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David Inserra

Statement from David Inserra, a fellow for free expression and technology at the Cato Institute:

Brazilian courts have now formally threatened to shut down X (formerly Twitter) in Brazil because X will not silence or provide information on individuals critical of the current government, including individuals living in the United States. The runaway judiciary claims it is protecting democracy from misinformation by

ordering the secret suppression of online expression by prominent Brazilian voices including current members of the Brazilian Congress,

the investigation and arrest of individuals for non-violent speech,

and now the shuttering of a popular social media platform serving over 20 million Brazilians that won’t bend the knee to its abusive overreach.

Also, now there are rumblings that Brazil may be targeting Starlink and SpaceX, which are only partially owned by Elon Musk. If true, this would mean that other unrelated US companies and investors are being hit by Brazil’s judicial authoritarians.

While the people of Brazil are the most directly harmed by such censorship, this information suppression also impacts Americans and our companies, calling for a vocal defense from our government.

Previous blogs on Brazil and X:

The Brazilian Judiciary’s Continued Censorship and the Brussels-Brasilia Effect

Note to Brazil’s Judicial Crusaders: Censorship in the Name of Democracy Is Still a Threat to Democracy

Jeffrey Miron

Focusing on the business tax cuts, a new paper reaches five conclusions:

First, large corporate tax cuts are expensive and increase the deficit substantially; specifically, the reform reduced corporate tax revenue by 40 percent.

Second, taxes matter for corporate investment. Firms facing larger corporate tax cuts invested more than firms facing smaller cuts. Three empirical approaches indicate that the tax cuts increased total tangible corporate investment by 8–14 percent. This response was far too small to offset the forgone tax revenue.

Third, domestic tax treatment of profits abroad can have important effects on investment at home; for example, provisions that increase foreign investment by US-based multinationals also boost their domestic operations.

Fourth, the effects of the [Tax Cut and Jobs Act] on economic growth and wages were smaller than advertised. Our analysis shows a long-run increase in wages of $750 per year (in 2017 dollars) per full-time equivalent employee. This impact was significantly below the $4,000–$9,000 range that the Council of Economic Advisers predicted before the law’s passage.

Fifth, the economic value received from forgoing tax revenue varies across different tax provisions. For example, it matters whether corporate tax reform encourages new capital creation via investment incentives rather than enriching old capital with corporate income tax cuts.

In brief, the corporate income tax changes generated substantial benefits, but several claims about these benefits (only a minimal reduction in revenue, with a large increase in wages) were significant exaggerations.

This article appeared on Substack on August 29, 2024.

Michael Chapman

The 2024 Republican Party platform, reflecting the protectionist views of presidential nominee Donald Trump, notes that “our trade deficit in goods” is over $1 trillion a year and says it is committed to “rebalancing trade” with foreign countries. Apparently, an imbalance—Americans buy more in imports than they sell in exports—is bad and must be fixed.

This is a fallacious claim because trade deficits don’t really matter—not between countries and not between you and your local grocery store.

When politicians and special interest groups—the latter usually domestic manufacturers averse to competition—talk about trade deficits, they imply that US businesses and workers are being hurt. Vice presidential candidate J.D. Vance, for instance, said in a July 30 speech, “We believe that a million cheap, knockoff toasters aren’t worth the price of a single American manufacturing job.”

What he means is that if Americans choose to buy one million toasters from foreign manufacturers because they are less expensive than US-made toasters, it isn’t worth it; one US job trumps consumer freedom.

In another speech, Vance said, “We’re done sacrificing supply chains to unlimited global trade, and we’re going to stamp more and more products with that beautiful label, ‘Made in the U.S.A.’” The implication is that a US-made product or service is better than a foreign good and “unlimited global trade” is bad. Never mind Sony TVs, Toyota cars, Columbian coffee, French wine, or Swiss chocolate.

In their criticism of global trade and imports, Vance and the GOP platform don’t mention several important things: the American consumer, private property, and the freedom that people should enjoy to voluntarily exchange goods and services. Some folks call this liberty and the pursuit of happiness: people freely choosing to buy and sell what they want, not what the government dictates.

In The Wealth of Nations, the great economist Adam Smith wrote, “If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them …. In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest. The proposition is so very manifest that it seems ridiculous to take any pains to prove it; nor could it ever have been called in question had not the interested sophistry of merchants and manufacturers confounded the common sense of mankind. Their interest is, in this respect, directly opposite to that of the great body of the people.”

Simply, it is in everyone’s interest to get the best deal. This applies to both the buyer and the seller who voluntarily engage in an exchange where each feels he is benefiting. If American consumers and businesses end up buying more goods from foreign manufacturers than they sell to foreign consumers, resulting in a trade deficit, so what?

“American citizens and firms deal with partners all over the world,” reports Cato adjunct scholar Daniel Griswold. “There is no rational economic reason why Americans should be expected to sell exactly the same value of goods and services to people in a particular foreign nation than they buy from them.”

Trade deficits or surpluses will always occur and will vary by product and from country to country. Keep in mind, you may buy lots of things from Amazon or Whole Foods yet they never buy anything from you. That’s a huge trade deficit on your end. But it does not matter because both parties benefited. The same economic relationship exists on the international level.

As the libertarian economist and historian Robert Higgs explains, “People—individuals, firms and other organizations, and governments—trade in order to improve their economic condition. Whether they trade with people inside or outside the USA has nothing to do with economics or human well-being. … Nations as such don’t gain or lose from trade; only individual traders do. If the trades into which these people voluntarily enter entice them by the prospect of mutual gain, it simply cannot be the case that the sum total of their transactions [a trade deficit or surplus] amounts to a bad deal.” (Emphasis added.)

When Trump claims that trade deficits hurt the United States, he ignores the US consumers and businesses that engage in those trades (imports) for mutual gain. Their interests apparently don’t matter. But if Americans want to buy toasters or washing machines or steel from China, for instance, why should the government try to stop them? The government only does so, as Adam Smith said, because of “the interested sophistry of merchants and manufacturers” who have “confounded the common sense of mankind.”

The merchants and manufacturers in question usually are the large domestic businesses and special interests (lobbyists and unions) who want to dominate the US market and keep competition out. They lobby Congress and the White House to protect them from foreign competitors. When they succeed, the government places tariffs (and other prohibitions) on selected imports, which are nothing more than taxes that are passed onto consumers. Thus, Americans pay higher prices for goods to help keep selected US businesses “protected” from the marketplace. The federal government gets the tax revenue.

For instance, a 2024 report by the Cato Institute, “Separating Tariff Facts from Tariff Fictions,” found that the 2018 tariffs on imported foreign goods “cost US consumers up to over $4 billion per month in additional taxes and deadweight loss (or lost income).” As an example, the Trump administration’s “tariffs on washing machines resulted in an aggregate increase in consumer costs of more than $1.5 billion,” noted the report.

Protectionists rarely talk about things like that. Nor do they like to discuss America’s trade balance when you include not just “goods and services” but also investment income and “unilateral transfers,” such as remittances and foreign aid. As Dan Griswold wrote, “the total outflow of dollars each year from the United States to the rest of the world is matched by an equal inflow of dollars from the rest of the world to the United States. … Dollars spent on imported goods and services return to the United States, if not to buy US goods and services, then to buy US assets in the form of an inward flow of investment.”

In other words, if you measure the value of US exported goods and services vs. imported goods and services, there may be a deficit. But if you include “all the dollars that flow into and out of the United States each year, the accounts are always balanced,” said Griswold. Contrary to protectionist claims, there is nothing to “rebalance.”

“This net inflow of investment funds to America balances out the trade deficit,” said Prof. Donald J. Boudreaux, co-director of the Program on the American Economy and Globalization at the Mercatus Center. “Because investing is every bit as much an economic activity as is buying (importing) and selling (exporting), when investing is included in the economic picture—as it should be—the existence of a trade deficit signals neither decline nor imbalance.”

Moreover, that investment in the US stimulates the economy in myriad ways and creates jobs. When the US consistently attracts “a disproportionately large share of investment funds from around the world, [it] can hardly be said to be on the decline or unbalanced,” said Boudreaux. Nonetheless, the protectionists ignore this reality.

If you believe in private property and that individuals should be allowed to buy and sell whatever they want—at local shops, among states, online, and from foreign businesses (Honda cars, anyone?)—then you know that all trade is good. It benefits the parties involved and brings people closer together.

You also realize that complaints about trade deficits, imbalances, and protection from foreign goods are nothing more than the “sophistry of merchants and manufacturers” and politicians who seek to confound “common sense,” whose “interest is opposite to that of the great body of the people”—the American consumers.

Ignore the charlatans. Pursue your happiness.

Colin Grabow

One of the more intriguing results of a recent Cato Institute–commissioned poll about trade and globalization was the respondents’ views on manufacturing. When asked whether the country would be better off if more Americans worked in the sector, 80 percent responded in the affirmative. Given widespread perceptions of American industrial decline—very much at odds with available evidence—that’s not entirely surprising.

But here’s the interesting part: among those same respondents, just 25 percent stated that they would personally be better off in a factory instead of their current work. It’s a result that holds across class, education, and racial lines. The most enthusiastic group, those aged 18–29, still registered just 36 percent interest in manufacturing employment.

Americans love the idea of people working in manufacturing, but most don’t think they would benefit from such work themselves.

The poll result comports with manufacturing job data. As of May, there were over 600,000 open positions in manufacturing, and the number hasn’t dipped below 300,000 in roughly a decade. These openings are one reason why the National Association of Manufacturers has championed a plan to expand immigration. Similarly, the secretary of the navy has called for increased immigration and work visas to address a lack of workers at the country’s shipyards.

Such jobs can’t find enough interested Americans to fill them.

Given some of the realities of manufacturing work, that’s understandable. As a recent Financial Times column points out, average hourly pay in manufacturing has been on a long, steady decline and fell below the private-sector average in 2018. The column also points out that such work can be “noisy, repetitive and isolating” (having once worked a summer job placing empty cans on an assembly line to be filled with paint, I can confirm) and that a 2024 Gallup poll found below-average enthusiasm for their work among those employed in manufacturing.

So it’s not a shock that many Americans aren’t champing at the bit for such employment. Indeed, even countries long associated with manufacturing such as China and Vietnam are seeing a growing aversion to factory work.

But how to explain this seeming disconnect between what Americans believe is best for the country and their self-interest?

One possible factor is that Americans are regularly told about the alleged depleted state of American manufacturing—particularly during presidential elections. Four years ago, President Biden campaigned on adding five million manufacturing jobs as part of an economic rebuilding effort, and four years before that, Donald Trump and Hillary Clinton each pledged to shore up manufacturing as part of their respective efforts to win the presidency. Unsurprisingly, the Democratic and Republican platforms for this year’s presidential race both feature language about revitalizing manufacturing.

This is hardly a recent phenomenon, with such talk by presidential hopefuls dating at least back to Walter Mondale’s 1984 claim that the industrial Midwest was being turned into a “rust bowl” due to a decline in manufacturing.

After being exposed to 40 years of rhetoric about manufacturing’s alleged downfall, Americans may have internalized the message. Add in a dash of nostalgia for yesteryear—two of the groups most supportive of more Americans working in manufacturing were those aged 65 and older (86 percent) and the retired (90 percent)—when manufacturing employment was more common, and the results are understandable.

Perhaps the better question, however, is not why Americans believe the country needs more manufacturing employment but why politicians regularly emphasize the importance of jobs in which Americans—both in word and deed—continue to show little interest.

Walter Olson

Where do the candidates in this fall’s White House race stand on issues of election and voting policy? The record holds few surprises, and the surprises that can be found are mostly negative.

Vice President Kamala Harris has been closely identified with the Democrats’ flagship election reform bill in Congress, previously the For the People Act and renamed the Freedom to Vote Act. As I’ve argued at length, this omnibus package puts its thumb in the eye of libertarian and constitutionalist principle, hews so relentlessly to the perceived electoral interests of the Democratic Party that it has failed to win support from even the most moderate Republicans, and is an obsolete contraption cobbled together from years’ worth of progressive messaging bills (Big Money influence! foreign tampering!), virtually none of which respond to the distinctive perils of the Trump era. And while Congress constitutionally can (and in my view should) pass some simple and straightforward rules curbing House gerrymandering, the Freedom to Vote Act is anything but simple or straightforward on that subject, instead putting litigators and hired experts in the driver’s seat while saddling state line-drawers with baffling standards that would resist sure compliance, even while actively discouraging sound districting criteria such as geographical compactness.

Unfortunately, according to an August 22 report by Patrick Marley of the Washington Post, “Democratic leaders say” this sorry assemblage “will be at or near the top of their governing agenda should Vice President Kamala Harris win the presidency this fall in a blue wave that also ushers in unified control of Capitol Hill.” They’ve had four years to come up with something better and more constitutional than this but apparently still haven’t. As colleague Patrick Eddington noted recently, the Democratic Party platform does not even engage with the dangers of excessive executive power that loomed large after the 2020 election. A better bill would take care to rein in a president who, as some advisers wanted Donald Trump to do, might be tempted after losing an election to invoke the Insurrection Act, order the seizure of voting machines, or even declare martial law.

As governor of Minnesota, Tim Walz has promoted and signed into law many electoral changes popular with progressives, including (to quote Jessica Husemann at VoteBeat) “creating state-level protections similar to the Voting Rights Act, allowing voters to sign up to receive absentee ballots for every election and restoring voting rights to more than 50,000 people who had been convicted of felonies.” Many of these measures are aimed at boosting turnout in a state that already regularly led the nation in that respect. (As I keep pointing out, it’s not clear that high turnout still benefits the electoral interests of the Democratic Party the way it once did.) Walz also signed bills in 2023 and 2024 aggressively regulating election-related use of deepfake images, an issue likely to give rise to First Amendment challenges at some point. On the brighter side, for me, Walz has spoken favorably of ranked-choice voting.

Ohio Sen. J.D. Vance has not tried to turn into actual legislation his “thought experiment” of giving parents proxy votes for their minor children, so I will not linger over its many complications, such as how the proxy would get voted when Mom and Dad’s opinions diverge. Back on a more familiar planet, Vance has introduced two election bills closely tied to timely controversies. One would cut off federal election administration funds under the Help America Vote Act of 2002 to states whose officials keep an otherwise eligible presidential candidate off the ballot on the basis of the Fourteenth Amendment. Another would, among other provisions, modify the apportionment of the US House of Representatives to base it on numbers of US citizens instead of numbers of persons.

Most pertinent is that Vance has closely aligned his positions with those of his patron, former president Donald Trump. Vance has said that he approves of the idea that after the 2020 election the states should have sent alternative slates of electors to Washington and that Congress should then have decided among them. He has praised Sen. Josh Hawley of Missouri, who led the fight against accepting the actual state certifications. As documented at length in a Politifact roundup, Vance has endorsed Trump’s constant complaint that the 2020 election was not free and fair or above board, that illegal votes were cast “on a large-scale basis.” During a primary debate when running for the Senate, Vance said, “I say it all the time: I think the election was stolen from Trump.”

Trump himself, of course, regularly repeats his much-refuted claims that the 2020 election was rigged, also defending as “warriors” and “hostages” the supporters foolish or fanatical enough to have believed him and to have rioted at the Capitol. To quote scholars Justin Grimmer and Abhinav Ramaswamy, “Trump’s claims of fraud or illegality are riddled with errors, hampered by misunderstandings about how to analyze official voter records, and filled with confusion about basic statistical techniques and concepts.”

I will be surprised if any of the candidates significantly modify their approach between now and Election Day.

Vanessa Brown Calder

Vice President Kamala Harris recently injected some policy ideas into a presidential campaign season that has been light on policy. Unfortunately, her ideas for reform are misguided and counterproductive. They would harm families and could increase the cost of living.

One of Harris’s ideas is to bring back the American Rescue Plan’s (ARP) version of the Child Tax Credit (CTC). Under the ARP version of the CTC, the credit was fully refundable and acted more as a child allowance or universal basic income for families rather than a credit against taxes owed.

Indeed, the federal government delivered half of the credit as a payment directly into taxpayers’ bank accounts. In addition to supporting a return to the ARP version of the CTC, Harris announced in a recent campaign speech her idea to boost the credit to $6,000 for households with newborns.

Harris is certainly not alone in wanting to expand the CTC; the House passed a bill to increase the credit’s refundability earlier this year, and Republican vice-presidential nominee J.D. Vance proposed expanding the credit to $5,000 per child in recent weeks.

However, there are drawbacks to any of these CTC proposals, including Harris’s plan. Research finds that the ARP version of the CTC that Harris favors reduces work and growth. The so-called “expanded” credit (more accurately “transformed”) is also enormously costly, at nearly double the cost of federal housing assistance.

An ARP-like version of the subsidy is more like a universal basic income payment (UBI) than a tax credit. However, UBI has fared poorly in the most recent and rigorous studies. Further, introducing what is functionally a UBI for families is misguided.

Two large-scale, recent studies find that UBI resulted in falling income, decreased labor participation, no improvement in physical health/​mental health, and short-lived improvements in stress and food security. Although it is unclear how generalizable these findings are for a child allowance half the size of the studied benefit, outcomes suggest caution is warranted.

Moreover, the CTC fails at many of its objectives. It is a poorly targeted anti-poverty program and, more relevant to Vance, an ineffective fertility initiative. As an anti-poverty program, most of the lowest-income households are ineligible. If low-income households are made eligible by removing the earned income (work) requirement, research finds millions of parents leave the workforce. This effect is not helpful from an anti-poverty or upward mobility standpoint.

Evidence and experience indicate that cash benefits are some of the least effective fertility incentives. A review of studies with experimental or quasi-experimental designs finds that financial transfers result in a short-term increase in births when parents move births forward in time while leaving the long-term total unaffected.

In addition to Harris’s misguided CTC proposal, Harris also proposed a $25,000 subsidy for first-time homeowners and other ideas like punishing corporate landlords who buy up single-family rental properties. But punishing landlords or investors for buying properties will do nothing to fix housing market fundamentals, and in places with inelastic housing supply (often the most unaffordable areas in the country) a demand-side homeownership subsidy would largely be captured by sellers, increasing costs for buyers.

To her credit, Harris has promised millions of additional housing units would be built under her administration. However, given that the federal government has limited ability to influence housing supply constraints (outside of federal land reform, environmental policy reform, or the like), it is a difficult promise for the executive branch to keep. New demand subsidies alongside limited supply present the worst of all worlds.

One silver lining is that Harris’s rhetoric around housing supply is a sign that housing supply is on the radar of top Democratic officials. The vice president should apply the same logic to other areas of families’ budgets rather than increasing demand for necessities with additional spending.

Colleen Hroncich

A few years ago, EdChoice released what’s casually known as the Chicken Little report. The official title was a little less catchy and a little more explanatory: Who’s Afraid of School Choice? Examining the Validity and Intensity of Predictions by School Choice Opponents. An accompanying video included snippets dating back to 1999 of choice opponents predicting public schools would be destroyed if parents were given more options. “Despite the predictions of the school choice Chicken Littles, the sky has not fallen,” the report noted.

The Chicken Littles are still at it, as seen in some headlines this summer: “School Vouchers Were Supposed to Save Taxpayer Money. Instead They Blew a Massive Hole in Arizona’s Budget.” “School choice vouchers tanked Arizona’s budget. Could they do the same in Alabama?”

Earlier this week, Arizona Superintendent of Schools Tom Horne released data that contradict claims that universal school choice is destroying the state budget—education funding was $4.3 million under budget for the year. “Having a surplus of more than $4 million is proof positive that the critics who have claimed the ESA [Education Savings Accounts] program will bust not only the state’s education budget but the entire budget itself were always wrong. It was always a myth, and that myth is utterly demolished,” said Horne.

An August 2024 analysis by the nonpartisan Arizona Joint Legislative Budget Committee also found savings, noting the higher-than-expected ESA enrollment was offset by an enrollment drop in district and charter schools. “With the above forecast adjustments, we estimate the total combined district/​charter/​ESA enrollment will generate savings of $(352,200) in FY 2024 relative to the enacted budget,” the report stated.

The Goldwater Institute’s Matt Beienburg recently detailed the fiscal impact of Arizona’s education savings accounts since they were made universal in 2022. In addition to the above findings, he noted that charter enrollment has flattened as parents opt for the universal ESA. Since charter schools receive more than $10,000 per student in state funding compared to around $7,500 received by ESA students, the shift from charters to ESAs represents a savings.

Beienburg also found that “the entire cumulative increase in spending on ESAs under universal expansion is smaller than the increase in state spending on public schools that state lawmakers authorized over the same period, despite enrollment in Arizona’s traditional public district schools declining in that time.”

These findings from Arizona make sense when you think about how education funding works. Currently, district schools receive funds from local, state, and federal taxpayers. While the breakdown varies by state, less than 10 percent is generally from federal sources with the remainder split between state and local. School choice programs like ESAs and vouchers are funded with a portion of state per-pupil dollars; districts retain all local funds even when children switch to another option.

The state funding for a private choice program is often less than the per-pupil funding that would have been sent to districts or charter schools. Thus, private choice programs typically save state tax dollars. Beyond that, they usually result in an overall increase in per-pupil spending in district schools since districts now have more local dollars to spread among fewer children.

No doubt the Chicken Littles will continue to cluck their doomsday scenarios when it comes to choice. But, as Arizona—the first state to pass a universal ESA—shows, the real-world results don’t match the fear-mongering.

Neal McCluskey

With a new school year upon us, a painful phenomenon over the last few years is likely to resurge: battles over books in public schools. A new survey from the Knight Foundation (for which I was on an advisory panel) gives reasons for both hope and pessimism. The survey indicates that book conflicts are not as prevalent as they might seem from frequent media reports, but differences about what books are appropriate for schools are very real.

Perhaps the headline finding of the Knight survey is that, despite all the sturm und drang we have had about book “banning” over the past few years, most people appear to be unaffected, at least directly. Only 23 percent of respondents reported being aware of efforts to restrict books in their community’s public schools, and only 3 percent reported having been active in fighting for or against a book. Contrary to the feeling one might get from media coverage, or even entries on the Public Schooling Battle Map, most school districts have not been wracked by book blowups.

That said, as you will find on the Battle Map, many “reading material” conflicts have been at the state level, potentially pulling everyone in the state into the brawl. Also, roughly one-quarter of school districts having had some discussion of book restrictions is nothing to sneeze at. With 13,318 districts nationwide, 23 percent is 3,063 districts, though apparently very few people get actively involved even when there are challenges.

Consistent with about a quarter of districts experiencing some sort of challenge, 26 percent of pre‑K through 12 parents reported being at least somewhat concerned about their child reading an age-inappropriate book “from” their school. It is not clear how many were concerned about their children reading an inappropriate book in school—for instance, while perusing library holdings—as opposed to checking it out and taking it home, as “from” might imply. So that percentage might be a baseline for worry.

Finally, 78 percent of adults reported being at least somewhat confident that their local public schools select appropriate books. About one-fifth did not feel confident, which would be sufficient to stoke many challenges that get media coverage and give the impression that book battles are pervasive. Still, this suggests most districts probably are not in the throes of explosive book conflicts.

Then things get more divided.

About one-third of respondents supported or leaned toward supporting challenges to books in public schools, generally speaking, and among public school parents the share was 40 percent. Not a majority, but a big chunk of the population.

Then there are the results when specific reasons for book challenges are given. While the large majorities of Americans might not have engaged in challenges and might trust their local public schools to make good choices, there is support for challenges and restrictions when specific concerns are invoked. Foremost, as seen in the following chart, 61 percent of respondents at least lean toward believing it is legitimate to restrict a book deemed age-inappropriate in schools.

Getting more concrete, the next chart shows that whether people think a book should remain in a library if a member of their community challenges it varies appreciably by student age group and specific content. At the low end of book support, only 26 percent of respondents think books that mention sexual intercourse should remain in elementary schools if challenged —a large majority for “banning”—while only 42 percent defend books at the elementary level that talk about sexual orientation, and 43 percent defend books that tackle non-traditional gender identities.

Finally, we can see how polarized we are overall in the chart below, which features yawning gaps between conservatives and liberals, especially concerning books that discuss sexual orientation and gender identity. A staggering 65 percentage points separate conservatives and liberals on whether books that cover nontraditional gender identities should be in elementary or middle schools if challenged, and the gaps are almost as wide concerning sexual orientation.

What we are likely seeing in these results are proximity, specificity, and sorting effects. Generally, people like and trust the institutions they know, which tend to be local. There are dissenters, and that can make for sometimes painful battles. But, generally, local decisions are made by people we might often somewhat know and, therefore, perhaps trust more. Indeed, the survey—which you should read in its entirety—contains questions showing directly that people trust decision-makers closer to them more than ones more distant, with state governments coming in tied for least trusted. Also, as I discuss about the history of American education in The Fractured Schoolhouse, people tend to select into districts populated with others who think like themselves, which has likely averted many conflicts.

Things change when we look at the national picture. People tend to be less trustful of faceless groups and more pessimistic about public schooling generally than their own public schools, perhaps increasing support for challenges when not asked about their specific community. More deeply, as we see when book content is specified, the country appears to truly have serious differences on values-laden issues, especially about sexual orientation and identity.

These survey results suggest that the book battles we’ve seen reflect real national polarization. But local control of public schooling has perhaps mitigated their spread.

David Inserra

In an August 26 letter to the House Judiciary Committee, Meta CEO Mark Zuckerberg admitted what many of us already knew: the federal government repeatedly tried to pressure social media companies into censoring Americans’ First Amendment speech. The letter exposes the challenges of addressing such censorial government demands, especially given the disappointing recent Supreme Court decision in Murthy v. Missouri.

The letter discusses several issues but it is worth focusing on the paragraph dealing with the pressure Meta felt from the government in which Zuckerberg states:

“In 2021, senior officials from the Biden Administration, including the White House, repeatedly pressured our teams for months to censor certain COVID-19 content, including humor and satire, and expressed a lot of frustration with our teams when we didn’t agree. Ultimately it was our decision whether or not to take content down, and we own our decisions, including COVID-19 related changes we made to our enforcement in the wake of this pressure. I believe the government pressure was wrong, and I regret that we were not more outspoken about it.”

Zuckerberg is saying two things here. First, government pressure was wrong, it happened repeatedly, and it had an impact on Meta’s content moderation decisions. Second, Zuckerberg is noting that the government did not actually force Meta to take these actions and so the decisions that were made, even if made under pressure, were ultimately Meta’s decisions. Meta has the right to host the kinds of speech it wants to host, allowing or removing speech that different parts of society will disagree with.

Unlike other governments that have direct power to weigh in on the speech and content moderation decisions of tech companies, the US First Amendment prevents our government from engaging in direct censorship. And so Zuckerberg’s letter is addressing this muddy area where the government pressures a company to suppress otherwise protected speech but cannot force it to do so. The challenge under our current legal jurisprudence is determining at what point government communications cross the line from being informational or persuasive into being threatening or coercive.

In Murthy v. Missouri, the Supreme Court looked at this very issue of government jawboning and added another potential hurdle—that of establishing standing. Only parties that could show that government demands directly led to the suppression of their speech could establish standing. This makes it difficult for the average citizen to establish legal standing, and it mostly falls to the pressured and coerced party to sue, i.e. the social media companies in this case.

But this leads to the next interesting part of Zuckerberg’s letter, where he states, “I feel strongly that we should not compromise our content standards due to pressure from any Administration in either direction—and we’re ready to push back if something like this happens again.” Zuckerberg is declaring that they are ready to combat government pressure.

But are they? As just mentioned, in the wake of Murthy, the court restricted standing most clearly to the platforms that directly faced such government pressure. So Zuckerberg, as CEO and majority owner of Meta, has standing to sue.

In this letter, he also says he believes the government wrongly jawboned his company and influenced its decisions. If Zuckerberg does “feel strongly” about this, then the conclusion is that Meta should sue the Biden administration for jawboning. Meta has a lot of good lawyers, many of whom I worked alongside for years in considering content moderation decisions, so they certainly know this too.

Why haven’t they sued then? Because the core problem of jawboning is that the threatened or pressured party has so much to lose by going toe to toe with the government, even if the threats are not made clear. The government is making an offer that these businesses can’t really refuse, at least some of the time. Yes, some victims turn on the mafia, but often at great cost.

Asking social media companies to respond with courage to repeated, secret demands made by the government is to ask them to face the government’s wrath in exchange for doing the right thing. They get little immediate credit for it, but they bear the consequences of the government becoming antagonistic or just less helpful in other areas of business.

So is Meta “ready to push back?” I suspect its spine is stiffer today and it would rebuff many advances made against it. But given that Meta is not willing to use its powerful position to resist the government and protect its speech and the speech of its users in the courts today, it is only a matter of time before Meta and other social media companies again find themselves facing irresistible government pressure.

Such a situation is untenable. Americans’ First Amendment right to speak online should not be contingent on whether a social media company feels brave enough to face down the vast regulatory and police powers of the government. Policymakers must explore additional safeguards to prevent the government from crossing the line.

The easiest solution is to require transparency into government demands of social media companies. Put simply, every time the government makes a request of a company, they would be required to report it. This would then generally be made public so that we know when and what the government is up to. By making these communications public, the government will be more hesitant to overstep its bounds and the public can be more confident that the government is not suppressing their speech behind closed doors.

Other solutions could build on this transparency requirement, such as establishing private standing in the courts so that it is easier for individuals to challenge any government suppression that occurs on social media platforms.

I’m happy to see social media companies condemn government overreach. But we need new policies to protect companies and their users’ speech online from government censorship.

Scott Lincicome

Today we’ve published two new essays for Cato’s Defending Globalization project:

How Trade Agreements Have Enhanced the Freedom and Prosperity of Americans by Daniel Griswold and Clark Packard shows that trade agreements have opened markets for hundreds of billions of dollars of US exports and foreign investment while lifting the standard of living for millions of American families through lower consumer prices and better jobs.

The Impact of International Financial Centers by Andrew P. Morriss explains that international financial centers (IFCs) provide outsized benefits to the global economy by reducing risk and transaction costs while encouraging better business laws around the world.

This content joins 34 other essays and additional multimedia features on the main Defending Globalization project page.

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