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Liberty News

  • Despite the Pall of Scandal, Some Incremental Progress during the Trump Administration    (2017-07-27)
    By Ivan Eland; Although the media is properly focused on the very troubling issue of Russian meddling in the 2016 election, and the Trump campaign's apparent willingness to collude with a foreign ...
  • Don't Sacrifice Privacy on the Altar of Convenience    (Matthew Feeney, 2017-07-27)
    Matthew Feeney We all hate long lines, whether we’re at train stations, airports, or grocery stores. Researchers and governments are hard at work to ease frustrating line congestion via facial recognition technology. Facial scanners may reduce time spent standing in boring lines, but they also threaten our privacy, which we shouldn’t sacrifice on the altar of convenience. In the United States, the Department of Homeland Security (DHS) is taking steps to implement facial scanning systems at airports. Facial scan trials are already underway in six airports, with more deployments planned by early next year at “high-volume”international airports. The scanners are part of a biometric entry-exit plan that aims in part to confirm the identity of travelers leaving the U.S. Two airlines—Delta and JetBlue—allow travelers to use facial scanners at select airports. From the Associated Press: DHS officials hope to defray costs through partnerships with airlines that are incorporating biometrics to boost efficiencies. Two airlines in the pilot program—Delta and JetBlue—tout identity-verification technology’s convenience for other ends: Delta for speeding baggage handling, JetBlue for eliminating boarding passes. Both carriers say they will not retain customers’ face scan files. In their privacy impact assessment for the facial scanning scheme DHS bluntly states, “the only way for an individual to ensure he or she is not subject to collection of biometric information when traveling internationally is to refrain from traveling.” The same assessment also points out that Customs and Border Protection (CBP) can share facial recognition information with state, local, and federal agencies. Shorter lines, no ticket turnstiles, and stores without checkouts sound great, but they come at a significant cost when they rely on facial recognition. Although CBP does mention that all newly captured photos will be deleted after 14 days it’s worth keeping in mind that CBP could extend this time period in the wake of a terrorist attack or other emergency In the United Kingdom, government-backed facial recognition technologycould be used to ease congestion at London Underground stations. The goal is for participating passengers to simply walk by cameras rather than wait at cumbersome ticket turnstiles. The technology, built by Bristol Robotics Laboratory, is reportedly accurate enough to distinguish between identical twins. According to Bristol Robotics Laboratory’s Professor Lyndon Smith, the technology could be commercially available in 2019. The United Kingdom is one of the most surveilled countries in the developed world, and the data collected as part of this proposed scheme will be in the hands of Transport for London, a local government body. We shouldn’t be surprised if London Underground’s facial recognition data finds its way into the hands of law enforcement. Such data sharing between Transport for London and London police would hardly be unprecedented. A 2014 report from London’s Metropolitan Police Service (MPS) stated that Transport for London sends MPS license plate data for national security purposes: The Mayor’s Crime Manifesto, published in April 2012, made a commitment to make Transport for London Automatic Number Plate Recognition data available to the Metropolitan Police Service for the purposes of preventing and detecting crime. [Transport for London] collects [Automatic Number Plate Recognition] data from the central London Congestion Charging Zone and the London-wide Low Emission Zone camera networks and processes it for the purpose of enforcement and traffic monitoring. This data is already transferred to the MPS for the purposes of National Security. In May 2015, the London mayor announced that MPS had access to license plate data for criminal—not only national security—investigations: The Mayor, Boris Johnson, has more than doubled the number of high-tech cameras used by the Police (MPS) to help identify criminals and bring them to justice. Around 2,300 Automatic Number Plate Recognition (ANPR) cameras are now in use for policing purposes in London after the MPS were granted access to 1,300 Transport for London cameras which were developed to enforce the Congestion Charge Zone and the Low Emission Zone. Each camera takes a digital reading of passing traffic, allowing speedy identification and collecting real-time data on the precise whereabouts of stolen cars or vehicles involved in crime. This vital information enables the police to detect more criminals, and deter and disrupt criminality on London’s streets. The move to incorporate Transport for London’s ANPR cameras into the Met’s network was one of the Mayor’s 2012 Manifesto pledges and part of his drive to bear down on crime in the capital. A similar access policy will no doubt be in place once the London Underground’s facial recognition system is up and running. Chinese companies are developing facial recognition technology that can not only identify people but may one day be able to predict crimes. A Singaporean company, Xjera Labs, has built surveillance technology that can identify vehicles as well as people. It also allows users to search CCTV footage for particular activity, such as a street fight. Xjera Labs’ technology is used by police in Singapore as well as Chinese schools. This may strike some as creepy and intrusive, but many people see benefits. Chinese researchers have built ATMs that use facial recognition to determine identity. Thanks to facial recognition, one cafe owned by the Chinese e-commerce company Alibaba does not need self-checkout kiosks, let alone human check-out assistance. These innovations from the United Kingdom and China or others like them will find their way to the United States, where around half of adults are already part of a facial recognition network. Shorter lines, no ticket turnstiles, and stores without checkouts sound great, but they come at a significant cost when they rely on facial recognition. The increased use of facial recognition will enable law enforcement to more easily track your lawful movements. When merged with CCTV, body camera, and drone technology facial recognition will allow law enforcement to identify law abiding citizens. The widespread use of facial recognition will open the door for increased tracking and surveillance as well as the stifling of First Amendment-protected activities. We shouldn’t think of facial recognition as a necessarily nefarious technology. It would be great to live in a world where there are fewer airport and shopping lines and our privacy is protected. And we could, provided that lawmakers take steps to limit the facial recognition data government collect and citizens don’t hurry to sacrifice their privacy for convenience. Matthew Feeney is a policy analyst at the Cato Institute.
  • The Hidden Costs of "National Security"    (William D. Hartung, 2017-07-27)
    By: William D. Hartung You wouldn’t know it, based on the endless cries for more money coming from the military, politicians, and the president, but these are the best of times for the Pentagon. Spending on the Department of Defense alone is already well in excess of half a trillion dollars a year and counting. Adjusted for inflation, that means it’s higher than at the height of President Ronald Reagan’s massive buildup of the 1980s and is now nearing the post-World War II funding peak. And yet that’s barely half the story. There are hundreds of billions of dollars in “defense” spending that aren’t even counted in the Pentagon budget.Under the circumstances, laying all this out in grisly detail — and believe me, when you dive into the figures, they couldn’t be grislier — is the only way to offer a better sense of the true costs of our wars past, present, and future, and of the funding that is the lifeblood of the national security state. When you do that, you end up with no less than 10 categories of national security spending (only one of which is the Pentagon budget). So steel yourself for a tour of our nation’s trillion-dollar-plus “national security” budget. Given the Pentagon’s penchant for wasting money and our government’s record of engaging in dangerously misguided wars without end, it’s clear that a large portion of this massive investment of taxpayer dollars isn’t making anyone any safer.1) The Pentagon Budget:The Pentagon’s “base” or regular budget contains the costs of the peacetime training, arming, and operation of the U.S. military and of the massive civilian workforce that supports it -- and if waste is your Eden, then you’re in paradise.The department’s budget is awash in waste, as you might expect from the only major federal agency that has never passed an audit. For example, last year a report by the Defense Business Board, a Pentagon advisory panel, found that the Department of Defense could save $125 billion over five years just by trimming excess bureaucracy. And a new study by the Pentagon’s Inspector General indicates that the department has ignored hundreds of recommendations that could have saved it more than $33.6 billion.The Pentagon can’t even get an accurate count of the number of private contractors it employs, but the figure is certainly in the range of 600,000 or higher, and many of them carry out tasks that might far better be handled by government employees. Cutting that enormous contractor work force by just 15%, only a start when it comes to eliminating the unnecessary duplication involved in hiring government employees and private contractors to do the same work, would save an easy $20 billion annually.And the items mentioned so far are only the most obvious examples of misguided expenditures at the Department of Defense. Even larger savings could be realized by scaling back the Pentagon’s global ambitions, which have caused nothing but trouble in the last decade and a half as the U.S. military has waged devastating and counterproductive wars in Iraq, Afghanistan, Syria, and elsewhere across the Greater Middle East and Africa. An analysis by Ben Friedman of the libertarian Cato Institute estimates that the Pentagon could reduce its projected spending by one trillion dollars over the next decade if Washington reined in its interventionary instincts and focused only on America’s core interests.Donald Trump, of course, ran for president as a businessman who would clean house and institute unprecedented efficiencies in government. Instead, on entering the Oval Office, he’s done a superb job of ignoring chronic problems at the Pentagon, proposing instead to give that department a hefty raise: $575 billion next year. And yet his expansive military funding plans look relatively mild compared to the desires of the gung-ho members of the armed services committees in the House and Senate. Democrats and Republicans alike want to hike the Pentagon budget to at least $600 billion or more. The legislative fight over a final number will play out over the rest of this year. For now, let’s just use Trump’s number as a placeholder. Pentagon Budget: $575 billion2) The War Budget: The wars of this century, from Iraq to Afghanistan and beyond, have largely been paid for through a special account that lies outside the regular Pentagon budget. This war budget -- known in the antiseptic language of the Pentagon as the “Overseas Contingency Operations” account, or OCO -- peaked at more than $180 billion at the height of the Bush administration’s intervention in Iraq.As troop numbers in that country and Afghanistan have plumetted from hundreds of thousands to about 15,000, the war budget, miraculously enough, hasn’t fallen at anywhere near the same pace. That’s because it’s not even subject to the modest caps on the Pentagon’s regular budget imposed by Congress back in 2011, as part of a deal to keep the government open. In reality, over the past five years, the war budget has become a slush fund that pays for tens of billions of dollars in Pentagon expenses that have nothing to do with fighting wars. The Trump administration wants $64.6 billion for that boondoggle budget in fiscal year 2018. Some in Congress would like to hike it another $10 billion. For consistency, we’ll again use the Trump number as a baseline.War Budget: $64.6 BillionRunning Total: $639.6 Billion3) Nuclear Warheads (and more):You might think that the most powerful weapons in the U.S. arsenal -- nuclear warheads -- would be paid for out of the Pentagon budget. And you would, of course, be wrong. The cost of researching, developing, maintaining, and “modernizing” the American arsenal of 6,800 nuclear warheads falls to an obscure agency located inside the Department of Energy, the National Nuclear Security Administration, or NNSA. It also works on naval nuclear reactors, pays for the environmental cleanup of nuclear weapons facilities, and funds the nation’s three nuclear weapons laboratories, at a total annual cost of more than $20 billion per year.Department of Energy (nuclear): $20 BillionRunning total: $659.6 billion4) “Other Defense”:This catchall category encompasses a number of flows of defense-related funding that go to agencies other than the Pentagon. It totals about $8 billion per year. In recent years, about two-thirds of this money has gone to pay for the homeland security activities of the FBI, accounting for more than half of that agency’s annual budget.“Other Defense”: $8 BillionRunning Total: $677.6 billionThe four categories above make up what the White House budget office considers total spending on “national defense.” But I’m sure you won’t be shocked to learn that their cumulative $677.6 billion represents far from the full story. So let’s keep right on going.5) Homeland Security:After the 9/11 attacks, Congress created a mega-agency, the Department of Homeland Security (DHS). It absorbed 22 then-existing entities, all involved in internal security and border protection, creating the sprawling cabinet department that now has 240,000 employees. For those of you keeping score at home, the agencies and other entities currently under the umbrella of DHS include the Coast Guard, the Federal Emergency Management Agency, the Federal Law Enforcement Training Center, the Domestic Nuclear Detection Office, United States Citizenship and Immigration Services, the U.S. Customs and Border Protection Agency, the Transportation Security Agency, the U.S. Secret Service, the Immigration and Customs Enforcement Agency (ICE), and the Office of Intelligence Analysis (the only one of America’s 17 intelligence agencies to fit under the department’s rubric). How many of these agencies actually make us safer? That would be a debatable topic, if anyone were actually interested in such a debate. ICE -- America’s deportation force -- has, for instance, done far more to cause suffering than to protect us from criminals or terrorists. On the other hand, it’s reassuring to know that there is an office charged with determining whether there is a nuclear weapon or radioactive “dirty bomb” in our midst. While it’s hard to outdo the Pentagon, DHS has its own record of dubious expenditures on items large and small. They range from $1,000 fees for employees to attend conferences at spas to the purchase of bagpipes for border protection personnel to the payment of scores of remarkably fat salaries to agency bureaucrats. On the occasion of its 10th anniversary in 2013, Congressman Jeff Duncan (R-SC) excoriated the department as “rife with waste,” among other things, pointing to a report by the DHS inspector general that it had misspent over $1 billion.DHS was supposed to provide a better focus for efforts to protect the United States from internal threats. Its biggest problem, though, may be that it has become a magnet for increased funding for haphazard, misplaced, and often simply dangerous initiatives. These would, for instance, include its programto supply grants to local law enforcement agencies to help them buy military-grade equipment to be deployed not against terrorists, but against citizens protesting the injustices perpetrated by the very same agencies being armed by DHS. The Trump administration has proposed spending $50 billion on DHS in FY 2018.Homeland Security: $50 BillionRunning Total: $717.6 Billion6) Military Aid:U.S. government-run military aid programs have proliferated rapidly in this century. The United States now has scores of arms and training programs serving more than 140 countries. They cost more than $18 billion per year, with about 40% of that total located in the State Department’s budget. Whilethe Pentagon's share has already been accounted for, the $7 billion at State -- which can ill afford to pay for such programs with the Trump administration seeking to gut the rest of its budget -- has not.Military Aid at the State Department: $7 BillionRunning Total: $724.6 Billion7) Intelligence:The United States government has 16 separate intelligence agencies: the Central Intelligence Agency (CIA); the National Security Agency (NSA); the Defense Intelligence Agency; the FBI; the State Department Bureau of Intelligence and Research; the Department of Homeland Security Office of Intelligence Analysis; the Drug Enforcement Administration Office of National Security Intelligence; the Treasury Department Office of Intelligence and Analysis; the Department of Energy Office of Intelligence and Counterintelligence; the National Reconnaissance Office; the National Geospatial Intelligence Agency; Air Force Intelligence, Surveillance, and Reconnaissance; Army Military Intelligence; the Office of Naval Intelligence; Marine Corps Intelligence; and Coast Guard Intelligence. Add to these the Office of the Director of National Intelligence (ODNI), which is supposed to coordinate this far-flung intelligence network, and you have a grand total of 17 agencies. The U.S. will spend more than $70 billion on intelligence this year, spread across all these agencies. The bulk of this funding is contained in the Pentagon budget -- including the budgets of the CIA and the NSA (believed to be hidden under obscure line items there). At most, a few billion dollars in additional expenditures on intelligence fall outside the Pentagon budget and since, given the secrecy involved, that figure can’t be determined, let’s not add anything further to our running tally. Intelligence: $70 Billion (mostly contained inside the Pentagon budget)Running Total: $724.6 Billion8) Supporting Veterans:A steady uptick of veterans generated by the wars in Iraq and Afghanistan has dramatically increased the costs of supporting such vets once they come home, including the war wounded, some of whom will need medical care for life. For 2018, the Veterans Administration has requested over $186 billion for its budget, more than three times what it was before the 2001 intervention in Afghanistan.Veterans: $186 billionRunning Total: $910.6 Billion9) Military Retirement:The trust fund set up to cover pensions for military retirees and their survivors doesn’t have enough money to pay out all the benefits promised to these individuals. As a result, it is supplemented annually by an appropriation from the general revenues of the government. That supplement has by now reached roughly $80 billion per year.Military Retirement: $80 BillionRunning Total: $990.6 Billion10) Defense Share of Interest on the Debt:It’s no secret that the U.S. government regularly runs at a deficit and that the total national debt is growing. It may be more surprising to learn that the interest on that debt runs at roughly $500 billion per year. The Project on Government Oversight calculates the share of the interest on that debt generated by defense-related programs at more than $100 billion annually.Defense Share of the Interest on the Debt: $100 billionGrand Total: $1.09 TrillionThat final annual tally of nearly $1.1 trillion to pay for past wars, fund current wars, and prepare for possible future conflicts is roughly double the already staggering $575 billion the Trump administration has proposed as the Pentagon’s regular budget for 2018. Most taxpayers have no idea that more than a trillion dollars a year is going to what’s still called “defense,” but these days might equally be called national insecurity.So the next time you hear the president, the secretary of defense, the chairman of the Joint Chiefs of Staff, or a hawkish lawmaker claim that the U.S. military is practically collapsing from a lack of funding, don’t believe it for a second. Donald Trump may finally have put plutocracy in the Oval Office, but a militarized version of it has long been ensconced in the Pentagon and the rest of the national security state. In government terms, make no mistake about it, the Pentagon & Co. are the 1%.William D. Hartung is the director of the Arms and Security Project at the Center for International Policy. He is the author of Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex.Originally published at TomDisatch.com.
  • The Fed Remains on Course – to Trouble    (Thorsten Polleit, 2017-07-26)
    By: Thorsten Polleit The Federal Reserve (Fed) is widely expected to continue to tighten its monetary policy this year. According to a latest Reuters Poll, the Fed is likely to start shrinking its US$4 trillion balance sheet in September and, moreover, raise further its key interest rate, which is currently standing in a range of 1.0 to 1.25 percent, in the fourth quarter this year.According to mainstream economic wisdom, the time has come for the US economy to return to a more normal level of interest rates. Industrial output is expanding at a decent clip, official unemployment has declined markedly, and prices in the stock and housing market show a sustained upward drift. Considering these circumstances, the US economy can now shoulder a tighter monetary policy, it is said.It should be understood, however, that there will be side-effects, even unintended consequences, if and when the Fed hikes interest rates further. Most importantly, the Fed doesn’t know where the “neutral interest rate” is. If it does too much, the economy will collapse. If it does not do enough, it will only prolong the artificial boom, causing ongoing malinvestment and, ultimately, another crisis.Admittedly, this is nothing new: The Fed has always been a cause of boom and bust. It sets into motion an artificial boom by issuing new fiat money through bank credit expansion. Such a boom, however, must sooner rather than later collapse and turn into a bust. It is, therefore, strongly advised to expect nothing good coming out of Fed interventions.Going Through the NumbersThis of course holds true for the Fed’s plan to start selling securities it has bought during the financial and economic crisis to prop up the economic and financial system. Back in 2008 and 2009, the Fed provided the US banking system with an enormous cash infusion by granting loans to and purchasing securities from banks.The Fed ramped up banks' cash holdings from US$ 24,9bn to US$ 2,398.1bn from September 2008 to July 2017. It did so by buying Treasuries and mortgage-backed securities (MBS) amounting to US$ 1,908.9bn and US$1,770.3bn, respectively. In the meantime, however, banks have repaid most of the loans provided by the Fed.This, in turn, has reduced banks' cash holdings to US$ 2,398.2bn. As a result, it has become impossible for the Fed to sell all the bonds it has purchased. Simply put: The US banking system does currently not have enough base money to pay for the Fed’s crisis-related bond purchases of US$3.755.8bn.If the Fed were to shed just 64 percent of its current bond holdings, the base money supply in the US banking system would be completely wiped out, making the banking sector effectively illiquid. In this process, US interbank interest rates would presumably spike, sending shock waves through the economic and financial system, not only in the US but worldwide.Three OptionsIt is safe to assume that the Fed and the banks would want to avoid such a scenario. This leaves the Fed with three options. Option 1: The Fed sells only a (small) part of its current Treasury and MBS to avoid a liquidity shortage in the interbank money market. In other words: The Fed would have to keep sitting on a significant part of its bond holdings and buy new bonds once they mature.Option 2: The Fed sells off its bond holdings and, at the same time, runs liquidity providing operations to keep banks sufficiently equipped with cash. It purchases, for instance, consumer and/or corporate loans from banks issuing new base money. As a result, the Fed’s assets in its balance sheet would see Treasuries and MBS go down, and consumer and corporate loans go up.Option 3: The Fed swaps its Treasury and MBS holdings into short-term maturities and sells these papers over time, thereby reducing the base money supply in the banking system as far as possible. This way, the Fed would reduce its active involvement in the credit markets somewhat, confining it mainly to the short-term end of the market.Interest Rates will Remain DistortedThat said, it will be enlightening to see which option the Fed will ultimately choose. Option 1 and 2 would be indicative of the Fed wanting to retain its powerful grip on the price action and consequently the yields in fixed income markets. Option 3, in turn, would suggest that the Fed allows interest rates in the long-term end of the market to normalize at least to some extent.Whatever option it chooses, however, the Fed will, one way or another, keep distorting interest rates. By issuing new quantities of fiat money through credit expansion, the Fed inevitably wreaks havoc on the economy's price system. It manipulates the perception of risk and flatters the value of future cash flows.This, in turn, causes many economic and social problems. Most importantly, the Fed’s actions debase the purchasing power of the US dollar, thereby destroying much of peoples' life savings. What is more, the Fed’s policy coercively redistributes income and wealth, and it also brings about costly boom and busts.Just to be on the safe side: The Fed is not the solution to all these problems. It is the actual cause. Whatever the US central bank will do: Be assured it will remain on course to trouble. And trouble there will be – and unfortunately so, whatever the Fed will be doing in terms of setting interest rates and dealing with the bonds it has purchased against issuing new fiat dollars.While this is certainly a gloomy message, it might help investors to make wise decisions. Because if the Fed causes another round of trouble, it will most likely resort to even lower interest rates and issuing even more fiat money. So whatever happens short-term, there is good reason to expect that the fiat dollar — and this holds true for all fiat currencies — will lose value.
  • Jeff Sessions's Drug-War Fanaticism Highlights a Growing Gap Between DC and the States    (Ryan McMaken, 2017-07-26)
    By: Ryan McMaken In recent years, numerous states have been passing new reforms of the long-abused civil asset forfeiture in which police agencies seize private property without any due process. At least 11 states, plus the District of Columbia, have passed new reforms. Some reforms, such as those in New Mexico and Nebraska, prohibit asset forfeiture altogether in the absence of a criminal conviction. Other states have opted for a more incremental approach, and have settled for new mandates in which law enforcement agencies must publicly report what has been seized — with the intent of identifying abuse for possible additional future reforms. The Heritage Foundation has noted the significance of these reforms: The fact that these reforms have been adopted within the past three years is remarkable. Only a few short years ago America’s civil forfeiture system was skewed at both the state and federal levels, seemingly invulnerable to public criticism and legal attack. Yet, with widespread support in their legislatures, states continue to enact significant forfeiture reform measures, often over the alarmist and overblown objections of police, sheriffs, and prosecutors. The message is clear: Outside the law enforcement community, support for the forfeiture status quo is remarkably thin.From Washington, DC, you might not know there's any perceived problem at all with asset forfeiture — a key tactic in the War on Drugs. This seems to be the case for US Attorney General Jeff Sessions who in a recent speech to the National District Attorneys Association doubled down on the practice and called for more asset forfeiture."[W]e plan to develop policies to increase forfeitures," Sessions declared this month, claiming that " No criminal should be allowed to keep the proceeds of their crime." Of course, given that asset forfeiture is by definition a seizure of property from a person without any criminal conviction, what sessions really means is this: "no person we suspect of being a criminal should be allowed to keep the proceeds of their crime." In other words, in the mind of Jeff Sessions, due process means nothing. RELATED: "Make Every State a Sanctuary State" by Ryan McMakenState legislatures, fortunately, have concluded otherwise, and this should perhaps be not surprising since state legislatures are far more responsive to the voters than is Congress. The US attorney General, who is a political appointee, is even more distant from any oversight by the voters or the public. State legislators tend to live among their constituents. Many of them are only part timers. A voter can arrange to have coffee with a state legislator without being wealthy or especially powerful. Members of Congress, on the other hand, are mostly millionaires who spend most of their time hundreds — if not thousands — of miles from their constituents. To get a meeting of any consequence with a member of Congress, one must usually be either a wealthy donor or represent a powerful interest group. The federal AG, is totally out of reach of the average voter.Thus it should surprise no one that Jeff Sessions, a wealthy out-of-touch former Senator himself, is moving in exactly the opposite direction as the state governments who are attempting to bring police powers under control. Sessions himself has admitted he's clueless as to what's going on in the real world, and back in April he revealed he was "surprised [the public] didn’t like" his fanatical anti-marijuana policies. Sessions won't let his obvious disconnect from state government and the public affect his obsession with the drug war, however. He wants more asset forfeiture, and he wants more drug prosecutions.Perhaps because of the initial reaction to his tone-deaf proclamations on marijuana, Sessions was careful to not mention marijuana in his remarks. Instead, he announced he wants law enforcement to "make visits to physician and pharmacies and do checks on those who prescribe or sell" prescription drugs because "This nation is prescribing and consuming far too many painkillers" and Sessions apparently knows exactly the correct number of prescriptions that ought to be issued.Of course, if Sessions has decided to abandon his drive to crack down on marijuana — at least as far as his public remarks are concerned — we shouldn't be thanking anyone in Washington, DC. Indeed, if DC's hands are increasingly tied on this matter it's because the states have simply become increasingly hostile to federal policy. Since 2012, eight US states — with a total population of over 60 million — have legalized recreational marijuana. More than a dozen other states have decriminalized marijuana. More than half of the states have legalized medicinal marijuana. Congress has done precious little to meet the states halfway on this, and legal marijuana businesses continue to be crippled by federal banking regulations, while the threat of federal prosecution still hangs over the heads of many. The federal government has not formally admitted defeat on this matter in any way and continues to reserve for itself the right to raid private homes and businesses to enforce federal law. In the matter of both asset forfeiture and marijuana's legality, we see a growing gap between the states and the immovable monolith that is the US federal government. As many state governments are increasingly forced to economize, reform, and engage in self-criticism over sacred cows like asset forfeiture, it's all just business as usual in Washington where federal budgets grow ever larger, where salaries get ever bigger, and where no regulation — no matter how onerous — seems to ever be repealed. And state hostility to federal edicts doesn't end with just drug war matters. In recent years, at least eight states have passed laws attempting to nullify federal efforts to restrict gun ownership. As with marijuana laws, many of these provisions are facing attacks in federal court. Sessions, of course, has declared "I want to see a substantial increase in gun crime prosecutions." He means federal prosecutions. Meanwhile, California keeps talking about secession. Cities threaten to become "sanctuary" cities for  immigrants contrary to federal law, and Utah is trying to regain control of federal lands. Jeff Sessions, however, continues to whistle past the graveyard on these matters. In this, he's probably a fairly typical Washington politician.  From their luxury condos on the shores of the Potomac, everything probably looks fine. 
  • Jeff Sessions's Drug-War Fanaticism Shows a Growing Gap Between DC and the States    (Ryan McMaken, 2017-07-26)
    By: Ryan McMaken In recent years, numerous states have been passing new reforms of the long-abused civil asset forfeiture in which police agencies seize private property without any due process. At least 11 states, plus the District of Columbia, have passed new reforms. Some reforms, such as those in New Mexico and Nebraska, prohibit asset forfeiture altogether in the absence of a criminal conviction. Other states have opted for a more incremental approach, and have settled for new mandates in which law enforcement agencies must publicly report what has been seized — with the intent of identifying abuse for possible additional future reforms. The Heritage Foundation has noted the significance of these reforms: The fact that these reforms have been adopted within the past three years is remarkable. Only a few short years ago America’s civil forfeiture system was skewed at both the state and federal levels, seemingly invulnerable to public criticism and legal attack. Yet, with widespread support in their legislatures, states continue to enact significant forfeiture reform measures, often over the alarmist and overblown objections of police, sheriffs, and prosecutors. The message is clear: Outside the law enforcement community, support for the forfeiture status quo is remarkably thin.From Washington, DC, you might not know there's any perceived problem at all with asset forfeiture — a key tactic in the War on Drugs. This seems to be the case for US Attorney General Jeff Sessions who in a recent speech to the National District Attorneys Association doubled down on the practice and called for more asset forfeiture."[W]e plan to develop policies to increase forfeitures," Sessions declared this month, claiming that " No criminal should be allowed to keep the proceeds of their crime." Of course, given that asset forfeiture is by definition a seizure of property from a person without any criminal conviction, what sessions really means is this: "no person we suspect of being a criminal should be allowed to keep the proceeds of their crime." In other words, in the mind of Jeff Sessions, due process means nothing. RELATED: "Make Every State a Sanctuary State" by Ryan McMakenState legislatures, fortunately, have concluded otherwise, and this should perhaps be not surprising since state legislatures are far more responsive to the voters than is Congress. The US attorney General, who is a political appointee, is even more distant from any oversight by the voters or the public. State legislators tend to live among their constituents. Many of them are only part timers. A voter can arrange to have coffee with a state legislator without being wealthy or especially powerful. Members of Congress, on the other hand, are mostly millionaires who spend most of their time hundreds — if not thousands — of miles from their constituents. To get a meeting of any consequence with a member of Congress, one must usually be either a wealthy donor or represent a powerful interest group. The federal AG, is totally out of reach of the average voter.Thus it should surprise no one that Jeff Sessions, a wealthy out-of-touch former Senator himself, is moving in exactly the opposite direction as the state governments who are attempting to bring police powers under control. Sessions himself has admitted he's clueless as to what's going on in the real world, and back in April he revealed he was "surprised [the public] didn’t like" his fanatical anti-marijuana policies. Sessions won't let his obvious disconnect from state government and the public affect his obsession with the drug war, however. He wants more asset forfeiture, and he wants more drug prosecutions.Perhaps because of the initial reaction to his tone-deaf proclamations on marijuana, Sessions was careful to not mention marijuana in his remarks. Instead, he announced he wants law enforcement to "make visits to physician and pharmacies and do checks on those who prescribe or sell" prescription drugs because "This nation is prescribing and consuming far too many painkillers" and Sessions apparently knows exactly the correct number of prescriptions that ought to be issued.Of course, if Sessions has decided to abandon his drive to crack down on marijuana — at least as far as his public remarks are concerned — we shouldn't be thanking anyone in Washington, DC. Indeed, if DC's hands are increasingly tied on this matter it's because the states have simply become increasingly hostile to federal policy. Since 2012, eight US states — with a total population of over 60 million — have legalized recreational marijuana. More than a dozen other states have decriminalized marijuana. More than half of the states have legalized medicinal marijuana. Congress has done precious little to meet the states halfway on this, and legal marijuana businesses continue to be crippled by federal banking regulations, while the threat of federal prosecution still hangs over the heads of many. The federal government has not formally admitted defeat on this matter in any way and continues to reserve for itself the right to raid private homes and businesses to enforce federal law. In the matter of both asset forfeiture and marijuana's legality, we see a growing gap between the states and the immovable monolith that is the US federal government. As many state governments are increasingly forced to economize, reform, and engage in self-criticism over sacred cows like asset forfeiture, it's all just business as usual in Washington where federal budgets grow ever larger, where salaries get ever bigger, and where no regulation — no matter how onerous — seems to ever be repealed. And state hostility to federal edicts doesn't end with just drug war matters. In recent years, at least eight states have passed laws attempting to nullify federal efforts to restrict gun ownership. As with marijuana laws, many of these provisions are facing attacks in federal court. Sessions, of course, has declared "I want to see a substantial increase in gun crime prosecutions." He means federal prosecutions. Meanwhile, California keeps talking about secession. Cities threaten to become "sanctuary" cities for  immigrants contrary to federal law, and Utah is trying to regain control of federal lands. Jeff Sessions, however, continues to whistle past the graveyard on these matters. In this, he's probably a fairly typical Washington politician.  From their luxury condos on the shores of the Potomac, everything probably looks fine. 
  • Why Some People Are Poorer than Others    (Henry Hazlitt, 2017-07-26)
    By: Henry Hazlitt Throughout history, until about the middle of the 18th century, mass poverty was nearly everywhere the normal condition of man. Then capital accumulation and a series of major inventions ushered in the Industrial Revolution. In spite of occasional setbacks, economic progress became accelerative. Today, in the United States, in Canada, in nearly all of Europe, in Australia, New Zealand, and Japan, mass poverty has been practically eliminated. It has either been conquered or is in process of being conquered by a progressive capitalism. Mass poverty is still found in most of Latin America, most of Asia, and most of Africa.Yet even the United States, the most affluent of all countries, continues to be plagued by "pockets" of poverty and by individual poverty.Temporary pockets of poverty, or of distress, are an almost necessary result of a free competitive enterprise system. In such a system some firms and industries are growing or being born, others are shrinking or dying; and many entrepreneurs and workers in the dying industries are unwilling or unable to change their residence or their occupation. Pockets of poverty may be the result of a failure to meet domestic or foreign competition, of a shrinkage or disappearance of demand for some product, of mines or wells that have been exhausted, of land that has become a dust bowl, and of droughts, floods, earthquakes, and other natural disasters. There is no way of preventing most of these contingencies, and no all encompassing cure for them. Each is likely to call for its own special measures of alleviation or adjustment. Whatever general measures may be advisable can best be considered as part of the broader problem of individual poverty.This problem is nearly always referred to by socialists as "the paradox of poverty in the midst of plenty." The implication of the phrase is not only that such poverty is inexcusable, but that its existence must be the fault of those who have the "plenty." We are most likely to see the problem clearly, however, if we stop blaming "society" in advance and seek an unemotional analysis.Diverse and InternationalWhen we start seriously to itemize the causes of individual poverty, absolute or relative, they seem too diverse and numerous even to classify. Yet in most discussion we do find the causes of individual poverty tacitly divided into two distinct groups — those that are the fault of the individual pauper and those that are not. Historically, many so-called "conservatives" have tended to blame poverty entirely on the poor: they are shiftless, or drunks or bums: "Let them go to work." Most so-called "liberals," on the other hand, have tended to blame poverty on everybody but the poor: they are at best the "unfortunate," the "underprivileged," if not actually the "exploited," the "victims" of the "maldistribution of wealth," or of "heartless laissez faire."The truth, of course, is not that simple, either way. We may, occasionally, come upon an individual who seems to be poor through no fault whatever of his own (or rich through no merit of his own). And we may occasionally find one who seems to be poor entirely through his own fault (or rich entirely through his own merit). But most often we find an inextricable mixture of causes for any given person's relative poverty or wealth. And any quantitative estimate of fault versus misfortune seems purely arbitrary. Are we entitled to say, for example, that any given individual's poverty is only 1 percent his own fault, or 99 percent his own fault — or fix any definite percentage whatever? Can we make any reasonably accurate quantitative estimate of the percentage even of those who are poor mainly through their own fault, as compared with those whose poverty is mainly the result of circumstances beyond their control? Do we, in fact, have any objective standards for making the separation?A good idea of some of the older ways of approaching the problem can be obtained from the article on "Poverty" in The Encyclopedia of Social Reform, published in 1897.1 This refers to a table compiled by a Professor A. G. Warner in his book, American Charities. This table brought together the results of investigations in 1890 to 1892 by the charity organization societies of Baltimore, Buffalo, and New York City, the associated charities of Boston and Cincinnati; the studies of Charles Booth in Stepney and St. Pancras parishes in London, and the statements of Böhmert for 76 German cities published in 1886. Each of these studies tried to determine the "chief cause" of poverty for each of the paupers or poor families it listed. Twenty such "chief causes" were listed altogether.Professor Warner converted the number of cases listed under each cause in each study into percentages, wherever this had not already been done; then took an unweighted average of the results obtained in the fifteen studies for each of these "Causes of Poverty as Determined by Case Counting," and came up with the following percentages. First came six "Causes Indicating Misconduct": Drink 11.0 percent, Immorality 4.7, Laziness 6.2, Inefficiency and Shiftlessness 7.4, Crime and Dishonesty 1.2, and Roving Disposition 2.2 — making a total of causes due to misconduct of 32.7 percent.Professor Warner next itemized fourteen "Causes Indicating Misfortune": Imprisonment of Bread Winner 1.5 percent, Orphans and Abandoned 1.4, Neglect by Relatives 1.0, No Male Support 8.0, Lack of Employment 17.4, Insufficient Employment 6.7, Poorly Paid Employment 4.4, Unhealthy or Dangerous Employment 0.4, Ignorance of English 0.6, Accident 3.5, Sickness or Death in Family 23.6, Physical Defect 4.1, Insanity 1.2, and Old Age 9.6 — making a total of causes indicating misfortune of 84.4 percent.No Objective StandardsLet me say at once that as a statistical exercise this table is close to worthless, full of more confusions and discrepancies than it seems worth analyzing here. Weighted and unweighted averages are hopelessly mixed. And certainly it seems strange, for example, to list all cases of unemployment or poorly paid employment under "misfortune" and none under personal shortcomings.Even Professor Warner points out how arbitrary most of the figures are: "A man has been shiftless all his life, and is now old; is the cause of poverty shiftlessness or old age?… Perhaps there is hardly a single case in the whole 7,000 where destitution has resulted from a single cause."But though the table has little value as an effort in quantification, any attempt to name and classify the causes of poverty does call attention to how many and varied such causes there can be, and to the difficulty of separating those that are an individual's own fault from those that are not.An effort to apply objective standards is now made by the Social Security Administration and other Federal agencies by classifying poor families under "conditions associated with poverty." Thus we get comparative tabulations of incomes of farm and nonfarm families, of white and Negro families, families classified by age of "head," male head or female head, size of family, number of members under 18, educational attainment of head (years in elementary schools, high school, or college), employment status of head, work experience of head (how many weeks worked or idle), "main reason for not working: ill or disabled, keeping house, going to school, unable to find work, other, 65 years and over"; occupation of longest job of head, number of earners in family; and so on.These classifications, and their relative numbers and comparative incomes, do throw objective light on the problem, but much still depends on how the results are interpreted.Oriented Toward the FutureA provocative thesis has been put forward by Professor Edward C. Banfield of Harvard in his book, The Unheavenly City.2 He divides American society into four "class cultures": upper, middle, working, and lower classes. These "subcultures," he warns, are not necessarily determined by present economic status, but by the distinctive psychological orientation of each toward providing for a more or less distant future.At the most future oriented end of this scale, the upper-class individual expects long life, looks forward to the future of his children, grandchildren, even great-grandchildren, and is concerned also for the future of such abstract entities as the community, nation, or mankind. He is confident that within rather wide limits he can, if he exerts himself to do so, shape the future to accord with his purposes. He therefore has strong incentives to "invest" in the improvement of the future situation — e.g., to sacrifice some present satisfaction in the expectation of enabling someone (himself, his children, mankind, etc.) to enjoy greater satisfactions at some future time. As contrasted with this:The lower class individual lives from moment to moment. If he has any awareness of a future, it is of something fixed, fated, beyond his control: things happen to him, he does not make them happen. Impulse governs his behavior, either because he cannot discipline himself to sacrifice a present for a future satisfaction or because he has no sense of the future. He is therefore radically improvident: whatever he cannot consume immediately he considers valueless. His bodily needs (especially for sex) and his taste for 'action' take precedence over everything else — and certainly over any work routine. He works only as he must to stay alive, and drifts from one unskilled job to another, taking no interest in the work.3Professor Banfield does not attempt to offer precise estimates of the number of such lowerclass individuals, though he does tell us at one point that "such ['multi problem'] families constitute a small proportion both of all families in the city (perhaps 5 percent at most) and of those with incomes below the poverty line (perhaps 10 to 20 percent). The problems that they present are out of proportion to their numbers, however; in St. Paul, Minnesota, for example, a survey showed that 6 percent of the city's families absorbed 77 percent of its public assistance, 51 percent of its health services, and 56 percent of its mental health and correction casework services."4Obviously if the "lower class culture" in our cities is as persistent and intractable as Professor Banfield contends (and no one can doubt the fidelity of his portrait of a sizable group), it sets a limit on what government policy makers can accomplish.By Merit, or by LuckIn judging any program of relief, our forefathers usually thought it necessary to distinguish sharply between the "deserving" and the "undeserving" poor. But this, as we have seen, is extremely difficult to do in practice. And it raises troublesome philosophic problems. We commonly think of two main factors as determining any particular individual's state of poverty or wealth — personal merit, and "luck." "Luck" we tacitly define as anything that causes a person's economic (or other) status to be better or worse than his personal merits or efforts would have earned for him.Few of us are objective in measuring this in our own case. If we are relatively successful, most of us tend to attribute our success wholly to our own intellectual gifts or hard work; if we have fallen short in our worldly expectations, we attribute the outcome to some stroke of hard luck, perhaps even chronic hard luck. If our enemies (or even some of our friends) have done better than we have, our temptation is to attribute their superior success mainly to good luck. But even if we could be strictly objective in both cases, is it always possible to distinguish between the results of "merit" and "luck"? Isn't it luck to have been born of rich parents rather than poor ones? Or to have received good nurture in childhood and a good education rather than to have been brought up in deprivation and ignorance? How wide shall we make the concept of luck? Isn't it merely a man's bad luck if he is born with bodily defects — crippled, blind, deaf, or susceptible to some special disease? Isn't it also merely bad luck if he is born with a poor intellectual inheritance — stupid, feebleminded, an imbecile? But then, by the same logic, isn't it merely a matter of good luck if a man is born talented, brilliant, or a genius? And if so, is he to be denied any credit or merit for being brilliant?We commonly praise people for being energetic or hardworking, and blame them for being lazy or shiftless. But may not these qualities themselves, these differences in degrees of energy, be just as much inborn as differences in physical or mental strength or weakness? In that case, are we justified in praising industriousness or censuring laziness?However difficult such questions may be to answer philosophically, we do give definite answers to them in practice. We do not criticize people for bodily defects (though some of us are not above deriding them), nor do we (except when we are irritated) blame them for being hopelessly stupid. But we do blame them for laziness or shiftlessness, or penalize them for it, because we have found in practice that people do usually respond to blame and punishment, or praise and reward, by putting forth more effort than otherwise. This is really what we have in mind when we try to distinguish between the "deserving" and the "undeserving" poor.What Happens to IncentiveThe important question always is the effect of outside aid on incentives. We must remember, on the one hand, that extreme weakness or despair is not conducive to incentive. If we feed a man who has actually been starving, we for the time being probably increase rather than decrease his incentives. But as soon as we give an idle able-bodied man more than enough to maintain reasonable health and strength, and especially if we continue to do this over a prolonged period, we risk undermining his incentive to work and support himself. There are unfortunately many people who prefer near destitution to taking a steady job. The higher we make any guaranteed floor under incomes, the larger the number of people who will see no reason either to work or to save. The cost to even a wealthy community could ultimately become ruinous.An "ideal" assistance program, whether private or governmental, wouldsupply everyone in dire need, through no fault of his own, enough to maintain him in reasonable health;would give nothing to anybody not in such need; andwould not diminish or undermine anybody's incentive to work or save or improve his skills and earning power, but would hopefully even increase such incentives.But these three aims are extremely difficult to reconcile. The nearer we come to achieving any one of them fully, the less likely we are to achieve one of the others. Society has found no perfect solution of this problem in the past, and seems unlikely to find one in the future. The best we can look forward to, I suspect, is some never-quite-satisfactory compromise.Fortunately, in the United States the problem of relief is now merely a residual problem, likely to be of constantly diminishing importance as, under free enterprise, we constantly increase total production. The real problem of poverty is not a problem of "distribution" but of production. The poor are poor not because something is being withheld from them, but because, for whatever reason, they are not producing enough. The only permanent way to cure their poverty is to increase their earning power.[The Freeman, 1972.] 1. Ed. by Wm. D. P. Bliss (New York: Funk & Wagnalls). 2. Boston: Little Brown, 1970. 3. Ibid., p. 53. 4. Ibid., p. 127.
  • Scorecard: Trump's First Six Months    (Michael D. Tanner, 2017-07-26)
    Michael D. Tanner The first six months of the Trump presidency have been dominated by tweets, insults, and investigations. But obscured by all the noise have been important questions of policy. Let us, therefore, put aside issues of style and look more closely at the substance. What has President Trump accomplished? There have clearly been successes. At the very top of the list is Supreme Court Justice Neil Gorsuch, who gives every sign of being the brilliant originalist who was advertised. Trump has been slower in nominating judges to lower courts, but those he has put up, in general, appear to be excellent choices. On the legislative front, Trump’s biggest victory may have been a bill making it easier to fire incompetent employees at the Department of Veterans Affairs, and protecting whistleblowers in the agency. He has also signed some 15 bills repealing all or parts of Obama-era regulations. Few have been earthshaking, but most have been steps in the right direction. And while his withdrawal from the Paris climate accords was as much symbolism as substance (as were the accords themselves), it was an important signal that America is going to prioritize economic growth. Some wins (Gorsuch, regulations, Paris accord), but character flaws continue to tarnish his achievements. Nor should we ignore addition by subtraction, so to speak. There are all the regulations that the Trump administration has not enacted, especially compared with what a Clinton administration probably would have done. By some measures, the Trump administration has been the least regulatory presidency since Reagan’s. That’s not nothing. But the president has mostly struck out on bigger items. Even if Republicans eventually cobble together some sort of health-care bill, full repeal of Obamacare is, by all accounts, not going to happen. Tax reform remains nothing more than a one-page outline and is unlikely to pass this year. The budget remains stalled, entitlement reform is off the table, and deficits are rising. Congress, of course, shares the blame for these failures. But Trump’s distraction, disengagement, and vacillation helped turn bad situations into true disasters. Then again, we should probably be grateful that many of Trump’s other initiatives, such as Ivanka’s paid family-leave and child-care programs, the trillion-dollar infrastructure boondoggle, and, of course, the wall are not going anywhere. And if you want to see a complete policy train wreck, look no further than the president’s travel ban, originally intended to bar entry for 90 days for applicants from seven Muslim-majority countries. Setting aside that the president managed to insult an entire religion and caused enormous personal hardship to innocent people, or that the ban does nothing to make America safer, one can’t overlook that the whole exercise ended up bogged down in the courts for longer than the order was originally supposed to be in effect. Meanwhile, on foreign policy, Trump’s flubs and snubs have obscured the fact that he has mostly carried on a pretty traditional approach to most issues. His rhetoric might be more bellicose, but his actual policies are not much different than what President Clinton probably would have done. Under other circumstances, one might consider these six months as perfectly mediocre, not as bad as critics feared, but no great shakes either. But circumstances are hardly normal. It’s all but impossible to separate Trump on policy from Trump’s character. From the point of view of his many critics, his petty feuds, continuing misogyny, and relentless assault on the truth have tarnished those things he has accomplished. Polls show that Trump’s support among voters is at record lows at this point in a presidency, but he retains nearly all the support of his base. For some of them, it’s enough that he appears to speak for them against the bipartisan Washington establishment. For others, they are enthralled by the way he drives liberals, critics, and the media crazy. For others, not being Hillary or Obama will carry him a long way. Besides, the Democrats are hardly offering much of an alternative. But if we are looking for real solutions to the serious problems facing this country, the Trump administration is a long way from winning. Michael Tanner is a senior fellow at the Cato Institute and the author of Going for Broke: Deficits, Debt, and the Entitlement Crisis.
  • U.S. Should Give Balangiga Bells Back to Philippines, Then Leave Rodrigo Duterte to China    (Doug Bandow, 2017-07-26)
    Doug Bandow Most foreigners see Donald Trump as unbalanced, vulgar, and dangerous. But Philippine President Rodrigo Duterte makes President Trump look decent, stable, and even statesmanlike. Elected last May, President Duterte governs a half-failed state. His signature domestic policy is the extra-judicial murder of drug users and dealers. His government faces a bitter Islamic insurgency in the country’s south. In a region dominated by economic “tigers” the Philippines barely muddles along, leaving its energetic and entrepreneurial population well behind neighboring peoples. After taking office Duterte wasted no time in denouncing President Barack Obama, the United States, and the U.S.-Philippine alliance. For a time Duterte even appeared to join Team China, proclaiming that he was in Beijing’s “ideological flow.” Although his enthusiasm for the Sino embrace appeared to fade when Beijing failed to ease its territorial claims, in his State of the Nation address on Monday President Duterte ostentatiously again flaunted his anti-Americanism. He demanded the return of three bronze church bells taken in 1901 by U.S. troops battling the Filipino resistance against Washington after the latter seized the archipelago from Spain. Explained Duterte: “Those bells are reminders of the gallantry and heroism of our forebears … who resisted the American colonization and sacrificed their lives in the process. Give us back those Balangiga bells. They are ours. They belong to the Philippines. They are part of our national heritage.” In fact, the Filipino people have good claim to the bells. But demanding them in a high profile speech after ostentatiously trashing America guarantees rejection. Indeed, the only reason Donald Trump didn’t respond in kind is because he took no notice of Duterte’s speech. The latter was a political act, not a genuine request to redress history. The relationship between America and the Philippines has been complicated from the start. Washington launched the Spanish-American War in 1898 in the name of freeing Cubans from Spanish colonial oppression. Madrid also conveniently controlled the Philippines, which offered America an advanced naval station on the way to what were imagined to be illimitable Asian markets. Although Filipinos already were fighting for independence, Washington insisted that defeated Spain surrender the islands and then undefeated Filipinos accept a new colonial master. Many refused. The American military fought an increasingly dirty war against the insurgents. Some three years and 200,000 dead Filipinos later, Washington had established its control over most of what now was America’s first “Salt Water” or overseas colony. Some resistance, especially among the Muslim minority, continued for years. One of the noted battles occurred in Balangiga, where guerrillas infiltrated the town and assaulted a U.S. Army base, killing 48 Americans. The ringing of church bells signaled the start of the attack. Retaliation was brutal, the kind of conduct Americans most often associate with Nazi Germany. Brig. Gen. Jacob W. Smith ordered the killing of anyone who could fight, meaning ten years old and up. Explained the commander: “I want no prisoners. I wish you to kill and burn, the more you kill and burn the better it will please me.” He further instructed his men to make the region “a howling wilderness.” Estimates of the number murdered start at around 2000, though no one really knows. Smith was forced into retirement, but not otherwise punished. Amid the slaughter the U.S. Army took the bells as war booty. One is housed in a military museum at Camp Red Cloud in South Korea; the other two are displayed at Wyoming’s Francis E. Warren Air Force Base. President Duterte complained: “they hijacked it, stole it and never returned it to us.” The bells represent oppression, not liberty; brutality, not bravery. Given their history, the bells should generate shame and embarrassment in any American who views them. They should go back to the Philippines. But Washington never has reacted well to demands to reexamine America’s past dubious conduct. President Bill Clinton rejected the request from far more respectable Philippine President Fidel Ramos for the bells’ return. Wyoming politicians also have steadfastly defended their state’s plundered bells. Three years ago Filipinos started an online petition requesting the bells back, but received no response. While criticism of America’s war-time conduct is warranted, the abuses occurred almost 120 years ago. President Duterte’s anti-American feelings date to his childhood (his grandmother reportedly described U.S. war crimes) and apparently were reinforced while he served as mayor of Davao City, when he was denied a visa to visit America because of his use even then of extrajudicial killings to fight crime. Today Duterte is sensitive to foreign, and especially U.S., scrutiny of his murderous misbehavior at a national level. Why should the U.S. go to war for the Philippines? America’s security does not depend on Manila. For instance, last week Rep. Jim McGovern (D-Mass.) led a hearing on Manila’s drug war, which has killed more than 7000 people over the past year. He said he would protest if the Philippine president accepted President Donald Trump’s invitation to visit America. In return, said Duterte, “You’re investigating me and the internal affairs of my country? I’m investigating you, and I will investigate you, and I will expose it to the world what you did to the Filipinos, especially to the Moro Filipinos.” As for visiting the U.S., Duterte said he wasn’t interested, proclaiming: “There will never be a time that I will go to America during my term, or even thereafter. So what makes this guy think I’ll go to America? I’ve seen America, and it’s lousy.” Washington loosened its controls over the archipelago before World War II and the two peoples fought together in that conflict. Independence followed the war and the U.S. agreed to the 1951 “mutual” defense treaty. American forces finally left Clark Air Base and Subic Bay naval station in 1991 and 1992, respectively. Eventually U.S. forces trickled back to the Philippines, helping train the Filipino armed forces, combat the terrorist/gangster band Abu Sayyaf, and battle other Islamic insurgents, like today in the city of Marawi on the island of Mindanao. Recent Philippine presidents also sought to expand Washington-Manila ties in order to enlist America against the People’s Republic of China, which seized control of Scarborough Shoal, part of the Spratly chain claimed by the Philippines. However, after taking office last year the 71-year-old former mayor challenged the cozy relationship between the American and Philippine militaries. At one point he talked of voiding the 2014 agreement giving Washington access to Philippine bases and even sounded like he wanted to end the alliance. Then Duterte said he desired to keep the 1951 defense treaty while “realigning” the country and expanding its military ties to other countries. In April he called the U.S. “the Philippines’ only defense treaty ally.” Contrary to his earlier rhetoric, Duterte did not end military cooperation with the U.S., though he suspended joint patrols in the South China Sea. The two armed forces held their annual exercises in May, but on a reduced scale and without attention to maritime defense. A Philippine military spokesman emphasized: “Just to make clear, this is not a war game.” At the same time, Duterte made a dramatic outreach to China. After taking office he said he would “set aside” the territorial ruling in Manila’s favor by a tribunal of the Permanent Court of Arbitration at The Hague. He followed up with a visit to Beijing. While there he announced his “separation from the United States.” He added: “I’ve realigned myself in your ideological flow and maybe I will also go to Russia to talk to Putin and tell him that there are three of us against the world-China, Philippines, and Russia.” Despite his seeming readiness to salute their flag the Chinese appeared wary of adopting the mercurial leader as their client. Beijing promised $24 billion in aid and investment, but did not offer to compromise its territorial claims. Duterte also indicated his desire to participate in China’s “One Belt, One Road” economic initiative. In April he appeared to toughen his stand toward the PRC, ordering the Philippine military to occupy contested territories of the Spratly Islands and “put in structures.” He explained: “We tried to be friends with everybody but we have to maintain our jurisdiction now.” Indeed, he added, “It looks like there’s a race to grab islands. What is ours now, we should get and make a strong point that it is ours.” But after Beijing objected, or gently admonished him, as he put it, he promised not to deploy any weapons to the islands (“Because of our friendship with China,” he explained). At the April ASEAN summit he said it was impossible to pressure the PRC on territorial issues: “talking-that’s the only luxury we have.” In May he welcomed a Chinese naval visit to Davao, where he had long served as mayor. He also said he was interested in undertaking joint military exercises with China. Acting Foreign Minister Enrique Manalo explained: “We are actively looking at developing greater contacts, such as defense cooperation, with China. Our defense officials are meeting regularly.” Duterte’s chief problem is that he governs a nation without a military, a least one directed against foreign threats and capable of serious action. The army is the most important service and is focused on internal security, such as combatting insurgencies, as in Mindanao. The other services’ reputations have been of a navy that couldn’t sail and an air force that couldn’t fly. Reported the Pentagon: “Although Manila recognizes the growing importance of external threats and has acquired a coast guard cutter, the country still lacks adequate air defense, maritime patrol, and reconnaissance capabilities.” The website GlobalFirePower.com’s latest global ranking places the Philippines at 50. China ranks number three, and the gap between the two is vast. Some observers suggested that Duterte’s erratic behavior is an attempt to squeeze a stronger defense commitment and/or more cash out of a frazzled Washington. However, rather like Donald Trump, Duterte seems to lack the nuance, dedication, organization, calculation, and self-control necessary to implement such a plan. He says whatever he feels or thinks. He simply isn’t capable of sustaining a false front for long. And if he was, that would merely be another reason for Washington to put distance between the two nations. Equally important Duterte apparently fears a military establishment which not only remains committed to the status quo but has removed previous elected presidents. Analyst Gordon Chang blamed the U.S. for failing to spring to Manila’s defense, promising to protect Philippines’ territorial claims like America’s own. Apparently so does Duterte, or perhaps one of his multiple personalities. Earlier this year the Philippine president reported that he had asked the U.S. ambassador “Why did you not send the armada of the 7th Fleet” to stop China from building artificial islands? The obvious reason is because Washington has a meaningful interest in its one-time colony’s independence, not its control of a barren, useless piece of rock. One which the Philippines has demonstrated little interest in doing much to defend. A country with a U.S. Coast Guard cast-off its flagship isn’t serious about protecting its island possessions. Duterte’s former foreign minister, Perfecto Yasay, Jr., similarly complained that “America has failed us” because it “could not give us the assurance that in taking a hard line towards the enforcement of our sovereignty rights under international law, it will promptly come to our defense under our existing military treaty and agreements.” Another Duterte adviser, Jesus Dureza, said “The idea is that our allies are not going to go to war for us, so why should we align with them?” But Manila, not Washington, is the supplicant. The question is, why should the U.S. go to war for the Philippines? America’s security does not depend on Manila. Washington has a substantial interest in freedom of navigation and rightly prefers peaceful resolution of territorial disputes. However, the PRC has a far greater interest in what is its neighborhood and will devote more resources and take more risks to assert itself. Washington certainly does not want to turn over the decision for war with a nuclear-armed power to an unimportant client state governed by an irresponsible and unpredictable leader who has disliked America for most of his life. Ultimately, if the U.S. wants to avoid conflict with China, Washington must accommodate the latter’s insistence that it play a larger regional role, one commensurate with its growing wealth and military power. The U.S. should reduce, not expand, the number of war contingencies for which it must plan. That is best achieved by dropping client states and encouraging them to avoid conflict. Which means Manila should look elsewhere for support against the PRC. Both Japan and India have significant potential conflicts with the PRC and benefit from constraining if not containing Chinese territorial claims and naval activity. Nearby Australia, Indonesia, Malaysia, and Vietnam share a similar perspective. They all should take over responsibility for advancing their interests. Give Rodrigo Duterte his due. He pointed to a continuing injustice dating back more than a century. Washington should return the stolen Balangiga bells, ending America’s continuing shame. More important, Uncle Sam should foreswear the sort of thoughtless, promiscuous military intervention that continues to characterize U.S. foreign policy today. Moreover, Americans should thank President Duterte for challenging a status quo which benefits his nation far more than the U.S. His lawless drug war caused the Obama administration to suspend development assistance. Washington also should back away militarily, ending its defense commitment and shifting to less formal military cooperation designed more to benefit America than Manila. In the meantime, the Philippines should focus on fixing its internal problems. Only then will it be able to stand up against China and any other threatening power. Doug Bandow is a Senior Fellow at the Cato Institute, former Special Assistant to President Ronald Reagan, and a Senior Fellow in International Religious Persecution with the Institute on Religion and Public Policy.
  • More Western Investment, More Economic Reform    (Doug Bandow, 2017-07-26)
    Doug Bandow Despite persistent fear about bubbles bursting, China’s economy continues to grow. Still, even the Xi government appears to realize that the good times might not go on forever. President Xi Jinping recently emphasized the importance of financial stability, calling it a matter of national security. China’s “Gray Rhinos,” large conglomerates with global reach, long prospered on state credit. Noted Minxin Pei of Claremont McKenna College: “The Chinese government played the role of an indispensable enabler.” In recent years, companies such as Wanda, Anbang, HNA Group, and Fosun have engaged in an orgy of high-priced foreign acquisitions, mostly financed by Chinese state-controlled banks. However, Beijing business and banking regulators have begun to crack down on the Gray Rhinos and other over-extended firms. Anbang’s chairman was detained last month. State banks apparently have begun to more closely scrutinize corporate loan requests. The Xi government’s new attitude also reflects a desire to keep money at home under state control: cash fled after the 2015 Shanghai stock market crash and Beijing spent nearly a trillion dollars in foreign exchange reserves to support the value of the yuan. China should adopt reforms to reinvigorate its appeal as a profitable location for foreign investment. Rather than devote so much money to such a dubious objective, the People’s Republic of China should reform policies to attract more foreign investment. Although the PRC doesn’t need foreign funds as much as before, given the availability of domestic capital, more money invested from whatever source continues to benefit the Chinese economy. Especially useful would be more cash coming in at a time when the government was concerned about too much money going out. The Hinrich Foundation recently released a report on the impact of Western investment on China. The results are particularly important since the once large welcome mat for foreign enterprises has shrunk considerably. Noted Hinrich: “American businesses report that protectionist policies, unclear regulations, policies that favor domestic companies, stalled reforms, and what some termed selective enforcement of laws against U.S. and other foreign companies (or at least the reporting of incidents) have made many U.S. companies feel unwelcome in China.” Although China’s National Bureau of Statistics estimates the amount and impact of foreign investment, the Hinrich Foundation believes Beijing’s numbers understate the role of Western money. For instance, estimates of U.S. foreign direct investment through 2015 range from $75 billion to $228 billion. The lower number ignores possible U.S. investment through third countries. Moreover, the simple FDI number does not capture the ultimate impact of invested capital. Majority-owned American firms in 2014 employed 1.67 million people and had sales of $341 billion and value added of $66 billion, almost 30 times U.S. FDI that year. For all U.S. affiliates the combined payroll was more than two million and sales were $470 billion. Hinrich expanded its analysis “to estimate the impact that U.S. companies have on China through their investments, their own operations, their ripple effect through supply chains, their impact on downstream distribution, and the consumer spending of the relevant employees.” The resulting numbers are even more impressive. For instance, majority owned enterprises have a value added of $310 billion as of 2014 and cumulative value added since 1979 of $1.8 trillion. The former is 131 times the U.S. foreign investment in 2014. The cumulative value added was 30 times the investment. In 2014 16.7 million jobs were added, about 2.1 percent of total Chinese employment. The GDP impact averaged 11 times the net income of majority-owned U.S. firms from 2005 to 2014, “indicating that while the U.S. affiliates have benefited from their presence in China, China’s economy has benefited far more.” All American foreign affiliates resulted in $435 billion in value added in 2014 and $2.6 trillion cumulatively. In that year the value added from U.S. investment accounted for 4.2 percent of the PRC’s GDP. The respective multiples of foreign direct investment were 184 and 42. Employment added was 22.8 million people, or 2.9 percent of Chinese employment. Here, too, the GDP increase was about 11 times the net income of the enterprises concerned. Hinrich applied the same analysis to individual firms. For instance, in 2014 P&G had about $6.4 billion in sales and $5.5 billion in distribution chain mark-up in China. The company accounted for $11.3 billion in value added and 612,000 people employed. Even these numbers, however, understate the benefits of U.S. investment in China, contended the Foundation. Simple economic measures miss some of the most important advantages. Examples, explained Hinrich, include: “the value of the presence of U.S. affiliates to consumers and business customers in China, the value of U.S. company sourcing activities in China, modernizing and creating industries in China, creating supply and distribution channels in China, expanding R&D capabilities in China, improving business practices and standards in China, improving the financial sector in China, bringing modern management training to China, integrating China into regional and global management systems, providing technical assistance in China, enhancing sustainability practices in China, shaping the CSU landscape in China, and providing policy advice and advocacy for China.” At a time when Beijing seems inclined to turn inward economically, emphasizing state control and punishing foreign investors, American firms should point out the obvious economic benefits of attracting outside capital. Foreign direct investment could prove to be even more important as the Beijing authorities attempt to slowly deflate the economic bubble resulting from the artificial infusion of public capital through state banks. American and other foreign firms could create some of the jobs necessary to employ Chinese workers who have come to expect a better life—and are likely to protest if that future does not materialize. The global economy has come to rely on vibrant Chinese growth. But double digit annual rises are gone forever and continuing strong increases no longer are guaranteed. As Beijing attempts to address the serious problems of artificial stimulus, bad loans, and dubious investments, China should adopt reforms to reinvigorate its appeal as a profitable location for foreign investment. The Hinrich Foundation report illustrates the significant benefits of past capital flows from overseas. The future could be even better for investors and China alike. Doug Bandow is a Senior Fellow at the Cato Institute, former Special Assistant to President Ronald Reagan, and a Senior Fellow in International Religious Persecution with the Institute on Religion and Public Policy.
  • Seattle's Minimum Wage Supporters Ignore the Facts    (Andrew Syrios, 2017-07-25)
    By: Andrew Syrios In what has become a running joke amongst those skeptical of the claim that minimum wage increases have no effect on unemployment, a recent report by the Employment Policies Institute showed that 174 of the 184 co-sponsors of a bill to raise the federal minimum wage to $15 an hour hired unpaid interns.My personal favorite example of this type of this is when the Freedom Socialist Party, which was pushing for an even more ridiculous $20 minimum wage, posted ads for new employees offering $13 an hour.The party’s national secretary doused himself in irony to defend his organization by saying “We’re practicing what we’re preaching in terms of continuing to fight for the minimum wage... But we can’t pay a lot more than $13.”Hmmm, perhaps some of the unemployment a higher minimum wage would bring might actually be beneficial. Maybe we’ve gotten this whole debate wrong…At the federal level Nancy Pelosi promised to pass a $15 an hour minimum wage if the Democrats take control of the House in 2018. Increasing the federal minimum wage across the nation is far more vulgar than increasing a state or city minimum wage. Having spent some time in New York recently, I can definitely understand the desire to increase wages. When a 350 sq. ft. studio that lacks enough space for anything more than a mini fridge rents for $2500 a month, taxes are through the roof and a pack of cigarettes costs $13, it can be hard to get by. Artificially raising the minimum wage isn’t going to fix that, but the desire to is understandable.RELATED: "A Nationwide Minimum Wage Is Even Worse than State-Imposed Wages" by Ryan McMakenNew York State may have the seventh highest median per capita income in the country, but the cost of living vary wildly by city and state throughout the United States. The Mises Institute’s Ryan McMaken showed that once you have accounted for the different costs of living in different states, “New York ($26,152) is now the state with the lowest median income due to its very high cost of living.”And they want to put a one-sized-fits-all $15 minimum wage across the whole country? From Podunk, Kansas to Midtown Manhattan, the geniuses in Washington will decide the minimum someone can agree to work for someone else. Whatever would we do without such wise bureaucrats to guide us?In Podunk, Kansas, a $15 minimum wage would be catastrophic. But even in large, wealthy cities, the minimum wage offers no panacea. The most notable example of this is Seattle, which put in motion a gradual increase to a $15 an hour minimum wage back in 2015.Now a $15 minimum wage in a city like Seattle was unlikely to ever be disastrous. The city is so expensive that wages are generally much higher than they are in other parts of the country. In 2015, the median household income in Seattle was $80,349 while it was only $56,516 in the United States on the whole. In other words, Seattle’s median income was 42 percent higher than the American average.That being said, increasing the costs of labor is still going to decrease its demand. Early on, economist Mark Perry noted, with the imperfect data he had available, that the unemployment rate seemed to increase after the passage of the bill. Anecdotal evidence, such as McDonalds and others rapidly switching to automated self-order kiosks, also trickled out. But with more time having passed, we have a better vantage point to evaluate the law.Now we have a study from the University of Washington that demonstrates that the new minimum wage law “…reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent.” Not a disaster for a wealthy city like Seattle, but it’s not good. And it’s more proof of what you should expect from basic economic theory.This story gets much more interesting though, as another study from the University of California Berkeley showed no effect. What gives? The title of Daniel Person’s article on the subject gives away the punchline, “The City Knew the Bad Minimum Wage Report Was Coming Out, So It Called Up Berkeley.” Here’s how Person describes what happened,While the Berkeley report… was cheered in many corners of the web, one blogger at Forbes called foul. Michael Saltsman is an avowed critic of higher minimum wages… [and he] raises a good question, pointing to a paragraph on the title page of the study that says the Berkeley report was "prepared at the request of the Mayor of Seattle." This was odd, Saltsman noted, given that the city was already funding a series of six studies from the University of Washington on the impacts of the wage law. Why look outside the city for research when taxpayers are already funding local number crunching?He had a theory: Those UW studies just weren’t positive enough. Saltsman pointed out that Reich is a go-to academic for proponents of a $15-an-hour minimum wage across the country.After contacting the mayor’s office and looking into the matter further, Person believes the timeline is as follows,The UW shares with City Hall an early draft of its study showing the minimum wage law is hurting the workers it was meant to help; the mayor’s office shares the study with researchers known to be sympathetic toward minimum wage laws, asking for feedback; those researchers release a report that’s high on Seattle’s minimum wage law just a week before the negative report comes out.As Person puts it, Seattle “weaponized data” to vindicate its minimum wage increase.The criticism that because Seattle’s overall economy is booming that that somehow detracts from the minimum wage hindering it in any way is also false. As Jonathan Meer observes,This is exactly backward: If Seattle is growing faster than expected, then the counterfactual comparison group is not keeping up as well at it should be, understating the extent of the job losses. It also seems strange to claim that low-wage work will do worse in good economic times, when the recent evidence of the Great Recession shows the opposite. More to the point, recent research shows that the negative impacts of the minimum wage are higher during economic downturns, not boom times.Finally, it would be worth addressing the often-heard point that recent studies have disproven the idea that minimum wages increase unemployment. Or in other words, that apparently the cost of labor behaves completely differently from other goods. In a review of over 100 studies, economists David Neumark and William Wascher found that,…there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage. However, the oft-stated assertion that recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. A sizable majority of the studies surveyed in this monograph give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries.Yes, minimum wages still do increase unemployment.
  • The Creation of Knowledge in Society: Waste Defined by Property and Exchange    (2017-07-25)
    By William Arthur Carden; First-user appropriation of private property is defensible on several grounds, and it meets Locke's "enough, and as good" proviso by actually providing "more, and better...
  • Americans Should Impeach Presidents More Often    (Gene Healy, 2017-07-25)
    Gene Healy Impeachment talk in the nation’s capital rose from a murmur to a dull roar in mid-May, thanks to a week jam-packed with Nixonesque “White House horrors.” On Tuesday, May 9, President Donald Trump summarily fired FBI director James Comey; on Thursday, Trump admitted the FBI investigation into “this Russia thing”—attempts to answer questions about his campaign’s links with Moscow—was a key reason for the firing; Friday found Trump warning Comey he’d “better hope that there are no ‘tapes’ of our conversations”; and the following Tuesday The New York Times reported the existence of a Comey memo on Trump’s efforts to get the FBI director to “let this go.” Along the way, Trump may have “jeopardized a critical source of intelligence on the Islamic State” while bragging to Russian diplomats about his “great intel,” according to The Washington Post. Still, the Beltway discussion of impeachment remained couched in euphemism, as if there was something vaguely profane and disreputable about the very idea. “The elephant in the room,” an NPR story observed, “is the big ‘I’ word—impeachment”; “the ‘I’ word that I think we should use right now is ‘investigation,’” House Judiciary Committee member Rep. Eric Swalwell (D-Calif.) told CNN’s Wolf Blitzer. We don’t call it “the v-word” when the president signals he might veto a bill. Yet somehow, when it comes to the constitutional procedure for ejecting an unfit president, journalists and Congress members—grown-ups, ostensibly—are reduced to the political equivalent of “h-e-double-hockey-sticks.” What’s really obscene is America’s record on presidential impeachments. We’ve made only three serious attempts in our entire constitutional history: Andrew Johnson in 1868, Bill Clinton in 1998—both of whom were impeached but escaped removal—and Richard Nixon, who quit in 1974 before the House could vote on the issue. Given how many bastards and clowns we’ve been saddled with over the years, shouldn’t we manage the feat more than once a century? A ‘National Inquest Into the Conduct of Public Men’ We’ve made only three serious attempts in our entire constitutional history. Given how many bastards and clowns we’ve been saddled with over the years, shouldn’t we manage the feat more than once a century? Impeachments “will seldom fail to agitate the passions of the whole community, and to divide it into parties,” Alexander Hamilton predicted in the Federalist. That’s how it played out during our last national debate on the subject, during the Monica Lewinsky imbroglio of the late ’90s. The specter of Bill Clinton’s removal from office for perjury and obstruction of justice drove legal academia to new heights of creativity. Scads of concerned law professors strained to come up with a definition of “high Crimes and Misdemeanors” narrow enough to let Bill slide. In a letter delivered to Congress as the impeachment debate began, over 430 of them warned that unless the House of Representatives wanted to “dangerously weaken the office of the presidency for the foreseeable future” (heaven forfend), the standard had to be “grossly heinous criminality or grossly derelict misuse of official power.” Some of the academy’s leading lights, not previously known for devotion to original intent, proved themselves stricter than the strict constructionists and a good deal more original than the originalists. The impeachment remedy was so narrow, Cass Sunstein insisted, that if the president were to up and “murder someone simply because he does not like him,” it would make for a “hard case.” Quite so, echoed con-law superprof Laurence Tribe: An impeachable offense had to be “a grievous abuse of official power,” something that “severely threaten[s] the system of government.” Just killing someone for sport might not count—after all, Tribe pointed out, when Vice President Aaron Burr left a gutshot Alexander Hamilton dying in Weehawken after their July 1804 duel, he got to serve the remaining months of his term without getting impeached. Still, Tribe generously allowed, in the modern era “there may well be room to argue” that a murdering president could be removed without grave damage to the Constitution. In the unlikely event that Donald Trump orders one of his private bodyguards to whack Alec Baldwin, it’s a relief to know that Laurence Tribe will entertain the argument for impeachment. But does constitutional fidelity really require us to put up with anything short of “grievous,” “heinous,” existential threats to the body politic? The Framers borrowed the mechanism from British practice, and there it wasn’t nearly so narrow. The first time the phrase appeared, apparently, was in the 1386 impeachment of the Earl of Suffolk, charged with misuse of public funds and negligence in “improvement of the realm.” The Nixon-era House Judiciary Committee staff report Constitutional Grounds for Presidential Impeachment described the English precedents as including “misapplication of funds, abuse of official power, neglect of duty, encroachment on Parliament’s prerogatives, [and] corruption and betrayal of trust.” As Hamilton explained in the Federalist, “the true spirit of the institution” was “a method of national inquest into the conduct of public men,” the sort of inquiry that could “never be tied down by such strict rules…as in common cases serve to limit the discretion of courts.” Among those testifying beside Sunstein and Tribe in 1998 was Northwestern’s John O. McGinnis, a genuine originalist, who argued that the Constitution’s impeachment provisions should be viewed in terms of the problem they were designed to address: “how to end the tenure of an officer whose conduct has seriously undermined his fitness for continued service and thus poses an unacceptable risk of injury to the republic.” Contra Tribe, who’d compared impeachment to “capital punishment,” McGinnis pointed out that the constitutional penalties for unfitness—removal and possible disqualification from future office holding—went “just far enough,” and no further than necessary, “to remove the threat posed.” In light of the structure and purpose of impeachment, he argued, “high Crimes and Misdemeanors” should be understood, in modern lay language, roughly as “objective misconduct that seriously undermines the official’s fitness for office…measured by the risks, both practical and symbolic, that the officer poses to the republic.” Today, even the president’s political enemies tend to set the bar far higher. Donald Trump has acted in a way that is “strategically incoherent,” “incompetent,” and “reckless,” Democratic leader Rep. Nancy Pelosi said in February, but “that is not grounds for impeachment.” But incoherence, incompetence, and recklessness are evidence of unfitness, and when we’re talking about the nation’s most powerful office they can be as damaging as actual malice. It would be a pretty lousy constitutional architecture that only provided the means for ejecting the president if he’s a crook or a vegetable, but left us to muddle through anything in between. Luckily, Pelosi is wrong: There is no constitutional barrier to impeaching a president who demonstrates gross incompetence or behavior that makes reasonable people worry about his proximity to nuclear weapons. Impeachable Ineptitude When Barack Obama was president, Trump once asked, “Are you allowed to impeach a president for gross incompetence?” Earlier this year, Daily Show viewers found that tweet funny enough to merit the “Greatest Trump Tweet of All Time” award. Still, it’s a valid question. The conventional wisdom says no, largely on the basis of a snippet of legislative history from the Constitutional Convention. As James Madison’s notes recount, when Virginia’s George Mason moved to add “maladministration” to the Constitution’s impeachable offenses, Madison objected: “So vague a term will be equivalent to a tenure during pleasure of the Senate.” Mason yielded, substituting “other high crimes & misdemeanors.” But the Convention debates were held in secret, and Madison’s notes weren’t published until half a century later. Furthermore, the language Mason substituted was understood from British practice to incorporate “maladministration.” Nor did Madison himself believe mismanagement and incompetence to be clearly off-limits, having described impeachment as the necessary remedy for “the incapacity, negligence, or perfidy of the chief Magistrate.” Thus far, the Trump administration has been a rolling Fyre Festival of negligence and maladministration, from holding a nuclear strategy session with Japan’s prime minister in the crowded dining room of a golf resort to having the former head of Breitbart News draft immigration orders without the assistance of competent lawyers. Near as I can tell, James Comey’s verbal incontinence had a bigger impact on the 2016 election than Russian espionage, but liberals hold out hope for a “smoking gun” of collusion that’s unlikely ever to emerge. Meanwhile, the Trump administration was apparently clueless that firing the FBI director in the midst of the Russia investigation would be a big deal, and Trump himself was unaware that admitting he did it in hopes of quashing the inquiry was a stupid move. As the Comey story emerged, pundits and lawbloggers debated whether, on the known facts, the president’s behavior would support a federal felony charge for obstruction of justice. But that’s the wrong standard. As the Nixon Impeachment Inquiry staff report pointed out: “the purpose of impeachment is not personal punishment. Its purpose is primarily to maintain constitutional government.” Even if, to borrow a phrase from Comey, “no reasonable prosecutor” would bring a charge of obstruction on these facts, the House is free to look at the president’s entire course of conduct and decide whether it reveals unfitness justifying impeachment. A Rhetorical Question? The Nixon report identified three categories of misconduct held to be impeachable offenses in American constitutional history: “exceeding the constitutional bounds” of the office’s powers, using the office for “personal gain,” and, most important here, “behaving in a manner grossly incompatible with the proper function and purpose of the office.” When Trump does something to spark cries of “this is not normal,” the behavior in question often involves his Twitter feed. The first calls to impeach Trump over a tweet came up in March, when the president charged, apparently without evidence, that Obama had his “wires tapped” in Trump Tower. The tweet was an “abuse of power,” “harmful to democracy,” and potentially impeachable, Harvard Law’s Noah Feldman proclaimed: “He’s threatening somebody with the possibility of prosecution.” Laurence Tribe, of all people, agreed. Murder may have been a hard case, but slander? Easy call. Trump’s charge qualified “as an impeachable offense whether via tweet or not.” I confess it wasn’t the utterly speculative threat to Barack Obama that disturbed me about Trump’s Twitter feed that day in March; it was that a mere two hours after lobbing that grenade, Trump turned to razzing Arnold Schwarzenegger for his “pathetic” ratings as host of Celebrity Apprentice. The Watergate tapes exposed much more than a simple abuse of power. They revealed a fragile, petty, paranoid personality of the sort you’d be loath to entrust with the vast authority of the presidency. And Nixon didn’t imagine that the whole world would be listening. Trump’s Twitter feed is like having the Nixon tapes running in real time over social media, with the president desperate for an even bigger audience. As it happens, there’s precedent for impeaching a president for bizarre behavior and “conduct unbecoming” in his public communications. The impeachment of Andrew Johnson gets a bad rap, in part because most of the charges against him really were bogus. The bulk of the articles of impeachment rested on Johnson’s violation of the Tenure of Office Act, a measure of dubious constitutionality that barred the president from removing Cabinet officers without Senate approval. But the 10th article of impeachment against Johnson, based on different grounds, has gotten less coverage. It charged the president with “a high misdemeanor in office” based on a series of “intemperate, inflammatory, and scandalous harangues” against Congress. In a series of speeches in the summer of 1866, Johnson had accused Congress of, among other things, “undertak[ing] to poison the minds of the American people” and having “substantially planned” a race riot in New Orleans that July. Such remarks, according to Article X, were “peculiarly indecent and unbecoming in the Chief Magistrate” and brought his office “into contempt, ridicule and disgrace.” ‘Peculiar Indecencies’ From a 21st century vantage point, the idea of impeaching the president for insulting Congress seems odd, to say the least. But as Jeffrey Tulis explained in his seminal work The Rhetorical Presidency, “Johnson’s popular rhetoric violated virtually all of the nineteenth-century norms” surrounding presidential oratory. Johnson stood “as the stark exception to general practice in that century, so demagogic in his appeals to the people” that he resembled “a parody of popular leadership.” The charge, approved by the House but not voted on in the Senate, was controversial at the time, but besides skepticism about whether it reached the level of a high misdemeanor, “the only other argument offered by congressmen in Johnson’s defense was that he was not drunk when giving the speeches.” It’s impressive that Trump—a teetotaler—manages to pull off his “peculiar indecencies” while stone cold sober. Since his election, Trump has used Twitter to rail against restaurant reviews, Saturday Night Live skits, “so-called judges,” and America’s nuclear-armed rivals. The month before his inauguration, apropos of nothing, Trump announced via the social network that the U.S. “must greatly strengthen and expand its nuclear capability,” following up the next day on Morning Joe with “we will outmatch them at every pass and outlast them all.” As Charles Fried, Reagan’s solicitor general, observed, “there are no lines for him…no notion of, this is inappropriate, this is indecent, this is unpresidential.” If the standard is “unacceptable risk of injury to the republic,” such behavior just may be impeachable. An impeachment on those grounds wouldn’t just remove a bad president from office; it would set a precedent that might keep future leaders in line. Gene Healy is a vice president at the Cato Institute, author of The Cult of the Presidency: America’s Dangerous Devotion to Executive Power (Cato 2008), and a columnist at the Washington Examiner.
  • Stop Denigrating Work – It's the Best Route out of Poverty    (Ryan Bourne, 2017-07-25)
    Ryan Bourne Most people in poverty in the UK are white. According to the Department for Work and Pensions (DWP) report on UK poverty published in March, a whopping 81 per cent of those individuals in households with income of less than 60 per cent of the national median are white. Individuals of Pakistani or Bangladeshi origin, on this metric, do far better: making up just 5.5 per cent and 2.5 per cent of the in-poverty population. What we really need then, is to have our government start prioritising reducing white poverty. I suspect most of you detect something fishy in the above statistical statements. They do not pass the smell test. In fact, the statistics are pretty meaningless. To imply that work does not reduce poverty on the grounds that most poor people already work is like claiming that exercise does not reduce obesity, given most obese people already exercise. To put it simply: most people in poverty are white because, well, most people in the UK are white. Clearly, what really matters is not the raw numbers, but the relative risk of being in poverty. Judged by this metric, the real story is the complete opposite of that implied: just 15 per cent of white people are in poverty in the UK, compared with 38 per cent of Pakistanis and 39 per cent of Bangladeshis. Dodgy statistics One would think that commentators, policy analysts and politicians who give a moment’s thought to this issue would realise this. Yet a variant of this bizarre way of thinking and distorted representation of poverty manifests itself in the UK media every day. “Most people in poverty are in work, earning their poverty” claimed Owen Jones in May. He was responding to a Theresa May television interview where she claimed that work was the best route of poverty. Just last week, the economics editor of the Independent newspaper, Ben Chu, tweeted “don’t let people tell you people are in poverty because they don’t work”. As a matter of fact, again, Chu and Jones are correct. Most adults who are in poverty are working (55 per cent of the total). But is this what really matters? These figures are again mainly a construct of the fact that many more adults work than do not. The relative risk of being in poverty is, in fact, far, far higher for those who do not work than for those that do: 39 per cent of adults who do not work are in relative poverty, compared with just 10 per cent of adults who are working. Mitigating the risk of poverty This is important. In recent years, there has been a bizarre fetish for denigrating work as a route out of poverty by those on the left. Whether this is cynical rhetoric to keep pushing for policies such as more generous redistribution and increased minimum wages or just a misunderstanding of the statistics, remains to be seen. But the result is a continued call for more to be done about “in-work poverty.” What people appear to want is for work to be a cast iron guarantee against relative poverty. A good ambition, but one that only really makes sense if we are talking about full-time, year-round employment. Yet we can also see that a lot of other people in poverty actually do not work full-time. The same DWP dataset as above highlights that a mammoth 55 per cent of individuals in workless households are in poverty. This falls to 24 per cent for those in households with at least one person in part-time work, to 20 per cent for those in couple households where one person works full-time or at least one person is self-employed, and to just four per cent in single or couple households with at least one person in full-time work. In other words, an increased degree of attachment to the labour market reduces the probability of being in poverty substantially. Working, and working longer hours, appears an important way of getting out of poverty. The implicit suggestion that the story of poverty is about low wages for full-time workers appears, on these statistics, to be particularly fallacious. Work pays Of course, moving into full-time work is easier said than done for many people. Those already in full-time positions are more likely to be the highly skilled, experienced and productive. Even if everyone currently in poverty looked for full-time work, they would be unlikely to find it. But that implies a much more complex and nuanced policy challenge than the oft-stated desire to increase tax credits or jack up the minimum wage to cure poverty. To imply that work does not reduce poverty on the grounds that most poor people already work is like claiming that exercise does not reduce obesity, given most obese people already exercise. Clearly, doing some is better than nothing, but doing a lot more reduces the probability of obesity substantially. The same applies to work and the prospect of being in poverty. Left wing commentators should stop denigrating work’s value.
  • China Has a Chance to Lead on North Korea, but Will It?    (Doug Bandow, 2017-07-25)
    Doug Bandow After insisting that China should “solve” the North Korea problem, President Donald Trump appears to have given up. “While I greatly appreciate the efforts of President Xi & China to help with North Korea, it has not worked out. At least I know China tried,” he tweeted. Now the issue apparently is back in President Trump’s not-so-capable hands. Unfortunately, the administration really didn’t try. Beijing never was going to act just because President Trump wanted it to. Expecting the People’s Republic of China to destroy its ally while the U.S. was busy elsewhere in the region seeking to contain Chinese military power, and to do so without receiving anything in return, never was realistic. Unspecified trade concessions simply weren’t enough to make a deal. The situation in the North is likely to worsen, while the opportunities to solve it peacefully are likely to shrink. Action is needed now. Alas, the administration doesn’t have any other good options. Airstrikes might not reach all the facilities and probably would ignite a war, with devastating consequences to everyone involved, most dramatically South Korea. Enhanced sanctions are more likely, including secondary sanctions against Chinese companies and banks. This would risk creating a confrontation with Beijing. Moreover, by shifting the issue from North Korea to the PRC the Trump administration might actually increase Chinese support for the North. Witness the popular rage against South Korea over the THAAD deployment. Although tougher sanctions would impose economic hardship, there is no reason to assume that alone would bring Pyongyang to heel. When I visited the Democratic People’s Republic of Korea in June, officials insisted they would stand firm against America’s “hostile policy” no matter what. While they could be expected to say that, the DPRK did not change policy even in the midst of a horrific famine a couple of decades ago. And so far the PRC appears to value stability above all. If the Kim Jong-un regime appeared in danger of breaking, Beijing might buttress the North rather than risk a collapse, and the violent chaos which could follow. None of this is in the PRC’s interest. Instead of acting as bystander if both regional stability and U.S. relations unravel, Beijing should push Washington to engage in serious negotiation with all parties. America’s priority should be halting the DPRK’s advancing missile and nuclear programs. Thus, Washington should revive the North’s proposal for a freeze on its activities in return for an end to annual military exercises between the U.S. and South Korea. The latter agitates North Korean officials, who call them a cover for a possible attack. When I raised this possibility in Pyongyang they dismissed it, saying that the U.S. had rejected their offer. Coming from China and America together, and backed by the threat of joint sanctions, it would be more persuasive. With some breathing space, Washington could work with the Republic of Korea and Japan to develop a big offer in return for denuclearization, and with Beijing to win the latter’s endorsement. The package would have to emphasize security — the DPRK’s rulers watched the war in Libya and aren’t impressed with verbal assurances like those offered by Secretary of State Rex Tillerson. China should offer its support, as well as whatever assistance and assurances would encourage Pyongyang’s acceptance. The objective is to denuclearize the peninsula peacefully through negotiation. In return, the PRC would agree to back the effort with the threat of enforcing its own and U.S. sanctions, so long as its other interests were respected. That would include allied assistance for China if the result was a violent DPRK collapse. Moreover, the U.S. should offer assurances that reunification would not put Beijing at a geopolitical disadvantage: In particular, all American military forces should go home in the event of unification. Seoul should consider a declaration of military neutrality for a unified peninsula. Even this approach has critics. Some aver the importance of regular maneuvers for combat effectiveness, but the ROK should be taking ever more responsibility for its own defense. Others fear the agreement would not be enforceable, but that would be an issue for any negotiated settlement. Finally, such an agreement would leave human rights at risk. However, a North Korea holding tightly to its nuclear weapons is unlikely to relax political controls. President Trump raised the potential of a China-U.S. deal over North Korea. Beijing shouldn’t let him drop the issue without trying to reach an agreement. The situation in the North is likely to worsen, while the opportunities to solve it peacefully are likely to shrink. Action is needed now. Doug Bandow is a senior fellow at the Cato Institute. A former special assistant to President Ronald Reagan, he is the author of “Tripwire: Korea and U.S. Foreign Policy in a Changed World” and co-author of “The Korean Conundrum: America’s Troubled Relations With North and South Korea.”
  • The Case against U.S. Overseas Military Bases    (John Glaser, 2017-07-25)
    John Glaser Over the last several decades, the digital revolution has fundamentally transformed business best practices. The changes have been slow to penetrate the public sector, however, which remains tied to traditional thinking and practices. U.S. Secretary of State Rex Tillerson is trying to review all aspects of the State Department to get it up to speed, which is all to the good. But even bigger game would be the Pentagon, the world’s largest bureaucracy. The strategy, structure, and funding priorities of the U.S. military were set decades ago, in response to an entirely different geopolitical, economic, and technological environment. Consider today’s elaborate and expensive network of U.S. overseas military bases, which first emerged as coaling stations for navy ships a century and a half ago. Modern surveillance and targeting technology have made the bases increasingly vulnerable, and the presence of U.S. military bases can militarize disputes and antagonize opponents that would have otherwise been more docile. U.S. bases can also encourage allies to take risks they might have avoided, thus heightening instability and entangling the United States in peripheral conflicts. Finally, forward-deployed forces are a temptation for U.S. leaders: they can make calls for intervention—even where core U.S. interests are not at stake—seem more reasonable. As the circumstances of international politics have changed, and as innovations in technology have both shortened travel times and made in-place forces more vulnerable, the strategic and operational utility of overseas bases deserves renewed scrutiny. The three main strategic justifications for overseas bases—to deter adversaries, reassure allies, and enable rapid contingency response by the U.S. military—are no longer sufficient to justify a permanent peacetime military presence abroad. The Deterrence Problem The deterrence value of overseas military bases is frequently exaggerated. For starters, it is hard to actually demonstrate. Because success is measured by the absence of an unwanted action by an adversary, determining whether something did not happen because of deterrence, because the adversary had no intention to attack in the first place, or because of some other reason is inherently challenging. This problem plagues many areas of U.S. foreign policy. For example, analysts such as the Brookings Institution’s Michael O’Hanlon and Richard C. Bush and policymakers alike claim that the U.S. military presence in South Korea is the only thing deterring a unilateral North Korean attack. But South Korea’s economy is 40 times the size of North Korea’s, South Korea has twice the population of North Korea, and South Korean military capabilities far exceed those of Pyongyang. These glaring gaps in economic and military power likely deter the North from attacking the South and would continue to do so even absent U.S. military power in the region. Similarly, advocates of a forward-deployed posture in the Middle East regard the U.S. Navy’s presence in Bahrain and its daily patrolling of the Persian Gulf as the principal deterrent to Iran attempting to close the Strait of Hormuz. But Iran exports most of its oil via the strait and would impose serious economic damage on itself if it attempted to close it. Such an attempt would also threaten the vital interests of the regional powers as well as external powers that rely on the free flow of oil from the region. Iran would thus run unacceptably high risks of retaliation by an international coalition of states and would probably be deterred even without the permanent U.S. naval presence in the Gulf. Sometimes, efforts to deter can backfire. Stationing military bases near an adversary can cause fear that generates counteraction. Russia’s actions against Georgia in 2008 and Ukraine in 2014 have been blamed on a lack of deterrence or diminished U.S. credibility, but they derive more from Moscow’s insecurities about the expansion of U.S.-led Western economic and military institutions into former Soviet republics and even up to the Russian border. Post-Cold War NATO expansion is the source of profound anxiety and lingering resentment in Moscow. Following Russian President Vladimir Putin’s annexation of Crimea, the Russian leader decried NATO expansion as an attempt at containment, and when in 2015 NATO invited Montenegro to be the newest member of the alliance, the Kremlin warned that further expansion eastward “cannot but result in retaliatory actions.” Indeed, one could say that forward deployment in some cases contributes to the insecurity it purports to prevent. New Technological Advances One of the prominent arguments in favor of maintaining an indefinite U.S. military presence with such bases is that it would be too difficult and time-consuming to secure host governments’ permission for access during a crisis in which U.S. forces were needed. That concern is overstated. To begin with, the ability to use bases for new missions is always conditional on host government permission. Basing agreements typically stipulate that the United States must consult with host nation governments before conducting any nonroutine operations. A 2016 RAND Corporation study concludes, “The presence of large permanent bases does not increase the likelihood of securing contingency access.” But, more to the point, the United States has historically not had trouble securing basing access in wartime. Indeed, it has been able to add new operating facilities overseas for every major conflict in the past 40 years. For combat operations that do not rise to the level of a crisis requiring massive mobilization of forces, technological advances in military capability, travel, and communications have made deployment from the continental United States sufficient. This is particularly so with air campaigns. According to the Pennsylvania State University professor Robert Harkavy, “The development of longer range aircraft and ships, plus the development of techniques for aerial refueling of planes and at-sea refueling of ships has had the effect of greatly decreasing the number of basing points required by major powers to maintain global access networks.” Carrier-based airpower can now be used to conduct major campaigns with round-the-clock sorties well beyond coastal reaches in remote areas on short notice and without access to nearby bases. Even beyond air strikes, U.S. troops can deploy from the United States to virtually any region fast enough. In emergencies, according to RAND, “Lighter ground forces can deploy by air from the United States almost as quickly as they can from within a region.” An armored brigade combat team, for example, can get from Germany to Kuwait in approximately 18 days, only about four days faster than if it deployed from the East Coast of the United States. Admittedly, deploying heavy forces by air in bulk is not plausible for contingencies requiring massive ground troops. But contingencies that truly depend on extremely rapid deployment are rare. The Risk of Entanglement Forward-deployed forces are more vulnerable to attack than forces stationed at home. Thanks to robust deterrence, U.S. overseas bases are not at risk of bombardment in the immediate future, but certain plausible scenarios could make them priority targets. If conflict breaks out over Taiwan or maritime territorial disputes in the East or South China Sea, it could trigger Chinese actions against U.S. assets. A large percentage of U.S. facilities—more than 90 percent of U.S. air facilities in Northeast Asia—are within range of Chinese ballistic missiles. Bases offer only a marginal increase in deterrence at added risk to forward-deployed troops. Entanglement is another risk exacerbated by the attempt to reassure allies with overseas bases. Much academic literature, including Reputation and International Politics by the University of Washington’s Jonathan Mercer and Calculating Credibility by Dartmouth’s Daryl Press, has questioned the need to take military action solely for the sake of credibility. But the presence of military bases in or near a conflict zone can intensify calls to intervene to satisfy credibility concerns, thus making entanglement more likely. In the past, the United States stumbled into conflicts because of the entangling influence of credibility, commitments, and the capabilities presented by a forward military presence. By December 1945, U.S. General John R. Hodge recommended full withdrawal of U.S troops from Korea. Secretary of War Robert Patterson argued the same in April 1947. In 1948, the National Security Council proposed withdrawing all U.S. troops by the end of the year. The Joint Chiefs of Staff explained that “Korea is of little strategic value to the United States” and warned that the lingering military presence risked entangling the United States in a war following some provocation on the peninsula. That indeed happened in 1950 when the North invaded the South. Unfortunately, calls to withdraw had gone unheeded. The presence of forces abroad can also tempt policymakers to get involved in elective wars that they could more easily forgo if the United States lacked in-theater bases. In NATO’s 2011 intervention in Libya’s civil war, for example, the United States bombed Libya from warships in the Mediterranean and from air bases in Spain, Italy, and Germany, among other nearby locations. The weak arguments in favor of U.S. involvement, which included conjectural claims about impending humanitarian disaster and pressure from NATO allies, might have been harder to sell politically if U.S. forces had not already been deployed in the area. The Future of U.S. Defense Policy Advocates of a forward-deployed posture contend that it has been a driving force in creating a more peaceful world since the end of World War II by dampening the effects of anarchy and by preventing conflicts from spiraling out of control. This argument is the essence of the logic behind deterrence and reassurance. But other plausible causal explanations exist for the lack of a great-power war since 1945. Although trade and economic interdependence are not always sufficient to stave off conflict between potential belligerents, there is solid evidence that the two factors do reduce the likelihood of war. The destructive power of modern conventional militaries has also made war prohibitively costly in many cases, and the fact that most of the world’s great powers possess nuclear weapons has likely been a major factor in the decline of international conflict. Normative changes in how people see war, from a noble and virtuous ambition to a barbaric last resort, have also contributed to peace among nations. The U.S. forward-deployed military posture should reflect real U.S. defense interests. The remarkably secure position of the United States, along with the relatively peaceful state of international politics, should allow a withdrawal from this global network of overseas military bases. Rather than defending the security of other states and attempting to stabilize regions of conflict around the world, the United States should encourage allies to carry the burden of their own defense and extricate itself from regional disputes, lest it get drawn into conflicts in which its vital interests are not at stake. John Glaser is associate director of foreign policy studies at the Cato Institute.
  • An Evening with Judge Andrew P. Napolitano    (Judge Andrew P. Napolitano, 2017-07-24)
    By: Judge Andrew P. Napolitano Includes an introduction by Lew Rockwell, as well as a Question and Answer Period. Recorded on the campus of Auburn University on 24 July 2017. Hosted by the Mises Institute.
  • The Origins of the Crack-Baby Myth    (Chris Calton, 2017-07-24)
    By: Chris Calton In a 1991 interview with Randy Paige about why drugs should be legalized, Milton Friedman said that the “main thing that bothers me about crack is not [that it’s addictive], it’s the crack babies, because that’s the real tragedy.”Paige responded by saying, “as you know, we are already experiencing epidemic proportions of that. One out of every four babies going into one hospital, I can tell you, in Maryland is addicted.”Ever since the mid-1980s, this perception of “crack babies” was accepted nearly without question throughout the country. If a mother smoked crack while pregnant, the child would be born addicted to crack and suffering from withdrawals, would be underweight, and would likely “have an IQ of perhaps 50.”Furthermore, as Randy Paige said, crack babies were an epidemic. They were everywhere. It was a major, nation-wide problem. Even today, the notion that babies are born underweight and addicted to crack from the mother’s personal use while pregnant persists with hardly a critical thought.The problem is, the “crack baby” is a complete myth.The Origins of the IdeaFor most of the twentieth century, cocaine was a relatively uncommon recreational drug. The major drugs were marijuana and heroin. In the 70s, it was seen as a drug used almost exclusively by wealthy white people, and the practice of “freebasing” – a way to smoke cocaine by cooking it with ether in a highly flammable process – had a quick rise and fall in popularity. In the 1980s, cocaine started getting more attention as the quantity of Colombian cocaine being imported into the country was driving down the price, and cocaine use was beginning to be associated with more than just upper-class parties and Wall Street yuppies.In 1985, Newsweek ran a cover story entitled “Cocaine: The Evil Empire.” This story brought the cocaine trade into the national spotlight. Not long after, the media was looking for ways to capitalize on the fears being generated against the new menace.The media jumped on the only study that, at the time, been published on prenatal cocaine exposure, which was conducted by Dr. Ira Chasnoff and published in the New England Journal of Medicine. In Dr. Chasnoff’s study, there seemed to be a possible link between cocaine and the “depression of interactive behavior” in newborns. The study only had a sample size of twenty-three women, and – even as Chasnoff himself admitted – it was far from perfect. In addition to the inadequate sample-size, a great many variables were not accounted for, such as the use of other substances.On September 11, 1985, the CBS Evening News reported on Chasnoff’s study. Susan Spencer, the reporter who picked up the story, had an image filmed of a baby shaking, which she explained was a symptom of cocaine withdrawals due to the mother using cocaine while pregnant. These types of stories started spreading around the country, and the idea of the “cocaine baby” was born.Only two months after CBS created the image of the “cocaine baby,” the New York Times ran their first story about crack cocaine. A substance that still was yet to be widely known throughout the country, crack was cheaper and more potent than traditional cocaine, which meant that it was perfect for the kind of “yellow journalism” that has helped craft the drug war narrative for the past century. CBS decided to repackage their original “cocaine baby” story. Now, they were “crack babies.”By 1987, both crack and crack babies were familiar concepts for every person in America. According to another Newsweek cover story entitled “The Plague Among Us,” crack cocaine was “an epidemic” that was “as pervasive and dangerous in its way as the plagues of medieval times.” And nearly every baby born underweight, unhealthy, or suffering from any kind of tremors was a “crack baby,” regardless of what substances the mother may use. With this kind of loose definition, it’s no wonder that Paige was reporting that 1-in-4 babies born was a crack baby.Ignoring the Science to Craft a NarrativeAt the Emory University Medical School, a psychologist named Claire Coles had been studying the effects of prenatal exposure to drugs on infants for several years (in fact, Dr. Coles is still conducting such research at Emory today). At the time, she had only looked at alcohol, cigarettes, and marijuana. She did not study the effects of heroin exposure, but this was only because she believed that infant heroin addiction from prenatal exposure was well settled, and she never felt a need to question the plausibility of a heroin-addicted infant.But after the “crack baby” stories started sweeping the nation, she thought it seemed fishy. Cocaine is not addictive the way heroin is, she knew. Addicts don’t suffer from withdrawals because there is no chemical dependency established in cocaine use. Cocaine “addiction” is really just the product of psychological “reinforcement,” meaning that when you use it, it makes you want to continue to use more, but ceasing use of it does not cause withdrawals the way heroin does because withdrawals are the product of an actual chemical dependency. Furthermore, because cocaine was a stimulant, she reasoned, if there were withdrawal symptoms at all, it should manifest in a baby being abnormally sleepy. The jittery babies plastered all over the news were – if anything – heroin babies.Coles had read Chasnoff’s study and originally thought little of it, but now she decided to read it again, and she noticed that some very important variables were not controlled for. The mothers in the study were undernourished. They had poor prenatal care. They were living in violent or abusive environments. More importantly to Coles’ own research, these mothers drank alcohol and smoked both tobacco and marijuana during their pregnancies. On what grounds could any legitimate conclusion be drawn linking the health problems of their babies to, specifically, cocaine?Cole started incorporating cocaine into her own research. Not only is there nothing to suggest that babies inherit any kind of addiction to crack from their mother’s use, but she was unable to identify any link between cocaine or crack and a baby’s cognitive or physical health. “When you have a myth,” Cole said about the crack baby narrative, “it tends to linger for a long time.”In a 1992 article, James Bennet and Thomas DiLorenzo published an article demonstrating that when other factors are accounted for, no statistical link between crack use and birth conditions remains. In fact, “the hysteria” about the crack babies, they note, “may convince many mothers that their children are indeed hopeless . . . [so] why bother with prenatal care?”1When reporters would call Cole for her expert opinion on the crack baby epidemic, she would explain to them the problems with the myth. The reporters eventually stopped contacting her. Instead, they ran interviews with hospital employees, many of whom were not even part of the medical staff. The crack baby myth continued to grow, and the science contesting it was ignored. 1. James T. Bennett and Thomas J. DiLorenzo, Official Lies: How Washington Misleads Us (Alexandria, VA: Groom Books, 1992).
  • The Ban on Flavored Tobacco: San Francisco's Nannies Are at It Again    (2017-07-24)
    By William F. Shughart II, Josh T. Smith; Not content to impose a heavy tax burden on cigarette smokers and to outlaw sales to anyone under 21, on June 20th, the San Francisco Board of Supervisors finalized the ban on all sales o...
  • Why Republicans Can't Pass a Health Care Bill    (2017-07-24)
    By John C. Goodman; Recriminations are already underway--at the White House, on Capitol Hill, in the news media. They are debating whose fault it is that Senate Republicans can't pass a health care...
  • Congress Loves to Slap Sanctions on Foreign Regimes — But Do They Ever Work?    (Ron Paul, 2017-07-24)
    By: Ron Paul This week’s expected House vote to add more sanctions on Russia, Iran, and North Korea is a prime example of how little thought goes into US foreign policy. Sanctions have become kind of an automatic action the US government takes when it simply doesn’t know what else to do.No matter what the problem, no matter where on earth it occurs, the answer from Washington is always sanctions. Sanctions are supposed to force governments to change policies and do what Washington tells them or face the wrath of their people. So the goal of sanctions is to make life as miserable as possible for civilians so they will try to overthrow their governments. Foreign leaders and the elites do not suffer under sanctions. This policy would be immoral even if it did work, but it does not.Why is Congress so eager for more sanctions on Russia? The neocons and the media have designated Russia as the official enemy and the military industrial complex and other special interests want to continue getting rich terrifying Americans into believing the propaganda.Why, just weeks after the White House affirmed that Iran is abiding by its obligations under the nuclear treaty, does Congress pass additional sanctions anyway? Washington blames Iran for “destabilizing” Syria and Iraq by helping them fight ISIS and al-Qaeda. Does this make any sense at all?When is the last time Iran committed a terrorist act on our soil? It hasn’t. Yet we learned from the declassified 28 pages of the Congressional 9/11 report that Saudi Arabia was deeply involved in the 2001 attacks against Washington and New York. Who has funded al-Qaeda and ISIS in Syria for years? Saudi Arabia. Yet no one is talking about sanctions against that country. This is because sanctions are not about our security. They are about politics and special interests.Why is Congress poised to add yet more sanctions on North Korea? Do they want the North Korean people to suffer more than they are already suffering? North Korea’s GDP is half that of Vermont – the US state with the lowest GDP! Does anyone believe they are about to invade us? There is much talk about North Korea’s ballistic missile program, but little talk about 30,000 US troops and weapons on North Korea’s border. For Washington, it’s never a threat if we do it to the other guy.Here’s an alternative to doing the same thing over and over: Let’s take US troops out of North Korea after 70 years. The new South Korean president has proposed military talks with North Korea to try and reduce tensions. We should get out of the way and let them solve their own problems. If Iran and Russia want to fight ISIS and al-Qaeda at the invitation of their ally, Syria, why stand in the way? We can’t run the world. We are out of money.President Trump was elected to pursue a new kind of foreign policy. If he means what he said on the campaign trail, he will veto this foolish sanctions bill and begin dismantling neocon control of his Administration.Reprinted with permission. 
  • Tempest in a Mall? Not Really    (Walter Olson, 2017-07-24)
    Walter Olson “Why care about the crowd size on the Mall for an inauguration, and whether Trump’s was the biggest ever? Why make Sean Spicer’s press conference about it a big story?” Good question. Here’s my answer. I’m one who agrees in not caring about the issue on a first approach. Does the size of an inaugural crowd has any relation to how well a President will govern? Not that I can see. What’s more, Friday’s event drew a very big audience both in person and in domestic viewership, more than respectable, even if not as big as Reagan I and Obama I. Trump could reasonably point out that more of his strongest followers live far from DC and may not have means to travel for a Friday midday event. TV viewership ratings become ever less certain with Internet viewing, especially the large audience outside the US. In short, I don’t think the White House would have gotten in trouble with fair-minded observers had it simply used the facts, rather than, as they soon became infamously known, “alternative facts.” I don’t think the White House would have gotten in trouble with fair-minded observers had it simply used the facts, rather than, as they soon became infamously known, “alternative facts.” So why’d the story blow up? 1) Trump himself cares greatly about this issue, enough to spend a lot of energy on it. That tells us something about him. Some report him as thinking the dispute implicates his very legitimacy, and some of his supporters online have woven theories of deliberate press misconduct, such as misrepresenting when aerial photos were taken, although photos with times noted or taken in sequence, such as those posted by PBS, appear to confirm that the Friday crowd fell well short of that drawn by Obama in 2009. 2) Many of us who didn’t care to begin with have been drawn into the issue by the White House’s willingness to assert untruths so confidently about it. It’s an issue on which several types of evidence (photographic, eyewitness accounts from experienced crowd estimators, Washington subway usage, and, on the claims about remote viewership, published broadcast ratings) could immediately be brought to bear to show the White House was playing fast and loose with the truth. 3) Every White House lies on at least some issues involving state secrets, national security, and foreign relations. Most also lie or shade the truth about some other high-stakes controversies (“If you like your plan, you can keep your plan.”) But why lie on *this* issue? 4) In telling lies, it is normal human behavior to tell ones that skirt falsification rather than ones that contradict what listeners just heard or saw with their own eyes. Even children learn this difference from an early age. One hopes it never becomes a test of loyalty to a government to accept lies at all, but especially not the second kind of lie. If it does, loyalty is being stretched rather far. 5) The timing matters. Many observers have taken a wait-and-see, give-him-a-chance approach on Trump because it is common for candidates to lie (or slime their opponents, or behave badly in other ways) during campaigns and then curb this misbehavior once they are in office. A breezy and entire disregard for factual accuracy was one of the biggest, if not the single biggest, problem with Trump as a campaigner. So for those who were waiting and seeing, one of the biggest open questions was whether he’d knock it off with the untruths once in office. A follow-up press conference by Spicer got far better reviews for candor and plausibility. So let’s hope the first impression isn’t going to be the one to set the tone. Walter Olson is a senior fellow at the Cato Institute’s Center for Constitutional Studies.
  • Our Obsession with Survey Data is Ruining Economics    (Jonathan Newman, 2017-07-23)
    By: Jonathan Newman In a recent Bloomberg article, Noah Smith celebrates the increasing trend of empirical work in economics over the years. Purely theoretical papers are on the decline as a share of all published work. More and more economists are utilizing data to estimate the magnitude of various effects or to estimate specific parameters in theoretical models.Empirical work is on the riseThe following figure from Angrist et al (2017)1 backs up Smith’s claims — empirical work is on the rise.Of course, the distinction between a purely theoretical paper and an empirical paper in the mainstream is quite different from the Misesian distinction between economic theory and empirical work (history). But the trend is undeniable — economists are using data in more of their research than they used to.Not only is empirical work in general on the rise, but one particular source of data is more popular than ever: surveys. To proxy the growth in popularity of surveys, I’ve plotted the National Longitudinal Survey citations by year since 1968:I’d like to focus on labor economics because survey data is especially popular in that field. Other fields also use survey data, though sometimes in an indirect way. Macroeconomists, for example, indirectly and perhaps unwittingly use survey data whenever they use price indices and unemployment rate data from the Bureau of Labor Statistics.The BLS and their NLSThe National Longitudinal Surveys are a product of the Bureau of Labor Statistics. The US spends close to $3 billion a year on collecting statistics about American citizens. The largest expenditure comes from the census (over $1 billion), but the Bureau of Labor Statistics comes in second with a budget of $618 million.The BLS administers a large collection of surveys to construct and calculate macroeconomic data (like price indices and unemployment rates), as well as to inform policymakers and bureaucrats as they carefully steer the country toward full employment and luxurious working conditions for all.The National Longitudinal Surveys are of particular interest to labor economists because they interview “the same individuals every year or two for several decades” and collect answers from “detailed questions about all aspects of their lives”.The NLSY97, for example, started following about 9,000 teenagers in 1997 and continues to this day, interviewing the now 30-somethings about their drug use, wages, religiosity, sexual activity, training and education, and other kinds of personal information.Self-reported high school grades are inaccurateInterestingly, the survey administrators asked the survey respondents about their high school grades, but they also collected the official transcripts of many of the respondents, which gives us a chance to fact-check the respondents. The distributions of their self-reported and actual grades are presented below.While the self-reports seem significantly lopsided toward high grades, the errors by student aren’t so extreme. More people over-reported than under-reported, but the errors are mostly within one letter grade. Notably, the errors aren’t random, but are correlated with certain personal and peer characteristics, meaning statistical analysis based on the respondent’s self-reports would be biased. The errors are also larger the longer the time interval between graduating high school and being asked the high school grades question in the survey.In a analysis of many papers on the validity of self-reported grades, Kuncel, Credé, and Thomas (2005)2 suggest that while self-reported high school grades are less accurate than college grades, the inaccuracies “may generalize to self-reports of other accomplishments.”Indeed, if people lie about or can’t remember their own high school grades, what about other information? Do you know exactly how much you spent on food last month? Do we expect people to be perfectly honest about how much they donate to charity? All survey data should be called into question and used with extreme caution, and surveys certainly should not serve as the basis for US labor law.Other problems with surveysSurveys, it turns out, have big problems. The biggest problem is that we can’t trust people to accurately report their own personal information. The accuracy of survey data depends on the respondent's own attention, memory, and attitude toward the survey.Surveys were discounted by economists in the 70s and 80s for this very reason: survey respondents cannot be trusted to reveal accurate information about themselves. People tend to have an inflated view of themselves and exaggerate their personal information. But surveys suffer from other issues like selection bias and difficulties in identifying causation in panel data.3Selection bias happens when people have certain characteristics that make them more likely to be included in the analysis than the rest of the population. It’s a problem for surveys because it’s difficult to randomly administer surveys, but it is easy to survey people from a certain region at a certain school who are of a certain age and are ok with taking a survey (maybe because they need the extra credit in their economics or psychology class) and then make the flimsy assumption that the sample is representative of the population.It’s difficult to wrench cause and effect from panel survey data because life events can be related to each other and because of interpersonal differences between the respondents. Since the survey respondents’ lives are the subject matter for the labor economist, there is still no pure laboratory experiment in which one life event is administered to a treatment group and then the researcher compares that group to a control group.People live their lives and select themselves into college, moving from place to place, marriage, having kids, etc., and these life events are often dependent on other life events that already happened and the individual’s own preferences and personality. These kinds of biases aren’t the type that “average out” if you just get a large enough sample size. Thus isolating the ultimate cause of some labor market outcome is an impossibly complex task, even if survey respondents have perfect memories and are totally honest.ConclusionEconomists should go back to discounting survey data, and we should spend less time, money, and effort administering surveys for the purpose of economic research and informing policymakers. People can’t be trusted to take the surveys seriously and report accurate information. Even if people do give accurate information on a survey, selection bias and other issues make causal inference and generalization to the whole population difficult, if not impossible.  1. Angrist, J., Azoulay, P., Ellison, G., Hill, R., & Lu, S. F. (2017). Economic Research Evolves: Fields and Styles. American Economic Review, 107(5), 293-297. 2. Kuncel, N. R., Credé, M., & Thomas, L. L. (2005). The validity of self-reported grade point averages, class ranks, and test scores: A meta-analysis and review of the literature. Review of educational research, 75(1), 63-82. 3. See James Morgan’s “Survey research” (In Econometrics, Palgrave Macmillan UK, 2009) for a brief review of some of these issues as well as a history of the use of survey data in economics since WWII.
  • A Mixed Hero: A Libertarian Reassessment of Elon Musk    (Konrad Graf, 2017-07-23)
    By: Konrad Graf Many libertarians seem to love to hate Elon Musk these days. His crime is to live off the public purse. His companies would be bankrupt without green subsidies and cheap government loans and contracts. He seeks out favorable terms from governments and angles to capture subsidies and cheap loans with no reservation and with vast success at doing so. This situation, along with certain financing practices and relationships among his companies, has led to it becoming fashionable to disdain Musk as a public figure and to characterize him with sweeping put-downs.I have a more complex assessment of Musk as a figure. I enjoyed listening to his 2015 biography by Ashlee Vance. I tend to look for the positive things in people. One positive quality here is the ability to re-envision products from the ground up in a completely different way. The Tesla is not just the evolution of the car, but a completely new way to think about what a car is. A car is a thing with an engine and a drive train, right? True for a century, but not any more. Musk has done in the fields of cars and rockets, what Steve Jobs did for computers and phones, completely re-envisioned what they could be, how they could be built, and how they could be used.A second quality is execution under very challenging circumstances. Anyone can have big ideas, but only the few are able to successfully execute on them in the "really existing" world. SpaceX's rocket designs and rocket reuse and the Tesla Model S were almost universally deemed impossible — until the job was actually done. Rocket reuse was just a science-fiction fantasy. SpaceX did it. An electric car "that didn't suck" was also an impossibility — until Tesla built the Model S, which has been assessed by multiple car review magazines as basically the best car in the world, bar none, on both safety and performance. It is not only as good asconventional vehicles, it leaves them all behind, not just on green measures, but on car measures as such.So from a simple first look, at this level, one could argue that however these things were achieved, they were at least potentially positive achievements (though this assessment will be qualified further below). In addition, Musk cannot be accused of relying on subsidies to the exclusion of also having skin in the game. He has repeatedly staked recklessly large portions of his personal fortune on bridging impossible-looking financial stretches for his enterprises.I fully support the view that actively advocating for the expenditure of public funds is immoral. The only moral way to advocate for the use of public funds is to argue in favor of their return to the people to whom they rightfully belong, namely those whose wealth was forcibly extracted, mainly the original taxpayers.On the other hand, if taxpayers in their role as victims of the state accept state handouts that are already flowing — provided they do not actively advocate for the continuation of such handouts — it is perfectly moral for them to take receipt of such funds as a form of limited restitution for other damages they suffer at the state's hands on a constant basis. This includes not only direct taxation but all the myriad seen and unseen harms from the arbitrary "regulation" of many aspects of life and work, all unjust restrictions on the liberties of mutually consensual production, trade, and association.In this context, Musk's actions in relation to subsidies and government contracts must be viewed as mixed. Green vehicle subsidies, for example, already existed before Tesla. Building a car that would qualify for them does not — in itself — constitute advocating for the subsidy program. Seeing only crappy electric cars receiving subsidies, an entrepreneur could quite reasonably set out to build a better competing car that would also receive these same pre-existing subsidies instead of the crappy golf-cart cars.Of course, Musk certainly does promote such programs. However, only at the point where he benefits from programs the adoption or maintenance of which was actually influenced by his advocacy — does a moral case against his benefiting from them become unmistakable. The minimal conceptual dividing line is that simply benefiting from subsidies is not objectionable per se, advocating for them is objectionable, and advocating for them and then also receiving benefits as a result of such advocacy is the worst case.In this view, I suspect that his guilt is far more mixed than a simplistic portrayal of "his company benefits from subsidies, and could not exist without them." His enterprises have surely benefited in all three types of ways, ranging from acceptable to less acceptable to not acceptable.Context is also important. No car company would exist in its current form and at its current scale without unimaginably massive subsidies continuously provided to all automobiles over many decades, distorting not only the entire structure of transportation, but also the very formation and shapes of cities and communities. This vast structural distortion of the entire transportation industry, which systematically twists spatial relationships between residences and businesses, takes a simple form: the production and maintenance of roads provided free of charge to drivers, financed by taxation. A simple heuristic to consider while commuting is that every time one has to pay by waiting, such as in a long line or in thick traffic, the state is squarely to blame.In prosecuting Musk for his moral position in relation to the receipt of government support, another "extenuating circumstance" of wider context must be considered. What his companies have done with the money and other advantages he receives from state entities is far more valuable a contribution than almost anything else that follows from other uses of such money and advantages.Most of the state's money goes to "the production of bads," to use Hoppe's terminology, as opposed to the free market's production of goods. We do not want the production of bads to be carried out more efficiently. Indeed, we do not want bads to be produced at all—less of them is better.Not only is the money the state extracts from the productive population wasted once when initially extracted, the ways that this money is subsequently used are generally quite wasteful a second time, compounding the damage to society. In the US case, most government money goes to the following types of uses: financing global military interventionism and promoting armed conflict and death all around the world, financing vast bureaucracies that meddle in all aspects of society, undermining healthy natural incentives, promoting fragility, harming employment, limiting innovation, and spreading social and cultural degeneration, high time preference, frailty, and dependency across the population.Against this backdrop, Tesla has extracted something from the stream of public money and used it as part of a project which has produced arguably the best car the world has ever seen.Why libertarians should want to focus vitriol on this, one of the bestexisting uses of the state's handouts is somewhat mysterious. Why not spend the same time complaining about the 99+% of uses of state subsidies and privileges that lead to worse outcomes than this?It is far easier to criticize than to achieve. A sad and strong cultural tendency is to find flaws in hero figures and emphasize those flaws over their positive characteristics. But what does such cultural cynicism bring?My approach is the opposite in two ways: focusing on the positive and focusing on qualities. I look for admirable aspects of a person. I look for actions and qualities to which positive adjectives such as heroic can be applied, rather than attempting to apply a blanket noun such as hero (or not a hero) to necessarily multifaceted persons. I always look for what I can admire and/or borrow, in both people and thought systems. If I were to look for the worst in others and focus on that, it would be simple, but would accomplish nothing, since I would always find and focus on negative aspects of persons, aspects which I did not want to emulate. If instead I look for the best in each person, I always have something available to learn from and emulate. Likewise, if I look for the best in each thought system, and dismiss the rest, I always have one new puzzle piece to add to my own global knowledge synthesis.I agree that Musk is guilty of actively seeking to gain from state handouts. However, this is partly mitigated in that at least some of these handouts were already being handed out, and could therefore be legitimately captured as partial restitution for other damages that the state continuously inflicts. It is also partly mitigated in that the uses to which these funds are being put are arguably positive developments relative to the worse outcomes that result from almost all other uses of money derived from state coffers.It should be made clear that extenuating circumstances do not make it morally acceptable to advocate for the receipt of subsidies from the state. Nevertheless, guilt on this count (albeit probably somewhat more mitigated guilt than some critics have implied) should not be interpreted such as to invalidate the man's positive attributes and accomplishments.As I read Musk's biography a couple years back, I came to view him more as the type of mixed Randian semi-hero who blends a certain heroic genius in some areas with serious flaws elsewhere. His genius is a vision- and engineering-driven entrepreneurship that has proven able to repeatedly achieve "the impossible" in practice in productive sectors of technological achievement (mainly transportation). One of his flaws is being all too gleeful in his pursuit of capturing ill-gotten gains from the state as one of the means he uses in this process.The purest of the Randian superheroes all went on vacation from their professions in an exclusive mountain resort. Engaging with the real world to achieve great things today is often messy and complex. This is not an excuse to soften one's moral principles in action. However, Musk's own moral worldview contains no compunctions about attempting to influence state and regulatory actions, including in favor of his own enterprises. He can therefore be accused of being morally mistaken on this topic. Yet this amounts to the relatively simple claim that he is not a libertarian, which I do not think is in dispute.I do not buy into the bases of some of Musk's bigger-picture motivations, above all global warming death hype. In addition, I argue in "The Unbearable Lightness of Martian Gravity" that his Mars colonization vision could very well turn out to be a dead-end, not on technical grounds, but on biological ones. That said, I do not criticize in order to take down a hero figure. I acknowledge and appreciate the heroic aspects of the figure, while also acknowledging the flaws and pointing out what I believe to be the errors.Ron Paul said that if we are reducing the size of the state, the place to start is not with old ladies' state pension checks, but with outlandish militarism and a state-orchestrated monetary system that enables virtually unlimited debt financing for the state and its cronies. Probably one of the last things to cut out in dismantling the interventionist state is old ladies' pension checks, and this after other policies that have undermined responsible private retirement saving, real insurance, and natural multi-generational care practices have been long since eliminated.Likewise, libertarians complaining about uses to which government money is being put might consider that Tesla subsidies could well be among the best uses to which such money is currently being put. They might therefore redirect their attention and vitriol to the widespread mass production of unmistakable "bads" financed by the state, those that are far worse than some of the more impressive American engineering innovations in recent memory.Konrad S. Graf has published articles on bitcoin monetary theory and action-based legal philosophy and has presented on these topics at conferences in Europe and Australia. In 2015, he published Are Bitcoins Ownable? Property Rights, IP Wrongs, and Legal Theory Implications, a monograph on bitcoin and property rights theory.
  • What I Learned from Murray Rothbard    (Thomas E. Woods, Jr., 2017-07-23)
    By: Thomas E. Woods, Jr. Watch the opening lecture of Mises University 2017 LIVE! Includes a welcome by Jeff Deist and faculty introductions by Joseph T. Salerno.Mises Insitute members can attend Virtual Mises University for free.Mises University is the world's leading instructional program in the Austrian School of economics, and is the essential training ground for economists who are looking beyond the mainstream.
  • Campaign for Democracy in China Will Outlive Liu Xiaobo: Chinese Desire for Liberty Will Never Die    (Doug Bandow, 2017-07-23)
    Doug Bandow Before Xi Jinping became China’s president in 2012, some observers hoped he would be a liberal reformer. But today he increasingly looks like at best a civilized Mao Zedong. Imprisoning the dying Nobel Laureate Liu Xiaobo showed Xi to be equally cruel, if not quite so crazy, as Mao. Indeed, the last Nobel Peace Prize winner to die under state control was Carl von Ossietzky in Nazi Germany. The desire to create a democratic China is not new. Sun Yat-sen’s revolution a century ago offered the Chinese people hope of a transition from decrepit empire to liberal republic. Sun, a Christian convert, studied medicine in America. He called for a three-phase process of “national reconstruction.” He knew moving his nation into the future wouldn’t be easy. Overthrowing the moribund Qing dynasty was easy compared to coping with what followed: Competition among feuding warlords who filled the political vacuum, autocratic rule by Chiang Kai-shek, who took over the dead Sun’s Nationalist Party, Japanese invasion and occupation which ravaged much of the country, bitter civil war which prolifically killed and destroyed, and finally Communist revolution and near ruin. However, the end of Mao Zedong’s mad rule revived hope for democratic change. In 1978 Chinese people debated politics on the “Democracy Wall.” A decade later demonstrators filled Tiananmen Square and erected a statue to the “Goddess of Democracy.” Liberal sentiments even infected the Communist Party leadership. Party chairman Zhao Ziyang sought to defuse the 1989 protests without violence. After paramount leader Deng Xiaopeng chose a military response, bloodily dispersing the protestors, Zhao landed under house arrest for the remaining 16 years of his life. With a PhD in literature, Liu Xiaobo was a writer and literary critic. A visiting scholar abroad, he returned to China to support the Tiananmen Square demonstrators. He called for ending the “one-party monopolization of ruling privileges.” He was arrested and imprisoned through 1991. Then again from 1995 to 1996 and 1996 to 1999. Next he headed the Democratic China magazine and Independent Chinese PEN Center. In December 2008 he was arrested again after co-authoring the Charter 08 manifesto, which demanded protection of human rights, including freedom of expression, and democratic elections. Xi Jinping and his CCP cronies only can slow the process of change. Convicted of “inciting subversion of state power,” he was sentenced to 11 years in prison. While incarcerated, he received the 2010 Nobel Peace Prize for “his long and non-violent struggle for fundamental human rights in China.” Beijing was enraged and blocked access to stories on the award in China. The Communist regime denounced the Nobel committee as “a political instrument for some Western forces.” Still, the People’s Republic of China was authoritarian, not totalitarian. Liberal sentiments didn’t disappear. The PRC’s immersion in the global economy ensured greater contact with Westerners and Western ideas. As the Chinese came to enjoy greater prosperity, they wanted more say over their political future as well. The Chinese Communist Party arrested anyone who challenged its authority, limited domestic criticism, and restricted access to the internet. But Chinese students studied abroad, businessmen and tourists traveled overseas, the intellectually curious evaded online controls, and cooperation with liberal thinkers expanded. While the PRC wasn’t exactly undergoing an intellectual renaissance, it was hard to find a young person who wanted the government deciding what he or she could read, think, or say. President Hu Jintao’s government was oppressive but not systematic. A liberal revolution might not have been inevitable, but it at least seemed possible. Unfortunately, when President Xi Jinping took over in 2012 he launched a wide-ranging purge under the guise of fighting corruption. As he expanded his power he extended the state’s reach. Censorship tightened. Punishment of criticism deepened. Organizations dedicated to liberty disappeared. Obstacles to academic exchange heightened. Demands for obedience increased. Recently censors even targeted references to Winnie-the-Pooh since Chinese internet users used the cartoon character as a stand-in when referring to Xi. It was not just critics who were jailed. So were human rights lawyers who dared to represent those arrested. The number of political prisoners now likely is in the thousands. With the number of Christians surpassing the number of members of the Communist Party, the government also stepped up its attack on believers and churches. Beijing tightened controls over nominally free Hong Kong. And Beijing impatiently denounced criticism of its human rights malpractices from abroad. The CCP treated the Chinese people as property of the state. Liu was a powerful symbol of the Communist regime’s ruthless determination to enforce its demand for obedience. He advanced the simple view that political leaders should be accountable to their people. Beijing so feared his message that it placed his wife, Liu Xia, under house arrest. An artist and poet, she was never charged with committing a crime, even under the CCP’s warped conception of law. Yet she was denied contact and companionship not only with her husband, but also with her family and friends. Beijing’s vindictiveness was evident in May when the regime announced that Liu was suffering from liver cancer and would be granted medical parole; he was transferred to a closely guarded hospital. His request to leave the PRC for treatment was denied. He deserved to be treated as an “ordinary convicted criminal,” said the Xi government. Liu Xia was allowed to see her husband but not speak of his condition to anyone. After Liu Xiaobo’s death on July 13 China ensured that no dissidents attended his funeral: it was “just a big performance,” dissident Mo Zhixu declared. That was followed by Liu’s cremation, apparently ordered by Beijing to prevent creation of a burial site that could have become a focal point for protests. Chinese censors worked overtime-for instance, blocking any mention of Liu or his death, or photos of him, on the popular messaging service WeChat. And Liu Xia remained under house arrest. The status of the Lius, said Beijing, was “China’s internal affair” and no other state had “the right to interfere.” Such conduct makes a mockery of President Donald Trump’s praise of Xi as a “great leader,” “terrific guy,” and “very good man.” The Chinese leadership claims to be proud of the nation which it has created: possessing what had been the world’s fastest growing economy, enjoying increased military capabilities, and taking on additional global responsibilities. Yet the regime desperately fears the ideas of liberty and democracy. Liu noted “China’s long record of treating words as crimes.” How the CCP detests those who believe the state is to serve individuals, not the reverse. How those with political power are willing to impose their will irrespective of the human cost. Liu suffered greatly for his beliefs. Liu Xia is still being mistreated for apparently sharing the belief that China’s original revolution should be completed. That after suffering through decades of oppression by their government the Chinese people should control their own political destiny. But Xi Jinping and his CCP cronies only can slow the process of change. Beijing’s brutality is a sign of weakness. The regime fears that popular allegiance is fragile. So near-absolute rulers deploy ever more force to maintain their hold over those they claim to serve. Doing so will only make their eventual fall that much greater. Observed Liu in the speech he prepared for his sentencing, which he was not allowed to present: “there is no force that can put an end to the human quest for freedom, and China will in the end become a nation ruled by law, where human rights reign supreme.” Someday the Chinese people will be free. Doug Bandow is a Senior Fellow at the Cato Institute, former Special Assistant to President Ronald Reagan, and a Senior Fellow in International Religious Persecution with the Institute on Religion and Public Policy.
  • Senate's Israel Anti-Boycott Act Has Good Intentions, but Bad Results    (Walter Olson, 2017-07-22)
    Walter Olson A bill sponsored by roughly half the members of Congress would — so we are warned by New York Magazine, at least — “make it a felony for Americans to support the international boycott against Israel” and “make avoiding the purchase of Israeli goods for political reasons a federal crime.” Would the bill really do that? No, not as sweepingly as those passages suggest. But even shorn of the exaggeration, the Israel Anti-Boycott Act (S. 720), sponsored by Sens. Ben Cardin (D-MD) and Rob Portman (R-OH), is plenty bad enough. By punishing boycott participation grounded in political belief, it would infringe on individual liberty. I don’t like the BDS (“Boycott, Divestment, and Sanctions”) movement one bit, but sponsors of this bill — who include conservatives like Sens. Ben Sasse (R-NE), Mario Rubio (R-FL), and Ted Cruz (R-Tex.), as well as progressives like Sens. Kirsten Gillibrand (D-NY) and Claire McCaskill (D-MO) — need to face some tough questions about how it squares with the First Amendment. The furor erupted following a July 17 ACLU letter in opposition to the bill and a widely noted Intercept column by Glenn Greenwald and Ryan Grim. By that point S. 720, drafted with the assistance of the American Israel Public Affairs Committee (AIPAC), had already picked up 43 Senate sponsors, 29 Republicans, and 14 Democrats. A similar bill in the House has 234 representatives, more than a majority in that chamber. It is not a proper function of law to force Americans into carrying on foreign commerce they personally find politically objectionable, whether their reasons for reluctance be good, bad, or arbitrary. The bill would add new language to the 1979 federal law that already prohibits taking part in or assisting boycotts promoted by foreign governments (in practice, the Arab League’s boycott of Israel). Among its key provisions, one would add a new prohibition on facilitating boycotts promoted by international governmental organizations (IGOs), such as the United Nations or European Union. Despite ongoing rumblings, neither the UN nor the EU have launched a boycott of Israel, but you never know what will happen in the future. Neither the current law nor the bill, then, proposes to ban all participation in Israel boycotts: if your refusals to deal are strictly homegrown and no motive of assisting a government-led or future UN or EU boycott comes into them at any point, you’d still be okay. Is that especially comforting? The bill seems to contemplate liability even for persons who are neither agents of the EU or another foreign entity nor, say, multinational businesses trying to keep them happy: so long as advancing some future boycott organized by such a body were part of your motive, you might be in trouble even if your actions followed the advice of some activist at your church or student group. And violations are subject to a minimum civil fine of $250,000, a ruinous sum for many. Berkeley law lecturer David Schraub has attempted a line-by-line interpretation in a blog post — no easy matter, as some of the provisions are ambiguous and confusing. Schraub points out that contrary to some of the early reports, neither old nor new versions ban (nor could they, given the First Amendment) “support” for a boycott in the everyday sense of sympathizing with it or speaking out in its favor. Instead, both ban a list of actions taken to advance a boycott. Some, such as refusals to deal, are commercial in nature, while others, such as relaying to a boycott authority information about one’s own compliance, or details on the ownership, and employment profile of someone’s company, can shade more into acts of communication. Of particular concern, free-speech-wise: S. 720 creates new liability arising from “requests” both to join a boycott and to furnish information to facilitate boycotts. Although the meaning of the new language is far from clear, it likely means that the bill would ban a swath of previously legal speech about boycotts. Also, to me, highly significant: for some courts, a key rationale in upholding the 1979 law as constitutional was that it functioned, in effect, as an anti-duress-payment law, in the same way that some laws ban the payment of kidnap ransoms. Since few American multinationals of that era found Arab League arm-twisting to be welcome, the law (or so it was argued) actually advanced their interests by taking a potentially coerced outcome off the table. But since there is no prospect of a group like the EU conducting a secondary boycott with similar coercive effect, the new bill cannot be rationalized even shakily this way. Its old rationale having eroded, the new law would much more frankly pivot to ban a class of foreign boycotts motivated by political belief. One irony here is that several of the groups sounding the alarm about this are having to row back from their position in other controversies that refusal to deal is merely a commercial matter unrelated to conscience or ideological commitment, that anyone who buys or sells in the marketplace must covenant to buy or sell with all comers, and all the rest of what we hear in the wedding services cases. The ACLU points out that one business may decline to deal with Israel for “purely pragmatic reasons,” such as shipping logistics, while another refuses to deal because it supports the boycott. Because only the second business is punished, it has in effect been punished for having taken an ideological stand. It’s not a bad argument — but it might also seem to apply to the difference between a wedding vendor who turns down a job because she’s doing another wedding that weekend, and one who turns it down to make some ideological point. For libertarians, meanwhile, the answer should be easy. It is not a proper function of law to force Americans into carrying on foreign commerce they personally find politically objectionable, whether their reasons for reluctance be good, bad, or arbitrary. The outcry might make a good occasion to revisit the 1979 law itself in light of principles of individual liberty; at a minimum, we should decline S. 720’s invitation to extend it further. Walter Olson is a senior fellow at the Cato Institute’s Center for Constitutional Studies.
  • Week in Review: July 22, 2017    (Mises Institute, 2017-07-21)
    By: Mises Institute Healthcare once again dominated the headlines as Republicans continue to struggle in their efforts to replace Obamacare. Of course, as Ryan McMaken noted this week, that’s part of the Republicans' problem. The obsessions of Obamacare itself has prevented honest conversation about what was plaguing American healthcare prior to the “Affordable” Care Act becoming law. Instead of eliminating government intervention in the healthcare industry, the GOP simply wants their own intervention. The issues ailing American healthcare does not mean that socialized medicine is the answer. As George Pickering pointed out, the UK's National Health Service looks great only if you ignore minor details. Like mortality rates. Instead, what is really needed is the elimination of the entire framework of the current highly regulated, subsidized, and manipulated healthcare market, and return to a free market where there is no room for government to get in the way of patient and doctor. On Mises Weekends, Jeff is joined by Brion McClanahan and Allen Mendenhall to discuss the US Constitution.Lysander Spooner called it "The Constitution of no authority." Conservatives fetishize it, but don't follow it. Progressives want it annulled. So what should libertarians think about America's founding document?Brion and Allen give us the unadulterated history and unpleasant truths about constitutionalism-- but also consider its underappreciated benefits. This is a discussion of the Constitution you won't hear anywhere else.Below you'll find all the week's articles, in case you missed any of them:An Interview with Bettina Bien GreavesDoes Britain Have the World’s Best Health System? Only If You Ignore Outcomes by George PickeringMoney Supply Growth Falls Again, Dropping to 105-Month Low by Ryan McMakenJeff Sessions's Pot War Is Up in Smoke in Nevada by Doug FrenchHere's the True Definition of a Recession — It's Not About GDP by Frank ShostakImmunity for Prosecutors Encourages Fraud by William L. AndersonBig Military Spending Boost Threatens Our Economy and Security by Ron PaulDon't MacLean on Me by David GordonTo Fix Healthcare, We Need to Repeal a Lot More than Obamacare by Ryan McMakenPrivate Property and Higher Ed by Peter G. KleinHow OPEC Became Irrelevant by Olav DirkmaatEven Partial Drug Legalization Goes a Long Way in Protecting Property Rights by Ryan McMakenSpace Cadets and Sex Changes: Our "Defense" Budget Is a Bad JokeWar and Foreign Policy by Justin RaimondoNet Neutrality Strengthens Monopolies, Invites Corruption by Ryan McMakenWhy Wage Growth Is So Weak by Frank ShostakHow to Look at Tariffs by Murray N. RothbardCan Japan End its Easy-Money Addiction? by Brendan Brown
  • The Never-Ending Woes of a Government "Enterprise"    (Gregory Bresiger, 2017-07-21)
    By: Gregory Bresiger History is something one can try to escape, but sometimes you can’t as millions of train riders find out every day.They can’t escape Penn Station falling apart along with Amtrak, New York City commuter railroads, and the New York City subways. They all have the same problem: Every day they are reminded of the sordid history of government enterprise with derailments, delays and the billions of dollars of red ink of these dysfunctional systems. The bill is handed to the taxpayers whether they ride these trains or not.As the New York City subways, Amtrak, and other government enterprises continue to fail, mainstream media and our political class have consistently missed how we reached this point of rail disasters as the norm. That’s because few of them have time for history. The management of Amtrak, New York Subways is actually a story of generations of the limitless failures of government. Indeed, most of the analyses and criticisms of government ownership and management of the subways are hopeless.Among the lost are the Goo-Goo groups of the 1930s  — who called for public subway ownership — and their scions, the Straphangers Campaign of today.  And then there's the allegedly laissez-faire Manhattan Institute. All reject the privatization discussion. That’s because they work from a proposition that Albany and Washington, owing to their ability to tax and spend, are omnipotent and should continue to run transit systems; that they are part the solution. History proves the opposite.The City to the Rescue?Today, there is an assumption that no degree of private management can be allowed on the rails because they will always fail.Yet it was private management that was there at the beginning. Private railroads helped build the economy of the United States in the 19th and 20th centuries. And it was private management that was essential when the first subways were built.Private management companies built the first lines in 1904 under a contract with the city. They were considered “an engineering marvel,” wrote Robert Caro in The Power Broker, his biography of the New York uber-builder and power broker Robert Moses. And the subways made money in their first 15 years of operation until the inflation of World War I squeezed the nickel fare. Repeated attempts to raise the fare in the 1920s and 1930 were rejected by politicians as the actions of “greedy” owners. However, soon after the city took control of the subways in 1940, ousting the last private companies, fares went up and up.But the ousting of the private management companies and the triumph of government enterprise supposedly heralded a new brighter period in subways. The sacred nickel fare would be protected. Labor unions would be happy and wouldn’t strike. (They would illegally strike several times and cripple the city’s economy). New lines would be built because, in 1940, the avaricious private management companies had been shown the door.Back then Mayor LaGuardia drove the first city train after the last private management company was bought out. He also promised a Second Avenue subway line as the city’s East Side el lines were ended. It took three bond issues over more than half a century even to get just a few stops of the Second Avenue going. New York Governor Cuomo, in recently opening the stations, bragged about the accomplishments of the system. However, he said nothing about the reverse signaling system the subways desperately need but haven’t been able to afford over decades. Yet what happened in 1940 had a significance that has redounded throughout the American economy. Governments increasingly moved into areas that no one could have imagined generations ago.The Broken Promises of Forgotten LeadersLet us review where this all started — the supposed golden era of the New York City subways that started just before World War IIThe subway promises of 1940 were a joke in every way — from the fare to the quality of service to the promises of line extensions (Example: what happened to the 1960s plan to extend the E and F lines to the Queens/Nassau border? It never happened. This one of a number of trains to “nowhere,” new branches that were started and never finished). Under city mismanagement, the subways became a mess. The city yielded control over the subways in 1968 to a state authority.Now, after almost 50 years of Albany controls, after countless bond issues and deficits in a system that is an effective monopoly, the system, by all accounts, is a disaster. Many New Yorkers, in numerous ways, have no confidence in this state subway system, with millions of New Yorkers driving cars even though it is incredibly expensive to run a car here (My old neighborhood in the South Bronx, a poor area, has a huge parking problem).The state authority running the subways, the Metropolitan Transportation Authority (MTA), is in debt and hasn’t been able to maintain the system properly for decades, a fact mainstream New York media only seems to have discovered lately. Vital repairs and improvements can’t be made because the subway system has no money since it consistently loses tons of money. Yet the MTA spends billions of dollars recklessly and has its headquarters in the most expensive part of town, located on Madison Avenue in Midtown.New York City Mayor Bill de Blasio, who rarely rides the subways, now offers to solve their problems. The mayor says the city should take over the subways from a state authority. Apparently, he has forgotten that the city under LaGuardia once owned the subways. Few pols are willing to learn from history.An Enlightened Critic IgnoredOne journalist understood what was happening when private companies were forced out of the subways.“The City of New York has set a pattern for the nationalizing of the railroads of the country.” Libertarian journalist Frank Chodorov, in reviewing the events of 1940, said that, “A regulatory body, with power to fix rates and compel unprofitable operation, squeezes the business into bankruptcy, so that the owners are quite willing to sell their property to the taxpayers, and bureaucracy improves its position.”Chodorov’s analysis was prescient. He would be proven right in the 1970s under President Richard Nixon as the government took over the passenger railroads (This is the same Nixon who imposed wage and price controls, kept interest rates artificially low so he could win re-election, proclaimed himself a Keynesian and led the nation into a decade of stagflation). In the 1970s this was a group of passenger railroads that were pushed into bankruptcy by the over-regulation of the ICC as detailed in the book No Way to Run a Railroad: The Untold Story of the Penn Central Crisis by Stephen Salisbury.Nixon’s kind of backdoor socialism is one that had been under discussion by American social democrats for over a century. Their goal was, and is, how does one repackage socialism to the average American, a person who usually is repelled by the idea.The backdoor socialism dream of progressives to take over transportation companies through over-regulation goes back to Herbert Croly and William Jennings Bryan, who favored nationalization of the railroads after visiting Czarist Russia. Wrote Croly in The Promise of American Life in 1909, when the idea of government railroads and transit systems seemed ridiculous, “the railroads might submit to the operation of some gradual system of appropriation, which would operate only in the course of several generations, and the money for which could be obtained by the taxation of railroad earnings.”By 1971, Americans got a national passenger railroad system called Amtrak. Amtrak officials, at the founding, then promised “the greatest turnaround in business history,” as detailed in the book End of the Line by Joseph Vranich. That hasn’t happened as anyone who uses Penn Station these days will tell you. Amtrak ran in the red from day one (Amtrak lost at least $13 billion between 1972 and 1997, according to author Stephen Moore). In fact, all the lines using Penn Station, including New Jersey Transit, the Long Island Railroad and the city subways, are deep in the red.Feeding the State Enterprise BeastYou don’t solve the problem of government enterprise by giving the entity — whether it be the New York City Subways or Amtrak—more money and more power. For instance, Senator Chuck Schumer proposes that Amtrak now be given trillions of dollars in new funding. The governor calls for an emergency appropriation of a billion dollars. Many city officials propose the same for the subways. But this has been tried before. Often bond issues were once routinely approved by trusting New York voters. Proposed emergency plans, all providing for more taxpayer geld and new forms of state or city authorities, abound.Writes one historian of the subway system: “If anything has emerged as a timeless and universal characterization of the New York Subway, it is the endless search for some future salvation, some not yet realized resolution of it difficulties and cure for its ills. Plans are made, programs developed, goals established. But they never quite live up to their initial expectations, and a new cycle must begin.”The writer was Brian Cudahy, and yet he is a former federal transit official and longtime defender of this flawed system of public subways. He wrote that some 20 years ago. Collectivism and CoercionSubway socialism, the government enterprise of Amtrak, not only is collectivism, which is inherently flawed, it is undemocratic. No elected official is directly in charge of these enterprises. The New York governor, for instance, appoints some but not all members of the state authority that runs the subways. That is the way our lawmakers duck responsibility for the woes of the government trains.Most of the lawmakers haven’t a clue about what is going on at the MTA or on Amtrak. And that is the way they want it. They wanted transportation companies to stay in the public sector, but they don’t want to be held accountable when Amtrak trains crash, the subways break down or when high speed train service is egregious.This collectivism combined lack of accountability in running state enterprises is dangerous.“If anything has been demonstrated by modern experience in these matters,” F.A. Hayek wrote in 1960, “it is that, once wide coercive powers are given to government agencies for particular purposes, such powers cannot be effectively controlled by democratic assemblies.”It is the same with the majority of mainstream media. It still favors continued government ownership of the subways and almost always rejects op-eds like this one (I write from experience).Through the years it and most state and city lawmakers have failed in its job of policing these government authorities. Most media outlets don’t even go to MTA meetings and have no specialized reporters covering these transit authorities.But again, this government ownership with no accountability idea is part of the long history of government enterprise. Alexander Gray, an economist who wrote the “The Socialist Tradition from Moses to Lenin” over 70 years ago, warned of the lack of accountability in the London Underground. “More and more,” he wrote, “the state interferes and controls, the less does it show a disposition to accept ultimate responsibility.”Sounds similar to New York or Amtrak or almost any other government enterprise today.Gregory Bresiger (GregoryBresiger.com) is an independent business journalist who lives in Kew Gardens, Queens, New York. He is the author of MoneySense, a forthcoming book of basic of money management with a libertarian point of view.
  • Obama's AWOL Anti-War Protest    (James Bovard, 2017-07-21)
    By: James Bovard Barack Obama campaigned for the presidency in 2008 as a peace candidate. He signaled that he would fundamentally change America’s course after the reckless carnage unleashed by the George W. Bush administration. However, by the end of Obama’s presidency, the United States was bombing seven different foreign nations.But Obama’s warring rarely evoked the protests or opposition that the Bush administration generated. Why did so many Bush-era anti-war activists abandon the cause after Obama took office?One explanation is that the news media downplayed Obama’s killings abroad. Obama was nominated for a Nobel Peace Prize less than 12 days after taking office — not because of anything that he had achieved, but because of the sentiments he had expressed. Shortly after he accepted the Peace Prize, he announced that he would sharply increase the number of American troops in Afghanistan. Much of the media treated Obama’s surge as if it were simply a military campaign designed to ensure that the rights of Afghan women were respected. The fact that more than 2,000 American troops died in Afghanistan on Obama’s watch received far less attention in the press than did the casualties from Bush’s Iraq war.In early 2011, popular uprisings in several Arab nations spurred a hope that democracy would soon flourish across North Africa and much of the Middle East. Violent protests in Libya soon threatened the long-term regime of dictator Muammar Qaddafi, who had become a U.S. ally and supporter in recent years. Secretary of State Hillary Clinton and other advisors persuaded Obama to forcibly intervene in what appeared to be a civil war.In March 2011, Obama told Americans that “the democratic values that we stand for would be overrun” if the United States did not join the French and British assault on the Libyan government. Obama declared that one goal of the U.S. attack was “the transition to a legitimate government that is responsive to the Libyan people.” Qaddafi, who was dealing with uprisings across the nation, sent Obama a personal message: “As you know too well, democracy and building of civil society cannot be achieved by means of missiles and aircraft, or by backing armed members of al-Qaeda in Benghazi.”Even before the United States began bombing Libya, there was no sober reason to expect that toppling Qaddafi would result in a triumph of popular sovereignty. Some of the rebel groups had been slaughtering civilians; black Africans whom Qaddafi had brought into Libya as guest workers were especially targeted to be massacred. Some of Qaddafi’s most dangerous opponents were groups that the United States had officially labeled as terrorists.Obama decided that bringing democracy to Libya was more important than obeying U.S. law. The War Powers Act, passed by Congress in 1973 in the waning days of the Vietnam War, requires presidents to terminate military attacks abroad after 60 days unless Congress specifically approves the intervention. Immediately after the bombing commenced, Secretary of State Clinton declared during a classified briefing for members of Congress that “the White House would forge ahead with military action in Libya even if Congress passed a resolution constraining the mission.” Echoing the Bush administration the Obama administration indicated that congressional restraints would be “an unconstitutional encroachment on executive power.”According to the Justice Department’s Office of Legal Counsel, Obama “had the constitutional authority” to attack Libya “because he could reasonably determine that such use of force was in the national interest.” Apparently, as long as presidential advisors concluded that attacking foreigners is in the U.S. “national interest,” the president’s warring passes muster — at least according to his lawyers. Yale professors Bruce Ackerman and Oona Hathaway lamented that “history will say that the War Powers Act was condemned to a quiet death by a president who had solemnly pledged, on the campaign trail, to put an end to indiscriminate warmaking.”The U.S. attack on Libya evoked almost no protests across the nation. After Qaddafi was killed, Secretary Clinton laughed during a television interview celebrating his demise: “We came, we saw, he died.” But U.S. missiles and bombs begat chaos, not freedom. Five years later, when asked what was the worst mistake of his presidency, Obama replied, “Probably failing to plan for the day after what I think was the right thing to do in intervening in Libya.”SyriaIn 2013, Obama decided to attack the Syrian regime of Bashar al-Assad. The Obama team alleged that the Assad regime had carried out a chemical weapons attack on Syrian civilians.A front-page Washington Post headline blared, “Proof Against Assad at Hand.” But that hand remained hidden. On a Sunday talk show, White House Chief of Staff Denis McDonough admitted that the administration lacked evidence “beyond a reasonable doubt” proving that the Syrian regime had carried out the gas attack. But McDonough asserted, “The common-sense test says [Assad] is responsible for this. He should be held to account.” Obama administration officials also insisted that attacking Syria would boost American “credibility.” But unless “credibility” is defined solely as assuring the world that the president of the United States can kill foreigners on a whim, that is a poor bet. This type of credibility is more appropriate for a drunken brawl in a bar than for international relations.The administration never provided solid evidence to back up its claim. Even Obama ally Sen. Tom Harkin (D-Iowa) characterized the evidence presented in a Capitol Hill classified briefing as “circumstantial.” Rep. Justin Amash (R-Mich.) commented, “The evidence is not as strong as the public statements that the president and the administration have been making. There are some things that are being embellished in the public statements. The [classified] briefings have actually made me more skeptical about the situation.”Seeking to rally the nation behind the cause, Obama called on Congress to authorize bombing Syria. But the American people had little stomach for another adventure abroad. There were a few protests — including one outside the White House on the Saturday when Obama was expected to announce that he had commenced bombing. I was there that day, along with a smattering of conservative and libertarian opponents to another war. The protest was a bit anemic until a couple busloads of ANSWER Coalition activists arrived from Baltimore. They had great signs — “Bombing Syria Doesn’t Protect People — It Kills Them” —and they marched and chanted in unison better than most high-school bands. The U.S. Park Police were unhappy with the protest and rode their horses into the middle of the group. Federal officials came up and threatened to arrest anyone who did not clear away from the street behind the White House. A handful of arrests were made and the crowd simmered down.But when Obama made his a radio speech to the nation that afternoon, the chanting from the protest could be heard in the background. Obama announced that he was postponing a decision on bombing.However, in the summer of 2014, the ISIS terrorist group released videos of the beheading of hostages. That provided sufficient cover for Obama to commence bombing that group — and other targets in Syria. The media played its usual lapdog role. A Washington Post headline proclaimed, “Obama the reluctant warrior, cautiously selling a new fight.” So we’re supposed to think the president is a victim of cruel necessity, or what? A New York Times headline announced, “In Airstrikes, U.S. Targets Militant Cell Said to Plot an Attack Against the West.” “Said to” is the perfect term — perhaps sufficient to alert non-brain-dead readers that something may be missing (e.g., evidence). By mid 2016, the Obama administration had dropped almost 50,000 bombs on ISIS forces (or civilians wrongly suspected to be ISIS fighters) in Syria and Iraq. A September 2016 Daily Beast article noted, “In January, the Pentagon admitted to bombing civilians on at least 14 different occasions. In July, an off-target airstrike in northern Syria killed more than 60 people.”Obama acted as if he was doing God’s work by again bombing the Middle East. But the supposed beneficiaries were not persuaded. On the eve of the 2016 U.S. November election, independent journalist Rania Khalek (who was visiting Syria) tweeted, “I’ve been asking Syrians who they want to win for president. The vast majority say Trump because they feel he’s less likely to bomb them.” Presidential rhetoric was not sufficient compensation for the lives and homes that would be destroyed by the increased onslaughts that Democratic candidate Hillary Clinton seemed to promise.Anti-War or Anti-Republican?Thousands of innocent foreigners were killed by U.S. bombings and drone attacks during the Obama administration. In his 2016 State of the Union address, Obama scoffed at “calls to carpet bomb civilians.” Perhaps he considered it far more prudent to blow up wedding parties instead (as happened during his reign in Yemen and Afghanistan). As long as White House or Pentagon spokesmen announced that the United States was using “precision bombing,” media controversy over innocent victims was blunted, if not completely avoided.Why did Obama suffer far less backlash than George W. Bush? Salon columnist David Sirota summarized an academic study released in 2013: “Evaluating surveys of more than 5,300 anti-war protestors from 2007 to 2009, the researchers discovered that the many protestors who self-identified as Democrats ‘withdrew from anti-war protests when the Democratic Party achieved electoral success’ in the 2008 presidential election.”Sirota noted that the researchers concluded that “during the Bush years, many Democrats were not necessarily motivated to participate in the anti-war movement because they oppose militarism and war — they were instead ‘motivated to participate by anti-Republican sentiments.’”There have been plenty of stout critics of U.S. warring in recent years — including Antiwar.com, The Future of Freedom Foundation, Ron Paul, the Mises Institute, and some principled liberals and leftists such as CounterPunch and Glenn Greenwald and The Intercept. But overall, the media spotlight rarely shone on U.S. carnage abroad, as it did in earlier times. Perhaps the anti-war movement will revive if Donald Trump commences bombing new foreign nations. But it is clear that too many Americans have not yet learned the folly of “kill foreigners first, ask questions later.”Originally published by the Future of Freedom Foundation. 
  • Should Libertarians Care about the Constitution?    (Brion McClanahan, Allen Mendenhall, Jeff Deist, 2017-07-21)
    By: Brion McClanahan, Allen Mendenhall, Jeff Deist Lysander Spooner called it "The Constitution of no authority." Conservatives fetishize it, but don't follow it. Progressives want it annulled. So, what should libertarians think about America's founding document?Our guests Brion McClanahan and Allen Mendenhall give us the unadulterated history and unpleasant truths about constitutionalism—but also consider its underappreciated benefits.This is a discussion of the Constitution you won't hear anywhere else.
  • Clean Coal Has Hit a Speedbump, but It Remains Essential    (2017-07-21)
    By William F. Shughart II; The Kemper County, Miss., power plant, once heralded as the future of clean coal, has become the poster child for its struggles. Over-budget and mired in technical problems, the S...
  • Four Reasons Obamacare Lived to Plague Republicans Another Day    (Michael D. Tanner, 2017-07-21)
    Michael D. Tanner Republican hopes to repeal Obamacare are all but officially dead, at least for now. This isn’t just a failure, this is an epic failure. This is the legislative failure by which all future legislative failures will be judged. But how did it come to this? When Republicans took power in January, they controlled both branches of Congress and the presidency, Obamacare was hugely unpopular with voters, and the health care law was spiraling into failure. Yet somehow, Obamacare not only survives, it is now more popular than ever. So what went wrong? 1. It’s Hard Taking Things Away from People: One thing Democrats have always understood is that there is no down escalator for the welfare state. As we witness every election cycle, when Democrats accuse Republicans of throwing grandma off a cliff for discussing Social Security or Medicare reform, it doesn’t matter how unsustainable or unrealistic promised benefits are, you are still taking away something that people feel they were promised. Santa Claus is always more popular than the Grinch, even if the Grinch understands math. Republicans tried hard to pretend that there were no losers under their proposals, but the public understood that, if you slowed the growth of Medicaid or reduced subsidies, some people would either pay more or get less. And because they don’t trust politicians, they didn’t want to take any chances that the person paying more or getting less would be them. That means it was always going to be hard for Republicans to repeal or replace Obamacare even if they got everything else right. As we saw, they didn’t. For one, Santa Claus is much more popular than the Grinch. 2. Institutional barriers: Because Democrats were unified in opposition to any Republican plan, Republicans were forced to rely on a complex procedure known as “reconciliation” to avoid a filibuster in the Senate. Among other things, reconciliation requires that all provisions in a bill have a direct budgetary impact. Thus, proposals like allowing the sale of insurance across state lines couldn’t be included in the bill. But those provisions were not only among the most popular Republican ideas, they were also important for making insurance more affordable. 3. No Plan: For 7 years, every Republican running for president or Congress (or any other office for that matter) campaigned on opposition to Obamacare. Congress even voted some 50 times to repeal all or part of the health care law. But once the stakes became real rather than symbolic this year, it quickly became apparent that Republicans had no actual plan for what would replace Obamacare. This wasn’t just a question of negotiating the final details either. They didn’t even understand the basics. It was obvious that very few Republicans had given much thought to how the health care system works or what a free market health care plan might look like. Without a base of understanding to start from, the negotiations over the Republican alternative quickly became obsessive efforts to find a plan that could pass, rather than one that would work. Thus Republicans tried to keep seemingly popular provisions of Obamacare, like preventing medical underwriting of people with preexisting conditions, while repealing unpopular provisions like the individual mandate. They ended up with a proposal that increasingly veered toward incoherence. It somehow managed the difficult feat of taking all the problems with Obamacare and making them worse. No Message: As Republicans became increasingly obsessed with process and the tantalizing question of whether they could pass anything, they almost completely stopped talking about why they should pass their bill. Almost no one talked about why this was a good bill, or why it was better than Obamacare. The average American had no idea what the Republican bill would do to their premiums, their coverage, their ability to see the doctor of their choice. There is a compelling case to be made for how free market health care reform can bring down costs, while improving quality and choice. No one ever made that case. No one was more derelict in this regard than President Trump. Say what you will about how President Obama sold Obamacare, but he did sell it. By some estimates Obama discussed health care on more than 150 occasions in his speeches, press conferences, and town halls. Even by generous standards, President Trump spoke about health care less than a dozen times in the first six months of his presidency, often just a passing reference sandwiched amidst other issues. The Republican failure to repeal Obamacare suggests that the rest of their agenda, from tax reform to the budget is in trouble too. None of the dynamics are going to change. Democrats, firmly in “resist” mode, will remain adamantly against anything Republicans propose. President Trump will remain distracted and disengaged (not to mention increasingly unpopular). Republicans will remain divided and afraid. Not exactly a recipe for success. The question, then, is whether the president and congressional Republicans have learned anything from this defeat. So far, there’s no evidence that they have. Michael Tanner is a senior fellow at the Cato Institute.
  • An Interview with Bettina Bien Greaves    (Bettina Bien Greaves, 2017-07-21)
    By: Bettina Bien Greaves Today is Bettina Bien Greaves 100th birthday. Mrs. Greaves is a truly special person, and without her the Mises Institute would not be what it is today.Along with her husband Percy, she attended Ludwig von Mises's seminars at New York University, where she earned the respect and trust of Mises. She went on to be a vital assistant to Mises for the rest of his life, as well as becoming an accomplished scholar in her own right. Ever since the Mises Institute's founding, Mrs. Greaves has been a remarkable supporter, contributor, and friend.Anyone who cares about the ideas of Austiran economics, freedom, and peace, owe her their sincerist gratitude.Below is an interview with Mrs. Greaves from 1998, discussing her time with Ludwig von Mises and the ideas the Mises Institute stands for. AEN: How did the most recent Mises book, Interventionism: An Economic Analysis, come to be written and published?GREAVES: This is a fascinating case. Mises came to the United States in 1940, and this must have been written soon after, but nothing ever came of it. This was a very sad and difficult period in his life. He had no money and no job. His books and papers, except for those he had taken to Switzerland, had been confiscated by the Nazis. He had few contacts in America. I marvel that he was able to be so productive.I'm very pleased this book is out at last. It is a valuable contribution, and stands with Socialism (1922) and Liberalism (1927) as an important part of the comparative-systems literature.In those first few months after arriving in the United States, Mises also wrote Notes and Recollections, a very moving book. I have to give Mrs. Mises the credit for Mises's productivity during this period. She shielded him from the world so he could get his writing done.AEN: Your bibliography is also an invaluable contribution to Misesian scholarship.GREAVES: It certainly was many years in the making. It began in the late 1950s, when I began attending Mises's New York University seminar. Then, one summer when the Miseses were going to Europe, his wife Margit gave me a key to their apartment so that I could catalog his books. I did that over the summer. Among the books and pamphlets were Mises's own writings. Also over the years when I was in Mises's seminar, he would hand me a copy of anything he wrote. I began accumulating things over time.That eventually became the bibliography I presented to him on his eightieth birthday (1961). But as soon as it went to print, I was dissatisfied with it because I had found some omissions. I kept thinking I would get back to it, but it took the constant urging of my friend Robert McGee to force me to pick the project up again. He came over every week to help, and we worked faithfully for months. We both thought that a list of books would be rather dull. So we decided to annotate it. Well, this vastly expanded the project.McGee became so busy in his work that he had to pull out, and I finished it up over the following year. It includes not only Mises's published works in all languages, but crucial passages from contemporary reviews of Mises's works, including reviews in German, French, and Spanish. I had help with the Italian, and the Czech I left only in titles, but the rest I did myself.AEN: And you did the translations yourself?GREAVES: Ill never forget Mises saying in his seminar, again and again, that languages are important. I took that to heart. It was still difficult for me and I did it very slowly. I had some French and German in school, and I studied Spanish after I got out of school in 1938, in anticipation of spending some time in Latin America. By the time the war came, I was working three jobs in Washington, D.C., two of which were secretarial. I wanted to do something more exciting and more lucrative. I went to the U.S. employment office to see what they had.They asked me: would you like to work for the government? I said no. Then facetiously I said, "For one thing I dont like long corridors." They assured me there would be no long corridors in South America. Thirty days later I was in South America, working with a special commission investigating labor trouble at a Bolivian mine. For propaganda purposes, the commission included a member representing organized labor. Every morning, he would go around pulling clean towels down from racks to insure that the maids at the hotel would have work to do. The New Deal ethic of "make work" trickled all the way down to that level.After completing its report, the special commission left Bolivia and I was transferred to the Board of Economic Warfare. For the war effort, the Board of Economic Warfare was buying tin, tungsten, and cinchona, for the treatment of malaria. I learned some Spanish in my two years in Bolivia, then returned to Washington. There I was assigned temporarily to the Board of Economic Warfare's Mexican Division, whose task was to approve licenses for trading with Mexico. There were four men and three girls in the office and practically no work. I spent my time doing my fingernails, cutting paper dolls, and making clothes for my young niece. But I did type up the office's request to Congress for the next year's funding to include six men and six girls. That taught me something about bureaucracy. Later I was transferred to Europe.AEN: Did you make it to Austria?GREAVES: Yes. After V-E Day, I was one of eight girls flown over the Alps to Austria. Working in Vienna gave me a chance to relearn German. But I had never heard of Austrian economics. I had one economics course at Wheaton College (Norton, Mass.), from which I concluded that the best kind of government would be an enlightened dictatorship. The only problem was that we could not be sure that later dictators would be equally enlightened. When the Board of Economic Warfare was disbanded, I switched to the War Department for a few months before returning home. When I left the War Department, I swore I would never work for the government again. And I did not.I worked in bookkeeping after the war, and one day I applied for a position as an editorial assistant. I wrote that I was fed up with government red tape. Well, at the other end of that letter was Percy Greaves, who would later become my husband. He ran the Foundation for Freedom in Washington, D.C., but that organization did not do well. In 1951, I came to the Foundation for Economic Education (FEE), where I met Ludwig von Mises, who was a part-time member of the staff.A magazine called The Freeman, before FEE took it over, sponsored a Mises seminar. I attended that summer and took verbatim notes. Then that fall I started attending Mises's New York University seminar, where I also took notes. I didn't stop taking notes on his seminar until it finally closed in 1969. I also took some private German lessons, conducted entirely in German.AEN: And you put your knowledge of German to work for Mises?GREAVES: He was generally suspicious of translations. He doubted whether many translators could be familiar enough with the two languages on which they worked to produce something truly faithful to the original. Also, he often pointed out that customs, practices, and concepts associated with one language may have no counterpart in another. Even so, he sanctioned some translations. I was particularly careful with the translation of three monetary essays published as On the Manipulation of Money and Credit, edited by Percy. The two of us often spent hours, with dictionaries and thesaurus at hand, discussing the most suitable words to use. It took a lot of time, but I hope the result would have pleased Mises.AEN: Was Human Action out by the time you met Mises?GREAVES: Yes, and I read it in 1951. I remember standing on a street corner reading it, waiting to be picked up for Mises's seminar. I was captivated by it. Of course I didn't have an economics background, but in some ways that worked to my advantage. Mises's book went against the grain of what was being taught in economics classes and business schools. To understand his approach required first unlearning what was being taught elsewhere at the time. I didn't have much to unlearn, so, in some ways, picking up Austrian economics was easier for me than even for Percy, who had been in business school.The laissez-faire politics of the book was no problem for me. I was raised by a father who was a strict constitutionalist. He believed in free trade and wasnt fond of government. He was opposed to the New Deal, though my grandmother was a New Dealer. He just agreed not to talk with her about it. My impression is that the Austrian explanation for the depression is more widely accepted today than in the past. Frederick Lewis Allens book Since Yesterday accepts that the cause and the problem of the depression rested with the credit system. And Paul Johnsons History of the American People adopts the Austrian explanation too.AEN: In the early 1950s, did you imagine that Mises would be your lifetime project?GREAVES: Oh, heavens no. I sort of got stuck with it. Percy was the real Misesian, and he kept pushing me to read and study and work with this project. You know, I'veheard it said that Percy worshiped Mises blindly, but that was not true. He was drawn to Mises because he realized that Mises had the answers and that others did not. I came to understand that too.Not that Mises was surrounded by acolytes. There were three types of people who came to his New York University seminar. First, students who wanted an easy credit. Second, more serious people like Murray Rothbard, Israel Kirzner, and Hans Sennholz, who were economists of the Austrian tradition. Then there were people like me, George Koether, Mary Sennholz, and many others. We came and just got hooked. Frequently, a person would hear one lecture and get hooked. I dont put myself in that category at all. I supported the free market, but it took me a while to fully appreciate Mises.AEN: Mises's appeal, then, is both scholarly and popular.GREAVES: Certainly, and I think this is one reason he has had such an impact. A good example of his popular style can be seen in Economic Policy: Thoughts for Today and Tomorrow. In 1959, he was to deliver some lectures in Argentina. He came with a clear message. Government should protect and defend the lives and property of the persons under its jurisdiction, settle disputes that arise, and otherwise leave people free to pursue their various goals and ends in life.This idea was radical then and it still is today. Governments still presume to regulate and control economic life. They manipulate prices, fix wages, subsidize business, hamper imports or exports, manage the money supply, care for the sick and elderly, bail out the profligate, and on and on. But these efforts are contrary to freedom and contrary to capitalism, and they produce undesirable consequences for society in the long run. They impede the ability of people to cooperate in their own material betterment.In these lectures, he expressed this idea with great clarity and force. He always said it was as important to convince businessmen and average people of the case for the market economy as it was to convince scholars and intellectuals. What determines whether or not we have a free economy is the ideas people hold about economics. Mises did everything he could to popularize the message.AEN: Was there a difference between the private Mises and the public Mises?GREAVES: In public and private, he was always a very quiet and unassuming person, but also he was positive and determined. As many people have said, he wouldnt compromise. When he lectured, he did not have the style that is popularly associated with genius: wild eyed, arms waving, demagogic. That was not Mises at all. He was conventional and traditional in his appearance. His manners were perfect. He didn't talk about what he was doing or thinking. But in a seminar setting, he could be extremely quick witted. He was once asked about the proposal for making "paper gold," i.e., Special Drawing Rights, the international currency. He responded that the proponents of "paper gold" should consult the alchemists.AEN: Many people have said he was a man of the Old World.GREAVES: Remember that his full name was "Ludwig Edler von Mises." "Edler von" indicates the particular rank of nobility he had under the old Austro-Hungarian Empire. Before 1919, his books and writings were signed "Ludwig von Mises." After World War I, all Austrian titles of nobility were abolished by law. As a result, his writings in the interwar period were signed "Ludwig Mises." After he left Vienna, he added the "von" back in. In America, he dropped the "von" in his private life, but continued to use it in his writings, so that bibliographers would know he was the same man.It was a smart choice, because he was so prolific. In Vienna, when Mises had a full-time job with the Chamber of Commerce, writing reports and articles on all sorts of economic topics, he was also teaching one evening a week and holding his famous private seminar one evening a week. Hayek says that in 1922, he was dumbfounded to see this huge book called Socialism come out. He didn't know Mises was even writing it and didn't know when he would have had time.AEN: Fritz Machlup seems to have worked hard to get Mises a position in those early years.GREAVES: They were very good friends. Machlup was a businessman, he also came to Mises's private seminar in Vienna and received his PhD at the University of Vienna. When Mises was thinking of migrating to the United States, he couldn't get permission without first having a job offer. It was Machlup, and I think Gottfried Haberler, who made arrangements with the provost of a university in California. Mises accepted. It was only after Mises arrived in New York that he was told that there was no job; it was only a ruse to get him to the United States.Henry Hazlitt, who was working for the New York Times, also tried to get Mises an academic position. He held a dinner party with some people from the New School for Social Research. But they found him far too extreme to hire. When he finally got an invitation to speak in Mexico, and the visas were arranged, it was a tremendous boost to his morale. Later, he was able to get a visiting professor position with New York University, and a foundation called the Volcker Fund paid NYU for the costs of his seminar.One point on Machlup. He was taken in, at least to some extent, by Keynesian economics. Many years later, Machlup made a speech at a Mont Pelerin Society meeting on money and credit. Mises stood up and left the room. He told Margit, "Machlup knows better than that." Later, Margit got Mises and Machlup back together again.AEN: It's been said that relations between Leonard Read and Mises were sometimes tense.GREAVES: FEE was Reads foundation, and he wanted to be the big I Am. And he was. Mises had his bailiwick, in which he felt he deserved recognition as the authority. Read realized that and respected it. Read invited Mises to lecture at FEE regularly, but they kept their jurisdictions separate, as they should have. Read didn't understand Mises, but he knew he was an important person.Read was also jealous of Percy for the same reason. Percy sometimes went on the road for seminars with Read. After a talk, the audience was split into three groups, and each speaker would take a third of the audience and field questions. Read couldn't field the questions sparked by Percy's talks. He didn't want to talk about money. He would shift the discussion to whether or not the seminar should include a talk on money. I think the problem was in the discussion group format.AEN: What role did Hazlitt play as Mises's editor?GREAVES: Mises got a grant to have an office at the National Bureau for Economic Research, and thats where he wrote both Bureaucracy and Omnipotent Government. Hazlitt helped considerably with them, editing and getting them published by Yale University Press. Then Hazlitt encouraged Yale to ask Mises to redo in English his German-language National?konomie. When Human Action was in manuscript form he went over it and marked it up, trying to smooth out the English. Later when reading over the published edition, Hazlitt occasionally came across some awkwardly phrased passages. Whether Mises rejected Hazlitts suggestions, I just dont know. In general, Mises's English was very good, but it was formal, not colloquial English.Thirteen years later, Mises wanted to make some changes in the sections on monopoly and on government, partly in response to discussions he had with Murray Rothbard. Yale said they would do this by pasting in the new material with the old manuscript. Mises said he wanted to see proofs before printing, but Yale said not to worry.When the new edition came out, Mises was sick about it. His lifetime work had been mangled. They omitted one page, printed one page twice, and did the same thing with a couple of paragraphs. They had dark type and light type, short pages and long pages. It was a lousy print job that Yale should have been ashamed of. Mises wanted to sue, but his lawyer said they had no chance of winning a case against Yale in Connecticut. At first Yale didn't want to relinquish reprint permission, but finally in 1966, the entire manuscript was reset and published by Henry Regnery. That was the version that was sold for many years. Two years ago, FEE was pleased to issue a newer edition with some corrected typos and a new and expanded index.AEN: Mises was often thought to be behind the times.GREAVES: And now we know that he was way ahead of his times. He was celebrating the wonderful inventiveness and productive power of markets while everyone else was talking about the wonders of central planning and socialism. Today, markets are becoming the driving force of history and governments are shrinking in their ambitions.AEN: What do you think about claims that the business cycle has been abolished?GREAVES: I'veheard this many times in the past. And I often get asked about parallels between the 1920s and today. Today, just as in the 1920s, people think the prosperity will last forever. Thats what they also thought in Thailand, Indonesia, and South Korea only two years ago. Theres no question that todays soft credit expansion has distorted production patterns, but in what way and to what extent we cannot know for sure.Of course there's been continual credit expansion since the creation of the Fed, with only a few interludes. Every step away from the gold standard has freed up the central bank to expand the money supply through the credit system, until we arrive at where we are today: no limits on what the Fed can do. The effects of inflation have been forestalled because the dollar is the reserve currency of the world, hoarded overseas and held by individuals and every central bank. It's hard to say where the present boom will lead, but I noted something Mises said in one of his lectures that I was transcribing the other day. He said that the capitalist system is so productive and adaptive that it conceals the ill-effects of credit expansion for a very long time. But there is a limit.AEN: What do you suppose will be the response by the Fed in the next recession?GREAVES: It's hard to say, but the history of bank failure doesnt suggest that banking authorities will do the right thing. Every time there were bank failures in the nineteenth century, people would blame the lack of centralization. That's how we eventually got a Federal Reserve. It was attempting to provide the banking industry with more liquidity so that it could ride out bank crises.Now, we have internationalized bank failures and even whole governments that are propped up by the IMF, working with the Fed and the Treasury. In each case, the dollar is serving as the foundation for these escalating bailouts of foreign governments and banking systems. That would imply that the next crises might lead to a push for a world central bank, which would only extend the present problem.Keynesians want to restrict the ability of nations to exercise sovereignty over their own central banking policies; they want all countries to inflate at the same rate. That's difficult to do when countries are trying to run their own affairs, and especially when every country seems to think that the way to keep prosperity going forever is to keep expanding the money supply.In the last series of Mises's lectures that I typed, he was speaking about the continual easing of money. He pointed out that when the quantity of money and credit is being increased, monetary authorities must decide who will get the new money first. Those who do are content; those who dont are resentful. In any event, every such case of selective expansion must lead to economic distortion. We have seen the total collapse of some Asiatic economies when things got out of kilter. The monetary authorities dont seem to have a clue as to how to manage the situation.AEN: Percy had a strong interest in the question of Pearl Harbor, and then you picked up his project.GREAVES: I'm working on finishing his manuscript. Percy served as chief of the minority staff on the Congressional committee that investigated Pearl Harbor. The book is called The Seeds and Fruits of Infamy, and it will probably be about 1,000 pages. I think it will be an important contribution. We have documentation that Roosevelt was not willing to wait for United States territory to be attacked. He intended on December 8 to have the United States enter the war to defend "our national interests" in Southeast Asia when British and Thai territories were attacked in that region by the Japanese. Thus the attack on Pearl Harbor became the excuse, but it was not the reason for our entering the war.The first substantial postwar book on Pearl Harbor appeared in 1947, by George Morgenstern. There have been many since. Most historians agree that Roosevelt wanted the United States to get into the war, but it is not well-known that he had that intention even before the December 7 attack on Pearl Harbor. Our book covers all the eight or nine investigations that sought to determine why we were surprised by the Japanese attack and who was responsible for the extent of the damage. My job is to update his work, considering all the modern scholarship on the subject, and provide as many details about the case and the investigations as possible, so the reader can make up his own mind.The administration's investigations were rigged, and ended up holding the Hawaiian commanders, Admiral Husband Kimmel and General Walter Short, responsible. The truth started to come out in 1944, when news leaked that the United States had broken the Japanese diplomatic code long before the attack and had been intercepting Japanese messages. But the revelations derived from the prewar intercepts were not delivered to the Hawaiian commanders. Roosevelt died in April 1945, before V-E Day. Only in August 1945, after V-J Day, were the reports from the Army and Navy released--by the new president, Harry Truman. These reports pretty much absolved Kimmel and Short of blame and placed the responsibility on the administration. That's when Congress got involved. Our book reviews all the investigations and considers all the evidence about the cover-ups. As you can see, government cover-ups and plots against the truth are nothing new.AEN: Will this book affect how we think of Roosevelt?GREAVES: I don't say this in the book, but I think it demonstrates that Roosevelt was cagey, sneaky, and scheming. That comes through in how he was trying to maneuver us into war. Clare Booth Luce said it in the 1944 campaign: he lied us into the war. I have a chapter in which I discuss what Roosevelt knew and when he knew it. He is not on record anywhere on the subject. There are many notes that say so and so met in the White House and discussed such and such with Roosevelt. But he didn't put things in writing. Incidentally, Admiral Kimmel's son read the first volume of this book, before he died not long ago, and said that was the best treatment of prewar events in Washington that he had seen.AEN: Do you think we could have avoided the war?GREAVES: Charles Lindbergh thought so. He said it wasnt our war and we should stay out. I tend to agree. I dont know what would have happened to England in the short run. And I dont know what would have become of Russia in the absence of our assistance.But as Mises says in Interventionism, Hitler's programs would not have worked over the long run. He was trying to run a planned economy, and it would have failed just as surely as other socialist programs have failed. But today, people think Roosevelt saved the world, not only militarily but also economically, through inflation.Incidentally, I highly recommend R.J. Rummel's book Death by Government. It is absolutely unbelievable what governments have done to people, ofttimes their own people. There are important lessons here to be learned!It's true that the attitude of people toward government has shifted. Many find government corrupt and expensive and doubt its effectiveness. At the same time, people still do not trust free markets and open competition. The ideas of Marx and Keynes linger on in the popular mind and still haunt legislation.AEN: And to explain the workings of economic liberty is a driving force behind your work.GREAVES: Yes it is. I loved working on Mises's bibliography. At times I found it fascinating; at other times I wondered who would ever be interested in all the minutia I was digging up. I enjoy talking about him and discussing his career. But as interesting as the details of his life are, his ideas and economic theories are more important. Promoting them will be the most fitting tribute possible to Mises.Originally published in the Austrian Economics Newsletter (Volume 18, Number 4 | Winter 1998)Bettina Bien Greaves attended Ludwig von Mises's New York University seminar, compiled Mises: An Annotated Bibliography, the major parts of which are now available on Mises.org here, and also edited several collections of articles. She is a senior Mises Scholar of the Ludwig von Mises Institute and was interviewed in her office at the Foundation for Economic Education 
  • Straight from DPRK: Traveling to NK: Brave or Crazy?    (Doug Bandow, 2017-07-21)
    Doug Bandow Pyongyang, North Korea — In the popular mind, there may be no more forbidding destination on earth. I’ve never had as many people ask if I was serious when I mentioned I was heading to the Democratic People’s Republic of Korea last month. In fact, I had no worries. I was going as a guest of the Institute for American Studies of the Foreign Ministry. I also understood what not to do. Failing at the latter has proved to be the undoing of a number of Americans, most spectacularly collegian Otto Warmbier, who died after being released by North Korea in a coma. Three other Americans remain in custody, along with several South Koreans and other foreign nationals. But their plight, though tragic, is not a good reason to ban travel to the DPRK. Some in Congress want to ban travel to the North. But a free society should protect the liberty to travel and explore. Some attributed Warmbier’s release to the Trump administration’s efforts, though it had no more leverage than its predecessor. While in the North I asked if the government sent Warmbier home as a conciliatory gesture to Washington. The unequivocal response was that it was strictly a humanitarian matter. Otto Warmbier’s family blamed the Obama administration for failing to win his release, but the decision always was Pyongyang’s. Why the DPRK released him was impossible to know for sure: perhaps Kim Jong-un decided that holding a comatose prisoner was a political liability. The cases of Warmbier and other Americans, some going back years, are uniformly awful: people punished for actions that should not be considered criminal. But the DPRK is not alone in penalizing foreigners for dubious offenses. The main difference may be that Pyongyang, more than most other “hostile” states, sees potential political value in jailed Americans. Still, a thousand Americans visit annually and don’t get arrested. Young Pioneer Tours, which organized the trip on which Warmbier traveled, pointed out that it had brought in more than 8000 other travelers without incident. On my plane entering North Korea I sat next to a British citizen who was making his third tourist visit. The worst trouble he had was being told to delete photos deemed inappropriate. A number of humanitarian groups, some explicitly religious, work in the officially atheist nation. I met several NGO staffers and volunteers in the midst of a lengthy sojourn providing medical care. None had ever ended up in jail. In fact, arrests aren’t random but, in North Korea’s view, for cause. DPRK officials say they punish intentional, not accidental, rules violations. I chatted with the head of a Western NGO active in the North who said her group had looked into the cases of those jailed: all had committed some illegal act. Obviously that doesn’t mean their conduct warranted punishment. But they put themselves under the DPRK’s authority, to ill effect. Warmbier’s case looks extreme even by North Korean standards. Some knowledgeable Westerners suggested that there was more to his case, perhaps involving an insult to the North Korean system and Supreme Leader Kim Jong-un. The poster incident merely became the cover story. Some in Congress want to ban travel to the North. But a free society should protect the liberty to travel and explore. This right shouldn’t be limited without compelling justification. Visiting the DPRK has educational value. Those who spend time in North Korea are more likely to understand it. Since the U.S. government lacks a diplomatic presence; American visitors are the best alternative. Going to the North also causes those living in free societies to better appreciate their systems. I left thankful that I lived in a society which, however imperfectly, protected individual liberty. Watching, meeting, and especially working with people who don’t fit the official stereotype provide North Koreans with an education as well. Knowledge is transmitted, curiosity is aroused. Engagement is no panacea, but is more likely than isolation to encourage Pyongyang’s positive evolution. Banning Americans from visiting the North would be especially perverse when the rest of the world remained free to go. Congress should think how best to transform the North’s people as well as government over the long-term. We may never know what happened to Otto Warmbier. His tragic case reminds us that visiting North Korea requires special caution. But that’s no reason to block outsiders from going. They have much both to learn and teach. Until the DPRK changes, individual travelers may end up being most important and perhaps only ambassadors to North Korea from democratic countries around the world. Doug Bandow is a senior fellow at the Cato Institute and a former Special Assistant to President Ronald Reagan.
  • Seeing North Korea from the Inside: Dedicated to the Supreme Leader and Nuclear Weapons    (Doug Bandow, 2017-07-21)
    Doug Bandow Pyongyang, North Korea—It doesn’t take long after arriving in the Democratic People’s Republic of Korea to realize that you’re not in Kansas anymore. There are multiple portraits of deceased Great Leader Kim Il-sung and Dear Leader Kim Jong-il. Every North Korean official wears a pin picturing one or both Kims. Customs personnel count books carried in by visitors. All this before reaching the terminal arrivals area. Of course, there’s a dark side to what seems almost comic to most Westerners. The imprisonment and death of Otto Warmbier offers a stark warning of the risk of visiting the DPRK. Three Americans remain in custody, along with 13 other foreigners. Behind them is the brutal oppression of an entire population. However, the vast majority of visitors to the North, including about 1000 Americans a year, have no problems. In fact, getting arrested requires a misstep, though it may seem trivial in the Western mind, such as stealing a political poster. North Koreans set the rules and say they only punish intentional offenses. This claim was surprisingly backed by the head of a Christian NGO which works in the DPRK. She told me the group had investigated every case in which an American was incarcerated; everyone had done something to attract the regime’s ill attention. That doesn’t mean they deserved punishment, of course, but suggests Pyongyang wasn’t trolling for hostages, as suggested by some. Even with a scripted program visiting the North is educational. My latest trip—I first went in 1992—reaffirmed the fact that DPRK officials are neither crazy nor suicidal. The system is unusual at best, bizarre at worst. But an internal logic drives foreign as well as domestic policy. As much as those outside desire to see it change, it is those inside who most need a freer, more humane North Korea. The Leader (whether Great and Dear, as in the past, or Supreme, like today) is central; everything and everyone revolves around him. The people are one with the Leader. The regime is equated with the (united) nation and must be preserved. Outside threats must be met with force. Most North Korean actions, however strange their appearance and whatever their human cost, are consistent with these precepts. Nuclear weapons dominate the West’s attention, but my conversations offer little hope for a negotiated settlement, which will surprise few analysts. Officials unapologetically defended their nuclear and missile programs which, they said, were made necessary by America’s “hostile policy,” highlighted by military and nuclear threats. The latter, they complained, dates from the 1950s. America is over there, North Korea is not over here. Of course, it’s not easy to disentangle beliefs from propaganda, but it’s been said that even paranoids have enemies. Pyongyang is aware of South Korean threats to march north dating back to Syngman Rhee. North Koreans see military exercises which concentrate allied forces. DPRK officials cite South Korean plans targeting their supreme command and intended to decapitate the leadership. They point to U.S. campaigns for regime change in Afghanistan, Iraq, and Libya. Obviously this narrative is self-serving and leaves out the DPRK’s behavior. But allied power does threaten the Kim regime. Nuclear weapons offer the only sure deterrent. Why, they ask, should they give up their nukes? However, they admit that even receipt of such assurances would not cause them to yield their nuclear weapons. What if the U.S. abandoned its “hostile policy” as they demanded, I asked? One of my interlocutors said the North might consider disarming if all the other nuclear powers eliminated their weapons as well. Which means they intend a nuclear North to be a permanent reality. What to do? Preventative war is inconceivable—Seoul is too vulnerable to attack—and sanctions have yet to work. In Washington, at least, China is seen as a miracle drug to cure the North Korean malady. In fact, the People’s Republic of China has surprisingly little clout in Pyongyang. These days the PRC and North Korea are at best frenemies. But divisions between the two states go back to the Korean War. The DPRK never gave Beijing credit for the latter’s regime-saving support. The Victorious Fatherland War Museum, which includes the USS Pueblo stationed on the nearby river, reflects North Korea’s view of the conflict. Exhibits highlight Marshall Kim Il-sung’s improbable triumph over U.S. imperialists, South Korean puppets, and European satellites. (Pyongyang also sports its own Arch of Triumph, bigger than the French version, to celebrate the same victory.) Yet I saw not a single mention of China’s role, even though the People’s Liberation Army sustained a half million or more casualties in the conflict. Still, many Americans believe, if only Beijing would crack down on trade and aid, then the DPRK would fold. Unsurprisingly, North Korean officials said they desire to diversify their economic partners so that the DPRK is not dependent on “any one nation.” They dismissed the possibility of Beijing joining with America to toughen sanctions. But it wouldn’t matter if China did so, they added, since under the “wise leadership of the Supreme Leader” they would stand united and overcome any challenge. And they might resist. A half million or so people starved to death in the late 1990s and Kim Jong-il, the current ruler’s father, refused to change course. I didn’t get to the countryside on this trip, but those who travel there say it has changed far less than the capital. The regime might survive tougher sanctions and even a Chinese embargo by again sacrificing the rural population. However, Kim Jong-un, unlike his father and grandfather, appears to be following China’s advice in reforming the economy, hoping to make the country into “an economic power,” as one official put it. Unfortunately, Kim has ignored Beijing’s counsel by continuing nuclear testing and accelerating missile development. Kim’s Byungjin program envisions both nukes and economic growth. Ironically, Pyongyang’s evident economic progress—new buildings, private cars, cell phones, better clothes, and more—suggests that the DPRK might be vulnerable to more economic pressure. (Despite these changes, the country remains desperately poor: the countryside has changed far less than the capital.) Apparatchiks, at least, now have more to lose. Thus, sanctions might hit harder. Still, this supposes that Beijing goes along. Despite his initial high hopes, President Trump recently said reliance on the PRC “has not worked out.” And absent a major diplomatic initiative which addresses China’s interests, Beijing isn’t likely to do the administration’s bidding. Otto Warmbier’s sad fate has led to calls to ban tourism to the North and his tour company said it would no longer accept Americans. Still, there is value in preserving even a small North Korean opening to the rest of the world. Visitors learn something about a system which is simultaneously threatening and mysterious. In doing so, they also gain an increased appreciation for the West, despite its manifold flaws. Moreover, personal contact, especially the more extended, less formal ties developed within tourist groups, plants seeds for the possible future transformation of North Korea. Visiting Westerners impart information and encourage curiosity. Engagement will not directly change the system, but isolation only reinforces the status quo. Ultimately the best hope for the North might be change from within, however improbable it might seem. Reform will not come easily to the DPRK. As much as those outside desire to see it change, it is those inside who most need a freer, more humane North Korea. Doug Bandow is a Senior Fellow at the Cato Institute, former Special Assistant to President Ronald Reagan, and a Senior Fellow in International Religious Persecution with the Institute on Religion and Public Policy.
  • The Many Failures of Britain's National Health Service    (George Pickering, 2017-07-20)
    By: George Pickering “The National Health Service is the closest thing the English have to a religion,” Margaret Thatcher’s Chancellor Nigel Lawson famously once observed. However, given the swivel-eyed fanaticism with which its supporters will defend it, even from the overwhelming evidence of its shortcomings, at this point it might be more accurate to describe the NHS as Britain’s national cult.The utterly unparalleled degree of moral outrage which greets any criticism of the NHS bespeaks the decades of propaganda — in the state’s schools, from the state’s politicians, and on the state’s news and media outlets — which have taught the British people to believe that the only alternative to a state-controlled healthcare monopoly is for the poor to die in the streets. So pervasive has this myth become that the Labour party has been able to base its entire electoral strategy, for decades, on painting themselves as the only party that truly cares about ‘our NHS’, and a recent survey found that, when asked ‘What makes you proud to be British’, the NHS was the nation’s most common answer by a considerable margin. All this has led to a situation wherein the desperately needed reforms to Britain’s healthcare system cannot even be discussed, due to the irrational overflowing of blind rage and uncomprehending contempt that greets any criticism of Britain’s ultimate sacred cow.This baseless self-satisfaction and refusal to consider change is in no way helped by studies such as one which has recently made headlines across the British press, which placed the NHS as “the number one health system”. The study in question ranked the healthcare systems of 11 countries, and found that Britain’s NHS fulfilled the study’s criteria of success most adequately, followed by Australia and the Netherlands, with Canada, France, and the United States languishing at the bottom of its rankings. This positive result might come as a surprise even to those who usually accept the mainstream narrative surrounding the NHS. Indeed, even at the bottom of the BBC’s own triumphalist article on the study in question, they link to related stories with headlines such as “NHS rationing leaves patients in pain”, and “Long waits for surgery have tripled in four years”!These two headlines hint at the perennial problem of shortages due to price controls which must inevitably exist in a system such as the NHS. For as long as the price of healthcare services is held artificially low (or free) by state intervention, individual consumers will no longer have an incentive to economise and question whether they really need a given service, or whether those scarce resources should go to others in more desperate need. This inevitably leads to a greater number of people clamouring to extract services than the supply can handle, leading to the shortages, long waiting times, and rationing which have characterised the piteous state of NHS services throughout its history. So immutable is the economic law that price controls lead to shortages that, in the words of Ludwig von Mises, “even capital punishment could not make price control work, in the days of Emperor Diocletian and the French Revolution.” The fact that public support for the NHS remains so high, despite these major problems inherent in the nature of the system itself, provides a stark real-life example of the dangers of choosing to ignore the insights of economics.Unfortunately however, price controls and shortages are far from the only problems which stem from Britain’s state monopoly of healthcare. As Kristian Niemietz of the Institute of Economic Affairs highlighted in an excellent recent article, the characteristics of the NHS which Britons mistakenly believe to be a unique source of pride, are actually present in almost every other healthcare system in the developed world; yet these other systems lack the NHS’s hostility to innovation in medicines and practices. Furthermore, the high number of avoidable infant deaths in some of its trusts led to the NHS being brought under government investigation in April for standards of maternal care which regulators described as “truly shocking”. I eagerly await the fundamental reforms that will surely result from the state regulators’ suggestion of a state investigation into the wrongdoings of the state’s own healthcare system.How is it possible, then, that the NHS should have ranked so highly in this recent study by the influential Commonwealth Fund health think tank, despite all these major problems? The answer is in the study’s careful selection of the criteria used as metrics of success, in order to give the most weight to the few areas in which the NHS actually does succeed. Indeed, the study stands out considerably from all other healthcare system comparisons by the great weight it places on procedure and general system characteristics, with relatively little weight given to the actual outcomes. One might think that the NHS’s place in the bottom 20% for both cancer survival rates and medically avoidable death rates would be seen as a statistic too important to be swept under the rug by the technicalities of this study’s method. The Commonwealth Fund also gives surprisingly little weight to the NHS’s dismally low efficiency in terms of healthcare bang per buck, a fact which undermines those who claim that simply throwing more taxpayers’ money at the system would solve its problems.In terms of its health outcomes across most common ailments, Britain’s NHS ranks closer to former communist bloc countries like Slovenia than to its Western European neighbours. Even a country like Spain, whose GDP per capita is fully 25% lower than Britain’s, has healthcare outcomes so much higher than those of the NHS that, if the British system were able to improve even to the point that it was merely equal with Spain, 10,000 fewer Britons would die of medically preventable causes every single year. Even the Commonwealth Fund study in question concedes that, while they ranked the NHS as the number one health system overall, its competence in the small matter of actually keeping its patients alive was the second-worst of any country under consideration.The boundaries of socially acceptable debate still have a considerable distance to shift in Britain before the desperate need for fundamental NHS reform can be calmly acknowledged and reasonably discussed. Until such time, no amount of minor tweaking or extra funding will be able to address the rot at the heart of the system, from which so many of its avoidable failures stem: namely its status as a taxpayer-funded state monopoly. Until this fundamental aspect of British healthcare can be criticised without incurring excommunication from public life, the NHS will continue to fail the British people, just as Britain’s state monopolies in coal, shipbuilding, automobiles, and other industries failed in the 1970s.In the words of the great Chicago economist Thomas Sowell, “You will never understand bureaucracies until you understand that, for bureaucrats, procedure is everything and outcomes are nothing.” Indeed, you can never understand the NHS until you understand that, for as long as British healthcare continues to be run as a government bureaucracy rather than a consumer-facing business, the very lives of British people will continue to be just another ‘outcome’ for the state to ignore.
  • Does Britain Have the World’s Best Health System? Only If You Ignore Outcomes    (George Pickering, 2017-07-20)
    By: George Pickering “The National Health Service is the closest thing the English have to a religion,” Margaret Thatcher’s Chancellor Nigel Lawson famously once observed. However, given the swivel-eyed fanaticism with which its supporters will defend it, even from the overwhelming evidence of its shortcomings, at this point it might be more accurate to describe the NHS as Britain’s national cult.The utterly unparalleled degree of moral outrage which greets any criticism of the NHS bespeaks the decades of propaganda — in the state’s schools, from the state’s politicians, and on the state’s news and media outlets — which have taught the British people to believe that the only alternative to a state-controlled healthcare monopoly is for the poor to die in the streets. So pervasive has this myth become that the Labour party has been able to base its entire electoral strategy, for decades, on painting themselves as the only party that truly cares about ‘our NHS’, and a recent survey found that, when asked ‘What makes you proud to be British’, the NHS was the nation’s most common answer by a considerable margin. All this has led to a situation wherein the desperately needed reforms to Britain’s healthcare system cannot even be discussed, due to the irrational overflowing of blind rage and uncomprehending contempt that greets any criticism of Britain’s ultimate sacred cow.This baseless self-satisfaction and refusal to consider change is in no way helped by studies such as one which has recently made headlines across the British press, which placed the NHS as “the number one health system”. The study in question ranked the healthcare systems of 11 countries, and found that Britain’s NHS fulfilled the study’s criteria of success most adequately, followed by Australia and the Netherlands, with Canada, France, and the United States languishing at the bottom of its rankings. This positive result might come as a surprise even to those who usually accept the mainstream narrative surrounding the NHS. Indeed, even at the bottom of the BBC’s own triumphalist article on the study in question, they link to related stories with headlines such as “NHS rationing leaves patients in pain”, and “Long waits for surgery have tripled in four years”!These two headlines hint at the perennial problem of shortages due to price controls which must inevitably exist in a system such as the NHS. For as long as the price of healthcare services is held artificially low (or free) by state intervention, individual consumers will no longer have an incentive to economise and question whether they really need a given service, or whether those scarce resources should go to others in more desperate need. This inevitably leads to a greater number of people clamouring to extract services than the supply can handle, leading to the shortages, long waiting times, and rationing which have characterised the piteous state of NHS services throughout its history. So immutable is the economic law that price controls lead to shortages that, in the words of Ludwig von Mises, “even capital punishment could not make price control work, in the days of Emperor Diocletian and the French Revolution.” The fact that public support for the NHS remains so high, despite these major problems inherent in the nature of the system itself, provides a stark real-life example of the dangers of choosing to ignore the insights of economics.Unfortunately however, price controls and shortages are far from the only problems which stem from Britain’s state monopoly of healthcare. As Kristian Niemietz of the Institute of Economic Affairs highlighted in an excellent recent article, the characteristics of the NHS which Britons mistakenly believe to be a unique source of pride, are actually present in almost every other healthcare system in the developed world; yet these other systems lack the NHS’s hostility to innovation in medicines and practices. Furthermore, the high number of avoidable infant deaths in some of its trusts led to the NHS being brought under government investigation in April for standards of maternal care which regulators described as “truly shocking”. I eagerly await the fundamental reforms that will surely result from the state regulators’ suggestion of a state investigation into the wrongdoings of the state’s own healthcare system.How is it possible, then, that the NHS should have ranked so highly in this recent study by the influential Commonwealth Fund health think tank, despite all these major problems? The answer is in the study’s careful selection of the criteria used as metrics of success, in order to give the most weight to the few areas in which the NHS actually does succeed. Indeed, the study stands out considerably from all other healthcare system comparisons by the great weight it places on procedure and general system characteristics, with relatively little weight given to the actual outcomes. One might think that the NHS’s place in the bottom 20% for both cancer survival rates and medically avoidable death rates would be seen as a statistic too important to be swept under the rug by the technicalities of this study’s method. The Commonwealth Fund also gives surprisingly little weight to the NHS’s dismally low efficiency in terms of healthcare bang per buck, a fact which undermines those who claim that simply throwing more taxpayers’ money at the system would solve its problems.In terms of its health outcomes across most common ailments, Britain’s NHS ranks closer to former communist bloc countries like Slovenia than to its Western European neighbours. Even a country like Spain, whose GDP per capita is fully 25% lower than Britain’s, has healthcare outcomes so much higher than those of the NHS that, if the British system were able to improve even to the point that it was merely equal with Spain, 10,000 fewer Britons would die of medically preventable causes every single year. Even the Commonwealth Fund study in question concedes that, while they ranked the NHS as the number one health system overall, its competence in the small matter of actually keeping its patients alive was the second-worst of any country under consideration.The boundaries of socially acceptable debate still have a considerable distance to shift in Britain before the desperate need for fundamental NHS reform can be calmly acknowledged and reasonably discussed. Until such time, no amount of minor tweaking or extra funding will be able to address the rot at the heart of the system, from which so many of its avoidable failures stem: namely its status as a taxpayer-funded state monopoly. Until this fundamental aspect of British healthcare can be criticised without incurring excommunication from public life, the NHS will continue to fail the British people, just as Britain’s state monopolies in coal, shipbuilding, automobiles, and other industries failed in the 1970s.In the words of the great Chicago economist Thomas Sowell, “You will never understand bureaucracies until you understand that, for bureaucrats, procedure is everything and outcomes are nothing.” Indeed, you can never understand the NHS until you understand that, for as long as British healthcare continues to be run as a government bureaucracy rather than a consumer-facing business, the very lives of British people will continue to be just another ‘outcome’ for the state to ignore.
  • Money Supply Growth Falls Again, Dropping to 105-Month Low    (Ryan McMaken, 2017-07-20)
    By: Ryan McMaken Growth in the supply of US dollars fell again in May, this time to a 105-month low of 5.4 percent. The last time the money supply grew at a smaller rate was during September 2008 — at a rate of 5.2 percent. The money-supply metric used here — an "Austrian money supply" measure — is the metric developed by Murray Rothbard and Joseph Salerno, and is designed to provide a better measure than M2. The Mises Institute now offers regular updates on this metric and its growth.The "Austrian" measure of the money supply differs from M2 in that it includes treasury deposits at the Fed (and excludes short time deposits, traveler's checks, and retail money funds). M2 growth also slowed in May, falling to 5.6 percent, a 20-month low. Money supply growth can often be a helpful measure of economic activity. During periods of economic boom, money supply tends to grow quickly as banks make more loans. Recessions, on the other hand, tend to be preceded by periods of falling money-supply growth. Thanks to the intervention of central banks, of course, money supply growth in recent decades has never gone into negative territory. Nevertheless, as we can see in the graph, significant dips in growth rates show up in years prior to a economic bust or financial crisis. For insights into what's affecting money supply growth, we can look at loan activity, such as the Federal Reserve's measure of industrial and commercial loans. In this case, we find that the growth rate in loans has fallen to a 74-month low, dropping to 1.9 percent. Loan growth has not been this weak since April of 2011, in the wake of the last financial crisis. We find similar trends in real estate loans and in consumer loans, although not to the same extent. The current subdued rates of growth in the money supply suggests an economy in which lenders are holding back somewhat on making new loans, which itself suggests a lack of reliable borrowers due to a lackluster overall economy.  This assessment, of course, is reinforced by the Federal Reserve's clear reluctance to wind down it's huge portfolio, and to end its ongoing policy of low-interest rates — concerned that any additional tightening might lead to a recession. 
  • Will Three Mile Island Closure End in a Meltdown for Pennsylvania's Electricity Consumers?    (2017-07-20)
    By William F. Shughart II; Three Mile Island, the nuclear reactor in Londonderry Township, partially melted down on March 28, 1979. Memories of that accident go a long way toward explaining why nuclear power's...
  • Saudi Arabia and United Arab Emirates Pay High Price for Botched Attack on Qatar    (Doug Bandow, 2017-07-20)
    Doug Bandow The pampered petro-states of Saudi Arabia and United Arab Emirates expected a quick victory after imposing a quasi-blockade on neighboring Qatar. Past crises in relations had been peacefully resolved, but this time Qatar’s antagonists demanded its virtual surrender, particularly abandonment of an independent foreign policy. They believed they had Washington behind them. Alas, the intervening weeks have not been kind to Riyadh and UAE. Secretary of State Rex Tillerson and Defense Secretary Jim Mattis signaled their support for Doha. Tillerson demonstrated obvious impatience with demands he viewed as extreme and not even worth negotiating, and called Qatar’s positions “very reasonable.” More than a few critics observed that Riyadh and Dubai are even guiltier than Qatar in funding terrorism. One of them was Senate Foreign Relations Committee Chairman Bob Corker, who complained that “The amount of support for terrorism by Saudi Arabia dwarfs what Qatar is doing.” Doha took the opportunity to ink an agreement with the U.S. on targeting terrorist financing, which none of Qatar’s accusers had done. Moreover, George Washington University Professor Marc Lynch observed that “The extremist and sectarian rhetoric which external forces brought to the Syrian insurgency was a problem extending far beyond Qatar.” The demand to shut Al Jazeera by nations which have no free press and even criminalized the simple expression of sympathy for Qatar was denounced globally. Riyadh and Dubai have sown the wind. Now they will reap the whirlwind. Then came reports that U.S. intelligence concluded the UAE had hacked the official Qatar website a couple months ago, creating the incendiary posts allegedly quoting Qatar’s emir which helped trigger the crisis. In contrast, Bahrain and Egypt, which joined the anti-Doha bandwagon, looked like mere hirelings, doing as they have been told by states which provided financial and military aid. Having initiated hostilities without a back-up plan, the anti-Qatar coalition cannot easily escalate against U.S. wishes or retreat without a huge loss of face. But staying the course looks little better. Saudi Arabia and UAE caused Qataris to rally behind their royal family, wrecked the Gulf Cooperation Council, eased Iran’s isolation, pulled Turkey directly into Gulf affairs, and challenged Washington. Quite an achievement. The experience has yielded several important lessons. President Donald Trump huffs and puffs, but doesn’t have much to do with U.S. foreign policy. Despite having criticized Saudi Arabia in the past, he flip-flopped to become Riyadh’s de facto lobbyists in Washington. However, his very public preferences have had little impact on U.S. policy, which ended up tilting strongly against UAE and Saudi Arabia. He recently acknowledged that he and Secretary Tillerson “had a little bit of a difference, only in terms of tone.” Saudi Arabia proved to be more paper tiger than regional leader. It spent lavishly on weapons, subsidized other Muslim states, sought to overthrow of Syria’s Assad regime, and launched a brutal war against Yemen, but had no response prepared when Qatar dismissed Riyadh’s demands. Then Secretary Tillerson effectively blocked any escalation. With the expiration of the Saudi-UAE ultimatum two weeks ago some observers feared that Saudi Arabia and UAE would impose additional sanctions, expel Qatar from the GCC, or even invade their independent neighbor. But all of those steps now would be more difficult if not impossible in practice. Indeed, the secretary’s shuttle diplomacy last week to support the Kuwaiti mediation attempt even forced Qatar’s accusers to effectively negotiate what they had termed nonnegotiable. UAE Minister of State Noura al-Kaabi said “We need a diplomatic solution. We are not looking for an escalation.” No wonder Saudis, who once believed they had coopted America’s president, now complain that America’s secretary of state is backing Doha. Saudi Arabia’s expensive overseas diplomacy has been of dubious value, gaining the Kingdom few friends. Riyadh and Dubai organized an inconsequential coalition featuring dependents Bahrain and Egypt, international nullity Maldives, and one of the contending governments in fractured Libya. Since then the group has failed to win meaningful support from any other state. The problem? The real issue isn’t terrorism, but far more selfish concerns, such as support for domestic political opponents. The reputation of the accusers has tanked. Discussion of the controversy almost inevitably resulted in more attention to the misbehavior of Riyadh and Dubai, particularly their brutal repression of any political and religious dissent at home, Saudi Arabia’s lavish funding for the extremist and intolerant Wahhabist strain of Islam, and UAE’s initiation of cyber-hostilities against Doha. Tom Wilson of the London-based Henry Jackson Society published a report calling Riyadh the “foremost” funder of terrorism in the United Kingdom and citing concerns that “the amount of funding for religious extremism coming out of countries such as Saudi Arabia has actually increased in recent years.” While Qatar was vulnerable to criticism over its backing for some radical groups, Riyadh and Dubai had been subject to even harsher U.S. attacks for the same reason. Iran continued to gain more from the actions of its antagonists than its own efforts.Doha and Tehran are linked by a shared natural gas field. Their relationship is one of Saudi Arabia’s chief complaints. Iran is a malign actor, but Riyadh, a totalitarian Sunni dictatorship, is worse. Saudi Arabia intervened militarily in Bahrain to sustain the Sunni monarchy against the Shia majority and backed radical insurgents to oust Syrian President Bashar al-Assad. The reckless new Crown Prince, Mohammed bin Salman, orchestrated the murderous, counterproductive war in Yemen and diplomatic/economic attack on Qatar in order to achieve Gulf hegemony. Now, without firing a shot, Iran helped thwart Riyadh’s latest scheme, won the gratitude of Qataris, and put a reasonable face on the Islamist regime. Secretaries Tillerson and Mattis deserve special credit. By ignoring President Trump’s misdirected enthusiasm for the Saudi monarchy, they helped shift public attention back to Riyadh and Dubai. Neither has demonstrated sufficient interest in cutting terrorist funding. For instance, in a lengthy cable dated December 30, 2009, released by Wikileaks, the State Department criticized Qatar and UAE, but was toughest on Saudi Arabia: “it has been an ongoing challenge to persuade Saudi officials to treat terrorist financing emanating from Saudi Arabia as a strategic priority.” Moreover, “donors in Saudi Arabia constitute the most significant source of funding to Sunni terrorist groups worldwide.” The kingdom “remains a critical financial support base for al-Qaeda” and other terrorist organizations. Despite Riyadh’s policies, “groups continue to send money overseas and, at times, fund extremism overseas.” If Saudi Arabia and UAE cared about terrorism, they would look inward first. And Riyadh would stop funding Wahhabism, an intolerant Islamic teaching which demonizes those who believe differently. Wilson charged that “a growing body of evidence has emerged that points to the considerable impact that foreign funding has had on advancing Islamist extremism in Britain and other Western countries.” The consequences of this funding may be more long-lasting than payments to the terrorist group du jour. Norwegian anti-terrorism analyst Thomas Hegghammer observed “If there was going to be an Islamic reformation in the 20th century, the Saudis probably prevented it by pumping out literalism.” What really bothers Saudi Arabia and the UAE is Doha’s support for opposition groups. For instance, both Riyadh and Egypt fear the Muslim Brotherhood, which challenges their ruling regimes with a flawed but serious political philosophy—and, incidentally, does not promote terrorism. The Saudi royals are insecure because a kleptocratic, totalitarian monarchy holds little appeal to anyone other than the few thousand princes who live lavishly at everyone else’s expense. Saudi Arabia and the Emirates similarly despise the TV channel Al Jazeera, which has criticized both regimes. Riyadh also wants to conscript Qatar in its campaign to isolate Iran. Ironically, the Kingdom so far has applied no pressure on UAE which, like Qatar, has maintained ties with the Islamist regime. Anyway, it would be far better to promote long-term change by continuing to draw Iran’s population westward in opposition to Islamist elites. By playing host to groups as diverse as the Taliban and Hamas, Doha actually has drawn controversial organizations away from more radical governments, such as Iran’s, and enabled the West to have unofficial contact with groups with which it is officially at odds, such as the Taliban. Riyadh and Dubai have sown the wind. Now they will reap the whirlwind. Their attack on Qatar further destabilized the Middle East, unsettling several of Washington’s closest allies. The Saudis and Emiratis ended up in a global cul-de-sac, isolating themselves more than Qatar. The latter has little incentive to yield, while the former face humiliation if they abandon their claims. Other governments increasingly expect a lengthy stand-off. Secretary Tillerson predicted that the “ultimate resolution may take quite a while.” That will benefit no one, other than Iran, perhaps. Not Qatar. Not America. And certainly not Saudi Arabia and the UAE. The U.S. can’t impose a settlement on its dubious allies. But Washington can recognize that “there are no clean hands here,” as a State Department spokesman recently observed. The Trump administration should place full responsibility for the current stand-off where it belongs, on Riyadh and Dubai. Doug Bandow is a Senior Fellow at the Cato Institute, former Special Assistant to President Ronald Reagan, and a Senior Fellow in International Religious Persecution with the Institute on Religion and Public Policy.
  • Jeff Sessions's Pot War is Up in Smoke in Nevada    (Doug French, 2017-07-19)
    By: Doug French Thousands lined up to purchase recreational marijuana legally at 12:01 a.m. on July 1. At Euphoria Wellness, with a location in southwest Las Vegas, a crowd of 400 to 500 people were lined up at midnight. Other locations had just as many.Among the first to purchase was state senator Tick Segerblom, who has a strain of weed named after him: “Segerblom Haze.” The senator tweeted that he believed the state would rake in a million dollars in tax money this first weekend. Judging from the lines out the doors at dispensaries in just my neighborhood, I don’t doubt his projection.Even with it being a scorching 107 degrees this afternoon, Las Vegans were waiting patiently in the sun to go up in smoke.The Las Vegas Sun reports, “Destiny Diaz stood in line for nearly three hours at the Jardin Premium Cannabis dispensary in central Las Vegas to celebrate what some were calling the end of marijuana prohibition in Nevada.” “A local resident for 35 years, [Steve] Evans, 54, said he arrived just before 7:30 p.m. and that the nearly five-hour wait Friday night was the longest he had been away from his home in over eight years.“‘I want an ounce of Gorilla Glue 4, and then I’m going home to sink into the sofa and be with my wife,’ Evans said, referring to one of the dispensary’s best-selling marijuana flower strains. ‘Pretty simple.’”It turns out the reality of supply, demand and the tax man bites for medical users. “Paul Pastwa, a medical marijuana cardholder who said he shops at Jardin twice a week, complained that a half-ounce of marijuana flower climbed from $60 to over $100 for medical buyers since he last shopped at the dispensary,” writes Chris Kudailis. “We understood that recreational buyers would have to pay more, but not medical,” Pastwa said. “My price has doubled overnight.” Adam Denmark Cohen, Jardin's owner, “said he was forced to raise prices because of a state-mandated increase in marijuana wholesale distribution taxes for shipment of items from cultivation and production facilities to dispensaries.”The Sun reports that Essence Cannabis Dispensary saw 1,200 customers at its two locations early this morning. Local laws allowed dispensaries to be open from midnight to 3 a.m., but then had to close until 6 a.m. As an aside, Sun newspaper CEO Brian Greenspan owns a portion of Essence. Marijuana licenses went to the politically connected, not necessarily to those with expertise in the business.All this reefer madness is happening after Attorney General Jeff Sessions sent a letter to Mitch McConnell, Paul Ryan, Nancy Pelosi, and Chuck Schumer voicing the Department of Justice’s opposition to anything that would “inhibit the DOJ’s authority to enforce the Controlled Substances Act (CSA).” The attorney general claims marijuana use has “significant negative health effects,” including the loss of IQ points, which is funny coming from a guy, who claims “marijuana has a high potential for abuse [and] no currently accepted medical treatment in use in the United States.” He evidently hasn’t read this article from the Business Insider listing 23 health benefits of marijuana.But, Sessions contends, “Good people don’t smoke marijuana.”As Mark Thornton wrote for mises.org, “Attorney General Sessions’s argument really does not make any sense. Legalized marijuana greatly reduces the size of the illegal drug market and the violence it causes, both by eliminating the illegal marijuana market and by encouraging producers and consumers to switch from hard drugs such as heroin, cocaine, and crystal meth to marijuana/cannabis which is non-addictive and non-lethal.”The out of touch Sessions told a crowd in Arizona, “When they nominated me for attorney general, you would have thought the biggest issue in America was when I said, ‘I don’t think America’s going to be a better place if they sell marijuana at every corner grocery store.’ ” “[People] didn’t like that; I’m surprised they didn’t like that,” he added.When in 1986 the Senate Judiciary Committee rejected the nomination of Sessions to be a Federal district judge in Alabama, Mr. Sessions apologized for once saying he had thought members of the Klu Klux Klan “were O.K. until I found out they smoked pot.”AG Sessions, the war is over. The government lost, and has decided to take the money. 
  • Here's the True Definition of a Recession — It's Not About GDP    (Frank Shostak, 2017-07-19)
    By: Frank Shostak According to the National Bureau of Economic Research (NBER), the institution that dates the peaks and troughs of the business cycles,A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough.1In the view of the NBER dating committee, because a recession influences the economy broadly and is not confined to one sector, it makes sense to pay attention to a single best measure of aggregate economic activity, which is real GDP. The NBER dating committee views real GDP as the single best measure of aggregate economic activity.We suspect that on the back of the NBER's much more general definition, the financial press as a shortcut introduced the popular definition of a recession as two consecutive quarters of a decline in real GDP. Also, by following the two-quarters-decline-in-real-GDP rule, economists don't need to wait for the final verdict of the NBER, which often can take many months after the recession has occurred.Regardless of whether one adopts the broader definition of the NBER or the abbreviated version, these definitions are actually failing to do the job.After all, the purpose of a definition is to establish the essence of the object of the investigation. Both the NBER and the popular definition do not provide an explanation of what a recession is all about. Instead they describe the various manifestations of a recession.And this is precisely what is wrong with all this. By stating that a recession is about a decline in real GDP for several or more months, one only describes and does not explain what a recession is all about. Obviously things are declining during a recession. What one wants to know is why these things are declining. To explain a phenomenon, one needs to trace the primary causes that gave rise to it.The Problem with Measuring GDPAnother grave problem with both the abbreviated and the NBER definitions is that recession is defined in terms of real gross domestic product (GDP), which supposedly mirrors the total of final real goods and services produced.To calculate a total, several things must be added together. To add things together, they must have some unit in common. However, it is not possible to add refrigerators to cars and shirts to obtain the total of final goods. Since total real output cannot be defined in a meaningful way, obviously it cannot be quantified. To overcome this problem economists employ total monetary expenditure on goods, which they divide by an average price of those goods. But is the calculation of an average price possible?Suppose two transactions are conducted. In the first transaction, one TV set is exchanged for $1,000. In the second transaction, one shirt is exchanged for $40. The price or the rate of exchange in the first transaction is $1000/1TV set. The price in the second transaction is $40/1shirt. In order to calculate the average price, we must add these two ratios and divide them by 2. However, $1000/1TV set cannot be added to $40/1shirt, implying that it is not possible to establish an average price.On this Rothbard wrote,Thus, any concept of average price level involves adding or multiplying quantities of completely different units of goods, such as butter, hats, sugar, etc., and is therefore meaningless and illegitimate.2Since GDP is expressed in dollar terms, which are deflated by a dubious price deflator, it is obvious that its fluctuations will be driven by the fluctuations in the amount of dollars pumped into the economy. Hence various statements by government statisticians regarding the rate of growth of the real economy are nothing more than a reflection of the fluctuations in the rate of growth of the money supply.Now, once a recession is assessed in terms of real GDP it is not surprising that the central bank appears to be able to counter the recessionary effects that emerge. For instance, by pushing more money into the economy the central bank's actions would appear to be effective since real GDP will show a positive response to this pumping after a short time lag. (Remember that changes in real GDP reflect changes in money supply). Observe that once the economy is expressed through GDP the central bank would appear to be able to navigate the economy (i.e., GDP) by means of a suitable policy mix.Even if one were to accept that real GDP is not a fiction and depicts the so-called real economy there is still a problem as to why recessions are of a recurrent nature. Is it possible that various shocks cause this repetitive occurrence of recessions? Surely there must be a mechanism here that gives rise to this repetitive occurrence?The Cause of Boom-Bust CyclesIn a free, unhampered market, we could envisage that the economy would be subject to various shocks but it is difficult to envisage a phenomenon of recurrent boom-bust cycles.According to Rothbard,Before the Industrial Revolution in approximately the late 18th century, there were no regularly recurring booms and depressions. There would be a sudden economic crisis whenever some king made war or confiscated the property of his subjects; but there was no sign of the peculiarly modern phenomena of general and fairly regular swings in business fortunes, of expansions and contractions.3In short, the boom-bust cycle phenomenon is somehow linked to the modern world. But what is the link? Careful examination would reveal that the link is in fact the modern banking system, which is coordinated by the central bank.The source of recessions turns out to be the alleged "protector" of the economy — the central bank itself.Further investigation would show that the phenomenon of recessions is not about the weakness of the economy as such, but about the liquidation of various activities that sprang up on the back of the loose monetary policies of the central bank. Here is why.A loose central bank monetary policy sets in motion an exchange of nothing for something, which amounts to a diversion of real wealth from wealth-generating activities to non-wealth-generating activities. In the process, this diversion weakens wealth generators, and this in turn weakens their ability to grow the overall pool of real wealth.The expansion in the activities that came about based on loose monetary policy is what an economic "boom" (or false economic prosperity) is all about. Note that once the central bank's pace of monetary expansion has strengthened, irrespective of how strong and big a particular economy is, the pace of the diversion of real wealth is going to strengthen.However, once the central bank tightens its monetary stance, this slows down the diversion of real wealth from wealth producers to non-wealth producers. Activities that sprang up on the back of the previous loose monetary policy are now getting less support from the money supply; they fall into trouble — an economic bust, or recession emerges.Irrespective of how big and strong an economy is, a tighter monetary stance is going to undermine various uneconomic activities that sprang up on the back of the previous loose monetary policy. This means that recessions or economic busts have nothing to do with the so-called strength of an economy, improved productivity, or better inventory management by companies.For instance, as a result of a loose monetary stance on the part of the Fed various activities emerge to accommodate the demand for goods and services of the first receivers of newly injected money. Now, even if these activities are well managed and maintain very efficient inventory control, this fact cannot be of much help once the central bank reverses its loose monetary stance. Again, these activities are the product of the loose monetary stance of the central bank. Once the stance is reversed, regardless of efficient inventory management, these activities will come under pressure and run the risk of being liquidated.From what was said we can conclude that recessions are the liquidation of economic activities that came into being solely because of the loose monetary policy of the central bank. This whole recessionary process is set in motion when the central banks reverses its earlier loose stance.We have established that recessions are about the liquidations of unproductive activities, but why they are recurrent? The reason for this is the central bank's ongoing policies that are aimed at fixing the unintended consequences that arise from its earlier attempts at stabilizing the so-called economy, i.e., real GDP.On account of the time lags from changes in money to changes in prices and changes in real GDP, the central bank is forced to respond to the effects of its own previous monetary policies. These responses to the effects of past policies give rise to the fluctuations in the rate of growth of the money supply and in turn to recurrent boom-bust cycles.ConclusionsContrary to the accepted way of thinking, recessions — properly understood — are not negative growth in GDP for at least two consecutive quarters.Recessions, which are set in motion by a tight monetary stance of the central bank, are about the liquidations of activities that sprang up on the back of the previous loose monetary policies. Rather than paying attention to the so-called strength of real GDP to ascertain where the economy is heading, it will be more helpful to pay attention to the rate of growth of the money supply.By following the rate of growth of the money supply, one can ascertain the pace of damage to the real economy that central bank policies inflict. Thus the increase in the growth momentum of money should mean that the pace of wealth destruction is intensifying. Conversely, a fall in the growth momentum of money should mean that the pace of wealth destruction is weakening.Additionally, once it is realized that so-called real economic growth, as depicted by real GDP, mirrors fluctuations in the money supply rate of growth, it becomes clear that an economic boom has nothing to do with real and sustainable economic expansion. On the contrary such a boom is about real economic destruction, since it undermines the pool of real wealth — the heart of real economic growth.Hence despite "good GDP" data, many more individuals may find it much harder to make ends meet. 1. The NBER’s Business-Cycle Dating Procedure (NBER, October 21,2003). 2. Murray N.Rothbard, Man Economy and State, Nash Publishing p 734. 3. Rothbard The Austrian Theory of the Trade Cycle and other essays, The Mises Institute,1983.
  • Can Ted Cruz Save Republican Health Reform?    (2017-07-19)
    By John C. Goodman; One thing missing from the recent Republican efforts to reform Obamacare is what George H.W. Bush called "the vision thing." What would a Republican health care system look li...
  • Criminal Justice on a Hunch    (Jonathan Blanks, 2017-07-19)
    Jonathan Blanks On Wednesday, Attorney General Jeff Sessions announced the reinstitution of a federal program that allows local police officers to seize personal property without so much as a criminal charge. The program is intended to increase the use of civil asset forfeiture in the never-ending War on Drugs. Federal “adoption,” as it’s referred to, allows local police to seize property without criminal charge — which is forbidden or limited under some state laws — and turn it over to the federal government. Then, under what is known as the “equitable sharing” provision, up to 80 percent of the value of that seized property is returned directly to the local law enforcement agency for certain purposes such as paying for overtime or buying law enforcement equipment. Attorney General Eric Holder suspended most federal adoptions in 2015 because of stories of abuse — one department used funds to buy a margarita machine — and of innocent owners losing their property to overzealous police departments. Today’s announcement stands in stark contrast to bipartisan efforts on the state and federal levels to curb this too often-abusive practice. Although the attorney general paid lip service to protections for innocent property owners, the reinstitution of federal adoption incentivizes police to employ tactics that will likely ensnare presumptively innocent people and place burdens on them to prove their property is legal. Moreover, this may have a disparate impact on ethnic minorities by incentivizing racial profiling and skewing police priorities away from public safety. Today, asset forfeiture is a process by which the government seizes property — cash, automobiles, real estate, etc. — that allegedly was produced by, or used in, the furtherance of a crime. For example, if a person led an investment scam for several years and made millions of dollars from that fraud, the state could seize his home, bank accounts, and other proceeds that can be tied to the underlying fraud. Assets connected to drug transactions can likewise be seized, such as the car the offender was driving, any cash in the car, or the house from which the drugs were alleged to have been sold. In too many cases, calling civil asset forfeiture “highway robbery” is not hyperbole, and Jeff Sessions just made it worse. Before the 1980s, the most common forfeiture used by domestic law enforcement was criminal asset forfeiture. In a criminal forfeiture case, the asset must have been related to a crime that was proven in court, either in a trial or admitted in a guilty plea. Importantly, in criminal forfeiture, the burden is on the government to prove that the seized property had a direct connection to the underlying criminal act. However, in 1984, Congress amended the Comprehensive Drug Abuse Prevention and Control Act of 1970 and established the Department of Justice’s Asset Forfeiture Fund (AFF) that allowed the Department of Justice (DOJ) to keep the funds it seized, sparking the resuscitation of the once-arcane practice of civil asset forfeiture. Many states followed suit with similar provisions that allowed their agencies to self-fund through property seizures, and they too saw an expansion of civil asset forfeiture. Unlike criminal forfeiture, civil forfeiture requires no arrest or criminal proceeding for the government to seize and liquidate property that the government claimed was connected to a crime. While there are administrative procedures that must run their course between the time the property is seized and when the government may liquidate the asset, the burden is usually on the property owner to prove that the asset is licit and not tied to a criminal act, turning due process completely upside down. In many jurisdictions, police don’t have to assert more than a hunch to meet the probable cause standard to take a person’s money under civil forfeiture. Officers have seized cash not because there were drugs or contraband present, but because it was “way, way” more than a “normal person would carry.” The amount of money does not have to be large, however. A simple wad of cash in a person’s pocket can be confiscated under some state laws if the officer says he suspects drug activity. That person then has to go to court to get it back. The process to reclaim the money or property can be time-consuming and expensive, making it truly not worth it for many individuals — particularly poor people — to go to court to recover the asset that was taken by a police officer. Thus, in too many cases, calling civil asset forfeiture “highway robbery” is not hyperbole. According to the Institute for Justice’s extensive study of state and federal forfeiture practices, between 2000 and 2013, the DOJ paid state and local agencies $4.7 billion in all forfeiture proceeds, the vast majority of which were obtained through civil forfeiture. To put the growth of federal forfeiture in context, the AFF’s net assets were $93.7 million in 1986. In 2014, the number was $4.5 billion: a 4,667 percent increase. In 2012, the City of Tenaha and Shelby County, Texas settled an ACLU class action lawsuit that alleged that the department was stopping drivers and, under civil asset forfeiture law, coercing them to sign over cash and property or face arrest on baseless charges. Officers threatened parents with taking custody of their children for non-cooperation, and on one occasion, seized a 16-month-old child from a restauranteur who refused to sign away his rights to $50,000 in cash he was carrying to make a legitimate business purchase. Horrifying as this is, the practice is worsened because the restaurateur and most of the other people the agencies were shaking down were black and Hispanic. Although the ACLU suit is a particularly egregious example, the racial disparity in stopping presumably innocent drivers with the intent to search them is not limited to Texas. Virtually everywhere police stops are counted and measured demographically, black and/or Hispanic drivers are over-represented in those pulled over and subsequently searched for contraband. The vast majority of searches of drivers across ethnicities come up empty, and statistics show that black and Hispanic drivers who are searched are less likely to be carrying contraband than whites who are similarly searched. Stopping drivers to search for drugs and drug proceeds is much cheaper than developing leads and building cases against large drug organizations through buy-and-bust operations or long-term stings, making interdiction through traffic stops all the more appealing. For that reason, while the disparity in stops almost certainly exists independent of asset forfeiture laws, increasing the use of forfeiture will likely result in an increase of racial profiling. Due to the challenges of data collection and the lack of transparency about collection practices, it is impossible to know the full extent to which asset forfeiture drives aggressive policing. But profit motives certainly can distort priorities, perpetuating these disparities. One investigative report in Tennessee uncovered that drug interdiction task force officers were ten times more likely to stop, search, and seize drivers on the westbound side of an east-west highway. This seemingly innocuous detail is relevant because the officers were apparently set up to catch the cash from allegedly Mexican-connected drug couriers. That is, instead of setting on the eastbound lanes where they could try to catch the drugs and guns before they got into the community, the police would look for the cash after the transaction took place. Waiting until the guns and drugs have entered the community to interdict trafficking is the opposite of policing for public safety, it is the definition of “policing for profit.” Recognizing some of these problems, a growing number of state legislatures have been trying to rein in civil asset forfeiture abuse, curbing officers’ ability to seize property under state law without a conviction, or limiting seizures to high dollar amounts in order to protect the state’s most vulnerable citizens from the arbitrary confiscation of their property. But the new DOJ guidance provides an end-run around some state limitations on asset forfeiture and incentivizes departments with direct payments of cash. Expanding the already profligate use of civil asset forfeiture is a giant step in the wrong direction for effective criminal justice policy. Indeed, civil asset forfeiture incentivizes police abuse of innocent people — abuse that falls disproportionately on the poor and racial minorities — and undermines good police work and public safety. In light of today’s news, Congress should move to end federal civil asset forfeiture entirely and make sure that federal law enforcement officers secure criminal convictions before seizing property from individuals they suspect of criminal wrongdoing. “Innocent until proven guilty” is the touchstone of the American criminal justice system. It’s about time our government lived up to it. Jonathan Blanks is a research associate at the Cato Institute’s Project on Criminal Justice and managing editor of PoliceMisconduct.net.
  • Publications Production Director    (2017-07-19)
  • Why You Shouldn't Knock 'Sweatshops' If You Care about Women's Empowerment    (Chelsea Follett, 2017-07-19)
    Chelsea Follett Factories producing Ivanka Trump-brand clothing have recently drawn “sweatshop” accusations. Of course, the United States had its own sweatshops once, often with worse conditions than factories in poor countries today. Those who imagine Industrial Revolution factory work in the United States as a dark and oppressive moment in history might benefit from reading the words of those who lived through it. “Farm to Factory: Women’s Letters, 1830-1860,” published by Columbia University Press, provides a collection of first-hand accounts revealing a more nuanced reality. The letters do indeed reveal abject misery, but much of that misery comes from nineteenth-century farm life. To many women, factory work was an escape from this backbreaking agricultural labor. Consider this excerpt from a letter a young woman on a New Hampshire farm wrote to her urban factory-worker sister in 1845. (The spelling and punctuation are modernized for readability.) Between my housework and dairying, spinning, weaving and raking hay I find but little time to write … This morning I fainted away and had to lie on the shed floor fifteen or twenty minutes for any comfort before I could get to bed. And to pay for it tomorrow I have got to wash [the laundry], churn [butter], bake [bread] and make a cheese and go … blackberrying [blackberry-picking]. By contrast, cities often offered somewhat better living standards. Far more women sought factory work than there were factory jobs available. Factory Work Could Mean Freedom A closer look at the letters in the book reveals the incredibly varied lives of the “factory girls.” Consider the life of Delia Page. With a substantial inheritance, she was never in need of money. But at age 18, Delia decided to move away from her rural home and work in a factory in New Hampshire. She did that despite the dangers of factory work. A mill in nearby Massachusetts collapsed in a fire that killed 88 people and seriously injured more than 100 others. Delia’s foster family wrote to her about the tragedy and their fears for her wellbeing. But she defiantly continued factory work for several years. What led well-to-do Delia to seek out factory work in spite of the danger and long hours? The answer is social independence. In their letters, her foster family repeatedly urges her to break off what they saw as an indecent affair with a scandal-ridden man, implores her to attend church and subtly suggests she come home. But by working in a factory, Delia was free to live on her own terms. To her, that was worth it. Today, across the developing world, factory work continues to serve as a path out of poverty and an escape from agricultural drudgery, with particular benefits for women seeking economic independence. The unique story of Emeline Larcom also emerges from the letters. Emeline’s background could not have been more different from Delia’s. Her father died at sea, and her mother, widowed with twelve children, struggled to support the family. Emeline and three of her sisters found gainful employment at a factory and sent money home to support their mother and other siblings. Emeline, the oldest of the four Larcom factory girls, essentially raised the other three. One of them, Lucy, went on to become a noted poet, professor, and an abolitionist against slavery. Her own memoirs cast mill work in a positive light. Of the diverse personalities captured in the letters, only one openly despises her work in the mill. Mary Paul was a restless spirit. She moved from town to town, sometimes working in factories, sometimes trying her hand at other forms of employment such as tailoring, but never staying anywhere for long. She loathed factory work, but it enabled her to save up enough money to pursue her dream: buying entry into a Utopian agricultural community that operated on proto-socialist principles. She enjoyed living at the “North American Phalanx” and working only three hours a day—while it lasted. But as with all such communities, it ran into money problems, exacerbated by a barn fire, and she had to leave. She eventually settled down, married a shopkeeper, and—her letters seem to hint—became involved in the early “temperance” movement to ban alcohol (another ultimately ill-fated venture). Factory Work Is a First Step Towards a Better Future Delia, Emeline, and Mary provide a glimpse of the different ways that factory work affected women during the Industrial Revolution. Wealthy Delia gained the social independence she sought and Emeline was able to support her family. Even Mary, who detested factories, was ultimately only able to chase her (ill-advised) dream through factory work. Although the Industrial Revolution is commonly vilified, it was an important first step toward increasing women’s socioeconomic mobility and ultimately brought about prosperity unimaginable in the pre-industrial world. The pace of industrial economic development may even be speeding up. In South Korea, Taiwan, Hong Kong, and Singapore, the process of moving from sweatshops to First World living standards took less than two generations as opposed to a century in the United States. Today, across the developing world, factory work continues to serve as a path out of poverty and an escape from agricultural drudgery, with particular benefits for women seeking economic independence. In China, many women move on from factories to white-collar careers or start their own small businesses. Very few choose to return to subsistence farming. In poorer Bangladesh, factory work has increased women’s educational attainment while lowering rates of child marriage. The country’s garment industry has also softened the norm of purdah or seclusion that traditionally prevented women from working or even walking outside unaccompanied by a male guardian. Women factory workers are often thought of as “undifferentiated, homogenous, faceless and voiceless” passive victims, but even a cursory examination of their words and lives reveals unique individuals with agency. Today, just as in the nineteenth century, industrialization not only spurs economic development and reduces poverty, but also expands women’s options. Chelsea Follett is the managing editor of HumanProgress.org, a project of the Cato Institute.
  • Unintended Impacts of Regulations on the Quality of Schooling Options    (Corey A. DeAngelis, 2017-07-19)
    Corey A. DeAngelis When the first random-assignment study ever to find a negative effect from a voucher program was released more than two years ago, a debate broke out over what role, if any, the Louisiana Scholarship Program’s regulations played. Some argued that Louisiana’s onerous regulatory environment — particularly its open admissions requirement and state test mandate — drove away better-performing private schools from participating in the program. Others dismissed such claims, arguing instead that such regulations were necessary to guarantee quality in the long run. The debate has reignited with last month’s release of the third year LSP reports, which found no statistically significant difference between voucher students and the control group. Louisiana’s superintendent of education, John White, argued that the results proved that concerns about over-regulation were unfounded. Whereas “conservative ideologues paraded around the idea that regulation is somehow anathema to choice, and is driving away the elite schools that otherwise would have magically served these kids better than the schools that participated,” White argued that instead, “it may very well be the regulation itself — the accountability system — that is the thing that has promoted the performance.” In fact, the available evidence suggests that regulations did indeed drive away higher-performing private schools. One of the three reports released by the School Choice Demonstration Project at the University of Arkansas addresses exactly this question. These findings strongly suggest that more onerous regulations are more likely to drive away better schools. In Supplying Choice, my colleagues and I examined the quality levels of private schools that decided to participate in voucher programs in Indiana, D.C., and Louisiana. We found a consistent negative relationship between several proxies for school quality and private schools’ likelihood of participating in the voucher program. Moreover, we found that private schools in D.C. and Louisiana, the two states that have higher regulatory burdens, are less likely to participate in voucher programs. While these findings are not conclusive, they do offer compelling evidence that regulations drove away better schools from participating in the voucher programs. Theory The theory is rooted in basic economics. Private school leaders decide whether to partake in a given voucher program based on the costs and benefits associated with participation. The benefit comes from additional funding which is limited in Louisiana to a maximum of 20 percent of total enrollment for private schools that have been in operation for under two years. The costs associated with participation come in the form of red tape. Participating private schools in Louisiana must administer the state standardized test, prohibit parental copay for families using vouchers, report finances to the government, and surrender their admissions process over to the state. As an American Enterprise Institute survey found, private schools are concerned that such regulations could threaten their character or identity, would force them to change what and how they teach, and bog them down in paperwork. In other words, they feared that the regulations would hamper their ability to carry out their educational missions. If the expected benefits exceed the expected costs, a given private school will participate in the program. The types of schools that will be more likely to find additional benefits in excess of additional costs are the ones that value financial resources more than a loss of autonomy. Of course, schools desperate for enrollment and funding will have a stronger incentive to accept the state requirements. Indeed, if a school is about to close down due to financial constraints, it would likely choose to participate regardless of the magnitude of the costs. Consequently, we expected to find the strongest negative association between quality and participation in the most-regulated program: Louisiana. Results As shown in Figure 1 below, we observed that only a third of eligible private schools in the state decided to participate in the LSP, while between 70 and 78 percent participated in D.C. and Indiana. This follows intuition, as the regulatory costs are the highest in the LSP. In our main analyses, we used enrollment and tuition levels as proxies for school quality. Economists would view tuition level as the price of schooling and enrollment as the quantity demanded. These two measures are the strongest measures of quality that exist, as they capture the sum of all of the quality-based decisions of individual parents. If we believe price to be the most informative measure, we would not want to control for anything in the analysis. Such an analysis produces the expected result: higher quality private schools are the least likely to participate in highly regulated voucher environments. As shown in Figure 2 below, a one-thousand dollar increase in tuition level is associated with a 3.5-percentage point decrease in the likelihood of participating in the LSP. The association is not statistically different from zero for Indiana, the least regulated program, and is only marginally significant in D.C. When we controlled for factors such as school racial composition, grades served, and religiosity, the coefficient on tuition became insignificant in Louisiana, but remained highly significant for the enrollment measure. As shown in Table 5 from the original report — a 100 student increase in enrollment was associated with a 28-percent decrease in the likelihood of participation in the LSP. The enrollment coefficient was not statistically different from zero for D.C. or Indiana. These findings strongly suggest that more onerous regulations are more likely to drive away better schools. Researchers and policymakers should take them into account when considering what sort of regulatory environment to construct for school choice policies. Even well-intended policies can produce negative consequences. White and others like him no doubt have noble intentions when they support imposing regulations on private schools. They want to make it impossible, or at least very difficult, for disadvantaged families to make bad choices. It remains possible that the regulation-heavy approach they prefer will lead over time to quality improvements among private schools that decide to participate in choice programs. However, our research suggests that the same regulations can also reduce the quality of educational options available to children in need by leading some schools not to participate at all. Corey A. DeAngelis is an education policy analyst at the Cato Institute’s Center for Educational Freedom.
  • Let Americans Go to North Korea    (Doug Bandow, 2017-07-19)
    Doug Bandow Pyongyang, North Korea—When I visited the Democratic People’s Republic of Korea last month, everyone there seemed calm. But North Korea’s development of both nuclear weapons and long-range missiles has created near panic in Washington. For good reason no one wants the DPRK so armed. However, America the superpower has faced far worse, most notably Joseph Stalin’s Soviet Union. The Kim regime is acting out of weakness, not strength, in seeking a nuclear deterrent against U.S. military action. What has American officials so concerned is that Pyongyang’s action threatens to prevent them from freely intervening around the globe. The DPRK is threatening to turn the U.S.-South Korea alliance on its head. There’s no good solution. No one is going to talk Kim Jong-un out of his big weapons. Threatening the North simply reinforces the case for building them. China is unwilling to cut off North Korea because Beijing believes its security would suffer if additional, tougher sanctions turned North Korea into a failed state that is ultimately swallowed by the South. If Pyongyang simply wants victims, banning tourists might encourage the North Koreans to look for additional reasons to jail other visitors. Another policy that won’t help is banning travel to the North. The death of American college student Otto Warmbier increased calls to regulate trips to North Korea, prohibiting tourism and requiring approval for other purposes. The State Department already discourages travel to the North. Moreover, Secretary of State Rex Tillerson said the administration has “been evaluating whether we should put some type of travel visa restriction to North Korea,” but had “not yet reached a decision.” However, Reps. Adam B. Schiff (D-Calif.) and Joe Wilson (R-S.C.) are pushing the “North Korea Travel Control Act,” which would license travel to the North. Foreign Affairs Committee Chairman Edward R. Royce (R-Calif.) proclaimed himself in favor of the ban, arguing that “travel propaganda lures far too many people to North Korea.” Whether imposed by executive fiat or statute, a ban is a bad idea. There is nothing good to say about a totalitarian system which holds some 25 million people in bondage. The system’s hallmarks include personality cults, labor camps, social classification system, and religious persecution. But so far the regime has proved impervious to outside attempts at change. Further isolating the DPRK won’t help. A month ago I returned from the DPRK. I went at the invitation of the Institute for American Studies of the Foreign Ministry. My trip won’t change the North, but was useful. And even tourist excursions can play a positive role. Otto Warmbier didn’t do anything to warrant what happened to him. We may never know the real story: There’s a lot of speculation that there was more behind his arrest. The North almost certainly didn’t want to kill him. To the extent they see political benefit in detainees, the regime recognizes that prisoners need to be alive. Years ago they sent an 85-year-old home fairly quickly after arresting him, presumably because of his frail physical condition. As for Warmbier, medical tests only tell us what didn’t appear to happen—the botulism episode alleged by the North Korean and beating suspected by Americans. Most previous captives were not abused; some were held in hotels. While Warmbier’s arrest was not justified, it is important to try to understand what happened. Contrary to some of the frenzied rhetoric circulating in Washington, American tourists are not being enticed to come to the DPRK so they can be kidnapped and used as hostages. As many as 1,000 Americans visit annually and incidents have been few. Just four of the 15 Americans held since 2009 were tourists. Three more U.S. citizens currently are in prison, but none was a tourist. Two were teaching at a school and the third was a businessman. Nor are Americans alone in being arrested by North Korea: it also holds South Koreans and other foreigners. (Nor is Pyongyang alone in arresting Americans. Iran currently detains at least two citizens on dubious charges; Cuba and Egypt have done so in the recent past.) Still, as a tourist destination the DPRK should not be sold as a drinking holiday, as did Young Pioneer Tours, which organized Warmbier’s trip. Indeed, YPT appears to encourage irresponsibility. Alex Hoban was on the Warmbier tour and wrote about heavy drinking, irresponsible leaders, and activities that constituted “a right of passage for misbehaving twentysomethings looking for thrills, spills and stories to brag about back home.” Such behavior was unwise, to put it mildly. Visitors should keep their wits about them and remember where they are. The North will enforce its rules. Privately North Korean officials say they focus on intentional, not accidental, violations. The regime is particularly tough on foreigners who evangelize, assist defectors/refugees, and degrade the system’s neo-religious iconography. Given the state of the U.S.-North Korea relations, no American should assume he or she will receive the benefit of the doubt. While the DPRK is unique, it is hardly alone in holding, often brutally, foreigners accountable for violating local laws and practices. A non-Muslim better not show up in Mecca or Medina. Don’t visit Pakistan and insult the Prophet: a mob will probably dispose of you before you are even arrested, let alone tried. Trashing a Koran might yield the same result. At least until recently peeing on an Ataturk statue in Turkey could get you arrested (though certainly not killed). Desecrating an Orthodox Church in Russia would not be wise. Smuggling drugs has gotten Western tourists executed in countries such as Indonesia. Try being a Christian missionary in Afghanistan, Saudi Arabia, or Maldives. In this regard North Korea is not so different. The U.S. prisoner treated worst by Pyongyang was Robert Park, who walked into the North from China with his Bible. There may be no scarier threat than a religious evangelist for a regime that essentially enshrines a secular faith. Then there are war zones. Americans can and do travel to Afghanistan, Syria, Burma, Turkey, Pakistan, Iraq, and other nations where conflicts rage and guerrillas operate-and visitors can be captured and killed. A freelance journalist might seem more serious than a tourist, but still, it is hard to argue that even then there is any “necessity,” whatever that might mean, for the trek. Is there some other reason to ban travel? Arrests put the U.S. government in a tough spot, with pressure to negotiate for the prisoner’s release. Washington has little bargaining power should they be arrested: The North rarely has had much more than a visit from some famous or semi-famous person, such as former President Bill Clinton or former UN Ambassador Bill Richardson. Warmbier’s family was angry that the Obama administration had not won Otto’s release, but it is not clear what more could have been done. He ultimately came home not because the Trump administration demanded his return, but because Pyongyang wanted to shift responsibility for someone in poor and apparently declining medical health. Anyway, licensing travel wouldn’t end the “kidnapping” of Americans, if that’s really what the DPRK was doing. The vast majority of detained Americans, 11 of 15 since 2009, came for other purposes which might be allowed even under a more restrictive system—humanitarian, journalistic, educational, business. If Pyongyang simply wants victims, banning tourists might encourage the North Koreans to look for additional reasons to jail other visitors. Tourism offers the Kim regime some financial benefit, but not much. Travelers bring in relatively small amounts of cash compared to the amount necessary to build nuclear weapons. At most, individual tourists are thought spend a couple thousand dollars or so in the North. Reducing the number of American travelers might not even change the total number of visitors that much, to the extent that their absence opened space for others. Equally important, the U.S. would have no way to police the prohibition. For years Americans traveled to Cuba illegally through either Canada or Jamaica and Cuba did not stamp their passports. Going to the North illegally through China would be equally easy: Speaking from experience, the North Koreans provide stand-alone visas to Americans that are taken upon exit, and do not stamp Americans’ passports. Except for the photos I took there would have been no evidence for U.S. officials that I was in the DPRK. Ironically, the ban would make the destination seem even more exotic and thus attractive to some. With more than 30 tour companies operating in North Korea, some probably would specialize in illicit U.S. travel. Nor does tourism raise the North’s international stature. To the contrary, seeing the country removes any illusions that visitors could have about such a system. One critic called a DPRK holiday “torture porn” and couldn’t imagine what there was to “enjoy” about such a trip. Gaining experience and knowledge is worthwhile, and often enjoyable, even when the subject is disquieting, or even alarming. On my first trip 25 years ago my hosts recognized my skepticism of their political theology and told me there was no leader like theirs in the world. I admitted that “Great Leader George H.W. Bush” didn’t sound quite right. But neither was I prepared to start chanting praises to Kim Il-sung. The iconography remains stifling and dozens of times I heard the same phrase: “under the wise leadership of the Supreme Leader.” I have no idea how many people I talked with believed what they were saying, which actually made the experience even creepier. I must admit, the not-so-wise leadership of not-so-supreme leader Donald Trump looks good in comparison. With the Kim dynasty so far intransigent and resilient, the best hope over time may be for internal transformation. Given the power structure and totalitarian controls, no one expects an imminent “Korean Spring.” But general attitudes may shift over time, creating pressure for liberalization even within the elite. The border with China has grown more permeable in recent years and outside information increasingly seeps in. Pyongyang looks very different from a quarter century ago, with private cars, cell phones, stylish clothing, and more Westerners behaving in ways inconsistent with the regime’s traditional message. Dealing with foreigners likely offers another revealing contact with the outside world. In some cases personal relationships form, especially with repeat visitors. The useful result is to provide information and arouse curiosity. Tours with multiple participants and guides offer the greatest opportunity for informal contact. In North Korea I chatted with a British tourist who was on his third visit and assisted by some of the same guides as before. The point is not to oversell the benefits: Revolution doesn’t appear to be in the air and elites most likely to meet Westerners are the least likely to lead one. Nevertheless, that doesn’t mean attitudes can’t shift, with an impact over the long-term. Even a bit of perestroika and glasnost would help, and those having some contact with the West might become agents of at least modest change. My favorite experience was leaving my room for breakfast and hearing Christian worship music: Members of a humanitarian group had gathered in the common area to sing and pray before heading out for the day. More rather than fewer such experiences are needed. For Western nations, especially the U.S., which has no diplomatic presence in Pyongyang, tourists are a useful source of information and experiences. Not military intelligence, mind you, but social mores, economic practices, development levels, health needs, ongoing changes, and more. Sometimes unscripted moments offer important insight into a system that to most people justifies the traditional label “Hermit Kingdom.” In fact, that term no longer applies to the DPRK, in part because of tourism. My British friend was planning helicopter and micro-light tours over the North Korean capital. That would have been inconceivable not many years ago. No one gains from an attempt by Washington to return the North to its more isolated past. Finally, there’s the basic issue of individual liberty. Admittedly, this concept receives little respect on Capitol Hill. But the right to travel is fundamental. Americans should be allowed to explore the world, make friends, take risks, gain experiences, and more—even if doing so inconveniences Washington. Absent a direct harm to America or other Americans, Congress and the administration should respect that freedom. It’s certainly fair to warn travelers that they cannot count on the U.S. cavalry to arrive if they get into trouble. But adventuresome folks should be left alone to behave in ways others might view as stupid and irresponsible. Otto Warmbier’s death was both tragic and unnecessary. But hard cases rarely offer a good basis for policy. Most Americans will never go, or even want to go, to North Korea. Allow the few to trek to a different world which almost certainly will fill them with greater appreciation for the U.S. Doug Bandow is a senior fellow at the Cato Institute and a former special assistant to President Ronald Reagan.
  • Entitlements Are out of Control    (Michael D. Tanner, 2017-07-19)
    Michael D. Tanner While the White House was busy getting its latest Russia story straight, and congressional Republicans were inventing another new way to not pass health-care reform, few noticed the latest double-barreled dose of bad budgetary news. But anyone who cares about the long-term economic health of the country should be paying careful attention. First, the Congressional Budget Office reported that this year’s budget deficit will hit $693 billion. That’s $134 billion higher than the CBO predicted just six months ago, and $100 billion higher than last year’s shortfall. Under current baselines, deficits are soon expected to hit $1 trillion per year. All this deficit spending will add more than $10 trillion to the national debt over the next decade, bringing it to more than $30 trillion. Of course, those projections are based on current policies. President Trump has proposed deep cuts in domestic spending. Assuming the president gets everything he wants, the debt will increase to only $27 trillion. Hurray? Of course, after the health-care debacle, and given the president’s other distractions, does anyone really believe that all those cuts are going to happen? If the GOP couldn’t slow the growth of Medicaid or reign in the program’s Obamacare expansion, how will it withstand the coming special-interest onslaught? But as frightening as those numbers are, most budget observers know that the real problems come farther down the road, when the true cost of entitlement programs, Social Security, Medicare, and Medicaid kick in. (Before legions of outraged seniors attack, let me simply point out that “entitlement” is simply a budgetary term for programs that are not subject to annual appropriation.) And it is these programs that are responsible for the second dose of bad news. According to the latest report of Social Security’s trustees, the program’s unfunded future liabilities now exceed $34.2 trillion (in discounted present-value terms). True, the program can maintain technical solvency until 2034 (cold comfort to anyone 50 or younger today). But that number is largely an accounting fiction that assumes that the Social Security Trust Fund is an asset that can be used to pay benefits. In reality, of course, the Trust Fund is just a claim against general revenues. On the far more important cash-flow basis, Social Security is already spending more on benefits than it brings in through tax revenue. Big numbers like $34 trillion tend to make the eyes glaze over, so consider this: Restoring Social Security to permanent sustainable solvency would require immediately a roughly one-third increase in the payroll tax (or an equivalent in other taxes), or a permanent reduction in benefits for all current and future beneficiaries of about 25 percent. Meanwhile, Medicare is in even worse shape. For the record, the Trust Fund for Medicare Part A will be technically exhausted by 2029, but like Social Security, the program is already running a cash-flow deficit. The big Medicare shortfalls, however, will be in Part B and the prescription-drug program, both of which are funded largely out of general revenues. Taken as a whole, Medicare’s unfunded liabilities are nearly $49 trillion, a slight improvement from previous forecasts. Those projections may, however, be overly optimistic. They assume that Medicare’s rising costs will probably trigger automatic spending cuts through Obamacare’s Independent Payment Advisory Board (IPAB), starting next year. But those cuts, which almost exclusively fall on doctors and hospitals, are potentially devastating. In fact, Medicare’s trustees warn in their report that payments to doctors would “fall increasingly below providers’ costs.” As a result, as many as half the nation’s hospitals, 70 percent of skilled nursing facilities and more than 80 percent of home health agencies would be losing money. More and more doctors will be driven to abandon the program. Faced with cuts of this magnitude, Congress will almost certainly step in and block IPAB’s recommendations. Anticipating that the cuts will never actually occur, the trustees warn that “actual future costs for Medicare may exceed the projections shown in this report, possibly by substantial amounts.” All of this makes the Republican failure to repeal and replace Obamacare all the more dispiriting. If Republicans could not even slow the growth of Medicaid or rein in the program’s Obamacare expansion, how will they ever withstand the special-interest onslaught that will accompany any attempt to control entitlement costs? The dynamics are not going to change. The public will remain horrified at the thought of giving up any benefits, no matter how unrealistic those promises may be. Democrats will remain adamantly opposed to cutting a dime from any program. President Trump will remain distracted and disengaged (not to mention increasingly unpopular). Republicans will remain divided and afraid. Not exactly a recipe for success. Yet failure would be catastrophic. Set aside the immorality of burdening our children and grandchildren with this mountain of debt: We are poorer today because businesses, looking at the wave of future debt and the taxes that paying it would impose, are less likely to invest or expand. It is a death spiral of its own. Debt slows economic growth, which increases the debt, which slows growth, and so on. It’s time for a little adult leadership in Washington. We’re waiting … Crickets. Michael Tanner is a senior fellow at the Cato Institute and the author of Going for Broke: Deficits, Debt, and the Entitlement Crisis.


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