Tag: hit&run

The liberty-loving attorneys of the Institute for Justice are teaming up with the Cato Institute to fight a federal policy that forbids defendants from discussing the terms of civil settlements they enter into with the federal government. If they don’t keep their mouths shut, these defendants are threatened with harsher punishments.

The offending agency targeted in a federal lawsuit filed today is the Securities and Exchange Commission (SEC). The Cato Institute wants to publish a book by an entrepreneur who believes he’s the victim of prosecutorial overreach by the SEC. But he can’t tell his story for fear of further prosecution.

Normally this is the point where we’d tell you who this person is and why the SEC went after him. But we cannot. As part of the agreement he reached to settle the matter, the plaintiff in the Cato suit had to accept a gag order that prevents him from discussing or criticizing the case. Even though the settlement does not require him to admit guilt, he is nevertheless forbidden from saying anything that would indicate that he thinks the “complaint is without factual basis.”

Because this gag order prevents him from talking about the case, it also prevents the Cato Institute from publishing his book. Cato and the Institute for Justice are thus not revealing the man’s identity because doing so would also reveal that he disagrees with, and is critical of, his settlement with the SEC. If he violates the gag order, SEC prosecutors could try to vacate the settlement and punish him more harshly.

Over at the Cato Institute, Clark Neily, vice president for criminal justice, explains about as much as he can without revealing the specific case:

The case began when a well-known law professor introduced us to a former businessman who wanted to publish a memoir he had written about his experience being sued by the SEC and prosecuted by DOJ in connection with a business he created and ran for several years before the 2008 financial crisis. The memoir explains in compelling detail how both agencies fundamentally misconceived the author’s business model—absurdly accusing him of operating a Ponzi scheme and sticking with that theory even after it fell to pieces as the investigation unfolded—and ultimately coerced him into settling the SEC’s meritless civil suit and pleading guilty in DOJ’s baseless criminal prosecution after being threatened with life in prison if he refused.

Most SEC cases—98 percent of them, according to the Institute for Justice—end in settlements. If each of these settlements includes a similar gag order, that means almost no one targeted by the SEC can publicly discuss or evaluate the merits of the case against them. We do not have the ability to consider whether citizens are coerced into accepting these deals because they cannot afford to fight back, not unlike what we see in many criminal court cases.

These agreements only bind in one direction. Here’s a recent press release from the SEC that details the settlement with a securities firm executive, emphasizing the accusations of fraud against him but noting that he neither admitted nor denied guilt when accepting the judgment. They get to describe these cases how they choose; defendants have to remain silent out of fear. Here’s a whole page of links to these press releases.

Jaimie Kavanaugh, an Institute for Justice attorney working on the case, tells Reason that these SEC actions start with the agency threatening their targets with massive prosecutions and then settling for fines and allowing the person to forego an admission of wrongdoing. Those fines seem to correspond with the amount of money that person or company’s insurance will cover, Kavanaugh says. That should raise concerns over whether these enforcement mechanisms are being used for revenue generation—a white-collar version of asset forfeiture, if you will. The censorship keeps the public from evaluating the extent that this might be happening.

“We think the book would tell the story of what’s happening to lots of people,” Kavanaugh says. And it’s not just the SEC. Other agencies like the Consumer Financial Protection Bureau and Commodity Futures Trading Commission write similar gag policies into their settlements.

The lawsuit from the Institute for Justice, filed in the United States District Court for the District of Columbia, seeks to have this gag order declared an unconstitutional violation of the Cato Institute’s First Amendment right to publish this man’s book. They’re asking for an injunction to stop the SEC from enforcing these gag orders.

Read the complaint here. A spokesperson from the SEC declined to comment in respone to the filing.

“Our southern border is a pipeline for vast quantities of illegal drugs,” Donald Trump said last night while touting the merits of the “big, beautiful wall” he wants to build along the border with Mexico. The border, of course, is not a pipeline, even metaphorically. The pipeline is the route by which illegal drugs cross the border, and here is where the president runs into practical as well as semantical difficulty.

First of all, as Joe Setyon noted last night, illegal drugs that enter the country from Mexico are mainly smuggled through ports of entry, which would still exist no matter how much money the government spends on physical barriers. In 2017, according to the Drug Enforcement Administration (DEA), only “a small percentage of all heroin seized by [Customs and Border Protection] along the land border was between Ports of Entry.” The vast majority is carried through ports of entry by privately owned vehicles or commercial tractor trailers.

The DEA says illicit fentanyl enters the United States largely (maybe mostly, once you take purity into account) in packages delivered by mail or private courier services, either directly or through Canada. Nearly all of the fentanyl seized at the southern border in 2017 was coming in through ports of entry. The picture is similar for cocaine and methamphetamine, the two other drugs that Trump mentioned: The vast majority of the supply would be unaffected by a wall.

The pipeline metaphor is misleading because it invites us to imagine a single flow of drugs that could be blocked if only the government devoted sufficient resources to the effort. But drug traffickers react to enforcement efforts, and if one route becomes relatively perilous they can always switch to another. As Theresa Cardinal Brown explained in the May 2017 issue of Reason, “drug smugglers have already beaten Trump’s wall” through a variety of evasive maneuvers. Those include not just hiding drugs inside vehicles going through the wall at points of entry (the currently preferred method) but also using tunnels to carry drugs under the wall, flying or catapulting drugs over the wall, and transporting drugs around the wall on boats and submarines. Thanks to prohibition, Brown notes, “the profit incentives to find ways over, under, around, or through any border infrastructure are high, and the cartels have more than enough money to spend on R&D.”

That profit incentive—the huge “risk premium” that criminals can earn by producing, transporting, and selling illegal drugs—is the most fundamental problem with Trump’s fantasy of stopping drugs at the border, whether with a wall or with any other conceivable method. “Traffickers can typically purchase a kilogram of fentanyl powder for a few thousand dollars from a Chinese supplier,” the DEA says, “transform it into hundreds of thousands of pills, and sell the counterfeit pills for millions of dollars in profit.” Taking the average of two actual sales cited by the DEA, a kilogram of fentanyl that costs $2,600 can be pressed into 666,666 fake pain pills, each containing 1.5 milligrams of the active ingredient, generating about $10 million in revenue at $15 each.

No feasible amount of interdiction will stop people from taking advantage of a business opportunity like that, although increased enforcement may push traffickers toward more potent drugs, as illustrated by the shift from diverted prescription pain pills to heroin, from heroin to fentanyl, and from fentanyl to fentanyl analogs. Each of those steps reduces risks for smugglers and increases profits, but it also magnifies the dangers that consumers face by making potency more variable and less predictable. The government’s efforts to block the “pipeline” cannot stop drug use, but they can make it deadlier.

A mother in Woodinville, Washington, posted an advertisement on behalf of her 9-year-old daughter, Sarah, who was willing to do housework—laundry, dishes, etc.—for neighborhood moms who needed help. Six hours later, the cops showed up to make sure Sarah wasn’t being abused or worked to death.

That’s according to Christina Behar, Sarah’s mom, who wrote me a letter about the incident.

“Apparently the ad generated multiple phone calls from paranoid neighbors thinking I was using my child as a slave,” wrote Behar.

This should spark some discussion of what we lose when we treat kids as incompetent or endangered, even though they’re quite ready to take on some responsibility in “the real world.” As that New York Times piece on the relentless demands of modern parenting made clear, many of us, wealthy or not, spend a whole lot of time and cash on our kids’ extracurricular “enrichment.” Let’s remember that making some money, dealing with some challenges, and assuming some responsibility are enriching childhood activities, too.

Here is Behar’s letter in full:

Dear Lenore:

My husband and I have three kids ages 9, 7 and 5. We have always tried to raise them to be independent and let them play outside for hours in our family-friendly suburban neighborhood outside of Seattle, walk alone to the neighbors, and have taught them how to cook, clean, do laundry and other household chores that we deem age appropriate. Inspired by your book [Free-Range Kids] I posted an ad on our neighborhood website advertising my daughter as a mother’s helper. Moms often ask me for her help and I figured I would take your advice and reach out to others in my neighborhood I may not know. This was the ad:

Mother’s Helper

Hello! My almost 10-year old is available as a mother’s helper. She is the oldest of three and is quite capable. She can fold and put away laundry, sweep, set tables, clean dishes, take out the trash, make beds, vacuum, make light meals, and keep your kiddo busy. We are a homeschool family so she has a flexible schedule. Please message me if you are interested in meeting with us.

Six hours later the Sheriff was knocking on our door. He was embarrassed and apologetic but said he had to do a welfare to check to make sure I wasn’t running a sweat shop! Apparently the ad generated multiple phone calls from paranoid neighbors thinking I was using my child as a slave.

You know I was thinking about it today—I was working in a church nursery with infants at nine years old, babysitting alone by 11, I had a paper route at 12, and was living on my own working almost full-time and going to college at 17. All those things would probably violate our state’s child labor laws today.

It’s a shame that our culture has resorted to this paranoia. It’s robbing our children of the pride that learning skills and hard work bring.

I’m keeping the ad up.

I wrote back to Behar asking about her own reaction to this experience. She responded:

I was shocked that a friendly ad for a child wanting to help a neighbor generated multiple calls to the police and resulted in an actual visit by an officer. Fortunately, in our case, he was sympathetic, although he did leave with a warning that I should never post anything about my child wanting payment for her services.

But my ad was no different than the fliers I made 20 years ago with my friends offering yard work or babysitting. What if I had mentioned compensation? Would Child Protective Services be investigating me then? When I told a few fellow mommy-friends about our surprise visit, I felt judged. I was met with silence or questions like, “Would you actually leave your kid at a stranger’s house?”

The knee-jerk distrust of all adults around all kids is a hallmark of our times. Where we could see verve, we see vulnerability. Where we could see neighbors helping neighbors we imagine the worst. Where we could see kids growing up with confidence and competence, we see a rising tide of anxiety.

Letting kids do some work for money isn’t making them into slaves. It’s making them into adults. That shouldn’t be a crime.

The spaghetti sauce recipe from Chef Anthony Bourdain uses 20 plum tomatoes and a pinch of crushed red peppers (personally I would prefer much more than a pinch of pepper). Now biotech researchers are suggesting that cooks could skip a step and simply use tomatoes engineered to produce their own pepper spice.

The ancestors of tomatoes and chili peppers went down their separate evolutionary paths nearly 20 million years ago. Derived from tiny pea-sized berries, tomatoes became milder as Native American farmers in South and Central America began domesticating tomatoes more than 8,000 years ago. Meanwhile Native American horticulturalists in Mexico 6,000 years ago turned wild bird peppers into domesticated varieties that continued to produce capsaicins (the compounds that give peppers their delicious hotness).

Now a team of researchers led by Agustin Zsögön, a plant biologist at the Federal University of Viçosa in Brazil, reports in the journal Trends in Plant Science that the genes for producing spicy capsaicin are dormant in tomatoes and could likely be reawakened via biotechnology. Instead of splicing new genes into tomatoes, researchers aim at activating existing genes in the plants. Various techniques that might be used to jump start capsaicin synthesis include using CRISPR genome-editing to modify genetic promoter sequences to turn on and turn up the dormant genes for capsaicin production in tomatoes.

Their main goal is not to get “hot” tomatoes into the produce aisle at your local grocery, but instead to use tomatoes to mass produce capsaicins for pharmaceutical purposes and/or as a pest deterrent. They note that yields of hot peppers seldom exceed 3 tons per hectare in about 4–5 months of growing, whereas is not uncommon to reach 110 tons per hectare for tomatoes during a 120-day cropping cycle.

The good news is that the U.S. Department of Agriculture has declared that it will not generally regulate genome-edited crop varieties. Therefore spicy tomatoes and hundreds of other genome-edited crop varieties now under development should be able to get to market sooner by escaping the ridiculously anti-scientific regulatory system that has so far slowed and stymied the development of beneficial biotech crops. I hope to dine on a “hot” tomato and melted cheese sandwich some day soon.

The ongoing partial shutdown of the federal government, now in its 19th day, means breweries around the country are unable to get the government’s permission to sell new types of beer—not because it’s dangerous or unhealthy to make new alcoholic drinks while government regulators are on furlough, but because there’s no one available to approve labels for cans and bottles of booze.

Those labels have to be approved by the Alcohol and Tobacco Tax and Trade Bureau (TTB), which is housed within the Treasury Department, one of the parts of the federal government affected by the shutdown. While the TTB’s main responsibility is collecting alcohol taxes—and don’t worry, it’s still doing that during the shutdown—the bureau is also charged with ensuring that beers, wines, and spirits accurately communicate details like the amount of alcohol by volume (ABV) and the mandatory Surgeon General’s warning. Without government approval, the drinks those labels envelope can’t be sold.

The turn-around time for this rote bureaucratic process is generally pretty quick, reports Philly.com’s Allison Steele, usually taking no more than a few weeks. But the shutdown has breweries rethinking their plans and even scrapping beers that were already in the pipeline. Michael Contreras, director of sales and marketing for the Pennsylvania-based 2SP Brewing Company, tells Philly.com that the brewery has canceled plans to make an imperial oatmeal stout, because it was unclear they would get label approval by the time the beer is ready.

At Atlas Brew Works in Washington, D.C., a brand new apricot IPA might have to be dumped because it’s already fermenting in the tanks but there’s no timetable for getting approval from the TTB. “That hurts, emotionally and monetarily,” Atlas founder and CEO Justin Cox tells DCist.

Other breweries are taking their frustrations directly to the president.

Hey @realDonaldTrump, we are an American-owned company and we want to distribute a new beer, but the shutdown includes the Alcohol and Tobacco Tax and Trade Bureau… so we currently can’t move forward. Please help. The people want the beer. #beer2020

— Prairie Artisan Ales (@prairieales) January 7, 2019

The longer the shutdown drags on, the more costly the consequences could be, with the potential to spread up and down the supply chain.

“If we can’t get our new labels approved in a timely manner, then it affects our entire operation. It hurts our employees, our farmers who provide our grain, our hops suppliers, our label printers, our box manufacturers and ultimately our distributors, retailers, and beer drinkers,” Bill Butcher, founder of Port City Brewing Company in Alexandria, Virginia, tells the Craft Beer Cellar newsletter. “This is a failure of government to do its job! Everyone suffers from the shutdown by slowing our business after we have busted our tails planning. It is inexcusable that this should happen.”

The Brewers Association, a trade group for small breweries, is advising breweries to expect longer waiting times for approval, even after the government reopens, because there will be a backlog of applications.

With the government shutdown grinding brewery operations to a halt, it seems like a good time to question whether the TTB’s role in approving beer, wine, and spirit labels is really necessary. After all, we’re not talking about oversight of anything that affects the safety or quality of the drinks themselves—the TTB’s involvement is just one more step that breweries and wineries must take before getting their product to the public, but it’s not a step that does much of anything in the public’s interest.

The other problem with the TTB is a First Amendment one. As Greg Beato pointed out in a 2008 feature for Reason, the TTB routinely denies certain labels for alcoholic beverages that would be considered perfectly fine to slap on any other product. “If you’re a perfume manufacturer and you’d like to name your latest fragrance Opium, no government agent will stop you,” he wrote. “The world’s flagship soda is called Coke. A company called Chronic Candy has been selling lollipops flavored with cannabis flower essential oil for eight years.”

But the TTB has used vague statues to justify blocking labels for beers that make references, usually, to drugs. In 2016, for example, a Minnesota-based brewery was told it could not sell a beer made with lavender extract, sunflower oil, and dates as “LSD Ale.” The exact same product, though, is perfectly legal to be sold under the name “Lavender Sunflower Date Honey Ale,” which is what Indeed Brewing Company ended up calling it. By any other name, right?

Instead of having to proactively approve every label for every alcoholic drink sold in America, the TTB’s bureaucrats could be relegated to an enforcement role. Breweries and wineries know what information they are supposed to include on their labels; if they fail to do that, let the TTB get involved. That’s how most other government agencies regulate consumer goods anyway. Better yet, do away with the TTB entirely and let the Federal Trade Commission enforce the beer label requirements if breweries fail to note the ABV of their brews.

The TTB is exactly the type of government agency that a shutdown should make us reconsider. When it’s operational, it causes problems. When it’s shut down, it causes other problems. Let’s get rid of it.

Economic commentators Matt Yglesias, Paul Krugman, and Noah Smith believe Rep. Alexandria Ocasio-Cortez’s (D–N.Y.) call for a 60 to 70 percent top marginal income tax rate is uncontroversial. According to all three, the New York Democrat’s proposal simply reflects the consensus of mainstream economics.

Their argument rests on two historical factoids. The first is that the rich paid higher taxes in the 1950s, and the economy grew just fine. The second “fact” is that an array of economists, from Nobel Prize winner Peter Diamond, to Thomas Piketty and Emmanuel Saez, have produced peer-reviewed research showing combined marginal rates as high as 70 to 80 percent are “optimal.”

But dig into these three papers, and you’ll find the results reflect philosophy as much as economics. These economists think they can plan the distribution of income to maximize “social welfare.” But they arrive at the decision to impose extremely high top marginal tax rates because they uniformly decide to put almost zero weight on the welfare of the rich, writes Ryan Bourne in his latest at Reason.

View this article.

Understandably, Transportation Security Administration (TSA) employees are no more enthusiastic about working when their paychecks are delayed than is anybody else on the planet. That’s why they’ve been calling-in sick in increased numbers—some to seek temporary work elsewhere—as the more-theater-than-reality “government shutdown” drags on.

But this is an opportunity for us all, suggests J.D. Tuccille. Given that the world is a better place when TSA employees and other government minions don’t do their jobs, and some are already seeking alternative employment, what a great opportunity to shut down their agencies, shrink the government, and make everybody’s lives a little better!

View this article.

On the list of dumb arguments to make in support of a wall on the U.S.-Mexico border, the one Donald Trump Jr. made last night has to rank near the top.

After his father delivered a nationally televised address making the case for more immigration control, Trump Jr. appeared to compare zoo animals to immigrants. “You know why you can enjoy a day at the zoo? Because walls work,” Trump Jr. posted on his Instagram story.

The comparison is, of course, ridiculous because undocumented immigrants are not animals.

The Trump administration has framed the situation at the southern border as a matter of national security. White House Press Secretary Sarah Huckabee Sanders, for instance, claimed Sunday that border officials caught almost 4,000 known or suspected terrorists crossing the border in 2018. But that’s not true. In fact, from October 2017 to March 2018 (the first half of the fiscal year), Customs and Border Protection apprehended just six such immigrants.

Plus, as Reason‘s Matt Welch pointed out yesterday, the State Department reported in 2017 there was “no credible information that any member of a terrorist group has traveled through Mexico to gain access to the United States.” Not only that, but studies have suggested illegal immigrants are actually less prone to commit crimes than native-born Americans.

Walls at zoos are just as irrelevant to the immigration debate as the fences rich people put around their homes. “Some have suggested a barrier is immoral,” President Donald Trump said in his speech last night. “Then why do wealthy politicians build walls, fences, and gates around their homes?”

“They don’t build walls because they hate the people on the outside but because they love the people on the inside,” he added.

Building a wall around your own home, of course, does not involve spending tens of billions of dollars in taxpayer money or seizing private property. And those walls Trump referred to actually work, which is more than you can say for his proposed border barrier.

Unfortunately, this is the kind of reasoning you’re going to use in front of the nation when you “borrow” talking points from cable news stars:

Something @realDonaldTrump said in his #OvalOfficeAddress tonight sounded familiar https://t.co/LfQzmlvs5i

— Tomi Lahren (@TomiLahren) January 9, 2019

Perhaps the most bizarre part of last night’s widely televised presidential address is how surface-normal it all seemed. Sure, President Donald Trump spouted off a dizzying array of incorrect statistics and outright lies about illegal immigration and the situation on America’s southern border. But he failed to let loose any of the fascist-leaning orders many were predicting after his administration started throwing the words “national emergency” around.

I am surprised at how relieved I am that nothing real actually happened in Trump’s address tonight. Apparently I was actually worried.

Have to build up those political cynicism calluses a bit more.

— Katherine Mangu-Ward (@kmanguward) January 9, 2019

Trump also paid lip service, at least, to humanitarian motivations and goals.

And he delivered much of it in a rote, flat affect that induced an Uncanny Valley effect. There was no name-calling, no stream-of-consciousness. No glimmer in his eye to go with the demagoguery on all the bad things border-crossers do. A number of outlets are reporting that Trump really didn’t want to do the speech.

“Watching Trump’s flat delivery of sentiments that he can’t possibly believe was the inverse of comforting,” writes Alyssa Rosenberg at The Washington Post. “Instead, the address had the queasy effect of a serial killer’s mask in a horror movie: It was a failed attempt to look normal that concealed something even more terrifying underneath.”

(While we’re on the topic of Post columns, you should definitely read Alexandra Petri’s all-subtext version of Trump’s address.)

This strange spectacle was blessedly brief and, unbelievably, followed by an even less credible attempt at coming across like human beings from House Speaker Nancy Pelosi (D–Calif.) and Senate Minority Leader Chuck Schumer (D–N.Y.). Or, as Petri put it: “The Democrats responded, in a long hallway, looking like something out of ‘The Shining,’ that the Government Shutdown Belongs In the President’s Lap.”

At least that one lent itself to some good memes.

QUICK HITS

• Megan McArdle on why we should pay people to donate kidneys.
• Former U.S. Rep. Jared Polis (“one of the most libertarian Democrats you’ll find,” says Reason Editor-at-Large Matt Welch) just assumed the governorship of Colorado.

• Osé, which Buzzfeed describes as a sex toy “that uses ‘biometric mimicry’ for hands-free vaginal and clitoral stimulation,” was chosen by the Consumer Electronics Show as an honoree in robotics innovation, only to be disqualified because awards can’t go to “adult products.”
• A badly redacted court filing from Paul Manafort’s lawyers shows what special counsel Robert Mueller thinks Manafort lied about, including sharing Trump campaign polling data andd meeting in Madrid with Russian-Ukrainian businessman and suspected spy Konstantin Kilimnik.
• “What, exactly, does it mean to be a contrarian in 2019?“

Do you keep track of the policies, positions, and practices of the businesses you deal with, lest you inadvertently lend support to a cause you abhor or undermine one you embrace? Even if you don’t, Jacob Sullum says, you should recognize that consumers who invest time and energy in that sort of discrimination see it as an important reflection of their moral values, which makes it an expressive activity that should be protected by the First Amendment.

The U.S. Supreme Court agrees—up to a point. But as the debate over laws targeting the anti-Israel Boycott, Divestment, and Sanctions (BDS) movement illustrates, it’s not clear where that point is. The answer people give may depend more on political sympathy than constitutional principle, Sullum says.

View this article.