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Colleen Hroncich

When the kids in Rosa Aristy’s homeschool co‐​op said they wanted to learn coding, the moms all looked at each other and wondered who was going to teach those classes. “The kids were so enthusiastic and wanted to learn more,” she recalls. “And I thought to myself, I’m not going to let these kids down. I was a marketing analyst before I became a mom, so I had done some programming. Not the kind they would want to learn, but I thought I could figure things out and take it from there.”

Rosa knew the kids would need a very solid math curriculum if they were going to get into robotics and coding. “I decided to start out with a math club, so then I’d get a rhythm and create a community,” she said. “Then these kids would be equipped to dive deep into robotics and coding and whatnot.”

She arranged for professors from Texas A&M to facilitate some sessions and she facilitated the others. One thing led to the other, and soon Rosa made connections that allowed her to start planning a robotics program. She was spending a lot of money on supplies and hated paying taxes on it when it was for educational purposes, so she decided to start a non‐​profit called Bridges to Science.

“Two months after we launched, Covid came and everything changed,” she recalls. “We started doing virtual, primarily the math circle. We continued that because the students really wanted to, and it gave them a sense of continuity in the midst of it all. Then we also started doing virtual coding clubs. We believe in providing a whole ecosystem for the students. By that I mean it’s not just me and the parents who are there chaperoning.

“We invite professionals—software engineers from different tech companies, faculty members, retired engineers, you name it. Every year in the math circle, we have a theme. Last year it was finance and economics. We did the stock market game, and we invited a lot of financial professionals who gave our students a peek into how they use math to buy stocks, create portfolios, etc.”

Last year, Rosa launched a Youth Ambassador program, where the upper high school students start training the younger students. Bridges to Science also has what they call family creative learning gatherings, which Rosa says are like mini science festivals. The youth ambassadors facilitate the different activities at the gatherings.

According to Rosa, the gatherings got the attention of a sponsor who suggested they host a larger event. “So we did,” she says. “We just launched the Houston Science Festival on September 9, and it was an amazing success. We exceeded expectations in attendance. We welcomed over 15 exhibitors, including the Houston Museum of Natural Science, Texas A&M, Rice University, cyber​.org, and Girls Who Code. We had music to kick off Hispanic heritage month. It was lots of fun. What was very gratifying is that over two‐​thirds of attendees were people who are considered low income. Many pulled me to the side and told me ‘if you hadn’t done this, we wouldn’t have ever seen any of these.’”

Rosa also focuses on Hispanic outreach. “There aren’t that many Hispanics homeschooling, and we believe there can be more of them,” she notes. “That was another great thing about the festival. Families came to us and said, ‘Oh my goodness, I didn’t know there were so many of us because usually every group has just handful of Hispanics.’ So we want to work with them and help them realize there are others.”

Bridges to Science is now shifting towards becoming an organization that supports the yearly science festival since it’s so much work. In between, the focus will be working with different communities in the Houston area so that families have access to resources that might not be accessible to them now. “If they attend a coding workshop or go to the Houston Museum of Natural Science to explore chemistry or the life sciences, the children begin to see which areas catch their fancy. Once you give them all these appetizers then they might want to dive deep into one of them,” Rosa explains. “The way we see our organization is we are a bridge—on one end of the bridge we have the communities that have little access and on the other we have the organizations, primarily universities, and we connect the two.”

David Boaz

It’s hard not to despair at the state of public policy discussion these days. Every day’s newspaper contains another bad idea from politicians, pundits, and wonks from across the political spectrum, from rent control to corporate subsidies to trillion‐​dollar handouts to costly regulations to red vs. blue cultural war games. It could keep an entire institute busy analyzing, criticizing, and warning about looming policy errors. As bad as the current climate is, though, I was reminded this week that we’ve lived through worse policy enthusiasms.

In his recent book Freedom’s Furies: How Isabel Paterson, Rose Wilder Lane, and Ayn Rand Found Liberty in an Age of Darkness, Timothy Sandefur describes the intellectual climate that those “founding mothers of libertarianism” faced in the Hoover‐​Roosevelt Depression years:

Between 1917 and 1919, agencies such as the War Industries Board and [Herbert] Hoover’s U.S. Food Administration appeared to vindicate Progressive beliefs in government planning. A decade later, many—including Hoover himself—pointed to that precedent, arguing that the Depression was analogous to a world war and should be dealt with in the same way.

That was the basis for the idea that General Electric’s president Gerard Swope proposed in September 1931. He recommended that the federal government create a system of industrial cartels under which all compa­nies of more than 50 employees would be assigned to a trade association vested with authority to dictate the types and amounts of goods and ser­vices businesses could provide, and how much they could charge. This would prevent “destructive” competition, by giving companies the power to prohibit their competitors from reducing prices or introducing new or improved products, which would “stabilize” the economy and ensure full employment. “Industry is not primarily for profit but rather for ser­vice,” Swope declared. “One cannot loudly call for more stability in busi­ness and get it on a purely voluntary basis.” Although hardly the only such proposal—it mimicked the corporatism already being implemented in Italy and Germany—the Swope Plan gained the most attention and would later form the blueprint for the National Industrial Recovery Act. But at the time, Hoover labeled it “fascism” and rejected it as “merely a remaking of Mussolini’s ‘corporate state.’”

Many similar schemes were offered by prominent intellectuals, includ­ing historian Charles Beard, who proposed “A Five‐​Year Plan for America” on the Soviet model, and New Republic editor George Soule, whose 1932 book A Planned Society proposed political control over the entire economy. These writers, said one of Soule’s colleagues, “were impatient for the com­ing of the Revolution; they talked of it, dreamed of it.” And they were not alone. That same year, novelist Theodore Dreiser published Tragic America, which he had originally planned to call A New Deal for America. It advo­cated the overthrow of capitalism and the replacement of the Constitution with a government that would control industry in the style of the Soviet Union, where he thought communism was “functioning admirably.”…

Dreiser probably changed his title because A New Deal had already been taken by economist Stuart Chase, whose book of that name also appeared in 1932. Chase—who considered it “a pity” that “the road” to socialist revolution in America was “temporarily closed”—looked forward to the day when the government would seize all industry and “solv[e] at a single stroke unemployment and inadequate standards of living.” It would do this, he said, by compelling all individuals to “work for the community.” The government should forbid high interest rates, stock market speculation, the manufacturing of “useless” products, the creation of new clothing styles, businesses “rushing blindly to compete,” and other “ways of making money”—and it should do so “by firing squad if necessary.” The 44‐​year‐​old Chase was inspired by the “new religion” of “Red Revolution,” which he found “dramatic, idealistic, and, in the long run, constructive.” “Why,” he asked, “should the Russians have all the fun of remaking a world?”

A system of industrial cartels under which all compa­nies of more than 50 employees would be assigned to a trade association vested with authority to dictate the types and amounts of goods and ser­vices businesses could provide, and how much they could charge. A Five‐​Year Plan. Political control over the entire economy. Replacement of the Constitution with a government that would control industry in the style of the Soviet Union. Seize all industry. Compel all individuals to “work for the community.”

As bad as our policy dialogue is in 2023, we don’t hear mainstream commentators calling for five‐​year plans and top‐​down control of the entire economy. It seems that libertarian and free‐​market ideas, along with our experience of overweening government in the United States and especially in other countries, have had some influence.

At the time, though, these ideas were not just wishful thinking by ivory tower academics. Consider some commentary from March 1933, when Franklin D. Roosevelt was inaugurated as president.

In his inaugural address Roosevelt declared, “We must move as a trained and loyal army willing to sacrifice for the good of a common discipline, because without such discipline no progress is made, no leadership becomes effective. We are, I know, ready and willing to submit our lives and property to such discipline.… I assume unhesitatingly the leadership of this great army of our people dedicated to a disciplined attack upon our common problems.” And if Congress didn’t promptly pass his agenda, “I shall ask the Congress for the one remaining instrument to meet the crisis—broad Executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe.…The people of the United States … have asked for discipline and direction under leadership.” And as Sandefur reports, plenty of people who ought to have seen themselves as guardians of constitutional liberty fell in line:

Fearful Americans cannot have been reassured by the February editorial in Barron’s that advocated “a mild species of dictatorship,” or by Walter Lippmann’s advice to the new president that same month—“You have no alternative but to assume dictatorial powers”—or by the New York Times reporter who proclaimed in May that Americans had given Roosevelt “the authority of a dictator” as “a free gift, a sort of unanimous power of attorney.… America today literally asks for orders.” Publisher William Randolph Hearst—who admired Mussolini and Hitler so much that he gave them columns in his newspapers—financed a propaganda film called Gabriel over the White House, which premiered days after the inauguration and depicted the new president being guided by heaven to declare martial law, unilaterally cure the Depression, execute criminals, and end all war. Even the Nazi Party celebrated Roosevelt’s commitment to all‐​encompassing power with a story in its newspaper lauding what it called “Roosevelt’s Dictatorial Recovery Measures.”

In some ways the real counterattack on this collectivist, centralist mindset began a decade later with the publication in 1943 of Paterson’s The God of the Machine, Lane’s The Discovery of Freedom, Rand’s The Fountainhead, and in 1944 of F. A. Hayek’s The Road to Serfdom. But as our current challenges illustrate, this intellectual battle is far from over.

Gabriella Beaumont-Smith

Today, I published a piece in Real Clear Policy highlighting Mattel’s Barbie supply chain and why manufacturing products in multiple countries is positive. Here’s a summary:

The toymaker behind Barbie’s iconic brand, Mattel, is one of the largest in the world and it exemplifies today’s global supply chains. Despite being known for her Malibu Dreamhouse, Barbie and her accessories come from all over the world—and for good reason. Different countries—much like different stores—offer different advantages. Barbie is small, requires intricate production, and has steady demand, while her Dreamhouse is big and heavy, and not purchased as frequently. These different factors mean that one is suitable to produce in one place and other parts somewhere else. However, the fact that the doll and her house aren’t made in America does not mean that Americans don’t add value to Mattel’s production process. In fact, quite the opposite is true. Read the full story here.

Plus, here’s a fun tariff reclassification case that didn’t make the op‐​ed:

Today, there are no tariffs on Barbie imports. However, this was not always the case. In the 1990s, Toy Biz Inc. brought an action to have certain action figures reclassified as “Toys representing animals or other non‐​human creatures” because the tariffs on these figures were 6.8% compared to 12% for “Dolls representing only human beings.” The tariff schedule no longer disaggregates dolls this way and the preferential tariff rate is zero. Dolls were temporarily subject to Section 301 tariffs imposed on China in 2018, but the list dolls were included on has since been suspended.

It’s a great free trade story on all fronts for Barbie!

Romina Boccia

Here’s an unpopular opinion: Social Security benefits are growing too fast. And this excessive benefit growth is one of the key reasons the program is unsustainable.

We’ve all heard that entitlement programs are suffering under the weight of a demographic shift. The American population is aging and living longer, as fertility has declined. Fewer new workers as the share of the senior population increases means fewer taxpayers available to cover the cost of old‐​age benefits.

This is true. And it’s also true that we could solve a lot of the entitlement spending problem, without cutting a single penny from current benefits, by slowing the growth in benefits.

In the case of Social Security, benefits are growing much faster than inflation. This is by design. And the difference is sizeable.

Prior to 1972, it took an Act of Congress to adjust Social Security benefits as they weren’t indexed to any economic measure. This meant that during periods of inflation the purchasing power of benefits would decline until Congress passed a benefit increase. Amendments in 1972 adopted the consumer price index for automatically adjusting current benefits for inflation. By 1977, Congress adopted further amendments, this time determining that initial benefits would be indexed to wage growth.

To this day, workers’ initial benefit levels are indexed to wage growth and ongoing benefits adjust with price growth.

The chart below shows the growth in workers’ initial benefit amounts over a period of 25 years, adjusted for inflation (for comparison) and wage growth (which tends to grow faster than inflation).

Here’s an example to illustrate this point: When Chris (an average American wage earner) decided to claim Social Security in 2020, she began receiving $18,231 per year. Pat on the other hand, with a very similar earnings history as Chris, claimed benefits 25 years earlier, in 1995, and she receives $14,545 in 2020—Pat’s initial benefit of $8,638, adjusted for 25 years of inflation.

Why are Pat and Chris, who earned the same and contributed the same payroll taxes to Social Security over their lifetimes, receiving wildly different benefits in 2020?

That’s the power of wage indexing. When Chris applied for benefits in 2020, she didn’t receive the same benefit as Pat, adjusted for inflation. Instead, Chris benefited from a $3,686 bump‐​up to reflect the increase in the standard of living, after inflation, that occurred between 1995 and 2020.

Some might argue that this is a good thing. Perhaps one of the goals of Social Security should be to raise the standard of living in retirement for average‐​wage workers by giving them a boost based on wage gains that occurred since they started working. After all, an important principle embedded in Social Security’s design is to redistribute some income from higher‐​earning workers to those lower on the income scale.

However, higher‐​earning workers also benefit from this excess benefit adjustment. Here’s another example featuring Jordan and Riley, high‐​income workers retiring 25 years apart. Jordan applied for benefits in 2020 and now collects $37,000 in annual income from the program. Riley, with the same earnings history and tax contributions collects $8,000 less, because she applied in 1995 and her benefits stayed the same, except for increasing with inflation. That doesn’t seem particularly fair but this is how the program works.

How benefit indexing works: When a Social Security‐​eligible worker’s benefits are first calculated, this worker’s past wages are indexed to bring them to the same level as today’s earnings. This is called wage indexing and is based on the growth in average wages in the economy. When the Social Security Administration (SSA) first indexes a worker’s lifetime covered earnings, it does so using the SSA’s Average Wage Index (AWI). The AWI includes all wages that are subject to federal income tax, including wages in excess of the taxable Social Security maximum payroll tax threshold.

Wage indexing gives retirees a benefit amount that reflects the increase in the standard of living over their working careers—even if they didn’t earn commensurate wages. It’s like giving workers retroactive credit for improvements in the economy, including for wage improvements among the highest income earners.

To illustrate: When Chris retired in 2020, her 1995 wages would have been counted as if they’d been earned in 2020, instead of the actual wages she earned in 1995. (Social Security uses the average wage index for two years prior to retirement. Thus, a person retiring in 2020 would see their wages through 2018 indexed to the 2018 average wage index; the two years immediately before retirement. This indexing increases past earnings to account for inflation as well as increases in average wage growth.)

After Chris’s initial monthly benefit was determined, it will be price indexed to preserve her benefit’s purchasing power against inflation – that’s the annual COLA (cost‐​of‐​living adjustment) that Social Security beneficiaries get when overall prices in the economy are going up.

The below chart shows how continuing initial benefit calculations using this model will increase Social Security benefits in the future. A maximum‐​benefit‐​eligible beneficiary retiring at age 70 in 2045 would receive an annual benefit of $114,306—more than $23,000 higher, after adjusting for inflation, than a similarly‐​situated worker retiring in 2020.

How much would this policy change save? According to the Social Security Trustees, switching to a benefit formula that adjusts workers’ initial benefits for inflation, rather than the growth in average wages, would close 80 percent of the program’s 75‐​year funding gap and lead to a surplus in the 75th year, if such a policy began in 2029.

Limiting the formula change to the highest 70 percent of earners (this is often called progressive price indexing) would close Social Security’s 75‐​year funding gap by 45 percent and achieve near‐​solvency in the 75th year, balancing out revenues and spending at 95 percent, assuming this change took place beginning in 2029. Figure 3 compares Social Security’s projected funding gap under current policy, progressive price indexing, and regular price indexing.

Changing the initial benefit formula to account for inflation instead of wage gains is one of the most significant changes that Congress could undertake. Adopting price indexing for initial benefits would preserve current benefits and protect beneficiaries from inflation, while reducing excess benefit cost growth.

How would this change affect the purchasing power of seniors? When President Roosevelt signed Social Security into law, he referred to it as “a law which will give some measure of protection to the average citizen and to his family…against poverty‐​ridden old age.” From a modest income support program, targeted toward individuals who lived beyond the age of life expectancy, Social Security now redistributes more than $1 trillion annually from working Americans toward those in retirement, despite the much greater wealth owned by retirees.

The median net worth of working Americans aged 35–44 was $91,300 in 2019, based on the Fed’s Survey of Consumer Finances. Meanwhile median net worth among those 65 and older was nearly three times that, at $266,400 for those in the 65 to 74 age bracket, and $254,800 for those 74 years and older.

As John Cogan, author of The High Cost of Good Intentions (2017), has argued in this Mont Pelerin Society report from 2020:

“modest Social Security changes to limit the growth in the inflation‐​adjusted value of initial monthly benefits and to raise the retirement age will maintain benefit levels that are fully consistent with the original objectives of the Social Security wage‐​indexing policy of helping senior citizens avoid a precipitous drop in their standard of living upon retiring and of helping senior citizen standards of living to keep pace with those of the working age population.”

When comparing the growth in the inflation‐​adjusted median income of households headed by persons age 65 or older (senior; considering all income, including from Social Security and other sources such as pensions and retirement account withdrawals) and the growth in the median income of households headed by persons under age 65 (non‐​senior) since 1980, shortly after Social Security adopted wage indexing, Cogan finds that:

“in the years since wage‐​indexing was established, incomes of senior households who are largely the group collecting Social Security, has not just kept pace with that of non‐​senior households, who are largely the group paying taxes to finance these benefits, it has a grown about four times faster. The more rapid income growth among senior households compared to the income of the typical working household has been an across the‐​board phenomenon [emphasis added].”

Cogan argues that if seniors’ initial Social Security benefits had been indexed to inflation, instead of wages, senior household income would have still grown twice as fast as non‐​senior household income, over the 40‐​year period since 1980. This is because most of the increase in senior household income is due to higher earnings from work and increases in retirement income, rather than increases in Social Security benefits.

It’s not only unnecessary and unfair to burden a declining share of workers with higher taxes to pay out benefits to a growing share of retirees, but such a policy is particularly offensive when those on the receiving end of an income transfer are better off than those providing the transfer. Shifting to price indexing for calculating initial benefits, at the very least when calculating benefits for higher income earners, is a sensible policy change. It would help avoid indiscriminate benefit cuts when Social Security’s trust fund borrowing authority runs dry (benefits would be automatically cut by 23 percent in 2033) and avert economically harmful tax increases to finance unsustainable benefit growth.

There’s a way to reduce Social Security’s financial and economic burden and eliminate its unfunded obligations over the long‐​term, and it requires no benefit cuts, but merely reductions in the growth of benefits. Now we just need to find the political will.

David J. Bier

New numbers from the Census Bureau’s mini‐​census, the American Community Survey (ACS), show that Americans had started panicking over a small increase in total immigration. The new data show that:

the immigrant share of the U.S. population rose just 0.3 percentage points from 13.6 to 13.9 percent from July 2021 to July 2022;
the total immigrant population—legal and illegal—grew less than 1 million during that time;
despite the increase, the number of immigrants was nearly 2 million immigrants lower than the Census Bureau’s 2017 projection for 2022;
over the last decade, the United States has seen the slowest growth in the immigrant share of the U.S. population since the 1960s;
the immigrant share is growing slowly, even while the United States faces the lowest total population growth in its history.

Figure 1 shows the immigrant share of the U.S. population from 2000 to 2022, as of July 1 of each year. The share increased by 1.5 percentage points from 2000 to 2007 before dipping in 2008 through 2009 as the housing bubble burst and employment fell. The share then rose again by 1.2 percentage points through 2017 to 13.7 percent before plateauing during the Trump years (note that 2020 ACS data used experimental weights due to the COVID-19 pandemic and are not comparable).

Under President Biden, the immigrant share rose again to 13.9 percent. The Census Bureau in 2017 projected that by 2022, 14.3 percent of the U.S. population would be immigrants. The gap of 0.4 percentage points between the actual and forecasted immigrant share means that the immigrant share grew at a third of the rate that the Census Bureau expected from 2017 to 2022.

Figure 2 graphs the total immigrant population from 2010 to 2022. It shows that the actual immigrant population was about 46.2 million, compared to the Census Bureau’s 2017 projection of 48.1 million—down 1.9 million people. The Census Bureau estimated that the number of immigrants would increase from July 2017 to July 2022 by 3.6 million when, in fact, it increased by less than 1.7 million.

Immigrant population growth was below expectations every year until 2022, when it exceeded the Census Bureau’s projection for the first time. Note that the Census Bureau ACS data include illegal immigrants.

The failure to meet projections resulted from declining immigration growth rates for several regions. European immigrants declined in absolute numbers from 2017 to 2022, while they held steady from 2012 to 2017. Asian immigrant population growth was 1.5 million lower in the more recent period than the earlier period. Latin American immigrants and African immigrants also grew at slower rates. Only Oceania and Northern America (Canada and Greenland) saw small increases in their growth rates since 2017.

The broader historical perspective is key as well. Figure 3 shows the immigrant share of the U.S. population at the start of each decade since 1960. The increase in the immigrant share of the population from 2012 to 2022 was the lowest for any decade since the 1960s when it declined. The 2012–2022 growth was just 0.7 percentage points—less than half the growth from 2000 to 2010. The growth in the immigrant share is down by 76 percent since the 1990s. In global context, the United States ranks in the bottom third of wealthy countries for its immigrant population share.

What’s particularly remarkable about the slower growth in the immigrant share of the U.S. population is that the U.S. population overall is growing at the slowest rate in U.S. history. Because Americans are having fewer children, each immigrant should have a bigger effect on the immigrant share of the U.S. population than in earlier decades, yet even though the U.S. population growth rate has declined by about 90 percent from its peak, the immigrant share is inching upward at the slowest rate in a generation.

This slower population growth creates a litany of economic challenges for the United States, as I explained in my recent testimony to the US Senate. Right now, America’s politicians seem far more concerned about the supposedly unsustainable increases in immigration than the massive worker shortage, the collapse in the worker‐​to‐​retiree ratio, and the catastrophic loss of skilled workers from the United States to China and other countries.

America needs people in both the short and long term, and it needs workers of all skill types. Immigrants can help, and they should be allowed to do so legally.

Jeffrey A. Singer

In November 2020, voters in Oregon approved Measure 110, which effectively decriminalized the possession of federally illicit drugs by reclassifying possession from a Class A misdemeanor to a Class E violation, resulting in a $100 fine or an agreement to undergo a health assessment. Making or selling illicit drugs remains prohibited. The measure also called for expanding drug rehab and harm reduction services funded by marijuana tax revenues.

The law went into effect during the pandemic year of 2021—a year in which pandemic policies impeded harm reduction efforts across the country and a time that saw national drug overdose deaths reach a record high of 108,000, abetted by feelings of despair and isolation accompanying those policies. While this reform is still a baby in its bassinet, a coalition of Oregon business and political leaders plan to put a ballot measure before voters that would essentially strangle it.

The group called the “Coalition to Fix Ballot Measure 110” has unveiled two versions of its drug re‐​criminalization proposal. One version again makes it a misdemeanor to possess heroin, fentanyl, cocaine, methamphetamine, and other illicit drugs. It also makes consuming illegal drugs in certain public places a misdemeanor. A second version increases penalties for delivering or transferring drugs, expands the definition of “delivery” to include “possession with the intent to transfer,” and increases penalties for subsequent arrests.

Both versions require mandatory treatment for people deemed “drug dependent.” Coercive treatment, aside from being an immoral violation of a person’s autonomy and agency, has also been found to be, at best, ineffective and, at worst, very harmful.

Harvard researchers recently reported that medication‐​assisted treatment with either methadone or buprenorphine is the only treatment strategy associated with “reductions in overdose and serious opioid‐​related acute care use compared with other treatments,” including inpatient detoxification or residential services.

Opponents of Measure 110 cite Oregon’s continued rise in overdose deaths, the growing homeless population, and the increase in public drug use to justify a return to failed prohibitionist solutions.

However, the “Coalition to Fix Measure 110” was mistaken if they believed that drug decriminalization would necessarily lead to a drop in illicit drug use—especially in the peak and post‐​peak years of the coronavirus pandemic. The primary goal of Measure 110 was to reduce drug overdose deaths by redirecting resources from incarceration to harm reduction. Alas, the pandemic got in the way.

Reverting to incarceration will do nothing to deter illicit drug use. It will just crowd the jails, prisons, and courts, add to the workload of law enforcement, and increase the burden on taxpayers. This approach didn’t deter drug use before Measure 110, so why should it if Measure 110 is effectively repealed? Also, evidence reported in the March 2023 issue of the American Journal of Public Health suggests that when law enforcement doubles down on drug seizures, it may directly increase overdose deaths. This is presumably because, after a drug bust, users must seek new and often unfamiliar sources for their drugs, many of whom provide drugs with different dosages and purity.

Max Williams, a former Republican Oregon state legislator, is a member of the group seeking to put the re‐​criminalization measures on the November ballot. To his credit, he doesn’t blame Measure 110 for Portland’s homelessness crisis, according to The Oregonian, the state’s largest newspaper. The causes of homelessness are complex and multifactorial. In a recent Cato briefing paper, Vanessa Brown Calder and Jordon Gygi discuss how land use and zoning regulations make housing less affordable and create barriers to housing development that increase housing supply.

Opponents of Measure 110 are understandably upset when they view drug use in plain sight, which their children can witness. One way to reduce open‐​air drug use is by bringing it inside, out of the public eye, and into overdose prevention centers (OPCs). A federal law, 21 U.S.C. Section 856 (the so‐​called “crack house statute”), makes OPCs illegal in this country, but two of them have been working in New York City, sanctioned by the city government since the end of 2021. They announced this July that they had reversed more than 1,000 overdoses since they began operating.

Another way to address the problem of loitering and gathering in ways that provide a public nuisance is by enacting and enforcing public nuisance laws. When a group of people are intoxicated with a legal drug like alcohol and vomiting on public streets, are rowdy, and litter the street with bottles, it is legitimate to call some enforcement authority (preferably an unarmed and separate division of the police department) to combat it—not with jail time, but with some sort of fine or sanction.

The same principle should apply to people who use other drugs. In some cases, the law can require them to relocate to areas of the city where they are less likely to disturb other residents.

This November, Oregonians will likely be asked to “fix” Measure 110 with “remedies” that have failed for more than 50 years and will only worsen the harms caused by drug prohibition.

Norbert Michel

I spent a large portion of my career working at a conservative think tank, and during my last few years there I often heard folks say things like, “Of course free markets are great, but they need limits, just like everything.” Typically, those folks wouldn’t say exactly what limits they wanted, only that it was important to have “a conversation” about them.

Unsurprisingly, when Vermont Senator Bernie Sanders, an independent who caucuses with the Democrats, and Representative Alexandria Ocasio‐​Cortez (D‑NY) introduced legislation to cap credit card interest rates at 15 percent to combat “economic brutality,” my colleagues weren’t fans.

And when Senator Jeff Merkley (D‑OR) introduced the Veterans and Consumers Fair Credit Act, a bill that would have extended rate caps beyond active‐​duty military personnel to all consumers, I received zero pushback on a paper laying out the case against interest rate caps.

So it will be very interesting to see what happens now that Senator Josh Hawley (R‑MO) has positioned himself barely to the right of Sanders and Ocasio‐​Cortez with a bill to cap credit card rates (for everyone) at an APR of 18 percent.

Of course, Hawley is blaming the Biden administration for the high prices that motivated his legislation, but it’s unclear if moving to the left of the administration on this issue is a winning political strategy. (At least one analyst believes Hawley’s bill has no chance of passing, and that Hawley is making a purely political move.)

The only thing that’s certain is that a rate cap policy is a losing economic strategy.

The historical record on price controls is awful. They tend to spawn harmful unintended consequences, including bribery and corruption to evade the controls, as well as rent‐​seeking, which only benefits the people implementing the controls. And price controls rarely help the people they’re intended to help, generally resulting in some combination of higher prices and shortages.

In the case of credit rate caps, it’s not hard to imagine that the highest income earners would suffer the least, while the lowest income earners—the people who most desperately need credit—would suffer the most. In the end, the rate caps would cause problems that provide additional pretense for more price controls and government intervention, both of which tend to further hinder the effectiveness of markets in the first place.

It will be very interesting to see which members of Congress support Hawley’s rate caps, and even more intriguing to see which D.C. think tanks support them. Hopefully, fundamental principles and common sense win out over populism and opportunistic politics.

Norbert Michel

This new Forbes post provides a brief overview of my testimony last week in the U.S. House of Representatives at a hearing titled Digital Dollar Dilemma: The Implications of a Central Bank Digital Currency and Private Sector Alternatives. Naturally, Cato’s scholars don’t see much of a dilemma—the United States government should foster more private alternatives in the payments sector and should not issue a digital currency.

While the hearing went pretty much as expected, there was a strange moment that should be addressed. Around halfway through the hearing (see the 1:20:00 mark), minority witness Raúl Carrillo implied that the other witnesses had mischaracterized the nature of the Fourth Amendment to the U.S. Constitution. He then blamed privacy problems in the financial sector on the “connection between the private and public sectors.” Here’s the passage in full:

…this question allows me to first clarify a point regarding Fourth Amendment doctrine, which I believe has been mischaracterized on this panel. The third‐​party doctrine creates problems precisely because of the connection between the private and public sectors. So, to suggest that it is just going to not apply to the public sector, and will apply to the private sector, is to fundamentally misunderstand constitutional doctrine. We could have a system wherein private companies work with public companies, and that still could lend itself to mass surveillance. So, these conclusory statements about application of the 4th amendment are not particularly helpful here. The laws and the technology of the models being suggested do not lend themselves to application of the Fourth Amendment.

First, I don’t believe anyone suggested that the third‐​party doctrine (or the Fourth Amendment) would apply to the public sector. I’m positive I didn’t make that claim. And, if Carrillo meant to say that a system where private companies working with the government—as opposed to, in his words, public companies—could still result in mass surveillance, he’s probably right. Any system that requires private companies to record information so that the government has unfettered access is ripe for government abuse.

However, I have to take issue with whether “the laws and the technology” lend themselves to the application of the Fourth Amendment. It’s a baffling statement that caps off an otherwise confusing analysis.

The purpose of the Fourth Amendment to the U.S. Constitution is to protect people from government abuse (unreasonable searches and seizures). Yet, the Bank Secrecy Act requires private companies to keep financial records that the government can access without a search warrant. So, while it’s useful to distinguish between what private companies are doing and what the government does, there’s no doubt that the government has commandeered the private sector to implement the Bank Secrecy Act regime.

And we’ll have an even bigger problem if we move to a CBDC because the government will start collecting the data directly, thus making it even easier to access citizens’ financial records. The important principle, though, is that regardless of what type of money Americans use, the government should not have access to citizens’ financial records without first demonstrating probable cause and obtaining a search warrant. Nonetheless, since Congress enacted the Bank Secrecy Act in 1970, the government has had access without obtaining a warrant.

So, as Cato scholars argue, Congress should explicitly prevent the Fed (and Treasury) from issuing a CBDC. Separately, Congress should amend the Bank Secrecy Act so that law enforcement must obtain a warrant to access citizens’ financial records. Anyone interested in these topics should check out the full hearing.

Chris Edwards

As Congress considers a farm bill in coming months, it should keep in mind that farm household incomes have risen greatly over the decades. When farm programs were put in place in the 1930s, the “per person disposable income of farms was 39% of U.S. per person disposable income,” reported agricultural economist Carl Zulauf. Farmers had lower incomes than other Americans.

Today, farmers have substantially higher incomes than other Americans, according to U.S. Department of Agriculture data. The chart shows the ratio of the average income of farm households to the average income of all U.S. households. Farm incomes fluctuate from year to year, but the long‐​term trend is upwards.

In 1960, farm households earned 65 percent of the incomes of all U.S. households, on average, but by 2021 they were earning 32 percent more. In 2021, the average income of farm households was $135,281, which compared to the average for all U.S. households of $102,316.

Farm subsidies in the 1930s were a low‐​income safety net, but that justification for subsidies has disappeared with today’s more prosperous farmers. For this reason and others, Congress should begin cutting the $20 billion or more in annual taxpayer support for farm businesses.

For farm households, the USDA data include income earned on and off the farm. The share of farm household income earned off the farm increased from less than 40 percent in the 1930s, to 53 percent by 1960, to 77 percent by 2021. Today’s greater diversification of income sources is a market‐​based way of mitigating the risks of farming without government subsidies.

These data are overall averages, but there are many different types of farm business. The USDA data show that smaller farm operators tend to earn a larger share of household income off the farm and are less likely to receive subsidies. Larger farm operators tend to earn a smaller share of household income off the farm and are more likely to receive subsidies.

Ian Vásquez

Hong Kong is no longer number one, according to the Economic Freedom of the World: 2023 Annual Report, released today by the Fraser Institute and co‐​published in the United States by the Cato Institute. As Hong Kong’s ratings declined, Singapore increased its score and edged the Chinese territory out for the top spot.

The report finds that the Chinese government imposed “new and significant barriers to entry” in Hong Kong and otherwise increased the costs of doing business there. The rule of law also saw a deterioration, contributing to the city’s decline.

Other countries ranked as follows: United States (5), Canada (10), Taiwan (11), Japan (20), Chile (30), France (47), Mexico (68), India (87), Turkey (101), Russia (104), China (111), Egypt (144), Argentina (158), Zimbabwe (164), Venezuela (165).

The report uses data that rate countries on 45 distinct variables in areas ranging from trade openness and the size of government to monetary policy, regulation, and the legal system through 2021, the most recent year for which comparable international statistics exist. It finds that, with the onset of the COVID-19 pandemic, global economic freedom fell dramatically in 2020 and remained at that level in 2021, a decrease that erased a decade of growth in economic freedom.

The authors of the report—James Gwartney, Robert Lawson, and Ryan Murphy—find a strong relationship between economic freedom and numerous indicators of well‐​being, including income, longevity, lower infant mortality rates, and more. This year’s report includes three chapters by guest authors on populism, the rule of law, and Botswana as a case study, respectively.

See those and other findings here.