The Bank Secrecy Act at 55: Costly, Ineffective, and Still Violating Your Financial Privacy

Today marks the 55th anniversary of the Bank Secrecy Act (BSA), a law that has immensely shaped the relationship between financial institutions, the government, and individual privacy. Enacted in 1970, the BSA was designed to help detect and prevent money laundering, tax evasion, and other financial crimes. The BSA mandates the reporting of large cash transactions over $10,000; suspicious activities that might indicate criminal behavior, regardless of transaction amount; and certain foreign financial accounts.

The BSA was initially meant to regulate banks only. In the 1980s, this coverage extended to casinos and currency exchangers to fight the War on Drugs. Securities brokers were added to the list with the creation of the Financial Crimes Enforcement Network (FinCEN) in the 1990s. The Patriot Act significantly broadened the BSA's reach by extending anti-money-laundering (AML) obligations to a wide range of financial institutions. In the 2010s, FinCEN managed to extend the BSA to such companies as PayPal, Venmo, and Western Union. The Anti-Money Laundering Act of 2020 significantly updated the BSA by expanding its scope to include digital assets, requiring the reporting of corporate beneficial ownership, and strengthening FinCEN's enforcement and data-sharing powers. 

By requiring banks, credit unions, and other financial institutions to collect this level of data, the BSA has turned private institutions into surveillance agents for the state. The purpose of the Fourth Amendment was to prevent government intrusion into private affairs without judicial oversight. With the BSA, the government can monitor, store, and analyze citizens' financial data without ever proving wrongdoing. The Supreme Court ruled in Miller v. United States (1976) that there is no reasonable expectation of privacy in bank records. As such, law enforcement can use this Supreme Court case as precedent to gain access to large amounts of financial data under the guise of crime prevention. For more on the constitutional issues with the BSA, you can read this Coin Center report here.

Speaking of crime prevention, how is that going? Financial institutions employ over 14,000 individuals and spend upwards of $8 billion annually to comply with BSA regulations. What do the American people get for that? Has financial crime dropped as a result of the BSA? It is difficult to tell. This is not simply because the FinCEN interim director said in 2022 that there are no precise metrics to answer that question. The Government Accountability Office (GAO), which is the legislative watchdog, had something to say on the matter. More specifically, in a 2022 GAO report, the DOJ said that there is such a data overload that they are unable to meaningfully prioritize the data. That lines up with a 2019 GAO report stating that it was unable to determine whether the reporting results in prosecutions. 

According to the Bank Policy Institute, less than 4 percent of Suspicious Activity Reports (SAR) that banks have to file per BSA mandate have any sort of follow-up. Only a small subset of these result in arrest or conviction. Looking at last year, out of the 27 million reports filed for the BSA, the IRS only initiated 372 investigations (or less than 0.001 percent). Not only are banks wasting countless hours and spending $8 billion annually to comply with the BSA, but there are many false positives or low-value leads. This minuscule benefit also undermines the justification for violating civil liberties. 

Plus, it has a chilling effect in the finance industry. As the Competitive Enterprise Institute (CEI) is right to point out, the BSA has the ability to discourage small banks and fintech firms from innovating since they are focused on regulatory compliance instead of serving customers or developing new products. This concept coincides with a 2022 Cato Institute report on the BSA's inefficacy: "These rules have also likely contributed to financial firms' hesitancy to work with emerging industries, such as cryptocurrency-related companies and blockchain-based technologies." Every dollar spent satisfying redundant filings is a dollar not spent building new financial products, expanding access to credit, or improving cybersecurity. The large compliance costs also make it easier for large incumbents to maintain market concentration.

The mission creep over the decades turned a narrow crime-fighting measure into a system of massive financial surveillance. The banks should decide what information they collect, who they do business with, and what risks they are willing to take on. If law enforcement wants to access the data, they should get a warrant. Increasing the threshold to adjust for inflation or removing the reporting requirements of the BSA would be inadequate because it minimizes, but does not eliminate the scope of its harm. The only prudent measure that would protect civil liberties while removing regulatory waste would be to repeal the BSA in its entirety, much as CEI has argued for 25 years. Letting it continue for another year would cost the American people much more than a pretty penny. 

Trump's Mass Deportation Idea Is As Massively Lousy As When He First Proposed It, If Not More So

There has been no shortage of terrible policy ideas to criticize and scrutinize during this presidential election cycle. Vice President Harris wants to implement such inane ideas as taxing unrealized capital gains and price controls on groceries. Trump has cranked out multiple absurd ideas, including, but not limited to, absurdly high tariffs and a temporary credit card interest rate cap. Today, I would like to cover one of Trump's longest-standing policy proposals: mass deportation. It is long-standing enough where I criticized the idea back in 2015. I did not like the idea back then and I certainly do not like it now. Here is why I think it is a terrible idea. 

Mass deportation is costly. There is the matter of how much this would cost. Think about what would go into enforcement. The government would need to identify, locate, detain, and legally process, and then remove 11 million unauthorized workers. Then there is the matter of creating and expanding upon detention facilities, courtrooms, and other infrastructure, not to mention hiring additional personnel. According to the American Immigration Council's October 2024 study on Trump's deportation plan, that would cost an estimated $967.9 billion over the next decade. 

Mass deportation would harm the U.S. economy. Immigrants are a net gain for the economy, and yes, that includes low-skill immigrants. Aside from the labor they provide, undocumented immigrants pay about $100 billion in taxes annually. Also, as this policy analysis from the Brookings Institution points out, unauthorized immigrants typically take different jobs from low-skilled U.S.-born labor (e.g., housekeeping, construction, caregivers), not to mention contribute to the long-term fiscal health of the U.S. 

As such, removing these laborers that are positively contributing to the economy would harm the economy, a concept I explored earlier this month with the housing construction market. The Peterson Institute for International Economics (PIIE) found that deporting 8.3 million unauthorized workers would brings the GDP to be at 7.4 percent below the baseline by 2028. The Wharton School of Business, which is the premiere business school in the U.S., similarly estimated a negative trend regarding GDP: a reduction of GDP per capita by one percent between now and 2050. 

PIIE also found that deportation would decrease the number of employee hours worked by 6.7 percent. That makes sense, especially since deportation has been shown to lower the employment and hourly wages of U.S.-born citizens because of an increase in labor costs and reduction of local consumption (East et al., 2023).

Mass deportation would not solve crime-related issues. During the Vice Presidential debates, J.D. Vance said that a Trump 47 administration would start by deporting the undocumented immigrants who are criminals. Trump also said he wants to target migrant criminal networks. The idea is that by deporting migrant criminals, it would lower the crime rates because there are fewer criminals. Forget for a moment that immigrants are 60 percent less likely to commit crimes than U.S.-born citizens (Abramitzky et al., 2023).

Theory gets in trouble with practice here because the U.S. government has already tried this before. Secure Communities was a program through Immigration and Customs Enforcement (ICE) that targeted unauthorized immigrants with the cooperation of law enforcement. A study from the Institute of Labor Economics found that the SC program did not reduce property or violent crime (Hines and Peri, 2019). Why would that be the case? Enforcing deportation is a labor-intensive endeavor. It does not make police more efficient in solving cases and it ties up resources that could be used to solve cases. 

Not only does deportation do nothing to lower crime rates, but it also exacerbates the victimization of Hispanics. Why? They are less likely to report crimes because there is lack of trust in law enforcement to do their job when the possibility of deportation is looming over their heads (Gonçalves et al., 2024). 

Mass deportation would violate a lot of civil rights, as well as destroy lives and erode civil society. This would destroy the lives of migrants and have migrants that have yet to be detained live in a climate of fear. As for the Constitution, it does not take much to see how much abuse of Fourth Amendment and Sixth Amendment constitutional rights would take place if Trump were given the green light to deport immigrants. 

Worksites, immigrant neighborhoods, and Catholic churches would be raided. The amount of surveillance to carry this out would be staggering. Police officers knocking on doors at the middle of the night would be reminiscent of the Stalinist regime. In the meantime, detaining Latino migrants would come with human rights abuses that FDR committed against Japanese-Americans during World War II. I would be worried about the detainees in detention camps. As a September 2024 report from the Office of Inspector General already lays out, ICE already has issues being able to "maintain a safe and secure environment for staff and detainees."  

If you look at history and such examples as Argentina in the 1970s, the Pinochet regime in Chile, or Stalinist Russia, detaining and deporting people is not the hallmark of a free society, but of an authoritarian one. 

What is the likelihood this would actually happen? On the one hand, Trump talked a big game about deportation for his first term but did not carry it out. 

On the other hand, Trump is better poised to implement mass deportation should he be elected. For one, he appointed 245 judges during his first term, thereby being fewer legal obstacles. Two, this idea is more popular than I thought. According to a U.S. Today/Suffolk University poll conducted earlier this month, 45 percent of American support the idea of mass deportation. 

On the other other hand, our immigration system is already dealing with considerable backlog. Going door-to-door to detain people is labor-intensive. It is not something our current immigration system can handle and would require cooperation from state and local police, which is not a given. Plus, it would require cooperation from the migrants' native countries, which is tenuous at best. 

Postscript. From a political lens, it makes sense why this is popular. People are getting fed up with what is taking place on the U.S.-Mexico border, not to mention how endemic and normalized crime has become. From a policy lens, deportation makes zero sense. Deportation is a costly endeavor that will harm the economy (including U.S.-born workers) while doing nothing to lower crime. Meanwhile, the U.S. government would have to trample constitutional rights and ruin millions of lives in the process. It is not only anti-immigrant, but anti-American.

It would take a lot of violence, force, and taxpayer dollars to make this a reality. Why should we deport largely peaceful, non-violent, hard-working people who are contributing to the economy and paying taxes? Why create a culture of distrust, paranoia, and division? Why pay so much money and derive no benefit? I agree that this country could use considerable immigration reform, but mass deportation is not the answer. For all of our sakes, I hope that this policy proposal is nothing more than a campaign gimmick and not a reality in which this country becomes more despotic and tyrannical, a prospect that would have the Founding Fathers rolling in their graves. 

Eliminating Qualified Immunity Would Curtail Rights Violations and Bring Greater Accountability to Law Enforcement

The unfortunate death of George Floyd caused by Officer Derek Chauvin has brought up a myriad of questions as to how to deal with police misconduct. A phrase that I am sure you have heard being thrown around is "qualified immunity." You are probably wondering how one could make a connection between modern-day policing and a nineteenth-century statute.

Under the Civil Rights Act of 1871, Section 1983 (42 U.S.C. §1983) allows for people to sue the government for civil rights violations. That sounds like a good thing because it holds government officials accountable for bad behavior. This makes sense since the Act was created to curtail civil rights violations that were particularly going in the South at this time. The plain language of 42 U.S.C. §1983 was upheld until the Warren Court. In the case of Pierson v. Ray (1967), the Supreme Court of the United States (SCOTUS) argued that "a policeman's lot is not so unhappy that he must choose between being charged with dereliction of duty if he does not arrest when he has probable cause, and being mulcted [fined] in damages if he does." And this is how qualified immunity was born.

It was in the case of Harlow v. Fitzgerald (1982) that SCOTUS ruled that qualified immunity applies except when it does not violate "clearly established" statutory or constitutional rights. The process of determining if something is "clearly established" was not formalized until 2001 (Saucier v. Katz). The first step is determining if there was a constitutional violation. The second step is determining whether the right was established at the time the conduct took place. For qualified immunity to not apply to the officer, there would need to be a previous court case with sufficiently similar circumstances rendering the conduct unconstitutional. Pearson v. Callahan (2009) ruled that the constitutionality of the violation remains undefined, which makes it more difficult to pass the hurdle of qualified immunity.

Now that we have gotten through the legal history, let's get into why this matters for policing. It was the initial case of Pierson v. Ray that established qualified immunity based on the notion that worries about liability would get in the way of their work. Law enforcement officers do not think about being sued when performing their duties (Schwartz, 2018; Hall, 2003; Vaughn et al., 2001; Garrison, 1995).

Tangentially, the worry is that even if they do their jobs properly, they will be burdened with the trial process and the associated costs. Qualified immunity was meant to protect all but the plainly incompetent or those who knowingly violate the law. This argument comes in two sub-arguments. The first claim is that qualified immunity exists to prevent officers from being bankrupt from civil lawsuits. The problem with that argument is that governments pay 99.98% percent of the dollars that plaintiffs recovered (Schwartz, 2014), which is to say that police officers do not pay the bill in such a trial (Emmet and Maazel, 2000). Even if indemnification were an issue (which it clearly is not), it would still be fine because it would give the government an incentive to crack down on abusive officers. Derek Chauvin had 18 complaints against him, and yet he was allowed to resume working. Perhaps that would not have been the case had qualified immunity not existed.

The second argument is that qualified immunity exists to protect officers from the burdens of the discover phase.  A study in Yale Law Journal found that qualified immunity is rarely applied early enough to protect officers from civil discovery. The study found that qualified immunity could be raised in 3.9 percent of cases. In practice, only in 0.6 percent of cases was such protection able to be offered (Schwartz, 2017).

Another point I would like to bring up is a study showing how qualified immunity increases the costs, time, and complexity of litigating constitutional claims (Schwartz, 2019). This study is more pessimistic in stating that the win rates would stay the same if we removed qualified immunity. However, removing the costs would increase the number of cases, which means that more justice would be served.

What we see here is that qualified immunity actually does very little to help with constitutional litigation. This brings me to the reasons to criticize the practice of qualified immunity. As the Cato Institute points out, qualified immunity is an "atextual, ahistorical judicial doctrine that shields state officials from liability." There was no good-faith defense (certainly during the creation of the Civil Rights Act of 1871) that would justify SCOTUS' ruling. As a matter of fact, prior to 1967, officers were strictly liable for unlawful acts (Pfander and Hunt, 2010).

Let's go with the "clearly established" clause from the 1982 SCOTUS case. This clause is argued to have made it more difficult to make it prosecute officers when they commit constitutional violations on the job. International news organization Reuters released a report on qualified immunity in May 2020. Reuters not only found that qualified immunity made it more difficult for the case to go to trial, but even when it does go to trial, there are many instances in which the courts favor the officers. Since Pearson v. Callahan, the officer is more likely to win, according to Reuters. An analysis from Notre Dame Law Review confirms Reuters' finding by concluding that officers win 70 percent of the time (Reinert, 2018).

Qualified immunity is judicial activism at its worst because it violated Fourth Amendment rights, not to mention a violation of the separation of power that the Constitution was meant to protect (see Baude, 2018). It sends the message that officers can "shoot first and ask questions later" while protecting bad cops.

The fact that something so unconstitutional and ineffective exists in our legal system is mind-blowing. We need to do better as a society when it comes to protecting constitutional rights, and one of those ways to improve police officer accountability is to eliminate qualified immunity or at least limit qualified immunity with "excessive reasonableness." Given the conservative nature of SCOTUS (and when I say conservative, I mean classical conservatism, i.e., it leans on tradition and established principles) and love for stare decisis, it is unlikely that SCTOUS will overrule its previous ruling. On the plus side, bipartisan legislation was introduced last week to eliminate qualified immunity, so we shall see what happens. I don't expect eliminating qualified immunity will eliminate police misconduct, but it would certainly be a step in the right direction.

Apple, the FBI, and the Cost of Bypassing Encryption

The fight over liberty versus security makes the news again. The Federal Bureau of Investigation (FBI) asked the company Apple to comply with an order to bypass security features on an iPhone 5c from Syed Farook, one of the attackers in the San Bernardino shooting back in December. Tim Cook, the president of Apple, released a poignant letter saying that Apple refuses to comply. In response, the Department of Justice filed a motion to force Apple to assist the FBI. It seems like a simple request: help the FBI unlock the phone of a terrorist who possibly had ties to ISIS. Why is Apple taking such a forceful stand?

At first glance, this seems like an open-and-shut case of the Fourth Amendment. This is especially true since Farook is dead, and the information could potentially help bring down certain terrorist organizations. While there is a general expectation of privacy in American jurisprudence, it can be overwritten if the government has acquired a warrant, which is permissible under the Fourth Amendment. What is being used to attempt Apple's compliance with such an order is an unprecedentedly broad reading of the All Writs Act of 1789, which involves compelling individuals or companies not involved in a given case to comply. While it's true that the Fourth Amendment allows for warrants, the warrant still needs to be executed in a reasonable manner. The Supreme Court ruled in the case of United States v. New York Telephone Company that the government cannot compel a company to comply if doing so would place "unreasonable burdens" on it. There is also a federal magistrate judge in New York that implied in preliminary comments on another case involving an Apple phone that the All Writs Act doesn't apply, which could help Apple's case during litigation. I'm sure that the ensuing legal battle will make for more interesting commentary, but I wonder just how much of an unreasonable burden such a compliance would cause.

Much like other versions of the iPhone, the iPhone 5c is an encrypted phone, which is to say only one who has a key (e.g., a four-digit password) can access the phone. It's a good thing that smartphones are encrypted because as I brought up about a couple years ago, smartphones can store information on banking, health, and location, as well as private text conversations. Encryption is also great if your phone is stolen by criminals or if you're visiting a totalitarian country, and the police decide to seize your phone. The fact that the FBI cannot bypass the encryption shows just how secure encryption can be.

Apple has already provided the FBI with data Farook stored on a Cloud device a month before an attack. Apple also provided the FBI with data that is directly under Apple's possession, so it's not as if Apple is deciding to be stubborn or recalcitrant as a form of baseless defiance. This case is not your standard Fourth Amendment issue in which the government has a warrant to access a house. It is more analogous to asking a lock manufacturer that manufactured locks for a certain house, and telling the manufacturer they have to come on-site to unlock the house so the police can gain entry. It would explain why the All Writs Act is being used in hopes to compel Apple.  While the circumstances of this case are unusual (e.g., the owner of the property is dead), this does set precedent that the government can coerce someone to gain access to someone else's property.

Aside from an enforced delay between password guesses, the security measure that is causing so much trouble has to do with passwords. Ten failed attempts at entering the phone could lock the phone and erase the data on the phone, which is why "brute force" wouldn't work in this case. The flaw in the iPhone 5c, which is an older version of the iPhone, is that the software controlling the phone is not encrypted. As such, the FBI is asking Apple to create a new version of iOS, Apple's operating system. By installing this new version of iOS on Farook's phone, which can be done without the consent of the owner, the FBI would be able to access the information required. Aside from the fact that such technology doesn't exist, what's the issue with this request? The FBI makes it sound as if the reply were a one-time request that would remain an isolated incident. However, the issue is that according to industry officials, the hacked software being requested would be general, and would work on any phone of the same model. Cook's issue is that creating a new version of iOS that bypasses security measures in such a manner would create a backdoor. The idea of a backdoor sounds alarming, not to mention an argument could be made that such an order could violate the First and Fifth Amendments (believe it or not, Bernstein v. United States and Junger v. Daly ruled that software source code is protected by the First Amendment). What are the possible outcomes of legal action? I see four possible outcomes.

1. Apple wins the case, and the government is kept at bay. This is a scenario in which the status quo is preserved, and sets precedent that the United States government cannot conscript companies to produce hacking or surveillance tools that are meant to compromise the devices. Privacy is not just an essential for living in a free society; it is vital for self-development. It's not only privacy, but the increased cost of having to create sophisticated technology along with products and workhours used to compromise said security. Imagine an entire department at Apple dedicated to building spyware for government. Imagine the barrier to entry that would create for start-up companies in the telecommunications industry. Also, imagine how lowered security on such devices would open up so many people to cybercrime, thereby increasing social cost. PriceWaterhouseCoopers found that in 2014, there were 42.8 million cyber attacks globally. McAfee also found that in 2014, cyber crimes cost $400 billion. Ironically enough, a secret document from the U.S. National Intelligence Council admits that encryption is the best tool again cyber attacks. It would be interesting to see what a cost-benefit analysis on the issue would end up looking like (the issue is too recent for such information to be readily available), but at first glance, having Apple lose doesn't look good. As someone who loves civil liberties and does not like government-induced price hikes, the preservation of privacy would be a desirable outcome. 
2. The FBI wins the case, and civil liberties aren't eroded because the government's scope is actually limited to this particular case. Some argue that Cook's claim about creating a backdoor is a tenuous argument, and that it is technically feasible to create an iOS software update for a specific phone without it being applicable to other iPhones. If it is possible to create the iOS software without giving the FBI the key to its encryption that could be used on other devices, then this could end up preserving both civil liberties and national security. 
3. The FBI wins this case, and it's the beginning of the end of civil liberties. Requiring backdoors could very well provide a Pandora's box for cybercriminals, industrial spies, and intelligence agencies to conduct all sorts of surveillance and steal secrets. Even if the technology were only applicable to Farook's cell phone, why do you think it would stop there? This is a precedent that could affect the future of smartphones, computers, and other digital devices. Such devices would come with an implicit warning label of "Sorry, we might be forced to hack you." The Senate Intelligence Committee Chair is already drafting legislation to compel technology companies to weaken encryption in order to make it easier for governments to access devices. And this only considers what would happen on a national level. This could create precedent for other countries. The would be even worse if such software were to be used by authoritarian regimes that have little to no respect for civil liberties. There are countries where speaking out against the government could lead to imprisonment or even death. Encryption protects correspondence of dissidents, and having Apple create a key could mean that through legal channels or illicit ones, authoritarian governments could get its hands on this technology to make the lives of millions even worse. 
4. It doesn't matter what the outcome of the case is because it's already the beginning of the end. We could very well find ourselves in a scenario in which the government is already on the path to use such devices as Internet-connected sensors, cameras, and other devices for surveillance purposes, as this 2015 Harvard University report shows. Technological development could very well inevitably render privacy a relic of the past, regardless of what the Supreme Court has to say. At the very least, the government can use technology to partake in a level of fact-finding and investigation that was not available in years past. 

So which is it? Can the government actually find a balance between national security and privacy? Will this case lead to a slippery slope in government surveillance? Does it ultimately not matter because it is only a matter of time that the government will have the technological capability to spy on us all, or will companies like Apple be able to harness the power of technology to protect the privacy of the people? I don't have the clairvoyance to tell you with 100 percent certainty what the future holds. I can make the educated guess that based on the government's past history of use and abuse of surveillance, the government's general trend towards becoming ever larger, and the demand from government to have such technology (e.g., the District Attorney of Manhattan said this past summer that there was a six-month period in which 74 iPhones were inaccessible), the government would not stop at Farook's phone. If the government knows that it can coerce one of the largest companies to create software that undermines the security of their products, then it would become more reliant on such a method in the future. It would also create a conflict of interest for telecommunications companies because it has to work so hard on creating devices and creating a separate division to undermine the security.

Ultimately, I think this will most probably end up being one of the biggest cases in American legal history involving civil liberties. Either we live in a society in which companies can provide us secure products to consumers, or we live in a society in which the government has the ability to force companies to violate the security of those products, thereby allowing that eerie, Orwellian capability for the government to use technology to spy on its people "for the greater good." This could very easily be used to undermine the trust in many devices on a global outcome, which is all the more important with increased reliability on digitized data. Whatever the outcome of the case ends up being, I hope that civil liberties prevail and that trust in digital devices can be preserved.

Focusing on Police Body Cameras and Best Practices for Law Enforcement

What has going on in Ferguson, Missouri has had the country quite riled up about race relations in America. It has become politicized enough where shortly after the release of a White House review on law enforcement practices on Monday, President Obama has recommended appropriating $75M to purchase 50,000 police body-mounted cameras. It should be no surprise that the events in Ferguson would elicit such a response. Personally speaking, I'm more perturbed by the increased police militarization in America that the Ferguson situation exemplified, which is something the White House review addresses. Regardless, it gets me wondering if equipping police officers with body cameras is such a good idea or not.

If one had to summarize the case for police body cameras in a single word, it would be "accountability." Since the shooting of Michael Brown on August 9, there has been considerable clamoring for police officers to wear body cameras to capture footage of police officers on the job. Not only are these cameras supposed to hold police officers accountable for their actions in order to reduce complaints of police misconduct, but it is also supposed to protect officers from false accusations of wrongdoing. Humans tend to behave better when they think they are being watched, which is the reasoning behind the body cameras and their efficacy.

While body cameras have the potential to alter behavior for the better, skeptics are worried about it can adversely affect law enforcement, as is illustrated by this Madison Police Department report. Do you think a confidential informant is going to want to talk to a cop with a camera streaming footage? Can a camera be turned off if the citizen requests it? Can this new technology be abused? Should police camera footage become public record? How much would these body cameras infringe upon the Fourth Amendment? Issues of privacy either for citizens or police officers set aside for a moment, there are also technological impediments.

As of date, the battery life on a camera can be as short as a couple of hours, but can be long as twelve hours. The technology can always improve, but it questions the ability of the camera to capture everything. Even if we assume that the camera never malfunctions during the entire tour of duty and the video is never tampered with, the camera is still not going to be a completely accurate telling of events because given the limits by the scope of the lens, it cannot capture everything. A video without context can be misinterpreted.

None of this even touches upon the dollar amount for such equipment. Obama is looking to spend $75M on 50,000 cameras, which comes out to $1,500 per camera. Considering that cameras range from $119-$1,000 per camera, I'm not sure why Obama is asking for this much money. Even so, this amount would only cover a fraction of the nearly 630,000 law enforcement officers. Also, the cost that is even bigger than the initial cost of buying the camera is video data storage. According to a recent Department of Justice study on police body cameras, the bulk of costs for body cameras goes to data storage, as the New Orleans Police Department has already discovered (p. 32). Again, technology can always improve, but considering the budget cuts that have been taking place since the Great Recession, it is going to be more difficult to fund such an initiative, even with federal funding assistance.

As for whether body cameras work, since they are a relatively nascent technology, the empirical evidence is scant (see Office of Justice Programs assessment here). Aside from the Department of Justice study cited above, a case study that has shown promising success is Rilato Police Department case study. In this case study, use of force by officers decreased by nearly two-thirds, and citizen complaints decreased by 88 percent. There are some other case studies out there, not to mention the UK Home Office's report on the topic, but there is still a lack of a causal link because it's not sure whether the citizens, officers, or both behave better as a result of being videotaped. Additionally, implementing the cameras is still new enough where we don't have anything close to a complete cost-benefit analysis. For instance, while the cameras cost money to purchase and maintain, there is the question of how help they prevent the costs of police misconduct. For instance, the NYPD paid out $152M last year as a result of claims of police misconduct, which is a lot more than body cameras would have cost. Do body cameras improve or erode relations between law enforcement officers and the citizenry? Do they have the ability to intimidate victims or even suspects, thereby altering their testimony?

Aside from it being new technology, I have my ethical and legal qualms about such technology. Even so, if the intuition behind the body cameras is correct, I have to agree with the American Civil Liberties Union (ACLU) in its 2013 report by saying that it will be an overall improvement over not having cameras. To affirm that assertion, more cities, such as Washington DC and New York City, should experiment to see if body cameras work. That being said, we should not treat this as a catch-all or a silver bullet in law enforcement reform. Body cameras can help with law enforcement, but this policy would have to work in conjunction in other policies if we want to improve upon the overall state of local law enforcement.




10-15-2015 Addendum: The University of South Florida just released a case study showing that body cameras are indeed effective.

Cellphones and Why the Supreme Court Affirmed There Still Is a Fourth Amendment

In a country where stop-and-frisk is a constitutional practice, the government searching metadata without a warrant, and the TSA that likes to violate Fourth Amendment rights at airports throughout the country, I had to wonder whether the Fourth Amendment was some antiquated law in American jurisprudence. Then the Supreme Court ruled last Wednesday in a 9-0 decision that police officers need a warrant before searching the cell phone of someone who has been stopped or arrested.

The ruling of Riley v. California affirmed that cellphones are worth constitutional protection. As Chief Justice Roberts pointed out in his opinion, cell phones hold "the privacies of life." Especially with the creation of smartphones, everything, whether we are talking about banking and health information, emails, photos, social apps, or website views, are all stored on cellular phones. Also, keep in mind that smartphones provide locational data with the installed GPS, which means that there is an ability to track your every move. Cellphones these days are more like miniature computers with massive storage capacity than they are a mode of communication to convert acoustic vibrations into transmitted sound. The importance of the ruling cannot be emphasized enough.

The Supreme Court could have simply cited Horton v. California and said that since cellphones are "in plain view," it is acceptable to search them without a warrant. Arrest is no longer a pretense to search something as important and informative as the cellphone. What the Supreme Court decided to do instead was apply a technologically literate view to the Digital Age and correctly apply the importance of privacy to cellphones (Kerr, 2013). The home is not the only place where massive amounts of private information can be stored, and I give kudos to the Supreme Court for realizing this important fact. Bravo! As Roberts closed in his opinion, "privacy comes at a price." That's true of any freedom, but I hope that the Supreme Court continues its trend of finding privacy worth protecting.

Stop-And Frisk Is Touch and Go At Best: Why Put a Stop to Stop-And-Frisk?

A few days ago, I was reading a short opinion piece by the Right-leaning Heritage Foundation entitled "Is Stop-and-Frisk Worth It?" In the article, the author justified the practice by saying that the practice of stop-and-frisk is useful and is not inherently bigoted. The article is concluded with ways to make the practice less oppressive. The history of stop-and-frisk goes back to 1968 when the Supreme Court ruled in Terry v. Ohio that stop-and-frisk practices are constitutional. In 1971, New York passed Criminal Procedure §140.50, which allowed for stop-and-frisk practices. Although the practice has been legal for a few decades, the NYPD started implementing it en masse in the early 2000s. Ever since, this issue has been contentious, and given the issues with civil liberties in the stop-and-frisk practice, I have to wonder whether we should continue giving police officers the ability to stop and frisk pedestrians for weapons or contraband if the officer has "reasonable cause."

Does stop-and-frisk work?
Although I will address issues of civil liberties later, the first question I have to wonder is whether the practice of stop-and-frisk decreases crime. The study that gets closest to showing that is the study of Rosenfeld and Fornango (2011). Even they found "very few significant effects (p. 2)," and that was without considering that a longer time lag between the rate of stops and the crime rate would nullify the effects. The New York State Office of the Attorney General (OAG) published an interesting report back in 2013. For one, the arrest rate with stop-and-frisk is really low (OAG, Appendix G).

The number of stops does not translate into fewer felonies. Stop-and-frisk is not proven to lower the crime rate, whereas such factors as increased number of police officers, an increased prison population, the receding crack epidemic, and the legalization of abortion better help explain the decrease in crime (Levitt, 2004). Even possibilities such a hot spot policing (Braga, 2005) or decrease in lead paint provide more plausible explanations than stop-and-frisk. Essentially, stop-and-frisk has no real effect on the crime rates (Greenberg, 2014).

The decrease in crime that took place in the 1990s took place before the vast increase in stops during the 2000s, which would mean no causal link. As a further indication of failure, only 0.1 percent of all stops lead to weapons confiscated (OAG, p. 1), and merely 0.1 percent of all stops led to a conviction (ibid).

Is stop-and-frisk racist?
Stop-and-frisk itself is not racist unto itself because the mechanism does not target members of certain racial or ethnic background. The issue, however, is the manipulation of using stop-and-frisk as a pretext for racism, much like we saw with Arizona's immigration law a couple years back. Some think that stop-and-frisk actually protects minorities, and thus alleges that it stops crime in predominantly Latino and African-American neighborhoods. However, that does not seem to be the case. During the case of Floyd v. City of New York, Dr. Jeffrey Fagan, an expert in criminology, provided testimony that shows that even when controlled for the crime rate, there is still a racial disparity. Even the NYPD Quarterly Reports show that blacks and Hispanics are disproportionately stopped and frisked. Almost half of New York consists of black and Hispanic citizens. Even so, nearly 90 percent of the stops were of black and Hispanic individuals, although black people were twice as less likely to have a weapon than a white person (Office of the Public Advocate, p. 3). I know that correlation is not causation, but still, to claim this as mere coincidence is tenuous as best.

Constitutionality and Violation of Civil Rights
Being ineffective and quite possibly racist are already troubling enough aspects of stop-and-frisk. There is also the issue of the violation of one's rights. First and foremost, there is the issue of the Fourth Amendment, which was brought up in Floyd v. City of New York. The Fourth Amendment doesn't prohibit any search or seizure, but rather it prohibits unreasonable searches and seizures. Going back to the data, there were 2.4 million stops conducted from 2009 to 2012 alone (OAG, p. 8). However, six percent of stops led to arrests, and only 0.1 percent led to conviction (OAG, p. 1). If reasonable suspicion was the primary reason for allowing the searches, wouldn't a low arrest rate and conviction rate undermine the justification for stop-and-frisk? Since the vast majority of stop-and-frisk encounters are that of innocent citizens, one cannot argue "reasonable search and seizure" with a straight face. And as the previous section on racism shows, there are also issues with violating the Fourteenth Amendment.

Conclusion
This "tough on crime" policy harkens back to the 1970s when New York City had astronomically high rates of crime. Maintaining such a mentality while holding onto an ineffective policy does not do any favors for the citizens of New York City. Stop-and-frisk also erodes trust in the police (see Vera Institute of Justice study here) and increases labor costs of law enforcement who waste time on such inefficiencies. If we're going to talk about reducing crime, let's do away with the War on Drugs so that police resources can be allocated to fighting real crime. We should also discuss policy alternatives to fighting crime, but let's discuss options that actually work and don't erode our constitutional rights in the process.

Supreme Court Ruling on Fourth Amendment This Week Warrants Criticism

The Bill of Rights was created to protect our individual rights, and the Fourth Amendment was no exception. Our Fourth Amendment states that "the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized." The Founding Fathers were astute enough to realize that the right of property and expectation of privacy are important for a free society.

This past Tuesday, the Supreme Court did a real number on the Fourth Amendment by ruling on Fernandez v. California. Back in 2006, the Court ruled in Georgia v. Randolph that the police have no constitutional authority to search an individual's premises where one resident disagrees to a warrantless search while another consents. What the 6-3 ruling of Fernandez v. California permits is that in the event that a resident who objects to a police search is removed from the residence through a legal arrest [or merely leaves the premises], a remaining co-resident can provide the police consent to search the premises without demanding a warrant. Until this past Tuesday, the police would have needed to obtain a warrant if a resident refused a warrantless search by the police. That has since changed.

The idea behind the Fourth Amendment is to protect individuals from unreasonable searches and seizures. Much like the Court has put limits on the First Amendment (e.g., Shenck v. United States), the Court has previously ruled on exceptions to the Fourth Amendment, including motor vehicle searches (Carroll v. United States, 1925), evidence in plain view (Horton v. California, 1990), and exigent circumstances (Kentucky v. King, 2011). Even cases of third-party consent searches (United States v. Matlock, 1974) are permissible under United States law. Even if the aforementioned examples can be construed as justifiable, Fernandez v. California is not one of those instances.

In his majority ruling, Justice Alito had stated that "even with modern technological advances, the warrant procedure imposes burdens on the officers who wish to search, the magistrate who must review the warrant application, and the party willing to give consent (III, C)." For Alito, a warrantless search  is somehow still in the spirit of the Fourth Amendment, irrespective of the availability (own emphasis added) of a warrant (ibid). Really? If anything, the modern technology makes it simpler than ever to acquire a warrant. Also, a warrant is supposed to burden the police. If a warrant didn't burden the police, they can enter houses on a whim, which is what occurs in police states. If a warrantless search is in the spirit of the Fourth Amendment, then why bother having a Fourth Amendment at all?

Rather than become the norm, Georgia v. Randolph became the narrow exception to the rule of how to handle warrantless searches with regards to a non-consenting resident. In this case, only one consenting co-occupant needs to be present for a warrantless search, irrespective of the physical presence of the [other] non-consenting co-resident. The message that Fernandez v. California sends is that the police can circumvent the law either by arresting the non-consenting resident in order to conduct a warrantless search or wait until the non-compliant individual leaves the premises, after which the police can acquire the permission of a compliant co-resident. Why go through the pain of getting a warrant when you can just play the waiting game or even arrest the suspect? Although the Supreme Court has not provided the police with a carte blanche for warrantless searches, it has nevertheless eroded something that is vital for civil liberties to flourish.

Liberty versus Security: Does Privacy Trump the NSA Collecting Metadata?

Edward Snowden leaked various documents from the National Security Administration (NSA) back in May 2013, which made Americans realize the extent of NSA surveillance that was done in the name of national security. Some have called Snowden a hero and a whistleblower, and others a traitor. Ever since, the NSA has been under scrutiny for overreach of its surveillance. Congressman Jim Sensenbrenner (R-WI) is at the helm of NSA reform, and is trying to pass the USA Freedom Act (H.R. 3361) in hopes to curtail NSA surveillance and to bring transparency to the process. This brings us to determining whether there can be some reasonable tradeoffs made between security and privacy, or if Benjamin Franklin was correct in asserting that "those who surrender freedom for security will not have, nor will they deserve, either one."

Let's address the standard argument of "if you have nothing to hide, why worry?" Let's start off with a need for privacy. Freedom is a vital part of a democratic society. We should be able to develop our ideas, personalities, beliefs, and lives without fear of government intervention or oversight. The vast majority of people in the developed world have a deep desire to keep aspects of their life private (that includes Facebook), even when that information or what they have done is moral and righteous. For argument's sake, let's give the NSA a benefit of a doubt and assume the information is used strictly for national security reasons, and the information gathered is not leaked. Even so, it still ends up being an invasion of privacy because the information is extracted without an individual's consent. Some famous Supreme Court cases dealing with the issue of privacy include Griswold v. Connecticut, Roe v. Wade, Cruzan v. Department of Health of Missouri, and Lawrence v. Texas. The right to privacy is also implied in the First, Third, Fourth, and Fourteenth Amendments. Furthermore, given all the laws and regulations on the books, even if you think you are not violating something, there are so many criminal laws that you very well are without knowing it, and the NSA could easily exploit obscure laws as a justification to spy on anybody and everybody.

Proponents of NSA surveillance might opine that data mining of phone records, like that of Verizon, is harmless. Before determining whether it is innocuous, we should ask what sort of data is being mined. The NSA is not listening in on phone conversations and acquiring the content of those conversations, which is a good thing, mind you. However, they still know who you called, how long the call lasted, and the location of where you made the call. If the information was so "useless," like proponents state, then why collect it in the first place? From this metadata, the NSA can glean information about people's relations, beliefs, and activities, which, once again, is private information unless the NSA obtains a warrant and extracts the information with due process.

There is little to no evidence that extracting warrantless metadata works (It very well could have just been used to foil one plot, and even in that one plot, using PRISM was unnecessary). Such surveillance makes us less safe, and furthermore, it is also estimated that using PRISM will cost US cloud computing industry up to $35 billion over the next three years. And this does not even take Bullrun into account, which was a highly classified NSA program that allowed the NSA to hack into targeted computers and catch encrypted messages before being encrypted.

There are other ways of gathering intelligence without warrantless data extraction. There is a reason why our government has a system of checks and balances, and warrants are a check on the government to make sure they do not abuse their power. With the development of technology, it is easier than ever for the government to spy on its citizens without us even knowing it, which is why there needs to be oversight (e.g., increased inspections) and transparency. If the government is to be entrusted with national security, it needs the trust of the people. Engendering reform and requiring warrants for metadata is the very sort of oversight that provides accountability, as well as avoiding the erosion of the confidence of the people and the social contract. Liberty is much more fragile than security. Even after a terrorist attack like 9/11, the American people showed that they can overcome it, rebuild, and move forward. If liberty takes a hit like that, it is significantly more difficult to recover that liberty.

The odds of an American dying in a terrorist attack is one in 3.5 million, which is really low compared to other causes of death. Considering the improbability of a terrorist attack, we should ask ourselves if throwing away vital liberties is worth preventing such a statistical improbability. There are ways the government can acquire information without resorting to warrantless searches, and I sincerely hope the government can implement methods to gather data and intelligence without violating the Constitution and trampling our right to privacy.



12/12/13 Addendum: The President's NSA review panel recently published this report on NSA reform. Let's hope there is some follow-through.

Scanning for the TSA's Ineffectiveness and Why We Need to Privatize Airport Security

Nothing says "fun at the airport" like a good-old fashioned, unsubstantiated pat-down from a TSA employee. Sarcasm about my recent travels set aside, I have to wonder if the Transportation Security Administration (TSA) does a good job in providing airport security, thereby preventing another 9/11, or if its unproductive "grope or scan" policy is a waste of taxpayer dollars and a violation of the Fourth Amendment.

One of the complaints lodged against the TSA is due to their mismanagement and abuse of power. I'm sure we can all find TSA abuse stories, like the 400 TSA employees fired for theft, the pat-down of a six-year old, having a the TSA use pliers to remove the nipple ring of a passenger, or cases of inappropriate groping. As illustrative as anecdotal evidence can be, it suffers from selection bias and does not reflect overall trends. That is why studies are more effective, like the 2013 GAO report showing a 26% increase in misconduct from 2010 to 2012. The graph below shows a breakdown of abuses (p. 11), including the 949 cases of inappropriate comments or conduct:

In addition to TSA abuse, one has to question the effectiveness of the TSA's methods (See recent Cato Institute study).  One of the methods used by the TSA is a program known as SPOT (Screening of Passengers by Observation Technique), which is supposed to prevent terrorist attacks by observing behaviors. This is another example of the government throwing lots of money at a project without researching the effects. Accordingly to a GAO report published this month, the SPOT program has been a waste of $1 billion in taxpayer dollars because the program doesn't work. Then there is the matter of the full-body scanners. For one, there are safety issues with the radiation from the scanners. Also, there is the matter of whether they work (GAO, 2010) and if it's possible to bypass the machines. Pat-downs are security theatre. You would think that with an annual budget of over $7 billion, they could at least foil a terrorist plot, but they have not.

It would be better to focus on intelligence and investigation than taking a "reactive approach to security" (House, p. 3) and trying to prevent a method of attack that has hundreds of tactics and hundreds of potential targets. The House of Representatives recommends making a leaner TSA, but I would get rid of the agency and privatize airport security. Airport screening needs to be separate from regulation of airport security if there is to be any notable success. Relegating security hiring to the airports would allow for market competition in airport security, which is preferable to a government monopoly that is very unresponsive to adapting to change. Through Catapult Consultants, the GAO found that private security performs just as well, if not better than the TSA. We should follow Canada and Europe's example and privatize airport security. It would certainly be an improvement to save taxpayer dollars and increase the quality of airport security.

5-17-2016 Addendum: The Left-leaning Vox put out a piece that shows not only that the TSA is ineffective, but they put lives at risk. 

Examining Arizona's Immigration Law As It Heads to Supreme Court

This must be the year for major Supreme Court cases. Tomorrow, the Supreme Court will be hearing open arguments for Arizona v. United States on the constitutionality of Arizona's immigration law, better known as Arizona's SB 1070. Governor Brewer's administration will be arguing that the measure is essential to fight illegal immigration, which disproportionately affects Arizona. Brewer is not arguing that the federal government doesn't have any jurisdiction, but rather that the state wants to assist the federal government in upholding federal immigration laws. The Obama administration is arguing that the federal government is the only entity that can enforce immigration laws, and that Arizona cannot "take the law into its own hands." The case will certainly set interesting precedent for what federalism looks like in modern-day America. In addition to the federalism argument, which is the facet in question, I want to take a look at a few aspects of the law that make me wonder not only the law's constitutionality, but also its effectiveness.

Federalism: The argument that the Obama administration is going to make is that the Constitution grants sole jurisdiction to the federal government. This, however, comes up against two main obstacles. The first is that the Supreme Court already ruled in Hampton v. Mow Sun Wong that regulating immigration is relegated to Congress per the Nationalization Clause in Article I, Section 8 of the Constitution. This point brings me to my second issue, which is Congress already passed a law in the United States Code, Title 8, Section 1357(g), as well as Section 1373(c), that the states can enter into agreements with the federal government to enforce immigration laws. The Brewer administration will essentially have to prove that they were not "going rogue" and instead prove that they were at least making attempts to work together with the federal government on immigration that would satisfy federal law.

Racial profiling: This is an issue brought up by those on the Left that actually merits reflection. They are up in arms that checking a suspected illegal immigrant for their proof of residency, per Section 2(B) of SB 1070, will lead to racial profiling. The Right will assert that there is nothing to worry about because the law explicitly states in Section 6(B) that one cannot discriminate based on ethnicity or national origin. The question is how the police officer would suspect someone of being undocumented. Since those who are undocumented are coming from "south of the border" and are Hispanic, the only distinguishing commonality of suspects is that they would be Hispanic. So unless I'm missing something key here, anyone who is Hispanic can potentially be harassed under this law, which is a violation of Equal Protection Clause of the Fourteenth Amendment. Although the de jure "color-blind" provision is in the law, there is no way that will take place in practice. Therefore, in this instance, I have to give kudos to the Left for the better argument.

Crime rates: The primary reason for enacting the bill was to lower the crime rates that were brought on by illegal immigration, and more specifically, the drug war in Mexico. The best way to determine the validity of this claim is to see Arizona's crime statistics. The U.S. Department of Justice provides a database that that dates from 1960-2010. Not only do they provide the number of crimes, but they provide the crime rate per 100,000 population, the latter of which accounts for population growth and proportionality. Upon looking at the statistics, they show that crime rates overall had been dropping in the latter half of the 2000s, long before any SB 1070 was passed. The overall property crime rate for Arizona hasn't been this low since the 1960s. Even with murder, rape, and theft, the rates have not been this low for a few decades. If SB 1070 was created to lower crime, that surely was a lousy reason to draft SB 1070. And if you were worried about a rise in illegal immigration, which SB 1070 doesn't even prevent, then you'll be equally disappointed by the recent study by Pew Hispanic Center that shows that net migration has not been positive since 2007.

Warrantless searches: Section 2 calls for warrantless searches if someone is suspected of a crime that could merit deportation. Especially since the bill puts an disparate impact on the Hispanic community, I hope it is self-explanatory how such a provision blatantly violates the Fourth Amendment rights of Arizonian citizens.

Economy: In addition to civil rights infringements, the bill also has brought about unintended economic consequences. I know everyone likes to talk about the "stopping suspected undocumented workers for identification" part, but then realize that the latter part of the bill has to do with labor regulation, mainly through the E-Verify program in Section 8(B) of the bill. The program is a database that requires employers to do background checks to verify the documentation of current employees. This provision not only translates into more red tape, regulatory costs and bureaucracy, but it either drives labor underground or out of the state of Arizona. The law requires employers to ask the government the permission to hire an employee. Considering that even if they did hire an undocumented worker, the act itself has no spillover effects. Whether or not the government likes it, the labor market has a high demand for such workers. More on the economic effects at this Cato Institute Daily Podcast.

Postscript: If proponents of SB 1070 think this bill has an effect on net migration via "attrition through enforcement," they must be dreaming. The recession and the Mexican Drug War are much bigger factors, which means its effect on illegal immigration is minimal at best. The claim for lowering crime rates because "undocumented Hispanics are causing crimes" is folly. This bill does nothing to address immigration reform, which is sorely needed. All the bill does is open the door for civil rights abuses and damper Arizona's economy. I'm hoping that the Supreme Court does the right thing and vote that SB 1070 is unconstitutional.