The Currency of Last Resort and Free Trade

Lately I have been following The Peterson Institute for International Economics.

See:  https://piie.com/

It can be characterized as pro free trade, and market oriented [right, Brent?].  It was founded by a guy named Fred Bergsten, a man with a long career in and close to government, as opposed to either business, finance, or academe.  The Institute got the Peterson brand because Pete Peterson gave it a bunch of money.  The place is considered one of the big time think tanks.

As it happens, Bergsten is a leading proponent of the strong dollar as the main cause of any trade imbalances.

His thinking goes like this: a strong dollar is the reserve currency, and thus the “price” of the dollar is relatively the highest price for any currency.

The high priced dollar means that America can buy overseas at a relatively low price for goods, while foreigners have to pay a relative premium for American goods.

Bergsten thinks this is a mixed blessing but balances on the gold/shit scale in favor of gold.  As an aside, I think most economists would say that.

But it has me wondering how much of the trade imbalance is related to the strength of the dollar, and whether there are empirical studies from either the IMF or the central banks or the leading graduate schools of finance?

Assuming there is a relationship, of course, how could a double blind study be managed?  I suspect any study would be entirely computer modeled and be dependent on inputs.

Brent, do you have any insights?

Nominee Kavanaugh

From Jonathan Adler at Volokh:

 

Judge Kavanaugh has served on the D.C. Circuit for twelve years. This court is often referred to as the “second-highest” court in the land because it hears the lion’s share of legal challenges to major federal regulations. Administrative law is a heavy part of the court’s docket, and forms a large part of Judge Kavanaugh’s record. In his time on the D.C. Circuit, Judge Kavanaugh has written over 200 opinions, over 100 of which concern administrative law.

Prior to serving on the D.C. Circuit, Judge Kavanaugh was a partner at Kirkland & Ellis, worked in the Bush White House, and for Independent Counsel Kenneth Starr. He clerked for Anthony Kennedy, as well as for two circuit court judges. There is no question about his qualifications for this nomination.

Attention will now turn to Judge Kavanaugh’s judicial opinions and other writings. Aaron Nielson has a summary of Judge Kavanaugh’s concurrences and dissents at the Notice & Comment blog. Going beyond Kavanaugh’s opinions, here are some other writings. Here’s a lecture Judge Kavanaugh gave at CWRU on the D.C. Circuit at the Case Western Reserve University School of Law. A published version of the lecture is here. Here is Minnesota Law Review article on the separation powers and here is Harvard Law Review piece on statutory interpretation.

Here are some additional thoughts on the Kavanaugh nomination:

  • Judge Kavanaugh is widely respected on the Supreme Court. Many of his clerks go on to clerk at One First Street. More importantly, his opinions attract notice from the justices. Several of his dissents have been vindicated by subsequent Supreme Court decisions. His dissents showed the way for the Court in Michigan v. EPA (White Stallion Energy Center v. EPA concerning mercury emissions), UARG v. EPA (CRR v. EPA concerning GHG emissions), Free Enterprise Fund v. PCAOB (concerning separation of powers), and D.C. v. Wesby (concerning qualified immunity). And even when certiorari was granted, Judge Kavanaugh’s dissents have been noted in subsequent Supreme Court cases (as in Lexmark International v. Static Control Components which favorably cited Kavanaugh’s dissent in Grocery Manufacturers Association v. EPA). This suggests other justices will take the new junior justice’s opinions quite seriously, especially on administrative law.
  • Judge Kavanaugh takes administrative law very seriously, and he makes agencies do their homework. As much as any other judge on the D.C. Circuit, he makes sure that agencies act within the scope of the authority they have been delegated by Congress, that they follow the procedures required by the APA, and that the adequately justify their decisions. This has often led to decisions invalidating agency action — both in challenges brought by supporters and opponents of regulation — but Judge Kavanaugh is not an anti-regulatory zealot. Where agencies play by the rules, he has upheld their actions against legal challenge, even where the actions in question may seem unreasonable or unfair (as when he rejected challenges to surface coal mining regulations).
  • Judge Kavanaugh shares the Chief Justice’s belief that there is a “major questions” exception to Chevron deference. In the challenge to the FCC’s “net neutrality” rule, Judge Kavanaugh echoed the Chief Justice’s admonition that courts should not lightly presume that Congress has delegated agencies broad regulatory authority if Congress never actually said so in the underlying statutory provisions.
  • Judge Kavanaugh takes separation of powers seriously, as can be seen in his dissenting opinions arguing that the structure of the Public Company Accounting Oversight Board (PCAOB) and the Consumer Financial Protection Bureau (CFPB) are unconstitutional. The former of these opinions was subsequently vindicated by the Supreme Court.
  • Like his former boss, Justice Kennedy, Judge Kavanaugh has a broad understanding of the freedom of speech protected by the First Amendment, including commercial speech. This is most noticeable from his separate opinion concurring in the judgment in American Meat Institute v. USDA. In this opinion, he showed a sophisticated understanding of how to reconcile various cases concerning commercial speech regulation and compelled commercial speech (an understanding better than that of the court’s majority, as I noted here).
  • Judge Kavanaugh’s views of executive power may depart from those of Justice Kennedy. Whereas Justice Kennedy voted with the Court’s liberals in support of habeas petitions filed by enemy combatants in the Boumediene case, Judge Kavanaugh has interpreted this precedent quite narrowly, and may be unlikely to follow his former justice’s lead. On the other hand, Justice Kennedy was himself highly supportive of executive power in many national security and foreign affairs cases, voting in support of Presidential power in cases such as Hamdi v. Rumsfeld, Trump v. Hawaii, and Zivotofsky v. Kerry.
  • Judge Kavanaugh will be criticized for prior statements he has made about Presidential immunity. In the Minnesota Law Review article linked above, he suggested that a sitting President should not be subject to litigation or criminal investigation. Note, however, that this was his opinion in 2009. More importantly, he did not suggest Clinton v. Jones was wrongly decided and said explicitly that any such insulation from litigation or investigation would have to be enacted by Congress, and could not be imposed by the Courts. Many early news reports on the nomination obscure or fail to mention this fact.
  • Judge Kavanaugh’s extensive record has created an extensive paper trail. There will be lots of documents for the Senate Judiciary Committee to review — and it’s certain that Senate Democrats will seek to slow things down on that basis. On the other hand, insofar as Senate Democrats have already announced their opposition to the nomination — some even before the nomination was announced — it’s not clear why they would need more time to review the record. After all, they don’t need more time to review materials if they’ve already made up their minds.

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I think this is a fair assessment of his writings and decisions and different from the spin the media has put on it from their various political as opposed to judicial or legal analyses.  I did read a [basically non-political] opinion of his that I found to be totally off the point of the case, and that would be the basis of my questioning of him.  There was no reason for a guy as smart as he is to miss the point of the whole litigation.  Maybe his clerk wrote his opinion, but I would want to make sure I knew he wasn’t throwing in a spanner for some personal reason.  If y’all are interested I will dig up the case.

And no, my questioning him on his politics would be limited or non-existent.  If he satisfied me on how he freaking missed the point on a simple case I would vote for him.

 

An Interesting Amicus Brief

Were states correct when they forced electors to vote according to the popular vote in those states?  Here are the arguments for elector discretion.

 

http://reason.com/volokh/2018/07/02/presidential-electors-can-vote-with-disc

Memorial Day Bits and Pieces

What is a conservative?

https://www.washingtonpost.com/opinions/the-best-way-to-tell-if-someone-is-a-conservative/2018/05/25/fdc5a1fa-5f83-11e8-a4a4-c070ef53f315_story.html?utm_term=.e3ae61ec8985

Will’s perspective here has resonance for me, especially because I agree that TR was the progenitor of the modern Presidency.  I have always thought, since law school anyway, that Taft deserved better placement in history, but Wilson, quite a bit worse.

I will be reading McCain’s final book as soon as it is in paperback.

 

Our Adriatic cruise was the first pleasure cruise longer than eight hours for me.  Plusses:

  • we got a taste of several different “go to” destinations – the ruins at Delos, the ruins at Minos, the UN historical site at Alborello, the mountain views on Corfu, the surprisingly [to us] inviting old Dubrovnik, and Venice.
  • a decent amount of walking at each destination.
  • perfect May weather, 70s, no rain.
  • relatively low cost way to “sample” several destinations.
  • comfortable and efficient cabin on ship (MSC Lirica)
  • talented entertainers nightly in big production staged music, magic, dance, and acrobatics.
  • a world of travelers and a core crew fluent in five languages; mix of ages, families, singles.

Minuses:

  • Cruise ships are apparently studies in captive audience selling – massages, youthful skin treatments, yoga, dance lessons, photos, duty free inflated priced jewelry, and much more.
  • The shipboard food is plentiful but uneven in quality –  e.g.; great fresh fruit but beef like shoe leather no matter how you order it.
  • Public spaces are superficially glitzy, like casinos – visually tiring after a few days.
  • People past middle age in bikinis and skinny briefs flaunting beer guts and worse.
  • Bad lounge singers in the bars – remember Bill Murray’s parodies?
  • Ping Pong on the deck of a ship making 20 knots.

 

I had never intended to cruise anywhere except perhaps a river or the Inner Passage from Alaska to Vancouver.  I am still of that mindset.  We did this trip because my brother in law arranged it for his wife’s 60th birthday. Thus there were three siblings and their spouses traveling together.  We all get along well so Rosanne and I were willing to join in.

My bucket list is long and my time may not be.  Too many National Parks left, plus Australia, New Zealand, more UK, more Canada, and more Italy.  Cruises are not the way to do that.  And Corfu may be pretty, but it isn’t spectacular like the American west and northwest, or many stops on the Canadian Pacific route from Vancouver to Banff.

 

April 18, 1906

The San Francisco Earthquake destroyed much of the city and left thousands homeless.

 

There is a website devoted to “What if it happened now?”

 

https://www.usgs.gov/natural-hazards/science-application-risk-reduction/science/haywired-scenario?qt-science_center_objects=0#qt-science_center_objects

March 31, 1968.

LBJ announced on national TV and radio that he would not run for President in 1968.

I heard the news with 31 other sailors and marines in the orthopedic ward of Newport Naval Hospital.  I was one of two patients who had not been wounded in combat.  The other was a sailor who had fallen from the mast in a storm.  I had reinjured a herniated disc that I first crushed working in a factory in high school.

The Army had rejected me as 1Y but I thought my back was cured and I passed my somewhat less rigorous Navy OCS physical, for which I volunteered.  Unfortunately I only made it about ten days through OCS when a 4 AM calisthenics workout completely buckled my back sometime between sit-up 72 and 75.  My squad leader, a Stanford PhD, gently kicked me in the ribs and told me to get moving.  I told him I couldn’t even get up.  I was carried to the hospital.

Doctors made rounds in the orthopedic ward on Wednesdays.  Our daily contact was (Nurse) Commander Jensen.  She ordered me to strict bed rest and gave me pain killers.  I couldn’t actually walk.  Had to yell for an orderly to get a bedpan.  One night, maybe the third or fourth, I had to piss at midnight.  I yelled for a bedpan.  The giant Marine sergeant across from me who had one leg blown off  growled “Pipe down, OC.”

I climbed out of bed and crawled on fours to the head, pulled myself semi-erect on the porcelain, and pissed.  I crawled back to my bed.  Commander Jensen was waiting for me.  I don’t know why.  She reminded me brusquely that I had been ordered to strict bedrest.  When I started to respond she pointedly told me that she had not asked me a question.  Then she had an orderly pump me full of something that knocked me out for 30 hours.

The stay at NNH was the closest thing to living in Yossarian’s world I could have imagined.  Second Wednesday on rounds, the Marine sergeant reported a seaman for uncontrollable farting [true] even in the face of having been ordered by the big Marine to control himself.  The seaman was moved out on doctor’s orders and we were told he was moved to Section 8 [psych ward] for evaluation.

Third Wednesday on rounds  a USN Regular doc suggested fusion surgery, but I asked him if traction were available as an alternative because it had worked nine years before.  He told me the surgery was no big deal and moved on.  A trailing doc came over to me and whispered that he was a Reservist and a surgeon.  He whispered “Did that monkey say he wanted to operate?” I nodded.  He said “Don’t let those monkeys touch you.”

When I told Commander Jensen that I refused surgery she came back with forms for me to sign.  Waiver of Vet bennies.  My thought was that because I had passed the OCS physical the Navy could not rely on pre-existing condition.  Well, we all know the Navy wins that one and I had no ability to get to a law book from strict bed rest, anyway.  So eventually I signed the waiver.

On my last Wednesday the docs gave me the going away present of 400+ horse pill sized Darvons in a gallon jug.

Lady Madonna was the most played song on the radio.  Nobody in the ward wanted LBJ to quit.  And that’s how it was 50 years ago this weekend.

 

 

 

The DACA Cases

Scott and I were discussing the DACA cases and while I had not read the briefs or opinions I thought that a due process argument could temporarily prevail against the Administration if the circumstances warranted.  I think it was fair to say that Scott thought the circumstances could not warrant that, ever.  I agreed that without knowing the facts and precedents for this case the current DACA cases might be losers.

Here are two of the most trustworthy legal discussions, both from Volokh Conspiracy, and a link to the California opinion.

https://www.washingtonpost.com/news/volokh-conspiracy/wp/2017/09/09/assessing-the-administrative-law-claims-against-rescinding-daca/?nid&utm_term=.d99021a00f12

https://www.washingtonpost.com/news/volokh-conspiracy/wp/2017/09/04/the-case-for-daca/?utm_term=.dc9d6e8e66f1

and

https://assets.documentcloud.org/documents/4345906/1-9-18-DACA-Opinion.pdf

I think these cases are surely eventual losers having read this much.  I think Temporary Relief could be justified based on the Justice Department’s missed argument.  Arguing that DACA was never lawful was a loser where arguing DAPA was never lawful had been a winner.

Read the two articles and the Opinion and come to your own conclusions.

I produced this as filler for the missing Morning Report.  Brent, where are you?

Also, Volokh has a new and better for them home at Reason.com.

 

 

 

 

 

 

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