Cato Recent Op-eds The Cato Institute seeks to broaden the parameters of public policy debate to allow consideration of the traditional American principles of limited government, individual liberty, free markets and peace. Toward that goal, the Institute strives to achieve greater involvement of the intelligent, concerned lay public in questions of policy and the proper role of government. en Billionaires Like Bloomberg Make Our Country Better, Not Worse <p><a href="" hreflang="und">Ryan Bourne</a></p> <div class="lead text-default"> <p>In this week’s Democratic debate, billionaire candidate Mike Bloomberg proved that capitalists are often the worst defenders of the market‐​based economic system that delivered their riches.</p> </div> , <div class="text-default"> <p>When Senator Bernie Sanders went on the attack, openly claiming that billionaires should not exist, Bloomberg said all the wrong things. “Mike Bloomberg owns more wealth than the bottom 125 million Americans. That’s wrong. That’s immoral,”&nbsp;<a href="" target="_blank">said Sanders</a>, who proposes a&nbsp;recurring wealth tax that would take&nbsp;<a href="" target="_blank">8% of Bloomberg’s wealth above $10 billion</a>, every single year.</p> <p>Asked to justify his&nbsp;<a href="" target="_blank">$63 billion‐​plus net worth</a>, Bloomberg fumbled: “All I&nbsp;know is I’ve been very lucky, made a&nbsp;lot of money, and I’m giving it all away to make this country better…I worked hard for it.”</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>The moral basis for billionaires in a&nbsp;market economy is that most obtain wealth by providing products, services or investments we want and need. That some work hard or support progressive politicians’ election campaigns is irrelevant.</p> </div> </div> </aside> , <div class="text-default"> <p>Given that lots of us work hard and that luck is beyond our control, this is hardly a&nbsp;glowing endorsement of billionaires or of capitalism writ large. What’s more, it’s wrong on emphasis. Bloomberg’s primary contribution to the economy is not his philanthropy or even the jobs his company creates, but the value of the products and services his vision and leadership provides to consumers.</p> <p>Rather than pretend he’s uniquely industrious or that charitable giving is his vocation, Bloomberg should have used this opportunity to defend capitalism. In a&nbsp;competitive market economy, the only way for a&nbsp;businessman to get rich is to oversee an enterprise providing goods and services that thousands of us want to buy, at prices customers are willing to pay.</p> <p>The best entrepreneurs and managers dream up new innovative products, find better and less costly production methods, identify gaps to serve markets and keep their enterprises running efficiently.</p> <p>Bloomberg has gotten incredibly rich because of his media business and, most importantly, the Bloomberg Terminal — a&nbsp;financial industry tool that allows subscribers to access, compile, track and analyze financial information. Both are&nbsp;<a href="" target="_blank">used</a>&nbsp;by hundreds of thousands of people around the world because they regard them as useful, high‐​quality products. This is Bloomberg’s overwhelming social contribution: not the hours of hard work he puts in or how much money he gives away.</p> <p>The same is true of other entrepreneurs. WhatsApp founders Brian Acton and Jason Koum developed a&nbsp;best‐​in‐​class app, reaching&nbsp;<a href="" target="_blank">2&nbsp;billion users</a>&nbsp;in over 180 countries by offering extremely low‐​cost instant messaging services. Given the monetizing potential of such a&nbsp;big user base, the founders pocketed $15 billion when the company was sold to Facebook. Sanders would lament again that this&nbsp;<a href="">raises wealth inequality</a>. But their riches came from providing millions of ordinary people globally with cheaper communication.</p> <p>Similar stories can be told about Jeff Bezos and Amazon, the Waltons and Walmart, or even J.K. Rowling and her classic Harry Potter books.</p> <p>During the debate, Sanders retorted that it wasn’t Bloomberg’s abilities that made him rich, but the toil of his workers, who are of course much less wealthy. Yet in a&nbsp;market economy, individual rewards are not distributed according to “just desserts,” but by supply and demand. Very few people have the vision, managerial expertise and capacity to set up or run a&nbsp;large successful company. Having these qualities is&nbsp;<a href="" target="_blank">extremely important</a>, as shown by big shifts in stock prices when CEOs join or leave firms.</p> <p>In claiming billionaires’ wealth is “immoral,” what Sanders is really implying is that riches are somehow ill‐​gotten or that they could be redistributed painlessly without affecting the entrepreneurial activity that generates them.</p> <p>To be sure, there is&nbsp;<a href="">a&nbsp;lot of cronyism</a>&nbsp;in our economy, which should be stamped out. Overly generous patent protections, trade tariffs and other government privileges can create circumstances that make some businesspeople rich at the direct expense of others. We should remove such programs.</p> <p>Yet taxing all top wealth, however it is made, risks deterring innovative entrepreneurs from starting the very companies that enrich our lives,too. Recurring taxes on the same wealth, year after year, reduces the returns to risky and innovative entrepreneurship, meaning we will get less of it. They also shrink the pool of funds that allow serial entrepreneurs or investors to take on new risky projects that can really drive innovation.</p> <p>The moral basis for billionaires in a&nbsp;market economy is that most obtain wealth by providing products, services or investments we want and need. That some work hard or support progressive politicians’ election campaigns is irrelevant. Bloomberg had the opportunity to defend his fortune by defending market capitalism from Sanders’ caricature and damaging policy ideas. In that moment, he blew it.</p> </div> Ryan Bourne occupies the R&nbsp;Evan Scharf Chair for the Public Understanding of Economics at the Cato Institute. The opinions expressed in this commentary are his own. Fri, 21 Feb 2020 13:17:57 -0500 Ryan Bourne Abolishing UK’s ‘Factory Tax’ Would Help Get Productivity Moving Again <p><a href="" hreflang="und">Ryan Bourne</a></p> <div class="lead text-default"> <p>If the Government is intent on borrowing more, it should focus that borrowing on easing Britain’s biggest economic challenge. That’s&nbsp;<a href="" target="_blank">my pre‐​Budget advice to Rishi Sunak</a>, the new&nbsp;Chancellor.</p> </div> , <div class="text-default"> <p>With 10 Downing Street apparently advocating looser fiscal rules, Sunak is under pressure to deliver either a&nbsp;Tony Blair‐​style public services spending binge or a&nbsp;Nineties Japan‐​inspired infrastructure splurge.</p> <p>Each would leave Britain with higher government debt and, eventually, higher taxes. History suggests neither is a&nbsp;path to strong economic growth.</p> <p>Instead, the Chancellor should focus, laser‐​like, on how policy might&nbsp;<a href="" target="_blank">raise productivity growth</a>. Britain has laboured since the financial crisis, with output per hour growing at a&nbsp;measly 0.3pc per year, compared with 2.2pc pre‐​crash. The consequences are all around us, even as the jobs market booms.</p> <p>Average weekly earnings have only just surpassed their pre‐​crisis peak, savers’ returns are in the doldrums and extensive austerity was required to eliminate a&nbsp;stubborn resulting structural deficit.</p> <p>The causes of the “productivity puzzle” are complex. But its profound impact on living standards makes it imperative to reverse any long‐​held policy mistakes exacerbating it. One obvious source is Britain’s weak private investment level in plant, machines and buildings, which has been the lowest in the G7 for two decades as a&nbsp;share of GDP.</p> <p>A key cause of this is surely Britain’s stingy capital allowances for these investments within its corporation tax code – a&nbsp;phenomenon the Adam Smith Institute (ASI) has called a “factory tax”.</p> <p>While the UK has a&nbsp;<a href="" target="_blank">low headline corporation tax rate</a>, new fixed capital investments can only be partially claimed back by businesses over time, rather than immediately written off like spending on raw materials or workers’ wages.</p> <p>Given inflation and foregone uses of those funds, the effect of this inability to fully recoup these investment costs is capital‐​intensive industries being tax disadvantaged relative to other sectors.</p> <p>Our complex system of depreciation schedules and asset lives, in other words, is an effective tax on manufacturing and factories, tilting the UK’s industrial structure away from the Midlands, Yorkshire and Wales (where manufacturing is relatively strongest) and towards the South East and London (where services and finance are concentrated).</p> <p>Actually, this tax bias has become worse since 2010. Part of the coalition government’s quid pro quo for lowering the headline corporation tax rate was making capital allowances for plant and machinery even less generous.</p> <p>Though there was a&nbsp;reintroduction of a&nbsp;structures and building allowance and an increase in the annual investment allowance in 2018, the UK still ranks 33rd of 36&nbsp;in the Tax Foundation’s “capital cost recovery” rankings of OECD countries.</p> <p>The last decade of corporation tax reforms taken together has therefore only seen a&nbsp;modest fall in the effective tax rate on new investment, which is why the business investment response of rate cuts has been so muted.</p> <p>Not many policy changes could raise GDP, move the tax code towards improved neutrality and further Boris’s aim for regional “levelling up” simultaneously. But removing this “factory tax” bias would do all three. In practice, that means introducing “full expensing,” where businesses could immediately and fully write off investment in plants, machinery and structures from their corporation tax bills, and carry forward losses with an interest factor.</p> <p>Abolishing the factory tax would eventually settle at reducing corporation tax revenues by about £9bn directly, according to ASI authors Sam Dumitriu and Pedro Serodio. Preferably any net shortfall would be made up by trimming spending.</p> <p>But rather than racking up debt for near‐​term consumption or wasteful high‐​speed rail projects, any additional borrowing to finance this will at least have a&nbsp;big economic pay‐​off.</p> <p>The ASI estimates the reforms would raise long‐​run investment in plants and machinery by 9.1pc and structures and buildings by 17.7pc, increasing labour productivity by 3.5pc (about a&nbsp;year‐​and‐​a‐​half of pre‐​crisis growth). Given other tax revenues would therefore rise, the tax cut would be far less costly than headline losses suggest.</p> <p>Oxford Centre for Business Taxation research on UK small businesses found firms qualifying for generous first‐​year investment allowances had 11pc higher investment levels than non‐​qualifying firms.</p> <p>Likewise, economist Eric Ohrn’s work found US states that temporarily implemented full expensing saw investment jump 18pc, on average, with higher employment achieved at 50pc lower cost per job than through government spending.</p> <p>Unsurprisingly, businesses respond to incentives. Studies generally find that a&nbsp;1pc fall in the post‐​tax cost of investment increases investment by anywhere between 7pc and 10pc. Yet Tory politicians seem to have forgotten this insight. Perhaps because many don’t fully appreciate the detail of the corporation tax reforms, they seem down on the idea of business tax cut‐​led growth right now.</p> <p>They shouldn’t be. We constantly hear that because “government borrowing is cheap … now is a&nbsp;good time to invest”. Yet government need not be the investor.</p> <p>If the Government can borrow at negative real rates over 30&nbsp;years, the fact that private projects tend to generate much higher returns on capital than public projects means that business tax cuts with good pedigree for stimulating investment (like full expensing) will often be better&nbsp;than government‐​led infrastructure spending.</p> <p>The March 11 Budget is a&nbsp;Boris‐​led administration’s first meaningful opportunity to flesh out what its eclectic economic wishlist will mean. His ministers have promised regional rebalancing, faster growth, tax cuts and sound long‐​term budgeting. Threading the policy needle on these goals, given the trade‐​offs inherent in many of them, is extremely difficult.</p> <p>Abolishing the UK’s factory tax is one idea that works towards all these objectives. Carpe diem.</p> </div> Ryan Bourne is the R&nbsp;Evan Scharf Chair for the Public Understanding of Economics at the Cato Institute. Thu, 20 Feb 2020 11:07:33 -0500 Ryan Bourne Will the 2020 Candidates End Our Pointless Wars? <p><a href="" hreflang="und">Doug Bandow</a></p> <div class="lead text-default"> <p>The cost of Washington’s endless wars fall most heavily on those who suffer under American bombs and drones. Yet the plight of foreigners is rarely mentioned. When asked about a&nbsp;half million Iraqi babies killed by American economic sanctions, then‐​UN ambassador Madeleine Albright famously replied: “We think the price is worth it.”</p> </div> , <div class="text-default"> <p>That was characteristic of Washington’s overwhelming hubris. Members of “the Blob,” as America’s foreign policy elite has been called, believe they are uniquely qualified to run the world. Only they can predict the future, assess humanity’s needs, develop solutions. And anyone who resists their dictates deserves his or her terrible fate.</p> <p>No doubt, foreign policy sometimes presents difficult choices. For instance, in World War II, the U.S. backed tyrannical Joseph Stalin’s Soviet Union against monstrous Adolf Hitler’s Nazi Germany. During the Cold War, Washington allied with a&nbsp;variety of authoritarian regimes.</p> <p>There was a&nbsp;logic to such decisions. However, those choices also left many policymakers with moral qualms. Such self‐​doubt seems to be almost completely absent from the Blob today. Who among advocates of the Iraq War have acknowledged the horrors they loosed upon the people of Iraq and its surrounding nations? Most resist taking any responsibility.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>We are imperially overstretched and The Blob refuses to see it. Will the next president?</p> </div> </div> </aside> , <div class="text-default"> <p>First, they simply deny that America is at war. President Barack Obama tried to avoid invoking the War Powers Act in Libya by arguing that the conflict did not qualify since Americans weren’t doing the shooting. However, Defense Secretary Bob Gates admitted that the Libyans being targeted probably thought Washington was at war. And the consequences of that conflict were significant: violent chaos that continues to this day. Moreover, the precedent of taking out a&nbsp;leader who voluntarily surrendered his missile and nuclear programs could discourage future dictators from disarming.</p> <p>Today some war enthusiasts deny that Americans are really fighting in the multiple conflicts in which they are engaged. Marc Thiessen, a&nbsp;speechwriter for President George W. Bush and Defense Secretary Donald Rumsfeld, whose tenures were defined by the disastrous Iraq War, denounced the very concept of endless wars as a “canard.” Yet casualties, though lower than before, continue with regularity in Afghanistan, Iraq, and Syria.</p> <p>More importantly, the risks of much larger conflict are real. American troops in Iraq have to confront Iranian‐​backed militias, and a&nbsp;recent round of mutual retaliation risked a&nbsp;full‐​blown conflict. The Pentagon has maintained forces in Syria for potential use against—depending on who claims to be directing U.S. policy—the Islamic State, and, without legal authority, the Damascus government, Iran, Turkey, and even Moscow. American and Russian troops recently confronted each other over Syrian oilfields that President Donald Trump ordered seized—illegally. The potential for a&nbsp;much broader conflict remains serious.</p> <p>Second, Washington’s permanent War Party dismisses the harm their wars have caused. After the Obama administration headed to Libya and joined Saudi Arabia’s war on Yemen, Samantha Power, perhaps the most visible advocate of supposedly humanitarian war‐​making, complained that Americans were discouraged by the Iraqi imbroglio: “I think there is too much of, ‘Oh, look, this is what intervention has wrought’…one has to be careful about overdrawing lessons.”</p> <p>The last two decades of war have had catastrophic consequences. The official costs are high enough, with the Pentagon having spent $1.55 trillion in Afghanistan and Iraq, according to the Congressional Research Service. A&nbsp;few billion dollars have gone into the anti‐​ISIS campaign in Iraq and Syria. Over $113 billion more has been spent on reconstruction in Afghanistan alone, though with little success, according to multiple reports from the Special Inspector General for Afghanistan Reconstruction.</p> <p>And these figures dramatically underestimate the total financial cost. Noted Brown University’s Watson Institute: “Through Fiscal Year 2020, the United States federal government has spent or obligated $6.4 trillion dollars on the wars in Afghanistan, Pakistan, and Iraq. This figure includes: direct Congressional war appropriations; war‐​related increases to the Pentagon base budget; veterans care and disability; increases in the homeland security budget; interest payments on direct war borrowing; foreign assistance spending; and estimated future obligations for veterans’ care.” Not included are macroeconomic costs due to the massive misallocation of valuable resources.</p> <p>More important has been the human cost. CRS reported about 7,000 dead and 53,000 wounded among U.S. service personnel in Afghanistan and Iraq. The split by conflict was 38 percent/​62 percent, respectively. Nearly 400 American military members have died elsewhere since 9/11.&nbsp;A&nbsp;million or more—the latest available figures are years out of date—disability claims have been filed by U.S. personnel. Suicide rates among the 2.7 million who have served in either Afghanistan or Iran are higher than among the civilian population.</p> <p>Also significant are casualties among U.S. contractors: 3,400 dead and 39,000 wounded. However, the Pentagon’s figures may be incomplete: the Watson Institute, with its Cost of War Project, figures the number of contractor deaths to be more than 8,000, higher than the number of dead uniformed personnel. Reliance on contractors may be controversial, but they essentially represent the U.S. government. The death of a&nbsp;contractor in Iraq triggered Washington’s strike on an Iranian‐​backed militia, which almost sparked war between Tehran and Washington. Several hundred allied military personnel also have died, along with an estimated 110,000 local military and police.</p> <p>Worse has been the civilian toll in those nations that Washington purports to be saving. American policymakers rarely speak of this cost. After all, they believe “the price is worth it,” to quote Albright. As of November, figured the Watson Institute, 335,000 civilians in Afghanistan, Iraq, Pakistan, Syria, and Yemen had died in conflicts featuring U.S. military operations. Unfortunately, these numbers are low, perhaps dramatically so.</p> <p>The Iraq Body Count has documented between 184,868 and 207,759 deaths in Iraq, but many killings in such a&nbsp;conflict go unreported. IBC suggested doubling its estimate to get a&nbsp;more accurate figure. Even that may be too few. A&nbsp;couple respected though contested surveys figure civilian deaths could top a&nbsp;million. The University of Michigan’s Juan Cole defended the methodology: “I believe very large numbers of Iraqi families quietly bury their dead without telling the government of all people anything about it. Another large number of those killed is dumped in the Tigris river by their killers. …Not to mention that for substantial periods of time since 2003 it has been dangerous in about half the country just to move around, much less to move around with dead bodies.”</p> <p>Nor do casualties stop there. On top of those killed directly, noted the Watson Institute, “War deaths from malnutrition, and a&nbsp;damaged health system and environment likely far outnumber deaths from combat.” For instance, in Yemen, the number of civilian dead due to famine, 85,000 by one count, vastly exceeds the number killed in the conflict, perhaps 12,000.&nbsp;A&nbsp;million people are thought to have suffered from cholera, resulting from the destruction of the country’s commercial, health, social, and transportation infrastructure. Most of the damage has come from airstrikes by the United Arab Emirates and Saudi Arabia, which are backed by U.S. intelligence, munitions, and formerly refueling.</p> <p>Explained the Watson Institute: “People living in the war zones have been killed in their homes, in markets, and on roadways.&nbsp;They have been killed by bombs, bullets, fire, improvised explosive devices (IEDs), and drones. Civilians die at checkpoints, as they are run off the road by military vehicles, when they step on a&nbsp;mine or cluster bomb, as they collect wood or tend to their fields, and when they are kidnapped and executed for purposes of revenge or intimidation. They are killed by the United States, by its allies, and by insurgents and sectarians in the civil wars spawned by the invasions.”</p> <p>War is not always avoidable. But since the end of the Cold War, every conflict started by the U.S. has been one of choice. America only ever had a&nbsp;serious interest at stake in Afghanistan—to destroy al‐​Qaeda after 9/11 and punish the Taliban government. In that case, however, the U.S. mission should have ended by early 2002, not carried on for nearly two decades.</p> <p>American policymakers should stop treating war as a&nbsp;first resort, a&nbsp;panacea for international conflict and tragedy. Washington is filled with ivory tower warriors. Their supposedly best intentions have spread chaos and death around the globe. What think this year’s presidential candidates?</p> </div> Doug Bandow is a&nbsp;senior fellow at the Cato Institute and former special assistant to President Ronald Reagan. He is the author of Foreign Follies: America’s New Global Empire. He is currently scholar‐​in‐​residence with the Centre for Independent Studies in Sydney. Thu, 20 Feb 2020 09:06:42 -0500 Doug Bandow President Trump’s ‘Deal of the Century’ Would Be a Historic Mistake <p><a href="" hreflang="und">Doug Bandow</a></p> <div class="lead text-default"> <p>President Donald Trump&nbsp;has unveiled his “<a href="" target="_blank">Deal of the Century</a>” and it is—for&nbsp;Israel.</p> </div> , <div class="text-default"> <p>In the past the Palestinians have been said to never lose an opportunity to lose an opportunity. In this case the opportunity is entirely Israel’s, and even more directly, Prime Minister Benjamin Netanyahu’s. Neoconservative Max Boot called the initiative “a PR campaign, not a&nbsp;peace plan.”</p> <p>Any proposal brokered by Washington should be immediately suspect. There is no pretense that American policymakers are objective or balanced: Israel is a&nbsp;political “third rail,” enjoying extraordinary favor among many Democratic and most Republican policymakers. Recent presidents made little effort to offer a&nbsp;balanced policy, irrespective of their rhetoric.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Washington might not be able to deliver a&nbsp;better future to the Palestinians, but it should not lock them into a&nbsp;worse one.</p> </div> </div> </aside> , <div class="text-default"> <p>Certainly, President Trump has not done so. His plan envisions immediate Israeli territorial gains with the annexation of settlements dispersed throughout the West Bank. Israel would forever control not only Jerusalem—the Palestinians would be left only with some city outskirts—but also their borders and airspace. The latter is even presented as a&nbsp;benefit to the Palestinians, since they could rely on Israel for security rather than spending on their own forces!</p> <p>However, only in several years, after the Palestinian Authority met unrealistic standards imposed by the U.S. and Israel, would a&nbsp;fragmented statelet be created. Then unnamed, unidentified parties not privy to the agreement would pour $50 billion into economic development of the Palestinian territories.</p> <p>Of course, a&nbsp;plan developed by American partisans of Israel and the Netanyahu government favors Israel. Indeed, reported the&nbsp;<em>Jerusalem Post</em>: “The broader ideas of the plan are similar to ones Netanyahu has long touted.” The main difference is “that the White House is behind his vision this time.” Observed Israeli Daniel Levy, president of the U.S./Middle East Project, “Only the Israeli side is deemed worthy by the American plan of empathy, of having its historical claims and justification to the land and to nationhood embraced.”</p> <p>The faux Deal of the Century was released shortly ahead of the next round of Israeli elections, in which Netanyahu is desperately attempting to gain a&nbsp;majority to reelect him and shut down the prosecution against him for corruption. At the plan’s release, he announced that Israel would “apply its laws to the Jordan Valley, to all the Jewish communities in Judea and Samaria, and to other areas that your plan designates as part of Israel.” Boot called this “an Israeli power grab and land grab.”</p> <p>The proposed Palestinian entity is not a&nbsp;state as commonly understood. Rather, it would be entirely dependent on Israel’s goodwill. The Palestinian Authority would not even have control over territory within. The administration plan states: “The Israeli population located in enclaves that remain inside contiguous Palestinian territory but that are part of the State of Israel shall have the option to remain in place unless they choose otherwise, and maintain their existing Israeli citizenship. They will have access routes connecting them to the State of Israel. They will be subject to Israeli civilian administration, including zoning and planning, within the interior of such Israeli enclaves. They will not be discriminated against and will have appropriate security protection. Such enclaves and access routes will be subject to Israeli security responsibility.”</p> <p>This Palestinian gerrymander bears a&nbsp;distinct resemblance to the ten South African “Bantustans,” or homelands, created to enhance Apartheid against black South Africans while providing a&nbsp;pretense of self‐​rule. Palestinians would be similarly disadvantaged, segregated, and subjugated, their isolated cantons stitched together through “bridges, roads and tunnels.”</p> <p>Moreover, the Palestinian creation is dependent on conditions unlikely to be met. For instance, Hamas, which controls Gaza and is beyond the Palestinian Authority’s control, must disarm, renounce a “right of return” for Palestinian refugees, and accept Israel as a&nbsp;Jewish state. To say this is unlikely is a&nbsp;stunning understatement.</p> <p>Moreover, stated the plan: “The Palestinians shall have implemented a&nbsp;governing system with a&nbsp;constitution or another system for establishing the rule of law that provides for freedom of press, free and fair elections, respect for human rights for its citizens, protections for religious freedom and for religious minorities to observe their faith, uniform and fair enforcement of law and contractual rights, due process under law, and an independent judiciary with appropriate legal consequences and punishment established for violations of the law.” The economic system must be similarly pristine.</p> <p>These are reasonable requirements for all governments. However, what Middle Eastern nation meets these criteria? Even Israel is backsliding on civil libertarian norms. And who decides that the Palestinians have met these conditions, years after Israel has annexed, forever, all the areas that it desires? Israel and its primary benefactor, the U.S.</p> <p>Trump famously promised $50 billion of commercial investment. This from a&nbsp;president who might not be in office a&nbsp;year from now. And one who has routinely trashed earlier agreements and treaties. Worse, there is no guarantee that anyone else will provide the money.</p> <p>The plan simply offers “the potential to facilitate more than $50 billion in new investment over ten years.” Even if Palestinians accept their role as docile Israeli dependents, which seems unlikely, what company will invest in a&nbsp;territory and region likely to be no less unstable and violent years in the future. What government will toss aid at the Palestinians&nbsp;<em>after</em>&nbsp;they have abandoned all leverage and agreed to submit? Promises to double the GDP are fantasies based on nothing at all.</p> <p>If there is an argument for the agreement, it is that the Palestinians have lost, Israel is supreme, Arab governments have dropped the pretense that they care about the issue, and Washington has abandoned the slightest veneer of balance. Indeed, the Trump administration spent the last three years imposing its version of “maximum pressure” on the Palestinians. That was not enough to force their surrender, so along with the plan the president threatened them with the loss of any concessions, opining that “this could be the last opportunity they will ever have.”</p> <p>Perhaps the president is unaware of what his administration is proposing. After all, he said: “it is only reasonable that I&nbsp;have to do a&nbsp;lot for the Palestinians, or it just wouldn’t be fair.” How else to explain the Misdeal of the Century? The result of this initiative will be neither peace nor prosperity. Washington might not be able to deliver a&nbsp;better future to the Palestinians, but it should not lock them into a&nbsp;worse one.</p> </div> Doug Bandow is a&nbsp;Senior Fellow at the Cato Institute Wed, 19 Feb 2020 13:06:20 -0500 Doug Bandow The Real Budget Question on Borrowing Is Not “Could We?” but “Should We?” <p><a href="" hreflang="und">Ryan Bourne</a></p> <div class="lead text-default"> <p>Rishi Sunak is reportedly being pressured to “loosen” the Conservatives’ already loosened fiscal rules in his scheduled March 11th budget. Not long ago, an overall budget surplus by the mid‐​2020s was the aim, with George Osborne and Phillip Hammond insistent that falling debt‐​to‐​GDP was the prudent path given high debt levels, future recession risks, and demographic realities.</p> </div> , <div class="text-default"> <p>Yet fiscal rules come and fiscal rules go. At any given moment treated as sacrosanct, the past 15&nbsp;years shows fiscal targets only last as long&nbsp;<a href="" target="_blank">as the politics dictates</a>. So, when deficit reduction ceased to be the overwhelming pre‐​election priority, the rules changed and suddenly borrowing for investment up to three per cent of GDP was allowed, meaning debt‐​to‐​GDP would barely fall this Parliament. Now, Number Ten seemingly wants further relaxation, even contemplating debt‐​to‐​GDP rising.</p> <p>Reaction from economists and&nbsp;<a href="" target="_blank">ex‐​Treasury officials</a>&nbsp;has centred on whether Britain could shoulder much higher permanent debt levels without fiscal crisis. Important as this debate is (and the long‐​term answer is uncertain and unknowable), it ignores more immediate questions: for what purpose is the extra borrowing being proposed? And is more borrowing actually appropriate for this aim?</p> <p>None of us know why, exactly, further borrowing is being contemplated. Most analysts think that manifesto promises on public service spending and investment can, just about, be delivered within the current framework. This suggests Number Ten wants to “spend more” somewhere.</p> <p>But given the Conservatives have no clear stated narrative about what they consider wrong with the economy (beyond pledges to “level up,” return to historic 2.8 per cent GDP growth rates, or “unleash the country’s potential” in response), it’s anyone’s guess what’s driving this new thinking.</p> <p>This lack of a&nbsp;clear economic policy is worrying. Having a&nbsp;clear economic aim, be it growth, or reducing debt, or even reducing inequality, is what anchors decision‐​making. A&nbsp;pursuit of a&nbsp;goal imposes discipline to think clearly about trade‐​offs. The major concern in regard this proposed relaxation is not necessarily that it shows Boris Johnson’s priorities are wrong, but that it exhibits an unwillingness to actually prioritise at all. The fear is that the Prime Minister’s team is falling for any old spending or tax cut demand, without a&nbsp;limiting principle. “You can’t say everything is your priority,” Sajid Javid reportedly said before resigning.</p> <p>In fairness, one reason that no clear economic narrative has emanated from this Government is precisely because they haven’t delivered a&nbsp;budget yet. For good or ill, modern budgets&nbsp;<em>are</em>&nbsp;the primary platform governments have to tell an economic story and outline a&nbsp;policy response. With Brexit done and a&nbsp;secure majority, the Prime Minister and Sunak now have the chance to try to synthesise the disparate stated ambitions for prosperity, regional rebalancing and more money for public services.</p> <p>Our Editor asked me to offer thoughts on “what they should do.” My honest answer is that, having won a&nbsp;majority and with limited time of healthy political capital, my priority would not be delivering more cash for public services than promised in the manifesto, nor additional infrastructure splurges, nor even broad tax cuts to “put money back in people’s pockets”.</p> <p>No, my major concern would be the&nbsp;<a href="" target="_blank">sustained weak productivity growth</a>&nbsp;performance post‐​crash. This makes every other government challenge more difficult, producing lower wages, less money for public services, and lower returns on saving.</p> <p>The past decade shows this is now a&nbsp;deep‐​set structural problem, requiring coordinated policy change. In tackling it, I’d try to work through the difficult and thorny politics of meaningful tax and supply‐​side reform (land‐​use planning, immigration, welfare, public sector productivity, infrastructure, and education), recognising the uncertainty of success but mindful of the potentially massive rewards.</p> <p>Prioritising long‐​term growth above all else means potentially tolerating more borrowing. But only if it helps to deliver the primary goal. So, no additional cash for the welfare state without productivity‐​enhancing public service reform as a&nbsp;chaser. No deficit‐​worsening tax cuts except to grease the wheels for actual pro‐​growth tax reform (by ensuring the inevitable pain of losers is bearable). And no additional infrastructure spending unless the spending is targeted at the most pro‐​growth projects with social returns exceeding private alternatives. And I’d apply these principles broadly: no new subsidies for housing, for example, without further meaningful planning reform.</p> <p>If that sounds an austere, transactional type of politics, then that’s the point. Reform without relaxing resource constraints is difficult. But showering money without reform is a&nbsp;wasted opportunity. Ask Tony Blair. What’s uncertain as yet is whether Johnson and Dominic Cummings share these views that growth is the most important challenge and that most public spending alone does little to improve it. My hunch is they are more positive about the prospects of state‐​led growth. My hope is they haven’t swallowed dangerously seductive economic arguments about how more spending will drive it.</p> <p>Many conservatives argue, for example, that now is a “good time to invest” because borrowing is cheap. But extra public service spending is mostly consumption and transfers. It is not “investment.” If Boris wants more funds for the NHS, social care, or the police, then he should raise taxes or find offsetting spending cuts to fund them.</p> <p>There’s no “get out of jail free” card here. The options are higher taxes or less spending for future generations or adding to a&nbsp;tax burden that’s already the highest in two generations today, weakening growth further. More public service spending might be a&nbsp;political imperative for the Prime Minister, but it comes with a&nbsp;clear growth trade‐​off.</p> <p>Nor is more government infrastructure spending&nbsp;<em>necessarily&nbsp;</em>good for growth, even with low interest rates. Yes, projects that solve market failures or have high social returns can improve growth prospects and be self‐​financing. Paying for them upfront via borrowing avoids damaging spikes in tax rates.</p> <p>But in an economy with a&nbsp;tight labour market, government projects take funds, workers, and machines out of the private sector, where they often do more good. In fact, if private projects generate higher returns than government projects then more government infrastructure spending may harm growth. In these instances, business tax cuts financed through borrowing to encourage private investment would be far better for economic health than just throwing more money at government transport projects.</p> <p>Advice of “if you are to borrow, at least do it wisely,” might sound inane. But in the absence of a&nbsp;clearly stated economic goal, the real question is not “could we could borrow more in today’s environment?” but “should we?” My answer would be “maybe, provided the spending or tax cuts significantly improved our growth potential.” But then growth would be my overriding priority. What is Number Ten’s?</p> </div> Ryan Bourne holds the R&nbsp;Evan Scharf Chair in Public Understanding of Economics at the Cato Institute. Wed, 19 Feb 2020 10:54:03 -0500 Ryan Bourne While We All Gawk at the Political Circus, Our Fiscal House Is Falling Apart <p><a href="" hreflang="und">Michael D. Tanner</a></p> <div class="lead text-default"> <p>In&nbsp;what was little more than a&nbsp;footnote amid the noise of impeachment and the continuing chaos of the Democratic primaries, late last month the Congressional Budget Office officially announced that for the first time since 2012, our annual budget deficit will top $1 trillion. Even worse, our fiscal house is set to remain in abominable shape for the foreseeable future: The CBO projects that the deficit will average $1.3 trillion from 2021 to 2030 and that the current $22 trillion gross national debt will reach $36.2 trillion by 2030.</p> </div> , <div class="text-default"> <p>None of this concerns the Democratic presidential candidates, of course. They’re busy promising to spend ungodly amounts of the taxpayers’ money on any conceivable scheme that they think might win them a&nbsp;few more votes.</p> <p>The most shameless of them is the self‐​proclaimed democratic socialist Bernie Sanders, who has proposed $97.5 trillion in new spending over the next ten years. To finance his grandiose plans, Sanders is proposing a&nbsp;variety of taxes on the rich totaling some $23 trillion and more than $74 trillion in additional debt. Think about that: Sanders’ plan would push the national debt over $100 trillion by the end of the decade.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Debt and deficits are not exciting issues, but they’ll have a&nbsp;huge impact on our future.</p> </div> </div> </aside> , <div class="text-default"> <p>Other Democrats are not far behind him, either. Elizabeth Warren has proposed more than $49 trillion in new spending over the next ten years. Even more‐​moderate candidates such as Joe Biden, Amy Klobuchar, and Pete Buttigieg have called for trillions in new spending. Biden is calling for just under $6 trillion in new spending over a&nbsp;decade. Buttigieg is calling for $7.5 trillion in new spending over the same period, though in fairness, he has at least proposed tax hikes sufficient to pay for it, while the others are content to pass the costs of their plans on to future generations.</p> <p>It should come as no surprise to anyone that every single viable Democratic candidate is firmly opposed to reforming Medicare, Medicaid, and Social Security, the entitlement programs that make up more than half of federal spending and are the chief engine of our deficits.</p> <p>As fiscally irresponsible as the Democrats are, though, anyone concerned about the growing tide of red ink should not look to the Trump administration for a&nbsp;better way forward. Faced with news of trillion‐​dollar deficits, President Trump’s response at a&nbsp;Mar‐​a‐​Lago fundraiser was a&nbsp;dismissive, “Who the hell cares about the budget? We’re going to have a&nbsp;country.” And a&nbsp;quick glance at his record confirms that that’s not just more of his trademark bluster: He has signed $4.7 trillion of new debt into law over his first three years in office. If he wins reelection and continues at that pace, by the end of his second term, Trump will end up having added more to the national debt than President Obama. And he will have done it amid relative prosperity, rather than the recession Obama had to navigate.</p> <p>Democrats conveniently blame Trump’s tax cuts for the ballooning debt. And it is true that the tax cuts have not paid for themselves, as some supporters claimed they would. Yet, tax revenue is up, albeit less than predicted under pre‐​tax baselines. The real culprit lies on the spending side. The new spending that Trump has signed into law amounts to an additional $1,441 per person per year. As Trump’s defenders are quick to point out, much of the responsibility for this fiscal recklessness lies with Congress. But the president, who has proven time and again that he’s more than willing to play hardball in fighting for the things he really wants, hasn’t made a&nbsp;peep about the big‐​spending budgets Congress sends him.</p> <p>The Trump administration’s most recent budget proposal is a&nbsp;case in point. It is full of cuts to the usual suspects such as foreign aid and “lower‐​tier” entitlement programs — Trump, like his Democratic rivals, has refused to touch Social Security and Medicare outlays — offset by massive increases in defense spending. It’s a&nbsp;budget designed to play well with his base while remaining a&nbsp;non‐​starter for Congress, and it would make no difference to our precarious fiscal situation anyway: Even if every one of its spending cuts made it into law, it would still add around $30 trillion to the national debt over eight years.</p> <p>Debt and deficits are not sexy political issues. It will always be difficult to get voters and the media to pay attention to them. But in the long run, our bipartisan fiscal irresponsibility is likely to have a&nbsp;greater impact on our future than the more‐​entertaining political circus that captivates us.</p> </div> Michael Tanner is a&nbsp;senior fellow at the Cato Institute and the author of&nbsp;<a href="" target="_blank">The Inclusive Economy: How to Bring Wealth to America’s Poor</a>. Wed, 19 Feb 2020 08:56:34 -0500 Michael D. Tanner A “Perfect” Impeachment Acquittal? <p><a href="" hreflang="und">Gene Healy</a></p> <div class="lead text-default"> <p><em>Acquittal</em>: it’s a “gorgeous word,” President Trump crowed at the White House post‐​impeachment&nbsp;<a href="" target="_blank">“VICTORY” rally</a>. His opponents found less cause for rejoicing: some were even furious enough to&nbsp;<a href="" target="_blank">tear things up</a>.</p> </div> , <div class="text-default"> <p>But whether you cheer or jeer the Senate’s refusal to convict, the more important question is, what precedent did it set? Unlike Supreme Court majority opinions, impeachment verdicts don’t explain themselves. “Not guilty” can mean anything from total vindication to “contemptible behavior that doesn’t quite justify removal.” A&nbsp;great deal turns on how senators from the president’s party explain their votes.</p> <p>On that score, Senate Republicans sent a&nbsp;distressingly mixed message in the impeachment trial’s immediate aftermath. In their floor speeches explaining their votes, too few managed to clearly condemn Trump’s misuse of presidential power for personal benefit. And too many embraced novel constitutional theories, concocted by Trump’s defense team, that would license more dramatic presidential abuses in the future.</p> <p>No one today thinks the lesson of Bill Clinton’s 1999 impeachment acquittal was “fooling around with an intern and lying about it in court is totally OK. It was a ‘perfect’ … er, fling!” In part, that’s because nearly every Democratic senator condemned Clinton’s behavior in harsh terms: “<a href="" target="_blank">abhorrent</a>”; “<a href="" target="_blank">deplorable on every level</a>”; “<a href="" target="_blank">immoral, disgraceful, reprehensible</a>”—and worse. Indeed, immediately after the verdict, Sen. Dianne Feinstein (D‑Cal.) tried and&nbsp;<a href="" target="_blank">failed</a>&nbsp;to force a&nbsp;vote on her resolution&nbsp;<a href="" target="_blank">censuring</a>&nbsp;the president for “shameless, reckless and indefensible” behavior and “false or misleading testimony.”</p> <p>This time around, however, only two Republican senators managed to sound seriously displeased with Trump’s conduct. One, of course, was Sen. Mitt Romney (R‑Utah): “<a href="" target="_blank">Corrupting an election to keep oneself in office is perhaps the most abusive and destructive violation of one’s oath of office that I&nbsp;can imagine.</a>” The other was Sen. Lisa Murkowski (R‑Alaska), who, while declining to join Romney’s vote to convict, made plain that “<a href="" target="_blank">the president’s behavior was shameful and wrong</a>.”</p> <p>Senatorial rebukes got pathetically timid from there. The president’s request for an investigation of the Bidens “<a href="" target="_blank">demonstrated very poor judgment</a>” tutted Sen. Susan Collins (R‑Maine). “<a href="" target="_blank">Inappropriate</a>,” murmured Sen. Lamar Alexander (R‑Tenn.). Sen. Ben Sasse (R‑Neb.)—who’s developed a&nbsp;side gig lecturing Americans about&nbsp;<a href="" target="_blank">virtue</a>&nbsp;and “<a href=";lpg=PT292&amp;ots=CQmAGhnPHE&amp;dq=ben%20sasse%20%22moral%20courage%22&amp;pg=PT292#v=onepage&amp;q=ben%20sasse%20%22moral%20courage%22&amp;f=false" target="_blank">moral courage</a>”—bravely ventured that Trump’s July 25 parley with President Zelensky was&nbsp;<a href="" target="_blank">“certainly not ‘perfect.’”</a></p> <p>A broad swath of the GOP caucus decided discretion was the better part of valor: the&nbsp;<em>Dispatch</em>&nbsp;<a href="" target="_blank">counted</a>&nbsp;16 senators who “artfully avoided addressing the question” of whether the president did anything wrong. Still more echoed Trump’s self‐​congratulatory pronouncement of a “<a href="" target="_blank">perfect call</a>.” “<a href="" target="_blank">Nothing wrong</a>” with it, insisted Sen. James Inhofe (R‑Okla.): “the transcript speaks for itself.” Holding up military aid was “<a href="" target="_blank">not even wrong</a>,” Sen. Mike Lee (R‑Utah) maintained. The president was trying “<a href="" target="_blank">to root out corruption in the Ukraine</a>,” explained Sen. David Perdue (R‑Ga.); that the target happened to be Trump’s then‐​leading rival in the 2020 presidential race was a&nbsp;happy accident, apparently.</p> <p>A key lesson of Richard Nixon’s near‐​impeachment (he quit before the full House could vote) was that using “the available federal machinery to&nbsp;<a href="" target="_blank">screw [your] political enemies</a>”—as an infamous 1972 “Enemies List” memo put it—is impeachable conduct. Trump’s defense team worked hard to overturn that understanding, calling abuse of power a “made‐​up theory” that “<a href="" target="_blank">fails to state an impeachable offense because it does not rest on violation of an established law</a>.”</p> <p>Though several Republican senators specifically rejected the Trump team’s legal theory, by my count, at least as many embraced it—despite its near‐​total lack of support in our&nbsp;<a href="" target="_blank">constitutional history</a>. Senator Inhofe proclaimed that “abuse of power is not a&nbsp;crime or impeachable conduct.” If only Nixon had known!</p> <p>Did fear of White House retribution—visions of&nbsp;<a href="" target="_blank">heads on pikes</a>—cause any Republicans to mute their criticism and fall in line? There’s no way to tell. What is clear is that there was an intellectually defensible, even honorable, way to acquit President Trump without whitewashing his behavior or holding the door open to further abuse. For whatever reason, too few GOP senators chose that path.</p> </div> Gene Healy is a&nbsp;vice president at the Cato Institute and author of&nbsp;<a href="">Indispensable Remedy: The Broad Scope of the Constitution’s Impeachment Power</a>. Tue, 18 Feb 2020 13:28:13 -0500 Gene Healy How Donald Trump Can Jumpstart Diplomacy with North Korea <p><a href="" hreflang="und">Doug Bandow</a></p> <div class="lead text-default"> <p>President Donald Trump&nbsp;apparently has given up on&nbsp;North Korea,&nbsp;<a href="" target="_blank" rel=" noopener noreferrer">according to his aides</a>. He said he wants no summits this year while he concentrates on his reelection campaign.</p> </div> , <div class="text-default"> <p>Downplaying PR extravaganzas makes sense as long as there is no agreement. However, the administration appears determined to move in reverse. An anonymous official told CNN that talks were “dead.” Apparently,&nbsp;<a href="">the State Department</a>&nbsp;has tightened already restricted travel to the North.</p> <p>Dropping efforts to achieve detente with the Democratic People’s Republic of Korea leaves President Trump without an obvious foreign policy success. Endless wars in the Middle East continue. The president abandoned the nuclear deal with&nbsp;Iran, creating greater Gulf instability. Relations with Russia have worsened in practice. Hostile governments in Cuba and Venezuela continue to challenge America. The main success of the trade war with&nbsp;China&nbsp;was winning increased agricultural sales to benefit his Midwest supporters, at the high cost of disrupting the economy with burdensome tariffs.</p> <p>The president should not give up working to defuse the Korean nuclear confrontation.</p> <p>He deserves great credit for ignoring complaints from the usual Korea policy analysts about his decision to engage the DPRK. Refusing to talk with one’s adversaries is dangerous as well as myopic. Imagine if the U.S. did not have diplomatic relations with the Soviet Union during the Cold War and especially the Cuban Missile Crisis. America and China might have avoided two and a&nbsp;half years of war in Korea had the two governments had regularly communicated as allied forces moved north toward the Yalu River.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Progress remains possible but will require a&nbsp;change in approach. The possibility of promoting stability and peace is worth the risk of doing so.</p> </div> </div> </aside> , <div class="text-default"> <p>Refusing to talk with Pyongyang for years was equally foolish. It is especially dumb now when North Korea’s Supreme Leader Kim Jong‐​un obviously desires contact. Indeed, he has proved to be quite skilled at the diplomatic game. That does not mean he is a&nbsp;closet liberal or friend of America. But he appears to be a&nbsp;man with whom America and, more importantly, South Korea, can do business.</p> <p>The president should build on this important achievement. How to proceed?</p> <p>President Trump should give the equivalent of a&nbsp;victory speech. He should note that he took the first, critical step in defusing the seven‐​decade long confrontation in Northeast Asia. In this way, he has achieved something none of his predecessors succeeded in doing.</p> <p>That doesn’t mean the lion is ready to lie down with the lamb on the Korean peninsula. But as during the move toward détente as the Cold War ended, the threat of military confrontation diminished. Moscow still possessed the ability to wreak havoc in Europe and around the world. However, the desultory apparatchiks who took charge of the U.S.S.R. during the Brezhnev era lacked the will to act. Creating a&nbsp;similar alternative path for the DPRK would be a&nbsp;limited but invaluable achievement nonetheless.</p> <p>To move further, to make nuclear or other arms agreements, ones that can survive the usual political vicissitudes, requires greater personal contact and trust. And that means more than an occasional brief summit between principals. The president should explain that this year he intends to strengthen the foundation of the relationship to support the larger denuclearization agreement he still seeks.</p> <p>That doesn’t mean a&nbsp;naïve belief that the extreme differences in political ideologies and systems can be wished away through personal rapport, however genuine. But it means changing a&nbsp;once persistently antagonistic relationship into one in which U.S. military coercion seems unlikely. Increasing communication, contact, and cooperation would advance a&nbsp;number of possible objectives—denuclearization, arms control, or simply civil relations. And listening to what the North says it desires increases the odds of reaching an agreement.</p> <p>The 2018 Singapore summit statement ordered the North’s objectives: better bilateral relationship, improved regional security, and then denuclearization. Separately South Korean officials reported that Kim said nuclear weapons would not be necessary if Washington and Pyongyang formed a&nbsp;closer relationship. Skepticism of Kim’s pronouncements is warranted, but such positions track with reality—after Muammar Khadafy’s brutal demise after surrendering his missile and nuclear programs, what sane dictator would voluntarily disarm? And the improved relations Kim claims to want would benefit the U.S. too.</p> <p>To that end, the president should announce that he intends to spend this year strengthening ties at all levels. He should revoke the ban on U.S.-North Korean travel, both to and from. Contact should be encouraged, not prohibited. Moreover, he should propose exchanging liaison offices, with permanent representation in both capitals. The U.S. should simultaneously insist on reciprocal rules governing freedom of movement of diplomats and wide‐​ranging conversations on all topics, including human rights.</p> <p>Critics complain that such a&nbsp;policy would “reward” the North. However, expanded communication would benefit both sides. It would improve the prospects for diplomacy and create mechanisms to defuse conflicts. The very act of legitimizing contact with Pyongyang would reduce the implicit threat of U.S. military action. Further, it would give America a&nbsp;small window into North Korea, a&nbsp;useful step when dealing with such an opaque regime.</p> <p>The president also should propose that the U.S., China, and both Koreas sign a&nbsp;peace declaration for the peninsula. A&nbsp;formal peace treaty should be placed on the agenda for future negotiation. Such a&nbsp;declaration should not be controversial. After all, the war is over. The long‐​ago combatants should acknowledge this reality.</p> <p>Opposition centers around the contention that recognizing reality somehow favors the North. The great success of America’s post‐​Korean War policy was preventing reignition of that conflict. The U.S. should celebrate that achievement. Moreover, Kim’s agreement would undercut the North’s use of perpetual war to strengthen political support for the regime. Regime propaganda might continue uninterrupted, but the dissonance between claims and reality would grow.</p> <p>Some South Koreans fear that admitting the peninsula is at peace might reduce American support for the bilateral alliance. However, a&nbsp;peace declaration does nothing more than recognize reality. It is that reality which undercuts the case for Washington’s continued defense of a&nbsp;nation with a&nbsp;population twice as large as and an economy more than 50 times that of its adversary. Only American support prevented North Korea’s conquest of the Korean peninsula in 1950, 1960, and maybe 1970. However, since then the Republic of Korea has surged past the North. Why should U.S. taxpayers continue to pay for the ROK’s defense? That question should be asked whether or not a&nbsp;peace declaration is issued.</p> <p>Finally, the administration should adapt its objectives to reality. It should be obvious that demanding complete denuclearization before offering any benefits is a&nbsp;dead end. The president should treat what he believes to be Kim’s promise to denuclearize as aspirational, a&nbsp;future possibility if a&nbsp;series of conditions are met. Thus, denuclearization is the end of a&nbsp;long road highlighted by multiple arms control steps along the way.</p> <p>There is great reluctance to admit the obvious, that the North already is a&nbsp;nuclear state and is highly unlikely to surrender what the regime’s sees as the ultimate tool to guarantee its survival. However, it is important not to allow the perfect to be the enemy of the good. A&nbsp;DPRK with nuclear weapons will always be dangerous, but one with a&nbsp;limited arsenal, constrained by agreements, enforced by inspections, and integrated in the larger international order would be far less dangerous. Perhaps this North Korea also is beyond reach. But the U.S. will never know unless it pushes in that direction.</p> <p>The administration should propose discrete steps that would reduce the military threat posed by the North. Each one should provide value on its own and be consistent with long‐​term denuclearization: continued suspension of testing, a&nbsp;compilation of a&nbsp;nuclear inventory, freeze on production, destruction of specific facilities, outside inspections, and more. Even if the process never reaches the ultimate objective of denuclearization, the result would be a&nbsp;more stable and peaceful peninsula.</p> <p>But moving along requires making concessions in return. Which means offering genuine sanctions relief. Agreements can be enforced by incorporating snap‐​back provisions if the terms are violated. Sanctions should be viewed as a&nbsp;means to an end, whose purpose is fulfilled as meaningful disarmament is achieved.</p> <p>Finally, Washington should consciously remove barriers to South‐​North Korea reconciliation. Pyongyang is a&nbsp;direct threat to the ROK, not America. Seoul should take the lead in developing their relationship. In contrast, Washington can and should step back from being in between the two. Thus, sanctions relief should begin by empowering the South in its relations with the DPRK, allowing joint economic and humanitarian projects to proceed. Encouraging South Korea to act as a&nbsp;sovereign state, rather than a&nbsp;U.S. dependent, also would strengthen ROK President Moon Jae‐​in’s position and authority to negotiate with the North.</p> <p>President Trump took a&nbsp;risk in pursuing the opening with Kim. The process has stalemated, but he should not abandon the opening which he has created. Progress remains possible but will require a&nbsp;change in approach. The possibility of promoting stability and peace is worth the risk of doing so.</p> </div> Doug Bandow is a&nbsp;Senior Fellow at the Cato Institute Tue, 18 Feb 2020 13:00:19 -0500 Doug Bandow Donald Trump’s Real North Korea Mistake <p><a href="" hreflang="und">Ted Galen Carpenter</a></p> <div class="lead text-default"> <p>President Trump needs to take advantage of his strengthened political position following the impeachment fiasco to keep his 2016 campaign promises about reassessing obsolete American military alliances. Unfortunately, thus far his approach has consisted of little more than empty talk.&nbsp;In terms of substance, Washington’s policies toward its NATO and East Asian allies have shifted very little.&nbsp;The administration’s principal change efforts have focused on demanding greater financial burden‐​sharing from its treaty partners in both regions.</p> </div> , <div class="text-default"> <p>That approach has worked only to a&nbsp;very limited extent.&nbsp;As Trump pointed out in his&nbsp;<a href="" target="_blank">State of the Union address</a>, the number of European NATO members meeting the agreed‐​upon target of spending two percent of their annual gross domestic product on defense has doubled during his administration.&nbsp;He neglected to mention, though, that the overwhelming majority of members still have not reached that target.</p> <p>His track record with South Korea and Japan is not much better.&nbsp;In November 2019, the administration&nbsp;<a href="" target="_blank">reportedly demanded</a>&nbsp;that Seoul make a&nbsp;five‐​fold increase in its $900 million annual support payments for U.S. troops stationed in the ROK.&nbsp;Washington also pressed Tokyo to&nbsp;<a href="" target="_blank">quadruple</a>&nbsp;its $2 billion support payment.&nbsp;Both allies strongly resisted that pressure, and likely viewed the demands as a&nbsp;bluff. As with earlier calls for greater burden‐​sharing by the NATO allies going back decades, U.S. leaders have never exhibited a&nbsp;credible willingness to withdraw U.S. forces if the calls were spurned. Allied governments seem confident that the situation is no different this time.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>It should be puzzling, frustrating, and alarming to all Americans that the United States is still on front lines of any crisis involving North Korea.</p> </div> </div> </aside> , <div class="text-default"> <p>Even in the unlikely event that they did accept Washington’s demands, the objective of financial burden‐​sharing fails to understand the real problem with U.S. foreign policy.&nbsp;The more fundamental problem is that the costs and risks of America’s alliance obligations now outweigh the prospective benefits—and the gap is growing rapidly.&nbsp;That situation is graphically apparent with respect to Washington’s security commitments in East Asia—especially to South Korea. The “mutual” defense treaty with Seoul entails the risk of a&nbsp;U.S. military confrontation with North Korea.&nbsp;That was perilous enough when Pyongyang lacked any nuclear capability, much less the capacity to strike the American homeland. Both conditions have now changed.</p> <p>It should be puzzling, frustrating, and alarming to all Americans that the United States is still on front lines of any crisis involving North Korea.&nbsp;That dangerous, unrewarding role arose in a&nbsp;different era under very different circumstances.&nbsp;Washington’s commitment to defend South Korea from the communist North reflected the pervasive view among U.S. policymakers that the world was bipolar strategically, and that any victory by a&nbsp;Soviet or Communist Chinese client would be a&nbsp;dangerous setback for the United States and its “free world” allies. Thus, U.S. leaders deemed keeping the noncommunist Republic of Korea (ROK) out of the clutches of international communism important to America’s own strategic interests.</p> <p>Whatever the logic of such a&nbsp;commitment in a&nbsp;bipolar Cold War setting, circumstances have changed dramatically over the past three decades. Unlike the backing that Moscow and Beijing provided to Pyongyang when the communist regime launched its military offensive in 1950 to conquer the ROK and unify the Korean Peninsula under communist rule, both China and noncommunist Russia have no desire for a&nbsp;second Korean war—or even a&nbsp;boost in tensions in the region. Even in the unlikely scenario that North Korea intends to invade the South again, Seoul’s vast economic advantage over its rival means that the ROK can build whatever forces it needs to deter or defeat such a&nbsp;conventional military threat. It also can choose to build a&nbsp;nuclear deterrent to offset anything Pyongyang does in that area.</p> <p>While North Korean leaders would logically regard as credible a&nbsp;determination by South Korea to defend itself, their assessment of a&nbsp;U.S. commitment to risk the American homeland to defend a&nbsp;small ally is far less certain. Uncertainty about credibility has always been a&nbsp;problem with the entire concept of extended deterrence. In any case, the existence of a&nbsp;North Korean nuclear arsenal and the growing reach of Pyongyang’s ballistic missiles markedly increase the risk level to the United State of maintaining the defense commitment to Seoul.</p> <p>The necessity of trying to reduce that risk impels the United States to continue pursuing the chimera of getting North Korea to renounce its nukes and missiles. As I’ve&nbsp;<a href="">written elsewhere</a>, Pyongyang is extremely unlikely ever to abide by those demands. Those weapons are the North Korean government’s ace in the hole to prevent the United States from trying to replicate the forcible regime‐​change strategy it pursued in Iraq, Libya, and elsewhere. Consequently, the risk level to the United States of trying to maintain its defense commitment to South Korea is certain to rise, not fall, in the coming years.</p> <p>In a&nbsp;normal international system, the neighbors of a&nbsp;difficult and menacing state would have the primary incentive and obligation to deal with that country. The United States should take steps consistent with that realization. It is absurd for America to remain be on the front lines of a&nbsp;simmering crisis in a&nbsp;region thousands of miles from home, when other powers have far more at stake.</p> <p>Washington can normalize its relations with Pyongyang—signing a&nbsp;treaty formally ending the Korean War, establishing formal diplomatic ties, and eliminating most unilateral economic sanctions—without persisting in the futile strategy of leading a&nbsp;multilateral effort to (somehow) induce Pyongyang to return to nuclear virginity. The Trump administration should make that dramatic policy shift. As it moves toward a&nbsp;normal relationship with Pyongyang, Washington should also inform South Korea, Japan, China, and Russia that the United States no longer intends to be on the front lines of trying to manage Northeast Asia’s security environment. South Korean President Moon Jae‐​in already has&nbsp;<a href="" target="_blank">taken initiative</a>s for détente between his country and North Korea, and he has achieved modest success. Washington should strongly encourage such moves by South Korea and other countries in the region instead of impeding them.</p> <p>Because of geographic proximity and other factors, maintaining peace in that region should be far more crucial to North Korea’s neighbors than to the United States. It’s time for them to assume the necessary responsibilities and incur the accompanying risks. Donald Trump should at long last make his alleged willingness to change policies regarding America’s obsolete alliances a&nbsp;reality. Korea is a&nbsp;good (indeed, necessary) place to start.</p> </div> Ted Galen Carpenter, a&nbsp;senior fellow in security studies at the Cato Institute and a&nbsp;contributing editor at the National Interest, is the author of 12 books and more than 850 articles on international affairs. Tue, 18 Feb 2020 09:10:41 -0500 Ted Galen Carpenter Bernie Sanders Is Far More Radical Than Corbyn’s Labour <p><a href="" hreflang="und">Ryan Bourne</a></p> <div class="lead text-default"> <p>It may be early days in the Democratic primary race, but Bernie Sanders is&nbsp;<a href="" target="_blank">now the favourite</a>&nbsp;to&nbsp;<a href="" target="_blank">win the party’s</a>&nbsp;nomination and set up a&nbsp;Trump‐​Sanders presidential election.</p> </div> , <div class="text-default"> <p>As the prospect of Sanders winning becomes ever more real, some commentators are downplaying his socialist credentials, painting the veteran Senator as no more than a&nbsp;moderate social democrat.</p> <p>“Memo to left‐​wing Americans who adore Sanders’s radical ‘socialism’…”&nbsp;<a href="" target="_blank">says Al Jazeera’s Mehdi Hasan</a>, “in most other Western/​European countries, Sanders would be considered a&nbsp;pretty mainstream, centre‐​left social democrat.”</p> <p>His view is shared by the economist&nbsp;<a href="" target="_blank">Paul Krugman</a>. Dastardly Republicans might have the audacity to use Sanders’ own preferred label to describe him, but since he doesn’t want to “nationalise our major industries” or “replace markets with central planning”, Sanders “isn’t actually a&nbsp;socialist.” Ignore scare stories about Venezuelan economics then, Krugman advises. Sanders just wants the US to look more like Denmark.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Sanders’ platform goes far beyond any modern social democracy in terms of government size and scope.</p> </div> </div> </aside> , <div class="text-default"> <p>Krugman is right to say that Sanders shuns nationalisation. To simply label him a&nbsp;socialist, without any caveats, is misleading. But it’s even more grossly misleading to suggest his “democratic socialist” ambitions stop at&nbsp;<a href="">a&nbsp;Scandinavian‐​style welfare state</a>. More redistribution is central to his agenda, sure, but he also proposes massive new market interventions, including the Green New Deal, a&nbsp;federal jobs guarantee, expansive price and wage controls, overhauling labour and corporate governance laws, and enforced mutualisation of companies.</p> <p>Any given European country might engage in one or some of these interventionist policies. Combined though, whatever label you give it, Sanders’ platform goes far beyond&nbsp;<a href="">any modern social democracy</a>&nbsp;in terms of government size and scope.&nbsp;Indeed, his policies can only be considered moderate if some three‐​way lovechild of the economics of 1970s Sweden,&nbsp;<a href="">Argentina</a>, and Yugoslavia’s market socialism is the baseline.</p> <p>Rather than countries, perhaps we might use another politician as a&nbsp;barometer here.&nbsp;<a href="" target="_blank">Hasan suggests Sanders is less “left”</a>&nbsp;than Labour’s Jeremy Corbyn and John McDonnell, which is quite a&nbsp;low bar to crawl under. Corbyn and McDonnell are certainly widely regarded as contemporary socialists and not social democrats.</p> <p>So, is Hasan right? Our best tool is to compare Labour’s 2019 manifesto against the Sanders’ economic platform. Doing so makes clear that Bernie is more radical than Corbyn on economics, both in absolute terms and relative to their countries’ respective politics.</p> <p>Take the size of government. The Manhattan Institute’s Brian Riedl calculates that Sanders’ promises would add&nbsp;<a href="" target="_blank">$97.5 trillion to spending</a>&nbsp;over a&nbsp;decade, taking total annual US government spending to around 70% of GDP and more than doubling the size of the federal government. Even if climate investments prove a&nbsp;one‐​off, spending would settle at a&nbsp;massive 64% of GDP. That’s far higher than&nbsp;<a href="" target="_blank">Labour’s planned 44%</a>&nbsp;and even France’s current 57% (itself the highest in the OECD).</p> <p>A look at certain individual spending areas also underlines just how radical the Sanders agenda is. Like Labour, he wants government‐​funded free public higher education. Unlike Labour, he’d also forgive all existing student debts. On climate change and infrastructure, Labour planned for £400 billion investment over 10&nbsp;years (about 20% of current annual UK GDP). Sanders wants to invest $16.3 trillion over 15&nbsp;years (about 75% of current annual US GDP.) On healthcare, both want government spending to expand to cover all medical treatment, prescription charges, long‐​term care for the elderly, and dentistry. But only Sanders would explicitly ban private health insurance (Labour did consider that proposal but held off in the end).</p> <p>True, Corbyn and McDonnell favoured nationalising buses, railways, the energy sector, water, and parts of the broadband network. Corbyn even wanted free government‐​funded broadband for all. But even here the results of Sanders’ pledges would bring similar results. He would set up&nbsp;<a href="" target="_blank">“publicly owned” and “democratically controlled”</a>&nbsp;broadband networks. And his Green New Deal would bring most public transport under government control and deliver effective&nbsp;<a href="" target="_blank">public ownership of energy production</a>.&nbsp;And Sanders historically&nbsp;<a href="" target="_blank">has supported exactly the types of nationalisations</a>&nbsp;Corbyn favours.</p> <p>When it comes to financing their promises, Sanders is arguably more radical again. Labour planned to only borrow to invest, raising the deficit by about 2% of GDP per year. But Bernie’s tax plans get nowhere near fully funding his agenda. Absent further broad‐​based tax rises, Riedl calculates annual borrowing would soar to around 30% of US GDP if his spending plans were implemented.</p> <p>That doesn’t mean he hasn’t got radical plans for higher tax rates as well. As with Labour, Bernie would tax capital gains and dividends as ordinary income and introduce a&nbsp;new financial transactions tax. But he’d also go much further in terms of higher rates on the rich and corporations.</p> <p>Combined with national insurance, Labour’s top marginal income tax rate would have been 52%. Sanders’ top&nbsp;<em>federal&nbsp;</em>income taxrate alone would be 52%, bringing a&nbsp;top combined top rate of around 80% once state and payroll taxes are considered. Sanders wants a&nbsp;new wealth tax too, another option Labour shirked. And while Labour wanted to raise the UK’s main corporation tax rate to 26%, Bernie&nbsp;<a href="" target="_blank">would opt for 35%</a>&nbsp;with a&nbsp;broad base.</p> <p>Again and again on economics, where there are differences, it’s because Sanders is offering the more radical leftwing policies. He and Labour both proposed big minimum wage rises, national rent control, mandated employee ownership, and workers on boards, for example. But where Labour proposed 10% worker ownership stakes in large companies, Sanders would mandate 20%; while Labour want 33% of boards to be made up of worker representatives, Sanders wants 45%.</p> <p>Then there’s Sanders’&nbsp;<a href="" target="_blank">federal jobs guarantee</a> — the mammoth plan to offer any American who wants one a $15‐​per‐​hour job with full benefits. If implemented, the federal government would become the&nbsp;<a href="" target="_blank">largest global employer by far</a>. No European country engages with such a&nbsp;large labour market intervention. Nor did Labour propose one.</p> <p>Now, there are no doubt some areas where Labour or even the current Tory government are more interventionist than Sanders envisages. It may well be true too that, in their hearts, Corbyn and McDonnell are more hardcore ideologically socialist than Sanders, and that their 2019 manifesto merely reflected having to gain acceptability from the broader party and country, whereas Sanders (for now) is just trying to win a&nbsp;primary.</p> <p>Certainly, there are more constraints on elected leaders in the US, meaning Sanders’ full agenda has less chance of being implemented than Labour’s would have done. And economics isn’t everything. Sanders seems more deferential to American institutions than Corbyn was to British ones, and though Sanders has himself had staffing and historical problems of unpleasant racial or foreign policy views, he doesn’t suck up to terrorists and authoritarian regimes in the way Corbyn has for his entire political career.</p> <p>Nevertheless, on the role of government, the declared economic platforms are instructive. Call it “democratic socialism,” or just plain old “interventionism,” Bernie Sanders is, in many respects, putting a&nbsp;more radical interventionist offer to the electorate than Jeremy Corbyn did.</p> <p>Given how Corbyn crashed and burned in a&nbsp;country much less hostile to “socialism” and “big government”, I&nbsp;can understand why commentators such as Hasan or Krugman might want to downplay the revolutionary nature of the platform. But that doesn’t make them correct.</p> </div> Ryan Bourne is R&nbsp;Evan Scharf Chair for the Public Understanding of Economics at the Cato Institute Mon, 17 Feb 2020 08:57:58 -0500 Ryan Bourne The EU Should Keep Pursuing International Free Trade <p><a href="" hreflang="und">Tanja Porčnik</a></p> <div class="lead text-default"> <p>Global trade growth has been in a&nbsp;slowdown for a&nbsp;decade. Contributing to the trend is a&nbsp;recent rise in protectionist policies, particularly in the United States.</p> </div> , <div class="text-default"> <p>On top of it, Brexit, no matter in what form it takes, is projected to decrease trade volumes and put strains on economies of both parties to this separation.</p> <p>With these considerations in mind, the European Union should keep a&nbsp;clear head and continue its commitment to free trade in the negotiations with the United Kingdom.</p> <p>Trade is essential for improving the lives of people. It does not only contribute to economic growth and job creation, but it also lifts people out of poverty, contributes to the rise in their incomes and improves their living standards.</p> <p>What is trade’s magic? As people find it easier and cheaper to trade with one another, resources are much more efficiently allocated. The ensuing increase in productivity drives research and innovation, intensifies competition and competitiveness, facilitates that technology crosses borders, and delivers greater quantity and variety of goods, at lower prices, to consumers.</p> <p>Crucially, to successfully compete on the global platform, the European Union (EU) needs to focus its efforts on creating more high skilled jobs and producing more tradable services.</p> <p>While the EU-28 accounted for 15 percent of the world’s trade in goods, the value of its international trade in goods exceeded that of services by three times. To continue to benefit from trade, the EU-27 should focus on making its market even more internationally competitive and attractive to foreign companies.</p> <p>Given the benefits accruing from free trade for families, businesses, and workers, it is imperative that the European Union, which is the world’s largest trading bloc, continues its commitment to scaling back own trade barriers through diplomatic actions, dispute settlement in the World Trade Organization (WTO) and, most importantly, new trade agreements with countries outside of the region.</p> <p>This way, it will become easier and cheaper for European companies of every size to produce, buy, and sell goods around the world, which will sooner or later lead to a&nbsp;higher disposable income per household in the EU.</p> <p>Furthering trade liberalization can be achieved multilaterally, regionally, bilaterally, or even unilaterally. In this regard, the European Commission and EU member states are expected to rise above the vicious downward spiral of recently inflicted trade wars which are harming economies across the globe.</p> <p>The recent shift in the United States (US) trade policy, which is under President Trump glorifying protectionism by imposing tariffs and making threats mainly against its largest trading partners, is for political or other reasons ignoring the existence of global value chains and the cost the economy pays when the administration goes down this road.</p> <p>According to a&nbsp;Bruegel study, an escalation in protectionism worldwide would lead to a&nbsp;permanent loss of three percent of GDP for the US and four percent for the EU.</p> <p>With this fact in mind, the European Commission should aim to reduce trade tensions while maintaining the focus of its policy actions on further trade liberalization and, therefore, becoming even more deeply integrated into global markets.</p> <p>The Europeans have no say in the US matters. However, it is on Europeans’ shoulders to further free trade within EU institutions and policies.</p> <p>In the last two years, the EU completed trade agreements with Japan, Singapore, Vietnam, and the Mercosur states (Argentina, Brazil, Paraguay, and Uruguay).</p> <p>As these free trade agreements enhance economic cooperation and increase trade flows, higher productivity will facilitate a&nbsp;competitive edge to European companies and, at the same time, build a&nbsp;powerful boost to growth, higher incomes, and improved lives across the EU in the years to come.</p> <p>On the other hand, these agreements will, unfortunately, only somewhat offset for the disruptions and the damage inflicted on complex supply and value chains caused by the ongoing trade wars and Brexit.</p> <p>It is almost impossible for new trade agreements to compensate for strained trade relations with key trading partners, such as the US and the UK.</p> <p>Thus, the European Union should keep pursuing free trade no matter how much some of its trading partners are imbued with protectionism.</p> </div> Tanja Porčnik is an adjunct scholar at the Cato Institute. Mon, 17 Feb 2020 08:44:10 -0500 Tanja Porčnik Time to Drop Defense Guarantees to the Philippines <p><a href="" hreflang="und">Doug Bandow</a></p> <div class="lead text-default"> <p>Rodrigo Duterte, the ever‐​unpredictable president of the Philippines, has given official notice to&nbsp;<a href="" target="_blank">terminate</a>&nbsp;the Visiting Forces Agreement (VFA) that governs the presence of U.S. military personnel. Among other complaints, he said Americans were rude and failed to leave their weapons after conducting military exercises on the islands. The VFA will conclude in six months, which actually is great news.</p> </div> , <div class="text-default"> <p>Although Americans always believed in continental expansion — even Thomas Jefferson spoke of an Empire of Liberty — “saltwater imperialism” was alien to the nation’s founding. Proposals to turn America into a&nbsp;traditional colonial power by conquering foreign peoples generated strong opposition. After all, Americans had revolted against their British masters.</p> <p>But as the U.S. prepared to enter the 20th&nbsp;century, Washington’s ambitions expanded exponentially. The yellow press, most spectacularly William Randolph Hearst and Joseph Pulitzer, helped prepare the way, using lurid “fake news” to promote imperial adventures. Indefatigable warmonger Theodore Roosevelt, among others, captured the public’s imagination. In 1898, Congress declared war on Spain, nominally to liberate its Cuban possession.</p> <p>But many imperialists had their eyes on the Philippines from the start. It could act as a&nbsp;way station to Asia, expanding Americans’ commercial and military reach. One of the leading imperial propagandists was Indiana Sen. Albert Beveridge, who in his famed speech “<a href="" target="_blank">The March of the Flag</a>” dismissed criticism of seizing Pacific lands. “Hawaii and the Philippines not contiguous! The oceans make them contiguous,” he proclaimed.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Rodrigo Duterte is no friend of America. But in this case he would force America to do the right thing, giving Washington an excuse to end an obsolescent military guarantee to a&nbsp;nation of little security importance to the United States.</p> </div> </div> </aside> , <div class="text-default"> <p>The main impediment to this plan was not the Spanish, who were quickly vanquished, but the Filipinos, who already were fighting for their independence. They were not inclined to accept a&nbsp;substitute colonial master, so war soon broke out between U.S. forces and Filipino insurgents. That conflict raged for more than three years, until mid‐​1902, and resulted in 200,000 or more civilian deaths. In some Muslim areas, resistance never ceased — and fighting continues to today.</p> <p>Washington eventually granted Manila independence in 1946, after liberation from Japanese occupation. The archipelago ended up as a&nbsp;semi‐​failed state, bedeviled by corruption and coups. Manila also was heavily dependent on America for its security, backed by the 1951 “Mutual” Defense Treaty. The most important U.S. military facilities were Clark Airfield and Subic Bay, returned in 1991 and 1992, respectively, after a&nbsp;volcanic eruption disabled Clark and political opposition blocked extending U.S. access to Subic.</p> <p>Still, the Philippine government continued to rely on American aid. And military ties were gradually rebuilt. The VFA took effect in 1999. In 2002, the U.S. sent “advisers” to help battle Islamist insurgents/​terrorists, primarily on the Mindanao islands.</p> <p>More recently, Manila sought backing in its territorial disputes with the People’s Republic of China, which in 2012 occupied Scarborough Shoal (Panatag Shoal to Filipinos and Huangyan Dao to Chinese). America’s dependents called the U.S. an “unreliable ally” since it did not confront the PRC over the 60‐​square‐​mile set of worthless rocks and reefs. (The appropriately named Mischief Reef was another flashpoint. Although within the Philippines’ Exclusive Economic Zone, or EEZ, the PRC claimed that territory, on which it constructed military facilities, as well.)</p> <p>Manila’s mad expectations only expanded. The Philippine population is generally pro‐​American. But Duterte, who also was elected in 2016 but makes Donald Trump look civil and cerebral, made no effort to hide his hostility toward America. Relations tanked after the Obama administration criticized Duterte’s brutal assault on the rule of law and civil liberties.</p> <p>Duterte declared his nation’s “separation” from the U.S. and shift to Beijing, and he visited China spouting its praises. But the PRC gives nothing away, especially territory. Last June, in what Manila claimed to be its EEZ but Beijing insisted were territorial waters, a&nbsp;Chinese vessel hit and sank a&nbsp;Philippines fishing boat. With a&nbsp;navy whose flagship is a&nbsp;half‐​century‐​old U.S. castoff, Duterte could only tell his people, “A shooting war is a&nbsp;grief and misery multiplier. War leaves widows and orphans in its wake. I&nbsp;am not ready or inclined to accept the occurrence of more destruction, more widows and more orphans should war — even at a&nbsp;limited scale — break out.”</p> <p>But Duterte did not hesitate pushing Washington into war: “I’m calling now, America. I&nbsp;am invoking the RP–US pact, and I&nbsp;would like America to gather their Seventh Fleet in front of China. I’m asking them now.” The bombastic Duterte seemed to channel&nbsp;<a href="" target="_blank">Major T. J. Kong</a>&nbsp;from the movie&nbsp;<em>Dr. Strangelove</em>, prepared to ride an American bomb down on the Chinese invaders: “When they enter the South China Sea, I&nbsp;will enter. I&nbsp;will ride with the American who goes there first. Then I&nbsp;will tell the Americans, ‘Okay, let’s bomb everything.’ ”</p> <p>But that was then. Duterte now says that there is no need to deter Beijing: “They do not mean harm,” he opined, as long as “we do not also do something that is harmful to them.” But it was not this startling new judgment that caused him to drop the VFA. Rather, he was angry over U.S. criticism of his government, especially its bloody drug war. Presidential spokesman Salvador Panelo cited “a series of legislative and executive actions by the U.S. government that bordered on assaulting our sovereignty and disrespecting our judicial system.” So irritated was Duterte that he declared he would neither “entertain any initiative coming from the U.S. government to salvage” the accord nor accept any invitation to visit the United States.</p> <p>The Trump administration simply ignored last year’s proposal to attack the PRC. But the risk of conflict remains. America’s ambassador, Sung Kim, stated that the misnamed “Mutual” Defense Treaty — Manila’s only job is to act helpless — would apply to “any armed attack,” including by any “government‐​sanctioned Chinese militia,” in disputed waters. Even so, the document does not automatically trigger Washington’s military involvement. The treaty commits America to “meet the common dangers in accordance with its constitutional processes,” meaning war remains a&nbsp;decision for Congress.</p> <p>Nevertheless, the Obama administration proclaimed its pivot or rebalance to Asia and strengthened military links with the Philippines. Washington signed the Enhanced Defense Cooperation Agreement in 2014, provided military equipment and financial grants, flew surveillance aircraft through the archipelago, and added exercises and other military activities. Defense consultant Jose Antonio Custodio contended that Obama engaged in “an obvious bending” of the law: “The U.S. and Philippine governments have always found ways to liberally interpret the provisions of the existing agreements.”</p> <p>Trump’s predecessor still remained cautious in addressing America’s role in contentious territorial disputes. Not, however, Secretary of State Mike Pompeo, who last year announced, “Any armed attack on Philippine forces, aircraft or public vessels in the South China Sea will trigger mutual defense obligations.” Earlier Philippines Defense Secretary Delfin Lorenzana had threatened to end the relationship if the Trump administration did not clarify the status of disputed territories under the security pact — meaning he wanted Washington to state its willingness to send Americans to fight and die for the Philippines. Else, said Lorenzana, Manila might end the relationship. He opined, “It is not the lack of reassurance that worries me. It is being involved in a&nbsp;war that we do not seek and do not want.” Foreign Secretary Teodoro Locsin Jr. said he accepted America’s word, which he interpreted as, “We have your back.”</p> <p>Why would any U.S. president make such a&nbsp;commitment to such a&nbsp;country?</p> <p>The defense treaty dates to early in the Cold War, when Japan was seen as a&nbsp;possible return regional threat and the Soviet Union was emerging as a&nbsp;global threat. Manila now welcomes increased Japanese military activity and Russia is a&nbsp;non‐​factor.</p> <p>The only plausible substitute threat is China. Yet it is far different than the “Evil Empire,” as Ronald Reagan called Moscow. Ideologically bankrupt and practically fascist, the PRC wants to gain predominant influence in its region, not threaten America. At stake is Washington’s continued determination to treat the Asia‐​Pacific as a&nbsp;U.S. sphere of interest — convenient, but unsustainable at reasonable cost as the PRC continues to grow.</p> <p>Beijing’s more limited territorial ambitions seem concentrated on plausibly Chinese territories — Taiwan, Hong Kong, and nearby islands. Nothing suggests a&nbsp;desire for aggressive war to conquer other lands that would be quite difficult to swallow. Americans understandably might prefer to extend the Monroe Doctrine to Asia than accept a&nbsp;more powerful PRC, but achieving that end is not worth war. China has far greater interest in its own neighborhood, something the U.S. should understand: the Kennedy administration almost went to war to prevent the Soviets from putting nuclear‐​armed missiles in Cuba. The good news is that even regional hegemony is likely to elude Beijing, which is surrounded by countries not only hostile but also at times military enemies: India, Japan, Korea, Russia, and Vietnam.</p> <p>The Philippines is weaker than these states and most of its other neighbors, but the costs of occupation still would outweigh any plausible benefits. Filipinos always have fought their oppressors — Spanish, American, and Japanese. Manila could do more to increase the price of war to the PRC.</p> <p>Anyway, the archipelago matters little to America. The contested rocks offer control of fish and oil/​natural gas, useful but not decisive. Possession of the shoals might aid Chinese efforts to inhibit freedom of navigation, but sovereignty is less important than capability. International law provides for freedom of navigation even in EEZ and territorial waters. Beijing likely won’t interfere with peacetime navigation; all that matters in wartime is naval superiority, which will be ever tougher to maintain so near the Chinese mainland.</p> <p>Nor is Manila a&nbsp;meaningful ally otherwise, since it is better at whining about its adversaries than arming against them. By offering base facilities, it still might enhance U.S. influence in the region, but that is threatened by the Duterte government and hardly warrants war. Nor is the Philippines likely to risk backing the U.S. against China when it mattered — in a&nbsp;war involving Taiwan or Japan, for instance. Whatever the state of relations with Manila, Washington faces the conundrum that it costs America much more to project power into Asia than costs the PRC to deter the U.S. from doing so. Although the Pentagon is working to counter China’s growing anti‐​access/​area‐​denial capabilities, the risk of escalation, especially by attacking the Chinese mainland, is great.</p> <p>There is an obvious alternative to the U.S. defending the Philippines. Manila should broaden its defense relationships with other nations. The Philippines broke with its anti‐​Japan recent past and welcomed the latter’s increased military outlays and role. Four years ago, Tokyo gave the Philippine government two ships. India also is playing a&nbsp;larger regional role and could cooperate with Manila. So too Vietnam, which fought a&nbsp;land war against China four decades ago and more recently clashed with Beijing over conflicting territorial claims. Moreover, Australia plays an important role in regional security and is concerned about China’s growing geopolitical ambitions.</p> <p>Thus, it is the U.S. that should be taking the lead in rethinking an alliance that long ago lost its raison d’être. In this case, Duterte did America a&nbsp;favor by forcing the issue.</p> <p>Alas, Defense Secretary Mark Esper continues to treat Washington as the supplicant, complaining that dropping the VFA “would be a&nbsp;move in the wrong direction.” An anonymous administration official opined, “regional and global security is best served through the strong partnership that is enabled by the Visiting Forces Agreement” and “We will continue to work with our Philippine government partners to strengthen this relationship in a&nbsp;way that benefits both our countries.”</p> <p>The VFA governs the legal status of visiting American military personnel. Without such a&nbsp;pact, the Obama administration’s efforts to expand the presence of U.S. military personnel at Filipino facilities and encourage construction of new bases likely would have been stillborn. Equally significant, the U.S. would have had to negotiate event by event over even joint activities. As for the future, warned Assistant Secretary of State for Political‐​Military Affairs R. Clarke Cooper, “All the engagements, all the freedom of navigation operations, all the exercises, all the joint training, having U.S. military personnel in port, on the ground, on the flight’s line, does require that we have a&nbsp;mechanism that allows that.”</p> <p>Finally, lack of a&nbsp;VFA would make it harder for Washington to defend the Philippines. Derek Grossman, senior defense analyst with the RAND Corporation, observed, “By not having the ability for U.S. troops to move freely into the Philippines, to operate there and to move military equipment into the Philippines makes it much more difficult for the U.S. to make good on its obligations under the mutual defense treaty.” In fact, Philippines Sen. Panfilo Lacson warned that dropping the VFA would reduce that pact “to a&nbsp;mere paper treaty as far as the U.S. is concerned.”</p> <p>As noted earlier, however, America does not depend on Manila for security. Nothing that happens to the Philippines is important to America. If Manila doesn’t want the U.S. military to stop by, Washington should say thanks and goodbye, eliminating any reason for American personnel to visit. Indeed, Duterte says he wants what the Trump administration should desire: the Philippines to act independently. The Filipino president, explained his office, “believes that our country cannot forever rely on other countries for the defense of the state.” Washington should give his efforts a&nbsp;boost by terminating the Enhanced Defense Cooperation Agreement and “Mutual” Defense Treaty.</p> <p>Indeed,&nbsp;<a href="" target="_blank">Trump</a>&nbsp;appears to understand. Asked about Manila’s decision, he responded, “I really don’t mind, if they would like to do that, that’s fine,” He added, “We’ll save a&nbsp;lot of money. You know my views are different from other people. I&nbsp;view it as, ‘Thank you very much, we’ll save a&nbsp;lot of money.’ ” And, more important, possibly American lives as well.</p> <p>Rodrigo Duterte is no friend of America. But in this case he would force America to do the right thing, giving Washington an excuse to end an obsolescent military guarantee to a&nbsp;nation of little security importance to the United States. It’s time for the Philippines to take over responsibility for its own defense.</p> </div> Doug Bandow is a&nbsp;Senior Fellow at the Cato Institute. Sun, 16 Feb 2020 13:10:48 -0500 Doug Bandow Resurrecting the Fountainhead of Removal Doctrine <p><a href="" hreflang="und">Ilya Shapiro</a> and <a href="" hreflang="und">Trevor Burrus</a></p> <div class="text-default"> <p>The Consumer Financial Protection Bureau has been controversial since its creation. First proposed by then‐​Harvard Law professor Elizabeth Warren, the CFPB administers 19 federal consumer‐​protection statutes and is overseen by a&nbsp;single director nominated by the president and confirmed by the Senate. That director serves a&nbsp;five‐​year term, removable only for “inefficiency, neglect of duty, or malfeasance in office.”</p> </div> , <div class="text-default"> <p>Even in a&nbsp;town where so much power is wielded, it isn’t going too far to say that the CFPB director is one of the most powerful and unaccountable people in Washington. The agency isn’t even beholden to the normal appropriations process because its funding comes from the Federal Reserve. The director simply requests an amount “reasonably necessary to carry out” the agency’s duties, and the Fed provides it (so long as it doesn’t go above a&nbsp;set percentage of the Fed’s operating expenses).</p> <p>A dedicated CFPB director could rework a&nbsp;large part of America’s financial system and there’s almost nothing any elected official could do about it. A&nbsp;dedicated president could promise his constituents that he would fix certain broken aspects of consumer lending, but he would be nearly powerless against the awesome and unaccountable power of the CFPB director.</p> <p>There’s something wrong with that. Although independent agencies may sometimes be good for governance, they fit uneasily into our constitutional structure. Seila Law is a&nbsp;California‐​based law firm that assists clients with consumer debt. When the CFPB opened an investigation into whether the firm violated consumer‐​finance law, it probably didn’t expect to end up at the Supreme Court litigating the constitutionality of its own structure. Or maybe it did, because the structure of the CFPB has hung like a&nbsp;sword of Damocles over the agency since its creation.</p> <p>This is a&nbsp;good time to have this fight. Independent agencies have been criticized for decades, and the judicial decisions that authorized them have long been questioned. This fourth branch of government skirts the usual system of checks and balances by exercising powers reserved for each of the three branches, frequently without any oversight or control by anyone, let alone the branch to which the power was originally entrusted. Yet the Constitution says, “The executive Power shall be vested in a&nbsp;President.” A&nbsp;fair reading of those words would look to the meaning of “executive power” and to anyone wielding that power. Those officials should be, at minimum, accountable to the president.</p> <p><a href=""><em>Humphrey’s Executor v. United States</em></a> (1935) is the foundational case upon which independent agencies were created. The Supreme Court looked to the meaning of “executive power” and ruled that limits on the president’s removal powers were constitutional with respect to the recently created Federal Trade Commission. The court described the FTC’s statutory duties as “neither political nor executive, but predominantly quasi‐​judicial and quasi‐​legislative,” emphasizing the “non‐​partisan” and “expert” aspects of the commission. When conducting investigations and reporting its findings to Congress, the FTC “acts as a&nbsp;legislative agency.” When acting “as a&nbsp;master in chancery under rules prescribed by the court, it acts as an agency of the judiciary.” The court viewed FTC commissioners as “occup[ying] no place in the executive department” and “exercis[ing] no part of the executive power vested by the Constitution in the President.” Any exercise of “executive function,” which the court described as distinguishable from “executive power in the constitutional sense,” is in the service “of its quasi‐​legislative or quasi‐​judicial powers, or as an agency of the legislative or judicial branches of government.”</p> <p>While the court concluded that the FTC is quasi‐​legislative, quasi‐​judicial, and nonexecutive, the core of <em>Humphrey’s Executor</em> is a&nbsp;respect for the separation of powers. If an agency is “wholly disconnected from the executive department,” then it follows that the president would not have the inherent, unlimitable authority to control it. Congress may restrict the president’s removal power to protect the nonexecutive agency from the executive branch’s control. Think, for an obvious example, of a&nbsp;congressional committee. The president has no inherent authority to appoint or remove members of such a&nbsp;committee because it exercises legislative authority. The president could only feasibly gain such authority if Congress gave it to him (and then there would be a&nbsp;significant nondelegation problem).</p> <p>In the decades after <em>Humphrey’s Executor</em>, the court continued to examine whether independent agencies wield “executive power.” In <a href=""><em>Wiener v. United States</em></a> (1958), the court looked to the “intrinsic judicial character” of the War Claims Commission in ruling that the president could not remove members of the commission at will. In <a href=""><em>Morrison v. Olson</em></a> (1988), however, the court changed course, upholding limits on a&nbsp;president’s ability to remove an independent counsel after considering whether “the removal restrictions are of such a&nbsp;nature that they impede the President’s ability to perform his constitutional duty.”</p> <p>It is an odd decision. Because the independent counsel was essentially a&nbsp;prosecutor, and prosecution is traditionally a&nbsp;core executive function, the court was obliged to move away from distinctions between the “executive power” and “quasi‐​legislative” and “quasi‐​judicial” powers in order to uphold the restrictions on presidential removal. Instead, it turned to the much vaguer question of whether it is “essential to the President’s proper execution of his Article II powers that these agencies be headed up by individuals who were removable at will.”</p> <p>Seven justices (with Anthony Kennedy recused and Justice Antonin Scalia vigorously dissenting), none of whom had ever been president or a&nbsp;governor, opined on what was “essential to the President’s proper execution of his Article II powers.” But there had earlier been a&nbsp;justice who had been president—and who wrote eloquently and knowingly about the nature of effective executive power. Chief Justice William Howard Taft, in <a href=""><em>Myers v. United States</em></a> (1926), wrote that “when the grant of the executive power is enforced by the express mandate to take care that the laws be faithfully executed, it emphasizes the necessity for including within the executive power as conferred the exclusive power of removal.”</p> <p>Taft’s lengthy opinion in <em>Myers </em>concluded that constitutional structure and separation of powers principles made the president’s removal power regarding officers exercising executive power “illimitable.” “From [the] division” of powers into three branches, Taft wrote, “the reasonable construction of the Constitution must be that the branches should be kept separate in all cases in which they were not expressly blended, and the Constitution should be expounded to blend them no more than it affirmatively requires.” Taft understood that when an agency exercises executive power, such as by filing suit to enforce a&nbsp;federal consumer‐​protection law, the officers of that agency are exercising the power vested by the Constitution in the president alone. For that exercise of the president’s power to be constitutionally valid, the president must retain ultimate control over its use.</p> <p>If the CEO of a&nbsp;company were limited in her ability to remove a&nbsp;lesser officer, that would severely curtail her prerogative as executive. Similarly, the president’s ability to remove agency heads at will means that he can remove them if he disapproves of their use of the executive power—leaving ultimate responsibility for the exercise of executive power with the president. The public can in turn hold the president accountable for his decision to remove, or not remove, an agency head. If the president is limited in his ability to remove an agency head, then the executive power exists at least partially outside his control. Instead, it rests with the agencies and their chief officers—bureaucrats, unaccountable to the people. Such a&nbsp;system has no place in our constitutional structure, which rigidly defines where each power of government is vested.</p> <p>Yet only a&nbsp;decade after <em>Myers</em> was decided, <em>Humphrey’s Executor</em>, in the words of Scalia’s dissent in <em>Morrison</em>, “gutt[ed], in six quick pages devoid of textual or historical precedent for the novel principle it set forth, [<em>Myers’</em>s] carefully researched and reasoned 70‐​page opinion.” While on the U.S. Court of Appeals for the District of Columbia Circuit, then‐​Judge Brett Kavanaugh described in his concurrence in <a href=""><em>In re Aiken County</em></a> (2011) how <em>Humphrey’s Executor</em> has led to a&nbsp;situation in which the president “lacks day‐​to‐​day control over large swaths of regulatory policy and enforcement in the Executive Branch” due to independent agencies with “huge policymaking and enforcement authority” that can “greatly affect the lives and liberties of the American people.”</p> <p>The test should be whether an officer exercises executive power. Because the executive power is vested by the Constitution exclusively in the president, any officer who exercises that power is removable by the president at his discretion. In <em>Seila Law</em>, this is not a&nbsp;close call: The CFPB director obviously exercises executive power. This case, which presents such a&nbsp;clear violation of the separation of powers, will allow the Supreme Court to set down a&nbsp;ground rule that will guide the lower courts in how to expound on the doctrine within the proper constitutional framework.</p> <p>As Scalia noted in <em>Morrison</em>—one of those solo dissents that has come to be viewed as the true reading of the law all along—determining which kind of governmental power an officer exercises is not always easy, and there will always be close cases. Dealing with those close cases of quasi‐​powers under a&nbsp;clear and definitive test is, however, preferable to the status quo, in which lower courts are faced with the daunting task of simultaneously following <em>Humphrey’s Executor</em>, <em>Morrison</em> and the Constitution.</p> <p>In <em>Seila Law</em>, the Supreme Court should clarify the extent to which <em>Humphrey’s Executor</em> remains good law and announce a&nbsp;clear test for removal‐​doctrine cases, thus relieving the lower courts of the task of navigating a&nbsp;jumbled set of precedents and allowing them to return to what Scalia referred to as the “fountainhead” of removal doctrine: the separation of powers.</p> </div> <p>lya Shapiro is director of the Robert A. Levy Center for Constitutional Studies at the Cato Institute, where Trevor Burrus is a&nbsp;research fellow and editor‐​in‐​chief of the Cato Supreme Court Review. They filed an <a href=""><em>amicus brief</em></a> in support of the petitioner in <a href=""><em>Seila Law v. Consumer Financial Protection Bureau</em></a>.</p> Thu, 13 Feb 2020 11:23:41 -0500 Ilya Shapiro, Trevor Burrus New Chancellor Rishi Sunak Must Prove the Conservatives Haven’t Forgotten Good Tax Policy <p><a href="" hreflang="und">Ryan Bourne</a></p> <div class="lead text-default"> <p>Three things are now certain in life: death, taxes, and Conservative chancellors flirting with curbing pensions tax relief before budgets.</p> </div> , <div class="text-default"> <p>Since at least 2013, occupants of No 11 Downing Street have seen relief as an “eye‐​wateringly expensive” policy — a&nbsp;pool of foregone revenue. With Gaelic bridges to finance and new Ofcom online regulators to fund, a&nbsp;looting on March 11 was being actively discussed. At least, until the dramatic change of personnel at the apex of the Exchequer.</p> <p>Campaigners claim that reliefs are “regressive” because richer taxpayers “receive” the lion’s share of the near £30bn recorded “cost.” Changing to a “flat‐​rate relief” system of 20pc or 30pc, they say, would raise revenue and improve “fairness.” For the&nbsp;<a href="" target="_blank">former Chancellor,&nbsp;Sajid Javid</a>,&nbsp;this redistributive case for a&nbsp;revenue grab was said to appeal.</p> <p><a href="" target="_blank">New Chancellor Rishi Sunak</a>&nbsp;must steer clear. His predecessors ultimately backed off this policy for a&nbsp;reason. A&nbsp;flat‐​tax relief for pensions would bring incoherence, complexity, and require extensive new regulations. It would introduce arbitrary new subsidies and&nbsp;<a href="" target="_blank">penalties for pensions saving</a>. And it would mean lifetime incomes being taxed differently depending on a&nbsp;person’s income volatility. This would heedlessly introduce new tax code injustices.</p> <p>Pensions tax relief is not just a&nbsp;savings “incentive,” as some claim, but a&nbsp;means of avoiding double taxation. When making contributions to a&nbsp;pension, basic rate taxpayers currently avoid their 20pc income tax rate on the money going to contributions. Higher and additional rate taxpayers likewise avoid paying 40pc or 45pc, in line with their marginal rates.</p> <p>But this is no gift from the Government. Pension income is ultimately taxed when received in retirement. It’s not “tax relief”, so much as “<a href="" target="_blank">avoiding penalising people for pension saving</a>”. Taxing both contributions and withdrawals would tax‐​disadvantage pension saving relative to ISAs or even just holding money. So when you read about how much pension tax relief “costs”, first consider “relative to what?” The numbers cited often compare against a&nbsp;world of destructive double‐​taxation and ignore that, for most people, this is just a&nbsp;case of tax deferral.</p> <p>One can in principle save for retirement out of post‐​tax income into an ISA, obtaining investment returns tax free and then not paying tax on withdrawals. Or else you can contribute to a&nbsp;pension tax free, avoiding tax on normal investment returns but paying tax when the fund is accessed. Both are coherent frameworks and would be functionally equivalent over a&nbsp;lifetime under a&nbsp;flat‐​rate income tax system.</p> <p>Confusion seeps in because, under our progressive tax system, someone can obtain 40pc relief when making contributions, but only pay a&nbsp;20pc basic income tax rate on pension income in retirement. For these people, the current framework appears to provide a&nbsp;big monetary incentive to save relative to an ISA‐​like framework.</p> <p>Proponents of&nbsp;flat‐​rate tax relief see this as an unjustified bung to the rich. But, in fact, this is a&nbsp;tax code feature, not a&nbsp;bug, that corrects for a&nbsp;real progressive income tax injustice. Those with highly volatile incomes would otherwise pay much more in tax over their lifetimes than those with steady incomes. As Philip Booth and I&nbsp;wrote in 2016, consider Mrs Volatile, whose income alternates between £90k and £30k each year (average income £60k). She would currently pay around £2,000 more in tax each year, on average, than Mr Steady with a&nbsp;stable income of £60k, because more of Mrs Volatile’s income would be subject to the 40pc higher rate.</p> <p>The only way she can match Mr Steady’s tax bill is to make greater pension contributions in her high‐​income years, paying a&nbsp;lower tax rate in retirement.&nbsp;Curbing pensions tax relief would disable such income smoothing, introducing lifetime “unfairness” into the tax code.</p> <p>In fact, one reason “the rich” account for such a&nbsp;large share of the tax relief “cost” today (other than that they pay more tax) is precisely because many basic rate payers wait until they earn higher incomes before making meaningful pension contributions. Before then, an ISA is just as attractive. To use those rational decisions as evidence of relief being unfair is perverse.</p> <p>A flat‐​rate&nbsp;pensions tax relief would instead introduce arbitrary new penalties and subsidies for pension saving. Some higher rate taxpayers might get relief of 20pc or 30pc for contributions but ultimately be taxed at 40pc in retirement — effectively paying a&nbsp;fine. Meanwhile, any flat‐​rate relief above 20pc would incentivise basic rate taxpayers to load up on contributions just before retirement to obtain “free money” from paying less tax just years later.</p> <p>HMRC would get bogged down closing loopholes and counteracting new behaviours.&nbsp;To give one example, they’d have to clamp down on the incentive for higher rate taxpayers to accept lower salaries in return for higher employer contributions to pensions (something it would be extraordinarily complex to counteract).</p> <p>Rather than all this absurdity, why not focus on the aspect of pensions taxation that defies economic reasoning? The current 25pc tax‐​free pension lump sum at retirement has no logical basis, given the whole point of pensions is to obtain a&nbsp;regular retirement income stream.&nbsp;It also requires huge amounts of accompanying legislation and a&nbsp;lifetime allowance restriction. Severely curtailing it would improve tax coherence, while raising revenue in the desired progressive way.</p> <p>New Chancellor Rishi Sunak has 26&nbsp;days to finalise his Budget and prove that today’s Conservatives haven’t forgotten the lessons of good tax policy. A&nbsp;key early test will be whether he jettisons this misguided assault on pensions tax relief.</p> </div> Ryan Bourne is the R&nbsp;Evan Scharf Chair for the Public Understanding of Economics at the Cato Institute. Thu, 13 Feb 2020 11:05:05 -0500 Ryan Bourne Why Germany Should Invite Its Nationalists into Government <p><a href="" hreflang="und">Doug Bandow</a></p> <div class="lead text-default"> <p>The political center is shrinking in the Federal Republic of Germany. Former communists already have insinuated their way into state government. Members of the right‐​wing Alternative for Germany (AfD) are attempting to follow suit. The latter’s efforts have set off much caterwauling on the left, but such hypocritical attempts to denounce and isolate the AfD — to enforce a&nbsp;political <em>cordon sanitaire</em> — will only make the party more extreme.</p> </div> , <div class="text-default"> <p>Germany is supposed to be the stable foundation of the European Union. But the country’s two traditional governing parties have seen their support drain away. In the 2017 Bundestag elections, the Christian Democrats (joined by the Christian Social Union in Bavaria) claimed a&nbsp;total of just 33 percent of the popular vote—down 8.6 percent from the previous election in 2013. The Social Democrats (SPD) took in 20.5 percent of the vote—a drop of 5.2 percent from 2013. Current polls show the two, which currently rule in a “grand coalition,” no longer commanding a&nbsp;popular majority.</p> <p>In contrast, the extremes are growing. Die Linke (“The Left”) won 9.2 percent of the vote, up from 8.6&nbsp;in 2013. Through Die Linke, East Germany’s communist party, the Socialist Unity Party, lives on, joined by more radical former members of the SPD. Though founded by an economic libertarian opposed to the European Union and the Euro currency, the AfD took off after new leaders emphasized immigration and cultural issues; it came in third nationally with 12.6 percent—up from 4.7 percent in 2013.</p> <p>These trends continued in the former East German state of Thuringia last October. Die Linke and the AfD led with 31 percent and 23.4 percent of the vote, respectively. Trailing were the Christian Democrats (CDU), who had finished first in 2014, at 21.7 percent; the SPD, at an enfeebled 8.2 percent; the Greens, at 5.2 percent; and the Free Democratic Party (FDP), generally pro‐​business, at 5&nbsp;percent.</p> </div> , <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Shutting out the AfD, as the mainstream parties are trying to do, will only make it more extreme.</p> </div> </div> , <div class="text-default"> <p>After reunification, the mainstream parties agreed to avoid coalitions with Die Linke. This commitment prevented a&nbsp;national left‐​wing coalition government in 2013. Instead, the CDU and the SPD joined in a&nbsp;grand coalition, which was repeated after the 2017 poll, though both parties had lost support.</p> <p>However, the SPD dropped this self‐​restraint at the state level. In Hesse in 2008, the party reached an agreement for informal cooperation with Die Linke, though the pact quickly collapsed. A&nbsp;year later, Die Linke entered government in Brandenburg. Thuringia was run by a&nbsp;local grand coalition before the 2014 poll. Then the SPD held a&nbsp;party vote and 70 percent of the members chose to shift left and join Die Linke and the Greens in coalition. Similar deals were reached in Berlin in 2016 and Bremen last year.</p> <p>Yet a&nbsp;repeat of Thuringia was impossible after October’s election, when the AfD doubled its support and the FDP gained the minimum 5&nbsp;percent, entering state parliament. Nevertheless, the presumption was that Thuringia’s prime minister, Die Linke’s Bodo Ramelow, would remain—either leading a&nbsp;minority government or a&nbsp;new coalition joined by the CDU. Instead, the CDU and the AfD voted for the FDP leader, Thomas Kemmerich, as premier.</p> <p>The three parties, which delivered a&nbsp;one‐​vote majority, said there was no coordination, a&nbsp;claim met with widespread skepticism. The reaction across the political spectrum, even among Christian Democrats, was hysterical. An impotent Chancellor Angela Merkel called the action “unforgivable.” Her heir apparent, CDU leader Annegret Kramp‐​Karrenbauer, then announced her resignation. Kemmerich also offered to resign and called for new elections to eliminate the “stain” of AfD’s support. However, there’s no reason to expect a&nbsp;significantly different result, which would leave the governing conundrum unsolved.</p> <p>Germany has a&nbsp;unique and understandable concern about the far right, but the AfD, while vocalizing ugly rhetoric and positions, is not fascist, let alone Nazi. Nor is Die Linke’s communist heritage more palatable. East Germans suffered grievously under Die Linke’s forebears, a&nbsp;record that the party has never confronted. Both the Soviet Union and the People’s Republic of China engaged in mass slaughter in the name of communism. In 2014, German president Joachim Gauck, a&nbsp;dissident minister in East Germany, observed that it would be “quite hard to accept” Die Linke taking a&nbsp;leading role. Why trust one extreme party over the other?</p> <p>More important, though, isolation keeps democratically elected parties at the fringes, encouraging radical voices and promoting a&nbsp;victimhood mindset. Bringing such parties into government tends to moderate their aspirations and behaviors. Thuringia’s Ramelow, from Germany’s west, ruled like a&nbsp;social democrat.</p> <p>The AfD needs similar political socialization. The party’s Thuringia leader, Bjoern Hoecke, is a&nbsp;member of the more radical faction, called the Wing. He is not likely to disappear anytime soon, after doubling his party’s support in the last vote. However, the AfD’s membership is not uniform. Nationally it is likely to gain support with the continued weakening of the CDU.</p> <p>Integration is not a&nbsp;pipe dream. Europe has substantial recent experience with unsettling nationalist parties. In several countries, outlying parties have been invited into governments and most have found the experience to be chastening. Some have suffered political losses after confronting the inevitable challenges of governing.</p> <p>For instance, the Freedom Party of Austria (FPO) began as an independent force but moved right. The establishment parties initially excluded the FPO, but the party eventually joined a&nbsp;coalition with the mainstream conservative Austrian People’s Party (OVP) in 2000. The FPO ended up losing votes in 2002 and split in 2005. Over time the party regained support; in 2016, the party’s presidential candidate was narrowly defeated by a&nbsp;Green candidate. In 2017, the FPO came in third and again joined with the OVP to form a&nbsp;governing coalition.</p> <p>That pact collapsed last year amid a&nbsp;scandal involving the FPO leader. Austrian chancellor and OVP chairman Sebastian Kurz dissolved the coalition and called a&nbsp;new election. The FPO lost about a&nbsp;third of its seats and Kurz turned to the Greens to form a&nbsp;novel conservative‐​Green pact. The FPO was subsequently racked by internal dissension. Still, the party remains a (reluctantly) recognized political participant, despite its harsh populist positions.</p> <p>Founded in 1995, Finland’s nationalist Finns Party (FP), previously known as the True Finns, is essentially left on economics and right on culture. In the 2011 parliamentary contest, the FP became the third‐​largest party. Four years later it moved up to second place and controversially joined the government. The party soon split over the concessions necessary to sustain coalition rule.</p> <p>In the 2019 poll, the FP again came in second. The country’s Social Democrats formed a&nbsp;five‐​party, center‐​left coalition without the populists. Critics contend that the FP’s views have not moderated, but the party’s total, 17.5 percent last year, is too small to threaten political stability, while the FP’s voters cannot complain about being disenfranchised.</p> <p>Italy provides a&nbsp;dramatic example of the rise and possible fall of populist forces. In 2009, the comedian Beppe Grillo established the ill‐​defined anti‐​establishment Five Star Movement (M5S). Vaguely left‐​leaning but Euro‐​skeptic, M5S became the country’s largest party in 2018 with a&nbsp;third of the vote, picking up 119 seats, many lost by the ruling Democratic Party. In some southern regions, M5S won almost half of the vote.</p> <p>Meanwhile, the League, established in 1991 as the Northern League, a&nbsp;coalition of six regional parties from northern and central Italy, began as a&nbsp;junior partner backing media mogul Silvio Berlusconi’s premiership. The League was strongly right and regional, but shifted in a&nbsp;more populist and national direction, targeting immigration and the European Union. Winning 17.4 percent of the national vote in 2018, the League increased its number of seats by 109. Dropping Berlusconi, League head Matteo Salvini joined with M5S’s Luigi Di Maio to form a&nbsp;fractious coalition that they optimistically called a “government of change.”</p> <p>With Salvini acting as its dominant voice, the partnership challenged establishment immigration and budget policies. Nevertheless, the coalition proved less than radical, let alone threatening. Both coalition partners downplayed their hostility to the EU and backed away from confrontation with Brussels. In last May’s European Parliament elections, M5S’s support was halved while the League’s doubled. Salvini then broke the coalition in an attempt to force a&nbsp;new national election. He failed, as M5S joined a&nbsp;new coalition with the Democratic Party, against which it had long campaigned.</p> <p>In regional elections last month, M5S’s total collapsed to 5.2 percent. The League narrowly trailed a&nbsp;revived Democratic Party, 26.7 percent to 29.5 percent. Salvini’s plan to use a&nbsp;victory in the regional poll to trigger a&nbsp;national contest was stillborn. Nevertheless, he remains a&nbsp;favorite to eventually return to power.</p> <p>Thuringia’s travails demonstrate that politics is a&nbsp;messy business. But attempting to cleanse it by excluding unsettling opinions, like those advanced by the AfD, is ultimately self‐​defeating. Voters do not give up having unsettling opinions. Instead, they find unsettling people to advance those beliefs.</p> <p>It is better to have discontented sentiments represented in the political system. That has been the lesson of countries as different as Austria, Finland, and Italy. To maintain social peace, Germany should absorb rather than suppress the AfD.</p> </div> <p>Doug Bandow is a&nbsp;senior fellow at the Cato Institute. He currently is scholar‐​in‐​residence with Centre for Independent Studies in Sydney, Australia. He is a&nbsp;former special assistant to President Ronald Reagan and the author of several books, including <em>Foreign Follies: America’s New Global Empire</em>.</p> Thu, 13 Feb 2020 09:05:37 -0500 Doug Bandow What ‘National Nightmare’? We Got Through Impeachment Just Fine, Thank You <p><a href="" hreflang="und">Gene Healy</a></p> <div class="lead text-default"> <p>“Our long national nightmare is over”: That’s how newly minted President Gerald Ford&nbsp;<a href="" target="_blank">described</a>&nbsp;the impeachment struggle that led Richard Nixon to resign. “Nightmare” wasn’t hyperbolic enough for Kenneth Starr, the former independent counsel and scourge of Bill Clinton who joined President Trump’s impeachment defense team in January. In his argument to the Senate, Starr proclaimed that&nbsp;<a href="" target="_blank">“impeachment is hell”</a>&nbsp;(<em>now</em>&nbsp;he tells us!).</p> </div> , <div class="text-default"> <p>That impeachment is a&nbsp;grievous national trauma was the rare&nbsp;<a href="" target="_blank">bipartisan sentiment</a>&nbsp;on Capitol Hill over the last two months: a “sad,” “solemn,” “grave” affair — so many reasons&nbsp;<a href="" target="_blank">to wear black</a>. Pols and pundits warned us that we risked rattling the markets, distracting Congress from the vital business of government, stoking partisan furies — perhaps even civil war.</p> <p>“The dark cloud is descending upon this House and I&nbsp;am fearful, Madame Speaker,” Rep. Doug Collins of Georgia&nbsp;<a href="" target="_blank">moaned</a>&nbsp;on the eve of the House vote.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Putting a&nbsp;president on trial for his job has never been a&nbsp;national nightmare. None of the scare stories are true.</p> </div> </div> </aside> , <div class="text-default"> <p>But after three serious presidential impeachment campaigns in the last five decades, we should know better by now. Putting a&nbsp;president on trial for his job has never been a&nbsp;national nightmare. None of the scare stories are true.</p> <p>Whatever disruption impeachment causes, it’s clearly not the kind that spooks investors. The Clinton impeachment coincided with one of the&nbsp;<a href="" target="_blank">biggest bull markets in history</a>, and — despite Trump’s warning that “the Impeachment Hoax is hurting our Stock Market,” the Dow and S&amp;P&nbsp;<a href="" target="_blank">hit record highs</a>&nbsp;the day after the House vote.</p> <p>Nor, for better or worse, does impeachment&nbsp;<a href="" target="_blank">paralyze government</a>. It never has. During the alleged Watergate “nightmare,” Congress found time to time to pass&nbsp;<a href="" target="_blank">landmark legislation</a>&nbsp;like the Endangered Species Act, the War Powers Resolution and the Impoundment Control Act.</p> <p>In the three weeks after the House authorized the Clinton impeachment inquiry, Congress passed&nbsp;<a href="" target="_blank">four major bills</a>.</p> <p>The legislative onslaught that accompanied Trump’s impeachment included paid family leave for federal workers, hiking the minimum tobacco age to 21 and creating a&nbsp;Space Force. Depending on how you evaluate that record, you might find yourself wishing impeachment was&nbsp;<em>more</em>&nbsp;of a&nbsp;distraction.</p> <p>And can we finally put to rest the notion that impeachment is so divisive it might lead to actual war? That particular scare story seems to have originated with former Trump consigliere&nbsp;<a href="" target="_blank">Roger Stone</a>, but it somehow got serious consideration in respectable publications like the&nbsp;<a href="" target="_blank">New Yorker</a>&nbsp;and&nbsp;<a href="" target="_blank">Bloomberg News</a>. The idea that impeachment would stoke red‐​on‐​blue violence was silly&nbsp;<a href="" target="_blank">to begin with</a>&nbsp;and looks even more absurd now. Judging by the Trump trial’s&nbsp;<a href="" target="_blank">weak Nielsens</a>, most Americans weren’t even mad enough to tune in.</p> <p>All told, our third presidential impeachment didn’t do the country any visible harm.</p> <p>But did it do us any good? Perhaps so: Recent polls suggest that Americans were split on whether Trump should be removed, but&nbsp;<a href="" target="_blank">clear majorities</a>&nbsp;agreed he&nbsp;<a href="" target="_blank">abused his power</a>. Impeachment by the House, without conviction in the Senate, had the effect of censuring Trump for his conduct without ejecting him from his job. Indeed, it’s the only kind of&nbsp;<a href="" target="_blank">presidential censure</a>&nbsp;that’s ever worked.</p> <p>In the run‐​up to the House vote, some speculated that Trump actually&nbsp;<a href="" target="_blank"><em>wanted</em></a><a href="" target="_blank">&nbsp;to be impeached</a>. But judging by the president’s near‐​daily meltdowns on Twitter, he never relished the prospect. Throughout the trial, Trump&nbsp;<a href="" target="_blank">wailed</a>&nbsp;about having “the stigma of impeachment attached to my name”; and in&nbsp;<a href="" target="_blank">Thursday’s “VICTORY” rally</a>, called the process “a terrible ordeal.”</p> <p>“We went through hell unfairly,” Trump complained, proving that Starr wasn’t entirely wrong: Impeachment&nbsp;<em>is</em>&nbsp;hell, for the president at least.</p> <p>This president engaged in a&nbsp;Nixonian attempt to “use the available federal machinery to&nbsp;<a href="" target="_blank">screw [his] political enemies</a>” — and Congress made him pay a&nbsp;price. Whether Trump has&nbsp;<a href="" target="_blank">“learned his lesson”</a>&nbsp;is another question entirely.</p> </div> Gene Healy is a&nbsp;vice president at the Cato Institute and author of&nbsp;<a href="" target="_blank"><em>“Indispensable Remedy: The Broad Scope of the Constitution’s Impeachment Power.”</em></a> Wed, 12 Feb 2020 11:58:14 -0500 Gene Healy Governors’ Standing Orders Can Lower Healthcare Costs <p><a href="" hreflang="und">Jeffrey A. Singer</a></p> <div class="lead text-default"> <p>Using executive action, governors in many states can use a&nbsp;relatively untapped means of reducing the cost and improving access to prescription drugs for their citizens.</p> </div> , <div class="text-default"> <p>This action is known as standing orders. They’re pre‐​written, clearly defined medication orders and instructions from a&nbsp;licensed medical practitioner to ancillary licensed healthcare practitioners, such as pharmacists.</p> <p>Classifying prescription‐​only versus over‐​the‐​counter is a&nbsp;federal prerogative. But defining the scope of practice of state‐​licensed healthcare practitioners is a&nbsp;state prerogative. Unfortunately, expanding the scope of practice of non‐​physician healthcare practitioners is often easier said than done.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Using executive action, governors in many states can use a&nbsp;relatively untapped means of reducing the cost and improving access to prescription drugs for their citizens.</p> </div> </div> </aside> , <div class="text-default"> <p>The various licensed health professions jealously guard their turf, and resist surrendering authority to competitors. This usually leads to long and contentious legislative battles pitting lobbyist against lobbyist, sometimes taking years to resolve. The standing order provides a&nbsp;way around that.</p> <p><a href="" target="_blank" rel="noopener noreferrer" data-saferedirecturl=";source=gmail&amp;ust=1581592101477000&amp;usg=AFQjCNEOVxoQor5hr3c6rE5tiJj42D_h1Q">More than half</a>&nbsp;the states use this tactic to get around the Food and Drug Administration’s prescription‐​only classification of the opioid overdose antidote naloxone. The standing order makes it easier for the people who use opioids — or those who care about those people — to get access to naloxone while saving the time and expense of a&nbsp;doctor’s office visit.</p> <p>The state’s public health commissioner or chief medical officer (if this person is also a&nbsp;licensed medical doctor) fills the role of the prescribing physician for anyone requesting naloxone from a&nbsp;pharmacist by issuing a&nbsp;statewide standing order.</p> <p>There are other workarounds. States where the chief public health official is not a&nbsp;licensed physician have expanded&nbsp;the scope of practice of licensed pharmacists so they can prescribe naloxone.</p> <p>This problem should have been solved already. For a&nbsp;couple of years now, the FDA has invited the makers of naloxone to request a&nbsp;<a href="" target="_blank" rel="noopener noreferrer" data-saferedirecturl=";source=gmail&amp;ust=1581592101477000&amp;usg=AFQjCNE_aEc3M-yzwCFzFhC8cqU1SXPxgg">reclassification of the drug to over‐​the‐​counter</a>, even though the FDA Commissioner can order the reclassification without being asked. None of the drug makers have shown interest. The urgent need to reduce overdose deaths drove the states to craft the above workarounds.</p> <p>Similarly, despite the fact that the&nbsp;<a href="" target="_blank" rel="noopener noreferrer" data-saferedirecturl=";source=gmail&amp;ust=1581592101477000&amp;usg=AFQjCNGatxYFF8q1Pfbee-9U9xxUIqQ00g">American College of Obstetrics and Gynecologists</a>,&nbsp;<a href="" target="_blank" rel="noopener noreferrer" data-saferedirecturl=";source=gmail&amp;ust=1581592101477000&amp;usg=AFQjCNEqQBum081hQbkYxOamphwVxNzNCg">American Academy of Family Physicians</a>&nbsp;and the majority of reproductive health providers have, for years, called for hormonal contraceptives to be available over‐​the‐​counter, the FDA has failed to act.</p> <p>As a&nbsp;result,&nbsp;<a href="" target="_blank" rel="noopener noreferrer" data-saferedirecturl=";source=gmail&amp;ust=1581592101477000&amp;usg=AFQjCNHaVnIBgY7qmrodzaum_ddbqSCoIw">11 states and the District of Columbia</a>&nbsp;have expanded&nbsp;pharmacists’ scope of practice so they can prescribe oral contraceptives — saving many women the inconvenience and expense of a&nbsp;doctors’ appointment. And in late 2019, California allowed pharmacists to prescribe&nbsp;<a href="" target="_blank" rel="noopener noreferrer" data-saferedirecturl=";source=gmail&amp;ust=1581592101477000&amp;usg=AFQjCNEgdDUUi8rrX3XeOFoZ4Zuzrjy-Eg">pre‐ and post‐​exposure prophylaxis</a>&nbsp;for HIV.</p> <p>Currently more than half the states plus the District of Columbia have state public health commissioners or chief medical officers who are also&nbsp;<a href="" target="_blank" rel="noopener noreferrer" data-saferedirecturl=";source=gmail&amp;ust=1581592101477000&amp;usg=AFQjCNECYNGiLqNww9paFvhrUlSuoruEKg">licensed medical doctors</a>. Governors in those states have the standing order arrow in their executive action quiver. Their public health officers serve in the executive branch at the pleasure of the governor. They can issue standing orders for several other medications in addition to the order already issued for naloxone.</p> <p>Examples include prescription‐​only smoking cessation drugs, non‐​sedating/​low sedating antihistamines, decongestants, corticosteroids and oral fluoride. All 50 states allow pharmacists to administer&nbsp;<a href="" target="_blank" rel="noopener noreferrer" data-saferedirecturl=";source=gmail&amp;ust=1581592101477000&amp;usg=AFQjCNEHO_mH3tA2zJ8kae5RYiC2h-etSQ">vaccinations</a>. A&nbsp;standing order can be issued to allow pharmacists to perform and interpret Tuberculin skin tests.</p> <p>Women can buy and take over‐​the‐​counter&nbsp;<a href="" target="_blank" rel="noopener noreferrer" data-saferedirecturl=";source=gmail&amp;ust=1581592101477000&amp;usg=AFQjCNFjN8GA2xf7M72e6fm14eqgTn1xug">pregnancy tests</a>. Pharmacists should be given a&nbsp;standing order to perform&nbsp;<a href="" target="_blank" rel="noopener noreferrer" data-saferedirecturl=";source=gmail&amp;ust=1581592101477000&amp;usg=AFQjCNHmOQhwP6RnNjv23yggLOEAvZJ61Q">swab tests</a>&nbsp;and cultures, and administer common prescription medicines for strep throat and&nbsp;<a href="" target="_blank" rel="noopener noreferrer" data-saferedirecturl=";source=gmail&amp;ust=1581592101477000&amp;usg=AFQjCNEJu9pIY5jREJlrkbAtmFrwk3cjSw">influenza</a>.</p> <p>None of these standing orders compel pharmacists to dispense a&nbsp;drug if they are uncomfortable doing so. Pharmacists can always refer the patient to a&nbsp;physician. Likewise, none of these orders prevents a&nbsp;patient from seeking the advice and prescription of a&nbsp;licensed medical doctor.</p> <p>But a&nbsp;more liberal use of the standing order provides a&nbsp;way for governors to improve choice, expand access and reduce the cost of healthcare for their residents while bypassing special interest haggling down at the state legislature.</p> <p>It lets governors take some positive action while Washington continues to drag its feet.</p> </div> Jeffrey Singer, M.D. practices general surgery in Phoenix and is a&nbsp;senior fellow at the Cato Institute. Wed, 12 Feb 2020 11:52:47 -0500 Jeffrey A. Singer How Reagan Won the Presidency in New Hampshire <p><a href="" hreflang="und">Doug Bandow</a></p> <div class="lead text-default"> <p>Despite a&nbsp;lackluster record, as 1980 dawned President Jimmy Carter led a&nbsp;baker’s dozen of Republican candidates in the polls. Before the year ended, he would be swept from office. The New Hampshire vote 40&nbsp;years ago proved critical.</p> </div> , <div class="text-default"> <p>I joined the&nbsp;<a href="" target="_blank">Reagan presidential campaign</a>&nbsp;out of law school. After taking the bar exam in July 1979, I&nbsp;drove down from the Bay Area to Los Angeles. I&nbsp;found a&nbsp;studio apartment a&nbsp;block from the beach in Santa Monica and worked at the Reagan for President headquarters on Airport Boulevard, appropriately near the airport. I&nbsp;worked for Martin Anderson, the former Nixon policy aide and Hoover Institution scholar who was candidate Ronald Reagan’s domestic policy adviser. I&nbsp;wrote issue papers, statements, and speeches and traveled with the campaign.</p> <p>Reagan was the front‐​runner, which made him the target of a&nbsp;diverse field, including former Texas Gov. John Connally, Illinois congressmen John Anderson and Phil Crane, and former CIA Director George H. W. Bush. Reagan originally entrusted his political fortunes to John Sears, the Nixon confidante and political strategist who managed Reagan’s 1976 primary challenge against President Gerald Ford.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Presidential winners often are forged in the heat of primary elections.</p> </div> </div> </aside> , <div class="text-default"> <p>Sears presented a&nbsp;moderate Reagan and organized what staffers called “the Rose Garden without the Rose Garden campaign.” That is, the Governor, as we called him, acted like he was president and held himself apart from the other GOP candidates. He even skipped a&nbsp;debate held in Iowa.</p> <p>The result was political disaster: Reagan was attacked as both arrogant and feeble. He narrowly lost the Iowa caucus vote to Bush. Reagan’s candidacy was at risk as Bush claimed ownership of “Big Mo.”</p> <p>Blame focused on Sears, who had systematically pushed out Reagan’s more trusted and conservative advisers, including my boss. I&nbsp;then reported to Ed Meese, but he also became a&nbsp;target of Sears. But personnel matters took a&nbsp;back seat to saving the campaign.</p> <p>Then there were five weeks rather than just one week between the Iowa and New Hampshire contests. Reagan immediately flew to New Hampshire and barnstormed the state. He went from morning to night, seemingly ageless while wearing out his staff (lucky for me, a&nbsp;colleague and I&nbsp;alternated on tour). Highlighting his comeback was the debate the Reagan campaign underwrote, at which the moderator attempted to silence him. The Governor’s dramatic&nbsp;<a href="" target="_blank">response</a>, “I am paying for this microphone,” essentially finished off the candidacy of Bush, who sat silent as the other Republican candidates stood by hoping to join the proceedings.</p> <p>Reagan’s success compares dramatically to Joe Biden’s failure. The Governor used the campaign to dispel claims he was too old, connect with stubbornly independent New Hampshire voters, and make a&nbsp;compelling case for his optimistic vision for America. On February 26, Reagan won half of the votes, more than twice Bush’s total. That night, he fired Sears, after which Martin Anderson and other fired staffers returned to the campaign.</p> <p>Bush’s “Big Mo” deserted him as Reagan took charge. A&nbsp;week later, the two candidates split Massachusetts and Vermont (Reagan won the latter), after which Reagan took South Carolina, Alabama, Florida, Georgia, and Illinois. Bush carried his (new) home state of Connecticut. Next came Reagan victories in Kansas, Wisconsin, and Louisiana.</p> <p>Wisconsin was particularly noteworthy. Until then, Carter and his aides were cheering Reagan on. Their view was the old right‐​wing cowboy would be a&nbsp;weak opponent in November.</p> <p>They were oblivious to history. In 1966, Democratic Gov. Pat Brown welcomed Reagan’s primary victory over the moderate former mayor of San Francisco, George Christopher. By November, a&nbsp;desperate Brown was running an ad in which he told a&nbsp;class of school children, “Remember, it was an actor who shot Lincoln.” Reagan won by a&nbsp;million votes and carried all but three counties.</p> <p>Carter &amp;&nbsp;Co. soon had reason to rediscover history. Wisconsin had an open primary, allowing people to vote in the party contest of their choice. When the votes were counted, Reagan had more than Carter. Some of the president’s aides took note.</p> <p>Bush won Pennsylvania, and Reagan took Texas, Bush’s (old) home state. Then Bush gained Washington, D.C., after which Reagan ran off victories in Indiana, North Carolina, Tennessee, Maryland, and Nebraska. Bush’s last victory came in Michigan, after which he dropped out and endorsed Reagan. The remaining states were big Reagan wins, the political equivalent of the Roman Empire’s triumph or victory parade for military conquerors. June 3&nbsp;wrapped up the primary season with nine contests, highlighted by Reagan’s home state of California.</p> <p>Still, the general election was no cakewalk. At the convention, the campaign narrowly avoided pressure to create a “co‐​presidency” by adding former President Gerald Ford as the vice‐​presidential nominee. The general election featured Reagan gaffes, pervasive media bias, barely disguised Carter vitriol, Anderson’s unpredictable third‐​party candidacy, and a&nbsp;risk‐​it‐​all single debate. The latter occurred on October 28, a&nbsp;week before the vote.</p> <p>There were hopeful signs of victory early on, such as strong blue‐​collar support from “Reagan Democrats.” Even television cameramen, as opposed to producers, were on our side, warning us of negative stories in development. Reagan also retained strong support from GOP moderates: Anderson’s backing steadily slipped during the campaign. The Governor really was the “great communicator,” making a&nbsp;case to the common voter and using humor to slice and dice his opponents.</p> <p>Reagan clinched his case at the debate. The avuncular, even grandfatherly, Reagan dispelled fears that he would be a&nbsp;mad bomber, triggering a&nbsp;global holocaust with the Soviet Union. He disarmed Carter’s attack on the Governor’s Medicare position with a&nbsp;casual “There you go again.” And he brought the campaign back to basics when he concluded with the brutally effective “Are you better off than you were four years ago?” The majority of Americans answered not just no, but hell no.</p> <p>Politics is ever unpredictable. Presidential winners often are forged in the heat of primary elections. Forty years ago, New Hampshire made Ronald Reagan the Republican nominee and president. So far the Democrats look to be less fortunate in 2020. But we will have to wait and see if the state makes a&nbsp;similarly formidable Democratic presidential candidate in November.</p> </div> Doug Bandow is a&nbsp;Senior Fellow at the Cato Institute. Tue, 11 Feb 2020 09:40:54 -0500 Doug Bandow Trump Budget Proposal Reins in Unconstitutional, Bloated Department of Education <p><a href="" hreflang="und">Neal McCluskey</a></p> <div class="lead text-default"> <p>If you love a&nbsp;constitutionally constrained federal government, President Trump’s latest&nbsp;<a href="" target="_blank">budget request</a>&nbsp;for Betsy DeVos’s Department of Education will warm your heart. But there’s more to be done.</p> </div> , <div class="text-default"> <p>Let’s start with the best part: The budget would cut $6.1 billion in education spending overall and consolidate $19.4 billion worth of K‑12 programs into simple block grants to states. That cuts federal strings off of a&nbsp;big chunk of education money, and doing so makes sense.</p> <p>This would be much more in line with the education power the Constitution gives the federal government — that is,&nbsp;<a href="" target="_blank"><em>absolutely</em>&nbsp;<em>none</em></a> — and states are much closer and more accountable to the people the money is supposed to serve than bureaucrats at the Department of Education. Even better would be to&nbsp;<a href="" target="_blank">let taxpayers keep their money</a>, either by letting states opt out of federal education or by getting rid of the federal intrusion entirely. But this is a&nbsp;good first step.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>The Trump administration is working to decrease the deep federal footprint on American education, and it will no doubt suffer the slings and arrows of outraged opponents because of it.</p> </div> </div> </aside> , <div class="text-default"> <p>It is also encouraging to see the administration put forward proposals to cap federal student aid and let colleges limit the debt students can take on.</p> <p>It is not clear how much substantive difference these proposals would make — there are already&nbsp;<a href="" target="_blank">caps on some loan programs</a>, and institutions have little incentive to discourage borrowing since their coffers swell when students can pay more — but recognition that&nbsp;<a href="" target="_blank">aid is at the heart</a>&nbsp;of the college cost problem is welcome.</p> <p>Things get dicier when it comes to the&nbsp;<a href="" target="_blank">Education Freedom Scholarships</a>&nbsp;that the secretary of education has been promoting for a&nbsp;while.</p> <p>The Trump administration’s heart is definitely in the right place: School choice empowers families over bureaucrats and allows diverse people in a&nbsp;pluralist society to&nbsp;<a href="" target="_blank">select the education</a>&nbsp;that meets their desires and values. And the proposal tries its hardest to avoid centralizing power by taking the form of a&nbsp;tax credit for scholarship donors rather than direct government funding via vouchers. Plus, it is only open to states that&nbsp;<em>choose</em>&nbsp;to join.</p> <p>Still, the proposal, which is included in this budget, doesn’t cut it in my book.</p> <p>The federal tax system only exists to raise revenue to execute the specific, enumerated powers the Constitution gives the federal government, and education is not among them. The opt‐​in for states is also somewhat coercive, pressuring them to adopt school choice lest their citizens not get the federal tax credit. And while research has shown that vouchers are&nbsp;<a href="" target="_blank">more prone to regulation</a>&nbsp;than credits, credits do carry a&nbsp;one‐​size‐​fits‐​all regulation threat to private schools. In Illinois, for instance, credits are connected to a&nbsp;mandate that private schools receiving scholarship students&nbsp;<a href="" target="_blank">administer state standardized tests</a>.</p> <p>Finally, the proposal contains some expansions of federal funding and intervention, contradicting constitutional principles and running counter to the overall positive tenor of the education budget. For good reason, career and technical education is trendy these days — we need more alternatives to&nbsp;<a href="" target="_blank">increasingly less profitable college degrees</a> — but there is no reason to increase federal spending on it by $900 million as this budget would do.</p> <p>The federal government instead should just stop encouraging four‐​year degrees with profligate student aid.</p> <p>The budget would also increase money for state grants under the Individuals with Disabilities Education Act. The intent is to help populations that have faced and continue to face serious obstacles to success, including discrimination in public schools. But the best of intentions does not mean the Constitution can be cast aside. And good intentions notwithstanding, this act has largely created a “lawyers playground” of&nbsp;<a href="" target="_blank">litigation between districts and families</a>.</p> <p>The federal government absolutely should ensure that states and districts do not discriminate in their provision of education, but that does not require big sums of federal funding. It mainly requires a&nbsp;robust civil rights enforcement effort — preferably not by the Education Department, which is poorly equipped for it, but by the Department of Justice.</p> <p>The Trump administration is working to decrease the deep federal footprint on American education, and it will no doubt suffer the slings and arrows of outraged opponents because of it. But the administration also seems unwilling to go all‐​in on shrinking the federal role in education. Still, two steps forward and one step back sure beats standing still.</p> </div> Neal McCluskey is the director of the Cato Institute’s Center for Educational Freedom. Mon, 10 Feb 2020 10:19:17 -0500 Neal McCluskey Religious Persecution Continues to Increase, Threatening All Believers <p><a href="" hreflang="und">Doug Bandow</a></p> <div class="lead text-default"> <p>There is no more fundamental liberty than the right to respond to one’s creator. Belief in the transcendent obviously varies, which is good reason for the state to stand clear as people respond to something infinitely mysterious and powerful. When government seeks to impose someone else’s understanding of the world beyond, it is interfering with the essence of the human person. Attempting to suppress people’s deepest spiritual beliefs also guarantees social conflict, since no serious believer in God can obey self‐​serving politicians instead.</p> </div> , <div class="text-default"> <p>Alas, the Pew Research Center finds a&nbsp;<a href="" target="_blank">significant increase</a>&nbsp;in infringements of religious liberty over the decade from 2007 to 2017:</p> </div> , <blockquote class="blockquote"> <div> <p>Government restrictions on religion — laws, policies and actions by state officials that restrict religious beliefs and practices — increased markedly around the world. And social hostilities involving religion — including violence and harassment by private individuals, organization or groups — also have risen since 2007.</p> </div> </blockquote> <cite> </cite> , <div class="text-default"> <p>Pew’s work is notable since it addresses two aspects of the&nbsp;<a href="" target="_blank">ongoing attack</a>&nbsp;on religious faith. One is legal restriction, from modest civil limits to brutal criminal penalties, including death. The other is social hostility, ranging from religious discrimination to mob violence. The two phenomena sometimes merge, especially in Islamic nations. In other cases, governments act despite general social indifference, like in China. In contrast, state repression trailed social antagonism in the Central African Republic.</p> <p>Unfortunately, both threats contribute to persecution and are on the rise. Put the two together, and religious liberty is likely to suffer greatly. Pew reported that over the decade covered, “52 governments — including some in very populous countries like China, Indonesia and Russia — impose either ‘high’ or ‘very high’ levels of restrictions on religions, up from 40&nbsp;in 2007.” The comparable increase for states exhibiting significant degrees of social hostility was 39 to 56.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>America cannot remedy the world’s ills, but it should treat religious freedom as an essential human right and stand for freedom of conscience whenever possible.</p> </div> </div> </aside> , <div class="text-default"> <p>The news was not entirely bad. Both religious restrictions and hostility actually peaked in 2012. But they have since rebounded after dropping. While the future is unpredictable, there is no reason to expect attacks on religious faith to fall measurably in the future.</p> <p>Countries with the highest restrictions are predictable, mostly Muslim or communist/​authoritarian. In 2017, 27 of 198 countries studied (isolated North Korea is not on the list but is known to be one of the worst) had “very high” levels of official repression: Algeria, Azerbaijan, Brunei, Burma/​Myanmar, China, Comoros, Egypt, Eritrea, Indonesia, Iran, Kazakhstan, Laos, Malaysia, Maldives, Mauritania, Morocco, Pakistan, Russia, Saudi Arabia, Singapore, Sudan, Syria, Tajikistan, Turkey, Turkmenistan, Uzbekistan, and Vietnam. The only Christian majority state that made the list was Russia — authoritarian and formerly communist.</p> <p>Those countries that have the highest degree of social hostility are fewer in number. Muslim majority states also dominate the list, though other ethno‐​nationalist regimes make an appearance: Bangladesh, Central African Republic, Egypt, India, Iraq, Israel, Nigeria, Pakistan, Syria, and Yemen. On this list, only Central African Republic is majority Christian. Nigeria is divided, but the violent conflict is driven by Muslim extremists.</p> <p>There is continual churning on both lists, with both Iraq and Western Sahara dropping a&nbsp;notch in 2017&nbsp;in terms of government restrictions, while Comoros, Pakistan, Sudan, and Vietnam rose into the “very high” category. In terms of social hostility, the Palestinian territories and Russia fell, while Central African Republic, Pakistan, and Yemen increased. Overall, in 2017 two‐​thirds of countries had measurable changes, up or down, in the degree of restrictions. Nearly three‐​quarters saw shifts in levels of social hostility.</p> <p>Pew looked at four different forms of government provisions:&nbsp;<em>restriction</em>&nbsp;on religious liberty,&nbsp;<em>state favoritism</em>&nbsp;toward religious groups,&nbsp;<em>limits</em>&nbsp;on religious activities, and official&nbsp;<em>harassment</em>&nbsp;of believers. The first two are most common and “have been rising; the global average score in each of these categories increased more than 20% between 2007 and 2017.”</p> <p>The latter two are less prevalent but also growing, sometimes faster than the other two. “For instance, the average score for government limits on religious activities in Europe (including efforts to restrict proselytizing and male circumcision) has doubled since 2007, and the average score for government harassment in the Middle East‐​North Africa region (such as criminal prosecution of Ahmadis or other minority sects of Islam) has increased by 72%.”</p> <p>Social hostility also has four characteristics:&nbsp;<em>responses</em>&nbsp;to religious norms,&nbsp;<em>gang/​mob violence</em>,&nbsp;<em>organized attacks</em>, and i<em>nterreligious tensions</em>&nbsp;among communities. In this area, the news is more mixed. The first has jumped notably. The next two have grown modestly. The last has “declined markedly.” Indeed, the number of nations suffering through communal battles was down 17 percent over the decade.</p> <p>Pew helpfully listed the 10 worst‐​rated states per category (though ties sometimes yielded more than 10 “winners”). Which favor particular religious groups? Afghanistan, Bahrain, Bangladesh, Greece, Iceland, Iraq, Kuwait, Malaysia, Maldives, Mauritania, Morocco, Oman, Pakistan, Palestinian territories, Sudan, United Kingdom, and Western Sahara. Unsurprisingly, most are majority Islamic.</p> <p>Those with the greatest restrictions are Eritrea, Maldives, Mauritania, Thailand, China, Syria, Comoros, Saudi Arabia, Algeria, Brunei, Egypt, Iran, Israel, Kazakhstan, Kuwait, Laos, Malaysia, Qatar, Tunisia, Turkey, Uzbekistan, and Western Sahara. Again, most are majority Muslim states.</p> <p>Countries with the most restrictions on individuals and groups are China, Maldives, Kazakhstan, Saudi Arabia, Singapore, Turkmenistan, Algeria, Azerbaijan, Laos, Sudan, and Uzbekistan. The malign leader of that list is communist. Most of the others are overtly Islamic states. It is much the same story for those notable for harassing religious groups: Iran, Russia, Malaysia, Vietnam, Indonesia, China, Syria, Egypt, Tajikistan, and Uzbekistan.</p> <p>Social hostility tied to religious norms yields an interesting mix, with some new malefactors: Germany, India, Somalia, Uganda, Israel, Afghanistan, Algeria, Egypt, France, Iraq, Italy, Libya, Russia, Syria, Ukraine, United Kingdom, and Yemen. Countries with significant interreligious tensions and violence produce a&nbsp;different set: Burma/​Myanmar, Central African Republic, Egypt, India, Iraq, Israel, Nigeria, Syria, Thailand, and Ukraine. Although Islamic states are heavily represented, other characteristics also matter.</p> <p>High levels of violence by groups occurred in Syria, Afghanistan, Iraq, Nigeria, Somalia, India, Libya, Pakistan, Yemen, and Palestinian territories. Significant harassment of individuals and groups afflicted Central African Republic, Egypt, Bangladesh, India, Nigeria, Pakistan, Iraq, Syria, U.S., Angola, Kenya, and Ukraine. America’s presence on this list is controversial. Pew explained that the ranking resulted “in part because of the ‘Unite the Right’ rally … where white supremacists … expressed anti‐​Semitic and racist sentiments.”</p> <p>The worst countries to live in obviously are those in which both government and society are antagonistic to religious minorities. Among the most populous nations, Egypt, India, Indonesia, Pakistan, and Russia are double offenders. Bangladesh, France, India, Nigeria, and Thailand come close. At the other end of the spectrum are Brazil, Japan, the Philippines, South Africa, and South Korea.</p> <p>Christians face harassment in 143 countries, up from 107&nbsp;in 2007. Muslims face the same in 140, up from 96; ironically, the worst treatment of Muslims typically occurs in other Muslim nations, given the Shia/​Sunni divide. Jews are abused in 87 countries, up from 51. The lower number reflects not greater acceptance but far fewer people to persecute. The mistreatment of members of other faiths trails far behind. Government harassment is the bigger problem for Christians, Muslims, and others, while social harassment is more extensive against Jews.</p> <p>Finally, not all geographic areas have been affected the same by rising persecution. The worst abuses have been concentrated in particular areas, some surprising. Pew reported, “The level of restrictions started high in the Middle East–North Africa region, and is now highest there in all eight categories measured by the study. But some of the biggest increases over the last decade have been in other regions, including Europe — where growing numbers of governments have been placing limits on Muslim women’s dress — and sub‐​Saharan Africa, where some groups have tried to impose their religious norms on others through kidnappings and forced conversions.”</p> <p>In terms of government restrictions, the Mideast/​North Africa is by far the worst. Always has been. Probably always will be. The reason is obvious: the concentration of Islamic‐​majority states. Almost all persecute other faiths. The Asia‐​Pacific is next. This region includes several Muslim states as well as communist/​authoritarian nations, most notably China, Laos, Vietnam, and (unmeasured) North Korea, along with other ethno‐​religious states, particularly India. Europe almost exactly matches the global average, sub‐​Saharan Africa falls a&nbsp;bit below, and the Americas are most friendly to religious liberty.</p> <p>The Mideast/​North Africa also is in the lead in terms of social hostility, though the magnitude has fallen over the last few years. Levels in Europe recently passed those in the Asia‐​Pacific; both are above the global average. Antagonism in sub‐​Saharan Africa roughly tracks world levels, while the Americas, again, fall well below average.</p> <p>There is no more fundamental freedom than the right to seek spiritual fulfillment. There was a&nbsp;time when Christian majorities used the state to oppress those who believed differently. Today the oppression mostly comes from those of other faiths, especially Muslims and Hindus, but also atheists, who rely on government to impose their worldviews. The result is massive injustice worldwide.</p> <p>America cannot remedy the world’s ills, but it should treat religious freedom as an essential human right and stand for freedom of conscience whenever possible. It isn’t enough to press governments to stop targeting religious believers. States also must protect their citizens from private extortion and violence. And defending spiritual liberty should not be viewed as only the government’s domain. People of goodwill of all faiths should act and organize to expose and shame oppressors around the globe. Freedom of conscience benefits all of us.</p> </div> Doug Bandow is a&nbsp;Senior Fellow at the Cato Institute. Sun, 09 Feb 2020 10:24:59 -0500 Doug Bandow Saving the Small Town without Big Government <p><a href="" hreflang="und">Chelsea Follett</a></p> <div class="lead text-default"> <p>So‐​called “deaths of despair” in rural areas — from drug overdoses and suicide — have become so common that they have even affected our national life expectancy figures. Life expectancy in the United States has fallen for three years in a&nbsp;row. That is a&nbsp;reversal not seen since 1918 (during a&nbsp;<a href="" target="_blank">pandemic</a>) or in any other wealthy nation in modern times, as Nobel‐​prize winning economist Angus Deaton has&nbsp;<a href="" target="_blank">pointed out</a>.&nbsp;What should be done?</p> </div> , <div class="text-default"> <p>Small town woes in many areas can be traced to the erosion of manufacturing jobs. A&nbsp;typical example is Lordstown, Ohio (population 3,300) which&nbsp;<a href="" target="_blank">revolved</a>&nbsp;around a&nbsp;now‐​shuttered manufacturing plant for 50&nbsp;years. “The feeling in the plant my last day was eerie, because nobody knew what to say,” noted a&nbsp;metal assembly worker employed at the Lordstown factory for 22&nbsp;years until it closed.</p> <p>Economists like Erika‐​Grace Davies&nbsp;<a href="" target="_blank">advise</a>&nbsp;small towns to create “an institutional environment that promotes productive entrepreneurship and market competition [so that] they can maintain progress and resiliency,” even when old industries fade.&nbsp;That approach differs from the&nbsp;growing chorus of respected writers and renowned&nbsp;<a href="" target="_blank">economists</a>&nbsp;suggesting that Americans in dying towns should pack up and move from depressed areas to booming ones.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>For a&nbsp;small town to flourish, it must become a&nbsp;place where free enterprise flourishes as well.</p> </div> </div> </aside> , <div class="text-default"> <p>Leaving may be a&nbsp;good idea in some cases, but many people would prefer not to move. A&nbsp;recent Gallup&nbsp;<a href="" target="_blank">poll</a>&nbsp;found that 27 percent of Americans would like to live in a&nbsp;rural area — more than chose any other option. “I don’t want to let our house go, but it has to be done,”&nbsp;<a href="" target="_blank">stated</a>&nbsp;one former Lordstown factory worker sadly during an interview last year, gazing at the farmhouse where she grew up.</p> <p>With the right legal and regulatory institutions, a&nbsp;small town can encourage entrepreneurs to open businesses. Research has&nbsp;<a href="" target="_blank">found</a>&nbsp;that the strength of the local economy is a&nbsp;top factor in the decisions of Iowans to return to their rural hometowns after college. Remote work is also often a&nbsp;factor, and as advancing technology makes remote education and work feasible for an ever‐​growing share of the population, it could help reinvigorate rural areas.</p> <p>Small towns can be hubs for entrepreneurship of&nbsp;<a href="" target="_blank">many kinds</a>: an accounting company founded in Clear Lake, Iowa (population 7,700), has grown to several hundred employees while maintaining its small‐​town headquarters. A&nbsp;software company founded in Stowe, Vermont (population 4,300) now employs more than a&nbsp;hundred people in two rural locations.</p> <p>Creating economic growth through the bottom‐​up flourishing of businesses is much more sustainable than the short‐​term stimulus packages supported by the&nbsp;<a href="">confused</a>&nbsp;advocates of a&nbsp;return of so‐​called “industrial policy.” The government has already spent billions of dollars trying to draw jobs and prosperity to stagnant rural areas, to no avail. Recent tariffs intended to help U.S. workers are actually&nbsp;<a href="">harming</a>&nbsp;the U.S. manufacturing industry. In fact, the U.S. manufacturing sector has been producing record‐​setting output year‐​after‐​year and does not need rescuing — except from the tariffs. The industry employs fewer people because more jobs can now be done by machines.</p> <p>An upswell of entrepreneurship is only possible when policymakers take a&nbsp;strong stand against cronyism and lobbying by established businesses designed to undermine new enterprises and innovative competitors.</p> <p>Davies’ research shows that Williamsport, Pennsylvania (population 28,300) once had the most millionaires per capita of any city in the United States, during the lumber boom of the 1800s. But the local government backed a&nbsp;single lumber company, giving it an effective monopoly. That mistake ultimately decreased entrepreneurship and harmed Williamsport’s economy, which has only recently revived thanks to the fracking boom. When local governments resist rent‐​seeking behavior, entrepreneurs are then able to innovate and draw new wealth into the town.</p> <p>Some towns, residents will decide, are worth saving. Even the most committed urbanite would be hard‐​pressed to deny the charm, tranquility, natural beauty, and neighborly goodwill that can often be found in villages, small towns and other rural locales.</p> <p>As cities grow, many small towns will fade away. Each small town’s fate will ultimately be decided by its residents: they may vote with their feet by moving away, or they may stay and attempt to revive their communities. If they choose the latter option, they should strongly consider the following advice: for a&nbsp;small town to flourish, it must become a&nbsp;place where free enterprise flourishes as well.</p> </div> Chelsea Follett is a&nbsp;policy analyst at the Cato Institute. Sat, 08 Feb 2020 08:19:44 -0500 Chelsea Follett The Media’s Coverage of the Syria April 2018 Chemical Weapons Attack Is a Disgrace <p><a href="" hreflang="und">Ted Galen Carpenter</a></p> <div class="lead text-default"> <p>For most members of the news media, the&nbsp;<a href="">Syrian civil war</a>&nbsp;that erupted in 2011 has been a&nbsp;<a href="" target="_blank">stark melodrama</a>&nbsp;between good and evil, much as journalists oversimplified the earlier murky conflicts in the Balkans, Iraq, and Libya.&nbsp;In the standard media narrative, Syrian dictator Bashar al‐​Assad is an arch‐​villain, while Syrian insurgents are innocent victims of his atrocities.&nbsp;That narrative also parrots the official position of Washington and its Western allies.</p> </div> , <div class="text-default"> <p>Nowhere is the lack of media skepticism about government propaganda more evident than in the coverage of allegations that Assad’s regime has used chemical weapons against civilians. Worse, media outlets (with few exceptions) have ignored a&nbsp;growing body of counterevidence. Their coverage of the Organization for the Prohibition of Chemical Weapons (OPCW), the UN body tasked with investigating allegations that Syrian forces used such weapons in 2013, 2017, and 2018, has been especially credulous and unprofessional.</p> <p>Independent analysts raised pertinent questions about several conclusions that the OPCW reached regarding the earlier incidents, and it was bad enough that mainstream journalists ignored or peremptorily dismissed those objections and critiques.&nbsp;But mounting evidence of outright OPCW misconduct during its investigation of the latest episode, the alleged use of chemical weapons in Douma (a rebel‐​held Damascus suburb) in April 2018, should have triggered a&nbsp;massive inquiry by journalists.&nbsp;Instead, there is the sound of crickets.&nbsp;The United States and Britain responded to the Douma incident with airstrikes against Syrian government targets, at least temporarily escalating Western military involvement in Syria’s civil war.&nbsp;Consequently, assessing whether those strikes were based on valid or erroneous information is rather important.</p> <p>The OPCW released an&nbsp;<a href="" target="_blank">official interim report</a>&nbsp;in July 2018, and issued its&nbsp;<a href="" target="_blank">final report</a>&nbsp;in March 2019.&nbsp;The interim report asserted that the weapon used likely was a&nbsp;cylinder of chlorine gas dropped from the air. The conclusion about the delivery method was important because insurgent forces lacked either fighter planes or helicopters, making aerial delivery of a&nbsp;chemical weapon from that faction highly unlikely. Ruling out possible manual placement of the cylinder thus made Assad’s regime the obvious suspect for the atrocity.&nbsp;However, both the July 2018 and March 2019 reports omitted significant material that investigators had included&nbsp;<a href="" target="_blank">in their initial draft</a>&nbsp;of the interim report.</p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Independent analysts raised pertinent questions about several conclusions that the OPCW reached regarding the earlier incidents, and it was bad enough that mainstream journalists ignored or peremptorily dismissed those objections and critiques.</p> </div> </div> </aside> , <div class="text-default"> <p>Then, in May 2019, an internal OPCW memo was leaked. That memo was written to the&nbsp;organization’s leaders and accused them of having&nbsp;<a href="" target="_blank">misled the public</a>&nbsp;about the investigation’s conclusions. Specifically, the conclusion that an aerial attack had been responsible was only a&nbsp;majority view, not a&nbsp;consensus.&nbsp;Ian Henderson, a&nbsp;member of the OPCW’s Fact‐​Finding Mission in Syria, has denied leaking the memo and the exact person who leaked it remains unclear.&nbsp;Regardless, it appears&nbsp;numerous inspectors harbored doubts about the official conclusion, and by extension, the Assad regime’s culpability. Yet OPCW officials had withheld the release of information about the dissenting views,&nbsp;<a href="" target="_blank">with no explanation or apparent justification</a>.</p> <p>The OPCW’s response to a&nbsp;<a href="" target="_blank">query</a>&nbsp;from British journalist Peter Hitchens about Henderson’s leak was strikingly defensive, insisting that the organization was focusing its investigation on “the unauthorized release” of the document questioning the official report, and adding that “at this time, there is no further public information on this matter and the OPCW is unable to accommodate [sic] requests for interviews.”&nbsp;Fellow British journalist Robert Fisk observed acidly: “[H]ere is an institution investigating a&nbsp;war crime in a&nbsp;conflict which has cost hundreds of thousands of lives — yet its only response to an enquiry about the engineers’ ‘secret’ assessment is to concentrate on its own witch‐​hunt for the source of the document it wished to keep secret from the world.” Unfortunately,&nbsp;<a href="" target="_blank">he contended</a>, “It’s a&nbsp;tactic that until now seems to have worked: not a&nbsp;single news media which reported the OPCW’s official conclusions has followed up the story of the report which the OPCW suppressed.”</p> <p>Questions regarding the OPCW’s conduct became even more pertinent in November 2019, when WikiLeaks&nbsp;<a href="" target="_blank">began releasing</a>&nbsp;a&nbsp;series of internal documents showing the existence of dissenting views and demonstrating that the team that wrote the OPCW’s final report on Douma apparently hadn’t even gone to Syria.</p> <p>At the very least, journalists should have exhibited caution about accepting official conclusions from the United States and its NATO allies about responsibility for the chemical attacks.&nbsp;Yet very few media outlets expressed the slightest skepticism.&nbsp;Instead, the vast majority repeated Washington’s original allegations and the OPCW’s subsequent conclusions as though they were established, indisputable facts.&nbsp;</p> <p>The unwillingness to challenge those official accounts continued even when information mushroomed about questionable aspects of the OPCW’s Douma investigation.&nbsp;The pervasive media indifference to damaging revelations persisted. What modest coverage the new information did receive was confined largely to non‐​mainstream outlets such as the&nbsp;<em>Intercept</em>,&nbsp;<em>Anti​war​.com</em>, the&nbsp;<em>Grayzone</em>, and&nbsp;<em>Counterpunch</em>. The&nbsp;<em>Grayzone</em>’s Aaron Mate&nbsp;<a href="" target="_blank">expressed disappointment bordering on disgust</a>&nbsp;about the performance of the journalistic community: “As the suppressed findings come out via brave whistleblowers and Wikileaks, they are still being kept from the public. That is because the Western media — including top progressive, adversarial outlets — have ignored or whitewashed the story. And that media self‐​censorship has become a&nbsp;scandal in itself.”</p> <p>The few mainstream journalists who did try to cover the increasingly embarrassing developments regarding the OPCW encountered ferocious resistance.&nbsp;One angry&nbsp;<em>Newsweek</em>&nbsp;writer, Tareq Haddad, resigned from that publication after editors repeatedly blocked his attempts to publish revelations about the leaked OPCW documents. One of the more disturbing aspects of his experience was that a&nbsp;key editor&nbsp;<a href="" target="_blank">making that decision</a>&nbsp;had previously worked for the European Council on Foreign Relations, an ultra‐​establishment think tank with extremely close ties to several NATO governments.</p> <p>Former UN weapons inspector Scott Ritter noted that Haddad’s analysis had the potential to be a&nbsp;blockbuster scandal involving a&nbsp;widely respected UN agency, because his investigative article “was not about Ian Henderson’s report, but rather a&nbsp;series of new documents backed up by an inspector turned whistleblower known only as “Alex,”&nbsp;that accused the OPCW leadership of&nbsp;<a href="" target="_blank">ignoring the findings of its own inspectors</a>&nbsp;in favor of a&nbsp;revisionist report prepared by another team of inspectors based out of Turkey.” The latter group apparently relied heavily on data and witnesses provided by the Syrian Civil Defense (the “White Helmets”)—<a href="" target="_blank">a virulently anti‐​Assad medical aid organization</a>&nbsp;backed by Saudi Arabia, France, and other foreign powers.&nbsp;Perhaps most unsettling,&nbsp;<em>Newsweek</em>&nbsp;not only blocked publication in its own pages, it allegedly threatened to sue Haddad if he published his analysis elsewhere.&nbsp;</p> <p>Coverage (or more accurately the lack of coverage) of the OPCW’s questionable conduct indicated that, as they had with regard to the Balkan, Iraq, and Libya conflicts, mainstream journalists are far too willing to serve as conduits for a&nbsp;questionable, government‐​inspired narrative. Once again the press is playing the role of a&nbsp;lapdog rather than a&nbsp;vigilant watchdog guarding the public interest.</p> </div> Ted Galen Carpenter, a&nbsp;senior fellow in security studies at the Cato Institute and a&nbsp;contributing editor at the National Interest, is the author of 12 books on international affairs, including Gullible Superpower: U.S. Support for Bogus Foreign Democratic Movements (2019). Thu, 06 Feb 2020 11:36:25 -0500 Ted Galen Carpenter Road Pricing Should Be Central to UK Infrastructure Reform <p><a href="" hreflang="und">Ryan Bourne</a></p> <div class="lead text-default"> <p>To the unaccustomed ear, it can seem almost alien. But heading outside of London over Christmas, a&nbsp;carless city‐​dweller like me was struck by how often people talk about driving. From planning journeys to bemoaning traffic, raging about potholes to regaling tales of accidents, Britain’s roads occupy a&nbsp;central place in most families’ lives and conversation.</p> </div> , <div class="text-default"> <p>Chancellor Sajid Javid believes better transport infrastructure can be economically transformative. For most Britons, roads are the day‐​to‐​day transport infrastructure they experience.</p> <p>Political debates&nbsp;<a href="" target="_blank">might be dominated by High Speed 2</a>, calls for metro schemes in cities, and demands for bus subsidies in towns. In reality, cars so vastly outweigh public transport use that any economically meaningful infrastructure push must put the capacity and efficiency of the road network at its heart.</p> <p>Cars account for almost two‐​thirds of all transport journeys in England and 78pc by distance, vastly exceeding rail (3pc and 11pc) and buses (5pc and 4pc). To put it more starkly, the average UK household spends £81 per week on transport, of which over three‐​quarters goes toward purchasing or running costs of personal vehicles. Rail, bus, and coach fares account for an average weekly sum of £5.80.</p> <p>Despite this, our politicians regularly prioritise public transport investment over roads, even when the case for doing so is not economically sound. In the 2010 Comprehensive Spending Review, the coalition government cancelled, deferred, or placed under strategic review road projects with benefit‐​cost ratios (BCR) of 3.2, 4.2, and 6.8, respectively. At the same time, they ploughed on with HS2 with its BCR of 1.2, while local public transport schemes tend to have BCRs of just 1.8.</p> <p>Motorists’ raw deal can be seen again by looking at net exchequer contributions. For 2018/19, rail enjoyed a&nbsp;net subsidy of £7.1bn. Spending on roads was larger at £10.2bn, but a&nbsp;massive £34.4bn of revenue was collected from fuel and vehicle excise duties.</p> <p>Yes, fuel duty is supposed to account for the negative broader consequences of driving — not least carbon emissions, localised air pollution, and noise. But fuel duty rates are much higher than can be justified by these externalities. Drivers get whacked.</p> <p>Anti‐​car zealots usually bring up unaccounted‐​for social costs of driving arising from congestion, which are real and do impose large costs on other drivers and businesses (often raising consumer prices due to higher freight costs too). But congestion is a&nbsp;consequence of government failures to deliver responsive capacity and efficient pricing.</p> <p>Government statistics show that between 2017 and 2018, there was an increase in average delay time on 71pc of the near 7,000 key areas of the strategic road network. If the economics doesn’t convince the Chancellor of the need to put roads as his number one transport priority, perhaps politics will.</p> <p>The worst regions outside London for average delay times on roads are the North West, West Midlands, and Yorkshire and Humber, areas where the Conservatives gained 30 seats in the 2019 election.</p> <p>The policy lesson here is not to unthinkingly plough more money into road building. What the data shows is that, economically, getting road infrastructure right is vastly more important in<a href="" target="_blank">&nbsp;improving the UK’s productivity performance</a>&nbsp;and quality of life than other transport modes.</p> <p>We all know what we want from the road network: well‐​maintained roads, reduced congestion, and fewer bottlenecks, with policy neutral between forms of transport. Yet today, anti‐​economic investment decisions and an inefficient use of road capacity holds Britain back.</p> <p>What can be done? Targeted investments can undo serious blockages and pothole filling can reduce damage to cars. If the Government is to finance transport infrastructure, then delivering it to obtain the biggest economic bang‐​for‐​the‐​buck at least seeks to mimic market signals. As&nbsp;<a href="" target="_blank">Sajid Javid’s infrastructure war‐​chest opens</a>&nbsp;next month, we can pore over projects selected and funds allocated, assessing the opportunity cost of his choices.</p> <p>But getting the road network right is about more than public spending. We also need the structural changes needed to make efficient use of any given road network. That requires grappling with the congestion challenge.</p> <p>Rather than imposing high taxes on cars, we now have the technology for dynamic road pricing, varying by time and location. Such a&nbsp;regime would charge near zero when traffic is free‐​flowing, but high prices at rush hour. When combined in future with&nbsp;<a href="" target="_blank">driverless cars</a> that automatically adjust routes in real time, the potential efficiency gains are huge.</p> <p>But the benefits aren’t just immediate. Road pricing also helps improve investment decisions. First, because the smoothing of traffic flows would negate the need to build expensive new capacity to meet rush hour needs that would otherwise prove wasteful outside peak times. Second, because the price signals themselves would prove an invaluable guide to informing where new investment really is needed.</p> <p>A Government‐​run system of road pricing is no panacea. Political incentives for “vote buying” through prestige infrastructure projects or even, now, politically‐​motivated pricing, would remain. Ideally, to mitigate such problems, we’d privatise certain routes or parts of the network, allowing private tolling or city‐​wide congestion pricing, which goes a&nbsp;long to delivering the same results but one step divorced from political control.</p> <p>As a&nbsp;first step, though, “unleashing Britain’s potential” via better transport infrastructure requires recognition that our road network is of primary importance. A&nbsp;sign of success for this Government’s aims would be if we could reach a&nbsp;state where driving didn’t induce so many angst‐​filled conversations.</p> </div> Ryan Bourne is the R&nbsp;Evan Scharf Chair for the Public Understanding of Economics at the Cato Institute. Thu, 06 Feb 2020 11:01:22 -0500 Ryan Bourne Our Military Is Clashing with Russians While Defending Syrian Oil. Why? <p><a href="" hreflang="und">Doug Bandow</a></p> <div class="lead text-default"> <p>Last month, American military forces<a href=""> physically blocked</a> Russian troops from proceeding down a&nbsp;road near the town of Rmelan, Syria. U.S. troops were acting on orders of President Trump, who said back in October that Washington <a href="">would be “protecting” oil fields</a> currently under control of the anti‐​Assad, Kurdish Syrian Defense Forces.</p> </div> , <div class="text-default"> <p>Meanwhile, the Russians are acting on behalf of Syrian president Bashar Assad, who says the state is ultimately in control of those fields. While no shots were fired in this case, the next time Moscow’s forces might not go so quietly.</p> <p>U.S. officials offered few details about the January stand‐​off, but General Alexus Grynkewich, deputy commander of the anti‐​ISIS campaign, said: “We’ve had a&nbsp;number of different engagements with the Russians on the ground.” Late last month the Syrian Observatory for Human Rights reported: “Tensions have continued to increase significantly in recent days between U.S. and Russian forces in the northeastern regions of Syria.”</p> <p>Stationed in Syria illegally, with neither domestic nor international legal authority, American personnel risked life and limb to occupy another nation’s territory and steal its resources. What is the Trump administration doing?</p> <p>American policy in Syria has long been stunningly foolish, dishonest, and counterproductive. When the Arab Spring erupted in 2011, Washington first defended Assad. Secretary of State Hillary Clinton even called him a “reformer.” Then she decided that he should be ousted and demanded that the rest of the world follow Washington’s new policy.</p> </div> , <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Trump seems to think it’s okay to choose who controls resources and who doesn’t in other people’s countries.</p> </div> </div> , <div class="text-default"> <p>For years the Obama administration implemented a&nbsp;confused mix of contradictory policies. The U.S. sought to oust Assad and destroy the Islamic State, which the Damascus government opposed. The administration sought to find and aid an ever‐​diminishing pool of “moderate” insurgents while cooperating with an al‐​Qaeda affiliate and watching substantial U.S. materiel end up in the hands of other radical groups. American officials maintained the fiction that Turkey shared Washington’s objectives, even as it aided ISIS and focused its ill attention on Syrian Kurds, which Washington, in turn, relied on as its primary ground force against the Islamic State. Both Moscow and Tehran aided Syria against ISIS, yet the administration sought to expel Russia from a&nbsp;country with which it had been allied throughout the entire Cold War and turn Syria into another front in the “maximum pressure” campaign against Iran, also long allied with Damascus.</p> <p>President Obama’s only serious objective was reversing the Islamic State’s geographic advance. However, the group was an outgrowth of the U.S. invasion of Iraq and would not have existed otherwise. ISIS was opposed by most every regional power backed by Russia, Europe, and America. The “caliphate” would have been defeated even without Washington, though not as quickly. Obama’s policy, which kept U.S. forces in Syria and Iraq, left the latter particularly dependent on America, which is proving dangerous for both Baghdad and Washington.</p> <p>Candidate Trump criticized “endless wars” in the Middle East, and as president he has repeatedly indicated his determination to bring home U.S. forces from Syria. Despite his cheerful announcement that ISIS had been defeated—it no longer rules any territory as a “caliphate”—Washington continues to occupy Syrian territory without legal warrant, U.S. or international. Nevertheless, the president has continuously faced determined resistance to his withdrawal demands from his own appointees as well as the Pentagon and the Washington foreign‐​policy establishment.</p> <p>Last year his staff convinced him to swap deployments in the name of withdrawal, removing troops from Kurdish‐​held territory in the north and deploying units to guard Syrian oilfields seized by the Kurds. This new presence could be essentially permanent. General Frank McKenzie, America’s Mideast commander, stated: “This is an area where we made a&nbsp;commitment. I&nbsp;think we’re going to be here for a&nbsp;while.”</p> <p>The president has long had a&nbsp;fixation on oil. As a&nbsp;candidate he complained that Washington should have kept Iraq’s petroleum reserves, and he continued to talk about the possibility of seizing the oil after becoming president, to Baghdad’s extreme discomfort. As for Syria, after he approved the Department of Defense plan he said America would be “keeping the oil.” It seemed natural to him: “I’ve always said that—keep the oil. We want to keep the oil, $45 million a&nbsp;month.”</p> <p>The president apparently believed that the U.S. would make back the money spent on the occupation: he said he hoped to “make a&nbsp;deal with an ExxonMobil or one of our great companies to go in there and do it properly.” That isn’t going to happen—no legitimate company is likely to develop <em>stolen resources</em> in a&nbsp;<em>war zone</em>. Even if the petroleum were developed, the resulting revenue collected from Syria’s wells, limited even before the conflict exploded, would hardly justify the occupation expense, let alone the military risk.</p> <p>And the latter is real. President Trump seemed ready for war: “Either we’ll negotiate a&nbsp;deal with whoever is claiming it, if we think it’s fair, or we will militarily stop them very quickly.” A&nbsp;bit less clear was Defense Secretary Mark Esper, who minimized the role of oil while announcing that Washington would “respond with overwhelming military force against any group who threatens the safety of our forces there.” Since some 500 Americans are currently occupying the oil fields, that effectively means they will defend them with deadly force.</p> <p>Unfortunately, potential conflict is not limited to Syria, the recognized government of the territory occupied by America and the legal owner of the oil the president threatens to sell. As noted earlier, Washington is prepared to confront nuclear‐​armed Russia, a&nbsp;Damascus ally, over Syrian oil.</p> <p>What conceivable stakes could be worth taking such risks?</p> <p>The president appears to realize that the standard reasons for entanglement do not just justify America’s ongoing military presence, but his officials see the oil mission as a&nbsp;stalking horse, an excuse to keep the U.S. entangled in the region. Admiral William D. Byrne, Jr., vice director of the Joint Staff, opined that protecting the stolen Syrian oil was merely a “subordinate task.” The president may reign, but he does not govern.</p> <p>What and why do Washington’s war partisans want America to do in Syria?</p> <p>Syria does not matter and never has much mattered to America. The Assad regime obviously poses no military threat to the U.S. Although Washington labeled Damascus a&nbsp;state sponsor of terrorism, the latter does not engage in terrorism as commonly understood. That designation is political, reflecting Syria’s support for quasi‐​states, such as Hamas, which are antagonistic to Israel. But the latter is well able to protect itself, having destroyed a&nbsp;Syrian nuclear reactor and more recently launched routine strikes against Iranian forces located in Syria, without any response from Damascus.</p> <p>Throughout the Cold War, Syria was allied with the Soviet Union, so Russia’s current involvement changes nothing. Washington, meanwhile, retains overwhelming influence in the Middle East, being allied with virtually every other state and possessing multiple bases, military relationships, and deployments. What happens in Syria simply isn’t important for the U.S., other than as a&nbsp;humanitarian tragedy, which cannot justify military intervention.</p> <p>Why else occupy roughly a&nbsp;third of Syrian territory with American troops? To continue the fight against ISIS? As a&nbsp;quasi‐​state, the group is dead. But its remnant forces will remain a&nbsp;problem, promoting a&nbsp;malignant theology and perhaps undertaking insurgent attacks. However, that is likely to be the case for years if not decades: the U.S. still worries about al‐​Qaeda nearly two decades after 9/11.&nbsp;A&nbsp;permanent U.S. occupation of Syria is not necessary. The Islamic State’s other enemies, Iraq, Iran, Israel, Jordan, Syria, Saudi Arabia, other Gulf States, and Russia, are capable of countering whatever remains of the group.</p> <p>The Syrian Kurds cooperated with America out of their own interest—defeating ISIS forces that threatened their population and territory—not for humanitarian reasons. Washington has no cause to offer a&nbsp;permanent defense commitment, especially one that Congress has never voted on. The Kurds’ best option is to make a&nbsp;deal with Syria, within which their territory is located.</p> <p>Desiring to defenestrate Russia is a&nbsp;fantasy objective, given Moscow’s long ties with Damascus. Attempting to exclude Iran, invited in by the Assad government, is an even less realistic objective. Pushing these two governments out would be convenient for Washington, but in practice would offer little meaningful benefit. America will retain its long‐​standing military dominance throughout the Middle East in either case. Indeed, the wreckage known as Syria may prove more liability than asset for both Moscow and Tehran in the foreseeable future.</p> <p>Finally, some Washington policymakers still dream of ousting Assad. Indeed, that objective likely underlies Esper’s October announcement that Washington would “maintain a&nbsp;reduced presence in Syria and deny ISIS access to oil revenue.” Since the Islamic State has been largely destroyed, in reality, Washington is denying Syria’s oil to the Syrian government and its allies, such as Russia, as we recently saw. Weakening the Assad government is supposed to allow its ouster, or force it to follow other U.S. dictates, such as the expulsion of Russia and Iran.</p> <p>Assad deserves to be overthrown, but that does not make him unique. Nor does the Trump administration have the ability to oust him. On the contrary, he has survived years of bitter warfare and is on the cusp of victory over the remaining rebels in Idlib. He has no reason to quit or abandon allies that sustained him against myriad insurgents backed by America, Europe, and the Gulf States.</p> <p>Moreover, removing Assad would not answer the vital question: who comes next? Washington has dramatically bungled regime change in both Iraq and Libya, leaving behind greater carnage and instability. Nor can the promotion of democracy justify the human and financial cost of promiscuous war‐​making, even for allegedly humanitarian reasons. American military personnel are not pawns for Washington’s ivory tower crusades; 9/11 demonstrated that misguided foreign intervention puts even America’s homeland at risk.</p> <p>The president wants to seize Syrian oil but his appointees have very different agendas. Such contradictory objectives could lead to confusion and worse. At the same time, the president’s well‐​publicized focus on resources feeds the traditional Mideast meme that all the U.S. government cares about is oil. Today that is not just a&nbsp;conspiracy theory; it is the president’s own official pronouncement.</p> <p>A policy of America First should be Americans First. Two months ago the president declared that “we left troops behind, only for the oil.” Last month a&nbsp;22‐​year‐​old North Carolina soldier, Antonio Moore, was the latest death in the illegal, counterproductive Syria mission. Washington policy should focus not on collecting cash for the federal government but protecting the lives and liberties of the American people. That means not risking them for interests that are fundamentally frivolous—like grabbing Syria’s oil for fun and profit. President Trump should fulfill his promise and bring home the U.S. military from Syria.</p> </div> <p>Doug Bandow is a&nbsp;senior fellow at the Cato Institute and currently scholar‐​in‐​residence at the Centre for Independent Studies in Sydney.</p> Thu, 06 Feb 2020 10:18:49 -0500 Doug Bandow Iran Is Not Hyperinflating <p><a href="" hreflang="und">Steve H. Hanke</a></p> <div class="lead text-default"> <p>Each and every day we read that Iran is hyperinflating or about to hyperinflate. The same is written about Zimbabwe and Venezuela, as well as a&nbsp;potpourri of other countries that are experiencing inflation flare‐​ups. While Iran came close to hyperinflating in the fall of 2012, it has never experienced an episode of hyperinflation. And while Zimbabwe experienced episodes of hyperinflation in 2007-08 and in 2017, it is not experiencing one now. At present, Venezuela is the only country experiencing hyperinflation.</p> </div> , <div class="text-default"> <p>It’s clear that journalists and those they interview tend to play fast and loose with the word “hyperinflation.” To clean up the hyperinflation landscape, we must define the word. So, just what is the definition of the oft‐​misused word “hyperinflation?” The convention adopted in the scientific literature is to classify an inflation as a&nbsp;hyperinflation if the monthly inflation rate exceeds 50 percent. This definition was adopted in 1956, after Phillip Cagan published his seminal analysis of hyperinflation, which appeared in a&nbsp;book edited by Milton Friedman, <a href=";tag=x_gr_w_bb_sout-20&amp;linkCode=as2&amp;camp=1789&amp;creative=9325&amp;creativeASIN=0226264068&amp;SubscriptionId=1MGPYB6YW3HWK55XCGG2" rel="noopener noreferrer" target="_blank"><em>Studies in the Quantity Theory of Money</em></a><em>.</em></p> <p>Since I&nbsp;use high‐​frequency data to measure inflation in countries where inflation is elevated, I&nbsp;have been able to refine Cagan’s 50 percent per month hyperinflation hurdle. With improved measurement techniques that I&nbsp;developed when I&nbsp;was studying Zimbabwe’s record hyperinflation, I&nbsp;now define a&nbsp;hyperinflation as an inflation in which the monthly rate exceeds 50 percent per month for at least thirty consecutive days.</p> </div> , <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>While Iran came close to hyperinflating in the fall of 2012, it has never experienced an episode of hyperinflation.</p> </div> </div> , <div class="text-default"> <p>After years of research with the help of many assistants, I&nbsp;have documented and ranked 58 episodes of hyperinflation, which are presented in the <a href="" rel="noopener noreferrer" target="_blank"><em>Routledge Handbook of Major Events in Economic History</em></a>. Hungary holds down the top spot. Its peak hyperinflation occurred in July 1946, when prices were doubling every 15&nbsp;hours. Zimbabwe’s November 2008 hyperinflation peak is second highest, but way behind Hungary’s. At their peaks, the daily inflation rates were 207 percent in Hungary and 98 percent in Zimbabwe. The most memorable hyperinflation was Germany’s in 1923. But, it only ranks as the fifth highest, with a&nbsp;peak daily inflation rate of 20.9 percent — way lower than the top four rates.</p> <p>Now, let’s turn to the world’s only current hyperinflation: Venezuela. It ranks as the 14th most severe episode in history. Today, the annual rate of inflation is 2,986 percent. While this rate is modest by hyperinflation standards, the duration of Venezuela’s episode, as of today, is long: 38 months. Only two episodes of hyperinflation have been more long‐​lived.</p> <p>Even though we can measure hyperinflation very accurately, no one has ever been able to forecast the magnitudes or durations of hyperinflations. But that hasn’t stopped the International Monetary Fund (IMF) from producing forecasts for hyperinflation in Venezuela. Even though the IMF does not <em>measure</em> Venezuela’s hyperinflation, something that can be reliably done, the IMF does <em>forecast</em> hyperinflation, something that cannot be reliably done.</p> <p>Surprisingly, the press dutifully reports the IMF’s forecasts for Venezuela’s annual inflation rate. For example, as late as October 2019, the IMF was forecasting that Venezuela’s annual inflation rate would hit a&nbsp;whopping 200,000 percent by the end of the year. Well, the IMF’s “guestimation” was a&nbsp;bit off. I&nbsp;measured Venezuela’s annual inflation rate on December 31, 2019, and it was 6,869 percent.</p> <p>But it turns out that the IMF isn’t the only one making finger‐​in‐​the‐​wind forecasts of hyperinflation. The Trump administration’s special envoy for Iran, Brian Hook, recently asserted that U.S. sanctions against Iran would fuel a&nbsp;hyperinflation. Well, even though Iran came close to a&nbsp;hyperinflation in October 2012, it failed to jump over the hurdle. And today, Iran isn’t even close to the hyperinflation threshold. Indeed, since the New Year, the Iranian rial has been very stable against the greenback on the black market, and the official annual inflation rate is 38.6 percent. And, according to my most recent measurements, Iran’s inflation rate is falling.</p> </div> <p>Steve Hanke is a&nbsp;Professor of Applied Economics at the Johns Hopkins University in Baltimore and the director of the Troubled Currencies Project at the Cato Institute in Washington, D.C.</p> Thu, 06 Feb 2020 10:00:34 -0500 Steve H. Hanke