Policy Institutes

Cato scholars pose a few suggested questions ahead of tonight’s final debate between Hillary Clinton and Donald Trump. Enjoy.

(This post is an ad for the upcoming debate: Should Libertarians Vote? It’s sure to rock the world of liberty. Sign up at the link.)

The first and second parts of my “Economics Will Be Our Ruination” series highlighted how putatively neutral economic analysis often subtly embeds non-neutral values. Economists tend to prefer human activity that’s measurable using dollars over non-monetary trade or leisure, for example. An economic model of the Fourth Amendment can easily place group interests ahead of individual rights. In this installment I’ll highlight weaknesses in the practice of economic modeling, using the example of voting.

Creating a theoretical construct to depict common transactions or interactions, then assessing such activity as abstracted, is essential to economics. But it is also a profound weakness of that form of analysis, because failing to model accurately will send one’s economic assessment off the rails.

An example of this is economic assessment of voting. Many economists, both professional and amateur, are ineluctably drawn to modeling voting as a process solely for selecting the officials that will serve in a representative government. Given the exceedingly low likelihood that one person’s vote will sway the outcome, the time and effort spent on voting is pure waste. So economists conclude that voting is irrational.

That model of voting is hugely over-simplified, omitting even down-ballot electoral and initiative races, which somewhat increase the still-small odds of casting a decisive vote. But what the model really fails to account for is the effect that margins of victory have on the many, many political and social actors that will consume vote information after election day. As I wrote a few months ago in a piece called Don’t Not Vote, “Votes are a dazzling roman candle of information supplied to elected officials, their staffs, political parties, journalists, opinion leaders, and future candidates, to name a few. All these witnesses to elections incorporate vote information—not just outcome, but win/loss margins—into their actions and assessments well beyond election and inauguration day.”

Michael Cannon agrees, adding that the custom of voting signals solidarity and commonality of purpose with your neighbors. If you want to have influence with them, “you obey the local customs.”

The upshot of over-simplified economic modeling of the vote is that it causes libertarian economists and economic thinkers to undercut the adoption of libertarian ideas. If libertarians don’t vote their preferences, their relevance is underweighted by all the election observers noted above, and on top of that they alienate themselves from nearby persuadable audiences, remaining odd political and social separatists instead. Thinking different is fun, but if you want to live in a more libertarian society, you might want to go out and vote.

It’s not economists that will be arguing the wrong side of the voting question at our upcoming debate on the topic. It will be philosophers Aaron Ross Powell and Trevor Burrus concocting delightfully amusing but still wrong, ivory-tower reasons why voting is a waste or even a harmful practice. And if present practice is any indication, some debaters are going to be throwing some shade! It should be a good time, followed by adult beverages to “pre-mourn the outcomes of the forthcoming election.” Register now!

The days are long past when a person worked from 9 to 5 at the same company for the entirety of their working lives. The ways people earn money are changing, and understanding these new dynamics is key to developing a policy environment that allows new business models and innovations to thrive. A new survey from the McKinsey Global Institute sheds some welcome light on this issue, and in addition to helping to answer who is in the growing independent workforce, they help explain how and why these people participate.

Researchers surveyed roughly 8,000 people from the United States and some European. They excluded what they call “fissured workers” or the people involved when  companies use vendors or subcontractors to fulfill non-core functions like technical support or security, because these individuals “are expected to keep regular work schedules with little autonomy, and they have a continuous relationship with their employer.”

Focusing on the independent workers who do meet their criteria, their survey estimates that there are 68 million independent workers in the United States alone, accounting for 27 percent of the working-age population. Perhaps unsurprisingly, young people are the demographic group most involved in independent work: they make up almost a quarter of the independent workforce, and this designation applies to more than half of all earners in this age group. Low-income households with income below $25,000 account for more than a fifth of this workforce, and almost half of earners here participate in some form of independent work.

Segmentation of Independent Workers in the United States

 

Source: McKinsey Global Institute, October 2016.

The largest segments in the U.S. are the casual earners and the free agents accounting for 72 percent of the total, which the McKinsey team dubs as participating “by choice” as opposed to “by necessity.” They enjoy being able to take advantage of the new options in independent work, and might be attracted to the autonomy and flexibility that it offers relative to a traditional job. The “free agents” who choose these non-traditional ways to earn, report higher satisfaction that those who choose traditional jobs on 12 of 14 measures, and are equally satisfied when it comes to income security and benefits like health care. They report being more engaged in work, enjoy having control over hours, and the opportunities for learning, among other aspects. Casual earners who use independent work to supplement their other income also report higher satisfaction compared to people in traditional jobs by choice in things like independence, work atmosphere, and flexibility.

Reported Satisfaction of Independent Earners vs. People in Traditional Work

 

Source: McKinsey Global Institute, October 2016.

Unlike their peers who are in the independent workforce “by choice,” Reluctants and the Financially Strapped would either prefer finding a traditional job instead or a situation where their other sources of income proved sufficient, so they are in their situation “by necessity.” Even for this group, these independent work options do provide an outlet that can be an important way for them to get by while they explore ways to pursue their preferred path. Compared to people in traditional jobs “by necessity,” these people are less satisfied with income security and level of income, but do express higher satisfaction with flexibility, independence, and work atmosphere. For some of the people in this group, this is a temporary solution to bridge a tumultuous time, as illustrated by the fact that among independent workers 27 percent had such a spell in the preceding year, compared to only 15 percent among traditional workers.

Some of the recent growth in the independent workforce has been the rise of new digital platforms, and the authors suggest developments in that sphere could further transform the market for independent work by allowing for larger scales, richer information signals, and lower barriers to entry for new participants.

We don’t know what the future of work will look like, but we do know it won’t look the same as it did last century. Our public policies were designed to function in the traditional labor market, and many of them are misguided or already have serious flaws. With these new developments, they are also at risk of becoming increasingly out of date.

Recent reports that infants now die at a higher rate in Venezuela than in war-torn Syria were, sadly, unsurprising—the results of socialist economics are predictable. Venezuela’s infant mortality rate has actually been above Syria’s since 2008.

 

The big picture, fortunately, is happier. The global infant mortality rate has plummeted. Even Syria and Venezuela, despite the impact of war and failed policies, saw improvements up to as recently as last year. From 1960 to 2015, Syria’s infant mortality rate fell by 91% and Venezuela’s by 78%. This year (not reflected in the graph above or below), Syria’s rate rose from 11.1 per 1,000 live births to 15.4, while Venezuela’s shot up from 12.9 to 18.6. Meanwhile, infant mortality rates have continued to fall practically everywhere else, and have declined even faster in countries that enjoy more freedom and stability. Consider Chile.

 

Chile’s infant mortality rate in 1960 was actually above that of both Venezuela and Syria. It managed to outperform Syria by the mid-1960s, but was still woefully behind its richer northern cousin, Venezuela.  In the early 1970s, Chile’s progress slowed to a crawl as its elite flirted with socialist policies. Once its government abandoned socialism and began economic reforms in the mid-1970s, the pace of progress sped up again, and soon Chile’s infants were safer than Venezuela’s. Today, Chile’s infant mortality rate is similar to that of the United States.

There is a lesson to be learned from these data points: economic policy matters. While Venezuela’s socialism has managed to kill more infants than a full-blown war in Syria, Chile’s incredible success story shows us that by implementing the right policies, humanity can make rapid progress and better protect the youngest, most vulnerable members of society. Today it is hard to believe that infants in Chile were once more likely to die within a year than their contemporaries in Venezuela and Syria.

What about your country? For every 1,000 infants born, how many die and how many live to see their first birthday? Explore the data for yourself, and consider using HumanProgress.org’s new tool, Your Life in Numbers, to see your country’s progress in infant survival and other areas since you were born.

Nigeria’s President, Muhammadu Buhari, and his government have lost control as Nigeria’s economic crisis sends that African nation into a doom-loop. Everyone, including the President’s wife, Aisha, knows that Nigeria is going down the tubes. But not the International Monetary Fund (IMF). As is often the case, the IMF doesn’t have a clue. The IMF’s October 2016 World Economic Outlook projects Nigerian inflation to average 15.4 percent for 2016.  This number is in sharp contrast to my Johns Hopkins-Cato Institute Troubled Currencies Project’s inflation estimate for Nigeria. We estimate that the year-over-year inflation rate is currently 104.8 percent (see the chart below). 

Why is the IMF so far off base? Because it is doing what it often does: it is taking the Central Bank of Nigeria’s (CBN) official inflation data at face value. That official rate averaged 14.3 percent from January to August of this year. For the IMF forecast to materialize, official annual inflation in Nigeria would need to average 17.6 percent for the September through December period.  What did the latest inflation report from the Central bank of Nigeria show?  According to the CBN, annual inflation was 17.9 percent in September. The IMF’s blind acceptance of the CBN’s data is a big mistake.

 

Driving Nigeria’s surging inflation is the collapse of its currency, the naira (NGN). Indeed, many of Nigeria’s recent economic troubles are reflected in the rapid depreciation of the naira.  For over a year, the CBN held the official exchange rate at about 200 NGN/USD, with the aid of exchange controls.  During this period, dollar shortages raised their ugly heads and caused foreign investment in Nigeria to deteriorate. The shortages even forced airlines to stop flights into Lagos. Simultaneously, a black market (read: free market) for foreign currency developed and the actual value of the naira deteriorated rapidly (see the chart below).

In June 2016, the CBN introduced a managed “float” and claimed that the resulting NGN/USD rate was a purely market driven exchange rate. After a massive one-day depreciation of the official NGN/USD rate, the naira has traded at about 315 NGN/USD while the black market rate plunged to over 450. The sharp contrast between official and black market rates is evidence that the CBN is spreading disinformation (read: lying) about its embrace of a free market for foreign exchange. 

Reports have emerged claiming that Nigerian businesses cannot access FX from the banks officially tasked with providing it, so they are turning to bureaux de change (BDCs) and black market dealers. On October 16, 2016 the black market rates and the BDC rates were both 460 NGN/USD, and the official rate was 315 NGN/USD.  The CBN brushes off the existence of the black market, claiming these rates don’t reflect the true value of the naira and only account for a small portion of FX transactions.  This is nonsense.  If this were true, stories of businesses struggling simply to access foreign exchange would not be so common.  The CBN’s claim to embrace a purely free market determined Naira is a lie.  Take what the Central Bank of Nigeria says with a grain of salt.

 

Nigeria is in a doom loop – one that the government and the CBN lie about and the IMF blindly repeats.

Last month, I wrote about a case challenging medical-licensing rules that prevented an innovative health-services company, Teladoc, from using advanced technology to provide care to hard-to-reach patients. The Texas Medical Board, which isn’t supervised by any branch of state government, oversaw the restrictions, which a district court threw out on antitrust grounds. After the board appealed, Cato filed a brief supporting Teladoc. And we weren’t alone; the range of briefing was impressive, particularly for a case that hadn’t yet reached the Supreme Court.

Well, today the Texas attorney general’s office filed an unopposed motion to dismiss the state’s own appeal. That should be the end of this case. Although I’m sure Teladoc and its fellow plaintiffs would’ve loved to finish litigating the appeal and get a favorable Fifth Circuit ruling, it’ll take this win all the way to the economic-liberty bank.

It’s always hard to know what impact an amicus brief has – even when you’re cited, it might be for a tangential point, or indeed to counter your argument – and this case illustrates that lesson: there’s not even a court ruling here, but the quality of amicus briefs certainly contributed to Texas’s decision to abandon the medical board’s appeal.

Congrats to Teladoc, its counsel, and the people of Texas!

Adam Davidson of the New Yorker has written a profile of Donald Trump’s trade adviser Peter Navarro. Here’s a key excerpt: “Navarro’s views on trade and China are so radical, however, that, even with his assistance, I was unable to find another economist who fully agrees with them.”

That’s the big picture of the trade views of Trump/Navarro. Now here’s a closer look at a very specific claim in a Trump campaign memo co-authored by Navarro. This kind of claim is, in my view, very enlightening about how this crowd approaches trade policy:

Over the last 25 years, Bill and Hillary Clinton have championed one-way deals like 1993’s NAFTA, China’s 2001 entry into the World Trade Organization, and the 2012 South Korea-US Free Trade Agreement. These poorly negotiated deals benefit the elite corporate interests that finance the Washington politicians even as they impoverish our heartland and destroy the livelihoods and lives of working Americans.

Michigan farmers lost out too. U.S. exports to Canada and Mexico of cattle – one of Michigan’s top agricultural products - fell 59 percent in the first 22 years of NAFTA.

What’s nice about this claim about cattle exports is that, unlike many of the vague criticisms people make about trade agreements, this one can be tested: Did these exports actually fall? The authors don’t give a citation for the data, which makes it difficult to double-check, but here’s some data from the U.S. International Trade Commission on exports of “bovine animals” (including cattle and buffalo, but mostly made up of cattle):

 

It turns out he’s roughly correct in terms of the 22 year trend. So does that mean he has a point about NAFTA? Could lowering Mexican and Canadian tariffs through the NAFTA somehow have hurt U.S. exports, contrary to all logic? The answer is no, for two reasons.

First, take a look at the export trend over time. Notice how the numbers increase for the first ten years or so, then suddenly drop down close to zero. That drop was due to BSE disease being found here in the U.S. So it wasn’t NAFTA that got in the way of U.S. exports, but a disease outbreak. Exports of cattle have improved since then, although they have not reached pre-BSE levels.

Second, there’s also another little trick in their data. When you see the word cattle, you might think of beef, and assume U.S. beef exports fell. But cattle actually means cattle. When’s the last time you bought cattle? I haven’t bought any cattle recently, but I have bought a fair amount of beef. So let’s look at U.S. beef (again, including a small amount of buffalo) exports to Canada and Mexico over the time period he uses:

 

What you see now is a large increase in U.S. beef exports (almost tripling since the time of NAFTA), with a brief fall during the U.S. BSE scare.

And when you put the figures together in one table, you can see how the beef figures dwarf the cattle figures, and thus how this sector of the U.S. agriculture industry saw trade expand after NAFTA:

 

Thus, the story here is really about how U.S. beef exports rose after NAFTA. What we have with the Navarro claim is someone cherry-picking data in an effort to support a broader point. But if you go beyond the selective statistics, you get the story you would expect: Lowering Mexican and Canadian tariffs correlates with a big rise in U.S. exports.

In my post last week, I demonstrated using surveys mostly from Gallup and Pew Research Center that Muslim Americans are rapidly abandoning beliefs widely held in their native countries and adopting the more liberal social and political beliefs of other Americans. But what’s even more remarkable about this fact is that this transition has occurred at the same time that Muslim immigration has ramped up. In other words, immigration is not detracting from those changes and may even be contributing to them.

While the number of Muslim immigrants and their children doubled from 2007 to 2015—from 1.4 million to 2.7 million—the native Muslim population fell by more than a third—from about 917,000 to 594,000. This provides evidence that the immigrants themselves are taking part in the recent changes.

Figure 1: Muslim Population in the United States by Generation in the United States

Sources: Pew (2007), Pew (2011), Pew (2015). Note Pew (2015) failed to provide the ratio of immigrant to native, so the figure uses Pew (2014). Pew has no surveys before 2007, but the best survey estimate for year 2000 placed the total Muslim population at 1.9 million (Smith (2002)).

I’ll just give a couple of examples for which I have data for both 2007 and 2014. Figure 2 compares the rate of acceptance of homosexuality among Muslim immigrants and their children to the rate of acceptance among all Muslims, while also tracking the number of Muslim immigrants in the United States. Pew does not report the breakdown of acceptance of homosexuality by nativity in 2014, but as Figure 2 shows, their views tracked the changes in those for all Muslims in 2007 and 2011—a 12 percent increase for both.

Figure 2: Percent of U.S. Muslims who find homosexuality “morally acceptable” and number of 1st or 2nd generation Muslims in the United States

Sources: See Figure 1

Given this departure from the strict reading of the Quran, we would expect that many Muslims in the United States may have adjusted their views on Islam’s scripture. Pew found in 2007 that 50 percent of U.S. Muslims favored taking a “literal” interpretation of the holy book, while 33 percent opposed doing so. By 2014, the literalists had dropped 8 points, and the non-literalists rose 10 points, as seen in Figure 2.

Figure 3: Percent of U.S. Muslims who say that the Quran should not be taken literally and number of 1st or 2nd generation Muslims

Sources: See Figure 1

Here’s another significant point of equal significance: these changes do not include those who abandoned Islam, and it’s safe to assume that these are the people who are likely to be the most liberal. Thus, these surveys probably underrepresent the level of liberalization among people who were raised Muslim or among immigrants who first arrived in the country as Muslim because it excludes those people who defected from the faith in adulthood or after their arrival in the United States.

This phenomenon is very significant. In 2014, 23 percent of all U.S. residents raised in Muslim households had left their religion, according to Pew. Another estimate placed the share at 32 percent. Two small surveys found that the number of Iranian Americans who identify as Muslim dropped from 42 percent to 31 percent from 2008 to 2012. Based on Pew’s 2011 survey of Muslims in America, this number may actually be at the high end—using American Community Survey Data, its numbers imply that the actual share is more likely about 22 percent. Estimates of the effect of “Muslim” immigration on the religious or political makeup of the United States would be highly misleading if they ignored this group.

The bottom line is that very large increases in the Muslim population in the United States due to immigration have not stalled assimilation of those immigrants. Rather, they are demonstrating Americans’ incredible capacity to encourage immigrants to adopt their ways.  

With support from American air strikes and special operations, Iraqi forces have launched the battle to retake Mosul from the Islamic State (ISIS). The fighting promises to be difficult. Though the Iraqis estimate that there are no more than about 5,000 ISIS fighters in the city, ISIS has had more than two years to dig after taking the city of in June 2014. American and Iraqi officials have warned it could take weeks or even months to liberate Mosul. The real danger for the United States, however, is what happens after Mosul.

Even in the best-case scenario – a quick defeat of ISIS and the destruction of its self-proclaimed caliphate – Iraq will face the monumental task of consolidating its hold on its territory, rebuilding its cities and critical infrastructure, and charting a course toward a healthier national politics, all while dealing with terrorism, sectarianism, and external intervention from both the United States and Iran.

The situation after Mosul will be like the situation after the Iraq war on steroids. Instead of looking ahead to the promise of democracy, Iraq will be grappling with more than a decade of political failure. Instead of tens of thousands of American forces to provide at least some semblance of stability, Iraq must look to its own troubled security forces. Instead of confronting an Al Qaeda in nascent form, Iraq must deal with an Islamic State that no one believes will wither with defeat in Mosul. In short, Iraq is a mess and unlikely to fix itself soon.

And therein lies the danger of Mosul for the United States. If the United States believed it was necessary to help rebuild Iraq after the 2003 war, how much more powerful will the temptation be to stick around this time given the situation? It is difficult to see President Trump or President Clinton making the decision to pull back once the primary fight against ISIS is won. Instead, the United States is likely to expand its presence in and support to Iraq in the years to come in the name of counterterrorism.

The past fifteen years, however, have made clear that long-term nation building projects like Afghanistan and Iraq are extremely costly and uncertain projects. In Afghanistan, after fifteen years and hundreds of billions spent in development and military aid, the country remains in shambles, terrorism and conflict are rampant, and only the continued presence of coalition military forces prevents the Taliban from retaking the country. In Iraq, of course, regime change provided the opportunity for ISIS to emerge, despite the presence of thousands of American troops and billions of dollars in assistance. And these failures occurred despite the fact that Afghanistan and Iraq were in many ways best-case scenarios given the level of influence and control the Untied States exerted in both places. So why, exactly, should the United States expect things to go better in Iraq after Mosul when the fundamentals on the ground are now so much worse than they were after the Iraq war?

The worst-case scenario after Mosul is that America’s next president decides that the only way to prevent the reemergence of ISIS is to reoccupy Iraq with U.S. troops to prop up the Iraqi government. The longer the United States military stays in Iraq, the more motivation it will give to ISIS, Al Qaeda and others who resent the American presence in the Middle East. In addition to making life dangerous for U.S. troops in Iraq, that resentment will inevitably lead to more terrorism, both in Iraq and in the United States and Europe. And even more frustratingly, those costs will compound year after year while their impact on what really matters, the security of Americans here at home, will be negligible. Killing terrorists abroad sounds comforting, but fifteen years of the war on terror has only served to increase the number of terrorists, while not lowering the number of attacks on the American homeland. Moreover, though ISIS is certainly a threat to Iraq and Syria, though it is on the run today. It is not and has never been, however, a major threat to the United States. Though every Islamist-inspired attack is a tragedy, the price the United States has paid for fifteen years of military intervention has been a self-inflicted wound far greater than any ISIS is capable of dishing out today.

It will be a great day in Iraq when government forces retake the nation’s second largest city back from ISIS. The United States should be happy for Iraq and take satisfaction from having helped make it possible. But the next president should resist the temptation to stick around and rebuild Iraq again.

The issue of immigration handed Donald Trump the Republican nomination. His style of communication, emphasis on the issue, and seemingly simple solutions courted, converted, or imported a core group of GOP voters to support his candidacy. Many expected Trump to moderate his immigration stance after winning the nomination, but Trump doubled-down on his anti-legal immigration position at a recent speech in Phoenix. This election is a great test of whether Americans will vote for a candidate whose substantive policy focus is immigration restrictionism. 

His choice to focus on immigration was successful during the Republican primary, but it’s not fairing as well with the general electorate. Since 1965, Gallup has asked Americans, “In your view, should immigration be kept at its present level, increased, or decreased?” Over time, Americans have become more supportive of liberalizing immigration. In 1965, only 7 percent of respondents wanted to increase immigration. The most recent 2016 poll found that 21 percent wanted to increase immigration (Table 1).

Figure 1

Should immigration be kept at its present level, increased, or decreased?

 

Source: Gallup Survey

The percentage of Americans who want to decrease immigration has swung wildly from a low of 33 percent in 1965 to a high of 65 percent in 1993, and currently sits at 38 percent. Meanwhile, the percentage of Americans who want to keep immigration at the same level shot up from 27 percent in 1993 to 38 percent today – tied with the percent who want decreased immigration. This does not bode well for those who want to slash legal immigration. 

Trends prior to Trump entering the race did not show a surge in nativist opinion – just the opposite. Respondents in the Gallup survey have become more pro-immigration over time. Lest you think this is a weird quirk confined to Gallup, other polls conducted by the General Social Survey, New York Times-CBS, and the American National Election Survey have all found similar results. 

Trump’s immigration position was successful in the GOP primary but is facing more trouble in the general election because the partisan differences in this issue are massive. Pew recently found big shifts in national and partisan responses to immigration. As expected, Americans think immigrants add more to the United States than they did in the mid-1990 (Figure 2). 

Figure 2

 

Source: Pew Research Center

From 1994 to 2006, Republicans and Democrats held similar views on whether immigrants strengthen the country but then diverged greatly (Figure 3). By 2016, 78 percent of Democrats thought that immigrants strengthened the country while only 35 percent of Republicans agreed. Republicans are not more anti-immigration than they used to be – they just appear that way because Democrats have become much more pro-immigration than they were. The partisan divergence on this issue helps explain how Trump won the GOP nomination but is not doing nearly as well in the general election.   

Figure 3

Source: Pew Research Center

Gallup has only released one poll asking this question since Trump became the Republican front-runner. From 2015 to 2016, the respondents changed their opinion by becoming slightly more opposed to liberalization and more supportive of shrinking or maintaining present levels (Figure 4). This shift in public opinion is small. Immigration opinion shifted more between February and June of 2014 than in the year since Trump has been hammering this issue publicly. At most, Trump has nudged the needle back to the opinion levels of 2012 – a year before the big immigration push in the U.S. Senate.

Figure 4

Shift in Gallup Responses since the Rise of Trump

 

Source: Gallup, author’s calculations

Immigration restrictionism increasingly appeals only to a shrinking percentage of the electorate that is concentrated in the Republican Party. Crucially, Republican respondents are not more opposed to immigration than they used to be. The rise of Trump does not reveal a political opportunity for future Republican politicians in general elections, but instead should warn them that the issue may help in winning the nomination but not in the general election.

In the first presidential debate, Donald Trump said, “We have to stop our companies from leaving the United States and, with it, firing all of their people… . They’re going to Mexico. So many hundreds and hundreds of companies are doing this.” He later added, “The companies are leaving. I could name, I mean, there are thousands of them. They’re leaving, and they’re leaving in bigger numbers than ever.” But Trump didn’t name thousands. He named two: Ford and Carrier.

U.S. companies commonly grow by expanding overseas, often to meet local demand (e.g., McDonald’s and Uber) rather than to export back to the United States. 

The amount invested is recorded as Foreign Direct Investment (FDI) abroad.   

The graph shows the United States’ total direct investments in select countries for 2009 and 2015, valued at historic cost. Contrary to Mr. Trump’s excited rhetoric, there has been very little FDI in Mexico, and such investments did not increase significantly from 2009 to 2015. In fact, China is now suffering a capital outflow, with a quarter of U.S. companies reportedly moving out.   

U.S. firms mainly invest in their subsidiaries in Europe and Canada, and do so largely to service those markets more quickly with lower shipping costs. The U.S. runs a large trade deficit with Europe, second only to China, but that is a symptom of Europe’s economic weakness rather than strength. Stagnant economies neither need nor can afford many imports.

U.S. direct investment in Australia and Singapore increased significantly from 2009 to 2015. Far from being a threat, however, the U.S. runs sizable trade surpluses with both countries (and with Canada and Hong Kong), and has a Free Trade Agreement with Singapore.

 

Today the White House is touting record-level high school graduation rates, and taking a bit of credit for them. But is this really good news, or are we maybe looking at artificially inflated, “subprime” diplomas?

Certainly, on its face, it is welcome news that the percentage of students who entered high school four years earlier and graduated on time rose from 79 percent in the 2010-11 school year to 83.2 percent in 2014-15. (2010-11 was the first year that states were required to use a standardized graduation rate.) We definitely wouldn’t want to see that rate going down. But it does not necessarily indicate that students are better educated.

Scores on the National Assessment of Educational Progress—a federal test given to a representative sample of students, without high stakes attached—suggest that greater completion does not necessarily go hand-in-hand with greater learning. Both math and reading scores for 12th graders have dropped a tad during the Obama years, not risen. In addition, there is at least anecdotal evidence that districts have increasingly moved kids to completion with dubious “credit recovery” programs that sometimes involve very thin demonstrations of subject mastery. In other words, as seemingly happens so often, districts may be gaming the system, and many diplomas could be hollow.

This is not to say that the rising graduation rate is necessarily deceptive, and it is crucial to note that standardized test scores that seem so concrete may actually tell us little about whether we are getting what we want out of education. But we shouldn’t celebrate too lustily over the latest graduation news.

When the Framers designed our federalist system, they assumed that the federal government would be limited to those powers actually enumerated in the Constitution and that it would exercise those powers only when authorized by statute. Further, to give the states some say in the drafting of these statutes, one half of the federal Congress—the Senate—was elected by the state legislatures themselves and designed to reflect the interests of the state governments.

Today, none of these elements of our original design remain. The Supreme Court has allowed the federal government to control nearly limitless activities, supposedly as an exercise of its power to regulate interstate commerce. The executive branch acts as its own de facto legislative branch, “interpreting” statutes through executive actions and agency rulemaking to unilaterally give itself the powers it wishes to exercise. And after the passage of the Seventeenth Amendment, senators are now elected by popular vote, meaning there is no longer any direct link between the state and federal governments. The result of these three changes is that states have less power than ever – and there’s not much they can do about it.

To solve that problem, Representatives Rob Bishop (R-UT) and Cathy McMorris Rodgers (R-WA) recently introduced the “Re-Empowerment of the States Amendment,” a proposal that would allow two thirds of the state legislatures to repeal any “Presidential Executive order, rule, regulation, other regulatory action, or administrative ruling issued by a department, agency, or instrumentality of the United States.”

Importantly, this amendment would not allow states to repeal the text of statutes that have duly passed both houses of Congress. This isn’t an amendment to change the system of bicameralism that the Framers designed; instead, it’s an amendment to restore the checks on the executive branch that existed before the massive expansion of the administrative state. As the amendment’s creator David Hemingway has explained, “The practical result would be to enhance the power of Congress since it would encourage the president to work with Congress rather than govern by issuing executive orders.”

Why are the states in the best position to check executive power? First, state legislators don’t have the same conflict of interest as members of the federal Congress. The House and Senate could—in theory—overrule any executive order by passing a statute with a veto-proof two-thirds majority. But in practice, they almost never do so. Members of Congress know that overruling an executive order will anger the same president they need to sign the bills that they want to pass, and so even the orders they privately oppose will usually go unchallenged.

Second, the states have the most to gain by limiting the federal government to its constitutionally designed role, and will thus be more active in policing it. As the Tenth Amendment made explicit, those powers not given to the federal government “are reserved to the States.” The Framers knew that most issues are best handled at the state level, and executive orders are often the worst culprits in usurping that original delegation. Giving the states a veto power over these agency rules simply allows them to say: “Either pass this law through Congress, or let the states handle the issue ourselves, as we did for most of our nation’s history.”

Creative amendment proposals like this one should be encouraged. (Another intriguing amendment, conceived by Mr. Hemingway’s colleague Gary Hansen, would aid this creative process by allowing states to draft and propose their own constitutional amendments without waiting for Congress to call an Article V convention). These days, it’s not that common for 34 states to agree on much of anything. But when 34 states can agree that the executive branch has gone too far, they should be able to do something about it.

You Ought to Have a Look is a regular feature from the Center for the Study of Science.  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. 

We highlight this week a collection of items which have a common thread—poorly informed beliefs lead to poorly formulated policy. And poorly formulated policy is worse than no policy at all.

For starters, consider this article by Cato senior fellow Johan Norberg, in support of his new book, Progress: Ten Reasons to Look Forward to the Future. Writing in CapX, Norberg looks at the reasons “Why are we determined to deny that things are getting better?” He points to how the media, in combination with our own psychological tendencies, lead us to the false assumption that the state of the world is declining, when in fact, trends are overwhelmingly in the other direction. Norberg points out that there is a danger in our misperception, “People led by fear risk curtailing the freedom that progress depends on.”

Here are some expects from his article:

A couple of years ago, I commissioned a study in which 1,000 Swedes were asked eight questions about global development. On average, every age group and every income group was wrong on all eight questions – because they all thought the world was in bad shape and getting worse. Large majorities, for example, thought that hunger and extreme poverty have been increasing, when they have in fact been reduced faster than at any other point in world history. And those who had been through higher education actually had less knowledge than the rest.

It’s not just Sweden. In Britain, only 10 per cent of people thought that world poverty had decreased in the past 30 years. More than half thought it had increased. In the United States, only 5 per cent answered (correctly) that world poverty had been almost halved in the last 20 years: 66 per cent thought it had almost doubled.

Why do we make these false assumptions? Many of them are formed by the media, which reinforces a particular way of looking at the world – a tendency to focus on the dramatic and surprising, which is almost always bad news, like war, murder and natural disasters.

…[P]eople led by fear might curtail the freedom and the openness that progress depends on. When Matt Ridley, author of The Rational Optimist, is asked what he is worried about, he usually responds “superstition and bureaucracy”, because superstition can obstruct the accumulation of knowledge, and bureaucracy can stop us from applying that knowledge in new technologies and businesses.

Johan’s full article, along with his new book, are well worth the taking the time to explore. A good place to start is this Cato book series event, where you can listen to Johan talk about his viewpoint and describe his findings.

Speaking of books, another provocative one hit the shelves recently. 25 Myths That Are Destroying the Environment: What Many Environmentalists Believe and Why They Are Wrong is latest in the collection of books by environmental biologist and lukewarmer compatriot Daniel Botkin. Dan has been in the center of the issue of global warming and its impacts on the environment since the beginning and often writes about his research and observations on the inherent robustness (rather than the oft-forwarded fragility) of nature. In 25 Myths, Botkin again includes that myth along with a large collection of others.  From the back cover:

25 Myths That Are Destroying the Environment explores the many myths circulating in both ecological and political discussions. These myths often drive policy and opinion, and Botkin is here to set the record straight. What may seem like an environmentally conscious action on one hand may very well be bringing about the unnatural destruction of habitats and ecosystems.

Topics include:

- Is life really that fragile?

- Is consensus science?

- Are recent weather patterns truly proof of long term weather change?

-Are wildfires really all that bad?

-Are predators absolutely necessary to control populations of other species?

In a world awash in misleading or false information about the environment, Daniel Botkin has written a straightforward and concise examination of the biggest myths hurting conservation efforts today.

If our society is to sustain the environment around us for future generations, solving environmental problems by understanding how nature works is not just helpful, it’s necessary.

Sounds like good advice!

And while we’re on the topics of myths, we’ll finish up this week with a recommendation to check out Bjorn Lomborg’s piece in the Wall Street Journal, “About Those Non-Disappearing Pacific Islands.” Lomborg takes a closer look at what’s going on in the Marshall Islands and finds, despite popular (mis)perceptions of global warming-fueled rising oceans swallowing the islands and giving rise to climate change refugees, that sea level rise is the least of their worries—in fact, the islands aren’t succumbing to sea level rise at all, and instead are gaining area. The details are in Bjorn’s article along with his identification of real problems there—poverty and government corruption.  But this doesn’t play as well to the press as global warming does.  According to Lomborg:

Telling viewers in the U.S. starkly that they’re “making this island disappear,” as a report from CNN’s John Sutter did in June 2015, makes for good, blame-laden television. But this reductionist, fact-averse rhetoric contributes to the idea that climate-change discussion should be a two-sided, cartoonish fight between those who say it is not real and those who say it is the worst problem facing humanity.

And like Norberg and Botkin, Lomborg, too, sees big problems with these misleading storylines. He continues:

Even more insidiously, doom-mongering makes us panic and seize upon the wrong responses to global warming. At a cost of between $1 trillion and $2 trillion annually, the Paris climate agreement, recently ratified by China, is likely to be history’s most expensive treaty. It will slow the world’s economic growth to force a shift to inefficient green energy sources.

This will achieve almost nothing.

Yep!

Back in 2003 the psychiatrist and columnist Charles Krauthammer declared a new psychiatric syndrome, “Bush Derangement Syndrome: the acute onset of paranoia in otherwise normal people in reaction to the policies, the presidency – nay – the very existence of George W. Bush.” He had a point. But derangement can be generated by support as well as opposition for a political figure.

What do we say about conservatives – people who believe, variously, in limited government, free markets, Judeo-Christian values, and the importance of character in public life – who have been forced to utter absurdities in defense of Donald Trump? It’s one thing to say that Hillary Clinton and her Supreme Court justices and her 4,000 bureaucrats are on net worse than Trump and whatever menagerie he brings to the White House. But when free-market conservatives find themselves enthusiastically defending the most protectionist presidential candidate since Pat Buchanan, or Christian conservatives are forced to say that personal character isn’t really a big issue for them, I fear that derangement has set in. Take just a few examples in the past few days.

In Thursday’s Wall Street Journal Karl Rove writes that Trump needs “a Republican House to pass his agenda.” But his agenda is trade war, deportation, and banning adherents of the Muslim faith from entering the United States. Is that an agenda a Republican House would pass? Say it ain’t so, Karl (or Paul).

Also in Thursday’s Journal the Christian author Eric Metaxas writes that “God will not hold us guiltless” if we fail to vote for Trump. Metaxas oddly cites Dietrich Bonhoeffer as a Christian who also had to make a difficult moral choice: He joined a plot to kill Hitler. Is that really something Metaxas thinks God would consider wrong? As for voting for Trump despite his moral flaws, Metaxas tells us that God will ask “What did you do to the least of these?” I wonder where that leads: Perhaps “the least of these” are the Mexican and Chinese workers whose jobs Trump wants to destroy, the Hispanic immigrants he wants to deport, separating them from their U.S.-born children, the low-income Americans who will find it harder to afford T-shirts, sneakers, and smartphones, or the refugees fleeing war and devastation whom he would bar from the United States on the basis of their faith.

And then there’s Ben Carson, who delivered himself of these thoughts at a college in Missouri:

Ben Carson urged a conservative audience to be strong in their faith and stand by their beliefs in the face of “ever-growing government.”

Tyranny will reign otherwise, “and there will be mass killings once again,” Carson told a crowd Friday. “The peace that we experience now will be a memory only. This is the nation that stands between peace and utter chaos.”

Asked at a press conference how he thought such a grim future might come about, Carson referenced “the whole gay marriage issue.”

“Why must they change it?” Carson said, referring to efforts to recognize civil unions as equal to traditional marriage. “I believe the reason is, if you can change the word of God in one area, then you can change it in every area. It’s the camel’s nose under the tent, and it will just be an avalanche of one thing after the other.”

Maybe that’s not exactly Trump Derangement, just general derangement. But Carson was the second former opponent to endorse Trump, and he’s become an enthusiastic surrogate.

Finally, I note the comments of Rush Limbaugh this week. Limbaugh is often funny and sometimes has real insights lurking in his monologues. But the attempt to defend both conservatism and Trump for three hours a day seems to be getting to him. In particular, a guy who soared to the top of the talk radio business by attacking Bill Clinton and his “bimbo eruptions” now finds himself compelled to defend confessions of sexual assault. He fell into the abyss Wednesday with this meditation:

You know what the magic word, the only thing that matters in American sexual mores today is? One thing. You can do anything, the left will promote and understand and tolerate anything, as long as there is one element. Do you know what it is? Consent. If there is consent on both or all three or all four, however many are involved in the sex act, it’s perfectly fine. Whatever it is. But if the left ever senses and smells that there’s no consent in part of the equation then here come the rape police. But consent is the magic key to the left.

This is just sad. A conservative, a defender of traditional moral values, denouncing the idea that consent is required for sexual activity. This is what rank partisanship, red team/blue team mentality, and a failure to recognize when your party has taken a wrong turn leads to.

None of this should be construed as an endorsement of Hillary Clinton. I’ve been denouncing her statism since the 1990s. But I hope, for the sake of my conservative friends, that the Wall Street Journal was wrong when it wrote early in the Clinton years, “the personal virtue known as self-restraint was devalued. In the process, certain rules that for a long time had governed behavior also became devalued,” and thus there were going to be a lot of casualties. Because a lot of conservatives seem to be hurtling over the guardrails and defining deviancy down in their determination to justify anything – anything – the Republican nominee for president says or does.

One of the most remarkable developments in the world of fiscal policy is that even left-leaning international bureaucracies are beginning to embrace spending caps as the only effective and successful rule for fiscal policy.

The International Monetary Fund is infamous because senior officials relentlessly advocate for tax hikes, but the professional economists at the organization have concluded in two separate studies (see here and here) that expenditure limits produce good results.

Likewise, the political appointees at the Organization for Economic Cooperation and Development generally push a pro-tax increase agenda, but professional economists at the Paris-based bureaucracy also have produced studies (see here and here) showing that spending caps are the only approach that leads to good results.

Heck, even the European Central Bank has jumped into the issue with a study that reaches the same conclusion.

This doesn’t mean balanced budget requirements are bad, by the way, but the evidence shows that they aren’t very effective since they allow lots of spending when the economy is expanding (and thus generating tax revenue). But when the economy goes into recession (causing a drop in tax revenue), politicians impose tax hikes in hopes of propping up their previous spending commitments.

With a spending cap, by contrast, fiscal policy is very stable. Politicians know from one year to the next that they can increase spending by some modest amount. They don’t like the fact that they can’t approve big spending increases in the years when the economy is expanding, but that’s offset by the fact that they don’t have to cut spending when there’s a recession and revenues are falling.

From the perspective of taxpayers and the economy, the benefit of a spending cap (assuming it is well designed so that it satisfies Mitchell’s Golden Rule) is that annual budgetary increases are lower than the long-run average growth of the private sector.

And nations that have followed such a policy have achieved very good results. The burden of government spending shrinks as a share of economic output, which naturally also leads to less red ink relative to the size of the private economy.

But it’s difficult to maintain spending discipline for multi-year periods. In most cases, governments that adopt good policy eventually capitulate to pressure from interest groups and start allowing the budget to expand too quickly.

That’s why the ideal policy is to make a spending cap part of a nation’s constitution.

That’s what happened in Switzerland early last decade thanks to a voter referendum. And that’s what has been part of Hong Kong’s Basic Law since it was approved back in 1990.

And while many nations struggle with ever-growing government, both Switzerland and Hong Kong have enjoyed good outcomes and considerable fiscal stability.

Now a Latin American nation may enact a similar reform. Brazil, which is suffering a recession in part because of bad government policies, is trying to boost its economy with market-based reforms. Given my interests, I’m especially excited that it has taken the first step in a much-needed effort to impose a spending cap.

The Brazil Chamber of Deputies on Monday voted in favor of a constitutional amendment that would limit government spending to counteract the country’s alarming economic downturn. …The amendment proposal must pass two rounds of voting in the lower House and Senate. Should it be passed, the government would limit spending increases to the rate of inflation… Following approval, the amendment would take effect in 2017.

The specific reform in Brazil would limit spending so it doesn’t grow faster than inflation. And it would apply only to the central government, so the provinces would be unaffected.

Capping central government outlays would be a significant step in the right direction. The central government would consume 16.8 percent of economic output in 2025 with the cap, compared to 20.8 percent of GDP if fiscal policy is left on autopilot.

Of course, there’s no guarantee this reform will become part of the Constitution. It needs to be approved a second time by the Chamber of Deputies (akin to our House of Representatives) and then be approved twice by the Senate.

But the good news is that more than 71 percent of Deputies voted for the measure. And there’s every reason to expect a sufficient number of votes when it come up for a second vote.

Brazil’s Senate, however, may be more of a challenge. Especially since various interest groups are now mobilizing against the proposal.

Advocates of the reform should go over the heads of the interest groups and other pro-spending lobbies and educate the Brazilian people. They should make two arguments that hopefully will be appealing even to those who don’t understand economic policy.

First, a spending cap doesn’t require spending cuts in a downturn. Outlays can continue to grow according to the formula. This should be a compelling argument for Keynesians who think government spending somehow stimulates growth (and also may appease those who simply think it is “harsh” to reduce spending when the economy is in recession).

Second, by preventing big spending increases during the boom years, a spending cap is a self-imposed constraint to protect against “Goldfish Government,” which should be an effective argument for those who are familiar with the underlying fiscal and demographic trends that already have caused so much chaos and misery in nations such as Greece.

P.S. While I haven’t been a fan of Brazilian economic policy in past years, I actually defended that nation when Hillary Clinton applauded Brazil for being more statist than it actually is.

P.P.S. Being less statist than Hillary is not exactly something to brag about, so I will note that Brazil deserves credit for moving in the right direction on gun rights and also having some semi-honest left-wing politicians.

An upcoming Cato event examines whether or not you should vote in the election. If you decide to go ahead with it, National Taxpayers Union (NTU) has resources to you help assess the fiscal issues at stake.

Regarding your choice for president, NTU has tallied the spending promises of Hillary Clinton, Donald Trump, and Gary Johnson. Clinton has proposed dozens of spending increases and a few cuts, which add up to a net $203 billion a year in higher spending. Trump’s promises add up to a net $20 billion a year in higher spending.

By contrast, Johnson is promising to save us money. NTU calculates that his net spending cuts would be $143 billion a year. Such reforms would be a good start, but less than my proposed cuts of $1.2 trillion a year.

If you don’t plan on voting for president, or any politician this year, another useful NTU guide describes other important issues at stake on state ballots. Here are a few highlights:

  • Marijuana legalization (and taxation) for recreational use is on the ballot in five states: Arizona, California, Maine, Massachusetts, and Nevada.
  • Tobacco tax increases are on the ballot in four states. My governor’s report noted that a dozen states have enacted tobacco tax hikes just since 2014. In the minds of some politicians, smokers are “deplorables,” so it is easy to target them.
  • New taxes on sugary drinks are on the ballot in a number of local jurisdictions. Cola drinkers are becoming a new class of deplorables.
  • Voters will decide on bond issues in many places. One statewide California proposition would authorize $9 billion in debt to fund schools and colleges. My governors report explains why state and local debt issuance is bad policy, even for capital improvements. State and local capital projects should be funded pay-as-you-go. It is cheaper, more transparent, and less conducive to corruption.
  • Coloradans will vote on Amendment 69, “which would create a government-run health care scheme (ColoradoCare) aiming to cover all residents. The amendment includes a $25 billion tax increase … This would nearly double the state’s budget.” Wow, that’s big.
  • Corporate welfare choices are on the ballot in a few places. Voters in Arlington, Texas, will decide on new taxes to fund a $1 billion stadium for MLB’s Texas Rangers. Voters in San Diego will decide on new taxes to fund a football stadium for the NFL’s Chargers.

I don’t know whether or not you should vote for president. But you should check out the NTU guide and www.ballotpedia.org to see what state and local issues you will be able to weigh in on.

E.D. Hirsch—author of the lightning rod Cultural Literacy: What Every American Needs to Know, and a tireless advocate of content-heavy education—has just spoken truth about the Common Core. An Education Week article heralding his latest book reports that:

He calls the reading standards “empty” and “deeply flawed” because they teach all-purpose reading-comprehension strategies rather than facts and information. An entire chapter of his new book is devoted to what he refers to as “the tribulations of the common core.”

“The people who developed the common core had a choice. Either [the standards] were going to be educationally correct or they were going to be politically viable,” he said. “They chose the second.” Forty-six states agreed to adopt the standards right away, which he argues “could only be accomplished if you didn’t specify the content of the curriculum.”

The Core is indeed very light on content in English language arts, Hirsch’s primary concern. But it hasn’t changed between 2010 and today, yet Hirsch endorsed it—emphatically!—in 2013.

As I have pointed out, Hirsch’s endorsement is one of many pieces of Core support that have sewn major confusion about the Core, befuddlement that supporters have loved to pin on opponents. But the reality is that Core supporters, seemingly obsessed with getting standards nationalized, have tried to make the Core sound like all things to all people: national and comprehensive, locally controlled and minimalist. Couple that with federal coercion, and the Core has thrown schools nationwide into utterly avoidable disarray.

But there is a deeper reality illustrated here: It is very difficult, short of a dictatorship, to impose content both deep and broad on diverse people. Why? Because diverse people will not agree on what that content should be. Just evolution, or also intelligent design? The Bible, or I Am Jazz? Ethnic studies, or commonality? And the list goes on…and on. This is precisely why for the Core to be “politically viable” it had to be largely bereft of what Hirsch has spent decades crusading for: rich content.

If you want deep, robust content, the way to get it is the opposite of nationalization: educational freedom.

When educators and families can freely interact, educators can offer rigorous curricula that take clear stands because consumers are free to choose what they want, and both sides agree to work together. We see evidence of this in the superior civics education of children in chosen schools, where they don’t have to compromise on whether things like community service are appropriate for schools to demand, or over disputed political issues. On the flip side, we see it in the teaching of biology, with public school teachers in droves soft-pedaling evolution so as not to ignite anger and conflict. And we see it with Hirsch’s own Core Knowledge curriculum, which at least according to data from 2008 is disproportionately found in schools of choice.

Hirsch, like many people, has shown that he cannot let go of the idea that unity and commonality must be, essentially, forced. But like a Chinese finger trap, greater force just makes the problem worse. Hopefully the Common Core debacle has made that more clear.

Concerns about Muslim assimilation made news again this week when Donald Trump erroneously claimed that U.S. Muslim neighbors failed to report the San Bernardino shooters. But this persistent idea that U.S. Muslims are not assimilating could not be more inaccurate. In fact, U.S. Muslims—81 percent of whom are immigrants or children of immigrants—are the most socially liberal and religiously tolerant in the world and becoming more so with each passing year.

U.S. Muslims Are Adopting Americans’ Liberal Social and Religious Views

More than 80 percent of Muslim Americans are immigrants or the children of immigrants, according to the Pew Research Center’s 2014 survey. The large majority of these are immigrants who arrived since 1990. Figure 1 provides the countries of origin for U.S. Muslim immigrants. The fact that Muslim Americans are dominated by immigrants could lead to the conclusion that the views of Muslim Americans will reflect the views of Muslims worldwide. But this is not the case. They are rapidly adopting American social views and liberalizing their religious views to accommodate.

Figure 1: Countries of Origin for Muslim Immigrants (2014)

Source: Pew (2011)

As an example, the vast majority of Muslims around the world are fiercely opposed to homosexuality. Worldwide, the average country-level support across 39 countries is just 5 percent with 80 percent opposed. Yet as Figure 2 shows, in the United States in 2011, 45 percent of U.S. Muslims considered homosexuality morally acceptable—the highest in the world—compared to 47 percent who did not. While lower than the U.S. public generally, opposition to homosexuality fell 14 percentage points from 2007 to 2014, while acceptance gained 18 percentage points—a 32-point swing in less than a decade.

Figure 2: Is homosexuality morally acceptable or morally wrong?

Sources: Gallup (2008)—Germany, France, U.K.; Pew (2007, 2011, 2014)—United States; Pew (2013)—all other countries. Note that at least 90 percent of Muslims in all countries not listed considered homosexuality immoral (Azerbaijan, Kazakhstan, Indonesia, Malaysia, Thailand, Egypt, Pakistan, Jordan, Lebanon, Tunisia, Cameroon, Chad, Ethiopia, Ghana, Kenya, Liberia, Mali, Niger, Nigeria, Senegal, and Tanzania).  

Another signal of their more tolerant attitudes is that a majority of Muslim Americans accept other faiths as spiritual equals. Pew Research Center found that U.S. Muslims in 2011 were unique among Muslims around the world in that they rejected the idea that Islam is the only faith leading to eternal life, instead believing that many other religions can also do so. As Figure 3 shows, a majority—56 percent—adopted the more liberal view, compared to just a country-level average of 20 percent for Muslims elsewhere.

Figure 3: Which statement comes closest to your view: Islam is the one, true faith leading to eternal life, or many religions can lead to eternal life?

Source: Pew (2011)—the United States; Pew (2013)—all others. Note that less than 20 percent of the Muslims in each of the countries not shown agreed that other religions could lead to eternal life. Those countries are: Tajikistan, Turkey, Uzbekistan, Indonesia, Malaysia, Thailand, Bangladesh, Pakistan, Egypt, Iraq, Jordan, Morocco, Palestine, Djibouti, Ethiopia, Ghana, DR Congo, Mali, Niger, and Nigeria

This pluralistic faith could be a consequence of the fact that in the United States, only 48 percent of Muslim Americans say that “all or most” of their friends are other Muslims, compared to 95 percent globally. Given their much more ready acceptance of other religions and their high level of interaction between members of other faiths, it is also not very surprising that Muslim Americans appear to be the most permissive of inter-faith marriages.

Unfortunately, Pew asked slightly different questions of Muslims in the United States than internationally, but 62 percent of U.S. Muslims said that it would be “OK” to marry a non-Muslim in 2007 (Figure 4). By comparison, the country-level average elsewhere around the world shows that only 20 percent of Muslims in 2011 would be comfortable with a child’s marriage to a Christian. Granting that people may be more likely to be “uncomfortable” with their own child’s activities than the same activity in the abstract, this is still a stark difference in attitudes. It’s also worth noting that 16 percent of U.S. Muslims were already living with a spouse or partner of a different religion in 2007.

Figure 4: Non-U.S. Question: How comfortable would you be if a child of yours someday married a Christian? U.S. Question: Do you personally think it is OK for a Muslim to marry someone who is not a Muslim?

Source: Pew (2011); Pew (2007). Note that less than 20 percent of the Muslims in each of the countries not shown felt comfortable with inter-faith marriages. Those countries are:Djibouti, Kenya, Kyrgyzstan, Ethiopia, Senegal, Bosnia-Herz., Morocco, Tunisia, Malaysia, Uzbekistan, Bangladesh, Tajikistan, Palestine, Iraq, Azerbaijan, Pakistan, Indonesia, Egypt, and Jordan.

Another interesting example of the modernizing trend in the United States is the extent to which Muslims in the United States are losing cultural expressions of their faith common in other countries. In a smaller yet telling Pew survey of Muslims in 8 countries, Muslim Americans were the most likely to never wear a hijab and the least likely to always or usually wear one—just 41 percent of U.S. Muslims do so compared to 61 percent internationally (Figure 5).

Figure 5: When you are out in public, how often do you wear the headcover or hijab?

Source: Pew (2011)

The willingness of Muslim Americans to depart from the strict requirements in Islamic law may stem from their more liberal views on scriptural interpretation. Muslim Americans are half as likely as other Muslims to believe that the Quran should be taken literally. A plurality in the United States favors not taking the Quran literally—43 percent to 42 percent—compared to the strong majority in other countries that favors literal interpretation—79 percent to 17 percent. As Figure 6 shows, Muslim Americans’ views are also trending strongly against the literal view—dropping from a net 17 percentage point in favor to a net 1 percentage point against from 2007 to 2014.

Figure 6: Is the Quran to be taken literally, word for word?

Sources: Pew (2007); Pew (2011); Pew (2014)

This acceptance of liberal values and rejection of a strict interpretation of the Quran is reflected in the share of Muslim Americans who oppose using the Quran as a source of legislation in the United States. In 2006, Gallup found support for using Sharia as at least one source for the law at a worldwide country-level average of 79 percent (Figure 7). The Institute for Social Policy and Understanding asked a very similar question of U.S. Muslims in 2016 and found that 55 percent opposed using “their religion” as even one source out of many for U.S. laws.

Figure 7: Should Sharia/your religion be a source of legislation?

Sources: Gallup (2006); ISPU (2016)

Support for Terrorism and Extremism Much Lower among U.S. Muslims

Another sign that U.S. Muslims are adopting American social norms is the extent to which they reject radical ideological groups, like al Qaeda and the Islamic State. Pew also conducted a survey of Muslims in 12 countries that asked about their views on al Qaeda. Of all the Muslims surveyed, only Lebanese had a more negative view of the Sunni terrorist group al Qaeda than U.S. Muslims (Figure 8). Just 5 percent of Muslim Americans had a favorable view of the group, compared to 81 percent who did not. The opposition was more pronounced among U.S. Muslim immigrants—just 2 percent saw al Qaeda favorably compared to 83 percent who didn’t. Both of which are within the poll’s margin of error (+-5%).

Figure 8: Do you have a favorable or unfavorable view of al Qaeda?

Source: Pew (2011)—United States; Pew (2013)—all others

U.S. Muslims also more strongly oppose violence in the name of Islam. Pew asked Muslims in 23 countries how often suicide bombing “and other forms of violence against civilian targets in order to defend Islam from its enemies” is justified. As Figure 9 shows, Muslims around the world are overwhelmingly opposed to this type of violence. At a country-level, 67 percent of Muslims oppose these attacks in all cases, compared to 27 percent who believe they can be justified at times (“rarely, sometimes, often”). In the United States, Muslims oppose all such attacks to defend Islam 81 percent to 13 percent. Among Muslim immigrants, opposition is more pronounced—82 percent to 10 percent.

Figure 9: How often do you think suicide bombing and other forms of violence against civilian targets are justified in order to defend Islam from its enemies?

Sources: Pew (2011)—United States; Pew (2013)—all others

In 2011, Gallup also conducted a similar poll that found a low level of support for violence against civilians among U.S. Muslims compared to countries in the Middle East and North Africa (Figure 10). They opposed such attacks in all cases 89 percent to 11 percent, compared to 85 percent to 13 percent in the other countries. They also had significantly lower levels of support for violence against civilians than U.S. and Canadian public generally, who opposed it in all cases just 77 percent to 22 percent.

Figure 10: Do you think that for an individual person or a small group of persons to target and kill civilians is never justified?

Sources: Gallup (2011)—United States; Gallup (2011)—all others

These differences between Muslim Americans and other Muslims around the world influence how U.S. Muslims see themselves in the world. Among all religious groups in the United States, Muslim Americans are the least likely to identify strongly with members of their religion internationally. Just 37 percent do so, despite the fact that Muslim Americans are the least likely to be U.S. citizens. As seen in Figure 11, they also had the largest gap between those who identify strongly with their religion and those who identify with their co-religionists around the world. They were also more likely to identify strongly with their adopted U.S. nationality than with their religion generally.

Figure 11: Do you identify strongly with those worldwide who share your religious identity?

Sources: Gallup (2011)

Explanations for Liberal Views and Policy Implications

This survey of Muslim assimilation demonstrates three important facts in the debate over Muslim immigration: first, that Muslim Americans have taken markedly more liberal views on social, religious, and political subjects than Muslims elsewhere; second, that Muslim Americans are quickly adopting the views of other Americans; third, that Muslim immigrants in the United States are less likely to support al Qaeda, violence against civilians, and aspects of strict Islamic law than native-born Muslim Americans.

There are two possibilities for the divergence in views between Muslims in the United States and those elsewhere: either immigrants who choose to come to the United States have views most similar to Americans, or immigrants who immigrate to the United States quickly adopt the norms of their new home. To put the question another way, either Muslim immigrants to the United States are unique or the United States is unique in its ability to integrate immigrants.

As has already been seen, the United States appears to be quickly changing the views of immigrants after they arrive, but this phenomenon does not rule out the possibility that Muslim immigrants to the United States started with more liberal views to begin with. One possible argument against this view is that the top origin countries (Figure 1) for U.S. Muslims are among  the least liberal in the world.

If the United States does have a liberalizing effect on the views and practices of fundamentalist Muslims, then large-scale immigration of Muslims could be a viable way to increase the influence of liberal Muslims in the world.

I stumbled on this 1997 talk abut NAFTA by my old friend Roberto Salinas-Leon, making a case for Hillary’s Wikileak dream of Hemispheric free trade (but not for her other dream of “open borders” if that really meant unhindered migration).  

I may be biased, but the following heretofore lost quote from me still seems relevant, but for the U.S. too, not just Mexico. Trump adviser Peter Navarro thinks the dollar is 45% too strong against the Chinese yuan, which supposedly excuses Trump’s threat of a 45% tariff.  (I’m more in the “strong dollar is good for America” camp, though strong doesn’t mean continually rising.) 

As Alan Reynolds has recently explained, “the explicit goal of devaluation is to worsen the terms of trade”-for instance, to make Mexico trade more exports for fewer imports. Reynolds continues: “…even if Mexico wanted to impoverish itself in this way, it does not work. When the peso was devalued at the end of 1994 that did not result in Mexican oil or beer being one cent cheaper in terms of U.S. dollars. After a devaluation, interest rates soar, real tax receipts collapse, and the foreign debt burden increases. This causes a squeeze on the government’s budget, and on the budgets of families, farms and firms. This is no way to make a country “competitive.” Economic growth depends on more and better labor and capital, neither of which are encouraged by a currency of unpredictable value. A weak currency has never produced a strong economy.”

To be sure, concerns surrounding currency revaluation are closely mixed with the fear of generating a substantial trade deficit. Reynolds again explains the misdiagnosis of increased imports as a sign of bad times: “current account deficits have nothing to do with ‘competitiveness.’ They are caused by a gap between investment and domestic savings that is filled by foreign investment (which is good) or loans (which are not so good). To the extent that a devaluation might “fix” such a gap, it does so by slashing investment, not raising savings.”

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