And so it begins:

In a move expected to swell federal prisons, Attorney General Jeff Sessions is scuttling an Obama administration policy to avoid charging nonviolent, less-serious drug offenders with long, mandatory-minimum sentences.

Mr. Sessions’s new guidelines revive a policy created under President George W. Bush that tasked federal prosecutors with charging “the most serious readily provable offense.”

Drug War critics have feared this moment ever since President Trump nominated Sessions; now it is a reality. The effects will be no different than after past escalations: more crime and corruption, with little or no impact on drug use.

Jeffrey Herbst, the President and CEO of the Newseum, recently released a report about free speech on campus. It is brief and well worth reading.

Herbst believes we are missing the major problem exposed by recent attacks on free speech at universities.

Systematic public opinion polling and anecdotal evidence suggests, however, that the real problem of free expression on college campuses is much deeper than episodic moments of censorship: With little comment, an alternate understanding of the First Amendment has emerged among young people that can be called “the right to non-offensive speech.” This perspective essentially carves out an exception to the right of free speech by trying to prevent expression that is seen as particularly offensive to an identifiable group, especially if that collective is defined in terms of race, ethnicity, gender, or sexual identity. The crisis is not one of the very occasional speaker thrown off campus, however regrettable that is; rather, it is a generation that increasingly censors itself and others, largely silently but sometimes through active protest.

Many people believe university students have adopted a “right to non-offensive speech” under the influence of their leftwing professors who are hostile to libertarian values. But Herbst shows that high school students and their teachers are equally doubtful about protecting speech that offends. He notes, “young adults come to campus with some fairly well-developed views that explain much of what subsequently occurs as they confront challenging speech.”

Jeffrey Herbst notes that young people support free speech in theory but not, as we have seen with Murray and others, in particular cases. In the past polls showed that while the First Amendment in the abstract received near unanimous support, its applications to unpopular speakers sometimes failed to attract a majority. Maybe the boomers were different, and young people now are returning—ironically enough—to views held by pre-boomers.

Herbst shows that millennials in general are less supportive of free speech than older cohorts. I would like to see if this pattern holds controlling for age. Were baby boomers less supportive of free speech in 1974? If so, people may grow out of intolerance. For purposes of argument, let’s assume that in the past people became more tolerant with age. Perhaps the millennials will follow that path too. But might the world have changed? Might some factor now exists that could preclude millennials from following the normal path of increasing toleration and greater support for free speech?

Maybe. Jeffrey Herbst argues that early education now fosters illiberalism:

The approach to diversity in many elementary and secondary schools seems to be little more than ‘Don’t say things that could hurt others.’ While this might be very good life advice, students have come to interpret it as curtailing the First Amendment.

What can be done to counteract this trend? The libertarian answer to most free speech problems is always: more speech. Notice, however, that education is different from most speech situations. In a normal speech situation, two people speak and argue about a topic, and neither has authority about that topic if we understand authority as a presumption of being correct. Teachers, especially teachers of children, do have such authority. And advocates of free speech cannot simply interpose themselves and their arguments between teacher and student. By the time students enter the university (which can approximate the normal speech situation), they apparently have learned to be illiberal in pursuit of “niceness.”

Private schools are another answer to this problem. If most parents want a genuinely liberal education for their children, the authority of teachers will inculcate a respect for free speech even if it offends. But what if parents value virtue or social justice more than free speech? The children of those parents may become illiberal. What then? Of course, for now private schools can only be part of the answer to our problem even if all such schools were libertarian in outlook.

We need teachers who support free speech or specifically teachers who see free speech and diversity as compatible rather than as values in conflict that should be reconciled by limiting speech. Professors and public intellectuals should be working on that reconciliation while defending a strong view on freedom of speech. For example, Cato’s Flemming Rose is thinking hard about the importance of free speech in a multicultural society.

One final point. We live in a world too defined by partisanship and closed minds. Progressives may doubt the case for free speech when it is made by people who otherwise doubt progressivism. On the other hand, progressives who defend free speech will have real authority with those who doubt free speech but are otherwise progressive. The world being what it is, the future of free speech depends crucially on progressive advocates of the First Amendment. But not just them. Perhaps though, especially them.

Law professor Catherine Ross is a leading progressive advocate of free speech. She explores the challenges to the First Amendment in schools in Lessons in Censorship. You can see Cato’s forum on her book here.

Robert F. Bauer is an important progressive defender of free speech. You can read his thoughtful blog here.

Two front-page stories in the Washington Post today tell a depressing story:

President Trump’s most senior military and foreign policy advisers have proposed a major shift in strategy in Afghanistan that would effectively put the United States back on a war footing with the Taliban…more than 15 years after U.S. forces first arrived there.

Seventeen years and $10 billion after the U.S. government launched the counternarcotics and security package known as Plan Colombia, America’s closest drug-war ally is covered with more than 460,000 acres of coca. Colombian farmers have never grown so much, not even when Pablo Escobar ruled the drug trade. 

There are high school students about to register for the draft who have never known a United States not at war in Afghanistan and Iraq. And of course the policy of drug prohibition has now lasted more than a century, though the specific Colombian effort began only under President Clinton around 1998, getting underway in 2000.

I wrote an op-ed, “Let’s Quit the Drug War,” in the New York Times in 1988. Cato scholars and authors have been writing about the seemingly endless war(s) in the Middle East for years now. Maybe it’s time for policymakers to start considering whether endless war is a sign of policy failure.

And maybe one day, a generation from now, our textbooks will not tell our children, We have always been at war with Eastasia.

A decade ago an errant pass in a basketball game hit my thumb hard along the nail. After a couple days of intense pain, the thumbnail fell off and then grew back misshapen. It turned out that the injury killed a portion of the nail bed. As afflictions go it is pretty minor, but it is a tad grotesque and makes a few tasks a bit more difficult.

An orthopedic surgeon suggested I either opt for surgery—which may not have worked or been covered by insurance—or else have the entire nail permanently removed for aesthetic reasons. I oped to leave it alone and began getting a regular manicure to keep the thumbnail under control.

A couple months ago, the owner of the salon I frequent asked if a new employee could do my manicure. The issue was that he spoke no English and had no license, but they assured me he had been doing manicures for years in Vietnam and was quite talented. I agreed.

The owner explained my thumbnail issue to him, and he spent several minutes on the digit. A few days later, to my surprise, the dead nail bed began growing again. The nail now looks almost normal.

The story of my healing nail asks a question: to what extent should states license manicurists, or professions that by and large have nothing to do with health and safety? Wisconsin—and many other states—requires graduation from an accredited institution that teaches the trade as well as hundreds of hours of experience. It does not automatically recognize licenses issued by another state or country either. In other words, there would be no clear path for this manicurist to legally practice his profession in the state.

The typical state licenses hundreds of professions. Some of those are unobjectionable—most people want doctors and anesthetists to undergo a licensing regime before assuming their professions, for instance. But other licenses are problematic. For instance, many states require interior designers and florists to be licensed. Do we really need to be protected from a rogue designer who might do damage to the color scheme of our homes? The same question can also be asked of manicurists, barbers, aestheticians, and other professions that have little to do with health or safety.

The harm in excessive licensing is twofold. First, people with an aptitude for a profession but without the means to take the classes to obtain the license are effectively shut out of a way to earn a decent living. A license for an interior designer, for instance, requires six years of training, including at least two years of school.

Second, the higher wages from excessive licensing translates to higher costs for these services as well. A manicure in Oshkosh—a former home of mine—costs more than in Washington DC, where I currently reside. While not everyone might need or want such services, the disparity in prices between my high-cost current home and my former low-cost residence suggests that someone’s getting a bad deal.

A study I wrote with my colleague Logan Albright, published last month by the Wisconsin Policy Research Center, examines the inexorable expansion of licensing in the state—driven both by the expansion of the service sector as well as the increase in the number of occupations in the state requiring a license. We suggest that in an economy where states have been ratcheting up their efforts to attract jobs and boost economic growth, it is time for Wisconsin to examine the current licensing regime and think cogently about which tasks merit licensing and which can do without. Many other states have begun to do precisely this—and are concluding that their current licensing regime has gone too far.

Such an exercise should be a bipartisan affair. Unnecessary licensing hurts the entire state, but those who come from low-income households or lack the means to obtain the training to get such jobs suffer the most.

Governor Walker and the state legislature have both announced they will look at this issue. There’s a lot to look at, we submit.

Ike Brannon is president of the consulting firm Capital Policy Analytics.

The executive order that President Trump signed today doesn’t go as far as some hoped and others feared, mainly putting a thumb on the scales for future regulatory and enforcement actions. Its three main parts are as follows:

1. Declares protecting religious freedom to be executive-branch policy, underlining an intent “vigorously enforce” the law’s “robust protections for religious freedom.”
2. Instructs the Treasury Department effectively not to enforce the Johnson Amendment — which prohibits nonprofit organizations from endorsing or opposing political candidates — against religious organizations.
3. Directs the Secretaries of Treasury, Labor, and Health & Human Services to issue new regulations that “address conscience-based objections” to Obamacare’s preventive-care mandate.

All of these are salutary, but none are earth-shattering. The IRS, which ultimately answers to Treasury Secretary Steve Mnuchin, already has vast discretion in enforcing the Johnson Amendment. HHS also has broad authority over how and against whom to apply the preventive-care mandate, but its freedom of action has already been restricted in several ways by the Supreme Court’s rulings in Burwell v. Hobby Lobby and Zubik v. Burwell (a.k.a. the Little Sisters of the Poor case) — and Secretary Tom Price were already expected to accommodate the religious nonprofits in a way the Obama administration refused to.

So all this move really does is signal the direction of executive policy preferences, which at the margin will lead agencies to implement federal statutes in a way that’s more solicitous of the freedom of religion, expression, and conscience. That’s a good thing, and a welcome change from the Obama years, but it’s not a radical (or any) change in the law. 

Police shootings are back in the news. Michael Slager has pleaded guilty to federal charges involving the killing of Walter Scott. Federal officials have declined to bring charges against the officers involved in the shooting death of Alton Sterling. Meanwhile Texas officer Roy Oliver has been fired in the wake of the shooting death of 15 year old Jordan Edwards.

Each shooting incident has to be considered separately to take account of all the surrounding circumstances. There are a range of possibilities—from self-defense on the part of the officer, to tragic accident or mistake, to manslaughter or even first degree homicide. To ensure just outcomes, one of the most important things is to have independent, impartial investigations whenever there is a questionable shooting, especially where someone is killed or injured. Preferably, this will be done by a completely separate police department or the state attorneys general office, rather than the federal government. Another best practice for police shootings involves transparency. Police departments should identify the shooter and disclose his or her record, such as previous involvement in shootings or previous lawsuits alleging wrongdoing. Authorities should also make videos available. Mayor Rahm Emanuel tried to make the Lacquan McDonald case go away with a quiet legal settlement. It was only when a reporter went to court to seek the release of the video that the scandal was exposed and real movement for police reform could begin. 

For related Cato work, go to our police misconduct web site. Still more here, here, and here.

Writing in The Wall Street Journal on April 27–making another last-ditch pitch for a 20% border tax on business imports–Martin Feldstein asserts that unless corporate tax rate cuts are “offset” by tax increases on imports or payrolls then larger projected deficits would crash the stock market by raising long-term interest rates. “The markets’ current fragility,” he writes, “reflects overpriced assets–the S&P 500 price/​earnings ratio is now 70% above its historical average–after a decade of excessively low long-term interest rates engineered by the Federal Reserve.” 

The odd notion that the Fed could somehow depress bond yields for a decade is an irrelevant ambiguity, since the whole point of Feldstein’s story is to claim budget deficits raise bond yields and higher bond yields threaten “overpriced” stocks.

In a recent blog, I found no evidence to support the dogma that bond yields rise and fall with rising or falling budget deficits (actual or projected). Wall Street Journal columnist Greg Ip opines that “interest rates haven’t responded to deficits lately because private investment has been so lackluster.” But that excuse makes interest rates dependent on private investment, not deficits, and leaves us tangled in circular illogic. If interest rates depend on private investment and deficits “crowd out private investment,” then interest rates could never respond to deficits because private investment would always be lackluster when deficits were large (which would also make deficits the opposite of a “fiscal stimulus”).

Switching from bonds to stocks in this blog, I find no evidence that the S&P 500 stock index is “overpriced” relative to long-term interest rates (which is the only meaning of “overpriced” that relates to Feldstein’s argument about deficits and bond yields).

Feldstein claims stocks are “overpriced” because “the S&P 500 price/​earnings ratio is now 70% above its historical average.” But there is no reason to expect the p/​e ratio to revert to its long-term average unless bonds yields revert to their long-term average.

The graph illustrates this connection by inverting the trailing S&P 500 price/​earnings ratio and expressing it as an earnings/​price ratio. This became known as “The Fed Model,” though I prefer to call it “The Reynolds Model,” because I first used it in March 1991 (to suggest bonds, rather than stocks, were overpriced). From 1970 to 2016, the average e/​p ratio was 6.52 (equivalent to a p/​e ratio of 15.2) while the average yield on 10-year bond yield was almost identical at 6.57%. That connection between stocks and bonds has been quite close over the long haul (though not before August 1971 when the dollar was convertible into gold).

An oversimplified thumb rule from Investopia says, “If the earnings yield is less than the rate of the 10-year Treasury yield, stocks as a whole may be considered overvalued.” In 2016, the earnings yield of 4.17 was about twice as high as the 10-year Treasury yield of 1.84, which suggests the earnings/​price ratio was then too high and therefore the price/​earnings ratio (or bond yield) was too low. 

On May 1, 2017, the p/​e ratio was 25.26, which is equivalent to an e/​p ratio of 3.96 (=1/25.26). Since an earnings yield of 3.96 is obviously much higher than recent bond yields of 2.3%, the market is still “undervalued”–not “fragile.”

If bond yields rose to 3.96% (much less to the historical average of 6.57%), that might indeed pose a risk to stocks–unless there was an offsetting rise in expected earnings. However, Feldstein wouldn’t dare to predict that U.S. bond yields may approach 4–7% in the foreseeable future regardless what happens to budget deficits. And his assumed connection between deficits and bond yields is pure conjecture, without credible empirical support.

Feldstein’s latest argument for adding new import or payroll taxes relies on budget deficits pushing up bond yields and thus threatening “overpriced” stocks. Unfortunately, those claims about deficits, bonds, and stocks all rest on faulty theories and nonexistent evidence.