James Taranto on Affirmative Action and Public Opinion Polling:
James Taranto of the Wall Street Journal's OpinionJournal.com website has written an interesting response to my posts on affirmative action and public opinion polling (see here and here).
However, Taranto claims that the "affirmative action" wording is misleading because "changing 'racial preferences' to 'affirmative action' is a change of meaning, not just wording. 'Affirmative action' is not only a euphemism for discrimination in favor of minorities; it is also a blanket term that encompasses other, less controversial policies." For example, Taranto quotes Justice Kennedy's concurring opinion in the Seattle school case that set off this debate, as an illustration of "non-preference" affirmative action policies:
School boards may pursue the goal of bringing together students of diverse backgrounds and races through other means [than racial preferences in admissions], including strategic site selection of new schools; drawing attendance zones with general recognition of the demographics of neighborhoods; allocating resources for special programs; recruiting students and faculty in a targeted fashion; and tracking enrollments, performance, and other statistics by race.
Taranto's argument is not without some merit. But there are two major problems with it. First, as I pointed out in my initial post on this issue, using the term "preferences" is also misleading because it will lead many voters to think of traditional invidious discrimination against minorities rather than of remedial affirmative action preferences.
Second, most of the supposedly nonpreferential programs listed by Taranto and Justice Kennedy are in fact themselves racial preferences. If, for example, school boards "pursue the goal of bringing together students of diverse . . . races" by trying to increase the percentage of minorities at certain schools, they are still intentionally taking race into account in their decisionmaking and still trying to ensure that the schools in question have some particular percentage of minority students. Similarly, "strategic site selection" of schools based on the racial composition of the surrounding neighborhood is surely a form of race-based decisionmaking that advantages areas with one type of racial composition at the expense of others with a different type. The fact that officials are not using formal racial classifications but are instead using "facially neutral" means does not change the essential nature of what they are doing. Racial balancing cloaked in seemingly neutral language is still racial balancing. As I explained in this post on Texas' "ten percent" college admissions plan:
[I]f it is morally wrong to aim for a given racial balance in a state university student body by using explicit racial preferences, why is it not equally wrong to intentionally try to achieve the same effect through indirect, facially "neutral" means? In the days of Jim Crow, southern states often used facially neutral policies such as literacy tests, poll taxes, and peonage laws to disadvantage blacks. Few today would argue that these policies were somehow morally superior to those Jim Crow laws that discriminated against blacks through explicit racial classifications. If, as critics of affirmative action claim, explicit affirmative action preferences are morally wrong for the same reason that Jim Crow laws were wrong, then "facially neutral" affirmative action systems such as the Texas ten percent are wrong for the same reasons that the facially neutral means of propping up Jim Crow were.
I do not contend that the majority of voters are clearly in favor of affirmative action. Rather, my view is that many of them don't know much about the issue, have not thought about it carefully, and therefore have unclear and often internally contradictory views. This is not in any way unusual, and is a natural consequence of voters' rational ignorance about public policy, which extends to a wide range of issues including some that are far more important than affirmative action. For that reason, I also question Taranto's claim that the voters in the California, Michigan, and Washington referenda reached a clear decision indicative of their true opinions because "they had the opportunity to hear both sides of the argument." While it is certainly true that they had the "opportunity" to hear both sides (something that they also had during the previous 25 years of intense public debate over affirmative action), it is unlikely that very many actually used that opportunity to study the issue in any detail.
UPDATE: Taranto has a rejoinder to this post here. I would first like to apologize to James Taranto for incorrectly referring to him as "Jim." I have corrected this in the original post. However, I remain unpersuaded by his substantive arguments.
In his new post, Taranto claims that initiatives that ban "discrimination" or "preferences" do not mislead voters by leading them to think of traditional discrimination against minorities because they "are intended to apply, to both forms of discrimination." It is true that they are intended to do that, but an unsophisticated voter reading the text is more likely to think of traditional discrimination when seeing the word "preference" or "discrimination" than of affirmative action.
Taranto also notes that his argument "is not that the rewritten language was deceptive but that it changed the meaning of the proposed law by expanding it to encompass nondiscriminatory forms of 'affirmative action.'" I don't think that this distinction undermines my point that questions banning "discrimination" or preferences will lead voters to think of traditional discrimination against minorities. Moreover, as I explain in my post above, the "nondiscriminatory" forms of affirmative action Taranto refers to are in fact preferences themselves.
Today's Washington Posteditorializes in favor of Senate confirmation of Leslie Southwick to the U.S. Court of Appeals for the Fifth Circuit:
BEFORE BEING nominated by President Bush to the U.S. Court of Appeals for the 5th Circuit, Leslie H. Southwick served for almost 12 years on the Mississippi Court of Appeals, where he participated in thousands of cases spanning the gamut of civil and criminal law. A panel of the American Bar Association unanimously found Judge Southwick to be "well qualified" for the promotion, its highest ranking. Yet congressional opponents have latched on to two opinions that Mr. Southwick joined, but did not write, to argue that he is unfit for the federal appeals post. . . .
Judge Southwick wouldn't have been our first choice for this vacancy. Nor do we like the results in the custody and racial slur cases. But we cannot find fault with Judge Southwick's narrow but ultimately legitimate interpretation of the law in those cases, and we do not find in his record the anti-gay, anti-worker caricature his opponents have drawn. Sen. Dianne Feinstein (Calif.), the lone Democrat on the Senate Judiciary Committee to vote in favor of his confirmation, got it right when she concluded that if senators were to examine Judge Southwick's entire career, including his stint as a judge advocate in Iraq, they would find a "qualified, circumspect person."
Tim Sandefur on a very interesting pending 9th Circuit case, in which the court will have to decide whether an occupational regulation that the government's own expert deems irrational is nevertheless constitutional.
Sandefur also addresses the right to earn an honest living more generally. I wasn't aware that the 10th Circuit held in 2004 that "absent a violation of a specific constitutional provision or other federal law, intrastate economic protectionism constitutes a legitimate state interest." Such a holding is contrary to hundreds of years of Anglo-American thinking.
It's one thing to say, as courts have done in the past, that any public-spirited rationale for a law restricting employment rights constitutes a sufficiently rational basis to uphold the law, or even to say that a court will make up such a rationale if the state doesn't provide one, as the Supreme Court has occasionally done. I think this is wrong, but at least it's consistent with the long-standing ideal that restrictions on occupational liberty must have a public purpose, and not simply be an effort to promote private monopolistic interests. The idea behind this weak rational basis test is that courts should defer to legislative judgments, not that protectionist legislation is inherently legitimate.
It's much worse (though perhaps more honest) for a court to find that no public-spirited rationale for particular restrictive legislation exists, and to nevertheless uphold the law as a naked exercise of political power for the benefit of a special class. This type of law that has been disfavored in our constitutional tradition at least since the Statute of Monopolies was enacted in England in 1623.
Researchers in Iowa subjected children to emotional abuse in the 1930s, in an attempt to prove a theory about stuttering. Almost seventy years later, the "children" sued. Surely, the state would be acting properly to voluntarily compensate the victims in some way. But a lawsuit seventy years later, when almost all the perpetrators and many of the victims are dead?
On a separate note, it looks like much of the money will go to the estates of some of the victims. This sort of thing always strikes me as odd; but for whatever experiences the victims had, good, bad, or indifferent, their children would have never existed. I'm sorry my ancestors were oppressed by the czars, but from a purely personal point of view, I benefited. It's not simply that I got to grow up in the United States instead of Eastern Europe, is that I exist at all! Even though three of my grandparents lived under the czars' rule, I would think it just about as strange to get a reparations check from the Russian government as from the Italians (for oppressing my ancestors 2,000 years ago) or the Egyptians (1,400 or so years before that).
Jacob Sullum has an excellent article in Reason explaining why the recently enacted transparency reforms have had little effect in curbing porkbarrel spending. Despite the reforms, which mandate disclosure of earmarked pork projects, the new Democratic Congress is shoveling out pork at a rate almost equal to the record posted by the Republicans in 2005.
Sullum notes that transparency is unlikely to actually prevent pork because congressmen actually want to publicize pork that benefits their constituents (and thereby improves their odds of getting reelected). But why would congressmen want to publicize their involvement in a practice that, although it benefits certain narrow interest groups, is hugely unpopular with the general public? I answered that question in a post last year, where I predicted that transparency reforms would fail to curb pork (as they indeed have):
The real problem is not that we have too little information. It is that we can't effectively use the information we already have. The main reason why porkbarrel projects get approved is not so much that information about them is unavailable, but that ordinary voters have little incentive to read it and process it. As I have argued in many of my academic writings (e.g. - here . . .), most citizens are "rationally ignorant" about politics and often don't know even very basic political information . . . It is highly unlikely that any significant number of voters . . . will have either the time or the incentive to spend large amounts of time studying [a] new data base [on pork projects]. Few will take the time to determine which of thousands of federal grants are wasteful pork and which are legitimate expenditures. Even those voters who do study the database could well be misled by creative labeling. For example, even a clear case of porkbarrel spending such as the notorious "bridge to nowhere" is unlikely to be labeled as such in the data base. Rather, creative congressional staffers could call it something like "spending for essential transportation infrastructure." To be sure, experts will not be fooled, but ordinary voters easily could be unless they devote many hours to the task of smoking out the truth. While they may be willing to do so for a few particularly notorious and highly publicized projects, that is unlikely to happen in the case of the vast majority of porkbarrel grants. To be sure, activist organizations could do some of the spade work for the voters. But reading reports prepared by these organizations and determining which ones are accurate and credible is still a difficult and time-consuming task that few voters are likely to take on.
Unlike ordinary voters, the well-organized interest groups that benefit from pork have the time, expertise, and incentive to keep track of pork projects that serve their interests. Thus, disclosure of porkbarrel projects can help congressmen gather support from the project's beneficiaries without significantly reducing their standing with the general public (most of whom don't even know their congressmen's names, much less their positions on pork). As Sullum puts it, "[a]lthough honesty and openness are surely preferable to dishonesty and secrecy (in politics, at least), they're not an adequate solution to a government that does too much and is therefore a magnet for people seeking gifts and favors." Amen.
Indictment for Threatening Arab-American Institute Staff:
Patrick Syring, apparently a former State Department foreign service officer, has been indicted for threatening Arab American Institute staff, in violation of 18 U.S.C. § 245(b)(2)(C) (using threats to intimidate and interfere with employment based on race and religion) and 18 U.S.C. § 875(c) (transmitting threats in interstate commerce). Here are the messages mentioned in the indictment (all dated from July 17, 2006 to July 29, 2006) (some paragraph breaks deleted):
[Voice mail to the Institute:] This is Patrick Syring. I just read James Zogby's statements online on the MSNBC website, and I condemn him for his anti-Semitism and anti-American statements. The only good Lebanese is a dead Lebanese. The only good Arab is a dead Arab. Long live the IDF. Death to Lebanon and death to the Arabs.
[E-mail to two Institute employees; all e-mails sent to work addresses:] Zogby's anti-Semitic, anti-American statements (and those of the AAI in general) are abhorrent, repulsive and disgusting. The only good Lebanese is a dead Lebanese (as the IDF knows and is carrying out in its security operations, God bless them.) Fuck the Arabs and Fuck James Zogby and his wicked Hizbollah brothers. They will burn in hellfire on this earth and in the hereafter.
[Voice mail to an Institute employee:] Hello Valerie, you fucking Arab American shit. James Zogby and you are all Hezballah supporters. The only good Arab is a dead Arab... You God [inaudible] bitch.
[E-mail to an Institute employee:] You are a fucking anti-Semitic Arab-American stooge who sympathizes with Hezballah terror. You and your Arab American Institute fuckers should burn in the fires of hell for eternity. The IDF is bombing Lebanon back into the stone age where it belongs. Arabs are dogs. Long live the State of Israel. Death to Arab American terrorists. The only good Lebanese is a dead Lebanese.
[E-mail to an Institute employee:] You are a fucking Arab American terrorist, a Hezbollah sympathizer pig. James Zogby is a vile evil anti-Semitic pig terrorist member of Hezbollah who is attempting to destroy the State of Israel. God Bless America[.] God Bless the State of Israel[.] The only good Lebanese is a dead Lebanese [a smiley face graphic]
[Voice mail to the Institute:] Hello, I'm Patrick I'm in Arlington VA, and I think James Zogby is worse than Osama bin Laden. Since he supports Hezballah, he's an anti-Semitic motherfucker, and the only good Arab is a dead Arab.
[E-mail to several Institute employees:] I condemn James Zogby and the AAI for perpetrating the murder and shootings at the Jewish Federation in Seattle on Friday July 28 (as well as the killings in Israel). You wicked evil Hezbollah-supporting Arabs should burn in the fires of hell for eternity and beyond. The United States would be safer without you. God Bless the State of Israel[.] God Bless America[.]
It seems to me that the messages are indeed punishable, precisely because they fall into the "true threats" exception to the First Amendment. But it's important to be precise about why this is so, and to see why this differs from protected statements that some people will burn in Hell, that some people (e.g., exploiters of the poor, abortion providers, child rapists) deserve to die, or that the capitalist stooges will be the first up against the wall when the revolution comes. Consider, by way of analogy, the Arizona Supreme Court's unanimous and correct decision in Citizen Publishing Co. v. Miller, 115 P.3d 107 (Ariz. 2005), that this letter to an Arizona newspaper was constitutionally protected:
We can stop the murders of American soldiers in Iraq by those who seek revenge or to regain their power. Whenever there is an assassination or another atrocity we should proceed to the closest mosque and execute five of the first Muslims we encounter.
After all this is a "Holy War" and although such a procedure is not fair or just, it might end the horror.
Machiavelli was correct. In war it is more effective to be feared than loved and the end result would be a more equitable solution for both giving us a chance to build a better Iraq for the Iraqis.
Here's my thinking: First, though the Syring messages are at times simply condemnation, and though "The only good Arab is a dead Arab" may in context be seen as chiefly a reference to what should be done in Lebanon in the Hezbollah War, it may also in context be seen as a personal threat to the recipients in particular.
Second, while ambiguity might cut in favor of protection in some contexts — consider the Arizona court's statement that "Given the letter's conditional nature and ambiguity, we do not believe that a reasonable person could view that letter as 'a serious expression of an intent to commit an act of unlawful violence to a particular individual or group of individuals'" — two related matters cut against this here:
(A) This was a letter addressed to particular people, which may reasonably make those people fear that they are in the writer's metaphorical crosshairs.
(B) The letter was sent just to those people, who were extremely unlikely to be persuaded or enlightened by the letter. The value of the letter to public debate — and the danger to public debate of punishing ambiguous statements — is thus considerably less than if it were a condemnation of Arabs or other large groups published to the public at large, which might have its views changed (whether we think in a morally sound or unsound direction) by such arguments as the letter may contain.
My sense is that these points, and especially (B), have to be a big part of the distinction between a punishable threat and protected advocacy. The Arizona court put this in a somewhat conclusory fashion, by saying that "Speech that is part of this sort of public discourse [newspaper publication] is far less likely to be a true threat than statements contained in private communications or in face-to-face confrontations." But it seems to me that a deeper analysis would reach the same result. Threats communicated privately to particular people are both more likely to be reasonably seen as individually threatening, and can be punished with less loss to public debate. (There are of course intermediate fact patterns, such as threats that mention particular people but are said in public, which I think should probably also be punishable, at least if they are relatively unambiguous. But here we have one end of the continuum, with the Arizona letter being the other.)
So Syring's letters — assuming the indictment provides the correct transcriptions, and doesn't omit important context — ought to be punishable. But it's important that any published decision upholding such punishment, or any public or legal consensus that emerges upholding such punishment, especially for ambiguous statements such as these ones, focus on the individualized nature of the threat (both that it mentioned individuals and that it was communicated to individuals). The analysis should be quite different if the statements were general, and distributed to the public at large, as in the Arizona case; the statements would still be morally reprehensible, but they should still be constitutionally protected.
At Cato Unbound, economist Peter Leeson has summarized some of his innovative research showing that the anarchy is, at least in many situations, superior to government.
Peter's post is followed by responses by Bruce Benson (himself a leading libertarian anarchist scholar), Dani Rodrik (a prominent liberal economist), and Randall Holcombe, a nonanarchist libertarian scholar. Peter replies to the critics here (quite effectively, in my judgment).
I know there is a tendency among many to respond to defenses of anarchism with snickering or derision. Given all the harm caused by government (mass murder, genocide, repression, war, and so on), this tendency should be resisted. We should at least consider the possibility that there is a better way to organize society - that we can get all or most of the benefits of government while avoiding its often massive costs. Scholars such as Leeson, Benson, and David Friedman have made a serious theoretical and empirical case that anarchy is superior to government, even (perhaps especially) under modern conditions.
On balance, I remain unpersuaded (or at least far from wholly convinced). I will try to explain why in a follow-up post. However, I do buy the argument (advanced by Peter in his interesting paper on Somalia) that anarchy may be the best feasible alternative for some parts of the world. And I also believe that technology and economic institutions might develop to the point where this is true of more and more areas.
In any event, the case for anarchism needs to be taken seriously rather than just derided. If you are at all interested in anarchism, libertarianism, political economy, or the justification of government, you should check out Peter Leeson's essay and the responses it has generated.
UPDATE: I see that many commenters are confused about the definitions of "government" and "anarchy" as those terms are used in this post and in Leeson's(and also by most social scientists, legal scholars, and political theorists). Let me clarify. "Government" is simply an entity with a monopoly (or at least overwhelming preponderance) of force over a particular territory, usually financed by some system of coercive taxation. "Anarchy" is simply the absence, in a given area, of government as defined above. Thus, it is inaccurate (or at least misleading) to use "government" as a synonym for any and all forms of social organization or to claim that any system of lawmaking or law enforcement necessarily equates to government. People can use words any way the see fit, of course. However, using them in a way that basically defines anarchy out of existence is both unlikely to lead to a productive discussion and also contrary to the way the terms are used in most of the serious literature on the subject - by anarchist and pro-government scholars alike.
UPDATE #2: I have corrected the previously faulty link to Holcombe's response essay.
Kerr and Lederman Battle it Out Over FISA and the Supreme Court At BloggingHeads TV:
Marty Lederman and I recently recorded an episode of BloggingheadsTV. (Yes, weirdly that makes it the second VC/Balkinization pairing this week. Go figure.) Anyway, the episode was just posted a few moments ago, and you can see it here.
Marty and I spend about an hour debating the new FISA legislation. We then spend the next 25 minutes on the Boumediene case and the issue of habeas rights for detainees at Guantanamo and elsewhere. This was our first Bloggingheads, and it was a pretty interesting experience; let us know what you think (in a civil and polite way, naturally).
The Case for Giving Porkbarrel Projects to Dead Members of Congress:
The good that congressmen do is oft interred with their bones, but the pork they sponsor lives on after their deaths. In this post, Don Surber notes that three members of Congress have died so far this year, but that did not prevent the wasteful porkbarrel projects they lobbied for for their districts from passing (hat tip: Instapundit). However, just as it is best to allow only dead farmers to collect government subsidies for not farming, it would also be good to allocate as much of our porkbarrel spending as possible to the districts of dead congressmen. If only dead congressmen were allowed to sponsor pork in their districts, there might be a whole lot less of it.
It is generally assumed that requiring compensation for regulatory takings would hamstring environmental conservation efforts. Forcing the federal government to pay landowners who lose the ability to modify their own land because it is designated as endangered species habitat or a jurisdictional wetland could well reduce the regulatory appetite of federal agencies (assuming the compensation came out of their budgets, rather than judgment fund), but would environmental protection suffer as a result?
In a new paper,"Money or Nothing:The Adverse Environmental Consequences of Uncompensated Land-Use Controls," I argue that the conventional wisdom is wrong. Compensating landowners for the costs of environmental land-use controls could actually enhance environmental conservation. Why? First, such compensation would reduce, if not eliminate, the incentives uncompensated land-use controls create to destroy or degrade ecological amenities on private land. Several recent empirical studies confirm theoretical predictions that such incentives are substantial, and lead to the significant loss of habitat. Because most endangered species rely upon private land, this is a big deal. Second, there is reason to believe that environmental agencies over-rely upon land-use control as a conservation strategy, and that substituting other conservation strategies could be more cost-effective. Requiring compensation, and mandating that such compensation be paid from agency budgets, could encourage greater consideration of trade-offs and thereby enhance the effectiveness of conservation programs.
A draft of the paper is now available on SSRN. I hope to expand on some of these points in a series of posts next week.
This week, former Congressional aide William Heaton was sentenced to two years probation for his participation in a corruption scheme involving former Rep. Bob Ney (R-OH), for whom he worked, and Jack Abramoff. According to he Washington Post Heaton "avoided jail time because of his unusual role in helping the FBI and the Justice Department convict his former boss." This "unusual role" consisted of wearing a wire and recording telephone conversations he had with Rep. Ney.
Over at Stubborn Facts, Pat ponders the implications of the D.C. Circuit's decision in the Rep. Jefferson case for the recording of conversations among legislators and their legislative staff.
Heaton also turned over documents from Ney's office and recorded colleagues in Ney's office. He taped many phone calls, and wore a wire for a particularly crucial 2 1/2 hour one-on-one conversation with Ney.
Part of Ney's criminal actions involved agreeing to insert false and misleading information into the Congressional Record. Under the speech & debate clause, Ney's actions in actually inserting the material into the Record would be inadmissible. Because of that, Heaton's taped confirmation of Ney's agreement to insert the false material was very important to the case.
Heaton conducted this taping, and turned over documents, while he was still Congressman Ney's chief of staff. As regular readers know, I recently opined that the decision from the U.S. Court of Appeals for the District of Columbia regarding the search and seizure of documents within Congressman Jefferson's office was both impractical and wrong on the law. However, given that the decision is currently the law in the District of Columbia (where Heaton and Ney were prosecuted), prosecutors should be very glad that Ney plead guilty before that case came down. . . .
Heaton turned over documents from Ney's Congressional office to prosecutors, without any review by Ney. Maybe none were privileged, maybe some where, maybe all were. Under the DC Appeals Court ruling, Congressman Ney would be entitled to review all such documents before they were turned over. The ruling did not hinge on the place being searched (a Congressional office in the Capitol) but on the exposure of the Executive to privileged legislative materials.
I would imagine that the same logic would apply to conversations between Ney and his staff. The speech and debate clause privilege, like executive privilege, is not precisely defined. Just as the executive privilege protects confidential discussions between the President and his closest aides, so too does the speech and debate clause privilege likely protect at least some communications between a Congressman and his top aides. After all, they often speak with each other through their respective staffs. Under the reasoning of the Jefferson court, it is impermissible for the Executive Branch to be exposed to such privileged communications prior to review by the Congressman for an opportunity to assert privilege, followed by an in camera review by a judge to review the claim of privilege.
Frankly, I think this situation sheds further light on the flaws of the Jefferson opinion. But until overruled or limited by a rehearing or by the Supreme Court, that's the law of the District of Columbia circuit. Under its logic, the FBI's use of Congressman Ney's chief of staff to disclose Ney's official documents and record his confidential communications with his own staff were improper.
But now a survey by researchers at the University of Washington, just published in The Journal of Pediatrics, has found that for every hour of baby-video viewing per day, children ages 8 to 16 months knew six to eight fewer words than those who watched no videos.... But the alarming finding from the University of Washington survey applied only to baby videos. Television time, in contrast, seemed to have no effect, good or bad, on babies this young.
I can't think of any plausible reason that watching videos would retard children's verbal development, but watching t.v. would not. If anything, babies watching videos are likely watching videos geared specifically toward their needs and interests, like Baby Einstein, while babies watching t.v. are likely watching whatever animated nonsense happens to be on at the time.
Conflict of interest watch: Unlike most of my peers with kids the same age, Natalie watches videos sometimes. She especially like Teletubbies (English and Hebrew), Barney, Sesame Street 1-2-3 Count With Me (prefers the Hebrew version), and Yuval Ha'mibulbal, an Israeli video. Nevertheless, she's extremely verbal, and in three languages.
At about 8:15 ET Friday morning, the Federal Reserve reduced the discount window rate, which was 6.25% (a 1% penalty over the stated 5.25% Fed Funds rate) to 5.75% (a .5% penalty) for borrowing at the discount window. The most heartening thing about it is the reversal in worrying much more about the economy:
Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward. In these circumstances, although recent data suggest that the economy has continued to expand at a moderate pace, the Federal Open Market Committee judges that the downside risks to growth have increased appreciably. The Committee is monitoring the situation and is prepared to act as needed to mitigate the adverse effects on the economy arising from the disruptions in financial markets.
I confess to being puzzled by the Federal Reserve’s actions in recent weeks, as well as by the assumptions of even most of the Fed’s public critics that we are not likely to go into a recession. Without an economics degree, I may well be misunderstanding the evidence or the Fed's duties. I had begun writing a series of long posts on the Fed two weeks ago, but decided to wait to publish them to see if the Federal Reserve would lower interest rates before I waded into such a difficult policy thicket.
I had always thought that part of what turned financial hardships into recessions and recessions into depressions was severe restrictions in the willingness of financial institutions to lend and borrow money. For example, after the 1929 stock market crash, banks and brokerage houses reformed their excessively easy lending practices, leading to a massive contraction in the supply of money and its velocity.
Over the last year, we have had four straight quarters of lower prices on the sale of existing single-family homes. While price declines so far have been modest, the rising inventory, tighter lending standards, increasing foreclosures, and substantial non-price seller concessions suggest that nominal prices may not fully reflect the extent of the price decline and that things could get much worse in the housing market before they get better.
Since World War II, there have been three sharp housing price declines (in real dollars):
With the ridiculously easy lending standards of the housing boom in the 2000s, an impending housing crisis was almost unavoidable, as Robert Schiller argued in March 2006.
The Federal Reserve, therefore, was and is faced with an extremely difficult challenge: to prevent a severe housing crunch from having its usual effect: driving the US economy into a recession, as the three biggest housing crunches since World War II have done.
In Part I of this morning's posts on the Federal Reserve, I pointed out that, since World War II, significant housing price drops have always been followed by recessions or been coincident with them.
The Federal Reserve’s initial response to the subprime mortgage crisis was to claim last spring that it seemed likely to be “contained”:
Although the turmoil in the subprime mortgage market has created severe financial problems for many individuals and families, the implications of these developments for the housing market as a whole are less clear. The ongoing tightening of lending standards, although an appropriate market response, will reduce somewhat the effective demand for housing, and foreclosed properties will add to the inventories of unsold homes. At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency. We will continue to monitor this situation closely.
As unlikely as that seemed to me at the time, I hoped that the experts at the Federal Reserve knew what they were talking about.
When Cerberus was unable to sell its paper to fund the Chrysler deal, the deal went through anyway by extending the bank bridge loans, but the stock market realized that subprime problems had spread to the market for commercial paper and private equity funding. Then it was revealed that the market for mortgage-backed securities was mostly not functioning, which made it difficult for mortgage lenders to raise money by selling off their existing mortgages. High-flying hedge funds and European banks started revealing problems. Unlike in downturns earlier in the year when precious metals, oil, and basic materials stocks tended to rally, in recent downturns harder assets (and stocks reflecting them) started doing poorly as well.
In the face of a credit crunch that was clearly not being contained, nine days ago the Federal Reserve released its decision on interest rates:
Economic growth was moderate during the first half of the year. Financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters, supported by solid growth in employment and incomes and a robust global economy.
Readings on core inflation have improved modestly in recent months. However, a sustained moderation in inflation pressures has yet to be convincingly demonstrated. Moreover, the high level of resource utilization has the potential to sustain those pressures.
Although the downside risks to growth have increased somewhat, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected.
Frankly, I was surprised.
Data released in the last few weeks suggest that US inflation is moderating (running only 2.2% year over year) and job growth is slightly softer than expected, giving the Fed plenty of room to lower interest rates. Seemingly informed commentators report that dozens of European and Asian banks probably have nontrivial amounts of subprime paper in their portfolios. The commercial paper market is so frightened that concerns have been raised about whether money market funds can maintain their $1 asset value. Although most commentators say that they will be able to do so, many institutions are reported to be dumping even quality commercial paper in favor of treasury bills and notes in a flight to quality.
It would seem that with housing prices falling, commodity prices falling, stock prices falling, commercial paper prices falling, and CDO prices collapsing, net deflation (rather than inflation) would seem to be the bigger risk. And, of course, the author of the leading policy paper on deflation is none other than Federal Reserve Chair, Ben Bernanke (2002, discussed in Part IV posted below).
In my genuine ignorance, it seemed to me that, even if the Federal Reserve Board had acted promptly in late July or at its August meeting last Tuesday, avoiding a US recession (or a near recession) would be a tough task for the Fed. In a global economy, the Fed has much less control than it used to. By deciding to wait until the subprime mess degrades not only the inputs for economic growth, but economic growth itself, the Fed may decrease the chances that it will ultimately succeed.
William Poole, president of the Federal Reserve Bank of St. Louis, said there's no sign that the subprime-mortgage rout is harming the broader U.S. economy, and an interest-rate cut isn't yet needed.
"I don't see any impact as yet on the real economy or on the inflation rate," he said in an interview in the bank's boardroom. "Obviously, there could be an impact, but we have to rely on some real evidence."
Barring a "calamity," there is no need to consider an emergency rate cut, Poole said. His comments were the first by a Fed official since the U.S. central bank joined counterparts in Europe and Asia to inject emergency funds after a surge in money- market rates. The Fed has added $71 billion of reserves in the past five trading days.
Poole, 70, said businesses have maintained their hiring and investment plans and banks have sufficient capital to weather the credit-market turmoil. The St. Louis Fed chief stressed that the best course is for policy makers to assess the latest economic data when they next meet Sept. 18. The comments contrast with the certainty that traders put on a rate cut next month.
"If the data confirm the market's view that the economy is sagging, we'll have to decide whether to share that view," said Poole, who votes on the rate-setting Federal Open Market Committee this year. He cited the monthly jobs, retail sales and industrial production reports as key gauges he'll be watching.
The yield on the September federal funds futures contract closed at 4.95 percent today, indicating at least a quarter-point reduction in the Fed's target. The benchmark two-year Treasury note yielded 4.29 percent, the furthest below the Fed's benchmark since 2001, when policy makers were lowering rates.
"There's no way the Fed is going to reduce interest rates before the meeting," said former Fed Governor Lyle Gramley, now senior economic adviser at Stanford Group Co. in Washington. "Bill is just being realistic that we haven't seen anything going on in markets yet that would warrant that kind of action."
Poole acknowledged that the credit-market turmoil will "stretch out" the "adjustment" in the housing industry. He said he couldn't predict how long the downturn will last.
The upheaval in credit markets was caused by deepening losses on securities backed by U.S. subprime mortgages. BNP Paribas SA, France's biggest bank, shocked investors Aug. 9 when it halted withdrawals from three funds just a week after its chief executive officer said the lender wasn't at risk. . . .
Poole rebutted comments from some Fed watchers that the central bank may be out of touch with market developments. The criticism followed comments the St. Louis Fed chief made to reporters on July 31 that the slump in stocks was "a typical market upset."
"No one has called up and said the sky is falling," Poole said today. "As I talk to companies, their capital spending plans are intact." . . .
[Referring to the housing market problems, Poole said:] "From experience, these things don't go on forever."
Poole said he didn't regret that the Aug. 7 statement retained a bias against inflation. He also said that while consumer price gains are "moving in the right direction," the "job is not done."
Inflation has slowed for four straight months under the Fed's preferred gauge, which excludes food and energy costs. . . .
Poole, who plans to retire next year, is a former economics professor at Brown University . . . .
Sometimes, as with the bursting of the dot.com bubble in 2000-2002, there may be little that the Fed can do to prevent the reduction by half of many people’s pensions. Other times, by looking realistically at the relative threat of serious inflation v. recession and setting interest rates where they should be to continue moderate growth by limiting the spread of a credit crunch, the Fed might be able to prevent a US recession or soften its length or depth.
As a non-economist, I recognize that I lack not only the Fed’s knowledge of the details of the US economy, but the expertise to evaluate that information with any confidence. I just hope that the Fed knows what it’s doing.
In 2002, before he was named Federal Reserve Chairman, Ben Bernanke gave an interesting talk on the dangers of deflation:
With inflation rates now quite low in the United States, however, some have expressed concern that we may soon face a new problem--the danger of deflation, or falling prices. That this concern is not purely hypothetical is brought home to us whenever we read newspaper reports about Japan, where what seems to be a relatively moderate deflation--a decline in consumer prices of about 1 percent per year--has been associated with years of painfully slow growth, rising joblessness, and apparently intractable financial problems in the banking and corporate sectors.
To be clear, Bernanke is not talking about a simple drop in investment assets, but a general deflation in consumer prices as well.
Bernanke then outlined how the Fed can avoid deflation:
[T]here are several measures that the Fed (or any central bank) can take to reduce the risk of falling into deflation.
First, the Fed should try to preserve a buffer zone for the inflation rate, that is, during normal times it should not try to push inflation down all the way to zero. Most central banks seem to understand the need for a buffer zone. For example, central banks with explicit inflation targets almost invariably set their target for inflation above zero, generally between 1 and 3 percent per year. Maintaining an inflation buffer zone reduces the risk that a large, unanticipated drop in aggregate demand will drive the economy far enough into deflationary territory to lower the nominal interest rate to zero. Of course, this benefit of having a buffer zone for inflation must be weighed against the costs associated with allowing a higher inflation rate in normal times.
Second, the Fed should take most seriously--as of course it does--its responsibility to ensure financial stability in the economy. Irving Fisher (1933) was perhaps the first economist to emphasize the potential connections between violent financial crises, which lead to "fire sales" of assets and falling asset prices, with general declines in aggregate demand and the price level. A healthy, well capitalized banking system and smoothly functioning capital markets are an important line of defense against deflationary shocks. The Fed should and does use its regulatory and supervisory powers to ensure that the financial system will remain resilient if financial conditions change rapidly. And at times of extreme threat to financial stability, the Federal Reserve stands ready to use the discount window and other tools to protect the financial system, as it did during the 1987 stock market crash and the September 11, 2001, terrorist attacks.
Third, as suggested by a number of studies, when inflation is already low and the fundamentals of the economy suddenly deteriorate, the central bank should act more preemptively and more aggressively than usual in cutting rates . . . . By moving decisively and early, the Fed may be able to prevent the economy from slipping into deflation, with the special problems that entails.
As I have indicated, I believe that the combination of strong economic fundamentals and policymakers that are attentive to downside as well as upside risks to inflation make significant deflation in the United States in the foreseeable future quite unlikely.
Bernanke's 2002 analysis appears to be very sound.
Brayton on Franck v. Balkin & Franck v. Pilon:
I have not been able to blog lately due to travel and writing commitments, which is too bad because if I could blog, I would blog about these exchanges between Matthew Franck and Jack Balkin on whether Balkin is a faux originalist and Roger Pilon on whether the fundamental rights jurisprudence is a scam. (For links see below and also Jonathan's post on the Balkin exchange.) Unlike Oren but like David, I think it is, as I explain in my forthcoming Michigan essay, Scrutiny Land, to which I am going to have to add a paragraph about Abigail Alliance, but which I seem to have forgotten to upload to SSRN. But no time for that now.
Fortunately, Ed Brayton does the reporting on Matthew Franck's critiques of Balkin and Pilon, their replies, and then provides an excellent critique of Franck of his own. You can find all the links and Ed's insightful commentary here:
There's a fight brewing over the concept of liberal originalism as a legitimate mode of constitutional interpretation, a fight between Matthew Franck of Radford and Jack Balkin of Yale. Balkin, you may recall from previous posts on the subject, has undergone an interesting transformation over the last few years, from legal realist to originalist; like myself, Randy Barnett and others, however, he argues that originalism often leads to different results than those argued for by conservative originalists.
The first shot was fired by Franck at Douglas Kendall and James Ryan for an article in the New Republic discussing how liberals can "take back the court" by developing "an affirmative message of what the Constitution means" to counter conservative originalism. But since Balkin was cited by them, he came in for some criticism too.
National Review legal scholar Matthew Franck seems to be getting into the habit of tangling with my favorite legal scholars lately. First it was Jack Balkin, now it's Roger Pilon, director of the Center for Constitutional Studies at the Cato Institute. . . . It began with Pilon's op-ed in the Wall Street Journal (reprinted here) condemning last week's en banc ruling from the DC circuit overturning a previous ruling that terminally ill patients have a constitutional right to access to experimental drugs not yet approved by the FDA (Abigail Alliance for Better Access to Developmental Drugs v. Eschenbach). Franck responded to that op-ed, leading to a Pilon reply, then a Franck reply, then another Pilon reply, and a final Franck reply. Got all that? Okay, let's look at the argument.
The discussion between the folks at NRO and Jack Balkin over the latter's variant of original meaning constitutional interpretation continues. In response to Ed Whelan's series of posts I noted here (and part four here), Jack Balkin takes to his own defense here. Balkin concludes:
my point-- which I have made repeatedly in my articles-- has been that originalism does not and cannot constrain judges all by itself. Originalism is a theory of fidelity in interpretation, not a theory of judicial review, and it is certainly not a one-size-fits-all method for ensuring judicial constraint. It is the bedrock or framework on which judicial practice should build. Judicial practice means starting with text and principle but not ending with it. Judges should consult all of the standard modalities of legal argument to flesh out and implement original meaning. These modalities include enactment history, expected applications, structural arguments, precedents (both judicial and non judicial), and the opinions and views of previous generations about the best interpretation of the constitutional text. In my view originalism is a framework that rules some interpretations out of bounds, but does not do most of the work of deciding specific cases. It leaves a great deal to be filled in by judges doing what judges normally do-- reasoning from the traditional modalities of legal argument. In addition, as I describe in my article, there are structural features-- like the appointments process and the fact that the Supreme Court is a multimember body-- that keep decisions within the mainstream in the long run.
Ed's version of originalism, by contrast, tries to do too much. That's why his method produces all the problems I have mentioned. My fear is that if Ed's method is the right one, then nobody who serves on the federal bench-- Justices Thomas and Scalia included-- can be a consistent originalist today, in which case it is very difficult to know what the debate is all about. By contrast, I am trying to give an account of originalism that is both faithful to the Constitution and that not only judges, but also ordinary citizens, can use.
Another debate has broken out on NRO, this one between Bench Memos regular Matthew Franck and Roger Pilon of the Cato Institute over the U.S. Court of Appeals for the D.C. Circuit's Abigail Alliance decision. Franck thinks the ruling was correct. Pilon begs to differ.
Jazz Drummer Max Roach, Dead at 83:
Max Roach, one of modern jazz's most influential drummers, has died. Roach was a master, and can be heard on hundreds of recordings. I heard him live only once, in 1991, in a band with the great saxophonist Harold Land and the bassist George Morrow. I remember thinking during that set that in a bop quintet it really is the drummer who defines the group's sound. (I think I even have his autograph from that event, although I can't be sure; kind of a long story.)
Here's a brief clip of Roach playing just a hi-hat:
For my favorite album with Roach as a leader or co-leader, don't miss the extraordinary Study in Brown.
Judge Exhibits Common Sense in Whole Foods/Wild Oats Case:
A federal judge has denied the FTC's request for an injunction to block the proposed merger between Whole Foods and Wild Oats. I was just telling co-conspirator Todd today that I thought that the FTC's theory in this case--that there is an organic and premium food grocery market separate from the regular grocery store market, even though any grocery store can carry organic and premium foods, and many, including Wal-Mart(!), do--was unusually silly.
Conflict of interest note: Guessing that no federal judge was likely to buy the FTC's theory, I recently took a small long position in OATS.
UPDATE: Here's Geoff Manne dissecting the FTC's argument in some detail over at Truth on the Market. Geoff calls the FTC's "conception of market definition ludicrous almost beyond belief."
Public Opinion and the Wording of Referendum Questions Banning Racial "Preferences" and "Affirmative Action" :
Several commenters on my last post make the perfectly valid point that strong public support for referendum questions banning racial "preferences" in the generally liberal states of California, Washington, and Michigan is an indicator of public opposition to affirmative action programs. True enough. However, all three of these referenda were worded as banning "preferences." In a 1997 Houston referendum, opponents succeeded in getting the city government to reword an otherwise similar ballot question as banning "affirmative action" rather than "preferences" (see here for an account critical of the City's decision). Sure enough, the initiative was defeated by a 55-45 majority, even in relatively conservative Houston. In referenda as in polls, whether the public supports affirmative action policies depends on how the question is worded.
Interpreting Public Opinion Polls on Racial Preferences and Affirmative Action:
Some caution is in order in interpreting the recent Quinnipiac University survey results on the Supreme Court's recent decision restricting the use of race in assigning students to public schools. As Orin notes in his post, Quinnipiac asked respondents whether they approved of the Supreme Court's recent decision "that public schools may not consider an individual's race when deciding which students are assigned to specific schools." A massive 71% majority said that they "agree" with the Court's decision.
However, the true level of public opposition to affirmative action preferences in education is likely much lower than this. Public opinion scholars have known for years that most survey respondents will express hostility to anything described as a "racial preference" or as racial discrimination. This is particularly true if the question at issue - like Quinnipiac's - fails to distinguish between affirmative action and traditional racial discrimination against minorities. Many of the Quinnipiac respondents probably assumed that the Supreme Court forbade old-style racial discrimination against minorities.
By contrast, a recent ABC/Washington Post poll that described the decision as "restrict[ing] how local school boards can use race to assign children to schools" and noted that "Some argue this is a significant setback for efforts to diversify public schools, others say race should not be used in school assignments." It found that 56% "disapproved" of the decision, while only 40% said they approved. A July Newsweek poll (hat tip: VC commenter Tim Dowling) described the decision as "limit[ing] the use of race for school integration plans," and found that 32% of respondents supported the decision, while 36% opposed it (a statistical tie).
The ABC/Washington Post and Newsweek questions have their own flaws (e.g. - "restricting how local school boards can use race" is very vague, and "integration plans" introduces a term - "integration" - with positive associations). But the contrast between their results and Quinnipiac's is nonetheless striking.
More generally, strong majorities favor programs described as "affirmative action." For example, this 2003 Pew survey found that 57% of Americans support "affirmative action programs that give special preferences to qualified blacks, women, and other minorities, in hiring and education," while only 35% oppose them. Note that a large majority - at least in this survey - supported "affirmative action" even in a question that defined AA as giving "special preferences" to women and minorities (albeit perhaps only to "qualified" ones). The same survey found that 60% said that "affirmative action programs designed to increase the number of black and minority students on college campuses" are a "good thing," while only 30% said that they were "bad." Similarly, this 2005 USA Today poll found that 49% of American support "affirmative action programs for racial minorities," with only 43% opposed. As a general rule, the majority of the public will express support for a program defined as "affirmative action" for minorities or women, but will oppose anything described as a "preference" or as "discrimination."
While political elites and others in the know use terms such as "racial preference" and "affirmative action" interchangably and have clear, stable views on the issue, much of general public has far less clear opinions and fails to understand the connections between them. Some of this is due to a genuine desire many people have to support "affirmative action" while at the same time rejecting racial "preferences." Some is probably due to widespread rational political ignorance, which results in many people not understanding the implications of common political terms. Whatever the cause, we must be very cautious in interpreting polls on affirmative action and racial preferences. Small differences in wording can have a big impact on results.
UPDATE: While it is not directly relevant to the subject of this post, it's also worth noting that the Quinnipiac question described the Court's decision incorrectly. The Court emphatically did not hold that the government "may not consider an individual's race when deciding which students are assigned to specific schools." Instead, Justice Anthony Kennedy's controlling opinion in the close 5-4 decision clearly indicated that some uses of race are in fact permissible, just not the very flagrant ones at issue in these particular cases. Kennedy emphasized his disagreement with Chief Justice Roberts' “all-too-unyielding insistence that race cannot be a factor in instances when, in my view, it may be taken into account.”
Law Schools Blogging Their Way Up the U.S. News Rankings?:
Sounds awfully unlikely to me, but Gordon Smith takes a closer look over at The Conglomerate.
The Quinnipiac poll also confirms what I've seen in most polls -- there is generally virtually no visibly greater support for abortion rights among women than among men:
37. Do you think abortion should be legal in all cases, legal in most cases, illegal in most cases or illegal in all cases?
Tot
Rep
Dem
Ind
Men
Wom
Legal/all cases
21%
12%
29%
23%
21%
21%
Legal/most
36
28
42
36
37
35
Illegal/most
24
35
15
20
23
24
Illegal/all
13
20
9
13
12
15
DK/NA
6
5
5
8
7
5
38. In general, do you agree or disagree with the 1973 Roe v. Wade Supreme Court decision that established a woman's right to an abortion?
Tot
Rep
Dem
Ind
Men
Wom
Agree
62%
42%
77%
64%
65%
60%
Disagree
32
54
17
30
28
35
DK/NA
6
4
6
6
7
5
There might be a difference in intensity of belief that this doesn't measure, and there might be differences if the question were asked some other way. (Certainly the overall results vary quite a bit from poll to poll, which may in some measure reflect subtle differences in wording.) But, as with the other polls I've generally seen, on balance men and women seem to break down roughly the same way as to abortion rights, and certainly women do not consistently show materially more support for abortion rights than do men.
Public Opinion on the Seattle Schools Cases:Quinnipiac released poll results today from a poll of 1,545 American voters (including 611 Republicans and 717 Democrats) that included a question on the recent Supreme Court decision about use of race to assign students in public schools. Here is the question asked:
"As you may know, the Supreme Court recently ruled that public schools may not consider an individual's race when deciding which students are assigned to specific schools. Do you agree or disagree with this ruling?"
The results:
By a 71 - 24 percent margin, American voters agree with a recent U.S. Supreme Court decision that public schools may not consider an individual's race when deciding which students are assigned to specific schools . . . . Republican voters agree with the decision 79 - 17 percent, while Democrats agree 64 - 30 percent and independent voters agree 71 - 24 percent[.]
Of course, poll results are no indication of whether the decision was right or wrong as a matter of constitutional law. But in light of recent claims that the Supreme Court is "dangerously out of balance," way off to the right of American public opinion, it's interesting to get a sense of where public opinion may in fact be on this question. Thanks to Lee Otis for the link.
What Does the Padilla Verdict Mean?:
Here's my take. In the short term, the major significance of the Padilla verdict is that the Administration won't have to face the question of what to do next in this case. A guilty verdict only settles this one case, but this one case otherwise could have gone on for a long time and likely would have ended up back at the Supreme Court. In the longer term, this case adds one data point in favor of using the criminal justice system to prosecute terrorist suspects. Every case is different, and no one verdict can settle very much in this debate; each verdict can only be a single data point in a broader set. But this case adds a data point in favor of using the criminal justice system. Beyond that, though, this verdict doesn't settle very much. Most importantly, it doesn't change how Padilla has been treated all this time; it doesn't erase the last six years. So while this one case is over, the questions it raised should and will continue.
Scripts for When Padilla Jury Hands Down Its Verdict:
The Jose Padilla case is complicated, and those who need a script for commentary when the verdict is handed down in an hour or so should follow these simple guidelines:
Script for Supporters of the Bush Administration: If the jury convicts, this proves how strong the government's case has been all along. If the jury acquits, this proves that you can't try to bring terrorism cases in a criminal court system.
Script for Opponents of the Bush Administration: If the jury convicts, this shows how the criminal justice system can indeed handle terrorism cases. If the jury acquits, this shows just how weak the case against Padilla has been all along.
Of course, that's not to say that these arguments are either equally strong or mutually inconsistent; the verdict alone won't shed light on these questions one way or the other. But those are the scripts that will be followed.
Verdict Reached in Jose Padilla Case:
Three months of testimony, three defendants, and only a day and half of jury deliberation? I would guess some acquittals are coming, but then we'll know for sure soon: the verdicts will be announced in a hearing that starts at 2pm EDT.
Live-Blog of Ninth Circuit Oral Arguments in NSA State Secrets Cases:
I didn't know that you could live-blog a federal court of appeals oral argument, but if we know anything about the Ninth Circuit, it's that everything is possible! To prove the point, Ryan Singel and David Kravets live-blogged today's oral argument in the NSA state secrets cases.
Their take: "On the whole, the judges seem to be leaning towards allowing this case to continue in the district court -- which would be a victory for EFF and the Al-Haramain lawyers." A short-term victory, yes, but the label "Pregerson, Circuit Judge" will be sure to draw some attention on a cert petition. The audio of the argument should be up on the Ninth Circuit's website by tomorrow, but it's not up as of right now.
The Court has generally upheld restrictive zoning laws targeted at sexually themed businesses. The usual rationale, though, has been that the business attracts unsavory clients who then misbehave -- for instance, patronize prostitutes nearby -- or whose very presence tends to drive down property values.
Here's an interesting twist, reported by the Miami Herald (thanks to BNA's Internet Law News for the pointer):
Miami's Code Enforcement Board ruled late Monday that Phillip Bleicher's Flava Works, an Internet porn production and distribution company, is illegally running an adult entertainment business out of a single-family home at 503 NE 27th St. -- zoned for residential use -- and ordered that those operations cease....
The website is CocoDorm.com, where visitors can, for a fee, watch live video streams from the Edgewater house, where chiseled young males are paid $1,200, plus room, board and meals, to live in the two-story home for a month and have sex with each other on schedule....
Assistant City Attorney Victoria Mendez argued that Bleicher also was running an illegal rooming house, but that violation was dismissed....
[Flava Works lawyer James Benjamin] argued that business transactions don't happen at the house .... "No member of the public came to the location to view, buy, trade or obtain any adult entertainment," Benjamin said.
But Mariano Loret de Mola, the city's director of code enforcement, testified that, on one occasion, he saw a man he recognized as "Dorm Dude" Breion, who is prominently featured on the website's main page, walk up to the Edgewater house and punch in a code to let himself in....
It turns out that in 2001, the U.S. Court of Appeals for the Eleventh Circuit had held a Tampa ordinance inapplicable to a similar Web site, but the board apparently took the view that the Tampa ordinance and the Miami ordinance were different enough to justify a different result here.
