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Patrick G. Eddington

Deadlines tend to focus the mind…except for the House and Senate, which every few years wait until literally the last possible moment to deal with a law that this time around expires at 12:01 a.m. on January 1, 2024.

In this case, the law in question is Section 702 of the Foreign Intelligence Surveillance Act (FISA). Section 702 involves the interception of communications of “foreign intelligence” interest carried on the global telecommunications network and its related infrastructure.

Last month, a bipartisan group of House and Senate members introduced the Government Surveillance Reform Act. The GSRA would, among other things, extend the Section 702 program for four years but require a probable cause‐​based warrant to access the communications of Americans acquired under the program.

Yesterday, a separate bipartisan group of House members introduced the Protect Liberty and End Warrantless Surveillance Act (PLEWSA), whose lead author is the extremely controversial Rep. Andy Biggs (R‑AZ). Biggs has emerged as one of the most consistent and harsh critics of the Section 702 program, and his bill, like the GSRA, would impose a probable cause‐​based warrant requirement for the communications of Americans. Both bills would also apply the same requirement to government efforts to acquire data on Americans from third parties such as data brokers.

The bipartisan momentum behind these dueling legislative proposals is driven by the execrable record of surveillance abuse racked up by the Section 702 program and its masters—the FBI and NSA—over the last 15 years. Not surprisingly, national security state bureaucrats are fighting back.

The same day Biggs and his colleagues introduced their Section 702 reform bill, Punchbowl News reported that officials at the Justice Department and the Office of the Director of National Intelligence (ODNI) sent a letter to key Senate leaders on the Intelligence and Judiciary Committees claiming, among other things, that a lapse in Section 702 authority would “inject tremendous uncertainty and risk, endangering the IC’s ability to gain valuable intelligence.”

As I pointed out recently in the Orange County Register, that statement is false. During the Clinton administration, the Central Intelligence Agency (CIA) ran a program under Executive Order 12333 that appears to have been nearly identical to the “upstream” (or internet backbone) portion of current FISA Section 702 collection.

The reality is that the FBI and NSA simply hate having to abide by the Fourth Amendment’s individualized, particularized probable cause‐​based warrant requirement.

What they’ve never been able to credibly explain is why that standard—which governs criminal proceedings in conventional Article III courts every day in this country—is impossible to meet in the national security context. The truth is that it is indeed not only possible but absolutely necessary if the Fourth Amendment is to truly have any consistent meaning and effect.

At present, the House and Senate are scheduled to leave DC by December 15—sixteen days before Section 702 is set to expire. Which reform proposal will become law, if any, is at this point anybody’s guess.

Walter Olson

Justice Sandra Day O’Connor, the first woman to sit on the US Supreme Court, has died at the age of 93. With each year I value her work more on and off the court. Five years ago, when medical reversals caused her to announce her retirement from public life, I wrote:

O’Connor is rightly admired for her inspiring life story and unswerving loyalty to the highest civic principles as well as the ideals of the judiciary. Even at this difficult moment of her life, as the letter shows, she is intent on advancing the res publica.

That O’Connor was the swing Justice of her day did not mean that her role on the Court came down to trimming or compromise. Together with fellow Arizonan Rehnquist, no one was more central in the Court’s reinvigoration of federalism, drawing on her record as the only Justice of our era with extensive service in a state legislature. She has led public discussion in the right direction on issues ranging from professional responsibility and race and redistricting to judicial elections.

And as I noted in 2005, if a single jurist deserves our thanks for helping turn back what had seemed like an irresistible trend toward ever more litigiousness in the civil justice system, it is she. “More vocally than any of her present colleagues, Justice O’Connor sounded the alarm against what she’s termed ‘the increasing, and on many levels frightening, overlegalization of everyday life in our country today.’” Her leading role on such issues as due process review of punitive damages reflected that view. For that, as well as for her notice of my work along the way, count me among the grateful.

There is much more to say from a Cato perspective, starting with her scathing dissent in Kelo v New London (2005) on eminent domain powers, lauded often by Cato scholars. “The specter of condemnation hangs over all property,” she wrote. “Nothing is to prevent the State from replacing any Motel 6 with a Ritz‐​Carlton, any home with a shopping mall, or any farm with a factory” under the mistaken Kelo principle — because “in each such case the city would get more tax revenue, and the city council would regard that as a public benefit,” as David Boaz has explained.

In Gonzalez v. Raich (2005) O’Connor led the charge—again, alas, in dissent—against an overbearing federal government power under the Commerce Clause to restrain peaceful local economic activity.

In praising a trio of 2004-06 Supreme Court cases placing limits on presidential war powers, Edward Crane and Robert A. Levy cited in particular O’Connor’s plurality opinion in one of the cases, Hamdi v. Rumsfeld (2004), which they said nicely captured the key principle: “Whatever power the U.S. Constitution envisions for the Executive … in time of conflict, it most assuredly envisions a role for all three branches of government when individual civil liberties are at stake.”

Two elements of O’Connor’s role on the court drew regular criticism. One was her longtime role as the court’s much‐​courted swing justice, and therefore more personally powerful than we would like a single justice to be, a role assumed by Anthony Kennedy after her. I wrote about some of the genuine problems with that arrangement, although I would also argue that if the country had to entrust so much power to two individuals with lifetime tenure, we’re lucky it was those two. 

The second element of O’Connor’s role that could occasion frustration was her celebrated judicial minimalism, straining not to decide more than was necessary for the case at hand. Again, there are genuine problems with this way of proceeding: the court may obscure its principles and miss a chance to supply a guide to future outcomes. But it’s only fair to note that public estimation of the court’s legitimacy may fare better with the combination of minimalism and a healthy respect for stare decisis, which she had.

And the flip side is that when O’Connor took a wrong step, it tended to be only a step, not a leap into an abysm. Some property rights advocates winced at her opinion for a unanimous court in the 1984 case Hawaii Housing Authority v. Midkiff supporting broad state eminent domain power—but then down the line came her opinion in Kelo.

Her body of work on election law—informed, like so many other areas of her work, by her background as the one justice in the room who’d run for office, managed a state legislative chamber, and served in a state judiciary—deserves its own tribute. On many a topic of this sort, O’Connor’s experience made for a breath of fresh air, as if you’d taken a panel of highbrow food critics and added in someone who’d actually been responsible for managing a kitchen.

Even her choice of what you might call extracurricular activities looks wise in retrospect. A longtime advocate of civility and responsibility in the legal profession, O’Connor took up in retirement the cause of improved civics education more generally. Prescient, I think: if fewer Americans were at sea when asked, say, to name the three branches of government, more of them might be resistant to the lies of demagogues.

All in all, in my opinion, a life for classical liberals to celebrate and admire.

Justin Logan

Last week, Henry Kissinger died at the age of 100. As the man inspired revulsion on the left, so did his death inspire arch obituaries there: the gist of my friend Spencer Ackerman’s obit is accessible right in the title: “Henry Kissinger, War Criminal Beloved by America’s Ruling Class, Finally Dies.” And as these things go, if the left dislikes something, the right must praise it. So for National Review, not only was Kissinger merely a man whose life’s work was “studying [turmoil], managing it, trying to tamp it down,” but he also “was not a war criminal.”

Above all the commentaries, though, was our colleague Patrick Porter’s piece in The Critic, describing HK as “The Man Who Loved Power.” My friend’s prose is always elegant, but particularly so here. I’ll leave you a long excerpt:

Kissinger is a warning above all about power. Realism, the tradition from Thucydides to Morgenthau that he identified with, encourages an acceptance and respect for power, especially hard power, as the ultima ratio of international life. That respect demands some restraint and some sense of civic purpose, given the world’s tendency towards hostile balancing, and given that power can corrupt its possessor. We cannot opt out of power politics. But that is no alibi to yield to its corruptions.

Kissinger, however, not only respected but loved wielding it. If Kissinger is to be remembered as a member of the realist family and its pursuit of Realpolitik, he embodied its darker form, crude and self‐​indulgent Machtpolitik. Kissinger’s behaviour suggests so‐ trying to sabotage a nation’s peace negotiations in order to advance one’s career is the definition of power‐​loving…

Kissinger practised power politics as much against his own republic as in the wider world. With his exotic accent and continuous harping on democracy’s frailties in the world of diplomacy, he knowingly trafficked on an American insecurity, the worry that the innocent young nation needs the guidance of the wised‐​up old world, as if America did not have its own exemplars of effective diplomacy long before Henry turned up. And his underlying impulse was not to tutor the republic. Hans Morgenthau, a civic‐​minded realist who knew Kissinger well, identified the actual motor: “Kissinger has done, during his adult life, very little that was not oriented toward a particular aim in terms of his personal service and particularly his personal power. And he has been eminently successful.” Full stop.

Please do read the whole piece.

But there are two things to add to Porter’s excellent statement: First is that where favoring realism and favoring war parted ways, Kissinger generally sided with war. As one of my old realist professors used to put it, “all American realists opposed the Vietnam War, except for Henry Kissinger. And all American realists opposed the Iraq War, except for Henry Kissinger.” As Kenneth Waltz would later recall in a 1998 interview, the two men met in 1968 and discussed the war in Vietnam:

We agreed completely: hopeless, pointless, no American interest at stake. But he believed… If we get out of Vietnam, just withdraw, the McCarthy period in American politics will pale into insignificance. American society will just blow up. There will be such recriminations, because we will be seen as having sold out.

Almost 17,000 US servicemembers died in Vietnam in 1968 and another 20,000 or so died in the war after 1968. Some alacrity—and even risk regarding his own political standing—was called for.

Secondly, Kissinger did more than anyone to make the concept of foreign policy “realism” synonymous with “grotesque indifference to human slaughter.” This did serious damage to the realist brand, and probably still does. For example, Reihan Salam, who now runs the Manhattan Institute, wrote a 2014 article answering his own question, “Why am I still a neocon?” in large part by pointing to Kissinger and Nixon’s support for the Pakistani military’s slaughter of hundreds of thousands of Bengalis, including his uncle. Realists who predated him, like Hans Morgenthau, as well as realists who came after him, thought very carefully about morality in the conduct of foreign policy.

Beyond the horrors in Bangladesh, or in Cambodia, or elsewhere, some of Kissinger’s utterances just pierce contemporary ears. For example, Kissinger offhandedly remarked to President Nixon in 1973 that, “The emigration of Jews from the Soviet Union is not an objective of American foreign policy. And if they put Jews into gas chambers in the Soviet Union, it is not an American concern. Maybe a humanitarian concern.” I suppose the cynical reading here is supposed to be exculpatory: perhaps the Jewish Kissinger was trying to endear himself to the anti‐​Semitic Nixon via this horrible remark. But Kissinger also inexplicably told the author of his 1992 biography, Walter Isaacson, that, “If it were not for the accident of my birth, I would be antisemitic.” Who is this person?

Not someone who should be the lodestar of a foreign policy school of thought in the 2023 United States. The Sino‐​Soviet split was an important and salutary Cold War development, although the US role generally and Kissinger’s in particular have both been overplayed historically. But for many of those who call ourselves realists, Kissinger is not and has not been our inspiration.

Jeffrey Miron

This article appeared on Substack on November 3, 2023.

The Biden administration recently issued an executive order regulating artificial intelligence. This partially reflects fear that AI will cause mass unemployment.

Such concern, however, is only the latest instance of misplaced fears surrounding technological change.

Speculation that technology would make humans redundant dates to Aristotle, who mused that laborers could be made obsolete by sufficiently complex tools.

During the Industrial Revolution, such fears were infamously revived as protestors (the Luddites) smashed textile machines to resist being displaced. Economist Thomas Mortimer opposed such machines because they would “exclude the labour of thousands of the human race, who are usefully employed.” Many weaving jobs disappeared, but new jobs arose in their place.

In 1964, a group of scientists warned President Lyndon Johnson that computers would soon cause mass unemployment. Such predictions have been replete over the last several decades in response to almost every form of novel technology.

A decade ago, for example, an Oxford study estimated that 47% of US jobs were subject to automation over the next two decades. A decade into the prediction, the employment‐​to‐​population ratio is higher than it was when the paper was released.

Today, some claim that “this time is different” and that AI will permanently reduce employment. But the lesson from centuries of incorrect predictions about technological unemployment is that demand for human labor will continue.

While new technologies will certainly destroy some jobs, money saved from automation will be spent in other sectors. The number of jobs may even rise as new, previously unthinkable roles result from tech advancements, such as social media managers or cybersecurity specialists.

Instead of trying to slow technology, policymakers should allow AI to destroy some jobs even while it creates many more.

Colleen Hroncich

“School choice won’t work here because there aren’t enough private options.” This is a common claim made by choice opponents. Bizarrely, they often make this claim while simultaneously saying choice will kill public schools because students will flee. How will they flee if there aren’t any other options? Perhaps they know deep down that the first claim is false. When funding follows students, education entrepreneurs have an incentive to create new, high‐​quality learning environments.

But even with school choice funding, startups face enormous hurdles—including no income stream until they can begin educating students. That’s where The Drexel Fund steps in. Started in 2015, the mission of the fund is to help entrepreneurs “launch and scale pioneering private schools focused on underserved communities.”

The Drexel Fund is named in honor of St. Katherine Drexel, a Philadelphia heiress born in 1858 who dedicated her inheritance and time to helping African Americans and Native Americans. She founded a religious order, and when she died in 1955 there were more than 500 Sisters in her order teaching in 63 schools throughout the country.

Eric Oglesbee is director of The Drexel Fund’s Founders Program, which is a one‐​year paid fellowship for entrepreneurs who are in the early stage of planning their school. He says the goal of the fund is to serve low‐​income families while being financially sustainable. “We define serving low‐​income families as a school that has at least one‐​third of its seats reserved for free and reduced lunch qualifying families. But our portfolio average is actually 73% of the seats that we create and fund meet that. So it’s much higher— one‐​third is just our floor,” he explains.

Since The Drexel Fund emphasizes sustainability, schools can only rely on philanthropy for 15 percent of their operating budget at maturity. That’s why the fund focuses on states with school choice programs. They have a list of target states that provide the best environment and of opportunity states that show promise. Eric says they’re increasing their counts in each group based on the recent spread of choice programs, especially education savings accounts (ESAs).

The fund offers support at a range of levels, from seeding startups to helping single‐​site schools develop into a network. Eric says the Founders Program that he runs is pretty unique. “It’s a one‐​year fellowship where an individual gets a stipend that’s commiserate with what their prior year’s salary was wherever they were working. And then they get what we call a ‘catalyst budget’ of about $40,000 to be able to engage in learning and some of the soft startup things that happen as you’re launching the school—things they really need to be spending money and time on, but most people don’t do it in startup because they don’t have access to resources.”

“Throughout that year, I help individuals hone their business plans and go through the process of launch with the goal that when somebody finishes the Founders Program, they’re going to open a school that fall and they’ll apply for startup funding from The Drexel Fund. Typically, people who go through the Founders Program do get a start‐​up grant from us, but not all the time. There are benchmarks they have to hit to get it because we treat them like any other startup.”

Eric is often asked why The Drexel Fund exists. He explains that the co‐​founder and current managing partner, John Erickson, was a Catholic school superintendent and saw there was a lot of support for charter schools, but not for private schools. “In the charter space, you have a lot of different operators that are supporting charter school startups through building funds and through growth funds that are out there to get granting,” says Eric. “But in the private school space, prior to The Drexel Fund, there has not been a significant funding organization that says we want to create private school seats to serve low‐​income kids.”

The Drexel Fund measures its impact by how many seats are created with school startups or expansions—with the count at over 18,000 seats in the first eight years. “We organize things according to funds because we’re not operating off of an endowment that’s been sitting here,” Eric explains. “We actually raise the money for everything that we’re doing. We created just over 18,000 seats in the first two funds. We’re now starting our next four‐​year fund where the target is to create 16,500—so try to do in the next four years almost what we’ve done over the previous eight.”

Eric has experienced The Drexel Fund from both sides—prior to working at the fund, he participated in the Founders Program and received a startup grant to co‐​found River Montessori High School in South Bend, Indiana. His number one advice is to build a team because “nobody does this well solo.” Second, he says to talk about your vision to anyone who will listen because that’s when you’ll spot the holes in it. Third is to learn about any school choice programs available in your state and if/​how you can access them—and building a realistic financial model from the get‐​go taking that into account.

One of Eric’s big concerns in burnout. Founders frequently sacrifice their own income to get their schools up and running. “I tell them that may be a lever you have to pull if you’re going to go down this route, but you must build into it that it cannot be forever,” he says. He did it himself when he started River, but he didn’t plan for it to stay like that.

In the Founders Program, he’s very intentional about building the financial model and pushing them when he sees something that looks like burnout waiting to happen. “For a budget to eventually pass muster, they have to address those things for me—because we don’t want to help zombie schools open,” Eric emphasizes. “You know, a lot of people can get the doors open in year one. They can probably keep them open into year two. But by year three is where you start with crunch time. I feel like if a school makes it five years and finishes its fifth year—even if it’s kind of at the border or losing money—but if they go through five years and are growing in student enrollment or stable, they’ll be around for a while. And so that’s a lot of the work I do in the Founders Program is trying to set people up not just to open, but to have a trajectory towards that sustainability.”

The Drexel Fund is an exciting program that is helping create new opportunities for students and teachers around the country. Stay tuned to the Friday Feature in the coming months to learn about some of the great schools that have opened or expanded with support from The Drexel Fund.

Gabriella Beaumont-Smith

Trade is traditionally thought about in the context of goods but free trade is about more than “cheap T‑shirts.” Arguably, the greatest benefits provided by trade liberalization are nonfinancial and intangible, so in my first installment of Cato’s Defending Globalization project, I discuss how free trade brings us goods, services, and time.

Consider how we’ve moved from growing our own food and making our own clothes to buying them. And how purchasing food and clothes from those better at making these products gives us time to do other things. For example, we can work on honing the skills for the sectors we are better suited to work in. This progression towards specialized labor and trade saves people time and money. In turn, both economic and social benefits arise. Some people choose to invest directly in themselves and become more competitive in their industry, some choose to invest in their families and communities, and others consume more leisure. Many people choose a mix.

Those that become entrepreneurs and innovators brought us accessible technology products like e‑commerce platforms and smartphones. Every day, these innovations allow us to communicate, learn, and buy the things that we need and want. For example, Amazon started in 1994 as an online marketplace for books. It has since expanded to an e‑commerce platform that provides brilliant convenience: at the click of a button, we can order what we need, and it will be delivered quickly to our front doors. More than that, the platform provides pages of choices at different price points from sellers located all over the world.

However, Amazon could look very different without the foresight of the World Trade Organization (WTO). The company progressed from an online marketplace of books to an e‑commerce platform, cloud computing service, online streaming and advertising service, and artificial intelligence developer. In 1996, WTO members signed the Information Technology Agreement to eliminate tariffs on hundreds of information and communications technology (ICT) products, including computers, semiconductors and their manufacturing and testing equipment, and software. The WTO’s elimination of tariffs on ICT products played an enormous role in the rise of digital services, like those that Amazon provides.

Since ICT products are the powerhouse of the digital and service economies, liberalized trade significantly contributed to the rise of accessible electronics. These accessible electronics make home offices more affordable. For example, as noted by my colleague, Gale Pooley, the time‐​price of a laptop is much cheaper today than in 1991. When Apple introduced its PowerBook 1000 priced at $2,500, in 1991, it took the average blue‐​collar worker that made $14.93 an hour 168 hours to earn one of these laptops. Today, Apple’s 13‐​inch MacBook Air costs $999 and the average blue‐​collar worker makes $36.50 an hour, so it only takes a little over 27 hours to earn a laptop. That is, it took six times as much work to earn one laptop in 1991 for the average blue‐​collar worker.

Those time savings give the freedom to workers to enrich their lives by spending time on other things they value. Indeed, while free trade has brought us more affordable food and fresh produce year‐​round, some people are using their free time to grow food for fun!

More than that, cheaper home office equipment combined with the invention of cloud services makes it easier for people to start a business at home. At the same time, these entrepreneurs benefit not only from remote work themselves but of others as they can hire workers from anywhere in the world creating a feedback loop of improved living standards, increased innovation, and higher economic growth—not only domestically but globally.

Combined with the pandemic’s demonstration of how much services‐​based work can be performed remotely, pro‐​social benefits are reaped. For example, new data illustrate that that US labor force participation of women with children under the age of five leapfrogged its pre‐​pandemic rate. Remote work (and cheap electronics) can help job retention and raise living standards by giving people, especially caregivers, the flexibility to keep their job but also become parents.

While we have not achieved pure free trade, the evidence is overwhelming that trade improves peoples’ lives—providing us with not only more stuff to consume but with more free time to spend on family, friends, and the other things we most enjoy in life.

This blog only provides a taste of the many benefits of free trade and globalization.

Jeffrey A. Singer

In last night’s “Red State vs. Blue State” debate between California Governor Gavin Newsom and Florida Governor Ron DeSantis on the Fox News Channel, Governor Newsom claimed that Florida’s drug overdose death rate is 41 percent higher than California’s overdose death rate.

While Governor DeSantis dismissed that and many other of Newsom’s claims as “lies,” Newsom got this one right.

According to the Centers for Disease Control and Prevention, in 2021 (the most recent year the data are available), California ranked sixteenth among the states with 26.6 overdose deaths per 100,000 persons, while Florida ranked thirty‐​third with 37.5 deaths per 100,000—41 percent higher.

However, one should not take these numbers at face value. There are multiple factors that might account for these differences. Among them are differences in demographics and availability of harm reduction programs.

For example, access to methadone treatment for opioid use disorder (OUD) can reduce overdose deaths. Methadone treatment eliminates the need to seek drugs on the black market where people cannot be certain of the drugs’ dosage and purity—or even if it is the drug they think it is.

In a recent Cato Institute study on expanding access to methadone treatment, we found that California had a greater number of Opioid Treatment Programs (OTPs) per people with opioid use disorder than Florida. In 2021, California had one OTP for every 3,083 people with OUD, while Florida had one OTP for every 3,216 people with OUD. The states ranked twenty‐​fifth and twenty‐​sixth respectively, in OTPs per people with OUD. As we argue in the study, Congress can greatly expand access to methadone treatment by enabling primary care providers to prescribe it to treat patients with opioid use disorder.

A Cato study found that both states had legalized syringe services programs (SSPs) by 2021, in which people who use drugs can get clean syringes and, nowadays, are handed the overdose antidote naloxone. However, thirty‐​nine sanctioned SSPs were operating in California by 2022, compared to eight in Florida. In 2021, California’s population was 39.4 million, and Florida’s was roughly 44 percent lower at 21.8 million. The population difference does not explain the SSP disparity.

What might help explain the disparity is that, unlike California, Florida requires SSPs to collect one syringe for every syringe it gives out. Harm reduction organizations trying to help people who use drugs have a hard time meeting that requirement. Oftentimes, people who use drugs don’t have their used syringes with them to exchange for clean ones.

State drug paraphernalia laws make it difficult for harm reduction organizations to distribute fentanyl test strips to people who use drugs, allowing them to check the drugs for fentanyl contamination. A Cato study found that, in 2021, both California and Florida explicitly prohibited fentanyl test strips in their paraphernalia laws. Fortunately, California lawmakers legalized distributing fentanyl test strips in 2022, and Florida lawmakers did so last summer.

Most states have enacted “Good Samaritan Laws” to encourage people to call first responders if a person with whom they are using drugs is overdosing. These laws assure people that police will not arrest them for illicit drug use if they call 911. However, in many states, police may arrest the caller for non‐​drug‐​related offenses. And in Florida, police have charged and arrested people for aggravated manslaughter when the overdose victim died. Such exceptions to these Good Samaritan Laws undermine their intent.

California may provide more access to harm reduction programs than Florida. But Governor Newsom missed a great opportunity to let the country’s most populous state strike a major blow in that direction in 2022 when he vetoed a bill that would have permitted overdose prevention center (OPC) pilot programs in some urban areas with a high density of drug users.

As I reported in a Cato study last February, OPCs have been saving lives since 1986. There are currently 147 government‐​sanction OPCs operating in 16 countries, including 14 in Switzerland, 27 in Germany, 38 in Canada, and 2 in New York City. A federal law called the “crack house statute” (21 U.S.C. Section 856) makes OPCs illegal in the US.

While the New York City mayor and the City’s Department of Health approved the two OPCs operating there, they were defying the federal law. In 2022, Rhode Island’s governor signed a bill into law that sanctions privately funded OPCs in the Ocean State, and Minnesota’s governor signed a bill legalizing OPCs earlier this year.

As more states defy federal law by allowing OPCs to reduce overdose deaths, it might push Congress to repeal or amend the 1980s statute. Had Governor Newsom signed the OPC bill lawmakers sent to his desk, it would have given great impetus to the movement to repeal the federal law while saving many California lives.

While Governor DeSantis can boast that Florida does better than California on a number of metrics, he cannot make that claim when it comes to overdose deaths. One way Governor DeSantis can improve Florida’s overdose rate vis‐​a‐​vis California’s is by working to legalize OPCs in the Sunshine State.

David Boaz

On December 1, 1982, F. A. Hayek became Cato’s first Distinguished Lecturer. Cato had supported his work for several years, and he was later named a Distinguished Senior Fellow — an honor to be sure, but not quite up to the level of his 1974 Nobel Prize.

Hayek’s life spanned the 20th century, from 1899 to 1992. In his youth he thought he saw liberalism dying in nationalism and war. Thanks partly to his own efforts, in his old age he was heartened by the revival of free‐​market liberalism. John Cassidy wrote in the New Yorker that “on the biggest issue of all, the vitality of capitalism, he was vindicated to such an extent that it is hardly an exaggeration to refer to the twentieth century as the Hayek century.”

Back in 2010 the New York Times said that the Tea Party “has reached back to dusty bookshelves for long‐​dormant ideas. It has resurrected once‐​obscure texts by dead writers [such as] Friedrich Hayek’s “Road to Serfdom” (1944).” I responded at the time,

So that’s, you know, “long‐​dormant ideas” like those of F. A. Hayek, the winner of the Nobel Prize in Economics, who met with President Reagan at the White House, whose book The Constitution of Liberty was declared by Margaret Thatcher “This is what we believe,” who was described by Milton Friedman as “the most important social thinker of the 20th century” and by White House economic adviser Lawrence H. Summers as the author of “the single most important thing to learn from an economics course today,” who is the hero of The Commanding Heights, the book and PBS series by Daniel Yergin and Joseph Stanislaw, and whose book The Road to Serfdom has never gone out of print and has sold 100,000 copies this year.

On the occasion of Hayek’s 100th birthday, Tom G. Palmer summed up some of his intellectual contributions:

Hayek may have made his greatest contribution to the fight against socialism and totalitarianism with his best‐​selling 1944 book, The Road to Serfdom. In it, Hayek warned that state control of the economy was incompatible with personal and political freedom and that statism set in motion a process whereby “the worst get on top.”

But not only did Hayek show that socialism is incompatible with liberty, he showed that it is incompatible with rationality, with prosperity, with civilization itself. In the absence of private property, there is no market. In the absence of a market, there are no prices. And in the absence of prices, there is no means of determining the best way to solve problems of social coordination, no way to know which of two courses of action is the least costly, no way of acting rationally. Hayek elaborated the insights of the Austrian economist Ludwig von Mises, whose 1922 book Socialism offered a brilliant refutation of the dreams of socialist planners. In his later work, Hayek showed how prices established in free markets work to bring about social coordination. His essay “The Use of Knowledge in Society,” published in the American Economic Review in 1945 and reprinted hundreds of times since, is essential to understanding how markets work.

But Hayek was more than an economist. As I’ve written before, he also published impressive works on political theory and psychology. He’s like Marx, only right. Tom Palmer noted:

Building on his insights into how order emerges “spontaneously” from free markets, Hayek turned his attention after the war to the moral and political foundations of free societies. The Austrian‐​born British subject dedicated his instant classic The Constitution of Liberty “To the unknown civilization that is growing in America.” Hayek had great hopes for America, precisely because he appreciated the profound role played in American popular culture by a commitment to liberty and limited government. While most intellectuals praised state control and planning, Hayek understood that a free society has to be open to the unanticipated, the unplanned, the unknown. As he noted in The Constitution of Liberty, “Freedom granted only when it is known beforehand that its effects will be beneficial is not freedom.” The freedom that matters is not the “freedom” of the rulers or of the majority to regulate and control social development, but the freedom of the individual person to live his own life as he chooses. The freedom of the individual to break old molds, to create new things, and to test new paths is the mark of a progressive society: “If we proceed on the assumption that only the exercises of freedom that the majority will practice are important, we would be certain to create a stagnant society with all the characteristics of unfreedom.”

Reagan and Thatcher may have admired Hayek, but he always insisted that he was a liberal, not a conservative. He titled the postscript to The Constitution of Liberty “Why I Am Not a Conservative.” He pointed out that the conservative “has no political principles which enable him to work with people whose moral values differ from his own for a political order in which both can obey their convictions. It is the recognition of such principles that permits the coexistence of different sets of values that makes it possible to build a peaceful society with a minimum of force. The acceptance of such principles means that we agree to tolerate much that we dislike.” He wanted to be part of “the party of life, the party that favors free growth and spontaneous evolution.” And I recall an interview in a French magazine in the 1980s, which I can’t find online, in which he was asked if he was part of the “new right,” and he quipped, “Je suis agnostique et divorcé.”

Hayek lived long enough to see the rise and fall of fascism, national socialism, and Soviet communism. In the years since Hayek’s death economic freedom around the world has been increasing (until a hopefully temporary dip during the Covid pandemic), and liberal values such as human rights, the rule of law, equal freedom under law, and free access to information have spread to new areas. But today liberalism is under challenge from such disparate yet symbiotic ideologies as resurgent leftism, right‐​wing authoritarian populism, and radical political Islamism. I am optimistic because I think that once people get a taste of freedom and prosperity, they want to keep it. The challenge for Hayekian liberals is to help people understand that freedom and prosperity depend on liberal values, the values explored and defended in his many books and articles.

Hayek came to Cato once more, for a small lunch. I have a picture from that event that I especially like because it looks like it’s just myself and Hayek at the table. Except for the dozen or so wine and water glasses of tablemates who weren’t in the camera shot.

“Exclusive Interview with F. A. Hayek,” Cato Policy Report, vol. 6, no. 3, May/​June 1984.

“An Interview With F. A. Hayek,” Cato Policy Report, vol. 5, no. 2, February 1983.

Ryan Bourne and Sophia Bagley

The Biden administration’s crusade against “junk fees” continues. Federal Communications Commission (FCC) Chair Jessica Rosenworcel recently announced a proposal to eliminate early termination fees (ETFs), or “junk fee billing practices” as she describes them, for cable and satellite TV providers. The proposal is slated for a vote on December 13 and will likely pass given the Democrat majority at the FCC.

Eliminating ETFs would alter the way cable and satellite TV services are priced. At the moment, ETFs are levied if a consumer enters a long‐​term service contract for cable or satellite TV service and cancels their contract before it’s finished. The fees typically start at a high rate and are then reduced each month that a consumer stays in their contract.

The Biden administration (and many consumer groups) see ETFs as unfair charges simply designed to lock in consumers by deterring them from shifting to another service. As such, they deem their use inherently anti‐​competitive. As with other so‐​called “junk fees” the administration bemoans, however, characterizing ETFs as some sort of standalone exploitative charge, rather than a fee that forms a part of an overall pricing model, leads to sloppy economic thinking.

Early Termination Fees can serve several economic purposes for cable and satellite TV companies. There are one‐​off costs to acquiring new customers, as well as for setting up new accounts and providing and installing equipment. These must be recovered, whether the customer sticks around for the length of the contract or not.

The fees also help provide more revenue certainty for businesses, which grants the companies the confidence to make bigger long‐​term investments in service infrastructure, particularly in more remote regions or where expensive overhauls of technology are required.

Banning ETFs obviously has some theoretical economic benefits, such as removing financial barriers to customers changing services when a novel product better suits their needs or when they move residence to somewhere not covered by their current TV provider.

Yet enforcing a ban is no free lunch. These are profit‐​seeking businesses that will seek to protect their revenue base. So the primary effect of banning ETFs would mean some combination of higher up‐​front monthly prices for all customers to reflect greater turnover risk, fewer promotional rates, higher installation charges, or a shift to a more “pay‐​as‐​you‐​go” model for channels or shows. There’s no a priori reason to think these pricing structures are better for consumers overall.

In fact, given that the market for television is increasingly competitive, with multiple different streaming platforms already offering “no contract” subscriptions, it seems a bizarre time to ban a whole model of pricing. Customers can already opt for many platforms where they can sign up for a streaming service and cancel at their leisure. But these have incredibly high churn rates for subscribers, which alters the incentives for what type of TV programs are offered.

Cable and satellite services typically offer a more comprehensive package of channels, usually comprising live events, like sports, alongside entertainment, news, and weather channels. But if the companies have no lock‐​in mechanisms to ensure steady cross‐​subsidies are available to provide more niche channels, and they find they can’t charge higher monthly prices without losing customers to streaming services, then we’d expect cable companies to start prioritizing trendier output.

In other words, the packages and channels they offer will increasingly look more like streaming platforms, with fewer niche channels, more customizable packages, and maybe even an increased focus on on‐​demand services, which are less reliant on retaining long‐​term customers to provide cost‐​effectively. In that sense, eliminating these “junk fees” could reduce choice for consumers in how certain TV packages are bundled. It would incentivize less in the way of output consumers watch rarely but value being available.

This proposal is another example of what I call politicians’ “war on prices.” Behind most unusual pricing structures are important economic considerations that are sometimes not immediately clear to regulators or consumers. The fact that cable companies have adopted ETFs suggests that banning them will be costly to the current model of TV provision. It may be that competitive pressure from streaming platforms would have made the ETF pricing strategy unviable anyway, in time, but this should be decided by sovereign consumers, not regulators.

Adam N. Michel

Congress is considering the merits of a package of expiring and expired business tax changes that some lawmakers want to pair with larger tax subsidies for families with kids. If made permanent, the ostensibly $100 billion in tax cuts could reduce revenue by more than $1.5 trillion over the budget window.

Keeping taxes low on new investment is an essential goal for American workers and production, but Congress should not tie necessary economic reforms to budget gimmicks and unrelated middle‐​class tax subsidies.

The Tax Extender Illusion

Almost every year, Congress attempts and often succeeds at extending a handful of expiring tax provisions. These so‐​called “tax extenders” usually rotate from year to year, but as temporary provisions, they are not only bad tax policy, they are also bad budget policy and bad economic policy.

Recent reporting indicates that Democrats have proposed a roughly $100 billion tax extender package with $50 billion for an expanded child tax credit and $50 billion to extend three business tax provisions. Each of the changes would expire likely at the end of 2025, although the parameters of the deal are still disputed (as is the legislative vehicle to which an extenders package could be attached).

The business tax cuts are economically important (as I detail here and here). If left unaddressed, effective tax rates on new investments will rise, decreasing the type of business activities that support jobs and wage growth. However, temporarily extending these policies year‐​by‐​year undermines their economic benefit. Temporary investment policies tend to shift investment between years rather than permanently increasing the investment level, which is what drives economic growth.

Any economic or political value of temporary business tax cuts is undermined further when paired with tax credits that are economically indistinguishable from direct government spending. As I’ve written before, the child tax credit should not be expanded. It is a costly transfer program for primarily middle‐ and upper‐​income taxpayers who do not need government subsidies. Depending on how the credit expansion is designed, it could discourage work, leaving lower‐​income Americans economically worse off.

Temporary tax policy also distorts budgeting. As the Committee for a Responsible Federal Budget recently estimated, a roughly $100 billion year‐​end tax deal would reduce revenues by more than $800 billion over the ten‐​year budget window, if made permanent. That number could rise by another $700 billion to $1.5 trillion, if policymakers also make the current base‐​child credit permanent beyond 2025 (a more realistic assumption).

If a year‐​end tax package gains support, it could include other smaller tax extenders, such as an extension of the pulsed‐​up rum cover‐​over program, among a number of other parochial interests (like special tax policies for corporations in American Samoa, certain racehorses, Indian employment, or mine rescue training).

Congress also usually implements these extenders retroactively to past years in which the provisions have lapsed due to congressional inaction. Retroactive tax changes are particularly wasteful as they do not change business behavior and primarily accrue as windfall profits. Year‐​end tax changes can also wreak havoc on tax filing season as businesses, tax preparers, and the IRS must scramble to adjust to last‐​minute changes.

There are always political reasons used to rationalize temporary changes, but arbitrary political cliffs make for poor economic policy and distort budgeting.

If policymakers want to support business investment, jobs, and broader economic growth, the lower revenue from making the business tax provisions permanent is worth the short‐​run fiscal costs.

Adding almost $1 trillion to the price tag to include direct subsidies to families is budgetarily unsustainable. Policymakers should not pair necessary economic reforms with temporary budget gimmicks and unrelated tax subsidies without offsetting spending cuts.

The current expiring business tax provisions are only a fraction of the tax increases scheduled for the end of 2025 when most of the 2017 tax cuts expire. If Congress wishes to keep taxes from rising over the long run, they must make serious reforms to federal spending.