President Obama has drawn some fire for telling Ohio State University graduates, among other things:

Unfortunately, you’ve grown up hearing voices that incessantly warn of government as nothing more than some separate, sinister entity that’s at the root of all our problems; some of these same voices also doing their best to gum up the works. They’ll warn that tyranny is always lurking just around the corner. You should reject these voices.

His critics included my colleagues Roger Pilon in the Wall Street Journal, who deplored Obama’s conflation of the family and the federal government, and Gene Healy in the Washington Examiner, who noted the president’s attempt “to reframe skepticism toward overweening federal power as “cynicism.’ ”

I was reminded of another political official’s warning back in 2001:

To those who scare peace-loving people with phantoms of lost liberty; my message is this: Your tactics only aid terrorists — for they erode our national unity and diminish our resolve. They give ammunition to America’s enemies.

That was attorney general John Ashcroft testifying before Congress on the Patriot Act and the Bush administration’s exercise of power after 9/11. It’s a standard theme of those in power: If you question our actions, if you protest the expansion of government and the loss of freedom, you’re aiding the enemy. You’re undermining our faith in government.

The Founders of this nation had a different view. James Madison warned us that since men are not angels, we can’t entrust them with unlimited power. And Thomas Jefferson wrote in the Kentucky Resolutions against the Alien and Sedition Acts, 

that it would be a dangerous delusion were a confidence in the men of our choice to silence our fears for the safety of our rights: that confidence is everywhere the parent of despotism–free government is founded in jealousy, and not in confidence; it is jealousy and not confidence which prescribes limited constitutions, to bind down those whom we are obliged to trust with power: that our Constitution has accordingly fixed the limits to which, and no further, our confidence may go.…In questions of power, then, let no more be heard of confidence in man, but bind him down from mischief by the chains of the Constitution.

That’s the spirit of freedom and self-government: Jealous of our rights and liberties, confident in our Constitution, and skeptical about power and about the men and women who seek it.

As for the president’s much-quoted attack on “individual ambition,” I addressed that in the Wall Street Journal back in 2008 when he made a similar argument to Wesleyan grads.

I was pleased to see last week that Professor Epstein had penned a response to my criticism of his recent piece on Hoover’s Defining Ideas in which he argued against treating protection of civil liberties and privacy as “nonnegotiable” in the context of counterterrorism. It is not the disagreement that is pleasing, of course, but the opportunity to air it, which can foster discussion of these issues among libertarians while illustrating to the broader world how seriously libertarians take both security and liberty.

What’s most important in Professor Epstein’s rejoinder is what comes at the end. He says that I should “comment constructively on serious proposals” rather than take an a priori position that civil liberties and privacy will often impede expansions of government power proposed in the name of counterterrorism.

I believe that Professor Epstein and I share the same prior commitments–to limited government, free markets, and peace. Having left it implicit before, I’ll state that I, too, believe that protection of life and property is the primary function of the state. But I also believe that excesses in pursuit of security can cost society and our liberties more than they produce in benefits.

Some years of work on counterterrorism, civil liberties, and privacy bring me to my conclusions. I had put in a half-decade of work on privacy before my six years of service on the Department of Homeland Security’s privacy advisory committee began in 2005. While interacting with numerous DHS components and their programs, I helped produce the DHS Privacy Committee’s risk-management-oriented “Framework for Privacy Analysis of Programs, Technologies, and Applications.” From time to time, I’ve also examined programs in the Science and Technology Directorate at DHS through the Homeland Security Institute. My direct knowledge of the issues in counterterrorism pales in comparison to the 30+ experts my Cato colleagues and I convened in private and public conferences in 2009 and 2010, of course, but my analysis benefitted from that experience and from co-editing the Cato book: Terrorizing Ourselves: Why U.S. Counterterrorism Policy is Failing and How to Fix It.

Whether I’m operating from an inappropriate a priori position or not, I don’t accept Professor Epstein’s shift of the burden. I will certainly comment constructively when the opportunity arises, but it is up to the government, its defenders, and here Professor Epstein to show that security programs are within the government’s constitutional powers, that such programs are not otherwise proscribed by the constitution, and that they cost-effectively make our society more secure.

The latter two questions are collapsed somewhat by the Fourth Amendment’s requirement of reasonableness, or “fit” between means and ends when a search or seizure occurs. And to the extent I can discern the program that Professor Epstein prefers, I have commented on it as constructively as I can.

Professor Epstein apparently believes that there is some kind of surveillance that is at once general, comprehensive, and non-intrusive. Adjoined to racial or ethnic profiling, it works to deter terrorism and more immediately to apprehend terrorists.

Let’s dispense with the profiling first. A “disproportionate number of terrorists are Muslim,” Professor Epstein wrote in his original piece, and in his rejoinder he said race and ethnicity are “valuable information that could help tweak the design of surveillance systems of searches.”

In 2006, IBM distinguished engineer and chief scientist Jeff Jonas and I published a paper entitled: “Effective Counterterrorism and the Limited Role of Predictive Data Mining.” We found that sophisticated algorithms based on variables far more salient than race or ethnicity will not turn up terrorism because there are insufficient instances of terrorism on which to build models that predict it. Sifting vast stores of data can turn up credit card fraud because there are thousands of examples per year on which to model this particular type of wrongdoing, and the costs of false positives are low–inconvenience to credit card customers, for example.

This is not the case with terrorism. “The possible benefits of predictive data mining for finding planning or preparation for terrorism are minimal,” we concluded. “The financial costs, wasted effort, and threats to privacy and civil liberties are potentially vast. Those costs out-strip any conceivable benefits of using predictive data mining for this purpose.” Data mining doesn’t work in this area, and tracking Muslims doesn’t help.

So what about mass surveillance? In his original essay, Professor Epstein cited the need for “improved software in such key areas as facial recognition detection” and apparently the use of aerial drones for visual data collection regarding all potential terrorists, which is to say everyone. His preferred surveillance system would “collect troves of information about the conduct of people in public places,” he emphasized, “which can then be stored for future use.” The idea of a secret court system governing access to this data does not put the privacy-minded at ease.

As I also said in my original piece, these systems would not work. By “work,” I mean “cost-effectively secure the country and its inhabitants.” The number of ways to do damage and the number of “soft targets” in the country would require an utterly comprehensive national surveillance system. National security expert and Cato senior fellow John Mueller has distilled this fact to a jibe about the terror threat to the Weeki Wachee Springs water park in Florida. It’s a symbol of the thousands of locations around the country all seeking homeland security money because they all could be attacked. They are all indeed potential targets, equally likely and unlikely, and it would take billions of dollars to implement the surveillance system Professor Epstein envisions if he wants visual surveillance to serve as a preventive or terrorist apprehension tool for them all.

As I said, doing so would not cost-effectively deter terrorists. And Boston is not the only guide. I have been pointing out since at least 2007 that terrorists are not terribly concerned with worldly justice and thus not as deterrable as ordinary people. Audrey Kurth Cronin shows in her excellent monograph “Ending Terrorism” that a goal of many terrorist acts is to signal other terrorists (imagined or real, and however pathetically). Notoriety is in the interest of terrorists to some degree. This helps explain lame escape attempts by the terrorists who don’t do themselves in. Their relative indifference to capture given their mixed motives renders security measures like national identification and mass surveillance rather impotent in comparison to its effect on ordinary criminals whose goal is truly “getting away” with something.

We aren’t relitigating Boston here. Security guru Bruce Schneier had an excellent piece on CNN​.com last week exploring how hindsight bias makes the Boston attack appear obvious when it was not. The problem after Boston is what will secure against the next attack, coming, as it will, from an unknown actor or actors, anywhere in the country, using a wide variety of tools and methods.

That’s a real security problem, though it’s far from existential. Terrorism is well under control and remains a far lower cause of mortality and morbidity in the United States than very exotic dangers like bees and fireworks accidents. Terrorism is indistinguishable from the x‑axis in any reasonably sized cause-of-death chart that includes overeating and smoking. The objective facts about causes of death and property damage in the United States today counsel keeping terrorism in its place on the list of priorities, below automobile accidents, heart disease, domestic violence, and the Drug War.

Returning to the constitutional issues in the light of the security challenge, there is certainly such a thing as surveillance that doesn’t implicate the Fourth Amendment. But what Professor Epstein must be defending if he thinks this program is going to catch terrorists before they act is not in that zone. United States v. Jones last year showed that the Court is not going to embrace the facile conclusion descended from dictum in Katz (and rejected in the holding) that all bets are off simply because a person is in public.

When facial recognition software arrives to the point where it works at scale—it’s not there yet—the issue will be joined whether it is a search to use high-definition camera scanning of each person’s visage, highly tuned algorithms that convert each face to a signature, and time-and-location databases that record every person’s facial signature each time it is recognized outside the enclave of the home. “Stand-off” identity detection by laser-scanning of the iris holds out more hope for reliability, I think. I look forward to the case in which the government argues that these kinds of high-tech “examinations” are not searches.

Whether he has in mind the logistics of his surveillance system or not, Professor Epstein rejects my comparison of it to clearly unconstitutional crotch-searches in response to a nuclear threat because:

The Fourth Amendment treatment of unreasonable searches and seizures rests on a critical distinction between investigation of particular suspects and the stopping of dangers from unknown quarters. There is a lot more information in the first case, so that a dragnet search makes no sense, which is why particularized evidence is required. But general surveillance at unknown targets has to spread its net far wider. It is both less intrusive and more comprehensive, and it can and does work.

The distinction he talks about doesn’t arise from the language of the Fourth Amendment, which requires all searches and seizures of protected things to be reasonable, and I don’t know of case law relying on these poles. To my mind, he is simply describing two distinct points on the continuum along which suspicion and reasonable government action run. Courts administer the reasonableness of searches and seizures in a step-wise fashion, of course: Searching or seizing is unreasonable when suspicion is non-existent or low, a modicum of seizing and searching is reasonable when there is “reasonable suspicion based on articulable facts,” and a full warrant search is reasonable when facts, inferences, and identifiers about crimes and criminals have reached the level of probable cause.

If there is a difference in kind between the two situations, I don’t see how they are on opposite sides of the line. In both my crotch-searches-for-nuclear-weapons hypothetical and mass surveillance for terror threats, law enforcement has no idea who the bad actor is and no idea where he, she, or they will strike–if anyone ever does. The government’s power to search and seize our persons, papers, houses, and effects is low—and rightly so: Even great danger doesn’t justify essentially random government action.

What we are looking at post-Boston is well-summarized by the statement of Massachusetts state senator Robert Hedlund (R — Weymouth) that Professor Epstein attacked. Hedlund appears to be the rare example of a politician who avoids the a priori position that we can get more perfect defense against terrorist attacks if we just give more power to the government. It brings him to thinking that I find welcome, and that I think libertarians should generally endorse:

It’s not surprising that you have law enforcement agencies rushing out to use [the Boston bombing and subsequent manhunt] as pretext to secure additional powers but I think we have to maintain perspective and realize that civil liberties and the protections we’re granted under the Constitution and our rights to privacy, to a degree, are nonnegotiable…

You don’t want to let a couple of young punks beat us and allow our civil liberties to be completely eroded. I don’t fall into the trap that, because of the hysteria, we need to kiss our civil liberties away.

Yesterday, the Bureau of Justice Statistics (BJS) released a special report, Firearm Violence, 1993–2011. Not surprisingly, at least for those who follow crime statistics, the report shows that firearm homicides went down 39% between 1993 and 2011. The report also reconfirms many things that gun-rights supporters have been saying for decades: that less than 2% of prison inmates in 2004 bought their firearm from a “flea market or gun show,” and that “2% of state inmates and 3% of federal inmates were armed with a military-style semiautomatic or fully automatic firearm.”

Also not surprising is that very few people know about the dramatically reduced crime rate. Also released yesterday was a Pew study on Americans’ perceptions of the crime rate. Despite cutting the murder rate nearly in half in less than twenty years, only 12% of Americans believe that gun crime has dropped in the past two decades. Fifty-six percent believe it has increased, and 26% believe it stayed the same. This is not new. People often don’t realize how much better things are getting, and this fact can push public policy in misguided directions. 

Many have tried to explain this precipitous drop in crime, including one study that connected it to the decreased amount of lead in the environment. Whatever the cause, one thing is clear: there are about 50 million more guns in America now than in 1993 and crime did not go up.

Now, I will not oversell that statistic, not only because it does not prove the thesis “more guns, less crime,” but also because overselling statistics is a big problem in the gun control debate for both sides. For example, to take another statistic from the BJS report: the number of times per year people use guns to stop or curtail crime. 

Despite the fact that the BJS is quite good at some things, it is uniquely bad at measuring the level of defensive gun use (DGU) in America. And despite the fact that I can easily demonstrate this to anyone with even the slightest inclination to allow their minds to be changed, I am not optimistic that the gun controllers will listen. 

Gun controllers are constantly accusing gun-rights supporters of over-estimating the instances of DGU, and their primary source is the data from the National Crime Victimization Survey, which they rely on unquestioningly. The disparity between the BJS statistics and other studies is stark, as much as 30x. For example, yesterday’s BJS report claims that, between 2007–2011, crime victims used guns to stop or curtail crime 235,700 times. This aligns with the general tendency for the BJS to record between 60,000 and 100,000 DGUs per year. By contrast, Florida State’s award-winning criminologist Gary Kleck has found there may be as many as 2.5 million DGU instances per year. Gun-controllers almost always dismiss Kleck’s data as wildly inaccurate, if not NRA-funded propaganda (it is neither), and instead unquestioningly accept the BJS numbers. See, for example, this study by the Violence Policy Center, which simply regurgitates the BJS numbers, and this discussion of the VPC report at Mother Jones. This New York Times post on the VPC report sneeringly offers this observation on the disparity between Kleck’s and the BJS’s numbers:

Readers can judge for themselves whether the V.P.C. or the N.R.A. is likely to have better numbers. The V.P.C. used data from the National Crime Victimization Survey, conducted by the Bureau of Justice Statistics. The N.R.A.’s estimate is the result of a telephone survey conducted by a Florida State University criminologist.

I accept the Times’s invitation, and I will judge for myself:

Six Reasons to Distrust the NCVS on Defensive Gun Use

1) As you can see from the NCVS survey questions here, the survey is non-anonymous. Although respondents were given guarantees that the results will remain confidential, many respondents would certainly be uneasy about answering questions about gun use after giving their names and addresses. This is a well-known effect of non-anonymous surveys.

2) Respondents were told from the outset that the survey is conducted by the government, specifically the U.S. Census Bureau. Coupling this with the survey being non-anonymous and you have a perfect recipe for withholding information. This is all the more true if the respondent had reasonable concerns about whether an instance of DGU was legal, either because they themselves were not allowed to have a gun or to be carrying a gun (perhaps because of a felony conviction), because carrying a gun or having a gun is essentially illegal in their area (e.g., DC, NYC), or because of the obvious legal gray-area around the act of threatening someone with a gun, much less firing it at them. In essence, those who unquestionably trust the NCVS data on DGUs believe that the question, “hi, I’m from the government, please give me your name and address and tell me if you’ve used a gun to protect yourself in the past year” will yield accurate results.

3) Respondents were only asked about DGU after they had given the location of the crime. If the crime occurred outside the home, as did 78.1% of violent crimes between 2007–2011 (table 7), and some respondents were unauthorized to carry a gun outside the home, then they were being asked to admit to a crime.

4) But respondents were not just told that the U.S. Census Bureau is conducting the survey, they were told that the survey is sponsored by the Department of Justice. They were then asked to volunteer information about possibly illegal activities to the chief law enforcement agency of the United States.

5) Respondents were not directly asked about DGU because the NCVS is not primarily designed to uncover instances of DGU. They were first asked whether they have been victims of a crime and only then were they asked follow-up questions about the incident. But the NCVS under-reports crime, particularly domestic violence and rape, and if it under-reports crimes where DGUs are particularly common then it would of course under-report DGUs.

6) The follow-up questions are not straightforward enough to accurately capture instances of DGU. As you can see from the follow-up questionnaire given to those who report a crime (page 12), respondents must first have answered “yes” to the question, “Did you do anything with the idea of protecting YOURSELF or your PROPERTY while the incident was going on?” before they were asked about DGU. They were then asked to volunteer information about a DGU rather than being put in a position of having to lie in order to deny a DGU.

That’s what the government did. Let’s see how “the result[s] of a telephone survey conducted by a Florida State University criminologist (Gary Kleck)” were collected:

We use the most anonymous possible national survey format, the anonymous random digit dialed telephone survey. We did not know the identities of those who were interviewed, and made this fact clear to the Rs [Respondants]. We interviewed a large nationally representative sample covering all adults, age eighteen and over, in the lower forty-eight states and living in households with telephones. We asked DGU questions of all Rs in our sample, asking them separately about both their own DGU experiences and those of other members of their households. We used both a five year recall period and a one year recall period. We inquired about uses of both handguns and other types of guns, and excluded occupational uses of guns and uses against animals. Finally, we asked a long series of detailed questions designed to establish exactly what Rs did with their guns; for example, if they had confronted other humans, and how had each DGU connected to a specific crime or crimes.

Interviews were monitored at random by survey supervisors. All interviews in which an alleged DGU was reported by the R were validated by supervisors with call-backs, along with a 20% random sample of all other interviews.

Questions about the details of DGU incidents permitted us to establish whether a given DGU met all of the following qualifications for an incident to be treated as a genuine DGU: (1) the incident involved defensive action against a human rather than an animal, but not in connection with police, military, or security guard duties; (2) the incident involved actual contact with a person, rather than merely investigating suspicious circumstances, etc.; (3) the defender could state a specific crime which he thought was being committed at the time of the incident; (4) the gun was actually used in some way–at a minimum it had to be used as part of a threat against a person, either by verbally referring to the gun (e.g., “get away–I’ve got a gun”) or by pointing it at an adversary. We made no effort to assess either the lawfulness or morality of the Rs’ defensive actions.

An additional step was taken to minimize the possibility of DGU frequency being overstated. The senior author went through interview sheets on every one of the interviews in which a DGU was reported, looking for any indication that the incident might not be genuine. A case would be coded as questionable if even just one of four problems appeared: (1) it was not clear whether the R actually confronted any adversary he saw; (2) the R was a police officer, member of the military or a security guard, and thus might have been reporting, despite instructions, an incident which occurred as part of his occupational duties; (3) the interviewer did not properly record exactly what the R had done with the gun, so it was possible that he had not used it in any meaningful way; or (4) the R did not state or the interviewer did not record a specific crime that the R thought was being committed against him at the time of the incident. There were a total of twenty-six cases where at least one of these problematic indications was present. It should be emphasized that we do not know that these cases were not genuine DGUs; we only mean to indicate that we do not have as high a degree of confidence on the matter as with the rest of the cases designated as DGUs. Estimates using all of the DGU cases are labelled herein as “A” estimates, while the more conservative estimates based only on cases devoid of any problematic indications are labelled “B” estimates.

Kleck’s study (which you can read here) was done in 1993, so there is good reason to believe that the instances of DGU have gone down with the crime rate. Also, Kleck’s study, like all studies, is far from ironclad. But I’ll leave that question to the reader: which study is likely to be more reliable?

(For more on defensive gun use, see Cato’s study Tough Targets. You can also check out interactive map on defensive gun use.)

Over at Capital Weather Gang, the always-perceptive Jason Samenow details a recent Twitterspat between Dot Earth’s (aka The New York Times’) Andrew Revkin and Penn State’s Michael Mann over attributing extreme weather events to anthropogenic climate change—tornadoes, in particular.

Revkin tweeted to ask whether the folks who were alluding to anthropogenic greenhouse gas emissions being behind the major (and deadly) tornado outbreak during the spring of 2011 were willing to attribute the record lack of tornado occurrences during the past 12 months to the same cause.

Revkin could have very well asked this same question about all kinds of bad weather—blizzards, hurricanes, droughts, floods, record heat, record cold, summer in Washington, winter in Chicago, etc.

Used to be, when the weather was bad, folks would logically cite Mark Twain’s “if you don’t like the weather in New England now, just wait a few minutes.” Now, someone will show up on TV who is quick to point out that this sort of thing “is consistent with” expectations of global warming. These same folks tend nap when the weather is hunky-dory, and to go into hibernation when the extreme weather category of their previous pronouncement has a hiatus.

Since the bang-up year of 2011, the number of tornadoes has dropped off the table, with the last 12 months showing the fewest since systematic observations began in the 1950s.

And like tornados, major hurricane strikes have also become scarce, in fact, they are so in remission that someone might soon announce they have been cured. It has currently been more than 7 years since a Category 3 made landfall in the U.S., the longest time in more than 100 years—and all this when overall hurricane activity in the Atlantic basin has been elevated. Maybe there is something to research that finds that while anthropogenic climate change may increase the frequency of major hurricanes in the Atlantic, it changes the circulation patterns such that they are more likely to remain offshore (see page 30–32 of our comments on the draft National Assessment Report)

But we digress…

Apparently the folks who rally around the anthropogenic climate change/​extreme weather linkage don’t like being awoken when all is calm.

In his response tweet, Michael Mann accused Revkin of “concern trolling”—which Samenow kindly defined for us as, in this case, “manufacturing a question to score points with climate change skeptics.”

Mann followed up with “Perhaps Andy ‪@Revkin is claiming that the background state of the atmosphere has NOT changed? Is that what he is arguing?”

We are sure that is not what Revkin is arguing at all.

It is true, and Revkin knows this, that human-activity in all its forms exerts some influence on the base state of the atmosphere. So, what?

This does not mean that such an influence is noticeable or even detectable, much less that every time the weather is bad, human activities are to blame.

In fact, in virtually all cases, the magnitude of natural variability is still much larger than the magnitude of the human influence. Nor is the specific impact of the human influence on any weather event ever clear. For example, see our comments about “superstorm” Sandy.

What this does smack of, is pseudoscience—an explanation of things that is not refutable by any conceivable event. Karl Popper famously drew this distinction in his 1957 essay (republished in 1963) Science: Conjectures and Refutations.

If the explanation is that bad weather events serve as evidence that humans have altered the atmospheric base state in such a way as to perceptively influence (make worse) extreme weather events, but that the absence of such events does not serve as counter evidence, then we have a situation where the theory is untestable. Pseudoscience.

Before we should even start to consider taking seriously claims about global warming making things worse, we need to start seeing some predictions about individual events.

Next time there is a discussion about a potential tornado outbreak somewhere in the U.S., we want to see a priori discussions of how anthropogenic climate change will influence the event. For instance, will it lead to 25 tornadoes instead of 23? Will the storms stay on the ground for 15 minutes instead of 14? Will their path length be 12 miles instead of 11? Will they hit the Lazy Acres Trailer park or just skirt by? Will they occur when kids are gathered in the school cafeteria or just after lunch lets out? All these factors, and many orders of magnitude more, collectively determine the impact of the event. And this completely leaves out the confounding influence that there are now more people, with more stuff in potential harm’s way.

Now, you might rightly point out that such predictions are impossible—the atmosphere is too chaotic and our models too coarse to pin down events with such detail.

But until such forecasts are issued—it is also impossible to assess whether the event acted in a manner expected by the global warming alarmists.

Despite this lack of predictive ability, there is no shortage of ex post facto postmortems. Until that changes, no autopsies please!

True science offers up expectations in advance (i.e. “hypotheses,” which, in the weather/​climate business are called “forecasts”), and then uses observations to verify (or reject) those hypotheses. Pseudoscience accepts all observations as support of its theories.

Isn’t it time we take a greater interest in the science of climate change?

Reference:

Karl Popper: Conjectures and Refutations, Routledge & Kegan Paul, 1963, reprinted 2008, pp 43–86.

This month our online ideas journal Cato Unbound boasts an all-new design, with new software to make reading and navigating a whole lot more intuitive.

Our latest issue tackles the topic of fusionism — the old-new idea that libertarians belong on the right side of the political aisle.

Fusionism has a long history. But will it play to millennials? That could be one of the most important questions in American politics.

Young voters are a lot less conservative on social issues like gay marriage and drug policy. In this, they echo previous generational trends on questions like interracial marriage and pornography, neither of which are live political issues anymore. Younger Americans also seem more skeptical of corporate influences in politics. That fact may tilt them to the left, but it could also pave the way for a less corporatist free-market movement, if only we can make the case to them. And some millennials might not even remember a time when America was at peace — a thing we can’t say about any previous generation.

How does the old right-libertarian alliance fare in this new environment? We decided to ask some young activists who’ve given some thought to the question.

Making the case for fusionism is Jacqueline Otto of the American Enterprise Institute’s Values and Capitalism Project. Economic liberty unites us, she says — and we ought not to let the rest divide us.

And contra, we have Jeremy Kolassa, a writer for United Liberty. He argues that libertarians haven’t gotten much from their old alliance with the right, and it’s time to stand on our own. Libertarians should offer good ideas to whoever will listen and form coalitions wherever specific issues allow it.

Over the next few days we’ll also have essays from Clark Ruper of Students for Liberty and Jordan Ballor of the Acton Institute. Also be sure to stop by our Facebook page and follow us on Twitter as the conversation develops.

Argentina is once again wrestling with its long-time enemy, inflation. Now, it appears history may soon repeat itself, as Argentina teeters on the verge of another currency crisis. As of Tuesday morning, the black-market exchange rate for Argentine pesos (ARS) to the U.S. dollar (USD) hit 9.87, meaning the peso’s value now sits 47.3% below the official exchange rate. This yields an implied annual inflation rate of 98.3%. For now, the effects of this elevated inflation rate are being subdued somewhat by Argentina’s massive price control regime. But these price controls are not sustainable in the long term. Indeed, the short-term “lying prices” only distort the economic reality, ultimately leading to scarcity. There is, however, a simple solution to Argentina’s monetary problems: dollarization. I have advocated dollarization in Argentina for over two decades, well before the blow up of their so-called “currency board.” To put the record straight, Argentina did not have a true currency board from 1991 to 2002. Rather, as I anticipated in 1991, the “convertibility system” acted more like a central bank than a currency board. This pegged exchange rate system was bound to fail—and fail, it did. The 2001-02 Argentine Crisis could have easily been avoided if the country had simply dollarized. Argentina had more than sufficient foreign assets to dollarize their economy even late into 2001. But the Argentine government, through a series of policy blunders, ended up “floating” the currency. Not surprisingly, Argentina is now back to where it was in the late 1980s. So, how can Argentina dollarize? In short, the Banco Central de la Republica Argentina (BCRA) would take all of the assets and liabilities on its balance sheet denominated in foreign currency and convert them to U.S. dollars. The Central Bank would then exchange these dollars for all the pesos in circulation (monetary base), at a fixed exchange rate. By my calculation, the BCRA would need at least $56.36 billion to dollarize at the official exchange rate (as of April 23, 2013).

As of April 23, the BCRA had net foreign assets equivalent to $31.23 billion. If Argentina were to dollarize at the official ARS/USD exchange rate of 5.17, it would fall $25.13 billion short of the $56.36 billion needed to cover the monetary base. That said, if the BCRA were to use an exchange rate closer to the black-market (read:free-market) exchange rate, this could be more easily accomplished. For example, if Argentina decided to dollarize at an ARS/USD exchange rate of 9.33 pesos to the dollar (5.5% lower than the black-market ARS/USD exchange rate as of Tuesday), only $31.23 billion would be required to cover its monetary base and dollarize the economy. This is the exact amount of net foreign assets held by the BCRA (see the accompanying table).

The end result would be an Argentine economy free of the inflation that has plagued it for decades. Indeed, Argentina could finally experience those benefits enjoyed by other dollarized countries, like Ecuador. Below, I present (with only one minor change) my blueprint for Argentina’s dollarization, which I first presented over a decade ago.

I don’t often commend regulators, but for those interested in preserving national sovereignty, new SEC chairwomen, Mary Jo White, is off to a good start if yesterday’s New York Times’ editorial is anything to go by. The Times criticized White for approving new SEC derivatives regulations that defer oversight of foreign security-based swap transactions, including those relating to the foreign subsidiaries of U.S. banks, to foreign regulators. The Times also derided White for approving rules that were “weaker” than the similar rules released by the Commodity Futures Trading Association.

Like the CFTC, the Times’ editorial board has clearly not heard of the concept of international comity, which it seems to confuse with “weakness”. In particular, it is not clear why the Times believes that unelected U.S. regulators should have the right to be self-appointed derivatives tsars to the rest of the world. The Times also appears to have overlooked the recent letter, signed by the finance ministers of nine of the United States’ largest trading partners and addressed to their U.S. counterpart Jack Lew. The letter was a thinly-veiled attack on the CFTC’s so called “extra-territorial” application of its cross-border swap rules and noted that an approach “in which jurisdictions require that their own domestic regulatory rules be applied to their firms’ derivatives transactions taking place in broadly equivalent regulatory regimes abroad is not sustainable.”

Of course, the Times does raise one important point: that it is undesirable to have two agencies releasing different rules on what amounts to the same topic. But the arbitrary distinction in the oversight of security-based swaps (regulated by the SEC) and OTC derivatives (regulated by the CFTC) is just one of Dodd-Frank’s many design flaws. Moreover, the SEC is under no obligation, pursuant to Dodd-Frank or otherwise, to follow the CFTC’s approach just because the CFTC released its regulations first. Especially as those regulations have proven to be so contentious (and not just with U.S. banks who legitimately fear being shut of international derivatives markets, but, more importantly, the foreign regulators on whom the U.S. may have to rely in a crisis).

It has become an unwelcome trend for U.S. regulatory agencies to overreach their jurisdictional and geographical boundaries. This began with the IRS’ FATCA implementation and has continued in the financial regulatory space. That White does not wish to follow her CFTC counterpart, Gary Gensler, down the rabbit hole and alienate the U.S.’s trading partners and allies is commendable, even if the Times is disappointed.