Category: reason

President Trump isn’t going to be happy, observes Veronique de Rugy. The U.S. trade deficit expanded in June, at its fastest rate since November 2016. Also, $291 billion was added to that gap in the first six months of 2018, compared with $272 billion in the first half of 2017. And wait until he finds out that in spite of the tariffs he imposed on billions of dollars in imports, those imports grew slightly while exports are going down.

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It was 43 minutes after his family called for an ambulance that a Chicago man suffering a heart attack arrived at a hospital. Officials say that all their ambulances were on other runs or under repair. The man’s doctor says he will survive but suffered irreparable damage to his heart.

Rep. Chris Collins, a Republican Congressman from New York, was arrested today along with his son and the father of his son’s fiancee for various crimes associated with the insider trading of stock in Innate Immunotherapeutics.

The U.S. Attorney’s office for the Southern District of New York claim in an indictment that Collins, who was on Innate’s board of directors, learned about a failed clinical trial in June 2017 involving their primary drug in development, which was intended to treat multiple sclerosis. Collins is accused of calling his son Cameron Collins to tell him that the trial had failed. (The Trump connection: Collins was at the White House when he made those allegedly illegal phone calls!)

The young Collins then allegedly informed Stephen Zarsky, his finacee’s dad, and the two of them, along with other unindicted co-conspirators, sold batches of Innate stock numbering well over a million shares. The Feds claim that the younger Collins et al. saved themselves a collective $768,000 compared to what they would have made had they sold the same number of shares after the failed trial became public. The stock plunged from 45 cents a share to three cents a share after that news broke. Rep. Collins is not himself accused of selling any Innate stock.

As the indictment notes, the company had called a halt to Innate stock trades on the Australian Stock Exchange (ASX) before Collins’ associates did their potentially illegal sales in America, a move that should have alerted the savvy that something big was happening with the company. The indictment blandly notes that the ASX “routinely halts trading at a company’s request in situations in which the company has become aware of material information, either positive or negative.”

Everyone active in ASX, then, was essentially tipped off with insider knowledge that something big was going on while Collins’ associates were selling in the U.S. That could be conceived as an example of the strangely-unspoken-of crime of insider non-trading, or situations when people choose to hold a stock they might have otherwise sold absent the non-public information.

The three men are charged with “conspiracy, securities fraud, wire fraud, and making false statements to the FBI.” The Securities and Exchange Commission (SEC) is simultaneously pursuing a civil suit against all of them.

As Martha Stewart learned when she went to prison—not technically for insider trading but for lying about stock trades to the government—these laws are designed as perjury traps, and just the “lying to FBI” part of the charges against the men could get them each five years behind bars. The securities and wire fraud charges have potential 20-year penalties.

The precise details of the investigation will be interesting to learn as they unfold. Who squealed on who? What level of niggling digging into people private lives did it take to unearth the fact that an act that is in most cases perfectly legal—choosing to sell a stock—was in this case illegal because of the thoughts and motivations in the minds of the seller?

The U.S. Attorney’s office pointed out in a press release that Rep. Collins “was already under investigation by the Office of Congressional Ethics (“OCE”) in connection with his holdings in, and promotion of, Innate. Indeed, he had been interviewed by OCE personnel on or about June 5, 2017, just 17 days earlier.” The indictment shows the feds possess phone and text records of the defendants relevant to the stock sales and discussions of same.

It’s quite likely other people were selling Innate stock in the period between Collins learning of the clinical trial and the theoretical ability of the world to learn it. It would be misleading to say “when the world learned,” since all knowledge flows at its own speed and its own path to every individual mind. There is no such thing as everyone who might think of buying or selling a stock knowing every relevant bit of information that might feed into that decision at any given moment, nor is there an objective set of facts that everyone would agree should feed into a decision to buy or sell a stock.

Many economists wonder whether the time and effort and potential years of incarceration are really worth it. The feds do all this to nail a few poor suckers to the wall for an act that is almost certainly performed far, far more often than it is ever discovered by federal agents.

In addition, it’s more than possible that more insider trading would be good for markets overall. As noted in The Washington Post back in 2013:

Insider trading is actually an active good. Markets work best when goods are priced accurately, which in the context of stocks means that firms’ stock prices should accurately reflect their strengths and weaknesses. If a firm is involved in a giant Enron-style scam, the price should be correspondingly lower. But, of course, until the Enron fiasco was unearthed, its stock price decidedly did not reflect that it was cooking the books. That wouldn’t have happened if insider trading had been legal. The many Enron insiders who knew what was going on would have sold their shares, the price would have corrected itself and disaster might have been averted.

That’s the argument of Henry Mannes, an economist at George Mason University who’s advocated legal insider trading for decades now. Referring to the Enron and Global Crossing’s scandals, he says, “I don’t think the scandals would ever have erupted if we had allowed insider trading because there would be plenty of people in those companies who would know exactly what was going on, and who couldn’t resist the temptation to get rich by trading on the information, and the stock market would have reflected those problems months and months earlier than they did under this cockamamie regulatory system we have.” And that’s months and months where investors could have allocated money toward more promising investments, increasing market efficiency.

More formal economic models reach the same conclusion. Christopher Matthews at TIME…points to a study by researchers at the Atlanta Fed, who surveyed a wide array of models and found that insider trading makes stock prices more informationally efficient….

Informational non-asymmetry is built into a world where time and attention are scarce, so it seems silly and unfair to selectively enforce a law that pretends to solve that “problem” when it comes to stock market transactions, a problem inherently impossible to solve at any rate.

As I wrote in USA Today in 2002:

Every day, brokers advise Americans to buy or sell stocks. Do we really want laws that require us to launch congressional-level inquiries into what “illicit” knowledge our brokers might have had?

Laws that turn legal actions into bureaucratic crimes based on our state of mind—on whether we know what we know or decide what we decide “fairly”—require….an unsavory degree of government snooping into who said what to whom when…..Insider-trading laws turn an act that any American should have a perfect right to perform into a crime, in the name of the impossible standard of equal information. There is no way to make everyone know what everyone else knows, all at the same time.

As for any alleged victim who bought the stock from the insider traders without knowing what they knew, well, they were in the market that day to buy stock at a given price, and certainly could have ended up buying it from someone else, not the handful of people legally barred because of knowledge in their heads from doing such selling. The same “harm” would have likely befallen those buyers even had the accused not done a thing.

This 2014 trend report on insider trading notes both that medical and biotech fields seem most rife with such charges, and a growing SEC preference for trying the cases in their own administrative courts, not the standard federal court system. A more recent November 2017 analysis of SEC insider trading actions notes, “Recent cases show other areas of interest for the SEC’s Enforcement Division: outside professionals entrusted with sensitive information; an increasing focus on high-tech trading schemes; and the identification of abuses of political intelligence.”

The SEC pursued 41 insider trading actions in 2017, slightly less than the 45 it did in 2016, in each case representing slightly less than 10 percent of its total prosecution caseload.

Collins is still insisting today this will not slow down his re-election bid.

Reason‘s Nick Gillespie sat down with Ken White, attorney and legal blogger at Popehat, recently to talk about Trump’s recent Supreme Court pick, Brett Kavanaugh, the firing of director James Gunn from the Guardians of the Galaxy film series, and what limits should be put on employee speech inside and outside the workplace. Watch above or click here for full text and downloadable versions.

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Vibrator or hand grenade? Security personnel at a Berlin airport apparently couldn’t tell the difference yesterday, leading to an hour-long terminal closure.

German federal police say Schönefeld Airport employees found “suspicious content in a luggage piece” while X-raying bags, according to CNN. As a result, Terminal D was closed while authorities investigated.

Airport officials used the public address system to find the bag’s owner, though a police spokesperson told CNN the passenger was hesitant to reveal what was in the bag.

Later, the passenger detailed his experience on social media. “When I arrived, the terminal was being evacuated. I approached a police officer and told him that I needed to check my bag with the baggage handlers. He asked my name and for my passport,” he wrote, according to The New Zealand Herald. “He then spoke into his radio and several armed police swarmed me with automatic weapons.”

But the “suspicious content” turned out to be nothing more than a sex toy. “After 60 tense minutes, [the member of the bomb squad] returned laughing,” the passenger tells RT, a Russian state-sponsored media outlet. “The hand grenade was in fact a vibrator from Ann Summers that my girlfriend and I had purchased two weeks previous.”

German airports might need to get better at identifying and dealing with explosives. Officials evacuated parts of Frankfurt Airport yesterday after an entire family was allowed to clear security even though they tested positive for explosives, Reuters reports.

Things aren’t too much better in the U.S., where the Transportation Security Administration does a terrible job of assessing risk and properly allocating resources, according to a Government Accountability Office (GAO) report released in December. “According to the GAO, the agency has not updated its comprehensive risk assessment since 2009,” Reason‘s Eric Boehm noted at the time.

“Given that TSA spends only about 3 percent of its budget on surface activities,” GAO auditors wrote in their report, “it is crucial that the agency have complete information on how resources are being used in order to best allocate these limited federal surface transportation security resources.”

When a mother in labor seemed to test positive for opiates, that alone was enough to get her reported for drug use. To make matters worse, she claimed that she hadn’t actually been using drugs.

Baltimore County mother Elizabeth Eden was in labor at St. Joseph Medical Center when a doctor informed her that she tested positive for opiates, WBAL-TV reports. Earlier that day, Eden had consumed a poppy seed bagel. She remembered hearing in a health class that the poppy seeds could lead to a false positive in a drug test.

“I said, ‘Well, can you test me again? And I ate a poppy seed bagel this morning for breakfast,’ and she said, ‘No, you’ve been reported to the state,'” Eden recalled. After giving birth, Eden’s daughter, Beatrice, was forced to remain in the hospital for five days. Eden was also assigned a caseworker, who conducted a home check. When the caseworker concluded that the poppy seed defense was legitimate, the case was closed. Still, Eden called the ordeal “traumatizing.”

Time explains why something as small as a poppy seed can cause such a misunderstanding:

Opium, heroin, codeine and morphine all come from opium poppies. While poppy seeds do not actually contain any of these substances, they can become tainted with morphine during the harvesting process, according to Brittanica. In some cases, the morphine residue on the seeds, while not enough to create a high, is enough to throw off the results of a drug test, research shows.

Over the years, cases like Eden’s have inspired questions about the thresholds used in drug tests—not to mention an arguably overzealous response when a new mother is suspected of drug use. In Pennsylvania in 2009, Lawrence County Children and Youth Services (LCCYS) seized Eileen Ann Bower’s newborn son from Jameson Hospital after poppy seeds in a potato salad triggered a false positive drug test. He remained in foster care for two months.

A similar incident occurred at the same hospital in 2010. After Elizabeth Mort and Alex Rodriguez welcomed their baby girl, Isabella, into the world, they received a home visit from LCCYS. The three-day-old was forced into foster care for five days before LCCYS realized its mistake. As in Bower’s case, the seizure revealed that cutoff level for opiate testing was low enough for poppy seeds to trigger a positive. This, coupled with what Mort and Rodriguez called a “seize first, ask questions later” policy in their eventual lawsuit, led to confusion between the legal system and parents.

In Eden’s case, Dr. Judith Rossiter-Pratt, chief of the OB/GYN department at St. Joseph Medical Center, told WBAL-TV that the test’s threshold was lowered in an attempt to catch more people. Setting the bar higher to only identify “true positives” could cause the hospital to miss several drug users, she argued.

Reason‘s Jacob Sullum has argued that the rush to separate mothers from their children following a positive drug test is misguided:

The problem with Lawrence County’s policy is not just that urinalysis is not always reliable. It is also that drug use during pregnancy does not ipso facto prove that a newborn is in danger of neglect or abuse, or that he would be better off in foster care. “By law,” [Charles Davis of Change.org] notes, “the state is only permitted to take a child from its parents if there’s clear evidence of abuse or imminent danger—and only as a last resort.” The government does not (and should not) automatically seize the children of women who drink alcohol or smoke tobacco during pregnancy, and there is no rational reason to treat illegal drugs differently.

It’s not just new mothers who get tangled in these policies. Just this year, Eleazer Paz, an officer with the New York City Department of Correction, lost his job after failing a drug test. Paz blamed the positive on poppy seeds, and sure enough, a doctor concluded that the opioids found in his drug test were “inconsistent with heroin or individual morphine and codeine ingestion.” Nonetheless the department decided to uphold the firing.

Bonus links: Here’s a story of a woman who was nearly placed behind bars because of a false drug test. Here is yet another story of a mother getting separated from her baby after failing a dubious drug test.

Maryland’s Democratic nominee for governor had a pointed response when asked today if he’s a socialist.

“Not to put too fine a point on it, but do you identify with the term socialist?” Washington Post reporter Erin Cox asked Ben Jealous at a press conference. The Republican incumbent, Larry Hogan, recently called his Democratic challenger a “far-left socialist who wants to increase the state budget by 100 percent.”

“Are you fucking kidding me? Is that a fine enough point?” Jealous responded.

Jealous has been endorsed by Sen. Bernie Sanders (I-Vt.), arguably the most well-known democratic socialist in the country. But he doesn’t like the s-word himself, claiming instead to be a “venture capitalist.”

Before lashing out at Cox, Jealous explained why he thinks Hogan is using the socialism label. “Calling me a far-left socialist is what the Tea Party called President Obama. It’s what Barry Goldwater called Martin Luther King,” said Jealous, a former president of the National Association for the Advancement of Colored People. “When you see conservatives like Hogan name-calling, you realize that they’re scared—that they’re, frankly, afraid of the change that all of our families need.”

U.S. Immigration and Customs Enforcement (ICE) appears to have lied after a cargo van holding eight Central American mothers crashed last month.

The eight women had been separated from their children under the Trump administration’s infamous “zero tolerance” immigration policy. On their way to an immigration detention center near Austin, where they were going to be reunited with their children, the van carrying them hit a pickup truck. The Texas Observer reports:

According to a police report obtained by the Observer and individual interviews with four of the passengers, the crash occurred as the group was leaving a Sunoco gas station just off Interstate 35. The van’s driver was an employee of Trailboss Enterprises, an Alaska-based company that provides transportation for ICE in Central and South Texas. The driver failed to come to a stop and T-boned an F-250 that was entering the gas station, police said.

But ICE spokesperson Leticia Zamarripa told the outlet two days after the incident occurred: “There was no crash.”

Zamarripa’s claim contradicts not just the police report but eyewitness accounts from the women involved. “The crash was really strong, like maybe we were going to flip,” one of the women, identified only as Dilcia, tells the Observer. “We were all trembling with shock from the accident; my whole body hurt,” adds Roxana, another of the passengers.

Another ICE spokesperson, Adelina Pruneda, eventually acknowledged the incident, though she insisted it was a “fender bender” rather than a “vehicle crash.” But according to the police report, the cargo van sustained “disabling damage” and was towed.

The four women who the Observer spoke with say they reported the incident to an immigration official. One of them also saw a doctor about a leg injury suffered in the crash. All four have since been reunited with their children and released from ICE custody.

It’s hardly the first time ICE has released misleading information. Last February, the agency said it had arrested 51 people in an Austin-area raid. Almost a year later, the Observer revealed ICE had actually taken 132 immigrants into custody.

The impending socialist takeover of the Democratic Party might be on hold for a while after a string of populist, left-wing primary candidates lost big against more moderate and incumbent contenders.

Leading up to Tuesday’s primaries in Kansas, Ohio, Missouri, and Michigan, Alexandria Ocastia-Cortez, a rising socialist star and the Democratic nominee for New York’s Fourth Congressional District, attempted to transfer some of the momentum from her victory over 10-term Rep. Joe Crowley (D–New York) to like-minded revolutionaries outside the famously liberal bastion of New York City.

Last week, Ocastia-Cortez tweeted her support for Michigan gubernatorial candidate Adbul El-Sayed, as well as Fayrouz Saad, Kaniela Ing, and Cori Bush, running in Democratic congressional primaries in Michigan, Hawaii, and Missouri respectively.

Every single one of these candidates that had their primaries yesterday (Ing’s isn’t until Saturday) failed to get their party’s nomination.

We’ve got about ONE WEEK LEFT until a whole slew of elections come up across the country.

From @KanielaIng & @SaadforCongress to @AbdulElSayed & @CoriBush, it’s time to leave it all on the field.

Check your state primary date & VOTE August 7th + 11th.

pic.twitter.com/sjQK0AkLtF

— Alexandria Ocasio-Cortez (@Ocasio2018) July 31, 2018

Sayed lost big against the more established former prosecutor and state legislator Gretchen Whitmer, earning 30 percent of the vote compared to Whitmer’s 52 percent. It was a similar result for Bush, who lost by some 20 points to eight-term incumbent Rep. William Lacy Clay (D–Mo.) Saad was the only candidate to even come close to victory last night, earning 19 percent of the vote for a fourth-place finish in a crowded five-way contest, where first-place finisher Haley Stevens only managed to attract support from 26 percent of voters.

Conservative commenters were quick to rejoice at the string of defeats.

“Every Candidate Ocasio-Cortez Endorsed Lost in The Primaries” shouted the not-to-accurate original headline of a Daily Caller article. “Socialist star Ocasio-Cortez strikes out: All endorsed candidates lose Tuesday primaries” proclaimed the American Mirror. Carl Higbie, director of the pro-Trump America First Priorities Center, tweeted out similar sentiments.

Ocasio-Cortez herself was quick to point out that two candidates she endorsed actually did when their primaries, James Thompson of Kansas and Rashida Tlaib of Michigan, both of whom she campaigned for.

GOP can’t handle the truth, so they just make up their own.

It’s alright. Denial is the 1st stage of acceptance

Stars @RashidaTlaib & @JamesThompsonKS won their races last night!

They’re getting 2 new rebellious women in Congress whether they like it or not pic.twitter.com/P5VVcK8DMr

— Alexandria Ocasio-Cortez (@Ocasio2018) August 8, 2018

That it was these candidates that managed to win their primaries, and not Bush, Sayeed, or Saad, is telling. It suggests the things that made Ocasio-Cortez’s victory in June exciting for many on the left—a younger, explicitly socialist, woman of color, defeating a powerful, moderate, incumbent white male—was more a product of local circumstances than some national progressive wave.

Thompson, though not having held elected office before, was not a political neophyte either. He was the Democratic nominee for Kansas’ Fourth Congressional District in the 2017 special election to fill the seat left vacant by Secretary of State Mike Pompeo. The Wichita Eagle notes that the biggest policy difference between him and primary opponent Laura Lombard, a business consultant, came down to gun control. Lombard favored a ban on “assault rifles,” while Thompson did not.

Tlaib’s win over main primary challenger Detroit City Council President Brenda Jones, is more impressive, but still a close affair. Tlaib pulled 33 percent of the vote compared to Jones’ 29 percent. Jones did herself no favors by running a lackluster campaign that saw the candidate hold zero scheduled events or rallies in the days leading up to Tuesday’s primary.

Indeed, the race that most resembled Ocasio-Cortez’s own was the face-off in Missouri’s First Congressional District. There, the left-wing Bush, a community organizer running on a platform of “Jobs, Justice, and Medicare-For-All” lost badly to Clay, a more moderate candidate who served as a state legislator for 15 years before taking over his father’s seat in 2000.

This is not to say the Democratic Party as a whole is not moving left, because it definitely is. But last night’s mixed results suggest the party is far more insulated from a grassroots socialist takeover than Ocasio-Cortez and her boosters would care to admit.

For a little while Tuesday night, it looked like a Green Party candidate might spoil Democrat Danny O’Connor’s chances of winning a special congressional election in Ohio’s 12th District.

O’Connor does appear to be heading for a loss, but it looks like he would have lost whether or not Green candidate Joe Manchik was on the ballot. Manchik got 1,127 votes, a mere .6 percent of the total vote. With 100 percent of the precincts counted, O’Connor is losing by 1,754 votes. He’d still be losing even if all of Manchik’s votes had gone to him instead. The race is close enough to not yet be called; there are still absentee and provisional ballots uncounted. O’Connor hasn’t decided if he’ll request a recount.

The stakes here are pretty low, since the winner will get the seat for only a couple of months; it’ll be up for vote again in November. The big news is that the Democrat performed so well. In 2016, the Democratic nominee lost badly, getting just 26.8 percent of the vote; the district favored Trump by 11 points that year. Meanwhile, Manchik actually underperformed last night. When he ran as a Green in 2016, he got more than 13,000 votes, or 3.6 percent.

So to the extent that this foreshadows what will happen in November, the Democrats should be feeling fairly happy right now, even if O’Connor does end up losing. But the possibility that Manchik’s votes might cover the spread between O’Connor and Republican Troy Balderson caused some heartburn among Democrats. The Green Party was actually trending on Twitter last night, thanks partly to some almost comically angry tweets:

You know what sucks?

Because of our unwillingness to pass policy that protects our election integrity, I immediately think the Green Party votes tonight are Russian meddling.

Why else would anyone cast a protest vote in Ohio when there’s so much at stake?#OH12

— Alyssa Milano (@Alyssa_Milano) August 8, 2018

The Washington Examiner has collected some more of them here. They boil down to a complaint that a third-party candidate has taken votes that somehow rightfully belong to the Democrats. Libertarian voters are familiar with such accusations, though usually they’re accused of stealing votes from Republicans.

When Hillary Clinton lost there was quite a bit of bellyaching that Green Party nominee Jill Stein had taken votes from her. But that’s not what really happened. The reality was that too many voters in too many pivotal electoral battlegrounds found Clinton such an uninspiring candidate that they didn’t even vote for president.

People who think all those votes for Manchik would have gone to O’Connor had Manchik not been in the race really need to go look at and read his campaign site. Here’s a short excerpt:

Other multinational corporations that own the Democratic-Republican Duopoly Party cabal are military industrial contractors, like Lockheed Martin, Northrup Grumman, Boeing, General Electric and others that get BILLIONS of OUR tax dollars each year to finance and manufacture the weapons of war. Other examples include multinational oil corporations like BP, Shell and Exxon Mobil, that get BILLIONS of petrodollars when they go in and steal the oil and the gas from the innocent victims of the sovereign nations that the United States occupies. These are clearly some of the motives behind the many ugly wars that our out of control American government is in the business of creating today, in order to increase the corporate profits of the multinational corporations that own the Democratic-Republican Duopoly Party cabal, and because of this I am now truly ashamed of what America has become.

People who are attracted to these kinds of platforms are not fans of friends of the Democratic Party. They were probably never going to vote for O’Connor. They would probably not vote at all if Manchik weren’t on the ballot.

And they’re not going to be shamed into supporting candidates they don’t like. Just because they’re on the left side of the political spectrum doesn’t make them the rightful property of the Democratic Party. If these people believe that Democrats and Republicans make up a “cabal,” why on earth should they care if the Democrats regain control over the House? Major-party candidates keep saying their party needs to be in charge if these third-party voters are to get what they want. But that party has been in charge, and clearly some of these third-party voters did not get what they wanted.

Rather than being angry about third-party voters, the complainers need to grasp the fact that not all voters share their same priorities in the same degree. Back when the Libertarian Party was accused (incorrectly) of spoiling Republican Ken Cuccinelli’s run for governor in Virginia, I wrote a primer to help the supporters of that “duopoly” Manchik complains about grasp exactly what drives third-party votes. Some of the same logic flaws are coming up again here. Don’t assume that Green Party voters see the Democratic choice as the “lesser of two evils.” Don’t presume that you know these voters’ priorities better than they themselves do. And try to make an actual case for your candidate, which these tweeters aren’t doing, probably because they couldn’t identify O’Connor out of a police line-up and only care about him or his positions to the extent that he can help give Democrats control of the House.