Cato Recent Op Eds

Syndicate content
The Cato Institute seeks to broaden the parameters of public policy debate to allow consideration of the traditional American principles of limited government, individual liberty, free markets and peace. Toward that goal, the Institute strives to achieve greater involvement of the intelligent, concerned lay public in questions of policy and the proper role of government.
Updated: 57 min 29 sec ago

Rethinking Standardised Test Scores

Mon, 06/18/2018 - 12:49

Corey A. DeAngelis

Standardised test scores have long been treated as the end-all-be-all of education. Researchers and the public at large generally use math and reading test scores to gauge education quality across countries, schools, and interventions. But a growing body of empirical evidence suggests that we have probably gotten it all wrong. Here’s why.

A study recently released by the American Enterprise Institute found that standardised test scores are weak predictors of long-term success. Specifically, the authors collected 34 studies that evaluated the effects of school choice programs on both test scores and high school graduation. The study found that 61 percent of the effects on math test scores — and 50 percent of the effects on reading test scores — did not successfully predict effects on high school graduation. Similarly large divergences were found between choice programs’ effects on student test scores and their effects on college enrollment.

But that’s not all. Standardised test scores do not appear to be strong predictors of other long-term outcomes either. I have compiled more evidence of these divergences that exist in the most-rigorous private school choice literature. My search revealed 11 disconnects between private schools’ effects on test scores and their effects on other arguably more important educational outcomes.

Focusing too much on test scores could compromise the character development necessary for true lifelong success.

For example, an experimental evaluation of a private school voucher program in Washington, D.C. found that winning the lottery to attend a private school had mixed effects on test scores, but over a 50 percent increase on students’ tolerance of others. Another rigorous evaluation of a voucher program in Milwaukee found no effects on reading test scores after four years. On the other side of the equation, my coauthor and I followed the same sample of students until they were around 22 to 25 years old and found that the Milwaukee program reduced the likelihood that they committed crimes as adults by over 50 percent. Other studies found significant divergences between test scores and outcomes such as charitable giving, political participation, effort, and happiness in school.

And divergences exist outside of the school choice literature as well. At least five studies that I know of using rigorous value-added methodology find disconnects between teachers’ effects on student test scores and their effects on student character skills such as behavior and effort. For example, Northwestern University professor Kirabo Jackson finds that teachers’ effects on student behavior are much stronger predictors of high school graduation than their effects on student test scores. Indeed, Jackson finds that teachers’ effects on student behavior are over 8 times as influential for high school graduation as effects on student test scores.

Of course, we cannot ignore the fact that some studies do find a link between test scores and long-term outcomes. For instance, prominent education scholars - Chetty, Friedman, and Rockoff — found that teachers that improve student test scores also tend to have positive effects on earnings later on in life. But that does not at all mean that their effects on test scores caused the effects on earnings. It is more likely that — in their sample — teachers that were good at shaping test scores were also good at shaping the non-cognitive skills necessary for success in the long-run, on average.

In other words, teachers that are good at improving standardised test scores can also be good at motivating students to work hard and to treat others with respect. Hard work and respect may be the skills that influence long-run outcomes such as earnings. But it is nearly impossible to accurately measure soft skills, which could be why we have found so many divergences in the literature.

Either way, what appears clear is that focusing too much on test scores could compromise the character development necessary for true lifelong success.

Corey DeAngelis is an education policy analyst at the Cato Institute’s Center for Educational Freedom, Washington DC.

Is Romney a Free Trader? or Trump’s Rubber Stamp?

Mon, 06/18/2018 - 08:18

Colin Grabow

In recent weeks President Trump has invoked his power to impose tariffs on national security grounds to launch a trade war with several U.S. allies. In response to the reckless abuse of this authority, a number of senators are attempting to apply a much-needed course correction by demanding that such tariffs be subject to congressional authority. The effort to pass such a bill, however, appears to face an uphill climb, underscoring the need for senators who grasp the importance of free trade.

While Mitt Romney has not weighed in on this dispute between Congress and the executive branch, previous rhetoric from the candidate suggests an unsettling alignment with the White House’s overall trade stance.

During the launch of his campaign Romney stated that Utah had a lot to teach the politicians in Washington, with the former Massachusetts governor and 2012 Republican presidential nominee crowing that the Beehive State “exports more abroad than it imports” — something he said that those in the nation’s capital had “backwards.”

The last thing Washington needs is another politician who subscribes to discredited theories about trade.

This message is mistaken in several respects, not least of which is the implication that his mercantilist views constitute a fresh approach in Washington. Such thinking certainly mirrors that of Trump, who regularly blasts bilateral U.S. trade deficits with various countries and claims that the overall trade imbalance “hurt[s] the economy very badly.”

Regrettably, too many U.S. political leaders misinterpret the trade account as an income statement, mistaking exports for earnings and imports for spending. The story of international trade, however, is much more complex.

Rather than driving Americans into debt, dollars sent abroad to purchase imports and foreign assets return to the United States as purchases of U.S. goods, services, and assets. China, blasted by Romney during the 2012 presidential campaign as a trade bogeyman, serves as a useful example.

The third-largest market for U.S. exports, China uses the dollars received from American imports to purchase vast amounts of goods, from Boeing airplanes to soybeans to over $54 billion worth of services in 2016 alone. Dollars also find their way back from China through a variety of other means including foreign direct investment .

This dynamic is repeated across the range of U.S. trading partners, with foreigners consuming over $2.2 trillion of U.S. goods and services and injecting over $373 billion worth of FDI into the United States in 2016 alone. Beyond the jobs provided by exports, such investment is estimated to provide employment for 6.8 million U.S. workers including over 42,000 Utahns.

That trade deficits and imports do not detract from the economy is also evidenced by the lack of a correlation between the trade balance and economic performance. The current economic expansion, for example, has correlated with an expanding trade deficit. In contrast, the trade gap dramatically tightened during the country’s last recession as the sputtering economy led to a severe drop in U.S. demand for imports.

While on the campaign trail, Romney should consider visiting auto parts manufacturer Autoliv. Employing over four thousand Utahns, the Sweden-headquartered company’s ability to invest millions in Utah is in large part made possible by the dollars it has obtained through Americans’ purchase of its products. The company’s ability to stay competitive, meanwhile, is no doubt bolstered by the approximately $600 million worth of intermediate goods it imports produce its finished products.

If Romney truly wishes to distinguish himself from the rest of the political pack he should start by discarding his misguided rhetoric and touting the virtues of international trade in all its dimensions — imports as well as exports.

The last thing Washington needs is another politician who subscribes to discredited theories about trade and sees salvation in the imposition of new tariffs. Of such legislators the nation’s capital is already running a large surplus.

Colin Grabow s an analyst at the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies.

Questioning the Case for War

Fri, 06/15/2018 - 10:30

Christopher A. Preble

While much of the world is focused on the war avoided (temporarily at least) on the Korean Peninsula, I’ve been thinking about the one in Iraq that we failed to stop fifteen years ago—and the one that some still want to fight in neighboring Iran. The occasion for this reflection is the upcoming release of Rob Reiner’s “Shock and Awe,” a film about Knight Ridder’s Washington Bureau, one of the very few American news organizations that got the Iraq story right.

Knight Ridder’s Washington Bureau was one of the very few American news organizations that got the Iraq story right.

McClatchy, which acquired Knight Ridder in 2006, hosted an advanced screening this week at the Newseum. A discussion with Reiner and the four real-life characters who are the film’s main characters followed: DC Bureau Chief John Walcott, and reporters Jonathan Landay, Warren Strobel, and Joe Galloway. (McClatchy has compiled several of the stories featured in the film here).

I’ll have more to say about the movie closer to its official release (scheduled for July 13; it will be available on DirecTV starting on June 14), but two things from the movie and ensuing discussion particularly resonated with me: one, the deliberate and often deceptive way that hawks divulge information to build the case for war; and, two, the pressure that is exerted upon those willing to question it.

One of the touchstones of Knight Ridder’s journalism was the inclination of its reporters to challenge conventional wisdom and to seek out alternative explanations. In the post-screening discussion, Walcott explained that too many reporters rely on the statements of senior government officials, serving more like stenographers than thoughtful individuals attempting to uncover the truth. News organizations tend to assess the quality of information based on the seniority of the persons doling it out. In fact, the inverse may be closer to true: mid-level personnel with comparable access, but who are less invested in a particular course of action, are likely to divulge information that strays from the official narrative.

Such skepticism is particularly important in the run-up to war. The typical technique for discrediting the opposition often hinges on the claim that outsiders, lacking access to classified information, don’t have sufficient grounds to question the war advocates’ claims. Instead, we are all expected to defer to the judgement of a select few who purportedly have all the relevant facts.

But the hawks often determine what is “relevant.” In his reporting at the time, Landay noted that many within the U.S. intelligence community were highly skeptical of Bush administration officials’ claims. Whereas Secretary of Defense Donald Rumsfeld was dismissing the need for “concrete evidence” of Saddam Hussein’s WMD plans or ties to terrorists, “U.S. intelligence officials,” Landay wrote, “said evidence actually suggested that Saddam had been careful to keep al Qaida at arms’ length to avoid giving Bush an excuse to invade Iraq.”

Landay’s story, dated September 12, 2002, countered Bush’s claims of an incipient Iraqi nuclear weapons program in the lead paragraph:

President Bush said…that Iraq could make a nuclear bomb within a year after getting enriched uranium or plutonium. But Saddam Hussein has been unable to get that nuclear fuel for more than a decade.

Later in the story, Landay observes:

In fact, Bush’s charge … that Iraq has attempted to buy high-strength aluminum tubes for enriching uranium indicates that the country has only begun the years of work needed to reach production.

The evidence of a concerted campaign by the Bush administration to shape—and indeed, misshape—public attitudes on the nature of the Iraqi threat was equally apparent to Warren Strobel. “The administration squelches dissenting views,” he wrote, and:

intelligence analysts are under intense pressure to produce reports supporting the White House’s argument that Saddam poses such an immediate threat to the United States that preemptive military action is necessary.

“Analysts at the working level in the intelligence community are feeling very strong pressure from the Pentagon to cook the intelligence books,” said one official, speaking on condition of anonymity.

A dozen other officials echoed his views in interviews with Knight Ridder. No one who was interviewed disagreed.

Some of the more pernicious attempts to build the case for war with Iraq capitalized on Americans’ understandable post-9/11 anxiety. For example,

President Bush said that a senior Al Qaeda leader received medical treatment in Baghdad this year—implying larger cooperation—but he offered no evidence of complicity in any plot between the terrorist and Saddam’s regime.

Rumsfeld also suggested that the Iraqi regime has offered safe haven to Osama bin Laden and Taliban leader Mullah Mohammed Omar.

Strobel remained unconvinced:

While technically true, that too is misleading. Intelligence reports said the Iraqi ambassador to Turkey, a longtime Iraqi intelligence officer, made the offer during a visit to Afghanistan in late 1998.

In fact, U.S. officials said, that there is no ironclad evidence that the Iraqi regime and the terrorist network are working together, or that Saddam has ever contemplated giving chemical or biological weapons to Al Qaeda, with whom he has deep ideological differences.

Such skepticism is often unwelcome, however. The film portrays instances in which Knight Ridder papers refused to run the Washington bureau’s dissenting stories, opting instead to follow the lead of the New York Times, which mostly repeated the Bush administration’s line. The movie singles out the Philadelphia Inquirer, but Walcott admitted that other papers were equally reluctant to go against the grain. The American people wanted blood after 9/11, and Afghanistan wasn’t sufficient. Someone else had to pay, too. Those who pointed out that Saddam Hussein’s Iraq had nothing to do with 9/11 were, in effect, siding with a brutal dictator who terrorized his own people.

In another poignant moment, Strobel (played by James Marsden) is confronted by family members at a weekend cookout. They note that Knight Ridder was practically alone in questioning the Bush administration’s case for war with Iraq, and thinly suggested that he was both unpatriotic and naïve. You were born at the time of the Cuban missile crisis, his father reminds him. Do you want Saddam Hussein to threaten us today, as the Soviet Union threatened us then?

Those who tried to stop the United States’ march to war in 2003 can no doubt recall many similar incidents, when friends and spouses doubted our judgement, and even our motives. One would hope—given what we now know about that war and its phony pretexts—that Americans will be more skeptical of those now making the case for “regime change” in Iran.

Christopher Preble is vice president for defense and foreign-policy studies at the Cato Institute and the author of The Power Problem: How American Military Dominance Makes Us Less Safe, Less Prosperous, and Less Free.

The DACA 'Compromise' Bill Is the Worst Immigration Legislation in a Century

Fri, 06/15/2018 - 08:51

Alex Nowrasteh

Ever since President Trump set in motion the gradual termination of the Deferred Action for Childhood Arrivals program, which gave work permits to young immigrants brought here illegally when they were children, Congress has been stalled on solving the situation of these 700,000 so-called Dreamers.

After much Republican intraparty wrangling, Speaker Paul D. Ryan just agreed to bring two bills to the floor of the House of Representatives.

He released one of those bills Thursday. The other has been kicking around Washington for a while: the Securing America’s Future Act. The White House supported an earlier version of it, stating that it “would accomplish the President’s core priorities for the American people.” The problem is that even if the SAF Act doesn’t pass, its draconian cuts to immigration will be the Republican starting point for all future negotiations.

It’s misleading to even call the SAF Act an immigration bill. As a matter of rhetoric, it an anti-immigration piece of legislation.

The primary outrage is this: SAF won’t give Dreamers green cards. Instead it grants renewable residency permits — with no pathway to citizenship — to some DACA recipients. Worse, the restrictions are so onerous that few Dreamers could ever spend a year as a stay-at-home mother, risk starting a small business or even become a priest. That’s because this bill would make it a crime for anyone holding a SAF permit to have an income below 125% of poverty level.

The House sponsors of the SAF Act claim it will cut only about a quarter of all green cards, but they are significantly understating its effect.

SAF cuts the number of legal immigrants by about 40% initially, and that number could reach 50% over 10 years. It cancels the diversity green card lottery, eliminates all family-sponsored immigration categories except for the most immediate relatives of U.S. citizens, and cuts to the bone the number of asylum seekers who will be admitted.

The SAF Act also purports to increase the number of highly skilled immigrants allowed into the U.S., and allocates 55,000 additional green cards toward that. But of adults who immigrated on a family or diversity visa in 2015, 47% had a college degree. The impact of any cuts to those programs will far outweigh the added employment visas.

This bill also poses major trouble for the families of legal immigrants. Under SAF, legal immigrants who already have a green card would be mostly unable to bring their foreign-born spouses or children to the U.S. Additionally, immigrants who have waited for decades for a type of green card that would be eliminated by the SAF bill would suddenly have their applications canceled and their fees confiscated. So much for respecting immigrants who played by the rules.

Republicans have for years claimed that they oppose only illegal immigration, and President Trump, as a candidate said he wanted immigrants “to come in, but they’ve got to come in like you: legally.” The SAF’s sponsors are clearly not on the same page.

It’s misleading to even call the SAF Act an immigration bill. As a matter of rhetoric, it’s an anti-immigration piece of legislation. If a Democratic politician sponsored a bill to cut legal gun ownership by 40%, Republicans would rightly call it an anti-gun bill. The same rules ought to apply here.

In addition, even though the number of illegal border crossings is at a 46-year low, the bill would spend about $124 billion over the next five years on border security. That’s about seven times what it cost to fund the Border Patrol for the five years from 2012 to 2017.

Congress hasn’t considered an immigration bill this bad since the 1920s, when it passed the Emergency Quota Act in 1921 and the National Origins Act in 1924. Those laws ended most immigration from Europe, slashing it by about 75%. The Great Depression followed soon after, leading to further tightening of immigration laws.

Those shameful bills ended the United States’ traditional role as a refuge for the oppressed peoples of the world just as communism, fascism and Nazism began to rise in Europe. And their effect endured. It wasn’t until this century that the number of new green cards issued annually consistently matched the decade before World War I — about 1 million a year.

Even if that sorry history doesn’t repeat itself, the SAF Act is still the worst immigration bill introduced in almost a century. Republican hardliners say it’s a compromise — helping out Dreamers in return for more border security. It’s not. It’s a strategy for deporting Dreamers over a longer period of time while cutting legal immigration in half, canceling the applications of those who have patiently waited for a green card, and wasting $124 billion.

Alex Nowrasteh is the senior immigration policy analyst at the Cato Institute.

Trump May Well Have a Point over Trade but It Doesn't Mean He's Right

Fri, 06/15/2018 - 08:46

Ryan Bourne

‘Well, he’s got a point.” One hears that phrase a lot about President Trump. It explains his appeal. Highlighting self-evident truths others gloss over — that some illegal immigrants commit gruesome crimes, for example — he gives voice to fears usually left unsaid. Those who reactively deny it look stupid. Those who describe it in broader context? Well, “if you’re explaining, you’re losing”, as President Reagan once said.

Before and after the G7 summit,the President faced righteous criticism from international leaders for deciding not to renew exemptions for the EU, Canada and Mexico from his steel and aluminium tariffs. He responded by pointing out how heavily protected Canadian dairy and EU car markets are.

“We have put up with Trade Abuse for many decades — and that is long enough,” he tweeted. His tariffs, and consideration of extending them to cars were, he claimed, really a response to this protectionism. Ideally, all countries would eliminate tariff and non-tariff barriers, he mused. But in the absence of that, he just wants reciprocity and a level playing field.

Who can argue with that? It all sounds reasonable. And, importantly, he does have a point! Canada’s dairy market is heavily insulated, with a “supply management” system incorporating tariff rates of near 300pc on dairy imports beyond their quota of 10pc market share. The European Union does impose 10pc tariffs on imports of American cars while the US charges only 2.5pc the other way (though truck tariffs are higher in the US than EU).

Trump, therefore, gives voice to the US car and dairy industries who want more freedom to export. These facts also allow him to take the moral high ground, creating space for Republican free-traders to justify new US trade barriers as a short-term price to pay for a freer future global trading environment.

But should we really believe that is what Trump desires? There’s not much evidence to suggest so. Remember, his steel and aluminium tariffs have been legally justified on “national security” grounds, not tit-for-tat protection. Why Canada and the EU opening up their dairy and car markets would resolve national security concerns about importing steel and aluminum inputs from allies is anybody’s guess.

If Trump were actually concerned with reciprocity, he wouldn’t cherry-pick individual sectors, but look at the bigger picture. This shows international tariffs have been falling worldwide over the past three decades as a result of painstaking multilateral negotiations and free trade deals.

According to World Bank data, the overall weighted mean applied tariff rate for the US and EU are near identical at 1.6pc, and even lower in Canada at 0.8pc. Mexico is higher at 4.4pc, but given this has tumbled from 15.5pc just 15 years ago, and many goods are traded tariff-free with the US due to Nafta, focusing on these countries seems an odd place to start to free up global markets.

True, the EU’s variance in tariffs is higher, meaning it imposes much higher tariffs in certain areas. But if Trump really had free-trade ambitions, would he not also bring some protected US sectors to the bargaining table to trade-off for liberalisation elsewhere?

Why not the US sugar industry, where interventions, tariffs and quotas raise the American sugar price to almost double the world price, and significantly block imports from the Caribbean? Or how about reducing clothes tariffs, currently kept high so the US textiles sector gets leverage in US free trade agreements to insist other countries can export their clothes tariff-free only provided they use US inputs? No, Trump sees the vested interests in other countries as a problem, but domestically they are just fine.

This, I’m afraid, is the Trump trade world-view personified. His focus on economically-meaningless bilateral trade deficits, and on producers, rather than consumers, represents the “exports good, imports bad” mercantilist mindset. The President really does not see trade as mutually beneficial exchange, but a game played between nations where some win and others lose, depending on how much you sell and how much you buy as a country.

Perhaps the best insight that deep down his administration does not believe in the free trade ideal was his adviser Peter Navarro’s recent defense of the tariffs. Rather dubiously, he claimed that they had already encouraged a new aluminum mill in Kentucky and restarted steelmaking facilities in Illinois.

But what was absent from his analysis was the real eye-opener, with no mention at all of the impact raising the steel price will have for the 6.5m workers in steel-consuming industries. Those looking for evidence the administration saw tariffs as a short-term necessary evil in Navarro’s musings would be disappointed.

By and large, of course, the economic case for free trade applies whatever other countries decide to do. Tariffs harm domestic economies by generating investment-sapping uncertainty, raising prices for consumers, and undermining overall efficiency (by insulating producers from global competition and raising input costs). As damaging as it is to European steel and aluminum exporters to see new US tariffs then, the EU should not have reacted by jacking up tariffs on US products such as bourbon. This was a dumb move when Trump’s priors suggest he would love any opportunity to ramp up tariffs in other areas.

Sadly though, politicians can’t resist tit-for-tat retaliation to avoid looking bullied. Sure, Trump is the clear aggressor here. But faced with the opportunity to call his bluff and take him up on eliminating more tariffs, EU and Canadian politicians seemingly lose the free trade mantras they eulogize and seek to act to protect their industries, not customers. Perhaps Trump has a point again that they aren’t the free traders they claim to be. But acting on that point now threatens a wholly unnecessary, full-blown trade war.

Ryan Bourne is the R Evan Scharf Chair for the Public Understanding of Economics at the Cato Institute.

Is NATO Pushing Russia Towards Retaliation?

Fri, 06/15/2018 - 08:02

Ted Galen Carpenter

The United States and its NATO allies continue to find ways to antagonize Russia. The latest provocation is a request from Norway to more than double the number of U.S. troops stationed on its territory and deploy them even closer to the border with Russia. Granted, the numbers involved are not large. There are currently 330 American military personnel in the country on a “rotational” basis. Oslo’s new request would increase the number to seven hundred. If the Norwegian government gets its way, the new troops would be stationed in the far north, barely 260 miles from Russia, in contrast to the existing unit in central Norway, several hundred miles from Russian territory.

The rotational aspect theoretically complies with Norway’s pledge to Moscow in 1949 when it joined NATO that Oslo would not allow U.S. bases on its territory. Indeed, Foreign Minister Ine Marie Eriksen Soriede reiterated that assurance in connection with the new troop request, contending that there would be “no American bases on Norwegian soil.” Making their official status rotational supposedly means that the troops are there only on a temporary basis. It is a cynical dodge that fools no one—least of all Vladimir Putin and his colleagues in the Kremlin.

Norwegian officials also insisted that the new deployment was not directed against Russia. That assurance has even less credibility than the rotational rationale. Oslo’s request came just days after nine nations along NATO’s eastern flank, including Poland, the Baltic republics, and Romania called for a larger Alliance (meaning largely U.S.) military presence in their region.

The United States and its NATO allies continue to find ways to antagonize Russia.

In addition to the move to increase the number of U.S. troops in Norway, major NATO military exercises (war games), code-named Trident Juncture 18, are scheduled for October. The focus of those exercises will be central and northern Norway, and they will involve thirty-five thousand troops, seventy ships, and 130 aircraft. Nevertheless, Soriede insisted that she couldn’t see “any serious reason why Russia should react” to Oslo’s proposal for an enhanced U.S. military presence.

She should perhaps receive credit for being able to make such a statement with a straight face. But such transparent dishonesty is a longstanding feature of NATO’s behavior toward Moscow. Even during the Cold War, Western officials routinely insisted that the Alliance was not directed against the Soviet Union. In their more candid moments, though, they conceded the obvious—that NATO was a military mechanism to contain Soviet power. Granted, it was not the sole purpose. Lord Hastings Ismay, NATO’s first secretary general, stated that NATO was created to “keep the Soviet Union out, the Americans in, and the Germans down.” The first objective, though, seemed to be the most important.

Containment of the Soviet Union made sense to keep democratic Europe out of Moscow’s geopolitical orbit, and NATO was an important component of that strategy. But Western leaders continued to apply that model to a noncommunist Russia once the Cold War ended. Indeed, they intensified the containment rationale by adding new members throughout Eastern Europe and expanding the Alliance to Russia’s border. Those actions were taken despite verbal assurances from Secretary of State James Baker and West German foreign minister Hans-Dietrich Genscher at the time of German reunification that NATO would not expand beyond Germany’s eastern border.

Throughout the Alliance’s inexorable move eastward, Western officials and pundits insisted that NATO enlargement was not directed against Russia. Indeed, some members of the Western foreign-policy community argued that the move would benefit Russia by erasing Cold War dividing lines and increasing Eastern Europe’s political and economic stability. One wonders whether Westerners thought that the Russians were gullible enough to believe such absurd arguments, or the proponents actually believed their own propaganda.

NATO leaders continue to insist that the Alliance has no offensive intent against Russia or that the Alliance seeks to undermine Moscow’s interests. But NATO’s behavior belies such assurances. The interventions in Bosnia and Kosovo that weakened and eventually truncated Serbia, a longstanding Russian ally, was certainly not a friendly act. Stationing Alliance (most notably U.S.) forces and weapons systems in NATO’s easternmost members, (a process that has accelerated markedly since Russia’s annexation of Crimea in 2014) likewise is provocative.

Yet Western leaders and publics act as through Russia has no legitimate reason to react negatively to such moves, as Soriede stated explicitly regarding the proposed increase in the U.S. troop presence in her country. NATO has conducted several large-scale military exercises in Poland and other member states, as well as naval maneuvers in the Black Sea near Russia’s important naval base at Sevastopol. Again, the Russians apparently are wrong to regard such actions as provocative and threatening.

U.S. and NATO leaders need to adopt a much more realistic attitude. Any nation would regard NATO’s behavior as decidedly unfriendly, and even menacing, if conducted on its frontiers. Continuing such actions while cynically denying their hostile intent could easily lead to miscalculation and a catastrophic confrontation. As a first step toward mending ties with Moscow, the Trump administration should summarily reject Norway’s unnecessary request for more U.S. troops.

Ted Galen Carpenter, a senior fellow in defense and foreign-policy studies at the Cato Institute and a contributing editor at the National Interest, is the author or contributing editor of twenty books on international affairs, including five books on NATO.

A Naval Race with China Is Unnecessary and Will Likely Backfire

Thu, 06/14/2018 - 09:19

John Glaser

WASHINGTON - Policymakers increasingly perceive China’s growing naval strength in Asia as an acute threat to American interests that must be met with a corresponding surge in U.S. naval power in the Pacific.

However, precisely what tangible threat a few more Chinese frigates on the other side of the planet poses to U.S. national security interests is rather difficult to identify. And exactly what objective is supposed to be achieved by boosting the U.S. Navy’s presence in the region is something of a mystery.

Hawks point to Chinese territorial claims and naval activity in the South China Sea as a signal of Beijing’s growing ability to undermine freedom of navigation. But capability does not equal intent. Indeed, any interruption in commercial shipping in the Pacific would be devastating for China’s own economic and security interests.

China’s naval expansion threatens not so much America’s security, but its prestige.

China is the largest trading nation in the world and relies on the South China Sea for almost 40 percent of all its trade, valued at roughly $1.5 trillion per year. If anything, Beijing’s more assertive posture suggests a determination not to close off vital sea lanes, but to keep them open.

It is notable, in addition, that the United States perceives a grave threat from China’s naval expansion that China’s own neighbors seem to miss.

Average defense spending as a percentage of GDP among the 11 East Asian states along China’s periphery has declined by almost half over the past 30 years. Moreover, none of them have engaged in their own freedom of navigation operations to directly challenge China, despite encouragement to do so from Washington.

The Philippines had a major dispute with China over maritime and territorial claims, which led to multiple naval standoffs, but now Manila appears to be buddying up to Beijing, not balancing against it. If China’s own proximate rivals don’t see a major threat, why should we?

Even stipulating that Chinese naval power is a problem, one is still left to wonder what effect beefing up the U.S. Pacific Fleet is expected to have on Beijing’s calculations.

Are we to believe Beijing will respond to a proliferation of U.S. warships off its shore by slashing its naval budget, decommissioning scores of ships, and eagerly forfeiting its regional ambitions?

There is a glaring logical contradiction in depicting China as a nascent peer competitor doggedly seeking to supplant America as the global juggernaut by whatever means necessary, but which will abruptly cower in response to a mild U.S. naval buildup in the Pacific Ocean.

More likely, cranking up a Sino-American naval competition will generate heightened fear and suspicion in Beijing.

Combined with President Trump’s threat of a trade war and his pugnacious foreign policy rhetoric, that is a recipe for inducing a more aggressive Chinese posture and locking the 21st century’s two major powers into a new cold war.

The truth is that China’s naval expansion threatens not so much America’s security, but its prestige. China’s rise is a symbolic threat to America’s status as the world’s sole superpower, the indispensable nation. We would be well advised to curb such pretensions.

China is most interested in continued economic growth and in gaining international status, respect, and recognition. It is far better to accommodate such benign objectives than to inflate the threat from China and ignite a bitter great power rivalry that neither country can win.

John Glaser is director of foreign policy studies at the Cato Institute, a leading Washington think-tank.

AT&T Ruling Tells Government: It's Not 1948 Anymore

Wed, 06/13/2018 - 14:10

Walter Olson

Judge to federal government: The entertainment business has moved on from the Truman era, and so has antitrust law.

In 1948 the US Supreme Court ordered Hollywood studios to sell their movie theaters, following the then-popular idea that the government should police marketplace competition by restraining businesses’ vertical integration — or as we might put it these days, by ordering content kept separate from distribution.

The surprise in 2018 is not so much that US District Judge Richard Leon rejected the government’s challenge to the $85 billion AT&T-Time Warner merger. That much was expected by most antitrust watchers. The shock came from the stinging way he rejected the government’s evidence — using language such as “gossamer thin” and “poppycock.”

[pullquote[The entertainment business has moved on from the Truman era, and so has antitrust law.[/pullquote]

That surprise wasn’t an unpleasant one for many. Media and telecom stocks rose on Wall Street, with the decision widely seen as green lighting further hookups of cable and wireless distributors with content providers, such asa potential Comcast deal for 21st Century Fox.

While “horizontal” challenges to mergers between competitors who sell to the same group of customers are alive and well, the government hadn’t gone all the way to a court decision in a vertical merger case in 40 years (and it lost then, too). It’s been more than 30 years since the government successfully opposed a vertical merger, though it’s sometimes negotiated to attach strings in order to proceed.

Until recently, media companies could do well at either the content end — like Time Warner, with its properties such as CNN, Turner and HBO — or at the distribution end, like AT&T with its vast consumer base including cell phone and satellite users. You could be good at making shows even if you weren’t good at getting to know individual customers and their data.

Now, amid rapid technological change, the advantage has shifted to companies that can do both, commissioning original programming while also knowing a lot in real time about who is watching and how, making informed predictions about what they might want to watch tomorrow or next year. Netflix, Hulu and Amazon, for example — with Facebook, Google and others coming up fast — can do both. Enterprises of this sort, the judge wrote, “have driven much of the recent innovation in the video programming and distribution industry.”

The government’s own merger guidelines describe vertical mergers as “not invariably innocuous,” a backhanded phrasing that points to the uphill legal burden of showing that the case at hand was in some way exceptional. And while the Department of Justice tried that, as with one theory about how existing distributors such as cable companies would be squeezed in negotiations, the judge found after a full trial it hadn’t come near to proving its case. Sample problem: It had analyzed as a market a slice of the TV business so narrowly defined that it excluded Netflix and the other new(ish) providers.

Meanwhile, AT&T’s lawyers pointed to uncontested big savings the merger would yield for the company and its customers: The government’s own expert acknowledged that customers of AT&T’s DirecTV and U-verse services would “pay a total of about $350 million less per year for their video distribution services.” Perhaps bigger, the combination would promote innovation. To quote the opinion: “The merged entity could, for instance, gather and edit individual news clips from CNN throughout the day — all tailored to a given user’s interests — and deliver that news to the wireless customer for viewing on his or her fifteen-minute break.”

The days of the Hollywood studio system are long gone, and so is the old antitrust law. It should be too late for Washington to block this deal at the altar; even trying would be as futile as attempting to separate Net from Flix or You from Tube.

Walter Olson is senior fellow at the Cato Institute’s Robert A. Levy Center for Constitutional Studies.

Afghan Ceasefire an Opportunity to Improve U.S.–Pakistan Relations

Wed, 06/13/2018 - 09:27

Sahar Khan

On June 7, Afghan President Ashraf Ghani announced a unilateral ceasefire with the Taliban from June 12 to 20, which the U.S. said it would honor. The Taliban followed suit, announcing a 3-day ceasefire coinciding with the Afghan government’s.

Why it matters: The ceasefire’s outcome will almost certainly impact the Afghan-led and Afghan-owned peace process: As the Taliban’s first ceasefire since the Afghanistan War’s inception in 2001, it indicates a strategic shift for how the group might engage in talks with the Afghan government. But the ceasefire also presents an opportunity for the U.S. and Pakistan to improve their bilateral relationship, which has hit a nadir.

Since 2001, U.S. administrations have repeatedly asked Pakistan to use its leverage against the Taliban to get them to the negotiating table, even as its influence over the Taliban has waned over the past decade. This time around, Pakistan, along with UNSC members, helped persuade the Taliban to reciprocate Ghani’s temporary truce. That’s a positive sign for Pakistan, which has always sought a prominent role in U.S.-Afghan peace talks.

While the Trump administration refuses to hold direct negotiations with the Taliban, U.S. officials are still asking Pakistan to facilitate Afghan-Taliban peace talks, as part of the administration’s support for an Afghan-led and Afghan-owned peace process. Pakistan may not be the most reliable partner for U.S. efforts in Afghanistan, but it is a key regional player.

The bottom line: If the U.S. hopes to end its war in Afghanistan with a lasting political settlement, it needs to improve its relationship with Pakistan — and hold direct talks with the Taliban, which is part of Afghanistan’s political fabric.

Sahar Khan is a visiting research fellow in the Cato Institute’s Defense and Foreign Policy Department.

A New Framework for Assessing the Risks from U.S. Arms Sales

Wed, 06/13/2018 - 07:57

A. Trevor Thrall and Caroline Dorminey

In the past two years, Congress has tried (and failed) twice to halt American arms sales to Saudi Arabia in response to that country’s intervention in Yemen’s civil war. This level of concern is historically unusual. Arms sales rarely spur much debate in Washington, where they are viewed as a critical tool of American foreign policy. The traditional refrain holds that arms sales promise leverage over recipient countries, help the United States support allies and manage regional balances of power, and generate economic benefits to boot. With some exceptions, few have challenged the wisdom of American arms sales practices.

In a recent study for the Cato Institute, however, we argue that the government’s approach to arms sales is misguided. The United States accepts as given the potential benefits of selling weapons while underestimating or simply ignoring the potential risks. The result has been too many arms sales to too many countries where the risks are likely to outweigh the benefits. Between 2002 and 2016, America delivered $197 billion worth of major conventional weapons, equipment, and training through its Foreign Military Sales program to 167 states worldwide. It is difficult to imagine what sort of process would rate so many of the world’s roughly 200 countries as safe bets to receive American weapons. Indeed, using a “risk index” we created to assess U.S. arms sales, we found that in this time period, the average dollar value of U.S. arms sales per nation to the riskiest states was higher than to the least risky states. Even more disturbing was our finding that 32 of the 167 recipients had risk index scores higherthan the average score of the 16 nations currently banned from purchasing American weapons.

For the United States to make more responsible use of arms sales, the approval process needs to change. And though our initial study focused on arms sales, the logic is the same for arms transfers (where the United States provides weapons to states or groups at no cost). There are often compelling reasons to consider providing weapons even (and sometimes especially) to risky clients, but the United States should account more carefully for both the benefits and the costs. The easiest place to start is cases of sales and transfers to nations engaged in conflict, fragile states, or states with poor human rights records, as well as in cases that do not directly enhance American national security. In these cases, the approval process should be more transparent, the bar for approval should be higher, and the government should do more to monitor weapons after they are sold to better understand unintended consequences that may blunt the benefits of arms sales and undermine U.S. security.

The Arms Sales Approval Process

On paper, the United States appears to have a robust procedure in place to assess arms sales. Since 1976, the Arms Export Control Act has required that the executive branch conduct a risk assessment for large government-to-government sales of major conventional weapons (commercial sales of many small and light weapons are covered by different rules). Once a foreign government decides it would like to buy an American system, it submits a letter of request. The request kicks off an extensive process that runs through a variety of offices at the Departments of Defense and State, as well as other agencies. The Country Team Assessment is the American government’s official risk assessment and is intended to determine:

how the [weapon] will be used, how it contributes to the defense and security goals of the partner nation and of the US, how it will change the partner country’s military capabilities, how the partner country will protect and safeguard sensitive technology, and the partner nation’s human rights record.

Once approved, the matter is turned over to Congress, which serves as an emergency brake for this process. Absent sufficient congressional opposition in the form of a veto-proof resolution of disapproval, the sale is made.

For the United States to make more responsible use of arms sales, the approval process needs to change.

In reality, the outcome of this process is almost inevitably the same: approval. Though the United States won’t sell its latest technology to everyone, it will sell most things to just about anyone. Although a full explanation of this is beyond the scope of our work, three possible reasons are worth noting. First, the benefits of arms sales are obvious and immediate, while the negative consequences are often less obvious, tend to emerge much later, and often receive little media coverage. Second, there is no constituency in Washington opposing arms sales. Presidents see them as a foreign policy tool, Congress sees them as economically beneficial benefiting its constituents economically, and the defense industry provides financial encouragement all around through campaign donations. Finally, the United States has been the world’s leading arms exporter for so long that the presumption that arms sales work seems to have become ingrained in the national security bureaucracy.

The Risks of Arms Sales

Arms sales are attractive for many reasons. They offer a low-cost, flexible way to help allies and partners wage wars, deter adversaries, and fight terrorism. Moreover, arms sales and transfers certainly pose less political danger for presidents than sending American troops into harm’s way. But just because the United States has good reasons to sell weapons in a specific instance does not mean the benefits are a sure thing — nor does it ensure that the benefits will outweigh the costs.

The negative side effects of arms sales take many forms. One extreme example is blowback — when Americans weapons end up being used against American interests. After the Iranian Revolution in 1979, the revolutionary government took possession of billions of dollars’ worth of American fighter jets and other weapons, an arsenal that Iran has used to exert itself ever since. A more common example is when American troops end up fighting other forces armed with American-made weapons that the United States had willingly provided, as happened in Somalia in 1991 with weapons provided during the Cold War.

Arms sales and transfers can also harm the regions into which American weapons flow. Another danger is dispersion — when weapons sold to a foreign government end up in the hands of criminal groups or adversaries. This risk is highest with sales or transfers to fragile states that are unprepared, unwilling, or too corrupt to protect their stockpiles adequately. For instance, despite America’s efforts to train and equip the Iraqi army, ISIL fighters in 2014 captured three Iraqi army divisions’ worth of American equipment, including tanks, armored vehicles, and infantry weapons.

American arms sales can also prolong and intensify interstate conflicts. Although the goal might be to alter the military balance of a conflict to facilitate a speedy end, sending weapons can also encourage the recipients to continue fighting even with no chance of success, leading to more casualties.

Finally, U.S. weapons sales in the name of battling terrorism and insurgency undermine U.S. national security when they are made to corrupt regimes and to nations with a history of human right violations. American firepower can enhance regime security and enable oppressive governments to mistreat minority groups and wage inhumane actions against insurgents or terrorist groups. Currently, Saudi Arabia is waging war in Yemen using primarily American weapons, which the United States has continued to provide even though the Saudis have been cited repeatedly for human rights violations and targeting civilian populations. In countries where serious corruption is endemic, American weapons can be diverted from their intended recipients and wind up in the wrong hands. For example, as a result of military and police corruption, the small arms and light weapons that the United States sends to Mexico and to several other Latin American countries in support of the war on drugs often facilitate the very crimes they were meant to stop.

Assessing the Risk

To provide a better accounting of the risks of arms sales and transfers, we developed a risk index based on five indicators that previous research suggests correlate strongly with negative outcomes. We know of no previous efforts to categorize recipients with respect to the risks of negative outcomes. Indeed, there is very little historical data available on the outcomes, positive or negative, of arms sales: There is no database to tell us how frequent various negative outcomes are, which makes it difficult to identify the causes of those outcomes with much precision. As a result, the risk index remains a work in progress.

For each of the 167 recipients of American weapons between 2002 and 2016, we compiled the scores from five existing metrics:

  • The Fragile State Index. Fragile governments are at greater risk for having weapons stolen or sold to third parties and are also more likely to collapse, raising the possibility that a friendly customer could turn into a national security threat.
  • The Freedom House Index and the S. State Department’s Political Terror Scale. Measures of oppression and political terrorism are a proxy for the risk that a recipient will misuse the weapons against its own people.
  • The Global Terrorism Index and UCDP/PRIO Armed Conflict Dataset. Civil and interstate conflicts create the conditions for all sorts of risks, including weapons dispersion, the misuse of weapons against a state’s own population, the amplification and intensification of conflict, and blowback.

To create a single risk index from these sources, all of which use different scales, we sorted the nations into three categories for each risk factor: 1 (low risk), 2 (medium risk), or 3 (high risk). This was straightforward for two of the measures. The Freedom House Index codes nations as “Free,” “Partly Free,” and “Not Free,” while the UCDP/Prio dataset codes nations as being involved in “High Intensity” conflict, “Low Intensity” conflict, or not involved in conflict. In each case, our categorization corresponded directly with the three existing categories.

The State Department’s political terror scale has five levels, from the first level where state terror and torture are rare or extremely rare, to levels two and three, in which police brutality and political imprisonment occurs but is limited, to levels four and five, in which gross rights violations, including torture and murder, are common. The states at levels one and two, which are the least likely to use force against their own citizens, received a score of 1 — least risky. Those states at levels four and five are the most likely to use force against their own citizens, so we coded them as 3 — most risky. The group of states in the middle received a score of 2 — medium risk.

The Global Terrorism Index scores states on a zero to 10 scale. We coded states that scored between 0 and 2 (no to low impact from terrorism) as least risky. States that scored between 2 and 6 we rated as medium risk, and states that scored between 6 and 10 we ranked as highest risk. Finally, the Fragile State Index runs from roughly 18 to 113. We divided the index into thirds, rating the most fragile third as most risky and the least fragile states the least risky.

To get each nation’s risk index score, we simply added its scores for each of the five risk factors. As Table 1 shows, the resulting index ranges between 5 and 15. If a country scored “low risk” on all five individual measures its overall risk index score was 5, while a country that scored “high risk” on all five earned a score of 15. The average score across the 167 nations was 8.2; the standard deviation was 2.9.

The result is an index that passes the common-sense test and provides a starting point for policymakers to rethink the risk assessment process, although it unavoidably sacrifices the nuance of the individual components. Because our approach measures only significant differences in state freedom, stability, and so forth rather than attempting to claim undue precision, there is good reason to believe that nations scoring higher on this index are indeed riskier customers even though we cannot be certain about the precise weighting of different components (an area for future research).

Figure 1. Cato Arms Sales Risk Index 2018

Table 1. Arms Sales Risk Index

Three critical observations emerge from this exercise. First, there are a lot of risky customers in the world, and the United States sells weapons to most of them. Thirty-seven nations (21.8 percent) scored in the highest risk category on at least two metrics and 77 (45.3 percent) were in the highest risk category on at least one of the five measures. There are simply not many safe bets when it comes to the arms trade.

Second, as simple as it is, our risk index does correlate with negative consequences. The five countries (Libya, Iraq, Yemen, the Democratic Republic of Congo, and Sudan) that scored as high-risk on all five measures are places where the negative consequences have been worst. American weapons have been stolen, misused, and used against American interests in each of these places since 2002. The very risky category also illustrates the full range of unintended consequences from arms sales. Afghanistan, Egypt, Saudi Arabia, Somalia, and Ukraine fall into this category.

Finally, the analysis provides compelling evidence that despite the warning flags, the United States does not discriminate between high- and low-risk customers. The average sales to the riskiest nations are higher than those to the least risky nations. The 24 countries labeled “highest risk” on the Global Terrorism Index, for example, bought an average of $2.2 billion worth of American weapons during the time period we analyzed. The 31 countries in active, high-level conflicts bought an average of $3.1 billion. This strongly suggests that the most obvious risk factors play little or no role at all in limiting U.S. arms sales.

Applying the risk assessment framework to the list of embargoed nations only sharpens this point. The 16 nations currently banned from buying American weapons had an average score of 11.6. Many of the nations on the list are adversaries (Iran, North Korea) but others, like Sudan and Eritrea, were only banned after egregious levels of insurgency, terrorism, and human rights abuses emerged. Although it is a sign of progress that these countries were eventually placed on an embargo list, the United States still sold weapons to them when most of the risks were already apparent. Moreover, America’s current customer list includes 32 countries like Egypt, Nigeria, and Pakistan, with a risk index score above the average of those who are banned.

Toward More Responsible Arms Sales

To be clear, our index is not intended as a standalone tool for deciding where and when to provide weapons to other nations. For each individual sale, the potential risks should be considered in light of the potential benefits. And in some cases, arms sales advocates can rightly argue that our risk index is a measure of which states need the most help. For example, fragile states like Iraq and Afghanistan score high on our index, but no one doubts they need assistance to ensure their security. However, a debate can and should be had about whether providing such states with weapons will achieve the intended goals. Our goal is not to suggest that there aren’t good reasons for providing weapons, but merely to help decision-makers do a better job considering the risks involved so that when the United States does sell weapons abroad, it has done a full accounting of the potential outcomes.

Our research suggests the United States could improve its arms sales policy in three important ways. First, the approval process must become more transparent. Neither Congress nor the public has much idea what benefits and risks were considered before an approval was made. All the public gets are stock phrases like “This proposed sale will contribute to the foreign policy and national security objectives of the United States,” and “The proposed sales of equipment and support will not alter the basic military balance in the region.” The executive branch should make the proposed benefits and potential risks clear, so Congress and the public can judge the justification of each sale and its outcomes accordingly.

Second, the government should raise the bar for approving arms sales. The United States enjoys a highly favorable strategic environment and an unmatched (though not unlimited) ability to influence events abroad. Focusing more on avoiding the negative consequence of arms sales than in the past would not significantly impair that global influence. One simple step in the right direction would be to stop selling weapons to states with clear warning signs: the most fragile states, those embroiled in civil wars, and those with the worst human rights records.

Third, the United States should implement a more comprehensive system of end use monitoring that tracks not only the physical location of American weapons (as is done today), but also attempts to account for how those weapons are used over the several decades during which they will be in service. As much of this data as possible should be made publicly available. Much of the difficulty in weighing risks and benefits is a product of the simple lack of data on what happens over the long-term when America sends weapons abroad. Having more information about both the positive and negative outcomes will help policymakers make more informed decisions about arms sales in the future.

The Saudi air campaign in Yemen, enabled by American weapons and American support, makes it clear that selling weapons is an inherently dangerous business. Even when the United States has important reasons for doing so the risks are real. A more prudent approach that denies sales to the riskiest clients would help the United States minimize its unintended consequences. Limiting arms sales, especially to countries engaged in conflict, would also give the United States greater diplomatic flexibility. It is difficult to be a credible mediator while arming one or both sides of a conflict. By taking this step, the United States would send a powerful signal to the international community about the dangers of unrestricted arms sales and America’s intention to be part of the solution to violence rather than an enabler of it.

A. Trevor Thrall is an associate professor at George Mason University’s Schar School of Policy and Government and a senior fellow at the Cato Institute’s Defense and Foreign Policy Department. Caroline Dorminey is a policy analyst at the Cato Institute’s Defense and Foreign Policy Department.

If Anyone Gets the Nobel, It’s Moon and Kim

Wed, 06/13/2018 - 07:53

Doug Bandow

Donald Trump, Nobel laureate? It is a jarring vision, but one that inched a little closer to reality after the seemingly amiable meeting between the U.S. president and North Korean dictator Kim Jong Un on Tuesday morning in Singapore. South Korean President Moon Jae-in had already proposed Trump for the prize following the Panmunjom talks between North and South Korea that preceded the summit.

Some of Trump’s fans gave him credit for achieving peace in our time even before the summit, chanting “Nobel, Nobel, Nobel” at a rally in late April. But the truth is that if there is a trip to Norway in the offing, Moon himself will be a far more deserving winner than Trump, even if his modesty — or cunning — means giving Trump the credit. And much as we might dislike it, Kim probably belongs on the stage too.

Talk of the peace prize is obviously premature. Trump’s meeting with Kim had great visuals, but there was no real deal struck and certainly no pledge of denuclearization from the North. And this isn’t the first summit to cause hopes to soar for inter-Korean reconciliation.

The blusterer-in-chief might blunder into a good deal with North Korea. But that won’t happen without the actions of several worthier candidates.

Still, definitive pessimism is overdone. In important ways, Kim appears different from his father and grandfather — more interested in economic development, more comfortable on the international stage, and perhaps even serious about a deal, though one that won’t come cheap.

But let’s optimistically assume that the deal does make substantial progress — if not toward the “full and speedy denuclearization” the Trump administration insists upon, then at least toward a formal peace on the peninsula and a serious thaw in relations between North and South.

Denuclearization is desirable but not essential for American security, because a nuclear North Korea could be deterred. Thus, understandings short of full nuclear disarmament still could leave the peninsula more stable. A freeze on missile and nuclear development, especially if backed by inspections, could promote peninsular and regional peace and stability. Conventional forces and deployments also could be adjusted to make war less likely. Regular communication could be established. Any of these would represent significant progress in a region where hostilities have flared for decades.

If so, should Trump be standing on the stage in Oslo?

The theory is that by trading insult for insult and threatening to blow up Northeast Asia, the president frightened North Korea into coming to the table. That might seem plausible, but Kim seems like a man confident in his power, not scared. North Koreans I spoke with last year seemed befuddled by the administration, not afraid of it. Most U.S. analysts view a U.S. attack as a wild gamble. And despite his bluster, so far, Trump has avoided any actions that would actually prompt serious conflict.

If Washington’s confrontational behavior forced anything, it likely was a change in strategy rather than objective. Kim told a high-level Korean Workers’ Party meeting earlier this year that the regime had finished the nuclear prong of its byungjin, or parallel development policy, so Pyongyang now would concentrate on economics. He did not suggest that his government completed the program only to give it away. To the contrary, in his New Year’s address this year, Kim proclaimed that North Korea now possessed “a powerful and reliable war deterrent, which no force and nothing can reverse.”

But continuing to formally resist denuclearization would ensure continued confrontation with the United States. That may explain Pyongyang’s feint toward South Korea. The latter creates the possibility of deals short of full denuclearization, while making U.S. military action less likely. This is not a strategy of desperation, but one of patience. So much for the president taking credit.

Another possible Nobel nominee is Chinese President Xi Jinping, for applying economic pressure on North Korea. But did Trump force China’s leader to do America’s bidding?

Probably not. Although U.S. pressure may have accelerated the China’s move up the sanctions ladder, the Xi government’s patience already was running thin. Beijing was tightening sanctions and enforcement every time North Korea conducted another missile or nuclear test. Xi also refused to meet Kim, despite having regular contact with South Korea’s president, until the crisis seemed to be reaching a breaking point.

The sanctions caused the North’s economy significant pain, but hardship isn’t new for North Koreans: a half-million or more people died of starvation in the late 1990s, and the North Korean economy kept growing throughout the sanctions. There is no reason to assume that Kim would sacrifice geopolitical ends in order to improve his people’s lives.

Moreover, Kim’s summit gambit generated leverage with China. By engineering a bilateral meeting with the United States, Pyongyang isolated Beijing. Rumors that the North would no longer insist on withdrawal of U.S. military forces from the South may have been a signal to China that North Korea was not going to protect the former’s interests. Anyway, Xi invited Kim to visit. Beijing may have made additional concessions to ensure its involvement in upcoming negotiations. So, Xi doesn’t appear to be the prime mover behind the North’s pirouette.

Give credit to Kim Jong Un. He set off the present process with his New Year’s address, in which he suggested that “the south Korean authorities should respond positively to our sincere efforts for a detente” and “a climate favorable for national reconciliation and reunification should be established.” He even “earnestly wish[ed] the Olympic Games a success” and offered “to dispatch our delegation and adopt other necessary measures.”

This was not Kim’s first expression of interest in diplomacy. In the Washington Post, David Ignatius pointed to North Korean statements five years ago indicating a desire for better relations with the United States. After “completing” the North’s nuclear deterrent, Kim probably believed he was negotiating from a position of strength, not the weakness Trump hoped he could prey on.

Kim’s New Year’s offer was particularly potent because it responded to South Korean fears that the North would attempt to disrupt the latest Olympics, like the one three decades before. Kim followed up by offering to meet Trump and take a number of conciliatory steps. If the latter prove to be ploys, as many believe, there will be no Nobel for anyone. However, if peace and stability advance, Kim will be the one taking his nation into a brighter future.

But one of the best candidates may be Moon himself. Shortly after taking office, the South Korean president announced that he planned to sit in the “driver’s seat” when it came to North Korea.

His pacific nature made the apparent breakthrough possible. Moon was elected last year more in spite of than because of his commitment to reconciliation with the North, and he tempered his policy in response to a skeptical public and a hostile Trump. Nevertheless, Moon — who cut his teeth in high-level politics as one of the architects of the old Sunshine Policy — made outreach to North Korea a priority after his inauguration last May. Most important, he ran through the opening made by Kim. The Olympics cooperation led to the inter-Korean summit, with the official slogan “Peace, a new start,” and plans for the Kim-Trump meeting.

If Kim and Trump reach a real agreement, they will owe their success to Moon’s persistence. The progress made by the two Korean leaders might even survive a Trump tantrum if North Korea kicks back against his claims of nuclear compliance. South Koreans have an obvious reason to resist U.S. threats of war. Given images of a seemingly reasonable Kim meeting leaders of both South Korea and the United States, even Americans might not be convinced that there is an urgent need for military action that could lead to full-scale war. And after his fulsome praise for Kim at the summit, the president’s madman shtick can no longer seem as plausible.

Who gets the Nobel for Korean peacemaking? We’ll have to wait and see if there is a peace to reward. In any case, there are better candidates than Donald Trump. The blusterer-in-chief might blunder into a good deal with North Korea. But that won’t happen without the actions of several worthier candidates.

Doug Bandow is a senior fellow at the Cato Institute. He is a former special assistant to President Ronald Reagan and the author of several books, including Foreign Follies: America’s New Global Empire.

America's Entitlement Crisis Just Keeps Growing

Wed, 06/13/2018 - 07:32

Michael D. Tanner

One problem with living in times as interesting as these is that important news often gets lost amid the swirl of rapidly changing events. If you blinked last week, you may have missed the latest report from the trustees of the Social Security and Medicare systems. But for the sake of our children and grandchildren, not to mention the country’s economic future, America’s looming entitlements crisis is worth paying attention to.

Start with Social Security. This year, the system’s trustees pegged its official “insolvency” date at 2034, the same as in last year’s report. Unfortunately for those under age 51, of course, we are now a year closer to that date than we were a year ago. And unless something changes dramatically between now and then, current law will require benefits to be slashed by 21 percent at that point.

But focusing on that top-line number badly understates Social Security’s real problems. Since 2009, Social Security has taken in less in taxes than it pays out in benefits. It has been using “attributed” interest to maintain a positive balance. But this year, benefits exceeded both taxes and interest, meaning that Social Security had to dip into the principal of the Social Security Trust Fund for the first time.

A new government report suggests that Social Security and Medicare are in even worse shape than you thought.

Of course, all of this is merely a bookkeeping fiction. The Social Security Trust Fund is not — and never has been — an asset that can be used to pay benefits. Instead, it is an accounting measure of how much money Social Security can draw from general revenues. Since the government doesn’t have any extra cash socked away — you may have noticed that we are running a $21 trillion debt — any Social Security shortfall only adds to the growing tide of red ink.

Overall, the trustees report that Social Security’s total unfunded liabilities now exceed $37 trillion, on a discounted-present-value basis over the infinite horizon.

And that’s the good news. Medicare is in even worse shape. This year’s trustees’ report estimates that the health-care program for seniors will hit technical insolvency by 2026, three years sooner than last year’s estimate. The program’s worsening financial condition is traced to “higher-than-anticipated spending in 2017, legislation that increases hospital spending,” and higher payments to private Medicare Advantage plans. Congress also repealed the Independent Payment Advisory Board (IPAB), an Obamacare provision that would have limited provider reimbursements.

Again, as with Social Security, focus on technical insolvency understates Medicare’s negative impact on the federal budget because of its reliance on Trust Fund accounting. In actuality, Medicare has been running a cash-flow deficit for decades.

The trustees’ report does estimate that Medicare’s finances will eventually improve — though not in our lifetimes — but only because it assumes savings built into the rapidly unraveling Affordable Care Act. If those savings fail to materialize (witness the repeal of IPAB), the program’s long-term liabilities could easily exceed $50 trillion or more.

The report also makes clear that there can be no long-term reduction in the national debt without addressing these massive entitlement programs. Social Security now costs nearly $1 trillion per year, and Medicare more than $700 billion. Those two programs alone account for some 40 percent of all federal spending. Congress can and should slash away at discretionary spending all it wants, but without entitlement reform, the debt will continue to grow.

It is long past time to face facts: We have lied to our kids. Social Security and Medicare cannot pay for all the future benefits that we have promised them — and until we admit that, we’ll continue down the road to national fiscal ruin.

Michael Tanner is a senior fellow at the Cato Institute and the author of Going for Broke: Deficits, Debt, and the Entitlement Crisis.

The Saudi-UAE Alliance Is the Most Dangerous Force in the Middle East Today

Wed, 06/13/2018 - 07:29

Doug Bandow

For three years, Saudi Arabia and the United Arab Emirates have conducted a murderous campaign to reinstall a pliable regime in the desperately poor country of Yemen. This campaign is based on a lie intended to gain American support: that the two authoritarian monarchies are responding to Iranian aggression. Now the UAE is preparing a military offensive that could split Yemen apart and create mass starvation.

The Saudi-Emirati alliance is the most dangerous force in the Middle East today. Sometimes acting alone, but usually in tandem, the two dictatorships have promoted intolerant Wahhabism around the world, backed brutal tyranny in Egypt and Bahrain, supported radical jihadists while helping tear apart Libya and Syria, threatened to attack Qatar while attempting to turn it into a puppet state, and kidnapped the Lebanese premier in an effort to unsettle that nation’s fragile political equilibrium. Worst of all, however, is their ongoing invasion of Yemen.

To demonstrate support for its royal allies, America joined their war on the Yemeni people, acting as chief armorer for both authoritarian monarchies and enriching U.S. arms makers in the process. America’s military has also provided the belligerents with targeting assistance and refueling services. And our Special Forces are on the ground assisting the Saudis.

The result has been both a security and humanitarian crisis. Observed Perry Cammack of the Carnegie Endowment: “By catering to Saudi Arabia in Yemen, the United States has empowered AQAP, strengthened Iranian influence in Yemen, undermined Saudi security, brought Yemen closer to the brink of collapse, and visited more death, destruction, and displacement on the Yemeni population.”

The latest: they are bombing a port that accounts for 80 percent of the food and aid trickling into starving Yemen.

The Yemeni people have done nothing to harm the United States. So why is Washington treating them as the enemy?

Yemen, both as one and two states, has been almost constantly at war over the last half century, as its more powerful neighbors have sought to meddle in its affairs. Once, Egyptian and Saudi troops battled each other on behalf of separate Yemeni states. The two Yemens united in 1990, but that resulted in neither peace nor stability.

The latest round of violence grew out of the Arab Spring. Long-ruling President Ali Abdullah Saleh, who cooperated with both the U.S. and the Saudis, was ousted. But he soon united with his old enemies, the Houthis, a political and tribal militia whose members are Zaydis, a moderate, Shia-related sect that also shares some Sunni characteristics. Together they defenestrated Saleh’s successor, Abdrabbuh Mansur Hadi. Area specialists agree that Iran had little to do with these maneuvers, while U.S. intelligence reports that Tehran even advised against the anti-Hadi coalition’s march on the capital of Sanaa.

The resulting conflict little affected America except in disrupting some operations against al-Qaeda in the Arabian Peninsula (AQAP). But the Saudis and UAE created a “coalition” supplemented with de facto mercenaries—from Sudan, for instance—in March 2015 to restore Hadi. That military operation, which was supposed to take a few weeks, continues more than three years later.

Today the Yemeni nation and state no longer exist. The UN has termed the conflict “the largest humanitarian crisis in the world” where “Yemenis are facing multiple crises, including armed conflict, displacement, risk of famine and the outbreaks of diseases, including cholera.” Some 30,000 civilians are estimated to have died since January 2017 alone. In March, the UN High Commissioner for Refugees reported: “Conflict in Yemen has left 22.2 million people, 75 per cent of the population, in need of humanitarian assistance and has created a severe protection crisis in which millions face risks to their safety and are struggling to survive.”

The Houthis share the blame for Yemen’s hardship. But the coalition, by employing airstrikes termed “indiscriminate or disproportionate” by Human Rights Watch, has caused at least two thirds of the infrastructure damage and three quarters of the casualties. Yemeni American Rabyaah Lthaibani was blunt: “For three years now, the Saudi Coalition has bombed hospitals, schools and wedding parties. They have systematically targeted roads and farms and blocked ports so lifesaving aid and other goods could not reach people facing famine and the world’s fastest-growing cholera outbreak.” Amnesty International concluded that the coalition deliberately hit civilian targets to create a crisis.

On Wednesday, the Saudis and Emiratis launched their planned assault on the port of Hodeida, which will only exacerbate this humanitarian horror. Pleas by the UN and U.S. that upwards of 250,000 people’s lives will be at risk have gone unheeded. But then why would Abu Dhabi listen, since Washington’s support for the coalition has thus far been total? The U.S. is enabling an aggressive war with all of its horrendous human consequences.

Washington’s complicity in Yemen’s destruction hasn’t promoted regional stability. Over the last two decades, misbegotten American intervention has spread conflict, loosed Islamist furies, imperiled religious minorities, and expanded Iran’s influence throughout the Mideast and beyond. Inflaming the Yemeni war has proved similarly destructive.

Hadi may be Yemen’s “legitimate” ruler, but he sacrificed what little popular support he had when he called in airstrikes on his own people. Nor is he a friend of America: journalist Laura Kasinof observed that Hadi had “cozied up to the Islamists” before his ouster, even sometimes cooperating with AQAP. Saudi Arabia and the UAE also have armed radical forces. AQAP may be the greatest inadvertent beneficiary of the overall conflict.

U.S. officials sound like Saudi propagandists when they falsely claim that the Houthis are Iranian proxies. Gabriele vom Bruck at London’s School of Oriental and African Studies explains: “The Houthis want Yemen to be independent, that’s the key idea, they don’t want to be controlled by Saudi or the Americans, and they certainly don’t want to replace the Saudis with the Iranians.”

As noted earlier, Yemen has rarely not been at war. According to Thomas Juneau of the University of Ottawa, the present fight “is at its root a civil war, driven by local competition for power, and not a regional, sectarian or proxy war.” The Houthis turned to Tehran out of necessity, after being attacked by their wealthy neighbors backed by America. Bruce Riedel of the Brookings Institution observed: “A major consequence of the war is to push the Houthis and Iran and Hezbollah closer together.” Tehran has opportunistically helped bleed the aggressors, rather like U.S. policy against the Soviet Union in Afghanistan.

While Riyadh still pays lip service to the idea of maintaining a united Yemen, the Emirates is actively promoting secessionists in the south. Indeed, the UAE may hope to grab Hodeidah for its own geopolitical and commercial advantage. Reports The Economist: “the UAE’s actions in Yemen appear part of a larger strategy to gobble up ports along some of the world’s busiest shipping routes.” For this, thousands more Yemenis could die.

The worst argument for the U.S. to back Saudi and Emirati atrocities is that doing so reduces civilian casualties. The claim is risible. Americans are helping the coalition kill civilians to stop it from killing more civilians? Seriously?

In fact, American officials admit they do not monitor Saudi attacks, so they have no means of judging the impacts of the strikes. Anyway, the best way to end coalition attacks on the Yemeni people would be to stop subsidizing coalition attacks on the Yemeni people. Make the royals pay for their own war.

Especially now. Hodeidah accounts for perhaps 70 to 80 percent of the aid, food, and fuel reaching Yemen. Observers fear that an Emirati assault would kill thousands and displace much of the city’s 600,000-strong population. Worse, such an attack would almost certainly interrupt vital shipments to Yemen’s civilian population. Abdi Mohamud, country director for Mercy Corps, warned that “Any disruption to this critical lifeline could be a death sentence for millions of Yemenis.” Mark Lowcock, UN undersecretary general for humanitarian affairs, said that “if for any period Hodeidah were not to operate effectively the consequences in humanitarian terms would be catastrophic.”

Humanitarian concerns did not stop Abu Dhabi from assaulting Hodeidah. Nor will the sort of cautious statements issued by the Trump administration. Unnamed officials recently told the Wall Street Journal that the administration light was yellow on the matter: “What we are scrambling to do is, if there’s an inevitability to this, we want to ensure that it causes the least amount of damage and make sure things are set up on the humanitarian side in the best way we can.”

Last weekend the Red Cross began removing its staff from the city to avoid the coming assault. And on Monday, the UN began evacuating its personnel from the port. That should make it clear: only a cut-off in U.S. assistance will get the UAE’s attention. But that Washington refuses to do.

Yemen continues a tragic pattern in American policy. Washington has intervened promiscuously throughout the Mideast, fomenting radicalism, creating chaos, promoting aggression, and subsidizing tyranny. The humanitarian costs of the Yemen war continue to climb. It’s time for the Trump administration to stop supporting tyrannical regimes like the Saudis and Emiratis as they assault both our interests and our values.

Doug Bandow is a senior fellow at the Cato Institute.

5 Steps to Take After Trump's North Korea Summit

Wed, 06/13/2018 - 07:22

Doug Bandow

President Donald Trump and North Korea’s “chairman” Kim Jong-un met in Singapore. Their unlikely, on-off-on summit simultaneously changed everything—and nothing.

Their time together was short, little more than five hours. Nevertheless, the president tells us, Kim is “very smart,” “very talented” and “loves his country very much.” One wonders if President Trump, George W. Bush redux, peered into the Korean leader’s soul and saw something warm and fuzzy. After all, said the president, they had developed a “special bond” and formed an “excellent relationship.” Just think of the connection the two men might have made had they spent an entire day together!

Proving that it is not only the Democratic People’s Republic of Korea (DPRK) which turns hyperbole into an art form, the two leaders declared that “the US-DPRK summit—the first in history—was an epochal event of great significance.” Unlike those past South-North Korean summits, which dissolved in the mists of time. What could better encapsulate the importance of the current proceedings than a tearful Dennis Rodman lauding the meeting between his “special friend” and America’s president? Surely that made the event epochal, if nothing else.

Although the summit is an inevitable target for snark, it nevertheless was a positive development. Most importantly, the talks were a welcome change from the hostile posturing and war threats which dominated relations between the two governments last year. Instead of insulting one another, the two leaders committed to peaceful cooperation and denuclearization.

Trump and Kim’s on-off-on summit simultaneously changed everything-and nothing.

Furthermore, it will be much harder for President Trump to again threaten military action, which could trigger a full-scale Second Korean War. Sen. Lindsey Graham might believe that such a conflict would be no big deal since it would be “over there,” but that would offer cold comfort to South Koreans, Japanese, and Chinese, whose nations could end up battle zones—as well as North Koreans—who should not be needlessly sacrificed because of their government’s policies. Moreover, plenty of Americans, military personnel in combat as well as civilians caught in the crossfire, likely would die in any conflict. Launching attacks in the hope that everything would work out just right would be playing a fearsome geopolitical game of chicken with potentially millions of lives at stake.

Because of the summit, South Koreans, whose attitude toward the North Korean dictator has changed dramatically, would be in no mood to risk pyrotechnics launched by Washington against a North which no longer looked so threatening. And how for the president to explain to the American people that aggressive war must be launched against someone he not long before embraced? Especially if Kim was playing the role of peacenik, no longer threatening to turn cities and countries into lakes of fire?

The meeting yielded some other benefits. For instance, China’s president-for-life Xi Jinping appeared discomfited by the possibility of being excluded from negotiations which could reorder Northeast Asia. The summit might also have exposed some fault lines in the DPRK: shortly before the meeting Kim replaced three top military leaders. Since taking power he has regularly shuffled the security leadership, but the mass removal was unusual.

Still, even optimists must find the summit’s outcome surprisingly thin. The joint statement was short and mostly rehashed previous promises, without detailing implementation. The president said that “some things were agreed and not reflected in the agreement,” but presumably anything important deserved formal recognition.

For instance, presumably the North will maintain its freeze on missile and nuclear testing. It appears that the United States may have informally agreed in turn to end military exercises, which the president said would be suspended so long as negotiations were ongoing. That’s actually a good trade for the United States, but the president apparently sought to deflect domestic opposition by keeping the deal off the books, so to speak. However, fudging commitments risks undermining denuclearization.

Ironically, the day before the summit Secretary of State Mike Pompeo dismissed previous agreements: “Many presidents previously have signed off on pieces of paper only to find that the North Koreans either didn’t promise what we thought they had, or actually reneged on those promises.” In this case Kim simply didn’t promise much of anything. When asked how his piece of paper was different from signed by past presidents, President Trump responded: “well, you have a different administration. You have a different president. You have a different secretary of state. You have people that are—you know, it’s very important to them. And we get it done.”

That obviously remains to be seen.

In fact, the United States gave up nothing of substance to get Kim to sign the statement. The North sacrificed little in return: the release of three prisoners who were more useful freed and destruction of a nuclear test site of dubious value. On a personal level Kim has gained the most, dramatically stepping onto the international stage, meeting the U.S. president as an equal, holding two summits each with China’s and South Korea’s leaders, and invited to visit Russia. Still, sampling life among the great and powerful might encourage him to stake his place by making future concessions. However, the meeting will prove “epochal” only if the general commitments are given effect.

With that in mind, the most important official promise was “to hold follow-on negotiations … at the earliest possible date” to generate concrete results from the summit. Substantively, the United States and DPRK are in the same place they were on Monday, last month, last year and a decade before. It won’t take long for the warm feelings to fade quickly without both sides taking significant steps toward a stable, lasting peace on the Korean Peninsula. Such negotiations should quickly demonstrate whether Kim deserves the confidence placed in him by the president, who said that press conference that “I think he wants to get it done.”

In moving forward—apparently the president extended an invitation for Kim to visit the White House—it is worth keeping some important realities in mind.

First, North Korea is a challenge, not a crisis. There is no evidence that Kim is suicidal; to the contrary, like his father and grandfather, he appears to prefer his virgins in this world. Indeed, he demonstrates that, as Henry Kissinger once opined, even paranoids have enemies. Kim rightly fears the United States. He does not plan on attacking America, thereby guaranteeing his departure from this world in a radioactive funeral pyre. Washington deterred Stalin’s Soviet Union and Mao’s China. Washington can do the same to Kim’s North Korea.

Second, the president’s new bosom buddy is a tough character whose rule is less than genteel. Whatever, say, Justin Trudeau’s foibles, he is not known for executing his opponents and maintaining large labor camps in Canada. The president is right to believe that the United States should engage the DPRK, but he should do so without illusion.

Third, while Chairman Kim appears genuinely committed to development, security remains his first priority. And the president is operating with a handicap—promiscuous U.S. intervention against weak states, including Afghanistan, Iraq, Libya, and Syria, failure to protect Ukraine, which gave up its nuclear weapons, and his own administration’s willingness to toss aside the Iran deal and make a litany of tougher demands of Tehran. None of these encourage the DPRK to give up its leverage and hope for the brighter future the president speaks of. Washington should offer more than verbal assurances and paper guarantees.

Fourth, the People’s Republic of China (PRC) could be helpful, but will want to see its interests protected. It will not promote reunification which strengthens America’s influence and turns the peninsula into another U.S. instrument to contain Beijing. Both the United States and Republic of Korea should act to assuage the PRC’s concerns.

Fifth, Washington must set priorities. And denuclearization is the most important objective. Without some resolution of the security challenge on both sides, significant improvement in the DPRK’s relations with its neighbors and respect for human rights internally is unlikely. Thus, the Trump administration should offer significant benefits for disarmament.

What to do from here? Establish regular diplomatic channels—best would be to inaugurate formal relations. That should be viewed as a form of communication, not a reward. Imagine having no contact with the Soviets during the Cold War. Had Chinese and U.S. diplomats talked in 1950, perhaps the two countries could have avoided a clash which prolonged the Korean War by more than two years.

Negotiations should begin on a peace treaty. That would be a significant symbolic step to demonstrate that the United States is not interested in forcing regime change in the North. Indeed, Washington should follow South Korea’s lead on this issue, since the latter has the most at stake in creating a stable peace.

The administration should promote travel and exchanges both ways. The United States should drop its travel ban and encourage North Korean visitors. In this way, Washington should play the long game and encourage the transformation of the North through social, economic and cultural contact.

Moreover, Washington should develop a list of steps desired by the United States, including denuclearization, other forms of disarmament, and improvements in human rights, and by the North, including end of sanctions, opening of trade, membership in international financial institutions, and “security guarantees” of various sorts. Then the administration should suggest various mini-deals on the road to denuclearization, striking agreements along the way. For instance, a North Korea which no longer tested missiles or nukes, capped its existing arsenal and allowed free access to inspectors would be a major improvement. As relations improved, the United States and its allied could continue pressing toward the ultimate goal of denuclearization.

Finally, the United States should put its troop presence in and alliance with South Korea on the table. American disengagement would provide a form of security guarantee to the DPRK while simultaneously ameliorating Beijing’s concern over Korean reunification. Seoul is more than able to defend itself from a non-nuclear North.

An added advantage would be to disentangle the United States from the day-to-day squabbles in Northeast Asia, leaving Washington freer to decide when vital interests truly were at stake. North Korea is a “threat” to America only because the United States is “over there,” intervening in what is essentially a Korean civil war. Otherwise Pyongyang would have little interest in America, and certainly no reason to threaten the United States.

For seventy years North Korea has been a seemingly intractable problem. President Trump deserves credit for his willingness to ignore critics even within his own party and meet Kim. Now comes the hard part. The president must demonstrate similar independence and determination in making the tough compromises necessary to strike more detailed agreements with North Korea, especially one to fully denuclearize. The task could prove impossible. But the attempt would be worth the effort.

Doug Bandow is a Senior Fellow at the Cato Institute and a former special assistant to President Ronald Reagan.

What Gina Haspel's Confirmation Really Represents

Tue, 06/12/2018 - 14:08

Sahar Khan

Gina Haspel was sworn in as the Central Intelligence Agency’s (CIA) first female director on May 21, 2018 following a controversial nomination period and a contentious Senate confirmation hearing. While Haspel is qualified for her new role—she is a career intelligence officer with 33 years of service in the CIA—her appointment is troublesome because of her involvement in the United States’ torture program and endorsement of destroying interrogation tapes of key terrorist suspects.

In the context of U.S. foreign policy, her appointment represents two troubling developments: an erosion of checks and balances on the executive, and a potential “torture redux.”

A president’s constitutional powers are complicated, and law professors are often divided on the issue of the scope and limits of presidential power. Haspel’s advocates argue that she would be in a unique position to restrain President Trump, who publicly voiced support of torture, especially as his inner circle is filled up with like-minded advisors. And she would be able to do so for two reasons. First, her main focus is to improve the CIA’s operational capacity—something former director John O. Brennan also sought to do during his tenure at the CIA. During her swearing-in ceremony she discussedboosting the agency’s foreign-language proficiency, strengthening intelligence sharing with allies, and deploying more covert officers abroad to better serve as a foreign intelligence service. Second, she has a good professional relationshipwith Secretary of State Mike Pompeo, having served as his deputy when he was the director of the CIA before accepting his current position. Yet, there was little discussion on how increasing the CIA’s capacity might impact its tendency to inflate threats. For example, declassified CIA documents from the 1950s and 1960s revealed that the United States significantly overestimated the number of Soviet missiles. In January 2018, then CIA Director Pompeo spoke of the growing threats from China and Russia, though there is a great deal of skepticism surrounding this claims. What is even unclear is how Haspel will address the problem of threat inflation.

I am preparing for the continuation of a poorly informed hawkish foreign policy that will result in misguided hardline approaches, troop increases, and a sidelining of diplomacy. I just hope it does not include torture’s comeback.

The U.S. torture program began under the Bush administration via an executive order in 2002. President Barack Obama ended the CIA’s enhanced interrogation techniques in 2009 but opted not to pursue accountability for those involved— one of the primary reasons why Haspel was able to remain at the CIA and advance her career. On the same day of Trump’s first State of the Union address, when he talked about “annihilating” terrorists, Trump signed an executive order keeping the controversial detention facility at Guantanamo Bay open. During Haspel’s confirmation hearing, Senators Kamala Harris (D-CA), Mark Warner (D-VA), and Susan Collins (R-ME) asked her what she would do if the president asked her to restart the torture program. Haspel replied that while she doubted that Trump would ask her to do so, she would “never, ever take CIA back to an interrogation program”. Nevertheless, when asked if she thought torture was immoral, she bypassed the question numerous times and instead focused on legal issues related to the program. For example, Haspel repeatedly stated that the torture program was legal at the time and, as an intelligence officer, she was simply following the law. But the legality of the program was always questioned, and the CIA continues to declassify details of the torture program. Nevertheless, Haspel’s phrasing evoked memories of the “just following orders” defense at the Nuremberg Trials following WWIII, when Nazi officials argued they were acting under the orders of their superior. This “superior order” legal strategy was rejected by the standing International Military Tribunal.

Domestically, the Haspel confirmation process has been odd. The CIA is known for remaining silent and out of the public eyes if it can help it. But when Haspel was nominated, the Agency went out of its ways to advocate for her as the director. She also has a great deal of support from the intelligence community, including Doug Wise, the former deputy director of the Defense Intelligence Agency. The CIA, however, has been selective about declassifying information on Haspel’s career for the Senate Intelligence Committee. For example, the CIA declassified the memo on Haspel’s involvement in the destruction of interrogation tapes, but it redacted all negative information, which should remain a cause for concern.

Haspel is the first female director of the CIA, which is a huge achievement for gender parity. But it is not a reflection of the general female experience in intelligence. Women are constantly overlooked for promotions. The intelligence community is also facing its own version of the “MeToo” campaign, called “MeTooNatSec” that will hopefully influence gender relations in a positive way. More significantly, Haspel’s critics state that her stance on torture negates any kind of gender parity she brings.

Ultimately, the CIA is an intelligence agency that follows orders. One can only hope that if faced with a situation where the president asks Haspel to engage in questionable intelligence practices, she will do what she said in her confirmation hearing, which is to refuse the president. I, however, remain doubtful that she would. Instead I am preparing for the continuation of a poorly informed hawkish foreign policy that will result in misguided hardline approaches, troop increases, and a sidelining of diplomacy. I just hope it does not include torture’s comeback.

Sahar Khan is a visiting research fellow in the Cato Institute’s Defense and Foreign Policy Department.

The Singapore Strategy Fascinates Supreme Leader Kim Jong-Un

Tue, 06/12/2018 - 12:32

Steve H. Hanke

Reporting of the historic Singapore Summit between President Donald J. Trump and Supreme Leader Kim Jong-un has been fascinating. The lead story in Pyongyang has been on the Supreme Leader’s Singapore walk around, and his desire to learn about economic development from the Singapore Strategy. In the western press, however, Pyongyang’s lead story is nowhere to be found.

Kim Jong-un is clearly onto something. As anyone watching telecasts from Singapore during the past few days could observe, Singapore appears to be very prosperous. And it is. Measured by per capita income, Singaporeans are some of the richest people in the world. The economy is capitalist, and capitalist on steroids. That’s why Singapore has shot up from the depths of the Third World, at its founding, to the upper reaches of the First World, today.

Singapore gained its independence in 1965, when it was, in effect, thrown out of Malaysia. At that time, Singapore was backward and poor — a barren speck on the map in a dangerous part of the world. If that wasn’t enough, it was experiencing race riots, which came close to igniting a civil war. Singapore’s per-capita income in 1965, adjusted for inflation, was roughly equivalent to that of poor countries like Albania, Angola, Armenia, Guyana, Kosovo, and Mongolia, today.

But, at its founding, Singapore had a leader, Lee Kuan Yew. He had clear ideas about how to modernize the country — a strategy which I have dubbed the “Singapore Strategy.” This strategy contained the following elements:

The first element was stable money. Singapore started with a currency board system — a simple, transparent, rule-driven monetary regime. Currency boards operate on autopilot, with automatic adjustments keeping the system in balance. Accordingly, currency boards deliver discipline to the spheres of money, banking, and fiscal affairs. For Singapore, the currency board provided stable prices and free convertibility of the Singaporean dollar, which was fully backed by foreign reserves and gold, at a fixed exchange rate. This established confidence and attracted foreign investment.

The second element was that Lee Kuan Yew ruled out passing the begging bowl. Singapore refused to accept foreign aid of any kind. This is a far cry from many developing countries, where, when you pick up the paper, all you see are politicians and bureaucrats trying to secure foreign aid from someone, be it an NGO, a foreign government, or an international financial institution, like the World Bank. By contrast, signs reading “no foreign aid” were hung figuratively outside every government office in Singapore.

The third element was that Singapore strived to have first-world, competitive private enterprises. This was accomplished via light taxation and light regulation, coupled with completely open and free trade — in short, policies that enabled Singapore to become one of the Asian Tigers.

The fourth element in the Singapore Strategy was an emphasis on personal security, public order, and the protection of private property.

The fifth, and final, element in the Singapore Strategy was a “small,” transparent government — a minimalist government that avoided complexity and “red tape”.

To execute the strategy with precision, Singapore appoints only first-class civil servants and pays them first-class wages. Today, for example, the Singaporean Finance Minister’s annual salary is 1.3 million dollars (USD). In exchange for these high salaries, the Singapore Strategy demands that the government runs a tight ship, with no waste or corruption. By embracing Lee Kuan Yew’s Singapore Strategy of stable money, no foreign aid, first-world competition, law and order, and a government that is free of waste and corruption, Singapore has transformed itself from a poor, barren speck to a global financial center.

It should come as no surprise that Singapore today is one of the freest, most flexible, and prosperous economies in the world. Kim Jong-un clearly has his eye on a winning strategy. Maybe the Supreme Leader is a bit more clever than most western observers give him credit for.

Steve Hanke is a professor of applied economics at The Johns Hopkins University and senior fellow at the Cato Institute.

President Trump’s Confused Approach to Trade Is One Giant Contradiction

Tue, 06/12/2018 - 08:03

Ryan Bourne

President Trump’s ideas on trade often seem paradoxical.

At the weekend G-7 summit, he floated both abolition of all tariffs worldwide and banning trade with certain countries entirely over the course of just 24 hours. His recent announcement of the removal of exemptions from steel and aluminum tariffs for the European Union, Canada and Mexico was justified on “national security” grounds. Yet reminded that these countries are military allies of the United States, the president retreated to suggesting the tariffs were retaliation for current EU and Canadian trade barriers to U.S. products.

Two theories of the president’s approach are consistent with these interventions. The optimistic case for free traders says that Trump is threatening tariffs and using the presidential bully pulpit to try to open up highly protected foreign sectors, and ushering a new era of global free trade. The pessimistic case says the president and his close team are protectionists at heart, and use the veneer of arguments about reciprocity to cover up their true intentions.

Rather than seeing free trade as a means of promoting mutually beneficial exchange between buyers and sellers, the president thinks of trade as a zero-sum game that sees nations “winning” if they export more than they import.

Sadly, most available evidence now points toward the latter. Over the last three decades there has been a slow but steady liberalization of markets, with tariff rates among advanced economies falling, in large part due to painstaking multilateral negotiations and trade deals. According to World Bank data, the weighted mean applied tariff rate for the U.S. and EU are near identical at 1.6%, and even lower in Canada at 0.8%. Mexico is higher at 4.4%, but given this has tumbled from 15.5% just 15 years ago, and many goods are traded tariff-free with the U.S. due to Nafta, focusing on these countries seems an odd place to start if your aim is a freer global trading environment.

That is not to say that there are not egregiously overprotected markets in the EU and Canada. All countries seem to have some well-organized vested interests who resist this pull toward open competition. President Trump is correct that the Canadian dairy sector uses a “supply management” system incorporating tariff rates of up to near 300% on dairy products for imports beyond quotas. These do raise prices for Canadian consumers and discourage importation of American produce. The European Union likewise imposes much higher tariffs on American car imports than vice versa (10% vs. 2.5%), though the U.S. imposes higher tariffs than the EU on trucks. The world as a whole would be better off if these restraints were gone entirely. But reversing the progress made because of unusually high tariffs in certain sectors is misguided.

If the president were a free trader at heart, one might imagine he would celebrate the overall progress, and push to go further. He would practice what he preaches, taking on his own domestically protected sectors, as in sugar, where federal interventions, tariffs and production quotas raise the American sugar price to almost double the world price. At the very least, he would argue his steel and aluminum tariffs were merely a necessary evil to compel broader liberalization overseas.

Yet this is not the argument the president or his key advisers make. When it comes to the aluminum and steel tariffs, for example, Trump adviser Peter Navarro has claimed, rather dubiously, they have encouraged a new aluminum mill in Kentucky and restarted steelmaking facilities in Illinois. He appears indifferent or willing to ignore the impact raising the price of a key input will have for the 6.5 million workers in industries that consume steel, instead claiming they are “pro-worker”. This is not the line an administration would take if they saw steel and aluminum tariffs as a damaging short-term pill to swallow to compel a more liberal trading environment in future.

Indeed, everything from Trump’s obsession with economically meaningless bilateral trade deficits, to his constant focus on producers, rather than consumers, suggests that “exports good, imports bad” represents Trump’s worldview. Rather than seeing free trade as a means of promoting mutually beneficial exchange between buyers and sellers, the president thinks of trade as a zero-sum game that sees nations “winning” if they export more than they import.

The danger with this thinking now is that nationalism begets nationalism. A world in which the U.S. president seeks to bully other countries to lower particular tariffs in certain areas but offers up no firm proposals to take on its own highly protected sectors is a world in which EU countries and Canada feel unfairly singled out, and retaliate in kind. Focusing on individual, politically sensitive foreign sectors (troublesome as they are) risks unwinding the true progress that has been made over many decades.

Economists will carefully explain to all sides that higher tariffs harm domestic economies by generating investment-deterring uncertainty, raising prices for consumers, and undermining overall efficiency (as producers are insulated from global competition and face higher input prices). But the president seems indifferent to their protestations, instead offering his biggest contradiction of all: that tariffs will be good for the U.S. today, but that the abolition of tariffs will be good for the economy in future.

Ryan Bourne occupies the R. Evan Scharf chair for the Public Understanding of Economics at the Centre for Economic Studies at the Cato Institute.

Corbyn's Tipping Tirade Lays Bare His Anti-Business Agenda

Tue, 06/12/2018 - 07:53

Ryan Bourne

Jeremy Corbyn has had another brainwave.

The Labour leader wants to make it illegal for businesses to “pocket” tips and optional service charges.

Some restaurants and hospitality firms currently collectivise what we add to our bills or give to waiters and waitresses. They might directly pool tips to redistribute them through a common fund system or add them to general revenues.

For Corbyn, these actions amount to theft.

“It is not right that workers have their tips stolen by bosses,” Corbyn said. The next Labour government will ensure that “workers keep 100 per cent of their hard-earned tips”.

Imposing strait-jacket regulation across a variety of businesses is the order of the day.

Let’s leave aside the fact that workers would keep far from 100 per cent, given the high taxes likely under a Corbyn administration.

Unfortunately, the Labour leader is not alone. He is making the same mistakes as then business secretary Sajid Javid made when discussing this subject: first, assuming that social expectations about where tips go can harmlessly be enshrined in legislation; second, failing to differentiate between the flow of cash and the overall economic impact.

In fact, imposing a one-size-fits-all “tip must go to worker” regulation could adversely affect businesses and workers alike, given the different nature of restaurant models and how managers use tipping to adjust total compensation.

Restaurant-specific tipping practices can be an important way to deal with risk, manage staff morale, and ensure that customers get a good service. Though less important generally in Britain than in the US, basic tipping can play an important economic function.

Consider the set-up that Corbyn has in mind, in which, say, a single waiter or waitress serves a set of tables exclusively.

The purpose of tips here is to be a form of risk-sharing for the restaurant, particularly if it is not easy to observe the behaviour and competence of wait-staff.

Tips lower the underlying hourly wage a restaurant might need to offer to attract staff (lowering fixed costs), and total remuneration for a worker becomes linked to customer satisfaction. This averts the need for workplace performance assessments and controversial wage negotiations for each and every staff member.

However, even this simple example (to say nothing of larger, more complicated restaurant set-ups) highlights reasons why it might make sense to deal with tips differently.

In very small restaurants or established chains, where behaviour is observed or customer expectations simple, it could make more sense to adjust overall pay rates and put any tips into general revenue toward that. If the work is relatively homogenous, staff might resent a tipping “lottery”, where lucky workers benefit from generous tippers and other wait-staff who work just as hard do not.

It can therefore make sense for restaurants to centralise this pot for distribution, or see it as general revenue, for the restaurant as a whole.

That is exactly what lots of restaurants do, distributing tips through formulae in many cases.

This amounts to some centralised assessment of what components of the customer experience generate the extra revenue, which is subsequently used to set a system to reward good performance, individually or collectively.

Think about it: when you go for dinner, do you really just tip based on the likeability or performance of your waiter? Or do you also take into consideration whether the manager was accommodating with your table preference, the food was good and prepared in a timely manner, the server spilled food over you, and the restaurant had your favourite dessert available?

It’s pretty obvious that lots of these things are outside the gift of the waiter or waitress. A strict version of Corbyn’s proposal would simply make it more difficult for firms to find imaginative ways to incentivise staff, and could in some cases work out as less fair than the system he is criticising.

No doubt firms would adjust in other ways: underlying pay rates and consumer prices would be tinkered with. But as Labour is also proposing a significant national living wage hike, many restaurants would have to cope with both higher fixed costs and less control of potential income.

In fact, this whole proposal speaks volumes about Labour’s economic ideology in general.

Nefarious restaurant owners (for which we can read business bosses in general) are regarded as having the market power and desire to screw over their workers at every available opportunity, while any perceived injustice can supposedly be corrected without harm by central diktat.

Imposing strait-jacket regulation across a variety of businesses is the order of the day. No thought is given to how this might affect norms and conventions that businesses adopt to solve their own challenges and balance the needs and desires of staff, customers, and managers.

It starts with restaurants, and ends with the whole economy.

Ryan Bourne holds the R Evan Scharf Chair for the Public Understanding of Economics at the Cato Institute.

Syndicate

Syndicate content