Afghan War Extended, Iraq Escalated, and Why Neither Will Work

President Obama will go down in history as the first president in US history to oversee two terms of perpetual war. Mind you, it's not declared war, but it is war in every other sense.

Additionally, the next president will take office under conditions that are worse by most metrics in the foreign policy space. Even if we confine our focus to the Middle East alone, the list of heightened problems is quite robust:

• Terrorist attacks against Western targets have become more frequent
• Iraq is somehow in a state of greater chaos than it was before, having lost control entirely of large swaths of the country
• Libya, Yemen, and Syria have been added to the portfolio of failed states thanks to US policy
• Two terrorist groups (ISIS and Al-Nusra in Syria) hold enough territory to be considered mini-statelets, and
• Afghanistan remains as unstable as ever, with the Taliban holding more land than they've had at any other point since the US overthrew them.

It didn't have to be this way.

President Obama initially took office on a wave of sentiment that was at least opposed to the Iraq War. This proved to be one of the decisive issues of the 2008 election and primary. But while President Obama did follow the withdrawal timeline accidentally established by President George W. Bush (by failing to negotiate a longer status of forces agreement), he was unable to exercise the leadership necessary to prevent the US from returning only a few years later. In the interim, President Obama proved that he had learned nothing from the Iraq War, as the interventions in Libya and Syria (covert in this case) carried the same risks and were implemented anyway. In turn, these interventions helped precipitate the very problems that were used to justify renewed US military involvement in Iraq to bring us up to our present condition.

This brief history helps give us a window into Obama's most recent policy adjustments in Iraq and Afghanistan. Obama's use of military force has never proved helpful, and most of it has proved positively destructive. Yet in spite of this, he continues to rely on it. In Iraq, the US recently announced its adding hundreds more ground troops, still without any debate on the subject. In Afghanistan, President Obama reduced a planned withdrawal by nearly 2,900 American troops, and NATO, in a decision which must have been significantly influenced by the US, recently committed to four more years of support for the Afghan government.

What's most noteworthy about these decisions is that they stand no chance whatsoever of making a major difference in either war. Doing so would require another round of troop surges, which are politically expensive and cannot create the conditions for long-term stability in any case. The experience under President Obama proves this, as Iraq shortly descended into chaos after the "successful" surge under Bush and Obama's own surge in Afghanistan provided similarly disappointing results.

It appears that the Obama administration has finally internalized that winning these conflicts, whatever we may mean by that, is not attainable using military force. Instead, the recent decisions are just stopgap measures to ensure a full collapse doesn't happen during the remainder of the President's term in office. Like most foreign policy decisions, these actions are not motivated by a coherent strategy for addressing either conflict. They are motivated primarily by domestic political concerns. The priority here is not about protecting Afghans or Iraqis; it's just about protecting the President's legacy and his party's electoral chances in the fall.

Civil Disobedience, the First Amendment, and Private Property

Protests against police brutality remain strong this week, and the response remains about as militarized as we might expect--riot gear, tear gas, sound cannons, and so on. The picture below captures the mood pretty well I think.

Some of the protests are permitted while others are not. Aside from sporadic reports of projectiles being thrown at police, the protests have been largely nonviolent across the country, which is commendable and typical of the Black Lives Matter movement.*

In spite of this, many protesters are being arrested (and not just the few that were violent). On the surface, this seems not to make sense. After all, the First Amendment guarantees a right to "peaceably" assemble. It would not be unprecedented for the government to violate the constitution, of course, but is that what is really going on?

In individual cases, probably so. But in general, we must understand peaceably means more than simply nonviolent. A moment's reflection on the matter reveals why this must be so. You could nonviolently stand on someone's private yard and refuse to leave when asked. You could nonviolently stand in someone's shop and refuse to leave. Or you could nonviolently sit in the road, and assuming you have enough friends to do it with you, you might be able to prevent all traffic from passing. All of these behaviors are nonviolent. However, they are not truly peaceful because they violate others' rights. The right to use their private property as they wish in the first two cases; the right to travel on the public road in the second. Peaceful actions don't infringe on the rights of others. Thus, marching on the sidewalk is probably totally fine; marching in the road and impeding traffic probably wouldn't be.

There are exceptions to this general rule. To facilitate free speech (in theory), local governments can create rules and offer permits to say march in the road to protest, for a reasonable amount of time. While this act would still be violating others' rights to use the road in some sense, it would no longer be illegal.

As it happens, blocking traffic appears to be a preferred tactic of the Black Lives Matter group, and they are quite adept at it. Given this, it should not be surprising that many are being arrested.

The reason we call it civil disobedience is precisely because laws are being broken. They might be bad laws, but laws nevertheless. If laws weren't being broken, it would just be called civil obedience, which I can think we can all agree is decidedly less appealing.

We should hope that disproportionate force and punishment is not meted out against protesters who break the laws in the name of protest--and we should probably assume that hope will not be fulfilled in reality. But we should not be appalled, in general, that arrests are occurring. At least in the activist circles I used to frequent (all of which were on the political left), arrests were an explicit part of the strategy of civil disobedience. Arrests bring publicity and media attention to a cause that might not otherwise get it. One can debate the effectiveness of such a strategy in producing real political change, but it does not make sense to object to protesters being arrested when and if they break the law. There are ways to protest without breaking the law; the rest is civil disobedience.

With all that said, however, we would be remiss to imply the cops have been following the letter of the law in response to the protests. A particularly interesting example of this recently occurred in Louisiana, when a group of protesters ended up leaving the street for private property. The protesters reportedly had the property owner's permission, and thus were fully within their rights to remain there. In spite of this, the cops eventually evicted them with a highly militarized response, even as the property owner tried to object.

The thin rationale used to justify this action by the police was that the protesters had already broken the law previously by walking on the road. Based on the sequence of events summarized by Reason, however, this does not make sense. Here's the relevant excerpt:

She says the protesters held a peaceful rally outside the state Capitol, then a portion of them attempted to march along the Interstate highway (a common Black Lives Matter tactic) but were blocked by the police and diverted to a city road.

Reason is citing one of the protesters here, so there's no reason to assume she's an objective observer. Still, the group clearly managed to get from the interstate (where they allegedly broke the law) to private property in what appears to be a subdivision. If the walking on the interstate was illegal, the police could have arrested them at that time.

Instead, they chose follow them to private property and arrest them there. For this to be legitimate, we would have to assume the police actually tracked exactly who in the protest group did and did not violate the law. Then in the chaotic mess that followed in the front yard, they judiciously identified those same people for arrest. Watch the video below, and then see how likely you think that explanation is.

What seems more likely is that, in the most generous scenario, the police may have observed some people breaking the law in the group and opted to use this as a pretext to invade private property. This response probably had nothing to do with identifying the actual individuals who violated a law, and everything to do with sending a message. In other words, it would appear to be thinly veiled collective punishment, with an innocent property owner's rights violated in the process.

Summing Up

It may be worth debating the usefulness of civil disobedience as a tactic, but it should be relatively easy to know when it occurs. And arresting protesters based on their violation of laws is not suppressing their First Amendment rights. It's just the logical outcome of protest actions that involve civil disobedience, for better or for worse.

But we'll end on a slightly more optimistic note. In the example cited above, a group of generally left-leaning individuals appropriately invoked private property rights only to see the government officers gleefully violate them with impunity. For libertarians, that's a perfect metaphor for government action writ large. Maybe some good will accidentally come from more people seeing that.

*It probably goes without saying, but the tragic police shooting in Dallas last week which claimed the lives of 5 officers was not affiliated with the protest that preceded it. The attacker used the event as an opportunity, but there's no evidence of coordination. People have used the event to assign blame to Black Lives Matter based on unassailable collectivist logic--the attack occurred in the vicinity of a peaceful Black Lives Matter protest, the attacker was black, ergo, Black Lives Matter is at fault. It's not clear whether the assailant was even sympathetic to the Black Lives Matter movement before he decided to commit the crime. Even if he was, it still would not warrant smearing the entire organization. A group cannot be justly judged based on the actions (or opinions) of its craziest members; otherwise none of us could ever bear to identify as anything. For example, I couldn't call myself libertarian now that the Iraq War-supporting Bill Weld has adopted the moniker. I also probably couldn't call myself vegan, given that some Canadian vegans went off the deep end and got a ruling passed that prevents discrimination against vegans. I deeply wish I made that up, but sadly, I did not.

I'm digressing in a footnote now, which may be a new low, but the point here should be clear. It is not correct to judge an entire group based on the actions of a single member. And this is particularly true of groups and identities that one does not voluntarily adopt (their race, national origin, religion (arguably), etc.).

Chief Economist at Germany's Largest Bank Calls for 150 Billion Euro Bailout

More bad news for the EU this week as it continues to grasp for a solution to the ongoing banking crisis. The Chief Economist at Deutsche Bank, the largest bank in Germany, has openly called for 150 billion Euro bailout in an interview with a prominent German newspaper.

Readers will recall that Italy's largest banks have been collapsing in the markets under the weight of an absurd 360 billion euros of nonperforming loans, which account for 18% of their total loan portfolios. Given that nonperforming loans are just a nice way of saying "loans that will probably not be paid back," this constitutes an existential threat to the banks and, by extension, possibly the Italian financial system.

Predictably, this has been blamed on the successful Brexit vote, though the claim made very little sense, as we explained recently.

In response to this newly urgent crisis, Italian Prime Minister Matteo Renzi was pushing for a proper bailout of the banking system. European Union rules, however, technically prevent a full taxpayer-funded bailout, and require what is referred to as a bail-in first.

Given the obvious and justified unpopularity of bank bailouts, an alternative solution would seem preferable. The EU bail-in might prove to be an exception.

What's a Bail-in?
Basically, a bail-in requires that investors, bondholders, and then even uninsured depositors lose part of their money to the bank. While investors and bondholders ought to bear the loss in a failing company, the inclusion of uninsured depositors is a very different animal.

Under this mechanism, the depositors are effectively viewed as creditors. And in a way, this makes sense. After all, when you deposit money at the bank, you are effectively loaning the bank money, and this is why you (used to be able to) get some non-negligible amount of interest for your trouble. In a bail-in, part of this "loan" to the bank is simply waived. Part of the bank's liabilities disappear, improving their balance sheet and their chance of surviving

But while deposits are a loan in some sense, they are generally conceived of as something quite different. A loan is presumed to carry some risk. Meanwhile deposits are generally seen as risk-free, at least in our era of central banking and heavy regulation. The prospect of the bail-in changes this.

Once the first depositors of Europe Proper start having their deposits confiscated to help out an unstable financial institution, this perception of deposits as risk-free will promptly evaporate. If that happens, a bank run will follow, as depositors rushyy to withdraw their funds before any of their deposits suffer the same confiscation. This has the ultimate effect of further destabilizing the very institutions the bail-in was meant to save.

This occurs because no bank can survive a bank run. Under a fractional-reserve system like ours, no bank ever has enough cash on hand to pay off all their depositors' claims because some of the money has been lent out. While this may seem unsavory, there's nothing secret or illicit about it. Take a look at the balance sheet of any bank, and it will be perfectly apparent. For instance, here's a snip of Deutsche Bank's balance sheet as of 12/31/2015.

How this works is that the top three assets listed are all basically liquid and can be readily used to pay depositors. From there, each successive asset becomes more difficult to convert to cash, with some of them being effectively impossible (goodwill).

Thus, we can compare the total of the top three assets (132 billion euros total) to the much larger deposits listed in liabilities (567 billion euros). If a substantial portion of Deutsche Bank customers suddenly began to worry and pull their deposits out, Deutsche Bank (like any other bank) would have to get creative to meet the demands--possibly selling off securities, taking out loans from other banks or the central bank, and if things got really bad, calling in some existing loans and credit lines. If the problem is not confined to Deutsche Bank and many banks experience this panic simultaneously--a likely outcome if the bail-in mechanism is used on the Continent--it becomes even more difficult to resolve. This is the worst case scenario for the EU financial system, and yet as things stand currently, it is also their official remedy for failing banks.

That is, the EU's solution for the banking crisis is, in effect, to induce a larger one.

Deutsche Bank's leadership is now weighing in to try to prevent the catastrophe this would likely unleash in the short-run. Their economist's solution is to do a standard bailout instead, as the US did in the 2008 crisis. Which leads to a useful question...

Is a Bailout Better?
Like most economic questions, the answer to this one is "It depends." And in particular, it depends on your time horizon. Assuming the government itself won't go broke from the initiative, a bailout can likely succeed in minimizing an immediate crisis. However, it doesn't resolve the underlying problems that caused the crisis, and it all but ensures another one will occur in the future. The best case scenario is kicking the can down the road.

For this reason, it is highly attractive politically. Yes, a bailout is effectively corporate welfare for the most reckless and terribly managed institutions. That rarely plays well on the campaign trail. But it plays better than a complete financial crisis. Assuming electoral success or protecting one's legacy are key goals for the decision-makers, bailouts are an excellent idea.

If one's goal is long-term financial stability, not so much.

Each bailout paves the way for the next. Other institutions observe that their peers suffered no consequences from making risky financial bets that lost money. This encourages all of them to take more such bets in the future. If the bets work out, they get to keep the profits. If they do not, the taxpayer bears the losses. Economists refer to this as the problem of moral hazard. People that don't bear the costs of taking risks, tend to take more risks. If those people are bankers, it doesn't end well.

In the long-run, the best approach is to let failing institutions actually fail. Deposits, like Puerto Rican bonds, are never truly risk-free. The banking system will only have a chance at stability when this fact is widely understood--and when banks are forced to compete for customers by showing just how sound and conservative they are, rather than simply pointing to a government guarantee.

What Happens Next?
Deutsche Bank's recent pronouncement should be properly viewed as a recognition of reality. The goal of the EU and the European Central Bank is to prevent a short-term crisis, and the bail-in regulation is unlikely to fulfill this purpose. Since a free market solution is not going to make headway in the EU, a bailout is the default alternative.

More Needless Police Brutality

Philando Castile had his life tragically cut short by a police officer in Minnesota yesterday. What began as a routine traffic stop (over a broken taillight) in a quiet suburb quickly escalated as the police officer shot Castile multiple times. Castile remained in the driver seat throughout, and he would later be pronounced dead at a local hospital. Explicit footage of the shooting itself has not been released (and may or may not exist). However, Castile's girlfriend, Diamond "Lavish" Reynolds was in the car at the time, and she began filming the encounter shortly after the officer shot Castile. Among other things, the video depicts a clearly panicked and hysterical police officer trying to justify his actions.

Earlier this week, a somewhat similar story emerged out of Louisiana. Another man, Alton Sterling, was killed by police responding to a call about a person matching Sterling's description pointing a gun at someone in front of a convenient store. Video has emerged of the actual shooting event in this case, and it's about as bad as it could be. Two officers are seen pinning Sterling to the ground and then one of the officers shouts that Sterling has a gun. The officer draws his own weapon and fires on Sterling multiple times at point-blank range. It's not whether the other officer also fired shots. Sterling died on the scene.

Both of these events follow the formula we have come to expect. Both of the victims were black, and it appears none of the police officers were. At the time of the shootings, neither of the victims appear to have posed a threat to anyone. And at least in the case of Castile, the reason the police encounter even occurred was completely mundane--a broken taillight. Offhand, I can only think of one other police murder case where the initial "offense" was even more benign than this--in that case, the victim flashed his brights.

Given these facts, there is a natural inclination to emphasize the racial component of these stories. This is understandable, and it is true that the victims of police killings are disproportionately black. In the Castile case, it also seems relatively certain that racial prejudices played at least some role. I find no other way to understand how a police officer can go from "that car has a broken taillight" to "the driver is going to try to shoot me".

Having said that, however, the fundamental issue here is not about race. Yes, it's true that there are racist cops. Yes, systemic racism does exist in at least some parts of the criminal justice system. And of course, we all know it's true that cops routinely get away with killing innocent black people, and face no sanctions or punishment whatsoever.

All of this is true. But on the last count, that fact is not exclusively true for black victims of police violence. Rather, the unfortunate reality is that cops almost never get punished for anything, except in the most heinous of circumstances. The primary explanation for this reality is not racism, but privilege--specifically, the extraordinary legal privileges that have been granted to cops that all but preclude their prosecution.

This is a critical distinction strategically. Focusing on the racial aspect of these stories has the effect of limiting its appeal to the usual confines of left and right. Modern liberals would line up behind Black Lives Matter while most conservatives reflexively defend police action. One side says racism is a problem, while the other denies its existence. The walls stay up, and nothing changes.

By contrast, arguing against the legal privileges of cops has much more potential appeal. I would argue this is generally true, but it definitely true right now after Clinton Email Scandal. The Clinton story has had the incredible effect of making everyone on the political right clamor for the rule of law, at least rhetorically. We discussed this case at length earlier this week, but the broad contours are straightforward:

• A powerful government official committed actions that would clearly be illegal if anyone else did them.
• The government conducts an ostensibly "independent" investigation by a different branch/agency into the official's conduct.
• The investigation finds insufficient evidence of wrongdoing and the government official gets away clean.

There are many problems in the Clinton case. But the fundamental problem is that the government is terrible at prosecuting itself. And that problem extends from the federal government all the way down to the local police department.

This week offers a golden opportunity to help thousands of people to discover this perfectly logical connection for themselves. The question we need to emphasize is not whether we think cops are bad or racist. The question is whether or not we believe in the rule of law, whether we think that government officials should be held accountable to the same laws as everyone else. By design, those questions may as well been rhetorical.

Explicit or implicit racism can help us account for why the victims of police brutality are disproportionately. But it cannot explain why cops (and many other powerful government officials) suffer no consequences in all but the most extreme cases. That outcome stems from a justice system that gives deferential treatment to government agents, no matter what the alleged crime or who their victim may have been. Dismantling those legal privileges must be the primary focus of any reform effort, both strategically and practically.

Newly Released Drone Death Toll Lowballs Reality

Last Friday, the Obama Administration released its estimate of civilians killed in US airstrikes outside of war zones. The figures covered President Obama's first 7 years in office, and they appear to have significantly underestimated the actual civilian death toll. The Obama Administration put the range of civilian casualties between 64 and 116 over this span. Meanwhile, independent organizations place the number far higher. For example, the Bureau of Investigative Journalism estimates that between 380 and 801 civilians have been killed by US airstrikes outside of war zones over the same period.

Since the United States long-ago dispensed with the tedious business of actually declaring war, it may not be obvious what countries count as war zones these days--or countries with "active hostilities" to use the government's term. For the purposes of this data, the government has defined the relevant non-war countries to be Pakistan, Libya, Somalia, and Yemen. It was not immediately obvious whether Libya would have been considered a country of "active hostilities" during the NATO intervention in 2011. Based on how low the overall numbers are, however, it seems safe to assume casualties from that conflict are not included.

As a general rule, steps toward greater transparency in government tend to be a good thing. Unfortunately, these estimates are so low that it's fair to question the objectivity and thoroughness of the government's investigation. The US Government likely has access to more extensive resources and tools to gather information on these events than journalists scouring the news. This may explain some of the gap in estimates. However, it cannot explain all of it. Indeed, as a casual observer of this subject, I can think of a few isolated atrocities perpetrated by US strikes that, by themselves, eclipse the lower estimates provided by the government:

• Cruise missile strike on al Majala in Yemen, killing an estimated 41 people (on the low-end), in late 2009.
• Drone strike on a wedding convoy in Yemen, killing between 15 to 27 civilians, in 2013
• Drone strike on Pakistani tribal meeting, killing at least 40 civilians, in 2011 

I can get to nearly 100 casualties using just 3 attacks. Thus, for the government figures to be reliable, they would need to have killed no more than 20 civilians in the remaining 470 airstrikes they acknowledged. Who thinks they achieved that?

Of course, the real story here is not about numbers. Numbers matter because they help us understand the scale and scope of the injustice that US policies have perpetrated against people in other countries. Ethically, however, there isn't a number above zero that can be justified. The US should not be engaged in a continuous global assassination campaign. Full stop.

I realize this may seem like a radical position given that "even" the Nobel Peace Prize-winning President Obama has used assassination missile strikes as his tactic of choice in the War on Terror. However, this position becomes the obvious one when we attempt to place ourselves in the shoes of the countries being attacked. A quick thought experiment may be helpful to prove this point.

Imagine a suspected terrorist is identified in Topeka, Kansas and the guy's house happens to be located next to an elementary school. Let's further assume that the government actually has very compelling evidence to support the idea that this individual truly is a dangerous terrorist. And explosions being what they are, it's not possible to hit the house without also damaging the nearby playground and school buildings. In this circumstance, would it be okay for the government to launch a drone strike on his house to neutralize the threat? What if the government did it on a weekend, so they could be nearly certain that no children would be around to be killed at the adjacent school? Then would it be okay?*

I'm going to go out on a limb here and suggest that most Americans would reflexively oppose missile strikes on Topeka. But why do we feel that way? Most likely, it's because the concept of collateral damage, even when it's accidental, becomes instantly toxic when it is changed from an abstract phrase to a real world policy that is close to home. This is particularly true when we're discussing places that do not have active hostilities (at least not with the US).

But if we can't justify a missile strike on Topeka (or any other Western city), how can we justify such a strike in Yemen? Practical distinctions can be made here, but ethical distinctions cannot. Unless your concept of justice involves preferential treatment to certain nationalities, races, religions, etc. we must conclude the hypothetical drone strike on a Kansas school is essentially equivalent to the very real assassination strikes carried out in Yemen and elsewhere.

Returning to our main story, the Obama Administration's new civilian casualty disclosures are a double-edged sword. On the one hand, it appears to be a step toward transparency. On the other, the data appears to clearly underestimate the casualties, and it fails to provide a sufficient level of detail that would allow different reports to be reconciled. It is important to keep an eye on the bigger issue--namely whether America can or should be entitled to assassinate people in other countries. We may never determine exactly how many civilians have been killed in America's global assassination strike program, but we can know how many such deaths would be acceptable. None at all.

*And yes, I realize that no likely US government would seriously consider such a tactic. It could be argued that this hypothetical is invalid since the US justifies its assassination decisions partly on the idea that it cannot conceivably capture the individual, due to the lack of a strong / friendly enough government to assist us. In a US context, this clearly would not be true.

I would argue that the capture alternative technically exists in the foreign context as well, even if the host government will not do so. The US has set a precedent (just or not) that this option is on the table, after it engaged in a cross-border night raid to capture Osama Bin Laden in Pakistan, without the Pakistani government's permission. Additionally, the US also has the resources to do it since special forces are deployed throughout the Middle East. The resulting cost might be higher than a local SWAT raid, but it is an option.

Shorter FBI: Hillary Clinton Broke the Law, But Don't Prosecute Her

The latest in shocking but not surprising news came yesterday as FBI Director Jim Comey formally recommended not indicting Hillary Clinton for her alleged mishandling of classified information.

Given America's less-than-stellar track record of prosecuting the powerful, this outcome has been a virtual certainty for some time. Even so, the event is still important. It offers the clearest evidence to date that the rule of law does not exist. One set of rules applies to the politically connected, and an entirely different set applies to everyone else. Nothing could illustrate this fact better than the Clinton email scandal.

Invalid Defenses
Before getting into the details on this issue, it's worth addressing a few of the common counterarguments that are offered in defense of the good Secretary.

Overclassification
The idea here is that a lot of information in government is classified for no reason. Thus, some defenders of Hillary Clinton--including President Obama himself--implicitly acknowledge that Hillary may have mishandled classified information. But, to borrow Obama's phrase, "There's classified and then there's classified." In other words, since almost everything in government is classified at one level or another, it's not really that big of a deal that Hillary may have sent and received a few emails on an insecure server. Would-be hackers might have been able to access the lunch menu on Capitol Hill, but that's about it.

Of course, it is true that too much information in government is classified. However, this is beside the point. The relevant question here is whether there is evidence that Hillary Clinton broke the laws as they are, including whatever system of classification exists. And if those laws are found to be absurd and unjust and her conduct is deemed harmless, then a jury could find her not guilty on those grounds. That is not a decision for the FBI, or the Department of Justice.

It could be argued that not indicting Clinton is just, if it marked a shift towards leniency in the government's handling of these cases. That is, maybe the Clinton scandal drew so much attention to the absurdly aggressive prosecution of others who have mishandled (questionably) classified information that the government has discovered the error in its ways. If this were really true and were accompanied by an imminent pardon of Chelsea Manning and/or a lifting of threats against Edward Snowden, the Clinton recommendation could almost be cause for celebration. But there's no reason to believe this is going to happen. As we'll see later, the FBI's decision was not based on a reevaluation of the justice of these laws. The laws are just as bad as ever; the FBI simply determined that Clinton did not violate them.

A final strike against the overclassification defense is that it appears that some of the classified information in Clinton's private email really was supposed to be classified. This is why the State Department refused to publicly release 22 of the Clinton emails because the underlying information was determined to be Top Secret. Even if overclassification accounted for most of the classified information in Clinton's private email, it would not excuse these. And obviously, since the Democrats are still in power in the Executive Branch, it would make no sense for the non-release of these 22 emails to be politically motivated.

Everyone Does It
This line of argument stems from the recent damning Inspector General report on email security and recordkeeping practices in the State Department's Office of the Secretary. Contrary to popular belief, it notes that only three high officials regularly used personal email accounts to conduct official business, Secretary Powell (2001-2005), Secretary Clinton (2009-2012), and Ambassador Gration (2011-2012). According to the report, Secretary Powell used a personal email account before formal email security guidance existed in the State Department. Additionally, when Secretary Powell began his term in office, the State Department email system only permitted communication within the Department. Thus, a personal email account was his only option to communicate with people outside of the Department (foreign ministers, etc.). These same circumstances did not exist for either Gration or Clinton.

Ambassador Gration routinely used a personal email account to conduct official business and ignored repeated directions from Department security personnel to use a secure Department account. Eventually, his refusal to obey these instructions resulted in the Department initiating disciplinary proceedings against him. However, he ultimately resigned his post before the proceedings were completed.

Thus, it's simply not accurate to say that everybody did what Clinton did with regard to private email usage. One official did so when no alternatives were available and proper security guidelines were yet to be created. The other used a private email in violation of Department guidelines and so had disciplinary action initiated against him. Only Secretary Clinton stands alone, without a justification and yet still without punishment of any kind.

Additionally, even if it were true that many other political leaders had behaved similarly to Clinton as some allege, it would not matter. That would justify the other officials getting prosecuted as well, not all of them getting away with impunity. This should go without saying. After all, if you are being prosecuted for murder, saying "OJ got away with it" is not likely to help your case.

The Emails Weren't Marked Classified
It is true that most of the classified emails on Clinton's email server weren't marked classified. However, this is not nearly important as Clinton's defenders would like to suggest. Former State Department employee Peter Van Buren recently explained why this argument doesn't carry any weight:

There is no physical connection between the U.S. government’s unclassified and classified systems; you absolutely cannot email a document from the dark side to the light. Properly configured, classified systems should not allow for removable media, to lessen the chance for information transfer (one of the reasons Chelsea Manning was able to smuggle out so much classified was because his computer was not properly set up, and included a DVD burner. We still don’t know how Ed Snowden got his documents out.)

Given these restrictions, the way anyone can move information from one system to the other is what’s called “sneakernet,” after the athletic shoes. You print out a marked, classified document, and then retype the parts you like into the unclassified system. You of course do not add the marking – TOP SECRET – because that would be like robbing a bank and then sticking a sign on your chest saying “Attention Cops, I’m the Guy Who Just Robbed a Bank.” Including the classification markings would be admitting to a crime. 

So that is why Clinton’s emails had no classification marking on them even though the contents of those emails contained information that was indeed classified at the time it was transmitted. That is why the emails are a big deal, no matter what smokescreen Hillary wants to throw up.

Additionally, we have evidence of at least one instance where Clinton apparently asked her staff to do precisely this. On one occasion, Clinton's aides were having difficulty sending her talking points over the secure fax line. Clinton gave the following instructions in an email that was subsequently released to the public: "If they can’t [get the fax to work], turn into nonpaper w no identifying heading and send nonsecure."

Based on this information, it is no longer mysterious how so much classified material came to be unmarked. And since classification isn't based on how something is marked anyway, it is not at all relevant to determining whether Clinton violated the law.

With these standard objections addressed, we move on to the heart of the matter.


Double Standards
The FBI's recommendation against indicting Secretary Clinton needs to be viewed in the context of the Obama administration. As we noted in a previous piece on the Clinton scandal:

...the US has zealously prosecuted cases involving the mishandling of classified materials. This was true in whistle-blowing cases like those of Private Manning (who got 35 years in prison) or the lesser known Thomas Drake (who was indicted and had his career ruined). But it's also been true of people who just downloaded files on to personal devices, for convenience, with no intent to distribute them. There was also the case of the Navy sailor who took pictures of classified areas on his submarine with a cell phone camera and now faces up to 10 years in prison.

There's no reason to think that any of the above outcomes were just or warranted, but they did occur. And while the prosecution of whistle-blowers is a slightly different issue, the others are worthwhile comparisons. In both cases, it was not alleged that the individuals intended to distribute the classified materials. And yet in both cases, the prosecution pursued and obtained convictions against the defendants.

The Clinton case involves significantly more material and presumably far more sensitive material, given her position as the US's chief diplomat at the time. But, if the FBI's recommendation is followed, she will not even be prosecuted, let alone convicted.


The FBI's Internal Contradictions
Given its importance in this election cycle, this story was bound to be newsworthy regardless of the outcome. However, the extensive details offered by FBI Director Comey made it even more remarkable.

In essence, Comey's remarks went like this:

1. Explain what the relevant laws require for a crime to be committed
2. Explain what the investigation found, most of which clearly satisfied at least some of the requirements for a crime to be committed
3. Recommend against indicting anyways

If that sounds incredible, the details are even more bizarre. Reading the full remarks, one almost gets the impression that there were two competing drafts composed--one for indictment and one against--and then they were hastily combined to produce the finished product. So the body of the statement builds a sound case in favor of an indictment, and the conclusion attempts to awkwardly walk it back.

For example, first we learn from Comey what is necessary to justify either a felony or misdemeanor charge:

Our investigation looked at whether there is evidence classified information was improperly stored or transmitted on that personal [email] system, in violation of a federal statute making it a felony to mishandle classified information either intentionally or in a grossly negligent way, or a second statute making it a misdemeanor to knowingly remove classified information from appropriate systems or storage facilities.

So far, so good. Given that we know from the Inspector General report that Clinton ignored Department guidance on email usage, it seems at least the misdemeanor charge would be met.

Next, Comey explains that Clinton actually had multiple private servers over the course of her tenure with the State Department. And since email records were nearly destroyed on one particular server that was decommissioned in 2013, the FBI apparently had a fun task of trying to recover the information.

Comey then moves on to give the classification statistics on 30,000 emails that Clinton and her legal team provided to the State Department for retention. In theory, these emails were supposed to be all of the work-related emails. Here's Comey:

From the group of 30,000 e-mails returned to the State Department, 110 e-mails in 52 e-mail chains have been determined by the owning agency to contain classified information at the time they were sent or received. Eight of those chains contained information that was Top Secret at the time they were sent; 36 chains contained Secret information at the time; and eight contained Confidential information, which is the lowest level of classification. Separate from those, about 2,000 additional e-mails were “up-classified” to make them Confidential; the information in those had not been classified at the time the e-mails were sent.

So here we have another official independent body verifying that Clinton did in fact send and receive classified information on her private email system. And importantly, several of them were classified at the time of transmission. Nothing real new here, but it's worth reiterating. Now is where it gets really good (emphasis added):

The FBI also discovered several thousand work-related e-mails that were not in the group of 30,000 that were returned by Secretary Clinton to State in 2014. We found those additional e-mails in a variety of ways. Some had been deleted over the years and we found traces of them on devices that supported or were connected to the private e-mail domain. Others we found by reviewing the archived government e-mail accounts of people who had been government employees at the same time as Secretary Clinton, including high-ranking officials at other agencies, people with whom a Secretary of State might naturally correspond. 

This helped us recover work-related e-mails that were not among the 30,000 produced to State. Still others we recovered from the laborious review of the millions of e-mail fragments dumped into the slack space of the server decommissioned in 2013. 

With respect to the thousands of e-mails we found that were not among those produced to State, agencies have concluded that three of those were classified at the time they were sent or received, one at the Secret level and two at the Confidential level. There were no additional Top Secret e-mails found. Finally, none of those we found have since been “up-classified.”

So the Clinton camp supposedly provided all work-related emails (30,000 total) back to the State Department and deleted the rest as merely personal. But then when the FBI had a chance to look through some of the other emails that were not included in this batch of 30,000, they found thousands(!) more that were, in fact, work-related. A few of these newly discovered work-related emails, once again, contained classified information.

Next, the FBI Director attempts to explain why the above facts are not actually a big deal (emphasis added):

I should add here that we found no evidence that any of the additional work-related e-mails were intentionally deleted in an effort to conceal them. Our assessment is that, like many e-mail users, Secretary Clinton periodically deleted e-mails or e-mails were purged from the system when devices were changed. Because she was not using a government account—or even a commercial account like Gmail—there was no archiving at all of her e-mails, so it is not surprising that we discovered e-mails that were not on Secretary Clinton’s system in 2014, when she produced the 30,000 e-mails to the State Department. 

It could also be that some of the additional work-related e-mails we recovered were among those deleted as “personal” by Secretary Clinton’s lawyers when they reviewed and sorted her e-mails for production in 2014.

The lawyers doing the sorting for Secretary Clinton in 2014 did not individually read the content of all of her e-mails, as we did for those available to us; instead, they relied on header information and used search terms to try to find all work-related e-mails among the reportedly more than 60,000 total e-mails remaining on Secretary Clinton’s personal system in 2014. It is highly likely their search terms missed some work-related e-mails, and that we later found them, for example, in the mailboxes of other officials or in the slack space of a server.

It is also likely that there are other work-related e-mails that they did not produce to State and that we did not find elsewhere, and that are now gone because they deleted all e-mails they did not return to State, and the lawyers cleaned their devices in such a way as to preclude complete forensic recovery.

This raises a few important questions. First up, what exactly would qualify as evidence that "work-related emails were intentionally deleted in an effort to conceal them"? Previously, Hillary Clinton and top aides certified, under penalty of perjury, that all government records (work-related emails) had been returned to the government. Now, we know that thousands of such emails were missing.

Fortunately for Clinton, she has a much better technical support team these days. After making the decision which emails were "private" and which were work-related, her team permanently deleted all "private" emails. As a result, the FBI has no way of knowing for sure whether Clinton's team explicitly deleted emails that were work-related or not. If this could be proved, this would seem to invalidate Hillary's previous certification and possibly constitute the crime of perjury. But since everything was wiped clean, we'll probably never know.

With all of this evidence produced, Comey offers the following summary (emphasis added):

Although we did not find clear evidence that Secretary Clinton or her colleagues intended to violate laws governing the handling of classified information, there is evidence that they were extremely careless in their handling of very sensitive, highly classified information.

 ...

Although there is evidence of potential violations of the statutes regarding the handling of classified information, our judgment is that no reasonable prosecutor would bring such a case.

Here, Comey is moving the goal posts. He ultimately justifies the decision not to recommend an indictment based on the fact that they could not find adequate evidence of intent. But earlier in this very same presentation, Comey explicitly stated that intent is not required. Recall that this is how he framed the potential violations being investigated (emphasis added):

Our investigation looked at whether there is evidence classified information was improperly stored or transmitted on that personal [email] system, in violation of a federal statute making it a felony to mishandle classified information either intentionally or in a grossly negligent way, or a second statute making it a misdemeanor to knowingly remove classified information from appropriate systems or storage facilities.

According to Comey, in order for Clinton's actions to rise to the level of a felony, gross negligence is all that is necessary. Thus, we are left to wonder what exactly is the difference between being "extremely careless" and "grossly negligent"? Apparently, one gets you a free pass, while the other gets you indicted for a felony. Adverbs matter.

Summing Up
While the FBI's recommendation on Clinton is clearly disappointing, it should not be surprising. The case for indicting Clinton for mishandling classified information is overwhelming. None of the defenses offered stand up to scrutiny, and Clinton's public statements on the subject have repeatedly been proven false as new information emerges. But the decision of whether or not to indict Hillary Clinton was never going to be based on the evidence or the law. In reality, powerful, politically-connected people like Clinton are immune to both. This week, the FBI reminded us of this fact in the clearest terms possible.

Stop Using Statistical Aggregates for Income Inequality

Income inequality is one of the major issues in this year's presidential election, and there is no shortage of statistics to convey just how dire the status quo is. Below, I've gathered a few examples:

• Bernie Sanders says top 0.1% have almost as much wealth as the bottom 90%
• Top 1% pay nearly half of all federal income taxes
• Richest 1% earn biggest share since Roaring '20s
• As union membership has fallen, the top 10% have been getting a larger share of income
• An Economic Cancer: The Top 1% Earns More Than the Bottom 50%

You get the idea. It seems there is almost no way to talk about income inequality (or tax policy) without resorting to the use of statistical aggregates (1%, 10%, etc.). The results of any such analysis can be jarring, and lead to many interesting questions. Is it really fair that 0.1% of population should possess 90% of the nation's wealth? Should the top 1% really make more than the bottom 50%? Can the government do something to ensure income is more broadly among the population?

While these are all interesting questions, they rely on two very important assumptions:

• "The Top x%" group contains a consistent group of individuals over time. 
• Extreme income inequality, among different income brackets, is an aberration.

The problem with these assumptions may not be immediately obvious, but it will become clear if we try out a slightly protracted thought experiment. Using broad statistical aggregates seems to be a reasonable way to describe these issues. However, it breaks down quickly under any scrutiny.

To illustrate this problem with statistical aggregates truly are, I decided to run the numbers on a hypothetical economy--the economy of Equalistan--that is completely equal by design. Here are the key assumptions driving Equalistan:

• Everyone starts work at age 23 at a starting salary of $40k per year. No one is unemployed after this age.
• Combining the effects of annual salary increases and promotions, it is assumed that everyone's salary increases by 5% per year.
• Each person saves 5% of their income each year, which is added to their wealth
• Each person earns a 5% return on their accumulated wealth. (And to make the math easy, this is calculated off the wealth at the end of the previous year).
• Everyone starts off at age 23 without any student loans and without any wealth of their own.
• Everyone retires promptly at age 65.

Now, it may be correctly argued that the assumptions driving my imaginary society are unreasonable. I would readily agree. However, I hope we can all agree that such a society would be a veritable utopia for those concerned about income inequality.

So let's see the results:

Note that in this table, all of these calculations are somewhat conservative, because they only include the working population. By assumption, no one is unemployed, and retirees are excluded from these percentages.

In spite of this conservative approach, and the explicitly equal nature of the society imagined, the statistical aggregates still paint a darker portrait. The 1% is well under control it would seem. But it's still the case that the top 10% owns dramatically more than the bottom 50%, and the top 20% makes almost 50% more than the bottom 50% does. What accounts for this?

Well, the most important fact is that in Equalistan, as in real life, older, more experienced, people tend to make more money than their younger counterparts. Older people are also likely to have accumulated more wealth, which, in the absence of Federal Reserve shenanigans, will generate meaningful returns on their investments each year. This wealth accumulation effect naturally contributes to income disparity, even though it is presumably not a feature of a market economy that we want to eliminate for ourselves

What all of this tells us is that using statistical aggregates like the top 1% or top 10% is deeply unhelpful. Some economists and politicians like this approach because the data is easy to access and it produces neat headlines. And in a very literal way, it does define the extent of income inequality.

But when we talk about income inequality, the inequality at any point in time is not the real issue. What we really ought to care about are poverty and social mobility. If no one was in poverty, it is my contention that we would not care how much the top 5% earned. Similarly, if even people from poor backgrounds had an equal chance to make it to the top, it would matter much less to everyone just how much those people made.

Of course, neither of these features describe the world in which we actually live. Poverty still exists and social mobility is not as strong as we would like. But if we are going to understand and evaluate progress on these issues, a good first step would be to use meaningful data. After seeing the thought experiment above, the bottom 100% of people should agree that mere rhetoric about "top 1%" isn't sufficient.

Hat Tip: Tom Woods and Bob Murphy at Contra Krugman for highlighting this problem.