Impeaching Philadelphia District Attorney Larry Krasner

Crime has surged under the progressive prosecutor, who won’t change his soft-on-criminal policies

WSJ editorial.

"Progressive district attorneys have presided over a resurgence in urban crime, and the demand for a political correction is rising. The latest DA in the dock is Philadelphia’s Larry Krasner, and on Wednesday Republicans in the state House filed articles of impeachment against him.

Mr. Krasner won election in 2017 with the help of George Soros, and crime has surged on his watch. On Monday a bipartisan House committee faulted the district attorney and his policies for contributing to “a catastrophic rise in violent crime at the expense of public safety.”

On Tuesday Charles Cherry, age 30, became the thousandth person slain in Philadelphia since Jan. 1, 2021. That’s up from 535 murder victims over the same period in 2016-2017. This year robberies with a gun are up 160% and aggravated assaults involving a gun are up 62% compared to the same period in 2017, the year before Mr. Krasner took office.

Philadelphia police data show that so far this year at least 1,938 people have been shot. That includes “eight victims of non-fatal shootings who have not yet celebrated their sixth birthdays,” the committee report notes.

Under Mr. Krasner, “criminals know that their likelihood of getting caught with a gun is slim and, even if they get caught, they feel that they can leave without severe (or any) consequences,” according to an analysis commissioned by the Philadelphia Police Department and quoted in the House committee’s report.

In a statement to the Philadelphia Inquirer Monday, the DA’s office said the committee report “fails to establish a connection between reported crime incidents and Krasner’s policies because one doesn’t exist.”

But then why the spike in crime? Mr. Krasner announced upon taking office that he’d no longer seek cash bail for some 25 offenses, including driving under the influence, retail theft and some drug offenses. Last year 67% of all offenses and 70% of violent offenses in Philadelphia were withdrawn or dismissed, compared to 35% and 51% respectively in 2017. The House committee acknowledged that these statistics combine cases when Mr. Krasner's office decided not to prosecute and cases subject to judicial dismissals.

Yet it also flags “a troubling trend” in Mr. Krasner’s handling of gun crimes. His office decided not to prosecute in 18% of cases in 2019 and 21% of cases in 2020, “compared to the respective statewide averages of 8% and 10%.”

The House articles of impeachment claim Mr. Krasner’s “lack of proper leadership” is a “direct and proximate cause of the crisis” in Philadelphia and accuse him of being “derelict in his obligations to the victims of crime.” They also claim Mr. Krasner has “at every turn, obstructed the efforts” of the House committee investigating the spike in crime.

Under the Pennsylvania Constitution, the impeachment standard is “misbehavior in office,” and an impeached official is disqualified from holding office again. Pennsylvania requires two-thirds of the Senate for conviction, which would require a bipartisan vote.

Mr. Krasner dismisses impeachment as partisan politics and an attempt to “erase Philadelphia’s votes.” Last week he also compared Republican criticism of lawlessness in Philadelphia to “the Southern strategy” he claims the GOP used and accused Republicans of engaging in “coded and racist messaging.” That resort to racial politics may surprise black residents of Philadelphia who are the most frequent victims of gun violence.

Whether to impeach Mr. Krasner is a political question, and Republicans will have to consider that Mr. Krasner won re-election last year with nearly 70% of the vote. But crime continues to surge, and Mr. Krasner refuses to change the policies that encourage it. His damage to Philadelphia and to the victims of crime is undeniable, impeachment or not."

The Supreme Court and Racial Preferences

The Justices can reassert the principle that discriminating by race is illegal

WSJ editorial.

"A great triumph of 20th-century American government was the Civil Rights Act of 1964. It broke the back of Jim Crow and reasserted the principle that no one should be discriminated against for his race. The Supreme Court has a chance to reaffirm that vital American principle on Monday when it hears challenges to the admissions practices at Harvard and the University of North Carolina(Students for Fair Admissions v. Harvard College and SFFA v. University of North Carolina).

The case is an important moment for American law but even more for the country’s social and political future. America is becoming increasingly diverse. Yet rather than assimilate this melting pot with race-neutral principles, many in our political class want to divide America into racial categories, allocating jobs, benefits and even elections based on race.

The Biden Administration is trying to embed this practice across the federal government and impose it on the private economy. This is a destructive trend that will inevitably lead to more racial balkanization and enmity.

***

The Supreme Court has too often assisted this racial division, notably in education. The seminal mistake was the 1978 Bakke decision in which a plurality opinion by Justice Lewis Powell opened the door to racial preferences. Universities pushed that door wide open, which the Court ratified in the misbegotten 5-4 Grutter v. Bollinger decision in 2003.

Justice Sandra Day O’Connor predicted for the majority in Grutter that racial preferences wouldn’t be necessary in admissions in 25 years, but 19 years later they are even more pervasive. The plaintiffs in Harvard and UNC argue that the schools violate Title VI of the Civil Rights Act, which bars recipients of federal aid from discriminating by race. The Fourteenth Amendment’s equal protection clause also prohibits states, including public universities, from discriminating by race.

Grutter’s great mistake was carving out an exception for colleges to use race in admissions to achieve a diverse student body. The Court set some guardrails, including that race may only be a “plus” factor, cannot "unduly harm” non-minority applicants; and must be considered alongside “all” forms of diversity. Universities were also required to consider race-neutral alternatives and to ensure that racial preferences are “limited in time.” But the Court said—wink, wink—it would be “presumed” they are acting in “good faith.”

Evidence uncovered from Harvard and UNC shows they aren’t. Like most colleges, Harvard uses “holistic” admissions reviews that include nonacademic and subjective criteria. Applicants are assigned academic, extracurricular, athletic, personal and overall ratings. But the personal ratings seem to reflect racial bias, and they are weighted heavily in the overall scores.

Applicants with similar academic qualifications thus have hugely disparate admission rates. The plaintiffs show that only 22.2% of Asian-Americans who rate in the top 10% academically received a high personal score compared to 34.2% of Hispanics and 47% of blacks. Do these differences owe to conscious prejudice or what the left calls “implicit” bias?

Asian-Americans in the top 10% academically have a 12.7% chance of getting into Harvard compared to 15.3% for whites, 31.3% for Hispanics, and 56.1% for blacks. Harvard can’t explain the large disparities if race is merely one factor among many, or why admissions officials apparently believe Asian-Americans have personal attributes that make them less worthy.

UNC’s admissions also demonstrate racial disparities that suggest bias. According to one statistical analysis, an out-of-state Asian-American in the fourth highest academic decile has only a 6.5% chance of admissions compared to 57.7% for a black. Another analysis finds that a white, out-of-state male with 10% odds of admission would have a 98% chance if he were black.

Online chats among admissions officers also show that UNC held non-Asian minorities to lower admissions standards—what George W. Bush once called the soft bigotry of low expectations. “If its brown and above a 1300 [SAT] put them in for [the] merit/Excel [scholarship],” one officer wrote. Another: “Stellar academics for a Native Amer/African Amer kid.”

Both colleges claim they don’t put undue emphasis on race. Yet a district court judge found that race was “determinative” for at least 45% of Harvard’s admitted black and Hispanic applicants. If Harvard eliminated racial preferences, the black share of its undergrad class would fall to 6% from 14% and to 9% from 14% for Hispanics. Race is a triple-plus factor.

Colleges could instead adopt race-neutral policies that still benefit minorities as public universities in nine states have done. For instance, Harvard could reduce alumni legacy preferences that primarily benefit affluent whites and give more weight to economic background. California schools have managed this without great rancor since voters there barred government discrimination by race in a referendum in 1996 and again in 2020.

***

The Harvard and UNC cases prove that Grutter was wrongly decided and unworkable. There are no substantive reliance interests that would argue against overturning it. Colleges could abandon racial preferences tomorrow without overhauling their admissions process. Many no doubt would devise race-neutral ways to admit minority applicants.

Grutter’s misplaced hope was that economic mobility would render racial preferences obsolete. Instead, colleges have helped to cover up the failures of K-12 public education, which disproportionately harms black and Hispanic children. Rather than leading to more racial comity, Grutter has bred division and resentment. This may explain why a majority of Americans in most polls say they want race-neutral government policies and admission standards.

By ruling that racial preferences in admissions are illegal, the High Court can send a powerful message that discriminating by race is contrary to American principles and destructive to social harmony."

Amid the Pandemic, Progress in Catholic Schools

Enrollment and student achievement are rising, thanks in part to parents

By Kathleen Porter-Magee. She is superintendent of Partnership Schools, a management organization that runs 11 Catholic schools in New York City and Cleveland, and an adjunct fellow at the Manhattan Institute. Excerpts:

"In March 2020, Catholic schools were among the first to close as Covid hit. In the fall of 2020, after we had learned more about curbing superspreader events and as it became clear that children were the least vulnerable to the virus, more than 92% of Catholic schools across the country re-opened for in-person learning, compared with 43% of traditional public schools and 34% of charters."

"if all U.S. Catholic schools were a state, their 1.6 million students would rank first in the nation across the NAEP reading and math tests for fourth and eighth graders.

Catholic-school students now boast the nation’s highest scale scores on all four NAEP tests. The average score among fourth-graders in Catholic schools was 233, 17 points higher than the national public-school average, or about 1½ grade levels ahead. In eighth-grade reading, the average score for Catholic school students was 279, 20 points higher than the national public-school average, or about two grade levels ahead.

When disaggregated by race, Catholic schools showed significant gains since 2019. In particular, achievement among black students enrolled in Catholic schools increased by 10 points (about an extra year’s worth of learning), while black students in public schools lost 5 points and black students in charter schools lost 8 points. Similarly, on the eighth-grade reading test, Hispanic students in Catholic schools gained 7 points while Hispanic students in public schools lost 1 point and Hispanic students in charter schools lost 2 points."

"As public-school enrollment plummeted, Catholic-school enrollment rose by about 4% between 2020-21 and 2021-22"

"Those trying to undercut the Catholic-school success story dismiss the results as merely the high performance of elite private schools. But K-8 Catholic schools are the only private elementary schools in America that serve the urban poor at scale. The average annual tuition for a K-8 Catholic school is $5,300—about one-third what states spend per child on public schools.

At Partnership Schools, we serve under-resourced communities in 11 Catholic schools. Enrollment surged over the past two years, growing by 40% in our Cleveland schools and 18% in our New York City ones. In New York, our share of low-income students grew from 65% to 79% since 2020. In Cleveland, almost all our students are low-income, and the average annual income of their families is $18,000."

Will Biden Embargo U.S. Oil?

The White House is considering a self-defeating ban on refinery exports

WSJ editorial.

"Winston Churchill is famously said to have said—who knows if he actually did—that Americans will do the right thing after exhausting every possibility. Alas, the Biden Administration seems intent on exhausting every bad policy to reduce gasoline prices. Its new brainstorm is a ban on refinery exports.  

The White House called in oil executives for a meeting to discuss Hurricane Fiona recently—then accused them of reaping windfall profits and threatened an export ban. In August Energy Secretary Jennifer Granholm sent a letter to refiners threatening “emergency measures” if they didn’t reduce exports. The risk that the Administration follows through on its threats has grown since OPEC+’s production cuts this week, even though it would be counterproductive.

U.S. gasoline and distillate fuel (e.g., diesel, heating oil) exports have increased this year, but they aren’t back at pre-pandemic levels. Refiners have been running all out while domestic gasoline demand has been running lower than in 2020, no doubt owing to higher prices. The big problem is five U.S. refiners have shut down in the past two years.

This has reduced the U.S. fuel supply on the East and West Coasts. Pipelines carrying fuel from Gulf Coast refineries to the East Coast are full. And there aren’t enough ships to move more that comply with the Jones Act—the protectionist law that requires cargo transported between U.S. ports to be on American-owned, -built and -crewed ships.

Gulf Coast refined fuel doesn’t comply with California's stringent environmental standards, and some doesn’t even meet U.S. specifications. That’s one reason one million barrels a day of U.S. distillate is exported to Latin America. If these exports stopped, our neighbors would have to find other fuel sources such as Russia or Venezuela, which refines Iranian crude.

U.S. fuel exports to Europe have also increased this year to power factories and electricity generators, and to keep homes warm amid a shortage of natural gas and sanctions on Russian oil imports. Biden officials earlier this year called on U.S. refiners to increase diesel exports to Europe. If these stop now, Europeans could face a cold and dark winter.

Americans would also be harmed. A July study from the American Council for Capital Formation (ACCF) estimated that an export ban could result in 1.3 million barrels a day of shuttered U.S. refining capacity in the Gulf Coast. This would reduce crude oil production in central states such as Oklahoma and the global fuel supply.

This would mean higher U.S. fuel prices, especially on the East Coast, which depends more on imports. The ACCF study estimated that an export ban would reduce U.S. GDP by $44 billion next year and increase prices for more than two-thirds of U.S. consumers. It would do the opposite of the Administration’s ostensible goal.

President Biden may do it anyway because he feels backed into a corner by OPEC. It would rank as his single most self-defeating energy policy—in a long, long line of them."

‘The Cash Monster Was Insatiable’: How Insurers Exploited Medicare for Billions

By next year, half of Medicare beneficiaries will have a private Medicare Advantage plan. Most large insurers in the program have been accused in court of fraud.

By Reed Abelson and Margot Sanger-Katz of The NY Times. Excerpts:

"The health system Kaiser Permanente called doctors in during lunch and after work and urged them to add additional illnesses to the medical records of patients they hadn’t seen in weeks. Doctors who found enough new diagnoses could earn bottles of Champagne, or a bonus in their paycheck.

Anthem, a large insurer now called Elevance Health, paid more to doctors who said their patients were sicker. And executives at UnitedHealth Group, the country’s largest insurer, told their workers to mine old medical records for more illnesses — and when they couldn’t find enough, sent them back to try again.

Each of the strategies — which were described by the Justice Department in lawsuits against the companies — led to diagnoses of serious diseases that might have never existed. But the diagnoses had a lucrative side effect: They let the insurers collect more money from the federal government’s Medicare Advantage program.

Medicare Advantage, a private-sector alternative to traditional Medicare, was designed by Congress two decades ago to encourage health insurers to find innovative ways to provide better care at lower cost. If trends hold, by next year, more than half of Medicare recipients will be in a private plan.

But a New York Times review of dozens of fraud lawsuits, inspector general audits and investigations by watchdogs shows how major health insurers exploited the program to inflate their profits by billions of dollars.

The government pays Medicare Advantage insurers a set amount for each person who enrolls, with higher rates for sicker patients. And the insurers, among the largest and most prosperous American companies, have developed elaborate systems to make their patients appear as sick as possible, often without providing additional treatment, according to the lawsuits.

As a result, a program devised to help lower health care spending has instead become substantially more costly than the traditional government program it was meant to improve.

Eight of the 10 biggest Medicare Advantage insurers — representing more than two-thirds of the market — have submitted inflated bills, according to the federal audits. And four of the five largest players — UnitedHealth, Humana, Elevance and Kaiser — have faced federal lawsuits alleging that efforts to overdiagnose their customers crossed the line into fraud."

"The government now spends nearly as much on Medicare Advantage’s 29 million beneficiaries as on the Army and Navy combined. It’s enough money that even a small increase in the average patient’s bill adds up: The additional diagnoses led to $12 billion in overpayments in 2020, according to an estimate from the group that advises Medicare on payment policies — enough to cover hearing and vision care for every American over 65.

Another estimate, from a former top government health official, suggested the overpayments in 2020 were double that, more than $25 billion."

The School Lockdown Catastrophe

The awful NAEP scores show damage from closing classrooms

WSJ editorial. 

"The pandemic lockdowns were a policy blunder for the ages, and the economic, social and health consequences are still playing out. But the worst catastrophe was visited on America’s children, as Monday’s release of the latest National Assessment of Educational Progress shows.

The 2022 NAEP test, often called the nation’s report card, found a record drop in learning across the U.S. since the last test in 2019. The tests measured proficiency in math and reading for fourth and eighth graders, and the harm from closed schools and online-only instruction is severe and depressing.

America’s schools weren’t doing all that well before the pandemic, but the lack of in-school learning made them worse. Eighth graders lost eight points on math since 2019, falling to an average 274 out of a possible 500. Fourth graders lost five points to an average of 236 in 2022. Not a single state or large school district showed better math performance.

The news is little better on reading, with the average score for fourth and eighth graders dropping by three points. Nationwide only 33% of fourth graders and 31% of eighth graders read at or above grade proficiency.

It’s hard to understate the human damage that these dry statistics represent. The learning loss is considerable and will take years to make up, if it ever is. Children who fall behind in reading skills have difficulty learning other subjects. The numbers also mean that millions of young Americans don’t know even the basics of writing and arithmetic.

The NAEP breaks down scores by states and school districts, though it is hard to compare scores by the degree of lockdowns. Every state lost ground to some extent, and different school districts across states often had different lockdown policies. There were also surprises, like a relatively small learning loss in Los Angeles, for unexplained reasons. Some 200,000 children were chronically absent from L.A. schools last year, which makes the results even odder.

But more often students in districts that struggled before the pandemic and had some of the most stringent lockdowns had some of the worst learning loss. In Detroit the average fourth-grade math scores fell 12 points to 194—20 points below basic mastery of fundamentals. The data-analytics company Burbio says Detroit students had access to in-person education only 51.2% of the 2020-2021 school year.

Fourth graders’ average math scores have now fallen below basic levels in Milwaukee, Baltimore, Philadelphia and Cleveland. In-person instruction was available less than one-fifth of the 2020-2021 school year in all of these cities, according to Burbio. Baltimore and Cleveland fourth graders recorded a 15-point drop since 2019.

Compare that to three Florida districts covered by NAEP, which offered in-person instruction 90% or more of the time in 2020-2021 by Burbio’s count. Fourth-grade math skills declined by seven points in Duval County, one point in Hillsborough County, and five points in Miami-Dade. Yet in all three districts the average fourth grader remained above basic mastery of math fundamentals in 2022.

The NAEP results support the case for school choice. Charter school performance was uneven, but in at least 11 states charter fourth graders outperformed their non-charter counterparts in math in 2022, including in Alaska (+16 points), Nevada (+12 points) and North Carolina (+21 points). NAEP says reporting standards were not met for a charter comparison in 22 states.

Catholic schools tended to stay open during the pandemic, and on average their fourth and eighth graders scored higher in reading and math than public-school students. Department of Defense schools performed even better. Students deserve an escape route from schools that can’t prepare them for life and work.

These learning losses didn’t need to be as severe as they are because the school lockdowns didn’t have to continue as we learned more about Covid’s relatively small risk for children. Sweden kept its schools open and avoided the catastrophic learning loss of the U.S.

The school closures were a political decision, typically influenced by teachers unions. The political consequences now should be a backlash against the politicians who let the unions close the schools for so long. For starters, that means anyone endorsed by American Federation of Teachers chief Randi Weingarten."

It Is Simply Not the Case That Globalization “Led to Economic Hardship Among Working Class Families”

By Stan Veuger of AEI.

"Instead of accepting either of the views presented here as correct, I would strongly dispute the premise underpinning the disagreement. It is simply not the case that globalization “led to economic hardship among working-class families.” In fact, if we think of the modern era of globalization as having started around 1990—around the fall of the Berlin wall and the dissolution of the Soviet Union—the opposite holds true.

My colleague Michael Strain likes to use July 1990, a business cycle peak, as the base period for comparisons along these lines. Average real wages for production and non-supervisory jobs have grown by around 20 percent between then and now using the CPI, or by about 40 percent using the PCE. In fact, it’s the twenty years before 1990—with price and wage controls in the United States, no NAFTA, and closed, centrally planned economies in eastern Europe and much of Asia—that were a disaster of wage stagnation.

Of course, the ebbs and flows of the free-enterprise system do not benefit everyone on any given day, and one can easily find people whose economic circumstances were negatively affected by import competition. But no cost-benefit analysis worth its salt should count only those costs.

What is true is that disastrous land use policies across much of the West have made it difficult for the benefits of globalization to materialize fully. Restrictions on the construction of new housing in superstar regions have excluded many less-privileged workers from reaping the fruits of agglomeration economies. At the same time, immigration restrictions and dropping fertility have contributed to the depopulation of other regions. Not coincidentally, those are often regions where cultural maladies have led to significantly intensified or even self-inflicted economic harm.

But those are errors wholly unrelated to the attitudes and policies typically associated with globalization—openness, freedom of movement, free trade, liberalized capital flows. Similarly orthogonal are the cruel and authoritarian domestic policies of Chinese dictatorship. It is those policies that should be the target of our ire, not the recipe for success that is globalization."

Meta’s Drop in Stock Price Unlikely to Dissuade Antitrust Inquiries, but It Should

By Alex Reinauer of CEI.

"“We don’t even know what it is yet.” That’s how the theatrical depiction of Mark Zuckerberg described “The Facebook” to his then co-founder Eduardo Saverin in the 2010 film, The Social Network.

“We don’t know what is it. We don’t know what it can be. We don’t know what it will be.”

Much of the same can be said about the Metaverse. At The Wall Street Journal’s  “Tech Live 2022” event last Wednesday, columnists asked several tech executives to finish the following sentence: “The Metaverse is …”

The answers varied. Snapchat CEO Evan Spiegel said “living inside a computer.” Microsoft Gaming CEO Phil Spencer, replied “a poorly built video game.” And Apple executive Greg Joswiak and Craid Federighi agreed on “a word I’ll never use.”

The responses weren’t surprising. After all, these tech executives represent Meta’s biggest competitors. But others have cast doubt on the company’s pivot to the Metaverse with the acquisition of the virtual reality company Oculus in 2014. Elon Musk stated in December 2021, “I don’t see someone strapping a friggin’ screen to their face all day.” 

Meta’s stock plunged this week, as you might have heard, with commentators pointing to the company’s firm commitment to virtual reality and the spending of $25 billion on R&D just this year. Meta has sold more than 15 million units of its Quest 2 headset, according to some estimates. But it’s unclear if the purchase of Oculus will pan out as Zuckerberg envisioned.

It’s a prime example of the risk companies take when they make acquisitions and attempt to innovate.

It remains to be seen if the drop in Meta’s stock will sway the momentum of FTC Chair Lina Kahn’s interest in the social media company. Meta’s drop in revenue and users earlier this year certainly didn’t dissuade the FTC from investigating Meta’s acquisition of the VR fitness app Unlimited.

We don’t know what the Metaverse is yet. We know it’s predicated on virtual reality, with some hoping that the platform will fully incorporate blockchain technology. But we don’t know the impact the platform will ultimately have on the stream of commerce.

Meta’s Facebook is already in decline among younger users. And many of the naysayers on the long-term success of the Metaverse are seeing the company’s stock drop as a foreseeable day of reckoning.

The future of the Metaverse is up to Meta, its shareholders, and its users. It certainly shouldn’t be up to the Federal Trade Commission (FTC) or other regulatory agencies. Acquisitions help companies innovate to deliver new products and emerging technologies. The FTC should stay out of the way."

Once discrimination in the name of social justice is recognised as legitimate, all the safeguards of individual freedom of the liberal tradition are gone

See Bonus Quotation of the Day from Cafe Hayek.

"from page 332 of F.A. Hayek’s October 1973 Wincott Memorial Lecture – titled “Economic Freedom and Representative Government” – as the text of this lecture appears as chapter 24 in the hot-off-the-press Essays on Liberalism and the Economy (2022), which is volume 18 (expertly edited by Paul Lewis), of The Collected Works of F.A. Hayek:

Differences in wealth, education, tradition, religion, language or race may today become the cause of differential treatment on the pretext of a pretended principle of social justice or of public necessity. Once such discrimination is recognised as legitimate, all the safeguards of individual freedom of the liberal tradition are gone. If it is assumed that whatever the majority decides is just, even if what it lays down is not a general rule, but aims at affecting particular people, it would be expecting too much to believe that a sense of justice will restrain the caprice of the majority: in any group it is soon believed that what is desired by the group is just."

Rewriting Protectionist History

By Scott Lincicome of Cato. Excerpt:

"Over at National Review today, I correct recent claims from American Compass’ Wells King and Dan Vaughn that 1980s U.S. automotive protectionism—in the form of Japanese “voluntary export restraints”—was a tremendous success, boosting both Japanese investment in the United States and domestic “Big 3” car manufacturers at minimal cost to American consumers or the economy more broadly. As I explain, “a fuller accounting… reveals the VERs not to be some inspiring success but instead a cautionary tale of American industrial policy’s high costs and failed objectives.” Owing to word limits and format (as a letter in the “dead‐​tree” magazine), however, several aspects of my original critique—hyperlinks, charts, snarky asides, etc.—were left on the cutting room floor. This blog post will therefore serve as a supplement to the letter, which you can read in full over at NR.

Let’s start with the litany of rigorous economic studies showing that the consumer costs of the VERs were far greater than the $5 billion total King and Vaughn provided, due in large part to the fact that (contra their figures) the quotas increased the prices of not just Japanese cars, but also American and European ones too, and they lasted for another decade after President Reagan wisely disavowed them in early 1985:

As I note in my letter, this means that the automotive quotas cost, per Dinopoulos and Kreinin (1988), as much as $6 billion (around $16.5 billion in 2022 dollars) in 1984 alone—a burden that persisted for several more years and was, per the New York Fed study, disproportionately borne by Americans with lower incomes.

That burden, moreover, was just the VER’s seen economic costs. As Cato adjunct Don Boudreaux explains, there were significant unseen economic harms that remain unexplored and unknowable:

King and Vaughn never ask “As compared to what?” Because the VERs caused Americans to pay higher prices for automobiles – on average about $1,000 more per vehicle* – which goods and services were, as a result, denied to American consumers? And which industries in America shrank, and which jobs in America were destroyed or not created, by whatever artificial diversion was effected by the VERs of resources into increased auto manufacturing in America?

Next, the claim that the VERs helped the Big 3 (or, per King, “saved Detroit”) and their unionized workforce is also, at best, a stretch. The biggest problem here was the VERs design:

• First, as quotas, the measures funneled most of the additional dollars that U.S. consumers were forced to spend on cars not to the Big 3 or to the U.S. Treasury (as tariffs do), but to foreign automakers via what economists call “quota rents.” As Dartmouth’s Doug Irwin recalls in his epic book, Clashing over Commerce, “The second most costly trade restriction in the 1980s was Japan’s auto VER. If the VER had been removed in 1984, De Melo and Tarr (1992) calculate that the welfare gain would have been $10 billion, of which $8 billion was the quota rent transferred to Japanese producers.” (For reference, $8 billion in 1992 is around $16 billion today.) Upstart Korean and established European automakers also benefited from the VERs, not only because of higher prices and quota rents but also because their Japanese competition was limited. Overall, it was a great time to be a foreign automaker selling cars America; for American car‐​buyers, on the other hand, not so much.
• Second, the quotas were set based on the number, not the value, of Japanese cars shipped. This gave Japanese automakers an incentive to spend all that quota rent cash on quality enhancements, marketing, and larger, more expensive models that further boosted their profits and competed more directly with the Big 3. (Japanese brands Acura, Lexus, and Infinity all got their start during the VER period.)
• Third, the quotas encouraged and allowed Japanese automakers, aided by Tokyo, to operate in the United States as “legal” cartel. “The big problem for the U.S.,” one observer noted in 1993, “was that it couldn’t complain of the anti‐​competitive nature of [Japan’s] setting of a quota and allocating market shares because the U.S. was the one who suggested the quota in the first place.” Oops.

For these and other reasons, economists generally agree that, to the extent a government must restrict trade, quotas are one of the worst possible ways to do it.

There’s also little evidence that the VERs put the U.S. auto industry onto a path of long‐​term global competitiveness and financial sustainability. For starters, the Big 3 spent its windfall profits like protected industries so often do—unwisely: “rather than investing more of their short run profits to quickly catch up with the Japanese… auto executives purchased financial, aircraft, and computer companies, wrote books, headed monument restoration commissions, and gave themselves hefty bonuses for earning profits from a restrictive trade agreement.” The Washington Post noted much the same in 1985, providing this helpful example: “General Motors Corp.‘s well‐​advertised Saturn project (a mere 200,000-car potential) will cost only $450 million, whereas GM spent five times that sum— $2.5 billion— to acquire Electronic Data Systems Corp., among other nonauto investments.” (Saturn is, of course, out of business today.)

To the extent that Detroit automakers did improve quality during the 1980s, they still badly lagged the Japanese throughout the 1980s and early 1990s. In 1985, for example, Big 3 cars continued to necessitate repairs at double the frequency of those made in Japan:

Indeed, because the Japanese were also innovating in the 1980s, the quality gap between them and U.S. automakers actually widened by 1990:

“Without a doubt, the Japanese won the 1980s,” said Chris Cedergren, an automotive analyst with J. D. Power & Associates, a research firm in Agoura Hills, Calif., that publishes studies that are considered, both here and in Detroit, to be the last word on automotive quality. “The Japanese are winning the war.”

Even Detroit executives–who usually like to publicize only their own quality gains–quietly admit that they have failed to catch Japan during their decade‐​long race.

…

J. D. Power’s surveys–perhaps the only quality measurements used internally by every major auto company in Japan and the United States–have found that while the domestics reduced their defects by 8% in 1989, the Japanese cut theirs by 17% to an all‐​time low, effectively opening up a wider quality gap over Detroit. In 1988, measured by defects per 100 cars, the Japanese had an 18% quality advantage over the domestic industry; in 1989 the gap was 27%, according to J. D. Power.

“The quality gap is still there, and if anything, it’s getting bigger,” Cedergren warned. “The domestics are certainly improving, but the Japanese are too. The domestics are now only about where the Japanese were in 1983 or 1984.”

Falling sales and market share—which resumed its decline after a brief uptick in 1985 (see figure below)—caused GM, Ford and Chrysler to lay off tens of thousands of workers, temporarily shutter almost two‐​thirds of their 62 assembly plants, delay new investments, and sell off old ones.

According to the New York Times a month earlier, “the Japanese still hold a competitive advantage, and some analysts say Detroit used too little of its profits from the quota‐​protected years to develop new products. Now the Japanese, loaded with cash, are able to speed the pace of new‐​model introductions and increase the pressure on Detroit.” Given these and other pressures, recent decades have seen six different American car brands (AMC (1988), Plymouth (2001), Oldsmobile (2004), Saturn (2010), Pontiac (2010), and Mercury (2011)) shut down. So much for saving Detroit."