Happy Thanksgiving From William Howard Taft

Knew How to Give Thanks

 

Thanksgiving is upon us, and readers may enjoy this 1911 Thanksgiving proclamation by William Howard Taft.    Careful readers will notice that Taft issued the proclamation from Chicago and not Washington D.C., the source of his three other Thanksgiving Proclamations.  Just two days earlier, Taft had dedicated the training facility at Naval Station Great Lakes, located in North Chicago.  A photograph of cadets in review before President Taft can be found here, courtesy of the Indiana Historical Society.

 

Happy Thanksgiving!   

    By the President of the United States of America
A Proclamation  

The people of this land having by long sanction and practice set apart toward the close of each passing year a day on which to cease from their labors and assemble for the purpose of giving praise to Him who is the author of the blessings they have enjoyed, it is my duty as Chief Executive to designate at this time the day for the fulfillment of this devout purpose.

Our country has been signally favored in many ways. The round of the seasons has brought rich harvests. Our industries have thrived far beyond our domestic needs; the productions of our labor are daily finding enlarged markets abroad. We have been free from the curses of pestilence, of famine and of war. Our national councils have furthered the cause of peace in other lands, and the spirit of benevolence has brought us into closer touch with other peoples, to the strengthening of the bonds of fellowship and good will that link us to our comrades in the universal brotherhood of nations. Strong in the sense of our own rights and inspired by as strong a sense of the rights of others, we live in peace and harmony with the world. Rich in the priceless possessions and abundant resources wherewith the unstinted bounty of God has endowed us, we are unselfishly glad when other peoples pass onward to prosperity and peace. That the great privileges we enjoy may continue and that each coming year may see our country more firmly established in the regard and esteem of our fellow nations is the prayer that should arise in every thankful heart.

Wherefore I, William Howard Taft, President of the United States, designate Thursday, the 30th day of November next, as a day of thanksgiving and prayer, and I earnestly call upon my countrymen and upon all that dwell under the flag of our beloved country then to meet in their accustomed places of worship to join in offering prayer to Almighty God and devout thanks for the loving mercies He has given to us.

 In Witness Whereof, I have hereunto set my hand and caused the seal of the United States to be affixed. Done at the City of Chicago, this 30th day of October, in the year of our Lord one thousand nine hundred and eleven and of the independence of the United States the one hundred and thirty-sixth.

William and Mary's Board of Visitors Extends Taylor Reveley's Appointment

 

 

 Will Serve Until 2017 (At Least!) 

 

 

Applauding His Creator  

Late last week William and Mary's Board of Visitors unanimously extended W. Taylor Reveley III's appointment as President of the College of William and Mary in Virginia, through June, 2017.  The Board first appointed Reveley, pictured above, as President in September, 2008.  Several months earlier, Reveley, then Dean of the William and Mary Law School and John Stewart Bryan Professor of Law and Jurisprudence, had agreed to serve as Interim President, in February 2008.   The Board's announcement praised Reveley's leadership, particularly his focus on strategic planning, private fundraising, and developing a new and more sustainable financial model known as the William and Mary Promise that recognizes the College's status as a Public Ivy and Liberal Arts University.  This blogger thanks President Reveley for his past leadership and future service as the College's 27th President, following in the footsteps of Bishop James Madison and others. 

However, no one is more pleased at the Board's action than the William and Mary Griffin, pictured above.   It was Reveley after all who, when presented with five mascot options after a grueling search process, exclaimed "get me the Griffin," as recounted in this video.  The rest, as they say, is history.



Minotaur Rocket Carries 29 Satellites Into Orbit

Last week the United States Air Force launched a Minotaur rocket from the Virginia Spaceport, on Wallops Island on Virginia's Eastern Shore.  According to this story in Spacenews, the rocket carried 29 satellites, including twelve from universities and one from the Thomas Jefferson High School in Fairfax County, Virginia.  For a description of NASA's so-called CubeSat Launch Initiative Program, which enables universities and others to launch small satellites, go here.  For a description of the satellite designed and constructed by the students from Thomas Jefferson High school, go            here.

This blogger photographed the Minotaur shortly after liftoff as it sped toward the heavens,  more than 80 miles from my location near Jamestown, Virginia. 

Readers who wish to track the satellite designed and constructed by the students at Thomas Jefferson High School can do so here.

Fundamental Right or "Public Benefit?"

 

 

Wants to Pursue His Vocation

 

Sergio Garcia recently passed the California Bar Exam on the first try and wants to practice law.  There is one problem.  His parents brought him to this country illegally when he was a child, with the result that his presence in the United States is unlawful.  While the California State Bar wants to admit him to the Bar, and the California Attorney General agrees, the Obama Administration is trying to stand in the way.  In particular, the Administration contends that allowing an individual to practice law is a conferral of a "public benefit," akin to an outright grant of money such as student loans, food stamps, or farm subsidies.  (See here for the government's brief).  As a result, it says, federal law requires the California courts to deny Mr. Garcia's application, because states may not grant individuals illegally present in this country such benefits unless the legislature of the state has expressly authorized the conferral of such a benefit.  See 8 U.S.C. § 1621.  

 

The administration's position has some basis in the statute, which defines "public benefit" to include "grant[s]," "commercial licenses" and "professional licenses . . . provided by any state agency or appropriated funds of the state."  See 8 U.S.C.1621(c).  (However, the California Committee of Bar Examiners has authored a powerful response, contending that bar admission does not satisfy the statutory definition of "public benefit.")   Moreover, the characterization of the practice of law as a state-conferred benefit accurately reflects how many members of the Bar view the legal vocation.  No less an authority than the American Bar Association, for instance, asserts that the ability to practice law is a "privilege" that society "confers" on individuals, with the result that lawyers are thereby obligated to provide some members of society free legal services in return.  (See here).  Some academics concur.   See e.g. Deborah Rhode, Cultures of Commitment: Pro Bono for Lawyers and Law Students, 67 Fordham L. Rev. 2415, 2419  (1999) (contending that lawyers' "privileged status" thereby obligates them to provide free legal services to others).  The Supreme Court has generally bolstered this characterization, by refusing to protect vocational liberty against arbitrary abridgments.   Thus, under current law, states may exclude individuals from their chosen vocation so long as a court can identify a single, hypothetical purpose that such exclusion might serve, without regard to whether the law actually serves that purpose.   See Williamson v. Lee Optical, 348 U.S. 483 (1955); United States v. Carolene Products, 304 U.S. 144 (1938) (sustaining ban on interstate shipment of filled milk by invoking baseless and pretextual health rationale).    Indeed, the Supreme Court has in one case rejected an occupational liberty challenges without identifying any plausible purpose served by the restriction.  See Ferguson v. Skupra, 372 U.S. 726, 728-31 (1963).  See also Nebbia v. New York, 291 U.S. 502 (1934) (sustaining minimum price regulation of independent retailers without identifying any plausible object of the law).  Compare Baird v. Arizona State Bar, 401 U.S. 1 (1971) (state cannot exclude individuals from a vocation because of political associations protected by the First Amendment).   One federal court has even gone so far as to hold that states may infringe occupational liberty for the sole purpose of enriching incumbent producers at the expense of consumers and potential entrants.  See Powers v. Harris, 379 F.3d 1208 (10th Cir. 2004).  (But see here for a discussion of a more recent decision rejecting this approach.)   The only exception is for those rare cases in which such exclusion violates an independent constitutional provision.   See e.g. Baird v. Arizona State Bar, 401 U.S. 1 (1971) (state cannot exclude individuals from a vocation because of political associations protected by the First Amendment).  There as a time, of course, when the Supreme Court took a different view, protecting liberty of occupation from infringements that did not serve a valid purpose.  See e.g. Allgeyer v. Louisiana, 165 U.S. 578 (1897) (unanimous). 

Thus, the Obama Administration's claim that a professional or commercial license is properly deemed a "public benefit" that governments generously confer on their citizens has substantial basis in statutory and constitutional law.  While defensible, this argument is still troubling.  After all, no one would seriously contend that the right to worship (or not) as one pleases or the right to write a poem or a song is a "public benefit" that the State can confer or withhold at will, regardless whether the individual exercising the right is lawfully present in the U.S.A.  Still, Congress, other public officials and academics have asserted, with a straight face, that the right to pursue a chosen vocation is no right at all, but instead a form of largess the State may (or may not) shower on its citizens.   The contemporary rhetorical plausibility of this argument illustrates just how far the national and state governments have exceeded the proper scope of regulation in a truly free society.

As previously explained on this blog, however, government exists to facilitate the exercise of liberty, not to restrict it. As James Madison, the cousin of this Blog's namesake, explained in Federalist 10 and elsewhere, individuals leave the state of nature and form governments so as to enhance their liberty, what Madison called "the faculties of acquiring property." To be sure, entering society requires individuals to forfeit a portion of their liberties, thereby empowering the State to restrict some freedoms.  In particular, individuals who leave the state of nature and enter society give up their right to restrict the freedom of others, on the understanding that others who enter society have given up the same rights.  This social contract between such individuals both empowers the state to act but also places limits on the scope of state authority to regulate, tax and spend.  In particular, states may ban murder, battery, theft, fraud and other conduct that harms others and raise revenue via taxation to fund the police and courts necessary to enforce such restrictions.  However, states may not restrain harmless conduct, whether pursued unilaterally or in concert with others, including the pursuit of harmless occupations.  On the contrary, states should facilitate such conduct by protecting property rights, enforcing contracts and the like.  States that do purport to prohibit such conduct and impose taxes to support such regulation do so without any basis in the social contract from which they purport to derive their authority.  

Thus, as Madison put it, in his 1792 on Property:

 

"That is not a just government, nor is property secure under it, where arbitrary restrictions, exemptions, and monopolies deny to part of its citizens that free use of their faculties, and free choice of their occupations, which not only constitute their property in the general sense of the word; but are the means of acquiring property strictly so called."

Thus, refusal to ban consensual transactions that have no impact on third parties is not a conferral of a "public benefit" but instead reflects the State's respect for the limits of the authority granted by the social contract and enforcement of an institutional framework that facilitates the exercise of fundamental freedoms.

No doubt Mr. Garcia's continued presence in the U.S.A. itself raises difficult questions of immigration policy.  Some would argue that, because his parents brought him here as a child, he should remain indefinitely, so long as he obeys the law and remains a productive member of society.  Others would contend that he should return to the country of his birth and join those who are applying through normal channels for permission to enter the United States lawfully.  However one resolves this dispute, one thing should be clear:  Mr. Garcia is not asking for public largess but instead seeks to hold the State to the terms of the social contract that Madison described.  

On The Supposed Tuition Crisis

Looking For A Crisis That Does Not Exist?

President Obama, pictured above in an official White House photo, recently unveiled proposals designed to rein in what he called the rising cost of attending college.  Focusing in particular on public universities, the President and the White House claimed that rising tuition leaves graduating students with too much debt, the prospect of which, the President said, even deters some students from attending college in the first place.  Under the President's plan, the national government would develop a metric for ascertaining how much "value" each college provides its matriculants and reward schools  deemed to be "higher performing" and "providing the best value."  In particular, low income students at "higher performing" schools will receive larger Pell grants than those who attend other schools.  Proposed metrics for assessing quality include percentage of students who graduate and "access," measured by the proportion of students from low income families.

Many commentators are considering these proposals for subsidizing centrally-determined indicia of value "on the merits," with many expressing skepticism about whether, if implemented, such proposals will further the President's objectives.  There is, however, a threshold question, namely, what justifies additional federal involvement in higher education in the first place? 

Less than a decade ago, the Economist  opined that, despite occasional controversy, "it is easy to lose sight of the real story: that America has the best system of higher education in the world."   The Economist also opined that the "main reason" for America's preeminence in higher education "lies in its organization." The "first principle" of  this organization, the Economist said, is that "the federal government plays a limited part.  America does not have a central plan for its universities. . . . Instead universities have a wide range of patrons, from state governments to religious bodies, from fee paying students to generous philanthropists."  Thus, America's system of higher education, which reflects the results of competitive federalism and private philanthropy, is the envy of the world.  While the national government provides some financial support, such assistance often takes the form of Pell Grants and various incarnations of the G.I. Bill, both of which  are the economic equivalent of vouchers that empower students to choose among innumerable institutions competing for their patronage. 

There is no reason to doubt the Economist's assessment of the quality of the U.S. system.  Recently the London Times published its World University Rankings.  20 of the top 25  universities are American, as are 34 of the top 50.  A different system, the Academic Rankings of World Universities, places 19 American universities in the top 25 and 35 in the top 50.  Moreover, each year thousands of foreign students flock to America's universities, leaving home temporarily and often paying significantly higher tuition than they would pay for an undergraduate education in their home country.  Given the virtues of competitive federalism and the advantages of private markets over planning, it is no surprise that such a decentralized system produces so many high quality institutions of higher education.

Proponents of the President's proposal to introduce additional planning would no doubt claim that high quality is beside the point if high prices prevent promising young Americans from matriculating.  Indeed, attempting to buttress claims that Federal action is needed, the White House released figures purporting to demonstrate a rapid increase in tuition over the past three decades at the nation's public colleges and universities.  Moreover, the White House also claims that two thirds of students graduate with an average $26,000 in college debt.  The prospect of high debt, it is said, deters some students from attending college in the first place and prevents others who start college from finishing.  Thus, it is said, there is a crisis of affordability in higher education, thereby justifying federal intervention.

Closer examination, however, reveals that, like the reports of Mark Twain's death, reports of an affordability crisis are greatly exaggerated.  In particular, White House data purporting to demonstrate large increases in tuition focus only on the "sticker price" of college and completely ignore the impact of financial aid that so many universities provide.  For instance, some public universities, including the University of North Carolina, Michigan State, William and Mary, and seven colleges in the University of Texas system (including UT Austin), provide free tuition, fees and room and board to low income students.  (See here, here, here and here for a description of these programs).  The University of Washington and Texas Tech offer such students free tuition and fees (see here and here).  Forty percent of students at the University of California at Berkeley pay no tuition.  (See here).   Students who attend Rutgers can receive a need-based grant of over  $9,000 per year, in addition to an educational opportunity grant up to $1,400 per year.  (See here).

Some private universities offer similar programs for families with low and modest incomes.   At the University of Richmond, for instance, Virginia families with incomes of $60,000 or less receive free tuition, fees and room and board. (See here).  Stanford also pays the full cost for families earning less than $60,000, while families earning between $60,000 and $100,000 need only pay room and board.  (See here for the details of the Stanford program.)  Brown University and several other Ivy League institutions have similar programs (see here and here )  Ditto for various other smaller private schools.  (See here).

Financial aid is not confined to that fraction of families with low incomes;  many schools also provide significant discounts to middle class families.  Vanderbilt, for instance, meets the financial need of all families, whether middle class or low income, with grants.  (See here).  So does Davidson.  (See here).       At the University of Virginia, middle class students who demonstrate financial need pay a maximum of 25 percent of the cost of attendance, with grants picking up the rest of the tab.   (See here.)   Texas A & M provides free tuition to families with incomes up to $60,000.  (See here).  At William and Mary, an in-state student from a family of four with an income of $100,000 will receive an annual discount of about $13,000.  (See here).  At the University of California Berkeley, a resident student from a family earning $100,000 would receive a grant of over $8,000; a student from a family earning $80,000 would receive a grant around $10,000.  (See here).   Some states also provide merit-based financial aid.  In Georgia, for instance, students who graduate from high school with a B average receive free tuition and fees at any Georgia public university.  (See here).  These programs are not cheap; the University of Washington, for instance, awarded $344 million in grants to 60 percent of its undergraduates in 2011-12.  (See here).   While federal aid in the form of so-called Pell grants helps fund aid for low income students, colleges make up the difference themselves, often raising money from alumni to cover this gap.  (See here for an example)

To be sure, some students still pay the "sticker price" or a large fraction of the sticker price, and some of these students emerge from college with significant debt.  However, as previously explained on this blog, taking on such debt to pay full tuition can be a very good investment, particularly at the nation's public universities.  For instance, tuition and fees at the University of Virginia, ranked 23rd among national universities, stands at just under $12,500 per year.    (See here)   At the University of North Carolina, the figure is about $8400.   Thus, even those students who pay "full price" pay only a portion of the cost of their education.  At UVA, for instance, tuition and fees equaled 53 percent of the cost of educating an undergraduate in 2010.  (See here).

Given these programs and aid programs at numerous other schools, the "sticker price" is a meaningless indicator of the actual cost of a college education. Indeed, the actual price of attending some of the colleges listed above is lower for some students, even before adjusting for inflation, than it was three decades ago, when many such financial aid programs did not exist. In the University of California system, for instance, 65 percent of undergraduates receive grant aid, and the net combination of tuition and fees for California residents equals just 40 percent of the sticker price. (See here).   Before declaring a "crisis" and embarking on expanded supervision of our nation's colleges and universities, Congress and the President should generate reliable data about the actual prices and benefits of higher education.  Indeed, the national government seems well-positioned to gather and disseminate such data to prospective students and policy experts alike.

None of this is to say that America's college students "have it made."  Upon graduation, such students will face an unfriendly job market, the product of the slowest economic recovery since the Great Depression.  (See also here and here).  Instead of attempting to micromanage our nation's colleges, the national government should focus on its core responsibility of encouraging robust economic growth and resulting economic opportunity for all Americans, including those who attend college.

Obamacare Imploding Already?

Architect of Implosion?

A recent story on CNNMoney explains why various Americans are choosing to pay a penalty instead of purchasing the health insurance nominally required by the so-called "Affordable Care Act" ("ACA").  Basically the insurance mandated by the ACA is far too expensive for some compared to the actual benefits such individuals would expect to receive.  Most importantly, like the Massachusetts reform that inspired it, the statute requires health insurance companies to charge younger, healthy individuals premiums that far exceed their expected health expenses, thereby subsidizing coverage for other Americans with higher-than-average expenses.  (See this previous post for an explanation of the Massachusetts approach and its onerous impact on younger, healthier individuals.)   As a result, and as previously explained on this blog, many rational individuals will be better off if they decline to purchase the mandated insurance, pay the penalty, and thereby self-insure, that is, pay their health care expenses "out-of-pocket."

The story profiles one such individual, a 29 year old who works as a medical assistant while attending nursing school.  According to the story, the insurance mandated by the Act would cost this single individual between $2400 and $3600 per year, despite taxpayer subsidies provided by the ACA, while the penalty for failure to purchase such a plan is about $300 per year.  It is therefore no surprise that this individual has concluded that "it is more economical for me to pay $300 a year [in fines] than $200 to $300 a month for insurance I don't use."

These data are of course only anecdotal, although they are consistent with more systematic analyses of the law's impact.  (See e.g. here).   These data are not surprising in light of the economic incentives that the ACA's centrally-determined pricing structure creates.  Moreover, if these data are in fact representative, this would be both good news and bad news for proponents of the Affordable Care Act.  The "good news" is that such data would bolster the Supreme Court's July, 2012 determination that the so-called "individual mandate" is an exercise of Congress's taxing power and thus constitutional.  As many will recall, a majority of the Supreme Court (Chief Justice Roberts and Justices Scalia, Kennedy, Thomas and Alito) properly held that Congress lacks the authority under the Commerce Clause of the Constitution to compel individuals to purchase health insurance, because coercing individuals to purchase a product against their will is not, under the standard announced by Chief Justice John Marshall in Gibbons v. Ogden, 22 U.S. 1 (1824),  a "regulation" of commerce.  (See here and here).  At the same time, a different majority of the Court, in an opinion by Chief Justice Roberts, sustained the law as an exercise of the taxing power, construing the Act's "penalty" for failure to comply with the mandate as a mere "tax" on such a failure to purchase.  As previously explained on this blog, the holding that the penalty was in fact a tax rested upon a determination that the tax is low enough that individuals have a "meaningful choice" between purchasing the "mandated" insurance, on the one hand, or paying the penalty and self-insuring, on the other.  Thus, evidence that individuals are in fact choosing the penalty/self-insurance route helps confirm that, at least under the majority's test, the individual mandate is no mandate at all, but instead an option, albeit one distorted by the requirement that individuals without health insurance pay a modest tax if they lack health insurance.

 

Now for the bad news.  As explained in a previous post, the ACA's financial model, like that of its Massachusetts predecessor, depends upon enrolling millions of young, healthy citizens and then charging such individuals premia that far exceed their expected cost of health care during the term of the policy.  However, as Thom Lambert has explained in a recent paper in Regulation, the prospect of paying these high premia will induce many individuals to forgo such insurance, thereby changing the characteristics of the risk pool and increasing the per capita expected health care expenses of those who remain in the pool.    (See also here).  The result, of course, will be even higher premia, thereby inducing additional individuals to forgo coverage, altering further the risk profile of those remaining in the pool and once again increasing the premium necessary to meet the expect health care costs of those who remain in the pool.  Such a vicious cycle will, Lambert explains, will cause the Affordable Care Act to "implode."

To be sure, Congress could arrest this spiral by raising the penalty that individuals who decline insurance must pay and/or threatening such individuals with jail time, thereby transforming an option into a mandate.  However, such legislation would contradict the Court's recent holding that such a mandate exceeds the scope of Congress's power, thereby placing any such fix in immedate legal jeopardy.  In short, a Congress serious about real health reform should begin to examine alternative means of achieving  the Affordable Care Act's objectives by, for instance, altering regulatory policies that increase the price of health care.   (See here, here, and here, for previous entries on this blog proposing such reforms).