Crime and No Punishment

The New York Sun comments on the state of New York passing a new law to prevent the New York Police Department from using its database of information gathered from its stop and frisk efforts. The database has been used to produce the past 18 months over 170 arrests, including 17 murders, 7 rapes, 11 shootings, and 36 robberies.

I'm not surprised that the leftists in New York have, given the outrage vented over the Arizona immigration law which is less troublesome than New York City's stop and frisk policy, have put these restrictions in place.

When the left had its way with New York City's mayoral and police administration, crime rates soared, culminating in 1990 with over 2,200 murders. In 2009, fewer than 500 murders occurred. Not only did this save great suffering upon the part of the people not killed and their families, but it has led to a remarkable renaissance in New York as many people no longer fear living, working, or visiting the city.

Many factors no doubt contributed to this decline in crime, including stopping people who the police under a "reasonable suspicion" standard and frisk them. Not only are some arrested from these stop and frisk encounters, but the policy's biggest impact is probably as a deterrent to people carrying weapons - if you know the police may stop you, you are less likely to carry a weapon that can get you arrested. Moreover, the data derived from these encounters has gone into a database to investigate future crimes.

Retreating from the policies that save lives and make New York safer may make leftists feel better. Unfortunately, it makes all of us less safe.

That Was Fast

Often the negative consequences of the government's intervention in the market takes some time to become apparent. But the egregiousness of Barack Obama's assault on the free enterprise system is so pervasive that we often see the impact in remarkably, and sadly, short order.

As example, a couple weeks after the passage of the healthcare bill, a number of prominent companies reported large write-offs due to the increased costs the healthcare bill will impose on them. When Congressmen claimed this was false, because "everyone knows the healthcare bill will reduce costs and not increase them", Congress began an investigation.

That investigation was quietly and quickly shelved when corporate documents submitted in response to the investigation revealed that many companies had done analyses that showed they could save money by terminating their health benefits for employees, paying the penalties in the healthcare bill for doing so, and letting employees get government-provided health insurance.

Now we have immediate consequences from the recently passed legislation imposing new regulations on the financial services industry.

The new law makes credit rating firms, such as S&P and Moody's, liable for the quality of their ratings decisions. Previously, such ratings were considered opinions, and since the ratings are estimates of what may happen in the future, an opinion is what they are. But now, if investors lose money on a bond which was rated by a credit rating agency, the credit rating agency could be sued by investors and win damages. Since there are trillions of dollars in bonds issued each year, credit rating agencies could go bankrupt based on the vagaries of the economy and markets.

In response to this risk imposed by the new law, the credit rating agencies are prohibiting the use of their ratings in the offering materials given to potential investors for new bond issuances. But some bonds, particularly those related to consumer loans such as mortgages, auto loans, student loans, and credit card debt, are required by law to include such ratings in their offering documents.

The predictable result?

A number of bond offerings have been put on hold, as participants digest the implications of the new law. The firms are investigating if there are ways to get around the rules through the issuance of private bonds, at the price of lower liquidity for new investors and higher borrowing costs for issuers of debt.

This will reduce the capital available to expand the economy, increasing borrowing costs, impairing job creation, and reducing economic growth.

But it is good deal for trial lawyers, who must be salivating at the opportunity for new revenue streams from litigating future bond defaults.

You might think, in a world of thoughtful and honest government, such an important part of the financial services law was heavily debated, so its consequences were well understood. But if you thought that, you haven't been paying attention to government policy the past two years. This provision was added to bill on June 30, when the law passed.

Such is how our freedom is being eroded, in last minute deals to pay off favored constituents that impose dramatic costs to the economy.

Arizona Revisited

The initial media coverage of the controversial Arizona immigration law does not state a critical component of the law, which is that it only allows people to be questioned about immigration status if another crime is involved.

As example, here is the initial New York Times article dated April 23 on the law, and no where is this critical fact mentioned. The Wall Street Journal on April 24 is similarly guilty of missing this important part of the story. But in this July 6 story, the New York Times clearly that:

"The law, signed by Gov. Jan Brewer on April 23, makes it a crime to be an illegal immigrant in the state and requires the officers to determine the immigration status of people they stop for another offense based on a 'reasonable suspicion' that they might be illegal immigrants."

This is a profound difference, since illegal activity other than violating immigration law is a predicate to being questioned about immigration status. People are asked for identification all the time in this country, such as going through an airport or being stopped for a traffic violation. The notion, as popularized in the initial commentary on the Arizona law, of Nazi-like police officers demanding to see anyone's "papers" simply isn't relevant: only those people stopped for a crime and who the police reasonably suspect of being here illegally can be questioned about their immigration status.

Compare this to New York City's "stop and frisk" policy, where over 570,000 times in 2009, the NYPD stopped people under a "reasonable suspicion" standard. About 6% of the people stopped are arrested, so only a small percentage of people detained under "stop and frisk" are arrested.

It is clear that Arizona's law requires holds the police to a higher standard to question someone's immigration status than New York City's law does to allow the police to stop and frisk someone.

So where are the boycott calls of New York City? Should the NFL rescind granting the city the 2014 Super Bowl? Should New York's baseball stadiums be unable to host future all-star games until the stop and frisk policy is rescinded? Given the reaction to Arizona's law, these would seem reasonable steps to take against New York too for its even more egregious law enforcement policies.

But we don't hear boycott calls against New York, just like we didn't get accurate reporting on the Arizona law when it was first reported, when first impressions are made in the public's mind. The Obama administration decided to use the Arizona law to rally Hispanic voters to the side of Democrats, and their friends in the media didn't report on key aspects of the law to make it appear more egregious than it is.

Moreover, the Obama administration's lawsuit against the Arizona law has nothing to do with alleged civil rights violations. Instead, the lawsuit claims enforcing immigration laws is a federal, not state, government responsibility. That is an important issue, as all constitutional issues are, but not a civil rights crisis.

Moreover, the Obama administration has not sued other states or cities that actively oppose federal immigration law - highlighting the political gamesmanship Barack Obama is playing with this issue.

Such is the thoughtful discourse Barack Obama has brought to American politics.