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Nicholas Anthony

The US Department of Justice (DOJ) has charged Keonne Rodriguez and William Lonergan Hill with “conspiracy to commit money laundering and conspiracy to operate an unlicensed money‐​transmitting business.” Better known as the co‐​founders behind Samourai Wallet, Rodriguez and Hill are now facing upwards of 25 years in prison, according to the DOJ.

While there’s little defense for where Rodriguez and Hill appeared to have openly and deliberately marketed their services for criminal activity, the news still marks yet another example of the US government’s ever‐​growing intolerance for financial privacy.

Bitcoin and Privacy

Although I won’t go into the weeds here to explain how Bitcoin works from scratch, some context is likely helpful. One of the features that makes Bitcoin unique is that it operates on an open and decentralized blockchain—often referred to as a public blockchain. This feature is special because it allows anyone at any time to look to see what transactions are taking place and audit the system. Yet that also poses a problem for privacy.

Users are pseudonymous insofar as they are identified only by digital addresses, but those addresses can be linked to people with some clever sleuthing. An entire industry has arisen to do just that. This industry (including companies such as Chainalysis, TRM Labs, and Elliptic) looks at public blockchains and works to untangle transactions to narrow down and even directly identify the people behind them.

It’s here that Samourai Wallet comes in.

Samourai Wallet was designed to be a digital wallet with access to privacy‐​enhancing features. More specifically, it offered access to features referred to as “Whirlpool” and “Ricochet.” These features offered users the ability to either mix funds or create additional transactions to add a layer of privacy on an otherwise transparent blockchain. Yet in the eyes of the DOJ, these features are nothing more than tools for criminals to launder their money.

For others, however, these services are vitally important. As Anna Chekhovich, CFO for the Anti‐​Corruption Foundation and non‐​profit Bitcoin adoption lead at the Human Rights Foundation, told Bitcoin Magazine,

At the Anti‐​Corruption Foundation, we use mixers because we need to protect [the identity of] our donors. We’re responsible for the safety of our donors because we encourage them to support us financially, and for supporting us, they risk being imprisoned up to eight years. We have a huge responsibility to do everything we can [to] not to let that happen. We also need mixers to protect [the identity] of the recipients of our funds.

The Charges

With that said, the news of the charges broke on April 24 when the DOJ announced that Samourai Wallet allegedly had “executed over $2 billion in unlawful transactions and facilitated more than $100 million in money laundering transactions.”

To be clear, however, the $2 billion is later clarified as “unlawful” because Samourai Wallet was allegedly operating without a money transmitter license, not because it was linked to serious crimes. Yet, even then, it’s worth taking the claim with a grain of salt. What the court has to say is still to be seen. But, as Coin Center’s Peter Van Valkenburgh has explained at length, Samourai Wallet could very well have been operating within the bounds of guidance previously issued by the Financial Crimes Enforcement Network (FinCEN) in 2013 and again in 2019.

So, what’s perhaps more accurate to say is that 95 percent of the $2 billion in total activity was likely made by normal people seeking to simply preserve their privacy.

A Chilling Moment for Cryptocurrency, Privacy, and Innovation

Beyond those directly affected, the news of the charges marked a chilling moment for cryptocurrency defenders, human rights activists, privacy defenders, and software developers. Wasabi Wallet, for instance, announced it would block Americans from using its service, and Phoenix Wallet is set to be removed from US app stores on May 3 despite no publicly known issues. Others may likely follow.

When commenting on the news of Phoenix Wallet’s departure from US markets, investment strategist Lyn Alden wrote, “It’s increasingly the case that a lot of good bitcoin apps work in dozens of other countries but not in the United States. The US is kind of slowly firewalling itself from the rest of the world in terms of financial innovation.”

While Alden’s take may be grim, it seems to be correct. For instance, the day after the DOJ announced its charges, the FBI specifically cautioned Americans from using services like Samourai Wallet in a public service announcement (pictured below). The announcement effectively told Americans not to do business with others unless those businesses collect your identifying information.

In other words, in an age of increasingly sophisticated fraud and cyber risks, the FBI said not to do business with anyone unless they collect your name, date of birth, address, and social security number.

To be clear, this information doesn’t just sit idly by in a database after it is collected. On the contrary, businesses are then required to report much of it to the government. In a single year, US financial institutions are required to report Americans tens of millions of times under the Bank Secrecy Act.

Given this nearly “all access pass” to our financial information, it’s easy to understand why law enforcement might find it jarring to learn someone is providing any semblance of an alternative. Yet, at the same time, it should be as easy to understand why Americans want an alternative when they learn how sweeping the financial surveillance status quo is.

If Congress truly cares about the Constitution, it should step in and reform the sweeping surveillance that is now the norm. Americans would be much less likely to seek out privacy tools in the first place if companies were not required to collect all of their information just to open an account.

(As the DOJ noted in its press release, “The charges contained in the Indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.”)

Thomas A. Berry and Alexander Khoury

On the night of May 28, 2021, Gregory Pheasant was arrested for riding his dirt bike through Moon Rocks, Nevada, without a taillight. Moon Rocks is a section of federally owned public land managed by the Bureau of Land Management (BLM). The BLM’s authority to issue regulations derives from the Federal Land Policy and Management Act of 1976. Claiming authority under the Act, BLM had issued a rule requiring all dirt bikes operating at night to be affixed with a taillight, on pain of criminal penalty. Pheasant was charged with violating BLM’s taillight regulation and two other crimes.

Pheasant moved to dismiss, arguing that the broken taillight charge was unconstitutional under the “nondelegation doctrine.” Pheasant maintained that Congress had unconstitutionally delegated its legislative authority to the executive branch and that crimes created by the executive branch pursuant to that power (including the taillight regulation) were void.

The United States District Court for the District of Nevada agreed and dismissed two counts against Pheasant on nondelegation grounds. The government has now appealed the district court’s decision to the United States Court of Appeals for the Ninth Circuit.

Cato has filed an amicus brief in the Ninth Circuit on behalf of Pheasant. In our brief, we argue that the district court correctly dismissed the two counts against Pheasant on nondelegation grounds. Further, we also explain that the court of appeals should take this opportunity to resolve an inconsistency between its separation‐​of‐​powers standards for overly vague criminal statutes.

Our brief explains that parties alleging a separation‐​of‐​powers challenge to overly vague criminal statutes risk facing the inconsistent application of two separate standards of scrutiny—vagueness review and the nondelegation doctrine’s intelligible principle test. Vagueness review is applied when a law gives too much discretion to police and prosecutors, while the nondelegation doctrine concerns laws giving too much discretion to rule‐​makers.

Both of these standards enforce the same core constitutional concern: preventing Congress from delegating away its criminal lawmaking authority to other government actors charged with executing the law. Yet courts scrutinize laws under vagueness review more strictly than under the nondelegation doctrine, where they apply the lenient intelligible principle test. Our brief argues that this distinction has no merit and that both vagueness and nondelegation claims should be scrutinized under the same standard of review.

Additionally, our brief contends that under a unified separation‐​of‐​powers standard, Pheasant’s charges for violating the regulatory crimes should be dismissed. The executive branch has been granted nearly unfettered authority to create regulatory crimes for federally owned public lands. A federal rulemaker is thus effectively a one‐​person super legislator for over 240 million acres of federal land, a discontinuous landmass more than double the size of California. This tremendous grant of lawmaking power far exceeds anything the courts have upheld under vagueness precedents. For that reason, the Act’s delegation of regulatory power violates the separation of powers.

The district court’s decision should be upheld, and the two regulatory charges against Pheasant should be dismissed under a unified separation‐​of‐​powers standard.

Jeffrey Miron and Jacob Winter

Charter schools receive public funding but escape many regulations that apply to traditional public schools (TPSs). Thus, many charters offer more varied curricula and teaching approaches than TPSs. Around 7,800 charters now operate in the United States, enrolling about 3.7 million students.

The value of charters depends partially on two issues: their impact on students who enroll in them, and the impact on students “left behind” in TPSs.

Research on the first question finds that charters increase math and reading scores in some cases but decrease them in others.

Research on the second question also obtains mixed results, with some papers suggesting that charters improve TPS students’ math and reading scores and other papers suggesting the opposite.

A new paper on the second question (Cato Research Brief No. 379) again finds provocative but mixed results:

[I]ncreased charter school competition improves reading test scores and reduces absenteeism of students remaining in TPSs … [but does not improve] math outcomes. … The null finding on math scores is particularly notable because education research tends to find that school policies affect math scores but not reading scores.

These mixed results might imply that advocates of school choice are overselling: charters (and private school vouchers) have positive effects in some cases, but they are far from a panacea.

That perspective, however, implicitly takes TPSs as the default and ignores a crucial consideration: many parents and students seem to value the choice that charters and vouchers provide, even when outcomes like test scores do not show obvious improvement.

So absent strong evidence that school choice has non‐​trivial negatives, shouldn’t more choice be the default?

Jeffrey A. Singer

In April 2022, the Food and Drug Administration announced plans to ban all menthol cigarettes and cigars. In December 2023, after several civil rights groups, including the American Civil Liberties Union, expressed concerns about a blanket nationwide menthol ban exacerbating racial law enforcement disparities, the Biden administration announced a delay in finalizing rules to ban menthol tobacco until March 2024.

In a press release on April 26, Secretary of Health and Human Services Xavier Becerra stated his department needed “significantly more time” to consider public comments and concerns about a menthol tobacco ban. The secretary did not mention when it would make its final decision.

According to the National Survey on Drug Use and Health, in 2020, 81 percent of Black smokers preferred menthol‐​flavored cigarettes. Research indicates genetics may play a role. The cynic in me wonders if the delay is based primarily on concerns about the upcoming election and how African‐​American voters might react to a ban. However, I will give the Biden administration the benefit of the doubt and not assume ulterior motives. Secretary Becerra made the right call. Perhaps he understands that prohibition doesn’t work and can cause many unintended harms.

The European Union (EU) banned menthol cigarettes in 2020. A recent EU survey finds 40 percent of menthol smokers switched to non‐​menthol, and only 8 percent quit smoking. Menthol smokers have come up with workarounds, such as “mentholizing” recessed cigarette filters and menthol flavor inserts, or have added menthol to their tobacco.

However, 13 percent reported getting menthol cigarettes from “other sources.” A black market for smuggled menthol cigarettes has emerged. A significant source is Belarus, where menthol brands such as Minsk, Fest, and Queen find their way into EU countries. The UK press reported that gangs smuggle such “illicit whites” into the country, and people can buy them “under the counter” from British tobacconists for the right price.

Worst of all, menthol bans might exacerbate racial and ethnic disparities in law enforcement and within the criminal justice system. In public comments that I submitted to the FDA on its proposed menthol ban, I wrote the following:

Prohibition fuels an underground market where peaceful, voluntary transactions become crimes. It gives law enforcement another reason to interact with non‐​violent people who commit these victimless crimes. Like everyone else, police respond to incentives. They are rewarded by arrests and convictions. Low‐​level street dealers in illegal substances are “low‐​hanging fruit.” They are much easier to find in dense inner cities and less dangerous to confront than violent felons. Law enforcement tends to scour racial or ethnic minority communities for victimless crimes because they are “easy pickings.” That’s how we wind up with African Americans arrested for marijuana violations four times as often as whites, even though both groups use marijuana roughly equally.

And never forget Eric Garner. New York City’s exorbitant taxes on cigarette packages generated an underground market in untaxed individual cigarettes, called “loosies.” In 2014, police infamously encountered 43‐​year‐​old Eric Garner selling loosies on a street corner, and a policeman’s chokehold led to his death as he repeated, “I can’t breathe.” This happened without a menthol ban. With menthol cigarettes more popular among Blacks and Hispanics, expect police to focus their attention on minority communities.

The last thing this country needs is yet another reason for law enforcement to engage with minorities they suspect are committing the victimless crime of selling menthol cigarettes in the black market.

Aside from criminal justice concerns, singling out menthol tobacco for a ban lacks a basis in scientific evidence. A 2022 research paper in the Journal of the National Cancer Institute found menthol smokers had no greater difficulty quitting smoking than non‐​menthol smokers. Furthermore, according to FDA research reported in the Journal of Nicotine and Tobacco Research, there is “evidence of lower lung cancer mortality risk among menthol smokers compared with non‐​menthol smokers among smokers at ages 50 and over in the U.S. population.” Perhaps that’s because menthol smokers tend to smoke fewer cigarettes per day, according to a Vanderbilt University study that also found “menthol cigarettes are no more, and perhaps less harmful than non‐​menthol cigarettes.”

Policymakers also cannot justify a menthol ban based on concerns that menthol tobacco might lead to greater teen smoking. Only 1 in 250 teens smoked cigarettes within the past 30 days as of 2020. According to the Centers for Disease Control and Prevention, 60 percent of the vanishingly small number of teens who smoke choose non‐​menthol cigarettes. A Reason Foundation study found states with the highest menthol consumption had the lowest youth smoking rates.

The wording of Secretary Becerra’s press release left the question of when the federal government will finalize plans to implement a menthol tobacco ban unanswered. Let’s hope it never does.

Walter Olson

Two legal developments in the prosecutions of of former President Donald Trump have understandably commanded widespread attention in recent days, the start of the New York “hush‐​money” trial last week, and the Supreme Court’s oral argument Thursday over the proper scope, if any, of presidential immunity. But another recent item on the Trump docket from early in the month deserves at least a bit of attention. It passed as a one‐​day story that drew no real notice from legal commentators, and it tends to confirm that one of the most vocally argued‐​over issues in the Trump prosecutions has been settled.

The claim at the time was that the former president and his allies had simply been exercising their First Amendment rights concerning the 2020 presidential election. After all, it was argued, the Amendment protects both the right of political speech (“This election was rigged, and we were robbed”) and the right to petition the government for redress (“These vote totals can’t be believed, do something about it!”). The defendants were simply saying and asking for things, the argument went, and under the First Amendment how can either of those be a crime?

But as I wrote at the time:

It is long established and ordinarily uncontroversial that speech can lose the protection of the First Amendment if, for example, it seeks to intimidate a public official into shirking a legal duty, or if it consists of the submission of forged documents to a government agency, or if it solicits or facilitates crime generally.… Speech that is part of a conspiracy to accomplish those things may be unprotected as well.

And here, regarding claims that the federal indictment was seeking to punish what was no worse than an outlandish instance of political speech:

It is widely agreed that the First Amendment protects some telling of lies for political benefit, and also that it protects (as, in effect, lobbying) some efforts to persuade government officials to carry out acts that are wicked and unconstitutional. It is equally certain that the First Amendment does not protect every act of speech or persuasion that someone might retroactively try to jam into these categories.

Now, in a ruling April 4, Georgia Superior Court Judge Scott McAfee has flatly rejected a motion by Trump and 14 co‐​defendants to dismiss the charges in that state’s January 6 indictment on First Amendment grounds. Judge McAfee noted, citing the Alvarez (stolen valor) and Stevens (depictions of animal cruelty) cases, that the categories of speech excluded from First Amendment protection

include speech integral to criminal conduct, fraud, or speech presenting an imminent threat that the government can prevent. Restrictions on “speech integral to criminal conduct … ‘have never been thought to raise any Constitutional problem[.]’”

In similar manner, the judge wrote, “the law does not insulate speech allegedly made during fraudulent or criminal conduct from prosecution under the guise of petitioning the government.”

Both the federal and the Georgia prosecutions rest squarely on Trump and other defendants’ alleged violation of specific laws. (The list of federal ones is here.) The Georgia charges, which unlike the federal includes counts arising from the local marshaling of a bogus elector slate, rely on alleged violations of specific state laws including O.C.G.A. § 16–10-23 (making it a crime for an individual to “falsely hold[] himself or herself out as a [] public officer or employee with intent to mislead another into believing that he or she is actually such officer”); O.C.G.A. § 16–9‑1(b) (forgery in the first degree, when “with the intent to defraud he or she knowingly makes, alters, or possesses any writing, other than a check, in a fictitious name or in such manner that the writing as made or altered purports to have been made … by authority of one who did not give such authority and utters or delivers such writing”); O.C.G.A. §§ 16–10-20 (false statements and writings), and O.C.G.A. §§ 16–10-20.1 (filing false documents)

To be sure, Judge McAfee also specified that at this pretrial stage he was required to interpret the indictment’s language in a way favorable to its validity, and also left room for the defense to raise as‐​applied challenges later after the establishment of an appropriate factual record—both normal and fine at this stage. But he also wrote: “the Court finds that the Defendants’ expressions and speech are alleged to have been made in furtherance of criminal activity and constitute false statements knowingly and willfully made in matters within a government agency’s jurisdiction which threaten to deceive and harm the government.”

This is anything but new. In fact, in her order last December denying Trump’s motion to dismiss, Judge Tanya Chutkan of the federal district court ruled to similar effect regarding the federal charges. That part of her ruling, however, tended to get lost in the coverage of the presidential immunity issues on which she ruled at the same time. And now the essentially identical ruling from Judge McAfee—who reportedly served as officer of his Federalist Society chapter while a law student—should underline that Chutkan’s handling of the First Amendment issues was not unusual.

Trump and his co‐​defendants will have other arguments and defenses to offer. But the argument that their alleged conduct falls within the bounds of First Amendment protected conduct should now, I think, be seen as laid to rest. 

James Bacchus

Is President Joe Biden more interested in fighting climate change or in sheltering domestic industries from foreign competition? We will find out not too long from now as his administration continues to grapple with what could be pivotal decisions on imports of solar energy products from China and elsewhere. If the president chooses trade protection, it will put the achievement of his professed climate goals further in jeopardy.

Seven domestic manufacturers in the solar industry have made this choice more difficult for the Biden administration by filing a petition simultaneously with the Department of Commerce and the US International Trade Commission (USITC), which seeks to levy tariffs on imports of solar cells from Vietnam, Cambodia, Thailand, and Malaysia. Chinese solar companies have been relocating to these four Southeast Asian countries to circumvent US tariffs imposed on imports of solar products from China, and the domestic petitioners claim that producers in these countries are dumping solar cells on the US market at prices below the cost of production while benefiting across borders from Chinese subsidies.

This is just the latest round in an ongoing legal slugfest between those who would impede solar imports (including these seven companies and their congressional and other political supporters) and those who would free them (including other parts of the US solar industry and most environmental groups, along with their supporters). It occurs against a political background in which President Biden appears to be competing in a downward spiral with his likely general election opponent, former President Donald Trump, over who can be the most protectionist on international trade.

The political vise tightening on Biden six months before the election is that, unlike Trump, he also wants to maintain the support of voters who prioritize preserving the environment, including by more ambitious national and international actions to address climate change. Presumably, the president also truly does want to counter climate change. (For his part, Trump seems to have no such ambitions, thus making his fervent advocacy for any and all additional trade protectionism much easier.)

If it is granted, this plea for new solar tariffs would not be implemented until sometime in 2025. But the Department of Commerce (DOC) will decide whether to proceed with an investigation sometime in May. A preliminary DOC determination that there are illegal dumping and subsidies would then take between four and six months. The USITC will determine whether the domestic industry is suffering material injury because of the imports of the dumped or subsidized products. A legal outcome could happen just before the November election.

These new tariffs would be in addition to tariffs on imports of Chinese‐​made solar products that are trans‐​shipped through these Southeast Asian countries to avoid still other existing US tariffs on solar imports from China. Responding to concerns expressed by US solar panel installers, US developers of solar farms, and other companies in the broader US solar industry, as well as by environmentalists, that high tariffs on solar imports could limit the continued expansion of US solar energy use, President Biden delayed implementation of those tariffs for two years. He also vetoed legislation that would have reinstated them. That two‐​year delay will end in June.

In addition to the competition from foreign competition provided by tariffs, US solar manufacturers such as the seven companies that have filed the new petition have benefited from billions of dollars of tax credits for new facilities that were created by President Biden’s multi‐​trillion dollar venture into industrial policy, the Inflation Reduction Act (IRA). The jobs in the solar industry resulting from these subsidies have been trumpeted as a triumph of the IRA. Yet, as my Cato colleagues Travis Fisher and Alex Nowrasteh have pointed out, “Economic activity created via subsidies does not indicate an increase in economic activity overall. Likewise, jobs created by subsidies do not indicate an increase in jobs overall. There is a net cost to society when subsidies and other industrial policies distort markets.”

If Chinese solar producers or solar producers in the four Southeast Asian countries that have been targeted by this petition are violating international trade laws, and if it can be shown that the US industry is being harmed, then trade action is warranted. But, overall, as climate policy, what will be gained from such action in curbing climate change, or, for that matter, in building a domestic solar energy supply chain that can compete here and throughout the world? Some of the tariffs already in place on solar imports from China are “safeguard” tariffs, which do not even involve an allegation of unfair trade practices. Isolation from foreign competition is not a national strategy for competitiveness.

According to the Department of Energy, solar energy could account for 40 percent of US electrical power by 2035 while employing 1.5 million Americans—and without raising electricity prices. This, the DOE estimates, will require current domestic solar capacity almost to double by that date. With the glut on the global market, prices of solar panels have fallen by 50 percent in the past year. Why, at a time when Americans are turning more and more to solar energy and when business investors are moving increasingly into the solar industry, should the federal government want to raise consumer prices and create further uncertainty in the solar market? That’s no way to help Americans pay their utility bills and fight climate change.

To reiterate what I have written here before, “President Biden has continually emphasized the importance of helping the climate in his agenda. Maintaining these tariffs will do little to achieve that goal. Continuing to impose the artificial expense caused by the tariffs only adds to the prices of renewable alternatives such as solar energy, making them less appealing.” A decision by his administration “not to restore freer trade in these products could have significant implications for Americans looking to expand their consumption of solar energy and, therefore, solar energy products. Making those products more expensive and more difficult to obtain is nonsensical as a matter of public policy.”

Clark Packard and Alfredo Carrillo Obregon

April marks the thirtieth anniversary of the signing of the Marrakesh Agreement and the culmination of the Uruguay Round of multilateral trade negotiations, which converted the General Agreement on Tariffs and Trade (GATT) into the World Trade Organization (WTO).[1] Today, the WTO has 164 members (it will expand to 166 as Comoros and Timor‐​Leste were approved for membership at the thirteenth Ministerial Conference in Abu Dhabi in February), which encompasses 98 percent of global trade.

As Larry Summers once remarked, “The Uruguay Round was the largest tax cut in the history of planet earth.” Indeed, as shown in Figure 1, since the WTO’s founding, tariffs and other barriers have fallen substantially—facilitating a more than fivefold increase in global trade between 1994 and 2023. Over the same span, global trade as a share of global GDP has increased from 19.9 to 29.9 percent.

As global trade has increased sharply with more exports from low‐​and‐​middle‐​income countries, global poverty has fallen precipitously. A recent blog post from the WTO’s Secretariat notes that the percentage of global citizens living in poverty fell from 38.1 in 1996 to 10.6 percent in 2022, as shown in Figure 2.

This is a humanitarian story worth highlighting and much of it is due to the multilateral trade liberalization achieved through the WTO.

Despite these tremendous gains, globalization is facing its most serious challenges since before World War II. Protectionism is clearly on the rise: the two largest economies in the world, the United States and China, took their trade spat outside of the WTO system and imposed massive tariffs on each other. On top of that, trade‐​distorting industrial policies are once again in vouge around the world.

Last fall, Cato launched its Defending Globalization project, which aims to cut through the noise about globalization while at the same time making an affirmative case for more integration. As part of the project, my Cato colleague Jim Bacchus, a former chairman of the WTO’s Appellate Body, penned an excellent essay dispelling some common myths about the WTO, including showing that the system does not undermine US sovereignty, is not biased against the US, and does not harm the US economy. On the latter point, for example, a study by the Bertelsmann Foundation in Germany found that WTO membership increased US GDP by approximately $87 billion between 1995 and 2020, thus economically benefiting more from the system than any other country.

More multilateral and plurilateral (with some but not all members of the WTO) liberalization is desperately needed to help restore the WTO’s centrality in world trade, particularly better disciplines on subsidies and digital trade. Likewise, reforming the WTO’s dispute settlement system should be a priority. But at a time of growing criticism of the multilateral trading system and creeping protectionism, the WTO has served and continues to serve a vital role in the global economy. And that’s worth celebrating.

[1] For an in depth look at the policy and political debates in the lead up to the signing see this excellent history by John Schmidt, the lead US negotiator in the talks

Colleen Hroncich

Like many education entrepreneurs, Nicolette Siebert is a mom who was a classroom teacher before she created her own learning community. Her son started out attending a homeschool co‐​op, but it was a long drive from their home and became too much for them. So she moved him to public school for a time. It was a combination of not liking some of what she saw in schools as well as wanting a Biblical worldview for her son that led her to open The Grove Christian Co‐​Op just south of Jacksonville, FL.

I toured The Grove earlier this year and was impressed to see how engaged the children were in their learning—and how smoothly it functioned despite being in its first year. Nicolette explained that the founder of the co‐​op her son initially attended provided a lot of support as she got The Grove up and running. While the organizations aren’t officially linked, she used the other one as a starting point and built from there.

According to Nicolette, the homeschool co‐​ops in their area all have a different feel to them. The Grove has developed into a very academic program based on Nicolette’s natural approach and the wants of the families. Nicolette described the curriculum as pretty classical, noting they use resources like Abeka, Saxon Math, Institute for Excellence in Writing (IEW), Notgrass History, Apologia Science, and Shurley Grammar. For math, students can move around so they’re in the class that matches their level of knowledge.

The Grove serves children in kindergarten through sixth grade. Classes are held in person Monday through Wednesday, and Thursday and Friday are work‐​at‐​home days. On Wednesday afternoons, they offer electives where they bring in outside experts to lead various classes. Options for electives can include cooking, music, art, coding, and nature club.

As homeschoolers, the parents are the teachers and are ultimately responsible for their children’s education. At The Grove, tutors deliver instruction in the classroom and assign lessons for the at‐​home days. Parental involvement is very important to the model, so parents are invited to volunteer at the co-op—for example, helping with lunch or serving as a substitute teacher.

The Grove isn’t currently a provider to receive funds from Florida’s school choice programs. However, Nicolette can provide receipts that they can submit for reimbursement. There’s no guarantee that the reimbursement will be approved, but, so far, parents have been successful.

While Nicolette initially planned to have quarterly informational meetings, she hasn’t been holding them this year because her waitlist is already so big, especially in some grades. She prefers to have 10–12 students per class, and there were already more than 30 kids on the kindergarten waitlist when I toured.

How to measure success is a frequent question when it comes to education, and for many parents a big part of the answer comes down to “is my child happy?” At The Grove, the answer to that question seems to be yes based on the kids that I saw. And Nicolette’s son and his friends have indicated as much—telling her how much they like co‐​op even as they work to help her set up classrooms each week.

Brent Skorup

The Federal Communications Commission today voted to reinstate Title II regulations for the Internet, needlessly extending the so‐​called net neutrality controversy into its third decade and opening the agency up to legal challenges. In 1996, before most Americans knew the sound of an AOL login dial tone (ask your parents), Congress passed a law announcing a national policy “to preserve the vibrant and competitive free market that presently exists for the Internet … unfettered by Federal or State regulation.” Lawmakers wanted to protect Internet services and companies from 70 years of accumulated telecommunications and media rules, including licenses to operate, content restrictions, and frequent, politicized rulemakings.

That deregulatory policy has been a resounding success. It was not obvious in the early 1990s that US tech companies would lead the world, but today, the largest Internet and artificial intelligence companies—Alphabet, Meta, Microsoft, Amazon, and the like—call the US home. Further, on the infrastructure side, there has been tremendous investment and improvement, including the millions of miles of new fiber optics, the roadside conduit, the radio spectrum, and cell towers.

The telecom industry spends over $100 billion spending in capex annually. Even before the pandemic and new federal spending, FCC data said around 130,000 rural households were getting high‐​speed broadband for the first time every month.

Since the early 2000s, amid this rapid progress, the so‐​called net neutrality movement has urged the FCC to apply 1930s telecom laws—Title II—to Internet access services. While appreciating the Internet’s democratic possibilities, regulation advocates have long regarded the prevailing Internet and tech culture as too libertarian, too disruptive, and too troll‑y to leave to market forces and general law. Thus, these advocates argued regulation by experts was needed.

Many in the FCC didn’t need much encouragement; the agency’s areas of regulation—telegraph, telephone, broadcast‐​TV, and cable‐​TV providers—are obsolete, dying, or being reinvented with Internet technology. The Internet undermined the FCC’s authority over media distributors and regulation advocates inside and outside the agency realized that the FCC needed new problems to “solve.”

For many of us who have followed the net neutrality controversy, the FCC’s attempt to re‐​impose Title II is a tremendous waste of the FCC’s expertise and time. Since 2003, when “net neutrality” was coined, millions of households have seen their Internet speeds increase from 200 kilobits per second to a gigabit per second, due in part to the deregulatory policy of Congress and a lot of infrastructure investment. It’s difficult to identify another service Americans use regularly that has seen a 5,000-times quality improvement in 20 years.

Title II regulations, created to police the Ma Bell phone monopoly, would transform Internet access from one of the least‐​regulated services in the United States into a national common carrier service. Access providers would be subject to second‐​guessing by regulatory lawyers, interminable waiver proceedings, and the FCC’s vague, new “general conduct standard.”

The FCC faces immense legal challenges. For one, it’s hard to square Title II common carrier regulation of the Internet with Congress’ deregulatory policy for the Internet. Courts struck down two previous attempts at net neutrality regulations, though the FCC extended Title II to Internet access companies for a couple years before it was rescinded by the Trump administration. Further, net neutrality enforcement creates complex First Amendment problems that the FCC seems indifferent to. Finally, the FCC claims it has the power to be the judge, prosecutor, and jury in net neutrality enforcement, an argument that seems to violate the separation of powers, and will likely receive a chilly reception from courts.

If history is any guide, these Title II rules will compel the thousands of small Internet service providers to “lawyer up” and keep abreast of the unpredictable interpretations and pronouncements of Washington, DC, regulatory lawyers. Larger companies will grow more sclerotic and risk‐​averse, as the pernicious revolving door between regulators and corporation spins faster. Hopefully, the net neutrality controversy will be retired—by courts or by Congress—before it does much damage to the Internet services and infrastructure sectors and before it enters a fourth decade.

Colin Grabow

Earlier this month Sen. Marco Rubio (R‑Florida) took to X (formerly Twitter) to address criticisms—including from me—of recent opinion pieces he penned calling for the expanded use of industrial policy. I’m normally not one to respond to social media call‐​outs, but since a sitting senator called me out by name—and called me names—I’m compelled to reply. The following are Sen. Rubio’s postings along with my responses.

Sen. Rubio is selling the far‐​reaching nature of his argument a bit short. In both his National Affairs and Washington Post essays, the Florida senator did not merely express concern over China or note that efficient markets may not operate in the country’s undefined “best interests” but called for aggressive government intervention to rebuild a manufacturing sector he described as in a state of collapse.

Sen. Rubio argued the United States must rescue US manufacturing from this (fictitious) implosion and develop an industrial base “capable of ending our reliance on foreign markets for goods that are essential to maintaining a free and prosperous republic.” His agenda is aimed not just at severing US dependence on “essential” (a term again left undefined) goods from China but all foreign countries, including those of US allies. He proposes nothing less than a reordering of the US economy.

The consequences of such government intervention would be profound. As Sen. Rubio himself concedes, markets are efficient, and thus any departure from them would necessarily reduce efficiency with a commensurate decline in prosperity. This is not to be taken lightly and demands a compelling justification—one that Sen. Rubio struggles to supply.

As Sen. Rubio never precisely defines what “this” is—instead opting to speak in vague, general terms about the nature of the problem that allegedly confronts the country—it is unclear what his critics are supposed to offer a solution to. If, however, the concern he seeks to address is merely US dependence on China, then the accusation that Sen. Rubio’s critics have no policy prescriptions to offer is baseless.

A 2023 policy analysis from my colleagues Scott Lincicome and Clark Packard, for example, called for rejoining the Trans‐​Pacific Partnership (now the Comprehensive and Progressive Trans‐​Pacific Partnership) and concluding the stalled Transatlantic Trade and Investment Partnership to bolster trade with the European Union as well as Pacific Rim countries other than China.

Lincicome and I, meanwhile, authored a recent op‐​ed that called for reforming the Jones Act to allow the use of vessels from allied shipyards. Enabling US‐​flag carriers to purchase ships at dramatically lower prices than those of US shipyards would promote fleet modernization and reduce the carriers’ need to repair and upgrade their aging vessels in Chinese state‐​owned shipyards.

If Sen. Rubio wants Americans to do less business with China, he should advocate for measures that make it easier to trade with US friends and allies. Instead of taking away options from Americans, why not first strive to present them with better ones?

More fundamentally, discrete problems such as the reliance on China for particular sensitive products demand targeted, discrete solutions—not vastly expanded government meddling in the US economy.

According to one of the most oft‐​quoted papers on this topic, 2016’s “The China Shock” authored by economists David H. Autor, David Dorn, and Gordon H. Hanson, US job losses due to increased imports from China between 1999 (China was not admitted as a World Trade Organization [WTO] member until December 2001) and 2011 were a maximum of 2.4 million and most likely about half that number.

At least a couple of things should be kept in mind when evaluating these numbers. First, in the context of a US economy that sees tens of millions of jobs lost (and gained!) annually, they are quite modest. In February of this year alone, for example, over 5 million Americans were separated from their jobs.

Second, the loss of jobs due to Chinese imports was accompanied by job gains elsewhere in the economy. That’s almost certainly not a coincidence. Savings from the purchase of Chinese products provided Americans with more money with which to spend or invest in the US economy. In addition, the dollars used to purchase those Chinese imports later returned to the United States due to Chinese purchases of US goods (goods exports to China rose from $13.1 billion in 1999 to $104.1 billion in 2011) or investments ranging from the purchase of US stocks and treasury bonds to greenfield investments.

This helps explain some findings that Cato’s Scott Lincicome recently highlighted in his weekly newsletter:

First there’s the question of what Chinese imports did to other US jobs in other places (i.e., not the jobs and communities hurt by the shock). Nicholas Bloom and colleagues, for example, concur with ADH that the China Shock caused US manufacturing job losses, especially for those without college degrees, but they add that the losses were fully offset by gains in service jobs in other regions. Several other studies (see this Lorenzo Caliendo and Fernando Parro paper for a review of the academic literature) have similarly found that a decline in US manufacturing jobs during the China Shock period was accompanied by increases in American service‐​sector jobs—and often well‐​paying ones at the same manufacturing companies. The results from another group of economists were even more positive: After accounting for the effects of Chinese imports throughout the supply chain, specific jobs were indeed lost, but overall US employment and wages increased, even in regions that experienced large manufacturing employment declines (contra ADH).

Finally, one should not be left with the impression that the surge in Chinese imports during the early part of this century was solely—or even mostly—due to China’s WTO membership. Much of the increase reflects the increased competitiveness of Chinese firms as China liberalized its economy and became more market‐​oriented. The story is as much, if not more, about China getting out of its own way as US reductions in barriers to Chinese imports.

At the very least Sen. Rubio’s diagnosis lacks context. While output has indeed stagnated over the past 15 years, it has done so at near‐​record levels. That performance is pretty good, particularly considering a) the increasingly services‐​oriented nature of the US economy as consumers spend greater portions of their paychecks on things like vacations and dining out than more stuff (how many washing machines, ovens, irons, etc. does one need?); b) the propensity of manufacturers to produce for their domestic market; and c) dematerialization that has seen fewer materials used to produce goods and even the disappearance of numerous items as they are supplanted by smaller multipurpose products (e.g., alarm clocks replaced by smartphones) or slip into the digital ether (DVDs, compact discs, newspapers, books, etc.).

Talk of declining manufacturing employment, meanwhile, is at odds with data showing the number of such jobs as having risen by over 900,000 since April 2009. While the increase has correlated with the decline in productivity that Sen. Rubio highlights, this further supports the notion the decline in manufacturing jobs since 1979 is more a story about productivity (e.g., automation) than trade. Sen. Rubio can express concern over declines in manufacturing productivity, and he can bemoan declines in manufacturing employment, but he can’t credibly do both given the clear tension that exists between them.

Lastly, the US share of the world market as an indicator of manufacturing vitality is a deeply flawed metric. As other countries become more developed—as we should wish for them to—they will account for a greater share of global production. Consider, for example, that even if US manufacturing value‐​added doubled over a certain period while international manufacturing value‐​added tripled, the US share would decline. Rising global prosperity is to be celebrated, and we shouldn’t be led astray by statistics that paint this trend as a cause for worry.

The claim that industrial policy critics believe it can “never work” is a strawman. More accurately, critics argue that it suffers from systemic flaws that make it less likely to succeed than market‐​based approaches. These flaws, such as the inevitable intrusion of political forces into government decisionmaking, mean that industrial policy failures (difficult to terminate as constituencies profiting from these policies lobby to maintain them) are bound to outnumber its successes (which are difficult to evaluate given the inability to know how a given industry would have fared absent industrial policy interventions). Given the likelihood of missteps occurring as a result of industrial policy, a high bar ought to be cleared—including a clear demonstration of a specific need that market forces aren’t meeting—before engaging in such policy adventurism.

Neither the moon landing nor NASA (cited in Sen. Rubio’s Washington Post op‐​ed), meanwhile, are the industrial policy trump cards that Sen. Rubio imagines them to be. In fact, they aren’t even examples of industrial policy, which is typically understood as government efforts to develop selected commercial industries in service of national economic goals in market‐​beating ways. The primary purpose of winning the space race was besting the Soviet Union in a high‐​stakes competition for global prestige, with any benefits to US industry a secondary concern.

If there are many cases of US industrial policy being successfully applied, why is it so difficult for Sen. Rubio to cite them?

“Doing nothing” is another strawman. First, industrial policy critics have proposed many policy reforms to boost the US manufacturing sector, address the China challenge, or otherwise jump‐​start the US economy. Second, government interventions may be warranted to meet specific challenges that face the country—particularly its national security. But Sen. Rubio fails to provide such specificity, instead speaking in vague terms about corporations and US adversaries that seek to “dictate the terms of our economy.” How can a challenge be addressed if it can’t even be spelled out? This inability to clearly articulate the challenges that Sen. Rubio insists demand attention, along with his numerous factual errors, is even more reason to resist calls for a more muscular industrial policy.

Furthermore, if “nationless corporations” are regarded by Sen. Rubio with such deep suspicion, why does he seek to empower them via industrial policy that their lobbyists will inevitably help shape? It’s worth noting, for example, that the primary beneficiaries of the Creating Helpful Incentives to Produce Semiconductors Act—Intel, Micron, TSMC, and Samsung—are all multinationals, the latter two of which are headquartered abroad. If these corporations are a malady, then providing them with government resources seems an odd cure indeed.

The context here is important. The Founders’ use of tariffs did not reflect a belief in industrial policy but rather a need to raise revenue. As economist Douglas Irwin wrote in his detailed history of US trade policy Clashing over Commerce:

During this period, the term free trade did not mean zero tariffs and the absence of any government restrictions on trade. It was generally understood that governments would need to tax trade for revenue purposes. Instead, free trade meant the freedom of a country’s merchants to trade anywhere they wanted without encountering discriminatory prohibitions or colonial preferences as long as they paid the required duties. Free trade could be more accurately characterized as open trade in which countries could impose import duties and regulate shipping but did so in a nondiscriminatory manner.

Economic historian Phil Magness, meanwhile, notes that decisions over which items to place tariffs on produced testy exchanges among legislators. Rather than considering the country’s economic welfare as a whole, these politicians—as they are wont to do—instead took a more narrow perspective focused on their constituents:

The new nation’s first foray into tariff policy began innocently enough on April 9, 1789, when Madison introduced a bill to the House of Representatives proposing specific duties on alcohol and applying a tax “on all other articles ___ per cent. on their value at the time and place of import.” Most expected a short debate, as indicated by Rep. Elias Boudinot of New Jersey, who followed Madison in suggesting “that the blanks be filled up in the manner they were recommended to be charged by Congress in 1783.” Rep. Thomas Fitzsimmons of Pennsylvania derailed the plan with a hastily drawn amendment to “encourage the productions of our country, and protect our infant manufactures.”

The proposal caught Madison, and most of Congress, off guard. “If the duties should be raised too high,” Madison warned in a letter, “the error will proceed as much from the popular ardor to throw the burden of revenue on trade as from the premature policy of stimulating manufactures.” And yet the allure of specialized rates swept through Congress, prompting requests from a succession of amendments seeking differentiated rates for favored goods from their home district or state. In his first major congressional action, Madison had unwittingly awakened the very same brand of factional politics he so eloquently diagnosed in The Federalist Papers. Except for slavery, tariffs became the most contentious federal policy issue of the 19th century and remained a source of continuous discord until the Great Depression.

Such dynamics should surprise only the grossly naïve. Furthermore, what reason is there to think that the same parochial interests that helped set tariff policy would not also influence the direction of Sen. Rubio’s envisioned industrial policy? Perhaps more fundamentally, why does Sen. Rubio think that trade policies adopted in the late 1700s offer useful lessons for economic policy in the 21st century?

Policies adopted by President Ronald Reagan are at least within living memory, but here Sen. Rubio succumbs to factual and logical errors. Reagan did not increase tariffs but instead implemented a voluntary export restraint (VER) that limited imports of Japanese vehicles. And it’s certainly nothing to emulate. As Scott Lincicome detailed in a 2022 blog post, the VER cost US consumers billions of dollars, much of which was funneled money into the pockets of Japanese automakers (who could raise their prices due to the VER’s constraint on supply). Rather than using the import restraint as an opportunity to retool and raise its game, meanwhile, the US auto industry frittered away the increased profits generated by the VER on items such as aircraft and bonuses for company executives.

The larger context is also worth bearing in mind. While tactically ceding free trade ground through adoption of the VER (eventually scrapped in 1994), Reagan also used his time in office to sign a free trade agreement with Canada—the foundation of the North American Free Trade Agreement—and helped launch the Uruguay Round of trade talks that eventually culminated in the establishment of the WTO. Reagan’s trade legacy is far more rooted in expanded liberalization than the kind of industrial policy Sen. Rubio now champions.

Sen. Rubio’s persistent use of the “free‐​market fundamentalist” pejorative—connoting an inflexible adherence to free markets regardless of circumstance—is disappointing. Not only is this portrayal of free marketers false, but Sen. Rubio almost certainly knows it is false. As he wrote in his National Affairs essay:

Regional conflicts in Ukraine and Gaza — in which the United States is not even a direct participant — have exposed the inadequacy of our industrial base. This problem is not easily amenable to market‐​based solutions (aside from purchasing more weapons and ammunition from countries with successful industrial policies, like South Korea). Just as there are no atheists in foxholes, when it comes to self‐​preservation, even hardened libertarians can concede that some amount of industrial policy is warranted. [Emphasis added] This is common ground that conservatives can use to make real progress.

Libertarians are indeed willing to sanction market interventions by government in response to specific national security concerns. What they are unwilling to do, however, is hand over power and taxpayer money willy‐​nilly in response to vaguely articulated and ill‐​supported notions that US manufacturing is not up to snuff. But one not be an ardent free marketer to oppose the expansive use of industrial policy. Indeed, the case against it is not rooted in ideology but in pragmatism and a recognition of how political processes distort even the best‐​intentioned initiatives.

Even if Sen. Rubio’s goals are noble, the end product of the industrial policy machinery he seeks to create almost certainly won’t be after special interests have their say.

The real questions that should be asked are of those who deny or are somehow blind to this reality. If anyone is to be labeled a fundamentalist, it seems a more useful descriptor of dogmatic adherence to industrial policy despite its demonstrated shortcomings.

Talk of alleged “deindustrialization” in a country that accounts for the second‐​largest share of global manufacturing output is odd if not outright false while claims of reduced resilience and cultural corruption are so nebulous and unspecific that they are difficult to respond to. Again, the inability to articulate the nature of the problem that Sen. Rubio demands the government be given fresh reserves of power and money to confront is a disturbingly recurrent theme.

That said, if Sen. Rubio is concerned about resilience it is unclear why he believes the answer lies in industrial policy. Far from undermining economic resilience, trade openness provides needed redundancies and alternative sourcing arrangements that help mitigate the impact of shocks such as the recent COVID-19 pandemic. Trade can also assist in the recovery process once these shocks subside. As a 2021 World Trade Organization report stated in its conclusion:

Trade can also better equip countries to deal with shocks. As a source of economic growth and productivity, it gives countries the technical, institutional and financial means to prepare for shocks. It also can help to ensure that critical services, such as weather forecasting, insurance, telecommunications, transportation, logistics and health services, as well as critical goods, are available in a timely manner before and after a shock hits. It can also enable countries to switch from domestic to external suppliers in case of domestic shortages, thereby making it possible to import essential goods quickly and more easily cope with shocks. In addition, trade contributes to economic recovery from shocks by improving allocative efficiency and unlocking scale effects, enabling the creation of export‐​related jobs and the importation of affordable necessary inputs, ultimately leading to better incomes and increased productivity and innovation.

A perfect example of the value of global supply chains—and the risk of overreliance on domestic ones—was seen during the 2022 baby formula crisis. During this crisis, recalls of formula as well as the shutdown of a US plant that produced formula over contamination concerns led to widespread shortages. These, however, were only the shortage’s proximate cause. Their persistence was due to US import barriers, consisting of both tariffs as well as strict nutritional, labeling, and other standards imposed by the Food and Drug Administration, that enabled US producers to control over 98 percent of the baby formula market. Had these barriers been lower, or removed entirely, foreign‐​produced supplies could have quickly eliminated the shortages.

The episode is a classic case of how severing Americans from global supply chains makes them more vulnerable and less resilient. The forced use of domestic production may seem like a wise exercise in self‐​reliance, but the reality is more akin to placing all of one’s eggs in a single basket.

Talk of cultural corruption, meanwhile, raises all sorts of questions. First, what does it mean? And whatever it is, does Sen. Rubio think it was caused by a decline in manufacturing employment? If so, this raises many questions. For example, what should be made of the approximately 1.5 million increase in manufacturing jobs since April 2010—is Sen. Rubio prepared to argue this has correlated with an improvement in American culture? Are productivity improvements—the leading cause of manufacturing job losses—to be regarded as a source of cultural corruption? And does Sen. Rubio think that industrial policy can fix this corruption? If so, his ambitions are grander (and frankly more concerning) than what his critics had perhaps first supposed.

Lastly, if deindustrialization has indeed wreaked such alleged havoc, what should be made of Sen. Rubio’s support for sugar protectionism that has encouraged US candy manufacturers to shift their production overseas? Is Sen. Rubio not complicit in fostering the very ills that he decries? If manufacturing is so vital, why does Sen. Rubio back policies that drive it away?

Sen. Rubio is correct that not everything is alright. The country faces numerous challenges ranging from runaway spending and massive budget deficits to counterproductive trade policies like the Jones Act, tariffs on imported steel, and sugar protectionism that have—among their other sins—all harmed US manufacturing. If the senator desires a conversation around US economic revitalization, these topics all offer excellent places to start.