Category: reason

When police charged New England Patriots owner Robert Kraft with soliciting prostitution, the press said the police rescued sex slaves.

“They were women who were from China, who were forced into sex slavery,” said Trevor Noah on The Daily Show.

We’re told this happens all the time.

“Human trafficking is the fastest growing illegal business in the United States,” says fashion model Kathy Ireland.

It’s bunk, says Reason Associate Editor Elizabeth Nolan Brown.

In the Robert Kraft case, she points out, “They had all these big announcements at first saying they had busted up an international sex trafficking ring, implying these women weren’t allowed to leave.”

But now prosecutors acknowledge that there was no trafficking. The women were willing sex workers.

The police and the media got it wrong. That’s typical. “Ninety-nine percent of the headlines are not true,” says Brown in my latest video. “Sex trafficking and prostitution are sort of used interchangeably.”

What about the headlines that say police are “rescuing victims”?

“By rescue they (mean) put them in jail and give them a criminal record,” says Brown. “The victims are the sex workers…getting harassed and locked up in cages by the cops.”

Politicians tell us that thousands of children are forced into the sex trade.

“Three-hundred thousand American children are at risk!” said Rep. Ann Wagner on the floor of Congress.

That 300,000 number comes from just one study, and that study’s lead author, Richard Estes, has disavowed it.

“The National Crimes Against Children Center says, ‘Do not cite this study’!” says Brown. It’s “total bull.”

Widely quoted bull.

On TV, former prosecutor Wendy Murphy shouts, “Three-hundred thousand kids a year are raped, sex trafficked and pimped in this country!”

“If that was the case, cops would be able to find this all the time,” responds Brown. “Cops wouldn’t have to go through these elaborate stings.”

Florida police spent months taking down the spa Robert Kraft visited.

“They had Homeland Security involved,” recounts Brown. “They were following these women around in the grocery stores, watching them buy condoms.”

I’d think cops would have better things to do with their time.

“If this was really a situation where these women were being forced and sexually assaulted multiple times a day, the cops just let it happen for months on end?” asks Brown.

She covered a case in Seattle where the local sheriff, at a news conference, said he’d rescued sex slaves.

But when Brown spoke to the sheriff later, “he ended up saying, ‘Well, you know, maybe they weren’t being forced by whatever, but we’re all trafficked by something and there was money involved.’ Then by the end of the investigation they were like, ‘Well, I mean, they were pressured because they didn’t know a lot of people and they wanted to make money’.”

One former sex worker says the moral panic over prostitution is a “combination of the conservative fetish for going after people for doing ‘sex stuff’ and the liberal instinct to help a group of people that they can’t be bothered to understand.”

That includes the celebrities who perpetuate the myth that sex slavery is rampant.

“You can go online and buy a child for sex. It’s as easy as ordering a pizza,” says Amy Schumer.

“Thousands of children are raped every day!” says comedian Seth Meyers.

Actor Ashton Kutcher even promotes an app that he claims rescues victims. He told Congress, “We have identified over 6,000 trafficking victims this year.”

Really? Where are they? Kutcher’s representatives did not respond to our repeated emails.

“If Ashton Kutcher is finding all those victims, he’s not turning them over to police,” said Brown.

Sex slavery is evil. Authorities should do everything they can to stop it. But there is a big difference between slavery and sex work done by consenting adults.

“When we have these exaggerated numbers,” says Brown, “it forces people into this crazy emergency moral panic mode that ends up not helping the actual problem that we have.”

Periodic crackdowns on prostitution don’t help either.

“They want this imaginary world where you take away a safer option for these women,” says Brown, and then “the oldest profession, as they call it, will magically stop. But that’s not going to happen.”

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Larry Kudlow, Donald Trump’s chief economic adviser, understands that tariffs on Chinese imports are a tax paid by American companies and consumers—a point his boss refuses to acknowledge. The president’s weird insistence that “China” pays the tariffs reflects not just his reluctance to take responsibility for tax increases but his longstanding, sincere, and fundamentally mistaken views on international trade—views that do not bode well for the outcome of his trade war.

“Tariffs are NOW being paid to the United States by China of 25% on 250 Billion Dollars worth of goods & products,” Trump tweeted on Friday. As Kudlow conceded in a Fox News interview on Sunday, that is not how tariffs work. U.S. importers pay the tariffs, and they respond by reducing their profit margins, raising prices, or both.

During 2018, a recent study of Trump’s tariffs by economists at Princeton, Columbia, and the Federal Reserve Bank of New York noted, “the U.S. experienced substantial increases in the prices of intermediates and final goods, dramatic changes to its supply-chain network, reductions in availability of imported varieties, and complete passthrough of the tariffs into domestic prices of imported goods.” By the end of the year, they estimated, the tariffs were costing Americans $3 billion a month in added taxes and another $1.4 billion a month in lost efficiency.

That was before Trump raised the rate on $200 billion in Chinese products from 10 percent to 25 percent. The administration plans to extend the 25 percent tariff to another $300 billion in goods, which would cover nearly everything Americans import from China, including computers and cellphones.

Kudlow argues that the price is worth paying if the tariffs pressure China to address American complaints about subsidies, restrictions on access to the Chinese market, intellectual property theft, and mandated transfers of technology and ownership stakes. Trump, by contrast, refuses to admit Americans are paying any price at all.

The president does acknowledge that China’s retaliatory tariffs have hurt American farmers, and he promises to help them, using revenue generated by his own tariffs, which amounts to a transfer from one set of victims to another. His stance is not just a form of blame shifting but a logical corollary of his economically ignorant conviction that exports are good and imports are bad.

“You only have to look at our trade deficit to see that we are being taken to the cleaners by our trading partners,” Trump wrote two decades ago in The America We Deserve, arguing that peaceful economic exchange is “like war.” This mercantilist notion—that something shady must be happening unless the Unites States exports at least as much to a particular country as it imports from that country—continues to dominate his thinking about international trade.

“If we didn’t trade,” the president averred last year, “we’d save a hell of a lot of money.” But that does not mean we’d be better off, since we would not have all the things we buy with our money, which we clearly value more than the money itself, since no one forces us to exchange one for the other. The analysis is the same whether or not the people who sell us things happen to be located in the United States.

As Rep. Justin Amash (R-Mich.) pointed out at the time and again when Trump claimed last week that money is “lost” when it’s spent on Chinese products, “A trade deficit is not a loss of money. If you buy from a supermarket or go to a movie, you have a trade deficit, but you have not lost money; you get stuff (groceries, entertainment, etc.) in exchange for your dollars.”

Whatever you think of Trump’s tariffs as a negotiating tactic, you should be troubled by the fact that the resolution of this trade war is in the hands of a man who thinks Americans would be better off if they spent nothing on imported goods they demonstrably want.

© Copyright 2019 by Creators Syndicate Inc.

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Who is going to stand up for the utopian possibilities of free markets, private property, and individual liberty in an era when more Americans between the ages of 18 and 29 have a positive view of socialism (51 percent) than capitalism (45 percent)?

Politicians such as Sen. Elizabeth Warren (D-Mass.), Rep. Alexandria Ocasio-Cortez (D-N.Y.), and Sen. Bernie Sanders (I-Vt.) yammer on about the need for “bold, structural solutions” that inevitably involve jacking up government control over more and more aspects of economic and cultural lives. Promises of higher taxes, tighter regulation of business, and policing of political speech on social media are just the beginning. On the Republican right, observes Max Gulker of the American Institute for Economic Research (AIER), conservatives have managed to yoke pro-market rhetoric with a backward-looking, mostly reactionary social agenda that is inimical to the individual freedom at the heart of the capitalist enterprise. “The same politicians most prominently arguing for capitalism and less government interference in markets have also been pushing social views that each successive generation finds increasingly unacceptable,” he writes. Donald Trump pulled just 39 percent of votes cast by people between the ages of 18 and 44. Conservative Republicans have effectively alienated Millennials and Gen Z, says Gulker, “who incorrectly see capitalism as part of an old order to be overturned.”

Ironically, Karl Marx and Frederick Engels understood that capitalism is in fact a constant source of disruption and change. In The Communist Manifesto (1848), they stated,

Constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real conditions of life, and his relations with his kind.

Almost a century later, Joseph Schumpeter updated Marx and Engels in Capitalism, Socialism, and Democracy in at least two profound ways. First, he pointed out that they were wrong in thinking that capitalism would destroy itself by “immiserating” workers. In fact, he noted,”the capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within reach of factory girls.” Say what you will about supposedly stagnant wages and the like, but we live in a country where a record-high percentage (67 percent) of low-income high-school grads go on to college, more than double the share in 1980. And where more households are moving up the income ladder than sliding down it. Around the globe, a growing majority of people live at middle-class standards or above, thanks to liberalization of trade and other market-based reforms.

Second, Schumpeter coined the term creative destruction to more fully describe the incessant changes that affect the economic life in a free-market (or “bourgeois”) society:

Capitalism […] is by nature a form or method of economic change and not only never is but never can be stationary. […] The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers’ goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates.

[…] The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in.

The same sort of creative destruction also characterizes social and cultural life, as well, which is one of the reasons why libertarians (as opposed to conservatives) have long been champions of liberatory policies such as marriage equality (Reason has been calling for that since the early 1970s), an end to drug prohibition, increases in legal immigration, and the like. Change created by individuals endlessly discovering, expressing, and recalibrating their desires in both economic and cultural terms is the only constant. This sort of freedom doesn’t lead to nihilism or iconoclasm in either the commercial or personal spheres. Rather, it allows for more options and the persistence of certain types of models and institutions that work, even as it gives more people the ability to run what John Stuart Mill called “experiments in living.”

In the current political landscape, though, the main choices on display are free-market reactionaries (Republicans) and socialistic control freaks (Democrats). AIER’s Gulker doesn’t fault younger Americans for being confused and siding with the latter:

Suppose you’re a 25-year-old who is neither expert nor ignorant in current events and economics. Those touting the virtues of capitalism are…offering a generally traditionalist worldview, not to mention specific social views you’re likely to find retrograde. Without much understanding of economics, how can you see capitalism as anything but the status quo, the system currently in place where big corporations are run by old men? Some center Left candidates who seem more in step with your social views keep telling you this old order of capitalism needs to be further “checked” by government. And some Far Left politicians, with a little more conviction, tell you that markets are just another part of an old unjust order we need to leave behind.

Yet this would be ruinous, since it’s precisely the creative destruction of markets that has helped generate exactly what young people like about the contemporary world—from smart phones to ride sharing to flexible workplaces to the near-infinite choice and near-instant gratification made possible by a company like Amazon. Gulker posits that it’s up to libertarians to explain and sell capitalism as a decentralized, forward-looking, and responsive system.

Free markets coupled with local, voluntary institutions can bring about a society widely prosperous and caring beyond the wildest dreams of central planners like Sanders and Elizabeth Warren, and do so without distorting the economy or appropriating vast amounts of money from anyone….No generation is better poised to understand the power of entrepreneurial dynamism and networked bottom-up cooperation more than millennials. If that doesn’t sound like a description of capitalism to you, you’re not alone. Capitalism is not a hallmark of conservatism, it’s the most surefire way to change the world.

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The debate over the “heartbeat bill” signed into law in Georgia last week has been both hyperbolic and vitriolic. Of course, stakes are high in the debate over the legality of abortion and the potential for reconsideration of the Supreme Court precedent set in Roe v. Wade (1973).

But at Reason, we believe calm, rational discussion is possible even between people who strongly disagree. So Editor in Chief Katherine Mangu-Ward sat down with Managing Editor Stephanie Slade, who is pro-life, and Associate Editor Liz Nolan Brown, who is pro-choice, to talk about the present state of abortion politics and the ways in which reasonable libertarians can disagree on this issue.

Further reading:

Stephanie Slade on Why I Am a Pro-Life Libertarian and Why Is the ACLU Targeting Catholic Hospitals?

Elizabeth Nolan Brown on how A Post-Roe World Would Pave the Way for a New Black Market in Abortion Pills and Doctors Call for Decriminalization of Self-Induced Abortion.

Subscribe, rate, and review our podcast at iTunes

Audio production by Ian Keyser.

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As Jonathan has noted, the Supreme Court recently released an interesting antitrust opinion in Apple, Inc. v. Pepper. The majority opinion was written by Kavanaugh and joined by the liberals; the dissent was written by Gorsuch and joined by the remaining conservatives.

In this post, I’ll explore how the Kavanaugh-Gorsuch disagreement relates to textualism. Later, I’ll talk about how this relates to the theory of the firm.

I. The Illinois Brick rule and the basic debate in this case

First, you need to know the basic debate, which is how to characterize the antitrust standing rule of Illinois Brick Co. v. Illinois (1977). (This is statutory standing, not constitutional standing—what in administrative law we call “zone of interests” standing.) Just so you understand the issues involved, let me give a brief overview: Suppose Firms A1, A2, etc. make concrete blocks and sell them to general contractors B1, B2, etc. Then you hire those general contractors for your construction projects. You have a theory that the concrete block manufacturers A1, A2, etc. have violated the antitrust laws (for instance, by conspiring to fix prices); as a result, general contractors B1, B2, etc. have paid excessive prices, and in turn you’ve paid excessive prices for your construction projects. Can you sue the concrete block manufacturers A1, A2, etc.?

Those are essentially the facts of Illinois Brick. The Illinois Brick rule says No. The general contractors B1, B2, etc. are the direct purchasers who directly pay the alleged price surcharge, and they have statutory standing to sue. You, on the other hand, are not a direct purchaser, and your damages are indirect: whether you pay the alleged price surcharge depends on the extent to which B1, B2, etc. have been able to pass on that price increase. So you can’t sue. Remember that this is a rule about standing, i.e. about access to court—you can’t sue even if A1, A2, etc. have really violated antitrust law.

Now Apple, Inc. v. Pepper presents a particular twist on the Illinois Brick facts. In the fact pattern above, there was a clear vertical hierarchy. The A firms sold to the B firms, which in turn sold to you. You had no contact with the A firms: you neither bought from them directly nor paid their allegedly inflated prices.

But what if the firms had a less clear-cut vertical relationship? In Apple, it was apps being sold through Apple’s App Store. When you buy an app, the price is set by the app developer. But you pay the price to Apple directly; Apple passes the money on to the app developers, retaining a 30% commission. The claim was that Apple was improperly using its monopoly power, which made the 30% commission too high. So this disaggregates two aspects of Illinois Brick:

• Who buys directly from Apple? You do.
• Who directly pays the alleged inflated fees? The app developers do. (You may indirectly pay more for the apps, but that depends on the extent to which the app developers can pass on the higher commissions.)

If you think the Illinois Brick rule was “Direct purchasers from the alleged violator may sue,” then you’ll probably think the end consumers can sue. That’s the Kavanaugh majority. But if you think the Illinois Brick rule was “Those who directly pay the alleged inflated prices may sue,” then you’ll probably think standing is reserved for the app developers, not the end consumers. That’s the Gorsuch dissent.

I’m not going to resolve that debate here, but I want to raise a number of interesting points. Today’s points relate to how the antitrust statutes relate to textualism.

II. Textualism and the Sherman Antitrust Act

The first point has to do with textualism. Kavanaugh is thought of as a textualist, and so is Gorsuch. How, then, are we to understand their disagreement on the meaning of the Sherman Antitrust Act in this case?

In the first place, the Sherman Act is very short and very old, and for a long time has been understood as a delegation to the judicial branch to develop (common-law-style) workable rules. (The Supreme Court suggested, in National Society of Professional Engineers (1978), that this common-law-style policy development was part of the intent of the original Congress. For my views on such delegations, see my Emory Law Journal article on federal common law and judicial non-delegation, and in particular pp. 1453-56 for the section on the Sherman Act.) A lot of antitrust law, these days, is fairly far removed from any actual text, though one can certainly imagine a more textualist approach.

But this isn’t the whole story, since both Kavanaugh and Gorsuch claim that their respective interpretation has greater textual bona fides.

Kavanaugh (p. 4) points to particular text in the Clayton Act of 1914 (emphasis added):

any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue . . . and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney’s fee.

“The broad text” of this statute, Kavanaugh wrote, “readily covers consumers who purchase goods or services at higher-than-competitive prices from an allegedly monopolistic retailer.”

Now this isn’t exactly right, because if any person who’s injured can sue the alleged antitrust violator, then we’d have virtually no statutory standing requirements at all (other than the requirement of injury, which is already taken care of by the constitutional standing requirement of injury-in-fact, and the “in his business or property” requirement, which is similar to what we have in RICO standing).

Still, even if pointing to this text doesn’t inexorably lead here to overruling Illinois Brick, at least, in Kavanaugh’s view, it cuts against any attempt to read statutory standing narrowly.

How does Gorsuch get around this? By writing (dissent, p. 9):

The Court even tells us that any “ambiguity” about the permissibility of pass-on damages should be resolved “in the direction of the statutory text”—ignoring that Illinois Brick followed the well-trodden path of construing the statutory text in light of background common law principles of proximate cause.

In other words, the statutory text doesn’t stand alone; you need to interpret statutory text in light of the rest of the legal system that existed at the time of enactment, including “background common law principles.”

How does Gorsuch’s approach square with his textualism? Answer: perfectly well. Eugene writes (in the context of the Hyatt decision) that:

none of the Justices on the Court is a pure textualist. They all consider at least the text, the original meaning, and “historical practice.” And that is in large part because the Constitution is widely understood as having been enacted against a backdrop of established law and practice, and therefore in some measure implicitly adopting aspects of that law and practice, rather than being limited to what is within the four corners of the document.

I agree, except insofar as considering the “backdrop of established law and practice” is labeled a departure from “pure textualis[m].” Thomas in Hyatt (quoting Kennedy in Alden v. Maine) criticizes “ahistorical literalism,” and I’d stick with that formulation. Ahistorical literalism isn’t pure textualism; it’s usually an anti-textualist’s caricature of what textualism requires. The idea that background principles of proximate causation should be read into statutes like the antitrust laws (or RICO, or others) is perfectly good textualism.

Of course, it’s not like Kavanaugh disagrees with the idea that proximate causation is part of the statute. They actually both agree on this score: Kavanaugh says (p. 5) that the statutory text counsels against reading standing narrowly, and that proximate-cause considerations prevent suits by indirect purchasers. Gorsuch says (dissent, p. 2) that proximate-cause considerations prevent going “the next step” after “the overcharging,” which would prevent suits by those who didn’t pay the alleged overcharge. So they agree on proximate cause but disagree on how to characterize the causal chain that eventually needs to be cut—which is the ultimate disagreement in the case. Either way, nobody’s approach here is necessarily inconsistent with textualism (though other approaches play a role here, including precedent and free-floating antitrust policy); someone’s presumably wrong and someone’s right, but these are valid disagreements among textualists.

III. Contraction traction, what’s your fraction?

Fine, please note that Gorsuch is all about using contractions. Scalia was very much against contractions, in his day (not just in his own opinions, but also in others’). Gorsuch embraces them. I’m glad to see this catch on. Bryan Garner approves too, and notes that Kagan has also been using them but only in separate opinions.

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The Houston narcotics officers who invaded a middle-aged couple’s home on January 28, serving a no-knock drug warrant based on a fraudulent affidavit, claimed they killed Dennis Tuttle and Rhogena Nicholas in self-defense. A recent forensic inspection of the house, commissioned by the couple’s relatives, casts doubt on that account and reinforces the suspicion that at least some of the four officers who suffered bullet wounds were shot by their colleagues.

According to the cops who served the warrant, which was based on a “controlled buy” of heroin that apparently never happened and authorized a search that found no evidence of drug dealing, Tuttle began shooting at them with a .357 Magnum revolver immediately after the first officer through the door used a shotgun to kill a dog that confronted him as he entered the house. They say the officer with the shotgun collapsed on a couch after a round from Tuttle’s gun struck him, at which point Nicholas moved to disarm him, prompting the cops to shoot her twice. Tuttle continued firing, we are told, until he died in a hail of bullets that struck him at least eight times.

Even taking this account at face value, the officers started the gunfight by breaking into the house without warning and shooting the dog, a reckless entry that invited confusion. It is not clear that Tuttle knew the armed intruders, who were not wearing uniforms and did not announce themselves before storming into the house, were police officers. Nor is there any body camera footage of the raid that might shed light on that question.

But there is physical evidence at the house, which seems inconsistent with the story told by the narcotics officers. Houston Chronicle reporters Keri Blakinger and St. John Barned-Smith say a forensics team that the Tuttle and Nicholas families hired, headed by Mike Maloney, a retired supervisory special agent with the Naval Criminal Investigative Service, “found no indication that any of the guns Tuttle owned were fired toward the front of the house at incoming police.”

While Maloney has not completed his analysis yet, “the initial bullet trajectories appear to be somewhat contradictory,” Chuck Bourque, an attorney representing Nicholas’ family, told the Chronicle. “We see no evidence that anybody inside the house was firing toward the door.”

Blakinger and Barned-Smith report that “some of the bullet holes outside the house appeared at least a foot from the door.” That suggests one or more of the officers who fired at Tuttle and Nicholas did so blindly. “You can’t see into the house from there,” Mike Doyle, another attorney hired by Nicholas’ relatives, told the Chronicle. “You’re firing into the house through a wall.”

Houston Police Department spokesman Kese Smith told me he can’t answer any questions about the ballistic evidence, or even explain why the revolver that Tuttle allegedly used was not listed on the search warrant inventory, until after HPD has completed its criminal and internal affairs investigations of the raid, which is also being investigated by the FBI and the Harris County District Attorney’s Office. But Maloney’s team found that police left behind a lot of potentially relevant evidence, including two teeth, a men’s shirt with bullet holes and an evidence tag, a shotgun shell casing, and about a dozen .223- and .45-caliber bullets in the walls and floor, which apparently were fired by police.

Sam Walker, a criminal justice professor at the University of Nebraska at Omaha, told the Chronicle the HPD’s haphazard evidence collection raises questions about its investigative practices. How many people have been convicted over the years as a result of sloppy investigations which failed to collect evidence that was there that would have exonerated the suspect?” he said. “If they do it in this kind of a homicide case, what do they do in other kinds of investigations?”

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