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The latest hairy growth on the
IRS-targeting-Tea-Partiers scandal is that the federal agency
apparently lost more than two years’ worth of potentially
incriminating emails in a single computer crash. Rep. Steve
Stockman (R-Texas) has proposed a creative solution to the problem:
have the National Security Agency (NSA) release the relevant
metadata.

He
wrote a letter to the agency’s new director, Michael Rogers, on
Friday. Here’s part of it:

As you probably read, the Internal Revenue Service informed the
House Ways and Means Committee today they claim to “lost” all
emails from former Exempt Organizations division director Lois
Lerner for the period between January 2009 and April 2011.

According to chairman Camp, “The IRS claims it cannot produce
emails written only to or from Lerner and outside agencies or
groups, such as the White House, Treasury, Department of Justice,
FEC, or Democrat offices” due to a “computer glitch.”

I am writing to request the Agency produce all metadata it has
collected on all of Ms. Lerner’s email accounts for the period
between January 2009 and April 2011.

Tim Cushing at the technology blog Techdirt
suggests that Stockman’s letter likely won’t yield anything,
since “the NSA can’t even confirm
or deny its monthly water usage at its Utah data site,
much less that it has metadata pertaining to Americans’
communications.” On the bright side, he says it’s good
that “this sort of thing is becoming increasingly common” as
it prevents the NSA from “pretend[ing] it doesn’t harvest data on
American citizens.” Not a bad consolation prize. 

In related news, Jay Carney’s replacement, Press Secretary Josh
Earnest, seems to be fitting right into the question-dodging
culture. He blew off
legitimate skepticism of the computer crash and turned it
around on the inquiring minds. “You’ve never heard of a computer
crashing before?” he
asked reporters yesterday. “I think it’s entirely reasonable. …
The far-fetched skepticism expressed by some Republican members of
Congress I think is not at all surprising and not particularly
believable.”

The United States paid a heavy
price in the Iraq War: some 4,500 U.S. troops killed, tens of
thousands more with traumatic brain injuries, hundreds of limb
amputations, $1.7 trillion in direct budgetary costs so far and
nearly half a trillion to come in veterans’ care and
disability. Given that history, perhaps there’s something to be
said for President Obama’s latest foreign policy maxim:
“don’t do stupid stuff.” At the very least, you wouldn’t think a
“first, do no harm” approach to foreign policy would
prove quite so controversial. The D.C. commentariat gripes, but
Gene Healy writes that it is sound, even noble, foreign policy
goal, one that can help us avoid further sacrifice of American
blood and treasure—even as we try to extricate ourselves from past
stupidities.

View this article.

“There’s a lot of people out there whose job it is to be
offended for other people,” says Adam Carolla, comedian and host of
the Adam Carolla
Show podcast. “They’re like, ‘Hey, these are opinions
people disagree with!’ It’s like, ‘Hey, United States there, buddy.
It’s just one big pile of opinions that people disagree with.'”

Reason TV sat down with Carolla in his Glendale
warehouse/podcast studio to discuss a lawsuit he’s facing from a
so-called “patent troll” who
claims intellectual ownership over the idea of “a system for
disseminating media content representing episodes in a serialized
sequence.” In other words, the company claims to own the very idea
of podcasting, despite never having produced a podcast itself.

Watch the video above to hear Carolla’s take on patent trolls,
Los Angeles (7:08), comedians being
pressured to issue fake apologies (10:25), and media
outlets
NPR and
Salon, whom he accuses of engaging in ambush interview
techniques (11:45). Or, click below
for the full text and downloadable versions of this video.

View this article.

It is legal to publish stories
about Sherlock Holmes and Dr. Watson without the permission of
their creator’s estate, because those characters are in the public
domain. That’s a straightforward reading of current copyright law,
and the Seventh Circuit confirmed it yesterday, upholding a lower
court’s
ruling that Holmes fan Leslie Klinger has the right to edit an
anthology of Sherlock stories by contemporary writers.

It’s a welcome decision. The argument offered by Arthur Conan
Doyle’s estate rested on the fact that 10 Sherlock stories have not
yet entered the public domain. Because those stories introduced new
elements to Holmes’ and Watson’s fictional lives, the estate’s
attorneys claimed that the characters were not complete
until those final tales were published; therefore, they declared,
the characters were not fully created until after 1923 and they
aren’t in the public domain after all. At a time when copyright
terms are constantly being
extended into the future, the estate was effectively attempting
to enact a stealth extension into the past.

It was an absurd argument, and Judge Richard Posner swatted it
down gracefully. His decision is embedded below.

Klinger v. Doyle
Estate

A new
study finds that insider trading is extremely common. CNBC
Squawk Box co-anchor Andrew Ross Sorkin writes up the
findings: 

Now, a groundbreaking new study finally puts what we’ve
instinctively thought into hard numbers—and the truth is worse than
we imagined.

A quarter of all public company deals may involve some kind of
insider trading, according to the study by two professors at the
Stern School of Business at New York University and one professor
from McGill University. The study, perhaps the most detailed and
exhaustive of its kind, examined hundreds of transactions from 1996
through the end of 2012.

But is all
this insider trading really bad news? At Reason, we have a
long history of sticking up for insider trading, even making Martha
Stewart our cover girl after she got into hot water with the
Securities and Exchange Commission (SEC) in 2003.

That’s because insider trading is a victimless crime. Markets
run
on asymmetrical information. Stock prices bounce around because
investors are always doing their best to use their own superior
information for personal gain. So-called insider information is
just one kind of asymmetry, and not a particularly insidious
one. 

What’s more, insider trading tends to make markets more
efficient.
Here’s The Washington Post last year, taking a page
from George Mason economist Henry Mannes’ book: 

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.

And what this
new study from Patrick Augustin of McGill University, Menachem
Brenner of New York University (NYU), and Marti G. Subrahmanyam of
NYU’s Stern School of Business finds is that our existing laws suck
at preventing insiders from cashing in, at least on certain kinds
of deals. In fact, the SEC isn’t even very good at
preventing its own employees from engaging in trades based on
special knowledge—they actually require such trades in some cases.
And while enforcing insider trading laws isn’t the only thing the
SEC does, it’s a significant chunk of the agency’s $1.3 billion
budget. 

I’ll be on CNBC to talk about the new study today in the 1:00
p.m. hour. Tune in!

The
U.S. Supreme Court declined yesterday to take up the case of
Elmbrook School District v. John Doe. At issue was a
Milwaukee public school district’s practice of holding high school
graduation ceremonies in a local church. According to the U.S.
Court of Appeals for the 7th Circuit, that decision violated the
First Amendment’s stricture against the establishment of religion.
“An unacceptable amount of religious endorsement and coercion
occurred when the District held important civil ceremonies in the
proselytizing environment of Elmbrook Church,” the 7th Circuit

ruled. Because the U.S. Supreme Court refused to hear the
district’s appeal, that decision by the 7th Circuit will stand.

There was, however, a dissent. Although the Supreme Court denies
most cases without comment, Justice Antonin Scalia, joined by
Justice Clarence Thomas, took the rare step in this case of filing
a written opinion
dissenting from the Court’s denial. In it, Scalia made clear
his sympathies were on the side of the school district and that he
saw little evidence of a constitutional violation. “Some there
are—many, perhaps—who are offended by public displays of religion,”
Scalia wrote. “I can understand that attitude: It parallels my own
toward the playing in public of rock music or Stravinsky.” But, he
declared, “my own aversion cannot be imposed by law because of the
First Amendment.”