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The UK and the EU Need a New Approach to Trade Remedies

January 16, 2020 in Economics

By Simon Lester

Simon Lester

Whatever your view is on the merits of the European Union, it would be hard to dispute that it is one of the most innovative international economic arrangements ever created. Its founders had a general vision, but it took a wide range of institutional and policy innovations during implementation to make it all work.

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Seeking institutional innovation

As the UK and the EU undertake the difficult process of undoing their relationship and developing a new one, there will be a need for some additional innovation. Trying to use traditional trade agreement obligations as a replacement for this deep and complex economic relationship will be insufficient.

One area of particular difficulty will be trade remedies, which include tariffs imposed in response to import prices that are deemed too low (anti-dumping duties) and to foreign government subsidies (countervailing duties).

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The term ‘dumping’ is sometimes thrown around loosely in trade policy discussions, but it has a technical meaning that involves a determination of whether the export price of a product is ‘unfairly’ low. A tariff can then be imposed to counteract the impact of this pricing. With regard to subsidies, there is a calculation of the amount of the subsidy, and, similarly, a tariff is imposed to counteract it.

The EU is one of the rare trade agreements that eliminates the use of trade remedies on internal trade. As a result, trade between the UK and other EU countries is not subject to trade remedies.

I have argued previously that tariffs imposed as trade remedies are unnecessary and problematic here, and should be kept out of the UK-EU economic relationship. This relationship would be permanently soured by recurring claims of ‘unfair trade’ by one side or the other.

Nevertheless, trade remedies are an established part of domestic trade policy and are difficult to avoid. Interest groups demand them, and it is hard to have a proper debate over their merits.

The UK has already set …read more

Source: OP-EDS

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Fixing FISA after the Carter Page Report

January 15, 2020 in Economics

By Julian Sanchez

Julian Sanchez

At a Senate Judiciary Committee hearing held shortly after the release of his scathinging report on the FBI’s investigation of erstwhile Trump aide Carter Page, DOJ Inspector General Michael Horowitz had a telling exchange with Sen. Marsha Blackburn (R-Tenn):

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Blackburn:  Let me ask you this, how often do you find mistakes in a FISA Application?

Horowitz: This is actually the first time my office has done a deep dive into a particular application. We’ve done higher level reviews on the FISA process and have found various issues at a higher level, but this is the first time we’ve been able to delve in this way.

Blackburn: It’s a fairly fairly unusual occurrence?

Horowtiz: Let me put it this way, I would hope so.

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Presumably Blackburn had expected a rather different response: That the embarrassing catalog of omissions, errors, and misrepresentations that the IG’s office found in applications for FISA surveillance of Page were extraordinary and unprecedented—suggesting some special vendetta against the Trump campaign.  Horowitz’s discomfiting, candid reply deserves to be unpacked, because it implies at least three important points worth bearing in mind.  

First, while surveillance of an advisor to a presidential campaign is certainly an unusual use of the Foreign Intelligence Surveillance Act, there is no reason to suppose that Page’s case is some sort of extreme outlier. On the contrary—as common sense would suggest and Horowitz’s report confirms—investigators were acutely aware that this was an enormously sensitive case certain to draw intense scrutiny. Thus the initial FISA application targeting Page, at least, was unusually detailed, and received additional layers of review before being submitted to the Foreign Intelligence Surveillance Court (FISC). It’s reasonable to infer, then, that many of the thousands of FISA applications filed each year have defects as bad or worse than those Horowitz identified here.

Second, if we want an explanation for those errors, Horowitz’s answer suggests one more systemic than a cartoonish anti-Trump vendetta: Nobody is doing the kind of thorough investigation that would find and correct those problems. In a criminal investigation, the purpose of a so-called Title III wiretap order is to obtain evidence for a criminal prosecution. While the initial application is submitted in secret, defense attorneys will be entitled …read more

Source: OP-EDS

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It’s Time to Make Congress Great Again

January 15, 2020 in Economics

By William Yeatman

William Yeatman

In contemporary American government, the presidency is dominating Congress in our system of separate-but-competing branches. This constitutional imbalance is a growing threat to liberty, and the only solution is to make Congress great again.

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Let’s start with first principles: The Constitution sets forth our governmental structure in its first three Articles.

Article I of the Constitution establishes Congress. Article II creates the presidency. And Article III renders the Supreme Court.

Did you notice that Congress is number one?

That’s not by accident. The Founding Fathers took it for granted that Congress is first among equals within our tripartite government.

Indeed, the Founders feared Congress most of all. In Federalist 47, James Madison worried that Congress’s “impetuous vortex” would swallow up the authority wielded by its coordinate branches.

Ultimately, the Founders feared most the concentration of power, which Madison described as being the “very definition of tyranny.”

For most of its history, Congress has lived up to these expectations. Now, however, our once-grand legislature is a shell of its former self.

With respect to current events, the best evidence of Congress’s fall is the ongoing impeachment debacle.

The Founding Fathers intended impeachment to be Congress’s ultimate weapon in a permanent competition with the presidency. In Federalist 66, Alexander Hamilton wrote that impeachment is Congress’s “essential check” on “encroachments” by the executive branch.

In accordance with these expectations, past impeachments have been part and parcel of structural battles between Congress and the presidency.

Consider President Richard Nixon. Sure, Congress put him through the impeachment wringer, but lawmakers also enacted reforms to shift the balance of power towards Congress. The Legislative Reorganization Act of 1970, for example, beefed up congressional staff and resources. And the Budget Impoundment and Control Act of 1974 attempted to reassert Congress’s power over the purse.

Similarly, the 19th century impeachment of President Andrew Johnson was emmeshed within a larger struggle between the elected branches of government.

Today’s impeachment of President Donald Trump, by contrast, has nothing to do with checking executive power. Instead, it’s all about winning the presidency on behalf of the two political parties.

Getting two-thirds of the Senate to go along with removing President Trump was never going to happen, so instead House Democrats are using the impeachment inquiry to sway next November’s vote.

For their part, Senate Republicans are embracing a trial, reportedly in the hope that a drawn-out …read more

Source: OP-EDS

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Amtrak's Big Lie

January 14, 2020 in Economics

By Randal O’Toole

Randal O'Toole

Recent articles in respected business journals report that Amtrak lost only $29.8 million in 2019 (out of $3.3 billion in total revenues) and that it expects to make a profit in 2020. This is a remarkable turnaround for a company that cost taxpayers more than $100 billion in its first 49 years of existence. Amtrak accomplished this using a simple yet apparently effective technique: It’s called lying.

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Amtrak’s accounting system is so full of lies that even the pro-passenger train Rail Passengers Association calls it “fatally flawed, misleading, and wrong.”

The first lie is that Amtrak counts taxpayer subsidies from the states as “passenger revenues.” According to Amtrak’s unaudited report, 17 state legislatures gave Amtrak a total of $234 million in 2019. The taxpayers in those states were never allowed to vote on these subsidies, and the vast majority don’t ride Amtrak. These subsidies are no more “passenger revenues” than the subsidies given to Amtrak by Congress. Deducting these subsidies from revenues immediately increases Amtrak’s 2019 losses to $264 million.

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An even bigger lie is Amtrak’s failure to report depreciation in its operating costs. Ignoring depreciation is an old railroad accounting trick aimed at misleading investors by boosting apparent profits.

A classic example was the Rock Island Railroad, which ran many fast passenger trains throughout the Midwest in the 1950s. Then Rock Island proposed to merge with another railroad, and to improve the merger terms it began deferring maintenance. By the time the federal government approved the merger, Rock Island’s tracks were so decrepit that its passenger trains ran as slow as 10 miles per hour. The other railroad backed out, and Rock Island shocked the nation by going out of business.

The Interstate Commerce Commission responded by requiring railroads to include depreciation among their operating costs. This represents the amount of money railroads have to spend or save to keep their infrastructure and equipment in good shape, ensuring that …read more

Source: OP-EDS

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Putin's Russia Is Not the Soviet Union Reborn

January 14, 2020 in Economics

By Ted Galen Carpenter

Ted Galen Carpenter

Key Point: U.S. foreign policy must catch up with the developments of the past thirty years and reassess its relationship with Russia.

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The American public and U.S. policymakers both have an unfortunate tendency to conflate Russia with the Soviet Union. That habit emerged again with the media and political reaction to the Helsinki summit between President Trump and Russian President Vladimir Putin. Trump’s critics accused him of appeasing Putin and even of committing treason for not doing enough to defend American interests and for being far too solicitous to the Russian leader. They regarded that as an unforgivable offense because Russia supposedly poses a dire threat to the United States. Hostile pundits and politicians charged that Moscow’s alleged interference in the 2016 U.S. elections constituted an attack on America akin to Pearl Harbor and 9-11.

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Trump’s supplicant behavior, opponents contended, stood in shameful contrast to the behavior of previous presidents toward tyrants, especially toward the Kremlin’s threats to America and the West. They trotted out Ronald Reagan’s “evil empire” speech and his later demand that Mikhail Gorbachev to tear down the Berlin Wall as examples of how Trump should have acted.

The problem with citing such examples is that they applied to a different country: the Soviet Union. Too many Americans act as though there is no meaningful difference between that entity and Russia. Worse still, U.S. leaders have embraced the same kind of uncompromising, hostile policies that Washington pursued to contain Soviet power. It is a major blunder that has increasingly poisoned relations with Moscow since the demise of the Union of Soviet Socialist Republics (USSR) at the end of 1991.

One obvious difference between the Soviet Union and Russia is that the Soviet governing elite embraced Marxism-Leninism and its objective of world revolution. Today’s Russia is not a messianic power. Its economic system is a rather mundane variety of corrupt crony capitalism, not rigid state socialism. The …read more

Source: OP-EDS

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Targeting the World’s Worst Religious Persecutors

January 12, 2020 in Economics

By Doug Bandow

Doug Bandow

Christmas is typically a joyous time for Christians. But many believers were not able to celebrate their most important holiday this past year. Or any other. By numbers, Christianity is the most persecuted faith.

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For example, confronting a population with more Christians than Communist Party members, the Chinese government has launched a brutal and intensive campaign against all faiths, especially when operating outside of government-controlled bodies. In the Middle East persecution is state policy in such nations as Saudi Arabia and Iran and favored activity of outside forces in Iraq and Syria.

No faith is exempt. Judaism remains a perennial target of the most malevolent actors in many societies. Yazidis, Baha’is, and other non-traditional religions are particularly vulnerable to Islamist extremists. Being the “wrong” kind of Muslim can lead to great hardship, even death, in Islamic nations.

The United States Commission on International Religious Freedom (USCIRF) makes an annual report on the status of religious liberty around the world. Persecution is surprisingly widespread. The situation is best in North and South America, though traditionally free countries, such as Canada, are moving in the wrong direction as socially conservative believers increasingly face exclusion and punishment. Africa, Asia, and the Middle East feature extensive religious cleansing and mass murder of people of faith.

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The State Department has named nine particularly egregious offenders as “Countries of Particular Concern.” The winners of the just concluded year’s contest for worst of the worst are Burma, China, Eritrea, Iran, North Korea, Pakistan, Saudi Arabia, Tajikistan, and Turkmenistan. Although rhetorically clumsy, the label is highly substantive, reflecting severe and systematic persecution. State generally follows the commission’s recommendations, though typically offers Realpolitik leniency based on other geopolitical considerations. USCIRF’s latest assessment details the offenders’ many crimes.

Burma. One of the most tragic cases covered by the commission, Burma, also known as Myanmar, seemed headed toward a democratic future four years ago when the military relaxed its …read more

Source: OP-EDS

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Be Skeptical about the Census

January 11, 2020 in Economics

By Matthew Feeney

Matthew Feeney

This year the Census Bureau will begin conducting the constitutionally required census, which takes place every 10 years. Many readers will dutifully fill out the forms, informing the bureau about their household and providing researchers with data. In May, the bureau will begin visiting those who haven’t responded to the census.

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But why wouldn’t someone want to contribute to social science and an accurate head count? The history of the census provides ample evidence to justify such reluctance.

The census sounds harmless enough. In a representative democracy like the United States where seats in at least part of the legislature are determined by population, it’s important to know how many people live in the country and where they live. The framers of the Constitution codified the decennial census as the mechanism for determining the number of seats each state occupies in the House of Representatives. Yet the information included in the census has been used to violate civil liberties, and it would be a mistake to assume similar abuses won’t occur again.

Governments often overreact in the wake of a crisis, and a crucial feature of such overreactions is the collection and analysis of information. During the first Red Scare, a 24-year-old J. Edgar Hoover was put in charge of the so-called “Anti Radical Division” formed by the Attorney General A. Mitchell Palmer after a string of anarchist bombings. Hoover, who previously worked at the Library of Congress, used his librarian skills in his hunt for aliens to deport. His team assembled hundreds of thousands of index cards associated with not only individuals but publications and organizations. These notecards aided Department of Justice officials, who conducted the so-called Palmer Raids in late 1919 and early 1920. The raids resulted in thousands of people being arrested without warrants, hundreds of whom were deported.

Such zeal for data collection was not isolated to the first Red Scare. Other crises have resulted in increased information gathering. And one of the best sources of information available to the government is the census.

After the Japanese navy’s air service bombed the U.S. Navy base at Pearl Harbor in December 1941, military officials reached for the census to facilitate one of the most shameful civil liberty abuses in American history: the internment of Japanese-Americans. A few months after the attack, President …read more

Source: OP-EDS

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Croatia Now Ranks among the Freest Countries in the World

January 10, 2020 in Economics

By Tanja Porčnik

Tanja Porčnik

With the rise of populism and hybrid forms of authoritarianism, people’s rights and freedoms are under assault in many corners of the globe. Unsurprisingly, among the countries with the most substantial deterioration in freedom in the last year are Angola, Venezuela and Tajikistan. The good news is that freedom has taken root in a diverse set of societies and it is spreading in many of them. Among them is Croatia, which for the first time ranks among the freest countries in the world by quartile.

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We recently released the fifth annual Human Freedom Index, the most comprehensive measure of freedom ever created for a large number of countries across the globe. With the index, my co-author Ian Vásquez and I cover 162 jurisdictions and use 76 distinct indicators of personal and economic freedom, applying data from 2008 to 2017, the most recent year for which sufficient data are available. Because of inherent value of human freedoms and their contribution to well-being, freedoms deserve the most vigorous defense. The report is co-published by the Fraser Institute in Canada, the Cato Institute in the United States and the Friedrich Naumann Foundation for Freedom in Germany.

In the recently released index, we again rank New Zealand and Switzerland as the two freest countries in the world while we again rank Venezuela and Syria last. Other selected countries rank as follows: Germany (8th place), Sweden (11), United Kingdom (14), the United States (15), Japan (25), Chile (28), France (33), Poland (40), Argentina (77), Kenya (79), Mexico (92), India (94), Brazil (109), Russia (114), Turkey (122), Saudi Arabia (149) and Iran (154).

How do the former Yugoslav republics rank? The freest country is Slovenia (35), followed by Croatia (37), Montenegro (53), Bosnia and Herzegovina (55), Serbia (58) and, the least free, North Macedonia (65).

The index confirms that global freedom remains in retreat as the average human freedom rating for 2017 again falls. At a country level, human freedom tumbles in more countries than not, with some 88 countries experiencing a decline in their freedom ratings compared to 70 countries increasing its freedom since last year. Within the latter group, Croatia experienced the 20th highest increase in the world by increasing its level of human freedom from 7.72 (43rd rank) in 2016 to 7.86 (37th rank) in 2017. Before …read more

Source: OP-EDS

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The Obama Administration Wrecked Libya for a Generation

January 10, 2020 in Economics

By Doug Bandow

Doug Bandow

Libya’s ongoing destruction belongs to Hillary Clinton more than anyone else. It was she who pushed President Barack Obama to launch his splendid little war, backing the overthrow of Moammar Gaddafi in the name of protecting Libya’s civilians. When later asked about Gaddafi’s death, she cackled and exclaimed: “We came, we saw, he died.”

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Alas, his was not the last death in that conflict, which has flared anew, turning Libya into a real-life Game of Thrones. An artificial country already suffering from deep regional divisions, Libya has been further torn apart by political and religious differences. One commander fighting on behalf of the Government of National Accord (GNA), Salem Bin Ismail, told the BBC: “We have had chaos since 2011.”

Arrayed against the weak unity government is the former Gaddafi general, U.S. citizen, and one-time CIA adjunct Khalifa Haftar. For years, the two sides have appeared to be in relative military balance, but a who’s who of meddlesome outsiders has turned the conflict into an international affair. The latest playbook features Egypt, France, Jordan, Saudi Arabia, the United Arab Emirates, and Russia supporting Haftar, while Italy, Qatar, and Turkey are with the unity government.

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In April, Haftar launched an offensive to seize Tripoli. It faltered until Russian mercenaries made an appearance in September, bringing Haftar to the gates of Tripoli. He apparently is also employing Sudanese mercenaries, though not with their nation’s backing. Now Turkey plans to introduce troops to bolster the official government.

Washington’s position is at best confused. It officially recognizes the GNA. When Haftar started his offensive, Secretary of State Mike Pompeo issued a statement urging “the immediate halt to these military operations.” However, President Donald Trump then initiated a friendly phone call to Haftar “to discuss ongoing counterterrorism efforts and the need to achieve peace and stability in Libya,” according to the White House. More incongruously, “The president recognized Field Marshal Haftar’s significant role in fighting terrorism and securing Libya’s oil resources, and the two discussed a shared vision for Libya’s transition to a stable, …read more

Source: OP-EDS

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Want to Create an Immigration System That Works? Look to Airbnb

January 9, 2020 in Economics

By Ryan Bourne

Ryan Bourne

Plenty of foreigners would value the opportunity to work in the UK for a short period. Lots of UK citizens, meanwhile, would prefer some time out of the labour market to upskill, care for a loved one, or even travel. Yet today these two groups have no means of trading their desires. We have what economists call “a missing market”.

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Economists view movements of people for work as synonymous with international trade. Barriers to immigration prevent workers moving to where they are most productive, making the global economy poorer. But as Brexit showed, completely “open borders” appears a politically unsustainable proposition.

Voters want migration controlled. They see their country more as a club than part of a global labour market. So although most evidence suggests immigration enriches the economy, voters place heavier weight on the welfare of adversely affected domestic citizens, the localised impact on public services, or perceptions of cultural damage, than on aggregate benefits including to migrants themselves.

Hence the Conservatives have pledged to end free movement for EU citizens after Brexit. They’ve promised instead an “Australian-style, points-based system”, applied equally to all countries. Our Government would rank potential migrants according to certain characteristics for determining visa eligibility, including educational achievement, language skills, work experience, or having a job offer.

Such a bureaucratic approach — setting conditions and allowing all who fulfil them to enter — is one of three broad ways to “control” immigration. The others are quotas (imposing a crude cap on immigrant numbers) or prices (some financial barrier to entry). Most real-life systems are hybrids of these approaches.

Economically, though, not all immigration controls are created equal. Capping numbers creates obvious absurdities. Suppose a limit is set at 99,999 people per year. Would the UK benefit if an international footballer was denied a Premier League job as number 100,000? The answer is, clearly, no.

Nor is the Government likely to do well at centrally planning the labour market through a points-based system. Already ministers are talking up a separate visa route for NHS nurses. Agriculture will surely follow. Whitehall has no knowledge of migrant’s potential for entrepreneurship, nor can it second-guess businesses’ needs in an environment in an ever-changing economy.

Is there a market-based immigration policy that could harness most of the benefits of immigration, address some stated public concerns, …read more

Source: OP-EDS