Summer is here—and so is the summer issue of the Independent Institute’s quarterly journal. Here are some of the topics that subscribers of The Independent Review can look forward to reading about:

• What’s wrong with recent economic studies calling for new regulations meant to reduce so-called “systemic risks” to the financial system? According to Alexander William Salter, they’ve neglected two fundamental problems. (Read a summary.)

• What do election studies reveal about the effects of campaign contributions on the decisions of elected officials? Jeffrey Milyo offers evidence that challenges widespread views about corporate influence and political corruption. (Read a summary.)

• Do minimum-wage laws have an ethical leg to stand on? The answer depends on a distinction between “magnanimous morality” and “mundane morality,” argues Dwight R. Lee.
 (Read a summary.)

As I’ve mentioned before, “All the President’s Men” is one of my all-time favorite movies, depicting the heroic efforts of two cub reporters relentlessly pursuing a story of little interest to others until their efforts eventually resulted in bringing down the entire Nixon administration.

When it was discovered in the course of the Congressional investigations into Watergate that Nixon had taped Oval Office conversations, a key “smoking gun” was the discovery of an 18 ½ minute “gap” in a conversation between Nixon and his chief of staff Haldeman about Watergate. Nixon’s secretary claimed she had accidentally erased the tape during its transcription—a claim found so ludicrous that the “18 1/2 minute gap” became short-hand for any ridiculous assertion, e.g., “The dog ate my homework.”

Nixon had engaged in all kinds of “dirty tricks” against political “enemies,” and among the articles of impeachment was the charge that Nixon “endeavored to obtain from the Internal Revenue Service, in violation of the constitutional rights of citizens, confidential information contained in income tax returns for purposes not authorized by law, and to cause, in violation of the constitutional rights of citizens, income tax audits or other income tax investigation to be initiated or conducted in a discriminatory manner.”

This IRS has since tried mightily (with spotted success) to establish a reputation for being above politics, and the current investigation into the IRS’s admitted targeting of conservative groups under the Obama administration thus rightly warrants a closer look.

“Will the digital age usher in the individual liberation and political freedoms that the Internet is uniquely capable of unleashing? Or will it bring about a system of omniscient monitoring and control, beyond the dreams of even the greatest tyrants of the past? Right now, either path is possible. Our actions will determine where we end up.” —Glenn Greenwald

Glenn Greenwald is not your typical journalist. A brief review of his biography and career shows that he has gone to great lengths to emphasize this particular point. According to a Buzzfeed profile:

Greenwald is a rare man of inflexible principle in an online conversation dominated by flexible partisans. He’s a civil libertarian for whom LGBT equality, a Nazi’s right to free speech, and freedom from government surveillance are bound by a common thread; and he’s a brutal and tireless combatant with everyone from President Obama’s Twitter legions to George W. Bush.

Whenever I read Greenwald, I am reminded of the courage and strongly held convictions exhibited by early twentieth century journalist H. L. Mencken. I’ve been following Greenwald’s writings for a number of years, and I especially admire his principled commentaries on civil liberties (covering free speech to due process), government transparency, whistleblowers, political hypocrisy, and the media’s disturbing subservient relationship to power. Perhaps then, it is no surprise that Greenwald was one of two journalists contacted by Edward Snowden to publicize his NSA revelations.

As with his other writings, Greenwald’s new book No Place to Hide: Edward Snowden, the NSA, and the U.S. Surveillance State was a pleasure to read and carries many important lessons for our time. With the racing suspense of a spy thriller, Greenwald gives his personal account on how he first met NSA whistleblower Edward Snowden and how that fateful encounter set the stage for arguably the greatest journalist scoop of the decade. Greenwald recounts the numerous technical and institutional hurdles that created many initial frustrations but was convinced of the gravity of what Snowden had to offer. After meeting him in-person after his trip to Hong Kong, he understood the moral and ethical considerations that drove Snowden’s actions and sought to honor the sacrifice Snowden rationally and willingly chose to make. Together with independent documentary filmmaker Laura Poitras and the backing of The Guardian, they produced the groundbreaking disclosures that garnered international headlines, triggered a new debate over the modern surveillance state, and spawned various socio-political movements dedicated to reform. It’s been over a year (see this excellent summary by the Electronic Frontier Foundation of what we learned so far) since the initial stories first ran, and the resulting international controversy over the NSA’s global system of surveillance remains ongoing.

Despite the fact he has written on government abuses for years, Greenwald was shocked by the massive archive provided by Snowden because it revealed the “sheer vastness” of a surveillance apparatus that has been “implemented with virtually no accountability, no transparency, and no limits.” After thorough review of the formerly top secret NSA documents, Greenwald firmly concludes:

[T]he US government had built a system that has as its goal the complete elimination of electronic privacy worldwide. Far from hyperbole, that is the literal, explicitly stated aim of the surveillance state: to collect, store, monitor, and analyze all communication by all people around the globe. The agency is devoted to one overarching mission: to prevent the slightest piece of electronic communication from evading its systemic grasp.

As summed up by NSA chief General Keith Alexander, the goal is to “collect it all.”

The Commonwealth Fund has released another edition of its Mirror, Mirror on the Wall, 2014 Update: How the U.S. Health Care System Compares Internationally. Following tradition, it concludes that the American health “system” is the worst of eleven developed countries. This time, it prompted the editorialists at the New York Times to conclude:

Britain and Switzerland were top scorers in a study examining the quality and efficiency of health care systems in 11 advanced nations by a leading American research organization. As usual, the United States finished last over all and last on several important measures of cost and health outcomes, despite having the most costly system in the world.

The poor results for the United States reflect the high cost of its medical care and the absence of universal health insurance, a situation being addressed by the Affordable Care Act.

Other advanced nations are far ahead in the game because they have long had universal health coverage and promoted strong ties between patients and doctors.

However, the report itself concludes that “the U.K. continues to demonstrate strong performance and ranked first overall, though lagging notably on health outcomes” (emphasis mine). So, the British health system works well, except for that one small problem: It does not help people get better.

My fellow blogger William Shughart recently gave a good critique of the Patent and Trademark Office’s decision to rescind protection of the Washington Redskins’ name.  I agree with him that whether some people view a trademark as offensive should not be a criterion for determining whether it should be protected.

If a large number of people are offended by a trademark, then it will be a liability rather than an asset to whomever uses it, and economic forces will limit its use.  People of a certain vintage will recall Sambo’s Restaurants, which were forced into a name change (and perhaps bankruptcy) because people were offended by the name.

The purpose of a trademark is to identify a firm’s products.  If people like the firm and its products, the trademark will attract customers.  If people are offended by the firm and its products, the trademark will alert customers to avoid that firm.  The market system works to weed out offensive trademarks, and the U.S. government should not be in the business of determining whether trademarks are offensive.

Ironically, if Redskins really is an offensive term, then denying the team trademark protection will allow others to use the term, and the offensive term could see even more widespread use.

But while I’m discussing the subject, I will admit to being a bit sensitive to the issue myself, because my own heritage is being demeaned by being used as a team mascot by a different team.

I’ve lived in the South most of my life, and am proud to be on the faculty at Florida State University (home of the Seminoles), but (and I rarely share this bit of my background with others), I was born in the North, in Bridgeport, Connecticut.  Yes, I am a Yankee.  I didn’t have any say in the matter; I was born a Yankee.  But I admit to being sensitive to this part of my background, and find it demeaning to have a sports team mocking my heritage.

If the Redskins lose their trademark protection, the Yankees should too.

The Kaiser Family Foundation has released a survey of a statistically significant sample of people who buy their own insurance. The headline reported by the media was that 57 percent of enrollees in Obamacare exchange plans were previously uninsured. To me, that seems underwhelming. But more on that later. We all know that Obamacare is unpopular. However, it is also unpopular among its beneficiaries — the previously uninsured who have bought (highly subsidized) health insurance in Obamacare exchanges. Only 53 percent of these people have a favorable opinion of Obamacare (p. 22). If that doesn’t make the law politically vulnerable, I don’t know what does.

As to the number of uninsured post-Obamacare: This estimate is getting more mysterious. When looked at from another angle, the survey suggests that Obamacare has had no real effect on the number of uninsured getting non-group (individual) private insurance. Elsewhere, the Kaiser Family Foundation  informs us that the number of people with private, non-employer-based, health insurance in 2012 was 15.8 million. We also understand that the most optimistic estimate of the number of people in Obamacare exchange plans is 8.1 million.

Kaiser Family Foundation’s new survey tells us that between 48 percent and 51 percent of the people in the non-group market are in Obamacare exchanges. That is, the total market is estimated to be between 15.9 million and 16.9 million. So, maybe one million people, net, have received non-group coverage due to Obamacare.

On the other hand, the survey reports that 71 percent of the previously uninsured people who enrolled in an exchange plan had been uninsured for two years or more. 71 percent of 57 percent of 8.1 million is 3.3 million. This clearly does not reconcile with the comparison of the number of people in the non-group market in 2012 and in 2014 — unless two million or more people who used to have non-group insurance have lost it and have either received group coverage, lost coverage, or become dependent on Medicaid.

Someday this dust will settle. Wherever it settles, the political future of Obamacare looks shaky.

* * *

For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.

About two-thirds of Americans disapprove of Obama’s immigration policies. The polling reveals extreme partisanship: 60% of Democrats and 8% of Republicans approve of the president’s approach.

And yet, there is nothing particularly remarkable about the current administration’s policies. In response to the increasing flow of children and women immigrants seeking asylum, Obama is escalating deportations and authorizing more detention facilities. This is completely consistent with the president’s tendencies over the last several years.

Many news articles have reported record deportations under Obama, while his anti-immigration critics have argued that a sensitivity to novelties in classification expose a president lax on border enforcement. Adjusting for all this, it appears that the truth is somewhere in the middle: Overall, the Obama administration has conducted deportation policies qualitatively similar to the last administration’s. Whether one concludes a slight decline or increase, the more important fact is that there has been no radical shift since he took office, and certainly not one toward liberalization. Obama’s proposal for reform last year was in fact quite reminiscent of Bush’s plan. Although conservatives tended to find Bush too liberal on immigration, a June 2007 poll showed that 45 percent of Republicans favored their president on these policies, down from 61 percent just a few months before.

How is it that two presidents can behave in a fairly similar manner and yet garner such very different reactions among voters who identify with the two parties? Surely this phenomenon is not unique to immigration. Although the figures have moderated quite a bit, in the immediate aftermath of the first NSA revelations last year, Democrats overwhelmingly supported the agency’s surveillance programs, while Republicans were about equally divided; back in 2006, Democrats opposed NSA wiretapping 61 percent to 37 percent, while Republicans approved it 75 percent to 23 percent.

It would appear that the biggest changes in American politics that arrive when one party displaces the other in power do not concern what the government actually does as much as what the populace thinks about what it does. The voters flip-flop more than the leaders, who all tend, on most issues anyway, to gravitate toward governing from the center. The implication for those with principled stances on the issues is troubling and somewhat counterintuitive. Because in the long-term the government’s activities tend to respond to and be constrained by public opinion, rule by one party rather than the other tends toward a paradoxical dynamic: A Democrat in power will be defended by partisans and condemned by opponents no matter how hawkish the policies in war and civil liberties. Similarly, a Republican in power will be defended by partisans and condemned by opponents no matter how spendthrift the economic agenda. This helps explain why Bush was able to get away with so much deficit spending and domestic government expansion, and yet be celebrated and tarred as a free marketer, while Obama can deport, bomb, and indefinitely detain while being celebrated and tarred as a bleeding heart dove.

On the other hand, of course, both parties also do have their own pet projects. The Democrats have greater ambitions of domestic entitlement aggrandizement and the Republicans do appear more ideologically committed to wars abroad. These differences, taken with the countervailing effects of political opposition, mean that we can’t make any sort of solid predictions other than a fairly confident assumption that the vast majority of government activity and its trajectory of growth will continue, with only somewhat minor differences in specific areas, regardless of the party in charge, at least so long as mainstream American political ideology continues fundamentally to embrace government in its most modern incarnation, tempered only by partisan hypocrisy as seen in these kinds of polling results.

So for the pundits wondering what all of this means for the 2014 and 2016 election cycles, to which they seem obsessed in relating every news item, all I can say is that mass deportations, the destruction of families, inhumane mass detentions, invasive border searches, and an overall horrific immigration policy will probably be safe no matter who wins or loses at the ballot box. For those who find this projection unsatisfying, I urge you to try to convince your neighbors of your political principles, and to stick to fundamentals. Nothing short of a widespread change in attitude will secure substantive reforms anyway.

In her modern, exceptional biography of President Calvin Coolidge, Amity Shlaes (Coolidge, HarperCollins, 2013) documents the very blemished history of today’s U.S. Department of Veterans Affairs (VA), illustrating the trite, but nevertheless very true old saw that the more things change the more they remain the same.

That department of the federal government, now embroiled in controversy for falsifying records about the excessive times the veterans of the wars in Iraq and Afghanistan are required to wait for appointments to treat their combat-related injuries, both physical and psychological, was born during the administration of President Warren G. Harding. At the time, “bonuses for veterans dominated all budget talks” (p. 230). In order to deflect pleas for spending taxpayers’ money on American soldiers returning from the trenches in mud of Belgium and France — “a new commitment to such a large group [that] would be ‘a disaster to the Nation’s finances’ — President Harding negotiated a compromise with Congress to abolish the existing War Risk Bureau and replace it with a new Veterans Bureau. Headed by Harding’s friend, Charles Forbes, the bureaucratic reorganization doubled federal budget outlays from $300 million a year to $600–$700 million. Harding’s Veterans Bureau, among other things, was supposed to “build hospitals in fourteen regional offices to serve the vets all over the country” (p. 231).

Soon thereafter, “the bureau was expanding at an alarming rate”, but unsurprisingly “the veterans were finding that they “were not getting what was promised”, in part because “the prices in the contracts for the buildings Forbes was constructing seemed inflated”  (p. 233). Nevertheless, “the Veterans Bureau continued to spend and [in 1923] was set to outgrow the navy in size, with a budget of $455 million” (p. 236), representing about one-seventh of the total federal budget of that long-ago time.

As is true nowadays, evidence of corruption at the Veterans Bureau was widespread: “At one hospital in Washington, Mount Alto Veterans, a dental aide was even caught stealing gold allocated for veterans’ teeth…. One man, the new director of the Veterans Bureau, General Frank Hines, had been paid $4,800 a year for two hours of work” (p. 268). More “incredible news” was that “Forbes’s bureau had paid nine times the appraised value for a site in Excelsior Springs, Missouri, and then built a hospital on such shabby plans that no veterans were being served there” (p. 269). For more recent evidence on the VA’s failings, see Ronald Hamowy’s Independent Policy Report, Failure to Provide: Healthcare at the Veterans Administration.

Many people, including me, think that caring for the veterans of America’s foreign wars, no matter how ill conceived they may be, is a national responsibility. (Truth in advertising: I am a veteran of the U.S. Navy). Quite plainly, though, that responsibility should not be delegated to a distant, inefficient and often corrupt federal bureaucracy. Such responsibilities should be devolved to state and local levels of government — or, more ideally, to the private sector (under a voucher scheme) — whereby the taxpayers who finance veterans’ benefits are better equipped than the federal government to monitor the charitable and patriotic purposes for which their hard-earned incomes are spent.

The Sunni extremist group Islamic State of Iraq and Syria (ISIS), which originated as al Qaeda in Iraq in a response to the U.S. invasion and occupation of Iraq during the George W. Bush administration, now occupies much of northern Iraq and has been said to threaten Baghdad and the Shi’i government of Nouri al-Maliki.  This group of Sunni jihadists feeds off al-Maliki’s autocratic oppression of Sunnis.  For example, he has attempted to shut the Sunnis out of the Iraqi government and military and has trumped up charges on and arrested Sunni leaders.  However, Obama’s demand that in exchange for U.S. military help in battling the group, Maliki and the majority Shi’a adopt a more “inclusive” government, containing more minority Sunnis and Kurds, will probably not work (even if Maliki is pushed out for a new Shi’i leader).

Iraq probably does not have the income levels and culture of compromise required for a multi-ethnosectarian power sharing arrangement.  The mutual suspicion of the various Iraqi groups is too high.  In my book, Partitioning for Peace:  An Exit Strategy for Iraq, I wrote that the United States should try to help the three groups achieve a negotiated (“soft”) partition:  that is a confederation of autonomous areas with a weak central government.  Then the groups would have little fear that the Iraqi government would be used by one group to oppress the others, as it has been throughout Iraq’s history.  Iraq is an artificial state set up by the allies after World War I to get its oil.  Syria is also an artificial state.  Syria has effectively been partitioned by civil war.  Iraq is about ready to be so partitioned with similar bloodshed unless a negotiated settlement is reached quickly.  President Obama is right that the solution in Iraq is political, not military.  So instead of sending U.S. military advisors back to Iraq or conducting air strikes to help an authoritarian leader avoid a “hard” partiton by war, Obama should be pushing the ethnosectarian groups toward negotiating a loose confederation, which would be more likely to lead to long-term peace and stability.

It is no secret that innovation suffers because of the current state of patent law.  Too many overly broad patents are issued and present patent trolls with the opportunity to sue, sue, and sue again.  Today, the High Court in Alice Corp. v. CLS Bank, made abundantly clear that abstract ideas are not patentable.  The patent at issue (and that was issued by the USPTO) claimed exclusive rights to the idea of an intermediated settlement, i.e., the use of a third-party to mitigate settlement risk.  The Court pointed out that “The use of a third-party intermediary (or ‘clearing house’) is … a building block of the modern economy.”  It is a fundamental, abstract idea that is not patent-eligible.  Alice Corp. tried to argue that the use of a computer  transformed the abstract idea into a something special that was subject to patent protection.  The Court shot this down.  “We conclude that the method claims, which merely require generic computer implementation, fail to transform that abstract idea into a patent-eligible invention.”

All 9 Justices joined in this common-sense result.  Hopefully, the patent examiners at the USPTO will read this decision carefully and decline to rubber stamp some of the ridiculous requests that the examiners have in the past  deemed patentable.