The Myth of the Resource Curse

America is becoming a major energy producer. Will this be a boon or a bane to our country?

by Kori Schake

“Rise early, work hard, and strike oil” was Rockefeller’s advice to young people looking to become successful. Today, the formula for success is quite different: academia advises to avoid striking oil, for it will doom a country’s economy to lower growth, and its society to bad governance. This advice results from studies in economics and political science purporting to show that countries that rely on extractive industries like oil tend not to develop as robustly and be as well-governed as those without the benefit of natural resources. This is called the “resource curse.”

The subject is of more than academic interest. As the United States becomes a major energy producer, will it become subject to the resource curse? Probably not. If the phenomenon really does exist, it flourishes in countries that lack strong institutions, governmental accountability, and already diverse economies. There is no reason to believe the political cultures of established democracies like the United States would be subject to the curse.

Discoveries of new gas fields along with innovations in recovery of shale, coal seam, and tight gas will turn the United States, Israel, Canada, Australia, and potentially other nations into major energy-producing countries. Production and estimates of reserves have grown steadily as technological innovations expand drilling and generation of power from gas.

These developments will have far-reaching effects, both economically and politically. Trade balances will be significantly altered as oil imports are reduced and gas becomes a major export.  The United States is the world’s largest petroleum consumer, importing 45 percent of our needs; eliminating that will dramatically change our balance of trade. Gas will probably still trail oil and coal as an energy source for decades (the International Energy Agency predicts oil’s dominance until at least 2035, and coal only provisionally overtaken then). But our reduced dependence will have beneficial consequences even in the near term.

Euro-zone recession threatens global economy

Social order withers while politicians dither

By Kiron Sarkar

The euro-zone economy is deteriorating alarmingly. While the German-inspired policy of austerity is essentially right, its implementation, over far too short a period of time, is forcing the region into recession. Social disorder, especially as the weather improves next spring, is a real probability.

The severe austerity measures have impacted Greece, Spain, and Portugal in particular (Ireland has stabilized and there are positive signs in Italy), though core euro-zone countries, such as France and even Germany, are now affected. Both France and Germany are likely to report a decline in GDP this quarter.

The negative impact of fiscal multipliers suggests that further cuts in spending and/or tax increases will reduce GDP by more than the aggregate of tax increases and spending cuts, thereby increasing budget deficits and debt-to-GDP for Greece, Portugal and Spain. (A view expressed by the IMF, though not accepted by the European Union.)

The EU revised its forecast for 2013 euro-zone GDP to just 0.1% with a decidedly negative outlook, down from 1% just last week and far more anemic than the 0.25% pace predicted by private-sector economists. The EU also increased French and Spanish projected budget deficits and reduced GDP forecasts materially. To date, Spain, and increasingly France, have reported wildly optimistic forecasts. A centralized budgetary system (coming, in spite of opposition from the relevant countries) will stop this practice, most likely next year.

The Future of School Choice

Education savings accounts will revolutionize K-12 education

by Clint Bolick

If you were designing a K-12 education system from scratch, with no preconceived notions, and taking full account of the breathtaking technological innovations that have made possible a high-quality, highly personalized education for every child, what would that system look like?

Chances are that it would look little like the hidebound, bureaucratic, expensive, top-down, one-size-fits-all, command-and-control, inefficient, reform-resistant, administratively bloated, special-interest manipulated, obsolete, impersonal bricks-and-mortar system that represents the most disastrous failure of central planning west of Communist China and south of the United States Postal Service.

And yet, that is the system to which the vast majority of American schoolchildren are consigned. Little wonder that American high schoolers rank 21st out of 30 economically advanced nations in science literacy and 25th in math. Our nation cannot continue to thrive so long as our schools are pumping out mediocre graduates who cannot compete effectively in the world economy.

The proliferation of school choice—through open public school enrollment, magnet schools, charter schools, school vouchers, and scholarship tax credits—has expanded educational opportunities and competition within American K-12 education. Charter schools, in particular, often provide world-class educational programs to a growing number of children, and they sometimes offer individualized, technology-based programs.

Bug in Search of Windshield

Japan Plunges Into Deep Recession - GDP Shrinks 3.5% Annualized

by Mike Shedlock
The global economy took another turn for the worse as Japan plunged into recession following two consecutive quarters of growth.

Please consider Japan’s economy shrinks annualized 3.5%.

Japan’s economy shrank an annualised 3.5 per cent between July and September, the steepest decline since the earthquake-hit first quarter of 2011, as exporters suffered big falls in shipments to key markets such as China and Europe.

Prime Minister Yoshihiko Noda described the gross domestic product figures as “severe”, while Seiji Maehara, economy minister, said Japan had possibly entered a “recessionary phase”.

In a speech on Monday, Masaaki Shirakawa, Bank of Japan governor, said there was “no question that the [central bank] should exert every effort to enhance its easing effects as much as possible”. He said domestic demand was “unlikely to increase at a pace that will outperform the weakness in exports”.

The Japanese government’s monthly survey of “economy watchers” – which includes barbers, hoteliers, car dealers and others who deal with consumers – has recorded six falls in a row since April. Last month the index stood at a level little better than that of April 2011, in the immediate aftermath of the quake.

How a $20 tablet from India could blindside PC makers, educate billions and transform computing as we know it

From the poor in the developing world, to the poor everywhere

Suneet Tuli, CEO of Datawind, holds up the commercial version of his company's new Aakash 2 tablet

By Christopher Mims

Suneet Tuli, the 44-year-old CEO of UK/Canadian/Indian startup Datawind, is having a taxing day. “I’m underwater,” he says as he struggles to find a cell signal outside a restaurant in Mumbai. Two days from then, on Sunday Nov. 11, the president of India, Pranab Mukherjee, will have unveiled the seven-inch Aakash 2 tablet computer Tuli’s company is selling to the government for distribution to 100,000 university students and professors. (If things go well, the government plans to order as many as 5.86 million.) In the meantime, Tuli is deluged with calls from reporters, and every day his company receives thousands of new orders for the commercial version of the Aakash 2. Already, he’s facing a backlog of four million unfulfilled pre-orders.

We’re speaking over the same overtaxed cellular networks that he hopes will enable Datawind to educate every schoolchild in India through the world’s cheapest functional tablet computer. But it’s a losing battle, as his connection to one of the 13 separate cell carriers in Mumbai buckles under too much competing traffic. He has to repeat himself when he tells me the ultimate price university students will pay for his tablet, after half its cost has been subsidized by the Indian government.

It’s $20.

Saudi America

The U.S. will be the world's leading energy producer, if we allow it

By WSJ Editors

Sometimes the revolution politicians seek isn't the one they get. Consider the irony—and the opportunity—in Monday's report that the U.S. is likely to surpass Saudi Arabia as the world's largest oil producer as early as 2020.

In its annual world energy outlook, the Paris-based International Energy Agency (IEA) says the global energy map "is being redrawn by the resurgence in oil and gas production in the United States."

The U.S. will increase its production to about 23 million barrels a day in 10 years from about 18 million barrels a day now, the IEA predicts. That's more optimistic than current U.S. government estimates and a change from a year ago when the IEA said Russia and the Saudis would vie for number one.

As readers of these pages know, the key to this U.S. energy boom has been technological innovation and risk-taking funded by private capital. Specifically, the private oil and gas industry pioneered the use of horizontal drilling and hydraulic fracturing (or fracking) to tap unconventional deposits such as shale that once were technologically out of reach. It also wouldn't have happened if the industry wasn't able to drill on private land, free from federal regulation.

This is a real energy revolution, even if it's far from the renewable energy dreamland of so many government subsidies and mandates. In his 2007 State of the Union, George W. Bush—the Oil Man President of liberal myth—said America was "on the verge of technological breakthroughs that will enable us to live our lives less dependent on oil."

One Nation, Under Compromise?

The warm and fuzzy feeling of victory will soon give way to the issue-by-issue trench warfare 

by Richard A. Epstein 

Our political and financial realities will force both Democrats and Republicans to work toward smaller government.

My last Defining Ideas column on the Libertarian’s Dilemma started with the simple but critical observation that voting for any candidate is like buying a bundle of goods. To get the goods (or policy issues) you want, you have to accept the goods you don’t. So, the winning candidate may receive at most minority support for many of the most controversial items in their bundle of policies. We know that Obama won the 2012 election because voters, by a margin of 81 to 18, think that he “cares for people like me.” But that warm and fuzzy feeling will soon give way to the issue-by-issue trench warfare

Of Labor and Business

The power of this simple proposition is made apparent whenever particular issues are put on the ballot as separate initiatives, subject to an up or down vote. Two weeks ago, I wrote about the misguided Proposal 2 in Michigan, which sought to entrench—by constitutional amendment—collective bargaining in the state to the extent that it was not inconsistent with federal law. That initiative was beaten by a 58-42 margin in a state that President Obama carried comfortably and which also reelected the pro-labor Democratic Senator Debbie Stabenow.

When in doubt, do what the Danes do

Just a year after introducing it, Denmark has dumped its nannying tax on fatty foods

by Rob Lyons 

Gone, by popular demand: Denmark’s fat tax. ‘The fat tax is one of the most maligned we [have] had in a long time’, said Mette Gjerskov, the Danish food and agriculture minister, in a press conference on Saturday announcing the decision to ditch the policy. ‘Now we have to try improving the public health by other means.’

The tax - more accurately a saturated-fat tax - came into force in October 2011 and added 16 kroner (about £1.70 / US$2.70 at current exchange rates) per kilogram of saturated fat in any product that contained more than 2.3 per cent saturated fat. According to the OECD, that worked out as ‘equivalent to up to 30 per cent more for a pack of butter, eight per cent more for a bag of chips, and seven per cent more for a litre of olive oil’.

Denmark isn’t alone in adopting food taxes in recent times. Hungary also introduced a tax in 2011 on manufactured foods that are high in sugar, salt or caffeine where a ‘healthier alternative’ exists. Basic foods are not affected. Finland introduced a confectionery tax in 2011, but pastries, buns and biscuits are exempt. (That tax has since been cut by 25 per cent.) The Finns also have a soft-drink excise duty of 7.5 euro cents per litre and a similar drinks tax now applies in France.

Time is Money

Greece Allegedly Gets Time, Not Money

After forcing Greece into more austerity measures, the next tranche of emergency loans to Greece (most of which will ultimately do a round trip back to Brussels) is now delayed because the path Greece is on is still not sustainable.

Greece still requires additional funding of around €32 billion. Germany has said no and the ECB has said no.

Please consider Greece to get more time but no immediate aid.

Euro zone governments will not agree to disburse more money to debt-ravaged Greece on Monday, despite the country approving a tough 2013 budget, because there is not yet a consensus on how to make its debts sustainable into the next decade.

Finance ministers gathered in Brussels should, however, give Athens two more years to make the budget deficit cuts demanded of it, a concession that will require funding of around 32 billion euros, according to a draft document prepared for the meeting.

The Greek parliament passed an austerity budget for 2013 late on Sunday and a structural reform package last Wednesday, meeting the conditions for the release of the next tranche of 31.5 billion euros of emergency loans from the euro zone.

Welcome to the Nuthouse

How Private Financial Fiat Creates a Public Farce

By Zeus Yoammoyiannis

Nothing succeeds like failure when you are a big bank. We’ve already seen that. Too many articles have already been written about that.

Heads, the big banks win through their hugely profitable derivatives and other fake wealth vehicles on the way up the phony growth curve.

Tails, you, the citizen, loses as you are forced to redeem this toxic trash for real money in the form of government bailouts and Federal Reserve purchases as fake value collapses.

“O, the inhumanity, O the injustice.”

Hey, we get it. You can stop pounding the drums. Bring on Act II: “The current anti-capitalist farce and its riotous effects.”

Capitalism turned on its head

What happens to functioning capitalism when its core operating principles of value and money, risk, private property, profit, supply and demand, price discovery, transparency and accountability, productivity, and exchange of worth can selectively be erased on the whim of self-interested, politically connected players?

Living In 'The Day Before'

Don’t get fooled again!

By Mark J. Grant

The Day Before 

• March 15, 44 BC - Julies Caesar was assassinated
• December 25, 4 BC - Jesus Christ was born
• 476 AD-Augustulus deposed - end of 505 years of the Roman Empire
• July 16, 622 - Mohammed began writing Koran
• December 25, 800 - Charlemagne crowned “Emperor of the Romans” by the Pope
• October 14, 1066 - William of Normandy defeated the English
• June 15, 1215 - The Magna Carta was signed
• October 12, 1492 - Christopher Columbus set sail

Where Spain Is Worse Than Greece

Spain still has a lot of government austerity to endure before the cutting is done

By Matthew Dalton

By most measures, Greece’s economy is in worse shape than Spain’s. Greece has been largely shut off from financial markets for more than two years; yields on its bonds are still sky high. Gross domestic product has fallen nearly 20% over the previous three years. Spain can still borrow from private investors, and its GDP has fallen around 5% during the crisis.

But if you take forecasts from the European Commission seriously, Greece enjoys one formidable advantage over Spain: Its economy is running well below capacity, while the Spanish economy, despite an unemployment rate around 25%, is operating relatively close to full steam.

Why is that an advantage? According to the commission, it means that the Greek unemployment rate should fall sharply if the economy starts to recover again, without causing inflation. Spain faces a much more difficult situation. If the structure of its labor market doesn’t change, the commission’s analysis suggests that a nascent economic recovery in Spain could be hampered by labor shortages that would spark wage inflation.

French Central Bank Says France Will Enter Recession 4th Quarter

Berlin Suggests Plan For France

As expected, at least in this corner, things are going downhill rapidly in France.  The French central bank is now predicting recession for France.

Bear in mind Europe tends to use a pretty strict definition of recession - two consecutive quarters of negative GDP.

Courtesy of Google translate from El Economista, please consider France will enter recession in the fourth quarter, according to Bank of France. 

 The Bank of France expects the country into recession later this year, to predict a fall in Gross Domestic Product (GDP) of 0.1% in the fourth quarter, the same percentage that fell in the previous three months. If confirmed, it would be the first recession in the French economy since the 2009 crisis.

This is the first estimate of the situation issued by the Bank of France, which occurs a few days before you make the National Statistics Institute (INSEE), on November 15.

In its latest forecast, the INSEE predicted stagnation in the French economy in the last two quarters of the year and growth in the full year of 0.2%, one tenth less than what the government provides.

Production falls

In a note on circumstances, the Bank of France reported a further fall in industrial production in October, "mainly due to the continued decline in activity in the automotive sector."

We Just Had a Class War ...

And One Side Won

By Jonathan Chait

When President Obama took the stage at McCormick Place in Chicago well after midnight, we were all too wiped out with joy or depression or Nate Silver auto-refresh fatigue to pay careful attention to the speech the newly reelected president delivered. The phrase that lingered in most of our sleepy ears was the reprise of his career-launching invocation of the United States as being more than red and blue states. So soaring, so unifying. But those words were merely the trappings of magnanimity draped over an argument that was, at its core, harsher than the one he had regularly delivered during the campaign.

 The telling phrase came when Obama turned away from the thank-yous and patriotic hymnals into the guts of his remarks.  Despite all our differences, he transitioned, most of us share certain hopes for America’s future.  The key term here is most, as opposed to all most meaning less than 100 percent and possibly as little as 51 percent. He attributed to most Americans a desire for great schools, a desire to limit debt and inequality: a generous America, a compassionate America.

The public itself is an independent press regulator - we don't need another

When the state apportions morality, then the public is once again diminished

By Raheem Kassam,

When over 40 Conservative MPs co-sign a letter in The Guardian, you have to assume a certain level of organisation and collaboration. 

Formulating a letter that dozens of people feel at ease with putting their names to is no easy feat, especially, presumably, when many of them in question are devout Cameronistas, and others are 'the old guard'. 

But if you'll humour my skepticism for a moment you'll see why today's letter urging an independent press regulator is less likely to have been a sporadic coming together of like-minded individuals in the cause of 'unfreedom', but rather all a part of a prevailing narrative emanating from the Prime Minister's office.

David Cameron has been under great pressure to look as if he is doing something about a 'rogue press' following hacking scandals and the all too high profile Leveson Inquiry. This fact is no better proven than by those text messages that Cameron is said to have exchanged with the former editor of The Sun, Rebekah Brooks. And where better to publish such a letter than where you can be sure the statist intelligentsia will devour it and 'hopefully' think, "Well look at that. I guess the Tories aren't so bad after all," or words to that effect.

But before we even set about the issue of what press regulation might entail, and mention the millions of people fighting around the world to release themselves from the clutches of a state-regulated media (which is one small step away from nationalisation, I might add) - we must examine the most basic premise of the letter that has been supplied to today's Guardian.

Tax mad French aim for 300 percent tax hike for... chocolate spread

It's a nutty world of tax and spend in France. But this takes the biscuit

by Robin Shepherd

According to OECD figures, French government spending as a percentage of GDP is a whopping 56 percent. Just quote that figure to anyone who tells you we live in a neo-liberal, free-market capitalist world (the average in OECD countries is 46 percent, by the way).

Well, if you're going to bomb and strafe your people out of their hard earned money, it has to come from somewhere. So why not hit the poor beleaguered French family where it really hurts them, right there in the famous French kitchen.

According to France 24, the latest piece of dirigisme comes in the form of an attempt to hike taxes by 300 percent (!) on a key ingredient in the all too delicious Nutella hazlenut chocolate spread (no, they haven't paid us to say that, but donations would be very welcome).  

France 24 reports that:

"The bill, which was adopted by a Senate commission and heads to the National Assembly this week for review, has been dubbed by French media as the “Nutella tax”. Upon careful inspection of the spread’s ingredients, it turns out that roughly 20 percent of the product is made of palm oil, which is known to be high in saturated fats and can potentially cause heart disease.

"The widespread use of palm oil has also been criticised for leading to deforestation in countries like Indonesia and Malaysia."

BRUSSELS SPROUTS: Kafka's EU fruit and veg fiasco

Franz Kafka could not have thought up this latest EU bureaucratic nightmare, but Britain isn't innocent either

By Alexandra Swann

Enter stage left, Franz Kafka.

As is well known, the European Institutions have an entrenched aversion towards transparency. For this reason, if one speaks fluent Eurocrat the most interesting, and often the more appalling revelations and grievous, costly errors can be found by trawling the seemingly dull acres of studies, policies and consultations found within the Institution's websites.

I do it, so you don't have to.

This week, I stumbled across a small gem hidden in a study into agricultural subsidies, marked as health policy. When you read between the lines, the study has inadvertently revealed tensions at the very heart of Whitehall.

As a bit of background, in 2009 the Commission set up the EU School Fruit Scheme, an EU-wide scheme to provide fruit and vegetables to school children, with an annual budget of 90 million euros. Given that the UK contributes roughly 14 percent to the EU budget, we are covering around 12.6 million euros towards this budget.

French State's War on French Economy

State meddling at its worst

By Fabio Rafael Fiallo

In 2000, France's Prime Minister Lionel Jospin, leader of the Socialist Party and a Trotskyite in his youth, caused public outrage by acknowledging that, in the economic realm, "the state cannot do everything." Everywhere else under the sun, such an assertion would have been accepted as a mere statement of fact. Not in France, however, where the population has been educated to believe that the state can do more and better than the market.

That belief has been at work for quite some time. It is worth recalling the case of the Franco-British supersonic jet Concorde, sponsored and vaunted by General de Gaulle in the 1960s as a flagship of French "grandeur." The Concorde project took the form of an agreement, not between profit-seeking, autonomous firms, but between the French and British governments. The plane took off in 1969, but it was never bought by airlines other than those of the two countries concerned. It was a commercial fiasco.

In France, state-piloted economic crashes are anything but negligible. In the 1980s, French authorities decided to disburse taxpayers' money as way to help the launching of Minitel, a supposed competitor to the U.S.-created Internet, as well as the purchase of the domestically-produced computer TO7. Their fate? Well, Minitel has become a museum piece, while TO7 lived only 2 years (1982-1984) before ending up in garbage dumps.

Cue the state involvement in the rescue of the ailing Credit Lyonnais in the 1990s. That maneuver was worse than a fiasco, it was a scandal. High-risk loans and criminal embezzlements, as well as compensation payments aimed at avoiding legal suits, brought about losses that reached the equivalent of 20 billion euros.

The Hard Fiscal Facts

Individual tax payments are up 26% in the last two years

By Ron Newall

While the rest of America was holding an election last week, the gnomes at the Congressional Budget Office released the final budget totals for fiscal 2012. They're worth reporting because they illuminate the real fiscal choices that confront the country, as opposed to the posturing you'll be hearing over the next few weeks.

The nearby table lays out the ugly details. The feds rolled up another $1.1 trillion deficit for the year that ended September 30, which was the biggest deficit since World War II, except for each of the previous three years. President Obama can now proudly claim the four largest deficits in modern history. As a share of GDP, the deficit fell to 7% last year, which was still above any single year of the Reagan Presidency, or any other year since Truman worked in the Oval Office.

Tax revenue kept climbing, up 6.4% for the year overall, and at $2.45 trillion it is now close to the historic high it reached in fiscal 2007 before the recession hit. Mr. Obama won't want you to know this, but this revenue increase is occurring under the Bush tax rates that he so desperately wants to raise in the name of getting what he says is merely "a little more in taxes." Individual income tax payments are now up $233 billion over the last two years, or 26%.

This healthy revenue increase comes despite measly economic growth of between 1% and 2%. Imagine the gusher of revenue the feds could get if government got out of the way and let the economy grow faster.

It's the Welfare State, Stupid

Who deserves support? How much? How long?

By Robert Samuelson 

If you doubt there's an American welfare state, you should read the new study by demographer Nicholas Eberstadt, whose blizzard of numbers demonstrates otherwise. A welfare state transfers income from some people to other people to improve the recipients' well-being. In 1935, these transfers were less than 3 percent of the economy; now they're almost 20 percent. That's $7,200 a year for every American, calculates Eberstadt. He says that nearly 40 percent of these transfers aim to relieve poverty (through Medicaid, food stamps, unemployment insurance and the like), while most of the rest goes to the elderly (mainly through Social Security and Medicare).

By all means, let's avoid the "fiscal cliff": the $500 billion in tax increases and federal spending cuts scheduled for early 2013 that, if they occurred, might trigger a recession. But let's recognize that we still need to bring the budget into long-term balance. This can't be done only by higher taxes on the rich, which seem inevitable. Nor can it be done by deep cuts in defense and domestic "discretionary" programs (from highways to schools), which are already happening. It requires controlling the welfare state. In 2011, "payments for individuals," including health care, constituted 65 percent of federal spending, up from 21 percent in 1955. That's the welfare state.

Yet, the subject is virtually taboo. Because Americans disapprove of government handouts, we don't even call the welfare state by its proper name, preferring the blander term "entitlements" (the label used by Eberstadt). Mitt Romney's careless comment about "the 47 percent" receiving government benefits -- implying they're all deadbeats -- squelched any serious discussion in the campaign. Interestingly, his figure is probably low: More than 50 percent of Americans may already receive benefits. Obamacare will raise this, because families with incomes up to four times the federal poverty line ($91,000 in 2011 for a family of four) qualify for insurance subsidies.

Baptists and bootleggers on the retreat

US Gone to Pot, but Not Completely

by Mark Thornton

The only good thing about the 2012 campaign — other than its being over — is that much progress was made on marijuana policy. Marijuana was legalized in two states, Colorado and Washington. Medical-marijuana legislation passed in Massachusetts. Marijuana was decriminalized is several major cities in Michigan and Burlington, Vermont, passed a resolution that marijuana should be legalized. The only defeats were that legalization failed to pass in Oregon and medical marijuana was defeated in Arkansas.

This is a stunning turnaround from the 2010 campaign when Prop 19 in California failed to pass despite high expectations. I explained in detail why Prop 19 failed here. It was an unfortunately common story of Baptists, i.e., people who oppose it, and bootleggers, i.e., people who profit from black-market sales, who stopped the legalization effort.

With regards to the legalization victories in Colorado and Washington, Tom Angell, Director of LEAP (Law Enforcement Against Prohibition) called the election a "historic night for drug-law reformers." Paul Armentano, the deputy director of NORML (National Organization for the Reform of Marijuana Laws), called the Colorado and Washington victories "game changers," noting that "both measures provide adult cannabis consumers with unprecedented legal protections." He noted that "until now, no state in modern history has classified cannabis itself as a legal product that may be lawfully possessed and consumed by adults." Writing for the Marijuana Policy Project, Robert Capecchi called Colorado and Washington "historic victories," saying that they "represent the first bricks to be knocked out of the marijuana prohibition wall."

Laws should be made by The People, not judges

Antonin Scalia is unpopular with liberals, but he has a point about democracy

by Luke Gittos 

As much as one can be a fan of judges, I have long been a fan of justice to the US Supreme Court, Antonin Scalia.

This is despite, not because of, the fact that he is a social conservative and an outspoken critic of many of the Supreme Court’s most liberal decisions. He is one of the most controversial figures in American public life. He is routinely described as ‘evil’ and ‘prehistoric’ for his opinions on cases involving, for example, laws banning homosexual sex and the use of torture. Following his outspoken defence of the Supreme Court’s decision in Bush v Gore, the case which is commonly thought to have ‘decided’ the 2000 US presidential election, many think of him as a right-wing ‘counterrevolutionary’, whose goal is to force a radically conservative agenda through his unflinching endorsement of conservative laws.

The striking thing about the opprobrium that Scalia receives is that he often arrives at his conclusions because of his devout commitment to the separation of powers and limiting the power of the federal courts to interfere in the democratic lawmaking process. Last week, he was in the news for saying that draconian amendments to the Foreign Intelligence and Surveillance Act, which were passed in 2008, could not be challenged in the federal courts, saying that the fact that challenge lay outside the court’s jurisdiction meant it was ‘none of our business’.

In the process of arguing for limitations to the federal courts’ power to bestow rights, Scalia has certainly defended the rights of states to hold and enforce some pretty awful laws. In the landmark 2003 case Lawrence v Texas, Lawrence and his partner had been arrested in their homes for having homosexual sex, which has been outlawed under Texan criminal law since 1974. Lawrence took the case to the Supreme Court to argue that the federal constitution protected the right for homosexuals to have sex, under the Fourteenth Amendment, which is known as the ‘due-process clause’. The amendment prohibits any state body from depriving a citizen of life, liberty or property without proper due process. The argument for Lawrence was that in being denied the right to have sex in his own home, he had been arbitrarily denied a significant aspect of his liberty.

A Return to Judicial Activism

What Obama’s second term means for the courts

BY ADAM FREEDMAN

Tuesday’s election victory means that President Obama will have four more years to reshape the federal judiciary. While it remains to be seen whether he can achieve any legislative victories in the face of Republican opposition, there is little doubt that he will, for the most part, get to appoint the judges of his choice.

Four justices on the Supreme Court are in their mid- to late seventies now: Ruth Bader Ginsburg, Antonin Scalia, Anthony Kennedy, and Stephen Breyer. With past as prelude, we can expect any Obama nominees to be reliably liberal in the mold of his two appointments from the first term, Justices Elena Kagan and Sonia Sotomayor. At a minimum, the president will likely replace the aging liberals Ginsburg and Breyer with younger models. But it’s also possible that Kennedy or Scalia, or both, could leave the bench during the next four years, presenting Obama with an opportunity to forge a liberal majority on the Court.

An invigorated and expanded liberal bloc on the Court could undo many important precedents. The Court’s decisions, for example, protecting speech rights of corporations (Citizens United v. FEC), school choice (Zelman v. Simmons-Harris), and the right to bear arms (District of Columbia v. Heller and McDonald v. Chicago) were all decided on 5–4 votes. Challenges to Obamacare and other recent regulations are likely to present the Court with major decisions on religious liberty and federalism over the next few years.