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Roger Pilon

Last week I had a short letter in the Wall Street Journal commenting on an op-ed by Journal editorial board member Collin Levy about China’s repression of religious liberty. (Years ago, by the way, when she was a rising senior at Vassar, Ms. Levy was my summer intern.) Because the Journal is behind a paywall, I reprint the letter here, then add a few comments that could not be included in a short letter.

Sept. 17, 2024

In her richly informative “China Expands Its Religious Repression” (Houses of Worship, Sept. 13), Collin Levy cites “37 academics, lawyers, journalists and others who signed a letter calling on the international community to insist that China live up to its human-rights commitments.” Unfortunately, China is doing just that.

As with all communist constitutions, China’s basic law lists rights we in the West take for granted. But at the end of that list is a general defeasance clause: “Citizens of the People’s Republic of China, in exercising their freedoms and rights, may not infringe upon the interests of the state, of society, or of the collective.” And who determines that? Why, the Chinese Communist Party, China’s real government.

Fidel Castro put it succinctly: “Within the revolution, everything. Against the revolution, nothing.” China’s religious repression is “lawful.”

Roger Pilon

Senior fellow, Cato Institute

The misreading of the Chinese Constitution shown in the letter Ms. Levy cites is not uncommon. In fact, during the Soviet era, when I served in the Reagan administration as the director of policy for the State Department’s Bureau of Human Rights and Humanitarian Affairs, I found that even our diplomats would sometimes lament that “if only the Soviets would respect the rights contained in their Constitution.” Unfortunately, they do, if you read the document carefully.

Doing so, you will also see that communist constitutions are fundamentally different from the understanding of constitutions that Americans once had. I brought those difference out in some detail in my chapter in a 1998 Cato book China in the New Millennium, edited by Jim Dorn. Thus, far from a document designed to secure the liberties of the people, the Chinese Constitution makes it clear from the start that the PRC “is a socialist state under the people’s democratic leadership,” that “the socialist system is the basic system” of the PRC, and that “disruption of the socialist state by any organization or individual is prohibited” (Article 1).

The document was written, therefore, with a specific agenda in mind—“building socialism”—which gives it less the feel of a constitution than of articles of incorporation for, say, “China, Inc.,” a body constituted for a specific, yet all-encompassing end. Given that character, a second feature looms especially large. For if the nation is organized along vast programmatic lines, one wants to know how it is that citizens join or consent to so far-reaching a program. The short answer is that they don’t.

This is top-down rule by the Chinese Communist Party. It should hardly surprise that the Constitution elevates the interests of the state above the rights of the citizen. After all, the whole point of the Constitution is to order affairs—including the affairs of individual citizens—toward the goal of building socialism.

Not surprisingly, several of those who commented on my Journal letter noted that our own system is moving in exactly that direction—and it is. After Franklin Roosevelt’s New Deal constitutional revolution, followed by Lyndon Johnson’s Great Society of the ’60s, to say nothing of the agendas of the Obama and Biden administrations, Americans are increasingly being drafted, through their taxes and the regulations that restrict their liberties, into building the world envisioned by their governors. At the end of that road is “America, Inc.,” and it isn’t as if we haven’t been warned as we see the state of religious and other liberties in countries like China.

Alex Nowrasteh

During the September 10 debate, former President Donald Trump channeled internet rumors when he said that Haitian migrants in Springfield, Ohio, were eating dogs and cats. This started a conversation over whether Haitian migrants in Springfield, almost all of whom are legally present in the United States, were eating pets and other animals like geese. Older suggestive videos and images without Haitians and from cities other than Springfield were circulating. Vice presidential candidate JD Vance even joined in, defending Trump’s claims in the media.

On the other side, Springfield police, the city government, and Republican Governor Mike DeWine said there was no evidence of unlawful pet consumption. Conservative activist Christopher Rufo found a video of what he claims are cats on the grill in a neighboring town near where African immigrants live, but local police dispute that conclusion. There have been many bomb threats in Springfield in the meantime. Post-debate polls show that a bare majority of respondents think claims about Haitian migrants eating pets are false, with large minorities thinking the claims are either true or don’t have an opinion.

This post supplies evidence that immigrants aren’t cruel toward animals. There’s been wonderful and ample reporting on Springfield, Haitian immigrants, and whether Haitian migrants in Springfield are eating pets (the answer appears to be “no”). But whether immigrants, in general, are eating pets or being cruel to animals is now a subtopic in the debate over how immigration affects the United States. When questioned about the veracity of claims regarding Haitians eating cats in Springfield, JD Vance said, “If I have to create stories so that the American media actually pay attention to the suffering of the American people, then that’s what I’m going to do.” So here goes.

The lack of evidence for disproportionate immigrant cruelty toward animals from Ohio is reassuring, but it’s not systematic and isn’t generalizable. Maybe Haitians in Springfield are eating animals they shouldn’t and criminally abusing them, but immigrants elsewhere may be doing so. The degree of animal cruelty certainly does affect American culture, and if immigrants are disproportionately cruel, it would be a mark against them. Fortunately, Texas’ detailed crime data can reveal whether immigrants are more or less likely to be cruel to animals than native-born Americans in that state.

As I wrote in a recent Cato policy analysis on illegal immigrant crime in Texas:

Texas is the only state that records criminal convictions and arrests by immigration status. Texas has this informa­tion because its law enforcement agencies cooperate with federal immigration enforcement authorities at the Department of Homeland Security (DHS), which checks the biometric information of arrestees in the state and tracks them through to their convictions. The Texas [Department of Public Safety] DPS keeps the results of these DHS checks, which they label as PEP, named after an earlier system that helped local law enforcement agencies identify illegal immigrant criminals. After criminal convictions, the TDCJ continues to investigate the immigration statuses of offenders incarcerated for some of the most serious offenses. This results in the identification and reclassification of legal and illegal immigrants who were previously categorized as other or unknown. The DPS then retains the results of both the DPS and TDCJ immigration checks.

When the “Haitians are eating our pets” story broke, I sent a Public Information Act request to the Texas DPS for data on criminal convictions and arrests for crimes against animals by immigration status. Texas DPS recently responded, and the data are analyzed below using the same methods employed in my earlier papers on illegal immigration and crime.

The immigrant criminal conviction rate for crimes against animals in Texas is 58 percent below that of native-born Americans in 2022 (Figure 1). The illegal immigrant criminal conviction rate is 66 percent lower, and it’s 52 percent lower for legal immigrants compared to native-born Americans in the same year. The same pattern holds over the entire period of 2013–2022. During the decade of 2013, there were 3,569 total convictions in Texas for crimes against animals. Of those, illegal immigrants were convicted of 81 offenses, legal immigrants were convicted of 186 offenses, and native-born Americans were convicted of 3,302.

Native-born Americans were 82 percent of the population in Texas in 2022, and they accounted for almost 93 percent of all criminal convictions for cruelty to animals. Illegal immigrants were 7.1 percent of the population and accounted for 2.3 percent of all criminal convictions for cruelty toward animals. Legal immigrants were 10.8 percent of the population and accounted for just 5.2 percent of the convictions.

There are many different crimes against animals in Texas, such as cruelty to livestock animals, cruelty to non-livestock animals, animal torture, cruelty related to abandonment, privation, transportation, overwork, and others. Figure 1 includes all crimes against animals, but cruelty to livestock stood out to me as a subcategory that’s different in kind. Farmers raise livestock for agricultural and work purposes, so they are a different category than pets. Thus, Figure 2 presents criminal convictions against animals that exclude those committed against livestock. The results are similar regardless of whether the analysis includes livestock.

Conviction data in Texas for the crimes of animal cruelty are obviously not data on Haitian migrant consumption of cats and dogs in Springfield, Ohio. However, we don’t have data on criminal convictions by immigration status or country of origin in Springfield. The data from Texas are suggestive, and they may be generalizable, despite having some issues, as I explain here.

Perhaps few immigrants who are cruel toward animals aren’t prosecuted or perhaps they’re less friendly toward our furry friends in other ways that wouldn’t be captured in criminal prosecutions for animal cruelty. Still, the Texas data help answer the questions of whether immigrants are crueler to animals nationwide than native-born Americans and whether more immigrants would result in more common animal cruelty in the United States. Immigrants in Texas are much less likely to be convicted of cruelty toward animals.

David J. Bier

While announcing an interest rate cut this week, Federal Reserve Chair Jerome Powell made comments about immigration that many have misconstrued to argue that immigration is increasing unemployment.

Question: We’ve only been running a little above a hundred thousand jobs a month on payroll the last three months. Do you view that level of job creation as worrying or alarming, or would you be content if we were to kind of stick at that level?

Powell: It depends on the inflows, right? If you’re having millions of people come into the labor force then, and you’re creating a hundred thousand jobs, you’re going to see unemployment go up. So, it really depends on what’s the trend underlying the volatility of people coming into the country. We understand there’s been quite an influx across the borders, and that has actually been one of the things that’s allowed [the] unemployment rate to rise, and the other thing is just the slower hiring rate, which is something we also watch carefully. So, it does depend on what’s happening on the supply side.

Powell was not saying that immigration caused unemployment. Rather, he was making a simple point about basic mathematics. He was explaining how it is possible that high job growth was continuing, but the unemployment rate had still risen somewhat. From a mere mathematical standpoint, immigration has “allowed the unemployment rate to rise” alongside more employment because, without immigration, employment would have fallen.

Powell’s point was that if this level of job growth continued without immigration, then this would be a sign of a healthy labor market. However, given the reality of how many new immigrants have come, job growth right now needs to be even higher to keep the unemployment rate low—hence the rate cut.

Powell is absolutely clear that he believes the labor market is in good shape, notwithstanding the “influx across the borders.” Some quotes: 

We’ll start with unemployment, which is the single most important one probably, you’re at 4.2 percent. That’s, I know it’s higher, we were used to seeing numbers in the mid- and even below mid-threes last year, but if you look back over the sweep of the year, that’s a low, that’s a very healthy unemployment rate. And anything in the low fours is a really good labor market.

Participation is at high levels … adjusted for demographics for aging.

Wage increases are still just a bit above where they would be over the very longer term to be consistent with 2 percent inflation, but they’re very much coming down to what that sustainable level is. So, we feel good about that. 

Vacancies per unemployed is back to what is still a very strong level. It’s not as high as it was. That number reached 2 to 1, two vacancies for every unemployed person, as measured, it’s now below, it’s around one. But that’s still a very good number.

Quits have come back down to normal levels, I mean I could go on and on. There are many, many employment indicators and what do they say? They say this is still a solid labor market. 

Clearly, labor market conditions have cooled off by any measure, as I talked about in Jackson Hole, but they’re still at a level, the level of those conditions is actually pretty close to what I would call maximum employment…

Moreover, Powell does not think that the influx of immigration is the cause for the slightly higher unemployment rate in recent months. Rather, it is clear that he blames general economic conditions influenced by high interest rates for the slowdown:

There has been change particularly over the last few months and so what we say is, as the risks, the upside risks to inflation have really come down, the downside risks to employment have increased and because we have been patient and held our fire on cutting while inflation has come down.

The labor market is actually in solid condition. And our intention with our policy move today is to keep it there.

With an appropriate recalibration of our policy, we can continue to see the economy growing and that will support the labor market.

We don’t think we need to see further loosening in labor market conditions to get inflation down to 2 percent. But we have a dual mandate, and I think you can take this whole action as, take a step back, what have we been trying to achieve? We’re trying to achieve a situation where we restore price stability without the kind of painful increase in unemployment that has sometimes come with disinflation.

Powell is partly reducing interest rates to prevent further increases in the still-low unemployment rate. The same factors cause unemployment rates for both immigrants and US-born Americans. Figure 1 shows the unemployment rate for immigrants and the US-born. It demonstrates that the same underlying economic conditions cause the unemployment rate to rise and fall for both groups. Figure 2 shows the number of unemployed US-born compared to employed immigrants, showing that the significant rise in immigrant employment has not caused an increase in unemployment among US-born Americans. More employed immigrants are associated with fewer US-born unemployed workers.

Immigrants are not taking jobs away from Americans or causing the unemployment rate to rise. A decline in immigration would be a bad sign for the labor market. Immigrants come when job opportunities exist. As the labor market has cooled, fewer immigrants have been crossing the border illegally since the start of the year. With inflation coming under control and the interest rate being cut, let’s hope policymakers can create a legal way for the next group to come.

Colleen Hroncich

Erica Paul and Anna Utley were homeschooling their children and attending a Pittsburgh-area co-op for enrichment activities twice a month. “It was a great source of Catholic community and all the lovely things that come with a co-op,” recalls Erica. “But as our kids started to get older, you start to see a need for something a little bit more consistent, something a little more academically focused.”

A conversation on Facebook led to Erica, Anna, and another mom meeting up to discuss creating a drop-off program focused on academics. Then a homeschooling dad told them he thought his parish priest would be open to letting them use their facilities, and suddenly they were running with it. “We started talking in March of 2018, and we started our first year September 2018,” says Anna.

They quickly realized that their new hybrid homeschooling program, which they named St. Ambrose Academy, was a business and was very different from the co-op that Erica had been running. “I would be up until like 2:00 a.m. searching ‘How do I incorporate?’ ‘What are our board documents?’” Anna says. “I taught myself how to do payroll because we had no money going in so we couldn’t pay for payroll. I taught myself taxes and Erica knew a tax guy who would try and teach me too.”

They did a lot of research on the various models and options for curricula. They wanted the program to be affordable for families and also allow them to support their teachers. When they couldn’t find a model that fit the bill, they created their own. While they aren’t affiliated with Mother of Divine Grace, a Catholic homeschooling program, they follow that curriculum for the most part. Anna says they chose it because it’s solidly Catholic, challenging, and classical.

They also like that families can enroll in Mother of Divine Grace’s teacher review program, which is an accredited online school while attending St. Ambrose Academy. Erica says many St. Ambrose families do their own grading and transcripts, but others are intimidated by that and want more support.

“A lot of our high school families will enroll with Mother of Divine Grace also and then ultimately graduate with a transcript from them,” she explains.

St. Ambrose Academy meets in person at a former Catholic school on Mondays and Wednesdays and students work on lessons at home the rest of the week. “Everyone’s homeschooling on their own,” Anna notes. “We’re not a school in the eyes of the state.” On the in-person days, they cover core academic subjects, including math, science, history, writing, and literature. As a Catholic program, religion is a key component of the curriculum. Grades K through six participate in Catechesis of the Good Shepherd, which is a Montessori-based religious education program.

The program began with preK through sixth grade and has added a grade each year; this year will be the first graduating class. Anna says 32 students joined St. Ambrose Academy in the first year and they had eight staff members. By last year, enrollment had ballooned to 191 students and they now have 54 staff members. Some staff members are there all day on Mondays and Wednesdays. Others teach just one class a week.

The success of St. Ambrose Academy has led Erica and Anna to offer support to other homeschoolers who want to start a similar program. “After we realized what all we took on in a very short amount of time, part of our goal was to make it easier for other homeschooling moms who wanted to do the same thing,” says Erica. “So we have created a mostly hands-off but supportive way of helping other moms start a St. Ambrose without us being too involved or micromanaging.” There is currently a branch in Zionsville, Indiana, and there’s potentially another branch opening next year.

“They’re not actually a franchise. They’re their own independent entity. But we have a relationship with them where they can use our documents, use our application, use all the intellectual property that we created,” Anna explains. “They can use all of that and have a branch of our website, but they have to remain within some requirements. Like they have to be under a certain amount of tuition because part of it is we don’t want it to be priced out where people cannot attend. They have to follow the teachings of the Catholic Church. So we have certain standards that they have to meet, and if they don’t at any time, we can say, ‘You can no longer use our documents.’”

I got to tour St. Ambrose Academy in Pittsburgh this week, and considering what I saw, I’m not surprised it’s grown so much. There was a balance between individual and group learning along with a lot of fun and kids able to be kids.

As Anna puts it, “Our ultimate goal would be to have it start up in a lot of places because it’s been truly beneficial to the community. Beneficial to my own children. And I just love that my children have gotten this whole kind of world that they wouldn’t have had.”

Matthew Cavedon

According to his legal complaint, petitioner Roy Sargeant is a prison inmate who has cooperated with the government and therefore was entitled to be housed separately from non-cooperating inmates. Sargeant filed a grievance against a prison official after she commented on his sexual preferences and refused to give him books he had ordered. Sargeant further complained after respondent Aracelie Barfield, another prison official, spread news about the grievance. In retaliation, Barfield repeatedly put Sargeant into cells with violent prisoners. This led to fights between Sargeant and other inmates.

Sargeant sued Barfield, alleging that she violated his Eighth Amendment right to be free of cruel and unusual punishment, specifically by failing to protect him during his imprisonment. The district court dismissed his complaint.

On appeal, the Seventh Circuit held that failure-to-protect claims cannot be the basis for a suit for damages under the Supreme Court’s Bivens decision. Dissenting, Judge Hamilton wrote that constitutional rights are only as good as the remedies available for their violation. Sargeant is now seeking certiorari (legal review) from the Supreme Court.

Cato and the Law Enforcement Action Partnership filed an amicus brief in support of Sargeant’s petition. It observed that suits for damages are a potentially highly effective means of enforcing constitutional rights, exposing individual and systemic misconduct, and incentivizing policymakers to adopt needed reforms.

And contrary to the Seventh Circuit’s analysis here, allowing federal prisoners a monetary remedy when a rank-and-file prison official deliberately subjects them to the risk of inmate-on-inmate violence will not present “separation-of-powers concerns” by inviting courts to “interfere with” issues such as prison “housing policies.”

Federal prisoners are among our nation’s most vulnerable populations. It is precisely these people—who generally cannot vote, protest, or garner attention from the media—who are most dependent on the judicial system to vindicate their constitutional rights. The court should grant Sargeant’s petition and reverse the earlier decision.

David Inserra

Last week, Australia dropped its revised Combatting Misinformation and Disinformation Bill 2024, and it’s about two sandwiches short of a picnic. The bill appears to draw some of its inspiration from the EU’s Digital Services Act in terms of creating significant responsibilities and regulations. And if past is prologue, what happens in Australia doesn’t stay in Australia—such as when Australia passed its “link tax” bill, which taxed social media companies when users shared links to news articles. That link tax spread to Canada and has been actively considered in the United States. Canada is also considering replicating Australia’s eSafety Commission, despite various cases of significant censorial overreach.

But whatever the rationale or history here, this bill not only will restrict Australians’ free speech and access to different online services, but its influence may spread and threaten American speech as well.

Let’s first look at how the bill defines misinformation and disinformation, a challenge for any bill or organization in this field. The bill defines misinformation as content that is

“reasonably verifiable as false, misleading, or deceptive;” and
“is likely to cause or contribute to serious harm.”

The definition also carves out some space for satire and parody, professional news content, and “reasonable” dissemination of content for “academic, artistic, scientific, or religious” reasons. Disinformation uses the same definition and adds that there must be grounds to suspect that the content was shared with the intent to deceive others or otherwise involves inauthentic behavior.

There is enough to unpack in these definitions alone to fill multiple blogs, but I’ll focus on three points:

What is verifiably misleading? There are claims that are objectively true or false because we can verify through evidence and logic that is available for anyone to interrogate. But how does one objectively verify that something is misleading? Misleading content involves leaving out certain context, cherry-picking data, predicting potential future outcomes based on a limited amount of evidence, intermingling opinion and fact, etc. Misleadingness, then, is all about the various ways we debate and discuss issues, often based on incomplete information, opinion, and determining how to weigh various factors and arguments against one another. In other words, what is or is not considered misleading is often highly subjective.

For example, some view CNN as hard-hitting and fair journalism, while others believe it to be highly biased and misleading. The same is true for Fox News, the Washington Post, the New York Post, Joe Rogan, the Daily Wire, the Young Turks, and every other expressive organization. But these opinions are often based on subjective assessments of how well these organizations interrogate the evidence, highlight alternative viewpoints, and provide the correct context and framing to their discussion of current events.

For the government to claim that misinformation based on subjective misleadingness can be objectively verified is a fundamental contradiction. What the government is actually asserting here is that its view of what is misleading is correct, guaranteeing significant bias in how misinformation will be policed.

What is harm? The government says that it is limiting its regulation of misinformation to only the most harmful content. But the list of harms is pretty expansive. Some of the most abusable areas include any harm to the “efficacy of preventative health measures,” “vilification” of group of people (i.e., hate speech), and harm to the Australian economy or public confidence in the markets. Importantly, the bill only requires that the speech in question “contribute” to harm. It doesn’t need to actually cause that harm.

So, it’s not hard to imagine many types of political and social discussions that could contribute to these categories of harm. For example, even a relatively careful claim about the potential weakness of a newly developed vaccine could contribute to vaccine hesitancy that harms the efficacy of preventive health measures. Or citing criminal statistics about different groups of people could be accurate but viewed by some as out of context and contributing to the vilification of a group. Again, the current government’s view of what is harmful is all that will matter, inserting yet more bias into this process.

How do we determine intent without full information or due process? Like many other definitions of disinformation, the bill differentiates disinformation from misinformation by its intent to deceive. While this is common, it elides a difficulty in how to figure out the intent of online speech without full information. Indeed, the bill doesn’t require a high level of proof but only that there be “grounds to suspect” the deceptive intent. This makes it incredibly easy to define content as disinformation.

For example, the widely cited counter-disinformation dashboard Hamilton 68 claimed that Russian bots were spreading large amounts of disinformation on Twitter. However, Twitter itself was able to determine that the users accused of being Russian bots were mostly just average right-leaning or populist users. This definition weaponizes these sorts of sensational and false claims of disinformation, forcing tech companies to address the purported disinformation or otherwise rebut it for fear of being penalized for noncompliance.

There are other concerning elements to these definitions (e.g., how the government intends to define and police inauthentic behavior in a way that is better than companies already try to do or if the exception for professional news media from being considered misinformation is favoring certain elite speech over the speech of online activists or independent journalists), but that’s for a different blog. It’s also worth noting that the government at least tried to learn some lessons from the highly problematic first version of this bill, such as by removing a provision that would have protected government speech from being considered misinformation while the oppositions’ speech could be targeted as misinformation. But the bill’s broad definitions of misinformation and disinformation remain highly problematic and are likely going to be enforced in a biased manner depending on the party in charge of the government.

Indeed, going beyond just the definitions, the way the bill intends to police misinformation and disinformation should also give Australians pause. In the name of stopping harm, it grants broad powers to the Australian Communications and Media Authority to regulate how various tech companies moderate what is true, false, misleading, or harmful online. The bill applies well beyond just social media to companies of all sizes that provide search engines, connective media services, content aggregation, and media sharing services—though not internet service, text, or direct message providers. This list is still incredibly broad, ranging from video games to Google search and from Facebook to porn sites.

These companies will be required to create or uphold certain codes to combat misinformation, which in theory they have some control over. These codes should address how to moderate content, including

removal of content via human reviewer or artificial intelligence (AI) tools;
stopping ads or monetization of misinformation;
allowing users to report misinformation;
transparency into the source of a political ad;
supporting fact-checking; and
providing users with authoritative information.

Many tech companies already have some set of policies and practices in this area, but they may vary significantly. For example, Meta uses third-party fact-checkers while X uses Community Notes. Reddit provides the users of its many subreddits with upvotes and downvotes. More decentralized systems like Bluesky or Nostr may have few centralized tools but give users control over how they source their newsfeeds. Similarly, search engines, video game platforms, and other companies covered by this law may vary significantly in the tools and policies they have.

Under this bill, though, the government has the authority to step in and enforce its own misinformation standards if it feels the companies aren’t doing enough. And, of course, failure to sufficiently implement these regulations can cost a company up to 5 percent of its annual turnover. So, companies don’t really have flexibility but must moderate enough misinformation to satisfy the government. This could change as governments, politics, and current events change, leaving companies with little surety that they have ever done enough. Since different ways or systems of addressing misinformation can be deemed insufficient by the government, ultimately companies may be limited to providing those tools that are government-approved. For example, if the government doesn’t like Community Notes, it could effectively demand X adopt the government’s preferred solution, perhaps a fact-checking regime like Meta’s, even though some Australian fact-checkers have been embroiled in a row over bias. Given the regulatory sword hanging over their heads, one can expect social media companies to over-moderate, favor the government’s view of misinformation, and be limited in what misinformation tools they can provide to Australians.

Together with other regulatory requirements around risk management, transparency, and beyond, the bill not only will inject government bias into the moderation of misinformation, but it will also put companies in a no-win position. Companies can try to comply with these rules but only do so in Australia. This means an increasingly fragmented set of company policies and procedures to manage Australia’s regulations while also handling the growing number of similar laws set in other jurisdictions, such as the EU’s Digital Services Act. Alternatively, companies could take a least common denominator approach, changing their policies and procedures to more uniformly comply with many of the laws being passed around the world. This approach is simpler, but it means that Americans using the services of mostly American tech companies are effectively subject to misinformation rules set by foreign governments, a phenomenon known as the Brussels effect. Finally, these companies could just exit or limit their presence in the market if it becomes too costly to comply. We can see this in how Facebook and Instagram in Canada simply don’t allow links to news articles anymore after Canada forced Meta to pay for each time a user linked to a media article. Video-sharing site Rumble left and X is now being blocked in Brazil, and X is also under pressure in the EU. Apple and Meta aren’t rolling out some AI products in the EU due to onerous regulations.

The proposed misinformation bill will harm Australians’ speech, and its precedent may spread to other nations looking to restrict speech in the name of stopping misinformation. Together with growing regulatory pressure around the world, such policies may increasingly impact Americans’ speech as well. We need a broad coalition of civil society to rise to face the challenge of government speech suppression, pointing out the harms such government actions are having on societies worldwide. More than that, the US government must also be more active and vocal in defense of free expression, not merely standing up for the principle but also for the sake of American speech and companies.

Krit Chanwong and Scott Lincicome

In a new Cato policy analysis out today, September 19, we show that state and local corporate subsidies have increased substantially in recent years, even though their economic costs typically exceed any plausible regional benefits. The paper finds, among other things, that the growth of these corporate incentives is likely owed to their enduring political attractiveness and to new federal industrial policy initiatives. It also finds that state and local subsidies routinely create problems beyond their high budgetary (taxpayer) expense.

Ohio’s latest subsidies to US chipmaker Intel may unfortunately provide us with yet another example.

As Scott Lincicome explained in a recent op-ed, Intel was just awarded the largest federal subsidy package under the 2022 CHIPS and Science Act (up to $44.5 billion in grants, loans, and tax credits), even though the company faces financial and strategic headwinds that have been building for decades. Key to Intel’s federal subsidy award was its promised construction of a huge chip facility in New Albany, Ohio, which has received further financial support from state and local governments, including:

A $1.941 billion subsidy from Ohio’s state government. These include $600 million in grants and $650 million in tax incentives over thirty years. This is the largest incentive package in Ohio’s history and represents almost seven percent of the state’s general fund revenue in 2022–2023.
A 100 percent property tax abatement over thirty years from the New Albany local government. 

As is often the case, Intel’s Ohio plans were announced to much fanfare in Washington, DC, and Ohio, even though the subsidies’ expected returns were immediately suspect. Intel promised, for example, that the New Albany project would generate 3,000 Intel jobs, 7,000 construction jobs, and “tens of thousands of additional jobs with suppliers and partners.” This would mean, however, that – even under the rosiest of projections – governments were paying at least $1.94 million for each job directly created by the New Albany facilities. And this assumes, of course, that Intel’s plans fully materialize.

There are already reasons to doubt that they will. As of 2023, Intel only employed 69 people in Ohio, and the firm has delayed the opening of its first New Albany plant from 2025 to 2026, with full operations supposedly starting in 2027. The company is also contemplating scaling back the scope of its factory investments in Ohio and elsewhere. Since many of the state and local subsidies to Intel can’t be clawed back, Ohio taxpayers could end up with an even worse deal than the bad one their elected officials signed them up for in the first place.

Some officials are expressing anxieties about Intel’s future in New Albany and in the process are demonstrating some of the corporate incentives’ political realities. For example, Licking County Commissioner Tim Bubb admitted that he and his fellow government officials were “overly optimistic” and didn’t do their due diligence when offering Intel all this taxpayer money. They simply “knew the name Intel.” Today, meanwhile, Bubb shows the political and practical difficulty of unwinding subsidy packages once offered: “We’re somewhat at their mercy. They own the site.” And he now admits that delays to the construction “could have somewhat of a cooling effect on the land speculation market” caused by the subsidies, thus adding to the possible economic pain in the area should Intel’s promises not pan out.

As we explain in our paper, these and other “unseen” costs are difficult to quantify and usually ignored, but they help to explain why so many economists warn against state and local business subsidies. Time and time again, the incentives’ direct and indirect costs are substantial, and there is little evidence that they generate broader economic spillovers—economic growth, job creation, increasing productivity, etc.—that might justify such an expense. The measures thus persist not for economic reasons but political ones, namely because politicians find them irresistible. Our paper suggests some guardrails to temper these political incentives and to help state and local legislators pursue pro-growth policies that don’t rely on costly corporate handouts like the ones Ohio and Licking County gave to Intel.

That deal might not be fixable, but perhaps its lessons and our reforms can help to prevent future ones like it.

Romina Boccia

Germany’s constitutional debt brake, or Schuldenbremse, is a critical fiscal policy tool designed to limit structural government deficits. Instituted in 2009 following the global financial crisis, the debt brake has returned German public debt to sustainable levels while providing a fiscal anchor for the country’s economy. In contrast, the United States lacks such a fiscal brake, and the consequences of unrestrained spending are stark.

This week I’ll be on a panel at the Prometheus Institute Open Summit in Berlin, debating the German debt brake, fiscal policy, and MMT (officially, modern monetary theory, but referring to this pseudoscience as a magic money tale is more apt). I’ll be sharing insights from the US experience relevant to the German context. As Germany debates changes to its fiscal rules following a temporary loosening during the pandemic, there are critical lessons to be drawn from the US experience with unchecked deficit spending.

The German Debt Brake: A Resounding Success

The debt brake has helped place Germany on a more sustainable fiscal footing. Under Angela Merkel, the long-serving Christian Democrat chancellor who was often endearingly referred to as “Mutti” (Mother), the country consistently ran balanced budgets for six years in a row—commonly referred to as the schwarze Null (black zero). By 2019, Germany’s debt-to-GDP ratio had dropped to a manageable 60 percent, a significant improvement from the heights reached during the global financial crisis. This achievement wasn’t just a fiscal success; it marked the culmination of 10 consecutive years of strong economic growth and the highest levels of employment since German reunification.

The US Debt Crisis: A Cautionary Tale

Meanwhile, the United States faces a ballooning debt crisis, with public debt just shy of 100 percent of GDP at $28 trillion ($35 trillion if you add in debts owed primarily to Medicare and Social Security) and projected to rise sharply in the decades ahead. Despite this brewing fiscal crisis, US policymakers consistently fail to address the structural drivers of debt, rising health care spending and old-age benefits like Social Security, as temporary funding battles over annual defense and nondefense appropriations distract legislators from bigger challenges. This lack of fiscal restraint has left the economy vulnerable to higher interest rates, with interest costs now the biggest driver of growth in the budget deficit. The results are reduced investment and slower economic growth, as government deficit spending crowds out private initiatives.

Running Up Against Fiscal Limits with No Debt Brake

The United States illustrates the peril of allowing short-term political priorities to undermine long-term fiscal sustainability. Without a debt brake or similar fiscal rule, US politicians have repeatedly deferred hard choices about tax and spending policy. Now mounting debt-servicing costs crowd out spending on other priorities, with the Congressional Budget Office (CBO) projecting net interest to rise significantly absent corrective actions.

This year, interest on the US debt is set to surpass defense spending of $849 billion. Under highly optimistic assumptions that don’t account for expected congressional adjustments to tax and spending policies, the CBO projects that US debt will reach 122 percent of GDP by 2034. Looking out further, the CBO highlighted that rising debt could reduce per-person income by $14,500 by 2054, assuming the debt grows to nearly three times the size of the economy. Excessive government debt hampers economic growth by crowding out more productive investments that enhance living standards, saddling future generations with higher costs while reducing their economic opportunities. Additionally, rising debt reduces economic flexibility, which limits the government’s ability to respond to future crises.

Germany has its own set of economic problems, including high energy costs, excessive red tape, and expensive public pensions given rising old-age dependency. Yet even after betting on Russian oil and gas imports backfired, rapid population aging drove up public pension costs, and an excessive bureaucracy hampering investment and job creation, Germany is a fiscally responsible front-runner compared to the United States. This is largely due to its debt brake, which caps structural deficits and helps stabilize debt levels over the long term.

Do Not Abandon Fiscal Discipline in the Name of Investment

Germany faces growing pressure to relax or even abandon its debt brake after policymakers got a taste of what looser purse strings can buy when the pandemic allowed for greater debt accumulation. Proponents of higher deficits claim that the energy transition, greater defense needs, and rising social welfare demands necessitate more government borrowing. As is usually the case, such spending is being labeled as “critical investments.” The US experience demonstrates the dangers of abandoning fiscal discipline in the name of public investments with uncapped energy tax credits passed into law as part of the misnamed Inflation Reduction Act. These credits turned out to be far more expensive than what members of Congress thought they had enacted based on projections by official government watchdogs. And thanks to no real fiscal limits, higher costs are simply piled on top of rising debt.

Moreover, central government investment in infrastructure is often inefficient and counterproductive. Political considerations can shift funding to areas where it serves electoral ends rather than meeting market demand. Also, government projects rarely have the proper incentives to keep things on budget and on time. Infrastructure assets are often better managed by the private sector and state and local governments. Instead of subsidizing and intervening, governments should focus on regulatory reforms to reduce costs and encourage private investment.

Learning from US Mistakes

Germany’s debt brake is a testament to the power of fiscal discipline. Its constitutional framework provides a built-in restraint on government spending, forcing policymakers to prioritize and live within the country’s means. The United States, which lacks such a mechanism, practices unrestrained spending, which leads to spiraling debt, with no clear path toward fiscal sustainability. As Germany considers loosening its fiscal rules for good following several years of profligacy to combat pandemic-related economic weakness, it should heed the lessons from across the Atlantic—once fiscal discipline is lost, it’s hard to regain.

Instead of following the United States down the path of unchecked deficit spending, Germany should return to the debt brake, remembering its track record of success, and focus on easing red tape, reducing onerous taxes, and integrating immigrants faster into labor markets to spur investment and become an economic powerhouse once again.

Meanwhile, the United States should adopt clear fiscal rules to rein in unchecked deficits and secure economic opportunity for this and future generations. Effective fiscal rules can help control government spending, reduce public debt, and create a more stable economic environment that enables businesses and workers to thrive. By committing to fiscal responsibility, US legislators can boost confidence in the US financial system and ensure younger generations aren’t weighed down by excessive debt and the specter of higher taxes and inflation.

As the late Nobel laureate and economist James Buchanan and George Mason University economist Richard Wagner wrote in Democracy in Deficit, “Budgets cannot be left adrift in the sea of democratic politics.”

Norbert Michel

On September 18, the Fed announced a 0.50 percent cut in its target rate, the first time it has cut its policy rate since 2020. The size of the cut may have surprised some people, but the Fed has been as murky as ever about what it would do today, and that’s not surprising.

With inflation continuing to head in the right direction, some had argued that we would see a larger cut after US employment data was revised downward in August. But last week the CME Group’s FedWatch suggested most financial market participants did expect the 0.50 percent cut.

While the public was left to guess what the Fed would do, it is a fact that multiple rates have already been declining for months. For example, the 30-year mortgage rate has essentially been declining since October, as have the 3‑month and 1‑month Treasury rates. (The 3‑month Treasury took a sharper dive in June, and the 1‑month Treasury fell more sharply in August.)

So, maybe the Fed’s not as powerful as everyone seems to think. Regardless, the public should not have to guess what the Fed will do with its target at each meeting.

As my colleague Jai Kedia has noted, at least one standard policy rule suggests the Fed should have already cut its target. Specifically, in July it showed that the Fed’s target range of 5.25 percent to 5.50 percent should have been significantly lower, in the range of 4.50 percent to 4.75 percent.

Perhaps none of these rates are the “right” one. But the precise value of the Fed’s target is not what matters most. What matters most is that people want and need predictability and accountability for the Fed, and they have neither. Congress could, however, fix this problem by requiring the Fed to follow a policy rule.

At the very least, Congress could require the Fed to follow a rule and give it the ability to deviate from that rule, provided they explain exactly why (and what they’re doing) to Congress. This approach was in the 2015 FORM Act, a bill that passed the US House.

This sort of reform would greatly reduce uncertainty with respect to the Fed’s future policy actions without overly restricting the Fed. It would also make it much easier to hold the Fed and elected officials accountable for their decisions. That’s not too much to ask in a democratic country.

Jeffrey A. Singer

Brian Mann of NPR News reports today on encouraging new data released by the National Center for Health Statistics showing that overdose deaths from all drugs have dropped from a high of nearly 112,000 just over a year ago to 97,309 by April 2024, a drop of more than 10 percent. Overdose deaths from all classes of drugs dropped during that period. Fentanyl-related overdose deaths dropped from nearly 78,000 to 65,878, and overdoes deaths involving diverted prescription pain pills remained very low, falling to just over 9,000 (compared to 12,269 in January 2016).

This is good news. But it’s too early to celebrate. Ninety-seven thousand is a considerable number, and we have seen the overdose death rate pause (in 2018) before resuming its climb. However, many factors may contribute if this is the beginning of a new downward trend.

The overdose antidote naloxone, which the Food and Drug Administration allowed people to obtain over-the-counter in its nasal spray form last year, has become more widely available. All but a few states have now amended their drug paraphernalia laws to allow people to distribute and use fentanyl test strips to check drugs obtained on the black market for the presence of this potent synthetic opioid. Harm reduction organizations are handing out naloxone and fentanyl test strips to people who use drugs, often as part of syringe services programs. Local public health agencies have implemented campaigns to educate non-medical users about the availability of these harm-reduction tools and how to use them. As more non-medical users—and people who know and care about them— avail themselves of these tools, they reduce the risk of fatal overdose.

Congress made it easier for clinicians to treat people with buprenorphine for opioid use disorder starting in 2023. While early evidence shows clinicians have not been quick to take advantage of the liberalized regulations, any increase in the number of people with opioid use disorder who are receiving buprenorphine treatment should help reduce the risk of fatal overdose from street drugs.

Then there’s the impact of the COVID-19 pandemic. Isolation, anxiety, and despair during the pandemic caused an increase in adult substance use during the pandemic, including alcohol consumption. Pandemic-related lockdowns made it more difficult for people to access harm reduction or drug treatment programs. The border closures and supply chain disruptions during the pandemic drove drug trafficking organizations to switch from heroin to fentanyl, which was easier to produce and distribute under those circumstances. All of these factors contributed to a surge in overdose deaths during the pandemic years. Some of the decrease in overdose deaths might reflect an ebbing of that surge as the public health emergency ended and life became more normal.

Another phenomenon that might be contributing is the dramatic increase in marijuana consumption as more states have legalized it for recreational use. To date, 24 states and the District of Columbia have legalized recreational cannabis. Seventy-four percent of Americans live in a state where recreational weed is legal. The National Survey on Drug Use and Health reported last May that daily marijuana use is now more common than daily alcohol consumption. Marijuana might be becoming an increasingly popular (and safer) substitute for other recreational drugs, attendant to it becoming increasingly legal and socially acceptable.

Sadly, part of the decline in overdose fatalities might be because many non-medical users are dying, reducing their population.

It’s essential to keep in mind that overdose fatalities hover around 100,000 per year, even though government policies continually pressure clinicians to reduce opioid prescribing. Opioid prescribing rates dipped below 1992 levels two years ago. Policymakers have mistakenly attributed the overdose problem to clinicians treating their patients’ pain despite the lack of evidence of any correlation between prescription rates and non-medical use rates. Patients suffer in pain while overdose fatalities from illicit drugs remain astronomically high.

The overdose crisis has always been a prohibition crisis. If policymakers want to reduce overdose fatalities dramatically, they will make currently illicit drugs legal and regulated, as they have done with alcohol and tobacco—drugs that arguably do more harm to the body than many presently illegal drugs.