After reading the account of civil asset forfeiture in today’s Some Links post, Chuck Hampton asked me to rerun this post from four years ago.  Here ’tis:

…….

Fifteen years ago, Adam Pritchard (now a law professor at the University of Michigan) and I had the following op-ed published in the March 15, 1996, edition of the Washington Times:

Would you like to forfeit your house?

March 15, 1996
Section: A COMMENTARY OP-ED
Edition: 2
Page: A21
Byline: By Donald J. Boudreaux and A.C. Pritchard

Imagine a guest with a marijuana cigarette secretly tucked in his pocket visits your house. The police storm in, seize the cigarette, and arrest your guest for drug possession. The police then announce that the government now owns your house.  “What?!” you wail, “I did nothing wrong. How can you take my house?”

You are told that civil-forfeiture law allows government to take property that harbored an “abatable nuisance” – illegal drugs, in this case. An officer explains that “Your house, not you, committed a wrong. To help stem drug trafficking, it must be seized. Your doubts about our ability to confiscate your property will be dispelled by reading the Supreme Court’s March 4th decision in Bennis vs. Michigan.”

Certain that such tyranny is impossible in America, you rush to read Bennis. Your heart sinks. Chief Justice Rehnquist explains that the Constitution permits Michigan to use civil forfeiture to strip Tina Bennis of her ownership of an automobile in which her husband John had a tryst with a prostitute. Civil forfeiture allows government to take property from someone without convicting that someone of a crime.

Everyone concedes that Mrs. Bennis was unaware that John used the car for illegal sex – for which he was convicted and fined $250. Still, according to the Court, Michigan violated neither the Due Process nor the Takings clauses of the Constitution by taking the innocent Mrs. Bennis’ property without as much as a “thankee, ma’am.” The court reasoned that the state’s confiscation and forfeiture of Mrs. Bennis’ car is constitutional because courts have long upheld civil-forfeiture seizures of some properties.  But these were historically confined to properties whose owners could not be tried in domestic courts. Not until Prohibition – long after the Constitution was adopted – did government generally wield civil forfeiture against people who could easily be criminally prosecuted.

Traditionally, no one can be punished unless first convicted. And government cannot convict someone – nor forfeit his property – who is denied an opportunity to defend himself before an impartial jury. But what to do about criminals outside of a domestic court’s jurisdiction? This was a pressing question for courts in cases involving smuggled goods as well as ships used for smuggling or piracy on the high seas. Owners of these properties were typically outside of domestic jurisdiction. Unless the law found a practical way to punish these foreign owners, smuggling and piracy would continue unabated.

Civil forfeiture solved the problem of unreachable wrongdoers. Under civil-forfeiture law, a court declared the property itself to be the wrongdoer. This legal fiction allowed the court to bypass the requirement of convicting the foreign wrongdoer before punishing him. Courts realized that the threat of civil forfeiture made foreign shipowners more reluctant to use their properties wrongfully. Civil forfeiture began here – and here is where it remained until after the Civil War. After the Civil War, civil forfeiture was expanded only far enough to reach property used to evade liquor taxation. Fact is, forfeiture of the properties of domestic citizens did not become widespread until Prohibition, when it was used to punish bootleggers smuggling alcohol.

When the Constitution was adopted, the common law did not condone using civil forfeiture against domestic citizens; therefore, use of civil forfeiture to seize the Bennis automobile is not permitted by the Constitution today. The Bennis criminals – Mr. Bennis and the prostitute – were within Michigan’s jurisdiction, and thus, outside the realm of civil forfeiture.

The Constitution does permit civil-forfeiture seizures of aircraft and similar properties belonging to the likes of Colombian drug lords. Such criminals are precisely the kinds of wrongdoers that civil forfeiture was meant to punish. But by upholding civil forfeiture in cases for which the government can easily prosecute suspected criminals in person – such as in the Bennis ruling – the court unleashes a government power unknown to America’s founding generation.

The Bennis decision frees government to impose huge costs on people never charged with criminal wrongdoing. Governments will respond to this novel constitutional loophole by devising ever more creative ways of preying upon innocent citizens as sources of revenue. A Supreme Court committed to respect legal precedent poorly serves judicial restraint and justice by so carelessly interpreting the tradition it seeks to protect.

Oliver Wendell Holmes observed that “hard cases make bad law.” For Tina Bennis, bad history makes hard law.

Donald J. Boudreaux is Visiting Olin Scholar in Law and Economics at the Cornell Law School. A.C. Pritchard practices law in the Washington office of Bickel & Brewer

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Here’s the always wise and insightful Alberto Mingardi, writing over at EconLog, on the Greek government’s default.

On the very same Greek topic is the Wall Street Journal‘s Holman Jenkins.  (gated).  A slice:

But Mr. Tsipras shriekingly insisted that Europe go on subsidizing Greece so Greece wouldn’t have to change. He effectively put a gun to Greece’s head and said, “Pay us ransom or the idiot gets it.”

The idiot is now getting it. Greece’s banking system and government are running out of cash because Mr. Tsipras spurned loans that the EU, frankly, was quite eager to give. The Greek people will likely vote overwhelmingly to stay in the euro in next week’s referendum, but by then it may be too late. By then, too, Mr. Tsipras likely will be propagating a “stab in the back” myth to blame Europe for rejecting Greece, not the other way around.

But it also pays to see why this crisis was baked into the euro. Of course the Greek people want to keep the common currency: Not only is the euro an excellent currency, but it comes with the additional virtue of requiring the EU to bail out member governments so politicians and voters can always view reform as less than an absolute necessity.

Cato’s Dan Ikenson correctly warns opponents of cronyism to remain vigilant in light of the demise of that great geyser of cronyism and monstrous monument to the myths of mercantilism, the U.S. Export-Import Bank.

Reserve your seats for upcoming “Conversations with Tyler.”

Here’s yet another account of the disgusting, would-shame-a-banana-republic-autocrat practice in the United States of civil asset forfeiture.  Again I ask of drug-war advocates (as I will ask of them whenever I encounter such instances of government thievery and tyranny): Do you really think that this ‘war on drugs’ makes the U.S. more civilized, law-abiding, free, and pleasant?  And if you are a white, middle- or upper-class suburban person, do you not think it incumbent upon you to put yourself in the shoes of blacks and other minorities upon whom the bulk of this atrocious tyranny is unleashed?

Finally, here’s the great Israel Kirzner’s lecture last month in Berlin upon his receipt of the 2015 Hayek Medal, awarded annually by the Berlin-based Hayek Gesellschaft:

(HT Pete Boettke)

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O happy day!

Screen Shot 2015-07-01 at 8.17.38 AM No one deserves more credit – and I’m not sure that anyone deserves even as much credit – for bringing about the closure (at midnight last night) of that great geyser of cronyism, the U.S. Export-Import Bank, than does my intrepid Mercatus Center colleague Veronique de Rugy.  This feisty economist from France has, over the past few years and on many different fronts, toiled tirelessly and brilliantly to expose the lies, half-truths, deep economic ignorance, and shameless cronyism upon which popular and political support for the Ex-Im Bank rested.

All Americans – save those formally privileged few whose wallets and purses are today lighter because of their reduced receipts of government-created rents – should this evening raise a glass of Pol Roger Brut or some other genuine and excellent champagne to Vero.  She’s genuinely and excellently heroic!

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Quotation of the Day…

by Don Boudreaux on July 1, 2015

in Myths and Fallacies, Science, Scientism

… is from page 70 of Vol. 12 – Economic Inquiry and Its Logic (2000) – of The Collected Works of James M. Buchanan; specifically, it’s from Jim’s 1981 article, co-authored with Geoff Brennan, “The Normative Purpose of Economic ‘Science’”:

By its very nature, intellectual activity involves coming to terms with a chaos of observations through the imposition of an order which is itself an artifact of the mental process.

Indeed.  So anyone who proclaims that he or she is guided without any priors or presumptions only by “the facts” or exclusively by “the data” is someone who is both insufficiently self-aware and inadequately philosophical.  Such a person is destined to be a poor thinker and analyst, having adopted his or her theory haphazardly (or even unawares).

In the above quotation, Buchanan and Brennan do not offer a recommendation for how best to do science; instead, they describe an unavoidable reality that must be lived by anyone who does, or who attempts to do, science (or any sort of intellectual activity).  Such priors and presumptions are not optional.  The “imposition of an order which is itself an artifact of the mental process” – note carefully the word “artifact” – is literally unavoidable.  Therefore, the chief issue is not whether a scholar or thinker or analyst or scientist will or will not have theoretical priors and presumptions that affect both the questions that he or she asks and the manner in which he or she interprets empirical reality; the chief issue is just what those theoretical priors and presumptions will be.

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Mr. Bob Keener
Business for a Fair Minimum Wage

Dear Mr. Keener:

According to your June 30th press release, “DC business owners are welcoming the minimum wage increases effective July 1.  They say … that businesses will benefit from lower employee turnover and increased productivity, product quality and customer satisfaction.”

Let’s get this matter straight.  These business owners are confident that if their lowest-paid workers get a raise the resulting increase in worker productivity will improve these businesses’ bottom lines, yet each of these owners is too daft to take such an available profit-enhancing step on his or her own.  In other words, these are business owners who refrain from running their companies as profitably as possible until and unless they are ordered to do so by politicians.

I’m afraid that your press release proves only that these business owners are so incompetent and clueless that any pronouncements they make about public policies should be utterly ignored.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

…..

The press release mentioned in my letter arrived in my e-mail box today; it is dated June 30th, 2015.  Yet this press release – titled “DC Businesses Set to Benefit from July 1 Minimum Wage Increases” – doesn’t seem (yet) to be available on-line at the website of this organization-of-evidently-incompetent-business-owners.

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Here’s a letter to the Washington, DC- based WTOP Radio:

In your report this morning on Pres. Obama’s proposal to force employers to expand the number of employees who are eligible for overtime pay, you featured a clip of a law professor proclaiming that such intervention is made necessary by employees’ alleged lack of bargaining power.

This law professor is a poor economist.

If workers in fact have no bargaining power, then firms will respond to the president’s mandate by demanding from workers fully offsetting concessions such as lower base pay, fewer fringe benefits, or more difficult job duties.  Without bargaining power, workers cannot refuse these offsetting demands.  Therefore, the mandate, by causing the mix of employment terms to change without any increase in overall compensation, will at best leave workers no better off than before.

More realistically, because each unregulated firm – even one with incontestable monopsony power over workers – has incentives to arrange the mix of employment terms (for example, the mix of wages, fringes, and workplace rules) in ways that are most attractive to its workers, the president’s mandate will almost certainly result in mixes of employment terms that are less attractive to workers than were the previously offered mixes.  This mandate will thus make workers worse off.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

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Quotation of the Day…

by Don Boudreaux on June 30, 2015

in Hayek, Hubris and humility, Innovation, Intervention

… is from page 226 of the 2014 collection, The Market and Other Orders (Bruce Caldwell, ed.), of some of F.A. Hayek’s essays on spontaneous-ordering forces; specifically, this quotation is from an essay of Hayek’s that, although it is relatively unknown, has long been among my favorites – namely, his June 1962 lecture, upon taking a faculty position at the University of Freiburg, “The Economy, Science and Politics” (available on-line here):

Not because he knows so much, but because he knows how much he would have to know in order to interfere successfully, and because he knows that he will never know all the relevant circumstances, it would seem that the economist should refrain from recommending isolated acts of interference even in conditions in which the theory tells him that they may sometimes be beneficial.

Few statements from Hayek’s pen convey so succinctly and clearly the essence of his political economy as does this one.  Far too many economists, intoxicated by the abstract knowledge that their theoretical understanding gives to them, forget (or never learn) that this abstract knowledge is knowledge only of the general character and logic of complex markets rather than knowledge of the countless, ever-changing, and often unobservable details that must somehow be taken account of if millions of strangers are to cooperate and exchange with each other in ways that generate a reasonably well-working economic order that produces prosperity for the bulk of ordinary people.  The decentralized, private-property and contract-based competitive market is the only institution that humans have stumbled upon that manages to collect and use in reasonably tolerable ways the colossally large number of bits of knowledge dispersed across millions of people.  The results of this market process are, of course, not perfect – but they are far superior to the results that are produced by efforts to replace all or parts of this market process with the conscious interventions of people empowered to use force to alter market relationships.

In order to intervene successfully in markets would require not only the kind of abstract knowledge that the best economists learn by mastering their discipline but also knowledge of what Hayek elsewhere famously called “knowledge of the particular circumstances of time and place.”  The very nature of this latter knowledge is that it cannot possibly be known to a single mind or agency.  Statistics, for all their value in many contexts, are not – contrary to the mistaken supposition of many people – adequate substitutes for the “knowledge of the particular circumstances of time and place.”  Indeed, the very best economists understand that perhaps the principal lesson to be drawn from the abstract knowledge that they master is that the competitive market order is so complex that it is folly to imagine that conscious interventions into it will generally succeed in improving the economic well-being of ordinary people.

Such a stance in support of non-intervention is unfashionable.  Confessing honestly one’s unavoidable ignorance of what must in reality be known to intervene successfully does not get one many gigs on television and other media venues where various “solutions” are paraded about.  A path to popularity isn’t paved by consistently noting humbly that one cannot predict any details of the future but can say only that whatever is likely to emerge over time from the competition of consumers and producers each spending his and her, and only his and her, own money will likely be better than the results of this Senator’s plan, of that president’s program, or of those economists’ proposed interventions.

In short, steadfastly taking stands based upon the mature understanding that reality is both far more complex than most policy wonks, politicians, and media types think and that reality is not optional is not as fashionable as is feeding the popular delusion that smart, well-advised, and well-spoken people in government can reliably and consistently improve reality through their conscious, hubris-fueled interventions.

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The great Steve Davies – one of the most learned, thoughtful, wise, and searingly smart people I know – reviews Ian Morris’s new book, War! What Is It Good For? Conflict and the Progress of Civilization from Primates to Robots.

Over at A Force for Good, Jon Murphy explains one reason why it is so difficult in practice to detect significant disemployment effects of minimum-wage legislation in the U.S.

Writing in the Toronto Sun, Gerry Nicholls defends free speech from those who would say they aim to improve politics by, in effect, muffling political speech.

Jonah Goldberg exposes the double-standard (to put it mildly) that “Progressives” have about racial identities.  A slice:

So: We live in a world where Bobby Jindal is a fake Indian, but it’s racist to say an older white woman [Elizabeth Warren] isn’t a real one (the correct term being “Native American,” of course). Nikki Haley is a villain for “suppressing” her Indian roots, but Senator Ted Cruz is a fraud for touting his Cuban roots.

David Henderson, writing in Regulation, reviews Alex Epstein’s The Moral Case for Fossil Fuels.

The United States is today, thank goodness, not close to the fiscal train wreck that is Greece.  But this reality is no cause for complacency about the size of the debt incurred by Uncle Sam and that, therefore, is a burden to taxpayers today and, especially, tomorrow.

David Boaz recalls when, in 1990, Cato’s then-President Ed Crane presented a bust of F.A. Hayek to Yevgeny Primakov (who died this past Friday at the age of 85).

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Commenting on this recent post – a post that argues that there is no good economic reason for government to provide retraining or other benefits to workers who lose their jobs because their fellow citizens take advantage of enlarged opportunities to purchase imported goods and services – Zuying Gao writes:

Ricardo’s theory is probably going to work in the long run. But theory is theory, it works best when there is no other intentional disturbance. In the real world, the best outcome for the free trade won’t come out so easily. I think Lowenstein simply is on humane stance to use “victim”. In the short run, out of luck, failing keep up with the steps of technology, some people are no doubt to be suffering, which does not mean they deserve this and we should show no compassion towards them.

I join with Mr. Gao in calling for compassion for anyone who suffers misfortune (although one must always be careful to distinguish misfortune that is genuine from misfortune that is trumped-up).  Yet I dispute Mr. Gao’s premise that there is something unique or special about economic misfortune that stems from changes in patterns of economic activity that span political borders (rather than being confined within a nation’s political borders).  The very point of that post of mine – and, indeed, of the bulk of the economics of international trade from the time of Adam Smith forward – is that there is nothing unique about the economic consequences of changes in trade patterns that span across political borders.

Yes, Mr. Jones who loses his job because his fellow citizens choose to buy less of the steel he produces and more of the steel produced by someone in another country must endure an outcome that he’d prefer not to endure.  But this outcome is no different than if Mr. Jones lost his job because his fellow citizens switched much of their spending away from buying products made with domestically produced steel to, say, products made with domestically produced plastics.  Whatever compassion one feels for Mr. Jones in the first scenario should be felt for him in the second scenario: no more and no less.  The reason is that from his perspective – as judged or measured by his disutility, suffering, anger, sadness, whatever you call it – the misfortune to him of his job loss is the same in both cases.  Nothing special or unique attaches to job and profit losses (and gains) “caused” by changes in the pattern of international trade; these losses (and gains) differ in no relevant way from such losses (and gains) “caused” by changes in the pattern of economic activity that involve no international component.

The importance of this point should be self-evident, although I realize that it isn’t.  People are easily mislead by the existence of political borders into imagining the existence of economic relevance that simply isn’t there.  Any such supposed economic relevance is a delusion.  Rent-seekers in each domestic market, of course, have powerful incentives to embrace and to fortify these delusions, for the greater the number of people who are so deluded, the greater are the prospects for rent-seekers to win and to maintain government-granted special privileges – such as tariffs – to protect them from having to compete in markets as vigorously as they would have to compete without such privileges.  But the economics of the matter are crystal-clear: any such imagined economic relevance of political borders is a popular delusion.  And one important role of the economist is to do all that he or she can to cure people of suffering this delusion.  Any successes that economists have in this endeavor help to protect society from rent-seekers who shamelessly exploit the popular delusion that there’s something economically unique about international trade.

So whatever quantum of compassion or indifference someone wishes to bestow upon a worker who loses his or her job because consumers choose to reduce their rate of purchasing whatever it is he or she produces is a quantum of compassion or indifference that should be bestowed upon any worker who loses his or her job because consumers choose to reduce their rate of purchasing whatever it is he or she produces – whether these consumer choices involve buying more imports or not.

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Quotation of the Day…

by Don Boudreaux on June 29, 2015

in Law, Myths and Fallacies

… is from page 34 of the 2009 collection of some essays by the Italian jurist and political philosopher Bruno Leoni, entitled Law, Liberty and the Competitive Market (Carlo Lottieri, ed.); in particular, this quotation is from Leoni’s brilliant 1963 New Individualist Review article, “‘Consumer Sovereignty’ and the Law” (original emphasis):

If only one word had to be used to define this widespread change in the idea of the law, I would say that according to the man on the street the law today is something which must be manufactured, or even pre-fabricated.  That is, it is something produced with the minimum of time and effort judged necessary, according to plans prepared in advance, by the “suitable” people in the “suitable” places (the national legislatures), and presented to those who must obey the laws.  The latter people (we might say the “consumers,” if the word were not misleading for reasons which we shall shortly see) do not have – or are thought not to have – any other role than that of using the product ready made for them, just as they use the automobile or the washing machine.

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