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Romina Boccia

I’ve excitedly been following former Senator Rob Portman’s advocacy for a congressional fiscal commission to address unsustainable spending that’s driving the US deeper into a debt crisis. From speaking out on behalf of a commission approach at a recent House Budget Committee hearing to advocating for it in writing as part of a series of essays by the Peter G. Peterson Foundation, Portman is a leading voice on the issue.

Which is why it’s so important that the senator gets his facts straight.

In his testimony and published essay, Portman claims:

“After Base Closure Commission recommendations were made, Congress took up or down on the whole package of bases with no ability to amend them [sic].”

The Base Realignment and Closure, or BRAC, commission did not force Congress to take an affirmative up or down vote before its recommendations would go into effect. Instead, BRAC used a mechanism that might best be described as allowing for congressional silent approval.

There is a key difference between members of Congress having to go on the record in favor of a commission’s recommendations and simply doing nothing to prevent the recommendations from taking effect. Forcing members of Congress to take an affirmative vote of approval before fiscal commission recommendations can go into effect poses a far larger barrier than allowing politicians to stand by as proposals get implemented in the absence of an affirmative act of disapproval.

BRAC capitalized on the power of default settings. As the Congressional Research Service described the process:

“The BRAC statute provided for expedited congressional procedures to disapprove commission recommendations regarding base realignments and closures, with a straight up or down vote and no possibility for amending the list. Upon receiving the commission’s recommendations from the President, Congress would need to pass a joint resolution of disapproval of the recommendations within 45 days, or else the commission’s recommendations would go into effect.”

Here’s how BRAC worked in a bit more detail:

The BRAC Commission submits a list of recommended base closures and realignments to the president.
The president reviews the recommendations and decides whether to approve or disapprove the list in its entirety. The president cannot make changes to the list.
If the president approves the BRAC Commission’s list, it is then sent to Congress for a 45‐​day review period.
During this review period, Congress has the option to pass a joint resolution disapproving the BRAC recommendations. If both the House and Senate pass the resolution and it is signed by the president, the BRAC list would be rejected, and the closures and realignments would not take place.
If Congress does not pass a joint resolution disapproving the BRAC list within the 45‐​day review period, the recommendations go into effect, and the implementation process begins.

I agree with former Senator Portman that we’ll need to empower a fiscal commission to address the seemingly insurmountable and politically intractable problem of reforming major old‐​age benefit programs. Medicare and Social Security are jointly responsible for 95 percent of all US government long‐​term unfunded obligations. There is no solution to the US debt crisis that avoids entitlement reform.

US entitlement programs operate on default settings that allow for spending to grow on autopilot, based on eligibility criteria that were established decades ago, and irrespective of the availability of the necessary resources to fund them. Today’s politicians do not have to lift another finger to increase government spending. Spending grows automatically under current law.

Default settings are powerful mechanisms, harnessed in a variety of contexts from automatic retirement savings to subscription‐​based services. Now, US entitlement program default settings are working to the detriment of American workers and taxpayers as rising spending gobbles up more and more economic resources. This happened because demographic changes, from an aging population to declining fertility, have turned the entitlement funding pyramid upside down, with fewer workers at the bottom of the pyramid funding a growing share of retirees at the receiving top end.

It’s about time that members of Congress leveraged the power of default settings in American taxpayers’ favor. Designing a fiscal commission after the successful BRAC model, by allowing Congress to avoid a politically suicidal vote to fix the growing debt crisis, is the most promising approach for establishing a commission that will succeed.

So, let’s establish a BRAC‐​like fiscal commission, and let’s also be sure to set it up in accordance with how BRAC actually worked.

Colleen Hroncich

Meh. This seems to be the best way to summarize how people feel about school—they don’t love it, they don’t hate it. But the overall view is negative. Meanwhile, research shows that students become less engaged the longer they stay in school. And a survey of high school dropouts found nearly 50 percent said they left school because classes weren’t interesting or relevant to their lives or future goals.

But what if school was different? What if it was more tailored to individual needs and interests? What if there was a wide variety of educational options that parents could choose from to customize their children’s education?

Believe it or not, this world already exists—and the Friday Feature series on the Cato at Liberty blog highlights examples of it each week. Hybrid and microschools that often combine the best elements of homeschooling and in‐​person education. Homeschooling resources that help parents ensure their kids are getting the education they seek. Traditional schools that are taking an unconventional approach to learning. Public policies, like education savings accounts (ESAs), which let parents use a portion of state education dollars to pay for a variety of learning options. And education entrepreneurs who are creating these innovative resources.

The education system is being transformed. School choice programs that allow funding to follow students to private schools have been around for decades. The first modern voucher program was enacted in Milwaukee in 1990. Arizona can claim credit for the first tax credit scholarship (1997) and ESA (2011).

But recent years have seen a rapid expansion. Early programs were limited to students who met certain qualifications, like income limits or special needs. In 2020, not a single state had a universal school choice program, but there are now 10 states with universal or nearly universal programs.

In the 1800s perhaps it seemed reasonable to design the education system the way it is—with students assigned to specific schools based on where they lived. Transportation and communication were difficult then. But we no longer live in that world. There’s no reason to limit students’ educational options to a school they happen to live near—or to the hours between 8 a.m. and 3 p.m., Monday through Friday.

The Friday Feature is meant to be a resource for people who are looking for better educational solutions. Parents who are seeking the best education for their children, teachers who want to create their own place of learning where they have flexibility and autonomy, and policymakers who want to support these efforts can find inspiration each week in the Cato Friday Feature.

If you’re new to the series or have missed any, we’ve got you covered. All this week, the Cato Institute’s Center for Educational Freedom will be having a Friday Feature Marathon on X (Twitter) to help spread the word about educational options and how they can spread even more with school choice. Stay tuned!

Gabriella Beaumont-Smith

As I wrote about recently, Mexico’s President Andres Manuel Lopez Obrador issued a decree banning genetically engineered (GE) corn for human consumption, creating serious implications for US‐​Mexico trade.

In August 2023, formal consultations failed, which resulted in the establishment of a dispute settlement panel under the United States‐​Mexico‐​Canada Agreement (USMCA). On November 17, the US filed its first submission (dated October 25) to the panel, which is best summarized in this paragraph:

“After permitting the importation and sale of GE corn in Mexico for decades without experiencing any adverse effects on human, animal, or plant life or health, and after recommitting to fair, open, and science‐​based trade under the … USMCA … Mexico suddenly and completely reversed its policy. There was no new science. There was no new risk assessment. There was only a change in government.”

The US is completely right that this policy reversal is scientifically unfounded and only an example of a protectionist agenda established by a new government.

Mexico’s arguments are yet to be released so the timeline for the case’s conclusion is unclear. However, the US has already tried engaging with Mexico on this issue for four years. The longer the case goes unresolved, the worse the turmoil for Mexican farmers, American farmers, other businesses, and consumers.

Walter Olson

The multiple prosecutions of former President Donald Trump have occasioned a torrent of comment but relatively few debates calmly airing arguments from both sides.

I’m happy to report that I participated in one such debate on October 19 at the University of Maryland in College Park, sponsored by the school’s Federalist Society chapter. Taking the other side, more critical of the prosecutions than I, was attorney Gene Hamilton, currently vice president and general counsel of America First Legal and formerly an official in the Department of Justice under Trump. Prof. Michael Spivey of the government department moderated with great skill, and an overflow crowd of 100 or so students attended, with thoughtful questions and a high civility level on all sides.

By agreement we discussed only the federal prosecutions of Trump, that is to say, the ones pursued by special counsel Jack Smith, and thus did not address the Georgia and New York state‐ proceedings. In my comments, I advanced some themes I’ve sounded in this space, such as that the presumption against indicting former presidents is a sound one but can be overcome, that the charges against Trump over his attempt to overturn the 2020 election do not somehow amount to criminalizing speech or advocacy, and that while laws such as conspiracy to defraud the United States and conspiracy against protected rights may sound open‐​ended, Smith’s team can point to recent precedent applying the laws in question to plausibly similar conduct. (For the current state of play on some of those questions, see prosecutors’ recent filing rebutting Trump’s attempt to get the case thrown out.)

Most of our time, however, wound up being spent on the Mar‐​a‐​Lago documents case. Hamilton’s firm has been seeking to develop the theory that the Presidential Records Act of 1978 is unconstitutional as an invasion of core presidential powers. (Among other provisions, the Nixon‐​era law requires presidents to turn over papers to the National Archives on leaving office, whether those papers were created by themselves or others.)

It is true that the Supreme Court has not squarely addressed this question, and also true that separation‐​of‐​powers analysis based on ideas of core presidential power has made some headway with commentators and judges of late. And while Trump’s own statements about the PRA have been confused at best, there is nothing wrong with lawyers’ developing a better defense of his interests than he has done himself.

I myself nonetheless expressed doubt that the high court will see fit to strike down most or all of the PRA. More fundamentally, I said, even if it did, such a ruling would not rescue Trump from criminal liability under either the national security or the obstruction‐​of‐​justice branches of the charges. Hamilton took the view that public support for the prosecution would be undercut were it established that the National Archivist had not been substantially justified in the document demands that led after several rounds of dispute to the obstruction charges.

I’m glad that the Federalist Society is offering a venue for these important debates, which are of keen interest and relevance to its membership and to all of us.

Jack Solowey

When you use a product that’s closely supervised by the government, you might be tempted to assume the bureaucratic babysitting is somehow necessary for the product or its industry to run smoothly. Yet when regulators first propose special supervision years after you’ve already seen the product work as intended, you may be tempted to ask, “What gives?”

When it comes to the Consumer Financial Protection Bureau’s (CFPB) proposal to bring popular payment apps (like Apple Pay, Google Pay, PayPal, Venmo, and Cash App) under a supervisory regime, the answer is that the agency sees the apps have become quite popular, and the CFPB treats success alone as a reason for more invasive oversight.

The digital payment app market is hardly crying out for a regulator to ride to consumers’ rescue, and the CFPB’s proposed rule provides a real‐​time demonstration of how regulators won’t hesitate to “fix” something even when—and perhaps, especially when—“it ain’t broken,” as the old saw goes.

This month, the CFPB proposed subjecting major digital consumer payment applications to agency supervision by designating the apps as “larger participants” in a market for consumer financial services. The Dodd‐​Frank Act gives the CFPB the authority to supervise these larger participants, meaning that in addition to the ability to conduct enforcement actions for violations of consumer financial protection law, the CFPB also may proactively monitor and examine these specially designated businesses.

Under the proposed rule, covered digital payment apps would find themselves facing a host of potential CFPB supervisory activities, including on‐​site exams involving requests for records, regulatory meetings, record reviews, as well as compliance evaluations, reports, and ratings. The Bureau estimates such exams would take approximately eight to ten weeks on average.

All this mucking about while a business is trying to get work done conjures images of Homer Simpson’s brief stint supervising a team of engineers:

Homer: “Are you guys working?”

Team: “Yes, sir, Mr. Simpson.”

Homer: “Could you, um, work any harder than this?”

Who exactly would become subject to CFPB supervision under the proposal? The proposed rule would cover providers of “general‐​use digital consumer payment” apps—including both fund transfer and digital wallet apps—that meet requirements around transaction volume (five million transactions annually) and firm size (not being a small business as defined by law). The proposal contains some notable exclusions, including exemptions for apps that only facilitate payments for specific goods or services (i.e., are not general use), as well as for transactions with marketplaces through those marketplaces’ own platforms.

One question raised by the proposal, particularly its reference to digital wallets, is whether cryptocurrency transfers and wallets are in scope. The answer, in short, is sometimes.

According to the CFPB, covered fund transfers include crypto transfers, so the rule likely would cover hosted crypto wallets (where an intermediary controls the private keys for accessing users’ funds) used for those purposes. However, the proposed rule does not cover purchasing or trading cryptocurrencies, as it excludes exchanges of one form of funds for another, as well as purchases of securities and commodities regulated by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). (Add this to the list of ways in which lingering questions about SEC and CFTC jurisdiction over crypto create unhelpful regulatory ambiguity.)

The proposed rule’s application to self‐​hosted crypto wallets (where users control their own private keys) likely will hinge on interpretive questions (including those related to the definition of “wallet functionality”), and these could leave the agency room to find some self‐​hosted wallets in‐​scope. (If the CFPB were to go this route, it would be yet another example of subjecting a core crypto technology to poorly conceived regulation.)

When it comes to the CFPB’s reasons for the proposal, perversely, the very data indicating that the market for digital payment applications is anything but broken is the data the CFPB cites as the basis for subjecting the market to special supervision. According to the agency, “The CFPB is proposing to establish supervisory authority over nonbank covered persons who are larger participants in this market because this market has large and increasing significance to the everyday financial lives of consumers.” Another way to put this is that fulfilling consumer demand alone calls for greater scrutiny.

How popular have these apps become? According to the CFBP itself, 76 percent of Americans have used one of four major payment apps; 61 percent of low‐​income consumers report using payment apps; merchant acceptance of payment apps “has rapidly expanded as businesses seek to make it as easy as possible for consumers to make purchases through whatever is their preferred payment method;” and adoption by younger users may drive even further growth.

Separate survey data tend to support the idea that consumers’ positive assessments of these apps line up with their revealed preferences. According to survey data compiled by Morning Consult in 2017, a sizable majority of American adults were either very satisfied or somewhat satisfied with a variety of digital payment apps, including Venmo (71 percent), Apple Pay (82 percent), Google Wallet (79 percent), and PayPal (91 percent). Recently, some even tried to frame Apple Pay as making payments “too easy” for consumers’ own good.

The CFPB’s proposal is not an example of a regulator seeking to impose sorely needed order in a broken and lawless sector, but rather an agency ratcheting up compliance requirements in an already regulated space. For instance, consumer financial products and services—which include consumer payment services via any technology—already are subject to the CFPB’s authority to enforce prohibitions against unfair, deceptive, or abusive acts or practices. Moreover, the CFPB already has the power to supervise relevant financial service providers where it issues orders determining, with reasonable cause, that the providers pose risks to consumers, something that the agency fails to do in any convincing manner in the proposal.

That the CFPB is seeking to assert supervisory authority over the digital payment app market without having to identify specific risks to consumers is emblematic of a fundamentally flawed approach to regulation.

In the case of digital payment apps, the proposed supervisory regime is not targeting a consumer financial service market failure but rather a market success. Witnessing this, it’s reasonable to ask what other supervisory regimes that consumers take for granted began as solutions in search of problems.

Jordan Cohen and Eric Gomez

Taiwan is waiting to receive $19 billion worth of US weapons that have been sold but not yet delivered, a sum almost equal to Taiwan’s entire proposed 2024 defense budget. The Biden administration’s willingness to funnel US weapons to Ukraine and Israel for “as long as it takes” ought to be causing some heartburn in Taipei, but that does not appear to be the case.

At a recent international forum in Halifax, Taiwan’s deputy foreign minister Roy Chun Lee told reporters, “The commitments from our US colleagues to the war in Ukraine, also the conflict in Israel, is not undermining its ability to deliver on its weaponry commitments.” Hsiao Bi‐​khim, Taiwan’s current de facto ambassador to the United States and recently announced vice presidential candidate for Taiwan’s ruling Democratic Progressive Party, has similarly argued that US weapons aid to Ukraine is “not a subtract from Taiwan and giving them to someone else situation.”

Taiwan’s officials ought to be more concerned than they are letting on. While the current overlap between the US arms backlog for Taiwan and weapons being sent to Ukraine and Israel is not as severe as some commentators argue, the overlap is growing over time. In other words, Taiwan’s officials are not whistling past the graveyard yet, but they are getting closer to the graveyard the longer current trends hold.

There are two ways in which the arms backlog for Taiwan is distinct from US support for Ukraine and Israel: the legal mechanism for providing weapons and the weapons themselves. The United States has used Presidential Drawdown Authority or PDA to pull weapons out of US stockpiles and immediately send to Ukraine. US arms sales to Taiwan, on the other hand, are traditionally Foreign Military Sales or FMS, which involves building and selling new weapons through a lengthy bureaucratic process.

Delivering weapons via PDA is faster than the FMS process because the weapons transferred using PDA are already built and there is less review in Congress and the relevant executive departments. The types of weapons in Taiwan’s backlog—such as anti‐​ship missiles and long‐​range missiles—also have more overlap with other countries—especially Saudi Arabia—than Ukraine.

These two areas of difference, however, are slowly but steadily changing as the Ukraine conflict has stalemated and Washington promises more support for Israel.

The 2023 National Defense Authorization Act extended PDA to Taiwan to the tune of $1 billion per year. In July 2023, the Biden administration transferred $345 million of equipment to Taiwan using PDA, but it did not say what weapons it transferred. Washington could use PDA to clear parts of the Taiwan arms backlog quickly, but this could create more direct competition for resources between Taiwan and Ukraine if weapons are transferred under the same mechanism instead of using different mechanisms. US weapons stockpiles that PDA draws from were already under strain before Taiwan’s first PDA transfer and Hamas’s attack on Israel.

More countries drawing on US military stockpiles will have a knock‐​on effect on weapons supply chains. Reductions in stockpiles will need to be backfilled with new equipment, which could increase production times and delays for FMS sales. Taiwan, for example, had to increase its purchase of HIMARS rocket artillery to offset a delay in Paladin mobile howitzers, a capability that the US donated to Ukraine.

The overlap in the types of weapons in the Taiwan backlog and the weapons it is sending to Ukraine is also growing over time. As the conflict in Ukraine has dragged on, the United States has sent Ukraine more weapons that are also part of the arms backlog to Taiwan, such as HIMARS, Abrams tanks, F‑16 aircraft, and ATACMS missiles. The United States and NATO also want to make Ukraine’s military look more like NATO militaries, which will further exacerbate this problem.

Relatedly, any escalation in Israel’s war in Gaza that draws in Hezbollah or even Iran would create overlap with Taiwan when it comes to long‐​range strikes and advanced air defense systems. Consequently, as wars around the world intensify, the risks of US production lines being unable to quickly produce weapons for Taiwan increases.

Taiwan’s $19‐​billion arms backlog is significant. Currently, it is not entirely caused by existing conflicts in Ukraine and Israel, but instead because of how Taiwan ordered weapons included in the backlog. Nonetheless, over time, conflicts in Ukraine and Israel could very likely make this problem worse. As a result, political leaders in Taipei and Washington need to seriously consider how to prioritize Taiwan’s ability to deter and defend itself against China.

Ian Vásquez

Javier Milei’s victory over the Peronist‐​party candidate in Argentina’s presidential election Sunday was crushing. Milei won by 11 points and in almost all electoral districts. He received the support of young people and of all socio‐​economic classes, including strong support from the middle and lower classes.

He did so with a message that, for the first time in almost 80 years, did not propose to simply adjust the corporatist, client‐​patron system imposed by Juan Domingo Perón, but to dismantle it completely because it is impoverishing and immoral. In clear language, Milei proposed a paradigm shift: to return Argentina to the classical liberal tradition that made that country one of the richest on the planet a century ago.

His campaign speeches focused on the importance of freedom, long lost under the weight of an oversized Argentine state. Before a national public, he incessantly repeated his definition of liberalism (in the classical sense), borrowed from the distinguished Argentine liberal Alberto Benegas Lynch Jr., whom he cites as a sort of national hero: “Liberalism is the unrestricted respect for the life project of others based on the principle of non‐​aggression and the defense of the right to life, liberty, and private property.”

Guided by this vision, Milei proposes to shrink the state and expand the role of the private sector and civil society. In practice, he proposes a significant reduction in public spending and taxes; dollarization and the elimination of the central bank; free trade; the elimination of bureaucratic obstacles; the reform of public administration; labor sector flexibility; and education reform that includes increased competition and school vouchers, among other proposals.

Will he be able to accomplish this ambitious agenda? It will not be easy. The economy is in crisis and the outgoing government has left an economic time bomb that any incoming government would have to deal with. Argentina has an annual inflation rate above 140 percent, a fiscal deficit exceeding 5 percent of GDP (or about 10 percent of GDP depending on how it’s measured), poverty above 40 percent of the population, a bankrupt central bank, interest rates over 130 percent, government debt at an all‐​time high, a recent splurge in public spending, debt payments coming due soon, and a shrinking economy. Any adjustment—which will include significant hikes in the price of gasoline, electricity, transportation, and so on—will be harsh.

Moreover, Milei does not have the support of Congress. His party has only thirty‐​eight deputies in a chamber of 257 deputies. Of the seventy‐​two senators, only seven are from his party. His possible coalition also falls short of a majority in the Chamber of Deputies or the Senate. Milei has a popular mandate and will try to use it to promote his agenda. But it is a given that the opposition will obstruct him in the legislature, in the courts, and in the streets. He will face obvious political limits on what he can achieve.

But he will be able to make important changes. As president, he can repeal some of the previous government’s regulations. He can free up prices by decree and, in due course, get rid of capital controls. He can cut some subsidies and reduce the number of ministries by decree.

Will he be able to carry out the main economic proposal of his campaign—that is, to replace the peso with the dollar? That too will have to go through Congress. But as the economic crisis worsens, the reform will become more politically feasible. As Milei and his team well know, dollarization is a fundamental reform because it eliminates irresponsible monetary policy, puts some limits on reckless fiscal policy, and forms the basis for other necessary reforms.

If Milei were only able to implement dollarization, it would be a great achievement. What Milei has already accomplished, however—articulating a clear, liberal alternative to Peronism with popular support and electoral success—represents a remarkable change in a country that really could be great again.

Note: This article is based on a version that was originally published in El Comercio (Peru) on November 21, 2023.

Justin Logan

The national security bureaucracy is working itself to death. The syndrome is particularly acute among the leadership of the uniformed military. The Marine Corps Commandant Gen. Eric Smith recently suffered a heart attack at 58, from which he is thankfully recovering, having reported the month before feeling exhausted by a schedule that has him beginning work at 5 a.m. and ending work at 11:30 p.m.

Smith isn’t alone in burning the candle at both ends. Defense Secretary Lloyd Austin’s chief of staff reported that Lt. Gen. Douglas Sims, the director for operations at the Joint Staff, “probably works about 18 hours a day, 7 days a week.”

Much of the blame for this state of affairs is presently falling at the feet of Alabama GOP Senator Tommy Tuberville’s hold on bulk military nominations, provoked by President Biden’s use of Defense Department funds to, in violation of the Hyde Amendment, pay for out‐​of‐​state abortions. But it’s far from clear that he is the real culprit. As the Marine Corps Times noted, in the case of Gen. Smith, “it’s unclear how the hours that Smith is working actually compare to the hours worked by other military leaders, past and present.”

Moreover, the problem exists outside the uniformed military and it predates the Tuberville hold. Take National Security Adviser Jake Sullivan, for example. A New York Times article revealed that the president’s chief adviser on national security matters averaged two hours of sleep per night across three weeks during the Afghanistan withdrawal. More recently, an intruder broke into Sullivan’s house earlier this year at 3:00 a.m., only to find Sullivan still awake working.

When he was at the State Department during the Obama adminstration, Sullivan reported that while on travel, he could at best get 3, 4, or 5 hours of sleep per night, and was in “pretty terrible” physical condition. What kept him going was “adrenaline” and a “persistent sense that if I made mistakes, the consequences would be awful.”

So rather than Tuberville, most of the blame lies in threat inflation among the national security establishment. As Sullivan noted above, the belief that he was the barrier between a dangerous world and his countrymen kept him going. Or as Austin’s chief of staff described the reason Sims was working so much, he “is literally holding the world together as the J3.”

Perhaps nothing illustrates this outlook as well as former Defense Secretary Robert Gates’ description of the pressures on the upper levels of the national security bureaucracy today:

There’s this gigantic funnel that sits over the table in the Situation Room. And all the problems in the world end up coming through that funnel to the same eight or 10 people. There’s a limit to the bandwidth those eight or 10 people can have.

All the problems in the world! Even before Hamas attacked Israel and Israel responded in Gaza, Gates was warning darkly that the United States was facing the most dangerous threat environment “perhaps ever.”

It is this view of the dangers the United States faces—and of the role of the national security bureaucracy in vanquishing those threats—that causes these people to abandon their families and their sleep, and plunge into a years‐​long frenzy of memos, meetings, and misery. It’s like Bill Lumbergh meets the Justice League.

The crowning tragedy here is that while there are a host of conflicts raging from Ukraine to Gaza, they do not pose great dangers to Americans at home unless the national security bureaucracy gets Americans into the middle of them. Geography, nuclear weapons, and the world’s most powerful military purchase the United States a large measure of safety that can still be leveraged against most problems in most places. Other countries’ national security bureaucracies don’t think of themselves—and don’t abuse their employees—in this way.

Even viewed in light of the complex literature on sleep loss, it is clear that we should not want national security decisionmakers to be operating under this kind of sleep deprivation, all while being separated for great stretches from the things that renew and refresh most people: family, love, and recreational pursuits.

G. K. Chesterton famously remarked that the true soldier does not fight because he hates what is in front of him, but because he loves what is behind him. In far too many cases in today’s national security bureaucracy, the principals might not even recognize what’s behind them. Acting on the illusion of barbarians at the gate, they are working themselves to the bone, unnecessarily.

Marc Joffe

A jury recently found that the National Association of Realtors and its brokers conspired against home buyers and sellers to artificially raise commissions. While we should be skeptical of government attempts to break up alleged conspiracies in restraint of trade (which include labor unions), it is worth understanding that market conditions were probably not what allowed the real estate brokerage industry to exercise so much market power.

The real culprit, it seems, is licensing. In particular, state governments across the United States have empowered incumbents and restricted new market entrants by requiring real estate brokers and salespeople to obtain licenses.

All states license real estate brokers, while 44 license real estate salespeople. A salesperson must work for a broker, but a broker can work independently. In California, a real estate salesperson must complete three college‐​level courses, pass an exam, and pay $305 in fees to obtain a license. Brokers have to complete eight courses, pass a different exam, and pay $395.

However, individuals are free to sell their homes without an agent. In California, “for sale by owner” transactions accounted for seven percent of home sales in both 2021 and 2022. If unlicensed individuals are capable of selling their own homes, why can they not help sell other people’s homes?

The Wall Street Journal recently reported that US real estate commissions are far higher than those in several European countries. For example, the WSJ found that brokerage commissions averaged 5.5 percent in the US compared to just 1.3 percent in the UK.

There are a lot of differences between the US and UK markets. One difference is that the UK does not have a licensing requirement for professionals known in Britain as “estate agents.” The regulatory regime for the real estate brokerage industry was put in place by the Estate Agents Act of 1979. The law created a regulatory agency that registers Estate Agents and enforces a requirement that they participate in an approved redress scheme, which adjudicates consumer complaints.

Although UK estate agents make a lot less on each transaction than their US counterparts, they participate in more transactions each year. According to the Wall Street Journal, UK Estate Agents participate in 40–50 sales each year compared to about a dozen for the average US agent.

In 2017, the UK government issued a “Call for Evidence” seeking public input on how to improve the homebuying process. Among the questions respondents were asked to address were whether new regulations were needed, and, if so, which types. Over three‐​quarters of those addressing this question called for more regulation, but only 10 percent favored government licensing of Estate Agents.

This proportion likely overstates public support for licensing since only motivated individuals and firms likely responded to the Call for Evidence. Indeed, as my colleagues Chris Edwards and Scott Lincicome have written with respect to the United States, new calls for occupational licensing restrictions usually come from members of the to‐​be‐​regulated industry at issue.

In the US real estate market, fixed percentage commissions have resulted in a transfer of wealth to the real estate industry over time. Since January 2001, median home prices have increased 153 percent from $169,800 to $431,000. Over the same period, the Consumer Price Index rose only 82 percent.

So, to the extent that commission rates have remained constant, real estate agents and brokers got a significant raise in real dollars. Had the market been more competitive, it is likely that commission rates would have been bid down thereby limiting this wealth transfer.

As policymakers rethink the real estate business in the aftermath of the recent jury decision, they may wish to revisit licensing to ensure that consumers actually benefit.

David Inserra

In early November, Nate Silver published his analysis of the 2024 College Free Speech polling done by the College Pulse and the Foundation for Individual Rights and Expression (FIRE) earlier this year. And boy is his analysis sobering. 

Students in the past led the charge for free expression, championing disfavored perspectives. Today a majority of students would reject speakers with disfavored views on some of the biggest issues in our society.

In the poll, only 29 percent of students said a speaker who viewed transgender people as having a mental disorder or who viewed “Black Lives Matter” as a hate group should be allowed to speak. Only 43 percent said an advocate for the abolition of abortion should be allowed on campus. 

On the other hand, 65 percent of students would allow a speaker calling for the abolition of the Second Amendment so guns can be confiscated; 57 percent would allow a speaker who argued that religious liberty is used as an excuse to discriminate against gays and lesbians; and 72 percent would allow speakers with the view that structural racism maintains inequality by protecting White privilege.

Such disparate views toward speech were largely driven by a divide between students on the left—who were permissive of progressive speakers but hostile to conservative speakers—and conservative students—who were fairly consistent in their support for speakers regardless of political viewpoint. 

But this polling contains other worrisome findings that transcend the viewpoints of speakers, such as that only 37 percent of students think it is never acceptable to shout down a speaker; only 55% think it is never acceptable to block other students from attending a speech; and 27% of students believe that violence can rarely, sometimes, or always be an acceptable answer to stop a campus speech. 

As Silver rightly notes, there is also plenty of blame to go around with both conservatives and progressives also calling for restrictions on certain types of speech or certain types of speakers. 

The threat to a culture of free expression is rising. While some may write off this threat as a passing fad that doesn’t threaten American First Amendment liberties, it is only a matter of time before a culture of silence and cancellation work their way into our laws and jurisprudence. As George Orwell wrote, “The point is that the relative freedom which we enjoy depends on public opinion. The law is no protection. Governments make laws, but whether they are carried out, and how the police behave, depends on the general temper in the country. If large numbers of people are interested in freedom of speech, there will be freedom of speech, even if the law forbids it; if public opinion is sluggish, inconvenient minorities will be persecuted, even if laws exist to protect them.”

FIRE’s polling highlights the ongoing challenge to a culture of free expression in the US as well as concerns about cancel culture. These issues are discussed further in FIRE President Greg Lukianoff’s recently coauthored new book The Canceling of the American Mind: Cancel Culture Undermines Trust and Threatens Us All―But There Is a Solution (Cato will host a book discussion Dec 6, 2024) on how cancel culture is a symptom of a larger problem— Americans are using cheap yet powerful tactics to de‐​platform those they disagree with rather than engage in difficult conversations. Thankfully, the Canceling book provides ideas for how we can restore a culture of free expression on college campuses and beyond through better citizenship

FIRE’s polling and Nate Silver’s analysis are cause for concern. Support for expression is fading, even among those who have historically needed and utilized free expression the most. As Americans debate a variety of contentious issues, cancellation and censorship must be resisted. As Canceling makes clear, we must build a culture of free expression if we are to continue to enjoy the many benefits of free expression.