Antonin Scalia, trampler on religious freedom

Rick Santorum and others have lit into President Obama for "trampling" on religious freedom by requiring religious-affiliated institutions to provide health insurance that covers contraceptives for their employees (sorry, this has since been revised to: requiring religious-affiliated institutions to allow health insurance companies to buy contraceptives for their employees).

Mitch McConnell introduced legislation to overturn the policy, arguing that this is a simple first amendment issue:

“The fact that the White House thinks this is about contraception is the whole problem. This is about freedom of religion, it’s right there in the First Amendment. You can’t miss it — right there in the very first amendment to our Constitution,” McConnell said. “What the overall view on the issue of contraception is has nothing to do with an issue about religious freedom.”

Here's what Antonin Scalia, not widely known as a secular humanist opponent of religious freedom, had to say on this general subject in Employment Division of Oregon Department of Human Resources v. Smith (1990):

This case requires us to decide whether the Free Exercise Clause of the First Amendment permits the State of Oregon to include religiously inspired peyote use within the reach of its general criminal prohibition on use of that drug, and thus permits the State to deny unemployment benefits to persons dismissed from their jobs because of such religiously inspired use...

The Free Exercise Clause of the First Amendment, which has been made applicable to the States by incorporation into [494 U.S. 872, 877] the Fourteenth Amendment, see Cantwell v. Connecticut, 310 U.S. 296, 303 (1940), provides that "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof . . . ." U.S. Const., Amdt. 1 (emphasis added)...

But the "exercise of religion" often involves not only belief and profession but the performance of (or abstention from) physical acts: assembling with others for a worship service, participating in sacramental use of bread and wine, proselytizing, abstaining from certain foods or certain modes of transportation. It would be true, we think (though no case of ours has involved the point), that a State would be "prohibiting the free exercise [of religion]" if it sought to ban such acts or abstentions only when they are engaged in for religious reasons, or only because of the religious belief that they display. It would doubtless be unconstitutional, for example, to ban the casting of "statues that are to be used [494 U.S. 872, 878] for worship purposes," or to prohibit bowing down before a golden calf.

Respondents in the present case, however, seek to carry the meaning of "prohibiting the free exercise [of religion]" one large step further.... It is a permissible reading of the text, in the one case as in the other, to say that if prohibiting the exercise of religion (or burdening the activity of printing) is not the object of the tax but merely the incidental effect of a generally applicable and otherwise valid provision, the First Amendment has not been offended...

We have never held that an individual's religious beliefs [494 U.S. 872, 879] excuse him from compliance with an otherwise valid law prohibiting conduct that the State is free to regulate. On the contrary, the record of more than a century of our free exercise jurisprudence contradicts that proposition. As described succinctly by Justice Frankfurter in Minersville School Dist. Bd. of Ed. v. Gobitis, 310 U.S. 586, 594 -595 (1940): "Conscientious scruples have not, in the course of the long struggle for religious toleration, relieved the individual from obedience to a general law not aimed at the promotion or restriction of religious beliefs. The mere possession of religious convictions which contradict the relevant concerns of a political society does not relieve the citizen from the discharge of political responsibilities (footnote omitted)." We first had occasion to assert that principle in Reynolds v. United States, 98 U.S. 145 (1879), where we rejected the claim that criminal laws against polygamy could not be constitutionally applied to those whose religion commanded the practice. "Laws," we said, "are made for the government of actions, and while they cannot interfere with mere religious belief and opinions, they may with practices. . . . Can a man excuse his practices to the contrary because of his religious belief? To permit this would be to make the professed doctrines of religious belief superior to the law of the land, and in effect to permit every citizen to become a law unto himself." Id., at 166-167.

Subsequent decisions have consistently held that the right of free exercise does not relieve an individual of the obligation to comply with a "valid and neutral law of general applicability on the ground that the law proscribes (or prescribes) conduct that his religion prescribes (or proscribes)." United States v. Lee, 455 U.S. 252, 263 , n. 3 (1982) (STEVENS, J., concurring in judgment); see Minersville School Dist. Bd. of Ed. v. Gobitis, supra, at 595 (collecting cases). In Prince v. Massachusetts, 321 U.S. 158 (1944), we held that a mother could be prosecuted under the child labor laws [494 U.S. 872, 880] for using her children to dispense literature in the streets, her religious motivation notwithstanding. We found no constitutional infirmity in "excluding [these children] from doing there what no other children may do." Id., at 171. In Braunfeld v. Brown, 366 U.S. 599 (1961) (plurality opinion), we upheld Sunday-closing laws against the claim that they burdened the religious practices of persons whose religions compelled them to refrain from work on other days. In Gillette v. United States, 401 U.S. 437, 461 (1971), we sustained the military Selective Service System against the claim that it violated free exercise by conscripting persons who opposed a particular war on religious grounds.

Our most recent decision involving a neutral, generally applicable regulatory law that compelled activity forbidden by an individual's religion was United States v. Lee, 455 U.S., at 258 -261. There, an Amish employer, on behalf of himself and his employees, sought exemption from collection and payment of Social Security taxes on the ground that the Amish faith prohibited participation in governmental support programs. We rejected the claim that an exemption was constitutionally required. There would be no way, we observed, to distinguish the Amish believer's objection to Social Security taxes from the religious objections that others might have to the collection or use of other taxes. "If, for example, a religious adherent believes war is a sin, and if a certain percentage of the federal budget can be identified as devoted to war-related activities, such individuals would have a similarly valid claim to be exempt from paying that percentage of the income tax. The tax system could not function if denominations were allowed to challenge the tax system because tax payments were spent in a manner that violates their religious belief." Id., at 260. Cf. Hernandez v. Commissioner, 490 U.S. 680 (1989) (rejecting free exercise challenge to payment of income taxes alleged to make religious activities more difficult)... [494 U.S. 872, 881]

Moreover, if "compelling interest" really means what it says (and watering it down here would subvert its rigor in the other fields where it is applied), many laws will not meet the test. Any society adopting such a system would be courting anarchy, but that danger increases in direct proportion to the society's diversity of religious beliefs, and its determination to coerce or suppress none of them. Precisely because "we are a cosmopolitan nation made up of people of almost every conceivable religious preference," Braunfeld v. Brown, 366 U.S., at 606 , and precisely because we value and protect that religious divergence, we cannot afford the luxury of deeming presumptively invalid, as applied to the religious objector, every regulation of conduct that does not protect an interest of the highest order. The rule respondents favor would open the prospect of constitutionally required religious exemptions from civic obligations of almost every conceivable kind - ranging from [494 U.S. 872, 889] compulsory military service, see, e. g., Gillette v. United States, 401 U.S. 437 (1971), to the payment of taxes, see, e. g., United States v. Lee, supra; to health and safety regulation such as manslaughter and child neglect laws, see, e. g., Funkhouser v. State, 763 P.2d 695 (Okla. Crim. App. 1988), compulsory vaccination laws, see, e. g., Cude v. State, 237 Ark. 927, 377 S. W. 2d 816 (1964), drug laws, see, e. g., Olsen v. Drug Enforcement Administration, 279 U.S. App. D.C. 1, 878 F.2d 1458 (1989), and traffic laws, see Cox v. New Hampshire,312 U.S. 569 (1941); to social welfare legislation such as minimum wage laws, see Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290 (1985), child labor laws, see Prince v. Massachusetts, 321 U.S. 158 (1944), animal cruelty laws, see, e. g., Church of the Lukumi Babalu Aye Inc. v. City of Hialeah, 723 F. Supp. 1467 (SD Fla. 1989), cf. State v. Massey, 229 N.C. 734, 51 S. E. 2d 179, appeal dism'd, 336 U.S. 942 (1949), environmental protection laws, see United States v. Little, 638 F. Supp. 337 (Mont. 1986), and laws providing for equality of opportunity for the races, see, e. g., Bob Jones University v. United States, 461 U.S. 574, 603 -604 (1983). The First Amendment's protection of religious liberty does not require this. 5 [494 U.S. 872, 890]

Geeks in love

When your love is at the zero bound, perk it up with some unconventional stimulus! More here.

Clearing up some misconceptions in monetary economics

The blogosphere seems replete today with commentary on money and monetary policy that seems to me to be erroneous or incomplete. Mark Thoma links to Eric Rauchway commenting on Detlev Schlichter's op-ed in the WSJ in defense of the gold standard:

Schlichter: "Forty years ago today, U.S. President Richard Nixon closed the gold window and ushered in, for the first time in human history, a global system of unconstrained paper money under full control of the state."

Rauchway responds that the Bretton Woods system established after World War II was a gold standard in name only, so that in fact the world economy was on a fiat money standard beginning in 1946 - or really 1933, when the US officially suspended the gold standard.

In fact our departure from the gold standard came earlier than that. The Federal Reserve Act required the Federal Reserve to keep a stock of gold equal to no less than 35 percent of bank reserve balances at the Fed and 40 percent of the Federal Reserve notes (dollar bills) in circulation. But as the US received huge inflows of gold from Europe during the 1920s, the Fed soon held gold far in excess of the legal requirement. That is, the money supply had become uncoupled from gold, and the Fed conducted monetary policy with an eye toward stabilizing prices rather than maintaining the money supply in a fixed proportion to gold. As usual, John Maynard Keynes described it best:

"The war has effected a great change. Gold itself has become a 'managed currency.'... The United States has not been able to let gold fall to its 'natural' value, because it could not face the resulting depreciation of its standard. It has been driven, therefore, to the costly policy of burying in the vaults of Washington what the miners of the Rand have laboriously brought to the surface.... Advocates of the ancient standard do not observe how remote it now is from the spirit and requirement of the age. A regulated non-metallic standard has slipped in unnoticed. It exists." [Tract on Monetary Reform, 1923]

The entire passage, including the famous "barbarous relic" phrase is a thing of beauty. Unfortunately it's in my office and I'm not, so I've only been able to present a portion from internet sources. Look it up!

The Church and contraception

Apparently employees at Catholic universities get health insurance that covers contraceptives. I believe this demotes providing employees with insurance covering contraceptives from "something that violates Church teaching" to "something that the Catholic Church does not want to do."

Voter fraud irony:

Website for Charlie White, Indiana Secretary of State:

When Indiana voters are confident that their vote will be counted, more Hoosiers will exercise their right to vote. Charlie believes that one of the best tools for ensuring fair and accurate elections is Indiana's Voter ID law... Indiana's Voter ID law gives Hoosiers confidence in the system, and voters are willing to invest their time again to vote.

CBS News: Indiana sec. of state convicted of voter fraud

Indiana Secretary of State Charlie White -- the man charged with upholding election integrity in Indiana -- was convicted of six felonies on Saturday, including three counts of voter fraud, two counts of perjury and one count of theft.

Health reform and small businesses

Suppose a study of the Affordable Care Act ("Obamacare") noted the following impact on small businesses:

Due to rising costs there has been a substantial decline in employer based health insurance coverage, especially in the small-group market... premiums paid by small- to medium-sized employers (3 to 199 workers) increased by 123 percent; at the same time, the proportion offering coverage declined from 65 percent to 59 percent... Among very small businesses (three to nine employees), just 46 percent now offer coverage, compared with 56 percent ten years earlier. The rate of decline has been especially pronounced in low-wage firms... Compared to just a little over one-quarter of workers in larger firms, more than half of workers in firms with fifty or fewer employees were uninsured or underinsured...

Well, if you read that you'd say that was a record of dismal failure justifying the repeal of ACA, wouldn't you? In fact, the passage above is from an article by Edward Alan Miller in the Journal of Health Politics, Policy and Law describing the experience of small businesses in the health insurance market in the ten years before ACA was passed in 2010. As such (by symmetry) it makes a pretty powerful case for the types of reforms included in ACA. But how likely is ACA to improve the situation? ACA is designed to help small businesses provide insurance to their employees in a couple of ways. First, the elimination of pre-existing condition exclusions, modified community rating, and other rules applying to insurance purchased on the new insurance exchanges will reduce premiums for small businesses. Second, firms employing up to 25 people will be eligible for federal tax credits worth a total of $40 billion over the next ten years.

The article makes some important points:

1. Whether ACA increases coverage of employees of small businesses depends on the generosity of subsidies and the effect of the new exchanges on premiums.

2. The maximum subsidy is about 35 percent, which probably isn't enough to induce a large number of small businesses to start offering insurance.

3. The effect of the exchanges is uncertain because final rules have not been made. But given the foot-dragging of many state governments, it's possible that the effect of exchanges on premiums will be small.

4. Therefore the net effect on coverage may be negative: the Congressional Budget Office estimates that 8-9 million employees of small businesses could lose their employer-based coverage. [It should be noted, however, that this would just be a continuation of the trend described above.]

5. However, these workers might actually be better off as a result because they would either be eligible for Medicaid (ACA expands the eligibility for Medicaid to people earning under 133% of the poverty line) or buy subsidized individual plans on the insurance exchanges (subsidies are available to those earning 133-400% of the poverty line). With the new regulations, these insurance plans will often be superior to the insurance they got from their employers.

In fact, we're probably better off transitioning away from an employer-based health insurance system entirely, whether the alternative is a single-payer system or a system of subsidized purchases of private health insurance. This is not just Democratic reformers talking - the "portability" of insurance plans is a key element of Mitt Romney's campaign proposals. If Romney and the Republicans could take off their campaign goggles they would see the common ground here; of course if they could take off their campaign goggles they would also see that ACA is essentially the same program as Romney's Massachusetts program.

Tim Duy is nervous

It looks like Greece is headed for default, and he doesn't know if the world financial system is prepared:

In the fall of 2008, US authorities conducted a financial market experiment. They allowed a large and heavily interconnected firm, Lehman Brothers, to file for bankruptcy, apparently under the belief that the consequences should be limited as everyone knew this was coming. I think that, in retrospect, US policymakers wished they had pursued an alternative path. The experiment was not exactly successful.

Now it seems that European policymakers are willing to risk yet another such experiment. To be sure, they could still pull the rabbit out of the hat, but it is starting to look like the Troika and Greece have was they call in divorce court "irreconcilable differences."...

In any event, I don't think financial market participants are really prepared for Greece to make a suicide run. Why should they be? This whole episode is like The Boy Who Cried Wolf. Everytime we come to the brink, and prognosticators call for the apocalypse, someone backs down. Why should this time be any different? Honestly, it is tough to argue with that logic. Expectations of imminent financial crisis have simply gone unmet, leaving markets relatively unphased by the most recent events in Greece. Perhaps the ECB haas done enough to let Greece slide out of the Euro without much noise.

It would be an interesting experiment to see unfold. I am curious to see if the ECB has indeed done enough. Not curious enough, however, to want to take such a risk. The Boy Who Cried Wolf ultimately had a poor ending.

If three and a half years after Lehman Brothers, with all of the support given to the financial sector, the issuers of credit default swaps on Greek debt are still not sufficiently capitalized and if banks have not already set aside reserves to cover themselves in the event of a Greek default, then I say we are completely screwed. Not just completely screwed in the sense that we're headed for another financial crisis, but completely screwed in the sense that neither the bankers nor the government has the faintest idea how to manage a financial system.

Jobs and Obama's reelection

Greg Mankiw notes that when the employment numbers for January were released shares of Barack Obama on Intrade rose by 2 basis points (that is, the price of a security paying $1 if Obama wins reelection rose from 55 to 57 cents, implying that "the market" thinks there's a 57 percent chance that Obama wins reelection).

Here's the longer view:

I imagine the big spike in May is when bin Laden was killed. Overall the price of Obama seems to track the jobs numbers pretty well.