Big Government and Responsibility

The Progressive-Democratic Party-run States and the Republican-run States are demonstrating what they think of the intelligence and capability of ordinary American citizens.

The roughly half of states controlled by Republicans are therefore moving aggressively to roll back the law widely known as Obamacare, while the smaller number of Democratic states are working to bolster it.

One party does not believe that Americans in a free market, here for health care and for health care coverage plans, are capable of making sound decisions.  They need Big Government to think and act for them.  The other party believes the opposite: the ordinary man is fully capable of thinking for himself and doesn’t need Big Government to tell him what to do.

Oh, and that other party also believes in free markets and the associated competition that brings down overall prices and increases the range of options available.  That other party also believes that the greater range of options facilitates the decision-making of the ordinary man.  The one party believes the range of options only confuses the ordinary man and so—single payer for limited choices.

Statutes, Judges, and DoJ

The Supreme Court last Tuesday heard a case between Microsoft and DoJ concerning whether the emails of an alleged drug dealer must be turned over to the government pursuant to a search warrant to that effect.  The catch is that the emails are stored exclusively on servers in Ireland—nominally beyond the reach of the US’ long arm of the law.

The statute in question is the Stored Communications Act, enacted 30 years ago before email and similar electronic communications were available.

Microsoft handed over some account data that was stored in the US but said it shouldn’t have to hand over the emails, which were stored on a server in Ireland.

The Second US Circuit Court of Appeals sided with Microsoft, ruling the 1986 law didn’t apply beyond US territory.

DoJ and the participating States’ Attorneys General argued that the appellate decision, if left intact, would hamper the government’s crime-fighting ability.  That’s likely accurate, but there are two things about that.  One is that the convenience of government is not an excuse for limiting individual liberties either directly or through the companies we own. Some of you have heard that from me before.

The other thing, though, is that extending the statute to reach beyond our borders is a political decision, not a legal one.  Only the political arms of our government—Congress and the President acting together (or with Congress overruling a veto)—can make that decision; only the political arms of our government can extend the Act or write a new one to fill the apparent gap.

There’s this bit of disingenuousity, too, from Solicitor General Noel Francisco:

Microsoft’s employees could prepare that disclosure without leaving their desks in the United States[.]

They could prepare such disclosures without leaving their desks in the US in 1986 when the Act was passed, too.  All they had to do was write letters to the managers of the overseas storage facilities.  Nothing has changed here except that email has replaced gofers and the mail room.  Nor has the status of the material stored overseas changed.

On the other hand, Microsoft and other massive tech companies also are raising red herrings.

Microsoft, Google, and other technology companies say…the case could threaten American dominance in the $250 billion cloud-computing industry, because foreign clients won’t use US firms if their data isn’t protected.

That also may be true, and it’s also not relevant.  That’s a question that’s strictly a business matter and not a legal one.  To the extent government help is useful in filling this business gap, it’s also a political question, and these businesses need to seek their recourse through those political arms of our government.

Finally, there already is an alternate route to getting the emails, as admitted by DoJ in their filings:

There is a diplomatic process, governed by legal assistance treaties, that allows the US to request that foreign law-enforcement counterparts share sought-after data, but it can be slow and ineffective, the department said.

There’s that convenience thing, again.

What does the text of the Act say? That’s what the Justices must apply, not a phantom Act that doesn’t exist but that does represent what Justices or DoJ officials might wish the Act to say.  Article I, Section 1, is quite clear about who gets to write the statutes in our system of government, and extending the reach of an existing statute is law-making that is beyond the reach of any member of the judiciary or of the DoJ.

Investment Acumen

Investment managers at Harvard and the State of Hawaii—and a potful of others—have made big bets [sic] on the low volatility of the stock and bond markets and on the apparent permanence of that low volatility.

After interest rates collapsed on the heels of the financial crisis, they [pension funds, endowments, and family offices] ran into challenges paying pensioners and filling university budgets, and added riskier bets on hedge funds and venture capital in the hopes of winning better returns.

More recently, some of these investors also made big, unpublicized wagers seeking to benefit from what had been an unusually long period of low volatility, according to pension-fund consultants and others who deal with these institutions. The strategies, often involving the writing of complicated options contracts….

These high-rolling gamblers include such luminaries as Harvard University’s endowment managers, Hawaii’s managers of the State’s Employees’ Retirement System, and the managers of the Illinois State Universities Retirement System.

Talk about betting the farm.  And then, as some of you may have noticed, volatility returned to the markets a couple weeks ago.  The markets returned to normal.

The rise of low-volatility bets is among the reasons this downturn is different, investors say, and difficult to predict.

Right.  This time it’s different is the most common claim of those who’ve bet the biggest and are losing big league.

At least these geniuses aren’t betting their endowments and pensions on bitcoin futures.  Yet.

Don’t Pay It

The Federal National Mortgage Association, Fannie Mae, the government-run (never mind that it’s supposedly only government-sponsored, it began life as a government agency, it was set out on its own and failed, and now it’s under Federal Housing Finance Agency management regulation) mortgage securitizor, is failing again.  And now this agency wants a taxpayer bailout.

Fannie said Wednesday its regulator, the Federal Housing Finance Agency, would seek a fresh taxpayer infusion of $3.7 billion from the Treasury Department as a result of the loss [of $6.5 billion in the last quarter alone]….

It also would be, if this taxpayer bailout goes through, the second one for this agency just since the Panic of 2008.

The thing has, in fact, been paying dividends to the Treasury, but it’s time to stop feeding it.  It isn’t necessary; if the free market wants securitized mortgages to facilitate mortgage lending, private enterprise securitizers will appear—just look at all the securitizers of other kinds of loans and other methods of securitization that have already appeared.  Treasury will more than make up for the lack of Fannie Mae dividends from the tax revenue accruing from a more dynamic free market.

Fannie Mae and its brother, Federal Home Loan Mortgage Corporation (Freddie Mac), just distort the lending market.

The agency needs the infusion?  No, it doesn’t.  It needs to go away.  Along with Freddie Mac.

A New Insurance Plan

Idaho has one.  Blue Cross of Idaho says it’s going to take advantage of newly issued State regulations to start marketing a plan that won’t meet Obamacare requirements, and they’re going to sell the plan alongside its existing Obamacare-compliant plans.

The Idaho Department of Insurance last month became the first state regulator to say it would let insurers begin offering “state-based plans” for consumers that involved practices generally banned for individual insurance under the ACA, including tying premium rates to enrollees’ pre-existing health conditions.

In particular,

The new Blue Cross state plans’ premiums would vary based on an enrollee’s health status—for instance, for one of its new plans, the insurer suggested that the best rate for a healthy 45-year-old could be around $194.67 a month, while a person of the same age with worse health could pay as much as $525.69. For one of its “bronze”-level ACA plans, the premium for a 45-year-old, regardless of health history, would typically be around $343.09, the insurer said.

Risk-based premiums.  What a concept.  And lower risk brings a premium roughly half the Obamacare risk-be-damned charge.