Stossel: The Case Against Socialism

Even as Venezuelans starve, Senator Rand Paul (R–Ky.) notes that socialism has gained ground in the United States.

That’s why he wrote “The Case Against Socialism.” The chapter on Venezuelan socialism is titled, “Because Eating Your Pets is Overrated.”

“You would think that…when your economy gets to the point where people are eating their pets, people might have second thoughts about what economic system they’ve chosen,” Paul tells John Stossel.

But Stossel notes that today American socialists say, “We won’t be like that.” Sen. Bernie Sanders (I–Vt.) says, “when I talk about Democratic socialism, I’m not looking at Venezuela. I’m not looking at Cuba. I’m looking at countries like Denmark and Sweden.”

But Paul debunks that myth in his book.

“It’s not true that the Scandinavian countries are socialist,” Paul tells Stossel.

Stossel points out that while Scandinavia tried socialist policies years ago, they then turned away from socialism, privatizing industries and repealing regulations. In fact, when experts rank economic freedom, Scandinavian countries rank near the top.

Denmark’s prime minister even responded to Sanders, saying: “Denmark is far from a socialist planned economy.”

Scandinavia did keep socialist policies like government-run health care. Media outlets suggest that’s why Scandinavians live longer.

But Paul says: “This is the trick of statistics…it started way before socialized medicine.”

His book has the stats to back that up. In the 1960s, before Sweden’s healthcare was totally nationalized, Swedish men already lived five years longer than American men. Now, they…still live five years longer.

Stossel says Paul’s book is different from other politicians’ platitude-filled books. Paul did actual research. He cites sources that back up his point about health care, comparing the life expectancy of Swedish and American men in 1960s.

Regarding Sweden’s ability to pull people out of poverty, Paul credits Swedish culture, not government programs. He tells Stossel of a story about Nobel Prize-winning economist Milton Friedman:

“This Swedish economist comes up to him and he says, ‘You know in Sweden we have no poverty.’ And Friedman responds, ‘Well, yeah, in America we have no poverty among Swedish Americans.'”

Paul confirms that with data from Swedish researcher Nima Sanandaji, who writes: “Danish Americans today have fully 55 percent higher living standard than Danes. Similarly, Swedish Americans have a 53 percent higher living standard than Swedes.”

Stossel says it’s good that Paul debunks these myths and warns against repeating the tragic history of socialism.

Paul gives a partial list of failures: “Stalin, Hitler, Mao, Pol Pot, Castro, Chavez, Maduro. It doesn’t work.”

The views expressed in this video are solely those of John Stossel; his independent production company, Stossel Productions; and the people he interviews. The claims and opinions set forth in the video and accompanying text are not necessarily those of Reason.

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Tax E-cigarettes, Increase Smoking

A new study from the National Bureau of Economic Research examines the effects of Minnesota’s decision to tax e-cigarettes like tobacco cigarettes. Here is the abstract:

E-cigarettes use a battery powered heater to turn a liquid containing nicotine into a vapor. The vapor is inhaled by the user and is generally considered to be less harmful than the smoke from combustible cigarettes because the vapor does not contain the toxins that are found in tobacco smoke. Because e-cigarettes provide an experience that is very similar to smoking, they may be effective in helping smokers to quit, and thus the availability of e-cigarettes could increase quit rates. Alternatively, e-cigarettes may provide smokers with a method of bypassing smoking restrictions and prolong the smoking habit. There is very little causal evidence to date on how e-cigarette use impacts smoking cessation among adults. Although there is no federal tax on e-cigarettes, a few states have recently imposed heavy taxes on them. We provide some of the first evidence on how e-cigarette taxes impact adult smokers, exploiting the large tax increase in Minnesota. That state was the first to impose a tax on e-cigarettes by extending the definition of tobacco products to include e-cigarettes. This tax, which is 95% of the wholesale price, provides a plausibly exogenous deterrent to e-cigarette use. We utilize data from the Current Population Survey Tobacco Use Supplements from 1992 to 2015, in conjunction with a synthetic control difference-in-differences approach. We assess how this large tax increase impacted smoking cessation among adult smokers. Estimates suggest that the e-cigarette tax increased adult smoking and reduced smoking cessation in Minnesota, relative to the control group, and imply a cross elasticity of current smoking participation with respect to e-cigarette prices of 0.13. Our results suggest that in the sample period about 32,400 additional adult smokers would have quit smoking in Minnesota in the absence of the tax. If this tax were imposed on a national level about 1.8 million smokers would be deterred from quitting in a ten year period. The taxation of e-cigarettes at the same rate as cigarettes could deter more than 2.75 million smokers nationally from quitting in the same period. The public health benefits of not taxing e-cigarettes, however, must be weighed against effects of this decision on efforts to reduce vaping by youth.

(Emphases added.)

This study is consistent with prior research finding that restrictions on youth access to e-cigarettes increases teen smoking rates.

It is becoming increasingly difficult for public health advocates and others to deny that burdening access to e-cigarettes, relative to smoking, results in higher smoking rates than we would have seen otherwise. So unless one believes the risks of e-cigarettes are anything near to those of combustible cigarettes, such policy measures have deadly consequences.

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Thanks to Late-Stage Capitalism, You No Longer Need To Leave Your House

Happy (almost) New Year! There’s never been a better time to be an introvert. Over the past decade, it became a whole lot easier to practically never leave your house.

Say you just woke up on a Saturday morning and you realize there’s a long list of errands to attend to. Don’t want to do any of them? Prefer to stay in and watch a movie on Netflix? It’s almost 2020 and now you can automate chores to your heart’s content.

Open a new tab to Amazon Prime or Pantry to order the paper towels, toilet paper, and toothpaste you’ve run out of—if you stock up and order $35 worth, you can get free shipping, with items dropped off at your door within a day or two.

Need groceries? Open a tab to Instacart or Prime Now and browse Whole Foods’ (or your local supermarket’s) selection of produce, dairy, snacks, meats, and seafood. Plan your meals for the week from your bed or couch. And if you’re feeling too lazy to cook (or do the dishes), your fallback plan can be ordering Thai via DoorDash or Chinese via Grubhub.

Realize you’re out of birth control pills and don’t want to miss a day? No need to visit the gynecologist to re-up when your prescription is running low; log onto Nurx (or Alpha, or HeyDoctor) and order your next month of pills. If a more serious malady ails you—mysterious food allergies?—order an at-home testing kit from EverlyWell and, later, send it off to a lab. And if acne is keeping you even more shamefully sequestered within the cozy four walls of your house, log onto your Curology dashboard, take some selfies of the problem, and chat with your remote dermatologist to get cream prescribed and delivered to your door.

Though feeding your family, taming your zits, and not getting accidentally pregnant are top priorities, we all know what Saturday mornings are truly about. If you live in a legal weed state, open up your Weedmaps or Budly app and pick which gummies, chocolates, and flower you want delivered to your door. This is the future libertarians want and, thankfully, increasingly have.

In the rare and startling occasion that you’re forced to leave your house, at least someone else can drive you to whatever horrifying social fate awaits. Thanks, Uber.

What is often disparagingly called late-stage capitalism is not just an introvert’s dream but also a huge blessing for those who want their time freed up. Though a common criticism levied at those who take advantage of the fully automated millennial life is that such pleasures are only enjoyed by the wealthy, on the backs of gig economy workers, late-stage capitalism’s little conveniences offer something to those who don’t fit the stereotype. Disabled or chronically sick people who legitimately can’t leave their couches now have more ways to get the groceries they need. People who are too old to drive no longer have to fear a loss of mobility when they lose their licenses. Working parents who want to spend more time with their little kids no longer have to tarry about waiting for a prescription at CVS, or take hours out of their weekends to joylessly peruse the grocery store aisles.

For now working-class people may be more likely to be driving for Uber or DoorDash than using the apps themselves, but that will change. Just as Netflix and Amazon Prime have become widely adopted by a broader pool of people over time, so will these other services, enabling more and more people to buy themselves some free time—the greatest scarcity of all.

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Double Jeopardy for School Choice

In Zelman v. Simmons-Harris (2002), the U.S. Supreme Court upheld Cleveland, Ohio’s school choice program against the charge that it was unconstitutional to provide tuition aid to parents who opted to send their children to religiously affiliated magnet schools. So long as “a government aid program is neutral with respect to religion, and provides assistance directly to a broad class of citizens who, in turn, direct government aid to religious schools wholly as a result of their own genuine and independent private choice,” the Court said, the program passes constitutional muster.

The Supreme Court is now weighing the constitutional merits of another school choice initiative. At issue in Espinoza v. Montana Department of Revenue is a 2015 scholarship program created by the Treasure State’s legislature “to provide parental and student choice in education.” The program operates by creating a tax credit for individuals and businesses that donate to private, nonprofit scholarship organizations, which then use such donations to fund educational scholarships. Families who qualify for the scholarships may use the money to help send their children to a “qualified education provider,” a category which includes religiously affiliated K–12 private schools.

In 2018, however, the Montana Supreme Court declared religious schools entirely off-limits for the program, pointing to a provision of the Montana Constitution that prohibits the use of public funds “for any sectarian purpose or to aid any church, school, academy, seminary, college, university, or other literary or scientific institution, controlled in whole or in part by any church, sect, or denomination.”

In effect, the ruling said, the Montana Constitution prohibits the very sort of school choice programs that the U.S. Supreme Court has previously upheld under the federal Constitution. “We conclude that Montana’s Constitution more broadly prohibits ‘any’ state aid to sectarian schools and draws a ‘more stringent line than that drawn’ by its [federal] counterpart,” the state court declared.

Assuming the Supreme Court justices follow their own precedents, Espinoza looks to be a winner for the school choice side. The Montana scholarship program seems to easily satisfy the test of constitutionality set out in Simmons-Harris and related cases, and the Supreme Court is unlikely to let a state court chart its own path in opposition to the federal jurisprudence that’s in place for the rest of the country. It is one thing, after all, to let the states operate as “laboratories of democracy” and something else to let the Constitution effectively mean two different things in two different places.

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Around the World in 80 Hacks

This week Maury Shenk guest hosts the podcast and takes us on a world tour of computer insecurity.

Even with a “phase one” trade deal with China apparently agreed, there’s of course plenty still at stake between China and the US in the tech space. Nate Jones reports on the Chinese government order for government offices to purge foreign software and equipment within three years and the plans of Arm China to develop chips  using “state-approved” cryptography. Nick Weaver and Maury agree that, while there are some technical challenges on this road, there’s a clear Chinese agenda to lose dependency on US suppliers. 

In the Department of Hacking, the aptly-named Plundervolt allows hackers to steal data using the power supply of Intel chips. The immediate hole has been closed, but Nick thinks the hack suggests bigger problems for Intel down the road. We also discuss Apple’s flirtation with the using DMCA to get Twitter to de-tweet an encryption key compromising a less-than-critical aspect of iPhone 11 security, and Maury reporte on an 11th Circuit decision on insurance coverage for losses from spear-phishing.

Maury points out that it’s not just the EU that is going after Big Tech. Amazon’s new-ish Ring subsidiary seems to have scored a couple of own-goals with privacy and security practices for its smart doorbells – Nick explains in detail. And Maury relates the Wall Street Journal report that the FTC is considering seeking an injunction of Facebook app integration, and the big 7.5% tax that Turkey will levy on digital services beginning in March.

Finishing up in the Gulf, we look at a “very big” cyberattack on Iranian banks that the Iranian government claims is state-sponsored. Nate doubts intimations that the US is involved, and we agree that political and commercial motives are difficult to disentangle in this type of attack. Across the Strait of Hormuz, we explore the involvement of former counterterrorism czar Richard Clarke in helping the United Arab Emirates build its DREAD (who thought that was a good name?) counterterrorism unit and the policy implications and slippery slope of allowing US expertise to be used for such efforts.

Download the 293rd Episode (mp3).

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The views expressed in this podcast are those of the speakers and do not reflect the opinions of participants’ firms, clients, institutions, families, or pets.

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Brickbat: What a Jackass!

Baldwin Park, California, businessman Robert Ehlers has filed a lawsuit challenging $12,400 in fines the city has levied against him for hanging two banners portraying city council member Ricardo Pacheco as a corrupt “jackass” and urging voters not to re-elect Pacheco in 2020. Ehlers hung the banners after a jury found Pacheco responsible for racial and sexual discrimination against former police chief Lili Hadsell. Hadsell was awarded $7 million in damages. Officials say the signs are not in compliance with the city’s sign ordinance, but Ehlers’ lawsuit says the city routinely allows signs that don’t comply with the law and he is being singled out because of the message on his banners.

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Judge Willett’s Change of Heart

It’ is not often that judges confess error or change their mind, so when they do it’s worth taking note. After all, we expect judges to approach cases with an open mind, willing to consider arguments fairly despite any initial skepticism.

Today, the U.S. Court of Appeals for the Fifth Circuit issued a revised opinion in Doe v. Mckesson, a tort suit against activist Deray Mckesson for allegedly inspiring protests that turned violent. The Fifth Circuit is allowing the suit to proceed, but Judge Don Willett has come to believe his colleagues are insufficiently sensitive the First Amendment implications of letting the suit go forward.

His opinion concurring in part and dissenting in part begins:

I originally agreed with denying Mckesson’s First Amendment defense. But I have had a judicial change of heart. Further reflection has led me to see this case differently, as explained below. Admittedly, judges aren’t naturals at backtracking or about-facing. But I do so forthrightly. Consistency is a cardinal judicial virtue, but not the only virtue. In my judgment, earnest rethinking should underscore, rather than undermine, faith in the judicial process. As Justice Frankfurter elegantly put it 70 years ago, “Wisdom too often never comes, and so one ought not to reject it merely because it comes late.”

On the First Amendment question, he writes:

Even assuming that Mckesson could be sued under Louisiana law for “negligently” leading a protest at which someone became violent, the First Amendment “imposes restraints” on what (and whom) state tort law may punish. Just as there is no “hate speech” exception to the First Amendment, “negligent” speech is also constitutionally protected. And under Claiborne Hardware (and a wealth of precedent since), raucous public protest—even “impassioned” and “emotionally charged” appeals for the use of force—is protected unless clearly intended to, and likely to, spark immediate violence. . . .

Holding Mckesson responsible for the violent acts of others because he “negligently” led a protest that carried the risk of potential violence or urged the blocking of a road is impossible to square with Supreme Court precedent holding that only tortious activity meant to incite imminent violence, and likely to do so, forfeits constitutional protection against liability for violent acts committed by others.64 With greatest respect, I disagree with the majority opinion’s First Amendment analysis—both its substance and its necessity. . . .

The opinion ends with a flourish:

In Hong Kong, millions of defiant pro-democracy protesters have taken to the streets, with demonstrations growing increasingly violent. In America, political uprisings, from peaceful picketing to lawless riots, have marked our history from the beginning—indeed, from before the beginning. The Sons of Liberty were dumping tea into Boston Harbor almost two centuries before Dr. King’s Selma-to-Montgomery march (which, of course, occupied public roadways, including the full width of the bloodied Edmund Pettus Bridge).

* * *

Officer Doe put himself in harm’s way to protect his community (including the violent protestor who injured him). And states have undeniable authority to punish protest leaders and participants who themselves commit violence. The rock-hurler’s personal liability is obvious, but I do not believe that Mckesson’s is . . .

Dr. King’s last protest march was in March 1968, in support of striking Memphis sanitation workers. It was prelude to his assassination a week later, the day after his “I’ve Been to the Mountaintop” speech. Dr. King’s hallmark was nonviolent protest, but as he led marchers down Beale Street, some young men began breaking storefront windows. The police moved in, and violence erupted, harming peaceful demonstrators and youthful looters alike. Had Dr. King been sued, either by injured police or injured protestors, I cannot fathom that the Constitution he praised as “magnificent”—”a promissory note to which every American was to fall heir”—would countenance his personal liability.

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Impeaching Fast and Slow

After the House Judiciary Committee approved two articles of impeachment, several media outlets reported that the House would promptly hold a floor vote, as early as December 18. Now, the timing seems to have slowed down, and it isn’t clear there will be a vote this week.

Philip Bobbitt writes that the House should pause the impeachment process. In the interim, the House should litigate various subpoenas against the Trump Administration:

Resort to the courts may take many weeks, but there is no reason it would take many months. The ultimate guidance given the parties—as in the Nixon case—can preclude endless re-litigation.

Success in getting a judicial order to produce documents and testimony is the only way to overcome the partisan impasse we currently face. The only possibility left lies in public attention, which will be substantial when Secretaries Pompeo and Perry, chiefs of staff Mulvaney and Kelly, national security adviser Bolton, White House Counsel McGahn and the president’s lawyer Giuliani are compelled to testify under oath. Some of these individuals are known to have had direct conversations with the president about Ukraine; others are knowledgeable about the president’s alleged obstructions that predate the Ukraine matter. Pausing now may afford other pieces of the story to fall into place.

What’s more, action by the courts broadens the legitimacy of the inquiry beyond the acts of one highly partisan body of one branch of the government.

Larry Tribe proposed a delay, but for very different reasons. The House should hold off on a vote until the Senate confirms that it will hold a fair trial. He tweeted:

The House Judiciary Committee approved the Articles at a blistering pace. But now, the House may see advantages–both legal and strategic–in dragging this process out. Bobbitt identified one such pragmatic reason:

And I ask the president’s political opponents: would you rather run against a candidate who is under indictment or one who has been acquitted?

Hitting the pause button would allow the allegations to hang over the political landscape for the next 11 months, without any definitive conclusion, such as an acquittal. The majority could also prevent its members in swing districts from having to take a difficult vote, at least until the political currents settle.

My colleague Seth Barrett Tillman suggested another option. The House could approve the articles of impeachment, but not transmit them to the Senate. As far as I can tell, there is no requirement that the House take any action after approving articles of impeachment. For certain, the Senate cannot take any action until the House managers show up. In this fashion, the articles of impeachment would operate as a censure that could stand indefinitely.

Consider another possibility. The House could determine that the Senate, with its current leadership and majority, would not afford the House managers a fair trial. (Tribe hints at this option.) Therefore, the House plans to wait until after the election to transmit the articles of impeachment. Of course, that option would be premised on President Trump winning re-election. What better way to start Trump’s second term than by holding an impeachment trial? Indeed, if the Senate flips to Democratic, the Senate trial could serve as a lengthy post-mortem of the Trump administration. However, even if Trump loses, I agree with co-blogger Keith Whittington that a former President could be impeached.

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“Keeping IP Real” Symposium Piece out in Houston Law Review

I participated in this year’s University of Houston IPIL Symposium in Santa Fe, New Mexico. The topic was “What’s Real?—IP from a Property Theory Perspective”, and the symposium pieces were just published in the Houston Law Review. Here is the abstract for my contribution, “Keeping IP Real”:

This symposium contribution analyzes the relationship between intellectual property and tangible property, focusing on four types of intellectual property: copyrights, trademarks, patents, and trade secrets. It posits that—contrary to popular conceptions—the question of rivalrousness should be viewed as central both to owners’ use of IP-protected goods and to others’ infringement of the underlying IP rights (just as that attribute lies at the heart of the concept of real and other tangible property). Rivalrousness typically arises where consumption of a good by a consumer prevents simultaneous consumption of that good by other consumers or, in the tangible property context, where simultaneous physical occupation of the same space is impossible. This symposium piece, however, adopts an understanding of rivalrousness that rests on economic rather than physical conceptions of rivalrousness. Previous scholarship, including my own, has questioned the boundary between intellectual property and tangible property by examining binary conceptions of rivalrousness, whereby physical goods (including real property) are understood to be completely rivalrous, and intangible goods completely nonrivalrous. This piece studies in depth how “(real) property-like” the different forms of intellectual property are when it comes to economic rivalrousness, and concludes that most trademarks and trade secrets hew quite closely to our understanding of real property and other tangible property as far as economic rivalrousness is concerned. There is more variance in that respect within copyrights and patents (with the associated goods often ranging from not rivalrous at all to highly rivalrous), which suggests that there may be more flexibility in those areas when granting rights to third parties. For copyright and patent rights, economic space might be more shareable than for trademarks or trade secrets, in the sense that the goods can sometimes more easily coexist in the market without the owner of the original intellectual property suffering profit losses.

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