessarily requires military commanders and soldiers to distinguish between combatants and non-combatants.  This is true whether the soldiers are suppressing an insurrection at home or invading an enemy abroad.  That is, they must "determine" (the language employed by the AUMF) whether various individuals are members of rebel forces (if at home) or enemy forces (if abroad).  When Admiral Halsey ordered American fighters to shoot down an aircraft on April 18, 1943, he did so because he "determined" that the plane was transporting Japanese Admiral Yamamoto.   He was right, and the mission was successful.  If he had been mistaken and the fighters had destroyed a civilian aircraft, that would have been a tragedy.  However, the possibility of such a wartime tragedy does not in my view mean that the attack deprived Admiral Yamamoto of due process of law.  Nor would such a mission have contravened due process if instead Halsey had targeted a fictitious American Admiral Murphy because he "determined" that Murphy had gone over to the enemy and thus chosen to wage war on the United States.  (Imagine if, during World War II, thousands of Americans had fled the country and enlisted in the German Army.  Imagine further that Germany had formed a division from these soldiers and deployed them to defend Normandy.  Surely President Roosevelt could still order an invasion of Normandy without some sort of judicial hearing beforehand.)

3.   As noted in my initial post, any President could abuse the power granted by the AUMF.  President Obama could, for instance, decide to launch drone strikes on random American citizens or random citizens of other countries.  (He could also do this absent the AUMF, by the way.)  In the same way, President Roosevelt could have ordered the battleships of the Atlantic Fleet to shell American cities, claiming that such cities had sworn loyalty to Germany.   All of these actions would exceed the authority conferred on the President by the relevant statutes (the AUMF or the Declaration of War against Germany) and the Constitution.  That is to say, President Obama's hypothetical drone attack on American cities would not be the result of an actual "determination" that the targeted citizens were members of Al Qaeda.  Thus, such orders, if carried out, would be murder --- the unprivileged taking of a human life and thus subject to prosecution under the law of the state where the murder took place.

So far as I know, however, no one has asserted that the drone strikes ordered by President Obama do not rest on a good faith "determination" that the targeted individuals have joined Al Qaeda and taken up arms against the United States.

Here is the full text of the Congressional Resolution that the Times and others have ignored:

One Hundred Seventh Congress

of the

United States of America

Begun and held at the City of Washington on Wednesday,
the third day of January, two thousand and one

Joint Resolution
To authorize the use of United States Armed Forces against those responsible for the recent attacks launched against the United States.

Whereas, on September 11, 2001, acts of treacherous violence were committed against the United States and its citizens; and

Whereas, such acts render it both necessary and appropriate that the United States exercise its rights to self-defense and to protect United States citizens both at home and abroad; and

Whereas, in light of the threat to the national security and foreign policy of the United States posed by these grave acts of violence; and

Whereas, such acts continue to pose an unusual and extraordinary threat to the national security and foreign policy of the United States; and

Whereas, the President has authority under the Constitution to take action to deter and prevent acts of international terrorism against the United States: Now, therefore, be it

Resolved by the Senate and House of Representatives of the United States of America in Congress assembled,


This joint resolution may be cited as the `Authorization for Use of Military Force'.


(a) IN GENERAL- That the President is authorized to use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons, in order to prevent any future acts of international terrorism against the United States by such nations, organizations or persons.

(b) War Powers Resolution Requirements-

(1) SPECIFIC STATUTORY AUTHORIZATION- Consistent with section 8(a)(1) of the War Powers Resolution, the Congress declares that this section is intended to constitute specific statutory authorization within the meaning of section 5(b) of the War Powers Resolution.

(2) APPLICABILITY OF OTHER REQUIREMENTS- Nothing in this resolution supercedes any requirement of the War Powers Resolution.

Speaker of the House of Representatives.

Vice President of the United States and

President of the Senate.

Tuesday, May 29, 2012

Is There A Student Debt Crisis?

Costs More Than Average Student Debt Burden

In a recent post on the Becker-Posner blog, Nobel laureate Gary Becker sheds some useful light on the controversy over growing student debt.  As Becker explains, such loans overcome a market failure caused by the (legal) inability of students to pledge their human capital and thus future earnings to lenders as collateral.   (Absent such collateral, private lenders would decline to lend or charge exorbitant rates.) Thus, he says, the availability of such loans provides access to a college education to many students who otherwise could not afford it.

At the same time. Becker also recognizes that student debt has risen significantly since the 1980s.   Indeed, as others have reported, student loan debt has reached $1 trillion dollars, an amount equal to Americans credit card debt and auto loan debt.  Becker attributes this rise to higher tuitio, viz. "[t]he proximate cause of the increase in student loans has been the sharp rise in tuition at both state and private colleges during this time period."   Two thirds of American college students take out some debt, and the average debt of those who do is $23,000.   That's less than the price of a Fiat-Chrysler Town and Country Minivan, pictured above, which has a manufacturer's suggested retail price of $29,995.

Unlike some pundits, however, Becker does not, like some on the right, chastise colleges and universities for high tuition or call for debt forgiveness like some on the left.  Instead he points out that college education, including an education financed with debt, has, since the 1980s, increased in value faster than increases in tuition.  (One might add that, despite these tuition increases, tuition and fees still pay only part of the cost of a college education; alumni, federal grants and, at public colleges, states, pay the rest.  Moreover, published tuition and fees are only a sticker price.  Many students receive discounts, including discounts of 100 percent in some cases.)   "As a result," he says, "the rate of return on college education in the United States – benefits net of all costs- grew greatly during the past 30 years[,]" thereby explaining why a larger proportion of young Americans have been attending college in recent years despite tuition increases.

Becker acknowledges that these debts can burden students after they graduate.  Still, he recognizes that the large returns from a college education make it relatively easy to repay them, given that college graduates earn on average $30,000 more annually than high school graduates.  Indeed, as Becker points out, graduates could readily repay even $50,000 in debt in short order with the higher earnings they receive as a result of a college education.

Of course, and as Becker notes, many college graduates are currently finding it difficult to obtain employment of the sort that such graduates have traditionally obtained.   Put another way, and as this blogger has explained in a related context, a strong macro-economy would alleviate many of the concerns about the economic sustainability of debt-financed higher education.  For instance, if unemployment were to fall to the level experienced during most years of the George W. Bush Administration or the Clinton Administration, college students would gladly borrow $23,000 or more to attend college, knowing that a college degree would significantly enhance their earnings prospects.  Unfortunately, the current economic recovery is very weak by historical standards, with no prospects for a strong recovery in sight. 

While Becker does not expressly say so, some of his observations imply that concerns about a "student debt crisis" are overblown or misplaced.  Capital markets and debt play an important role in a free society, allowing individuals with constrained liquity to make present investments that can pay dividends in the future, thereby benefiting individual investors and society at large.  Comparisons to debts taken on for consumption, e.g., the purchase of automobiles, are therefore misplaced.  Student loans exemplify this principle, allowing individuals of modest means to invest in human capital, thereby enhancing their own productivity, their own welfare and the welfare of society at large.  Such investments exemplify the economic dynamism necessary to economic growth and the expansion of economic opportunity.  However, until the Nation experiences a strong economic recovery, pundits on both sides of the aisle will likely continue to question the value of such investments, casting blame on a symptom of a much larger problem.

Monday, May 28, 2012

Sink the Bismarck: Fact and Fiction

Forgotten By Cinema

71 years ago today, the British Navy sank the German Battleship Bismarck,   Three days earlier, in the Battle of the Denmark Strait, the Bismarck had sunk the British Battlecruiser HMS Hood and damaged the Battleship HMS Prince of Wales while attempting to break out into the Atlantic.  The Prince of Wales had itself scored a few hits on the Bismarck, which began to trail oil, and the latter changed course for Brest, in Nazi-occupied France. 

The film Sink the Bismarck (1960) portrays British efforts to prevent Germany's finest battleship from reaching the Atlantic and raiding British convoys.  The film, one of this blogger's favorite war movies, departs from the actual historical record in several ways worthy of note on this anniversary.

1.  In the film, both the Hood and the Prince of Wales open fire on the Bismarck at the outset of the Battle of the Denmark Strait.  In fact, the Hood initially targeted the heavy cruiser Prince Eugen, which it mistook for the Bismarck, firing at least six salvos at the cruiser before realizing its error.  (By contrast, the Price of Wales correctly directed its fire at the Bismarck from the outset, scoring a hit before the Hood redirected its fire.)  By the time the Hood realized its error, the Bismarck and Price Eugen had already found the range and begun scoring hits on the Hood. Bismarck's fifth salvo struck the fatal blow to the Hood.  (See Zetterling and Tamelander, Bismarck: The Final Days of Germany's Greatest Battleship, 163-71 (2009).  We can only speculate what would have happened if the Hood had targetted the Bismarck, a larger target than the Prinz Eugen, at the outset of the battle.

2. In the film, the British heavy cruisers Norfolk and Suffolk continue to shadow the Bismarck after the Battle of the Denmark Strait, until the Bismarck evades the pursuers and steers toward Brest.  The Norfolk and Suffolk did shadow the Bismarck as depicted, but they did not do so alone. Instead, the battleship Prince of Wales, although damaged in the Denmark Strait, accompanied the two cruisers in the continued pursuit.  Indeed, the Bismarck and the Prince of Wales exchanged fire for several minutes on the evening of May 24, with neither ship scoring a hit.  Eventually the Prince of Wales and Suffolk broke off pursuit and sailed for Iceland to refuel.  (See Zetterling and Tamelander, Bismarck: The Final Days of Germany's Greatest Battleship183-85, 196-97 and 233.)

3.   The film portrays the destruction of a Swordfish torpedo plane by the Bismarck's anti-aircraft fire during the first attack on the Bismarck by planes from the aircraft carrier Victorious.  In fact, the Bismarck did not shoot down any British planes.

4.  The film depicts a torpedo attack on the Bismarck by several British destroyers, one of which the Bismarck sinks shortly after the attack.  Several British and one Polish destroyer did launch torpedoes at the Bismarck during the night of the May 26th and the very early morning of May 27th.  Moreover, the Bismarck did fire on several of these destroyers and exchanged fire with one of them --- the Polish destroyer Piorun.  However, the Bismarck did not score any hits.  (See  Zetterling and Tamelander, Final Days, at 251-56.)

5.   Late in the film, Admiral Lutjens expresses hope that, once in Brest, the Bismarck could put to sea with the pocket battleships Scharnhorst and Gneisnau and together raid British convoys.  The scene implies that this is a new idea    In fact, the initial plan for the operation called for the two pocket battleships to sortie at the same time as Bismarck and Prinz Eugen.  However, Scharnhorst required extensive repairs after returning from a previous sortie with Gneisenau (led by Lutjens), and an attack by British torpedo planes had damaged Gneisnau.   Thus, Bismarck and Prinz Eugen had to sortie alone in search of convoys.  (See Zetterling and Tamelander, Final Days, at  82-86.)

6.   The film's portrayal of the final engagement between the British and the Bismarck departs from the actual events in several respects.  For instance, in the film the Bismarck opens fire first.  Moreover, the British Battleship King George V, flagship of the British Home Fleet, is the first to open fire in return and scores a hit on the second or third salvo.  In fact, the British Battleship Rodney (pictured above), performing escort duty and on her way to Boston for an overhaul, opened the final attack on the Bismarck, at 8:47 AM, shortly before the King George V itself opened fire.  (See Zetterling and Tamelander, Final Days, at 265-69)  The Bismarck answered three minutes later. (See id.)  Moreover, while Zetterling and Tamelander are ambiguous on this point, some sources report that Rodney struck the first blow, at 9:02 AM.  (It should be noted that the film does mention the diversion of the Rodney to intercept the Bismarck several scenes before the final engagement.)   Finally, while the King George V witnesses the Bismarck sinking in the film, the Bismarck did not in fact sink until both British Battleships, low on fuel, had left the scene and headed for Scapa Flow.  (See Zetterling and Tamelander, Final Days, at 280.)  The heavy cruiser HMS Dorchester, which had joined in pummeling the Bismarck with her eight inch guns, fired several torpedoes into the Bismarck after the British battleships departed.  (In the film, the Dorchestire joins the King George V at the end of the engagement and launches her torpedoes in full view of the British battleship.)

Saturday, May 26, 2012

President Obama's Rejection of Economic Science

Thought the Earth was Flat

Thinks Tax Cuts Slow the Economy

Embraced Economic Science for the Common Good

A recent survey (discussed here) finds that Conservatives are losing faith in Science.    Remarks by President Obama in Iowa earlier this week (reported here by USA Today) suggest that he, too, has abandoned some basic tenents of science, in this case, economic science.  In particular, the President accused Republicans of clinging to policies that would, in his words "double down on some of the policies that didn't work and got us into this mess in the first place."  According to the report in USA Today, the President "cit[ed] in particular proposed tax cuts for the wealthy" as examples of such policies that caused the current downturn and would, if maintained prevent recovery.  The "tax cuts for the wealthy," of course, referred to the 2001 across-the-board reduction in tax rates advocated by President Bush and passed by Congress.

Perhaps USA Today has mis-reported the President's remarks.  If not, the President has apparently decided the repudiate basic science.    There is simply no plausible economic theory or evidence supporting the President's claim that tax cuts for the wealthy or  tax cuts for anyone else, result in an economic downturn.  On the contrary, tax cuts put more money in the pockets of consumers, including rich consumers, who in turn spend a portion of this new wealth, thereby increasing aggregate demand and national output.   See N. Gregory Mankiw, Macroeconomics, 296 (7th Edition 2010) (explaining how tax cuts increase aggregate demand and thus increase national output).   This result is a basic scientific fact, taught annually to thousands of college freshmen annually across the country.  Indeed, the nation's unemployment rate remained below 5.0 percent for all 24 months in 2006-2007, compared to a peak of 5.7 percent the year Congress enacted the tax cuts the President Obama has decried.  (Of course, there were other sources of fiscal stimulus during the first term of the Bush Administration, including increased military spending, such that the tax cuts were not the sole source of economic stimulus.) There is only one circumstance in which tax cuts will not increase output and employment, namely, when the economy is already at full employment.  While tax cuts (or spending increases) will increase aggregate demand in these circumstances, national output will remain the same, because society is already employing all of its resources in their highest-valued uses, with the result that national output is at its maximum.  No one argues that the current economy is at or near full employment.

The President's rejection of scientific fact and theory in this context is particularly odd.   After all, the centerpiece of the President's economic recovery program entailed a so-called "Stimulus Package" of nearly $800 Billion (discussed previously on this blog), spread out over five years, a portion of which included tax cuts.  The logic of the stimulus package depends upon the very same economic models establishing that tax cuts, even tax cuts for the rich, stimulate aggregate demand and national output.

It is also noteworthy that President Obama's attitude toward economic science stands in stark contrast to the approach taken by President Kennedy, pictured above with Dr. Walter Heller, who chaired the Council of Economic Advisors during the Kennedy Administration.  As previously explained on this blog, President Kennedy advocated across-the-board tax cuts as a means of "getting America moving again," the theme of his 1960 presidential campaign.  In so doing, he followed the advice of Heller and others who understood that across-the-board tax cuts would stimulate the economy, not get us into a "mess" as President Obama now claims.

Of course, across-the-board tax cuts are not the only means of stimulating the economy.  The national government could also rely upon spending increases and/or an expansive monetary policy.  Moreover, the government could reduce taxes for lower income and middle income workers.  Nonetheless, any claim that extending such cuts to "the rich" will cause an economic downturn is akin to the claim, by Thales of Miletus, pictured abouve, that the earth is flat.

Friday, May 18, 2012

Obama's Actual Biography No Match for Coolidge or Reagan

The Actual Calvin Coolidge


The Actual Ronald Reagan


Coolidge/Reagan Wannabe?

Recent reports indicate that the Obama Administration has been re-writing the biographies of former Presidents on the White House website.  In particular, the Administration has been inserting references in such biographies to President Obama's purported accomplishments.  Indeed, the Administration has inserted such references in the biography of each President since Calvin Coolidge, with the exception of the biography of President Gerald Ford. 
Not surprisingly, some have criticized this form of self-promotion at the expense of prior Presidents, most of whom are not able to speak for themselves.   However, it is no surprise that President Obama would seek to associate himself with leaders like Calvin Coolidge and Ronald Reagan.  Simply put, both Presidents had economic records that put the current President to shame.  As explained previously on this blog, the Reagan Recovery produced the equivalent of 455,000 jobs per month between April and November 1984.  By contrast, the Obama "recovery" is producing jobs at less than a third of that rate.  (See here and here.)   Moreover, when Calvin Coolidge left office in 1929, the nation's unemployment rate was near 3 percent.  Even if the unemployment rate was twice the Coolidge rate, the American People would likely re-elect President Obama in a landslide.

Wednesday, May 16, 2012

Will the Griffin Fly the Coop?

A recent article in the Richmond Times Dispatch recounts speculation that Old Dominion University, Virginia Commonwealth University and George Mason University might take their basketball programs and leave the Colonial Athletic Association for other conferences (the Atlantic 10 for GMU and VCU, and Conference USA for ODU).  Such departures would leave only 8 basketball programs left in the league:




James Madison




William and Mary

Departures by such marque programs would obviously be a blow to the CAA's national profile and thus the ability of CAA schools to recruit highly sought-after college athletes.  GMU, VCU and ODU have won twelve of the last thirteen CAA mens basketball championships, thereby earning automatic berths in the NCAA tournament.  Both VCU and GMU have, in the past decade, made it to the "Final Four."

If in fact all or even just some of these schools depart the CAA, the remaining schools will have three options: (1) Soldier on with eight basketaball programs of relatively modest national profile; (2) invite new and hopefully higher profile schools to join the CAA or (3) depart from the CAA for other conferences.  Of course, some combination of options 2 and 3 is possible.  That is to say, some schools could depart from the CAA which could in turn invite and welcome new programs.

Both the Times-Dispatch article and a separate piece in the William and Mary Flat Hat have speculated that William and Mary could ultimately choose to depart from the CAA and join the Patriot League, for basketball.

According to the Times-Dispatch, for instance:

"If William and Mary decided to leave [the CAA for basketball], it might find a partner in the Patriot League, which features similar institutions with high academic profiles."

The Patriot League, it should be noted, consists of the following teams.





Holy Cross



As the story notes, these schools have academic profiles more similar to that of William and Mary than the teams of the CAA.  For instance, the College of the Holy Cross has a 4 year graduation rate of 87 percent, while William and Mary's is 89 percent.  By contrast, the  4 year graduation rate at Towson State is 43 percent and 23 percent at Drexel.  (Though it should be noted that these rates rise to 73 and 68 percent, respectively, after 6 years.)  (The 4 year graduation rate at VCU is 24 percent, while the 6 year rate is 50 percent.)    Moreover apparently athletes have even higher graduation rates at some Patriot League schools.  Indeed, according to this story, 21 Holy Cross teams recently achieved a 100 percent graduation rate.  At the same time, the Patriot League would provide stiff competition on the court for the Tribe.  Both Bucknell and Lehigh, for instance, ended the 2011-2012 season with higher RPI rankings (87 and 94, respectively) than ODU (107).  Holy Cross (182) and American (158) ended with higher RPI rankings than William and Mary (293).  (Colgate earned an RPI ranking of 295.)

Of course, any speculation that William and Mary will some day join the Patriot League for basketball is just that, speculation.  This author knows of no evidence that William and Mary is considering such a move.

UPDATE:  Earlier today (May 17, 2012) Old Dominion announced that it will leave the CAA for Conference USA.  ODU's announcement follows by a day VCU's announcement that it will leave the CAA for the Atlantic-10 conference.  By contrast, George Mason University announced less than a week ago that it will remain in the CAA.  Unlike VCU, whose move only affects basketball, ODU will be moving its football program as well, thereby allowing it to move into the FCS division, where it will reportedly begin play in 2015.

Meanwhile, two remaining members of the CAA, Towson State and UNC-Wilmington, may soon find themselves barred from post-season play because of their respective failures to satisfy NCAA academic progress requirements.

Monday, May 14, 2012

Happy Mother's Day --- Despite Ruth Bader Ginsburg

Fought to Found Mother's Day

Tried to Quash It

Today Americans celebrated Mother's Day, founded by Anna Jarvis (pictured above) despite the efforts of Ruth Bader Ginsburg (also pictured above), now a Justice on the U.S. Supreme Court.  Believe it or not, now-Justice Ginsburg once signed a report suggesting that Congress "replac[e] Mother's Day and Father's Day with a Parents' Day as an observance more consistent with a policy of minimizing traditional sex-based differences in parental roles."  (Hat tip to Ed Whelan over at Bench Memos.) 

Whatever one thinks about the merits of now-Justice Ginsburg's proposal, Congress could not lawfully eliminate Mother's Day if it tried.  To be sure, Congress recognized Mother's Day by statute in 1914.  However, that statute did not purport to require Americans to celebrate the occasion.  Moreover, the national government is one of limited powers, and the Constitution does not authorize Congress to require the celebration of Mother's Day or ban that celebration, any more than it authorizes Congress to require or ban the celebration of birthdays or wedding anniversaries.  Thus, thanks to the genius of the Founders, and despite the misguided intermeddling of some, Americans will freely and enthusiastically continue to celebrate Mother's Day so long as there are mothers.

Sunday, May 13, 2012

Vive La 49 ?

A recent article in Business Week highlights one inefficient byproduct of over-reaching French labor legislation.  The article reports that, in France, there are 2.4 times more companies with 49 employees than with 50 employees.  The article convincingly contends that there is a reason for this apparent statistical anomaly, namely, regulation.  Under French labor law, any company that employs 50 or more individuals is suddenly subject to certain onerous requirements.  Such companies must create three different "worker councils," inaugurate profit sharing, and submit proposed "restructuring" plans to the worker councils if the company plans to lay off employees for economic reasons.  (See this treatise for additional details of this regulation.)  (It is not clear whether employees of covered firms must also share losses with the a covered firm's owners.)  As Business Week reports, French entrepreneurs often seek to avoid such requirements by dividing what would otherwise be a single company of more than 50 employees into several companies with 49 or fewer employees, thereby avoiding altogether the onerous regulations explained above. 

It should go without saying that this artificial restructuring of economic activity to avoid regulation reduces the economic welfare of the French people, other things being equal.  For one thing, entrepreneurs must incur the real costs of organizing and incorporating more than one business entity.  These same entrepreneurs must also manage several nominally separate concerns, in some cases hiring additional and economically redundant managers to do so.  Such entrepreneurs must also forgo whatever economies of scale they might otherwise realize by expanding a single firm beyond 50 employees.  Finally, some entrepreneurs might forgo the benefits of vertical integration by dividing input suppliers and downstream customers into separate firms even if the combination of such entities would reduce the cost of economic activity.  Simply put, predictable efforts to avoid regulations applicable to firms with greater than 49 employees divert economic resources from productive to less productive uses thereby reducing economic welfare.

The sort of conscious regulatory avoidance just described does not exhaust the negative impact of the distinction between 49 and 50 person firms.  To the extent that the labor regulations just described increase the cost of economic activity, firms with 49 or fewer employees will, other things being equal, incur lower production costs and thus possess a competitive advantage vis a vis larger firms. 

Of course, the mere fact that firms will incur costs to avoid regulation does not necessarily counsel repeal of such regulations.  Such regulations might themselves increase welfare, by eliminating inefficient externalities or combating other sources of market failure such as monopoly.  Moreover, larger firms may pose a greater risk of the type of harm that the regulation seeks to combat and/or be better able to absorb the cost of such regulations.  In these circumstances, limiting such regulations to a subset of a nation's firms --- particularly its larger firms --- may constitute an optimal regulatory strategy.  If so, the costs of regulatory avoidance detailed above may be the unavoidable and incidental price of regulations that, on balance, create wealth.

Still, the labor regulations in question do not seem to combat any externalities or other market failure and thus themselves distort the allocation of resources and reduce welfare.  As a result, the costs of regulatory avoidance detailed above simply compound the inefficiencies resulting from the regulation itself and thus, along with many other anti-growth policies, help account for France's sluggish growth and high unemployment.  Indeed, some estimate that, by 2050, France's GDP, now 6th in the world and ahead of the United Kingdom's, will rank 11th,  behind that of Mexico and the United Kingdom.  Regulatory policies have consequences, and the consequences of the policies imposed by France are negative.

Saturday, May 5, 2012

The Obama "Recovery" is Even Weaker than We Thought

Led Strong Recovery

Did Not

Yesterday's disappointing report that the economy only added 125,000 jobs last month confirms what many have been saying for some time now --- the present recovery, from a very deep recession, is far less robust than the 1982-83 recovery, also from a deep recession.  Thus, a story in CNN Money yesterday compared current job growth at this point in the Presidential election cycle to analogous growth during 1984, the year that an incumbent President Reagan was locked in a re-election bid against former Vice President Mondale.  According to the story:

"In April 1984  the economy added 363,000 jobs. In the first four months of 1984, employment growth hit 1,564,000. This year [2012], the first four months have brought about half that amount.   And the Reagan recovery sustained its momentum through the election, averaging 300,000 new jobs a month from May to October."

As the story explains, President Reagan went on to win reelection with a 525 electoral vote landslide, despite presiding over a deep recession early in his first term.

It goes without saying that, if job growth remains weak through November, the prospect of President Obama's reelection will remain comparatively dim, perhaps even dimmer than some might realize.  After all, comparisons like those just quoted, while instructive, actually understate the gap between the Reagan and Obama recoveries.  Simply put, the 2012 labor force is far larger than its 1984 equivalent.  According to these data from the St. Louis Fed, total non-farm employment was about 91 million when the economy peaked in early 1980.  In late 2007, by contrast, total employment peaked at just over 138 million.  (See also here for the late 2007 figure.)  Thus, any comparison between  the Obama and Reagan recoveries requires upward adjustment of the figures from the Reagan figures, to account for today's much larger denominator.

Such an adjustment would require the following "corrections" to the CNNMoney story:

"In April 1984 the economy added 363,000 550,000 jobs. In the first four months of 1984, employment growth hit 1,564,000 2,371,780. This year [2012], the first four months have brought about half that amount. And the Reagan recovery sustained its momentum through the election, averaging 300,000 455,00 new jobs a month from May to October."

Friday, May 4, 2012

Did Congress Employ the Commerce Power to Impose Individual Mandates in the 1790s? Of Course Not.

Recently some, including Eliot Spitzer (see here) and Einer Elhauge before him (see here) have invoked early maritime legislation in support of their argument that the Affordable Care Act's coercive individual mandate is consistent with the original meaning of the Commerce Clause, in part because so many of the Founders were members of Congress during the 1790s.  Both point to two such statutes:  First, a 1798 "Act for the Relief of Sick and Disabled Seamen," which required ship owners to collect taxes to support health care for seamen and second, a 1790 Act purportedly requiring ship owners to purchase health insurance for seamen manning their vessels.  Spitzer refers to Professor Elhauge's essay  as a "brilliant article" involving "spectacular historical reporting."  Professor Elhauge's tone, it should be noted, is far more nuanced and modest.

Invocation of the 1798 Act is not new in this context.  As early as January, 2011, Ezra Klein of the Washington Post invoked this statute in his blog, claiming that the Act constituted precedent for the Affordable Care Act's coercive requirement that Americans who can afford to do so must purchase health insurance policies whose terms are dictated by the National Government.  In so doing, Klein claimed that the 1798 Act "was, in essence, a regulation against a form of inactivity: You were not allowed to not do something, in this case, pay for sailor's health insurance."

Others issued effective rebuttals to this claim at the time.  (See this excellent January 2011 essay in Forbes by Avik Roy.) 

Neither statute provides precedent for the Affordable Care Act's coercive individual mandate.

The 1798 statute, for instance, was a quintessential regulation of interstate commerce.  By its terms, the statute only applied to vessels whose owners affirmatively sought licenses to engage the so-called "coasting trade," that is, the carriage of goods within the waters of the United States from one port to another.  According to Joseph Story, Congress's power over the coasting trade derived from the Commerce Clause, and "extends to the regulation of navigation, and to the coasting trade and fisheries, within, as well as without any state, wherever it is connected with the commerce or intercourse with any other state, or with foreign nations."  See Joseph Story, II Commentaries on the Constitution of the United States, Ch. 15, Section 1071 (1833).  Indeed, as Story explained, this power "extend[ed] to the regulation and government of seamen on board of American ships."  Id.

Indeed, it may be that the 1798 Act involved an exercise of the taxing and spending power.  As Matthew Franck has explained, the statute imposed a "payroll tax collected by shipowners from seamen’s wages for purposes of a federal spending program on caring for sick sailors."  Characterized in this way, the statute was not a regulation of commerce at all, but instead an exercise of the power to "lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States."   Of course, under a Madisonian view of the Commerce Power, such spending could only further the general welfare if it carried into execution  one of Congress's enumerated powers, such as the Commerce Power.

The 1790 Act provides no more support for the Spitzer/Elhauge claim.

Here is the relevant text:

"[E]very ship or vessel belonging to a citizen or citizens of the United States, of the burthen of one hundred and fifty tons or upwards, navigated by ten or more persons in the whole, and bound on a voyage without the limits of the United States, shall be provided with a chest of medicines, put up by some apothecary of known reputation, and accompanied by directions for administering the same; and the said medicines shall be examined by the same or some other apothecary, once at least in every year, and supplied with fresh medicines in the place of such as shall have been used or spoiled; and in default of having such medicine chest so provided, and kept fit for use,Penalty on the master for default. the master or commander of such ship or vessel shall provide and pay for all such advice, medicine, or attendance of physicians, as any of the crew shall stand in need of in case of sickness, at every port or place where the ship or vessel may touch or trade at during the voyage, without any deduction from the wages of such sick seaman or marine."

As Matthew Franck (again) has explained, the Act did not require vessel owners to provide health care as such.  Instead, owners only had to provide such care if they "default[ed]" on the statute's requirement to provide "a chest of medicines, put up by some apothecary of known reputation, and accompanied by directions for administering the same . . ."   Moreover, the statute did not apply to any and all vessels but instead applied only to those vessels "navigated by ten or more persons in the whole, and bound on a voyage without the limits of the United States."   Thus, the statute did not even apply to the so-called "coasting trade" governed by the 1798 Act.

In sum neither Act provides precedent for the Affordable Care Act's coercive individual mandate.  Instead, both regulate --- that is, prescribe a rule governing --- Commerce Among the Several States and with Foreign Nations.  Indeed, in  Gibbons v. Ogden, 22 U.S. 1, 197 (1824), a case often invoked by advocates of broad national power, Chief Justice John Marshall defined the power to regulate interstate commerce as the power "to prescribe the rule by which commerce is to be governed."   The two early statutes invoked by Spitizer and Elhuage do exactly that --- they impose a rule on individuals volutarily conducting interstate commerce.  Thus, the requirements of these statutes are indistinguishable from, say, a requirement that interstate railroads install particular safety equipment, allow their employees to unionize, or travel at certain speeds.  Examples could be multiplied.  Like so many other laws, all such requirements "mandate" that firms voluntarily operating in interstate commerce perform certain acts they would not otherwise perform. 

By contrast, of course, the Affordable Care Act's individual mandate applies to individuals as such, regardless whether such individuals are engaged in interstate commerce.  That is to say, instead of prescribing a rule by which parties conduct interstate commerce that already exists, such legislation conscripts individuals into engaging in interstate commerce in the first place.  The maritime Acts invoked by Spitzer, Elhauge and others no more support such an unprecedented expansion of Federal power than they would support, for instance, a ban on the possession of guns near a school.  See United States v. Lopez, 514 U.S. 549 (1995) (invalidating such a ban)  or the regulation of purely intrastate commerce.  See A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935) (invalidating such regulation). 

Update:  After publishing this post I located a response by Professor Elhauge to a similar but briefer argument made by Randy Barnett.  The core of Elhauge's response is worth quoting in full, though I have highlighted key portions.

Although Barnett acknowledges that the early medical insurance mandates were exercises of Congress’ commerce clause power, he distinguishes them on the ground that they were imposed on actors who were in commerce, namely on shipowners and (in a third example he omits) seamen. His distinction thus means that he admits that these precedents show that if one is engaged in commerce in market A – here the shipping market or the seamen labor market – then Congress has the power to impose a mandate to purchase in market B – here the medical insurance market – even though markets A and B are totally unrelated. This concession conflicts with the argument of the challengers, which claimed that widespread activity in the health care market did not permit a purchase mandate even in the highly related health insurance market. Indeed, this concession seems to make the whole action/inaction distinction collapse because the fact that no relation between the markets is required means that commercial activity in any market – say, the market for employment or food or housing – would permit the Obamacare mandate. Because the Obamacare mandate applies only to those who have income that subjects them to income tax, it is necessarily limited to people who are active in some commercial market and thus his test would be satisfied.

Basically, then, Elhauge argues that the coercive individual mandate is constitutional because it only applies to individuals who earn enough income to subject themselves to the requirement.  As such they are "in commerce" with the result that Congress may require them to purchase products in an unrelated market, just as Congress required the owners of vessels to, for instance, purchase medicine.

Elhauge's argument ellides two distinct questions: (1) whether individuals subject to the mandate are engaged in commerce and (2) whether the mandate constitutes a regulation of that commerce.  Elhauge is certainly correct that individuals who work for employers and earn income are "in commerce" (at least according to the Supreme Court's modern case law.)   In this sense they are analogous to the vessels travelling in interstate commerce regulated by the statutes discussed above.  However, while the individuals are analogous to the vessels, the mandate is emphatically NOT analogous to the regulations of those vessels that Congress promulgated in the 1790s.   Simply put, given the definition of "regulate" announced in Gibbons and discussed above, the coercive individual mandate is not a "regulation" of employment or other income generating activity.  That is to say, the mandate does NOT "prescribe the rule by which commerce [earning income] is to be governed."  Instead, the mandate has nothing to do with that income-generating activity.

Indeed, if Professor Elhauge is correct, then choosing to enter the workforce would thereby subject an individual to any regulation of Congress's choosing.  Congress could, for instance, require all individuals to do a certain number of push ups each day, or ban exercise altogether.  It could ban poker or require it.  It could require all individuals to eat rice pudding or broccoli.  Nothing in the American Constitution grants Congress this sort of power.