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The WSJ has an interesting article today on the Target credit card security breach. As the article notes, the US card system is less secure than elsewhere in the world, most notably Europe, which has a “chip and PIN” system, which has a computer chip embedded in the card and requires the purchaser to insert a PIN as well to make a transaction. The Target security breach has led many to wonder–and implicitly the WSJ–why the US has lagged on adopting this more secure technology.
Well it turns out that the economics of credit card security is more complicated than it appears at first glance. But first, an important thing to keep in mind: historically the United States has been a high-trust, low-fraud country when it comes to payment card usage. For example, the conventional practice of handing over your credit card (or debit card) to a waiter in a restaurant and having him disappear into a back room with it is something that must strike people in other countries as somewhat bizarre. Nevertheless, we do it all the time and rarely does anything go wrong in this process. So, this makes a difference–in a high-trust, low-fraud country it generally is not necessary to invest in as elaborate security protections as elsewhere. As an analogy, consider that in the U.S. very few restaurants, stores, or hotels routinely post visible armed guards at their front door, whereas this precaution is not uncommon in other countries.
With that background in mind, the WSJ article contains some interesting numbers relative to the optimal level of credit card security.
First, consider the size of the potential dollar size:
But if the chip cards were used in the U.S., fraud losses could be halved, Aite Group estimates. U.S. merchants and banks had 2012 losses of $11.3 billion due to credit-card fraud, or 5 cents on every $100 spent, according to the Nilson Report, a payment-industry newsletter based in Carpinteria, Calif.
So, if that is correct, this obviously means that card issuers would save about $5.65 billion per year from adopting more secure technologies. So there is a strong incentive there to do so. According to the Washington Post, however, the amount saved from adopting more secure payments technologies is only $1.1 billion.
But this doesn’t include a whole bunch of excluded costs, especially the costs to consumers in the time, aggravation, and any out-of-pocket expense of dealing with security breaches and potential follow-on effects such as identity theft.
But there are costs on the other side as well:
A typical large issuer will spend about $1.30 to buy a chip card, compared with 10 cents for a traditional magnetic-stripe card, according to Aite Group.
And according to the article there are ”5.6 billion credit and debit cards in circulation in the U.S., only an estimated 15 million to 20 million are chip cards–issued mainly to people who travel overseas frequently.” So, holding all else constant, this would mean that the card issuers would have to replace some 5.4 billion cards at an increased cost of $1.20 per card for a one-time cost of $6.48 billion. So, in the short-run, this is a one-time $6.48 billion expenditure to save some $5.65 billion per year. And so it seems like it would be recovered in a year and a half. The Post story estimates the cost at $8 billion to switch over.
But according to this article by Bankrate, these the cost to produce and distribute a traditional magnetic card to a customer is “under $2.” By contrast, the “cost to make and distribute a chip card to a customer is between $15 and $20,” according to Andi Coleman, a member of the Accredited Standards Committee X9, “which determines the standards for the financial industry in the U.S.”
So, the numbers vary–a lot. But they are big numbers.
But that’s incomplete as well. First, that’s just the cost of issuing the cards. There is a whole other group of costs of upgrading all the technology to accept the cards. As Bankrate also notes:
And don’t expect retailers to be too eager to pay for a switch either, he says.
“You’re telling the merchant that they have to buy a new machine,” says Abagnale. “They’ve already purchased this one machine for $450. If you’re a Kroger store or a Safeway or someone, and you have thousands of these machines, they’re telling you now to go get a new machine.”
Because U.S. laws put most of the onus for paying for fraud on card issuers rather than retailers, says Abagnale, retailers have little incentive to make the steep investment required to implement the change.
So we are talking about huge network costs on all sides of the equation to transition from traditional magnetic stripe cards to chip and PIN. This isn’t to say that the cost and network effects are insurmountable. But it isn’t easy either.
But there is still another factor to consider–traditionally card issuers have essentially issued their cards for free to customers, in the sense that they do not charge you for actually producing, distributing, and activating the card for you. That makes sense if the cost of the card is relatively trivial (a dime or $2 or however we measure it). But what if the cost is higher, as with chip and PIN? Then it is going to be harder to easily absorb those costs.
Moreover, people often use cards for awhile and then switch or they lose their cards and they need to be physically replaced. According to Federal Reserve data that I summarize in this article, in 2009 16.5% of credit card users discarded their cards and 29% of prepaid card users did so. Customer churn is especially high for prepaid card users, who often use their cards for only a short period or for a specified purpose. Churn is lowest for debit cards, because they are linked to bank accounts. But if the cost of issuing cards increases this will mean that issuers will need to recoup these higher fees in some way or another. In fact, one reason why general-purpose prepaid cards cost more to use than other payment systems is because of the need to recoup these fixed costs across a shorter time period and lower transaction volume. If chip and PIN becomes standard, it would be foreseeable that card issuers will begin charging a fee for card issuance or certainly for replacement cards.
Finally, this whole issue of new technology adoption becomes much more complicated when you move from credit cards to debit and prepaid cards. In particular, although the Durbin Amendment to Dodd-Frank supposedly permits a price allowance for “fraud,” it is unclear whether it would permit recovery for the costs of a recall and reissue of new cards with the technology. As Judge Leon emphasized in his opinion invalidating the Federal Reserve’s cost-recovery rule, the Durbin Amendment ties allowable recovery costs very closely to the cost of particular transactions, and it is not clear to what extent it would permit recovery of increased costs from issuing new cards. Moreover, even if investments in card security are recoverable, they are capped under the Durbin Amendment at one cent per transaction under 12 CFR 235.4(a). Indeed, I argued some time ago that one unintended consequence of the Durbin Amendment became effective that it would likely discourage investments in card security and other features (such as processing speed) by making it more difficult for issuers to recoup those costs.
So in the wake of the Target debacle, there appears to be an emerging belief that merchants and issuers have dragged their feet on increasing card security. In fact, the issue is much more complicated than that and has to do not only with whether the benefits of the transition (in the U.S.) exceed the costs, but also who bears the transitional and going-concern costs. Not to mention a healthy dose of special-interest politics involving the Durbin Amendment.
This book, by journalist Charlie Savage was published six years ago, but I just finished it. It’s a well-written, well-researched critique of the George W. Bush’s Administration’s abuse of executive power based on often extremely dubious constitutional theories. If you’re interested in the subject matter, it’s well worth reading, despite its age. Of particular interest to many VC readers is that he traces the intellectual origins of the Bush Administration’s broad assertions of executive power back to (mostly) young conservative lawyers who worked in the Reagan Administration.
I have a few qualms about the book. Most important, for a book that’s all about executive power, you’d hope the author would master what the theory of the unitary executive means, and wouldn’t, as so many Bush Administration critics did, confuse that theory with other issues. Savage, unfortunately, fails that test repeatedly.
Savage also sometimes overstates his case, especially later in the book. For example, Savage notes that Bush issued signing statements indicating that the Administration would decline, for constitutional reasons, to enforce affirmative action preferences in government employment dictated by statute. Savage claims that Bush did so despite the Supreme Court’s holding in Grutter that affirmative actions preferences are constitutionally permissible. Savage indicts the administration for ignoring Grutter in favor of its own interpretation of the Constitution. In fact, Grutter only held that preferences in higher education are permissible. While some scholars think that Grutter’s logic can be applied to employment (I’m not one of them), Grutter didn’t purport to overrule cases unfavorable to preferences, in particular the Adarand case, banning preferences in government contracting. In this instance, I think Bush had the better of the constitutional argument based on Supreme Court precedent, but at the very least Savage significantly overstated the case that Bush was acting lawlessly.
And some errors crept in. For example, Savage writes that before 1937, a bloc of Supreme Court Justices “kept striking down minimum wage, work-week, and child-labor laws on the grounds that the Constitution has an unwritten right to contract for one’s labor one might see fit.” In fact, the Court never invalidated a child labor law on such grounds, and invalidated only one work-week law (Lochner), while upholding about a dozen other hours laws.
All of which to say that I recommend the book, but I spotted enough overstatements and errors that I would not rely on any particular factual statements in the book without independent verification.
UPDATE: Charlie Savage responds in the comments, and I respond to his response.
I think President Obama has been better to Israel than his critics acknowledge, and has been very pro-Israel by any standard except perhaps that of the prior two presidents, who were the most pro-Israel of any American presidents. But it’s hard to imagine him giving a speech like this:
“It is a Canadian tradition to stand for what is principled and just, regardless of whether it is convenient or popular,” he said to the Israeli parliament.
But “support today for the Jewish state of Israel is more than a moral imperative. It is also of strategic importance, also a matter of our own long-term interests,” he elaborated, praising Israel’s record on human rights and economic freedom. “Israel is the only country in the Middle East which has long anchored itself in the ideals of freedom, democracy and the rule of law. These are not mere notions. They are the things that, over time and against all odds, have proven to be the only ground in which human rights, political stability, and economic prosperity, may flourish. These values are not proprietary; they do not belong to one nation or one people. Nor are they a finite resource; on the contrary, the wider they are spread, the stronger they grow.”
“Likewise, when they are threatened anywhere, they are threatened everywhere,” Harper continued. And “what today threatens the societies that embrace such values and the progress they nurture? Those who scorn modernity, who loathe the liberty of others, and who hold the differences of peoples and cultures in contempt. Those who often begin by hating the Jews, but, history shows us, end up hating anyone who is not them. Those forces which have threatened the State of Israel every single day of its existence, and which, today, as 9-11 graphically showed us, threaten us all… And so, either we stand up for our values and our interests, here, in Israel, stand up for the existence of a free, democratic and distinctively Jewish state, or the retreat of our values and our interests in the world will begin.”
“Most disgracefully of all, some openly call Israel an apartheid state,” Harper said. “Think about that. Think about the twisted logic and outright malice behind that: A state, based on freedom, democracy and the rule of law, that was founded so Jews can flourish, as Jews, and seek shelter from the shadow of the worst racist experiment in history, that is condemned, and that condemnation is masked in the language of anti-racism. It is nothing short of sickening.”
UPDATE: Here is the full text of the speech.
Here are some speaking engagements I will be doing in the next two weeks:
Thursday, January 22: I will be delivering the annual Brennan Lecture at Oklahoma City University. My topic (picked because it interested the organizers) is “NFIB v. Sebelius and the Constitutional Debate Over Federalism.” Perhaps Justice William Brennan would turn over in his grave if he knew that I was giving this lecture. There are important areas of agreement between us, but probably not on this issue. On the other hand, he might already have turned over when co-blogger Randy Barnett delivered a previous lecture in the series in 2004 (the list of past speakers also includes many people closer to Brennan’s views).
Jan. 27, noon: University of Chicago Law School Federalist Society: I will be doing a talk on my book Democracy and Political Ignorance: Why Smaller Government is Smarter (with commentary by a U of Chicago professor, name TBA).
Jan. 28, noon: University of Illinois College of Law Federalist Society, Champaign, IL: “Democracy and Political Ignorance,” (with commentary by Illinois Prof. Jason Mazzone).
January 31, 2-3:30 PM: University of Texas School of Law, Austin Texas, Conference on “Is Democracy Desirable?” (with commentary by Yale Law School Professor Heather Gerken and University of Texas Professor Sanford Levinson).
I recently wrote a guest post for the Open Borders blog on migration and political freedom. The connection between the two is often ignored in debates over immigration policy. Here’s an excerpt:
There is widespread agreement that political freedom is a fundamental human right – that everyone is entitled to substantial freedom of choice in deciding what type of government policies they will live under. This is one of the main justifications for democracy. Voting enables the people to exercise political choice. But the principle of political freedom also has implications for international migration. The same logic that justifies giving people a right vote at the ballot box also implies that they should have a right to vote with their feet. This is particularly true of people living under authoritarian governments, where foot voting is often the only feasible way of exercising any political choice at all. But even for those fortunate enough to live under a democracy, the right to migrate elsewhere is an important aspect of political freedom. In both cases, obviously, the right to emigrate is of little value unless there is also a right to immigrate to some other nation….
Although the democracy has spread rapidly in recent decades, the majority of the world’s population still live in undemocratic states….
Residents of many authoritarian nations can exercise political freedom only through international migration or not at all. If developed democracies refuse admission to migrants from such countries, they effectively deprive them of their political freedom. They therefore become complicit in violating a fundamental human right. One can object that Westerners are not responsible for the lack of democracy in many Third World nations. But as philosopher Michael Huemer explains, immigration restrictions don’t merely leave in place poor conditions created by others. They involve the active use of force to prevent people from bettering their condition through voluntary transactions. If I forcibly prevent a starving man from purchasing food, I bear moral responsibility for his resulting death, even if it is not my fault that he was starving in the first place. Similarly, those who use force to prevent the exercise of political freedom through migration are partially responsible for would-be immigrants’ political oppression, even if they had nothing to do with establishing undemocratic governments in the migrants’ homelands.
For those who may be interested, the Open Borders website has possibly the most extensive compilation of arguments for and against immigration restrictions anywhere on the internet – ranging from the most mainstream to the very obscure.
Copernicus Publications, “the innovative open access publisher,” recently announced it was terminating one of its journals, Pattern Recognition in Physics due to concerns about the journal’s editorial practices. PRP was not even one year old. It seems the problems began when the journal’s editors agreed to a special issue on “Pattern in solar variability, their planetary origin and terrestrial impacts,” in which the issue’s editors had the temerity to “doubt the continued, even accelerated, warming as claimed by the IPCC project.”[*]According to the original explanation offered by Martin Rasmussen of Copernicus Publications, as reported by JoNova, the expression of this conclusion was a motivating factor for the “drastic decision” to terminate a journal. A letter to one of the editors also expressed “alarm” that a paper in PRP would question the IPCC.
If Copernicus indeed shuttered a journal because of disagreement with the conclusions expressed in a published paper, it would be quite shameful. But is that what happened? In a revised statement, Rasmussen notes “the editors selected the referees on a nepotistic basis, which we regard as malpractice in scientific publishing and not in accordance with our publication ethics we expect to be followed by the editors.” Whatever the merits of the papers at issue (and even some climate skeptics were unimpressed), it appears that PRP did violate accepted peer review norms in producing the special issue — as Anthony Watts details here — and concerns were raised about the journal last year. So it appears Copernicus did have sufficient grounds to reconsider its production of PRP. Given the wording of Rasmussen’s initial statement, however, questions remain about what prompted the publisher’s decision.
[* The IPCC is the Intergovernmental Panel on Climate Change, a UN-sponsored, intergovernmental entity that produces periodic reports on climate change.]
The post Was a Scientific Journal Canned for Disagreeing with the IPCC? appeared first on The Volokh Conspiracy.
It is perhaps worth mentioning that the two teams that made it to the Super Bowl on Sunday represent Colorado and Washington – the two states that recently legalized marijuana. If this somehow helps accelerate the recent decline in public support for the War on Drugs, it will almost be enough to offset my disappointment over the Patriots and Tom Brady losing to longtime rival Peyton Manning.
I just wanted to thank the many people who helped me with Obsidian Finance v. Cox:
I very much appreciate all that all these people have done to bring us to Friday’s win.
A Germantown mother and another woman accused of killing two toddlers and trying to kill two other children believed that they were releasing demonic spirits that had possessed the siblings, Montgomery County police said Saturday.
The two dead children — a boy, Norell Harris, 1, and a girl, Zyana Harris, 2 — were found Friday morning on their mother’s bed in a Germantown townhouse. Both had been stabbed repeatedly, police said. A sister, Taniya Harris, 5, and a brother, Martello Harris, 8, were seriously injured but are expected to survive.
Police said the women thought that they were performing an exorcism, although it did not appear they had followed any ritual….
Police identified the women as Zakieya L. Avery, 28, the mother, and Monifa Sanford, 21, who lived with the family. Each has been charged with two counts of first-degree murder and two counts of attempted first-degree murder….
Avery, who has received mental health counseling, moved twice in recent years — from Western Maryland to Ohio and then to Montgomery, according to a minister whose church she attended. A relative said she had separated from her husband. Writings on her Facebook page suggest that she believes in God and fears Satan….
In the townhouse community where Avery lived … at least one neighbor saw signs of possible trouble Thursday night. He spotted a child alone in a parked car and called 911, police said. As officers were on the way, two women came out of Avery’s townhouse, told the neighbor to mind his own business, took the child and went back into the home, police said.
When officers arrived, they knocked on Avery’s door but got no response. They didn’t hear or see anything suspicious and — after calling the county’s child welfare agency, where someone said the agency would follow up on Friday — they eventually left.
The Guardian (UK) reports:
A man who created a Facebook page poking fun at a revered Greek Orthodox monk has been sentenced to 10 months in prison in Greece after being found guilty of blasphemy…. Filippos Loizos, 28, … used a play on words to portray Father Paisios as a traditional pasta-based dish [pastitsio -EV] ….
Father Paisios, who was revered for his spiritual teachings and was said by some believers to have powers of prophecy, died in 1994.
Loizos had appealed against the ruling and would not be jailed before his case was heard by a higher court, Kleftodimos said.
Here’s what seems to be a copy of the Facebook page:
A reminder that blasphemy prosecutions are, unfortunately, not entirely a thing of the past in Europe. Thanks to Bill Poser for the pointer.
My thanks again to the VC for lending me the podium this week to talk about The Conscience of The Constitution. I hope you’ll join me—in person or online—on January 30, when I speak about the book at the Cato Institute’s book forum. Then I’ll be participating in February’s Cato Unbound to discuss the debate over “judicial activism” (which takes up chapter 5 of my book).
If you enjoy The Conscience of The Constitution, you might also be interested in my other books, The Right to Earn A Living: Economic Freedom And The Law, and Cornerstone of Liberty: Property Rights in 21st Century America (on sale now for only $7 at the Cato store).
Please also bookmark the Pacific Legal Foundation’s Liberty Blog to follow our litigation in defense of economic liberty and other constitutional rights across the country—including our ongoing challenges to Obamacare, subject of the cover article in this issue of Regulation. And my personal blog is Freespace, where I write on various subjects of interest. You can also follow me on Twitter @TimothySandefur.
I mentioned in a previous post that Progressivism has a curious definition of “democracy” that largely takes the form of unaccountable administrative agencies wielding enormous power to regulate people’s behavior. Perhaps the most extreme example of administrative power—the Independent Payment Advisory Board, or IPAB—is the subject of the latest constitutional challenge to Obamacare to be heard by a federal court of appeals. The Ninth Circuit will hear the case in a special session in Las Vegas on January 28.
IPAB is an agency created by Obamacare to regulate Medicare reimbursement rates. This group of bureaucrats is required by the statute to promulgate “recommendations” as to how to reduce Medicare costs—except that those “recommendations” go into effect automatically, without Congressional or Presidential approval. On the contrary, the law specifically forbids Congress or the President from altering these “recommendations” (except in one limited sense: Congress can replace those “recommendations” with new ones, so long as they achieve the same reductions as the originals.) And Obamacare even attempts to make IPAB immune to repeal. It allows Congress to abolish the agency only by passing a joint resolution during a narrow one-month window in 2017—and that resolution must receive the most extreme supermajority ever required in American law. Courts are prohibited from reviewing IPAB’s actions, also. In short, IPAB is an autonomous lawmaking body that operates without Presidential, Congressional, or Judicial checks or balances.*
Given its extreme degree of independence from popular control, it’s not surprising that opponents of the law labeled IPAB a “death panel.” The law’s defenders called that an exaggeration because the law expressly forbids IPAB from “rationing care.” But the law also doesn’t define what “rationing care” means—and since IPAB’s actions are immune from judicial review, it’s hard to see how courts could stop it from doing so. And cutting the Medicare reimbursement rate for some procedure or other to $0, as IPAB is free to do, would certainly qualify as rationing care. The statutory ban on rationing is simply not enforceable.
Considerations like these led one of the most prominent academic defenders of Obamacare, Prof. Timothy Jost, to call IPAB a group of “Platonic Guardians.” But as I point out in the amicus brief that Pacific Legal Foundation filed in support of the challenge to IPAB, the Constitution was written for the express purpose of ensuring that no Platonic Guardians would ever rule in America.
Sadly, IPAB is only the latest example of the increasing danger of administrative agency control over our lives. Although advocates of “judicial restraint” insist that various matters should be left to the “democratic process” instead of being determined by courts, the fact is that most of the laws under which we live our lives are not written by elected officials—they’re written by hired bureaucrats in administrative agencies that are purposely insulated against control by the voters. This allows elected officials to retain power and public prestige while avoiding responsibility for actual governing outcomes.
A candidate runs for office by saying he’s opposed to some Bad Thing or other. Since everyone’s against Bad Things, they reward his brave stand by electing him to office. He then oversees passage of the No Bad Things Act of 2014. This Act consists of two sentences: “1) There shall be no more Bad Things. 2) There is established a No Bad Things Agency which shall define what a Bad Thing is, investigate alleged Bad Things, and prosecute Bad Things.” And then the candidate proclaims victory and moves on to the next public controversy. Meanwhile, the bureaucrats get to work—combining executive, judicial, and legislative authority and acting with minimal oversight, no accountability, and every incentive to expand their own jurisdiction as far as possible. That’s why Hannah Arendt called bureaucracy “rule by Nobody…tyranny without a tyrant.”
Remarkably, these autocratic agencies are not treated with skepticism by the courts, as one might expect if the will of the people were really such an important value. Instead, courts accord these agencies deference, on the grounds that the agencies are staffed by experts who can be trusted to make wise, informed decisions, and that the legislature—which has little incentive to do so—can rein in an agency that goes too far. It’s not just judicial deference to agency interpretations of statutes, either—it’s deference to their fact-finding. These layers of deference allow agencies to subvert the ordinary legal process, since agencies are allowed to base their factual findings on speculation, guesswork, and hearsay, and courts often refuse even to allow a person to introduce contrary evidence when appealing an administrative decision. Meanwhile, agencies know that they can delay their decisions, or bring unjust economic and legal pressure, or play various political games, in order to twist the arms of citizens, who rarely have the resources to take on a giant bureaucracy, until they yield to the agency’s will.
The result of rule by administrative agency is the betrayal of the principles of limited, divided government on which the Constitution was founded—and the creation of an unaccountable, and unrestrained, ruler who presumes against individual liberty and requires the citizen to get permission from the state before he may act.
In Mistretta v. United States, Justice Antonin Scalia warned about the increasing danger of independent agencies. He warned that
[b]y reason of today’s decision, I anticipate that Congress will find delegation of its lawmaking powers much more attractive in the future. If rulemaking can be entirely unrelated to the exercise of judicial or executive powers, I foresee all manner of “expert” bodies, insulated from the political process, to which Congress will delegate various portions of its lawmaking responsibility. How tempting to create an expert Medical Commission (mostly M.D.’s, with perhaps a few Ph.D.’s in moral philosophy) to dispose of such thorny, “no-win” political issues as the withholding of life-support systems in federally funded hospitals, or the use of fetal tissue for research. This is an undemocratic precedent that we set….
*–As President Obama has not made any appointments to IPAB (knowing they wouldn’t get confirmed), the statute provides that IPAB’s powers will instead be vested not in a group of bureaucrats, but in the hands of a single bureaucrat: our capable Health & Human Services Secretary, Kathleen Sebelius, who recently said, and correctly, that she “doesn’t work for” the American people.
Disclosure: The case will be argued by my wife, Christina Sandefur, who contributed to this post.
The post Ninth Circuit to Hear Challenge to Obamacare’s “Platonic Guardians” January 28 appeared first on The Volokh Conspiracy.
I have a few upcoming talks that are open to the public and may be of interest to VC readers.
At SCOTUSblog, Lyle Denniston has an interesting post on an effort by lawyers who represented Fred Korematsu and other victims of the internment of Japanese-Americans during World War II to persuade the Obama administration to advocate the overruling of Korematsu v. United States, the notorious 1944 Supreme Court decision that upheld the forcible internment of over 100,000 Japanese-Americans during World War II [HT: GMU law student Rebecca Bucchieri]:
Lawyers who worked for years — ultimately successfully — to clear the names of U.S. citizens of Japanese ancestry who were convicted of violating government detention policy during World War II are trying to persuade the Obama administration to join in wiping off the books the Supreme Court rulings of that time, upholding those detentions. The most famous of those rulings – often reviled – was the 1944 decision in Korematsu v. United States.
The lawyers did so in a letter last week to U.S. Solicitor General Donald B. Verrilli, Jr., attempting to shape the government’s response to a new Supreme Court appeal that attacks the Korematsu decision. They want the government to formally repudiate that precedent, and tell the Court that it is no part of the justification today for detention of U.S. citizens during the war on terrorism.
The new case is Hedges v. Obama (docket 13-758), an attempt to revive a constitutional challenge to Congress’s recent support of presidential power to detain suspected terrorists….
While Congress was debating that measure, a controversy arose over how far it would go, if at all, to permit the detention without trial of U.S. citizens captured inside the U.S. In a compromise effort to resolve that dispute, Congress included a statement that now seems ambiguous about what was intended. In the Hedges case, the claim is that the statement can be read to rely upon the Korematsu decision as support for such detentions — something that those challengers want to have clearly refuted.
Here is the language of the compromise provision: “Authorities. — Nothing in this section shall be construed to affect existing law or authorities relating to the detention of United States citizens, lawful resident aliens of the United States, or any other persons who are captured or arrested in the United States.”
What concerns the challengers in the Hedges case, and the lawyers who wrote to the Solicitor General, is the phrase “existing law or authorities.” In the petition in the Supreme Court seeking review of the Second Circuit’s decision, this was included as one of the questions at issue: “To the extent that the Second Circuit opinion holds that Koremasu is among the ‘existing law and authorities’…that relate to military detention of citizens and legal residents, should Korematsu be overruled?”
Although Korematsu is one of the most widely reviled decisions in Supreme Court history, it has never been formally overruled, and therefore could potentially be included among the “existing law or authorities” referred to by the 2011 statute.
I discussed the case for overruling or repudiating Korematsu and the other WWII-era Japanese internment decisions in this post, where I also noted that such an overruling can potentially take several different possible forms. Overruling Korematsu would not necessarily deprive the president of all authority to detain suspected enemy combatants, spies, and terrorists without trial. What made that decision so egregious was not just that the Japanese-Americans were detained, but that the detention was undertaken purely on the basis of race without any individualized evidence of guilt, that it was on such a massive scale, and that it went on for over three years. In addition, there is extensive evidence that the internment decision was motivated at least as much by racism as by genuine security concerns. If all that isn’t enough to qualify as an unconstitutional abuse of wartime executive power, it’s difficult to imagine what is. We can legitimately debate the extent to which the executive should have the power to order less drastic forms of internment in wartime. But it is long past time for the Court to repudiate Korematsu.
The post Lawyers for Victims of WWII Internment of Japanese-Americans Urge Overruling of Korematsu appeared first on The Volokh Conspiracy.
Some years ago, Raleigh started a moving business in Lexington called Wildcat Moving. What he didn’t know was that if you want to start a moving company in Kentucky, the law requires you to basically get permission from all of the state’s existing moving companies.
The law, called a Certificate of Necessity or CON law, works this way: to run a moving company, you need a license. But when you apply for a license, the law requires you to notify all the state’s moving companies and give them the chance to file an objection. And when an objection is filed, you have to go to a hearing and prove to the government that “existing moving services are inadequate,” and that a new moving company would be consistent with the “present or future public convenience and necessity.” What do these phrases mean? Nobody really knows. In fact, the chief lawyer for the state’s Transportation Cabinet testified under oath that there are “no objective criteria” for deciding what services are “inadequate.” And it’s hard to imagine how bureaucrats can predict “future public convenience.”
But one thing is clear: the law gives bureaucrats almost unlimited power to decide who can and who cannot run a moving business. In the past five years, there have been 39 applications for new moving licenses. Of those, 19 were subjected to protests by one or more existing moving companies, giving a total of 114 protests. You can see an example of a protest here. Note that it doesn’t even suggest that the applicant is unqualified or unsafe or untrustworthy. That’s typical; in fact, since 2007, no protest has ever alleged that an applicant was a danger to the public. Instead, all of them have asserted as grounds for protest that the new company would “directly compet[e] with” the existing company and “result in a diminution of [its] revenues.”
It gets worse: since 2007, not a single protested application for a moving license has ever been granted. If a protest is filed, the Transportation Cabinet always rejects that application, without regard to the applicant’s qualifications. Take the case of Michael Ball. He’d been in the moving business for 35 years when he filed an application for his own license so he could start his own company. But existing companies protested that he would compete against them, so his application was denied in a written opinion that acknowledged he was safe and qualified—but a new moving company wasn’t “necessary.”
The pattern is different when a person applies for permission to buy a license from an existing moving company. There, the existing firms don’t face the same competitive threat, so they don’t file protests. Those applications are easily granted. In one case, an applicant asked for a new license, and was denied, in part because she’d operated illegally without a license before filing her application. But only a year and a half later, she reapplied for permission to buy a license from an existing company—and that was approved, in a decision that remarked favorably on her long experience in the moving industry!
It’s not just Kentucky. As I explain in an article in the next George Mason Civil Rights Law Journal, the pattern was the same in Missouri, where the Pacific Legal Foundation also challenged a CON law for moving companies. Between 2005 and 2010, there were 76 applications for moving licenses in Missouri: 17 sought authority to operate statewide, and all were subjected to one or more objections by existing firms, for a total of 106 interventions. The other 59 only wanted to operate either within a “commercial zone” (exempt from the licensing rules) or in an isolated or rural area, where they presented little competitive threat to existing firms—and none of them were ever protested.
All of the 106 objections were filed by existing moving companies that already had licenses, and all stated as the sole grounds for objection that allowing a new moving company would cause “diversion of traffic or revenue.” None ever alleged any danger to public. In 14 of the 17 protested cases, the applicant simply gave up—knowing how expensive and time-consuming it would be to try to prove a “public necessity” for a new moving company—and either withdrew their applications or asked for a smaller operating radius (in which cases, the existing companies always withdrew their objections, proving again that they were not concerned with public safety). Only three times did an applicant insist on seeking statewide authority. And of these, one decided to buy an existing license instead (all objections were then dropped); one was denied a license on the grounds that he would compete against existing movers—and the other was approved on the grounds that competition is a good thing!
When we challenged the constitutionality of the Missouri law, the legislature backed down and repealed it. The results were stark. Previously, the state Department of Transportation reported an average wait time of 154 days on a moving license application. After repeal, that dropped to 19 days.
That isn’t the worst of it. By far the nation’s most oppressive licensing law is Nevada’s Certificate of Necessity law. There, the law explicitly declares that it is the state’s policy to bar competition in the moving business, and requires bureaucrats to decide whether a new moving company would “foster sound economic conditions”–a term that the state’s chief transportation official has admitted he cannot define. (Our lawsuit challenging that law is currently pending in the Ninth Circuit.)
It ought to be so easy to run a moving business. You should be able to get a truck, paint the word MOVER on the side, and go from there. But Certificate of Public Convenience And Necessity laws—which were invented in the late 19th century to regulate railroads—now bar entry into a wide variety of industries: everything from taxis and limos to moving companies and even hospitals! These are normal, competitive industries that should not be restricted in this way. When they are, the result is to create cartels that raise prices for consumers and deprive hard-working entrepreneurs of their right to earn a living.
Remarkably, every time the Supreme Court has considered the constitutionality of laws like these, it has struck them down. And the Court has made clear that the government may only restrict entry into a trade or profession if its grounds for doing so are related to a person’s “fitness or capacity to practice the profession.” But Certificate of Necessity laws have no relationship at all to a person’s fitness or qualifications. Moreover, the Sixth Circuit—which governs Kentucky—has made clear that the Constitution forbids states from using licensing laws simply to protect established businesses against legitimate economic competition. Yet Kentucky laws explicitly forbid competition, simply to prop up existing firms. And not only do Kentucky bureaucrats deprive hard-working entrepreneurs like Raleigh Bruner of their right to earn a living—but while his federal civil rights lawsuit was going forward, they tried to shut down Raleigh’s business by suing him in state court! Fortunately, the federal judge put a stop to that. Here’s hoping the courts also put a stop to the Bluegrass State’s unconstitutional favoritism.
The post Kentucky’s War On The Little Guy…And Nevada’s…and Missouri’s… appeared first on The Volokh Conspiracy.
The justices Friday agreed to decide when searching a cellphone requires a warrant—the very kind of evidence that Los Angeles County sheriff’s deputies believe could link the “Believe” singer to the egging of a neighbor’s house.
Deputies searched Mr. Bieber’s Calabasas, Calif., house on Tuesday and seized his iPhone, among other items. The device could contain photos or video related to the egging, authorities think.
But Sgt. Ernie Masson, reached at the sheriff’s Malibu/Lost Hills station, said that while deputies had a search warrant for the Bieber house, he could not say whether it specifically covered the phone.
Progressive constitutional doctrine underwent some interesting changes in the middle of the twentieth century. One was the return of liberty-based concerns in jurisprudence, and the repudiation of some of the more extreme Progressive democracy-based legal decisions. This is most notable in West Virginia Bd. of Ed. v. Barnette, which held that school children could not be compelled to salute the flag, and overruled Minersville School District v. Gobitis only three years after the earlier decision had allowed schools to require this. Then in cases like Griswold, the Court recognized a right to privacy which ultimately barred the state from intruding into the bedroom. Justifying this right to privacy was difficult for Progressives, since doing so ran counter to democracy. Witness the fight between Justices Douglas and Black in Griswold. Black rightly argues that Douglas is reviving Lochner, but Douglas tries weakly to evade that accusation by taking shelter in weird language of “emanations” and “penumbras.” But the trend had begun of liberal justices reinjecting liberty considerations into some aspects of their jurisprudence, ultimately a healthy development, whatever its shortcomings.
What’s more interesting to me is how conservatives responded by making the Progressive theory of judicial restraint their own. They saw decisions like Griswold as disruptive to traditional values and social structures, and as rooted in abstract conceptions of justice of which good Burkean gradualists are always suspicious. But that gradualism combined with the primacy of democracy meant moral relativism.
Chief Justice William Rehnquist, for example, argued that there is “no basis other than the individual conscience of the citizen that may serve as a platform for the launching of moral judgments,” and “no conceivable way in which I can logically demonstrate to you that the judgments of my conscience are superior to the judgments of your conscience, and vice versa.” This meant that when the majority enacts laws, it aggregates the people’s subjective preferences—which then become both morally right and legally valid. “The laws that emerge after a typical political struggle in which various individual value judgments are debated,” he wrote, “take on a form of moral goodness because they have been enacted into positive law.” But it is only “the fact of their enactment that gives them whatever moral claim they have upon us…not any independent virtue they may have.”
Note how this reverses the principles of the Declaration of Independence. The Declaration holds that there are moral truths rooted in universal human nature; these are not matters of choice any more than are the laws of economics or the rules of a healthy diet—lawmakers are confined within them, and the laws they make take on a form of goodness only if they consist with those principles. The fact of their enactment is actually essentially irrelevant to the moral claim they have upon us, because a command is not, and cannot be, normative. (A command to do a wrong thing, for instance, does not thereby cease to be a command—whereas a purported moral rule to do a wrong thing ceases thereby to be a moral rule.) Yet while the Declaration provides that states may only do things “which Independent States may of right do,” Rehnquist’s formulation reverses this: the will of the majority is not only presumptively valid, but the very definition and source of morality; it creates moral law, so that states determine what individuals may, of right, do.
Probably the most influential conservative critic of judicial activism was Robert Bork, who explicitly denounced the Declaration and wholeheartedly embraced the Progressive critique of the judiciary in The Tempting of America. The Constitution’s “Madisonian system,” he claimed, provides that “in wide areas of life majorities are entitled to rule, if they wish, simply because they are majorities.” This was, of course, the exact reverse of Madison’s actual beliefs; Madison held that nobody is ever “entitled” to rule—and certainly not on account merely of them being majorities. Instead, rulers are authorized to rule, and only within the preexisting rights of individuals.
But while Bork claimed to recognize that courts have a duty to protect the individual against the majority, he provided no recipe for doing so, and he believed individual liberties should be strictly limited to those specified in the Bill of Rights. True, the Ninth Amendment declares that this is the wrong way to read the Constitution: it says that the fact that some rights are specified must not be interpreted to deny the existence or importance of other rights. But Bork tried to dodge the import of the Ninth Amendment by claiming, falsely, that there is “almost no history that would indicate what the ninth amendment was intended to accomplish,” and even likening that Amendment to an “inkblot.” Actually, Madison, Hamilton, and others wrote at length about what that Amendment meant, making clear that it was intended to ensure that nobody would think the Bill of Rights specifies all the rights that people possess.
Bork’s rejection of the idea that rights precede the state and limit its powers is rooted in moral agnosticism. “There is no principled way to decide that one man’s gratifications are more deserving of respect than another’s or that one form of gratification is more worthy of another,” he writes.
There is no way of deciding these matters other than by reference to some system of moral or ethical values that has no objective or intrinsic validity of its own and about which men can and do differ…. The issue of the community’s moral and ethical values, the issue of the degree of pain an activity causes, are matters concluded by the passage and enforcement of the laws in question. The judiciary has no role to play other than that of applying the statutes in a fair and impartial manner.
Thus, despite his reputation for moralistic conservatism, Bork was actually a relativist: the majority has unlimited freedom to adopt its (entirely subjective) moral preferences as law, and to impose those preferences on others. There is no way to judge the rightness or wrongness of the majority’s decisions in this matter, because the fact that a majority has adopted something just makes it right.
This argument was an updated version of the wolf’s view of political authority: legislative majorities have a basic right to do what they want to the citizen and the product of his labor, and those protections that are accorded to individual rights are only matters of legislative grace. In fact, Bork indignantly rejected Justice Harry Blackmun’s statement in his Bowers dissent that individual rights are protected because “a person belongs to himself and not others nor to society as a whole.” Such “extreme individualism,” Bork contended, would lead to a world in which “society may make no moral judgments that are translated into law.” Thomas Jefferson wrote that each of us is “made for ourselves,” and that it would be “slavery” to “suppose that a man had less right in himself than one of his neighbors or indeed all of them put together,” but in Bork’s view, the notion that each person belongs to himself and not to society as a whole “can hardly be taken seriously.” Nobody, he wrote, “should act on the principle that a ‘person belongs to himself and not to others.’ No citizen should take the view that no part of him belongs to ‘society as a whole.’”
The confusion between the state’s protection of rights on one hand, and its creation of “rights” (i.e., privileges) on the other, becomes clear when we ask whether the state creates, say, a woman’s right not to be raped. According to the positivist argument, a woman has no fundamental human right not to be raped; her so-called private or voluntary sphere is only a creation of law and hardly voluntary. Without the criminal laws against rape, or legal rules relating to marriage, divorce, and child-rearing, and the regulation of contraceptives, maternity care, or abortion, the relationship between men and women would not be what it now is. Indeed, it would be extremely difficult to figure out what that relationship might be, if it would exist in recognizable form at all. If a woman wants the right not to be raped, then according to this argument, she must advance and justify that right/privilege in a public forum. The state might give her that right by promulgating and enforcing rules against rape, but only if the lawmakers—who stand in a superior position to her, not in a position of equality—choose to create such a realm of freedom for her.
This example might appear extreme. But it is what Bork endorsed. In a democracy, he argued, the majority has a boundless power to outlaw whatever conduct it finds objectionable, including conduct that takes place in private, harms nobody, and is not witnessed or overheard by anyone else. This is because all law is simply the enforcement of the majority’s subjective and irrational prejudices. Just knowing that some activity is taking place and being “outraged” by it entitles the majority to proscribe that activity. Presumably, this would even include criminalizing private religious beliefs—because “[a] change in the moral environment…may surely be felt to be as harmful as the possibility of physical violence.” But it certainly would include rape, because laws relating to rape are also based on irrational emotional impulses: “[t]here is, indeed, no objection to forcible rape in the home…except a moral objection,” and morality has “no objective or intrinsic validity.”
Thus while Bork claimed to recognize a “moral distinction between forcible rape and consenting sexual activity between adults,” such a distinction was only his personal idiosyncrasy. There is “no objectively ‘correct’ hierarchy” of ethical values, and therefore “no way to decide” whether “sexual gratification [is] more worthy than moral gratification.” So we must “put such issues to a vote,” and “the majority morality prevails.” That, of course, means that a woman’s right not to be raped is only a subjective preference—and one the majority may override at will.
So, notwithstanding Bork’s belief that there is a difference between rape and consensual sex, “the subject for discussion is not my morality…. If a majority of my fellow citizens decide that [rape and consensual sex], while not alike, are nevertheless similar enough so that both actions should be made criminal,” then one must comply with that decision regardless of one’s own opinion; “while I may disagree…it is in the polling booth that my moral views count.” Obviously it would follow from the same premises that the majority may also permit rape by revoking a woman’s rights/privileges. Women would then need to resort to the ballot box to request that protection—assuming the majority sees fit to give them the right/privilege to vote.
We see here the horrifying consequences that follow from the notion that rights are benefits created by the state. That contention empties the word “right” of any real content, and replaces it with a permission extended by the superior state to the inferior individual, when and how the state chooses.
The founding fathers were familiar with this argument, and they rejected it. John Locke, the intellectual progenitor of the American Revolution, is most famous for his Second Treatise of Civil Government, passages of which Jefferson paraphrased in the Declaration. But in his First Treatise, Locke had focused on refuting the arguments of Robert Filmer, a monarchist whose view of rights was remarkably similar to modern positivism. Filmer claimed that government owns citizens, and that it may give them rights or withhold rights from them whenever it sees fit. So, Locke asked in his rejoinder, can princes also eat their subjects? If we recognize that rights are not just government-created permissions, we also can recognize that there are limits on what government may justly do to us. But Rehnquist and Bork held that government comes first, and that it gives people freedom when it wills, and for its own purposes. Their argument, as Locke said, lies in a little compass, and it is this: that all government is absolute monarchy, and the ground they build on is this: that no man is born free.
Last July, Judge Boyce Martin announced his retirement from the U.S. Court of Appeals for the Sixth Circuit. Tonight, TPM reports that Martin made his decision “under a cloud of accusations that he had racked up nearly $140,000 in ‘questionable travel expenses.’”
The details came out in a decision filed by five members of a federal panel on judicial conduct. The decision was in response to a petition filed by Boyce in August asking that his name be kept confidential and that his case not be referred to the Justice Department. Both requests were denied. . . .
Before the investigation could go any further, according to Friday’s decision, Martin submitted his letter of resignation to President Obama. Because of that, the court investigators halted their inquiry and never reached a conclusion about the expenses. . . .
In its decision, the panel wrote that the court’s efforts to disclose Martin’s name and refer his case to the Justice Department’s Public Integrity Section were appropriate under federal rules.
UPDATE: A spokesperson for Judge Martin e-mails to note that Judge Martin had offered to repay all travel reimbursements he had received over the relevant period, not merely those that were in question. This is the source of the $138,500 figure. The spokesperson did not identify the value of those reimbursements that were in question, however. According to the ruling, Judge Martin offered to repay this amount in three installments between June and August 2013, but only the first two payments were ever received.
For those interested in more details on this case, here is yesterday’s ruling and a prior ruling in the matter. Former Sixth Circuit clerk Josh Blackman has also posted a handy timeline of relevant events.
SECOND UPDATE: According to Judge Martin’s spokesperson, he had sent a check to pay the third installment when it was due. As this payment appears not to have been received by the court, he has sent a new payment to cover the final installment.
The post Did Judge Martin Retire Because He Was Under Investigation? – UPDATED appeared first on The Volokh Conspiracy.
[UPDATE: Whoops, Jonathan beat me to it; I'm turning off comments, so people can post on that thread instead.]
So holds Autor v. Pritzker (D.C. Cir. Jan. 17, 2014), a very interesting D.C. Circuit decision just handed down today. (Congratulates to my Mayer Brown LLP colleagues Charles Rothfeld and Joseph Minta, who represent the plaintiffs.) An excerpt (one paragraph break added):
President Obama, seeking to reduce the “culture of special interest access,” directed executive agency heads to bar federally registered lobbyists from serving on advisory committees. Appellants, federally registered lobbyists wishing appointment to one type of advisory committee — Industry Trade Advisory Committees (ITACs) — challenge the constitutionality of the presidential ban. Because the ban requires Appellants to limit their exercise of a constitutional right — in this case, the First Amendment right to petition government — in order to qualify for a governmental benefit — in this case, ITAC membership — we reverse the district court’s premature dismissal of the complaint and remand for that court to determine in the first instance whether the government’s interest in excluding federally registered lobbyists from ITACs outweighs any impingement on Appellants’ constitutional rights.
Created by the Trade Act of 1974, which requires the President to “seek information and advice from representative elements of the private sector … with respect to” trade policy, ITACs play a significant role in shaping international trade agreements. The sixteen industry-specific ITACs run the gamut of industrial interests from Aerospace Equipment to Consumer Goods to Service and Financial Industries. In addition to meeting “at the call of the United States Trade Representative,” ITACs prepare reports for the President, Congress, and the Trade Representative on whether proposed trade agreements provide for “equity and reciprocity within” the committees’ sector. Although ITAC advice is non-binding, the Act requires the Trade Representative to “inform the advisory committees of significant departures from such advice or recommendations made.”
Unlike many advisory committees, ITACs exist for the very purpose of reflecting the viewpoints of private industry. According to the Trade Act, the “committees shall, insofar as is practicable, be representative of all industry, labor, agricultural, or service interests.” Applicants for ITAC membership must be sponsored by a firm or organization engaged in trade or trade policy. ITAC members serve in a “representative capacity presenting the views and interests of a U.S. entity or U.S. organization.” It should thus come as no surprise that[, for example,] the Aerospace Equipment ITAC includes representatives of Boeing, Pratt & Whitney, Gulfstream, General Electric, Lockheed Martin, and Bell Aerospace….
Although Congress created ITACs to represent the views of the private sector, President Obama directed “the heads of executive departments and agencies not to make any new appointments or reappointments of federally registered lobbyists to advisory committees.” In so directing, the President sought to further his commitment to change “the culture of special-interest access” that is furthered by lobbyists’ “service in privileged positions within the executive branch.” “My administration,” the President explained, “is committed to reducing the undue influence of special interests that for too long has shaped the national agenda and drowned out the voices of ordinary Americans.” Pursuant to the President’s directive, and setting the stage for this litigation, the Commerce Secretary and the Trade Representative prohibit federally registered lobbyists from serving on ITACs.
The court notes that lobbying is generally constitutionally protected by the Petition Clause, discusses the various precedents involved in the case, and concludes:
To sum up, then, Appellants have pled a viable First Amendment unconstitutional conditions claim. That is, they allege that the government has conditioned their eligibility for the valuable benefit of ITAC membership on their willingness to limit their First Amendment right to petition government.
But this does not end our inquiry. The Supreme Court has long sanctioned government burdens on public employees’ exercise of constitutional rights “that would be plainly unconstitutional if applied to the public at large.” Although ITAC service differs from public employment, the government’s interest in selecting its advisors implicates similar considerations that we believe may justify similar restrictions on individual rights. As the Supreme Court explained in Pickering v. Board of Education [a leading government-as-employer precedent], the “problem in [these cases] is to arrive at a balance between the interests of the [individual] … and the interest of the State.” And where, as here, the government imposes a “blanket” ban on protected activity, its “burden is greater” than in an ordinary Pickering case.
The government justifies the ban on the grounds that it “directly relates to the purposes and efficacy of the ITACs as advisers” by “enabl[ing] the government to listen to individuals who have experience in the industry but who are not registered lobbyists, and are thus not otherwise as actively engaged in the political and administrative process.” This rationale, Appellants respond, is “barely intelligible” because ITAC members “serve in a representative capacity.” … [G]iven that the issue is virtually unbriefed, that the district court dismissed the complaint pursuant to Rule 12(b)(6), and that the challenged ban represents a major presidential initiative, we believe the wisest course of action is to remand for the district court to develop a factual record and undertake the Pickering analysis in the first instance.
In so doing, the district court should ask the parties to focus on the justification for distinguishing, as the lobbyist ban does, between corporate employees (who may represent their employers on ITACs) and the registered lobbyists those same corporations retain (who may not). The court may also want to ask the government to explain how banning lobbyists from committees composed of representatives of the likes of Boeing and General Electric protects the “voices of ordinary Americans.”
As I said, a very interesting case, both to those who are interested in government-industry relations, and to those interested in the special First Amendment rules applicable to the government acting in a managerial capacity (such as with respect to its employees). Read the whole opinion.
The post Federal Ban on Lobbyists’ Service on Advisory Committees May Violate the First Amendment appeared first on The Volokh Conspiracy.