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The Man Who Sowed the Seeds of Puerto Rico’s Collapse by Lawrence W. Reed

Is there anything more tragically monotonous than a failing welfare state? From ancient Rome to modern Greece, the story is one of the most repetitive in history. It goes like this:

People increasingly decide they’d rather vote for a living than work for one. An academic and intellectual class, dependent on subsidies and anxious to command the economy, advises the people that this is a really good thing. Politicians cater to them with high-sounding rhetoric (“We’ll take care of you”) and low-balling promises (“We can afford it. It won’t cost much. We’ll just take it from the rich”).

Responsibility, self-reliance, and enterprise give way to an entitlement mentality. Power concentrates and corruption ensues. Taxes and debt rise. The government debases the money. Crisis leads to more government, which leads to more crisis. What was always bankrupt morally finally goes bankrupt economically. Goodbye economy, liberty, and often even civilization itself. The barbarians take over. What else is new?

Now it’s Puerto Rico’s turn.

The Commonwealth of Puerto Rico is a US territory in the northeastern Caribbean. Its governor, Alejandro García Padilla, startled the world back in June when he announced that the island cannot pay back its $72 billion public debt.

“The debt is not payable,” García Padilla said. “There is no other option. I would love to have an easier option. This is not politics; this is math.”

He called the situation a “death spiral.” Suddenly, millions of Americans were learning what a basket case the Puerto Rican economy has become. It is indeed a crisis but one that was, to an embarrassing extent, made right here in America.

It was foisted on Puerto Ricans by one lousy New Dealer in particular. His name was Rexford Guy Tugwell.

More on the egghead Tugwell in a moment, but let me bring everybody up to date on just how bad things are down there. Be sure to read to the end because there’s a silver lining in this very dark cloud.

Puerto Rico has been in a funk for a good while. Its stubbornly high, double-digit unemployment rate is more than twice that of the United States. In fact, it hasn’t been below 9.7 percent in 40 years.

The island’s debt is higher on a per capita basis than that of any US state and four times that of Detroit, which went bankrupt two years ago. Businesses are collapsing. People are fleeing (200,000 have left since 2005). Almost half of the island’s 3.7 million residents earn incomes under the US federal poverty line. Nearly 40 percent of all households get food stamps. Until recently, the retirement age for government school teachers was as low as 47, prompting underfunded pension fund crisis so endemic to welfare states. (The retirement age has lately been raised to at least 55 for current teachers, and 62 for new teachers.)

As Tyler Durden explains at ZeroHedge.com, policies imposed from Washington must shoulder a big part of the blame for this mess: the wizards on the Potomac encouraged debt and deficit spending, priced hundreds of thousands of Puerto Ricans out of entry-level jobs with a punishing minimum wage, taxed and regulated commerce and investment to a crawl, and showered the island with debilitating welfare. The place would be a showcase of government-induced prosperity except for one sticking point: government.

All of this has been decades in the making, which brings me to the character named Tugwell. I’ve long had a distaste for this pompous meddler. The more I learn about his role as Puerto Rico’s appointed governor (1941–1946), the more I’m ashamed that a US president was dumb enough to put him in charge of anything.

I first heard of Tugwell as an undergraduate economics major at Grove City College in the early 1970s. Fascinated by what my econ prof, Dr. Hans Sennholz, had said in class about America’s 22nd and 24th president, Grover Cleveland, I checked out a biography of him. It carried the imaginative title, GroverCleveland, and included a revealing subtitle, A Biography of the President Whose Uncompromising Honesty and Integrity Failed America in a Time of Crisis.

The author was Rexford Guy Tugwell, widely regarded as the most influential ideologue of economic planning during Roosevelt’s New Deal. The Cleveland terms were largely wasted opportunities, according to Tugwell, because Cleveland would not turn the economy into his personal plaything. If only he had trashed his honesty and integrity, Cleveland could have been the scientist and the rest of us the lab rats.

Tugwell was the Jonathan Gruber of his day. (Recall the smug academic who admitted that deception was employed to fool stupid Americans into supporting Obamacare.) He went straight from academia as a student (the Wharton School at U-Penn, then Columbia) to academia as a professor (University of Washington, American University in Paris, and Columbia University). His intellectual mentors were socialists like Upton Sinclair and Edward Bellamy. Woodrow Wilson’s wartime administration gave him his first real glimpse of the glorious fun of central planning, and he loved it even when it flopped.

In 1932, President-elect Franklin Roosevelt invited Professor Tugwell to join the first White House “brain trust.” These were the whiz kids — the social scientists and experimenters of the administration. Blessed with power and attention, they were ready to “transform” America and “plan” our way out of the Great Depression.

H.L. Mencken was less charitable in his description. He called them “an astonishing rabble of impudent nobodies,” “a gang of half-educated pedagogues, starry-eyed uplifters and other such sorry wizards.” Along with FDR, they “planned” the Depression into the longest slump in American history.

Tugwell loved to set up and run what came to be known as “boondoggles.” He was an architect of the Agricultural Adjustment Act and later director of its Agricultural Adjustment Administration (AAA), which taxed agricultural processors and used the revenue to destroy crops and cattle to raise prices. It was declared unconstitutional by the Supreme Court and ridiculously destructive by clear thinkers.

From its inception in 1935, he directed the Resettlement Administration (RA), which relocated the rural unemployed to new, planned communities in suburbs. Urban authority Jane Jacobs, in her classic The Death and Life of Great American Cities, showed that his program simply displaced people and ruined neighborhoods. The RA was also thrown out as unconstitutional. True to the statist stereotype, Tugwell learned nothing from either experience. “Planning” was his religion and he was going to be its high priest, come hell or high water.

In 1936, Tugwell left Washington and two years later showed up as the first director of the New York City Planning Commission. He tried retroactively to enforce nonconforming land uses with almost no legal or public support. He proved too much an ideologue even for the polarizing Robert Moses, who killed Tugwell’s 50-year, pie-in-the-sky master plan for public housing.

Now let’s get back to Puerto Rico.

By 1941, Rexford Guy Tugwell had behind him a 20-year career of pontificating for big government and managing expensive government flops. Somehow that gave Franklin Roosevelt the idea of naming him governor of Puerto Rico. What Tugwell did for the mainland, he could now do for an island. Maybe this central planning stuff works better if you work small, right?

Nope.

So for five years, Professor Tugwell became Governor Tugwell. One of the first things he did was to create, with the legislature’s approval, the Puerto Rico Planning, Urbanization, and Zoning Board in 1942. If only he had done what John Copperthwaite did later in Hong Kong or what Ludwig Erhard did in postwar Germany or what inspired free marketers have done in freeing their cities, Puerto Rico might today be a beacon of liberty and prosperity. But Tugwell wanted to plan, plan, plan.

Pedro Serra is president of a new organization in Puerto Rico, the Alliance for the Protection of Liberties. He is a businessman from San Juan whose interest in free-market economics led him to work with the 2012 Ron Paul campaign. Looking back on the Tugwell period, he observes,

When President Roosevelt appointed Rexford G. Tugwell governor of Puerto Rico, it was in keeping with the same economic attitude that characterized the New Deal — that the government can solve an economy’s woes. Our government has since taken as an axiom that economic stagnation results from too little government, not too much. If this were the case, then today’s Puerto Rico should be paradise on earth. Instead our economy is depressed, our people jobless, and our government bankrupt.

Climate would seem to have blessed Puerto Rico for agricultural pursuits. Tugwell’s infinite wisdom suggested it should opt for industry instead, so he directed public policy against farming and toward manufacturing. He lobbied for all the aid and welfare from the mainland he could get. He set the tone for decades of a top-down welfare state. Joe Milligan, a colleague of Serra’s, is originally from Rochester, Michigan, and now brings his passion for free markets to San Juan, Puerto Rico, as the director of development for the Alliance for the Protection of Liberties. Here is how Milligan sums it up:

Governor Tugwell’s legacy is alive and apparent on the island. His tenure in office was characterized by central planning, government growth, and expansion of the welfare state. He stamped out the thriving sugar cane and coffee industries in favor of manufacturing. The result is that now we have neither. Today in Puerto Rico our government is the island’s largest employer and half of all residents require government financial assistance to subsist. In this sense Governor Tugwell truly left his mark.

Indeed, for many years after Governor Tugwell left Puerto Rico for academia back in the United States (where failure is celebrated as long as you worship the state and have good intentions), other New Dealers sojourned to the island to offer more of the same.

One of them was Hugh Barton, who had directed the US State Department’s Office of Strategic Services until he was fired for his knowledge of the communist affiliations of some of his top staff. Barton set up shop with the Puerto Rico Planning Board and the Office of Economic Research. If you had a college degree and a penchant for planning the economy of other people, you could get a government job in Puerto Rico in the 1950s and ’60s. Except for a brief retrenchment under one-term Governor Luis Fortuño, Puerto Rico has been run for decades as Tugwell first envisioned it, exacerbated by Washington’s poor policies to boot.

As I promised early in this article, there’s some good news in this bleak course of events. Puerto Rico now has a nascent libertarian movement and an organization devoted to spreading ideas of liberty as an antidote to the Tugwell legacy — the Alianza para la Protección de Libertades (Alliance for the Protection of Liberties) that Pedro Serra and Joe Milligan have launched.

The Alliance seeks to improve the lives of Puerto Ricans by building a new consensus around this proposition: a free society — not a centrally planned, politicized one — is a more prosperous and tolerant society. It works to build public support for smaller government and advise policy makers in choosing the proven path toward prosperity. The Alliance’s programs include developing a college campus lecture circuit, starting a YouTube channel specific to Puerto Rico’s issues, and disseminating compelling literature to legislators.

Never let a crisis go to waste, as the saying goes. Puerto Rico represents a unique opportunity to undo a painful, statist history. I hope readers will want to help.

To support the efforts of the Alliance, email Pedro Serra, the director, at pedro@protecciondelibertades.org.

“The curious task of economics,” Austrian economist F.A. Hayek taught us, “is to demonstrate to men how little they really know about what they imagine they can design.”

Rexford Guy Tugwell never understood that. With the help of the Alliance for the Protection of Liberties, Puerto Ricans may yet embrace Hayek’s wisdom and thereby shake the curse of Tugwell.


Lawrence W. Reed

Lawrence W. (“Larry”) Reed became president of FEE in 2008 after serving as chairman of its board of trustees in the 1990s and both writing and speaking for FEE since the late 1970s.

New York Orders Fast-Food Workers Replaced With Robots, Kiosks, Mobile Apps by Daniel Bier

Well, they didn’t quite put it that way — the New York Times‘ headline read “New York panel recommends $15 minimum wage for fast-food workers” — but it amounts to the same thing.

A panel appointed by Gov. Andrew M. Cuomo recommended on Wednesday that the minimum wage be raised for employees of fast ­food chain restaurants throughout the state to $15 an hour over the next few years. Wages would be raised faster in New York City than in the rest of the state to account for the higher cost of living there.

The panel’s recommendations, which are expected to be put into effect by an order of the state’s acting commissioner of labor, represent a major triumph for the advocates who have rallied burger­ flippers and fry cooks to demand pay that covers their basic needs.

They argued that taxpayers were subsidizing the workforces of some multinational corporations, like McDonald’s, that were not paying enough to keep their workers from relying on food stamps and other welfare benefits.

The $15 wage would represent a raise of more than 70 percent for workers earning the state’s current minimum wage of $8.75 an hour. Advocates for low­ wage workers said they believed the mandate would quickly spur raises for employees in other industries across the state, and a jubilant Mr. Cuomo predicted that other states would follow his lead.

In other news, I ordered my lunch yesterday on my computer and picked it up from Panera Bread without ever talking to a person. Last night, I picked up a couple groceries and paid through the self-checkout lane. This morning, I ordered a latte on my Starbucks app, and it was waiting for me when I walked into the store. I’m thinking of going to a burger joint later, where I’ll tap out my order on a kiosk.

Of course, it’s not fair to blame the minimum wage exclusively for the increasingly widespread automation of service jobs. Ordering kiosks and mobile apps are becoming more popular as the technology becomes better, cheaper, and more popular. That will probably happen no matter what the price of labor is.

But the fact that the cost of not using technology — that is, an employee — is about to cost 70% more will give the entire New York fast-food industry a great big shove away from labor and towards machines. And since chain restaurants don’t just operate in New York, the investment in automation will spill into stores everywhere.

Who wins from this?

Unions and more experienced workers, at least in the short-run. Labor unions’ entire purpose is to push up wages for their members, which makes them more expensive and less attractive compared to non-union workers.

But if unions — like, say, the Service Employees International Union — can make all workers more expensive, it makes union labor look relatively better by comparison. They won’t have to compete against cheaper labor anymore (which is to say, less-skilled workers won’t be allowed to compete by underbidding them).

Why arbitrarily single out “fast food” for the hike?

First, it makes the fight politically easier because the unions only have to defeat one industry lobby, instead of every business that uses unskilled labor. Second, the SEIU, in particular, represents a lot of food workers and has for years been pushing to unionize the big fast-food chains.

Who loses?

First, businesses, especially those operating on thin margins. They’ll be staring at a 70% increase in labor costs, already typically one of the biggest expenses for restaurants.

Less experienced workers — especially unskilled immigrants and young people starting out in the job market — will also lose. Businesses will try to offset some of higher cost of labor by cutting hours or jobs, delaying or cancelling expansions, replacing labor with capital where they can, and replacing less skilled with more skilled workers where they can’t.

They’ll also try to raise prices to cover costs, so consumers lose, too — especially those who eat fast-food more often, have tighter budgets, and have food as a bigger share of their budgets: i.e., low and lower-middle income families.

The net effect this will be less employment, less production, and less consumption. The economy and especially less-advantaged people will be worse off for it.

Miscellaneous arguments:

  • CEO pay: The Times awkwardly shoehorns in the fact that McDonald’s chief executive made $7.5 million last year, presumably trying to suggest that he’s the reason its other 420,000 employees are paid so little. In case you’re wondering, redistributing his salary comes out to 5 cents per employee per day. And then McDonald’s has no CEO. Hurray?
  • Corporate Subsidy: The Times also uncritically repeats the incoherent claim that taxpayers are somehow “subsidizing” these “multinational corporations” because they don’t pay “enough to keep their workers from relying on food stamps and other welfare benefits.” This makes no sense at all.
  • No Big Deal: The economists who claim that raising the minimum wage won’t hurt employment that much always couch it with the caveat that the increase be “small” or “moderate.” By no stretch of the imagination is hiking the wage floor to $15 “moderate.” In New York, it’s a 70% increase; in states with the federal minimum of $7.25, it’s 107% increase.

Antony Davies has charted the relationship between the minimum wage as a share of the average wage and the unemployment rates for different workers over time.

There’s no connection between the minimum wage and unemployment for the college-educated, but for those with high school or less, there’s a strong positive correlation:

Notice that the chart axis stops at 45% of the average hourly wage: in more than three decades, the minimum wage has never gone higher. Today, according to BLS data, a $15 minimum wage would be 60% of the average hourly wage — the highest relative minimum wage ever. We are literally going into uncharted territory.

Daniel Bier

Daniel Bier is the editor of Anything Peaceful. He writes on issues relating to science, civil liberties, and economic freedom.

Bernie Sanders Thinks the Middle Class Is Deteriorating: He’s Wrong! by Corey Iacono

Sen. Bernie Sanders is a democratic socialist running for President of the United States, and his passionate populist message has won him many admirers on the left. His willingness to push for radical progressive policies (such as top income tax rates of 90 percent), which mainstream Democrats are too moderate to embrace, is steadily eroding Hillary Clinton’s dominance of the Democratic primary field.

There are several “facts” upon which Sanders has built his campaign. Probably the most important is the claim that the American middle class has been declining for quite some time. According to Sanders’s website:

The long-term deterioration of the middle class, accelerated by the Wall Street crash of 2008, has not been pretty…

Since 1999, the median middle-class family has seen its income go down by almost $5,000 after adjusting for inflation, now earning less than it did 25 years ago.

The situation is clearly dire, and the right man for the momentous job of saving the middle class is Sen. Sanders. Well, at least that’s [the] message his campaign seeks to convey.

But what if the middle class isn’t becoming worse off over time? What if the American middle class is actually doing as well as ever? Would Sanders’s supporters be as likely to endorse his more radical ideas if they weren’t convinced that the middle was becoming poorer over time — and that only progressive policies could reverse this trend?

It’s worth taking the time to examine Sanders’s claim that the middle class is worse off now than in the past. He doesn’t cite a source for his statistic, but it seems to rely on looking at the median household income over time and adjusting for inflation using the Consumer Price Index (CPI).

This is a problematic methodology because it does not control for the well-known fact that the median household has itself grown smaller over time. Even if median income stayed the same over time, a decline in the number of people in the median household over time would lead to an increase in income per household member.

Additionally, Sanders’s statistic looks at income before taxes and transfers. Transfer payments and tax credits (like the Earned Income Tax Credit) make up a significant portion of income for many lower-income families. Not controlling for these factors understates their true economic well-being.

The figures cited by Sanders also fail to take into account the fact that a larger proportion of worker compensation comes in the form of non-cash benefits (such as health insurance) now than in the past.

According to research published by the National Tax Journal, “Broadening the income definition to post-tax, post-transfer, size-adjusted household cash income, middle class Americans are found to have made substantial gains,” amounting to a 37 percent increase in income over the 1979-2007 period.

Similarly, in 2014, the Congressional Budget Office found that adjusting for changing household size and looking at income after taxes and transfers, households in all income quintiles are much better off than they were a few decades ago.

The incomes of households in the three middle income quintiles grew 40 percent between 1979 and 2011. Somewhat surprisingly, given the histrionics about the state of America’s poor, income in households in the lowest quintile was 48 percent higher in 2011 than it was in 1979.

Research from the Federal Reserve Bank of Minneapolis comes to even more optimistic conclusions.

The Consumer Price Index is widely understood to overstate inflation — among other reasons, by failing to accurately account for improvements in quality and consumer substitutions for newer or cheaper goods — which is why the Federal Open Market Committee uses an alternative measurement for inflation, the Personal Consumption Expenditures (PCE) price index, which includes more comprehensive coverage of goods and services than the CPI.

If the CPI does, in fact, overstate the extent to which prices rise over time, then it also consequently understates the growth in real, inflation-adjusted incomes over time.

Indexing median household income (post taxes and transfers) to inflation using the PCE, rather than the CPI, and adjusting for the long-run decline in household size shows that median incomes have “increased by roughly 44 percent to 62 percent from 1976 to 2006.”

Moreover, the focus on statistical categories ignores what is happening at the level of individuals and households, which may move up or down the income ladder, through different income quintiles. And studies have consistently shown that this income mobility has not changed in decades.

While the rate of growth for some income categories in recent years has been sluggish, the claim that middle incomes are declining precipitously is false. Based on these findings, it seems appropriate to conclude that Sanders’ claim that there exists a “long-term deterioration of the middle class” is patently untrue.

Learn more about wage “stagnation” from former FEE president Don Boudreaux:

Corey Iacono

Corey Iacono is a student at the University of Rhode Island majoring in pharmaceutical science and minoring in economics.

SCOTUS Says You Can Be Sued for Unintentional Discrimination by Walter Olson

Stop calling it fair housing law. If it was ever a matter of fairness, it isn’t now.

Under today’s 5-4 Supreme Court holding in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, you can be held liable for housing discrimination whether or not you or anyone in your organization intended to discriminate.

Instead — to quote Justice Anthony Kennedy, who joined with the Court’s four liberals in a 5-4 majority — you might have been influenced by “unconscious prejudice” or “stereotyping” when you lent money or rented apartments or carried on appraisal or brokerage or planning functions.

What you did had “disparate impact” on some race or other legally protected group, and now you’re caught up in potentially ruinous litigation in which it’s up to you to show that you had a good reason for what you did and could not have arranged your actions in some other way that had less disparate impact.

The decision is quite broad in its implications. For example, in employment discrimination law, where disparate impact has long been legally established, it is increasingly legally dangerous to ask job applicants about criminal records, or carry out criminal background checks on them before a job offer, for fear of disparate impact.

Is it still safe to ask such questions of prospective tenants in your apartment building? Better ask your lawyer.

The case hinged on statutory interpretation, and as Justice Alito’s dissent makes clear, King v. Burwell wasn’t the only case decided today in which a majority mangled the clear meaning of a law’s text to get the result it wanted.

As Justice Ginsburg was frank enough to note at oral argument, “”If we’re going to be realistic about it…in 1968, when the Fair Housing Act passed, nobody knew anything about disparate impact.”

On the contrary, the law’s text specified that it was banning decisions taken “because of” race, and to find a loophole the majority was obliged to fall back on an incidental clause banning the making “unavailable” of a “dwelling,” which we are meant to believe snuck in a huge new area of liability.

As the majority stresses, many appeals courts did go along with a liberal interpretation. But the Executive Branch did not — in 1988 it took the position before the Court that the law did not permit disparate impact claims — while Congress hedged the issue in later enactments so as to keep all sides on board a compromise.

Despite ridiculous claims (like that in a Vox headline) that the Court today “saved” the Fair Housing Act or that a contrary decision would have “gutted” it, the great majority of litigation under the Act has been on disparate-treatment complaints (which, as Alito notes, can already use disparate impact as evidence of pretext.)

But the Obama administration, as I’ve documented elsewhere, has launched a huge effort to turn disparate-impact law into an engine of revolutionary changes in local government and housing practice, introducing, for example, such concepts as a local government obligation to pursue subsidized federal housing grants and to enact laws forcing private landlords to accept Section 8 tenants.

As the four dissenters make clear, a compliance and litigation nightmare now looms for many in real estate, finance, and local government as they try to dodge liability.

“No matter what [Texas] decides” in the case at hand on locating low-income housing, for example, one or another group “will be able to bring a disparate-impact case” based either on the theory that projects should be put in poorer areas (which enables building more of them) or in affluent areas (which will benefit some future residents).

If you have time to read only one bit of today’s opinion, read Justice Clarence Thomas’s separate dissent. Thomas brilliantly recounts the EEOC’s successful subversion of its own founding statute, culminating in the Court’s profoundly mistaken opinion in Griggs v. Duke Power, the employment case that founded disparate impact theory.

“We should drop the pretense that Griggs’ interpretation of Title VII was legitimate,” he writes. It’s a tour de force — and already being denounced vehemently on the Left.

This post first appeared at Cato.org.


Walter Olson

Walter Olson is a senior fellow at the Cato Institute’s Center for Constitutional Studies.

Real Hero Joe Louis: A Fighter on Many Fronts by Lawrence W. Reed

If you remember the famous 1938 fight for the world heavyweight boxing title between Detroit’s Joe Louis and Germany’s Max Schmeling, you’ve been around awhile. If you don’t, there’s a good chance you’ve heard about it from your father or grandfather. It was a rematch that Louis, known as the “Brown Bomber,” won in just 124 seconds.

Joe Louis was a hero not only for who and what he fought and beat but also for maintaining his integrity along the way. He dealt personally with poverty and racism. He overcame a speech impediment and the loss of his father at an early age. He took on the best boxers of his day. He battled the Nazis. He crossed swords with the Internal Revenue Service. When he died at age 66 in 1981, he was widely revered as a champion of character and was beloved by good people of every color.

The grandson of slaves, Joe Louis Barrow was born in 1914 in Lafayette, Alabama. He barely spoke until he was in the second grade. At age 12, he moved with his mother, his stepdad, and his seven siblings to Detroit after a scare from the Ku Klux Klan. To his credit, Joe never viewed the racism of a few as indicative of the many. He judged men and women the way he wanted them to judge him: namely, by what Martin Luther King would call “the content of their character.” In spite of his mother’s desire that he pursue either cabinetmaking or the violin, he showed an early penchant for pugilism. He dropped “Barrow” and became simply “Joe Louis” when he started competing in the ring as a teenager, apparently because he didn’t want his mom to know he was boxing. She soon found out, as did the rest of the world.

Louis judged men and women the way he wanted them to judge him.

The Great Depression was in full swing when Louis fought the first big match of his amateur career in 1932. He lost to a future Olympian. Undaunted, he went on to win all but 3 of his next 53 fights (43 were knockouts) and caught the attention of boxing promoters. He went pro in 1934.

One of the most famous dates in boxing history is June 22, 1937. That’s when Louis went up against heavyweight titleholder James Braddock, knocking him out in the eighth round. Americans black and white stayed up all night across the country in celebration, but the joy was especially high in black communities. Here’s how author Langston Hughes described it:

Each time Joe Louis won a fight in those depression years, even before he became champion, thousands of black Americans on relief or W.P.A. and poor, would throng out into the streets all across the land to march and cheer and yell and cry because of Joe’s one-man triumphs. No one else in the United States has ever had such an effect on Negro emotions — or on mine. I marched and cheered and yelled and cried, too.

Of 72 professional fights, Louis scored 57 knockouts and lost only three matches. For 12 years (1937–1949), he held the heavyweight championship. It was the longest stretch of winning titles in the sport’s history. His closely watched 1938 defeat of Max Schmeling embarrassed the Third Reich because it said to the world, “This Aryan superiority thing is nothing more than propaganda.”

A month after Pearl Harbor, Louis enlisted in the US Army and went off for basic training to a segregated cavalry unit at Fort Riley, Kansas. The army used him to cheer up the troops by sending him some 20,000 miles for 96 boxing matches in front of two million soldiers. He was eventually given the Legion of Merit for his “incalculable contribution to the general morale.” It was in the army that he befriended Jackie Robinson, the future major league baseball player. Louis persuaded a commanding officer to drop charges against Robinson for punching out a fellow soldier who called him the N-word.

Nobody who ever really knew Joe Louis, it seems, had an unkind word for him. Perhaps the worst ever said was actually spoken in jest, by fellow boxer Max Baer: “I define fear as standing across the ring from Joe Louis and knowing he wants to go home early.”

A very different fight that Louis waged is less well known than his boxing. It was with the Internal Revenue Service. As we do in our day, Louis had to contend in his with a president whose fingers itched to get into the pockets of wealthy Americans. I first learned of this story from historian Burton Folsom, author of the superb book New Deal or Raw Deal?

In 1935, President Roosevelt pushed Congress to raise the top income tax rate to 79 percent, then later to 90 percent during and after World War II. In the war years, Joe Louis donated money to military charities, but the complicated tax laws wouldn’t allow him to deduct those gifts. Although Louis saw almost none of the money he won in charity fights, the IRS credited the full amounts as taxable income paid to Louis. He had even voluntarily paid back to the city of Detroit all the money he and his family had received in welfare years before, but that counted for nothing with the feds.

Louis retired as heavyweight champion in 1949, but his tax debt was approaching $500,000. After an IRS ruling in 1950, the debt began accumulating interest each year. Louis felt compelled to come out of retirement in 1950 to fight Ezzard Charles, the new champion. After the fight, his mother begged him to stop but, he said, “she couldn’t understand how much money I owed…. The government wanted their money, and I had to try to get it to them.”

The next year, Louis fought Rocky Marciano and lost. The fight earned him $300,000. With a 90 percent tax rate on high incomes, what he had left was peanuts, but he gave it all to the government. When his mother died in 1953, the IRS swiped the $667 she left him in her will. With interest compounding, his debt by 1960 had soared to more than $1 million.

According to Folsom, “Louis refereed wrestling matches, made guest appearances on quiz shows and served as a greeter at Caesar’s Palace in Las Vegas — anything to bring in money” for the IRS.

The notorious mobster Frank Lucas (still living today at 85) was so disgusted with the IRS’s treatment of Louis that he once paid a $50,000 tax lien against the boxer. Even Max Schmeling came to the rescue, assisting with money when Louis was alive and then paying funeral expenses when the boxer died in 1981.

You may not think of Louis in connection with the game of golf, but he made an impact there as well. Golf was his longtime, personal hobby. In 1952, he became the first black American to play at a PGA Tour event. Just as Jackie Robinson broke the color barrier in baseball, Joe Louis broke it in golf. He cofounded The First Tee, a charity that introduces golf to underprivileged children. Today, his 68-year-old son, Joe Louis Barrow Jr., is the organization’s CEO.

Joe Louis, a decorated army veteran and world-class athlete, remained a symbol of black achievement in spite of his tax troubles, which finally came to an end when the IRS settled and the US government — to which he had given so much — finally got off his back.

When Louis died, President Reagan waived the rules to allow him to be buried in Arlington National Cemetery with full military honors. He was a man who fought on many fronts and emerged as a great example every time.

For further information, see:

Lawrence W. Reed

Lawrence W. (“Larry”) Reed became president of FEE in 2008 after serving as chairman of its board of trustees in the 1990s and both writing and speaking for FEE since the late 1970s.

EDITORS NOTE: Each week, Mr. Reed will relate the stories of people whose choices and actions make them heroes. See the table of contents for previous installments.

Inequality: The Rhetoric and Reality by James A. Dorn

The publication of Thomas Piketty’s bestseller Capital in the Twenty-First Century has led to widespread attention on the rising gap between rich and poor, and to populist calls for government to redistribute income and wealth.

Purveyors of that rhetoric, however, overlook the reality that when the state plays a major role in leveling differences in income and wealth, economic freedom is eroded. The problem is, economic freedom is the true engine of progress for all people.

Income and wealth are created in the process of discovering and expanding new markets. Innovation and entrepreneurship extend the range of choices open to people. And yet not everyone is equal in their contribution to this process. There are differences among people in their abilities, motivations, and entrepreneurial talent, not to mention their life circumstances.

Those differences are the basis of comparative advantage and the gains from voluntary exchanges on private free markets. Both rich and poor gain from free markets; trade is not a zero- or negative-sum game.

Attacking the rich, as if they are guilty of some crime, and calling for state action to bring about a “fairer” distribution of income and wealth leads to an ethos of envy — certainly not one that supports the foundations of abundance: private property, personal responsibility, and freedom.

In an open market system, people who create new products and services prosper, as do consumers. Entrepreneurs create wealth and choices. The role of the state should be to safeguard rights to property and let markets flourish. When state power trumps free markets, choices are narrowed and opportunities for wealth creation are lost.

Throughout history, governments have discriminated against the rich, ultimately harming the poor. Central planning should have taught us that replacing private entrepreneurs with government bureaucrats merely politicizes economic life and concentrates power; it does not widen choices or increase income mobility.

Peter Bauer, a pioneer in development economics, recognized early on that “in a modern open society, the accumulation of wealth, especially great wealth, normally results from activities which extend the choices of others.”

Government has the power to coerce, but private entrepreneurs must persuade consumers to buy their products and convince investors to support their vision. The process of “creative destruction,” as described by Joseph Schumpeter, means that dynastic wealth is often short-lived.

Bauer preferred to use the term “economic differences” rather than “economic inequality.” He did so because he thought the former would convey more meaning than the latter. The rhetoric of inequality fosters populism and even extremism in the quest for egalitarian outcomes. In contrast, speaking of differences recognizes reality and reminds us that “differences in readiness to utilize economic opportunities — willingness to innovate, to assume risk, to organize — are highly significant in explaining economic differences in open societies.”

What interested Bauer was how to increase the range of choices open to people, not how to use government to reduce differences in income and wealth. As Bauer reminded us,

Political power implies the ability of rulers forcibly to restrict the choices open to those they rule. Enforced reduction or removal of economic differences emerging from voluntary arrangements extends and intensifies the inequality of coercive power.

Equal freedom under a just rule of law and limited government doesn’t mean that everyone will be equal in their endowments, motivations, or aptitudes. Disallowing those differences, however, destroys the driving force behind wealth creation and poverty reduction. There is no better example than China.

Under Mao Zedong, private entrepreneurs were outlawed, as was private property, which is the foundation of free markets. Slogans such as “Strike hard against the slightest sign of private ownership” allowed little room for improving the plight of the poor. The establishment of communes during the “Great Leap Forward” (1958–1961) and the centralization of economic decision making led to the Great Famine, ended civil society, and imposed an iron fence around individualism while following a policy of forced egalitarianism.

In contrast, China’s paramount leader Deng Xiaoping allowed the resurgence of markets and opened China to the outside world. Now the largest trading nation in the world, China has demonstrated that economic liberalization is the best cure for broadening people’s choices and has allowed hundreds of millions of people to lift themselves out of poverty.

Deng’s slogan “To get rich is glorious” is in stark contrast to Mao’s leveling schemes. In 1978, and as recently as 2002, there were no Chinese billionaires; today there are 220. That change would not have been possible without the development of China as a trading nation.

There are now 536 billionaires in the United States and growing animosity against the “1 percent” — especially by those who were harmed by the Great Recession. Nevertheless, polls have shown that most Americans think economic growth is far more important than capping the incomes of the very rich or narrowing the income gap. Only 3 percent of those polled by CBS and the New York Times in January thought that economic inequality was the primary problem facing the nation. Most Americans are more concerned with income mobility — that is, moving up the income ladder — then with penalizing success.

Regardless, some politicians will use inflammatory rhetoric to make differences between rich and poor the focus of their campaigns in the presidential election season. In doing so, they should recognize the risks that government intervention in the creation and distribution of income and wealth pose for a free society and for all-around prosperity.

Government policies can widen the gap between rich and poor through corporate welfare, through unconventional monetary policy that penalizes savers while pumping up asset prices, and through minimum wage laws and other legislation that price low-skilled workers out of the market and thus impede income mobility.

A positive program designed to foster economic growth — and leave people free to choose — by lowering marginal tax rates on labor and capital, reducing costly regulations, slowing the growth of government, and normalizing monetary policy would be the best medicine to benefit both rich and poor.


James A. Dorn

James A. Dorn is vice president for monetary studies, editor of the Cato Journal, senior fellow, and director of Cato’s annual monetary conference.

The New Paganism? The Case against Pope Francis’s Green Encyclical by Max Borders

Paganism as a distinct and separate religion may perhaps be said to have died, although, driven out of the cities, it found refuge in the countryside, where it lingered long — and whence, indeed, its very name is derived. In a very real sense, however, it never died at all. It was only transformed and absorbed into Christianity. – James Westfall Thompson, An Introduction to Medieval Europe

In 2003, science-fiction writer Michael Crichton warned a San Francisco audience about the sacralization of the environment. Drawing an analogy between religion and environmentalism, Crichton said:

There’s an initial Eden, a paradise, a state of grace and unity with nature, there’s a fall from grace into a state of pollution as a result of eating from the tree of knowledge, and as a result of our actions there is a judgment day coming for us all.

We are all energy sinners, doomed to die, unless we seek salvation, which is now called sustainability. Sustainability is salvation in the church of the environment. Just as organic food is its communion, that pesticide-free wafer that the right people with the right beliefs, imbibe.

This analogy between religion and environmentalism is no longer a mere analogy.

Pope Francis, the highest authority in the Catholic Church — to whom many faithful look for spiritual guidance — has now fused church doctrine with environmental doctrine.

Let’s consider pieces of his recently released Encyclical Letter. One is reminded of a history in which the ideas of paganism (including the worship of nature) were incorporated into the growing medieval Church.

Excerpts from Pope Francis are shown in italics.


 

This sister protests the evil that we provoke, because of the irresponsible use and of the abuse of the goods that God has placed in her. We grew up thinking that we were its owners and rulers, allowed to plunder it.

Notice how Pope Francis turns the earth into a person. Sister. Mother. This kind of anthropomorphic trope is designed to make you think that, by virtue of driving your car, you’re also smacking your sibling. We’ve gone from “dominion over the animals and crawling things” to “plundering” our sister.

The violence that exists in the human heart wounded by sin is also manifested in the symptoms of the disease we feel in soil, water, air and in the living things. Therefore, among the most abandoned and ill treated poor we find our oppressed and devastated Earth, which “moans and suffers the pains of childbirth” [Romans 8:22].

First, if the state of the soil, water and air and living things is indeed symptomatic of our violent, sinful hearts, then the good news is that sin is on the decline. On every dimension the Pope names, the symptoms of environmental harm are getting better all the time — at least in our decadent capitalist country.

Do not take it on faith: here are data.

There are forms of pollution which affect people every day. The exposure to air pollutants produces a large spectrum of health effects, in particular on the most poor, and causes millions of premature deaths.

This will always be true to some degree, of course, but it’s less true than any time in human history. Pope Francis fails to acknowledge the tremendous gains humanity has made. For example, human life expectancy in the Paleolithic period (call this “Eden”) was 33 years. Life expectancy in the neolithic period was 20 years. Globally, life expectancy is now more than 68 years, and in the West, it is passing 79 years.

Yes, there is pollution, and, yes, the poor are affected by it. But the reason why the poor are affected most by air pollution is because they’re poor — and because they don’t have access to fossil fuel energy. Pope Francis never bothers to draw the connection between wealth and health because he thinks of both production and consumption as sinful. Brad Plumer writes at Vox,

About 3 billion people around the world — mostly in Africa and Asia, and mostly very poor — still cook and heat their homes by burning coal, charcoal, dung, wood, or plant residue in their homes. These homes often have poor ventilation, and the smoke can cause all sorts of respiratory diseases.

The wealthy people of the West, including Pope Francis, don’t suffer from this problem. That’s because liberal capitalist countries — i.e., those countries who “plunder” their sister earth — do not suffer from energy poverty. They do not suffer from inhaling fumes and particulate matter from burning dung becausethey are “sinful,” because they are capitalist.

See the problem? The Pope wants to have it both ways. He has confused the disease (unhealthy indoor air pollution) with the cure (cheap, clean, abundant and mass-produced energy from fossil fuels).

Add to that the pollution that affects all, caused by transportation, by industrial fumes, by the discharge of substances which contribute to the acidification of soil and water, by fertilizers, insecticides, fungicides, herbicides and toxic pesticides in general. The technology, which, connected to finance, claims to be the only solution to these problems, in fact is not capable of seeing the mystery of the multiple relationships which exist between things, and because of this, sometimes solves a problem by creating another.

It is strange to read admonitions from someone about the “multiple relationships that exist between things,” only to see him ignore those relationships in the same paragraph. Yes, humans often create problems by solving others, but that doesn’t mean we shouldn’t solve the problems. It just means we should solve the big problems and then work on the smaller ones.

Solving problems even as we discover different problems is an inherent part of the human condition. Our creativity and innovation and struggle to overcome the hand nature has dealt us is what makes us unique as a species.

Perhaps this is, for Pope Francis, some sort of Green Original Sin: “Thou shalt just deal with it.” But to the rest of us, it is the means by which we live happier, more comfortable lives here under the firmament.

The Earth, our home, seems to turn more and more into a huge garbage dump. In many places on the planet, the elderly remember with nostalgia the landscapes of the past, which now appear to be submerged in junk.

If you get your understanding of waste management and the environment from the movie Wall-E, then you might have the impression that we’re burying our sister in garbage. But as the guys over at EconPop have pointed out, land used for waste management is also governed by laws of supply and demand — which means entrepreneurs and innovators are finding better and less expensive ways to reuse, reduce, recycle, and manage our waste.

The industrial waste as well as the chemicals used in cities and fields can produce an effect of bio-accumulation in the bodies of the inhabitants of neighboring areas, which occurs even when the amount of a toxic element in a given place is low. Many times one takes action only when these produced irreversible effects on people’s health.

People, on net, are living longer and healthier than they ever have in the history of our species. What evidence does the Holy Father have that irreversible effects on people’s health rises to the level of an emergency that demands drafting in a papal encyclical? And why focus on the costs of “chemicals” without a single mention of overwhelming their human benefit? Indeed, which chemicals? This kind of sloppy thinking is rather unbecoming of someone who is (we are constantly reminded) a trained chemist.

Certain substances can have health effects, but so can failing to produce the life-enhancing goods in the first place. The answer is not to beg forgiveness for using soaps and plastics (or whatever), but to develop the institutions that prevent people and companies from imposing harmful costs onto others without taking responsibility for it.

The key is to consider the trade-offs that we will face no matter what, not to condemn and banish “impure” and unnatural substances from our lives.

These issues are intimately linked to the culture of waste, affecting so much the human beings left behind when the things turn quickly into trash.

Now we’re getting somewhere. This is where Pope Francis would like to add consumerism to production on the list of environmentally deadly sins.

Let us realize, for example, that most of the paper that is produced is thrown away and not recycled.

Heaven forfend! So would Pope Francis have us burn fossil fuels to go around and collect processed pulp? Is he unaware that demand for paper is what drivesthe supply of new trees? We aren’t running out of trees because we throw away paper. The Pope’s plan sounds like it could have been hatched in Berkeley, California, instead of Vatican City. And yet worlds have collided.

Michael Munger puts matters a little differently:

Mandatory recycling, by definition, takes material that would not be recycled voluntarily, diverts it from the waste stream, and handles it several times before using it again in a way that wastes resources.

The only explanation for this behavior that I can think of is a religious ceremony, a sacrifice of resources as a form of worship. I have no problem if people want to do that. As religions go, it is fairly benign. Butrequiring that religious sacrifice of resources is a violation of the constitutional separation of church and state.

Well, Professor Munger, this is the Pope we’re talking about.

We find it hard to admit that the operation of natural ecosystems is exemplary: plants synthesize nutrients that feed the herbivores; these in turn feed the carnivores, which provide a lot of organic waste, which give rise to a new generation of plants. In contrast, the industrial system, at the end of its cycle of production and consumption, has not developed the ability to absorb and reuse waste and slag.

Where is the evidence for this? These are matters of faith, indeed. All this time I thought the industrial system did have the ability to absorb and reuse waste: It’s called the system of prices, property, and profit/loss. The problem is not that such a “recycling” system doesn’t exist, it’s that corruption and government distorts the system of property, prices and profit/loss so that our economic ecosystem doesn’t operate as it should.

Indeed, when you have the Pope suggesting we burn gas to save glass, you have to wonder why the industrial system is so messed up. A system that “requires us to limit the use of non-renewable resources, to moderate consumption, to maximize the efficiency of the exploitation, to reuse and to recycle,” is called the market. And where it doesn’t exist is where you’ll find the worst instances of corruption and environmental degradation.

Then, of course, there’s climate change. In the interests of brevity I won’t quote the whole thing. But here’s the punchline, which might have been plucked straight from the IPCC Summary for Policymakers:

Climate change is a global problem with serious environmental, social, economic, distribution and policy implications, and make up one of the main current challenges for humanity. The heaviest impacts will probably fall in the coming decades upon developing countries.

This might be true. What the Holy Father fails to appreciate is that the heaviest impacts of policies designed to mitigate climate change will definitely fall upon developing countries. (That is, if the developing countries swear off cheap energy and embrace any sort of global climate treaty. If history is a guide, they most certainly will not.)

Meanwhile, the biggest benefits of burning more carbon-based fossil fuels will accrue the poorest billions on earth. The Pope should mention that if he really has their interests at heart or in mind.

But many symptoms indicate that these effects could get worse if we continue the current patterns of production and consumption.

“Patterns of production and consumption”? This is a euphemism for wealth creation. What is wealth except production and consumption of resources to further human need and desire?

His suggested cure for our dangerous patterns of wealth creation, of course, is good ole demand-side management. Wiser, more enlightened minds (like his, he hopes) will let you know which light bulbs to buy, what sort of car to drive, and which insolvent solar company they’ll “invest” your money in. You can even buy papal indulgences in the form of carbon credits. As the late Alexander Cockburn wrote,

The modern trade is as fantastical as the medieval one. … Devoid of any sustaining scientific basis, carbon trafficking is powered by guilt, credulity, cynicism and greed, just like the old indulgences, though at least the latter produced beautiful monuments.

But the most important thing to realize here is that the “current” patterns of production and consumption are never current. The earthquakes of innovation and gales of creative destruction blow through any such observed patterns. The price system, with its lightning-quick information distribution mechanism is far, far superior to any elites or energy cronies. And technological innovation, though we can’t predict just how, will likely someday take us as far away from today’s energy status quo, just as we have moved away from tallow, whale oil, and horse-drawn carriages.

The Pope disagrees with our rose-tinted techno-optimism, saying “some maintain at all costs the myth of progress and say that the ecological problems will be solved simply by new technical applications.”

The Pope sits on his golden throne and looks over the vast expanse of time and space — from hunter-gatherers running mammoths off cliffs to Americans running Teslas off electric power, from the USA in 1776 and 2015, from England before and after the Industrial Revolution, from Hong Kong and Hiroshima in 1945 to their glorious present — and sneers: progress is a myth, environmental problems can’t be fixed through innovation, production is destroying the earth, consumption is original sin.

Innovation is the wellspring of all progress. Policies to stop or undo innovation in energy, chemistry, industry, farming, and genetics are a way to put humanity in a bell jar, at best. At worst they will put some of us in the dark and others in early graves. They are truly fatal conceits.

And yet, the Pope has faith in policymakers to know just which year we should have gotten off the train of innovation. William F. Buckley famously said conservatives “stand athwart history, yelling ‘Stop!’” Greens are similar, except they’re yelling “Go back!”

Therefore it has become urgent and compelling to develop policies so that in the coming years the emission of carbon dioxide and other highly polluting gases is reduced drastically, for instance by replacing fossil fuels and by developing renewable energy sources.

I reflect again on the notion that this effort might be just another way of the Church embracing and extending a competitor religion. Then again, Pope Francis so often shows that he is a true and faithful green planner. In an unholy alliance with those who see the strategic benefit in absorbing environmentalism, the Holy Father has found the perfect way to restore the power of the Church over politics, economics, culture, and the state to its former glory.


Max Borders

Max Borders is the editor of the Freeman and director of content for FEE. He is also cofounder of the event experience Voice & Exit and author of Superwealth: Why we should stop worrying about the gap between rich and poor.


Daniel Bier

Daniel Bier is the editor of Anything Peaceful. He writes on issues relating to science, civil liberties, and economic freedom.

The Government Cannot And Will Not Solve Poverty

Jesus Christ stated that the poor you will always have amongst you.  However, he did not say that the problem of being poor could not be solved.  In fact, again He said “the poor you will always have amongst you.”   I interpret that to mean that despite viable solutions to poverty, people, especially progressive government officials eventually increase poverty, not decrease it.  America is still reeling from the awful effects of Lyndon Baines Johnson’s “War on Poverty.”  After $20 Trillion and counting spent to fight poverty with tax-payers dollars has resulted in a higher poverty rate now than in the 1960s.

I find it ironic when those who have never run a business, vie for political office and declare they will provide jobs.  I guess I will give Donald Trump a pass after saying “I will be the greatest jobs president God ever created” because he has provided both jobs and business opportunities for many thousands of people.  But government has never, ever created jobs without extracting monies from the wealth producing economy to pay for government jobs.  Many of which are wasteful duplications and don’t get me started on economy draining burdensome departments like the IRS, Department of Education, the Just us uh Justice Department and everyone’s favorite, the EPA all of which have the problems they were supposed to address, much worse.

Unfortunately, that practice has run most of America’s once gleaming major cities into the ground politically, morally, economically and economically.  Under liberal/progressive policies have been immorally manipulated to barely function under the false premise that American style inequality and unfairness entitles certain people to your hard earned money.  How long do you think that “We the People” can afford to allow ourselves to be seduced by the evil lies of the progressive game of lying to us and draining us of our earnings, while making it more difficult for the next generation to reach their vision of the American dream?

Because of the non-stop onslaught of lies, government school indoctrination, trillions of dollars of annual wasteful spending, then the many international trade agreements that always grant advantages to competitor nations America is in a heap of hurt.  Right now, our republic is on the brink of utter collapse.  Despite the obvious situation, government officials continue to methodically shrink the U.S. economy.  Of course, as a result there are more and more so-called dependents every single year.  The thirty plus million illegal immigrants, who President Obama, presidential candidate Hillary Clinton and California governor Jerry Brown want taxpayers to pay for everything the illegals desire and demand.  So now, some Americans are asking why should I bust my hump just to have my earnings taken away and given to illegal immigrant moochers?

The Congressional Budget Office recently warned that if congress does not soon reign in over spending, over taxation and I’ll throw in over regulations, our prosperous way of life will be negatively altered permanently in less than ten years.  By now it would seem that America would have learned from the five-plus decades of offensive progressive blunders foisted upon Detroit.  That once great city was per capita the wealthiest city in the world in 1962.  In November of that year progressive democrat Cavanaugh was elected as mayor.  The changes in policies he enacted were a dramatic departure from the previous republican administrations.  Almost immediately, there was a piling on of regulations and layers of taxes that set that city on a downward spiral she has yet to recover from.

Right now the percentage of working Americans is declining while the dependent class is rapidly multiplying.  What can be aptly described as the American welfare state is not shrinking as we are so often told by progressive democrats and rino republicans.  In fact the $1 Trillion a year fighting poverty fighting budget is a planned abysmal failure.  Most politicians, including president Obama know this.  I remember telling people, long before Obama was elected as president that he and many others want to do to America what was done to Detroit.  Unless some major changes are made in the very near future they will reach their goulash goal.

For example, federal and overall welfare spending is going up.  The federal government alone currently funds and operates 126 different welfare or anti-poverty programs.  Federal welfare spending alone totals more than $14,848 for every poor man, woman, and child in this country.  For a typical poor family of three, that amounts to more than $44,500.  Combined with state and local spending, the government spends $20,000  for every poor person in America, or $61,830 per poor family of three.

Yet government economic no growth policies such as draconian environmental regulations with our republic being the most taxed on earth, stymies the ability to create new economic opportunities, while chasing away or killing off existing businesses.  This brutal assault on America’s onetime prosperous economy only serves to threaten our blessed way of life, while whetting the appetites of our enemies both foreign and domestic who seek to overthrow us.

May America soon seek Providential guidance and reclaim the wisdom that made her the onetime envy of the world, before it is much too late.

Pope turns lobbyist?! Urges prayers for passage of UN climate treaty!

Pope Francis: ‘We believers cannot fail to ask God for a positive outcome to the present discussions, so that future generations will not have to suffer the effects of our ill-advised delays.’

Climate Depot’s Marc Morano comment: “No matter how nuanced and faithful to Catholic teachings this encyclical attempts to be, this passage where the Pope urges Catholics to ‘ask God for a positive outcome’ to the current UN global warming treaty process, will overpower every other message. The Pope is clearly endorsing a specific UN political climate treaty and essentially declaring he is on a mission from God to support a UN climate treaty. He even conjures up the comical concept of climate ‘tipping points’.”

Full text of  “LAUDATO SI’, mi’ Signore” – “Praise be to you, my Lord”.

Full Text of Paragraph 169 reprinted below:

169. “As far as the protection of biodiversity and issues related to desertification are concerned, progress has been far less significant. With regard to climate change, the advances have been regrettably few. Reducing greenhouse gases requires honesty, courage and responsibility, above all on the part of those countries which are more powerful and pollute the most. The Conference of the United Nations on Sustainable Development, “Rio+20” (Rio de Janeiro 2012), issued a wide-ranging but ineffectual outcome document. International negotiations cannot make significant progress due to positions taken by countries which place their national interests above the global common good. Those who will have to suffer the consequences of what we are trying to hide will not forget this failure of conscience and responsibility. Even as this Encyclical was being prepared, the debate was intensifying. We believers cannot fail to ask God for a positive outcome to the present discussions, so that future generations will not have to suffer the effects of our ill-advised delays.”

End excerpt.

Related Links:

Watch Now: Morano on Fox: ‘The Pope sounds a lot like Al Gore’ – There is an ‘unholy alliance’ between Vatican & UN

Marc Morano on Fox – Varney & Co. w/ Stuart Varney – June 17, 2015 – Watch here:

Morano: ‘The pope appears to be jumping on the bandwagon just as the evidence to weaken on man-made global warming…On all of these metrics, the case is weakening… It’s one thing for the Pope to have a scientific view that people can disagree on, but it’s completely another thing to time an encyclical and tie it in with a UN global warming treaty. The confusion is going to be Catholic Americans will ask themselves: ‘Hey do i have to support a UN political treaty on global warming? If I don’t , am I not a good catholic?’ It’s sowing confusion. But on the other hand, only 2% of this encyclical appears to be on climate. There are lot of other issues in it. The people touting the Pope’s view on climate are ignoring all of the other issues, life issues, overpopulation, that the Pope is against. The media loves it because he sounds a lot like Al Gore in this encyclical.’

Climate Skeptics Respond to Papal EncyclicalClimate Depot’s Marc Morano: “The Vatican’s partnering with the United Nations climate agenda is nothing short of an unholy alliance. The papal encyclical, no matter how nuanced it may read, will simply be used as a tool to support UN global warming ‘solutions’ that are at odds with most Catholic teachings on issues such as abortion, contraception, overpopulation, and helping the poor nations develop. The Vatican appears to be taking an unprecedented step by seemingly endorsing a specific UN climate treaty.

“Despite the media’s portrayal, this is ultimately not a climate change encyclical, as only 2% of the encyclical deals with climate at all. It is about much more than that, and the irony is that the people who are lauding the pope’s position on climate disagree with just about everything else he stands for. Climate activists who take the time to read the entire encyclical will learn about Catholic teaching on a host of moral issues that they probably have never been willing to listen to before.

“The climate activists are no doubt getting a PR boost from the pope’s entry into the climate debate. But ultimately, the pope’s views on climate science will do little to alter the opinions of Catholics about global warming. As a Catholic, it is my hope that the pope does not take the next step and essentially lobby for a UN climate treaty.”

Senator Inhofe: Pope’s Words Will Be Used To Justify ‘Largest’ Tax Increase In History

Catholic Herald: ‘Pope Francis is unduly pessimistic about the world’

Pope Francis: Time for a “bold cultural revolution” to confront climate change and ‘compulsive consumerism’

U.S. bishops taking Pope’s climate message to Capitol Hill for briefings with lawmakers

Pope Francis: Climate Change and Abortion are ‘Interrelated’

UN Climate Chief: Pope’s encyclical may have ‘major impact’ on climate talks

Boston Globe: US must take the lead on Pope Francis’ call on climate change

Watch Now: Morano in lively TV EWTN climate debate with enviro lobbyist: ‘The points she just made are demonstrably not true’

Climate Depot’s Mission to Rome – Persuading the The Vatican on ‘Climate Change’

Watch Now: Marc Morano’s Presentation in Rome to Vatican – April 28, 2015 – Watch video here: – Marc Morano, executive editor and chief correspondent at ClimateDepot.com, gives a presentation at The Heartland Institute’s climate science and policy event outside the Vatican on April 28, 2015. – Morano’s Powerpoint is here.

VATICAN HEAVIES SILENCE ‘CLIMATE HERETICS’ AT UN PAPAL SUMMIT IN ROME

Climate Skeptics In Rome Warn Pope Francis of ‘Unholy Alliance’ With UN Climate Agenda

Flashback: Vatican Climate Advisor ‘proposed creation of a CO2 budget for every person on planet!’

Pew Poll: Less than half of US Catholics believe climate change is mostly man-made – The survey by the Pew Research Center found 71 percent of U.S. Catholics believed the planet was getting warmer, but less than half, or 47 percent, attributed global warming to human causes. About 48 percent viewed it as a very serious problem. The numbers are similar to the U.S. population overall – 68 percent believe warming is happening, 45 percent say it is caused by humans, and 46 percent see it as a very serious problem.

Climate conversion? Al Gore: ‘I could become a Catholic because of this Pope’

Climate conversion? Al Gore: ‘I could become a Catholic because of this Pope’ – Gore: ‘Well I’ve said publicly in the last year, I was raised in the Southern Baptist tradition, I could become a Catholic because of this Pope. He is that inspiring to me.’

Against Eco-pessimism: Half a Century of False Bad News by Matt Ridley

Pope Francis’s new encyclical on the environment (Laudato Sii) warns of the coming environmental catastrophe (“unprecedented destruction of ecosystems, with serious consequences for all of us”).  It’s the latest entry in a long literary tradition of environmental doomsday warnings.

In contrast, Matt Ridley, bestselling author of GenomeThe Agile Gene, and The Rational Optimist, who also received the 2012 Julian Simon Memorial Award from the Competitive Enterprise Institute, says this outlook has proven wrong time again. This is the full text of his acceptance speech. Video is embedded below.

It is now 32 years, nearly a third of a century, since Julian Simon nailed his theses to the door of the eco-pessimist church by publishing his famous article in Science magazine: “Resources, Population, Environment: An Oversupply of False Bad News.”

It is also 40 years since The Limits to Growth and 50 years since Silent Spring, plenty long enough to reflect on whether the world has conformed to Malthusian pessimism or Simonian optimism.

Before I go on, I want to remind you just how viciously Simon was attacked for saying that he thought the bad news was being exaggerated and the good news downplayed.

Verbally at least Simon’s treatment was every bit as rough as Martin Luther’s. Simon was called an imbecile, a moron, silly, ignorant, a flat-earther, a member of the far right, a Marxist.

“Could the editors have found someone to review Simon’s manuscript who had to take off his shoes to count to 20?” said Paul Ehrlich.

Erhlich together with John Holdren then launched a blistering critique, accusing Simon of lying about electricity prices having fallen. It turned out they were basing their criticism on a typo in a table, as Simon discovered by calling the table’s author. To which Ehrlich replied: “what scientist would phone the author of a standard source to make sure there were no typos in a series of numbers?”

Answer: one who likes to get his facts right.

Yet for all the invective, his critics have never laid a glove on Julian Simon then or later. I cannot think of a single significant fact, data point or even prediction where he was eventually proved badly wrong. There may be a few trivia that went wrong, but the big things are all right. Read that 1980 article again today and you will see what I mean.

I want to draw a few lessons from Julian Simon’s battle with the Malthusian minotaur, and from my own foolhardy decision to follow in his footsteps – and those of Bjorn Lomborg, Ron Bailey, Indur Goklany, Ian Murray, Myron Ebell and others – into the labyrinth a couple of decades later.

Consider the words of the publisher’s summary of The Limits to Growth: “Will this be the world that your grandchildren will thank you for? A world where industrial production has sunk to zero. Where population has suffered a catastrophic decline. Where the air, sea, and land are polluted beyond redemption. Where civilization is a distant memory. This is the world that the computer forecasts.”

Again and again Simon was right and his critics were wrong.

Would it not be nice if just one of those people who called him names piped up and admitted it? We optimists have won every intellectual argument and yet we have made no difference at all. My daughter’s textbooks trot out the same old Malthusian dirge as mine did.

What makes it so hard to get the message across?

I think it boils down to five adjectives: ahistorical, finite, static, vested and complacent. The eco-pessimist view ignores history, misunderstands finiteness, thinks statically, has a vested interest in doom and is complacent about innovation.

People have very short memories. They are not just ignoring, but unaware of, the poor track record of eco-pessimists. For me, the fact that each of the scares I mentioned above was taken very seriously at the time, attracting the solemn endorsement of the great and the good, should prompt real skepticism about global warming claims today.

That’s what motivated me to start asking to see the actual evidence about climate change. When I did so I could not find one piece of data – as opposed to a model – that shows either unprecedented change or change is that is anywhere close to causing real harm.

Yet when I made this point to a climate scientist recently, he promptly and cheerily said that “the fact that people have been wrong before does not make them wrong this time,” as if this somehow settled the matter for good.

Second, it is enormously hard for people to grasp Simon’s argument that “Incredible as it may seem at first, the term ‘finite’ is not only inappropriate but downright misleading in the context of natural resources.”

He went on: “Because we find new lodes, invent better production methods and discover new substitutes, the ultimate constraint upon our capacity to enjoy unlimited raw materials at acceptable prices is knowledge.” This is a profoundly counterintuitive point.

Yet was there ever a better demonstration of this truth than the shale gas revolution? Shale gas was always there; but what made it a resource, as opposed to not a resource, was knowledge – the practical know-how developed by George Mitchell in Texas. This has transformed the energy picture of the world.

Besides, as I have noted elsewhere, it’s the renewable – infinite – resources that have a habit of running out: whales, white pine forests, buffalo. It’s a startling fact, but no non-renewable resource has yet come close to exhaustion, whereas lots of renewable ones have.

And by the way, have you noticed something about fossil fuels – we are the only creatures that use them. What this means is that when you use oil, coal or gas, you are not competing with other species. When you use timber, or crops or tide, or hydro or even wind, you are.

There is absolutely no doubt that the world’s policy of encouraging the use of bio-energy, whether in the form of timber or ethanol, is bad for wildlife – it competes with wildlife for land, or wood or food.

Imagine a world in which we relied on crops and wood for all our energy and then along comes somebody and says here’s this stuff underground that we can use instead, so we don’t have to steal the biosphere’s lunch.

Imagine no more. That’s precisely what did happen in the industrial revolution.

Third, the Malthusian view is fundamentally static. Julian Simon’s view is fundamentally dynamic. Again and again when I argue with greens I find that they simply do not grasp the reflexive nature of the world, the way in which prices cause the substitution of resources or the dynamic properties of ecosystems – the word equilibrium has no place in ecology.

Take malaria. The eco-pessimists insisted until recently that malaria must get worse in a warming 21st century world. But, as Paul Reiter kept telling them to no avail, this is nonsense. Malaria disappeared from North America, Russia and Europe and retreated dramatically in South America, Asia and Africa in the twentieth century even as the world warmed.

That’s not because the world got less congenial to mosquitoes. It’s because we moved indoors and drained the swamps and used DDT and malaria medications and so on. Human beings are a moving target. They adapt.

But, my fourth point, another reason Simon’s argument fell on stony ground is that so many people had and have a vested interest in doom. Though they hate to admit it, the environmental movement and the scientific community are vigorous, healthy, competitive, cut-throat, free markets in which corporate leviathans compete for donations, grants, subsidies and publicity. The best way of getting all three is to sound the alarm. If it bleeds it leads. Good news is no news.

Imagine how much money you would get if you put out an advert saying: “we now think climate change will be mild and slow, none the less please donate”. The sums concerned are truly staggering. Greenpeace and WWF, the General Motors and Exxon of the green movement, between them raise and spend a billion dollars a year globally. WWF spends $68m alone on educational propaganda. Frankly, Julian, Bjorn, Ron, Indur, Ian, Myron and I are spitting in the wind.

Yet, fifth, ironically, a further problem is complacency. The eco-pessimists are the Panglossians these days, for it is they who think the world will be fine without developing new technologies. Let’s not adopt GM food – let’s stick with pesticides.

Was there ever a more complacent doctrine than the precautionary principle: don’t try anything new until you are sure it is safe? As if the world were perfect. It is we eco-optimists, ironically, who are acutely aware of how miserable this world still is and how much better we could make it – indeed how precariously dependent we are on still inventing ever more new technologies.

I had a good example of this recently debating a climate alarmist. He insisted that the risk from increasing carbon dioxide was acute and that therefore we needed to drastically cut our emissions by 90 percent or so. In vain did I try to point out that drastically cutting emissions by 90% might do more harm to the poor and the rain forest than anything the emissions themselves might do. That we are taking chemotherapy for a cold, putting a tourniquet round our neck to stop a nosebleed.

My old employer, the Economist, is fond of a version of Pascal’s wager – namely that however small the risk of catastrophic climate change, the impact could be so huge that almost any cost is worth bearing to avert it. I have been trying to persuade them that the very same logic applies to emissions reduction.

However small is the risk that emissions reduction will lead to planetary devastation, almost any price is worth paying to prevent that, including the tiny risk that carbon emissions will destabilize the climate. Just look at Haiti to understand that getting rid of fossil fuels is a huge environmental risk.

That’s what I mean by complacency: complacently assuming that we can decarbonize the economy without severe ecological harm, complacently assuming that we can shut down world trade without starving the poor, that we can grow organic crops for seven billion people without destroying the rain forest.

Having paid homage to Julian Simon’s ideas, let me end by disagreeing with him on one thing. At least I think I am disagreeing with him, but I may be wrong.

He made the argument, which was extraordinary and repulsive to me when I first heard it as a young and orthodox eco-pessimist, that the more people in the world, the more invention. That people were brains as well as mouths, solutions as well as problems. Or as somebody once put it: why is the birth of a baby a cause for concern, while the birth of a calf is a cause for hope?

Now there is a version of this argument that – for some peculiar reason – is very popular among academics, namely that the more people there are, the greater the chance that one of them will be a genius, a scientific or technological Messiah.

Occasionally, Julian Simon sounds like he is in this camp. And if he were here today, — and by Zeus, I wish he were – I would try to persuade him that this is not the point, that what counts is not how many people there are but how well they are communicating. I would tell him about the new evidence from Paleolithic Tasmania, from Mesolithic Europe from the Neolithic Pacific, and from the internet today, that it’s trade and exchange that breeds innovation, through the meeting and mating of ideas.

That the lonely inspired genius is a myth, promulgated by Nobel prizes and the patent system. This means that stupid people are just as important as clever ones; that the collective intelligence that gives us incredible improvements in living standards depends on people’s ideas meeting and mating, more than on how many people there are. That’s why a little country like Athens or Genoa or Holland can suddenly lead the world. That’s why mobile telephony and the internet has no inventor, not even Al Gore.

Not surprisingly, academics don’t like this argument. They just can’t get their pointy heads around the idea that ordinary people drive innovation just by exchanging and specializing. I am sure Julian Simon got it, but I feel he was still flirting with the outlier theory instead.

The great human adventure has barely begun. The greenest thing we can do is innovate. The most sustainable thing we can do is change. The only limit is knowledge. Thank you Julian Simon for these insights.

2012 Julian L. Simon Memorial Award Dinner from CEI Video on Vimeo.

Anything Peaceful

Anything Peaceful is FEE’s new online ideas marketplace, hosting original and aggregate content from across the Web.

There Is No “Nationwide Crime Wave” — But Baltimore Is in Trouble by Daniel Bier

Heather McDonald’s Wall Street Journal op-ed “The New Nationwide Crime Wave” has exploded into the debate over police misconduct and criminal justice reform like a flash-bang grenade. It’s been discussed on numerous talk radio and cable news shows, and it’s been shared nearly 40,000 times on social media.

It’s a story engineered to go viral: It has a terrifying premise (crime everywhere is spiraling out of control!), a topical news hook (it’s all because of protesters!), a partisan bad guy (it’s all liberals’ fault!), and a weapons-grade dose of confirmation bias.

But there is no nationwide crime wave. It is completely manufactured by cherry picking data and misleading stats.

McDonald selects a handful of cities and quotes statistics to show that crime is exploding in “cities across America” this year:

In Baltimore… Gun violence is up more than 60% compared with this time last year, according to Baltimore police, with 32 shootings over Memorial Day weekend. May has been the most violent month the city has seen in 15 years.

In Milwaukee, homicides were up 180% by May 17 over the same period the previous year. Through April, shootings in St. Louis were up 39%, robberies 43%, and homicides 25%. …

Murders in Atlanta were up 32% as of mid-May. Shootings in Chicago had increased 24% and homicides 17%. Shootings and other violent felonies in Los Angeles had spiked by 25%; in New York, murder was up nearly 13%, and gun violence 7%.

Does this blizzard of numbers show a “nationwide crime wave”? No.

As John Lott points out at FoxNews.com,

Overall, the 15 largest cities have actually experienced a slight decrease in murders. There has been a 2 percent drop from the first five months of 2014 to the first five months of this year. Murder rates rose in eight cities and fell in seven. There is no nationwide murder wave.

Murder rates fell dramatically in some of these cities. Comparing this year’s January-to-May murder data with last year’s, we find that San Jose’s murder rate fell by a whopping 59 percent; Jacksonville’s fell by 31 percent; Indianapolis’ by 28 percent; San Antonio’s by 25 percent; and Los Angeles’ by 15 percent.

Even in the cities where murder is up compared to 2014, other categories of crime are down. New York, for instance, has had more murders but fewer burglaries and robberies. LA’s other violent crimes may be up, but murder is down.

She also implies that police are being attacked and killed more than ever: “Murders of officers jumped 89% in 2014, to 51 from 27.”

This 89% statistic is a deeply misleading view of the facts. Yes, 51 officers were murdered in 2014, compared to 27 in 2013. But 2013 was the safest year for police since World War II. It had the fewest shooting deaths for police since1887.

If you compare 2014’s 51 murders to other recent years, it’s not exceptional. In 2012, there were 48 officers killed. In 2011, it was 72. Over the last couple decades, the rate of police murders (and indeed work-related deaths from all causes) have fallen by nearly half, as have assault and injuries of police.

There’s another reason why McDonald quoted last year’s statistics for officer deaths when all of her other figures come from this year: officer shootings are down 27% so far this year.

Just like her other statistics, if she had given any context at all to the 89% figure, it wouldn’t have fit with her narrative of rising violence.

But never mind — as the author of this story, McDonald knows the cause of this fictitious trend: the “Ferguson Effect.”

The most plausible explanation of the current surge in lawlessness is the intense agitation against American police departments over the past nine months.

By her account, an “incessant drumbeat against the police” is behind the nonexistent “wave” of crime and violence against cops.

But this is also a myth. Public support for police has not waned. Gallup’s polling shows that confidence in law enforcement has been steady since the early 1990s.

That hasn’t changed, even after the protests against police abuse around the country. A Huffington Post/YouGov survey from April 2015 showed that 61% of Americans have a “great deal” or a “fair amount” of trust in their local department; 21% said “not very much,” and only 14% had “none.”

There is no national crime wave. Big cities are not facing a “surge of lawlessness.” There is no “war on cops.” The public hasn’t turned against the police.

So what’s going on in Baltimore? McDonald isn’t wrong about the spike in crime there. Baltimore City really is facing a breakdown in law and order.

Alex Tabarrok notes that police have made 40% fewer arrests since the start of the protests and the filing of criminal charges against six cops involved in Freddie Gray’s death.

As arrests have declined, crime has soared.

Tabarrok writes,

Not all arrests are good arrests, of course, but the strain is cutting policing across the board and the criminals are responding to incentives.

Fewer police mean more crime. As arrests have fallen, homicides, shootings, robberies and auto thefts have all spiked upwards.

Homicides, for example, have more than doubled from .53 a day on average before the unrest to 1.35 a day after (up to June 6, most recent data) – this is an unprecedented increase – and the highest homicide rate Baltimore has ever seen.

It’s not just murder. Shootings are up over 250%. Robberies are up 64%. Car thefts are up 42%.

It’s reasonable to assume that the increase in crime is at least partially related to the decline in police activity — criminals respond to incentives just like everyone else — but why aren’t police making arrests?

The answer might be found in the “De Blasio Effect.”

New York saw a similar “work stoppage” — that is, an unofficial strike — by the NYPD during its feud with Mayor De Blasio over his critical comments about the death of Eric Garner.

The NYPD retaliated: Arrests fell by 56% and criminal summonses fell by 92%, until the mayor made up with the department and police work resumed.

Kevin Drum speculates that BPD’s precipitous decline in arrests is a similar reprisal against the indictment of the officers involved in Freddie Gray’s death.

It’s certainly possible that has something to do with it, but officers appear to be genuinely spooked. About 130 cops were injured in the riots — that’s about 4.5% of the city’s officers down over the course of a week. That’s almost twice the rate of injury the average department sustains in a whole year.

Cops are understandably worried. Peter Moskos, a former BPD officer, says, “In Baltimore today, several police officers need to respond to situations where formerly one could do the job. This stretches resources and prevents proactive policing.”

There’s another issue: when crime spikes, police can be overwhelmed. Cases build up, and as new reports pour in, less and less time can be devoted to the old ones.

Most murders in Baltimore this year have gone unsolved. BPD’s clearance rate for homicides has fallen to just 40%, and the surge in killings can only make things worse.

Police Commissioner Anthony W. Batts said the rise in killings is “backlogging” investigators, just as the community has become less engaged with police, providing fewer tips.

Tabarrok is worried that a new equilibrium for crime could emerge in Baltimore. If crime continues to rise, clearance rates will fall further, detectives will get more backlogged, and it gets even harder to solve the next case. And if the probability of being caught and punished goes down, criminals will commit more crimes.

With luck the crime wave will subside quickly but the longer-term fear is that the increase in crime could push arrest and clearance rates down so far that the increase in crime becomes self-fulfilling. The higher crime rate itself generates the lower punishment that supports the higher crime rate

It’s possible that a temporary shift could push Baltimore into a permanently higher high-crime equilibrium. Once the high-crime equilibrium is entered it may be very difficult to exit without a lot of resources that Baltimore doesn’t have.

Some people see criminal justice reform as being anti-cop or “soft on crime,” but it’s not. Reform enables police to do a better job, which reduces crime — and that makes them and their citizens safer.

The best thing that Baltimore can hope for is that cops get back to work and start solving crimes. The best way to do that is for the community to engage with law enforcement.

Communities’ trust in police is key to fighting crime, and right now the BPD doesn’t have it. The Baltimore Sun has documented in excruciating detail the department’s history of corruption and excessive force, writing: “The perception that officers are violent can poison the relationship between residents and police.” And that leads to tips not given, 911 calls not dialed, and witnesses failing to come forward.

Real, credible reform, combined with accountability for misconduct and a strong commitment to community safety, is the best and probably only way to rebuild the relationship between citizen and cop and to turn crime around in Baltimore. The city and the police must embrace the task; they won’t accomplish it without each other.


Daniel Bier

Daniel Bier is the editor of Anything Peaceful. He writes on issues relating to science, civil liberties, and economic freedom.

Nevada Passes Universal School Choice by Max Borders

People are becoming more conscious about animal welfare. The livestock, they say, shouldn’t be confined to factory farms — five by five — in such horrible conditions. These beings should be given more freedom to roam and to develop in a more natural way. They’re treated as mere chattel for the assembly line. It’s inhumane to keep them like this, they say — day after day, often in deplorable conditions.

Unfortunately, only a minority extends this kind of consciousness to human children. But that minority is growing, apparently.

Nevada is changing everything. According to the NRO,

Nevada governor Brian Sandoval [recently] signed into law the nation’s first universal school-choice program. That in and of itself is groundbreaking: The state has created an option open to every single public-school student.

Even better, this option improves upon the traditional voucher model, coming in the form of an education savings account (ESA) that parents control and can use to fully customize their children’s education.

Yes, school choice has often advanced through the introduction of vouchers and charter schools — which remain some of the most important reforms for breaking up the government education monopoly.

But vouchers were, to quote researcher Matthew Ladner, “the rotary telephones of our movement — an awesome technology that did one amazing thing.” States such as Nevada (and Arizona, Florida, Mississippi, and Tennessee) have implemented the iPhone of choice programs. They “still do that one thing well, but they also do a lot of other things,” Ladner notes.

So what’s the deal? What do parents and kids actually get out of this?

As of next year, parents in Nevada can have 90 percent (100 percent for children with special needs and children from low-income families) of the funds that would have been spent on their child in their public school deposited into a restricted-use spending account. That amounts to between $5,100 and $5,700 annually, according to the Friedman Foundation for Educational Choice.

Those funds are deposited quarterly onto a debit card, which parents can use to pay for a variety of education-related services and products — things such as private-school tuition, online learning, special-education services and therapies, books, tutors, and dual-enrollment college courses.

It’s an à la carte education, and the menu of options will be as hearty as the supply-side response — which, as it is whenever markets replace monopolies, is likely to be robust.

This is big news. Not merely because it is the most ambitious school choice measure yet passed, but also because it represents a very real opportunity to demonstrate the power of competitive forces to unleash entrepreneurship and innovation in the service of children.

When we compare such a bold measure to the status quo, it’s pretty groundbreaking. So it’s probably not the time to quibble about the ideological purity of such a policy.

But we should seriously consider the concerns of those who advocate full privatization, as opposed to tax and voucher reform.

Here are three things to keep an eye on:

  1. Nevadans have to remain vigilant that this doesn’t become an entree for regulators and incumbent crony schools to jack up the prices and mute the very market forces that will liberate teachers and kids.
    In other words, you don’t want to see what happened to health care (and, to some extent, higher education) happen to private education, just as low-income students finally have a chance to escape government-run schools.
  2. Nevadans have to ensure that cost spirals don’t infect the system due to cross-subsidy. This is what happened to the university system.
  3. Nevadans have to capitalize on the wiggle room quickly, by fundamentally disrupting the education market in such a profound way that it wards off the specter of those who are waiting to seize it back from parents and children.
    This can have spillover effects into other states, too, due to innovation and copycat entrepreneurship. (It might also attract a lot of parents to the state.)

Such alterations to the status quo should be welcome news to those who understand that freedom is not some ideal sitting atop Mt. Utopia.

This is a weak joint and a leverage point to unleash creative, tech-propelled market forces in a space that has been dominated by politics and unions and stifling bureaucracy.

There will be battles ahead on this front. But Nevada’s change is certainly cause for cautious celebration.


Max Borders

Max Borders is the editor of the Freeman and director of content for FEE. He is also co-founder of the event experience Voice & Exit and author of Superwealth: Why we should stop worrying about the gap between rich and poor.

Real Heroes: A Good Samaritan in Cambodia by Lawrence W. Reed

In 30 years of traveling to 81 countries, I’ve come across some pretty nasty governments and some darn good people. To be fair, I should acknowledge that I’ve also encountered some rotten people and a half-decent government or two. The ghastliest of all worlds, of course, is when you have rotten people running nasty governments — a combination that is not in short supply.

Indeed, as Nobel laureate F.A. Hayek famously explained in The Road to Serfdom, the worst tend to rise to the top of all regimes — yet another reason to keep government small in the first place (as if we needed another reason).

“The unscrupulous and uninhibited,” wrote Hayek, “are likely to be more successful” in any society in which government dominates life and the economy. That’s precisely the kind of circumstance that elevates power over persuasion, force over cooperation, arrogance over humility, and corruption over honesty.

So I take special note when I encounter instances of good people working around, in spite of, in opposition to, or simply without a helping hand from government. In today’s dominant culture and climate, private initiative is frequently shortchanged or viewed with suspicion. In some quarters, “private” means unreliably compassionate, incorrigibly greedy, or hopelessly unplanned. We’re overdue for a celebration of the good character many people exhibit when there’s no fame or fortune in it, just the satisfaction that comes from knowing you’ve done the right thing.

Sadly, I can’t give you the name of the person I want to tell you about, and shame on me for that. I spent a grand total of perhaps an hour with him, in short increments as he gave me rides in his “cyclo” (or rickshaw) from one place to another in Phnom Penh, Cambodia, in August 1989. When I was about to fly home to the United States, I gave him something without ever expecting he would do with it what I asked. I wish I’d had the presence of mind to ask for his name and contact information because, in all the years since, I’ve wished for an opportunity to thank him.

I lived in Midland, Michigan, at the time. The area press, particularly theMidland Daily News and the Saginaw News, featured stories about my upcoming visit to Southeast Asia. Local doctors donated medical supplies for me to take to a hospital in the Cambodian capital. A woman named Sharon from a local church saw the news stories. She called me and explained that a few years before, her church had helped Cambodian families who escaped from the Khmer Rouge communists and resettled in mid-Michigan. The families had moved on to other locations in the United States but stayed in touch with the friends they had made in Midland.

Sharon told me that she sent copies of the news stories to her Cambodian friends her church had helped a few years before. Through Sharon, each family asked if I would take letters with cash enclosed to their desperately poor relatives in Cambodia. When they sent anything through the mail, it usually didn’t end up where it was supposed to, especially if cash was involved. I offered to do my best, with no guarantees.

The families who were in Phnom Penh would prove relatively easy to locate, but the last family was many miles away in Battambang. That would have involved a train ride, some personal risk, and a lot of time I didn’t have. If I couldn’t locate any of the families, I was advised not to bring the cash back home but to give it to any poor person. Finding poor Cambodians in 1989, after the savagery the nation endured under the butchery of the Khmer Rouge a decade before, was like looking for fish in an aquarium.

When I realized I wasn’t going to make it to Battambang, I approached a man in tattered clothes in the hotel lobby. I had seen him there a few times before. He always smiled and said hello, and spoke enough English to carry on some short conversations. I had a sense — intuition, perhaps — that he was a decent person.

“I have an envelope with a letter and $200 in it, intended for a very needy family in Battambang. Do you think you could get this to them?” I asked. He replied in the affirmative. “Keep $50 of it if you find them,” I instructed. We said goodbye. I assumed I would never hear anything of what became of either him or the money. I am pained to this day by the realization that without much thought, I had sold him short.

Back home in Michigan several months later, I received an excited phone call from Sharon. “The Cambodians in Virginia whose family in Battambang that last envelope was intended for just received a letter from their loved ones back home!” And then she read me a couple paragraphs from that letter. The final sentence read, “Thank you for the two hundred dollars!

That man whose name I’m unsure of and whose address I never secured had found his way to Battambang. Not only did he not keep the $50 I offered; he somehow had found a way to pay for the train ride himself. Does his act of honesty tug at your heartstrings? If it does, then you appreciate something the world desperately needs, something that is indispensably crucial to a free and moral society. The man I trusted the money to was poor in material wealth but rich in something more important. As I wrote in a recent book,

Ravaged by conflict, corruption and tyranny, the world is starving for people of character. Indeed, as much as anything, it is on this matter that the fate of individual liberty has always depended. A free society flourishes when people seek to be models of honor, honesty, and propriety at whatever the cost in material wealth, social status, or popularity. It descends into barbarism when they abandon what’s right in favor of self-gratification at the expense of others; when lying, cheating, or stealing are winked at instead of shunned.

If you want to be free, if you want to live in a free society, you must assign top priority to raising the caliber of your character and learning from those who already have it in spades. If you do not govern yourself, you will be governed.

Character means that there are no matters too small to handle the right way. It’s been said that your character is defined by what you do when no one is looking. Cutting corners because “it won’t matter much” or “no one will notice” still knocks your character down a notch and can easily become a slippery slope.

In 2016, I hope to visit Cambodia again. It will be my first time there since 1989. I have a slim lead on how I might find the man I gave that letter and $200 to. I know it’s a long shot. He may have moved away or passed on. But if I find him, it will be a thrill I’ll never forget.

I will embrace him as a brother and be sure he understands that in my book, he is one Real Hero.

For further information, see:


Lawrence W. Reed

Lawrence W. (“Larry”) Reed became president of FEE in 2008 after serving as chairman of its board of trustees in the 1990s and both writing and speaking for FEE since the late 1970s.

EDITORS NOTE: Each week, Mr. Reed will relate the stories of people whose choices and actions make them heroes. See the table of contents for previous installments.

Kelo: Politicians Stole Her Home for Private Developers and Started a Legal War by Ilya Somin

Most of my new book, The Grasping Handfocuses on the broader legal and political issues raised by the Supreme Court’s ruling in Kelo v. City of New London.

As explained in the first post in this series, I wrote the book primarily to address these big-picture issues.

But the story of how such a momentous case arose from unlikely origins is interesting in its own right.

The case originated with a development project in the Fort Trumbull area of New London, a small city in Connecticut. The neighborhood had fallen on difficult economic times in the 1990s after the closure of a naval research facility.

City officials and others hoped to revitalize it. The administration of Republican Governor John Rowland hoped to expand his political base by promoting development in New London; but to avoid having to work directly through the heavily Democratic city government, they helped resuscitate the long-moribund New London Development Corporation, a private nonprofit organization established to aid the city with development planning.

The NLDC produced a development plan that would revitalize Fort Trumbull by building housing, office space, and other facilities that would support a new headquarters that Pfizer, Inc. – a major pharmaceutical firm – had agreed to build nearby.

The development plan produced by the NLDC was in large part based on Pfizer’s requirements, which NLDC leaders (some of whom had close ties to Pfizer) were eager to meet. Pfizer would not be the new owner of the redeveloped land, but did expect to benefit from it.

I believe that NLDC leaders genuinely thought the plan would serve the public interest, as did the city and state officials who supported it. But it is also true, as one of those who worked on the plan put it, that Pfizer was the “10,000-pound gorilla” behind the project.

In order to implement the plan, the NLDC sought to acquire land belonging to some ninety different Fort Trumbull property owners.

In 2000, the New London city council authorized the NLDC to use eminent domain to condemn the land of those who refused to sell. Some defenders of the takings emphasize that all but seven of the owners sold “voluntarily.”

But as New London’s counsel Wesley Horton noted in oral argument before the Supreme Court, many did so because there was “always in the background the possibility of being able to condemn… that obviously facilitates a lot of voluntary sales.”

Moreover, owners who were reluctant to sell were subjected to considerable harassment, such as late night phone calls, dumping of waste on their property, and locking out tenants during cold winter weather.

Seven individuals and families, who between them owned fifteen residential properties, refused to sell despite the pressure. One was Susette Kelo, who wanted to hold on to her “little pink house” near the waterfront.

Some of the other families involved had deep roots in the community and did not want to be forced out. Wilhelmina Dery, who was in her eighties, had lived in the same house her whole life, and wished to continue living there during the time left to her.

The Cristofaro family were also strongly attached to their property, which they had purchased in the 1970s after their previous home had been condemned as part of an urban renewal project.

Susette Kelo’s famous “little pink house” in 2004 (photo by Isaac Reese)The resisting property owners tried to use the political process to prevent the takings. They managed to attract the support of a wide range of people in the community, including many on the political left who believed that it was wrong to forcibly expel people from their homes in order to promote commercial development.

But the Coalition to Save Fort Trumbull organized by the resisters and their allies had little, if any, hope of prevailing against the vastly more powerful forces arrayed against them.

The owners also tried to hire lawyers to fight the taking in court. But the lawyers they approached told them that there was little chance of success, and that – in any event – they could not afford the necessary prolonged legal battle.

The owners would almost certainly have had to capitulate, if not for the intervention of the Institute for Justice, a libertarian public interest law firm. IJ had long been interested in promoting stronger judicial enforcement of “public use” limitations on takings, and one of the members of the Coalition reached out for help.

As IJ lawyer Scott Bullock put it, the Fort Trumbull situation was an “ideal public interest case” for the Institute. Legally, the case was a good one because the city did not claim that the property in question was “blighted” or otherwise causing harm, thereby making it harder to prove that condemnation would genuinely benefit the public.

The case also featured sympathetic plaintiffs who were determined to fight for their rights. That made it likely that it would play well in the court of public opinion, and that it would not be settled before it could lead to a precedent-setting decision.

IJ hoped to achieve a ruling holding that takings that transfer property from one private individual to another for “economic development” do not serve a genuine “public use” and are therefore unconstitutional.

Thanks to IJ’s pro bono legal representation, the case went to trial. In 2002, a Connecticut trial court invalidated the condemnation of 11 of the 15 properties because the city and the NLDC did not have a clear enough plan of what they intended to do with the land.

Both sides appealed to the Connecticut Supreme Court, which upheld all fifteen takings in a close 4-3 decision. The majority ruled that almost any public benefit counts as a “public use” under the state and federal constitutions, and that courts must generally defer to government planners.

In a dissenting opinion, Justice Peter Zarella argued that “the constitutionality of condemnations undertaken for the purpose of private economic development depends not only on the professed goals of the development plan, but also on the prospect of their achievement.”

Presciently, he warned, “The record contains scant evidence to suggest that the predicted public benefit will be realized with any reasonable certainty,” and that it was “impossible to determine whether future development of the area… will even benefit the public at all.”

At this point, most legal commentators (myself included) believed that the case was almost certainly over. Few thought that the federal Supreme Court was going to take a public use case.

Supreme Court precedent dating back to 1954 held that virtually any possible public benefit counts as a public use, and the Court had unanimously reaffirmed that view in 1984. Most experts thought that the debate over the meaning of “public use” had been definitively settled.

But Scott Bullock and Dana Berliner – the IJ lawyers who represented the property owners – thought the conventional wisdom was wrong. And they were vindicated when the Supreme Court unexpectedly agreed to take the case. At that point, much new national media attention was focused on the New London condemnations.

Property law experts were well aware that longstanding Supreme Court precedent permitted the government to take property for almost any reason. But very few members of the general public knew that. Many ordinary Americans were shocked to learn a city could condemn homes and small businesses in order to promote private development – a reality they were unaware of until the publicity surrounding Kelo drove it home to them.

The Supreme Court upheld the takings in a 5-4 ruling. But the resulting controversy created a major political backlash and shattered the seeming consensus in favor of a broad approach to public use.

As for the City of New London, Justice Zarella and other skeptics turned out to be right. The NLDC’s flawed development plan fell through, as did a number of later efforts. Richard Palmer, one of the state supreme court justices who voted with the majority, later apologized to Susette Kelo, telling her he “would have voted differently” had he known what would happen.

Today, the condemned land still lies empty, though city officials now plan to build a memorial park honoring the victims of eminent domain, on the former site of Susette Kelo’s house.

The former site of Susette Kelo’s house – May 2014 (photo by Ilya Somin)

In the meantime, feral cats have been using the property. So far, at least, they have been the main local beneficiaries of the takings.

Feral cat near the former site of the Kelo house – March 2011 (photo by Jackson Kuhl)

(I should point out that the events in New London leading up to the Supreme Court case are the subject of an excellent earlier book by journalist Jeff Benedict. My book primarily focuses on the broader legal and policy issues raised by the Kelo case, which Benedict touched on only briefly. But I also cover the origins of the case in Chapter 1, and post-decision developments in New London in the conclusion.)

This post first appeared on the Volokh Conspiracy, where Ilya Somin is a frequent blogger.

You can buy The Grasping Hand on Amazon here.


Ilya Somin

Ilya Somin is Professor of Law at George Mason University School of Law. He blogs at the Volokh Conspiracy.

The Poor Need Affordable Energy by Iain Murray

Affordable energy is fundamental to what economist Deirdre McCloskey calls the “Great Fact” of the explosion of human welfare. It remains central to the reduction of absolute poverty. Yet, some Western governments are working to increase energy costs, purportedly to combat global warming.

What they are really combating is prosperity.

This is perverse and regressive. In America and Europe, energy takes up a much larger share of poor households’ budgets compared to other income brackets. For instance, a household with an annual income between $10,000 and $25,000 spends well over 10 percent of its budget on energy, according to the Bureau of Labor Statistics. And a January 2014 study for the American Coalition for Clean Coal Electricity found that “households earning $50,000 or less spend more on energy than on food, spend twice as much on energy as on health care, and spend more than twice as much on energy as on clothing.”

Increasing the cost of energy also harms people’s health. That’s because energy use is so fundamental to modern life that it can take precedence over other household expenses — including health care. The National Energy Assistance Directors’ Association found that an increase in energy costs led 30 percent of poor households to reduce purchases of food, 40 percent to go without medical care, and 33 percent to not fill a prescription.

The term “fuel poverty” describes households in cold climates that are not able to keep their home warm at an affordable cost. The primary causes of fuel poverty are low income, poor insulation, and high energy prices. Eight percent of households in Belgium, France, Spain, Italy, and the United Kingdom suffer from some form of fuel poverty, according to the European Union’s European Fuel Poverty and Energy Efficiency consortium project. In the UK, where there is much more data owing to an official designation of fuel poverty, a household is defined as fuel poor if it has to spend 10 percent of its income on essential energy services; 20 percent of households meet this definition.

Despite this, Western governments are pursuing policies to increase energy prices. President Obama said during his first election campaign that electricity rates from coal would “necessarily skyrocket” under his policies; this may finally come to pass under his EPA’s proposed Clean Power Plan. In Western Europe, energy costs have increased due to a combination of renewable energy subsidies and mandates, bans or moratoria on hydraulic fracturing (“fracking”), hostility to nuclear energy, and Russia’s control of natural gas supplies for much of the continent’s eastern half.

Despite the president’s policies, US energy markets have shown that innovation beats regulation every time. Even though huge swaths of American energy resources are locked up under untouchable federal lands, energy production has boomed over the past decade, thanks to the development of horizontal drilling and improved hydraulic fracturing techniques. These technological advances have led to lower electricity prices from natural gas. And subsurface property rights have benefited both urban and rural households through royalty payments for energy production on their land.

Moreover, as gas became more affordable, it led to a reduction in greenhouse gas emissions. Indeed, thanks to energy innovation, America met the emissions targets set for it in the Kyoto Protocol, without any need for burdensome laws and regulation — or for the Kyoto Protocol itself. Whatever you think of the need for carbon emissions reduction, energy innovation is achieving that goal.

This is all to the good, but more energy innovation is possible. They key is greater liberalization. America should free up federal lands to energy development, rather than pickle them in regulatory aspic. Europe could enjoy its own energy boom by approving hydraulic fracturing.

Reducing artificially high energy costs is the first step in tackling fuel poverty. In America, the market is alleviating the burden of energy costs on poor households, even as the government goes the wrong way. That shows us the way forward for tackling the much greater problem in the developing world.


Iain Murray

Iain Murray is vice president at the Competitive Enterprise Institute.