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David J. Bier

New numbers from the Census Bureau’s mini‐​census, the American Community Survey (ACS), show that Americans had started panicking over a small increase in total immigration. The new data show that:

the immigrant share of the U.S. population rose just 0.3 percentage points from 13.6 to 13.9 percent from July 2021 to July 2022;
the total immigrant population—legal and illegal—grew less than 1 million during that time;
despite the increase, the number of immigrants was nearly 2 million immigrants lower than the Census Bureau’s 2017 projection for 2022;
over the last decade, the United States has seen the slowest growth in the immigrant share of the U.S. population since the 1960s;
the immigrant share is growing slowly, even while the United States faces the lowest total population growth in its history.

Figure 1 shows the immigrant share of the U.S. population from 2000 to 2022, as of July 1 of each year. The share increased by 1.5 percentage points from 2000 to 2007 before dipping in 2008 through 2009 as the housing bubble burst and employment fell. The share then rose again by 1.2 percentage points through 2017 to 13.7 percent before plateauing during the Trump years (note that 2020 ACS data used experimental weights due to the COVID-19 pandemic and are not comparable).

Under President Biden, the immigrant share rose again to 13.9 percent. The Census Bureau in 2017 projected that by 2022, 14.3 percent of the U.S. population would be immigrants. The gap of 0.4 percentage points between the actual and forecasted immigrant share means that the immigrant share grew at a third of the rate that the Census Bureau expected from 2017 to 2022.

Figure 2 graphs the total immigrant population from 2010 to 2022. It shows that the actual immigrant population was about 46.2 million, compared to the Census Bureau’s 2017 projection of 48.1 million—down 1.9 million people. The Census Bureau estimated that the number of immigrants would increase from July 2017 to July 2022 by 3.6 million when, in fact, it increased by less than 1.7 million.

Immigrant population growth was below expectations every year until 2022, when it exceeded the Census Bureau’s projection for the first time. Note that the Census Bureau ACS data include illegal immigrants.

The failure to meet projections resulted from declining immigration growth rates for several regions. European immigrants declined in absolute numbers from 2017 to 2022, while they held steady from 2012 to 2017. Asian immigrant population growth was 1.5 million lower in the more recent period than the earlier period. Latin American immigrants and African immigrants also grew at slower rates. Only Oceania and Northern America (Canada and Greenland) saw small increases in their growth rates since 2017.

The broader historical perspective is key as well. Figure 3 shows the immigrant share of the U.S. population at the start of each decade since 1960. The increase in the immigrant share of the population from 2012 to 2022 was the lowest for any decade since the 1960s when it declined. The 2012–2022 growth was just 0.7 percentage points—less than half the growth from 2000 to 2010. The growth in the immigrant share is down by 76 percent since the 1990s. In global context, the United States ranks in the bottom third of wealthy countries for its immigrant population share.

What’s particularly remarkable about the slower growth in the immigrant share of the U.S. population is that the U.S. population overall is growing at the slowest rate in U.S. history. Because Americans are having fewer children, each immigrant should have a bigger effect on the immigrant share of the U.S. population than in earlier decades, yet even though the U.S. population growth rate has declined by about 90 percent from its peak, the immigrant share is inching upward at the slowest rate in a generation.

This slower population growth creates a litany of economic challenges for the United States, as I explained in my recent testimony to the US Senate. Right now, America’s politicians seem far more concerned about the supposedly unsustainable increases in immigration than the massive worker shortage, the collapse in the worker‐​to‐​retiree ratio, and the catastrophic loss of skilled workers from the United States to China and other countries.

America needs people in both the short and long term, and it needs workers of all skill types. Immigrants can help, and they should be allowed to do so legally.

Jeffrey A. Singer

In November 2020, voters in Oregon approved Measure 110, which effectively decriminalized the possession of federally illicit drugs by reclassifying possession from a Class A misdemeanor to a Class E violation, resulting in a $100 fine or an agreement to undergo a health assessment. Making or selling illicit drugs remains prohibited. The measure also called for expanding drug rehab and harm reduction services funded by marijuana tax revenues.

The law went into effect during the pandemic year of 2021—a year in which pandemic policies impeded harm reduction efforts across the country and a time that saw national drug overdose deaths reach a record high of 108,000, abetted by feelings of despair and isolation accompanying those policies. While this reform is still a baby in its bassinet, a coalition of Oregon business and political leaders plan to put a ballot measure before voters that would essentially strangle it.

The group called the “Coalition to Fix Ballot Measure 110” has unveiled two versions of its drug re‐​criminalization proposal. One version again makes it a misdemeanor to possess heroin, fentanyl, cocaine, methamphetamine, and other illicit drugs. It also makes consuming illegal drugs in certain public places a misdemeanor. A second version increases penalties for delivering or transferring drugs, expands the definition of “delivery” to include “possession with the intent to transfer,” and increases penalties for subsequent arrests.

Both versions require mandatory treatment for people deemed “drug dependent.” Coercive treatment, aside from being an immoral violation of a person’s autonomy and agency, has also been found to be, at best, ineffective and, at worst, very harmful.

Harvard researchers recently reported that medication‐​assisted treatment with either methadone or buprenorphine is the only treatment strategy associated with “reductions in overdose and serious opioid‐​related acute care use compared with other treatments,” including inpatient detoxification or residential services.

Opponents of Measure 110 cite Oregon’s continued rise in overdose deaths, the growing homeless population, and the increase in public drug use to justify a return to failed prohibitionist solutions.

However, the “Coalition to Fix Measure 110” was mistaken if they believed that drug decriminalization would necessarily lead to a drop in illicit drug use—especially in the peak and post‐​peak years of the coronavirus pandemic. The primary goal of Measure 110 was to reduce drug overdose deaths by redirecting resources from incarceration to harm reduction. Alas, the pandemic got in the way.

Reverting to incarceration will do nothing to deter illicit drug use. It will just crowd the jails, prisons, and courts, add to the workload of law enforcement, and increase the burden on taxpayers. This approach didn’t deter drug use before Measure 110, so why should it if Measure 110 is effectively repealed? Also, evidence reported in the March 2023 issue of the American Journal of Public Health suggests that when law enforcement doubles down on drug seizures, it may directly increase overdose deaths. This is presumably because, after a drug bust, users must seek new and often unfamiliar sources for their drugs, many of whom provide drugs with different dosages and purity.

Max Williams, a former Republican Oregon state legislator, is a member of the group seeking to put the re‐​criminalization measures on the November ballot. To his credit, he doesn’t blame Measure 110 for Portland’s homelessness crisis, according to The Oregonian, the state’s largest newspaper. The causes of homelessness are complex and multifactorial. In a recent Cato briefing paper, Vanessa Brown Calder and Jordon Gygi discuss how land use and zoning regulations make housing less affordable and create barriers to housing development that increase housing supply.

Opponents of Measure 110 are understandably upset when they view drug use in plain sight, which their children can witness. One way to reduce open‐​air drug use is by bringing it inside, out of the public eye, and into overdose prevention centers (OPCs). A federal law, 21 U.S.C. Section 856 (the so‐​called “crack house statute”), makes OPCs illegal in this country, but two of them have been working in New York City, sanctioned by the city government since the end of 2021. They announced this July that they had reversed more than 1,000 overdoses since they began operating.

Another way to address the problem of loitering and gathering in ways that provide a public nuisance is by enacting and enforcing public nuisance laws. When a group of people are intoxicated with a legal drug like alcohol and vomiting on public streets, are rowdy, and litter the street with bottles, it is legitimate to call some enforcement authority (preferably an unarmed and separate division of the police department) to combat it—not with jail time, but with some sort of fine or sanction.

The same principle should apply to people who use other drugs. In some cases, the law can require them to relocate to areas of the city where they are less likely to disturb other residents.

This November, Oregonians will likely be asked to “fix” Measure 110 with “remedies” that have failed for more than 50 years and will only worsen the harms caused by drug prohibition.

Norbert Michel

I spent a large portion of my career working at a conservative think tank, and during my last few years there I often heard folks say things like, “Of course free markets are great, but they need limits, just like everything.” Typically, those folks wouldn’t say exactly what limits they wanted, only that it was important to have “a conversation” about them.

Unsurprisingly, when Vermont Senator Bernie Sanders, an independent who caucuses with the Democrats, and Representative Alexandria Ocasio‐​Cortez (D‑NY) introduced legislation to cap credit card interest rates at 15 percent to combat “economic brutality,” my colleagues weren’t fans.

And when Senator Jeff Merkley (D‑OR) introduced the Veterans and Consumers Fair Credit Act, a bill that would have extended rate caps beyond active‐​duty military personnel to all consumers, I received zero pushback on a paper laying out the case against interest rate caps.

So it will be very interesting to see what happens now that Senator Josh Hawley (R‑MO) has positioned himself barely to the right of Sanders and Ocasio‐​Cortez with a bill to cap credit card rates (for everyone) at an APR of 18 percent.

Of course, Hawley is blaming the Biden administration for the high prices that motivated his legislation, but it’s unclear if moving to the left of the administration on this issue is a winning political strategy. (At least one analyst believes Hawley’s bill has no chance of passing, and that Hawley is making a purely political move.)

The only thing that’s certain is that a rate cap policy is a losing economic strategy.

The historical record on price controls is awful. They tend to spawn harmful unintended consequences, including bribery and corruption to evade the controls, as well as rent‐​seeking, which only benefits the people implementing the controls. And price controls rarely help the people they’re intended to help, generally resulting in some combination of higher prices and shortages.

In the case of credit rate caps, it’s not hard to imagine that the highest income earners would suffer the least, while the lowest income earners—the people who most desperately need credit—would suffer the most. In the end, the rate caps would cause problems that provide additional pretense for more price controls and government intervention, both of which tend to further hinder the effectiveness of markets in the first place.

It will be very interesting to see which members of Congress support Hawley’s rate caps, and even more intriguing to see which D.C. think tanks support them. Hopefully, fundamental principles and common sense win out over populism and opportunistic politics.

Norbert Michel

This new Forbes post provides a brief overview of my testimony last week in the U.S. House of Representatives at a hearing titled Digital Dollar Dilemma: The Implications of a Central Bank Digital Currency and Private Sector Alternatives. Naturally, Cato’s scholars don’t see much of a dilemma—the United States government should foster more private alternatives in the payments sector and should not issue a digital currency.

While the hearing went pretty much as expected, there was a strange moment that should be addressed. Around halfway through the hearing (see the 1:20:00 mark), minority witness Raúl Carrillo implied that the other witnesses had mischaracterized the nature of the Fourth Amendment to the U.S. Constitution. He then blamed privacy problems in the financial sector on the “connection between the private and public sectors.” Here’s the passage in full:

…this question allows me to first clarify a point regarding Fourth Amendment doctrine, which I believe has been mischaracterized on this panel. The third‐​party doctrine creates problems precisely because of the connection between the private and public sectors. So, to suggest that it is just going to not apply to the public sector, and will apply to the private sector, is to fundamentally misunderstand constitutional doctrine. We could have a system wherein private companies work with public companies, and that still could lend itself to mass surveillance. So, these conclusory statements about application of the 4th amendment are not particularly helpful here. The laws and the technology of the models being suggested do not lend themselves to application of the Fourth Amendment.

First, I don’t believe anyone suggested that the third‐​party doctrine (or the Fourth Amendment) would apply to the public sector. I’m positive I didn’t make that claim. And, if Carrillo meant to say that a system where private companies working with the government—as opposed to, in his words, public companies—could still result in mass surveillance, he’s probably right. Any system that requires private companies to record information so that the government has unfettered access is ripe for government abuse.

However, I have to take issue with whether “the laws and the technology” lend themselves to the application of the Fourth Amendment. It’s a baffling statement that caps off an otherwise confusing analysis.

The purpose of the Fourth Amendment to the U.S. Constitution is to protect people from government abuse (unreasonable searches and seizures). Yet, the Bank Secrecy Act requires private companies to keep financial records that the government can access without a search warrant. So, while it’s useful to distinguish between what private companies are doing and what the government does, there’s no doubt that the government has commandeered the private sector to implement the Bank Secrecy Act regime.

And we’ll have an even bigger problem if we move to a CBDC because the government will start collecting the data directly, thus making it even easier to access citizens’ financial records. The important principle, though, is that regardless of what type of money Americans use, the government should not have access to citizens’ financial records without first demonstrating probable cause and obtaining a search warrant. Nonetheless, since Congress enacted the Bank Secrecy Act in 1970, the government has had access without obtaining a warrant.

So, as Cato scholars argue, Congress should explicitly prevent the Fed (and Treasury) from issuing a CBDC. Separately, Congress should amend the Bank Secrecy Act so that law enforcement must obtain a warrant to access citizens’ financial records. Anyone interested in these topics should check out the full hearing.

Chris Edwards

As Congress considers a farm bill in coming months, it should keep in mind that farm household incomes have risen greatly over the decades. When farm programs were put in place in the 1930s, the “per person disposable income of farms was 39% of U.S. per person disposable income,” reported agricultural economist Carl Zulauf. Farmers had lower incomes than other Americans.

Today, farmers have substantially higher incomes than other Americans, according to U.S. Department of Agriculture data. The chart shows the ratio of the average income of farm households to the average income of all U.S. households. Farm incomes fluctuate from year to year, but the long‐​term trend is upwards.

In 1960, farm households earned 65 percent of the incomes of all U.S. households, on average, but by 2021 they were earning 32 percent more. In 2021, the average income of farm households was $135,281, which compared to the average for all U.S. households of $102,316.

Farm subsidies in the 1930s were a low‐​income safety net, but that justification for subsidies has disappeared with today’s more prosperous farmers. For this reason and others, Congress should begin cutting the $20 billion or more in annual taxpayer support for farm businesses.

For farm households, the USDA data include income earned on and off the farm. The share of farm household income earned off the farm increased from less than 40 percent in the 1930s, to 53 percent by 1960, to 77 percent by 2021. Today’s greater diversification of income sources is a market‐​based way of mitigating the risks of farming without government subsidies.

These data are overall averages, but there are many different types of farm business. The USDA data show that smaller farm operators tend to earn a larger share of household income off the farm and are less likely to receive subsidies. Larger farm operators tend to earn a smaller share of household income off the farm and are more likely to receive subsidies.

Ian Vásquez

Hong Kong is no longer number one, according to the Economic Freedom of the World: 2023 Annual Report, released today by the Fraser Institute and co‐​published in the United States by the Cato Institute. As Hong Kong’s ratings declined, Singapore increased its score and edged the Chinese territory out for the top spot.

The report finds that the Chinese government imposed “new and significant barriers to entry” in Hong Kong and otherwise increased the costs of doing business there. The rule of law also saw a deterioration, contributing to the city’s decline.

Other countries ranked as follows: United States (5), Canada (10), Taiwan (11), Japan (20), Chile (30), France (47), Mexico (68), India (87), Turkey (101), Russia (104), China (111), Egypt (144), Argentina (158), Zimbabwe (164), Venezuela (165).

The report uses data that rate countries on 45 distinct variables in areas ranging from trade openness and the size of government to monetary policy, regulation, and the legal system through 2021, the most recent year for which comparable international statistics exist. It finds that, with the onset of the COVID-19 pandemic, global economic freedom fell dramatically in 2020 and remained at that level in 2021, a decrease that erased a decade of growth in economic freedom.

The authors of the report—James Gwartney, Robert Lawson, and Ryan Murphy—find a strong relationship between economic freedom and numerous indicators of well‐​being, including income, longevity, lower infant mortality rates, and more. This year’s report includes three chapters by guest authors on populism, the rule of law, and Botswana as a case study, respectively.

See those and other findings here.

Thomas A. Berry

Yesterday at the Cato Institute we celebrated Constitution Day with our annual symposium, which coincides with the release of the Cato Supreme Court Review. This was the 22nd edition of the Review, and my first as editor in chief. Every article from the Review is now available for free on online. Here’s a rundown of what’s on offer:

First up is the Foreword, written by my colleague Anastasia Boden, Director of Cato’s Robert A. Levy Center for Constitutional Studies. Boden writes that despite what critics of the Supreme Court may say, the modern Court is far from “activist.” If anything, she writes, the Court is still too hesitant to strike down laws that violate constitutional rights.

Next we have last year’s annual B. Kenneth Simon Lecture. Professor Akhil Reed Amar of Yale Law School offers 18 arguments for 18‐​year term limits on the Supreme Court. Amar argues that term limits would have several beneficial effects, such as making presidential appointments of Supreme Court justices more regular and more predictable.

Next, Brannon Denning of Samford University Cumberland School of Law writes on National Pork Producers v. Ross. Even though the Court rejected a challenge to a California pork regulation under the “dormant Commerce Clause doctrine,” Denning explains why the doctrine is here to stay.

Margaret Little of the New Civil Liberties Alliance then covers the consolidated cases of Axon v. FTC and SEC v. Cochran, the latter of which she had a front‐​row seat for as one of Cochran’s counsel. In both cases, the Court held that litigants can bring constitutional challenges to administrative agencies straight into federal court, without going through an agency proceeding first.

Next, Eric Franklin Amarante of the University of Tennessee College of Law writes on the term’s First Amendment overbreadth case, United States v. Hansen. Amarante criticizes the Court’s decision, which upheld the federal statute banning speech that encourages or induces violations of immigration law. Amarante argues that the majority opinion understated the harms caused by the “chilling effect” of a broadly worded law, harms that can’t be measured solely by counting the number of prosecutions under the law.

Christopher Green of the University of Mississippi School of Law then writes on 303 Creative v. Elenis. Most commentators have focused on the First Amendment aspects of this case, in which the Court held that a website designer may not be compelled by state law to design a custom site for a same‐​sex wedding. Green points out that there is another issue at play, however, which is the scope of the traditional power of the state to compel access to public accommodations.

Continuing with the Court’s speech cases, Clay Calvert of the University of Florida Levin College of Law writes on Counterman v. Colorado. The Court held that to convict someone for making a threat, the First Amendment requires that the speaker must have been at least reckless to the risk that the message would be understood as a threat. Calvert notes that this was a middle‐​ground position and that the Court could have required a higher mental standard or none at all—both positions that at least some on the Court espoused.

Next, David Bernstein of the Antonin Scalia Law School writes on the Term’s affirmative action cases, Students for Fair Admissions v. Harvard/​UNC. Bernstein focuses in particular on the Court’s discussion of the racial categories that were used by universities and how those particular categories came to be standardized. This history, of which Bernstein is the leading expert, shows just how arbitrary these categories are.

Timothy Sandefur of the Goldwater Institute then tackles the Court’s Indian Child Welfare Act case, Haaland v. Brackeen. Sandefur explains why the Supreme Court’s decision is most notable for what it did not decide—whether the law violates the Equal Protection Clause of the Constitution. As Sandefur notes, the constitutional concerns with ICWA will not go away and will remain a live controversy in the courts.

Next, Jed Handelsman Shugerman of Boston University School of Law writes on Biden v. Nebraska, the student loans case. Shugerman argues that the Court reached the right result, because the Biden administration did not explain how the relief it wished to offer was tailored to the COVID-19 emergency specifically. Shugerman suggests that going forward, courts should develop a doctrine to evaluate claims of emergency power to ensure that emergencies are not used as pretexts to enact long‐​term policy goals.

Moving to environmental law, Damien Schiff of Pacific Legal Foundation writes on Sackett v. EPA, a case he argued and won at the Supreme Court. Schiff relates the long history of the Clean Water Act and its mysterious statutory definition, “waters of the United States.” Multiple Supreme Court cases had considered what this definition means, but Sackett finally resulted in a majority of the Court setting out a clear test.

Next, Vikram David Amar of UC Davis School of Law tackles Moore v. Harper, the “independent state legislature doctrine” case. Amar argues that the Court’s rejection of the doctrine was clearly right as a matter of original constitutional meaning. Amar also explains the consequences that would have resulted if the Court had ruled the other way.

Wrapping up the articles on cases from this past Term, Gregory Dolin of the University of Baltimore School of Law covers Andy Warhol Foundation for the Visual Arts v. Goldsmith and Jack Daniel’s Properties v. VIP Products. In both cases, the Court narrowed the circumstances in which artists or parodists may adapt copyrighted or trademarked material without permission. Dolin argues that both cases were decided correctly and both can be understood as treating intellectual property similar to physical property.

Finally, Wen Fa of the Beacon Center of Tennessee authors our annual “Looking Ahead” article. Fa identifies several major cases to watch next term, on topics ranging from Chevron deference to an agency’s self‐​funding powers, to the original meaning of “income” in the Sixteenth Amendment. The Court will also consider the First Amendment implications of public officials “blocking” citizens on social media and the standing of ADA online “testers.” Even though this past Term was undoubtedly a blockbuster, Fa suggests the sequel may end up being just as exciting.

Thank you to every author who contributed to another excellent edition of the Review. As in every edition, we hope it proves informative and illuminating for lawyers and non‐​lawyers alike who wish to understand the most important decisions from the highest Court in the land.

Kayla Susalla

School is back in session and many districts prepared by stocking up on School Resource Officers (SROs). Yet research is unclear about the effectiveness of SROs at increasing school safety, and suggests their presence leads to excessive discipline.

Policies increasing SROs are often proposed in response to school shootings, and officers have adopted additional roles outside of traditional law enforcement in an attempt to maximize security. But as demonstrated in the Parkland, Florida, and Uvalde, Texas shootings, law enforcement isn’t a panacea, and its presence may adversely impact students.

Concern for and calls to address students’ safety amplify when innocent lives are stolen by a school shooter. Such a horrific act of violence leaves many traumatized and shakes the public with fear. But, as seen in the charts below, over the past decade public schools became increasingly hardened, yet active shooter situations remained relatively stable or were even in an increasing trend. Also, far fewer students than usual were physically in schools due to COVID-19 for part of 2020 and much of 2021. This suggests increasing security may not be the best approach to address shootings.

Looking at specific attacks, Scot Peterson, the School Resource Officer at Marjory Stoneman Douglas High School in Parkland, remained outside for over 45 minutes until the shooting subsided, acting in opposition to his active shooter training, which directs officers to confront the shooter. Peterson cited confusion about the location of the shooting, yet dispatch audio was discovered of him identifying where the shots were coming from. Peterson was charged with child neglect, culpable negligence, and perjury, but acquitted on all charges.

At Robb Elementary in Uvalde, poor judgment calls between officers led to a 77‐​minute wait before law enforcement confronted the shooter. Nearly 400 officers were on the scene at Uvalde. Yet the lack of consensus on how to approach the situation and the absence of leadership resulted in a severely prolonged response.

This is especially alarming considering two months prior to the shooting, Uvalde Consolidated Independent School District police officers completed active shooter training at Uvalde High School.

In the rare situations in which active shooters enter schools, both cases highlight the complexities around confronting the shooter, school security failures, and law enforcement’s pitfalls. Large settings where schools are divided into two buildings, like in Parkland, make it increasingly difficult to locate the shooter, despite the presence of security cameras and personnel. Both schools had multiple doors unlocked, allowing the shooter access to the buildings. Schools can be heavily hardened, but if security measures are not applied as intended, that can be in vain.

Even in cases where an SRO successfully intervened to apprehend the shooter, like at Great Mills High School in Maryland, the assailant was able to bring a firearm into school, fire, and injure two students before being stopped. Despite the known presence of police, schools remain a target. In fact, a study found that after controlling for factors such as school type, location, and characteristics of the attack, the rate of deaths was 2.83 times greater in schools with an armed officer present than without one. These findings could be a result of shooters attempting to commit “suicide by cop,” when the shooter targets settings in which they know police protocol is to neutralize the target, suggesting an underlying mental health issue.

Perhaps SROs are charged with doing too much, including serving as counselors. According to the National Association of School Resource Officers, SROs assume a triad model: teacher, informal counselor, and law enforcement officer to maximize school safety. Such a wide net leaves SROs’ duties applicable to several issues within a school, but they may not be suited for such complex roles.

SROs are not required to have any additional education or training to police schools. Teachers, in contrast, at a minimum possess a bachelor’s degree, while counselors typically hold an advanced degree or additional certifications. Degrees are not always synonymous with greater ability to do a job, but schools are not the same as the street, and police officers might be poorly prepared to do work outside of traditional law enforcement.

Police officers are trained to respond to threatening and dangerous situations, not to counsel children, which can leave students underserved when serious mental health support is needed. Filling schools with police also sends a message to students that school isn’t safe, fostering a climate of apprehension and uncertainty.

It’s important to take necessary protective measures to ensure student safety, but SROs may not be the best avenue.

Adam N. Michel

The Organization for Economic Co‐​operation and Development (OECD) is seeking to raise taxes on multinational businesses by billions of dollars with a novel, internationally coordinated 15 percent minimum tax. Nearly 140 countries have signed on to this new global tax, including the Biden administration, and about 50 countries have taken steps to implement parts of the plan.

The OECD estimates the new minimum tax will raise $220 billion in annual, global corporate tax revenue. This would be a transfer from the private sector to governments. According to preliminary estimates, the transfer would result in at least $248 billion in costs. Thus, the new minimum tax would come at a net cost, or deadweight loss, to the global economy of at least $28 billion a year.

For the United States, the OECD plan is a clear loser. Recent estimates from the Joint Committee on Taxation (JCT) show that the new OECD rules could reduce domestic tax revenues by between $122 billion over ten years (if other countries implement the OECD tax and the U.S. does not) and $57 billion (if Congress concedes to the OECD and implements its international tax rules).

In addition to reducing federal revenue, the new global tax is estimated by others to reduce U.S. jobs by about 370,000 and cut annual investment by roughly $22 billion.

However, some argue that the JCT estimates are too pessimistic and that even if the rules do not accrue new revenue for the United States, the new OECD tax system is necessary to promote fairness and ensure other countries can raise additional revenue.

Taxes are a transfer from the private sector to the government. Those transfers come with additional costs to the economy. Even globally, the OECD’s optimistic projection of raising $220 billion must be weighed against the economic and administrative costs the government and private sector must incur. Recent estimates from Germany—one of the countries that could benefit the most from the new rules—report the revenue their government is expected to raise and the expected costs incurred by the government’s collection agency and the private sector.

In the first five years, the tax is expected to raise about €1.68 billion annually, compared to startup compliance costs (government and private) of €1.42 billion. The ongoing annual compliance costs are about 7 percent of the yearly revenue collected.

The new revenue for the government comes with other societal costs that should also be accounted for. The following estimates are highly imperfect, but they can provide a conservative, lower‐​bound back‐​of‐​the‐​envelope tabulation of the costs and benefits to global well‐​being of the OECD’s tax increase. This analysis applies a similar framework used by Chris Edwards to assess the value of additional domestic IRS enforcement funding.

The German government estimates an ongoing annual cost of $76 million for the public administration of the new tax. Assuming the recurring costs are similar in other countries, it implies that the 139 countries signed on to the OECD deal will collectively spend about $11 billion annually administering the new tax.[1]

The annual ongoing private sector cost estimates from Germany imply compliance costs about 2.4 percent of the revenue raised. This suggests the private sector will conservatively spend about $5 billion complying with the minimum tax rules each year.

It is also widely acknowledged, including by the OECD, that higher taxes under the global minimum tax will reduce investment and shrink global GDP. The United Nations Conference on Trade and Development estimates that the OECD minimum tax will reduce foreign direct investment (FDI) flows by between 2 percent and 3 percent. A 2.5 percent reduction in the pre‐​covid FDI average of approximately $1.8 trillion means that the new tax will reduce annual FDI by about $44 billion. This estimate is likely conservative, given the expected declines in domestic investment. Ernst and Young estimates a $22 billion reduction in U.S. domestic investment.

Adding up the costs, the OECD minimum tax will impose $60 billion in ongoing costs to raise $220 billion in new revenue. But the $220 billion is not new money. It is transferred from the private sector to the government. The only gain from this transaction is any additional efficiencies from world governments directing the resources instead of the private sector.

Government spending would need to be about 25 percent more productive than private sector spending to break even. While estimates vary widely, the highest return on government spending is usually infrastructure spending, for which the economic literature rarely estimates returns greater than 10 percent. If we make the generous assumption that the government spending is 10 percent more productive than its private sector alternative, the $220 billion in government spending (net of the $11 billion in government compliance expenditures) would generate $21 billion in additional benefits.

These rough estimates imply that the OECD global minimum tax proposal to raise $220 billion will impose an ongoing annual net cost of roughly $28 billion on the world.

While the JCT analysis makes it clear that the OECD minimum tax is a loser for the United States solely as a matter of the federal government’s finances, a fuller accounting of the proposal’s costs shows that it is also a net negative for the entire world.

Chelsea Follett

“Cities, the dense agglomerations that dot the globe, have been engines of innovation since Plato and Socrates bickered in an Athenian marketplace,” as urban economist Edward Glaesar explains in his book The Triumph of the City.

Athens’s storied breakthroughs in philosophy are but one example of how cities have often been the sites of pivotal advances throughout history. Kyoto gave us the novel. Bologna gave us the university. Florence gave us the Renaissance. Paris gave us the Enlightenment. Manchester gave us the Industrial Revolution. Los Angeles gave us cinema. Postwar New York gave us modern finance … the list goes on.

As Glaeser also notes, “Wandering these cities—whether down cobblestone sidewalks or grid‐​cutting cross streets, around roundabouts or under freeways—is to study nothing less than human progress.”

If you’re not able to travel to each of these extraordinary cities, perhaps the next best thing is to embark on a virtual tour from the comfort of your home. To that end, I wrote a book surveying 40 of history’s greatest urban centers, showcasing each city at a moment in time when it notably contributed to progress.

Centers of Progress: 40 Cities That Changed the World offers a fact‐​filled yet accessible crash course in global urban history, spanning from the agricultural revolution to the digital revolution. This book affirms the importance of cities to the story of human progress and innovation by shining a spotlight on some of the places that have helped create the modern world.

The book’s chapters can guide you through the Library of Alexandria, the stock exchange of Dutch Golden Age‐​era Amsterdam, and the pubs of Edinburgh during the Scottish Enlightenment, all in an afternoon.

Centers of Progress “takes the reader on a time‐​travel cruise through the great flash points of human activity to catch innovations that have transformed human lives” at their moment of invention, according to writer Matt Ridley in the insightful foreword he kindly provided. Come explore Agra as the Taj Mahal was erected and Cambridge as Isaac Newton penned the Principia. Meet engineers in Ancient Rome, Silk Road merchants in Tang Dynasty Chang’an, music composers in 19th‐​century Vienna, and Space Age flight controllers in Houston.

Learning about past achievements may even hold the secret to fostering innovation in the present.

As I note in the book, “Although there are some exceptions, most cities reach their creative peak during periods of peace. Most centers of progress also thrive during times of relative social, intellectual, and economic freedom, as well as openness to intercultural exchange and trade. And centers of progress tend to be highly populated.… Identifying those common denominators among the places that have produced history’s greatest achievements is one way to learn what causes progress in the first place. After all, change is a constant, but progress is not.”

From the fall of the Berlin Wall to Hong Kong’s transformation from a war‐​ravaged “barren island” into a prosperous metropolis, many of the stories featured in Centers of Progress hold valuable lessons about the importance of ideas, people, and freedom. I hope that you will consider joining me on a journey through the book’s pages to some of history’s greatest centers of progress.