Month: June 2020

Throw a Billion Dollars from the Helicopter is a new documentary about the wildly successful (and incredibly stupid) 2016 ballot initiative led by Jeff Williams, the mayor of Arlington, Texas, to throw $500 million in subsidies at a new ballpark for the Texas Rangers. If you care at all about sports, you’ll want to stream this movie, at the risk of killing whatever residual pleasure you might still get from watching baseball. And if you care about tax policy, crony capitalism, and good governance, you’ll want to watch it too, even though—spoiler alert—the ragtag bunch of ex–Tea Party renegades opposed to an indefensible giveaway got bowled over like Ray Fosse trying to protect the plate against Pete Rose at the 1970 All-Star Game.

Director Michael Bertin advances two intertwined storylines. The first is tight study of local politics, showing how Arlington Mayor Jeff Williams came into office in 2015 as a small-government, tax-cutting, low-spending character straight out of central casting. Once in office, Williams almost immediately starting pimping for taxpayers to cover half the cost of a new billion-dollar stadium for the Rangers (a team once partly owned by former President George W. Bush).

Williams expertly works the levers of local boosterism, and Bertin relishes showing the mayor and other stadium supporters invoking the phrase “world-class city” over and over again. The new ballpark will feature a retractable roof! It will be not just a stadium but a family “destination” with bars, restaurants, and concert venues! All of which will be “world class” and make Arlington a “world-class city”! Smaller cities—Arlington has about 400,000 residents and is part of the Dallas-Forth Worth metro area—often have inferiority complexes, and sports leagues and national chains know how to take advantage of that when looking for sweetheart subsidy deals.

“Someone in Cleveland once said that, without the sports teams, Cleveland is just Omaha,” Bertin told me yesterday in an interview. In 2009, Arlington lured the Dallas Cowboys from Irving, largely by giving billionaire team owner Jerry Jones $325 billion in subsidies.

Opposing the stadium is group called Citizens for a Better Arlington, a handful of folks left over from the Tea Party movement. They come across as an amiable group of people who don’t want the city to issue $500 million in bonds to cover half the cost of the park, especially since the old one was opened relatively recently (in 1994) and remains popular with fans. The bonds would be paid off by continuing a half-cent sales tax put in place to cover the debt incurred on the Cowboys’ deal, plus a series of hospitality taxes on rental cars, hotel rooms, stadium parking, and tickets. It’s a classic David-and-Goliath story, with the stadium backers funneling hundreds of thousands of dollars into the campaign while opponents scrape together loose change to cover the cost of yard signs and Xeroxed factsheets.

The second storyline deals with the phoney-baloney economic analysis that gets mustered up every time a team owner and pliant politicians want to sell a stadium to wary taxpayers. The Stanford economist Roger Noll compares stadiums to pyramids in ancient Egypt, structures built to honor dead pharaohs but paid for by the sweat and toil of living, breathing people. Noll and others point out that entertainment spending is generally a fixed pie and that local residents substitute one option for another. Teams thus don’t create new spending; they take it from other businesses, most of whom are actually paying property and other taxes. Bertin drives home the fact that most stadium boosters talk about the “economic impact” of having a team, not the actual economic benefits. Invariably, when you factor in the costs of building and financing a stadium and all the extra giveaways to team owners (who keep most or all revenue from parking, concessions, and the like), stadium projects are municipal money pits.

As Bertin shows, Irving’s economy has boomed relative to Arlington’s since the Cowboys vamoosed. It might be true that Cleveland without sports teams is just Omaha, but Omaha has a median household income of nearly $54,000 while Cleveland’s is just over $27,000.

The movie’s title comes from the University of Chicago economist Allen Sanderson, a longtime critic of subsidized stadiums (and a one-time Reason contributor). Rather than spending massive amounts on a stadium deal to keep a team in town, Sanderson says you’d get a bigger payoff by taking the money, converting it $20 bills, renting an aircraft, and then throwing “a billion dollars from the helicopter” while hovering over a city.

The good news is that publicly financed stadiums and arenas seem to be on the decline. As one economist mentions toward the end of the movie, “Arlington is the old world” when it comes to things. Here’s hoping.

A first-time filmmaker, director Bertin tells me that he started the project because he loved baseball. Before the coronavirus shut down sports (including the planned opening of Arlington’s new billion-dollar stadium), he used to get MLB’s streaming package that allowed him to watch just about any game he wanted to on his computer. Working on the documentary has kind of ruined it all for him, because it’s just so awful to watch teams bilk taxpayers for so much money. Speaking as a fan of baseball, football, soccer, college basketball, and the Olympics (the biggest boondoggle of them all!), understanding the economics of most modern sports had me turning away long before COVID-19 cancelled everything.

Oh, well. At least we’ve got documentaries like Throw a Billion Dollars from the Helicopter to pass the sports-free days.

Bonus video: “5 Cities That Got F*cked by Hosting the Olympics.”

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In previous posts based on my new book Free to Move: Foot Voting, Migration, and Political Freedom, I explained what the book is about and why I wrote it, described the advantages of foot voting over ballot box voting, took a closer look at the three major types of foot voting, and summarized the book’s answers to a number of common justifications for restricting migration rights. In this post—the last in the series—I provide an overview of the final two chapters of the book, which explain how both domestic constitutions and international law can be structured in ways that facilitate foot voting, while minimizing potential downsides.

There are many ways in which domestic constitutional law can promote foot voting. Some are relatively obvious. For example, it can ban restrictions on migration from one state or locality to another. At least until the current Coronavirus crisis, modern Americans have taken interstate mobility for granted; and even now states have enacted only relatively modest restrictions on it, such as 14-day quarantines for people arriving from high-risk locations. Historically, however, state governments imposed more severe restrictions, including trying to keep out African-Americans and “paupers”—often citing the same sorts of justifications that are today used to justify restricting international migration. Internal mobility is still restricted in some other countries today, notably including China, with its hukou system.

Foot voting can also be facilitated by constitutional limitations on the scope of central government power. The more issues are devolved to regional or local governments, the greater the opportunities for people to “vote with their feet” between them. The same goes for constitutional rights that leave issues such as speech, religion, and other questions to the private sector. That facilitates foot voting between private institutions, which often offers greater choice, higher quality, and lower moving costs than is possible with public-sector foot voting.

Constitutional limits on central government subsidization of regional and local governments can help facilitate foot voting by incentivizing competition between jurisdictions seeking to attract new taxpayers. As I discuss elsewhere in the book, this is entirely compatible with a centralized system of redistribution to the poor, provided that the funds go to poor people directly rather than getting channeled through subnational governments.

At the same time, strong constitutional protection for property rights in immobile assets can prevent subnational governments from expropriating or otherwise exploiting immobile property to make up for the fact that they cannot “trap” mobile assets. This is one of several ways in which constitutional law can mitigate potential downsides of foot voting.

Constitutional design can also be used to facilitate international migration. The most obvious way is by placing tight limits on the national government’s power to exclude immigrants, as the US Constitution was understood to do during the Founding era and long after. If the central government is nonetheless given a broad power to exclude, that power should at least be subject to the same limitations as other national government powers. For example, it cannot be used to exclude migrants on the basis of race, ethnicity, religion, speech, and other criteria that would be unconstitutional in the context of other government policies. Sadly, current US Supreme Court precedent instead largely exempts immigration restrictions from constitutional constraints that apply to other policies.

In federal systems, the constitution can allow subnational jurisdictions to issue visas to immigrants, who otherwise would not have been accepted by the central government. Such systems already exist in Canada and Australia, and the US should consider adopting a similar approach, as has been proposed by GOP Senator Ron Johnson and Democratic presidential candidate Joe Biden, among others (see discussion of their proposals in Chapter 7).

While the central government’s power to ban migrants should be severely restricted, it should have the power to adopt “keyhole solutions” limiting potential negative side effects of migration. These may include restricting eligibility for the franchise and for welfare payments, temporary quarantine provisions to limit the spread of disease, and—possibly—imposing special taxes or entry fees, where necessary to offset costs. Most Western governments, in fact already have such powers. They should be kept limited so as to prevent their use as backdoor restrictions on immigration.

In Chapter 7, I also discuss a range of less obvious ways in which constitutional rights can facilitate foot voting. They include protections for freedom of religion, broad rights to marriage—including same-sex marriage, economic liberties, property rights, due process rights for people arrested and detained by the government, and others.

I certainly do not claim that the protection and expansion of foot voting should be the only factor considered in constitutional design; still less do I believe that there is one constitutional structure that is ideal for every nation. But foot voting should be an important element in evaluating constitutions, one that is too often neglected.

In Chapter 8, I consider the implications of foot voting for international law and global governance. In the first part of that chapter, I describe how foot voting can be promoted by expanding the range of people who qualify as a “refugees” whom governments are forbidden to expel. Current US and international law draw a sharp distinction between “economic” migrants and those fleeing persecution based on race, ethnicity, gender, and other similar characteristics. I argue that this distinction is untenable, in large part because it ignores the fact that many “economic” refugees are actually victims of oppressive government policies. I discuss a number of proposals for incrementally expanding refugee rights, and also consider which types of refugees should be given priority in a second-best world where we cannot (at least not yet) establish a general presumption of free migration for all.

The last part of Chapter 8 offers a warning against the dangers of world government and strong forms of “global governance.” While such ideas may seem consonant with the cosmopolitan orientation of Free to Move and especially with the critique of ethnic nationalism in Chapter 5, they are in fact inimical to foot voting. The reason is simple: a world government is a regime with no exit—one whose authority we cannot use foot voting to escape. Moreover, foot voting and political freedom would be even more seriously compromised if the world government became corrupt, oppressive, authoritarian—or—worst of all—degenerated into a totalitarian state. The same risks arise, albeit to a lesser degree, from proposals for strong forms of “global governance” that fall short of full world government.

In the book, I discuss why the risks of world government are not sufficiently mitigated if that government is democratic, has a federal structure, or both. Among other things, there is good reason to fear that a global democratic or federal state wouldn’t stay that way in the medium to long-run. The discussion of world government in Chapter 8 expands on “A Cosmopolitan Case Against World Government,”  a 2017 article I wrote for the World Government Research Network. In that article—and more fully in the book—I also discuss why world government and global governance are subjects worth thinking about and debating, even though it is unlikely that a world government will be established in the near future.

I do not claim that world government or strong global governance can never be justified. If, as advocates claim, they are the only way to forestall some enormous evil like global nuclear war or environmental catastrophe, then their benefits might outweigh the enormous risks. But there should at least be a strong presumption against creating such dangerous institutions. In the book, I explain why the problems world government advocates cite as justifications are better addressed by other means. Some of them might even be exacerbated rather than ameliorated by the establishment of a world state.

In these chapters and in other parts of the book, I emphasize how my argument is both radical and moderate at the same time. It is radical because I advocate a massive expansion in foot voting rights, both domestic and international. But it is moderate because I emphasize that there is much to be gained from more moderate incremental reforms. Even a modest 10% increase in the number of new immigrants allowed into the US and other liberal democracies would mean vastly greater freedom and happiness for millions of people. A 10% increase in domestic freedom of movement in the United States—accomplished by reducing obstacles to mobility such as exclusionary zoning—would also benefit large numbers of people, particularly the poor and disadvantaged.

At various points in the book, I discuss a number of incremental reforms that can expand both domestic and international freedom of movement without major changes to current political institutions. But I also emphasize that the ultimate goal should be the one Frederick Douglass outlined in a great 1869 speech on immigration, decrying then-widespread opposition to Asian migration to the United States:

There are such things in the world as human rights. They rest upon no conventional foundation, but are external, universal, and indestructible. Among these, is the right of locomotion; the right of migration; the right which belongs to no particular race, but belongs alike to all and to all alike. It is the right you assert by staying here, and your fathers asserted by coming here. It is this great right that I assert for the Chinese and Japanese, and for all other varieties of men equally with yourselves, now and forever.

This is the last in the series of posts based on my new book Free to Move. Like previous posts in the series, it provides only an overview of points discussed in much greater depth in the book itself. I hope those interested in these will consider reading it. As previously promised, I will donate 50% of all royalties generated by the book to causes benefiting refugees.

NOTE: The Introduction to  Free to Move, which provides an overview of the rest, is available for free download on the SSRN website here.

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From Judge Jesse Furman decision this morning in Usherson v. Bandshell Artists Mgmt. (S.D.N.Y.); you can also read more posts on Mr. Liebowitz’s adventures:

Richard Liebowitz, who passed the bar in 2015, started filing copyright cases in this District in 2017. Since that time, he has filed more cases in this District than any other lawyer: at last count, about 1,280; he has filed approximately the same number in other districts.

In that same period, he has earned another dubious distinction: He has become one of the most frequently sanctioned lawyers, if not the most frequently sanctioned lawyer, in the District. Judges in this District and elsewhere have spent untold hours addressing Mr. Liebowitz’s misconduct, which includes repeated violations of court orders and outright dishonesty, sometimes under oath. He has been called “a copyright troll,” McDermott v. Monday Monday, LLC (S.D.N.Y. Oct. 26, 2018); “a clear and present danger to the fair and efficient administration of justice,” Mondragon v. Nosrak LLC (D. Colo. May 11, 2020); a “legal lamprey[],” Ward v. Consequence Holdings, Inc. (S.D. Ill. May 7, 2020); and an “example of the worst kind of lawyering,” id. In scores of cases, he has been repeatedly chastised, warned, ordered to complete ethics courses, fined, and even referred to the Grievance Committee. And but for his penchant for voluntarily dismissing cases upon getting into hot water, the list of cases detailing his misconduct—set forth in an Appendix here—would undoubtedly be longer.

One might think that a lawyer with this record would tread carefully, particularly before a judge who had recently sanctioned him. See Rice v. NBCUniversal Media, LLC (S.D.N.Y. July 10, 2019). But—as this case makes clear—not Mr. Liebowitz.

In November of last year, Mr. Liebowitz appeared, in the company of a criminal defense lawyer, before another judge on this Court after being held in contempt for repeatedly lying, including under oath, about the date his own grandfather had died to justify his failure to attend a court conference. See Berger v. Imagina Consulting, Inc. (S.D.N.Y. Nov. 13, 2019) (“Berger Tr.”). The very next day, he appeared before the undersigned and—despite an explicit warning to be “very, very, very careful about the representations” he made in court—lied about his compliance with a court Order that had required an in-person mediation. Making matters worse, Mr. Liebowitz then repeated that lie, over and over, and ultimately under oath during an evidentiary hearing.

On top of that, he violated at least six court Orders. And to cap it off, defense counsel discovered only after incurring the expenses of litigating the case that the Complaint Mr. Liebowitz prepared and filed contained a false allegation—namely, that the photograph at issue in this case had previously been registered with the Copyright Office—that would have required dismissal of the lawsuit at its inception.

In the view of the undersigned, this misconduct, when viewed in light of Mr. Liebowitz’s deplorable record, confirms a conclusion that others have reached: that “steps should be taken promptly … to suspend his ability to file new cases,” at least until “he has demonstrated” that he can comply “with court rules and rules of professional conduct.” Mondragon. But that is a question for another body—the Grievance Committee of this Court—and for another day.

The question for today is what sanctions, if any, this Court should impose on Mr. Liebowitz for his misconduct in this case. For the reasons stated below, the Court concludes that sanctions are amply justified, indeed all but required, and orders a mix of substantial monetary and non-monetary sanctions against Mr. Liebowitz and his firm. The Court also refers Mr. Liebowitz to the Court’s Grievance Committee to evaluate whether he should be allowed to continue practicing law in this District….

If specific deterrence—that is, deterring Mr. Liebowitz from repeating his misconduct—were the sole consideration, it is not clear that any sanction (short of, perhaps, disbarment) would suffice. After all, his first lie in this case occurred only one day after he was dressed down by Judge Seibel for repeatedly lying about his grandfather’s death, and despite a warning from the Court to be “very, very, very careful” about what he said. And thereafter, as in the case before Judge Seibel, he dug his hole even deeper, repeating his lies over and over, including under oath. (In fact, he arguably expanded upon his lies, concocting, after the fact, his “custom and practice” excuse.)

Even more troubling, as the discussion above makes clear, Mr. Liebowitz’s misconduct in this case is part of a larger pattern that has led judges on this court—and, as his practice has expanded to other districts, judges on other courts—to chastise him, impose sanctions on him, and require his clients to post bonds to cover future adverse awards of attorney’s fees and costs resulting from his misbehavior. The list of such cases is too long to cite here and, thus, is attached as an Appendix to this Opinion and Order. And even that list is likely not exhaustive….

But because disbarment is an issue for the Grievance Committee, this Court is left with the task of crafting a sanction that could conceivably deter Mr. Liebowitz from repeating his misconduct again. Moreover, another purpose of sanctions is general deterrence—that is, deterrence of “comparable conduct by similarly situated persons.” In view of both considerations, it is plain that substantial sanctions—a mix of monetary and non-monetary sanctions—are well justified. As discussed above, much of Mr. Liebowitz’s misconduct was the product of intentional bad faith. In addition, Bandshell and Mr. Newberg (who handled the case pro bono) incurred considerable expenses as a result of Mr. Liebowitz’s misconduct, having to defend against a lawsuit that was flawed from its inception, having to appear at a mediation that was doomed from the start, and having to litigate the issue of sanctions.

Moreover, there is, to put it mildly, a long and ignominious history of misbehavior by Mr. Liebowitz, and an enormous risk that he will continue his pattern of misbehavior. And finally, Mr. Liebowitz never corrected his misconduct, but rather repeated his lies under oath and, in the case of the false allegation regarding the copyright registration, proffered unconvincing excuses. In light of that record, and the fact that prior efforts to deter him—including hefty fines, see, e.g., Ward ($20,000), and sizeable awards of attorney’s fees and costs, see, e.g., Craig ($98,532.62)—were insufficient, substantial sanctions are plainly warranted….

The court ordered that:

• “[Mr. Liebowitz must pay] $83,517.49 in fees and costs attributable to the mediation and the sanctions motion” “for misrepresenting that the Mediator gave permission for Mr. Usherson not to attend the mediation in person and for his multiple other violations of the Court’s Orders,”
• “[Mr. Liebowitz must pay] $20,000 for falsely alleging that the Photograph was registered, not conducting a reasonable investigation prior to filing the lawsuit and after being put on notice of the registration issue, and maintaining the suit thereafter,”
• “Mr. Liebowitz shall be required to serve a copy of this Opinion and Order on Mr. Usherson and every other current client of the Liebowitz Law Firm and to file it on the docket of any pending case brought by Mr. Liebowitz or any attorney working for his firm, as well as on the docket of any new case brought within one year from the date of the Opinion and Order by Mr. Liebowitz or any attorney working for his firm,”
• “in any action that is filed within one year of the date of this Opinion and Order by Mr. Liebowitz or any attorney working for the Liebowitz Law Firm that involves allegations of copyright infringement, the complaint must include as an attached exhibit a copy of the deposit files maintained by the U.S. Copyright Office reflecting the registration of the relevant copyrighted work or works at issue,”
• “the Court will send a copy of this Opinion and Order to the Chair of the Court’s Grievance Committee to take whatever action the Committee deems appropriate.”

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If you thought the economic toll wrought by the COVID-19 pandemic was only going to be horrendous, you may have been overly optimistic. A combination of voluntary behavior changes and government-imposed lockdowns that choked-off social and economic activity are now projected to have even worse consequences than economists initially feared. Life may start returning to normal sometime next year, but there will be lasting pain even if we avoid another wave of the virus.

“Global output is projected to decline by 4.9 percent in 2020, 1.9 percentage points below our April forecast, followed by a partial recovery, with growth at 5.4 percent in 2021,” Gita Gopinath, Director of the Research Department at the International Monetary Fund (IMF), wrote this week.

As depressing as the IMF’s numbers are, the Organization for Economic Cooperation and Development (OECD) is actually more pessimistic. The OECD predicts that, if we’re hit by only one wave of COVID-19, global economic activity will fall by 6 percent this year, with five years of income growth lost. A second wave of infections would drive world economic output down by 7.6 percent in 2020.

Despite the high number of infections in the United States, our economy may get off relatively lightly compared to some other countries. The IMF sees American economic activity dropping by 8 percent this year, compared to 10.2 percent for the Euro Area and the UK. Brazil’s economic activity is projected to drop 9.1 percent, Canada’s by 8.4 percent, Russia’s by 6.6 percent, and India’s by 4.5 percent. Japan is expected to take a 5.8 percent hit.

China, where the outbreak started, could actually eke out 1 percent of growth.

OECD projections, though more downbeat, largely bracket the IMF numbers depending on whether the world is hit once by the virus or suffers a second wave.

The reason for the grim and worsening economic outlook is both the virus and the tradeoffs inherent in shutting down economies in an attempt to stem infection.

“The COVID-19 pandemic pushed economies into a Great Lockdown, which helped contain the virus and save lives, but also triggered the worst recession since the Great Depression,” writes Gopinath.

“The lockdown measures brought in by most governments have succeeded in slowing the spread of the virus and in reducing the death toll but they have also frozen business activity in many sectors, widened inequality, disrupted education and undermined confidence in the future,” agrees the OECD.

There’s a recognition from both organizations that ordering stores and offices closed and people to stay at home may slow the spread of disease, but it comes at a cost in terms of the physical and mental well-being that depend on prosperity. Protecting good health requires not just efforts against a new virus, but also making a living so we can afford food, clothing, shelter, medicine, and the other necessities of life.

That’s not to say that lifting lockdown orders necessarily stems all of the economic carnage. We saw evidence last month that people started sheltering from the virus before they were ever told to do so, and that they started emerging from their homes before government officials gave the go-ahead. That is, people make their own decisions and aren’t just tools of government policy.

“We find that COVID-19 induced high-income households to self-isolate and sharply reduce spending in sectors that require physical interaction,” concludes a new paper from a Harvard University economic research team led by Raj Chetty. “This spending shock in turn led to losses in business revenue and layoffs of low-income workers at firms that cater to high-income consumers, ultimately reducing their own consumption levels.”

The same paper finds that government stimulus programs intended to offset pandemic-related losses are largely ineffective.

“Stimulus checks increase spending  particularly among low-income households, but very little of the additional spending flows to the businesses most affected by the COVID shock; and loans to small businesses have little impact on employment rates,” write the paper’s authors (that’s without mentioning that $1.4 billion went to hard-to-stimulate dead people).

So, government officials might have the power to worsen the economic impact of the pandemic by ordering businesses closed and populations confined to their homes and by punishing those they catch in violation, but they can’t just flip prosperity back on like a light switch. People will start spending and investing when they feel confident and not because they’ve been told to do so or been handed a sum of magic money created by politicians out of thin air.

That’s unpleasant news for the many governments that have spent heavily in response to COVID-19 during a period of shrinking revenue. “Public debt is projected to reach this year the highest level in recorded history in relation to GDP, in both advanced and emerging market and developing economies,” notes the IMF’s Gopinath.

The OECD predicts a 24.49 percent increase in public debt for the United States – with another 6.83 percent in case of a second wave of the virus. That level of debt will have lasting effects on government finances, not to mention the burdens placed on taxpayers.

“Countries will need sound fiscal frameworks for medium-term consolidation, through cutting back on wasteful spending, widening the tax base, minimizing tax avoidance, and greater progressivity in taxation in some countries,” adds Gopinath.

For years to come, that is likely to look an awful lot like an accelerated game of whack-a-mole between tax collectors and a public that gets less than ever for its forcibly extracted money.

Given the realities of voluntary responses to the global pandemic, some of this pain was unavoidable. Many people were going to choose to self-isolate, reduce spending, and generally hunker down to weather COVID-19. But there’s no doubt that governments exacerbated the pain with lockdown orders that curtailed economic activity against the wishes of those who prefer to make their own decisions. Those orders made the world poorer, and less free, than it otherwise would have been.

So, hold on tight. The pandemic isn’t over, and neither is the pain caused by the virus itself as well as by the policies that are intended to hold it in check.

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