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The Dangers of Naïve Faith in Big Government

August 15, 2018 in Economics

By Michael D. Tanner

Michael D. Tanner

Last week the New York Times reported that Puerto Rican
authorities had discovered at least ten trailers full of food,
medicine, and baby supplies that were left to rot as a result of
government ineptitude in the aftermath of Hurricane Maria. At this
point, news stories about such incompetence are so commonplace that
the Times’s scoop barely elicited a yawn.

Yet it does — or should — raise a question. Given
the ongoing evidence of government’s inability to carry out even
its most basic tasks, why do so many Americans want to expand its
control over our lives?

The democratic socialists who are all the rage in American
politics at the moment have long since run out of foreign examples
of socialist nirvana to point to. Venezuela is busy starving its
children, while the Danish prime minister is scolding American
liberals that “Denmark is far from a socialist planned
economy. Denmark is a market economy.”

Voters are increasingly
placing their trust in government to solve their problems, despite
its endless record of incompetence.

Nor does the record of government in this country provide much
more on which to hang faith in big government. Yet that
doesn’t seem to make much of a difference. Indeed, every
demonstrated government failure seems to lead inevitably to calls
for … more government.

Has Obamacare driven up the cost of health care while driving
down the quality of care? Is Medicare tens of trillions in debt?
Has the VA delivered substandard care to American veterans? Well,
then, the answer must be to put the government in charge of the
entire U.S. health-care system.

Have our government-run schools left millions of poor and
minority students behind, despite massive increases in spending?
Well, then, the answer must be to spend still more, while attacking
private alternatives.

Have more than 100 federal anti-poverty programs and roughly $1
trillion in anti-poverty spending failed to enable the poor to
flourish or become self-sufficient? Well, then, we must immediately
spend more money on ever-more-complicated schemes.

Is Social Security racing toward insolvency? Then we must expand
benefits and impose more restrictions on private retirement
options. Have government jobs programs failed to create meaningful
and productive work? We’ll just have the government guarantee
everyone a job. Have government subsidies and regulations driven up
the cost of everything from college to housing? I guess we’ll
have to regulate and subsidize more.

A naïve faith in big government isn’t strictly a
phenomenon of the Left, of course — especially in the age of
Trump. Conservatives who long decried government as unable to
manage a two-car funeral suddenly argue that it should determine
everything from whom we trade …read more

Source: OP-EDS

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Beware the “Unfair Trade” Trap in Any Brexit Deal

August 14, 2018 in Economics

By Simon Lester

Simon Lester

Understandably, the Brexit talks are hung up on big questions
such as the UK’s trade relationship with the EU Single Market and
what to do about the Irish border. Tariffs, the traditional focus
of trade policy, have played only a small role in the debate. UK-EU
tariffs are already at zero, so the typical trade negotiating
exercise of phasing out tariffs on particular products has not been
followed. The apparent assumption that any Brexit deal will
maintain zero tariffs is reassuring.

But this assumption may only apply to ordinary tariffs. There is
also a special category of “trade remedy” tariffs that apply to
so-called “unfair trade”, and the approach of a Brexit deal to
these tariffs has been less clear. Brits received a crash course in
the use and abuse of “trade remedies” last year, when there was the
prospect of the United States imposing tariffs on Bombardier
aeroplanes in amounts close to 300% — although, ultimately,
the US agency responsible decided not to impose them.

Trade remedies include tariffs imposed in response to import
prices that are deemed too low (anti-dumping duties) and to foreign
government subsidies (countervailing duties).

With regard to dumping, when people hear this word, they may
assume that it means something like the predatory pricing that
competition policy usually deals with. In reality, though, dumping
calculations do not assess actual predation; they often rely on
dubious facts or methodologies; and they are mainly an excuse for
protectionism. Any actual unfair pricing practices related to
foreign goods can be taken into account by domestic competition
policy laws; special anti-dumping laws for foreign goods are not
needed.

As for subsidies, they can be a source of market distortions,
but a better response is to address them directly in complaints at
the WTO, under its Agreement on Subsidies and Countervailing
Measures. National countervailing duty laws are subject to the same
political pressures that distort anti-dumping measures. If the goal
is to police global subsidies and get them removed, rather than
just impose a new tariff, the WTO may be the better forum.

Nevertheless, trade remedies are an established part of domestic
trade policy. Prior to Brexit, the UK relied on the EU to carry out
trade remedies. Now, the UK is setting up a Trade Remedies
Organisation of its own to oversee a domestic trade remedies
regime.

That takes us to Brexit, where negotiators need to decide what
to do with this issue in the context of UK-EU trade. Are tariffs on
this trade going to remain at zero for all products, or will an
exception be made for trade remedies? This exception would mean
that high tariffs could be imposed …read more

Source: OP-EDS

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Why Xi Jinping Thought Is a Threat to China's Future

August 14, 2018 in Economics

By James A. Dorn

James A. Dorn

This year marks the 40th anniversary of China’s opening to the
outside world in 1978. Following the disastrous Cultural Revolution
and Mao Zedong’s death in 1976, economic development, not class
struggle, became the primary aim of the Chinese Communist Party
(CCP). Deng Xiaoping allowed experimentation with market-based
alternatives to central planning, and for a while it appeared that
economic liberalization would help create a free market in ideas
with greater debate on political as well as economic issues. That
hope is rapidly disappearing with the rising power of China’s
president for life, Xi Jinping.

A new “little red” book, Thirty Chapters about Xi Jinping
Thought on Socialism with Chinese Characteristics for a New
Era,
compiled by the Publicity Department of the CCP’s Central
Committee, presents the politically correct view on Chinese-style
socialism. The book is being widely distributed within China, but
there is little room for serious debate. As the China
Daily
notes, the book “explains that Xi Jinping Thought is the
guiding thought that the Party and the country must follow
in the long run.”

Xi Jinping Thought is a 14-point manifesto to ensure CCP
“leadership over all forms of work.” It promises “continuation of
‘comprehensive deepening of reforms’ ”; propagates the long-held
myth that under “socialism with Chinese characteristics,” the
“people” are “the masters of the country”; asserts that China
should be governed by “the rule of law”; reinforces the post-Maoist
idea that “the primary goal of development” is to improve “people’s
livelihood and well-being”; and advocates creating “a peaceful
international environment.”

In March 2018, the National People’s Congress, by a vote of
2,958 to 2 (with 3 abstentions), added “Xi Jinping Thought” to the
Preamble of the PRC’s Constitution, alongside “Marxism-Leninism,
Mao Zedong Thought, and Deng Xiaoping Theory.” At the same time,
the NPC amended Article 1 by adding: “The defining feature of
socialism with Chinese characteristics is the leadership of the
Communist Party of China.”

China’s institutional
infrastructure is weaker than it might appear at first
glance.

If President Xi actually allowed the common people to be
“masters of the country,” adopted a genuine rule of law to limit
the power of government and safeguard persons and property —
including freedom of thought — then he would truly transform
China. Yet his actions and growing power do not instill much
confidence that the Middle Kingdom will couple economic freedom
with limited government and protect basic human rights. Indeed,
since Xi took over as paramount leader, economic reform has stalled
or even regressed, and suppression of human rights has
worsened.

Liu Xiaobo’s dream for “a future free China” looks dim. As a
signatory to Charter 08, he was imprisoned …read more

Source: OP-EDS

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U.S. Security Aid Enables Torture in Cameroon

August 14, 2018 in Economics

By A. Trevor Thrall, Jordan Cohen

A. Trevor Thrall and Jordan Cohen

A recent video showing the Cameroonian military
executing two women and two children by gunshot to the head shocked
many Americans, most of whom are certainly unaware that since 2002
the United States has trained nearly 6,400 soldiers, sold Cameroon
$6 million worth of American weapons, and
provided its military with $234 million in security aid.

Making matters worse is the fact that this sort of behavior is
nothing new in Cameroon. In 2017, Amnesty International revealed that the
Cameroonian military tortured prisoners in over 20 sites, and
recorded 101 cases of incommunicado detention and torture between
2013 and 2017. Chillingly, the report also notes that many of these
actions took place at the same military base used by U.S. personnel
for drone surveillance and training missions. During the
U.S. fortification of this site — known as Salak —
Amnesty International found that suspects were subjected to water
torture, beaten with electric cables and suspended with ropes,
among other horrors.

American counterterrorism policy should never allow the ends to
justify such means. Though unintentional, American counterterrorism
policy in Cameroon has done just that. Even after learning of the
crimes documented in the Amnesty report, the United States
continued to provide training and funding for the Cameroonian
military, enabling the ongoing torture and the execution of
innocent people.

Washington needs to take
steps to ensure that it does not enable the torture and oppression
of Cameroonians in the name of American national
security.

The rationale for American aid and assistance to Cameroon since
2001 has never been in question. Nigerian-based Boko Haram —
a group briefly affiliated with the Islamic State — is indeed a violent
group. It is responsible not only for the famous kidnapping of over
276 schoolgirls in 2014 but also for tens of
thousands of deaths in Nigeria (and many in Cameroon, as people
fled across the border from Nigeria to escape) since 2009. Beyond
this, Cameroon is Central Africa’s second-biggest economy after
Nigeria and is a development hub with regard to paved roads
and sea ports, both of which play a large role in the region’s
future. Though Boko Haram does not pose a direct threat to American
national security (it has never attacked the United States), it
certainly remains a destabilizing force in Africa today. As such,
making efforts to help local partners confront and manage Boko
Haram is a reasonable policy.

Unfortunately, the very states like Nigeria and Cameroon that
suffer from violent insurgencies and terrorism are also extremely
unreliable partners. Cameroon …read more

Source: OP-EDS

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Want to Make Child Care Cheaper and More Accessible? Deregulate It.

August 14, 2018 in Economics

By Ryan Bourne

Ryan Bourne

The push for federal subsidies for child care is gaining
momentum. Ivanka Trump has urged Congress to pass a tax deduction
for child-care expenses. During the 2016 presidential campaign,
both Hillary Clinton and Bernie Sanders proposed new federal
preschool and child-care programs. And recently, one commentator
even advocated
opening federally subsidized care centers nationwide
.

The concern is understandable. According to 2016 data compiled
by Child Care Aware, the average annual cost of full-time
center-based infant care
varies dramatically nationwide
, from $5,178 in Mississippi to
$23,089 in the District of Columbia. That amounts to 27.2 percent
of median single-parent family income in Mississippi and fully 89.1
percent in D.C. Such high burdens not only have a crippling
financial impact on poorer families but can make it uneconomic to
work and pay for child care at the same time.

Yet none of the proposed solutions to costly care would make it
cheaper. They would simply transfer the high costs to taxpayers. A
better starting point would surely be to ask: Why is child care so
expensive? One important answer, it turns out, is state-level
regulation. Staff-child ratio rules and worker-qualification
requirements, in particular, increase prices and reduce
availability, particularly in poor areas. These are things state
legislators can do something about.

Suppose a staff-child ratio is made more stringent, meaning that
fewer children can be cared for per staff member, and qualification
requirements for directors of infant centers are increased. These
could theoretically improve care by heightening the quantity and
quality of interactions with children. The regulations may even
convince wary parents that their child would be well cared for,
increasing demand for formal, center-based care.

But both regulations raise the cost of serving a given number of
children. These increased costs reduce supply, increasing prices
and encouraging parents to use less-costly alternatives. Child-care
centers could try to compensate by paying staff lower wages, but
this may mean the industry attracts lower-quality workers. They
might also try to hire cheaper, lower-quality support staff. Both
could actually lower quality, rather than increase it.

Empirical research analyzing differences across states shows
that the net effects of these requirements are costly and that
relaxing them would have beneficial effects without significantly
compromising quality. Mercatus Center economists Diana Thomas and
Devon Gorry, for example,
estimate
that loosening ratios by just one child across all age
groups would result in prices falling by 9 percent or more. That’s
over $2,000 per year for a family using full-time infant-center
care in D.C. Requiring lead teachers to have high-school diplomas
likewise raises prices by between 25 percent and 46 percent.

The rules the …read more

Source: OP-EDS

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Remembrance of War as Warning

August 13, 2018 in Economics

By Christopher A. Preble

Christopher A. Preble

Two articles in different weekend magazines have me thinking
about America’s many wars. David Montgomery in last weekend’s
Washington Post pondered the proliferation of war
memorials in our nation’s capital. The second, an excerpt
from C.J. Chivers’s new book in the latest
New York Timesmagazine, details the experiences of an Army
unit in Afghanistan’s Korengal Valley.

Some of those killed in that desolate distant place will be
remembered, indirectly at least, in a new Global War on Terrorism
Memorial. Montgomery reports that President Donald Trump
“signed legislation waiving the statutory 10-year post-war
waiting period so planning could begin.” He continues:

That memorial would accomplish a feat rarely if ever matched in
the annals of memorial building: commemorating a war before it is
over. It also epitomizes the new state of affairs, where endless
war means endless war-memorial building.

In a similar context, Chivers notes that the Afghan war will
enter its 18th year in October. As he explains, this means that
soldiers born after the U.S. military toppled the Taliban in 2001,
who were not even crying babes when the planes hit the towers, will
likely be serving there soon. And this is only one of several
initiated after 9/11. Chivers recites the grim statistics that, for
many Americans, have become akin to the music played in retail
stores: We’re vaguely aware that a song might be playing, but
unable to hum the tune, let alone recite the lyrics:

More than three million Americans have served in uniform in
these wars. Nearly 7,000 of them have died. Tens of thousands more
have been wounded. More are killed or wounded each year, in smaller
numbers but often in dreary circumstances…

Beyond the statistics, beyond the numbers killed and wounded,
Americans are similarly disinclined to weigh their deeper meanings.
Chivers spells those out, too.

On one matter there can be no argument: The policies that sent
these men and women abroad, with their emphasis on military action
and their visions of reordering nations and cultures, have not
succeeded. It is beyond honest dispute that the wars did not
achieve what their organizers promised… [They] have continued in
varied forms and under different rationales… They continue today
without an end in sight, reauthorized in Pentagon budgets almost as
if distant war is a presumed government action.

I wonder: Might our war memorials do more than memorialize war?
Might they also help us to avoid future ones?

***

It’s not the first time that I contemplated this
question.

Back in May 2004, I ventured down to the National Mall and
wondered “What kind of memorial will they build for the Iraq
war?
…read more

Source: OP-EDS

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A Modest US Concession Can Reduce Tensions in the South China Sea

August 13, 2018 in Economics

By Ted Galen Carpenter

Ted Galen Carpenter

Tensions between China and the United States are rising on
multiple fronts. The onset of dueling tariffs is threatening to
trigger a full-fledged bilateral trade war. Beijing’s anger
is rising about Washington’s growing attempts to upgrade
diplomatic and military ties with Taiwan. Finally, the two
countries are sparring dangerously over their respective policies
and goals in the South China Sea.

All of those disputes are dangerous, but the Taiwan and South
China Sea issues hold the most potential for poisoning the
bilateral relationship and escalating into war. Compromise
regarding Taiwan is inherently elusive, but a modest change in U.S.
policy could significantly dampen tensions in the South China Sea.
Specifically, Washington needs to dramatically reduce its
confrontational “freedom of navigation” patrols and
stop treating Beijing as a disruptive element, if not an outright
threat, in that region.

One longstanding reason for a large-scale U.S. naval presence in
the western Pacific is the importance of unimpeded shipping to the
health of the global economy. U.S. political and economic leaders
fret about potential disruptions to the flow of commerce and have
done so for decades. That is an understandable concern. The United
Nations Conference on Trade and Development (UNCTAD) estimates that 80% of world trade measured by volume
and 70% measured by value travels by sea.

The sea lanes transiting the South China Sea are especially
crucial arteries. UNCTAD’s analysis shows that one-third of
global shipping passes through that body of water. A conservative
estimate of the annual dollar value by the Center for Strategic and
International Studies’ China Power Project put the figure at $3.37
trillion, but concedes that other estimates are as high as $5.3
trillion. The CSIS study emphasizes that the waters “are
particularly critical for China, Taiwan, Japan, and South Korea,
all of which rely on the Strait of Malacca, which connects the
South China Sea and, by extension, the Pacific Ocean with the
Indian Ocean.”

U.S. leaders increasingly view China as a potential menace to
that commerce. The root of Washington’s suspicion is the
extent and intensity of Beijing’s territorial claims in the
South China Sea. It is not a new issue. In December 1947, the
government of the Republic of China (Chiang Kai-shek’s
regime) issued a map delineating an 11-dash line (later reduced to
a 9-dash line) that laid claim to more than 80% of the South China
Sea. The communist regime that overthrew Chiang two years later and
established the People’s Republic of China (PRC) subsequently
embraced that claim.

Until the past decade or so, though, Beijing’s audacious
territorial ambition remained little more than theoretical. The PRC
lacked the military power to make even a …read more

Source: OP-EDS

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Venezuela Is on the Verge of a Massive Humanitarian and Economic Collapse. the Culprit? Socialism.

August 13, 2018 in Economics

By Juan Carlos Hidalgo

Juan Carlos Hidalgo

The recent and bizarre alleged assassination attempt on
Venezuelan President Nicolas Maduro, complete with exploding armed
drones, remains mostly a mystery. Regardless of who perpetrated it
or why, however, the controversy is already allegedly being used by the regime
to persecute political enemies and distract from the serious
economic crisis besieging that country.

Despite constant condemnation from outside observers, the
situation in Venezuela continues to worsen. A top U.N. official
recently warned that the country is on the
verge of turning into “an absolute disaster in unprecedented
proportions for the Western Hemisphere.”

What was once Latin America’s richest nation, is now
sending hordes of refugees into neighboring countries. Since 2016,
nearly two million people have fled the country. Those unfortunate
enough to stay are facing life-threatening shortages of food and
medicine, one of the highest murder rates in the world
and an annual inflation rate that now sits above 40,000 percent.

The seeds of this crisis
were planted in 1999, but the chaos has flourished under President
Nicolas Maduro and his incompetent, corrupt ideologues.

A national survey in 2017 found that 87 percent of families live
below the poverty line. Nearly two-thirds of Venezuelans reported
losing an average of 25 pounds in the previous year —
some have called it the “Maduro
diet.”
The Pharmaceutical Federation estimates that
80 percent of drugs are not available in
drugstores. There are outbreaks of diseases that had been
eradicated or were under control, such as diphtheria, measles and
malaria.

Maduro has reacted to the collapse of the economy by
consolidating the dictatorship, intensifying human rights abuses (including
torture)
and further cracking down on the private sector. He
claims that his regime is the victim of an “economic war”
waged by the opposition and the United States. The reality is that
this man-made tragedy has a well-known culprit: socialism.

The seeds of this crisis were planted in 1999, when the late
President Hugo Chavez came to power. He soon went about rebranding
his nationalist Bolivarian revolution, proclaiming it 21st-century socialism. Chavez
dramatically increased the size of the government payroll and the
reach of social programs. In fairness, patronage had been a common
practice in Venezuela for decades. However, buoyed by more than
$1 trillion in oil revenues during his time in
office
, Chavez took that practice to unprecedented levels.
These social policies earned him popularity at home and plaudits
from abroad — including
from Nobel laureate Joseph Stiglitz
— even though they
were financially unsustainable. Today, an estimated 60 percent …read more

Source: OP-EDS

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California Senate Bill 1421 Helps Hold Bad Cops Accountable

August 11, 2018 in Economics

By Jonathan Blanks

Jonathan Blanks

Of all 50 states, California has enacted perhaps the most
stringent legislative barriers to police accountability. Not only
do state laws protect misconduct findings against officers from the
public, but the law also keeps that information out of the hands of
prosecutors who need to trust the police to ensure justice. A
prosecutor cannot put an officer on the witness stand that she
knows has a history of lying. But if that prosecutor cannot easily
get access to the officer’s disciplinary record, as California law
currently ensures, then she may be relying on bad police
information or, even worse, prosecuting an innocent person on the
word of a dishonest officer. As both a matter of principle and
practicality, the government should do its best to maintain the
honesty and integrity of its police officers.

For police to be effective in their job to protect and serve the
public, they require the trust of the communities they serve.
Without trust, witnesses will not cooperate and provide testimony
to bring criminal perpetrators to justice. Without witness
cooperation, perpetrator apprehension becomes less likely —
negating the greatest deterrent to committing crime — and
thus public safety suffers. When police are not held accountable
for their actions and misconduct against the community, then, the
public suffer twice: first, the community is damaged by the
misconduct itself and second, the community’s security is
compromised by the diminished trust that comes from misbehaving
police who remain on the streets.

Restoring community trust
in police and the justice system writ large will require more
transparency from departments and more accountability for those
officers who have abused their positions.

There is currently a bill before the California Legislature that
would ease the burden for the prosecutors and the public to know
whether the officers in their communities are trustworthy. SB1421
would require police departments to release information about,
inter alia, sustained findings of dishonesty in the course of
criminal cases and other instances of police misconduct. This bill
would also require police departments to release information about
serious uses of force, including officer-involved shootings, to
increase transparency.

Law-and-order conservatives can support SB1421 because it may
restore a level of legitimacy to criminal prosecutions. When
dishonest officers are found out after many years of misconduct,
hundreds or thousands of prosecutions in which they played a role
may be jeopardized because of their misdeeds. The criminal justice
system relies upon honest police officers and shielding the
dishonest among them, as California law currently does, undermines
the integrity and, ultimately, the final disposition of criminal
prosecutions.

Officers who honor the badge and have no history of lying or
other serious misconduct — which, in …read more

Source: OP-EDS

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Congress Missed Its Chance to Strangle the Imperial Presidency in Its Cradle

August 11, 2018 in Economics

By Ted Galen Carpenter

Ted Galen Carpenter

There are growing bipartisan
concerns
and warnings about the unrestrained power of
presidents to take the republic into war. That worry has surfaced
most recently with respect to U.S. military involvement in Syria
and the looming danger of war with Iran. Both Barack Obama and
Donald Trump committed U.S. military personnel to Syria, ostensibly
to repel the terrorist threat that ISIS posed, but also to assist
other insurgent forces attempting to overthrow Syrian dictator
Bashar al-Assad. Obama and Trump did so without seeking (much less
obtaining) a declaration of war—or even a more limited
congressional authorization.

Those episodes are just the latest manifestations of what
historian Arthur Schlesinger, Jr. labeled the imperial presidency more than four decades ago.
Schlesinger worried that the ability of presidents to launch major
military ventures on their own had grown steadily during the Cold
War and had reached the point that it undermined the constitutional
system of checks and balances. Matters have grown considerably
worse since he expressed such concerns. Indeed, the reality of an
out-of-control presidency regarding decisions of war and peace may
well have reached the point where it cannot be reversed.

The emergence of an imperial presidency reflects both executive
usurpation of the constitutional war power and congressional
abdication of that power. The most crucial episode was Harry
Truman’s commitment of U.S. troops to the Korean War in the summer
of 1950. True, there had been earlier episodes of executive
military missions with little or no congressional approval,
especially interventions in Latin America during the first decades
of the twentieth century. But there had never been anything close
to the scale of the Korean War. Not only the two world wars, but
smaller conflicts such as the Spanish-American War and the War of
1812, were authorized as the Constitution required: with a formal
declaration of war. Yet Truman sent more than three hundred
thousand U.S. military personnel to the Korean battlefield to wage
a full-scale war that ultimately lasted more than three years and
resulted in some thirty-six thousand American fatalities without
even asking for such a declaration.

The rule of law and the
health of the republic suffered a severe blow when the eighty-first
Congress failed to fulfill its constitutional duty and impeach
Truman.

The flaccid congressional response to Truman’s violation
of the Constitution was an omen of how subsequent Congresses would
fail to defend the war power that the founders explicitly entrusted
to the legislative branch. Members of the eighty-first Congress had
an opportunity to strangle the imperial presidency in its cradle by
impeaching the president if he persisted. But at …read more

Source: OP-EDS