That said, both Iranians and the world will almost certainly be better off with the removal of the Ayatollah regime. In addition to all the ways in which the people of Iran have been oppressed by Islamists, including the recent slaughter of 10s of thousands of protestors, the Iranian regime has been one of the premier bad actors on the world stage.

Iran has waged proxy war against the US and Israel for decades. It has engaged in state-sponsored terrorism through Hezbollah in Lebanon, Hamas and Palestinian Islamic Jihad in Palestinian territories, Houthis in Yemen, and various Shi’ite militias in Iraq and Syria. These groups have engaged in terror campaigns that have resulted in the deaths of hundreds of Americans.

Iran routinely targets US networks and infrastructure for cyber attack and wages propaganda and disinformation campaigns online with large bot networks. It has also been a major supplier of drones for Russia’s attempted conquest of Ukraine.

So no one should cry for the potential collapse or defeat of a truly evil regime. The various online grifters and anti-western activists online who shill for this regime, often simply because it stands opposed to America, are morally grotesque.

But none of that means this action is well-conceived by the administration. Aside from its disregard for constitutional responsibilities, we have to seriously wonder whether it has fully weighed the costs of taking on regime change in Iran. Trump seems to have little appetite for directly involving US troops, for good or for ill depending on one’s point of view, and it’s not entirely clear whether air strikes alone are sufficient to dislodge such a deep-rooted regime, even one deeply unpopular among its populace.

There’s also the question of what takes the regime’s place. The odds of something even worse seems low, but it’s not zero. Moreover, what might be the downstream effects in the region, including the potential spread of conflict beyond Iran’s borders or a new contest to fill a potential power vacuum? Perhaps the administration has satisfactory answers to these questions, but absent Congressional oversight, if even behind closed doors, we don’t even know if these concerns have been thoroughly considered.

By all appearances, President Trump backed himself into a corner with an imprudent promise that “help is on the way” during the recent protestors, along with threats against the use of violence by the regime. We simply lacked the resources in theater to step in and deliver on these threats, and so the regime brutally repressed the uprising without consequence. Trump is loathe to tolerate the sort of weakness this reflect on him and so he’s not going to stop until he gets what he can consider a sufficient “win” to justify the initial threat.

Because the precise goals of this campaign are unclear, at least to the public, we can only wait and see how high a cost, in terms of resources or lives, the administration is willing to accept. But regardless of whether it is wise or worth the cost, the Iranian regime thoroughly deserves what it is getting.

That said, I think it’s important to contextualize these critiques by recognizing that the judiciary is the last remaining properly functional branch of government.

The executive branch has long trended toward imperialism through the consistent erosion of legal and political constraints, emboldened and enabled by a public that prefers a powerful president. The legislature has both turned a blind eye to executive overreach and actively relinquished its constitutional responsibilities. But under Trump both of these trends have accelerated.

The executive branch now routinely operates without legal authority and ignores court orders. The Department of Justice has given up any pretense to the objective enforcement of the law and primarily operates instead to punish the president’s political enemies and protect his friends and allies. And the level of corruption, self dealing, and grift is historic.

So it’s noteworthy that SCOTUS, and in particular the Gorsuch concurrence, not only stood up for Constitutional constraints on power, but laid out a robust defense of the importance of the legislative process.

In the land of the blind, the one-eyed man is king. And in an America with highly dysfunctional political institutions, the only semi-functional branch is Supreme.

It is thus quite alarming that political partisans continue to try and chip away at the legitimacy of the Supreme Court. Barack Obama stretched political norms with his threats to the court, implying that its legitimacy could only be maintained by affirming the lawfulness of his signature healthcare legislation. It’s possible these threats influenced Roberts’ decision to switch his vote and save Obamacare.

Attacks have only intensified since. During the 2020 campaign, Democrats became giddy at the prospect of packing the court, a radical politicization many progressive still hope to enact upon a return to power. The left has subsequently manufactured scandals to undermine and delegitimize the court.

But Trump’s response to the decision striking down his unlawful IEEPA tariffs, like so much of his behavior, blows past all prior norms. He declared the judges who upheld the Constitution to be “fools and lapdogs,” that they were an “embarrassment to their families,” and even “swayed by foreign interests.”

These attacks are contemptible. Donald Trump seems most comfortable running a personalist autocracy in the style of Vladimir Putin or Saddam Hussein, complete with shameless plastering of his name and mug all over, and thus cannot tolerate the normal constraints, disagreements, negotiations, and give and take demanded by our republican system and its separation of power.

Congress has thoroughly humiliated itself by consigning the institution to the cuck chair for the foreseeable future. Until such time as voters demand its legislators attempt legislating again, SCOTUS and the judiciary stands alone as the last serious political institution interested in upholding the rule of law.

Cross-posted at CF&P.

Much of our time, energy, and economic activity is dedicated to combating entropy, or disorder. We tidy things up, nature moves it all around, and then we do it over again.

We can see this fight against entropy everywhere in our daily lives. Parents, for instance, know the struggle of returning order to a room visited by an energetic child. Homeowners especially understand the constant fight against the forces of entropy—of the never ending cycle of maintaining, fixing, replacing, or upgrading everything in and around a house. Much of that time is spent dealing with one of entropies favorite instruments: water. We fill our homes with equipment to move it where we need it, build barriers to keep it from where we don’t want it, and at great cost repair the damage when we inevitably fail.

Entire industries exist to aid and assist the domestic war on entropy. Landscapers, pressure washers, contractors, plumbers, roofers, on and on it goes. We grab our plot of land, fix it up nice, and fight like hell against the forces of nature to keep it that way. We heat it when it’s cold, cool it when it’s hot, bring light when it is dark, and block it out when it’s bright.

All of civilization is more or less the same story. Man long ago looked out at the natural world and said, “we can make this better.” We tame, plow, sow, harvest, irrigate, fertilize, mine, dam, dredge, excavate, drill, fence, pave, and we build, build, build.

At every stage, as we conquered one challenge, we’d learn, iterate, improve efficiency, and eventually we got so good at it that it freed enough time and energy to look for the next challenge. We piled victory upon victory against the forces of nature until it became easy for many to forget there was a war at all. Americans, in particular, live on average in extreme comfort, the day to day fight against entropy present but routinized. And when the fight gets tough we have ample aforementioned industry allies to call upon.

But entropy is never truly defeated, our victory never quite total. All it takes is a bit of neglect and time and then nature will return in force. Abandoned gardens will turn wild, streets will crack, homes will decay.

Entropy, moreover, is more than just a domestic challenge or a battle against nature. Disorder threatens us socially and politically as well. Just as we civilized the physical world, so did we eventually civilize ourselves.

We tamed our social and political world with institutions large and small, governmental and private, religious and secular. These institutions are the core of our defense against the entropy of social disorder. And boy have we neglected them.

If eternal vigilance is the price of liberty, then we are presently asleep. We have allowed our institutions to be hijacked by those who use them for the advancement of their personal or political agendas at the expense of the institutional mission. The cost has been a rapid decline in institutional trust and, in turn, growing social and political disorder.

With social norms eroding and having torn down many political norms for the expediency of punishing our political enemies, we find ourselves facing great social and political challenges without the proper tools to address them. Many of those tools were imprudently bent to another purpose and we have failed to fix or replace them.

We have journalists who think media exists for advancing partisan agendas, pastors who spread one message from the pulpit and the opposite on Twitter, universities that value ideological conformity over knowledge, scientists that chase grant dollars instead of truth, and elected officials who think their first responsibility is TV punditry.

When you park in your garden and defecate in your sinks, don’t be surprised when nothing grows and the plumbing doesn’t work.

Pretty much everyone understands that in the aftermath of a snowstorm, you pick up a shovel. Fewer grasp the importance of faith and trust in our institutions for fighting social entropy, and even fewer still the role that the selfish bending of institutions to personal whims plays in undermining that effort.

As we witness the social and political entropy around us, let us not despair. The tools we need have already been invented; we just need to take better care of them.

Cross-posted at CF&P.

Enacting new standards to determine whether a product qualifies as “domestic” or “foreign,” if agreed to by FAR Council, could upend the supply chains of federal contractors. The EO order calls for the Eisenhower-era standards that consider a product to be “domestic” if more than 50% of the components (by cost) are of U.S. origin to be updated to a 55% requirement, and for the FAR Council to consider whether it should be increased over time until the requirement is for at least 75% U.S. components. However, it is also proposes a separate standard of 95% U.S. sourced components for iron and steel products. That’s a huge potential change for contractors

It matters whether a good is labeled “foreign” or “domestic” because the latter are given a “price evaluation preference,” where foreign sourced products are considered 6% (or 12% if the domestic competition is a small business) more expensive than they actually are. This means awarding contracts to firms with domestic source goods in some cases even when they are not offering the best price. Trump’s EO seeks to increase those price advantages from 6% to 20%, and from 12% to 30% for small businesses, potentially saddling taxpayers with much higher costs.

Cato’s Daniel Ikenson has previously explained the folly of “Buy American”:

When we artificially reduce the pool of qualified suppliers or the variety of eligible supplies that can satisfy procurement requirements, projects cost more, take longer to complete, and suffer from lower quality. Only a basic understanding of supply and demand is required to see that limiting competition for procurement projects ensures one outcome: taxpayers get a smaller bang for their buck.

Sure, some U.S. companies will win bids, hire new workers, and generate local economic activity. What will be less visible — but every bit as real — are the contracts denied numerous other U.S. businesses and workers because the resources have been stretched and depleted to satisfy restrictive procurement rules. Some U.S. companies and some U.S. workers may benefit, but the real value of public spending  — the actual products and services procured — will decline.

According to Trump, “The philosophy of my administration is simple. If we can build it, grow it or make it in the United States, we will.” This mindset, by ignoring the insights of comparative advantage, leaves us worse off than if competition was allowed to occur the same across national boarders as it does within them.

Think about your individual household. It is likely that a greater proportion of your food intake could be grown at home (for most, it’s currently zero percent). But would farming that food really be the most valuable use of your time? Any time spent farming is time not spent producing something else of value. For most, the decision not to grow food at home is the rational choice. We’d all be worse off if those people were forced by politicians, either directly or through manipulation of incentives, to make a different choice. Just because we can farm at home, in other words, doesn’t mean we should (but if you like it, go for it!).

As explained by Econlib:

The magic of comparative advantage is that everyone has a comparative advantage at producing something. The upshot is quite extraordinary: Everyone stands to gain from trade. Even those who are disadvantaged at every task still have something valuable to offer. Those who have natural or learned absolute advantages can do even better for themselves by focusing on those skills and buying other goods and services from those who produce them at comparatively low cost.

A consequence of this is that the more entities with which we have to trade the fewer different activities we each need to do, i.e. the more we are able to specialize. Consider a household again, this time adding a new roommate who is really good at folding clothes. Previously, the tenets each took turns doing the laundry. But since the new roommate is so much better at the task than anything else, they’ve now got laundry duty to themselves. Another roommate who used to clean dishes and share laundry duty now just does the dishes. There are more dishes to clean than before because there is another person using them, but they no longer need to fold laundry at all. They’re perfectly capable of doing so, mind you, but it’s not the most efficient arrangement when considering each roommate’s comparative advantage.

Similarly, just because Americans are capable of doing more of something, doesn’t mean we should. Contra Trump, not everything that can be built or grown in the United States should be. As more and more of the world becomes connected, others will gain comparative advantages at tasks we used to do at home. Instead of doing those tasks, we’ll do other tasks where we have the comparative advantage. And everyone will be better off.

The great thing about this process⁠—or one of them, anyway⁠—is that it doesn’t require planning. Prices do pretty much all the work, showing us who is able to produce a particular good at the lowest opportunity cost. Unless, of course, politicians add distortions or otherwise muck it up with misguided “Buy American” protectionism.

Cross-posted at CF&P.

For context, the tax plan’s centerpiece is the slashing of the corporate tax rate from a uniquely high and uncompetitive 35 percent down to 21 percent (which, when combined with state taxes, will move the U.S. to near the OECD average).

Just a few years ago, the need to cut corporate taxes was considered a bipartisan consensus. Obama wanted to cut it to 28%. Was that also a “windfall” for CEOs, as some on the left claim? In which case, why was it the desire of Patron Saint of Liberalism Barack Obama? Did he “chose corporate profit over the American people” as Sen. Booker claims of Republicans?

Presumably, Obama wasn’t beholden to Republican donors (which we are told repeatedly by the leftwing hordes on twitter is the real motivation behind reform), so what was his motivation? It was the same basic one as that of Republicans: to bring the U.S. corporate tax rate into competitive alignment with the rest of the world and make it an attractive destination for business investment. That Republicans went for a lower rate strikes me as a fairly ordinary policy disagreement unworthy of the hysterics we are currently seeing from the left.

The same nonsense is being said about the individual rate cuts. Rather than simply cut across the board and preserve the current progressivity of the tax code, Republicans went out of their way to stack the deck in favor of the poor and middle-class, even undercutting the goal of simplification by increasing spending subsidies in the tax code. The result of this approach is that the wealthy will end up shouldering an even higher share of the total tax burden than before. This ought to please the left, but they have latched on to the fact that top earners are getting any of the cuts to portray it as a giveaway to the wealthy. Tim Kaine, for instance, inexplicably says that “the middle class foot the bill for a big tax cut for the top,” despite all evidence to the contrary.

This rhetoric has been typical of the tax reform process. Thought to be among the last remaining Democratic Senate moderates, a designation one must now question, Sen. Mark Warner said the bill was “the single worst piece of legislation that I’ve seen since I’ve been in the Senate.” Nancy Pelosi went even further, having also called tax reform “armageddon,” and said it was the worst “in the history of Congress.” Worse, apparently, than even the Fugitive Slave Act, to pick one of several morally appalling legislative episodes from our history. Such rhetoric is, needless to say, lacking in the sobriety department.

A glance at social media shows that the Democratic base has taken cues from their leaders. They even showed up at the vote to debase themselves with lame slogans like “kill the bill, don’t kill us.” Though given the predictions of doom, it’s a wonder that anyone is even left alive after the FCC rolled back its Title II power grab, in the name of “net neutrality,” over the internet.

I don’t want to pick exclusively on the left, it’s just that tax reform is on my mind and they’re providing the timeliest example of the problem. But it must be pointed out that Donald Trump ran an entire campaign on the premise that no issue is too small to be worthy of lies and exaggerations. Just about every subject he addressed was required to be either the best or worst thing ever (if that subject was a person, which moniker was warranted was entirely dependent on whether they said good or bad things about Donald Trump).

As Trump found during the campaign and Democrats are finding now, use of such hyperbole can succeed in riling up supporters, but it comes at the cost of stripping all nuance from every issue. That, in turn, makes negotiation and compromise all but impossible. Republicans, like Democrats with Obamacare, were able to narrowly pass a top legislative priority on a strict party-line vote, but it’s clear that moving legislation is getting increasingly difficult. I’m not normally one to fret about an absence of political action–I generally prefer it–but the frantic yearly scramble to pass a spending bill because Congress can’t be bothered to appropriate leads to all sort of suboptimal outcomes.

Many of those who expressed concern about the quality of the campaign are now jumping at the chance to condemn with the most over-the-top and outlandish rhetoric a tax overhaul that, while sweeping in its scope, is fairly mainstream center-right in its ideological placement. So long as public discourse is only worthy of concern when it’s politically convenient, the problem will not be resolved.

Public choice teaches us to look at the incentives and institutional constraints placed on elected (and unelected) officials in order to understand how they are likely to behave. This is of practical import. If we want to compel government to live within its means, for instance, then applying public choice theory we know to direct our efforts toward the creation of a debt break or other spending cap, rather than naively thinking it is sufficient simply to elect politicians claiming they will be more responsible. The reason the latter doesn’t work is because politicians are incentivized to seek reelection, and showering various constituencies with taxpayer dollars remains the best way to go about it (we could drill down deeper, if we desired, into things like the problem of concentrated benefits and dispersed costs to further understand why electoral mechanisms are unlikely to enforce spending restraint).

There are a great many reforms that are needed if the nation’s many policy-related problems are ever to be solved. Thankfully, there seems to be enough awareness of this fact that some key process reforms are moving forward. One of them is the REINS Act, which was passed by the House last week, and attempts to solve the issue of excessively expensive and numerous regulations. Recognizing the fact that career bureaucrats have an incentive to grow their power and to ignore the costs imposed on society by doing so, the REINS Act requires Congress and the president to approve regulations with significant economic impact before they are finalized.

It understandably has the left freaking out, as the REINS Act would return to Congress a bit of the lawmaking power that has long been delegated to unaccountable regulators–power which the left has exploited to insert government into every aspect of our lives. And while Congress carries its own set of perverse incentives, looping legislators into the rule-making process adds an obstacle to the promulgation of new regulations that should hopefully prevent some of the more onerous and destructive rules from ever coming to fruition.

The REINS Act reforms Congress as much as it does regulatory agencies. Under the current system, legislators can hide from electoral accountability by delegating more and more of their responsibilities to unelected bureaucrats, who they then campaign against. By restoring the role of Congress in filling in the details for new laws, legislators cannot as easily duck electoral responsibility for agency actions.

Other regulatory reform efforts are also proceeding concurrently. But there are other areas that can improve from process reforms as well.

One of those is the electoral system. There’s been renewed interest in the topic post-election, though most of it is motivated by the particular partisan circumstance of recent elections and directed in unhelpful ways.

Hillary supporters are focused on the fact that she won the popular vote but lost in the electoral college. Ignoring that we don’t actually know how the campaign would have unfolded were the goal different from the beginning, they are focused on the wrong reform. The real tragedy of 2016 is that despite two major party candidates with historic unfavorables, and an electorate in which a plurality of 43% choose not to belong to either major party, the major party nominees still secured 94.3% of the vote.

Why did this happen? Because the voting system we have chosen compels it to. See Duverger’s law for the full explanation, but the short of it is that our first-past-the-post voting system (pick one, winner take all) incentives voters to vote against their most hated candidate instead of for their most liked one.

Interestingly, this same election also produced a tiny step toward a new (and I’d argue better) system. Maine passed a ballot initiative to implement ranked-choice voting for all statewide elections (though not federal House, Senate, or presidential campaigns). It works by having voters rank their top choices in order. If no candidate breaks 50 percent, the candidate with the least first choice votes is dropped and the ballots recounted. This continues to happen until a candidate reaches a majority. If such an approach had been used in the presidential election, as an example, voters could have supported a candidate outside the Republican-Democrat duopoly without fear that they were inadvertently supporting Hillary or Trump depending on which they loathed more.

But that’s not our voting system, and so we are left with the most unpopular president ever elected. Process is destiny.

The European Commission says Apple owes $14.5 billion plus interest in back taxes to Ireland. What makes the ruling particularly unusual is the fact that Ireland itself disagrees. They don’t want to collect the money. They would rather continue to be a nation with an attractive corporate tax code so that they can benefit from tax competition, rather than short-shortsightedly treating companies as ATM machines.

At issue is whether Ireland granted illegal “state aid” to Apple, which is prohibited under the EU treaty. Such aid is admittedly the wrong way to do tax competition. Jurisdictions should compete through the overall tax and regulatory code, not through special carve-outs. But even where they get it wrong, sovereign nations must be free to administer their own tax codes for tax competition to exist.

The EU surely knows this, which is why their ongoing efforts to move control of tax policy away from individual jurisdictions and towards Brussels is deeply disturbing. The Apple ruling fits a pattern of seeking to eliminate tax competition on the continent, where nations like France and Germany have in the past pressured Ireland to raise its 12.5% corporate tax rate. They wrongly fear a “race to the bottom” that would leave national treasuries empty, instead of recognizing that taxpayers and politicians alike benefit from the higher economic growth induced when destructive taxes are kept low.

It is not at all clear that Apple did in fact receive special dispensation. Those facts will continue to be litigated, as both Apple and Ireland plan to appeal the ruling. They insist that the company was merely given rulings that offered clarification as to how the tax law would be applied in their case, which is both a common and desirable practice because it provides certainty. Adding uncertainty through broad retroactive tax rulings won’t just impact the U.S. companies that Europe wrongly thinks can provide their financial salvation, but it will make the continent less attractive to businesses going forward.

Ultimately, it is up the the United States to defend its businesses against these opportunistic tax grabs. The bipartisan criticism of the EU ruling is a good first start. But politicians must stop demonizing businesses to distract from their own failures to spend responsibly. The U.S. should also lead by example and end its own greedy worldwide tax system.

We’ve seen through the OECD BEPS project what happens when Washington, and in particular Congress, allows European bureaucrats to dream up global tax rules unmolested. It inevitably leads to a byzantine system of arcana designed to keep the government bureaucrats and  accountants employed while squeezing the maximum amount of tax revenue possible out of the global economy. If U.S. politicians continue to sit on the sidelines, these threats will only multiply.

Unfortunately, years of politically motivated attacks on corporations have made large multinationals like Apple seem like low-risk targets. Voters are not going to take to the streets on behalf of the likes of Apple, Google, or Amazon. After pounding on and on about big business not paying its “fair share,” Washington is in an awkward place now that the EU has said “we agree” while helping themselves to the coffers of an American company. Yet if Washington doesn’t act, Apple will just be the first of many.

The facts of the case were not in dispute. The stop of Strieff was acknowledged by all to be illegal. The question was whether, upon happening to find an outstanding warrant, any evidence uncovered during the stop would then be admissible. The majority said it would. I find this troubling, and think it severely undermines Fourth Amendment protections by not punishing officers for undertaking illegal searches.

Sotomayor, along with Ginsburg and Kagan, were in the minority. One passage of Sotomayor’s dissent, not joined by the others, has gotten particular attention. It reads:

[T]his case tells everyone, white and black, guilty and innocent, that an officer can verify your legal status at any time. It says that your body is subject to invasion while courts excuse the violation of your rights. It implies that you are not a citizen of a democracy but the subject of a carceral state, just waiting to be cataloged. We must not pretend that the countless people who are routinely targeted by police are “isolated.” They are the canaries in the coal mine whose deaths, civil and literal, warn us that no one can breathe in this atmosphere. See L. Guinier & G. Torres, The Miner’s Canary 274–283 (2002). They are the ones who recognize that unlawful police stops corrode all our civil liberties and threaten all our lives. Until their voices matter too, our justice system will continue to be anything but.

Aside from the vague social justice-y “until their voices matter” bit, which has no legal or policy meaning that I can deduce, I think she’s generally on the money.  The leftwing coverage of the matter, however, has been atrocious.

Ethan Epstein at the Weekly Standard (I don’t know what his/the magazine’s opinion of the decision is, though I suspect it’s not the same as my own) accurately captures the vacuousness of much of the leftist coverage in his mocking headline, “You Won’t Believe What Happened When Justice Sotomayor Dissented.”

It’s not just the clickbait-style breathlessness of their coverage which is so exasperating, but also the weird fixation on Sotomayor’s personal characteristics instead of the quality of her opinion. The Nation, before changing its headline (hopefully due to realizing how stupid it was), declared “Sonia Sotomayor’s Epic Dissent Shows Why We Need People of Color on the Supreme Court.” (For those keeping track, “People of Color” is the current approved nomenclature, though it will no doubt be rotated out soon enough). The New Republic assessed, “Sonia Sotomayor just showed the value of having a ‘wise Latina’ on the court.” This apparent obsession is worth noting because it can lead to false conclusions on how to reach better judicial decisions.

Insofar as Sotomayor’s got it right, it was due not to her race but her defense of the clear intent of a key Constitutional protection. She is not, after all, the only minority on the court, and her fellow “POC” voted with the other side. In my original critique of the boosters of Sotomayor’s appointment, I noted how the reverence to identity is inconsistent, employed by the left when it serves ideological interests and tossed aside when it does not. They certainly have never respected the “lived experience” of Clarence Thomas.

To the point, if we want a SCOTUS more consistent in its defense of individual rights, it will not come from appointments based on whatever personal characteristics happen to be the most important according to the identity politics of the day. It will come through recognizing the proper role of the Court as a patrolman on the border of governmental power, a last safeguard against the persistent encroachment of state authority on individual rights through enforcement of clear Constitutional limits.

In a radio interview yesterday, New York Police Commissioner William Bratton said violence associated with marijuana trafficking in his city should give pause to advocates of legalization. “In New York City,” Bratton told AM 970 host John Catsimatidis, “most of the violence we see around drug trafficking is involving marijuana, and I have to scratch my head as we are seeing many states wanting to legalize marijuana.”

I suppose his confusion is understandable given his apparent ignorance of the consequences of prohibition. What these other states know and Commissioner Bratton does not is that prohibition does not eliminate the market for a good, but rather drives it underground in the black market where crime is more likely to occur.

The negative effects of prohibition are not a secret. It is well understood, for instance, that the production and sale of alcohol is not an inherently violent trade, despite its close relationship with organized crime during Prohibition. This occurred for a multitude of reasons. Prohibition significantly increases the costs of a good, which creates a strong profit motive. But because entering the market requires breaking the law, only those comfortable with doing so move to capture those profits. And if they don’t mind breaking the law to make and sell a product, they’re less likely to care about breaking it to fight, often with violence, their competitors.

Prohibition also increases health risks for users. Product quality declines on the black market, where information on who produces what and how are necessarily hidden from consumers, and torts are not available to hold producers liable for subpar product. The Iron Law of Prohibition also states that, for reasons of economic efficiency, product potency increases in concert with the level of enforcement. Put another way, “the harder the enforcement, the harder the drugs.”

All of this is to say that what Commissioner Bratton sees are the products of prohibition itself, not justifications for it. Sadly, he is also providing a demonstration of how bad government tends to beget more bad government.

In other words, like most of the stories from the Panama Papers that are dominating the news, Gunnlaugsson’s is one of only tangential relation to the actual business of Mossack Fonseca. Had he been a private citizen with the exact same legal and business arrangements, no one would care. Where he erred was on his responsibility to disclose his holdings and maintain the trust of his citizens.

Nevertheless, his and other similar stories have been framed as proof that something must be done about “shady” offshore dealings. In fact, the entire media coverage from start to finish has been littered, either directly or through implication, with myths.

Here are a few areas where the media, and the public discussion surrounding the Panama Papers, has more often than not gotten it wrong:

Myth 1: Tax Avoidance and Tax Evasion Are Both Wrong

On the tax front (the instances of corruption representing a different matter entirely), most all of the media and political hand-wringing surrounding the Panama Papers has been due to a willful blurring of the lines between tax evasion and avoidance. Yet in reality there are significant legal and ethical differences between the two.

Tax evasion is a crime, and involves the deliberate disregard of tax obligations. Evasion can be committed by lying about assets or engaging in fraud. Banking in jurisdictions that respect privacy rights can be used by unscrupulous individuals as part of a strategy to commit tax evasion. But so can using cash. Both also have legitimate functions, making it unfair to treat everyone who uses privacy respecting services (or cash) as suspect and unwise to create rules on that assumption.

Tax avoidance is not a crime. It is, in fact, simply obedience to the law as it is written. Lawmakers bemoan those who seek to minimize their tax burdens when doing so shines a negative light on the quality of the laws they have written. But in other instances they encourage it. When politicians provide tax credits, for instance, it is with the understanding that those who use them are doing so to avoid paying more tax than they have to. And when they seek to discourage other activities through excise taxes, they are counting on people changing their behavior to avoid the tax. Politicians understand and even expect tax avoidance when it suits them, and decry it when it does not.

Most of what the media directly claims or indirectly implies to be tax evasion is merely legal avoidance. It is individuals choosing to do business in jurisdictions with less onerous tax codes. Not only is this legal, but it has concomitant positive benefits. Tax competition between jurisdictions serves as a check on political greed, and pressures governments to adopt tax policies designed to grow economies instead of just treasuries.

Myth 2: Offshore Financial Services Are Only Used for Wrongdoing

Opportunists who have long despised the ability of individuals to legally flee from confiscatory tax rates want to make the Panama Papers story about financial privacy. It’s not. That makes no more sense than if the story of Congressman William Jefferson, found with a stash of ill-gotten money in his freezer, had been spun as one primarily about cash or kitchen appliances.

Yes, bad people also use legal and financial services. Sometimes they even do so to help them conduct their illicit activity. They also sometimes use airplanes to meet with co-conspirators, or cash to conduct black market sales. That’s not an argument for depriving law abiding citizens of then use of either of those. The fact that corrupt politicians made use of the legal services of Mossack Fonseca does not mean that something must be done about Mossack Fonseca and similar firms. It suggests, if anything, that something must be done about political corruption.

The idea that anyone benefiting from the legal services of Mossack Fonseca, and others who specialize in meeting the needs of international clientele in establishing new businesses and trusts, simply does not match reality. They file incorporation papers. What is then done with those companies is on the people who actually manage them.

Myth 3: Indiscriminate Leaking of Private Financial and Legal Information, Especially of the Rich, Serves a Public Good 

While exposing potential corruption of politicians who might be looting their national treasuries or hiding potential conflicts of interest likely serves a public good, massive data leaks that include innocents are still a massive violation of privacy. The Panama Papers leak consists of confidential and legally protected communications, including those of the vast majority of innocent Mossack Fonseca clients caught up in the data for no other reason than that they used ordinary legal and tax planning services that a small number of elites may have been simultaneously misusing.

Whether or not the individuals who did nothing wrong but were exposed anyway are wealthy or not shouldn’t matter. They have the same expectation of privacy as the rest of us. Moreover, the implication that they are “hiding” their wealth even when all tax laws have been followed presumes a public right to individual financial information that does not exist. No one accuses an individual with an ordinary savings account who chooses not to broadcast their account balance as “hiding” their money. That information is simply their business and their business alone.