Tuesday, February 28, 2017

The Target of the “Border Adjustment Tax” is You

The Target of the “Border Adjustment Tax” is You

The Target of the “Border Adjustment Tax” is You

“[O]n life support,” says US Senator John Cornyn (R-TX) of the “Border Adjustment Tax,” proposed during last year’s GOP presidential primaries by US Senator Ted Cruz (R-TX) and backed by Speaker of the House Paul Ryan (R-WI). If the idea is indeed dead, American workers and consumers should heave a sigh of relief. It’s a very bad idea, in more ways than one.



The BAT is promoted as a “tax on imports.” Which, I guess, is technically accurate, but doesn’t tell the whole story. It’s not just a tax on imports. It’s a tax on people who buy the imports. That is, it’s a tax on you.

For obvious reasons, retail merchants don’t like the idea very much. It would force them to raise prices on lots of items. Which is the same reason you shouldn’t like it, unless you like paying more for stuff than you pay now.

For equally obvious reasons, some American manufacturers love the Border Adjustment Tax. Every extra dollar you have to pay in tax for something made abroad is a dollar they don’t have to find ways to cut from their manufacturing costs to compete on price. For them it’s the equivalent of running a race in which their competitors have to carry backpacks full of lead and they don’t.

The politicians behind the idea love it because it would let them give their business cronies a huge tax cut — reducing the corporate tax rate from 35% to 20% — without reducing government spending.

Ultimately American consumers pay both types of taxes, of course, but the BAT would shift the burden to customers who buy goods made in China, Mexico, South Korea, Pakistan and so on, hurting retailers who sell those things in order to subsidize American manufacturers at everyone else’s expense.

All this talk of “tax reform” is just smoke and mirrors, a way of disguising the reality that every dollar government spends has to come from somewhere, and that somewhere is taxation. Borrowing money is just promising to tax later. Inflating the currency is just a hidden tax.

Shifting the tax burden around with tricks like a “Border Adjustment Tax” isn’t real reform, it’s just rearranging the deck chairs on the Titanic. The first step in any meaningful reform is for Congress to commit to spending no more money than it takes in. The second is for it to start taking in less.

Republished from The Libertarian Institute.



Thomas Knapp
Thomas L. Knapp, aka KN@PPSTER, is Director and Senior News Analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism and publisher of Rational Review News Digest. He lives and works in north central Florida.

This article was originally published on FEE.org. Read the original article.

Crossing the Welfare State With the Carbon Tax

Crossing the Welfare State With the Carbon Tax

Crossing the Welfare State With the Carbon Tax

I don’t have strong views on global warming. Or climate change, or whatever it’s being called today.

But I’ve generally been skeptical about government action for the simple reason that the people making the most noise are statists who would use any excuse to increase the size and power of government.



To be blunt, I simply don’t trust them. In Washington, they’re called watermelons – green on the outside (identifying as environmentalists) but red on the inside (pushing a statist agenda).

But there are some sensible people who think some sort of government involvement is necessary and appropriate.

The Carbon Tax

George Schultz and James Baker, two former Secretaries of State, argue for a new carbon tax in a Wall Street Journal column as part of an agenda that also makes changes to regulation and government spending.
…there is mounting evidence of problems with the atmosphere that are growing too compelling to ignore. …The responsible and conservative response should be to take out an insurance policy. Doing so need not rely on heavy-handed, growth-inhibiting government regulations. Instead, a climate solution should be based on a sound economic analysis that embodies the conservative principles of free markets and limited government. We suggest…creating a gradually increasing carbon tax…, returning the tax proceeds to the American people in the form of dividends. And…rolling back government regulations once such a system is in place."
A multi-author column in the New York Times, including Professors Greg Mankiw and Martin Feldstein from Harvard, also puts for the argument for this plan.
On-again-off-again regulation is a poor way to protect the environment. And by creating needless uncertainty for businesses that are planning long-term capital investments, it is also a poor way to promote robust economic growth. By contrast, an ideal climate policy would reduce carbon emissions, limit regulatory intrusion, promote economic growth, help working-class Americans and prove durable when the political winds change. …Our plan is…the federal government would impose a gradually increasing tax on carbon dioxide emissions. It might begin at $40 per ton and increase steadily. This tax would send a powerful signal to businesses and consumers to reduce their carbon footprints. …the proceeds would be returned to the American people on an equal basis via quarterly dividend checks. With a carbon tax of $40 per ton, a family of four would receive about $2,000 in the first year. As the tax rate rose over time to further reduce emissions, so would the dividend payments. …regulations made unnecessary by the carbon tax would be eliminated, including an outright repeal of the Clean Power Plan."
They perceive this plan as being very popular.
Environmentalists should like the long-overdue commitment to carbon pricing. Growth advocates should embrace the reduced regulation and increased policy certainty, which would encourage long-term investments, especially in clean technologies. Libertarians should applaud a plan premised on getting the incentives right and government out of the way."
Not So Fast

I hate to be the skunk at the party, but I’m a libertarian and I’m not applauding. I explain some of my concerns about the general concept in this interview.

In the plus column, there would be a tax cut and a regulatory rollback. In the minus column, there would be a new tax. So two good ideas and one bad idea, right? Sounds like a good deal in theory, even if you can’t trust politicians in the real world.

However, the plan that’s being promoted by Schultz, Baker, Feldstein, Mankiw, etc, doesn’t have two good ideas and one bad idea. They have the good regulatory reduction and the bad carbon tax, but instead of using the revenue to finance a good tax cut such as eliminating the capital gains tax or getting rid of the corporate income tax, they want to create universal handouts.

They want us to believe that this money, starting at $2,000 for a family of four, would be akin to some sort of tax rebate.

That’s utter nonsense, if not outright prevarication. This is a new redistribution program. Sort of like the “basic income” scheme being promoted by some folks.

And it creates a very worrisome dynamic since people will have an incentive to support ever-higher carbon taxes in order to get ever-larger checks from the government. Heck, the plan being pushed explicitly envisions such an outcome.

I’ve made the economic argument against carbon taxes and the cronyism argument against carbon taxes. Now that we have a real-world proposal, we have the practical argument against carbon taxes.

Reprinted from International Liberty.

This article was originally published on FEE.org. Read the original article.


Friday, February 24, 2017

Don’t Ruin A Chance for Tax Reform with “Border Adjustments”

Don’t Ruin A Chance for Tax Reform with “Border Adjustments”

Don't Ruin A Chance for Tax Reform with "Border Adjustments"

As part of an otherwise very good tax reform plan, House Republicans have proposed to modify the corporate income tax so that it becomes a “destination-based cash-flow tax.”

For those not familiar with wonky inside-the-beltway tax terminology, there are three main things to understand about this proposal.
  • First, the tax rate on business would drop from 35 percent to 20 percent. This is unambiguously positive.
  • Second, it would replace depreciation with expensing, which is a very desirable change that would eliminate a very counter-productive tax on new investment outlays. This is basically what makes the plan a “cash-flow” tax.
  • Third, any income generated by exports would be exempt from tax but the 20-percent tax would be imposed on all imports. These “border-adjustable” provisions are what makes the plan a “destination-based” tax.
I’m a big fan of the first two provisions, but I’m very hostile to the third item.

I don’t like it because I worry it sets the stage for a value-added tax. I don’t like it because it is designed to undermine tax competition. I don’t like it because it has a protectionist stench and presumably violates America’s trade commitments. I don’t like it because that part of the plan only exists because politicians aren’t willing to engage in more spending restraint. And I don’t like it because politicians should not try to reinvent the wheel when we already know the right way to do tax reform.

Heck, I feel like the Dr. Seuss character who lists all the ways he would not like green eggs and ham. Except I can state with complete certainty I wouldn’t change my mind if I was suddenly forced to take a bite of this new tax.

Today, I’m going to augment my economic arguments by noting that the plan also is turning into a political liability. Here are some excerpts from a news report in the Wall Street Journal about opposition in the business community.
A linchpin of the House Republicans’ tax plan, an approach called “border adjustment,” has split Republicans and fractured the business world into competing coalitions before a bill has even been drafted. …There is also global uncertainty: Other countries may retaliate, either by border-adjusting their corporate taxes or by challenging the U.S. plan at the World Trade Organization as too tilted toward American producers.
And The Hill reports that grassroots organizations also are up in arms.
Americans for Prosperity is stepping up its efforts to advocate against a proposal from House Republicans to tax imports and exempt exports, as lawmakers are increasingly raising concerns about the proposal. …AFP has hundreds of volunteers and staff who are making phone calls about the proposal. The group has about 100 meetings set up with Congress members and their staff for next week, while Congress is in recess.
Meanwhile, the Economist reports that the plan is causing uncertainty around the world.
To offset a border-adjusted tax of 20%—the rate favoured by House Republicans—the greenback would need to rise fully 25%, enough to destabilise emerging markets burdened with dollar-denominated debts. If the dollar stayed put and wages and prices rose 25% instead, the Federal Reserve would have to decide how to respond to an unprecedented surge in inflation. Why tolerate such disruption?
Holman Jenkins of the Wall Street Journal has a devastating take on the issue.
Like a European value-added tax, its cost would be deeply hidden in the price of goods, thus easily jacked up over time. Also, compared with the current tax structure, businesses would see less incentive to move abroad in search of lower taxes, eroding a useful pressure on politicians to be fiscally sane. And because the tax would alter the terms of trade, it would be expected to lead to a sharp increase in the dollar. U.S. holders of foreign assets would suffer large paper losses. Since many foreigners borrow in dollars too, a global debt crisis might follow. The tax might also violate World Trade Organization rules, inviting other countries to impose punitive taxes on U.S. exports.
Last but not least, John Tamny outlines some of the political downsides at Real Clear Markets.
…the House of Representatives…is aggressively promoting a…tax on imports. …When we get up and go to work each day, our work is what we exchange for what we don’t have, including voluminous goods and services produced for us around the world.  …Party members are proudly seeking a tax on our work. …Only the “stupid” Party could come up with something so injurious to every American, to the American economy, and to its growth-focused brand.  But that’s where we are at the moment.  The Party that attained majorities with its tax cutting reputation is aggressively seeking to shed its growth brand through the introduction of tax hikes meant to give politicians even more of what we the people produce.  If so, the majority Party can kiss its majority goodbye.  It will have earned its minority status.
For what it’s worth, I think John overstates the case against the plan. The additional revenue from border-adjustable tax provision would be used to cut taxes elsewhere. Heck, the plan is actually a significant net tax cut.

But John is right when you look at the issue through a political lens. If the DBCFT actually began to move through the legislative process, opponents would start running commercials about the “GOP scheme to impose new consumption tax on Americans.” Journalists (most of whom dislike Republicans) would have a field day publicizing reports about the “GOP plan to raise average family tax bill by hundreds of dollars.”

Such charges would be ignoring the other side of the equation, of course, but that’s how politics works.

All of which brings me back to one of my original points. We already know that the flat tax is the gold standard of tax reform. And we already know the various ways of moving the tax code in that direction.

My advice is that Republicans abandon the border-adjustable provision and focus on lowering tax rates, reducing double taxation, and cutting back on loopholes. Such ideas are economically sounder and politically safer.

Republished from International Liberty.



Daniel J. Mitchell
Daniel J. Mitchell is a senior fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.

This article was originally published on FEE.org. Read the original article.


Thursday, February 23, 2017

The Congressional Budget Office Can't Count

The Congressional Budget Office Can’t Count

The Congressional Budget Office Can't Count

The Congressional Budget Office just released their national debt prediction for the upcoming decade, and it’s not good. Assuming the government does not add any new costs, the CBO is expecting another $10 trillion to be added to the current debt, raising the total to $30 trillion.





But as bad as that is, the reality will likely be even worse. The CBO has historically underestimated future debt by a huge margin. Judging by their past optimistic errors, the real debt in 2027 will likely not be $30 trillion, but $75 trillion.

The next decade’s tax situation will be similar. The CBO is predicting that the government will collect $5.1 trillion in taxes in 2027, but, again, their tax predictions have been consistently wrong. The real number will most likely be closer to $4.1 trillion, which is a good thing for taxpayers but bad for the deeply indebted government.

And it keeps going. Assuming interest rates don’t change between this moment and 2027, the government will owe about $2 trillion in interest alone. However, interest rates are already starting to go up, and the CBO thinks they’ll be much higher in 2027. Even if rates don’t rise above the historical average of 6 percent (versus our current rate of 2.5 percent), the annual interest rate will consume 75 cents of every tax dollar.

A version of this story first appeared on US News.



Antony Davies
Antony Davies is an associate professor of economics at Duquesne University.

He is a member of the FEE Faculty Network.

This article was originally published on FEE.org. Read the original article.

So… What’s a Blockchain?

So… What’s a Blockchain?

So... What's a Blockchain?

I live in the world of blockchain and smart contracts. I hear people using terms that remind me of when we were building the Web back in the 1990s: they are talking, but they aren’t understanding each other because they don’t have a common understanding of the terms of a new technological order.

The worst part is not that they don’t understand each other but that they think they do understand each other!

Here, I’d like to offer a few basic definitions from my keynote speech that I hope will help people get on the same page and collaborate.



What Is a Blockchain?

There is tremendous confusion over what a blockchain is. Ask ten experts, you’ll get eleven answers.

I will offer my definition, hoping it will help people understand a bit better:

A blockchain is a shared ledger that everyone trusts to be accurate forever.

Let me unpack that.

First, it has nothing to do with blocks and chains. If you hear someone answer the question by talking about blocks and chains, I submit that this person doesn’t get it. Yes, we have blocks and chains today, but the blocks and chains don’t matter. When we have $500 billion in value stored on shared ledgers, I hope there will be no blocks and chains involved.

The key is the shared ledger. What’s a ledger? It’s a record of transactions. That’s it. That’s the “one simple trick” for changing the world completely, from top-down hierarchical institutions to autonomy, freedom, and self-determination.

How? Sharing a ledger means we don’t both keep our own books, but rather we share a common set of books. We trust each other to keep a record of transactions that we both believe represents the truth.

Magically, this enables us to get rid of banks, insurance companies, most government institutions, and even media companies. I’ll expand on that a bit more in another essay, but you can read many of the use cases on my website.

Building the Trust Machine

I said everyone trusts this shared ledger to be accurate, and that includes people who don’t trust each other. So the blockchain and smart contracts are called “the trust machine,” because we no longer have to rely on third parties to help us conduct business.

Make a list of everything banks do. It comes down to trust — right? The rest is mechanics. We trust them to help us manage our money.

How well has that worked out? How many billions have the top banks been fined for screwing their customers to increase fees? Many. Every bank is now under heavy pressure to reduce headcount and improve profits. We can do all those things now without banks, thanks to the trust we have in smart contracts.

Forever. Forever is a long time. We call the blockchain “immutable,” because it would take something like $1 billion to hijack the bitcoin blockchain today and start changing records of past transactions.

While it’s not impossible to do, it is very difficult to see how you’d make any money on that $1b investment. Because it’s an impractical use of hundreds of millions of dollars, we don’t expect anyone to change the record. In the future, when billions of records are on the blockchain, and when the blocks and chains are all gone, we’ll use trusted systems to execute smart contracts that will be as commonplace as using PayPal or ApplePay today. The difference will be that there won’t be any large institutions or fees involved.

What Can You Do with a Blockchain?

Here’s a slide I show three times during my talk:
I mentioned smart contracts, the short version of which is: smart contracts let us program the assets on the blockchain, from cryptocurrencies to gold to diamonds to land to stocks and bonds and many other valuable things.
Thus, the blockchain represents programmable money.
If you can program money, you can replace most white collar workers with software. At my new company, that’s exactly what we’re working on.

Where to Go from Here?

This isn’t meant to be a complete overview. I’ll talk about smart contracts and other terms in in the future if people are interested. For now, I invite you to four web sites I have built to help people learn about the decentralized revolution:

DecentralStation.com — my online starting point for your deep dive into the world of blockchain.

Twenty Thirty — my new company, which is completely run on volunteer power and we’re having a great time changing the world.

BusinessAgilityWorkshop — this site is dedicated to helping people build a decentralized, agile mindset. There are plenty of essays and short videos here.

The Culture Deck — A well-referenced essay on the 24 aspects of culture you can start changing today that will lead you to a more vibrant, autonomous culture that can thrive on change.

I’m giving several talks in London the week of March 20th, including my big introduction to blockchain. Please come learn.

Feel free to leave comments and ask me what you’d like to learn about. I believe that William Mougayar is correct when he says that all technological shifts are much more about attitude, culture, and business process change than they are about the actual new technology.

Once you see the world from a more adaptive, agile mindset, you’ll see that the blockchain really is going to change everything forever.

Republished from Startup Grind.



David Siegel
Entrepreneur, investor, start-up coach, and consultant – working to bridge the gap between perception and reality in business. See www.businessagilityworkshop.com

This article was originally published on FEE.org. Read the original article.

Wednesday, February 22, 2017

Alien: Resurrection (PlayStation)

Alien: Resurrection (PlayStation)




Tuesday, February 21, 2017

Federal Shortfall Equals $670K Per Household

Federal Shortfall Equals $670K Per Household

Federal Shortfall Equals $670K Per Household

Newly published data from the U.S. Treasury shows that the federal government has amassed $84.3 trillion in debts, liabilities, and unfunded Social Security and Medicare obligations. This amounts to $670,000 for every household in the U.S., a fiscal burden that equals 93% of the nation’s private wealth, including the combined value of every American’s assets in real estate, corporate stocks, small businesses, bonds, savings accounts, cash, and personal goods like automobiles and furniture.

Federal law requires the U.S. Treasury and White House to produce an annual report on the “overall financial position” of the federal government. The law also requires the Government Accountability Office to audit this data, which is then published in the Financial Report of the United States Government.

Despite the important and shocking nature of this report, a search of Google News shows no results for it, even though it has been almost a week since it was published.

“A Complete Picture”

Unlike the federal budget, which primarily uses cash accounting, this Treasury report uses accrual accounting. The Government Accountability Office explains that this accounting method “is intended to provide a complete picture of the federal government’s financial operations and financial position.”

Cash accounting is the simple process of counting money as it flows in or out. In contrast, accrual accounting measures financial commitments when they are made. For example, as federal workers earn pension benefits, accrual accounting measures these obligations in the year that they are earned. Cash accounting does not measure such liabilities until they are paid, which may not be until years or decades later.

The federal government requires large corporations to use accrual accounting for their pension plans, because this is the “most relevant and reliable” way to measure their financial health. The same applies to other retirement benefits like healthcare. The official statement of this rule explains that “a failure to accrue” implies “that no obligation exists prior to the payment of benefits.” Since an obligation does exist, failing to account for it “impairs the usefulness and integrity” of financial statements.

Nonetheless, the federal budget, which is the “government’s primary financial planning and control tool,” is not bound by the accounting rules that the government imposes on the private sector. In the words of the U.S. Treasury, the federal budget is prepared “primarily on a ‘cash basis’.”

This has major implications for future taxpayers, partly because pension and other retirement benefits are a large part of compensation packages for government employees. When these benefits are included, civilian, non-postal federal employees receive an average of 16% more in compensation than private-sector workers with comparable education and work experience. Postal workers receive an even greater premium.

The recently released Treasury report shows that the federal government currently owes $7.2 trillion in pensions and other benefits to federal employees and veterans. Paying the present value of these benefits would require an average of $57,000 from every household in the U.S. Yet the vast majority of these liabilities are not reflected in the national debt.

Social Security and Medicare

A similar situation exists with Social Security and Medicare, because the government mainly funds the current expenses of these programs with taxes from younger workers who don’t receive benefits until they become senior citizens. Hence, Social Security and Medicare are sometimes called “pay-as-you-go” programs.

Once again, this is different from the private sector, where “federal law requires that private pension plans operate as funded plans, not as pay-as-you-go plans.” As explained by the American Academy of Actuaries, the law requires private pension plans to pay for “benefits as they are earned” to ensure “intergenerational equity.” In other words, the law prevents older workers from placing the costs of their retirements on younger workers, at least in the private sector.

Social Security and Medicare differ from pensions, because taxpayers don’t have a contractual right to receive these benefits. In the original Social Security Act of 1935, Congress “reserved” the “right to alter, amend, or repeal any provision of this Act.” Consequently, the Supreme Court ruled in 1960 that Congress can change Social Security benefits at will. Nevertheless, paying these benefits is an implied commitment of the federal government, and federal lawrequires that these programs be included in the Financial Report of the U.S. Government.

Federal actuaries measure the obligations of Social Security and Medicare in several different ways, but only one of them approximates the concept of accrual accounting. This is called the “closed-group” obligation, which is the money needed to cover the shortfalls for all current taxpayers and beneficiaries in these programs. In the words of Harvard Law School professor and federal budget specialist Howell E. Jackson, the closed-group measure “reflects the financial burden or liability being passed on to future generations.” These burdens amount to $29.0 trillion for Social Security and $32.9 trillion for Medicare.

The Treasury report includes other obligations of the federal government, like environmental liabilities and accounts payable. The report also measures federal assets, such as cash, real estate, and corporate stocks. This excludes federal stewardship land and heritage assets, such as national parks and the original copy of the Declaration of Independence. While these items have tangible value, the report explains that the government “does not expect to use these assets to meet its obligations.”

Tallying the Treasury’s data on assets and subtracting its obligations shows that the federal government has a fiscal shortfall of $84.3 trillion in debts, liabilities, and unfunded Social Security/Medicare obligations. Divided evenly across all U.S. households, this amounts to an average of $670,000 per household.

Optimistic Assumptions

The actual shortfall may be worse, because the Treasury data is based on federal government assumptions that are highly uncertain and optimistic. For example:
  • A paper in the journal Demography found that the Social Security Administration is using an antiquated method to project life expectancies, and as a result, the program “may be in a considerably more precarious position than officially thought.”
  • When the federal government makes student loans, it projects that it will eventually reap a 9% average profit from interest on the loans. However, the Congressional Budget Office has determined that if the federal government accounted for the market risk of these loans, it would show an average loss of 12% on every dollar it lends.
  • The Board of Medicare Trustees has stated that the program’s long-term costs may be “substantially higher” than projected under current law. This is because the Affordable Care Act (i.e., Obamacare) will cut Medicare prices for “many” healthcare services to “less than half of their level” under prior law. The Trustees explain that this may cause “withdrawal of providers from the Medicare market” and “severe problems with beneficiary access to care.” This would pressure lawmakers to raise prices and thus increase the costs of Medicare.
Causes and Effects

The current national debt is $19.9 trillion. This amounts to 107% of the nation’s gross domestic product, which is higher than any point in U.S. history except for two years near the end of World War II. The national debt, however, is mainly measured on a cash basis, and as such, it does not include most of the obligations detailed above.

These obligations are looming, and this can be seen in Congressional Budget Office projections of publicly held debt, which is a partial measure of the national debt that is often cited by government agencies and media outlets. In 2014, CBO projected that this debt would grow over the next two decades to unprecedented levels unless the government changed its policies. Two and half years later, the actual outcomes are slightly worse:



The vast bulk of current and impending federal debt is due to increased spending on social programs like Medicare, Social Security, Medicaid, and food stamps. Such programs have grown from 21% of federal spending in 1960 to 63% in 2015. Under current laws and policies, the Congressional Budget Office projects that almost all future growth in spending will be due to these programs and the interest on the national debt.

It is often impossible to objectively isolate the effects of a single factor (like the national debt) on an economy. However, a broad range of evidence indicates that excessive government debt can cause far-reaching negative outcomes, such as lower wages, weak economic growth, increased inflation, higher taxes, reduced government benefits, or combinations of such results.

The Government Accountability Office has warned that “the costs of federal borrowing will be borne by tomorrow’s workers and taxpayers,” and this “may reduce or slow the growth of the living standards of future generations.” This may have already begun. The national debt has risen dramatically over the past decade, and with this, the U.S. has experienced historically poor growth in gross domestic productproductivity, and household income.

Reprinted from Just Facts Daily.



James Agresti
James D. Agresti is the president of Just Facts, a nonprofit institute dedicated to publishing verifiable facts about public policy.

This article was originally published on FEE.org. Read the original article.


The Eclipse of Liberalism

The Eclipse of Liberalism

The Eclipse of Liberalism

The following was printed in the newspaper "The Nation" on August 9, 1900. Special thanks to the Molinari Institute for preserving this essay.
 

As the nineteenth century draws to its close it is impossible not to contrast the political ideals now dominant with those of the preceding era. It was the rights of man which engaged the attention of the political thinkers of the eighteenth century. The world had suffered so much misery from the results of dynastic ambitions and jealousies, the masses of mankind were everywhere so burdened by the exactions of the superior classes, as to bring about a universal revulsion against the principle of authority. Government, it was plainly seen, had become the vehicle of oppression; and the methods by which it could be subordinated to the needs of individual development, and could be made to foster liberty rather than to suppress it, were the favorite study of the most enlightened philosophers. In opposition to the theory of divine right, whether of kings or demagogues, the doctrine of natural rights was set up. Humanity was exalted above human institutions, man was held superior to the State, and universal brotherhood supplanted the ideals of national power and glory.

These eighteenth-century ideas were the soil in which modern Liberalism flourished. Under their influence the demand for Constitutional Government arose. Rulers were to be the servants of the people, and were to be restrained and held in check by bills of rights and fundamental laws which defined the liberties proved by experience to be most important and vulnerable. Hence arose the demands for Constitutional reform in all the countries of Europe; abortive and unsuccessful in certain respects, but frightening despots into a semblance of regard for human liberty, and into practical concessions which at least curbed despotic authority. Republics were established and Constitutions were ordained. The revolutions of 1848 proved the power of the spirit of Liberalism, and where despotism reasserted itself, it did so with fear and trembling.

To the principles and precepts of Liberalism the prodigious material progress of the age was largely due. Freed from the vexatious meddling of governments, men devoted themselves to their natural task, the bettering of their condition, with the wonderful results which surround us. But it now seems that its material comfort has blinded the eyes of the present generation to the cause which made it possible. In the politics of the world, Liberalism is a declining, almost a defunct force. The condition of the Liberal party in England is indeed parlous. There is actually talk of a organizing a Liberal-Imperialist party; a combination of repugnant tendencies and theories as impossible as that of fire and water. On the other hand, there is a faction of so-called Liberals who so little understand their traditions as to make common cause with the Socialists. Only a remnant, old men for the most part, still uphold the Liberal doctrine, and when they are gone, it will have no champions.

True Liberalism has never been understood by the masses of the French people; and while it has no more consistent and enlightened defenders than the select group of orthodox economists that still reverence the principles of Turgot and Say, there is no longer even a Liberal faction in the Chamber. Much the same is true of Spain, of Italy, and of Austria, while the present condition of Liberalism in Germany is in painful contrast with what it was less than a generation ago.

In our country recent events show how much ground has been lost. The Declaration of Independence no longer arouses enthusiasm; it is an embarrassing instrument which requires to be explained away. The Constitution is said to be “outgrown”; and at all events the rights which it guarantees must be carefully reserved to our own citizens, and not allowed to human beings over whom we have purchased sovereignty. The great party which boasted that it had secured for the negro the rights of humanity and of citizenship, now listens in silence to the proclamation of white supremacy and makes no protest against the nullifications of the Fifteenth Amendment. Its mouth is closed, for it has become “patriot only in pernicious toils,” and the present boasts of this “champion of human kind” are “To mix with Kings in the low lust of sway, Yell in the hunt, and share the murderous prey; To insult the shrine of Liberty with spoils From freemen torn, to tempt and to betray.”

Nationalism in the sense of national greed has supplanted Liberalism. It is an old foe under a new name. By making the aggrandizement of a particular nation a higher end than the welfare of mankind, it has sophisticated the moral sense of Christendom. Aristotle justified slavery, because Barbarians were “naturally” inferior to Greeks, and we have gone back to his philosophy. We hear no more of natural rights, but of inferior races, whose part it is to submit to the government of those whom God has made their superiors. The old fallacy of divine right has once more asserted its ruinous power, and before it is again repudiated there must be international struggles on a terrific scale.

At home all criticism on the foreign policy of our rulers is denounced as unpatriotic. They must not be changed, for the national policy must be continuous. Abroad, the rulers of every country must hasten to every scene of international plunder, that they may secure their share. To succeed in these predatory expeditions the restraints on parliamentary, even of party, government must be cast aside. The Czar of Russia and the Emperor of Germany have a free hand in China; they are not hampered by constitutions or by representatives of the common people. Lord Salisbury is more embarrassed, and the President of the United States is, according to our Constitution, helpless without the support of Congress. That is what our Imperialists mean by saying that we have outgrown the Constitution.

Edwin Godkin
(October 2, 1831 – May 21, 1902) was an Irish-born American journalist and newspaper editor. He founded The Nation, and was editor-in-chief of the New York Evening Post 1883-1899.

This article was originally published on FEE.org. Read the original article.



Your Favorite Products Are about to Cost So Much More

Your Favorite Products Are about to Cost So Much More

Your Favorite Products Are about to Cost So Much More

The United States tax code clearly needs reform, but one plan being proposed by House Republicans – border adjustment – will have a significant negative impact on consumers.



Imports Are Important

In our global economy, so many of the products we use every day are imported to the US – the Apple iPhone you’re checking Facebook on, the Nike tennis shoes you work out in, the Jose Cuervo tequila that’s in your happy hour margarita.

Under border adjustment, a company would be taxed based on where their products are sold, not where the company is headquartered. Supporters of the strategy say it’ll keep businesses from moving abroad to try to escape the United States’ high corporate taxes.

But the real result will be consumers paying much more to cover the added expenses.

Under our current tax code, companies pay a 35 percent corporate income tax on a product’s profit, regardless of if it’s made in the US or imported from another country. The tax plan from House Republicans lowers that rate to 20 percent, and only applies to profits made in the US, both of which are solid, pro-growth reforms. However, if border adjustment is included, US companies that import materials and products will no longer be able to deduct those costs from their taxable income, effectively slapping a 20 percent tax on everything that is imported.

Targeting More than Profits

Target is one of the top importers in the US. Say the company imports a table at a cost of $75 and marks it up to $100 when selling it to you. With other expenses and fees, they make a $10 profit. Right now, Target would pay $3.50 in corporate income tax based only on their profit. But if border adjustment were implemented, they’d be taxed on the $10 profit and the $75 they paid to import the table for a final tax bill of $17.

Who do you think will cover the added $13.50 in taxes? That’s right – us, the consumers.

If lawmakers really want to incentivize companies to stay in the US, they should make our tax code simpler and fairer for all. Companies who would face the new import tax would likely just raise their prices to cover the additional taxes, but consumers can’t afford to pay so much more on products we use every day.


Reprinted from Generation Opportunity.



Patrice Lee
Patrice Lee, a Senior Fellow at the Independent Women’s Forum, is the Director of Outreach at Generation Opportunity where she works to promote economic opportunity for Millennials.

This article was originally published on FEE.org. Read the original article.

Monday, February 20, 2017

MacAddict – Issue Number 8 – April 1997

MacAddict – Issue Number 8 – April 1997




Friday, February 17, 2017

Publishers Still Fighting to Bury Universities, Libraries in Fees for Making Fair Use of Academic Excerpts

Publishers Still Fighting to Bury Universities, Libraries in Fees for Making Fair Use of Academic Excerpts

On behalf of three national library associations, EFF today urged a federal appeals court for the second time to protect librarians’ and students’ rights to make fair use of excerpts from academic books and research.

Nearly a decade ago, three of the largest academic publishers in the world— backed by the Association of American Publishers (AAP) trade group— sued Georgia State University (GSU) for copyright infringement, insisting that GSU owed licensing fees for the use of excerpts of academic works in its electronic reserve system. Such systems are commonly used to help students save money; rather than forcing students to buy a whole book when they only need a short excerpt from it, professors will place the excerpts “on reserve” for students to access. GSU argued that posting excerpts in the e-reserve systems was a “fair use” of the material, thus not subject to licensing fees. GSU also changed its e-reserve policy to ensure its practices were consistent with a set of fair use best practices that were developed pursuant to a broad consensus among libraries and other stakeholders. The practices are widely used, and were even praised by the AAP itself.

But that was not enough to satisfy the publishers. Rather than declare victory, they’ve doggedly pursued their claims. It seems the publishers will not be content until universities and libraries agree to further decimate their budgets. As we explain in our brief, that outcome would undermine the fundamental purposes of copyright, not to mention both the public interest, and the interests of the authors of the works in question. The excerpts are from academic works whose authors are not looking to get rich on licensing fees. They are motivated, instead, by a desire to contribute to the greater store of knowledge, and by the benefits accrued to their professional reputation when other scholars read, and cite, their published work. They care about recognition, not royalties.

Moreover, the fair use analysis is supposed to consider whether the practice at issue will cause material harm to an actual or potential market. But there’s no real market for digital excerpts that the libraries’ practices could harm. Indeed, as GSU explained in their brief, “[m]any professors testified that they would not have used any excerpt if students were required to pay a licensing fee.” And even if such a market existed, most libraries likely couldn’t afford to be part of it. In light of rising costs and shrinking resources, “academic libraries simply do not have the budget to participate in any “new” licensing market" without diverting funds away from other areas—like those used to add new works to their collections.

Copyright is supposed to help foster the creation of new works. Requiring university libraries to devote even more of their budgets to licensing fees will have the opposite effect. We hope the court agrees.

Source: Publishers Still Fighting to Bury Universities, Libraries in Fees for Making Fair Use of Academic Excerpts | Electronic Frontier Foundation

The Customer Is Always Taxed

The Customer Is Always Taxed

The Customer Is Always Taxed

Philadelphia’s most famous son, Benjamin Franklin, popularized the expression that “nothing can be said to be certain, except death and taxes.” To that list you can add a third certainty: politicians will consistently misunderstand or misrepresent how taxes actually work. Look no further than Philadelphia Mayor Jim Kenney’s misguided soda tax for proof.



Like most politicians, Kenney looks at taxes the way a barfly looks at an ATM near closing time: he thinks he can simply draw money out of the economy whenever he wants without consequence. As any Economics 101 textbook would have explained, had he picked one up, the soda tax was destined to lead to higher soda prices. Instead of looking in the mirror, though, he blames the very merchants on whom he foisted the tax in the first place. “They are,” he said, “gouging their customers.” The implication? Mayor Kenney believes that “business,” not customers, should pay the tax.

Taxes in Reality

In pushing for more taxes, politicians either don’t understand or won’t admit that every tax ― no matter on whom it is levied ― is ultimately paid by people. Every tax on “business” gets passed on in the form of higher prices, lower wages, or lower investment return. Businesses don’t pay taxes to the government; they collect taxes for the government. One way or another, people pay.

The mayor needn’t look outside the Commonwealth for proof. Beginning in 2013, the legislature increased state gasoline taxes, which currently add 58 cents to the price of each gallon of gas sold in Pennsylvania. Proponents of the gas tax hikes argued that the taxes would be levied on oil companies and wholesalers, not consumers. It apparently never occurred to the legislature that the oil companies and wholesalers would pass the tax along to the people.

Of the $2.50 the average Pennsylvanian now pays for a gallon of gas, $1.40 goes to the oil companies. But that’s sales, not profit. Oil company profit margins are around 6 to 7 percent, meaning that oil companies actually pocket around 10 cents per gallon of gas, which is about what they made before the tax increases. The taxpayer, as usual, picks up the difference. On a gallon of gas, the Commonwealth makes almost six times what the oil companies do.

In October, Governor Wolf signed into law a 40 percent tax on vaping shops. Again, the levy was presented as a “tax on businesses.” Politicians did some third-grade math and decided that they would get something approaching 40 percent of the total sales of vaping products in the form of new tax revenues. Instead, they destroyed a burgeoning local industry and now stand to collect nearly nothing.

In the end, Kenney’s tax is nothing new. It is nothing smart either. Politicians love money, and they hate offending voters. They take every opportunity to tax “business,” and when businesses simply pass the taxes along to consumers, workers, and investors as they must, those same politicians cry foul.

But here’s the rub. There are only two possible explanations for any of this: politicians who claim that businesses will pay for new taxes are either too stupid to understand simple economics or they are lying. And it really doesn’t matter which of those things is true of Mayor Kenney. Either way, the citizens of Philadelphia deserve better.

Republished from the Huffington Post.



Antony Davies
Antony Davies is an associate professor of economics at Duquesne University.

He is a member of the FEE Faculty Network.

This article was originally published on FEE.org. Read the original article.

Republicans Are Already Trying to Raise Taxes

Republicans Are Already Trying to Raise Taxes

Republicans Are Already Trying to Raise Taxes


Republicans in the House of Representatives are inadvertently setting a nasty political and economic trap for Donald Trump. Yes, it’s the Republicans, not the Democrats, who are ready to administer an unnecessary black eye to the new President. That’s not their intention, but it manifestly will be the result.



The vehicle for this unwitting GOP punch is a new exaction called the border adjustability tax. This levy will cost American consumers at least a trillion dollars over the next ten years. Knowing how Washington politicians calculate these things, you can bet the amount will end up being considerably more. Prices for everyday items, such as socks, shoes and household appliances, will go up. So will tech devices like the iPad, not to mention automobiles and trucks. Gasoline? Millions of Americans will pay an additional 30 cents or more per gallon at the pump. Lower-income and struggling middle-class Americans will get hit the hardest.

Few people are even aware of what the Republicans are getting ready to hit them with. There has been virtually no debate or public discussion about this new, horrible tax, yet in one of those strange fits of collective, self-destructive behavior, numerous GOP lawmakers are ready to enact it.

Here’s how, in essence, this sneaky, anti-consumer tax works. Importers will no longer be allowed to deduct an item as a business expense. To simplify things, let's say a store imports a pair of sneakers for $40 and then sells them for $50, making a $10 profit on which it would owe taxes. Under the Republican plan, however, the retailer wouldn't be able to deduct the $40 it paid for the sneakers. In fact, it would owe taxes on the entire $50! And who, ultimately, pays this tax? You, the consumer, in the form of higher prices or fewer choices of where you can shop. Retailers and their customers will be hit.

Many oil refiners import crude oil to turn into gasoline. This new tax will sharply raise their costs, which will spell pain when you fill up your tank. Worse, some could be forced out of business or have to sharply curtail operations, as drivers cut back on buying the suddenly more expensive fuel.

Companies like BMW, Toyota, Mercedes, Honda, Nissan and Hyundai have major manufacturing operations in the U.S. that employ tens of thousands of workers in good-paying jobs. These companies’ costs will soar because they import numerous parts for the vehicles their workers assemble.

The Loophole of All Loopholes

But wait, it gets worse. Another feature of this bizarre GOP scheme gives exporters a gargantuan tax break by, in effect, not taxing their export revenues. Let's say a corporation sells a piece of machinery to Iran for $5 million, which cost only $4 million to produce. That means $1 million in taxable profit. Under the new Republican scheme, however, that $5 million received from the mullahs wouldn’t be taxable. Instead of a $1 million profit, the corporation, for tax purposes, would have a $4 million loss. Loophole doesn't begin to describe this "tax break."

No wonder companies like Boeing, GE and other big exporters are orgasming over this GOP "reform."

Big breaks for big companies, higher prices for beleaguered consumers. Why are the Republicans doing this? They say the revenue raised will help finance a huge tax cut, such as getting rid of the death tax and the horrific alternative minimum tax, cutting the corporate tax rate from its disastrous 35% to a highly stimulative 20% or less and very meaningfully lightening the tax burden on individuals. These are all extremely exciting ideas and would do wonders for the economy.

But enacting a big, brand-new tax to finance cuts in old taxes is a dangerous business, especially in the way the Republicans are going about it. Democrats will gleefully remind voters why prices are going up, conveniently ignoring the tax cuts. Moreover, the GOP border adjustment tax is a but a small step away from a full-blown value added tax, which has financed the bloating of governments around the world. Democrats will someday be back in power, and they won't hesitate to either ramp up this GOP-created tax or go for the VAT. This would be hypocritical--rip apart the Republicans over this tax, and then go on to compound their felony. A VAT would crush future U.S. economic growth rates, just as it has in Europe and elsewhere.

Consider this astonishing fact: In the mid-1960s government spending in Europe as a proportion of their economies wasn't much different from our own. Growth rates matched or exceeded ours. Then Europe discovered the VAT. Spending ballooned and growth slowed to a crawl, consistently clocking in at significantly lower levels than Uncle Sam's.

Republicans also claim their new tax would help exports. In the real world it would do no such thing, as astute tax expert Dan Mitchell has explained (see this and this).

The GOP should drop this tax scheme. Why create unnecessary conflict and damage our new President? Republicans shouldn’t be constrained by the Congressional Budget Office's antiquated way of measuring the economic impact of changes in taxes. Drop the green eye shades, and go for big cuts that would turbo-charge the economy.

Republished from Forbes.



Steve Forbes
Steve Forbes is an American publishing executive, who was twice a candidate for the nomination of the Republican Party for President. Forbes is the Editor-in-Chief of Forbes, a business magazine. Forbes was a Republican candidate in the 1996 and 2000 Presidential primaries. Forbes is the son of longtime Forbes publisher Malcolm Forbes, and the grandson of that publication's founder, B.C. Forbes.

This article was originally published on FEE.org. Read the original article.

Thursday, February 16, 2017

Game Player’s (February 1991)

Game Player’s (February 1991)








Wednesday, February 15, 2017

Border Security Overreach Continues: DHS Wants Social Media Login Information

Border Security Overreach Continues: DHS Wants Social Media Login Information



Now more than ever, it is apparent that U.S. Customs and Border Protection (CBP) and its parent agency, the Department of Homeland Security (DHS), are embarking on a broad campaign to invade the digital lives of innocent individuals.



The new DHS secretary, John Kelly, told a congressional committee this week that the department may soon demand login information (usernames and passwords) for social media accounts from foreign visa applicants—at least those subject to the controversial executive order on terrorism and immigration—and those who don’t comply will be denied entry into the United States. This effort to access both public and private communications and associations is the latest move by a department that is overreaching its border security authority.

In December 2016, DHS began asking another subset of foreign visitors, those from Visa Waiver Countries, for their social media handles. DHS defended itself by stating that not only would compliance be voluntary, the government only wanted to access publicly viewable social media posts: “If an applicant chooses to answer this question, DHS will have timely visibility of the publicly available information on those platforms, consistent with the privacy settings the applicant has set on the platforms.”

As we wrote last fall in comments to DHS, even seeking the ability to view the public social media posts of international travelers implicates the universal human rights of free speech and privacy, and—importantly—the comparable constitutional rights of their American associates. Our objections are still salient given that DHS may soon mandate access to both public and private social media content and contacts of another group of foreigners visitors.

Moreover, as a practical matter, such vetting is unlikely to weed out terrorists as they would surely scrub their social media accounts prior to seeking entry into the U.S.

Such border security overreach doesn’t stop there.

There have been several reports recently of CBP agents demanding access to social media information and digital devices of both American citizens and legal permanent residents. Most disturbing are the invasive searches of Americans’ cell phones, where CBP has been accessing social media apps that may reveal private posts and relationships, as well as emails, texts messages, browsing history, contact lists, photos—whatever is accessible via the phone.

Such border searches of Americans’ digital devices and cloud content are unconstitutional absent individualized suspicion, specifically, a probable cause warrant. In light of the DHS secretary’s statements this week, we fear that DHS may soon take the next step down this invasive path and demand the login information for American travelers’ online accounts so that the government can peruse private, highly personal information without relying on access to a mobile device.

Source: Border Security Overreach Continues: DHS Wants Social Media Login Information | Electronic Frontier Foundation

US Beats UK in Lives Saved by Health Care

US Beats UK in Lives Saved by Health Care

US Beats UK in Lives Saved by Health Care

Last night’s CNN duel between Senators Bernie Sanders and Ted Cruz on the future of Obamacare was pretty illuminating for a recent arrival to the United States, with Senator Sanders’ playbook all-too-familiar to those of us from the UK.



Sanders wants a single-payer socialized healthcare system in the United States, just as we have in Britain. Any objection to that is met with the claim that you are “leaving people to die.” The only alternatives on offer, you would think, are the U.S. system as it exists now, or the UK system.

Sanders did not once acknowledge that the UK structure, which is free at the point of use, inevitably means rationed care, with a lack of pre-screening. He also failed to acknowledge that lower health spending levels (indeed, even public spending on health is lower in the UK than the United States now) are not the same as efficiency—which is about outputs per input.

In the face of anecdote after anecdote about those saved by Obamacare and the virtues of a government-run health system, Cruz countered with some anecdotes from the UK showing the consequences of rationed care: a Scottish hospital turning away pregnant women, a woman in Wales waiting eight hours on the floor for an ambulance to arrive after a fall, and a hospital in Essex canceling life-saving cancer treatment because there were no free beds in intensive care.

He could also have talked about the Mid-Staffs scandal, or a recent documentary showing doctors deciding between saving a cancer patient or a pensioner bleeding to death.

Anecdotes are powerful in helping to persuade people, and there are good reasons to use them in debates. Yet they are always susceptible to the charge that all health systems have extreme failures. Perhaps more powerfully then, the inadequacies of the UK system show up systematically in the data about how well conditions are dealt with (data from my former colleague Kristian Niemietz’s reports here and here):
  • In the United States, the age-adjusted breast cancer 5-year survival rate is 88.9 percent, compared with just 81.1 percent in the UK
  • The United States leads the world on the equivalent stat for prostate cancer (97.2 per cent) vs. 83.2 percent in the UK
  • Lung cancer: 18.7 percent in the United States vs. 9.6 percent in the UK; bowel cancer: 64.2 percent vs. 56.1 percent
  • Just in case you think I am cherry picking: U.S. survival rates are also better for leukemia, ovarian cancer, stomach cancer, and liver cancer—all of those for which I can find comparisons
  • The age- and sex-standardized 30-day mortality rate for ischaemic stroke is just 3.6 per cent in the United States vs. 9.2 per cent in the UK; for haemorrhagic stroke, the figures are 22 percent vs. 26.5 percent
I could go on. All of which is to show that your probability of dying from a range of common conditions is much higher in the UK than here. Perhaps that’s why (with no hint of irony) The Guardian’s write-up of a Commonwealth Fund Report suggesting the UK’s health system was “the best in the world” said “the only serious black mark against the NHS was its poor record on keeping people alive.”

Reprinted from Cato Institute.



Ryan Bourne
Ryan Bourne, former head of public policy at IEA, occupies the R. Evan Scharf chair in the Public Understanding of Economics at the Cato Institute. He is a co-author of "The Minimum Wage: silver bullet or poisoned chalice?" and "Smoking out red herrings."

This article was originally published on FEE.org. Read the original article.

Tuesday, February 14, 2017

FBI Search Warrant That Fueled Massive Government Hacking Was Unconstitutional

FBI Search Warrant That Fueled Massive Government Hacking Was Unconstitutional

Appeals Court Should Find Warrant Violated Fourth Amendment Protections

Boston—An FBI search warrant used to hack into thousands of computers around the world was unconstitutional, the Electronic Frontier Foundation (EFF) told a federal appeals court today in a case about a controversial criminal investigation that resulted in the largest known government hacking campaign in domestic law enforcement history.


The Constitution requires law enforcement officers seeking a search warrant to show specific evidence of a possible crime, and tie that evidence to specific persons and places they want to search. These fundamental rules protect people from invasions of privacy and police fishing expeditions.

But the government violated those rules while investigating “Playpen,” a child pornography website operating as a Tor hidden service. During the investigation, the FBI secretly seized servers running the website and, in a controversial decision, continued to operate it for two weeks rather than shut it down, allowing thousands of images to be downloaded. While running the site, the bureau began to hack its visitors, sending malware that it called a “Network Investigative Technique” (NIT) to visitors’ computers. The malware was then used to identify users of the site. Ultimately, the FBI hacked into 8,000 devices located in 120 countries around the world. All of this hacking was done on the basis of a single warrant. The FBI charged hundreds of suspects who visited the website, several of whom are challenging the validity of the warrant.

In a filing today in one such case, U.S. v. Levin, EFF and the American Civil Liberties Union of Massachusetts urged the U.S. Court of Appeals for the First Circuit to rule that the warrant is invalid and the searches it authorized unconstitutional because the warrant lacked specifics about who was subject to search and what locations and specific devices should be searched. Because it was running the website, the government was already in possession of information about visitors and their computers. Rather than taking the necessary steps to obtain narrow search warrants using that specific information, the FBI instead sought a single, general warrant to authorize its massive hacking operation. The breadth of that warrant violated the Fourth Amendment.

“No one questions the need for the FBI to investigate serious crimes like child pornography. But even serious crimes can’t justify throwing out our basic constitutional principles. Here, on the basis of a single warrant, the FBI searched 8,000 computers located all over the world. If the FBI tried to get a single warrant to search 8,000 houses, such a request would unquestionably be denied. We can’t let unfamiliar technology and unsavory crimes lead to an erosion of everyone’s Fourth Amendment rights,” said EFF Senior Staff Attorney Mark Rumold.

EFF filed a brief in January in a similar case in the Eighth Circuit Court of Appeals, and will be filing briefs in Playpen cases in the Third and Tenth Circuits in March. Some trial courts have upheld the FBI’s actions in dangerous decisions that, if ultimately upheld, threaten to undermine individuals’ constitutional privacy protections over information on personal computers. 

“These cases will be cited for the future expansion of law enforcement hacking in domestic criminal investigations, and the precedent is likely to impact the digital privacy rights of all Internet users for years to come,” said Andrew Crocker, EFF Staff Attorney. “Recent changes to federal rules for issuing warrants may allow the government to hack into thousands of devices at a time. These devices can belong not just to suspected criminals but also to victims of botnets and other hacking crimes. For that reason, courts need to send a very clear message that vague search warrants that lack the required specifics about who and what is to be searched won’t be upheld.”

Source: FBI Search Warrant That Fueled Massive Government Hacking Was Unconstitutional, EFF Tells Court | Electronic Frontier Foundation

Monday, February 13, 2017

The StingRay Is Exactly Why the 4th Amendment Was Written

The StingRay Is Exactly Why the 4th Amendment Was Written

The StingRay Is Exactly Why the 4th Amendment Was Written

Imagine you are in the middle of your typical day-to-day activities. Maybe you are driving, spending time with family, or working. If you are like most people, your phone is at your side on a daily basis. Little do you know that, at any time, police and law enforcement could be looking at information stored on your phone. You haven't done anything wrong. You haven't been asked for permission. You aren't suspected of any crime.

The StingRay

Police have the power to collect your location along with the numbers of your incoming and outgoing calls and intercept the content of call and text communication. They can do all of this without you ever knowing about it.

How? They use a shoebox-sized device called a StingRay. This device (also called an IMSI catcher) mimics cell phone towers, prompting all the phones in the area to connect to it even if the phones aren't in use.

The police use StingRays to track down and implicate perpetrators of mainly domestic crimes. The devices can be mounted in vehicles, drones, helicopters, and airplanes, allowing police to gain highly specific information on the location of any particular phone, down to a particular apartment complex or hotel room.

Quietly, StingRay use is growing throughout local and federal law enforcement with little to no oversight. The ACLU has discovered that at least 68 agencies in 23 different states own StingRays, but says that this "dramatically underrepresents the actual use of StingRays by law enforcement agencies nationwide."

The Violation

Information from potentially thousands of phones is being collected every time a StingRay is used. Signals are sent into the homes, bags, and pockets of innocent individuals. The Electronic Frontier Foundation likens this to the Pre-Revolutionary War practice of soldiers going door-to-door, searching without suspicion.

Richard Tynan, a technologist with Privacy International notes that, “there really isn’t any place for innocent people to hide from a device such as this.”

The Fourth Amendment of the Constitution states that, “the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”

The StingRay clearly violates these standards. The drafters of the Constitution recognized that restricting the government from violating privacy is essential for a free society. That's why the Fourth Amendment exists. The StingRay is creating a dangerous precedent that tells the government that it's okay for them to violate our rights. Because of this, freedom is quietly slipping out the window.

Little Regulation

Law Enforcement is using StingRays without a warrant in most cases. For example, the San Bernardino Police Department used their StingRay 300 times without a warrant in a little over a year.

In 2010, the Tallahassee Police Department used a StingRay in a warrantless search to track down the suspect of a crime. A testimony from an unsealed hearing transcript talks about how police went about finding their target. The ACLU sums it up well:
"Police drove through the area using the vehicle-based device until they found the apartment complex in which the target phone was located, and then they walked around with the handheld device and stood ‘at every door and every window in that complex’ until they figured out which apartment the phone was located in. In other words, police were lurking outside people’s windows and sending powerful electronic signals into their private homes in order to collect information from within."
A handful of states have passed laws requiring police and federal agents to get a warrant before using a StingRay. They must show probable cause for one of the thousands of phones that they are actually searching. This is far from enough.

Additionally, there are many concerns that agents are withholding information from federal judges to monitor subjects without approval - bypassing the probable cause standard laid out in the Constitution. They even go as far as to let criminals go to avoid disclosing information about these devices to the courts.

If the public doesn’t become aware of this issue, the police will continue to use StingRays to infringe on our rights in secret and with impunity.

Olivia Donaldson

Olivia Donaldson
Olivia Donaldson is a recent high school graduate that is currently opting out of college and participating in an entrepreneurial program called Praxis.

This article was originally published on FEE.org. Read the original article.