SCOTUS Arbitration Decision

Yesterday, the U.S. Supreme Court (5-4) upheld the right of employers and employees to agree to submit disputes to one-on-one arbitration. The decision is NLRB v. Murphy Oil USA, Inc. This is a great victory for the right of contract and opting out of the government courts in favor of private dispute resolving entities.

I really like Justice Gorsuch’s introduction to the opinion and his distinction between making policy and interpreting law. Here is a snippet:

Should employees and employers be allowed to agree that any disputes between them will be resolved through one-on-one arbitration? Or should employees always be permitted to bring their claims in class or collective actions, no matter what they agreed with their employers?

As a matter of policy these questions are surely debatable. But as a matter of law the answer is clear. In the Federal Arbitration Act, Congress has instructed federal courts to enforce arbitration agreements according to theirterms—including terms providing for individualized proceedings.

The New York Times sums up the decision as follows:

Writing for the majority, Justice Neil M. Gorsuch said the court’s conclusion was dictated by a federal law favoring arbitration and the court’s precedents. If workers were allowed to band together to press their claims, he wrote, “the virtues Congress originally saw in arbitration, its speed and simplicity and inexpensiveness, would be shorn away and arbitration would wind up looking like the litigation it was meant to displace.”

SCOTUS blog has this analysis of the ruling.

The Washington Post offers this summary.


William J. Watkins, Jr. is a research fellow at the Independent Institute and the author of the award-winning Independent book, Crossroads for Liberty: Recovering the Anti-Federalist Values of America’s First Constitution.

Johns Hopkins University: Launching Pad for My Fifty Years as a Professional Economist

This month, I am celebrating—if that’s the right word—an especially important milestone in my life. In May 1968, exactly fifty years ago, I was putting the finishing touches on my work for the Ph.D. degree in economics at the Johns Hopkins University. Among other things, my dissertation had to be typed in the exact form prescribed for a copy to be deposited in the Hopkins library.

I also had to defend my dissertation before a committee that consisted of the two members of my oversight committee, H. Louis Stetler III and Edwin S. Mills; another member of the department of political economy (as the economics department was then called), G. Heberton Evans; and an outside member, who in my case was Alfred Chandler, an acclaimed business historian, among other things, from the history department. I received a passing evaluation in the defense despite Chandler’s asking me some questions I was totally unable to answer.

At that point, I had only to await the actual delivery of my diploma, which came the following month after I had evacuated Baltimore for the blessed relief of returning to the West Coast and reporting to my first academic faculty job at the University of Washington in Seattle.

The Balance of International Payments Is Economic Nonsense

Let us define the set of all human beings whose height is greater than 170 cm and less than 180 cm. Call this set A. Now let us collect data on all the dealings between members of set A and members of set B, which consists of all human beings whose height is less than or greater than those in set A. What economic significance can we ascribe to the aggregate of monetary flows between members of set A and members of set B? Correct answer: none. This aggregation of persons who trade with persons in the complementary set has no economic meaning; the sets are arbitrary so far as economic understanding is concerned. People—individuals, firms and other organizations, and governments—trade in order to improve their economic condition. Whether they trade with shorter or taller people or with people within a certain height range or outside this range has nothing to do with economics or human well-being. To draw up a balance of inter-set payments for set A and set B, or any given subset of B would serve no purpose. It would be a nonsensical exercise.

Sports Betting Decision and Federalism

Last week the Supreme Court struck down provisions of the Professional and Amateur Sports Protection Act (PAPSA) that prohibit state authorization and licensing of sports gambling schemes. SCOTUS held that this statute violates the Constitution’s anticommandeering rule. The New York Times sums up the import of the decision as follows:

The decision seems certain to result in profound changes to the nation’s relationship with sports wagering. Bettors will no longer be forced into the black market to use offshore wagering operations or illicit bookies. Placing bets will be done on mobile devices, fueled and endorsed by the lawmakers and sports officials who opposed it for so long. A trip to Las Vegas to wager on March Madness or the Super Bowl could soon seem quaint.

Can History Survive Duke University’s Nancy MacLean?

Even though the dust-up over Duke University historian Nancy MacLean in 2017 should have prepared me, I came away from my belated cover-to-cover read of Democracy in Chains: The Deep History of the Radical Right’s Stealth Plan for America even more deeply troubled than I expected. The book is a thoroughgoing attack on public-choice economics and the Nobel Prizewinning (1986) co-founder of the sub-discipline, James M. Buchanan. MacLean also sends broadsides toward Charles Koch and the Koch Foundation, but this extension of her argument is strained at best (perhaps a case of the tail wagging the dog?).

MacLean’s disingenuous polemic is far more problematic than her obvious and shallow misrepresentations of leading scholars, the libertarian movement, and the academic discipline of public-choice economics. While dozens of MacLean’s critics have weighed in, two fundamental flaws in her work haven’t received enough discussion or play. These errors, in my opinion, were severe enough that her book manuscript would not have been accepted as a graduate thesis or dissertation in the social sciences. If this book represents the state of art in the research and critical thinking in her field, History as an academic discipline is in serious intellectual trouble.

Another Latin American Tyrant: Nicaragua’s Daniel Ortega

Given that Venezuela monopolizes whatever interest there is in Latin America these days, we pay insufficient attention to another tyranny—that of Daniel Ortega. Yes, I am talking about the Sandinista who tried to impose a communist regime in Nicaragua in the 1980s and came back to power eleven years ago.

The Nicaraguans have taken to the streets to demand his resignation and that of his wife, Rosario Murillo, who is his vice president. She is the object of as much resentment among the population as he is. Murillo is known for having disowned her own daughter, Zoilamérica Narváez, who at the end of the 1990s accused her stepfather, Daniel Ortega, of having sexually abused her beginning in her childhood. Zoilamérica lives in exile in Costa Rica; the stepfather, on the other hand, rewarded the betrayal of the mother by conferring on her enormous power once he regained the presidency. The couple has been in the government since 2007 thanks to the fact that in 2011 they used the subservient courts to legalize an unconstitutional re-election and three years later they forced the Congress to allow the permanent re-election of the president.

Washington, DC: Where Torture Is More Forgivable than Harassment

Less than a month ago, President Trump’s nominee for the VA head chose to withdraw his name from consideration as allegations mounted—which he vehemently denied—of his having created a “toxic” work environment and assorted other peccadillos. Meanwhile, most of us have lost count of how many members of Congress have resigned due to allegations of sexual harassment of various degrees, some proven, some not, including, for example, Al Franken, who issued this mea culpa:

The first thing I want to do is apologize: to [accuser] Leeann, to everyone else who was part of that tour, to everyone who has worked for me, to everyone I represent, and to everyone who counts on me to be an ally and supporter and champion of women.

A Hidden Cost of Inflation

Many readers will know that the Currency and Foreign Transactions Reporting Act of 1970 requires that financial institutions must keep records of cash transactions summing to more than $10,000 in one day and report suspicious transactions to the federal government. In addition, people coming into the United States from foreign countries (including US citizens) must declare cash or other negotiable instruments they are bringing into the country if the amount exceeds $10,000.

Monitoring large holdings of cash and cash transactions provides a way for the government to identify people who may be engaging in illegal activity. These reporting requirements open the potential for government to abuse them, especially because of civil asset forfeiture laws that allow governments to confiscate assets without proof of any wrongdoing, and require the owners of the assets to prove they were not associated with any illegal activity to get their assets back. That’s an important point, but not my point here.

Cultural Appropriation and Cultural Imperialism

You may have seen the uproar caused by an American student wearing a Chinese-style dress to her prom, bringing her widely publicized criticism that she was guilty of cultural appropriation. What is cultural appropriation?

This commentary says cultural appropriation is “taking intellectual property, traditional knowledge, cultural expressions, or artifacts from someone else’s culture without permission. This can include the unauthorized use of another culture’s dance, dress, music, language, folklore, cuisine, traditional medicine, religious symbols, etc.”

Following that definition, it would seem that American (and perhaps more broadly, Western) culture is the most appropriated culture in the world today. Everywhere in the world, people have adopted Western styles of dress, music, language, and cuisine.

Free Traders Should Be More Careful When Defending Trade Deficits

In a recent Wall Street Journal op-ed, Harvard economist Robert Barro understandably took aim at President Trump’s faulty mercantilist criticism of free international trade. In contrast to Trump’s view, Barro argued that imports are “things we want” whereas exports are “the price we have to pay” to obtain them. Although Barro’s statements are a useful way to get novices to think about trade, they can be misleading, and in this case actually did lead a WSJ editor to write something incorrect. All too often, in their zeal to defuse hysteria over America’s trade deficit, free-trade economists prove too much, using arguments that suggest countries with trade surpluses are somehow getting ripped off. In this post, I’ll spell out the WSJ mistake, and offer a clearer way to think about international trade.