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Jeffrey A. Singer

Last month, an advisory panel convened by the Food and Drug Administration reviewed the results of phase 3 clinical trials of MDMA (midomafetamine, known colloquially as “ecstasy” or “molly”) in treating post-traumatic stress disorder (PTSD). The committee recommended, by a vote of 9–2, against the FDA approving the drug to treat PTSD.

The committee based their vote on an analysis by FDA scientists that concluded it is impossible to conduct truly double-blinded placebo-based randomized controlled trials on the drug. For a study to be double-blinded, neither the participants receiving a drug nor the researchers administering it can be aware of which subjects are receiving a placebo instead of the drug under study. The analysts contended that patients would quickly surmise they were administered a placebo if they did not experience the profound mood alterations and sensations widely known to be associated with MDMA. The analysts argued that it may be “nearly impossible to blind” studies on such psychoactive drugs. (That seems like a catch-22.)

The 9–2 vote came despite a multi-site randomized double-blinded phase 3 study published in Nature last September that found 86 percent of PTSD patients who received MDMA plus talk therapy had reduced severity of symptoms after 18 weeks.

Lykos, the company applying for approval, is a public benefit corporation spun off from the Multidisciplinary Association for Psychedelic Studies (a non-profit research and educational organization) with the mission of developing and marketing novel psychedelic-assisted therapies. The FDA is scheduled to decide on approving MDMA to treat PTSD in August. While it is not required to follow the advice of its independent advisory councils, it usually does.

Since 1985, the Drug Enforcement Administration has classified MDMA as a Schedule I drug—“drugs with no currently accepted medical use and a high potential for abuse.” The agency does so despite intensive hearings on its medical use, potential for abuse, safety, and toxicity, overseen by DEA administrative law Judge Francis D. Young. Young ruled that MDMA should be classified as Schedule III—drugs with “moderate to low potential for physical and psychological dependence.”

Just as the FDA can overrule its advisory panels’ recommendations, the DEA can overrule its administrative law judges’ recommendations. It did so in 1985, in another example of cops practicing medicine. Millions of people living with PTSD have been denied access to treatment with MDMA ever since.

On July 7, approximately two dozen clinicians and clinical researchers, including several holding academic positions at prestigious institutions in the US and UK, signed a “consensus statement” endorsing MDMA-assisted therapy for PTSD. The clinicians addressed the concerns FDA scientists raised about the difficulties of conducting double-blinded studies on psychoactive drugs like MDMA:

Although concerns have been raised about functional unblinding and expectancy effects in the phase 3 trials, these are common issues with testing psychoactive medications. We believe that these concerns do not rise to a level that would call the main clinical trial findings into question. In our assessment, the findings provide ample evidence of the efficacy of midomafetamine-assisted therapy for PTSD…

The statement concludes:

While we agree with many of the issues raised by the FDA advisory committee, given the data we have reviewed and the urgency of the need, our assessment is that the benefits of midomafetamine-assisted therapy outweigh the risks and that midomafetamine is now approvable. The use of midomafetamine-assisted therapy should include a Risk Evaluation and Mitigation Strategy (REMS) that can be adjusted as real-world safety and efficacy data emerge.

So now the fate of PTSD sufferers is in the hands of the FDA, which will decide which group of experts’ advice to follow.

What is missing in all of this is the idea that autonomous adults have the right to self-medicate. The idea that competent adults have the right to self-medicate follows directly from the doctrine of informed consent. All public policies must start from a presumption of individual liberty and autonomy. They must respect personal freedom and self-governance.

In a 2020 white paper, Michael F. Cannon and I presented a roadmap for returning to drug regulations that respect adult autonomy and the right to self-medicate. Neither the cops in the DEA nor the bureaucrats in the FDA are morally justified to do otherwise.

Daniel Raisbeck

During his speech at a June 12 event in Buenos Aires, held by the Cato Institute and local think tank Libertad y Progreso, Argentina’s President Javier Milei pointed to the sale of puts on Treasury bonds as part of the ruinous inheritance he received from the last government. Puts are options in which the seller agrees to buy a security at a lower price (the strike) than when the contract is agreed upon if the buyer so chooses, whereas the buyer risks losing the cost of the option if the strike price does not materialize before the expiration date.

The puts strategy, Milei argued in Buenos Aires, was one of the previous government’s “major perversions.” This is true; former President Alberto Fernández’s administration did introduce the puts as a failed means to counter a run on Argentine debt instruments. Still, during the first six months of Milei’s government, the central bank sold a far greater peso amount of puts than the previous government during its last six months in office, as evidenced by 1816, an Argentine consulting firm that analyzes the central bank’s figures. Indeed, the sale of puts has been a key part of the “dilution” mechanism implemented by Luis Caputo, Milei’s finance minister.

Dilution consists of lowering interest rates drastically while inflation remains high, so that the government’s debt is thinned or diluted through inflation. However, diluting the debt involves devaluing fixed-term deposits by individuals and businesses. As my colleague Gabriela Calderón and I have argued, dilution is incompatible with dollarization, which Milei promised to bring about during last year’s campaign. He also pledged to shut down Argentina’s central bank. Both measures are still necessary. Although Milei still pledges to carry them out, the plan for executing dollarization is unclear.

At the end of the last government, Argentina faced triple-digit annual inflation levels due to the entrenched practice of monetizing the debt incurred to finance profligate spending. One of the main drivers of inflation was the mountain of interest-bearing liabilities on the central bank’s balance sheet, worth around USD $30 billion. Known as liquidity notes (Leliqs), these liabilities had very short-term maturities, ranging from 24 hours (notes known as Pases) to 28 days (with a rollover mechanism), and an effective annual interest rate of 155 percent when inflation stood at around 130 percent per annum. Only the commercial banks had access to the Leliq market, so Argentine banks, through mere access to the central bank, had one of the highest Return on Assets ratios in Latin America. But the only way for the central bank to finance the Leliq scheme was by issuing more Leliqs. At one point it was issuing the equivalent of the entire monetary base every five months. Hence the very real possibility of hyperinflation.

Upon taking office, Caputo transferred the central bank’s liabilities to the Treasury. The new notes also matured every 24 hours but at far lower interest rates than before (100 percent initially). The annual interest rate for fixed-term deposits was also cut to 110 percent (from 133 percent previously). Plus, the Treasury issued 28-day bonds yielding 180 percent per annum and medium-term issues (1–3 years) indexed to inflation. Today, the benchmark interest rate stands at 40 percent after six cuts (still well below inflation even as inflation drops sharply).

Since the banks are still the main buyers of Argentine debt, they had to be incentivized to buy the new Treasury issues, with lower rates and longer maturity periods. This is where the puts come in. They are an “insurance” mechanism that, in effect, creates a floor that protects the buyer (i.e. the banks), with a guarantee from the central bank to rebuy the Treasury bonds at the strike price in case bond prices drop far below face value. Currently, around USD $21 billion of Treasury bonds are “insured” through puts, with around 50 percent due to expire in 2026 and 2027. If the options were to be exercised instantly during a bond market rout (hence Milei’s concern with the “American” puts, which account for the majority of the total), the central bank would only be able to pay the commercial banks by issuing the money ex nihilo.

The government’s strategy is risky, and highly inflationary in a worst-case scenario. Hence the concern with any movement that could cause market jitters. This includes, in their view, getting rid of exchange rate controls. On the other hand, the International Monetary Fund, which by no means represents a radically libertarian viewpoint, has urged the government to free the exchange rate.

The government’s reticence to move quickly to end exchange rate controls underscores the peril of selling puts on Treasury debt. The risk of a blow-up might not seem imminent, especially while the market backs Milei’s broad reform agenda, which now appears to finally have support from Congress. But any exogenous shock that hits the bond market in the next three years could unleash a deluge of newly created pesos into the banking system, thus undoing all efforts to ease inflation. The dilution strategy has thus left the Argentine state dangerously exposed to unforeseen events, as is the general case with put sellers. Contrariwise, the buyer of out-of-market puts runs the high risk of a small loss in exchange for the small probability of exponential gains. 

The irony is that Caputo’s approach rests on the premise that dollarization under current conditions is a far too risky path for Argentina. Hence his insistence on a series of pre-conditions prior to dollarization and prior even to removing the cepo. As Mary Anastasia O’Grady writes in The Wall Street Journal, the official stance, despite the urgent need to attract foreign investment, is that it is necessary “to achieve fiscal balance, defeat inflation, and clean up short-term debt held by the banks before it lifts capital and exchange controls.”

Ideally, a free-floating rate would remove a major source of price manipulation in Argentina, thus allowing markets to clear, as O’Grady argues. Nonetheless, if the government sought to dollarize now, lifting exchange rate controls would not be indispensable. In 2000, Ecuador dollarized simply by overshooting the lower bounds of the black-market exchange rate.

Since Argentina’s blue dollar value is the closest thing to a free-floating exchange rate, either overshooting or undershooting it to dollarize would distort prices further. Undershooting would benefit depositors, who generally have no access to the overvalued, official exchange rate. But undershooting would create greater liabilities for the central bank and commercial banks, which would have to exchange people’s pesos for dollars during a determined time period (in Ecuador, the government mandated a nine-month period during which the dollar circulated alongside the old national currency). In terms of dollarization, undershooting also would be counterproductive; the government would create a sudden demand for pesos, whereas the point of dollarization is to no longer have a local currency.

On the other hand, overshooting—as long as it is not overdone so as to exacerbate inflation— favors the banks and the government itself because it reduces their liabilities vis-à-vis their creditors. But consider that even freeing the exchange rate involves a “devaluation” of sorts, insofar as the government admits that its official rate is massively overvalued. The same applies to dollarizing at the blue dollar rate. Slightly overshooting that rate would bolster the move away from a weak currency that is artificially strengthened through government fiat. By overshooting, the government would benefit one final time at the expense of current peso holders. In the long run, however, the effect of such a “devaluation” ends up being minimal compared to the proven benefits of dollarization, as Ecuador’s case clearly proves.

Hence, dollarizing at Argentina’s “blue” dollar rate—or slightly overshooting it—remains a perfectly good option to stabilize the currency once and for all. The government would further send a clear signal that it no longer denies the reality of market forces in currency exchange markets.

Nor are there fiscal preconditions to dollarization. As economist Francisco Zalles notes, Ecuador’s foreign liabilities were far greater than its foreign exchange reserves in 1999 (63 percent negative net reserves in terms of total reserves) than was the case for Argentina earlier this year (negative 35 percent net reserves). Since immediate dollarization is viable, Caputo’s insistence on achieving positive net reserves prior to lifting the cepo becomes a moot point.

As things stand, the allegedly safer alternative to dollarization (the sale of puts) involves the implicit guarantee of printing money suddenly and on a massive scale, thus leaving the government’s entire anti-inflation project at risk. Although Argentina’s chronic fiscal problem is certainly improving, propping up the peso while dilution takes place—and expanding the monetary base (among other reasons due to the puts strategy), as has been the case since December—remains potentially explosive.

Consider also that the latest round of dilution, with interest rates lowered to 40 percent, has meant that the carry trade—the practice of borrowing at a low interest rate in one currency to invest at a high rate in another—is far less attractive in light of the risk involved. In part, this explains the recent rise in the blue dollar, which sells for ARS $1,420 at the time of writing versus ARS $980 in early March. Caputo set the official exchange rate, to which the general public has limited access, at ARS $800 to the dollar in late December, with a 2 percent monthly crawling peg. The official rate now sits at ARS $956. After a brief respite, the currency market has once again become skittish. This explains, I think, why Milei once again promised dollarization in recent weeks, albeit while maintaining his “fiscal surplus first” approach. 

One great advantage of dollarization, however, is that it makes fiscal policy largely irrelevant in terms of the stability of people’s savings and purchasing power, all while inflation drops rapidly to merge roughly with US levels, which is precisely what Argentina needs now.

To their credit, Milei and Caputo have set Argentina, a chronic defaulter on its debt, on the correct fiscal path. But even their most ardent supporters should recognize the high probability of an eventual return to fiscal recklessness under a future government. This is why delaying dollarization any further is the least prudent option available.

Colin Grabow

Perhaps no part of the United States is more impacted by the Jones Act than Puerto Rico. Thanks to the 1920 law, the struggling territory’s approximately 3.2 million people must use some of the world’s most expensive shipping for commerce with the US mainland (by far its top trading partner). One would intuit such protectionism inflicts no small cost to the island’s economy given its heavy dependence on ocean transport. But exactly how significant is it?

A recently released working paper from two Purdue University economists may have gotten us closer to the answer. Authored by Russell Hillberry and Manuel I. Jimenez, the paper finds that the Jones Act imposes an annual welfare burden on Puerto Rico of $1.4 billion. And that, they add, might be on the low side.

The paper focuses on an oddity within Puerto Rico shipping. Unlike most vessels transporting goods to the island and its Caribbean neighbors, those operating under the Jones Act—which requires vessels engaged in domestic transportation to be US-flagged and US-built—consist almost entirely of containerships and barges. Other vessel types such as dry bulk ships, tankers, and general cargo ships used to haul heavy and bulky items not easily placed in containers are either absent from the US-Puerto Rico trade or exceedingly rare.

The authors posit that this phenomenon is due to the economics of operating under Jones Act restrictions—particularly for dry bulk ships. After unloading their cargo in Puerto Rico, such vessels typically would—akin to a taxi that has dropped off its passenger—immediately search for new goods to haul. Unable to compete for cargo in nearby international ports due to their high costs, however, Jones Act vessels would face an empty, money-losing trip back to the US mainland. The math doesn’t work, so such vessels rarely serve Puerto Rico (none in the specific case of oceangoing dry bulk ships, as they do not exist in the Jones Act fleet).

For Hillberry and Jimenez this raises an interesting question: how high would a tariff have to be to produce such a drop in demand for these vessel types? Their answer: 30.6 percent. Such a de facto tariff, they calculate, implies an annual welfare burden of $1.4 billion.

The largest component of this figure is the Jones Act’s cost to Puerto Rican consumers, which they place at $692 million (about $203 per person) annually. For comparison, the economists estimate that most favored nation tariffs (default rates the US applies to other World Trade Organization member countries) applied to Puerto Rican imports cost the island’s residents $94 million ($28 each per year). The Jones Act’s financial damage to Puerto Rican households exceeds that of US tariffs by a factor of seven.

The other elements of the $1.4 billion welfare burden, meanwhile, are a $291 million charge to Puerto Rican exporters in the form of costlier inputs and a hit to investment of $403 million.

But as Hillberry and Jimenez explain, the law’s costs may well go higher. They point out, for example, that for upstream products—inputs used in the production of final goods—there is “a large bias against sea-shipped products from all sources.” That finding, the economists state, “is consistent with [the Jones Act] having shifted the structure of [Puerto Rico’s] production away from processing sea-shipped inputs over the long run” (although they add that other policies may have also contributed to the outcome).

In other words, there is good reason to think the high cost of Jones Act shipping—and possibly other factors—has distorted Puerto Rico’s economic development by rendering certain industries unviable. Indeed, such suspicions are rooted not only in economic theory but Puerto Rican history.

In 1961 congressional hearings Teodoro Moscoso, the head of a Puerto Rican government initiative tasked with sparking the island’s industrialization, testified that high Jones Act shipping rates had placed industries involving heavy and bulky raw materials or finished products “almost out of the question.” These high rates, he added, meant that Puerto Rico had been limited to “light manufacturing, to electronics, light metal manufacturing, and things of that kind which, of course, hampers us tremendously [emphasis added].”

The Purdue economists further state that the Jones Act’s $403 million cost to investment—an implicit tax of 3 percent—implies that the law “imposes dynamic losses on [Puerto Rico] that are likely much more consequential” than their static estimates.

This raises an important point. A true accounting of the Jones Act’s burden on Puerto Rico must include not only the law’s immediate costs but also its knock-on effects.

Higher energy costs due to the Jones Act, for example, mean the island must either raise electricity prices (higher on average than any US state except Hawaii, which is similarly burdened by the Jones Act as well as extreme geographical remoteness) or cut costs elsewhere, such as through deferred maintenance. Higher electricity prices or an unstable grid—both of which are no strangers to Puerto Rico—in turn deter investment and other economic activity.

Between such dynamic losses and the distortions to Puerto Rico’s economic development, one cannot help but wonder what might have been—and what might be still—if the island could transport goods to and from the world’s largest economy using efficient international-flagged shipping.

Hillberry and Jimenez’s new paper, meanwhile, is just the latest addition to a body of recent literature confirming the Jones Act’s harm to Puerto Rico. Reports prepared by economic consultants in 2019 found the Jones Act to raise prices on the island by $1.1 billion and by $367 million on food and beverages alone, while a 2012 academic study found a cost of $537.2 million (2010 dollars).

In addition, a 2015 report by three economists including Anne Krueger, a former chief economist at the World Bank, identified a Jones Act exemption for Puerto Rico as a means of sparking growth, and a 2020 Rand Corporation report on Puerto Rico’s economy cited the Jones Act as one of five main impediments to economic growth.

Of course, any analysis of the Jones Act’s application to Puerto Rico must also balance such costs against its benefits for the US maritime industry. These, however, are underwhelming at best.

While the law theoretically generates ships and mariners for military sealift purposes, as well as steady work for US shipyards, only five Jones Act-compliant ships regularly serve the island. Furthermore, one of those five wasn’t even built in the United States (the National Glory, which operates between Houston and San Juan, was constructed in a Polish shipyard but is permitted to operate under the Jones Act after being seized in a drug bust and auctioned off by the US government).

The remainder of Jones Act commerce with Puerto Rico is handled by tugboats and oceangoing barges not used for strategic sealift and whose crews lack the necessary licenses to serve on sealift ships.

If one conservatively pegs the Jones Act’s annual cost to Puerto Rico at $1 billion, each ship (and their crews) is employed at a cost of $200 million per year. For perspective, the government’s Maritime Security Program annually spends less than $325 million on stipends to ensure the availability of sixty US-flagged commercial ships in times of war or national emergency.

But beyond this gross cost-benefit asymmetry, the Jones Act’s application to Puerto Rico also doesn’t pass muster as a matter of simple fairness. If the Jones Act truly is about meeting national security needs, why is its burden so disproportionately borne by such a relatively small percentage of the US population?

That Puerto Rico bears this cost while facing a poverty rate that exceeds 40 percent, having limited recourse through the political process (the island has no vote for president and its only representation in Congress is a single member of the House of Representatives with limited voting power), and being the only inhabited US territory to which the Jones Act is fully applied (Guam is exempt from the law’s requirement that vessels be constructed in US shipyards while American Samoa, the Northern Mariana Islands, and the US Virgin Islands are all fully exempt) only compounds the injustice.

Hillberry and Jimenez’s paper is just the latest evidence of the toll the Jones Act exacts on Puerto Rico—one that in no way compensates for whatever benefits it generates. Whether evaluated through a cost-benefit lens or as a matter of fairness, the Jones Act’s imposition on the island is indefensible. The time to remove this hardship is long overdue.

Scott Lincicome

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

A Cosmopolitan Case against World Government, by Ilya Somin explains why support for globalization and opposition to global government are not contradictory positions.

Without Protectionism and Wars, Could the First Age of Globalization Have Occurred a Century Earlier?, by Vincent Geloso shows that government-created barriers to trade (e.g., tariffs and wars) delayed the onset of globalization by a century.

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

Make sure to check it all out and stay tuned for future releases.

Emma Hopp

While the timeline for the EU’s Digital Markets Act (DMA) was lengthy, spanning more than three years from proposal to effective date, its impact was immediate on the tech industry in Europe. The seven platforms designated as gatekeepers—Alphabet (Google), Amazon, Apple, Bookings, ByteDance (TikTok), Meta (Facebook), and Microsoft—continue to make significant changes to their services to comply with their obligations. In June 2024, the European Commission decided that Apple’s App Store and Microsoft’s Teams service still did not comply with the obligations of the DMA, hitting each company with the possibility of a fine of 10 percent of their global revenue.

The regulation may have a much farther reach and impact as well. Regulation like the DMA has become the primary form of leverage Europe has in the global tech industry rather than actual companies. Instead of reducing regulation or other barriers that would encourage innovation by companies on its own shores, the region hamstrings its opponents abroad to level the playing field.

As of the end of 2023, six out of the top ten largest tech companies in the world were American, with the top three—Alphabet, Microsoft, and Apple—all headquartered in the US. The largest tech company in Europe by market cap, ASML, a semiconductor supplier, is behind on the list at eleventh place. The market value of the top ten largest tech companies in Europe combined is still less than the market value of Alphabet, Microsoft, or Apple. It is evident that the tech industry in the US and the tech industry in Europe are on two distinct levels in terms of the robustness of large players and their successes. Even with the larger population and larger market Europe provides relative to the US, the region continues to lag.

One likely reason for this difference can be attributed to the cost of compliance in Europe. Eighty-eight percent of global companies say that General Data Protection Regulation (GDPR) compliance alone costs their organization more than a million dollars each year, with 40 percent responding that they invest more than ten million dollars per year. High costs of compliance deter entrants into the market and prevent sizable growth from occurring.

The Digital Markets Act and GDPR are not the origin of this story, but the latest iterations. In 1995, the European Union launched the Data Protection Directive for each member state to incorporate in their internal laws. It applied to any “controller” of data who processes EU data for their services, regardless of where they are located. The directive was broad in its scope, sweeping in application, and cumbersome in its processing and reporting requirements. Meanwhile, the United States around the same time passed the Telecommunications Act of 1996 and the Framework for Global Electronic Commerce in 1997, which are intended to deregulate the telecommunications industry and encourage the private sector to make appropriate choices that would benefit consumers in their services. It’s not surprising that those actions encouraged an acceleration in innovation.

Not only is it difficult for companies to grow large in Europe, but it’s challenging for them to get started. While Europe has more tech startups formed than the United States, tech startups in the US are 40 percent more likely to have secured venture capital funding, and as the startups mature, this disparity grows. This is certainly the story in the AI sector, as annual private investment in AI in the US has outpaced the EU and UK every year since 2013. Venture capitalists themselves are skeptical about the health of the ecosystem, with 70 percent indicating the fundraising environment in Europe is “bad” or “very bad” in a 2023 survey.

A more expensive regulatory regime that leads to less private funding in an already pessimistic private investment market creates more difficulties for any tech startup hoping to become the next superstar in the industry, even if the talent and the desire to innovate is present in the region.

As a result of the Digital Markets Act, companies will have to change the products that led them to a significant market presence in the region, altering the interface and features their users chose. Consumers in Europe now find these kinds of changes outside of their control, and instead under the government’s. After all, the superstars that already exist in the tech industry—the ones the DMA labels as “gatekeepers”—are not hated by consumers in Europe.

From 2015 to 2024, Google’s share in the search engine market has hovered at or around 90 percent in Europe. This decision is not by force, and users understand they have a choice. In a 2020 survey, 87 percent of respondents in Europe said they were satisfied with their choice of search engine. If they were unsatisfied, 67 percent of respondents agreed that it is easy to switch. For Apple, over 101 million users own an iPhone and 23 million own an iPad. Amazon leads the online marketplace in Europe based on the number of visits, registering about 1.3 billion, and there are 408 million monthly active Facebook users. WhatsApp, especially, is extremely popular in Europe.

Unfortunately, consumers in Europe and beyond could see an elimination of some of these popular product options if the gatekeepers decide to pull select services out of the European market entirely because of high costs. This could also impact consumers more globally if companies must change their products entirely or choose not to pursue features that would not be allowed in Europe.

Consumers are frustrated with the visible changes that alter their user experience. For instance, Apple’s parental control feature “Ask to Buy” operates through the iOS App Store but, because of the DMA, apps can choose a third-party marketplace that does not have the same parental features, leaving parents with less control over the content on their kids’ devices. The disappearance of Google Flight and Google Maps search results has angered users who were used to the convenience.

Overall, nobody is happy about the approaches of the gatekeeper companies to comply with the DMA, even the companies that were the biggest champions of the regulation with supposedly the most to gain.

Beyond consumers, the regulation is already backfiring on the very companies regulators claim to try to help. Since its official implementation, intermediary firms—online services that connect individual product sellers to consumers—that benefit from the services of the gatekeepers because of the large market these companies provide have found that they are not getting the boost they expected from the DMA. For example, when people search for restaurants online, a survey found almost half of all restaurant searches did not leave Google. Nothing indicates this has changed since DMA and instead is costing middlemen companies like TripAdvisor, OpenTable, and Yelp even more traffic than they received before the obligations of the DMA.

The DMA is the latest representation of a divergence in tech policy positions over the decades and shows Europe’s continued attempt to export regulation of America’s leading tech companies. Instead of punishing the US companies for their success, Europe should look to join the US as a fellow proponent of its innovation-first mentality. American policymakers that may look favorably on a regulatory approach can also learn that such an approach has real ramifications for consumers and entrepreneurs of all sizes based on Europe’s experience.

Jeffrey Miron and Jacob Winter

The Supreme Court recently threw out a case alleging that Biden administration officials unlawfully pressed social media companies to remove COVID-19-related disinformation. The court found that the plaintiffs did not have standing to sue, so it did not address the free speech or broader policy issues. Future cases with standing are likely, however, so it is important to consider the underlying questions.

Distressingly, many on the left and right want to regulate social media, claiming these outlets inappropriately promote or suppress certain viewpoints. Social media outlets inevitably make choices about whether, how much, and what to promote or suppress on their sites, and their decisions cannot possibly be neutral.

That, however, is the nature of free speech. The defense of the First Amendment is not that all speech is good, correct, or without harmful consequences. Instead, the defense is that controlling speech makes society worse by preventing discussion, expression of different viewpoints, and the vigorous debates that characterize a free society.

The opposing view holds that if content is false and harmful, it might be good overall to keep it offline. It is not possible, however, to restrict this power so that officials can pressure for the removal of only false or harmful content. 

In particular, many claims are difficult to prove. Granting officials power in deciding validity privileges those officials’ weighing of the evidence. Additionally, ceding evaluative power to the government promotes a culture where the public is not responsible for evaluating claims themselves. At worst, this would allow government officials to assert that false claims are true, or vice versa, with minimal resistance.

More broadly, it is difficult to know the harmfulness of content. For example, social media platforms moderate content about mental health, such as by suppressing pictures of self-harm. After viewing these images, however, youth have reported varied reactions — from wanting to imitate the harm to offering help and feeling a sense of belonging.

Thus, the antidote to false and harmful content is not government regulation; it is market forces that will provide a range of social media outlets for users to engage with each other. 

Social media outlets should therefore be free to choose their moderation policies and political biases — or eschew them — with no interference from the government.

Colleen Hroncich

Genevieve Peterson’s own struggles in school have long inspired her. It wasn’t until she was in high school that she was diagnosed as “twice exceptional,” gifted and dyslexic. That made a world of difference because she was given tools and accommodations that allowed her to succeed in a rigorous honors program and go to college and graduate school. She told her mom at the time of her diagnosis, “Someday I am going to make a school that meets the students’ educational needs. I’m going to create something different that allows students like me to succeed.”

That thought stuck with her. “I kept talking about that all the way through my undergraduate, my graduate school training, and as my career started. It was always in my mind,” she recalls. “I had a lot of key players along the line that kept giving me little sprinkles of wisdom, little pieces to the puzzle.”

After her third child was born, she found a book called Rethinking School by Susan Wise Bauer. “That’s the first time I had ever heard about a hybrid between a home school and private school,” she says. Her oldest was in preschool at the time, and she had started to see some signs that he might learn the same way she learned. So she was already looking for alternatives to public school for her kids.

“I started brainstorming. I’m pretty sure my husband thought I was nuts during that time period because he’d come home and I had our bedroom wall plastered with poster papers with ideas and thoughts,” Genevieve says. “It was during that time I created A One-Room Schoolhouse.”

She recruited friends to be on the board, and they launched the program publicly at the beginning of 2020. “We had our first parent information meeting in February of 2020. We had a lot of interest—a lot of people showed up—but no one signed on,” Genevieve says. Then COVID-19 shut down schools, including her son’s preschool, so she decided to just start homeschooling using her plans for A One-Room Schoolhouse. She and the other board members turned her basement rec room into a classroom and formed their own pandemic pod.

“Pretty much all interest ground to a halt,” she says. “Until people really got the full picture of what pandemic public schooling was going to look like.” In her area, access to the internet is spotty, so initially school buses drove around, and the drivers threw packets of work onto everyone’s driveways. Later they would go around and pick up the completed packets. “They got a better system going after some time, but to say that was not well received by some would be an understatement,” Genevieve adds.

She started hearing about people who were interested in homeschooling but didn’t know how to do it. So she decided to host “Homeschool 101” sessions in her basement classroom. She purposely didn’t talk about A One-Room Schoolhouse in the homeschooling sessions, but parents started asking her about it. She ended up filled to capacity that first year because so many parents were looking for another option. The next year, they doubled in size and moved out of Genevieve’s basement. They opened two satellite campuses the following year. Seeing their success, they added another campus this past year along with additional classrooms at one campus. This fall will mark the fifth year of A One-Room Schoolhouse.

Classes were offered five days a week during the initial year, but she found parents didn’t really want that schedule. They’ve settled on a hybrid program—three days a week at A One-Room Schoolhouse and students work at home the other days. Tuesdays and Wednesdays focus on language arts, math, science, and social studies. Thursdays are for electives, which are multi-age and include music, art, and nature studies.

A One-Room Schoolhouse follows a curriculum called The Good and the Beautiful, which is laid out in a way that makes it easy for parents to pick up at home where they leave off in school. The curriculum is nondenominational Christian and incorporates a lot of Charlotte Mason elements. Genevieve breaks the day up to ensure the kids get a lot of time outdoors and in free play.

Genevieve’s financial policy is for the tuition, which is just $2,000 a year, to cover all basic expenses—rent, salaries, insurance, etc. For extras, they hold a gala every year. “The gala funds our expansion efforts and our scholarship program because we never want someone to not come because of money. That has been fundamental from the beginning,” she says. “Our scholarship program can help families out when the $2,000 a year is too much. I know with four children, $2,000 a year equals $8,000 a year. So our scholarships are really helpful.”

A One-Room Schoolhouse follows its own calendar, running from Labor Day to Memorial Day for classes. Since they are located in Pennsylvania, homeschoolers must have a portfolio review each year and turn in a certification to their local school district. Genevieve combines parent-teacher conferences and portfolio reviews the week after Memorial Day to simplify things for parents. “They can sign up for their classes for next year, review their portfolios, and get some feedback on what teachers are seeing. Then we put our heads together with the parents to plan what the next steps are because our model is very much a collaborative process,” she explains.

“I started A One-Room Schoolhouse because I was just dissatisfied with the options I had available, and I wanted a different choice,” says Genevieve. “It’s not that the other choices were bad, it’s that they weren’t a good fit for my family.”

Krit Chanwong

Acupuncture is a widely practiced part of traditional Chinese medicine. It involves sticking multiple needles into strategic parts of the body. Some believe that acupuncture is effective at relieving pain. Others believe that acupuncture’s benefits are largely illusory, attributable to the placebo effect. Regardless, everyone should be free to get and practice acupuncture. In California, however, restrictive occupational licensing constrains many aspiring acupuncturists’ ability to make a living.

Forty-six states and DC require acupuncturists to be certified with the National Certification Commission for Acupuncture and Oriental Medicine (NCCAOM). To obtain certification, aspiring acupuncturists must hold a degree from one of the 49 accredited schools of acupuncture. Aspiring acupuncturists also need to pass at least two of four exams administered by the NCCAOM. The number of exams required differs by state. Delaware, for example, mandates that its acupuncturists take all four NCCAOM exams. On the other hand, Pennsylvania mandates only two exams.

California does not recognize any NCCAOM certification. Instead, the state has its own licensing rules. Aspiring acupuncturists in California need to graduate from one of 29 universities accredited by California’s Acupuncture Board and take California’s acupuncture licensing exams. According to the People’s Organization of Community Acupuncture (POCA), California’s acupuncture licensing exams “has been held up as the gold standard for acupuncture licensing tests.” The high regard given to California’s exam is due to the test’s increased rigor and depth when compared to the NCCAOM’s.

As Figure 1 shows, the number of people taking California’s acupuncture board exams has fallen dramatically since 2020.

California’s high barriers to entry mean that consumers pay more for acupuncture. A 2019 study found that the median price of a first acupuncture in four California cities was $110, which is 16 percent higher than the national median price of $95.

Moreover, California’s high barriers to entry into acupuncture mean that businesses have a harder time hiring qualified candidates. The Oakland Acupuncture Project, for example, reports that “2022 was by far our most challenging year in terms of HR and hiring ever.” In fact, as Table 1 shows, the number of acupuncturists in California from 2018 to 2022 has declined by two percent. This makes California the only state with more than 1,000 acupuncturists to experience a shrinking acupuncturist labor pool.

High prices and employee shortages may be justified if California’s exams really do ensure that consumers receive higher-quality acupuncturists. However, POCA seems to think that “neither [California’s exam nor the NCCAOM’s] have been proven to have any real bearing on whether or not the individuals taking them will go on to become competent and capable practitioners.”

Acupuncture licensing is just one small example of California’s licensing mania. For 20 years, California was ranked 49 out of 50 in Cato’s Freedom in the 50 States survey for occupational licensing freedom. A 2023 Archbridge Institute study found that California requires occupational licensing for 189 occupations, which is higher than the national average of 179. These licensing regulations harm all Californians: a 2018 Institute of Justice study suggests that California’s licensing regime costs 195,000 jobs annually—perhaps one reason the Golden State has one of the highest state unemployment rates.

California’s crackdown on the freedom to choose and work comes at a large cost to prosperity. The state should consider reforms that liberalize the state’s overregulated occupational licensing regime. One reform that would help improve California’s job market is universal license recognition, whereby the state recognizes out-of-state licenses. This idea is not radical: it already exists for driver’s licenses and for physicians in over forty states. My colleague, Marc Joffe, has written extensively on the economic benefits of universal license recognition.

Emily Ekins

This 4th of July, 248 years after the Declaration of Independence was adopted, a new forthcoming Cato Institute national survey finds 76% of Americans have a favorable opinion of the founding of the United States and 59% feel “gratitude” about what the Declaration eventually secured. But Americans fear the freedoms made possible by the American founding are at risk. Nearly three-fourths (74%) of Americans worry that if we’re not careful, Americans could lose the freedoms we have in this country.

An overwhelming majority–85%–of Americans have a favorable view of the US Constitution. However, 70% of Americans believe that if the signers of the Declaration of Independence were alive today they would disagree with how the Constitution is being followed.

Notable shares of young Americans feel a sense of complacency or negativity toward the nation’s founding and the US Constitution. About a third (34%) of Americans under 35 have either an unfavorable view or simply don’t care. In contrast about a quarter (28%) of Americans aged 35–54 and 12% of Americans over 55 years old have similarly negative or complacent views.

There are also considerable knowledge gaps—especially among young people. In particular, 50% of Americans under 30 don’t know that Thomas Jefferson was the primary author of the Declaration of Independence. Nearly a third (32%) didn’t know that the Declaration of Independence led to the American Revolutionary War.

Views of the US Constitution

Nearly 9 in 10 Americans say they have a favorable view of the U.S. Constitution, including 53% who have strongly favorable views. Most Americans also believe that the U.S. Constitution is what guards their liberty. Ninety-four percent (94%) say the US Constitution is “important” to protect their liberty and freedom, including 56% who say it’s “extremely important.”

The survey asked how important specific rights and freedoms were to people, personally guaranteed by the US Constitution or through judicial interpretation. The following said each of these were “extremely” important to them personally:

77% The right for all people to have equal protection under the law
76% The right to privacy
75% If accused of a crime, the right to be informed of the accusation and evidence
75% The right to vote
74% Freedom of speech
71% The right to own private property
70% If accused of a crime, the right to a fair, speedy, and public trial
70% If accused of a crime, the right to have a trial by a jury
68% Freedom of religion
68% The right to be free from unreasonable search and seizure from gov’t
68% The right to due process of law
67% Freedom for people to assemble peacefully
65% The right to travel
62% Freedom of the press
61% The right to marry
61% The right to self-defense
57% Freedom to petition the government
54% If convicted of a crime, the right not to have a cruel and unusual punishment
39% Freedom to keep and bear arms

The top five rights that were most important to Americans include the right for all people to have equal protection under the law (77%), a right to privacy (76%), to be informed of any accusation and evidence if accused of a crime (75%), the right to vote (75%), and the freedom of speech (74%). Notably, only two of these five were included in the Bill of Rights, the first ten amendments to the Constitution.

The freedom to “keep and bear arms” received far less enthusiasm, with only 39% who said it was “extremely important” to them. Yet nearly double that share (61%) said a “right to self-defense” was extremely important to them. This demonstrates that many Americans do not view the Second Amendment protection to keep and bear arms as the same as a right to self-defense.

Partisan Priorities

It should be emphasized how much Democrats and Republicans similarly prioritize most rights secured by the Constitution. For instance, both similarly value the right to have equal protection, to assemble, to vote, to travel, to marry, to have privacy, to own private property, to petition the government, as well as the freedom of the press, and if accused of a crime to have a fair trial, but informed of accusations and evidence, and to avoid cruel and unusual punishment. But there are some important differences too.

Republicans are nearly 50 points more likely than Democrats to say it’s extremely important to them to have the right to keep and bear arms (66% vs 17%), and 33 points more likely to have a right to self-defense (79% vs 46%). Notably, Republicans are also nearly 25 points more likely than Democrats to prioritize being free from unreasonable search and seizure from the government (84% vs 61%). More Republicans than Democrats also care deeply about the freedom of religion (79% vs 62%), the freedom of speech (81% vs 69%), and due process of law (75% vs 64%). Democrats (60%) stood out in that they were more likely than Republicans (49%) to say that having the right to a trial by jury was extremely important.

Redesigning the United States Constitution

A significant minority (44%) of Americans would be open to “writing a new American constitution to reflect our diversity as a people,” while 56% would oppose writing a new constitution. This builds upon the work of political scientist Eric Kaufmann who found a similar pattern of results.

Democrats stand out with 63% who favor writing a new constitution, compared to 16% of Republicans and 37% of independents. A majority (54%) of Americans under 30 also favor designing a new constitution. However, support drops among older cohorts including among those aged 30–44 (47%), 45–54 (40%), 55–64 (27%), and 65 and above (25%). Black Americans (73%) and Asian Americans (60%) also support designing a new constitution. In contrast, majorities of Hispanic Americans (56%) and White Americans (68%) oppose designing a new constitution.

Preserving and Extending Liberty

A majority of Americans–57%–agree that “eternal vigilance is the price of liberty.” Eleven percent (11%) disagree while 31% aren’t sure either way. Even more, 74% worry that if we aren’t careful we could lose our freedoms in this country. About a quarter (26%) of Americans believe our liberty will be preserved.

While both Democrats (68%) and Republicans (80%) worry about the future of liberty in the United States, Democrats are somewhat more likely than Republicans to be confident their freedom will remain protected (32% vs 20%). Young Americans under 25 (41%) are about twice as likely as Americans over 65 (21%) to be confident the liberty they enjoy will continue into the future as well. 

Knowledge of American History

The survey quizzes Americans’ knowledge of the country’s founding. Fortunately, majorities of Americans got most answers correct. However, some groups were less likely to know the nation’s history.

Who was the primary author of the Declaration of Independence?

57% Thomas Jefferson (CORRECT)
7% James Madison
7% Alexander Hamilton
5% Abraham Lincoln
4% George Washington
20% Don’t Know

What war did the Declaration of Independence lead to?

72% The American Revolution (CORRECT)
10% The American Civil War
3% World War I
1% The French-Indian War
1% The Mexican American War
14% Don’t Know

How many colonies were there when the American colonists declared their independence from Great Britain?

76% 13 colonies (CORRECT)
2% 5 colonies
3% 8 colonies
2% 50 colonies
17% Don’t Know

Who rode in a famous midnight ride to warn the American colonists that the British were coming?

81% Paul Revere (CORRECT)
3% John Adams
2% Alexander Hamilton
1% Robert Livingston
13% Don’t know

Who famously crossed the Delaware River to eventually lead the Americans to victory against the British in the American Revolution?

69% George Washington (CORRECT)
2% Thomas Jefferson
2% Benedict Arnold
5% Ulysses S. Grant
4% Robert E. Lee
17% Don’t Know

Who famously described the US Constitution as “a republic, if you can keep it”?

26% Benjamin Franklin (CORRECT)
8% Thomas Jefferson
6% James Madison
6% Alexander Hamilton
4% George Washington
51% Not sure

Young people know less about American history than older cohorts. For instance:

50% of Americans under 30 didn’t know that Thomas Jefferson was the primary author of the Declaration of Independence, compared to 34% among Americans over 55 years old
32% of Americans under 30 didn’t know that the Declaration of Independence led to the American Revolution, compared to 19% among Americans over 65 years old
33% of Americans under 30 didn’t know that there were 13 original colonies when the American colonists declared independence from Britain, compared to 13% among Americans over 65
36% of Americans under 30 didn’t know Paul Revere had a famous midnight ride to warn the American colonists the British were coming, compared to 1% of Americans over 65
44% of Americans under 30 didn’t know George Washington famously crossed the Delaware River to lead the Americans to victory against the British compared to 11% of Americans over 11

1619 Project

Most Americans (56%) reject a central premise from the New York Times’ 1619 project that preserving slavery was a primary cause of the American Founding—a view renowned historians reject. Sixteen percent (16%) of Americans believe preserving slavery was a “primary” reason prompting the war, and 22% aren’t sure either way.

Views of the American Founders

The plurality of Americans’ favorite “Founding Father,” or prominent figure who played a significant role in the Revolution and the establishment of the United States, is George Washington with 35%. Second to Washington is Benjamin Franklin (22%), followed by the primary author of the Declaration of Independence Thomas Jefferson (16%), then John Adams (5%), Alexander Hamilton (5%), John Hancock (4%), James Madison (3%), John Jay (1%) or someone else (9%).

A majority (57%) of Americans view the “Founding Fathers” as “heroes” rather than villains (3%), but a considerable minority view them as both heroes and villains (43%). A majority (53%) of Democrats view the founders as both heroes and villains and 42% view them as heroes. In stark contrast, 74% of Republicans view them as heroes while 25% think of them as both.

Few Americans support removing statues dedicated to prominent figures including George Washington (82% oppose monument removal), and Thomas Jefferson (82% oppose monument removal). No demographic group identified in the survey supported removing these monuments.

While some Americans have concerns about the American founding—an overwhelming share of Americans—94%—believe the Declaration of Independence was primarily a force for good in the world. 

The Cato Institute 2024 4th of July Survey was designed and conducted by the Cato Institute in collaboration with YouGov. YouGov collected responses online June 26-July 1, 2024 from a national sample of 2,000 Americans 18 years of age and older. Restrictions are put in place to ensure that only the people selected and contacted by YouGov are allowed to participate. The margin of error for the survey is +/- 2.41 percentage points at the 95% level of confidence. Full results, toplines, crosstabs, and methodology are forthcoming.

Gene Healy

I’m just old enough to remember when people worried that a then-73-year-old Ronald Reagan was too befuddled to serve after he had a couple of “senior moments” in his first debate with Walter Mondale in 1984. If Reagan’s brief lapses were concerning, President Biden’s “senior 90 minutes”—his tragic, shambolic debate performance last Thursday—was a blaring alarm bell. Score one for the Cassandras of national decline.

“There’s a lot of people asking about the 25th Amendment,” House Speaker Mike Johnson said on Friday, “because this is an alarming situation.” And when people are asking about the 25th Amendment, it usually falls to me, as Cato’s resident 25th Amendment guy, to explain why it’s probably not going to happen. I did that on Friday’s Cato Daily Podcast, and I’ll do it again here: It’s probably not going to happen.

The 25th Amendment, ratified in 1967, was drafted in the wake of the Kennedy assassination. That grisly event highlighted the potential problem of presidential incapacity; what if, “instead of being mortally wounded, [JFK] had lingered for a long time between life and death, strong enough to survive but too weak to govern”?

The amendment’s drafters provided a potential remedy in Section 4. That provision allows the VP to take the keys away from the president when she and a majority of the Cabinet decide he is “unable to discharge the powers and duties of his office.” But when you look at how Section 4 works, you can appreciate why it’s unlikely to work as a means of getting Democrats out of their current predicament (much less the rest of the country out of ours).

Under Section 4, the vice president and a majority of Cabinet heads make the initial disability determination and notify Congress, at which point, “the Vice President shall immediately assume the powers and duties of the office as Acting President.” If the president challenges that determination, the question goes to Congress, and if two-thirds of both chambers ratify the switch, the vice president continues to serve as “Acting President.”

But as a practical matter, unless a supermajority of both houses affirms the decision, all triggering Section 4 does is put the president in a temporary timeout. As Sen. Birch Bayh (D‑IN), one of the amendment’s principal architects, explained: “[W]e were concerned about the politics of the palace coup,” so they deliberately set a higher bar than what’s required for removing the president via the impeachment process (which has also never happened).

Thus, even if Vice President Kamala Harris likes her odds and manages to coax along a Cabinet majority with enticing visions of “what can be, unburdened by what has been,” it’s all for naught unless she can muster the votes in Congress to make it stick.

Speaking of national decline, I’m also old enough to remember when people genuinely worried that Vice President Dan Quayle was too much of an airhead to be safely placed a “heartbeat away” from the presidency. There’s no way to put this politely, but Kamala Harris is almost as incoherent and rambling as President Biden, without the excuse of age. Would enough congressional Democrats favor a 25th Amendment solution that makes Harris the incumbent president and presumptive nominee? That’s not clear at this point, though recent polls that show her outperforming Biden may make that option more attractive.

But, given those polls, would enough congressional Republicans prove public-spirited enough to swap out a demonstrably feeble opponent just because the country might require a president who can be “dependably engaged” outside the hours of 10 a.m. to 4 p.m.? If not, Biden “resume[s] the powers and duties of his office.”

All plausible paths to a new Democratic nominee, whether Harris or someone else, involve President Biden stepping down voluntarily, as LBJ did in 1968. You’d like to think there was a point to Thursday’s cruel spectacle: that it was part of a plan toward convincing the president to withdraw. It’s possible to imagine a strategy session among the president’s handlers analogous to the following: “We all know that Dad really shouldn’t be driving anymore, but he’s not going to give up the keys unless he has an accident. So before we can have that difficult conversation, we’re going to have to let him crash the car. Let’s hope nobody gets hurt!” My guess is that there was no actual method to the madness, however. The Biden team stood him up hoping he’d muddle through. It didn’t work.

Looking beyond the 2024 horse race, this whole appalling episode brings three problems with the modern presidential system into stark relief. First, on both sides of the aisle, our primary-governed nomination process is a disaster, routinely elevating candidates who are unfit for office. When we pick people for the presidency, we’re not sending our best. Second, once presidents have assumed office, they’re far too hard to dislodge. In parliamentary regimes, “prime ministers may be removed at any time when Parliament is in session through a nonconfidence motion”; weak leaders can even be dumped by their own party without bringing down the government. In contrast, we Americans seem to be stuck with an elected pseudo-monarch, all but impossible to dethrone between four-year terms. Third, and most concerning, the modern president wields far more power than any one fallible human being ought to have.

All three are daunting problems, resistant to reform. Even if it were achievable, fixing the primary process wouldn’t help us right now, and lowering the bar to presidential removal would require a constitutional amendment. The “easiest” of the three, re-limiting presidential power, is still an extraordinarily heavy lift. But last Thursday’s debate is only the latest reminder of our urgent need to make the effort.