In an interesting side-note to the Medellin decision, the case’s convoluted procedural history made for some rather strange political bed fellows. The Court’s decision, anchored by the “conservative wing” (Roberts, Scalia, Thomas, Alito) and joined by the “moderate” Kennedy and (writing separately) the “liberal” Stevens effectively clears the last remaining roadblock to Texas’s imposition of the death penalty on the murderer Jose Erenesto Medellin. Consequently, Tuesday’s result disappointed death penalty abolitionists, who join on the losing side those who want international law to have direct applicability in the United States. That’s right, by ruling against President Bush’s executive overreach — which at least three members of the Court’s “liberal” wing implicitly ratified — the Court angered cosmopolitan liberals. Go figure.
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Paul Krugman’s Fallacious Forecast of a $6–7 Trillion Drop in Housing Wealth
The Case-Shiller index of house prices covers just 20 major metropolitan areas. It shows house prices down by 10.7% between January 2007 and 2008, but that largely reflects the fact that Los Angeles, San Diego and San Francisco account for 27.4% of the index.
In Fortune magazine’s March 17 interview, economist Paul Krugman says “We’re probably heading for $6 trillion or $7 trillion in capital losses in housing.”
Such estimates begin by assuming the S&P Case-Shiller index of house prices (which is now down 12.5% from its peak month) has a lot further to fall, and that it accurately represents the value of all real estate held by U.S. households throughout the 50 states.
The Federal Reserve’s Survey of Consumer Finances (updated with flow-of-funds data by David Malpass of Bear Stearns), shows U.S. real estate worth $22.5 trillion in the fourth quarter—up 2.5% from a year earlier and accounting for 31.2% of household wealth.
If you think the Case-Shiller index will eventually fall by 30% (Krugman said 25%), then 30% of $22.5 trillion would yield an estimate of $6–7 trillion capital losses “in housing.” But the $22.5 trillion is not just single-family homes—it includes commercial property, apartments and farm land. More important, even single-family housing wealth is not located in only 20 major metropolitan areas.
The Office of Federal Housing Oversight (OFHEO) index covers all 50 states, including nonmetropolitan areas, but not the most expensive homes (which is not where Case-Shiller finds the biggest declines). The OFHEO index shows house prices down 3% in January, compared with a year before. But even that average is by no means typical of all housing (much less real estate) in the entire nation.
Between the fourth quarters of 2006 and 2007, house prices rose in all but two of the many states excluded by Case-Shiller, and the increase averaged 3.8 percent.
Economists and journalists who use gloomy predictions about the Case-Shiller index to predict a comparable loss of real estate wealth are making several serious mistakes.
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Senator Levin’s War on Taxpayers
In a remarkable display of chutzpah, Senator Carl Levin of Michigan is quoted in the Christian Science Monitor stating that “Tax havens have declared war on honest taxpayers.” This is from a politician who routinely votes for higher taxes and has a rating of “F” from the National Taxpayers Union because he votes against taxpayers 85 percent of the time — a record that puts him below Senators Hillary Clinton and John Kerry. Tax havens, by contrast, have helped taxpayers by forcing governments around the world to lower tax rates. Indeed, a prominent British accountant explains in the story that low tax rates are the appropriate way to deal with global competition. Returning to the theme of chutzpah, an OECD bureaucrat (who receives a tax-free salary!) actually admits that people should have a right to financial privacy — but only if the term is stripped of all meaning by giving governments unlimited snooping rights:
“Tax havens have declared war on honest taxpayers,” says US Sen. Carl Levin (D) of Michigan, who along with Sen. Barack Obama (D) of Illinois is co-sponsoring the “Stop the Tax Haven Act,” introduced last year. … Chas Roy-Chowdhury, head of taxation at Britain’s Association of Chartered Certified Accountants… says… “Governments should open themselves up to the wind of global competition and accept that they need to run efficiently to keep tax rates low.” … Perez-Navarro [of the OECD] adds that individuals should have the right to a certain banking confidentiality, but that when investigators want to see numbers they should be handed over.
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Foolish European Union Regulations
Two stories from the British press highlight regulatory excess from the Brussels bureaucracy. The Times reports that a winemaker is being harrassed because he is selling his wares in 37.5cl bottles instead of the 50cl or 35cl sizes allowed by European regulation:
An award-winning winemaker whose wares are sold at the royal palaces is facing a £30,000 bill after European bureaucrats ruled that he was using the wrong-shaped bottles. Jerry Schooler, who sells 400,000 bottles of fruit wines and mead a year, has been threatened with prosecution over his determination to use traditional measurements. The proprietor of the Lurgashall Winery in West Sussex, has been told to halt the sale of beverages such as mead, silver birch wine and bramble liqueur in 75cl and 37.5cl bottles. If he continues to sell them, he could be taken to court under a new EU directive that permits the sale of such products in 70cl, 50cl or 35cl measures only. …Mr Schooler now faces costs of about £30,000 to change his production line. “We are going to have to change all our bottling, the labels, machinery, boxes and maybe the corks as well and it is going to cost me thousands to do it,” he said. …West Sussex County Council’s trading standards department said that the winery was bound by EU Directive 2007/45/EC, which was drawn up in September to “lay down rules on nominal quantities for prepacked products”. It said the directive meant that the use of 37.5cl bottles for liqueurs was illegal.
The absurdity of this story makes one wonder how such a regulation came into existence. Did a bureaucrat wake up on the wrong side of the bed one day and decide that wine should only be sold in bottles of certain sizes? Is there some sort of crazy health or safety rationale for the regulation? Speaking of which, that’s the alleged reason for a regulation that is forcing English bus companies to make customers disembark in the middle of routes. This foolish regulation apparently is designed to prevent driver fatigue, but, as reported by the Sun, the practical effect is to make people waste their time:
Thousands of passengers are being forced to hop off buses midway through journeys to comply with barmy EU laws. A Brussels ruling has banned local services longer than 30 miles to ensure drivers don’t spend too long at the wheel. As a result, drivers have to pull in as they hit that limit and order everyone off their bus. They then change the route number on the front and invite passengers to jump back on before resuming the trip. …Western Greyhound has split its Newquay to Plymouth route in three — even though it uses a single driver throughout. Passengers must buy three tickets and break their journey twice. Managing director Mark Howarth said: “It’s a farce. We have to kick customers off as soon as the driver hits the 30-mile limit. “Often it’s in the middle of nowhere. Passengers think we’re crazy.”
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Union May Sue if Too Many Floridians Demand School Choice
According to a report by Tallahassee’s News Channel 7, the Florida Education Association may sue to shut down that state’s scholarship tax credit program. Under this program, businesses can donate to non-profit scholarship funds that subsidize tuition for low-income kids at the private schools of their families’ choosing. In return, the businesses can claim dollar for dollar tax credits up to a certain limit.
Public school employee unions have left this program alone since its enactment in 2001, despite having successfully sued to kill a much smaller school voucher program two years ago. So why the sudden talk about filing suit? Let’s go to the Chanel 7 report by Mike Vasilinda:
The teachers [i.e., the Florida Education Association, ed.] successfully challenged the voucher program that was centered around failing schools. They’ve turned a blind eye to the corporate voucher [i.e., scholarship tax credit, ed.] program, but they [through FEA attorney Ron Myer] say if it’s to triple over the next five years, they may go to court.
Keep in mind that scholarship organizations must allocate all donations to scholarships as they receive them, they can’t carry over more than 25% of donations from one year to the next, and the maximum scholarship value is fixed at $3,750 (far below per pupil spending in the public schools). So the only way the total value of scholarship donations could triple would be for triple the number of low-income families to ask for them.
So the Florida Education Association is saying that if too many poor parents want to escape the public schools and get their kids into independent schools, it will shut them and this whole program down.
That is evil.
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Supreme Court to President Bush: Don’t Mess With Texas
Tuesday the Supreme Court slipped the Gordian knot of a case that could have come straight from a law school exam, involving federalism, treaty interpretation, the scope of executive power, criminal procedure, and conflicts between international and domestic law. The issues in Medellin v. Texas boiled down to: 1) Whether a particular decision of the International Court of Justice is automatically binding on Texas courts and, if not, 2) Whether President Bush made it binding by issuing a memorandum to then-Attorney General Alberto Gonzales. The Court answered in the negative on both counts by a 6–3 margin.
The result of this decision is that neither the ICJ (the so-called “World Court”) nor the president acting alone can force states to review criminal cases involving foreign nationals. The underlying treaty at issue – which gives foreign nationals accused of a crime the right to meet with consular officials – is not enforceable in the absence of implementing legislation from Congress. The ICJ ruling is similarly not self-executing, and does not gain legal effect merely because the president tells the states to abide by it.
The Supreme Court has thus protected America’s carefully calibrated system of federalism and checks and balances by preventing an international court from overriding a state’s duly enacted (and constitutionally sound) law. Just as importantly, the Court correctly rejected the argument that the president has the power to enforce against the states a treaty that is, in the absence of congressional action, enforceable only by diplomatic means. Telling state courts how to do their jobs is simply not among the powers of the nation’s chief executive.
Be Still My Beating Heart…
Move over Ron Paul, my heart belongs to Jack! How long until we see a “Kevorkian Girl” on You-Tube?
The assisted-suicide advocate Jack Kevorkian announced that he was running for Congress as an independent. If elected, he said his main priority would be promoting the Ninth Amendment, which protects rights not explicitly specified elsewhere in the Constitution. Mr. Kevorkian, 79, says he interprets it as protecting a person’s choice to die through assisted suicide or to avoid wearing a seat belt. The Congressional seat in Detroit’s suburbs is now held by Representative Joe Knollenberg, a Republican who is seeking re-election.
Those still a bit uncertain about the wisdom of physician assisted suicide might want to keep in mind the following three words: President Hillary Clinton.