If you’re struggling to understand why Congress would contemplate reauthorizing a program that 1) has never stopped a terrorist attack on the United States, 2) violates the fundamental Constitutional rights of Americans, and 3) squanders taxpayer money by the truck load, you’re not alone. I submitted a statement for the record to Senate Judiciary on all this madness which you can find here.

A recent New York Times article described the wretched management of New York City’s public housing. The main problem highlighted is a common one in government ownership: bureaucracies do not maintain their assets.

Governments build shiny new highways, rail systems, schools, parks, sidewalks, and other infrastructure, and then let the assets rapidly deteriorate. Politicians like to brag about the new projects they are spending money on, but they pay little attention to old facilities that are falling apart, except when the media shines a spotlight.

The federal government provides $7 billion in annual funding to public housing agencies. Such aid induces irresponsible local management. It should be zeroed out and states encouraged to privatize their public housing stock. See these studies on federal aid and public housing.

Here are highlights from the NYT story by Luis Ferré-Sadurní:

The seven steel boilers should have been replaced years ago. Instead, they continue to sputter inside a cavernous brick building, producing steam that travels through a maze of old pipes providing heat and hot water to the Breukelen Houses in Canarsie, Brooklyn, a public housing complex where 3,500 people live.

… As winter approaches, [New York City] is racing to ready boilers in the nation’s largest public housing system, where widespread heat outages have repeatedly left many of its 400,000 low-income residents shivering in their homes. Many of the boilers are old; some were built in the 1950s. With temperatures dropping, the fragile, antiquated heating network imperils a large portion of public housing residents: children, older residents and people with health conditions.

Providing consistent heat is only one challenge in a long list of woes for the agency, which oversees 176,000 subsidized apartments. New York City Housing Authority is under the supervision of a federal monitor after federal prosecutors accused it of years of mismanagement. In addition to heating inadequacies, the agency has a history of failing to rid its apartments of mold and lead paint.

More than half of the housing authority’s 1,713 boilers — some made by companies that no longer exist — are more than 20 years old, the typical life span of a boiler. Following years of underfunding and poor maintenance, nearly half are in critical condition and need major repairs or replacement. Pipes that circulate steam to apartments are crumbling, aging buildings are poorly insulated and radiators need to be overhauled.

… But as it started to get cold again, those improvements meant little to residents of the Breukelen Houses. It was among the developments with the most outages last winter. Residents there had no heat or hot water 25 times from Oct. 1, 2018, to May 1, 2019 — the city’s heat season.

Let’s begin by updating Justice Oliver Wendell Holmes for the digital era:

Persecution for Suppression of the expression of opinions seems to me perfectly logical. If you have no doubt of your premises or your power and want a certain result with all your heart you naturally express your wishes in law content moderation and sweep away all opposition.

(The original quotation may be found on page 888 of this worthwhile essay).

Today many people have no doubt about one premise: they know what a lie is. Naturally, they demand that online platforms refuse to run political ads containing lies. Put another way, the platforms should make sure that no one hears false speech. Democratic citizens should not be burdened by the task of making up their own minds about the truth or falsity of speech in political ads online. After all, the people demanding suppression of speech in ads have no doubts that they know what is true and what is false in politics.

Here are a couple of practical problems with all this. In the politics today (and probably yesterday too), the answer to the question: “what is a falsehood?” will be “what the other side says.” But in politics there will be at least two sides to various controversies and maybe many sides. And the proponents of those many sides will all be convinced that the “other side” is lying. In an illiberal society, they will deem their opponents’ lies worthy of suppression. The First Amendment will prevent the government from acting on everyone’s censorious desires. But the First Amendment does not apply to online platforms. What should the platforms do about “lies”?

Let’s consider a hypothetical but realistic case. Imagine the Elizabeth Warren for president campaign wants to buy an ad from Facebook that says, “Two prominent economists—Emmanuel Saez and Gabriel Zucman—have found that inequality has grown rapidly. We need a wealth tax now. Vote for Elizabeth Warren for president.” Seeing the ad, some demand it be taken down because critics of Saez-Zucman have argued that their conclusions involve manipulating data; it is, the critics say, filled with falsehoods. Other people associated with the Justin Amash for president campaign buy a Facebook ad that says, “The studies of inequality come from the Data Fudging School of Taxation Advocacy. Let’s have prosperity not a wealth tax. Vote for Justin Amash for president.” Seeing this ad, Saez-Zucman demand that it be taken down. The ad is, they say, based on lies about their research.

What should Mark Zuckerberg do? I see three choices. He would be well within his rights to refuse to run either ad. Jack Dorsey at Twitter has decided to go down this path. Second, Zuckerberg could take sides and run the Warren ad or the ad of its critics. In short, he (or a fact-checking organization) could decide which one is true and protect Facebook’s users from the other one, the lie. Third, Zuckerberg could do what he has done: he could run both ads and leave it to those who see the ads on Facebook to decide their truth or falsity and the implications of either answer. Zuckerberg has selected the most liberal choice. He has refused to decide whether Piketty-Saez-Zucman or their critics have the best of the argument. Facebook has placed that power and responsibility to decide with its users.

That trust in individuals to read, think, and decide marks much of classical liberalism and its philosophical descendants over the past couple of centuries. That trust is one foundation of our First Amendment and our politics. Yet Zuckerberg has been roundly criticized for refusing to run ads said to include falsehoods. We live at a moment when liberalism, the philosophical foundation of our society, is unpopular.

From this point things get more complicated. Remove the candidates from the above examples and Facebook’s policies change. In theory, Facebook could send Saez-Zucman or their critics to fact-checkers and refuse to sell ads to whoever fact-checkers deemed the liar. In practice, neither Saez-Zucman or their critics are likely to end up at the fact-checker since the latter already has a full agenda dealing with obvious hoaxes and conspiracy theories. As a matter of free speech theory, however, the logic of Zuckerberg’s decision about political ads applies to almost all political speech, paid or unpaid. So users should be left to decide the truth or falsity of all speech, including Saez-Zucman­­­, their critics, obvious hoaxes, and conspiracy theories.

But leaving the obvious hoaxes and conspiracy theories up may alienate many users and spook advertisers, driving shareholder value down. What appeared at first to be a conflict between liberalism and its critics is actually a tension within liberalism which values both political and economic liberty. The challenge of digital liberalism will be to accommodate both kinds of liberty while keeping government and politicians at bay. Perhaps those most given to denouncing Facebook would do better to keep in mind the complexities of the challenge they are struggling with.

Meanwhile, everyone should keep in mind that the facts at issue in free speech controversies are not like “Stanford University is (is not) north of San Francisco.” They are more commonly like the facts at issue between Saez-Zucman and their critics. The facts at issue in such struggles may become established after “more speech,” but are, for now, “essentially contested.” One thing is clear though. We should never allow such controversies to be settled by people who never doubt their premises and want a certain result with all their heart.

Over at Notice & Comment, I posted today about a brief Cato filed last Friday, joined by the National Federation of Independent Business. Here’s a snippet:

On Friday, the Cato Institute and NFIB filed an amicus brief on behalf of petitioners seeking Supreme Court review of the Ninth Circuit’s April order in Baldwin v. United States. Of course, the odds of the Court exercising its appellate jurisdiction are low for any given controversy; nevertheless, Baldwin reflects a rare combination of worst-practices that might catch the eye of any Justice intent on revisiting “reflexive” Chevron deference and its corollary doctrines.

The Baldwins are a married couple from California who believe they overpaid $167,000 in taxes and sought a refund from the IRS. They claim that they sent their amended return months in advance of the statutory deadline. To prove timely mailing, the Baldwins have offered circumstantial evidence—in the form of multiple affidavits by corroborating witnesses—that they deposited their documents at a post office with months to spare. A federal district court has determined that the Baldwins’ testimonial evidence is credible.

The IRS, however, claims never to have received the documents. The tax code doesn’t directly speak to the possibility of lost mail, but the agency reads the statute’s silence as leaving the Baldwins out of luck, no matter how many witnesses the couple calls forth to testify that the tax documents were timely sent. According to the IRS, the Baldwins not only are denied a refund, but the filing deadlines trigger the government’s statutory waiver for sovereign immunity, so the couple also is denied access to the courts for redress.

Millions of taxpayers rely on the US Postal Service to mail tax documents every year, and these mountains of mail are carried and received by imperfect humans who misplace documents. Indeed, the Baldwins’ plight is far from unique, and many such cases have come before the courts over the years.

Since 1954, circuit courts have split over how to deal with allegedly lost mail that denies taxpayers their “day in court.” On the one hand, two circuits adopted the IRS’s unforgiving interpretation. On the other hand, four circuits turned to an old common-law evidentiary principle, known as the mailbox rule, which allows taxpayers to present extrinsic evidence that their claims were timely mailed.

After decades of litigating the mailbox rule with mixed success, the IRS switched gears and tried an administrative shortcut. Specifically, the agency underwent a cursory five-page rulemaking to “clarify” that the statute meant what the IRS had argued all along in court.

On its own terms, the IRS’s “clarifying” rule fails to implicate agency expertise; instead, it purports to deny courts access to a common-law principle developed by federal judges to police their own jurisdiction. Simply put, the agency’s rule regulates the craft of judging, which is obviously outside of the IRS’s bailiwick.

The IRS’s lack of expertise explains why the agency’s rulemaking said so little—because there was so little to say. Across the proposed and final rules, the entire rulemaking provided a paltry nine paragraphs of conclusory reasoning.

Having jumped through the bare-minimum procedural hoops, the agency then felt entitled to the Chevron framework. The Ninth Circuit, alas, agreed. In so doing, a three-judge panel applied the sort of cursory methodology that can give deference a bad name.

Read the whole thing here

Chris Edwards argued earlier in the week that wealth inequality statistics alone tell us little to nothing interesting about the American economy. It seems Larry Summers agrees (see from 8h 27 mins).

In a speech at PIIE yesterday, the former Treasury Secretary under Bill Clinton outlined why wealth inequality wasn’t a particularly useful measure to consider the justness of a society.

He highlighted, for example, that the arguments about wealth inequality and political power appear to have almost no validity. Interest groups and corporate lobbying are much more important sources of political power than wealthy individuals. In the panel discussion afterward, he pressed economist Emmanuel Saez to give just one example or mechanism of how an extraordinarily rich individual losing a large fraction of their wealth would alter political outcomes. Little meaningful response was forthcoming.

I’ve looked in detail at the supposed relationship between wealth inequality and democracy for a forthcoming Cato paper with Chris Edwards, and the evidence for wild assertions we hear about inequality killing democracy is extraordinarily weak. But more on that next week. What was heartening was to hear Summers deliver some home truths to the left on wealth inequality and the redistributive welfare state:

Wealth inequality reflects many things that happen in a society. Suppose we successfully in the United States adopted a more generous and complete progressive social security system….I would assume that the lower half of the population would have much less need to accumulate or hold liquid assets because they were being properly insured. And so measuring the ratio of the wealth of the wealthy to the wealth of the less wealthy may reflect something about accumulation at the top or it may reflect something about the adequacy or inadequacy of social insurance arrangements.

This is exactly right, and supports what Chris and I have outlined about the disingenuousness of those who say wealth inequality shows the need for a more progressive welfare state.

Evidence from both here and abroad shows major social programs, not least Social Security, increase measured wealth inequality because they leave the non-rich with “proportionately less to save, less reason to save, and a larger share of their old-age resources in a nonbequeathable form than the lifetime rich.” Economists Baris Kaymak and Markus Poschke estimate that the expansion of Social Security and Medicare caused about one-quarter of the rise in the top one percent wealth share over recent decades.

As Chris writes today, the European experience shows the same results. It therefore makes no sense to say you believe reducing wealth inequality is an overwhelming imperative, and that expanding the welfare state is the way to do it.

Those who worry about measures of private wealth inequality and want a bigger welfare state therefore face two ways of squaring the circle. Either they can admit that reducing measured private wealth inequality is not an important and overwhelming public policy objective. Or they can seek to incorporate social programs into broader, “lived” measures of wealth inequality.

Both would be problematic for them, politically. If goals other than reducing wealth inequality drive their desire for more social spending, it’s much more difficult to argue that concerns about other priorities are illegitimate when discussing top taxes (for example, economic growth). And if you include assessments of the present value of promised government benefits as if they are real wealth, wealth inequality looks much lower and less problematic.

What’s dishonest though is to argue that private wealth inequality measures show we need an all-out war on narrowing the wealth distribution and that more social spending is the cure. Kudos to Larry Summers for pointing that out.

Elizabeth Warren and Bernie Sanders continue to blast wealth inequality. But the twin leftists seem oblivious that wealth inequality may reflect starkly differing causes, as I discuss in a new Fox Business op-ed.

The Warren-Sanders broad-brush denunciations are useless as a guide to policy because high wealth inequality may reflect either the growth benefits of capitalism or the negative effects of cronyism and crowding out.

Capitalism here means economic freedom, entrepreneurship, and innovation. Cronyism means corruption and narrow benefits to particular groups. Crowding out means the displacement of private savings by the welfare state.

These causes of wealth inequality are loosely evident in cross-country comparisons. Countries such as Denmark, Sweden, and the United States have high wealth inequality combined with high levels of capitalism and large welfare states. Countries such as Egypt, Kazakhstan, Nigeria, and Ukraine have high wealth inequality likely caused by high corruption, as measured by this index.

The figure below shows a modestly positive correlation across 167 countries between the United Nations Human Development Index and wealth Gini coefficients. The HDI measures income levels, life expectancies, and education levels. Higher numbers are better. The Gini measures wealth inequality, with higher numbers meaning more inequality. Wealth Gini data (mine from Credit Suisse) are likely quite rough measures.

Generally, countries with more capitalism provide more opportunities for entrepreneurs to become wealthy, which in turn generates growth and raises overall human development. However, some countries with fairly high levels of capitalism—such as Japan—have low wealth inequality. Why wealth inequality levels in, say, Japan and Denmark are so different is a mystery.

So one takeaway from the figure is that the level of wealth inequality does not tell us whether a country is prosperous or not. Both Sweden and Nigeria have high wealth inequality, while both Japan and Ethiopia have low wealth inequality.

Warren and Sanders say they want less inequality, but that could mean they want America to be more like either Japan or Ethiopia. I’d like to hear more specifics from the candidates on the causes of wealth inequality. Which cronyist government programs do they favor repealing? Would their plans to expand social programs cause more wealth inequality?

Wealth inequality means nothing on its own. It’s the causes that count.

Research help from interns Dan Rothschild and Jay Zaleski.

President Trump is done cooperating with the House impeachment inquiry, White House Counsel Pat Cipollone announced yesterday in a letter that reads like the lawyerly version of a primal scream. “Your unprecedented actions have left the President with no choice,” he told the House Democratic leadership: the Trump administration “cannot participate in your partisan and unconstitutional inquiry under these circumstances.” We’re done here: It’s a “full halt,” full stop.

Does Donald Trump actually want to be impeached? There’s been some speculation along those lines recently. But the fact that the president seems to be having a Nixon-style, talking-to-the-portraits nervous breakdown live over social media makes me skeptical that’s the plan—or that there’s any plan at all. Still, if Trump wants to become the third American president to earn that ignominious distinction, this would be a great way to go about it.

The categorical stonewall Trump just announced is clearly an impeachable offense. There’s precedent for it in the Nixon case. One of the articles of impeachment that drove the 37th president out of office (he quit before the full House could vote) was based on disobeying congressional subpoenas and making bogus executive privilege claims. Article III against Nixon, passed by the House Judiciary Committee on July 30, 1974, charged the president with having “failed without lawful cause or excuse to produce papers and things as directed by duly authorized subpoenas” issued by the Judiciary Committee, “thereby assuming to himself functions and judgments necessary to the exercise of the sole power of impeachment vested by the Constitution in the House of Representatives.” In other words, Nixon’s resistance to lawful demands for evidence in an impeachment inquiry was itself grounds for impeachment.

And, at least at first, Nixon’s obstructionism wasn’t as flagrant as the policy Trump has announced. The basis for Article III was Nixon’s partial, selective, and duplicitous compliance with congressional demands for information. (It wasn’t until late May 1974, less than three months before he resigned, that Nixon announced no further demands would be answered, on the grounds that “the Committee has the full story of Watergate.”) As the Judiciary Committee’s Report on the Nixon impeachment noted, of dozens of federal officers who’d been the subject of impeachment investigations up till that time “not one of them challenged the power of the committee conducting the investigation to compel the evidence it deemed necessary.” Even President Andrew Johnson—who might have had better cause to complain of a “kangaroo court”—never “asserted any privilege to prevent disclosure of presidential conversations to the Committee, or failed to comply with any of the Committee’s requests.”

How, then, should the House respond to President Trump’s uber-Nixonian intransigence? Cipollone’s letter is mostly bluster and nonsense, confusing impeachment with a criminal process and demanding due process protections unavailable to grand jury targets actually at risk of losing their liberty instead of, as in Trump’s case, merely being put out of a job.

Still, the White House Counsel has half a point when he argues that the full House should honor past practice by voting for an impeachment inquiry. Nothing in the Constitution requires that move; but even so, the Speaker should make a concession to the administration’s newfound concern for “norms.” Hold the vote—and give the minority subpoena power (Maybe they’ll call Hunter Biden. That could be fun).

Would those concessions end the impasse? Even while demanding them, administration flacks “refuse to say what it would take for them to comply,” as CNN’s Kevin Liptak reported last night: “We don’t want to speculate on what would happen in various hypothetical situations.”

Earlier tonight, the president signaled he might soften his position “if Republicans get a fair shake.” But if the House calls his bluff, he may well move the line, coming up with a new excuse for stonewalling. “That rationalization is no longer operative,” as Nixon press secretary Ron Ziegler might have put it, “this is the operative rationalization.” If so, many self-proclaimed “constitutional conservatives” will follow along, adopting their own rationalizations—“well, he hasn’t defied the Supreme Court yet. Anyhow, I can stop any time I want to”—like junkies bargaining with themselves.

“You have left the President no choice,” Cipollone writes in the memo. The administration’s policy of massive resistance may in turn leave the House no choice. As the HJC Report explained in 1974, “Unless the defiance of the Committee’s subpoenas under these circumstances is considered grounds for impeachment, it is difficult to conceive of any President acknowledging that he is obligated to supply the relevant evidence necessary for Congress to exercise its constitutional responsibility.”