Policy Institutes

Some of you may have seen my December 2 post showing an “isochronic” map of the world. The map visualized the length of time it took to get from London to anywhere else in the world in 1914. More recently, the good folks at The Telegraph have updated the original 1914 map with 2016 data. To give just one example, it took five days to reach the East Coast of the United States in 1914. Today, it takes half-a-day.

The recent “occupation” of government-owned lands in Eastern Oregon by disgruntled ranchers’ motivated Quoctrung Bui and Margot Sanger-Katz of the New York Times (NYT) to produce an edifying essay on January 6th. It was aptly titled “Why the Government Owns So Much Land in the West.” Curiously, the NYT essay fails to mention one of the most significant, recent, and contentious attempts to “dispose” of federal public lands.

When Ronald Reagan was elected president for his first term in 1980, he received strong support from the so-called Sagebrush Rebels. The Rebels wanted lands owned by the federal government to be transferred to state governments.Their champion was James Watt, a self-proclaimed Sagebrush Rebel who became the Secretary of the U.S. Department of the Interior.

When I was operating as one of President Reagan’s economic advisers, an early assignment was to analyze the federal government’s landholdings and make recommendations about what to do with them. This was a big job. These lands are vast, covering an area six times that of France.

These public lands represent a huge socialist anomaly in America’s capitalist system. As is the case with all socialist enterprises, they are mismanaged by politicians and bureaucrats dancing to the tunes of narrow interest groups. Indeed, the U.S. nationalized lands represent assets that are worth trillions of dollars, yet they generate negative net cash flows for the government. I first presented my findings and recommendations publically at the annual Public Lands Council meeting of September 1981 in Reno, Nevada. The title of my speech was “Privatize Those Lands”—privatize being a word Mrs. Hanke, a Parisian, had imported from France.

My Reno speech caused a stir. James Watt, the Secretary of the Interior, was furious because he wanted to hand over the lands to the state governments—exchanging one form of socialism for another. Needless to say, I thought I was in deep trouble. Hoping to avoid political immolation, I rapidly sent my analysis to the President.

Reagan instantly responded, taking my side. Better yet, he swiftly made my proposals the Administration’s policy. The president endorsed privatizing federal lands in his budget message for the 1983 fiscal year: “Some of this property is not in use and would be of greater value to society if transferred to the private sector. In the next three years we would save $9 billion by shedding these unnecessary properties while fully protecting and preserving our national parks, forests, wilderness and scenic areas.”

It turned out that Reagan had already thought about this issue. The book Reagan, In His Own Hand (2001) makes that clear. This volume contains 259 essays Reagan wrote in his own hand, mainly scripts for his five minute, five-day-a-week syndicated radio broadcasts in the late 1970s. Reagan, In His Own Hand contains several essays on the subject that clearly foreshadowed his policy statement on privatizing public lands. His 1970s musings on public lands echo the writings of Adam Smith. While Reagan never cited Smith, he employed similar reasoning.

Indeed, Smith concluded in The Wealth of Nations (1776) that “no two characters seem more inconsistent than those of the trader and the sovereign,” as people are more prodigal with the wealth of others than with their own. In that vein, Smith estimated that lands owned by the state were only about 25% as productive as comparable private holdings. Smith believed Europe’s great tracts of crown lands to be “a mere waste and loss of country in respect both of produce and population.”

Unfortunately, political opposition—largely from ill-informed environmentalists and some Sagebrush Rebels, too—stopped Reagan from privatizing. U.S. nationalized lands remain ill-used and a constant source of dispute.

Your odds of “making it to the top” might be better than you think, although it’s tough to stay on top once you get there.

According to research from Cornell University, over 50 percent of Americans find themselves among the top 10 percent of income-earners for at least one year during their working lives. Over 11 percent of Americans will be counted among the top 1 percent of income-earners (i.e., people making at minimum $332,000 per annum) for at least one year.

How is this possible? Simple: the rate of turnover in these groups is extremely high.

Just how high? Some 94 percent of Americans who reach “top 1 percent” income status will enjoy it for only a single year. Approximately 99 percent will lose their “top 1 percent” status within a decade.

Now consider the top 400 U.S. income-earners—a far more exclusive club than the top 1 percent. Between 1992 and 2013, 72 percent of the top 400 retained that title for no more than a year. Over 97 percent retained it for no more than a decade.

HumanProgress.org advisory board member Mark Perry put it well in his recent blog post on this subject:

Whenever we hear commentary about the top or bottom income quintiles, or the top or bottom X% of Americans by income (or the Top 400 taxpayers), a common assumption is that those are static, closed, private clubs with very little dynamic turnover … But economic reality is very different—people move up and down the income quintiles and percentile groups throughout their careers and lives

What if we look at economic mobility in terms of accumulated wealth, instead of just annual income (the latter tends to fluctuate more)?

The Forbes 400 lists the wealthiest Americans by total estimated net worth, regardless of their income during any given year. Over 71 percent of Forbes 400 listees and their heirs lost their top 400 status between 1982 and 2014.

So, the next time you find yourself discussing the very richest Americans, whether by wealth or income, keep in mind the extraordinarily high rate of turnover among them.

And even if you never become one of the 11.1 percent of Americans who fleetingly find themselves in the “top 1 percent” of U.S. income-earners, you’re still quite possibly part of the global top 1 percent.

With the rise of electronic communications, the volume of snail mail has fallen precipitously, and the U.S. Postal Service (USPS) has been losing billions of dollars. The 600,000-worker USPS is an unjustified legal monopoly that is heavily subsidized. It is a bureaucratic dinosaur that Congress should put on the way to extinction.

In April, I highlighted an excellent study by Robert J. Shapiro that described USPS subsidies in detail. The subsidies include: exemption from taxes, low-cost government borrowing, monopoly protections, and other special benefits.    

Shapiro completed another study in October, which is a great addition to the postal debate. He details how government-conferred advantages have translated into cross-subsidies from USPS monopoly products to products sold in competitive markets. The USPS uses its monopoly over letters and bulk mail to unfairly compete with FedEx, UPS, and others on express mail and packages.

Shapiro finds that USPS raises prices on its monopoly products, and uses those extra revenues to artificially push down prices on its competitive products. For USPS, this makes sense because consumers are less price sensitive for the monopoly products than for the competitive products. Shapiro concludes, “USPS has strong incentives to cross-subsidize its competitive products with revenues from its monopoly operations,” and it does so by $3 billion or more a year.

For Fed Ex, UPS, and other private firms, this is completely unfair because they have to pay taxes, borrow at market rates, and abide by all the normal business laws and regulations. Fed Ex, for example, had an effective income tax rate in 2015 of 35 percent, per the company’s 10-K. That tax load is money that it could not use for reinvestment to meet the subsidized USPS challenge. Shapiro thinks that “without its subsidies, [the USPS] could probably not compete at all” with its more nimble private competitors.

As Shapiro discusses, Congress and the USPS regulatory agency are familiar with the cross-subsidy problem, but their solutions have been weak. Part of the problem—as we also see with other government businesses like Amtrak—is that USPS is secretive about its accounting, and so the cross-subsidies are hidden.

The solution to all this is privatization and open entry. That would end cross subsidies, increase efficiency, improve transparency, and provide new opportunities for America’s entrepreneurs. Retaining special protections for a centuries-old paper delivery system when 215 billion emails blast around the planet every day is getting pretty silly.

This week, President Obama announced a package of proposals with the ostensible goal of stemming gun crime in America.  Unfortunately, however, the proposals represent a mishmash of ideas that lack a solid logical nexus to the problems they’re being offered to solve.  President Obama even acknowledged this incongruity himself when he admitted that the tragic shootings he emotionally invoked would not have been prevented by his recommendations.

But faced with a Congress that fundamentally disagrees with the president’s views on gun control, his authority to act is limited, and these proposals are proof.   The full “Executive Action” plan released by the White House can be found here, but I thought it would be useful to sum up the major points.

“Engaged in the Business” of Selling Firearms

One of the primary goals of the Obama Administration has been expanding the National Instant Criminal Background Check System (NICS).  The president and his gun-control allies have long called for universal checks in order to close the (non-existent) “gunshow loophole,” but Congress has thus far refused to go along (and for good reason).

Still, the president gave the impression during his remarks that he would use his executive authority to expand the background check system by reconsidering what it means for people to be “engaged in the business” of selling firearms.  For almost 50 years, the ATF regulations have interpreted this somewhat vague phrase by distinguishing those who sell guns commercially as a means of livelihood and those non-commercial sellers who transfer the odd gun every so often. Commercial sellers are required to perform background checks through the NICS system, while non-commercial private sellers are subject to a federal statute requiring that the transferor not know or have reason to know that the recipient of the weapon is prohibited from having it. Every transfer, in other words, is currently regulated by federal law.  The only difference is which law applies.

While President Obama’s announcement and the action plan released along with it suggested a move to broaden the category of transferors that are required to put customers through the NICS system, it’s not clear that there has been any change at all.

As Jonathan Adler writes at The Washington Post, there hasn’t been  a new ATF rule issued making any substantive change to the government’s interpretation of what it means to be “engaged in the business.”  The criteria President Obama and Attorney General Loretta Lynch gave for how they would be assessing whether someone is engaged in the business of selling firearms closely mirror language the ATF included in a recently issued “guidance document.” 

The guideline document represents an outline of current federal law, including caselaw based on the longstanding interpretation of the statute, rather than a change.  In other words, as Adler writes, this proposal, the centerpiece of President Obama’s plan, may not have any effect on the law at all:

According to the White House, the new ATF guidance is intended “to ensure that anyone who is ‘engaged in the business’ of selling firearms is licensed and conducts background checks on their customers.” The ATF is achieving this not by issuing new regulations (re)defining what it means to be “engaged in the business” of selling guns under federal law. Instead, the ATF issued a guidance document that simply explicates what this legal requirement means, providing examples of the sorts of things that would indicate that a given individual is in the gun business, rather than conducting the occasional personal sale as a hobbyist or as part of an estate liquidation, or something of that sort. According to both the White House release and the ATF guidance, the various indicia identified in the guidance are, in turn, based upon what federal courts have found in relevant cases. (The relevant court decisions are not cited or otherwise identified in the document, and I have asked both ATF and the White House for more information on this point.)

Taken at face value, the new ATF guidance is thus nothing more than a restatement of existing legal requirements. Put another way, it merely identifies those who are already subject to the relevant federal requirements and does not in any way expand the universe of those gun sellers who are required to obtain a license and perform background checks. In other words, it is — as the document says — a guidance, and not a substantive rule. It has no legal effect.

In the event that the administration attempts to enforce the law as if there has been a substantive change, Adler points out that there would be an immediate legal challenge:

A consequence of choosing to issue a guidance document instead of a new regulation, however, is that the guidance document cannot have legal force. That’s what it means to be a guidance — and is one reason that such documents do not have to go through the rulemaking process. To be sure, sometimes agencies do one thing while saying they are doing another — issuing a new substantive regulation that changes the relevant legal requirements but calling it a guidance. Yet when agencies do this, they make themselves legally vulnerable. Courts reviewing agency actions are more concerned with the substance of what an agency does than what the agency calls it. So if one were to conclude that the new ATF guidance is really an expansion of existing regulatory requirements, it would be legally invalid under the Administrative Procedure Act because ATF did not go through the relevant rulemaking requirements.

Our own David Kopel, who recently released a paper on the state of gun control in America, agrees with that understanding of the ATF’s interpretation and also argues that President Obama’s commitment to ensuring that everyone who should have a federal firearms license is able to attain one is actually a reversal of a Clinton-era program of taking licenses away from people who were considered to be selling too few firearms to justify the issuance of a license.

Despite the rhetoric, then, President Obama’s proposals on background checks do not seem designed to upset the status quo in any meaningful way.  Whether they’ll be enforced in some new way that raises legal concerns remains to be seen.

Mental Health

More worrisome are the president’s recommendations on mental health and their potential to expand the negative consequences of seeking treatment for mental health problems.  Despite acknowledging that mentally ill Americans are far more likely to be victims of violence than perpetrators, and professing a desire not to stigmatize people who seek mental health treatment, the president’s proposals threaten to do exactly that.

Federal law prohibits people who have “been adjudicated as a mental defective,” from possessing firearms.  Traditionally, “adjudicated” has been seen as requiring some measure of judicial process, and mental health patients who had not been adjudicated mentally ill by a court could still rely on the patient protection provisions of laws like HIPAA. But over at The National Review, Josh Blackman argues that while President Obama’s proposals will have little, if any, impact at the federal level, they do seem to pave the way for anti-gun state governments to drastically expand the definition of “mentally defective” for purposes of the NICS background system:

Yesterday, the Department of Health and Human Services announced that it would modify HIPAA regulations to allow state health agencies to disclose personally identifiable information of a “mental[ly] defective” individual directly to NICS. On its face, the regulation doesn’t require anyone to disclose this information, and merely allows certain entities that “are responsible for the involuntary commitments or other adjudications” to submit this information to the federal database. But on page 38 of the rule, HHS notes that “this final rule does not preempt State or other laws that may require reporting to the NICS.” In English, that means that while the executive action does not require entities to report this information, progressive states are free (and indeed invited!) to mandate that doctors collect and report this information.

Along with the president’s press conference Tuesday, Attorney General Loretta Lynch sent letters to 50 governors “permitting” them to report the names and information of such individuals from their states to the federal government. The NICS database can be expanded by leaps and bounds, through the actions of cooperative states, without the need for any congressional action. Supporting governors can take a hint. In contrast, Texas governor Greg Abbott tweeted “come and take it.”

Understandably, many in the mental health community are wary of policies that will further stigmatize mental illness or impose conflicts of interest on mental health professionals unsure whether they’re obligated to report their patients to the government.

The president also called on Congress to increase spending for mental health services by $500 million.

Social Security Administration

President Obama also suggested that the NICS system would start incorporating information from the Social Security Administration to prohibit people who are mentally incapable of managing their benefits from purchasing firearms.  The action plan released by the White House insists there must be an adequate process for beneficiaries who lose their right to bear arms to contest the decision, but at this early stage it’s unclear what that process will look like.

President Obama’s plans to expand the meaning and scope of the federal prohibition on firearm possession by “mental defectives” is concerning.  Few would argue that dangerous people, including violently mentally ill people, should have easy access to firearms, but the problem quickly reduces to how we define what it means to be dangerously mentally ill, who gets to make these determinations, and what recourse exists for individuals who feel they have been unjustly denied their rights.

Unfortunately, President Obama’s proposals do not evince a serious concern about these process issues. The proposals run the risk of further stigmatizing mental health and drastically increasing the liberty cost of seeking treatment.  Given the ease with which point-of-sale gun laws are circumvented, the danger in pushing people away from treatment is plainly a grave concern that deserves more attention.

Whether it’s “potential terrorists” from the federal no-fly list or “potentially dangerous” mentally ill citizens reported by their doctors or government bureaucrats, there must be an adequate process in place to protect the rights of people who have not been convicted of any criminal behavior.

National Firearms Act Items

One interesting change in federal firearms law strangely didn’t appear in either the president’s remarks or the action plan released by the White House. 

Under the National Firearms Act of 1934, people who wish to acquire, transfer, or manufacture certain weapons and accessories, including machine guns, short-barreled rifles and shotguns, and silencers/suppressors, must submit to the ATF fingerprints and passport photos, undergo a background check, and receive a “certification” from a chief law enforcement officer (CLEO) in their jurisdiction. 

If the CLEO in an applicant’s jurisdiction refused to authorize the transfer, the ATF would refuse the application.  In other words, the ATF gave local law enforcement a veto power over the possession of NFA items.  In order to evade the CLEO requirement while still complying with the law, some enthusiasts created what are known as “gun trusts,” which are not subject to the CLEO certification requirement.

Announcing his desire to ensure that everyone involved with NFA-regulated items undergo adequate screening, President Obama announced that he was directing the ATF to enforce the photo, fingerprint, and background check provisions on the trusts as well as the individual applicants.  In effect, this would abolish the procedural distinction between an NFA gun trust and an individual applicant.

However, neither President Obama’s remarks nor the action plan mentioned another change from the same new ATF rule promulgation: the abolition of the CLEO certification requirement.

The goal of this final rule is to ensure that the identification and background check requirements apply equally to individuals, trusts, and legal entities. To lessen potential compliance burdens for the public and law enforcement, DOJ has revised the final rule to eliminate the requirement for a certification signed by a chief law enforcement officer (CLEO) and instead require CLEO notification.

So, while it will now be more burdensome for individuals to acquire NFA items through a gun trust, the Obama Administration has also eliminated a bureaucratic burden that incentivized individuals to form the trusts in the first place.

Additional  Recommendations

President Obama’s proposal also contains a push for “smart gun” technology that would theoretically ensure guns can only be operated by their owners, a clarification of the reporting obligations for situations in which gun shipments are lost or stolen, and calls for increased “coordination” between federal prosecutors and state and local officials to combat domestic violence.

The prosecution of domestic violence offenses is traditionally a state matter, and it’s unclear what “coordination” with federal prosecutors will entail.  The clarification over which party bears responsibility for reporting stolen gun shipments or inventory is unobjectionable.  Faith in smart gun technology is largely unjustified at this point, as the technology is underdeveloped and the market seems to have very little interest in it.  It’s conceivable that bulk government purchases could “stimulate” that market, but for now smart gun mandates remain largely speculative. 

Conclusion

For all the pomp and ceremony, nothing in the president’s proposals is going to put a dent in U.S. gun crime or even substantially change the federal legal landscape.  In that sense, apoplectic opponents and overjoyed supporters are both probably overreacting.   President Obama’s clarifications on the FFL system and the ATF’s removal of a substantial burden on individual enthusiasts wishing to procure NFA-regulated items may even be improvements over the status quo (in deep contrast to the tone of the president’s emotional message). 

The mental health proposals are more worrisome, and the behavior of state governments and federal healthcare agencies in response to an expansion of their power to circumscribe the rights of people seeking mental health treatment will require close scrutiny (and perhaps litigation) to ensure that people diagnosed with mental illnesses are not being unfairly deprived of their rights.

The most disappointing aspect of the proposals is that there is so little in them to suggest that President Obama is willing to address any of the major drivers of gun crime in America.  The sad irony is that President Obama could do far more to protect American lives and clean up our streets by ending the drug war than by expanding background checks.  Criminals, from gang members to spree shooters, have no trouble passing checks, finding straw purchasers, or simply buying guns on the inherently unregulated black market.  As long as there are hundreds of billions of dollars changing hands in the illicit drug market every year, the black market for firearms and the violent competition for market shares will continue to claim thousands of lives annually and make a mockery of the idea of gun control.

Gun crime is a serious problem, and it deserves attention.  Unfortunately, these proposals do not offer effective solutions.

In 2015 we witnessed an astonishing sight: by the end of the year news coverage of Donald Trump in major U.S. newspapers eclipsed coverage of every major world hotspot and the dreaded Islamic State.

 

At the most basic level, this reflects the American tendency to focus on domestic politics during presidential campaigns. Foreign affairs often fade from view as the presidential campaign season heats up and economic and social issues take the fore. But this year foreign policy has in fact been a major focus of the campaign, making this a less powerful effect than in most years.

More importantly, the news flow is a function of Trump’s uncanny ability to set the news agenda. This ability stems only in part from the fact that he holds a commanding lead in the polls. More critical is his tendency to make outrageous statements, tapping into anger and frustration in the electorate, which has not only stimulated outrage and concern on left and right but also discussion about what the Trump phenomenon means beyond the election itself. In December Trump appeared in twice as many stories as both Ted Cruz, his closest competitor in both the polls and coverage, and President Obama. Simply put, Trump is incredibly newsworthy given the way in which American news outlets define news and given the news Americans appear to want.

But less obviously, this pattern also reflects the long-term shrinking of the international news hole in the United States. Since the late 1980s the share of American news devoted to international affairs has shrunk by as much as half in major U.S. newspapers and broadcast television news. With occasional and temporary reversals, this trend has persisted despite increasing globalization, despite constant U.S. military intervention abroad since the early 1990s, and despite 9/11 and the war on terrorism.

Trump’s news dominance has at least three important consequences for U.S foreign policy. First, Trump’s success has clearly shifted the debate on how to confront the Islamic State. Even though Trump’s most outrageous statements about killing the wives and families of terrorists are not serious policy proposals, they have nonetheless found considerable support among the American public. And since Trump continues to lead the field, his competitors have responded by ratcheting up their own rhetoric, leading the Republican contest to take on an increasingly hawkish tone. This has also encouraged Hillary Clinton to continue to take a more aggressive stance toward confronting ISIS than she otherwise would be likely to have done. The end result is that public approval for military intervention against ISIS is at an all-time high.

Second, Trump’s rhetoric has shifted the American debate about borders and refugees in a decidedly nativist direction. Trump’s obsession with the U.S.-Mexican border early on in his campaign and his willingness to suggest extreme measures others would not ensured him a leading role in responding to the Syrian refugee crisis. In the wake of the Paris attacks, Trump’s hyperbole about the dangers posed by immigrants and refugees not only tapped into fears and frustrations of many conservatives but also pushed Republican governors and the other GOP presidential candidates to affirm extreme positions regarding Syrian refugees. At this point it will be surprising if the United States manages to take in even the 10,000 refugees President Obama originally promised and it seems extremely unlikely that the next president will suggest taking in any additional refugees.

But perhaps the most troubling consequence of the Trump phenomenon is its impact on the very quality of the foreign policy debate itself. Thanks to his popularity and the responsive chord his rhetoric has struck, Trump has legitimized a simplistic and naïve approach to dealing with the world. To listen to Trump, the United States can meet all of its challenges simply by “getting tougher” with our adversaries. In a Trump-dominated news environment the world loses its complexity and we lose the ability to ground foreign policy in a realistic and sophisticated debate about how to meet the challenges we face. 

Though election watchers remain doubtful that Trump will wind up the Republican nominee, 2016 begins with Trump in first place both in the national polls and in news coverage. And whether Trump wins a single caucus or primary, the echoes of his campaign will be felt for a long time to come.

This week Hillary Clinton became the second prominent Democrat to refuse to answer the question, “What’s the difference between a socialist and a Democrat?”

In July MSNBC host Chris Matthews stumped Democratic national chair Rep. Debbie Wasserman Schultz (D-FL) with the question. Asked three times, Wasserman Schultz first looked blank, then evaded: “The relevant debate that we’ll be having this campaign is what’s the difference between a Democrat and a Republican….The difference between a Democrat and Republican is that Democrats fight to make sure everybody has an opportunity to succeed and the Republicans are strangled by their right-wing extremists.”

On Tuesday Matthews asked Clinton the same question. Clinton could see it coming, and she did say of socialism, “I’m not one.” But pressed to explain “What’s the difference between a socialist and a Democrat?” she too retreated to boilerplate:

I can tell you what I am, I am a progressive Democrat … who likes to get things done. And who believes that we’re better off in this country when we’re trying to solve problems together. Getting people to work together. There will always be strong feelings and I respect that, from, you know, the far right, the far left, libertarians, whoever it might be, we need to get people working together.

Hey, thanks for the “libertarians” plug, Madam Secretary! But seriously, why is this a hard question? Here’s a clear answer:

“Socialists believe in government ownership of the means of production, and Democrats don’t.”

Would that be a true statement? If so, why don’t Clinton and Wasserman Schultz just say it?

One possibility, of course, is that they don’t actually think there’s much difference between Democrats and socialists. Clinton, after all, voted with taxpayers only 9 percent of the time as a senator, according to the National Taxpayers Union. She calls herself a “government junkie.” She says, “There is no such thing as other people’s children,” a strikingly collectivist thought. She tried to nationalize health care long before President Obama. Voters could be forgiven for seeing a socialist lurking there. But Clinton has never called for mass nationalization of the Soviet or even the British Labour variety.

Maybe Clinton and Wasserman Schultz see socialism as a beautiful dream that simply can’t be achieved with the current American electorate. Take a look at Clinton’s answer to Matthews: “I am a progressive Democrat … who likes to get things done.” That reminded me of her comment in 2008 when she was running against Barack Obama: “Dr. King’s dream began to be realized when President Johnson passed the Civil Rights Act. It took a president to get it done.” Perhaps in that case and the current one she’s saying that speeches are fine, but she’s the candidate prepared to dig in and do the hard work to “get things done” – the things that King and Obama only talked about, the things that Bernie Sanders gives speeches about, maybe even the things that socialists aspire to do. In 2008 she also explained that she had never supported a single-payer health care system – medical socialism – because “we had to do what would appeal to and actually coincide with what the body politic will and political coalition building was.” That’s a rejection on political grounds, not on the basis of economics, political philosophy, or an understanding of the failures of socialism.

My guess is that politics is driving Wasserman Schultz’s and especially Clinton’s evasion on the question of socialism. This week we’ve seen repeated charges in the mainstream media that Republican presidential candidates were treading cautiously on the issue of the takeover of a federal building in Oregon – or even “flirting with extremists” – because they don’t want to offend voters who are angry at federal land ownership or at federal overreach more generally. Democrats also have base voters, and extreme factions, and voters who might stay home or vote for Ralph Nader if they feel disrespected. Apparently Wasserman Schultz and Clinton think enough Democratic voters to worry about are sympathetic to socialism. They may be right. Although most Americans say they wouldn’t vote for a socialist, a majority of Democrats report favorable views of socialism. Clinton doesn’t want to diss those voters.

And that seems like something that journalists other than Chris Matthews ought to ask about. Let’s see some articles about the refusal of arguably the two most important leaders of the Democratic party (other than President Obama) to state that Democrats are not socialists.

The plunging Shanghai Stock Exchange and the sudden reversal in the yuan’s appreciation have caused fears to spread beyond China’s borders. Is something wrong with the world’s growth locomotive? In a word, yes.

Indeed, China’s leadership has chosen instability. They have forgotten my golden rule: stability might not be everything, but everything is nothing without stability.

How did China arrive at this point — a point of high uncertainty and potential economic instability? A look at China’s exchange-rate regimes provides a window into these troubled waters. Since China embraced Deng Xiaoping’s reforms on 22 December 1978, China has experimented with different exchange-rate regimes. Until 1994, the yuan was in an ever-depreciating phase against the U.S. dollar. Relative volatile readings for China’s GDP growth and inflation rate were encountered during this phase.

After the maxi yuan depreciation of 1994 and until 2005, exchange-rate fixity was the order of the day, with little movement in the CNY/USD rate. In consequence, the volatility of China’s GDP and inflation rate declined, and with the yuan firmly anchored to the U.S. dollar, China’s inflation rates began to shadow those in America (see the accompanying exchange-rate table). Then, China entered a gradual yuan appreciation phase (when the CNY/ USD rate declined in the 2005-14 period). In 2015, the yuan began to experience weakness. In terms of volatility, economic growth and inflation rates, China’s performance has deteriorated ever since it dropped exchange-rate fixity.

 

So, why did China drop exchange-rate fixity in 2005? After all, China’s fixed-rate regime had performed very well. Pressure from the U.S. and many nonsensical mercantilist’s arguments, emanating from Washington, D.C., caused China to abandon fixity. Little did Beijing realize that it had chosen instability.

There’s a new development in the Keystone XL pipeline saga. Recall that last year the Obama administration denied a permit, ostensibly on environmental grounds, to build this pipeline. Now the Canadian company behind the pipeline, TransCanada, has started the process of suing the U.S. government before a NAFTA tribunal, asking for $15 billion in damages. Yes, that’s “b” for billions. (They have also filed a case in U.S. court).

A NAFTA lawsuit on this issue may seem odd, but provisions for claims by foreign investors are a standard feature of today’s trade agreements. I have argued that this feature is unnecessary, and should be abandoned. But as long as it’s in there, companies can use it, and TransCanada seems to have a case.

It’s hard to say, at this point, exactly how strong the case is. The legal obligations are vague, and there’s no international appellate court in the area of investment to bring order to the jurisprudence. Roughly speaking, TransCanada is arguing that the U.S. government has treated it in an arbitrary manner and discriminated against it, in violation of several specific obligations. I don’t like to predict outcomes, but I’m guessing that, based on the facts (and these cases are very fact-intensive), TransCanada’s lawyers are feeling pretty good about things.  But I’m reluctant to express too strong a view until both sides present all of their factual and legal arguments.

Keep in mind, also, that these investment cases are not quick. We’ll have a new president long before the NAFTA case is completed. If the new president is a Republican, he/she will likely approve Keystone (if TransCanada files a new application). That should end the NAFTA lawsuit (although TransCanada could still claim damages from the delay). If it’s President Clinton/Sanders, though, who both oppose Keystone, we could see a ruling in the case.

Beyond the specifics of the pipeline, the case has implications for the public debate over trade agreements more generally. Discussing the trade agreement provisions that give rise to these investment claims was kind of hard without a simple, straightforward, and well-known case. This lawsuit should make clear that foreign investors can sue governments before international tribunals when they feel mistreated.

Now, maybe people will like the idea of such lawsuits, although I have doubts that most will. I still say it is not needed, but at least everyone will understand how the system works and the kinds of cases governments may face.

When Congress passed the REAL ID Act, it hadn’t held a hearing to examine the merits and demerits—or practicalities—of instituting a U.S. national ID. Unworkable, the Chairman of the Senate Homeland Security Committee called it. In the U.S. House, REAL ID was attached to a must-pass military spending bill after the House vote on that bill. REAL ID wasn’t a shining example of democratic deliberation.

But REAL ID requires state cooperation. States must convert their driver licensing bureaus into arms of the U.S. Department of Homeland Security. This means that states may deliberate openly about whether databases of information about their residents should be poured into a national ID system. (This is a clear requirement from the statute. States that commit to REAL ID compliance now eventually must “[p]rovide electronic access to all other States to information contained in the motor vehicle database of the State.”)

Minnesota is a state where Department of Homeland Security bureaucrats have recently pressured elected officials to fall in line. And in Minnesota today a “Legislative Working Group on Real ID Compliance” will meet to discuss “possible compliance measures.” The chair of the group is Rep. Peggy Scott (R) and the alternate chair is Sen. Scott Dibble (DFL).

Now, the Minnesota legislature is moving pretty fast. Their governor appears to have been successfully buffaloed by the Department of Homeland Security. But at least there is an open meeting that Minnesotans and interested advocates can attend to inform the legislature.

So now the question can be joined: Will Minnesota’s elected officials put the state’s residents into a national ID system?

The web page on which this meeting is listed appears as though it will change. Other members of Minnesota’s “Legislative Working Group on REAL ID Compliance”—folks who will have a big say on whether Minnesota becomes a national ID state—are listed below.

House Members
Rep. Peggy Scott (R)
Rep. Abigail Whelan (R)
Rep. Drew Christensen (R)
Rep. Dan Fabian (R)
Rep. Tim Miller (R)
Rep. Bob Vogel (R)
Rep. Dennis Smith (R)
Rep. Brian Daniels (R)
Rep. Brian Johnson (R)
Rep. Duane Quam (R)
Rep. John Petersburg (R)
Rep. Ron Kresha (R)
Rep. Tony Cornish (R)
Rep. Tim Kelly (R)
Rep. Cindy Pugh (R)
Rep. Carlos Mariani (DFL)
Rep. Rick Hansen (DFL)
Rep. Barb Yarusso (DFL)
Rep. Jason Isaacson (DFL)
Rep. Mike Freiberg (DFL)
Rep. Karen Clark (DFL)

Senate Members
Sen. Scott Dibble (DFL)
Sen. Jim Carlson (DFL)
Sen. Greg Clausen (DFL)
Sen. Melisa Franzen (DFL)
Sen. Foung Hawj (DFL)
Sen. Lyle Koenen (DFL)
Sen. Ron Latz (DFL)
Sen. Roger Reinert (DFL)
Sen. Tom Saxhaug (DFL)
Sen. Matt Schmit (DFL)
Sen. Warren Limmer (R)
Sen. David Osmek (R)
Sen. Carla Nelson (R)
Sen. David Senjem (R)
Sen. Julianne Ortman (R)
Sen. Dan Hall (R)
Sen. Karin Housley (R)

You Ought to Have a Look is a feature from the Center for the Study of Science posted by Patrick J. Michaels and Paul C. (“Chip”) Knappenberger.  While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic.  Here we post a few of the best in recent days, along with our color commentary.

Here we highlight a couple of things that we’ve been paying attention to as the new year unfolds.

First is an on-the-ground example of the extensive and invasive power of the federal government’s social cost of carbon. David Roberts, writing for Vox, describes the ongoing situation in a Colorado coal mining region which pits local, near-term coal mining interests (i.e., economic activity) against the federal government’s desire to mitigate potential damages that may result from climate change sometime in the future some place on the globe. So far, the present inhabitants of Colorado are losing out to the yet unborn future inhabitants of some faraway Pacific Island—a loss happily facilitated by the federal government.

Specifically, a federal judge has told the U.S. forest Service (USFS) that it did not adequately consider climate change when granting a special exception for coal mining activities on a protected tract of federal forest around Paonia, Colorado. The judge cited the National Environmental Policy Act (NEPA) as grounds for his decision.  When the USFS came back with its new analysis, it reported a huge, negative net impact of coal mining in the region.

How so? Because under the new federal guidelines for interpreting NEPA, the USFS had to consider not only the local environmental impacts of mining activities when compiling its Environmental Impact Statement, but also the impact that burning the mined coal to produce electricity would engender via the carbon dioxide emitted in the process.

If this sounds absolutely ludicrous, it is. And as you might imagine the locals are a bit flummoxed. “Who would have thought that they would have had to analyze the burning of coal in a power plant somewhere?” says Kathy Welt, a mineworker potentially impacted by the decision.

What’s even more ludicrous is that although the USFS admits that it is “problematic - likely impossible - to link emissions associated with this project to a specific increase in temperature, or changes in precipitation,” it can nevertheless estimate that the future cost of those unquantifiable climate changes may approach $13 billion, which of course swamps any local economic benefits.

This is precisely the kind of thing that we have been warning about, not only through our multitude of comments on the federal government’s development of the social cost of carbon, but on its mandated use and abuse.

David Roberts’ full article is well-worth a read to get into the details, but, it’ll leave you shaking your head, if not your fist.

Next up is commentary from Judy Curry on the argument that the existence of the potential (no matter how small) for calamitous outcomes from climate change makes it worth pursuing climate change mitigation measures. Those that are most risk averse are the ones pushing for a carbon tax or other mitigation measures.

But Judy takes them to task in her commentary on a recent essay “Climate models and precautionary measures”  by noted risk analyst Nassim Taleb.

Judy effectively counters Taleb’s contention that “we should build down CO2 emissions, even regardless of what climate-models tell us,pointing out that Taleb’s application of the precautionary principle isn’t well-suited to address “wicked” problems like climate change.

Judy writes:

While these issues [ozone, sulphur emissions and nuclear bombs] may share some superficial similarities with the climate change problems, they are ‘tame’ problems (complicated, but with defined and achievable end-states), whereas climate change is ‘wicked’ (comprising open, complex and imperfectly understood systems). For wicked problems, effective policy requires profound integration of technical knowledge with understanding of social and natural systems. In a wicked problem, there is no end to causal chains in interacting open systems, and every wicked problem can be considered as a symptom of another problem; if we attempt to simplify the problem, we become risk becoming prisoners of our own assumptions.

Simply put, the current focus on CO2 emissions reductions risks having a massively expensive global solution that is more damaging to societies than the problem of climate change.

Her blog post is rich with links to posts from her large archive of articles on the issue of climate change and risk, countering virtually all of the typical its-too-risky-not-to-act  talking points.  It is well worth a visit and a bookmark.

We close this issue of You Ought to Have Look with a suggestion to check out a tweet storm from energy analyst Jesse Jenkins explaining why energy efficiency measures are not a particularly effective way at reducing carbon dioxide emissions (contrary to the aspirations of many of the INDCs approved at the U.N.’s Paris Conference). Hint: the Rebound Effect.

It’s a quick, easy, and effective read. You can find it here.

You really ought to have a look.

On Tuesday President Obama announced a series of executive actions to reduce access to firearms in efforts to improve public safety. Consequently it might come as a surprise that one of the president’s core constituencies—the millennial cohort—is not overly enthusiastic about gun control.

The Pew Research center has consistently found that millennials are no more likely than older generations to agree that its more important to control ownership than protect the right of Americans to own guns.

In fact, a Reason-Rupe poll, that I helped conduct in 2013, found that millennials were the least likely to say that government should prohibit people from owning assault weapons: 63% of 18-34 year olds thought people should be allowed to own assault weapons, compared to 54% of 35-54 year olds and 36% of those 55 and over.

Furthermore, Gallup found that millennials were slightly less likely than older Americans to support stricter laws “covering the sale of firearms” (49% versus 56% of those over 55).

These results may seem puzzling since young Americans are less Republican than older cohorts, but it’s Republicans who tend to be less supportive of gun control measures.

In addition, millennials are less likely to own a firearm; Reason-Rupe found millennials were half as likely to report owning a firearm as those over 55 (11% versus 22%). However, people who don’t own firearms are more likely to support gun control measures. For instance, in the same poll a majority of gun owners opposed an assault weapons ban while a majority of non-gun owners supported a ban.

Furthermore, copious research on this cohort finds their social liberalism stands apart from older generations. In other words, millennials are more tolerant and accepting of difference, LGBT rights, racial inclusivity, marijuana legalization, immigration, etc. (see GallupPew, Reason-Rupe).

Nevertheless, their social liberalism hasn’t translated into their being liberal across the board. They are not significantly different from older cohorts on a number of issues, including attitudes toward business, the social safety net, and they are more supportive of entitlement reform (see here, and here). Furthermore, they take a more laissez faire approach to allowing products and activities that many have sought to ban or restrict.

Despite their Democratic sympathies, millennials’ more permissive approach to lifestyle choices and access to products and activities might at least in part explain why they are not more enthusiastic about gun control.  

Phosphorus (P) is an important macronutrient necessary for plant photosynthesis. When present in sufficient quantities, it has been shown to benefit plants by stimulating the formation of oils, sugars and starches, fostering rapid tissue growth and development, increasing stalk and stem strength, improving resistance to disease, enhancing crop quality, aiding flower and seed production, and benefiting a host of other growth- and development-related factors and processes. Out in the real world, however, P availability is often limited. Consequently, plants have developed multiple adaptive mechanisms (morphological, physiological and molecular) to help them cope with P insufficiency (Pi).

Despite such adaptive mechanisms, there are concerns that Pi will increase in the future as atmospheric CO2 concentrations rise. This hypothesis is based upon the recognition that elevated CO2 stimulates plant photosynthesis and growth. Such stimulation, however, is expected to require additional amounts of P in order for plants to sustain the projected CO2-induced growth enhancements. Otherwise, if P is limiting in the growth medium, or if plant adaptive mechanisms cannot compensate for the increased P demand, the growth benefits of CO2 enrichment may be reduced, and possibly wholly overcome, by Pi.

In a test of this hypothesis, Pandey et al. (2015) investigated the interactive effects of elevated CO2 and P nutrition on the growth response of three cereals: two wheat varieties (Triticum aestivum L. cv. PBW-396 and Triticum durum L. cv. PDW-233) and rye (Secale cereal L. cv. WSP 540-2). These three cereal species were grown in controlled environment chambers at the National Phytotron Facility, Indian Agricultural Research Institute, New Delhi, under conditions of 22°C/12°C day/night temperatures, a 10-hour photoperiod (450 µmol m-2 s-1 PAR) and relative humidity of 90 percent. Atmospheric CO2 concentrations were maintained at either ambient (380 ppm) or elevated (700 ppm) and supplied P levels were either low (2 µM) or sufficient (500 µM). And, after 15 days post germination various growth and biochemical analyses were performed. So what did the authors’ analysis reveal?

First off, Pandey et al. note that elevated CO2 increased the total plant dry weight of all three cereal species by an average of approximately one-third, regardless of P treatment level. In addition, they write the “total plant dry matter accumulated in plants grown with low-P under elevated CO2 was equivalent to those grown with sufficient P under ambient CO2” (emphasis added), which, they say, “indicates efficient utilization of tissue P under higher CO2.” Thus, elevated CO2 was able to completely compensate for the reduction in total plant dry weight that was induced by the low P treatment.

Elevated CO2 was also shown to benefit whole plant leaf area, which increased by 15 percent in low-P conditions, and by a much larger 43 percent under sufficient P. It also altered the partitioning of plant dry matter; under elevated CO2, both P treatments experienced a higher number of lateral roots per plant, greater root length and increased root surface area, which led to an increase in plant root/shoot ratio of approximately 20 percent in both P treatments.

Nutrient uptake per unit root mass and total P content per plant were also enhanced under elevated CO2. Under P-sufficient conditions these parameters increased by 19 and 49 percent respectively, whereas under low P conditions they were stimulated by 55 and 26 percent. Lastly, Pandey et al. report that these several benefits of elevated CO2 combined to induce a whopping 59 percent average increase in plant phosphorus use efficiency (PUE, defined as a unit of dry matter produced per unit of P uptake) among the three studied cereals when grown under P-limiting conditions.

Given the above findings, it is clear that elevated CO2 was able to sufficiently compensate for an increased P demand by (1) stimulating the cereals’ root systems, which allowed the plants to acquire greater amounts of P from the growth medium, and (2) by improving the ability of Pi-compensating mechanisms within the plants to utilize P, as evidenced by the large increase of PUE observed under low P conditions. And that is news worth celebrating.

 

Reference

Pandey, R., Dubey, K.K., Ahmad, A., Nilofar, R., Verma, R., Jain, V., Zinta, G. and Kumar, V. 2015. Elevated CO2 improves growth and phosphorus utilization efficiency in cereal species under sub-optimal phosphorus supply. Journal of Plant Nutrition 38: 1196-1217.

Yesterday, President Obama delivered a 35-minute address on gun control (I have seen several references to Obama’s “press conference,” but reporters were not invited to the White House east room for the event and the president did not take any questions). Cato associate policy analyst David Kopel discussed Obama’s “executive actions” last night on PBS Newshour.

By way of background, Cato published a paper by Kopel titled, “The Costs and Consequences of Gun Control,” and we are in the process of getting it into the hands of both federal and state policymakers.

Back to Obama.  According to the Washington Post, Obama and the ATF are merely clarifying existing law with respect to who must obtain a federal license to sell guns and conduct background checks.  There is no “executive order” that changes existing law.  Persons “engaged in the business” of selling arms must obtain a license.  Persons who just sell once in a while do not need a license.  So, for example, if someone loses interest in hunting and wants to sell his shotgun to a friend or neighbor, no license is needed for that transaction.  An ATF pamphlet released yesterday makes it a bit clearer who it considers “engaged in the business” for persons who fall in the gray area.  That non-change has been hailed as the big change.

The media is mostly right that all the executive actions are modest–and it is true that some of the GOP presidential candidates have overreacted by suggesting that whatever Obama has done must be reversed just as soon as they get into the Oval Office.  However, it must be noted that Obama points to the gun control policies of other countries, such as Australia and Great Britain, as models for the USA.  Kopel’s paper points out those countries have confiscated the weapons of citizens.  Obama also admits we’ll see more shooting sprees and that more gun control regulations are desirable.  Indeed, Hillary Clinton is making gun control a centerpiece of her promised domestic agenda if elected.  Add that up, and it seems safe to say that the gun control debate is not going away.  

For additional background, go here, here, and here

Poland’s new government wants a deal with Great Britain. Help us get a NATO (meaning American) garrison, and we’ll agree to limit European migrant flows to Britain.

British Prime Minister David Cameron was rebuffed when he sought Warsaw’s support for his European Union reform plan. However, over the holidays, Foreign Minister Witold Waszczykowski said, “Of course, Britain could offer something to Poland in terms of international security.” He went on to complain that “there aren’t, aside from a token presence, any significant allied forces or defense installations, which gives the Russians an excuse to play this region.”

Indeed, as host of the July NATO Summit, Polish President Andrzej Duda will make the issue a priority: “We need a greater presence of NATO in this part of Europe.” He called for allied bases in Poland and said: “We need more guarantees from NATO, not only we as Poland but the whole of central and eastern Europe in the current difficult geopolitical situation.”

No one seriously expects the Dutch, Italians, or Spanish to provide permanent garrisons for Poland. The Germans, who publicly oppose the idea, won’t be coming.

Only Britain and France are realistic candidates, and both reluctantly halted further cuts in their military budget. They aren’t likely to tie up significant combat units in Poland.

Which leaves you-know-who. The United States will be cajoled to continue defending a continent which doesn’t see much need to defend itself.

Last year, NATO-Europe collectively spent about 1.5 percent of GDP, well short of the two percent member objective. Only Estonia, Greece (to confront Turkey), Poland (first time ever), and the United Kingdom made that level.

Even two percent isn’t much if you believe your country is threatened by the authoritarian, aggressive power next door. And Latvia and Lithuania can’t be bothered to spend that much. Turkey also fails the two percent test, despite threatening fellow NATO member Greece, whining about the impact of the Syrian civil war, and shooting down a Russian plane over Syria.

Everyone simply assumes America will do whatever is necessary.

Of course, Russian threats are not as great as the Poles would have others believe. Poland appears secure. Moscow is unpleasantly aggressive, yet its ambitions appear bounded, largely limited to preventing further NATO expansion up to Russia’s borders. Nothing suggests that Vladimir Putin wants Russia to try to digest millions or tens of millions of Georgians and Ukrainians, let alone troublesome Poles living in historically Polish territory. Despite Russian threats against central and eastern Europeans, Moscow lacks the military and economic capability to make those threats credible.

The Baltics, with varying populations of ethnic Russians, also don’t appear to be of much concern to Russia. Attempting to grab a majority-Russian city or other territory would offer few benefits at high cost.

Washington should stop being complicit in the European game of playing the United States. America no longer can afford to defend its populous and prosperous allies.

However, Europe will do nothing so long as America does almost everything. Washington must do less.

If London supports Polish plans for a NATO garrison at the Warsaw Summit, let Britain offer the first troops for that purpose. Anyone else voting yes should be invited to join in too.

As I note in National Interest online: “U.S. officials should note that America remains a bit busy elsewhere—fighting in Afghanistan and the Middle East, garrisoning Japan and South Korea, patrolling the world’s oceans, and maintaining troops all over ‘Old Europe.’ Washington will allow the Europeans to take the lead in their continent’s defense.”

The case for a U.S.-dominated NATO disappeared years ago. The Europeans should discuss how they will defend themselves in the future.

Poland wants to make a deal putting a NATO tripwire on its territory. Washington should make clear that, irrespective of what other nations want, the Americans won’t be coming.

Dr. Ben Ho’s piece in Tuesday’s New York Times entitled “The Conservative Case for Solar Subsidies” is certain to raise a few eyebrows amongst the conservative crowd. But Ho asks a valid question that I’m not sure conservatives have seen fit to fully address in the last few years: What, precisely, should free market denizens hold true about energy policy?

The facile response–that there should simply be no government role–doesn’t quite work here. To be fair, few conservatives suggest such a thing. Ho points out that when there are negative externalities to the production of a good or service the economically efficient policy response requires a tax, and our carbon-based fuels emit a variety of pollutants when burned. This holds true regardless of one’s opinion about the verities of carbon emissions and climate change: Smog–which results mainly from automobile emissions–remains a key contributor to myriad health problems in the United States, and particulate matter resulting from coal burning bedevils asthmatics.

But the libertarian solution is not quite as simple as imposing a tax that covers the socialized pollution costs of burning fossil fuels. We have a nationwide energy grid, one that the federal government played an integral role in conceiving and constructing. Without eminent domain, such a thing would have been all but impossible. The federal government’s regulatory apparatus also has an integral role in regulating power providers, and since the provision of power is a natural monopoly, it’s hard to conceive of an alternative, at least for the moment.

One victory libertarians managed to achieve in the last twenty years has been to convince regulators that the inherent natural monopoly lies solely in the distribution and not the production of energy, so the two have been disconnected in most states. These days, most utility customers can choose from where to get their power, which is a good thing, but it still leaves us with a fundamental economic problem: How do we get a natural monopoly–the operators of the energy grid–to behave as if it were subject to competition?

The basic regulatory solution is to allow the utilities to charge a price to recoup their costs plus some incremental profit. This may sound reasonable, but it creates lousy incentives–namely, the utility has zero incentive to control costs under such a scheme. In fact, they have an incentive to increase their costs and capital investments, since this boosts their attendant profits.

Dr. Ho alluded to the profound potential impact that solar energy could have on this monopoly in the future.  With the advent of Tesla’s home battery, it is possible that within the next decade (provided the batteries continue to improve–far from a sure thing) we could see some houses begin to go off the grid entirely, with solar energy producing all the energy they need. If this were to occur at a large scale, we might see utilities being forced to act as if they were a competitive firm and strive to boost efficiency where possible in order to distribute energy at the lowest possible costs to keep customers from cutting the power cord.

The other possibility in such an environment is a downward spiral: as people leave the grid, the costs of maintaining it gets spread over fewer people, boosting the cost and, in turn, nudging more people to get off the grid until only those without any other viable energy option are left holding the bag and paying sharply higher costs for energy.

The answer to such a potentiality is to embrace technology and apply a modicum of foresight to regulatory activities. While the utilities would prefer that home solar just go away, Ho points out that its costs are now competitive with gas and coal, and prices seem poised to drop further in the future. The potential of solar energy–and solar energy that can be stored–is that it can allow utilities to dramatically reduce their investments. If energy storage were to allow utilities to close marginal power plants that produce only at the peak demand each day, the savings to power companies would be enormous. What’s more, having distributed power across the grid would also allow utilities to reduce their own capital investment along the grid by smoothing out the fluctuations in power distribution: in essence, doing one of the utilities’ jobs for them.

We are entering a brave new world in energy production, one that threatens to upend the century-old regulated utilities monopoly and replace it with something that could be much less expensive to run–but only if we get the right policies in place to let it develop. The one worry is that the biggest player in this market has absolutely no incentive for these changes to happen, and its regulator more often than not takes its cues thusly.  This is the conservative’s task for the next decade–keep a watch on regulators to act in the long-term interests of the customers and not the utilities. It’s easier said than done.

 

North Korea has grabbed international headlines. Again. Pyongyang staged its 4th nuclear test, supposedly a thermonuclear device.

Proposals for more sanctions and further isolation likely will grow. However, the test dramatically demonstrated that the U.S. attempt to build a cordon sanitaire around the Democratic People’s Republic of Korea has failed.

Washington instead should develop a new policy focused on engagement, not denuclearization. The latter should remain an objective, but even if it remains out of reach the U.S. might be able to reduce military threats on the peninsula.

As always, North Korean foreign policy reflects domestic politics. The test also gives Pyongyang greater leverage in its attempt to engage both South Korea and the U.S.

Talks with the Republic of Korea recently ended without result. The North also long has sought to draw the U.S. into bilateral discussions. However, the Obama administration set as a precondition for any talks that Pyongyang take steps toward dismantling its nuclear program, a non-starter.

In dealing with the North there are only second-best options which might ameliorate the threat otherwise posed by a famously enigmatic, persistently paranoid, and potentially unstable nuclear-armed state viewing itself in a perpetual state of war with America and its allies, South Korea and Japan.

The possibility of Pyongyang amassing not only a sizeable nuclear arsenal, but a thermonuclear arsenal, should help concentrate minds in Washington.

Current policy has failed. But more military threats would merely reinforce the case for nuclear weapons to North Korea. Moreover, the North recognizes that Washington has little stomach for a real war with mass casualties.

Additional sanctions aren’t likely to work without Beijing’s support. Xinhua News Agency ran an editorial criticizing the test, but urging “various parties” to “exercise restraint to prevent conflicts from escalating.”

Even if Beijing allows passage of a new UN Security Council resolution condemning the North, China is likely to limit the impact of any new sanctions. The PRC wants neither a messy national implosion on its border nor a united Korea hosting U.S. troops that could become part of an American containment network directed against the PRC.

Moreover, the DPRK has reopened channels to Russia. Although Moscow condemned the test, growing North Korea-Russia ties will discourage China acting against the DPRK.

The status quo has nothing to recommend it. North Korea will expand its nuclear and missile programs. Tensions will steadily rise. Any conflict will become more destructive.

Which leaves engagement.

Demanding denuclearization first ensures failure. As I wrote for Forbes: “Pyongyang is unlikely to abandon its weapon that best deters a U.S. attempt at regime change on the Korean peninsula. A nuclear arsenal has the additional advantages of preserving independence amidst other major powers (China, Japan, Russia), winning international stature for an otherwise minor, impoverished state, and offering abundant opportunities to extort economic and other benefits from fearful neighbors.”

In contrast, engagement at least creates the possibility, though admittedly small, of future denuclearization. First, negotiating with the North is the best way to reduce its fear of an American preventative war and detail the potential economic and diplomatic benefits of abandoning nukes.

Second, reducing U.S. threats against the DPRK would satisfy China’s standard response when urged to apply greater pressure on Pyongyang. Fair or not, the PRC long has blamed Washington for driving the North toward nuclear weapons.

Talking with the DPRK might achieve nothing. But Washington might be pleasantly surprised. Even if Pyongyang refused to eliminate its existing arsenal, the Kim regime might make other concessions, such as limiting future nuclear activity and reducing conventional threats.

So far nothing has stopped Pyongyang from developing nuclear weapons. Continued attempts at coercion aren’t likely to yield a better result.

As has oft been said, a good definition of insanity is doing the same thing while expecting a different result. Which leaves engagement as the best option for dealing with North Korea.

RealClearPolitics provides a useful tool to compare the Republican and Democratic nomination races today to similar points during the 2012 and 2008 primary cycles. Those nominating contests show that the candidates ahead at this point in the election cycle did not take home the nomination. This suggests that despite Donald Trump and Hillary Clinton’s persistent leads throughout the summer and fall of 2015, their primary victories remain uncertain.

Averaging across recent December polls, Donald Trump holds the lead among national Republican voters (not necessarily likely primary voters), at 35 percent. Trump holds a 15-point lead over Sen. Ted Cruz (R-TX) in second place at 19.5 percent and an over 20-point lead over Sen. Marco Rubio (R-FL) in third place with 11.5 percent. Trump’s support took-off in July and, for the most part, he’s remained ahead and increased momentum. 

Does Trump’s lead entering into 2016 portend his eventual win? Not necessarily.

At this point in the 2008 primary election cycle, former New York City mayor Rudy Giuliani led the pack with 23.6 percent. Former Arkansas Governor Mike Huckabee garnered 16.8 percent in second place while the eventual GOP nominee Sen. John McCain (R-AZ) was in third with 13.6 percent. Like Trump, Giuliani consistently remained ahead throughout the summer and fall of 2007. 

Similarly, in 2012, RCP shows that former House Speaker Newt Gingrich held the top slot at this point in the cycle with 31 percent, while the eventual nominee Mitt Romney was in second with 20.5 percent. Herman Cain was in third with 13 percent.

 

 

As for the Democrats, Secretary Clinton has maintained a solid polling lead throughout this cycle for the nomination. Averaging over the same period as the 2016 GOP candidates, Clinton garners an average of 53.8 percent of the Democratic vote. Trailing by over 20 points, Sen. Bernie Sanders (D-VT) averaged 31.2 percent in December and O’Malley came in a distant third at 4.6 percent.

 

Source: Real Clear Politics

Hillary Clinton seems certain to clinch the nomination with little trouble, and she likely will. But it’s worth pointing out that Clinton found herself in a similar–albeit not identical–polling position heading into the January 2008 primary. As she did in this cycle, Clinton had held a persistent lead over her rivals throughout 2007,  Sens. Barack Obama and John Edwards. Analysts were all but certain she would be the party’s nominee.

 

Source: Real Clear Politics

Average polling throughout December 2007 found Clinton with 45 percent of the Democratic vote. Barack Obama trailed by 20 points with 24.6 percent and John Edwards garnered 13 percent. Fast-forward a few weeks: Obama won the Iowa Caucuses and his numbers soared past Clinton, eventually securing the nomination. Similar to the Republicans in 2012, the eventual winner of the Democratic nomination was polling second at the start of the new year in 2008.

Source: Real Clear Politics

Discussion

Even candidates consistently ahead in the polls entering into a presidential election year can still falter. Similar to Trump’s persistent lead throughout the fall of 2015, Giuliani and Clinton maintained a consistent lead throughout the summer and fall of 2007. They eventually lost to their third and second place rivals, respectively. Throughout the summer and fall of 2011, Mitt Romney trailed Texas Governor Rick Perry, former Godfather Pizza CEO Herman Cain, and Newt Gingrich.

Despite these similarities across the last three nominating seasons, there are important differences between the candidates and campaigns. First, Trump has attracted more enthusiastic support with (thus far) enduring momentum and has activated a new base of supporters who have traditionally not voted in Republican primaries. Giuliani did not attract the growing momentum that Trump has, but rather maintained a consistent lead in 2007. In 2012, Republican voters cycled throughout a number of different contenders before they settled on Romney.

Second, there are far more Republican contenders vying for the nomination in 2016 than in 2012 or 2008.

Third, Hillary Clinton’s primary rival is Bernie Sanders, not Barack Obama. Polling of Sanders supporters reveals they comprise a much narrower demographic and ideological base than Obama’s coalition. Consequently, it’s difficult to conceive of a situation where Sanders wins an early primary and convinces enough strategic Clinton voters who actually prefer Sanders that he is, in fact, electable.

Fourth, Sanders has failed to make headway in terms of the “endorsement primary,” which research shows is highly predictive of successful candidates (see Cohen, et al 2008, The Party Decides). That said, Clinton led Obama in endorsements leading up to the Iowa Caucus in 2007, but by a smaller margin.

It’s anyone’s guess what could happen after the 2016 Iowa Caucuses and first few primaries. Nevertheless, based on 2008 and 2012 there is reason to expect changes in today’s polling lineup.

In an earlier post, I argued that addiction per se such should not be regarded as a negative of drug use.  And I discussed recent concern from policymakers and public health officials about Kratom, a plant that allegedly has medicinal properties but that is also allegedly addictive.

In response, I received this email (quoted with permission):

Thank you so much for this article.  I discovered kratom almost three years ago, and have been using it ever since to control the symptoms of severe restless leg syndrome.  I’m a 71-year-old woman, and before finding kratom I couldn’t take plane flights to visit my grandchildren, or sleep longer than two or three hours at night.  Kratom gave me back my life. 

I don’t understand the push to make it illegal.  Kratom doesn’t even seem to be dangerous.  The only thing I feel when I take it is a blessed relief from the squirmy, torturous feeling of severe restless leg syndrome.   

The weird thing is that the prescription drugs prescribed for severe RLS (Usually the dopamine agonist drugs)  really ARE dangerous.  Their side effects are scary (obsessive compulsive behaviors like gambling, nausea, and the showstopper:  the RLS eventually gets worse and the drugs no longer work.  They call it augmentation). 

So thank you.  I really hope it remains legal.  I don’t want to be the grandmother standing out on street corners looking for kratom drug dealers.

Well said.

If you ask just about anyone at Cato what is the biggest problem we face, they will say big government, particularly the vastly overgrown federal government. Gallup finds that many Americans agree with us.

GovExec reports:

The country’s No. 1 problem in the year that just passed was its government, according to a new survey. The Gallup poll found for the second consecutive year, more Americans identified Uncle Sam as the “most important problem facing the United States” than any other issue. An average of 16 percent of respondents selected government, followed by 13 percent who said the economy, 8 percent who chose unemployment and 8 percent who selected immigration.

Aside from having a dim view of the president and Congress, people are presumably responding to the fact that Uncle Sam is so damn dysfunctional. While we are overloaded with news on ISIS and the economy, Americans may also be aware that the Secret Service has been making a joke of itself, Veterans Administration officials have been lying and cheating regarding the agency’s long wait lists, and the IRS director has been so dishonest and derelict in his duties that even mild-mannered George Will called for impeachment.

Those are some of the recent scandals, but federal government dysfunction goes much deeper. I describe the five fundamental reasons for federal failure in this recent study. And I discuss dysfunction in numerous federal agencies here.

Here are the Gallup results, courtesy of GovExec:

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