The Pentagon’s inability to pass an audit, after years of outright stonewalling, followed by many more years of foot-dragging, is suddenly a hot topic. A few weeks ago, Rolling Stone featured a scathing exposé highlighting the Pentagon’s inability to count.

Writer Matt Taibbi explains

Ahead of misappropriation, fraud, theft, overruns, contracting corruption and other abuses that are almost certainly still going on, the Pentagon’s first problem is its books. It’s the world’s largest producer of wrong numbers, an ingenious bureaucratic defense system that hides all the other rats’ nests underneath.

These and other stories seem to have prompted House Armed Services Committee Chairman Adam Smith (D‑WA) to deliver a stern message to officials in the Department of Defense. The Trump administration has requested $750 billion for the Pentagon, but, Smith noted, “We literally don’t know where a chunk of that $750 billion is going to go. We can identify some of it here and there, but by any normal accounting measure, you can’t tell us where you’re spending your money, or how much inventory you have.”

Taibbi continues:

If and when the defense review is ever completed, we’re likely to find a pile of Enrons, with the military’s losses and liabilities hidden in Enron-like special-purpose vehicles, assets systematically overvalued, monies Congress approved for X feloniously diverted to Program Y, contractors paid twice, parts bought twice, repairs done unnecessarily and at great expense, and so on.

Enron at its core was an accounting maze that systematically hid losses and overstated gains in order to keep investor money flowing in. The Pentagon is an exponentially larger financial bureaucracy whose mark is the taxpayer. Of course, less overtly a criminal scheme, the military still churns out Enron-size losses regularly, and this is only possible because its accounting is a long-tolerated fraud.

Judging from the response of DoD’s senior leaders, however, there is absolutely no cause for alarm. Acting Secretary of Defense Pat Shanahan explained last year that they “never expected to pass the audit.” When a reporter asked him why taxpayers should trust the Pentagon with their money if it can’t even “get their house in order and count ships right or buildings right,” Shanahan quipped, “We count ships right.”

Taibbi explains: “This was an inside joke. The joke was, the Pentagon isn’t so hot at counting buildings. Just a few years ago, in fact, it admitted to losing track of ‘478 structures,’ in addition to 39 Black Hawk helicopters (whose fully loaded versions list for about $21 million a pop).”

This cavalier attitude is pretty maddening. It’s almost as though the DoD sees public scrutiny as not much more than a bothersome distraction. As I explained when we discussed Taibbi’s article in War on the Rocks’ latest “Net Assessment” podcast, I had Colonel Nathan R. Jessup’s courtroom monologue from the movie A Few Good Men running through my head.

While on the stand, Jessup (played by Jack Nicholson) tries to deflect questions about his immoral and unethical actions: “I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the very freedom that I provide and then questions the manner in which I provide it. I would rather that you just said ‘thank you’ and went on your way.”

DoD leaders may not have the inclination to explain their shoddy accounting, but they do have a responsibility to the American people who pay the bills; and our elected representatives have an obligation to get to the truth. There are reasonable doubts about the Pentagon’s ability to be a responsible steward of the vast sum of money shoveled its way every year. So long as these doubts persist, we shouldn’t expect that Americans will want to spend even more. 

This week saw the passing of “Equal Pay Day,” which marks the culmination of the roughly three extra months that an average female employee had to work in 2019 to match the amount of money made by an average male worker in 2018. Many people see the pay gap as unjust, but is it really a result of rampant sexism in the workplace as the critics allege?

A survey unveiled on Tuesday by CNBC and Survey Monkey suggests that, actually, both men and women are equally pleased with their employment situations and the earnings gap can largely be explained by women being more likely on average to choose part-time work.

“Men have a Workplace Happiness Index score of 72 and women a score of 70, close enough to lack a statistically meaningful difference,” according to the newly released data. That fits with earlier polling that was conducted by Cato’s Dr. Emily Ekins, which found that in the United States, the vast majority of women “believe their own employers treat men and women equally.” Fully 86 percent of women polled believed that their employer pays women equally.

There is still a pay gap between men and women who work full-time, but that may be partly due to men and women opting to work in different fields. Dangerous jobs in fields like mining and fishing, for example, tend to attract men. Those jobs also tend to be relatively well-remunerated. (As Human​Progress​.org advisory board member Mark Perry points out, the gender gap in workplace deaths far exceeds the gap in pay).

Even so, among full-time workers, the “pay gap” is rapidly narrowing. Data from the OECD shows that the gender wage gap in median earnings of full-time employees is declining in practically all countries for which there are data. In the United States, highlighted in blue in the graph below, the wage gap has fallen dramatically since the 1970s. In 1975, the U.S. gender wage gap was 38 percent. By 2015, it had shrunk to 18 percent.

That 18 percentage point difference does not take into account important characteristics like “age, education, years of experience, job title, employer, and location,” according to my Cato colleague Vanessa Calder. A recent study, which controlled for those characteristics, concluded that the U.S. gender pay gap is only around five percent, meaning that Equal Pay Day should actually be in January.

Of course, if any of that small remaining five percent gap is the result of sexist discrimination—rather than additional mitigating factors that the study failed to control for—then that is unacceptable. We should denounce all forms of inequitable treatment, wherever it persists. We should also take a clear-eyed view of the data and recognize the remarkable gains women have made in the workplace—and how labor market participation has transformed women’s lives for the better.

Several years ago, Atlantic writer Conor Friedersdorf asked Twitter “If you could add one Bill of Rights style amendment to the Constitution what would it be?” I responded “The Fourth Amendment and “we mean it.””

My answer may have been tongue-in-cheek, but quite seriously, the Fourth Amendment and its protections have been eroded by the Supreme Court precedents over several decades. As a result, the power of the police to intrude upon the lives of individuals has grown and they have taken advantage of that power throughout the country.

The Fourth Amendment reads:

“The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place searched, and the persons or things to be seized.”

In plain English, the amendment should mean—among other things—that the police cannot stop (or “seize”) you on the street for no good reason. In the context of traffic stops, the Supreme Court held in Whren v. U.S. (1996) that the police had to have probable cause to believe the driver or vehicle is in violation of a traffic law. In the abstract, Whren makes perfect sense: If an officer observes a moving violation, he or she can stop a driver to address the issue.

In practice, however, Whren has provided virtual carte blanche for police to stop motorists due to innumerable traffic laws, many of which are vague and subjective, that most drivers violate every time they get behind the wheel. As I explained in my 2016 Case Western Reserve Law Review article “Thin Blue Lies,” police routinely use these myriad violations as pretext to stop motorists and investigate other crimes entirely unrelated to traffic safety. Officers understand if they follow any driver long enough, they can almost certainly find a pretext for stopping the vehicle and conducting an informal roadside investigation, subverting the spirit (if not the letter) of the Fourth Amendment’s protection against arbitrary seizure.

Despite this gaping hole in Fourth Amendment protections, police officers in Nebraska initiated a traffic stop on a vehicle without probable cause of any traffic violation whatsoever. (This isn’t hyperbole. In court filings, the State of Nebraska stipulates there was no traffic violation.) As a result of the stop, the driver of the vehicle, Mr. Colton Sievers, was questioned and eventually arrested for methamphetamine possession after a search of his vehicle. He moved to have the evidence thrown out because the original stop was an illegal seizure under the Fourth Amendment.

In a rather unusual decision, the Supreme Court of Nebraska found that the stop was legal under a different case, Illinois v. Lidster (2004), which allowed police to stop vehicles at checkpoint to seek eyewitnesses to a recent crime in the area, not to investigate drivers for criminal wrongdoing. The merits of that decision aside, neither Sievers nor the State of Nebraska argued Lidster would have permitted the stop at issue in the present case.

So unusual is the Nebraska Supreme Court decision that law professor Orin Kerr, to whom Cato scholars often find ourselves in opposition regarding Fourth Amendment jurisprudence, has joined the Sievers legal team and co-authored a cert petition to the U.S. Supreme Court (SCOTUS). The petition asks SCOTUS to either hear Sievers v. Nebraska or summarily reverse the decision below.

In a Volokh Conspiracy blogpost about the Nebraska Supreme Court decision, Kerr wrote:

It’s true that Lidster allowed a suspicionless “information-seeking” checkpoint stop, which is effectively an exception to the usual rule that reasonable suspicion is required under Terry v. Ohio. [note: Terry v. Ohio (1968) preceded Whren, requiring police to have reasonable suspicion to initiate a pedestrian stop.] But the key to Lidster was that the officers were only trying to find innocent eyewitnesses to a past crime. The police set up the checkpoint at the scene of the accident hoping to find a member of the public who had seen the crime and might be able to give the police some leads. This fell out of the usual Terry requirement of suspicion, the Lidster Court held, because the police where just asking members of the general public if they could help the police.

[…]

It seems obvious that Sievers was different. This was not a case of “seeking information from the public.” The officers testified that they stopped the truck because they thought it might contain evidence of crime — specifically, stolen goods that they thought were being stored at the house where the truck had been parked. When the stop occurred, the officer who ordered the stop “advised the [other] officers to make a traffic stop to prevent the truck from leaving with any stolen items.” The lead officer explained that they need to stop and search the truck “for any items taken from the [firearms] burglary.”

And when Sievers was stopped, the officers didn’t treat him like a member of the public who perhaps just might have seen a crime. Instead, Sievers was treated as a dangerous suspect.

Hopefully, SCOTUS agrees to hear the Sievers case or summarily reverses the Nebraska Supreme Court. SCOTUS has already ceded too much leeway to police to stop motorists as pretext, but police officers should at least meet the minimum standard for a legal stop.

You can read the whole cert petition here.

A common refrain in opposition to school choice is that choice is rooted in racial segregation. Specifically, that people barely thought about choice until the Supreme Court’s 1954 Brown v. Board of Education decision required public schools to desegregate, and racists scrambled to create private alternatives to which they could take public funds. I have dealt with this before and won’t rehash the whole response (hint: Roman Catholics), but a new permutation popped up on Vox yesterday, with author Adia Harvey Wingfield asserting:

Prior to Brown v. Board of Education, most US students attended local public schools. Of course, these were also strictly racially segregated. It wasn’t until the Supreme Court struck down legal segregation that a demand for private (and eventually charter and religious parochial) schools really began to grow, frequently as a backlash to integrated public institutions.

Kudos to Prof. Wingfield for making clear that many public schools were “strictly racially segregated,” which often seems to be soft pedaled when linking choice to segregation. But her assertion that private schooling didn’t “really” begin to grow until after Brown is not borne out by the data. As the chart below shows, while the share of enrollment in private schools spiked in 1959, the growth in private schooling didn’t suddenly increase right before that. In 1889—the earliest year available— the private school share was 11 percent, dipping to 7 percent in 1919, then pretty steadily rising until the 1959 peak. (Note, the earlier years of the federal data are in ten-year increments. Also, data include pre‑K enrollments.)

History is clear that private education has long been with us, and while it has certainly at times been used to avoid racial integration, it has also been employed for reasons having nothing to do with that. This remains true even in our relatively modern era in which “free” public schools have crowded out many private options.

Minerva Dairy, based in Ohio, is America’s oldest family-owned cheese and butter dairy. It has been producing artisanal, slow-churned butter in small batches since 1935. It has sustained its business through their website and by selling to regional distributers in several states. This model has worked well everywhere except Wisconsin, which requires butter manufacturers to jump through a series of cumbersome and expensive hoops to sell their product.

Of course, Wisconsin is America’s Dairyland, with many large producers who (big surprise) have an interest in limiting competition. At the behest of these companies, the state requires every batch of butter to be “graded” by a specifically state-licensed grader—all of whom live in Wisconsin, except for a half-dozen in neighboring Illinois and a handful around the country that have been licensed only in the last year—who must taste-test every single batch. Because Minerva’s butter is produced in multiple small batches over the course of each day, the law would effectively require the dairy to keep a licensed tester on-site at all times, which is cost-prohibitive. The state admits that the grading scheme has nothing to do with public health or nutrition, but claims that its grades, based largely on taste, inform consumers.

The fact that Wisconsin is trying to shape the taste of butter isn’t even the most absurd part of this story. The criteria used to grade the butter are a ludicrous mad-lib of meaningless jargon not even the state’s experts understand. The law purports to identify such flavor characteristics as “flat,” “ragged-boring,” and “utensil.” (All commonplace terms spoken by consumers in dairy aisles across the nation, no doubt.) The terminology hearkens to a freshmanic—not even sophomoric—term paper on the semiotics of postmodern agrarian literature. To claim that a grade calculated with reference to udder nonsense serves the purpose of informing anyone illustrates the danger inherent in judges’ deferring to government rationales for silly laws that burden people who are just trying to make an honest living.

Our friends at the Pacific Legal Foundation represent Minerva in a lawsuit that challenges the butter-grading law on the grounds that it burdens interstate commerce in violation of the Commerce Clause, and also hurts small dairies’ Fourteenth Amendment rights to due process and equal protection of law. Minerva lost at the district court when the judge applied a toothless, cheesy “rational basis” test to the law in question, giving little weight to the serious concerns described above, then again in the Seventh Circuit (where Cato filed an amicus brief).

Tireless in its pursuit of reasonable review of this silly law, Minerva has asked the Supreme Court to take its case. Because laws that abrogate constitutional rights warrant meaningful judicial oversight, Cato has again filed an amicus brief supporting Minerva’s petition.

Wisconsin’s law directly burdens the right to participate in the state’s butter market, and thus their economic liberty, for no sane or “rational” reason. There are simply no benefits to consumers that come from forcing producers to pay considerable sums to have an arbitrary process deposit a random letter on product packaging. It curdles the mind to argue otherwise.

The Supreme Court will decide before it breaks for the summer whether to take up Minerva Dairy v. Pfaff.

A new report suggests that the Democrats’ FAMILY Act paid leave proposal is substantially more costly than previously estimated. The difference is meaningful: using more realistic assumptions, the cost of national paid leave is 7‑fold greater than previous estimates, and taxpayers would be picking up the tab.

The American Action Forum analysis uses data from Cato’s paid family leave poll to estimate the cost of the FAMILY Act. Previously, assumptions used to model the cost of the program relied on the use of national unpaid leave benefit take-up rates (FMLA), or lesser-known, less generous, state paid leave program take-up rates. Unfortunately, neither are good proxies for the likely use of a paid, nationally-known, and more generous FAMILY Act-like program.

The nationally representative Cato paid leave poll asked directly about respondent’s intended use of a FAMILY Act-like benefit. The take-up rate and benefit use duration for the FAMILY Act were substantially higher than previous estimates that relied on take-up rates for unpaid leave or lesser-known and less generous state programs.

Figure 1: Three Estimates of the Cost of the FAMILY Act 

Using more realistic use assumptions, the FAMILY Act would cost 7‑fold as much as previously estimated (Figure 1) and require a 2.85 percent payroll tax on workers. For an average worker, that means paid leave would cost $1,440 per year. This is substantially more expensive than previously claimed: elsewhere, advocates assert that the FAMILY Act would require a 0.2 percent payroll tax on workers, at a cost of $75–95 annually. 

Accurately forecasting the cost of paid leave is critical, because Americans are price-sensitive. For example, when costs aren’t mentioned, 74 percent of Americans say they support national paid leave policy. But if paid leave costs workers $1,200 per year, a majority of Americans oppose paid leave. 

It seems likely the FAMILY Act will cost substantially more than advocates claim, either because estimates use erroneous assumptions or because the policy grows substantially over time, as paid leave policies have elsewhere in the world. Either way, taxpayers deserve accurate information about the cost of paid leave before policymakers ask them to sign on the dotted line. 

Housing prices have soared in many U.S. and international cities, which has generated affordability problems for middle- and lower-income families. An article in the Wall Street Journal today by Laura Kusisto and Peter Grant notes, “Across 32 major cities around the world, real home prices on average grew 24% over the last five years.”

Kusisto and Grant imply that the blame should be shared: “Governments haven’t had the money to subsidize new supply … The private sector has also fallen short.” And they say, “But no approach has solved the crises and most have other negative ripple effects.”

But then the reporters undercut their own narratives with news about Tokyo:

But one major city has had stable housing prices as a result of pumping out housing supply to keep up with rising demand.

Tokyo is one of the few cities in which supply has kept up with demand, keeping a crisis from developing. But that is due largely to deregulated housing policies that other countries would have a hard time reproducing.

“It goes against the notion of planning and developing cities in an orderly fashion,” said Laurence Troy, research fellow at the City Futures Research Centre of the University of New South Wales, Australia.

So maybe the idea of imposing top-down “order” is harmful. If the government gets out of the way, businesses can invest, supply will increase, and prices will be restrained.

Not only will supply increase, but Kusisto and Grant report that businesses in deregulated markets respond to the high-price problem by innovating to cut construction costs. Thus, the private sector is not “falling short” in places where it is allowed to work its magic. 

On the next page in the Journal today, River Davis reiterates these points in her report on Tokyo’s relatively free housing markets:

In the past two decades, home prices in some leading North American and European cities have skyrocketed. In Tokyo, however, they’ve flatlined.

So why no affordable-housing crisis in Japan? A big factor, experts say, is the country’s relatively deregulated housing policies, which have allowed housing supply to keep up with demand in the 21st century.

With no rent controls and fewer restrictions on height and density, Tokyo appears to be a city where the market is under control—where supply is keeping home prices from rising as drastically as they have in many other major world cities.

… Japan’s current level of housing supply is tied to a package of policy changes—implemented around the turn of the century—that were aimed at restoring the profitability of Japan’s land-development industry, according to Andre Sorensen, a professor of urban geography and a Japan housing expert at the University of Toronto Scarborough.

The Japanese government began relaxing regulations that had restricted supply, allowing taller and denser buildings in Japan’s capital. Private consultants were given permission to issue building permits to speed up construction. “This created something like a free-trade zone in Tokyo,” Mr. Sorensen said.

With deregulation has come business innovation, which has further restrained prices:

Two of Japan’s largest housing construction companies, Daiwa House Industry Co. and Sekisui House Ltd, both say that the easing of land and construction regulations has helped them build in Tokyo. The companies say that deregulation has benefited them particularly in their ability to expand housing units by replacing low-rise residential complexes with much higher ones.

“A good environment for housing construction is being created,” says Daiwa House managing executive officer Yoshinori Ariyoshi.

To deal with rising construction fees, Mr. Ariyoshi says Japan may have to rely more on prefabricated homes to provide affordable housing. He estimates that about 20% of the country’s homes are already being assembled in increasingly automated factories.

For more on these issues, see Vanessa Brown Calder’s analysis here.