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Gabriella Beaumont-Smith

Last Monday, the US Court of Appeals for the Federal Circuit (CAFC) ruled against a US Court of International Trade’s (CIT) decision from November 2021 that was widely considered a win for the solar panel installation industry. That CIT decision overturned former President Trump’s proclamation that increased safeguard duties on imported solar panels.

It is unclear how the Biden administration will respond to the CAFC’s reversal of the CIT’s opinion. However, reversing the CIT’s ruling matters for two reasons. Firstly, imports of bifacial panels between October 25, 2020, and February 7, 2022, could retroactively be subjected to duties for that period: 20 percent for bifacials imported between October 25, 2020, and February 6, 2021, and 18 percent for bifacials imported between February 7, 2021 and February 6, 2022.

The CAFC remanded the case, returning it to the CIT for further action. Secondly, the reversal sets a precedent for the president to modify safeguard measures in a trade‐​restricting manner.

These safeguard duties date back to 2018 when President Trump imposed tariff‐​rate quotas (TRQs) and tariffs on most crystalline silicon photovoltaic (CSPV) products—the predominant type of solar cells and panels. The Trump administration used Section 201 of the Trade Act of 1974 to apply “safeguard” measures to “prevent or remedy the serious injury to the domestic industry.” The tariff rates levied on these solar imports started at 30% in 2018 and were set to decline by 5 percentage points each year over the next three years.

In June 2019, the US Trade Representative (USTR) granted bifacial (two‐​sided) solar panels exclusions from the tariffs (only solar cells are subject to the TRQ). In October 2020, President Trump issued a proclamation to revoke tariff exclusions on bifacial solar panels and to increase the tariff rate for the fourth year (February 7, 2021, through February 6, 2022) from 15 percent to 18 percent.

Litigation ensued and US industry groups prevailed in challenging the proclamation at the CIT. In November 2021, the court agreed that the proclamation “clearly misconstrued the reach of … the Trade Act, and thus constituted an action outside the President’s delegated authority.” The CIT ruled that the president could not modify the safeguard unless to liberalize trade. That is, since President Trump’s proclamation restricted trade by revoking the bifacial exclusion and increasing the fourth‐​year tariff rate, the court overturned the proclamation, reinstating the exclusion of tariffs on bifacial panels and the 15% tariff rate for the fourth year.

Then, last Monday (November 13), the CAFC disagreed with this interpretation. Specifically, the CAFC ruled that the statutory definition of “modification” established no limit on the president’s power to change safeguard duties under the Trade Act.

What makes this story even more complicated is that the tariffs were set for four years because safeguard measures are supposed to be temporary. A little over a year into his first term, President Biden needed to decide how temporary these tariffs would be. In February 2022, President Biden needed to evaluate whether the US solar manufacturing industry should receive more time to be shielded from foreign competition. Even though numerous reports stated that the tariffs had successfully helped the domestic industry adjust, President Biden extended the safeguards for another four years, with some tweaks, including exempting bifacial solar panels.

While presidential actions on future safeguards for solar panel imports are yet to be seen, domestic panel producers already cite “the exclusion of bifacial modules from duties at different times within the tariff period” as a reason for limited growth in manufacturing. Yet, the Solar Energy Industries Association—which represents the larger part of the US solar sector in the installation and maintenance of solar panels—is vocal about safeguard duties’ (and antidumping and countervailing duties’) costly impact, which amounts to thousands of jobs and billions of dollars in investments lost. It will be interesting to see which group wins.

One thing is for sure—more trade, not less, is good for US workers and the environment. President Biden tacitly acknowledges this by vowing to use his veto power to backpedal harmful trade policies on renewables. In fact, earlier this month, the president vowed to veto the Senate’s joint resolution overturning his waiver of certain “Buy America” (domestic content rules) requirements on government‐​funded electric vehicle charging stations.

Instead of continuing support for efforts that keep renewables expensive through protectionist means, the administration or Congress could do more for US workers and the uptake of renewables by:

repealing tariffs on steel and aluminum, which are vital components to producing solar panels,
repealing tariffs on Chinese goods,
repealing antidumping and countervailing duties on imports of solar cells and modules from China, Taiwan, Cambodia, Malaysia, Thailand, and Vietnam, and
removing all tariffs on environmental goods.

Otherwise, dirty politics will continue to plague the clean energy space.

Adam N. Michel

Republicans often invoke the “Laffer Curve” when discussing tax reform. But this mental model often confuses policymakers’ thinking. The most recent confusion came during the last Republican presidential debate when Senator Tim Scott claimed, “What we know is the Laffer Curve still works…the lower the tax, the higher the revenue.”

The Laffer Curve is a useful tool to understand the limits to how high tax rates can go. However, relying too heavily on this model can distort policymakers’ understanding of the benefits of tax cuts. Tax cuts may be worthwhile pursuing, even when they result in less revenue. Sometimes, they are worthwhile because they result in less revenue. 

The Laffer Curve

There should be no debate about whether the Laffer Curve works in some situations. The disagreement is over the curve’s parameters.

The hypothesis from economist Art Laffer states that a tax will not raise any revenue when the rate is zero or when the rate is 100 percent. The debate is over what happens between the two extremes. Revenue generally rises with the rate until the costs of the tax are so great that revenue begins to fall. That is, the tax base shrinks so much as rates rise that overall revenue falls. At higher tax rates, people work and invest less, substitute more for non‐​taxed activities, and increase investment in avoidance and evasion.

Only in some cases does revenue rise as rates fall. This may occur, for example, when a high corporate income tax or capital gains tax rate is cut. However, this is only true if the tax rate is on the wrong side of the peak of the Laffer Curve. The debate over the top of the curve for each tax is important and contested but often complicated by one‐​time realization effects, timing shifts, and policy changes to the tax base.

Don’t Think Backward from the Top of the Laffer Curve

If policymakers always reason backward from the top of the Laffer Curve, we might get the impression that the goal of a tax cut is not to set efficient fiscal policy but instead to maximize revenue for the government. Over‐​applying the Laffer Curve implies that it only makes sense to cut taxes if the tax rate is on the wrong side of the revenue‐​maximizing point. This is obviously false if the goal is limited government and low taxes.

Taxes primarily exist to raise money for governments to spend; thus, spending ultimately sets the long‐​run tax rate. Either through direct taxes or inflation (which is an indirect tax), government spending must be paid. Relying on Laffer Curve thinking allows politicians to avoid talking about government spending. If a tax cut always leads to additional revenue, politicians can promise new spending at lower tax rates. This is similar to Democrats claiming large new spending programs can be paid for by taxes on a few very wealthy people. It distracts from reality.

Laffer Curve analysis can also implicitly assume that the revenue from the revenue‐​maximizing tax rate results in the appropriate level of government spending. I am not going to resolve the question of welfare‐​maximizing government spending levels here, but it seems unlikely that it would be the same as the result of the revenue‐​maximizing tax rate.

One reason the Laffer Curve gives policymakers no useful information about the welfare‐​maximizing spending level is that the top of the Laffer Curve is highly susceptible to the tax base. If the goal is to maximize revenue extraction, policy changes to what is subject to tax can shift the achievable top rate. For example, broadening the tax base can eliminate planning opportunities and shift the top of the Laffer Curve.

Limited government policymakers should pursue tax and spending cuts to improve economic efficiency and allow individuals to control a larger portion of their earnings. Both goals of an improved economy and lowering the government’s take can be achieved at any tax rate. The economic benefits of tax cuts are largest when rates are high, but this does not negate the benefits of cutting taxes when rates are low.

As structural US federal deficits top $2 trillion, advocates of limited government will need to face the reality that spending ultimately sets the long‐​run tax rate, and higher revenues cannot fix our fiscal dilemma. The Laffer Curve is an important concept to keep in mind, but relying on it as orthodoxy can lead to indefensible positions, such as “all tax cuts pay for themselves,” that ultimately undermine the more important project of keeping taxes low and government small.

Alex Nowrasteh

The Department of State (DoS) recently proposed a regulation that would drastically shrink the au pair program by altering the way au pairs are compensated based on where they work in the United States and how many hours they work. These changes are unnecessary and would complicate a program that needs more, not less, regulation by raising wages, increasing reporting requirements, and multiplying paperwork.

Au pairs are foreign nationals who travel to the United States on a J–1 visa, live with an American host family for up to two years, and care for their children. Sponsoring agencies are the middlemen who help host families identify au pairs and run the regulatory gauntlet for everyone involved. Au pairs receive lodging, meals, and a wage their host families pay. The minimum wage for au pairs is the federal minimum wage minus 40 percent to compensate host families for lodging and meals. For au pairs, they must take classes paid for by the host families, engage in cultural activities, and be involved with the family by going on vacations and being part of the household.

The au pair program allows them to become acquainted with American life for up to two years. One of the justifications for the program is that au pairs will return to their home countries more aware of American values and culture, and American families are also supposed to benefit from the cultural exchange by learning about foreign customs. However, the main benefit for most host families is childcare.

In 2022, 21,449 au pairs on J‑1 visas entered the United States. Although au pairs can be in the program for up to two years, many only participate for one year before returning. The number of au pairs is between 2–4 percent of all childcare workers in the US, a small fraction. Au pairs are also heavily concentrated in households where both parents are skilled workers with high incomes. Furthermore, they are geographically concentrated in richer cities and suburbs in wealthy states. About a third of au pairs went to California, Washington DC, New York, and Illinois in 2022.

When the government proposes new regulations, they first post a Notice of Proposed Rule Making (NPRM). The regulation doesn’t just go into effect. The purpose of an NPRM is to solicit comments from the public or anybody else that identifies problems that would undermine the regulation’s intended effects, could have other unintended negative effects, or would violate the law and could be struck down by the courts. The last point is crucial to regulators. They must read the submitted comments and respond to the most substantive, sometimes even changing the regulation before it goes into effect. If they don’t, lawsuits will likely be filed and succeed.

I filed comments on the proposed au pair regulation that focuses on a particular inconsistency in the new au pair wage formula. Before reviewing my comments, it’s important to explain that they are not principled from a libertarian perspective. If regulators adopt my proposed changes, the final regulation would be more libertarian than that currently proposed. Still, the au pair program would be a far cry from the ideal free labor market I support.

I didn’t write a principled libertarian comment that called for ending the regulations that constrain the number of au pairs because regulators would have ignored it, as such a program would be contrary to current law. “I can’t change the law,” the regulators would think, “so why would I waste my time reading this?” I concentrated my regulatory comments on the changes that are consistent with current law and would reduce the harm of the regulation.

Au Pair Compensation

The current wage for au pairs is the federal minimum wage minus 40 percent, a deduction for the cost of lodging and meals. The DoS proposes replacing the current compensation formula with the maximum of the state, local, or federal minimum wage that is then adjusted according to a multitiered table whereby the maximum wage is paid.

The multitiered table ranges from a low of $8 an hour to $18, while minimum wages nationwide range from $7.25 on the federal level to $17.68 in Emeryville, California. Additionally, the State Department proposes mandating time‐​and‐​a‐​half for hours worked above 40 per week.

The DoS justifies its proposed rule because “geographically‐​specific variation in the costs of living” and the “federal minimum wage no longer provides sufficient compensation to au pairs placed in geographic areas in which growing number of states and localities have adopted state or local minimum wages that exceed the federal minimum wage.”

On the other side of the compensation formula is the 40 percent deduction mentioned, which is based on the current federal minimum wage multiplied by some arbitrary numbers to compensate host families for the cost of providing lodging and food. The DoS does not propose increasing the monetary cost of lodging and meals that host families can deduct from au pair compensation. In other words, the DoS proposes increasing the wages paid to au pairs but does not adjust the lodging and meals deduction formula to include those new higher minimum wages. Just as wages have risen to different extents in the geographic regions of the United States, so too has the cost of providing lodging and meals.

The DoS should also use the new minimum wages it proposes on the deduction side of the compensation formula. It makes little sense to increase the wage and then not use that increased wage on the deduction side. My comment goes into detail about different options for adjusting the deduction side of the formula.

Other Damaging Reforms to the Au Pair Program

Beyond the problems mentioned above, the DoS rule adds unnecessary complexity. Section 62.31(a) of the proposed rule creates a distinction between a part‐​time au pair (24–31 hours of childcare per week) and a full‐​time au pair (32–40 hours per week), which host families and au pairs would have to agree to in advance. However, the number of hours worked for calculating compensation would be maximum in each category (31 or 40 hours). This creates a perverse incentive for host families to require au pairs to work the maximum number of hours, whether they are full‐​time or part‐​time. But beyond that, why even create this arbitrary tier? Au pairs should be paid for the hours worked.

Section 62.31(l) of the proposed rule concerns rematch when a host family or au pair decides to terminate the relationship. Under the proposed rule, a rematch would require the sponsoring au pair agency to refund au pairs 25–75 percent of the fees they paid, if the sponsors cannot find a suitable rematch. This creates a bad financial incentive for sponsors to cover up or diminish problems with a particular au pair in favor of placing them with another family as soon as possible. Perversely, the au pairs who have completed 75 percent of their initial program or are on six‑, nine‑, or 12‐​month extensions may not request a rematch. This is an attempt to reduce the financial liability of the sponsors created by Section 62.31(l), but it would incentivize au pairs to stay in bad host family situations. This is a perverse restriction on them.

Section 62.31(j) also requires that updated work schedules agreed to by au pairs and host families be updated in a legal contract overseen by the sponsors. This unnecessary regulatory burden increases the transaction costs and other costs for all parties.

The rule continues in like fashion, suffocating the au pair program under a pile of paperwork. The current au pair program is far from libertarian, but the proposed regulations would worsen it. The United States does not have a migrant domestic worker visa like Singapore, and there is little prospect that one could be enacted soon. Au pairs are too legally restricted, although they are paid above the minimum wage in most cases. They should be able to switch jobs easily and have more leeway for working in the United States, attending school, and fulfilling the other visa requirements. Similarly, American families face onerous reporting restrictions and wage regulations that raise the costs.

Suppose the point is to make the immigration system more beneficial for Americans. In that case, there is no benefit to undermining the au pair program and there is much to gain by deregulating or radically expanding it—to say nothing of creating a broader domestic workers visa. Americans are productive workers with high opportunity costs who spend too much time on household chores. If lower‐​skilled migrants want to work for a wage higher than they could make in their home countries and if Americans want to hire them, both win.

Jeffrey A. Singer

Few people noticed—the press didn’t cover it much—but Coloradans in pain and the clinicians who treat them got relief this legislative session when Colorado Governor Jared Polis signed SB 144 into law last May. The bill revised an earlier statute that had placed restrictions on how clinicians treat chronic pain. The new law, which removed those restrictions, went into effect in August.

Like the majority of states, Colorado placed limits on the dosage and amount of opioids clinicians can prescribe to patients in pain, effectively enshrining in law the flawed 2016 Centers for Disease Control and Prevention recommendations for treating pain. Responding to criticism from physicians, pharmacologists, and addiction specialists who argued, among other things, that the CDC’s morphine milligram equivalent conversion tables were junk science, the CDC revised its guideline in 2022. Unfortunately, the revised pain‐​prescribing guideline has hardly any more basis in the evidence than the original. And though the agency stressed that it is not intended as a mandate, policymakers will likely interpret it that way.

In SB 144, Colorado lawmakers returned the clinical decision‐​making process to clinicians. Lawmakers also recognized the fallacy of using morphine milligram equivalent conversion tables to govern how clinicians treat individual patients. The following are among the bill’s provisions:

A HEALTH-CARE PROVIDER ACTING IN GOOD FAITH AND BASED ON THE NEEDS OF THE PATIENT WITH A DIAGNOSED CONDITION CAUSING CHRONIC PAIN IS NOT SUBJECT TO DISCIPLINE FROM THE REGULATOR SOLELY FOR PRESCRIBING A DOSAGE THAT EQUATES TO AN UPWARD DEVIATION FROM MORPHINE MILLIGRAM EQUIVALENT DOSAGE RECOMMENDATIONS OR FROM THRESHOLDS SPECIFIED IN STATE OR FEDERAL OPIOID PRESCRIBING GUIDELINES OR POLICIES.
A HEALTH-CARE PROVIDER TREATING A PATIENT WITH CHRONIC PAIN…SHALL NOT BE REQUIRED TO TAPER A PATIENT’S MEDICATION DOSAGE SOLELY TO MEET A PREDETERMINED MORPHINE MILLIGRAM EQUIVALENT DOSAGE RECOMMENDATION OR THRESHOLD IF THE PATIENT IS STABLE AND COMPLIANT WITH THE TREATMENT PLAN AND IS NOT EXPERIENCING SERIOUS HARM FROM THE LEVEL OF MEDICATION CURRENTLY BEING PRESCRIBED OR PREVIOUSLY PRESCRIBED. A DECISION TO TAPER OR MAINTAIN MEDICATION MUST INCLUDE AN INDIVIDUALIZED ASSESSMENT OF THE PATIENT’S CURRENT MEDICAL CONDITION AND TREATMENT PLAN, THE RISKS AND BENEFITS OF MAINTAINING OR TAPERING THE PATIENT’S MEDICATION, AND A DISCUSSION WITH THE PATIENT.
A PHARMACY, CARRIER, OR PHARMACY BENEFIT MANAGER SHALL NOT HAVE A POLICY IN PLACE THAT REQUIRES THE PHARMACIST TO REFUSE TO FILL A PRESCRIPTION FOR AN OPIATE ISSUED BY A HEALTH-CARE PROVIDER WITH THE AUTHORITY TO PRESCRIBE OPIATES SOLELY BECAUSE THE PRESCRIPTION IS FOR AN OPIATE OR BECAUSE THE PRESCRIPTION ORDER EXCEEDS A PREDETERMINED MORPHINE MILLIGRAM EQUIVALENT DOSAGE RECOMMENDATION OR THRESHOLD.
A HEALTH-CARE PRACTICE OR CLINIC IN WHICH A HEALTH-CARE PROVIDER IS AUTHORIZED TO PRESCRIBE…SHALL NOT HAVE A POLICY IN PLACE THAT REQUIRES THE HEALTH-CARE PROVIDER TO REFUSE TO PRESCRIBE, ADMINISTER, OR DISPENSE A PRESCRIPTION FOR AN OPIATE SOLELY BECAUSE THE PRESCRIPTION EXCEEDS A PREDETERMINED MORPHINE MILLIGRAM EQUIVALENT DOSAGE RECOMMENDATION OR THRESHOLD.

While I appreciate and agree with the spirit behind the last two provisions, I don’t think lawmakers should mandate what policies private clinics, pharmacies, or pharmacy benefit managers choose to institute. However, Colorado’s lawmakers and governor deserve credit for unshackling clinicians who are trying to help their patients who are in pain and for tacitly repudiating morphine milligram equivalent junk science.

SB 144 should improve patients’ access to pain management. It isn’t the only step Colorado has taken this session to increase access to care. Earlier this year, Governor Polis signed into law HB 1071, making Colorado the sixth state to expand access to mental health care by removing barriers to psychologists prescribing.

Colorado’s lawmakers and governor deserve praise for these reforms.

Anastasia P. Boden

Give a critical mouse a Supreme Court ethics code and it’ll ask for a glass of milk. Is that how the saying goes?

This week the Supreme Court issued its first public code of conduct. Facing increasing accusations that the justices are too cozy with political organizations and billionaires, and in response to the misunderstanding “that the Justices … unlike all other jurists in this country, regard themselves as unrestricted by any ethics rules,” the Court released eight pages reflecting what it had long adhered to internally.

The code covers what you’d expect: resisting outside influence or the appearance of outside influence, recusal guidelines, and participation in extrajudicial activities (i.e., no fundraising, no political activities, no promoting commercial products). For two recaps of the code, see here and here.

The guidelines make good sense and no one seems to object to the substance. But critics had objections nonetheless, quickly pointing out that there was no way of enforcing the code. Instead, the justices are expected to comply or presumably face the private wrath of Chief Justice John Roberts. This led some to insist, once again, that Congress must step in and pass its own standards and impose some form of accountability on the Court.

If people are truly concerned with the Court’s credibility or impartiality, that seems like a very bad idea. Making the justices attend histrionic and performative congressional hearings would be disastrous for the Court’s image. And even if the hearings were administrated by lower court judges rather than legislators, it would mean dragooning those judges into an often politically motivated process. For more about the difficulties and dangers of creating an enforcement mechanism, here’s an entire article about it.

But there’s another reason to be wary of congressional action: it’s not even clear Congress has the authority to pass an ethics code for the justices in the first place. While the Court currently abides by disclosure requirements applicable to other judges and government employees, the justices have made clear they do so voluntarily, not because they think they’re bound. Arguably, they’re not.

There’s nothing in the Constitution explicitly authorizing Congress to pass such a code. Under Article III, Congress can set the number of justices and modify their pay (though it can’t reduce their salaries while the justices are in office, which reinforces the Constitution’s expectation that the judiciary will enjoy independence from Congress).

Article III also states that the Supreme Court “shall have appellate Jurisdiction” over certain matters “both as to Law and Fact, with such Exceptions, and under such Regulations as the Congress shall make” (emphasis added). Some say this provision empowers the legislature to write binding ethics rules. But it can’t mean that Congress has plenary power over the Court’s internal operations because such an interpretation would lead to separation of power concerns. Instead, the language would seem to empower Congress to determine the nuts and bolts of how cases get to the Court. And in fact, it would be odd if the provision permitted Congress to pass an ethics rule for cases that arise under the Court’s appellate jurisdiction since those rules would not apply to cases arising under the Court’s original jurisdiction.

There are also some practical difficulties. Let’s say Congress tried to directly impose a binding ethics code on the justices. Any questions over the code’s constitutionality would go to … well, the Supreme Court, which could result in something of a crisis (or at least a chess match). What would happen if the Court refused to comply? Congress could retaliate by limiting its jurisdiction. Or, if it had good enough reason, it could try to impeach. But the very effort would start a game of constitutional chicken, which would not be great for the stability of our institutions (or judicial independence).

Before people who purport to care about the Court’s legitimacy throw the institution into a full‐​blown crisis, it’s worth noting that no serious observer of the Court actually thinks the justices are being bought and sold. No one has even attempted to point to a case where they think a justice has compromised his or her vote out of loyalty to some third party.

The idea that someone like Justice Thomas, who is well‐​known for his consistent judicial philosophy and readiness to dissent rather than compromise his principles, is trading his vote for a ride on a private plane is preposterous. In fact, the man said to be “buying” him, his close friend Harlan Crowe, doesn’t even have business before the Court. Crowe is also openly pro‐​choice, meaning the justice is doing a very poor job of acting as his proxy.

Similarly, while Justice Alito has been criticized for failing to report he took a private plane chartered by “Republican megadonor” Paul Singer, Singer had no business before the Court at that time. Since then, the Court has repeatedly turned down Singer’s company’s request to take up its case, and, in the one case it did, the Court voted 7–1 in his favor. Also, Singer has spent millions trying to legalize same‐​sex marriage, complicating the narrative.

The accusation isn’t that the justices are changing their votes in exchange for luxury travel; it seems to be that they are flouting disclosure rules and thus “see themselves as above the law.” But there’s a serious argument that travel costs qualify for the personal accommodation exception to the disclosure rules. And lest we forget, justices nominated by presidents from both political parties have had their travel paid for by others to get to events. Even colleges have offered to use private planes to transport the justices.

In other words, there’s a lot of simplification, obfuscating inconvenient facts, and selective amnesia going on (see: colleges paying $100,000+ for books signed by Justice Sonya Sotomayor, or the justice failing to disclose travel payments or to recuse from a case involving her publisher). One begins to wonder whether the accusations, most often directed at “conservative” justices, aren’t intended to destabilize the Court rather than rehabilitate it.

The same goes for the accusations that the justices are “fundraising” for “political causes.” There’s been a lot of hand‐​wringing over the justices’ appearances at Federalist Society events. But the Federalist Society neither lobbies nor litigates, and it’s no more political than the American Constitution Society, which has hosted events for justices on the other side of the bench.

Calling either of these organizations political erroneously conflates judicial philosophy with partisan politics. And most, if not all, of the justices regularly appear at colleges, which themselves have become political. University officials routinely use the justices’ appearances as fundraising opportunities for large donors.

The complaint seems to be that the justices attend or speak at events that are also attended by wealthy people who donate to political causes. Well, of course, they do. The justices went to elite schools and had elite careers. It’s no surprise they run in high‐​powered social circles and are sought‐​after speakers at high‐​profile events. And it’s no surprise that the host institutions (including colleges) use these appearances as fundraising opportunities, even if the justices are not engaging in fundraising themselves. So yes, the institutions are very glad to advertise their events to donors. And yes, some of those donors will also donate to political causes. None of that means that the justices are unable to perform their duties impartially or are engaging in political or fundraising activities themselves.

We can squabble over whether the “gifts” (Crowe buying Justice Thomas’s mother’s house for future use as a museum, RBG receiving a large monetary award and donating it to charity) were “gifts” subject to disclosure rules or whether they truly raise the specter of impropriety. My own opinion is that most of the accusations are overblown and that most of these things (private travel to events, trips with close family friends) are different than gifting someone a Rolex. That being said, there are cases where I think the justices should have disclosed or perhaps, in their better judgment, refrained.

Still, it’s important to recognize the difference between the judiciary and the legislative branch, which presents a far greater opportunity for corruption. Law is simply not like politics. Politicians wield a far more dangerous power than judges. Politicians pass laws that directly threaten liberty; judges pass judgment on the constitutionality of those laws. Politicians have nearly unlimited opportunity to vote on measures directly affecting our everyday lives and can do so arbitrarily or self‐​interestedly without anyone knowing because they vote on omnibus bills that hardly anyone reads. There are simply too many bills to keep track of, and there’s less political accountability than ever now that Congress outsources a lot of its work to the administrative state.

Legal interpretation, by contrast, is limited and transparent. The justices only take a handful of cases a year (fewer than ever), engage in open oral arguments, and write lengthy opinions justifying their decisions. Unlike the frequent and accepted vote‐​trading that goes on between politicians, it’s quite clear when judges are compromising their long‐​held principles. Judging doesn’t present the same opportunity and danger as the political branches. And to the extent that Congress is concerned about the Court, well, you know that saying about people in glass houses.

The point is, if we are concerned about legitimacy, we should be thoughtful about how we characterize the Court and the remedies we suggest. That’s not to say the rules cannot be improved or clarified or that the justices can’t do better. It’s only to say that the current state of the debate has the potential to do more damage to the Court than bolster it.

Daniel Raisbeck

Javier Milei’s unexpected victory in Argentina’s presidential run‐​off is a remarkable feat.

Not only did Milei defeat Peronism’s formidable political machine while leading a new political party; he also convinced a majority of voters to choose a return to Argentina’s lost tradition of classical liberalism, with an overt emphasis on the unqualified respect for the fundamental rights of life, liberty, and property as the true source of prosperity.

Nonetheless, the time for glee will be short‐​lived. Milei will become Argentina’s new president on December 10 with annual inflation levels above 140 percent, a practically worthless national currency, and 40 percent of the population living below the poverty line. The president elect seems aware, however, that the gravity of Argentina’s economic crisis leaves no time for half measures.

Implementing Milei’s economic program is Argentina’s only chance of defeating inflation, regaining monetary stability, and returning to economic growth. A free‐​market economist, the president elect understands that price and currency controls must be done away with, as is the case with all taxes on exports. Milei has even suggested that he will get rid of Argentina’s barriers to global trade unilaterally, a radical and necessary volte‐​face after eight decades of protectionist failure. 

Most importantly, Milei plans to dollarize Argentina’s economy and shut down the central bank. Dollarization is the best available means to bring inflation down to single digits rapidly and permanently. Granting the dollar legal tender also protects citizens’ purchasing power by rendering the devaluation of a local currency vis‐​à‐​vis the dollar impossible.

Milei’s own party does not control Congress, although he will likely form a coalition with Juntos por el Cambio, a center‐​right party. Even if he struggles to have all of his intended reforms approved by Congress, dollarization would be a magnificent achievement in and of itself.

As the experience of Panama, Ecuador, and El Salvador shows, dollarized countries in Latin America enjoy lower interest rates and longer loan periods for solvent private sector actors. Moreover, dollarization imposes a hard budget constraint on the local political class, thus providing an institutional curb on public spending that has been sorely lacking in Argentina.

Dollarization is no silver bullet; it guarantees neither high levels of economic growth nor sound fiscal management. Nonetheless, granting the dollar legal tender does tame inflation and provide price stability, thus ushering the basic conditions that Argentina’s next government needs to implement other, much‐​needed supply‐​side reforms.

If carried out successfully, Argentina’s dollarization can have consequences across Latin America. Since Panama, Ecuador, and El Salvador are relatively small countries, dollarization’s success in the region has been mostly overlooked. Argentina, however, is a large and influential country. A dollarized Argentina would create an enlarged, Latin American “dollar zone” that, informally, also includes Venezuela, a country that has become de facto dollarized. Besides bringing monetary stability, the common use of a hard currency also could boost intraregional trade, which has remained at minimum levels in Latin America (especially if compared to North America and the European Union).

The presidential campaign in Argentina acquired an international dimension as several of the region’s leftist leaders—among them Brazil’s Lula Da Silva and Colombia’s Gustavo Petro—blatantly intervened in Argentine politics by opposing Milei and supporting his opponent, Peronist finance minister Sergio Massa.

Given recent election victories for the Peronists’ hard leftist allies in Brazil, Chile, Colombia and other countries, today’s election in Argentina can be seen as a referendum on the future of Latin America itself. This makes Milei’s win even more significant.

Ian Vásquez

This Sunday, amidst economic crisis, Argentina will hold a presidential election that pits Sergio Massa of the ruling Peronist party against Javier Milei, a self‐​described libertarian. The stakes are high because Massa represents continuity, while Milei has promised far‐​reaching reforms consistent with limits to power and what he and his supporters view as a return to liberal democracy.

Given those stakes, Peruvian novelist Mario Vargas Llosa, along with nine ex‐​presidents from Latin America, and numerous other pro‐​democracy leaders, activists, and intellectuals issued a statement  today in support of Javier Milei. The only way out of Argentina’s crisis, they write, is through political and economic freedom, rather than the populist path the country has been on. Below, I offer an English translation of the statement. See the original in Spanish here that includes a list of all of the signatories.

Statement in Support of Javier Milei

“On Sunday, November, 19, Argentina, one of the most important countries in our region, will determine its political, economic and social future at the ballot box. Peronist Kirchnerism, the political movement that has practically hegemonized Argentine political life during the 21st century, aspires to obtain a fifth term in office. This time, the Peronist candidate is Sergio Massa, Argentina’s current Finance Minister. Massa presides over a stagnant country, with three‐​digit inflation rates, over 40 percent of the population in poverty, and a chronic unemployment problem, which is barely cloaked over by welfare handouts.

“Massa represents the continuity of a failed corporate and economic model. Argentina’s institutions have not allowed the country to grow at a par with its neighbors during the last decades. The cost of these perverse economic policies has been rampant inflation, widespread poverty, and the economic distress of millions of Argentines, who see their standard of living collapsing on a daily basis.

“Massa blatantly attempts to merge the Argentine state itself with the current administration and his own party. He is using all the mechanisms, institutions, and human and economic resources that should be at the service of citizens as a battering ram against the opposition. Massa’s project is a continuation of Néstor and Cristina Kirchner’s original project: to achieve political hegemony by inflating the budget and punishing the opposition.

“In the international sphere, Kirchnerism aligned itself with the worst governments on the planet while supporting the regional dictatorships of Cuba, Venezuela, and Nicaragua. The Kirchnerist regime has allowed the entry of narco‐​criminal gangs that have settled in the country, cornering the forces of the state itself. Massa represents the continuity of this sad situation.

“Massa’s opponent is Javier Milei, a new candidate in politics, with whom we certainly have many differences, but who believes in the ideas of freedom and has a very accurate diagnosis of the country’s economic problems. Furthermore, Milei has managed to gain the support of a good portion of center‐​right party Juntos por el Cambio and its voters. Today he represents the hope for change against the continuity of the Kirchnerist model.

“We, the undersigned, consider that a new term in office for Kirchnerism would deal a serious blow to Argentina’s resistance against economic populism, authoritarianism, political corruption, and the corporatist model.

“The only way out for Argentina is with political and economic freedom, respect for the rule of law and private property, and with the rules of the game of liberal democracy, the social market economy, social justice, and modernity.

“Argentina has everything it needs to become a developed and exemplary country once again. It is our hope and desire that Argentines will eradicate at the ballot box the model that binds them to populism, economic backwardness and political authoritarianism and, finally, opt for change towards freedom, progress, and justice.”

Daniel Raisbeck

An irony of the BRICS summit in South Africa last August, which included “de‐​dollarization” in the official agenda, was the touting of Argentina as one of the group’s new members. Argentina, of course, is on the brink of a presidential run‐​off in which the candidate who leads most polls, free‐​market economist Javier Milei, vows to shut down the central bank and officially dollarize the country.

Having lost over 95 percent of its value relative to the dollar since January 2019, Argentina’s national currency has been effectively destroyed. Even if Milei’s opponent, current Peronist finance minister Sergio Massa, wins the election on Sunday, he will have to face the fact that the country is already unofficially dollarized.

Indeed, Argentines have flocked to the dollar to protect their savings and gain monetary stability. For instance, 80 percent of used cars are now being sold through dollar transactions according to one report.

Nor is Argentina alone in terms of its de facto dollarization. In Venezuela, where socialists also destroyed the currency and unleashed hyperinflation, autocrat Nicolás Maduro relaxed a series of currency and price controls in 2019, thus granting people greater access to US dollars. Venezuelans embraced the opportunity without delay. By 2021, over half of all purchases of basic goods were being made in dollars. Maduro is now trying to curb the use of the dollar once again. Venezuelans, however, are fully aware that access to a sound currency is among the most basic of property rights.

Nearby, the citizens of Panama, Ecuador, and El Salvador, Latin America’s three officially dollarized countries, also know the advantages of a hard currency firsthand: low inflation, low interest rates, longer loan periods, and strong purchasing power. This is why large majorities in those nations have no desire to de‐​dollarize. Nor do they wish to grant legal tender to one of the BRICS currencies. The case for de‐​dollarization, it seems, has been overstated.

As economist Tyler Cowen writes, the US dollar is still used for the lion’s share of all global transactions, while American financial markets remain unparalleled in terms of their depth and liquidity. Fears of Chinese expansionism across the world have even strengthened the view of the dollar as a safe haven currency.

In Latin America, capital flight to the US financial system has long been the standard reaction to high taxes and fiscal profligacy, especially when governments add a penchant for monetizing the debt, devaluing local currencies and expropriating private property. Official dollarization, meanwhile, eliminates the option of devaluation, imposes a hard budget constraint on politicians, and introduces a strong rule‐​of‐​law element to the monetary sphere, as Professor Steve Hanke has argued.

Since Panama, Ecuador, and El Salvador are relatively small countries, dollarization’s success in Latin America has been mostly overlooked, regarded only as a regional anomaly. Argentina, on the other hand, is a large and influential country. If Milei wins, Argentina’s dollarization could be a regional watershed. If executed properly, other Latin American countries, not only those suffering under hyperinflation, might begin to consider the dollarization alternative.

In this sense, Brazilian President Lula Da Silva and his left‐​wing allies are correct in arguing that Latin America needs a common currency. Contrary to what they propose, however, the optimal currency for the region is that which ordinary Latin Americans use if given a choice: the US dollar.

Widespread dollarization would not only bring broad monetary stability to Latin America, an achievement in and of itself. Dollarization also can accelerate the next wave of regional integration through free trade, especially if the region’s democratic republics are granted access to USMCA, the free trade area formerly known as NAFTA (as a bipartisan group of members of Congress now propose).

In fact, as Shannon K. O’Neil notes, one of Latin America’s most underrated economic problems is its lack of intraregional trade, which accounted for a mere 15 percent of overall trade in 2018 compared to 55 percent for the European Union and 38 percent for North America.

Thus, a single free trade area encompassing most of the Americas is a brilliant prospect. Its achievement would create a trade bloc larger than that of the EU’s Single Market. And, as in the Eurozone, the widespread use of one, strong currency can boost the free flow of goods and services across national borders, especially for “later adopters.” In Latin America, this can be achieved without the serious drawbacks of an EU‐​like fiscal or political union.

If Milei wins the election on Sunday, Argentina’s dollarization can be a major step toward an enlarged, Latin American “dollar zone,” which can spur extraordinary opportunities for wealth creation across the region. But even if the Peronists hold on to power, the dollarization cat already might be out of the bag. Milei’s unexpected electoral success has made it evident that, in one of the region’s largest countries, “monetary sovereignty” has only amounted to sovereign monetary blundering.

Chris Edwards

A new ProPublica article takes the Army Corps of Engineers to task for major failures coming at the expense of taxpayers and the environment. The article ploughs some of the same ground I did in this 2012 study.

The Army Corps is a government‐​owned engineering company that employs 24,000 people. It builds and operates river navigation infrastructure, constructs flood control systems, dredges seaports, manages recreation sites, and operates hydroelectric plants. In my view, most of these activities should be transferred to state governments and the private sector.

ProPublica summarizes problems in nine Army Corps projects. Here are some highlights:

Engineering Failures. “In 2005, design flaws allowed a storm surge from Hurricane Katrina to breach the walls of the $738 million levee system that the Corps had built over the preceding four decades … The American Society of Civil Engineers called the levee failures ‘the worst engineering catastrophe in US History.’” I document the government’s Katrina failures here.
Economic Losses. The Olmsted Locks and Dam project in Illinois was supposed to cost $700 million and create $920 million in benefits annually but ended up costing $3 billion and creating only $236 million in annual benefits. Another failure is the $2 billion and 234‐​mile Tennessee‐​Tombigbee (Alabama) Waterway. The Corps promised it would create 208,000 jobs, but it only created 29,000.
Costly Fixes. Taxpayers are paying billions of dollars to fix environmental damage caused by the Corps to the Florida Everglades, to Oregon’s salmon runs, and to other natural systems. One project dredged the Mississippi near New Orleans causing a saltwater intrusion and requiring the city to build a new freshwater supply pipe costing at least $100 million.
Useless Projects. After Hurricane Sandy, the Corps spent $63 million constructing sand dune defenses in Margate, New Jersey, that residents apparently did not want. The dunes have caused drainage problems, as predicated, and litigation has ensued.

Investigations at Down​siz​ing​Gov​ern​ment​.org have found that many federal agencies screw up over and over for decades but are not reformed. The politicians, who are supposed to fix government failures, talk big but never get the job done before they leave office and become lobbyists or retire on gold‐​plated pensions.

The Corps is a case in point. It has attracted scathing criticism about its wasteful projects for more than a century, as I discuss here. ProPublica quotes a 1971 New York Times editorial: “The American people are becoming increasingly fed up with the expensive, boondoggling, make‐​work, environmentally destructive projects that to a large degree characterize the civilian activities of the Army’s Corps of Engineers.”

The Army Corps has been wasteful a long time. That said, I’m still optimistic about reform of the Corps and other failing federal agencies. Exploding federal debt, technological changes, and other dynamics will force change. Technology, for example, is obsoleting the massive government‐​owned US Postal Service.

How should Congress reform the Corps? I concluded that many of the Corp’s activities—such as flood control and recreation area management—should be turned over to state governments. Other activities— such as seaport dredging and hydropower generation—should be turned over to the private sector. Remaining activities should be moved to the Department of the Interior and the Corps closed down.

Peter Van Doren

What can be done to increase the supply of affordable housing? The traditional answer in Blue states has been inclusionary zoning, a policy that mandates that new housing developments price a small percentage of units at less than the market. The New York Times recently profiled a new inclusionary zoning development in Montgomery County, Maryland, one of the jurisdictions that invented the policy in the early 1970s.

Inclusionary zoning is superficially attractive to voters and elected officials because it isn’t “public housing” and thus does not have an explicit budget that is visible to taxpayers. And the rhetoric that surrounds the policy suggests that it simply makes developers do the right thing:

In the decades since Montgomery County passed the housing ordinance, the idea that developers should provide affordable housing in every kind of building and neighborhood, once regarded as a wild notion pushed by volunteer activists, has spread around the country. It is known as “inclusionary zoning” and has become a staple of many cities’ housing policy.

But regardless of the positive rhetoric that suggests the benefits that flow from good government mandates, inclusionary zoning is a tax on new housing that is also attached to a spending program on rent reduction that is off budget. The irony, of course, is that a tax on new housing reduces its supply and thus increases its price. This understanding is not new. More than thirty years ago a colleague and I asked why tax the supply of a commodity (housing) whose supply you intend to increase?

Previously I have described two alternatives to inclusionary zoning. The first is filtering: reduce zoning constraints on new construction and allow the effects of the increased new supply to “filter down” to existing units whose owners have to reduce price to maintain occupancy. Recent evidence suggests the benefits from filtering are real. The second is payments to incumbent low‐​density homeowners to gain their acceptance of increased density and affordability.

Allowing local governments to convert the current in‐​kind, opaque, underground market for zoning change into an explicit legal exchange of cash for density would facilitate the development of housing and reduce prices.