constitution

We Need Regulators, Not Interveners

by Ryan Young on June 22, 2011

in Deregulate to Stimulate, Regulation

The Constitution’s Commerce Clause gives Congress the power to regulate commerce. What does that mean, exactly? Over at the Daily Caller, my colleague Jacque Otto explain that regulation is about making commerce regular: no barriers to entry or trade, clear, understandable, and consistent rules, and so on.

Most of what people call regulation doesn’t have anything to with regular commerce. These kinds of rules are more accurately called interventions.

These interventions didn’t appear out of thin air, either:

One important reason regulators intervene is that many businesses want them to — businesses spend considerable effort and resources lobbying Washington to that end. For the most part, American companies compete on quality, price, or other consumer preferences. But on too many occasions, some companies try to use regulatory interventions to dispatch the competition. Sprint’s efforts to squander AT&T’s proposed purchase of T-Mobile are emblematic of this troubling trend.

Lessons abound for antitrust regulators — sorry, interveners.

Legislating the Way to Prosperity

by Ryan Young on March 14, 2011

in Economy, Politics as Usual

Rep. Jesse Jackson, Jr. has a novel idea for ending poverty: make it illegal. He explains in this short video of a speech he gave on the House floor:

The Constitution should be amended to guarantee everyone the right to a decent home. That way, everyone will get one. In a speech he gave on the House floor, he asks, “What would that do for home construction in this nation? What would that do for millions of unemployed people?”

The Constitution should also be amended to guarantee the right to decent health care. Jackson implores, “How many millions of doctors would such a right create?”

Education needs an amendment, too. “How many schools would such a right build, from Maine to California?” Jackson goes on to wonder how many jobs would be created by giving every student and iPod and a laptop.

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Obamacare’s Costs Rise, as Obama Backers Get Preferential Treatment

by Hans Bader on March 7, 2011 · 1 comment

in Economy, Features, Healthcare, Politics as Usual, Regulation

Post image for Obamacare’s Costs Rise, as Obama Backers Get Preferential Treatment

The cost of Obamacare continues to explode and exceed its sponsors’ predictions. HHS Secretary Kathleen Sebelius has now admitted to double-counting in the Obamacare budget, using the same $500 billion twice, first “to sustain” the existing Medicare program and then to “pay for” brand new Obamacare entitlements. Last year, the CBO hiked its estimate of Obamacare’s costs by $115 billion, even as many of its promised benefits failed to materialize.

Obamacare was supposed to save patients money by curbing insurance company profits and expanding state Medicaid programs to cover millions more people. (This expansion was criticized by state officials, including a few Democrats such as former Tennessee Gov. Phil Bredesen, who called it “the mother of all unfunded mandates.” Bredesen’s health care legal advisor concluded that Obamacare’s Medicaid-expansion provisions were unconstitutional.)

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Why Have a Legal System at this Point?

by Lee Doren on February 3, 2011 · 3 comments

in Legal

In the recent court decision declaring Obamacare unconstitutional, the Judge wrote the following on page 75 of the opinion: “[T]he award of declaratory relief is adequate and separate injunctive relief is not necessary.” This statement was regarding whether to order an injunction stopping the federal government from implementing Obamacare. Using crystal clear language, the Judge argues that the government should not enforce a law that a judge declares unconstitutional. Mark Levin has argued this point earlier in the week.

Sadly, the Obama administration appears willing to ignore the court’s decision and continue to enforce the law. So, in light of the federal government’s decision, what is the point of have the Constitution or a legal system at all? The Congress and the President passed a law that was clearly unconstitutional. A judge declares it so and says that he doesn’t even need to grant an injunction because the government cannot implement unconstitutional law, and yet, we continue as if nothing happened.

Using words like tyranny often turn off people who consider themselves willing to disagree without being disagreeable. But, what else would one call this? We have a government currently enacting policy with no checks and balances, and no system with which people can predict their legal standing. How else does one define what has taken place this week?

Smartphone Searches, Encryption, and the Constitution

by Ryan Radia on January 17, 2011 · 1 comment

in Legal, Personal Liberty, Privacy

The smartphone is arguably one of the most empowering and revolutionary technologies of the modern era. By putting the processing power of a personal computer and the speed of a broadband connection into a device that fits in a pocket, smartphones have revolutionized how we communicate, travel, learn, game, shop, and more.

Yet smartphones have an oft-overlooked downside: when they end up in the wrong hands, they offer overreaching agents of the state, thieves, hackers, and other wrongdoers an unparalleled avenue for uncovering and abusing the volumes of sensitive personal information we increasingly store on our mobile phones.

Over on Ars Technica, I have a long feature story that examines the constitutional and technical issues surrounding police searches of mobile phones:

Last week, California’s Supreme Court reached a controversial 5-2 decision in People v. Diaz (PDF), holding that police officers may lawfully search mobile phones found on arrested individuals’ persons without first obtaining a search warrant. The court reasoned that mobile phones, like cigarette packs and wallets, fall under the search incident to arrest exception to the Fourth Amendment to the Constitution.

California’s opinion in Diaz is the latest of several recent court rulings upholding warrantless searches of mobile phones incident to arrest. While this precedent is troubling for civil liberties, it’s not a death knell for mobile phone privacy. If you follow a few basic guidelines, you can protect your mobile device from unreasonable search and seizure, even in the event of arrest. In this article, we will discuss the rationale for allowing police to conduct warrantless searches of arrestees, your right to remain silent during police interrogation, and the state of mobile phone security.

You can read the full essay on Ars Technica here. And while you’re at it, I highly recommend watching this informative YouTube video that explains why it’s not a good idea to talk to police:

Dodd-Frank Financial “Reform” Violates Property Rights and Equal-Protection Guarantees

by Hans Bader on January 9, 2011 · 2 comments

in Bailout Watch, Economy, Legal, Property Rights, Regulation

Last week, I described how the Dodd-Frank financial “reform” law passed last summer violates constitutional separation-of-powers safeguards by giving unaccountable bureaucrats the power to seize companies and legislate through administrative fiat.  But that is not the only way Dodd-Frank violates the Constitution.  It also violates property rights and equal-protection guarantees.

For example, it contains racial preferences that were criticized by members of the U.S. Commission on Civil Rights. It “imposes race and gender employment quotas on the financial industry,” noted economist Diana Furchtgott-Roth in the Washington Examiner. Its ”Section 342 states that race and gender employment ratios must be observed by all government agencies that regulate the financial sector, as well as private financial institutions that do business with the government.”

This unconstitutional requirement is the brainchild of Los Angeles Congresswoman Maxine Waters, the Castro-loving, left-wing ideologue who earlier praised the Los Angeles race riots that destroyed scores of Korean-owned businesses as an “uprising” against injustice. Waters once told a CEO in a public Congressional hearing, “This liberal will be all about socializing . . . .uh, uh . . . would be about, basically, taking over and the government running all of your companies.”

Law Professor Richard Epstein notes that Dodd-Frank is also an unconstitutional “taking” of private property, since it deliberately forces certain banks to process debit card transactions at a loss. (That provision is being challenged in a lawsuit called TCF Bank v. Bernanke. Debit cards did not contribute to the financial crisis in any way, but Dodd-Frank regulates them at the behest of large businesses that objected to being charged any fee by banks for processing debit card payments. Thanks to Dodd-Frank, some customers will now be charged annual fees for their debit cards.)

Dodd-Frank itself contains little “reform,” reinforcing the very features of the status quo that spawned the financial crisis.  Congressional Democrats blocked a GOP amendment that would have reformed the government-sponsored mortgage giants, Fannie Mae and Freddie Mac, and the Obama administration lifted a $400 billion limit on bailing them out and showered their executives with $42 million in pay — even though Treasury Secretary Geithner has admitted that “Fannie and Freddie were a core part of what went wrong” in the financial crisis.

Fannie and Freddie helped spawn the mortgage crisis by buying up risky mortgages and repackaging them as prime mortgages, thus creating an artificial market for junk: “From the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime.”

At the direction of the Obama administration, Freddie Mac ran up more than $30 billion in losses to bail out mortgage borrowers, some of whom had high incomes. Federal regulators sought to make Freddie Mac hide the resulting losses from the SEC and the public.

Dodd-Frank is not unique in containing racial preferences. Many bills backed by Obama are riddled with racial set-asides, including the health care law passed last year. Obamacare has attracted criticism from the U.S. Commission on Civil Rights for containing both racial preferences and lower standards for treatment in predominantly-minority institutions, potentially harming both white applicants and minority patients. This racial discrimination appears to violate court rulings like the Supreme Court’s Adarand decision, and the Rothe and Western States Paving decisions issued by the federal appeals courts.

Obamacare Makes State Budget Problems Worse

by Hans Bader on December 21, 2010 · 1 comment

in Healthcare, Legal, Regulation

Obamacare is making state budget problems much worse, as governors now lament. Earlier, CEI filed an amicus brief in Florida v. HHS on behalf of two governors explaining how the radical changes to state Medicaid programs resulting from Obamacare violated limits on congressional power under the Constitution’s spending clause. Some of the fiscal burdens Obamacare imposes on states are obviously huge, while many others are ambiguous, unpredictable, and contingent on bureaucratic caprice, and uncertain future events.

Governors like Phil Bredesen (D-Tenn.) and Donald Carcieri (R-R.I.) warned earlier about the crippling costs of Obamacare to state budgets, but they were ignored by Obama and Congressional Democrats in their headlong rush to pass the health care bill. An adviser to Gov. Bredesen, James Blumstein (a professor of constitutional and health care law at Vanderbilt), argues that Obamacare is a violation of constitutional limits on Congress’s power under the spending clause.

Senate Leaders Violate Constitution in Pushing Through Costly Food Safety Modernization Act

by Hans Bader on December 2, 2010 · 3 comments

in Health and Illness, Legal, Nanny State, Personal Liberty, Precaution & Risk, Regulation

The House and Senate passed different versions of the Food Safety Modernization Act, which would ratchet up costly regulations of farms and food processing.  (Greg Conko explains how the bill’s expensive and cumbersome red tape might thwart “firms from developing innovative new processes and practices that could deliver real food safety improvements.”)   But as Conko and law professor Jonathan Adler have separately noted, there is a constitutional problem with the bill.  As Conko notes, the “user fees added to the Senate version run afoul of a constitutional requirement that tax measures originate in the House.

Similarly, Professor Adler notes “that the Senate’s failure to follow constitutionally prescribed procedures could doom the food safety bill.   The bill includes fee provisions that constitute taxes and the Constitution requires that all tax bills originate in the House of Representatives, and it looks unlikely that House Dems will let the slip pass.  Based on what Walter Olson has written about the bill, this could be a good thing.”

The House version of the bill would “drive out of business local farmers and artisanal, small-scale producers of berries, herbs, cheese, and countless other wares, even when there is in fact nothing unsafe in their methods of production,” warned legal commentator Walter Olson at Overlawyered.   I earlier discussed the harms likely to result from the bill, and false claims made by the bill’s defenders, here.

Crony Capitalism, the TSA, and Insider Trading

by Alex Schibuola on November 23, 2010 · 1 comment

in Odds & Ends

An additional dollar of resources that government uses means one less dollar of resources for the private sector. The private sector’s use of resources must satisfy consumers’ wants. If they don’t, businesses won’t make profits. A government’s use of resources however makes no guarantee about satisfying consumers’ wants.

Take for example, the video game and movie series Resident Evil. It’s about an evil corporation that produces an army of cannibalistic zombie warriors. My willingness to pay for cannibalistic zombie warriors is $0. I imagine most people share my unwillingness to pay. Quite frankly I’d rather have a beer, or a million other goods. All those resources used to produce zombies (scientists, security guards, cement and equipment, etc.) become unavailable to satisfy my preferences for an additional beer or other wants.

So who on earth is willing to pay for cannibalistic zombie warriors? Governments are. If the zombie warrior example is to extreme for you just consider the following government waste of resources: Amtrak, bridges-to-nowhere, nuclear missiles, your DMV, the TSA’s full body scanners, etc. No single human is willing to pay for them so no business is willing waste resources to produce them.

But if a government can take resources from people (taxes) and spend it as politicians choose, businesses can avoid producing to satisfy consumer wants. Rather, by making the right political campaign contributions, businesses can avoid satisfying consumers and just get contracts from government. All of a sudden insider trading by politicians becomes a lucrative trade and crony capitalism reigns supreme.

The TSA full-body scanners are a particularly egregious case of this. George W. Bush’s former Homeland Security Secretary, Michael Chertoff has a personal financial stake in the production of full body scanners produced by Rapiscan Systems (a subsidiary of OSI Systems). Notably, the CEO of OSI Systems recently joined President Barack Obama on the recent trip to India. No doubt it was a great opportunity to convince Obama of the “necessity” of full-body scanners in the ironic battle to protect freedom.

OSI’s 10-Q statement reports that “Revenues for the Security division for the three months ended September 30, 2010, increased $3.8 million, or 8%, to $51.1 million, from $47.3 million for the comparable prior year period. The increase was attributable to… a $8.1 million increase in people screening equipment as a result of wider adoption of body scanners…”

If OSI Systems is representative of the crony capitalist industry, you can see here how much better crony capitalist firms (see blue line) are performing relative to the S&P 500 (see red line).

The President, as leader of the executive branch of government, is supposed to protect and defend the Constitution of the United States, which (via the Fourth Amendment) protects Americans from government searches and seizures without probable cause. I consider TSA searches to violate this.

Any economist will tell you that incentives matter. If current and former executive branch members have a personal, financial incentives regarding issues (especially ones that contradict the Bill of Rights/Constitution) they’ll be more likely to shirk their sworn duty to defend and protect the Constitution.

Justice Kagan, Please Be a Judicial Activist

by Ryan Young on August 6, 2010

in Legal, Personal Liberty

Over at the Daily Caller, I explain why newly-minted Justice Kagan should be a judicial activist — but not in the way most people use the term. True judicial activism doesn’t mean legislating from the bench. It means standing up to the executive and legislature and striking down unconstitutional laws. Unfortunately, Justice Kagan seems like she would rather defer to the branches that gave her her new job:

There is a reason why the Supreme Court is filled with Justices eager to defer to the political branches. It’s because the political branches get to pick who sits on the bench. No president would nominate a judge who might nullify his administration’s signature achievements. No Senator would vote to confirm a judge who might strike down an important bill that she wrote. There is a selection bias favoring judicial passivists.

But there is light at the end of the tunnel:

Justice Kagan was nominated and confirmed because of her judicial passivism. But now that she’s in, she’s in for life. She can stand up for the judicial branch if she wants to. If a case comes before her involving a law that is clearly unconstitutional, her rightful duty is to strike it down.

In many cases, it’s as easy as just saying no.

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