Trade and International | Publications | Competitive Enterprise Instittue

Letter on Farm Bill Entitlements

Christine Hall — Tue, 08 May 2012 21:45:03 +0000

CEI signed a joint letter advocating real reform of subsidies and other entitlement programs in a new farm bill.

Fran Smith

Tue, 2012-05-08

Forget France, the Greek Elections Are the Beginning of the End for Europe

Iain Murray — Tue, 08 May 2012 18:46:37 +0000

While much of the world's attention was concentrated on France's presidential election last Sunday, the real action was in Greece. French President-elect François Hollande may be promising 75 percent income tax rates and a renegotiation of the European Union's fiscal treaty, but it was the result of the Greek elections that will determine the future of Europe.

The irony is that Greece should never have been allowed into the euro in the first place. It did not meet the entrance criteria, but Eurocrats in Brussels turned a blind eye because they viewed the creation of a European identity as more important than financial stability. When the process began to unravel, a panicked EU, along with the International Monetary Fund, responded by throwing money at the problem, in exchange for a promise of austerity.

The result of the Greek elections was a resounding rejection of the coalition government -- comprised of mainstream socialists and conservatives -- that engineered an EU/IMF bailout. The Conservative New Democracy (ND) party, the junior party in the coalition, received the most support of any party, but only 20 percent of the total votes cast. The coalition socialist party, PASOK, placed third, behind a coalition of other leftist parties calling itself Syriza. The Independent Greeks, a pro-Russian, anti-Turk conservative group led by a former ND legislator placed fourth, with the Communist KKE in fifth, the neo-fascist Golden Dawn sixth, and yet another leftist block seventh. No other parties achieved enough support to gain representation in parliament. Fully 66 percent of votes cast were for anti-bailout, anti-austerity parties.

Thanks to a bizarre quirk in the electoral system, ND gained 50 extra seats in parliament for coming in first. This measure, designed to aid the creation of coalition governments, could plausibly have resulted in a pro-bailout government forming despite the overwhelming rejection of the bailout parties. By Monday afternoon, however, ND leader Antonis Samaras had conceded defeat in his efforts to find a majority, which will allow the Syriza faction to attempt to form a coalition of the anti-bailout groups.

The upshot? Greeks have exchanged a democratic crisis for a financial crisis with far-reaching implications. If an anti-bailout government is formed -- a big if, as that would require the various anti-bailout groups to overcome their considerable ideological differences -- the subsequent rejection of the austerity policies demanded by the EU and IMF would almost certainly lead to a Greek sovereign default, Greece leaving the Eurozone, and the return of the Drachma.

If this happens, Greece will experience severe short- and medium-term financial pain, likely exacerbated by confiscatory leftist or autarkic policies -- or some combination thereof.

However, there is some good news. By leaving the euro, Greek living standards will eventually reach a market-clearing level, and, assuming that the Greeks have fully appreciated the problems caused by statist policies during this process, they may be well placed to welcome industry back to their country with low costs and barriers to entry. How urgent is market liberalization? A recent Financial Times column tells of one entrepreneur who was asked to provide a stool sample to the government before he was allowed to start an online business.

Add to reform Greece's unique national assets -- an amazing history and climate -- and tourism should also boom, raising Greek living standards once more.

Yet if the future for Greece in this scenario looks potentially fine in the long-term, the same cannot be said for the euro. It recently become obvious to everyone that the Eurozone's Target-2 system of payments between central banks tuned out market signals that otherwise would have warned that a crisis was coming. This system places the euro in very grave risk if a country were to default.

Financial journalist Martin Hutchinson described the system very well:

When a Greek makes a large euro payment to a German, his Greek bank makes a payment to the Greek central bank, which makes a payment to the Bundesbank, which pays the German bank, which pays the German. This is quite different to the U.S. system. There is no central bank of Alabama intermediating dollar payments between Alabama and New York, and there was equally no need for such intermediation in the [E]urozone -- it just gave the otherwise redundant national central banks something apparently useful to do.

This means that the effects of capital flight are doubled. Not only does the central bank of Greece have an existing imbalance with the Bundesbank, the German central bank, but when a Greek moves his money from Greece to Germany, the imbalance grows larger.

Now consider what would happen if Greece were on the verge of default. The fear of successive default by the other shaky economies -- Spain, Portugal, and Italy -- would lead to rapid capital flight from those countries to Germany. The Bundesbank is probably able to absorb the effects of Greek default and capital flight, but it simply could not absorb the capital flight from other countries. Germany may well be forced to leave the euro rather than subject itself to this risk. This could all happen extremely quickly.

Should Americans be worried? Yes, because the United States will be caught up in a crisis it could have helped prevent. The European Project that now stands on the precipice of self-inflicted destruction was enthusiastically supported by successive U.S. presidents, who all urged Europe down the path to union for the simple reason of diplomatic convenience. If the scenario I have outlined above comes to pass, we may see a banking crisis that could make 2008 look like a walk in the park.

Iain Murray

Tue, 2012-05-08

Citation Source:

The American Spectator

http://spectator.org/archives/2012/05/08/forget-france-the-greek-electi

Super Mario Talks a Good Game But Italy's Entrepreneurs Have Lost Out

Nicole Ciandella — Fri, 27 Apr 2012 15:43:48 +0000

ITALIAN Prime Minister Mario Monti recently proclaimed “historic” labour reform and even declared the “financial aspect” of the crisis to be over. But don’t pop the Prosecco yet. Italy’s biggest impediments to business – rigid labour rules and uncertain contract enforcement – are alive and well.

Monti’s upbeat attitude should be tempered by Italy’s ongoing economic stagnation. Total production in Italy still hasn’t recovered to its 2007 peak, while the unemployment rate – 9.3 per cent in February – continues to rise. On ease of doing business, the World Bank ranks Italy at 30 out of the 31 OECD high-income countries. It is only beaten to worst place by Greece.

This spring’s labour reform battle was a lost opportunity at turning that situation around. The government and party leaders came to a fragile agreement with Italy’s largest unions. Businesses would be allowed to lay off workers for “economic reasons,” meaning financial distress, while paying up to an exorbitant 24 months of severance. But firms still would not be allowed to fire employees for incompetence.

The centerpiece of Italy’s rigid labour market, and the main issue of contention, is Article 18 of the Worker’s Statute. Under it, “poor performance” is not grounds for employee dismissal. Only “concrete and wanton negligence” justifies that. If a labour court finds a business guilty of firing an incompetent employee, the firm must rehire the worker and compensate for lost pay. If an entrepreneur has fewer than 15 employees, he faces a choice between rehiring or paying up to 14 months of severance. Article 18 protects 87 per cent of private sector workers, according to numbers from Datagiovani – a statistical agency that studies Italian youth.

Then there’s Italy’s two-tier labour market, an unintended consequence of Article 18. The law shields older workers, who already have regular contracts, from the competition of new job seekers: the young. Because they are shut out from regular employment, 17 per cent of employed Italians under 35, more than any other age group, work on short-term contracts exempt from protection. The rest not on protected contracts remain unemployed. Italy’s youth unemployment averaged 5.8 percent above the EU average from 2001 to 2010.

Recent reform makes it even less attractive to hire the young because social and retirement contributions for short-term contracts would increase. Young qualified Italians just cannot find jobs, because businesses won’t take the risk of hiring an employee for life.

Entrepreneurs are afraid to grow. Within the EU, Italy boasts the highest proportion of employment in both micro-firms – businesses with fewer than 10 employees – and micro and small firms combined. It also faces the lowest proportion of employment in medium-sized enterprises.

Compounding the problem of an inflexible labour market is a slow legal system not known for its impartiality. On average, it takes almost 3.5 years to adjudicate a lawsuit, according to the World Bank. Italy ranks dead last among OECD countries in efficiency of contract enforcement.

Making matters worse, entrepreneurs don’t find much sympathy in Italian courts. Economist Andrea Ichino of the Center for European Policy Research found that every percentage point increase in regional unemployment correlates with a 2.5 per cent reduction in an employer’s chance of winning employee dismissal cases in that region.

Fiat, Italy’s iconic car manufacturer, has already moved production to Poland and is threatening to shift more to Eastern Europe and North America. While allaying fears recently that Fiat would leave Italy entirely, chief executive Sergio Marchionne didn’t hesitate to criticise Italy’s impossible regulatory environment: “The rules that were thought to defend jobs have brought us to a situation in which the hardest thing is to create jobs.”

Rigid labour markets and a broken court system make doing business in Italy a gruelling ordeal. Recent reforms merely placate intransigent unions and cowardly party leaders. Super Mario should not be surprised when financial chaos returns as markets lose confidence in Italian prosperity once again.

Matthew Melchiorre

Tue, 2012-04-24

Citation Source:

City AM

http://www.cityam.com/forum/super-mario-talks-good-game-italy-s-entrepreneurs-have-lost-out

New IRS Rule Benefits Only Foreign Dictators

Iain Murray — Thu, 08 Mar 2012 16:28:36 +0000

Since when is it the U.S. government's job to report on the financial activities of foreign nationals to their home governments? It is now. The IRS has rolled out a new rule that will force deposit institutions, such as banks and credit unions, to report how much interest nonresident aliens have earned on their U.S.-held accounts to the IRS, who will then report it to their home country governments.

The rule isn't tailored to accommodate special circumstances, which means U.S. banks might be forced to report the earnings of foreign dissidents made in the U.S. to their home regime. The IRS and the rule's supporters say this fear is baseless. But even if it were tailored to prevent disclosures to certain "unfriendly" regimes, it's worth remembering how quickly friends become adversaries. Libya's Muammar Gaddafi went from friend to foe almost overnight. If the rule had been in place a few years ago, Syria's Bashir al-Assad might now have a wealth of data about his opponents' finances.

Why is the U.S. government subsidizing the tax collection efforts of foreign regimes? Because the U.S. wants other governments to do the same for it. The IRS taxes Americans globally, and through the Foreign Account Tax Compliance Act (FATCA) of 2010, wants to require any transnational financial companies to report account information on U.S. clients. The IRS claims that it's only fair to require U.S. banks to fulfill a similar requirement.

But the FATCA is already an extraterritorial power grab of doubtful legitimacy. In December 2011, the United States led the charge at the United Nations against the attempt by Eritrea to impose a Diaspora Tax on its citizens abroad. The Security Council resolution was passed on the grounds that it violated human rights. The U.S. has not imposed a Diaspora Tax on its citizens. They are free to leave the country as they wish -- unless they happen to earn more than $9,350 abroad, at which point they are subject to significant punishment from the IRS for failing to file a tax return.

The FATCA was passed and new IRS regulations were proposed with hardly any foreign consultation. Foreign governments are furious, and for good reason. The head of Canada's banking association has said the FATCA is "conscripting financial institutions around the world to be arms of U.S. tax authorities." Implementing the law would even violate privacy laws in countries like Singapore and Hong Kong. Nonetheless, the IRS wants to impose a 30 percent tax on any U.S. assets held by firms that fail to comply. It's hard to think of a better way to scare foreign investment away from our shores.

The IRS doesn't tax foreigners' interest on U.S. deposits, but this new reporting rule would actually be worse than if it did. Conservative estimates of a previous version of the rule, which affected just 15 countries, found that it will suck at least $87 billion out of the economy. This is because foreigners often invest in the U.S. because their money is protected from their home government. Consider that as much as one third of all bank deposits in Florida are owned by foreigners, which might be surprising until you look immediately south, to Cuba, Venezuela, and beyond. Many Florida banks could go under if this rule goes ahead.

These costs are also a problem for the IRS. Executive Order 12866 requires that any regulation with "an annual effect on the economy of $100 million or more" to be subject to a cost-benefit analysis. Yet the IRS hasn't performed any such analysis for its proposed rule. It is easy to see why. The costs, as we have already seen, are likely to be huge. The benefits? They amount to some goodwill from the few legitimate foreign governments that take an interest in offshore holdings of their citizens (most, like the United Kingdom, do not), and a lot of goodwill from dictators who will use this information to monitor and punish dissidents.

This rule's timing couldn't be worse. The unfolding European debt crisis could send capital flooding into the U.S. Yet rather than let the money roll in, the IRS wants to discourage foreigners from investing in the American economy, by imposing extra costs on the fragile banking system, to the benefit of no one -- except dictators.

If IRS officials think that is prudent policy, Congress should ask them to explain why. It is high time for reform of this agency, before it impoverishes us all.

Iain Murray

Thu, 2012-03-08

Citation Source:

The American Spectator

http://spectator.org/archives/2012/03/08/new-irs-rule-benefits-only-for

EU's Proposed Gender Quotas For Corporate Boards

Hans Bader — Thu, 08 Mar 2012 16:06:14 +0000

From Isaac Gorodetski's post on Point of Law:

In recent commentary, senior attorney and counsel for special projects with the Competitive Enterprise Institute, Hans Bader, articulated a compelling argument against the European Union's push for gender quotas for corporate boards. Several European nations including Spain and France already impose 40-percent quotas for corporate boards and EU officials are moving toward implementing a mandate on all member nations even those that have resisted interfering with corporate governance.

In his entry, Hans recognizes the potential disaster in widespread implementation of a discriminatory gender quota:

Gender quotas could provide a big boost for nepotism on corporate boards in some fields. In sectors like metallurgical engineering, there are just not very many women with the required knowledge and expertise to sit on a corporate board. So a company in such a sector, confronted with a gender quota, will probably pick female relatives of existing corporate insiders to sit on the board. If you have to put someone who is largely ignorant of your business on your board, it might as well be someone who will do what others on the board with more knowledge advise them to do -- and they are more likely to take your advice if they are your relative than if they are not related to you.

After Norway adopted gender quotas for corporate boards -- requiring companies to have boards of directors comprised of at least 40 percent women -- large numbers of inexperienced people ended up as corporate directors. "A study by the University of Michigan found that this led to large numbers of inexperienced women being appointed to boards, and that this has seriously damaged those firms' performance."

Additionally, in this piece, Hans points to the fallacy which often leads to the adoption of these quotas:

Defenders of these quotas argue that quotas are good for business because companies with more women on their boards do better. But even if such companies typically make more money, this claim confuses cause and effect, and puts the cart before the horse, as studies like the University of Michigan study illustrate. With each passing year, the percentage of female business professionals in Europe rises, as does the percentage of female college graduates. The pool of female qualified applicants in a company for a directorship naturally rises over time. So a company that is not growing and hires few new people will naturally have less women in its ranks than a company that is growing and hiring new people. The company's growth does not occur because of the increase in women in the company; rather, the increase in women in a company occurs because of the company's prior and pre-existing growth.

In an earlier post, Hans also examines the push by the Obama administration to implement quotas in the workplace and higher education based on race, disability and possibly sexual orientation.

Hans Bader

Tue, 2012-03-06

Citation Source:

Point of Law

http://www.pointoflaw.com/archives/2012/03/hans-bader-on-eu-gender-quotas-for-corporate-boards.php

Give Greece a Going Away Present, But Go It Must

William Frezza — Tue, 21 Feb 2012 22:34:57 +0000

The rate at which things are deteriorating in Greece now officially exceeds the rate at which desperate Eurocrats weave new fantasies as they try to keep Greece on the euro. The just-announced bailout will be no different.

As other European governments advance their latest scheme to soak their own taxpayers and fleece holders of Greek debt—while they fail to stop crazed Greek anarchists, communists, and unionists from burning down their own cities—a voice of reason pierces the fog offering the only way forward.

Too bad no one will listen.

Hans-Werner Sinn, German supply-side economist and President of the Ifo Institute for Economic Research, lays it out in a crisp 800-word interview inSpiegel Online. I’ve read a lot of nonsense about how fantastical Rube Goldberg mechanisms can help save the euro, save the bondholders, save the bankers, save the politicians, and save the people of Greece. But it cannot be done. Here is why.

Greeks consume more than they produce. This has been going on since Germany put the whole country on the dole after the euro was created, and there is nothing Greeks have enjoyed more than living it up on the dole. They are a very proud people, though, so they don’t call it the dole. They call it government employment—and woe to any politician that takes away their “right” to a no-show job!

The Greek government, which created this free flow of money by selling idiotic bankers sovereign bonds that are never going to be repaid, continues to slide deeper into debt faster than the rate at which those debts can be serviced. The so-called “austerity” programs the Greek Parliament keeps passing at the behest of its German paymasters are only making things worse, as the already sclerotic economy implodes, along with tax collections that never amounted to much anyway, given the Greek penchant for tax evasion.

Now those same idiotic bankers, along with the French and German politicians they control, are conspiring with the Greek government to pretend they can fix the problem by forcing private bondholders to “voluntarily” swap one set of worthless bonds for another set of worthless bonds, without acknowledging a default that in a sane world would be all but inevitable.

The reason for this urgency? Private holders of these worthless bonds also hold hundreds of billions in insurance that would have to be paid to them should those bonds fail. And who are the sellers of these insurance policies? Why, the same idiotic bankers who control the French and German politicians!

The circus is now in its final act, complete with breathless announcements of eleventh-hour deals that will stave off disaster until the next eleventh-hour deal. Meanwhile, our own Timothy Geithner, Secretary of the Treasury, is doing everything in his power to keep the whole mess from blowing up before his boss stands for reelection. Après moi le deluge.

It won’t work. There is no way to keep the wheels from falling off before November. The next shoe to drop will be the refusal by some private bondholders to go along with the latest deal, followed by the Greek government passing a retroactive law trying to force them, followed by chaos on the streets and in the world markets.

It’s time for Greek leaders to end the pain and honestly face reality like the men they claim to be. Stand before the world, stand before your people, stand before the bankers, and repeat the immortal words that Otter spoke to Flounder: “You f**ked up… you trusted us! Tear up those bonds we sold you, they are worthless. Kick us out of the euro, we deserve it.” Then they need to find those old drachma plates and start over.

Once that is settled, the Greek people have to take their medicine. As Hans-Werner Sinn points out, in order to be competitive in global markets and start producing more than they consume, every Greek needs to take a 30% pay cut.

This cannot happen if pay is measured in euros. Greek labor unions will commit national suicide before they accept a pay cut. So they have to be paid in drachmas—wheelbarrows full of them, so many drachmas that union leaders can boast to their members that they are getting pay raises!

Only until the value of the drachma drops low enough for everyone in the country to actually get paid a wage commensurate with the amount of value they are producing will the situation start to stabilize.

If France, Germany, the International Monetary Fund, and the European Central Bank really want to help, they can give the Greek government one last going away present: a €100 billion gift to allow the Greek government to capitalize Greek banks long enough to bridge through the transition. In return, the EU can avert a civil war on its front steps.

There is no other way out. It will have to happen sooner or later. Prolonging the agony benefits no one—not even the politicians hoping to fake it long enough to get reelected.

Greece is dead. Long live Greece.

William Frezza

Tue, 2012-02-21

Citation Source:

Forbes

http://www.forbes.com/sites/billfrezza/2012/02/21/give-greece-a-going-away-present-but-go-it-must/

Comments Submitted to U.S.-EU High Level Working Group on Jobs and Growth

Nicole Ciandella — Tue, 07 Feb 2012 18:14:37 +0000

Full Document Available in PDF

The path to economic growth and prosperity is not something readily planned from above but rather is “discovered” by experimentation and experience. Markets are a discovery process – it is not evidence a priori which polices do or do not foster growth and employment. The two primary models are the “harmonization” model of seeking to “standardize” rules between those seeking mutually beneficial trading partners and the “competitive” model which seeks to have each party experiment with rules to determine which are superior. Which approach is superior is not always clear. The “harmonization” approach can easily morph into a “cartelization” path – enriching some within the two blocs but harming the overall economies of both. The “competitive” model can needlessly increase the transaction costs of trade.

In this context, let me discuss the question raised in this proceeding. I have some sympathies for both paths; however, as will be obvious, my belief is that the “harmonization” approach is far less likely to advance economic growth. Politics is too uncertain a process to allow top-down rules to become dominant.

Remove Tariffs

The U.S. and the EU are formidable trade partners that represent about 50 percent of the world’s GDP. While the U.S. and the EU have dramatically reduced tariffs on goods and services imported to their countries, the countries should agree to eliminate remaining tariffs to spur growth and opportunity.

Eliminating tariffs would create significant economic growth and enhance consumer welfare for both partners. In terms of exports, it has been estimated that getting rid of tariffs on merchandise trade between the EU and the U.S. would increase EU exports to the U.S. by up to $69 billion, while U.S. exports to the EU could increase by up to $53 billion. There would be substantial gains in both economies – GDP in the EU could rise from $58 billion to $85 billion, while U.S. GDP could increase from $59 billion to $82 billion.

In a free-trade lesson the U.S. should study, in November 2011 Canada announced that, to help spur the economy, it was eliminating tariffs on imports that Canadian manufacturers use. Tariffs would be cut on about 70 items, the latest in government moves to get rid of all tariffs by 2015. Already Canada has abolished tariffs on more than 1800 items — relief that is expected to add about $423 million annually to its economy.

Important too should be the recognition that tariffs on imports are in reality added taxes on the foreign goods and services that consumers and businesses purchase. Trade laws should consider the consumer impact. Consumers benefit from imports that may reduce their costs, increase their choices, provide new technological advances. Eliminating tariffs can provide major “tax cuts” that can help stimulate the economy.

Fran Smith

Fri, 2012-02-03

Cuba, Where Sheep Are Trained to Venerate Wolves

William Frezza — Thu, 02 Feb 2012 21:38:22 +0000

With the death of Cuban dissident Wilman Villar Mendoza, Cuba has lost one of its precious remaining brave souls. While a sputtering dissident movement shows occasional signs of life, reminding us of the hell the Cuban people endure, it casts a pale shadow compared to the fury of the Arab Spring. How is it possible that the Castro brothers have been able to run one of the world’s most repressive and dysfunctional gulags for so long without their meeting the fate of the Ceausescus by now?

Their technique of how to introduce communism on an island scale is worth studying.

First, take a geographic area and build a firewall around it. Allow an elite group of monomaniacal thugs to subject the people trapped inside to five decades of brutal repression, privation, confiscation, and humiliation, all bolstered by relentless propaganda designed to convince victims and observers alike that this is necessary for the greater glory of the revolution.

Second, enlist an army of global intellectuals to manufacture a smokescreen of respectability for a governing philosophy that extols the virtues of equality and sacrifice, despite the fact that it delivers the equality of poverty and the sacrifice of self respect. Build a few Potemkin village medical facilities to fool the gullible into believing some noble purpose or higher achievement motivates the endeavor.

Third, make it is risky, but not impossible, for anyone who possesses the ambition and courage to rebel to escape instead.

Finally, marinate for two generations as you chase off the best and the brightest and observe what happens to the character of the people that survive.

Welcome to Cuba, where the human spirit has been so thoroughly crushed that a nation of sheep passively waits for their predatory wolves to die of old age, safely in their beds, not a hand raised against them.

Given the Cuban people’s apparent resignation to their own fate, is it any surprise that the rest of us just shake our heads in wonder and go about our business, our political leaders impotently decrying the occasional human rights outrage that escapes the censors and makes it into the news?

When the nightmare runs its course and the complete story is finally told, there will be no redeeming chapters.

But what about the lower-than-average infant mortality and longer life expectancy touted by the Castro regime’s boosters, if such statistics can be believed? Isn’t living longer an end that justifies the means? Think about what living longer implies if you’re forced to live under tyranny. America’s founders—and indeed, the leaders of the Central and South American independence movements—preferred death to that sort of life, and said so with their words and deeds.

What about the famously low crime rate, where a midnight stroller is safer in Havana than in Washington, DC? Yes, violent crime is a government monopoly in a police state. Plus, in a country that has so little, there is nothing much to steal. After all, how many iPhones can get ripped off when nobody can afford one and posting the wrong thing on Twitter can earn you a visit from state security?

It’ll be interesting to see what happens to a demoralized people after Castroism breathes its final breath. A new pack of wolves might try to keep the workers’ paradise going, but at this point even the most devoted cadres may well be weary of the experiment. Look for them to enrich themselves by “privatizing” the economy Russian oligarch-style, as they carve up the island to remodel it into the Caribbean resort destination it has every right to be—so long as the “right” people profit.

A brief vintage car export market will likely open up as the world’s largest living auto museum sells off its collection. Prostitution will return, or more precisely come out of the shadows, perhaps along with the revival of what once was a thriving pornography industry. It’s hard to imagine a manufacturing base springing up to take advantage of the cheap labor as this needs to be coupled with a work ethic, something the Castro regime has made every effort to destroy. Surely, some unique comparative advantage will come to the fore. But having tolerated the intolerable for so long, will the Cuban people know what to do with their newfound freedom once liberated from their chains?

That is the experiment that awaits the return of capitalism.

One can imagine a scenario in which an influx of returning expats, rich in both human and financial capital, blow past the locals as they reintroduce the courage, entrepreneurship, and work ethic they took with them when they escaped. A two-tier society could easily emerge, with returnees and their children lording their success over the bewildered and resentful locals. Petty theft likely will make a comeback, so expect a vigorous market for alarm and security services.

Cubans who have managed to get an advanced education under Castro, like the many doctors staffing its medical system, will probably do fine, though many might move to the U.S. seeking better pay, filling our looming doctor shortage. Cigar exports will spike, although once Cuban cigars lose their naughty cachet they will have to compete with many excellent products produced by Cuba’s neighbors. And the music industry will thrive once it is coupled with international distribution—some talents just cannot be stamped out.

But what will happen to the rest of the populace? Many might go to work as the cooks, dishwashers, waiters, and hotel maids that will surely be in demand when Club Med comes to town. They’ll be much better off than they are now. But don’t expect that to stop the mainstream media from running nostalgic stories about the equality that should have, would have, and could have been had Marxism only been implemented properly.

William Frezza

Tue, 2012-01-31

Citation Source:

Forbes

http://www.forbes.com/sites/billfrezza/2012/01/31/cuba-where-sheep-are-trained-to-venerate-wolves/

How 'Europe' Became a Dirty Word in the U.S. Election

Iain Murray — Thu, 02 Feb 2012 16:44:05 +0000

Iain Murray

Mon, 2012-01-30

Citation Source:

BBC News

http://www.bbc.co.uk/news/magazine-16583813

Britain's Future Lies With America, Not Europe

Iain Murray — Wed, 28 Dec 2011 21:09:59 +0000

In 1952, then-U.S. Secretary of State Dean Acheson said that "Britain has lost an empire but has failed to find a role." Sadly for Britain, it decided to renounce its longstanding global cultural, legal and philosophical links to North America and instead looked for that role in Europe. Despite its geographic proximity to Britain, the Continent is nevertheless home to a host of cultures, legal systems and governing philosophies very different from those of traditionally liberal Britain. The consequences from that bad choice have bedeviled Britain for decades.

Now, as a result of Prime Minister David Cameron's stance at the recent EU summit, Britain and Europe are at a crossroads. America could help Britain make the right choice, to both countries' mutual benefit.

French President Nicolas Sarkozy helpfully summed up the results of this month's summit. He told Le Monde that there are now two Europes, one that "wants more solidarity between its members and regulation, the other attached solely to the logic of the single market." The Europe of regulation wants to press forward with deeper integration, stringent budget rules and a transition away from nation-state democracy.

The problem is that no one asked the peoples of Europe whether they wanted this. Nationalism is on the rise. Budget rules have been flagrantly ignored in the past, and the Franco-German plan does nothing to deal with the euro's structural problems, which make southern European countries grossly uncompetitive.

It is obvious to most outsiders that the euro zone's problems remain. The rating agencies have been unimpressed, and downgrades of most euro-zone members and their banks are now more likely than ever. This meant that Mr. Cameron was left with two choices: strike out for the shore or drown with the rest.

Perhaps the most interesting thing about Mr. Cameron's decision is the way he made it. It is now clear that he made an attempt—as he had promised British voters—to repatriate powers away from Brussels. This attempt was rebuffed with some prejudice. Given the outright hostility to Britain now evident in the European Union establishment, any further attempt at repatriation will be a non-starter. The implications are considerable.

The European Economic Community (EEC) for which the British signed up in a 1975 referendum—a community of free trade and cooperation, not supranational bureaucracy—is long gone. Worse, even today's less-palatable EU will soon no longer be on offer. Sometime in the next few years at most, Britain will likely face the choice between immersion in a powerful centralized European mega-state and full exit.

Most probably, the choice will be made in an atmosphere of crisis, with dramatic media coverage proclaiming impending doom for Europe. Britain today needs to think seriously about a Plan B, so that it does not have to take an option it will regret for lack of coherent alternatives.

Britain does have other choices. To find the country's new role, British leaders should look to North America.

Alone among EEC members, Britain narrowed some of its major trade networks when it joined. It also traded ordinary Britons' right to virtually bureaucracy-free movement, temporary or permanent, between the U.K. and British Commonwealth nations. This meant losing easy access to prosperous places like Canada, Australia and New Zealand, which enjoy plentiful jobs and high standards of living, for the largely theoretical right to take a job in Düsseldorf or Lille. While much trust was lost between Britain and the rest of the Commonwealth because of this move, strong personal, cultural and economic ties remain and could be revived. Ask the average Briton where he'd feel more at home, Paris or Toronto.

Canada and Australia have well-managed, vibrant economies. Both countries sit on huge deposits of natural resources of ever-increasing value. Britain's top-tier financial sector and still-excellent technical capabilities already play a role in Canada's economy. These ties could be much strengthened.

Britons also feel at home south of the Canadian border. Contrary to an oft-repeated myth, links between Britain and the United States are not reducible to the personal relationships between presidents and prime ministers. The U.S. and the U.K. have always been each other's primary financial partners. A few simple measures could substantially deepen this relationship, especially once Britain no longer needs to adhere to EU rules.

Foremost among these would be to admit a post-EU Britain to the North American Free Trade Agreement. Nafta is not a perfect vehicle, but it has the enormous advantage of already existing, with a nearly 20-year track record behind it. And unlike the EU, Nafta would not seek to impose a single social vision on its members. For example, Nafta has had no effect on Canadian social policy, which is very similar to Britain's—except for Canada having more revenue to pay for it all.

The ongoing euro crisis will not be resolved any time soon, and America will continue to be impacted by bank write-downs and declines in U.S.-European trade. Increasing U.S.-U.K. trade would be one relatively quick and effective way of taking up some of the slack.

Up to now, however, the U.S. has pursued a policy of propping up the euro while discouraging British independence from Brussels. This is incredibly short-sighted. Using the vehicles of the Federal Reserve and the International Monetary Fund to try to fill the gaping hole in Europe's finances will get everybody nowhere. Instead, British, American and Canadian policy makers (along with their Nafta partners in Mexico) should be taking the long view and preparing for a future in which the unsustainable euro zone inevitably collapses. Welcoming Britain back into the North Atlantic economic community would be a win-win for all involved.

Iain Murray

Thu, 2011-12-29

Citation Source:

The Wall Street Journal Europe

http://online.wsj.com/article/SB10001424052970204791104577110163558996698.html