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Donald Trump has offered his foreign policy vision. It was a bit of a mishmash, but he is no Neoconservative and broke with pro-war Republican orthodoxy in important ways.

The speech, delivered last week in downtown Washington, was standard campaign fare, intended to demonstrate that the candidate was serious, and included some of the usual bland generalities.

Still, there was considerable good in the talk.

After the Cold War, he noted, “Logic was replaced with foolishness and arrogance, which led to one foreign policy disaster after another.” Hard to argue with that. Moreover, said Trump, it was a mistake to believe that the U.S. could impose Western-style democracy on countries “that had no experience or interests” in the process.

Indeed, he noted that “the legacy of the Obama-Clinton interventions will be weakness, confusion and disarray, a mess.” It actually is the Bush-Obama-Clinton interventions, but point taken. “Our actions in Iraq, Libya and Syria have helped unleash ISIS,” Trump added.

Added Trump: “unlike other candidates for the presidency, war and aggression will not be my first instinct.” Those are words not often spoken by Republicans. He also criticized the Iraq debacle, whose “biggest beneficiary has been Iran.”

Further, complained Trump, “our allies are not paying their fair share.” He promised to get out “of the nation-building business.” He argued that Washington should cooperate with Russia.

But there was the bad in the talk as well.

In complaining about the cost of defending allies, Trump drew the wrong conclusion: “The countries we are defending must pay for the cost of this defense, and if not, the U.S. must be prepared to let these countries defend themselves.” Washington should not hire out its military. Rather, foreign peoples should defend their own nations.

In a speech intended to highlight his unconventional thinking, he made the standard Republican claim that “our friends are beginning to think they can’t depend on us.” Like those nations in Asia, Europe, and the Middle East that Washington continues to defend at such high cost?

He complained about the “disastrous deal with Iran” without offering an alternative. Yet the agreement has pushed back Tehran’s ability to create nuclear weapons and intensified the internal struggle over Iran’s future.

 “Our rivals no longer respect us,” complained Trump. “President Obama watches helplessly as North Korea” continues its nuclear developments. As did Presidents Bill Clinton and George W. Bush. President Trump likely would find himself in the same situation.

Finally, there was more than a little ugly.

Trump overestimated Washington’s ability to force other nations to do its will: with America’s “economic power, we can rein in and we can get [the Chinese] to do what they have to do with North Korea.” It would make more sense to use diplomacy, which Trump elsewhere lauds, to address China’s concerns over a possible North Korean collapse than to threaten to wreck the relationship between the world’s two most important states. As I point out in Forbes, “Trump should recognize the likely reaction of a proud, nationalistic people whose country only recently escaped centuries of humiliation to an attempt by arrogant foreigners to dictate policy.”

Trump announced: “ISIS will be gone if I’m elected president. And they’ll be gone quickly. They will be gone very, very quickly.” Ironically, this is another instance of Washington doing someone else’s job: America’s allies and friends are the countries threatened by ISIS, so they should do the heavy lifting.

Moreover, Trump insisted that “we have to rebuild our military.” In fact, even after adjusting for inflation Obama’s cumulative military expenditures will exceed those of his predecessor. America accounts for roughly 40 percent of the globe’s military outlays because it needlessly defends Washington’s Asian, European, and Middle Eastern friends.

Donald Trump’s foreign policy sounds a lot like his domestic policy: inconsistent, ill-formed, incomplete. But still better than those of his main rivals. If he wins the GOP nomination, the presidential race might yield a genuine debate over foreign policy.

Last week’s resignation of Michael Melaniphy as CEO of the American Public Transportation Association (APTA) is a sign that more people are seeing that America’s transit-industrial complex has no clothes. Melaniphy’s departure comes on the heels of the withdrawal of the New York Metropolitan Transportation Authority (MTA) from APTA membership.

MTA’s complaint is that APTA has failed to help the seven “legacy” transit systems, that is, rail systems that are more than 40 years old, that are suffering from severe maintenance backlogs. These transit systems, which are in New York, Chicago, Philadelphia, San Francisco, Boston, Pittsburgh, and Cleveland, carry nearly two-third of the nation’s transit riders yet–thanks in part to APTA lobbying–a disproportionate share of federal transit dollars go to smaller cities that are building new rail systems that they won’t be able to afford to maintain.

In 2010, the Federal Transit Administration estimated that the legacy rail systems (plus Washington and Atlanta) needed nearly $60 billion to restore them to a state of good repair. Yet little was done, and the latest estimate is that the maintenance backlog has grown to more than $93 billion. Meanwhile, with APTA’s encouragement, Congress has spent something like $15 billion supporting the construction of new rail systems in places like Los Angeles, Seattle, and Portland.

Even the transit systems that suffer from maintenance backlogs are spending precious resources building new rail lines because that is what Congress will fund, not maintenance. Thus, the Massachusetts Bay Transportation Authority is spending $3 billion on a light-rail line to Medford even as it let its maintenance backlog grow to $7.3 billion. The Chicago Transit Authority is spending $2.3 billion extending its Red Line even as its maintenance backlog exceeds $22 billion. The San Francisco BART system is suffering frequent breakdowns and has a $9.7 billion maintenance backlog, yet is spending $6.3 billion on a line to San Jose that partly duplicates existing commuter rail service.

Meanwhile, other cities seem to be racing to see who can spend the most on their own rail transit expansions. Having just finished spending $1.5 billion on a seven-mile light-rail line, Portland wants to spend $2 billion on a new 12-mile line. Seattle just spend $1.9 billion on a three-mile light-rail line and is now spending $3.7 billion on a fourteen-mile line to Bellevue. The Los Angeles Metropolitan Transportation Authority wants to spend $120 billion on new transit lines, including the construction of a nine-mile light-rail tunnel to the San Fernando Valley that will cost nearly $1 billion per mile. 

Despite their expense, none of these light-rail lines are anything like the Washington or other subway systems. The “light” in light rail refers to capacity, not weight: light rail is, by definition, low-capacity transit, capable of carrying only about a quarter as many people per hour as a subway or elevated line. In 1981, San Diego opened the nation’s first modern light-rail line at a cost of $5.6 million per mile (about $12.5 million in today’s money); the cost of the average line being built today is $163 million per mile, yet those new lines won’t be able to carry any more people than the San Diego line.

These new rail lines do little good for transit riders, mainly because their high cost eventually forces most transit agencies that build them to cannibalize their bus systems. For example, construction of new light-rail lines forced San Jose’s Valley Transportation Authority to reduce bus service by 22 percent since 2001, leading to a 32 percent decline in ridership

It’s no surprise that APTA sheepishly reported last month that the nation’s overall transit ridership declined in 2015. While APTA blamed the decline on low gas prices, the truth is (as noted here last year), if you don’t count the New York subway system (whose ridership has been growing in response to rising Manhattan employment), nationwide ridership has declined for the past several years. 

Why are we spending so much money building new rail lines when it doesn’t help, and often hurts, transit riders? Part of the answer is Congress likes shiny new projects more than maintenance. But part of the answer is that APTA’s membership is stacked with manufacturers and suppliersconsultantscontractors, and land developers who build subsidized projects next to rail stations. Although New York’s MTA carries nearly 37 percent of all transit riders in the country, its membership dues covered less than 2 percent of APTA’s budget because APTA gets most of its money from non-transit agencies. Thus, like Congress, APTA is biased towards new construction.

For example, APTA claims to be an educational organization, yet it hasn’t done much to educate Congress or the public about the long-term costs of rail transit and the need to almost completely and expensively rebuild those rail lines every 30 years or so. After all, this message could undermine support for building new rail transit lines in cities that don’t need them.

People who support the needs of actual transit riders, rather than rail snobs (people who say they’ll ride a train but not a bus) or contractors, should use these facts to persuade Congress to stop funding obsolete rail transit systems when cities desperately need things that will truly relieve traffic congestion and cost-effectively improve everyone’s mobility.

Neal McCluskey has updated an overview study on federal aid for K-12 education, which is posted at DownsizingGovernment.org. Neal reports that K-12 spending under the U.S. Department of Education and its predecessor agencies rose from $4.5 billion in 1965 to $40.2 billion in 2016, in constant 2016 dollars. He notes that the department funds more than 100 subsidy programs, and each comes with regulations extending federal control over local schools.

Over the years, the states have been happy to receive federal funds, but they have chafed under the mandates imposed by Washington. George W. Bush’s No Child Left Behind Act provoked a backlash because of its costly rules for academic standards, student testing, and unrealistic proficiency demands. Neal argues that the new Ensuring Student Success Act of 2016 may have reduced some aspects of top-down control, but we won’t know for sure until all the regulations have been written.

Despite large increases in federal aid since the 1960s, public school performance has not improved much, if at all. Reading and math scores on the National Assessment of Educational Progress for 17-year-olds have been stagnant. In addition, America’s performance on international tests has remained mediocre, yet we spend more per-pupil on K-12 education than most countries.

Neal concludes that federal funding and mandates are not the way to create high-quality K-12 education. He notes that Canada has an advanced economy, yet it has no federal department of education. Public education in Canada is almost solely a concern of provincial and local governments. That decentralized approach has resulted in substantial experimentation and innovation, including school vouchers, charter schools, and competing public schools. International comparison tests show that Canadian kids generally outperform American kids in reading, mathematics, and science.

Neal is right that Congress should phase out federal funding for K-12 education and end all related regulations. Federal aid is ultimately funded by the taxpayers who live in the 50 states, and thus it provides no free lunch. Indeed, the states just get money back with strings attached, while losing billions of dollars from wasteful bureaucracy. There is no advantage in federal manipulation of K-12 education, and our school systems would be better off without it.

Neal’s essay.

In his push to stop Donald Trump in Indiana, Ted Cruz has finally taken a principled stand against Trump’s economy-crushing proposal to impose a 45% tariff on all imports from China.  This comes after months of Cruz equivocating on trade policy and even adopting Trump’s own rhetoric (“we’re getting killed at international trade”) at a debate less than two months ago. 

Here’s what Cruz said on last Sunday’s Meet the Press:

Donald’s only economic agenda is imposing massive taxes on the American people with a 40 percent tax hike of a giant tariff.  That would send us into a recession.  It would drive jobs overseas.  It would kill small businesses.

In the past, Cruz has limited his criticism of Trump’s tariff proposal to the fact that it would spark retaliation against U.S exports.  He recommended his own proposal for a value-added-tax for having the same effect of stifling imports without incurring such retaliation. 

Cruz is, unfortunately, still pushing the idea that bringing manufacturing jobs back to America is a good economic policy.  The truth is that American manufacturing is thriving (especially in Indiana) even as manufacturing employment decreases, enabling other sectors of the U.S. economy to grow faster.

Thankfully, Cruz’s plan to “bring back manufacturing jobs” is to reduce the burden of taxes and regulations, which will be good for the economy whether it achieves Cruz’s stated goal or not.

In an interesting twist, Politifact has gauged Cruz’s criticism of Trump’s tariff as only Half True while still recognizing that it would cause prices “to soar” and “cost U.S. jobs.”  Here’s what they had to say:

Trump has outlined a few other economic proposals beyond tariffs like declaring China a currency manipulator, upholding intellectual property law, ending China’s export subsidies (more on this later) and lowering the corporate tax rate to incentivize American companies to stay at home. He’s also suggested renegotiating or pulling out the North American Free Trade Agreement (NAFTA) and stopping the Trans-Pacific Partnership.

I think it’s worth recognizing that complaints about what China is doing are not economic proposals.  Upholding Chinese intellectual property law and ending China’s export subsidies, for example, are goals that Trump ostensibly hopes to achieve through his tariff proposal.  They are not separate policy proposals, since even Trump wouldn’t have the power to change Chinese law.

Tariffs at the level Trump is suggesting would cause prices of cheap products like air conditioners and intermediate goods like auto parts to soar and could cost U.S. jobs. But as some of the costs would be absorbed by Chinese and Mexican exporters, a 40 percent tariff doesn’t translate directly into a 40 percent tax hike.

Most economists agree that American consumers and manufactures would bear some of the cost of these tariffs, though it’s not entirely clear if prices would increase by 40 percent, as Cruz says.

What Politifact has done here is conflate “tax” hikes with “price” hikes.  It’s true that a 40% tariff won’t increase prices by 40% and no one, not even Cruz, has said it would.  Even a 40% general sales tax wouldn’t increase prices by that amount—some of the added expense would be absorbed in the form of lower wages and lower profits.

A tariff is, by definition, a tax paid by American businesses and consumers when they purchase imports.  When only some products are taxed at a higher rate, the result is less competition and less efficiency—leading to higher prices.  The fact that foreign producers would also suffer from increased tariffs only goes to show how harmful they can be.  It doesn’t mitigate the fact that Trump’s tariff is a tax paid by Americans that would lead to higher prices for American consumers and manufacturers.

Trade is one of a number of areas where Trump’s candidacy is driving the Republican Party away from free market policies.  It’s nice to see Cruz, even at his candidacy’s apparent eleventh hour, stick up for free trade by pointing out the costs of protectionism.

In January North Korea conducted its fourth nuclear test in the face of universal international protest. Even China, Pyongyang’s one nominal ally, joined in the criticism.

With Beijing’s support the United Nations imposed new sanctions on the Democratic People’s Republic of Korea. The U.S. and its allies warned Pyongyang of further isolation if the DPRK continued to flout the will of the international community.

Now the North appears to be preparing another nuclear test. If the DPRK does so no further proof will be needed that the North intends to become a significant nuclear power.

Pyongyang has invested too much to drop the program. Moreover, the North lives the old Henry Kissinger aphorism that even paranoids have enemies. The U.S., backed by the Europeans, has demonstrated its willingness to oust dictators on its “bad” list, even after making a deal with them, such as Moammar Khadafy.

What makes the prospect of another test particularly dramatic is Kim Jong-un’s apparent willingness to proceed at any cost. He can have little doubt that the U.S. will press for additional sanctions. He knows that no other government will defend his regime.

He is aware that after the January test the People’s Republic of China approved tougher international penalties. Every additional DPRK provocation threatens to become the last back-breaking straw for China, leading it to target food and energy aid, which would cause Pyongyang enormous hardship.

What to do when nothing so far has worked?

First, the U.S., Republic of Korea, and Japan should consider how to deal with a nuclear North Korea. Two decades of pronouncements that the North must not develop nuclear weapons are for naught.

If North Korea continues to augment its capabilities, then what? What military, political, and economic steps should be taken, and by whom? The more likely the prospect of Pyongyang as a modest nuclear power, the more urgent serious thinking about a transformed Northeast Asia.

Second, Japan and the ROK should set aside past differences to confront a common threat. The colonial era ended 71 years ago. These two prosperous democratic countries should prepare for problems of the future rather than reinvigorate hatreds of the past.

Third, U.S. and its allies should further engage Beijing over Pyongyang. The PRC has the most leverage with the North because of the former’s energy and food assistance, but is hesitant to risk encouraging regime collapse. Thus, as I point out in National Interest: “the allies need to offer to share costs, acknowledge Chinese interests, and convince Beijing that they would not take geopolitical advantage of the demise of the PRC’s one East Asian ally.”

Fourth, Washington should offer to defuse the perceived threat environment facing the North, backed by an offer to negotiate on issues other than nuclear weapons. This doesn’t mean blaming America or trusting Pyongyang. Rather, it means recognizing that the current regime has reason to fear the U.S. To the extent that Kim desires a wealthier nation, he might be willing to limit his arms programs if less concerned about his dynasty’s future. Maybe not, but Washington should test the possibility.

Fifth, the allies should consider the advisability of Japan and South Korea developing countervailing nuclear arsenals. America’s nuclear umbrella keeps the U.S. dangerously entangled in a potential conflict no longer critical to American security.

We are approaching a time when Northeast Asia will have three nuclear powers, all potentially bad actors: China, Russia, and the North. Washington can forever remain in the middle of this unstable nuclear scrum. Or America’s democratic allies can deter aggression on their own. The idea certainly is worth discussing, especially within hearing of Chinese officials.

It’s still okay to hope for collapse, implosion, or some other deus ex machina to “solve” the problem of the North. But it is foolish to expect a miraculous rescue. The U.S. and its friends should start planning seriously for a nuclear DPRK.

A half century of military dictatorship has officially ended in Burma, or Myanmar. Yet taking the final steps toward democracy may be as difficult as making the transition so far.

It long seemed like this day would never come. But six years ago the military regime transformed itself into a nominally civilian administration. Suu Kyi, now a Nobel laureate, was released from house arrest. Free elections were held last November, in which the NLD won an overwhelming victory.

The new government has taken over. Suu Kyi was barred from the presidency by a constitutional provision drafted specifically against her. However, she chose classmate U Htin Kyaw as president, having previously explained that she would be “above the president.”

To formalize her authority the party’s first legislative act was to create the position of “state adviser,” which, explained MP Khin Maung Myint, would be “the president’s boss” who “can control the president and all the Cabinet members.” This step was necessary because the military refused to remove the clause disabling Suu Kyi.

Guaranteed one-quarter of the parliamentary seats by the constitution it drafted, the Tatmadaw, as the military is known, is able to block any amendment. The armed forces also retain control of the defense, home affairs, and border affairs ministries.

Despite the NLD’s overwhelming electoral triumph and Suu Kyi’s expansive moral authority, governing will remain a cooperative process. Myanmar’s future requires Suu Kyi and the NLD to push steadily for moderate reform while winning the military’s confidence if not trust.

The challenges facing the new government are enormous. Despite enormous potential, Burma remains a desperately poor land. However, reforms have barely begun. The latest Economic Freedom of the World index placed Burma at a dismal 146 of 157 nations.

The state remains authoritarian. Last year Human Rights Watch reported that “the reform process has stalled.” Freedom House rated Burma as “Not Free” and moving backwards. The new government must liberalize free speech and assembly, media freedom, online activism, judicial process, and criminal procedure.

Myanmar remains a land aflame. Although most ethnic groups have signed ceasefires with the government, conflict continues with some. Particularly contentious is the status of the stateless Rohingya in Rakhine State, who have been targeted by Buddhist nationalists.

Complicating all these tasks are the people’s high expectations. President Htin Kyaw called for patience, but that may end up in short supply. The Burmese people voted more for The Lady, as Suu Kyi is known, than the NLD or a particular political program. It isn’t likely to take long for disappointment to arrive amid practical politics, including difficult economic, ethnic, labor, and religious disputes.

Despite all this, however, what is happening in Naypyidaw is extraordinary. As I pointed out in Forbes: “civilians have taken over most of the positions of authority in Burma. The people of Myanmar do not yet rule themselves. But they are closer to doing so than at any previous point in more than a half century.”

The U.S. and other nations should encourage the democracy process. Some U.S. economic sanctions remain. As a result, American firms are having trouble finding capable local partners and at a disadvantage compared to firms from Europe. Indeed, Suu Kyi declared last November that “With a genuinely democratic government in power, I do not see why they would need to keep sanctions on.”

While much more remains necessary to create a liberal and free society, Washington should further relax sanctions to reward progress so far. If the military continues to cooperate in Myanmar’s transformation the rest of the restrictions should be lifted in the coming months.

Burma once vied for the title of worst governed nation on earth. Today Myanmar is not yet fully democratic, but it no longer is a dictatorship. The Burmese people deserve America’s support as they seek to complete their journey to a liberal and free society.

This weekend Venezuelan President Nicolás Maduro announced a 30 percent increase in the minimum wage. This marks the twelfth increase since he took over from Hugo Chavez in 2013, and comes on the heels of a 25 percent increase March 1. The minimum wage is now up to roughly $13.50 at the black market inflation rate. That’s not an hourly minimum, but $13.50 per month.

Due to disastrous economic policies and the recent fall in the price of oil, Venezuela’s economy, already teetering on the brink of a crisis, has plunged into full-fledged collapse in recent weeks. Venezuelans face dire shortages in everything from food to soap to toilet paper.  Rampant inflation makes it hard to find the basic necessities they need to survive even when they spend hours in lines hoping to buy them.

Venezuela, once one of the richer countries in the Americas due to its oil, has had the ignominy of topping the Misery Index, a project from Cato’s Steve Hanke which scores countries on unemployment, inflation, lending rate and change in real GDP per capita.

There does not seem to be an end in sight to these troubles. The International Monetary Fund (IMF) forecasts an economic contraction of eight percent this year after the economy shrank 10 percent last year. Inflation shows no signs of abating either, as the IMF expects it to surge even further to 720 percent this year.

Instead of pursuing economic liberalization or structural reform, Maduro is doubling down on the same kinds of government interventions and price controls that led to the country’s current predicament.

Without appearing to recognize the irony of his statement, Venezuelan President Maduro lauded the minimum wage increase in an address on state television, saying “Only a president like Nicolas Maduro, son of Hugo Chavez (could achieve this).”

Aggrieved Venezuelans might agree, though not in the way Maduro would hope. The Washington Post reported that yesterday the opposition turned in a petition with 1.8 million signatures seeking a nationwide referendum to remove him from office, in what would be a final repudiation of the economic policies of his administration. 

“Helicopter money” started out as, and long remained, nothing more than a heuristic device — and a brazenly counterfactual one at that — employed by monetary economists as a means for gaining a better theoretical understanding of the consequences of changes in the stock of money.  “Suppose,” the analysis went, that instead of increasing the monetary base by buying bonds in the open market, central banks dropped new supplies of currency from helicopters, thereby instantly increasing everyone’s money balances.  What would that do to spending and, eventually, to prices?

Lately, however, helicopter money has made its way from the inner recesses of economics textbooks to the financial pages of major newspapers and magazines, where a debate has been joined concerning its merits, not as an abstract analytical tool, but as an actual policy tool for relieving Japan, and perhaps some other economies, of their deflationary woes.  Look, for some examples, here, here, and here.  And see as well this recent blog post by our dear friend Jerry Jordan, written for the Atlas Foundation’s Sound Money Project.

Yet for all the controversy surrounding the suggestion that Japan should actually try dropping money from helicopters (or something close to that), my own response to it consisted, not of either surprise or dismay, but of a strong sense of déja vu.  For I myself wrote an op-ed proposing helicopter money for Japan in the spring of 1997, that is, almost exactly 19 years ago.  I never tried to publish it, in part because I myself couldn’t quite decide just how firmly my tongue was poking my cheek as I wrote it, and because I had then as I do still an abiding dislike of  “clevernomics,” which is the sort of stuff economists write to show just how clever they they can be, rather than because they are seriously trying to help the world along.  Worried that I was myself lapsing into that sort of thing, I stuffed the essay into a file cabinet, where it has been buried ever since.

All the recent writing on the subject has, however, emboldened me to resurrect my dusty old essay and to publish it hereunder its original title.  I don’t pretend that it adds anything to what recent commentators have had to say on the topic.  Consider it a bagatelle, if you like: you’ll get no argument from me.

****

They said it was like “pushing on a string.”  It was the middle of the 1930s, and the U.S. and much of the rest of the world were in the midst of an unparalleled deflationary crisis.  Normally the way out of such a crisis would have been for central banks, including the Federal Reserve, to inject more reserves into their banking systems by buying securities in the open market and paying for them with central bank credits.  That policy would do provided banks put the new reserves to work by lending them out, thereby stimulating an increase in demand for investment or consumer goods.  But in the U.S. interest rates on loans and securities had fallen so low, the Fed claimed, that adding to bank reserves no longer helped: the new reserves “pushed” into commercial banks would simply pile-up there, instead of causing the banks to extend more private credit.  Hence, “pushing on a string.”  Economists, following John Maynard Keynes, referred to the conundrum in question as a “liquidity trap.”

Whether the U.S. economy was really stuck in a liquidity trap during the Great Depression remains controversial.  For several decades afterwards, however, the issue was moot, as inflation replaced deflation throughout the world’s economies.  Only recently it has again taken on practical significance, with economists and Japanese monetary authorities pointing to Japan today as another instance of an economy faced with an insatiable demand for liquidity.  Japanese consumer and producer spending has been shrinking for months, causing wholesale prices to decline and inventories to accumulate.  The overnight call loan rate has hit zero, and short-term lending rates are at historically low levels.  Although the Bank of Japan has been pumping reserves into the banking system, bank lending remains sluggish.  The banks have more reserves than ever, but seem to lack any incentive for putting them to use.

Japan’s dilemma has at least one Federal Reserve official worried that the same thing might happen again (or, as some would have it, for the first time) in the United States.  Marvin Goodfriend, a Vice-President of the Richmond Fed, proposes in a recent paper that, in the event that we should fall into a liquidity trap, Congress should grant the Fed authority to tax bank reserves, causing them, in effect, to earn a negative return.  Since even a zero interest rate on loans beats a negative return on reserves, the banks would have reason to lend even at zero rates.  For good measure, Goodfriend recommends that public currency holdings be taxed as well, so as to discourage hoarding by the public.

Goodfriend’s proposed taxes are meant to be emergency measures only, which would be removed in good times.  Still, one shudders to think what might happen should the government decide to take advantage of the new measures’ capacity for enhancing its share of the profits from the Fed’s money monopoly.

Fortunately, central banks don’t need new taxing powers to free their economies from liquidity traps.  All they need to do is to supply new money directly to the public, instead of trying to get it to them indirectly by first adding it to bank reserves.  Individual citizens, unlike commercial banks and other financial firms, do not have to decide either to hoard money or to lend it at some trivial rate of interest.  They have a third, more tempting, option, namely, that of spending unwanted money balances directly on goods and services.  Central banks, on the other hand, don’t have to issue new money in exchange for securities or collateral owned by private financial firms: they can simply give it away to citizens, avoiding the middlemen.

In Japan today, the strategy could work as follows: the Bank of Japan could announce its intention of giving away, say Y5000 (roughly $50 U.S.) to every Japanese citizen each month until private spending picks up, bringing Japan’s deflationary crisis to an end.  The giveaway could be engineered in a manner similar to that employed during the 1990 German monetary unification, when the Bundesbank supplied East German citizens with limited quantities of Deutsche marks in exchange for Ostmarks.  The policy would assure Japan’s citizen’s that, one way or another, their money earnings were about to permanently increase, giving them ample reason to consume more.  Given Japan’s population, the promised rate of new money creation would increase Japan’s monetary base by around ten percent after a year — a substantial rate, but not large compared to recent annual figures.  Moreover, the mere announcement of the policy might suffice to revive spending quickly, allowing the policy to expire in relatively short order.

Critics of the monetary giveaway proposed here might fear that it would ultimately trigger inflation.  The same sort of thinking led the Federal Reserve, in the mid 1930s, to actually raise bank reserve requirements out of fear that banks might change their minds any minute and begin lending their hoards of cash.  The Fed’s fears turned out to be exaggerated, to put it charitably: its decision actually helped to keep the U.S. depression going for several more years.  Of course, if spending had actually revived on its own, surpassing the level necessary to revive the economy, the Fed could have dealt with the “problem” easily enough, by reabsorbing excess money by means of bond sales.

Keynes had a good quip about Fed officials who worried, in 1936, about inflation: they “professed to fear that for which they dared not hope.”  Let’s hope that the Bank of Japan won’t harbor such misplaced fears, and that it doesn’t otherwise allow the liquidity-trap bogey to keep it from doing all it can to revive Japan’s economy.

[Cross-posted from Alt-M.org]

I met with a group of House Republicans last week to talk about tax reform. Ways and Means chairman Kevin Brady is laying the groundwork for a major tax restructuring next year, and so GOP members are boning up on reform ideas. I discussed income tax reforms with the members, including the creation of Universal Savings Accounts. And, on payroll taxes, I proposed reviving the Right-to-Know National Payroll Act, a bill that passed the House back in 2000 but died in the Senate.

The federal payroll (or FICA) tax that funds Social Security and part of Medicare imposes a huge burden on workers and the self-employed. Liberals are right when they note that the 15.3 percent tax costs moderate-income people far more than the income tax does. In addition to the large burden, the problem with the payroll tax is that half of it (7.65 percent) is collected from employers and hidden from citizens because it does not appear on worker paystubs or annual IRS W-2 forms.

Economists agree that the “employer” half of the payroll tax actually falls on employees in the form of lower wages. Thus the tax reduces wages of American workers by $550 billion a year without them even knowing it. For transparency in taxation, Congress should change the administration of the payroll tax so that the full 15.3 percent is clearly visible on worker paystubs and W-2 forms.

The House passed the Right-to-Know National Payroll Act in 2000, which would have required W-2s to report the full amount of payroll tax. Even better would be to make the full payroll tax visible on weekly or biweekly worker paystubs. Full disclosure of this burden is needed more than ever given the huge expected cost growth in Social Security and Medicare.

Raising worker awareness of the full costs of these retirement programs would help open their eyes to the need for restructuring. The current chairman of Ways and Means was a co-sponsor of the 2000 bill, so this reform idea may have legs in 2017.

A broader right-to-know proposal from the Mackinac Center is here.

An overview of federal tax reform options is here.

Rising powers tend to be cocky and pushy. They believe their time has arrived and they want their just deserts—now. So it is with China.

Alas, there’s a downside, which Beijing has discovered. Rising powers don’t make many friends.

If you listen to the debate on the U.S. presidential campaign trail—not recommended for the faint-hearted!—you’d think America was a helpless Third World state, besieged by enemies deploying vast armies and armadas. The truth is, the United States dominates the globe. Among its advantages is being allied with every major industrialized state, save China and Russia, and is friendly with many other states as well.

The latter point underscores America’s extraordinary global reach. There are many reasons Washington has so much international clout. Much of this has is because U.S. policy has emphasized making friends and acquiring allies.

There are downsides to this approach. Nevertheless, overall the United States is stronger because it has a cooperative relationship with so many other countries.

In contrast, let’s look at the international response to Beijing’s so-called peaceful rise.

The People’s Republic of China is essentially friendless. Its one ally of sorts, North Korea, is a frenemy at best.

China has a solid relationship with Pakistan, though that offers only modest benefits, given the latter’s weakness and the PRC’s lack of nearby military operations requiring support. The South Korea has become disillusioned by China’s unwillingness to do more to punish the North.

Until recently, Beijing was close to Burma–too close, it seems. One reason the latter’s military stepped into the background and welcomed the relaxation of Western sanctions was to gain breathing room.

China recently moved closer to Thailand, but mostly as a result of Bangkok’s estrangement from Washington over the Thai military’s seizure of power. The PRC is far from forging a long-term, enduring relationship. Beyond Asia, China has gained clout because of its economic prowess, but “winning” in such pariah states as Sudan and Zimbabwe is a dubious accomplishment. In Zambia, perceived Chinese arrogance became a political issue.

While the PRC has made economic and political gains elsewhere in Africa, they remain limited. During the Cold War, Washington made a substantial investment in many of the same nations, with little lasting benefit.

Beijing’s most important relationship may be with Russia. But the two nations are, at most, “strategic partners” and only because the United States foolishly pushed them together. Once the West’s sanctions end, Moscow is likely to shift its gaze again.

As I pointed out on China-US Focus, “while China can count on few friends, it has accumulated numerous adversaries. Japan is arming itself. The Philippines is pushing for a closer military relationship with Washington. Even Vietnam, which fought a long war against America with the PRC’s support, is looking toward the U.S. for aid against China.”

Indonesia, the world’s most populous Muslim nation, has confronted China over illegal fishing. Malaysia’s defense minister talked of “pushback” by Southeast Asian states against the PRC. Australia has grown increasingly wary of Beijing despite strong bilateral economic ties. India’s relationship with the PRC remains strained because of a territorial conflict running back a half century.

This is an appalling record for Beijing. China’s behavior would make U.S.-style alliances difficult for any nation.

The PRC is not an attractive partner for countries which matter. Although Chinese officials complain that the United States is embarked on a policy of “containment,” Beijing is doing much to contain itself.

Given its international ambitions, the PRC needs friends if not formal military allies. But China already is discovering that money does not guarantee love.

If Beijing wants to compete with America globally, the former must follow Washington’s lead and build a network of mutually cooperative states. Until now, however, the PRC has been pushing countries away.

China’s obnoxious behavior looks likely to continue. If Beijing can’t find a way to win favor from at least some of its neighbors and other influential nations around the globe, it may remain a modest geopolitical player.

The Syrian Civil War has produced about 5.8 million Syrians seeking refuge or asylum elsewhere–a scale of population displacement unseen since World War II. Although the flow into Europe dominates the news, most of the registered Syrian refugees remain in the Middle East. Lebanon, Turkey, and Jordan are the main recipients of the immigration wave, receiving roughly 1.1 million, 2.7 million, and 640,000 Syrians, respectively. The Gulf States are hosting about 1.2 million Syrians on work visas but they are not legally considered refugees or asylum seekers because those nations are not signatories to the UNHCR commission that created the modern refugee system. Regardless, the humanitarian benefit of Syrians working and residing there is tremendous.

The movement of so many Syrians over such a short period of time should result in significant economic and fiscal effects in their destination countries. Below is a summary of recent economic research on how the Syrians have affected the economies and budgets for Lebanon, Turkey, Jordan, and Europe. 

Lebanon

Syrian refugees are 24 percent of Lebanon’s population–the highest Syrian refugee to population ratio in the world. However, neither the Lebanese government nor the United Nations has established official refugee camps in the country and registration of new Syrian refugees stopped in May 2015. International NGOs provide humanitarian aid that benefits over 126,000 destitute Syrians, but significant funding shortages have left some Syrians living on less than half a dollar per day. To more efficiently provide aid, the United Nations High Commissioner for Refugees has divided the country into four areas: Mount Lebanon and Beirut, North Lebanon, Bekaa Valley, and South Lebanon. Most refugees have settled in the underdeveloped areas of the Bekaa Valley and North Lebanon because the Lebanese in these areas share many family ties with Syrians. Locals in these areas are struggling to accommodate Syrian refugees despite the family ties.

Many Syrians, especially those with more wealth and greater skills, are responding to the poor economic conditions in North Lebanon and Bekaa by moving to South Lebanon and Beirut where there are more job opportunities, higher wages, cheaper rents, and safer communities. Syrian entrepreneurs are also welcomed in these regions of the country.

Lebanon’s real GDP grew 2.5 percent in 2015, the best growth rate since the turn of the decade, despite losses of investment and tourism due to the Syrian civil war. Furthermore, a World Bank report noted that a 1 percent increase in the population of Syrian refugees increases Lebanese service exports by 1.5 percent, due in part to the so-called market size effect. In the Bekaa Valley and North Lebanon, the influx of Syrians has led to 60 percent reduction in wages because low-skilled Syrian and Lebanese workers are substitutes. Lebanese entrepreneurs are not hiring many Syrian refugees and prefer to blame Syrian-operated businesses for regional economic problems and sluggish growth. The Lebanese government responded in the Bekaa region by closing down Syrian businesses, worsening the employment situation.

In response to the constant inflow of Syrians, the Lebanese government established a new visa system for students, businessmen, and those sponsored by Lebanese citizens. Missing from their visa reforms, however, is a humanitarian visa.

The refugee crisis could have a less negative or maybe even a net-positive effect on Lebanon’s economy after more policy changes. While it is undeniable that wages have fallen in certain areas of Lebanon, there are many Lebanese government policies that have exacerbated that effect.  Here are some suggested reforms:

  • Immediately grant legal work permits to all Syrian refugees. Most Syrian refugees are informal workers because the government has generally restricted legal work permits. As a result, 92 percent of them do not have a contract and black market employees are especially vulnerable to abuses and wage reductions. If the government allowed Syrians to work legally, they would become more competitive, have more of an incentive to invest in Lebanon-specific human capital, and face an improved bargaining position–all reactions that would help to increase their productivity and likely offset some of the downward pressure on wages.
  • Stop restricting Syrian entrepreneurship. Local Lebanese governments, especially in North Lebanon and Bekaa, have limited or shut down Syrian-owned businesses. Syrian entrepreneurship will help alleviate unemployment and wage stagnation problem. The Lebanese government should immediately stop punishing Syrian entrepreneurs. 

Jordan

The influx of Syrian refugees into Jordan is equal to about 8 percent of that country’s population. Refugees are not evenly dispersed in Jordan with about 90 percent residing in the governates in the north of the country. Despite the significant population shock, unemployment rates are lower in these governorates than the rest of the country and they have been declining since the start of the Syrian Civil War. On the other hand, labor force participation rates in these governorates are also slightly lower. Overall, Syrian refugees have not had a significant effect on the labor markets in Jordan.

This better labor market outcome could stem from the Jordanian government deregulating the labor market in the face of the refugee surge. Since March 2016, Jordanian authorities have expanded work permit access to refugees using Jordanian Ministry of the Interior identity cards and UNHCR-issued asylum seeker cards, allowing many more Syrian refugees to work in the legal market. About 99 percent of Syrians worked in the underground economy prior to these reforms. This new policy is projected to expand work permit access to 78,000 Syrians in the short term and thousands more in the future. The Jordanian government has a long history of these types of labor laws as their constitution and guest worker laws attest.  

These new work permits are better than unlawful employment but they often come with restrictions such as employer sponsorship and minor fees that make them difficult to obtain for some workers.  Fortunately, the pace of reform is increasing so hopefully those guest-worker permit barriers are further pared down. Syrian workers who entered the country legally and were not residents of a refugee camp could apply for work permits–a big policy shift for the 83 percent of refugees who are not in camps.

The Jordanian housing market has suffered the greatest shock as rents and prices have climbed in response to the refugees. According to one projection, those rents have grown by 7.73 percent since the beginning of the Syrian crisis–an estimated 5 percentage points higher than if the refugees had not arrived. This effect is unsurprising as the housing market is more affected by immigrant inflows than any other market.  Refugees aside, the Syrian Civil War and Arab Spring have dampened Jordan’s tourist and trade markets, likely slowing export growth.

The fiscal effects of the Syrian refugee crisis are acute. The Jordanian government supplies a substantial amount of social services and welfare benefits to the Syrians. They consumed an estimated 8.8 percent of the government budget through healthcare, education, and security services. While that number is slightly higher than the Syrian percentage of the population, this estimate was also made in 2014 before the changes in work permit policies.

There are additional policy steps the Jordanian government can take to maximize the benefits from welcoming refugees while minimizing the costs:

  • Eliminate or at least reduce fees, remove employer sponsorship requirements, and repeal other restrictions on the granting of work permits to Syrians. By removing restrictions on work permits they can bring Syrians out of the informal market, lower the fiscal costs of supporting the refugees, and allows complementary task specialization to occur in the broader Jordanian labor market. 
  • Ask the United States to further reduce the trade and regulatory barriers that remain after the passage of the Free Trade Agreement. This will make up for the decline in regional economic activity and provide more employment opportunities in export-oriented industries. If possible, American relaxation of these remaining trade barriers should be accompanied by further Jordanian labor market deregulation and the granting of work permits to all Syrian refugees without fees or restrictions.

Turkey

Turkey is currently hosting 2.7 million Syrian refugees, more than any country in the world. Unlike Jordan and Lebanon, however, Turkey has a much larger population base and a more robust and developed economy. While there are established refugee camps, 85 percent of the Syrian refugees in Turkey have left the camps and found work in the formal and informal markets.

Lower-skilled Syrian workers in the informal market have displaced similarly skilled Turks and increased unemployment in areas where they are concentrated by about 2 percentage points. The government’s restrictive work permit policy likely led to that negative effect. The Turkish government issued regional permits allowing refugees to work only in the refugee community,which concentrated the increase in the supply of labor rather than letting the workers fan out into the Turkish economy. Refugees not employed in the community either had to seek informal employment or rely on state aid. As a result, the government had to spend an additional $5 billion for the refugees.

Since January 2016, Turkey has taken steps to allow Syrians to work legally. Syrian workers are now allowed to comprise a maximum of 10 percent of the employees in any firm and are subject to minimum wage requirements. While the full effects of this new policy have yet to be measured, some Turkish politicians have recognized the economic benefits of Syrian entrepreneurship and a growing labor market. Legalizing Syrian workers will likely ensure the further decline of the informal market, which has shrunk almost 7 percentage points between 2011 and 2014.

Overall, the Syrian refugees have had a modestly positive impact on Turkey’s economy. Turks have responded to the population shock through occupational upgrading, as the expanded consumer base has created new opportunities for higher wage formal jobs

Turks have also responded to increased labor market competition by seeking skill upgrades to make themselves complementary to the new Syrian workers. The percentage of Turks in higher education increased from 20 percent to 23 percent from 2011 to 2014.  School attendance has increased for Turkish women as well,  though those effects may have occurred as a result of other changes in government policy. Turks who directly compete with low-skilled Syrians and don’t change occupation do face some job displacement and wage declines, but the average wage increases as they shift to higher wage jobs. Furthermore, as more Syrians participate in the market, consumer prices have dropped an average of 2.5 percent since 2011 because of increased competition at the lower end of the labor market has made goods more affordable for every Turkish consumer.

Turkey has handled the Syrian refugee surge better than any other neighboring country. Endogenous factors such Turkey’s larger population and more developed economy deserve enormous credit, but Turkey’s recent labor market liberalizations also helped. Turkish occupational upgrading, made possible by a larger labor market, is the best possible result. There are some policy changes the Turkish government can make to further increase the benefits and diminish the costs of the Syrian refugee crisis:

  • Increase or remove entirely the 10 percent cap on Syrian employment in firms. The Turkish government could phase-out this cap with increases announced months in advance to allow Turks to adjust or shift occupations in response. 
  • Eliminate the minimum wages for the refugees and normalize wage regulations for all workers, hopefully with fewer restrictions. This will further diminish the size of the informal labor market and draw more lower-skilled Syrians into jobs. 
  • Turkey should ask the European Union and the United States to further remove trade barriers on Turkish exports. In exchange, Turkey should take further steps to integrate Syrians into their economy, provide universal work permits, and eliminate the two-tiered labor market regulation system. This will make Turkey a more attractive place for Syrian refugees to stay. The first step in this should be the United States dropping its dumping complaints against Turkish steel firms. A growing export sector in the Turkish economy could help absorb many Syrians.    

Europe

There have been 972,012 Syrian asylum applications in Europe between April 2011 to February 2016. Sixty-one percent of them are hosted by Serbia, Kosovo, and Germany, while 27 percent are hosted by Sweden, Hungary, Austria, the Netherlands, and Denmark. 

European governments have responded to this influx by increasing fiscal expenditures to accommodate the refugees and provide humanitarian assistance. Increased social expenditures are likely to continue even if optimistic estimates find that 10-15 years are necessary before refugees begin to be fiscally positive. For 2015-2016, the European Commission allocated additional funding of 9.2 billion euros in order to address the refugee crisis. The scale of the funding could be decreased and the time until fiscal balance could be diminished drastically through better labor market integration.

Optimistic projections of refugee integration assume they will have a labor force participation rate 5 percent lower than similarly skilled natives. The refugee unemployment rate is currently 30 percent and well above 50 percent for asylum seekers in Germany, Britain, and France. Unemployment for these groups is even higher in non-EU European countries.

Long-term gaps in immigrant versus native employment vary considerably across European countries (Chart 1). The positive figures in Chart 1 show a gap where immigrant unemployment is greater than native unemployment. The negative figures show when immigrant unemployment is less than it is for natives. There is an especially wide gap in the refugee destinations of Sweden, the Netherlands, Denmark, and Germany.

Chart 1

Long-Term Unemployment Rate Gap between Natives and Immigrants, Aged 15-64 in 2012-2013

 

Source: OECD http://www.oecd.org/els/mig/Indicators-of-Immigrant-Integration-2015.pdf.

These negative results stem from significant and costly European labor market regulations that prevent non-EU immigrants from economically integrating. The fear of immigrant labor market competition is misplaced as most of them are complementary to European workers, not substitutable. These labor market regulations are even more onerous for Syrians. Labor market policies directly at refugees and asylum seekers are:

  • Work bans. There are significant prohibitions on employment after a refugee or asylum seeker enters a country (Chart 2). These bans make the Syrians completely dependent on charity and government aid while delaying their labor market integration. 
  • Shortage occupation lists. These lists allow immigrants to be hired to fill the gaps in industries that are supposedly suffering labor shortages. These prevent immigrants from working in many sectors of the economy. Shortage occupation lists in Germany, for example, delay employment even for high-skilled refugees such as university graduates and apprenticeship diploma holders.
  • Priority checks. These regulations ensure that businesses guarantee there are no suitable unemployed natives before hiring refugees. The German priority check system places the priority check bar on refugees for 15 months. During this time, if the refugee is interested in a job, the business must ensure not only that no German is qualified to fill this role, but also that no EU citizens of associated countries are qualified and available as well. By placing refugees at the end of the labor line, European nations effectively deny refugees employment options.
  • Self-employment bans. These prevent refugees from creating businesses or otherwise employing themselves. In the United Kingdom, France, and Germany, for instance, asylum seekers and refugees are not allowed to start businesses in any case. This is simultaneously harmful to both sides of the labor market, as refugee entrepreneurs would expand European labor demand and help to accommodate fellow refugees as well as European workers.
  • Temporary employment bans. These prevent refugees from taking temporary employment. In place in the United Kingdom and Germany, temporary employment bans further limit options for refugees to find work.

Chart 2

Waiting Periods for Asylum Seeker Access to Labor Markets, in Months

 

Source: OECD http://www.oecd.org/migration/How-will-the-refugee-surge-affect-the-Euro….

Egregious labor policies in the European Union are the roadblock to refugee integration. As such, there are many reforms European nations should undertake to lessen this problem:

  • Remove the working bans on new refugees and asylum seekers. Incentivize them to work immediately. 
  • Remove the other labor market regulations listed above, at least for refugees and asylum seekers. 
  • Remove minimum wage requirements for the refugees and asylum seekers or give them a temporary reprieve until they gain some labor market experience. Given that a consensus of literature has found minimal effects of low-skill immigration on native wages, the minimum wage only decreases the opportunity for refugees to find work in their host country.

Conclusion

The Middle Eastern countries with substantial Syrian refugees have all responded with similar reforms, to different extents. Turkey and Jordan have done the most to integrate Syrians while Lebanon has done the least. Lessening government barriers to legal employment and entrepreneurship have made the situations better in those destinations. Europe is still struggling, and their sclerotic labor market regulations do not bode well for successful integration unless some serious reforms are undertaken.  

The Fourteenth Amendment guarantees that no state shall “deny to any person within its jurisdiction the equal protection of the laws.” Among lawyers, the buzzword we looking for in an equal protection case is “strict scrutiny,” because chances are that once the court has said that standard applies, the government will lose. Nevertheless, there are plenty of cases—including last term’s Obergefell decision on gay marriage—in which a government action has transgressed even less rigorous levels of scrutiny.

After all, the Constitution doesn’t guarantee the “equal protection of the laws” only to people who fit within certain categories. Instead, it guarantees that governments – federal or state – will not make arbitrary distinctions among the people subject to their laws. For instance, the Supreme Court has said that the government cannot refuse food stamps to people living in a household where not everyone is related (U.S. Dep’t of Agr. v. Moreno). Nor may the government require a special-use permit for the operation of a group home for mentally disabled people (City of Cleburne, TX v. Cleburne Living Center, Inc.). Nor may a state restrict access to its public schools to legal residents, thereby preventing illegal-immigrant children from receiving an education (Plyler v. Doe).

Now there’s a new lawsuit in federal court in California, Garcia v. Harris, that challenges the way that state has structured its Gun-Free School Zones Act. Until last year, state law contained an exemption for people who had obtained a California license to carry a concealed weapon (“CCW”). Due to pressure from the anti-gun lobby, however, the state legislature removed that exemption, nevertheless leaving in place the exemption for “an honorably retired peace officer authorized to carry a concealed or loaded firearm.”

However much the anti-gun lobby wants to tout this as a commonsense exemption, or a bone to throw to the law-enforcement community, it leads to ridiculous outcomes. As an initial matter, retired police who ever carried a firearm during their service are eligible to carry a firearm afterward as a matter of course. They are exempt from the Act even though they haven’t gone through anything near the rigors of the CCW application process, which requires showing “good moral character,” completing a firearms training course, and establishing “good cause.” (We’ll set aside for now the issue of why someone needs to show “good cause” to be able to exercise a constitutional right; the Supreme Court has repeatedly declined to take up cases that would explore the scope of the right to bear arms outside the home.)

But the exemption is even broader than that: It allows people whose work had nothing to do with firearms to carry them simply because they worked for the government. For example, the law exempts retired employees of the California Department of Fish and Game. It also exempts retired marshals who “ke[pt] order and preserve[d] peace at the California Exposition and State Fair.”

And perhaps most absurdly, the law exempts retirees from “any federal law enforcement agency.” So while the law does not give an exemption to a Marine Corps vet who served in Afghanistan and is an expert marksman, it would exempt an IRS retiree who spent his career at a desk computing tax penalties far away from the field of combat.

These inane rules giving preferential treatment to former government employees cannot withstand even the so-called “rational basis test” under the Equal Protection Clause. As the Court said in Cleburne, equal protection “is essentially a direction that all persons similarly situated should be treated alike.”

There is simply no reason that an emergency room doctor who received threats against his family cannot carry a firearm when he drops his children off at school but a retired tax collector can. Working for the government already carries enough benefits: Special treatment under gun-control laws should not, and under the Equal Protection Clause cannot, be one of them. 

Whatever the issue and occasion, North Korean ambitions loom large. Foreign Minister Ri Su-yong recently opined that the confrontation between the United States and his nation “will lead to very catastrophic results, not only for the two countries but for the whole entire world as well.”

Actually, most of the world doesn’t much notice the Democratic People’s Republic of Korea. Nevertheless, everyone would benefit if international relationships involving the DPRK became more normal.

Interviewed by the Associated Press, Ri defended the right of his nation to possess nukes and blamed American hostility for forcing the DPRK to create a nuclear deterrent in self-defense. The latest missile test, he said, gives North Korea “one more means for powerful nuclear attack.”

However, Ri suggested a potential deal between North Korea and the United States: “Stop the nuclear war exercises in the Korean Peninsula, then we should also cease our nuclear tests.” It’s an idea worth pursuing.

Pyongyang is unlikely to ever agree to fully disarm. It has spent too much developing nuclear weapons. Nukes also offer security against the world’s greatest military power, which has demonstrated a propensity for ousting the regimes of largely defenseless antagonists.

Nevertheless, there are more limited steps which Pyongyang might be willing to take, having already established its nuclear bona fides. Halting additional nuclear tests is one.

Ending military exercises with South Korea would be a small price for Washington to pay. In fact, America’s conventional military presence on the peninsula is a relic of the past.

The Republic of Korea long ago surpassed the North on every measure of power, save military. The latter failure is merely a matter of choice.

The ROK began to take-off economically during the 1960s. Today, South Korea has around 40 times the GDP of the DPRK. South Korea also has twice the population, a vast technological edge, and far greater international reach and support.

Although Seoul’s forces are outnumbered by those of the North, the ROK possesses newer equipment, larger reserves, superior naval and air forces, and a much bigger industrial base. If the South wanted to match North Korea man for man and tank for tank, it could do so. But it doesn’t need to, since the United States will do the job.

Washington’s security guarantee is a bad deal for Americans and creates the opportunity for a win-win agreement with North Korea.

America should bring home its conventional forces and in doing so could offer to trade away the maneuvers.

The United States could propose to end exercises in exchange for the North halting nuclear tests. The United States could follow-up with a proposal for troop withdrawals. In return, the DPRK might end missile tests, move its conventional units away from the border, and freeze nuclear activities.

America could add a little extra incentive: diplomatic relations. There is no good reason not to have regular contact between North Korea and the United States. Providing North Korea with a way to contact Washington without having to arrest another errant American for one alleged crime or another would be a nice bonus.

Of course, the gambit might turn out to be a propaganda ploy, with the Kim regime unwilling to follow through. Pyongyang might quickly violate any agreement that it reached.

Possible, but unknowable, without taking up Ri’s challenge.

And, as I point out in Forbes, “no one has a better solution. Preventive war is unthinkable. The latest sanctions have bitten more deeply than before, but remain inadequate to force change in Pyongyang. At the moment, all Washington can do is watch the DPRK continue testing nuclear weapons and missiles.”

North Korea long has been an insoluble problem for the United States. But Foreign Minister Ri’s remarks suggest the possibility of at least reducing the threat posed by North Korea.

 

The administrative state has ballooned in size and power—essentially having become its own branch of government—and Cato has now filed an amicus brief saying enough is enough.

The Securities and Exchange Commission, no longer content with just regulating securities, has accused a company called Timbervest of fraudulently taking undisclosed real-estate commissions. Timbervest was found liable by an SEC administrative law judge (“ALJ”), but even without getting into the merits of the allegations, there are several problems with this prosecution inquisition.

First, ALJs are executive-branch officers who nonetheless are insulated from removal by the president. Yet Article II of the Constitution, to ensure democratic accountability, vests the president with power over the executive branch—including over quasi-judicial officers like territorial judges—and requires that he “take care that the laws be faithfully executed.” The relevant statute here prevents the president from doing just that by having three levels of officials between the president and the SEC’s ALJs, each of whom can only be removed for cause.

Second, the SEC picked the ALJ who heard this case, even though the Supreme Court has held that there is a reasonable fear of bias when “a man chooses the judge in his own cause.” This problem has become so systemic that a former SEC ALJ felt compelled to speak publicly about how ALJs were pressured to rule in the agency’s favor.

Third, there is a real problem with this matter being in an administrative forum at all. After all, this is real-estate fraud case, of a sort that courts—real courts—have heard since the Founding. Congress can assign new statutory rights that didn’t previously exist for adjudication in an administrative forum (for example, Social Security disability claims), but it can’t take away long-held freedoms without the due process that that only the judiciary can provide. Here the SEC permanently banned Timbervest’s owners from associating with any investment advisers. The Supreme Court has recognized the right of association for the advancement of ideas as a protected First Amendment right, which is not something that can be taken away without at least a jury trial. If the SEC wants to try this case, it needs to do it in a proper Article III judicial proceeding.

Accountability, impartiality, and the right to a day in court before constitutional rights are taken away: is that too much to ask? We hope that the U.S. Court of Appeals for the D.C. Circuit, the court charged with reviewing most administrative-agency actions, agrees that it’s not.

Thanks to legal intern Devin Watkins for his help with Cato’s brief, and this blogpost.

In today’s Wall Street Journal, Scott McCartney reports on the superior air traffic control (ATC) system north of the border. American aviation is suffering from a bureaucratic government-run ATC, while Canada’s privatized system is moving ahead with new technologies that reduce delays and congestion.

Showing leadership and boldness, House Transportation Committee chairman Bill Shuster managed to get reforms along Canadian lines passed out of his committee. Unfortunately, Senate Republicans have thus far been too timid to move ahead with restructuring. The flying public may have to wait until a reform-minded president can push an overhaul through Congress.

Here’s some of McCartney’s reporting:   

Flying over the U.S.-Canadian border is like time travel for pilots. Going north to south, you leave a modern air-traffic control system run by a company and enter one run by the government struggling to catch up.

The model is Nav Canada, the world’s second-largest air-traffic control agency, after the U.S. Canada handles a huge volume of traffic between the U.S. and both Asia and Europe. Airlines praise its advanced technology that results in shorter and smoother flights with less fuel burn.

In Canada, pilots and controllers send text messages back and forth, reducing errors from misunderstood radio transmissions. Requests for altitude changes are automatically checked for conflicts before they even pop up on controllers’ screens. Computers look 20 minutes ahead for any planes potentially getting too close to each other. Flights are monitored by a system more accurate than radar, allowing them to be safely spaced closer together to add capacity and reduce delays.

And when flights enter U.S. airspace, pilots switch back to the old way of doing things.

The key, Nav Canada says, is its nongovernmental structure. Technology, critical to efficient airspace use these days, gets developed faster than if a government agency were trying to do it, officials say. Critics say slow technology development has been the FAA’s Achilles’ heel.

… Another innovation adopted around the world is electronic flight strips—critical information about each flight that gets changed on touch screens and passed from one controller to another electronically. Nav Canada has used them for more than 13 years. Many U.S. air controllers still use paper printouts placed in plastic carriers about the size of a 6-inch ruler that controllers scribble on.

For more on ATC, see here.

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.

We’ll jump right into this week by highlighting an appearance by Manhattan Institute senior fellow Mark Mills on The Federalist’s Radio Hour. During his time on the show, Mills explains how the foreseeable future is going to play out when it comes to global energy production and why he says that even if you were concerned about climate change, “there really isn’t anything you can do about it.” 

Mills is one of the leading thinkers and analysts on energy systems, energy markets, and energy policy, bringing often overlooked and deeply-buried information to the forefront.

During his nearly hour-long radio segment, Mills discusses topics ranging from climate change, the world’s future energy mix, the role of technological advances, and energy policy as well as giving his opinions on both Bills Gates’ and Pope Francis’ take on all of the above. It is an entertaining and informative interview.

As a taste, here’s a transcript of a small segment:

In the life we live, and the world we live in, we have to do two things, one is deal with reality [current understanding of physics] and the moral consequences of that, and we can have aspirations. If the aspiration, which Bill Gates’ is, is to use fewer hydrocarbons, we need to support basic research.

We don’t subsidize stuff. The reason we don’t subsidize stuff and make energy more expensive, is because, for me, it is morally bankrupt to increase the cost of energy for most people in most of the world. Energy should be cheaper, not more expensive. We use energy to make our lives better. We use energy to make our lives safer. We use energy to make our lives more enjoyable. Everything that we care about in the world, safety, convenience, freedom, costs energy. [emphasis added]

Mark Mills’ sentiment closely matches that which Alex Epstein explained to Congress a few weeks back and that we highlighted in our last edition. 

If you can find any time to listen to a little or a lot of Mills’ full interview, you’ll probably find that what he says to make a lot of sense. Funny, though, how much of it seems to have escaped some folks.

Next up is an article in the current issue of First Things authored by Walter Wilson titled “Scientific Regress.” If you think the title is provocative, you ought to have a look at the rest of the piece beginning with the first line “The problem with ­science is that so much of it simply isn’t.” Instead, it reflects the results of a gamed system driven by pre-conceived ideas often emanating from the science/political establishment.

In describing the current sad state of science, Wilson reflects our concerns here at the Center for the Study of Science, that external factors (e.g., influence, power, money) act to negatively shape the course of science—a negative influence that is hard to shake.

Wilson writes:

[O]nce an entire field has been created—with careers, funding, appointments, and prestige all premised upon an experimental result which was utterly false due either to fraud or to plain bad luck—pointing this fact out is not likely to be very popular. Peer review switches from merely useless to actively harmful. It may be ineffective at keeping papers with analytic or methodological flaws from being published, but it can be deadly effective at suppressing criticism of a dominant research paradigm. Even if a critic is able to get his work published, pointing out that the house you’ve built together is situated over a chasm will not endear him to his colleagues or, more importantly, to his mentors and patrons.

Hear! Hear!

Wilson leaves us with this warming:

At its best, science is a human enterprise with a superhuman aim: the discovery of regularities in the order of nature, and the discerning of the consequences of those regularities. We’ve seen example after example of how the human element of this enterprise harms and damages its progress, through incompetence, fraud, selfishness, prejudice, or the simple combination of an honest oversight or slip with plain bad luck. These failings need not hobble the scientific enterprise broadly conceived, but only if scientists are hyper-aware of and endlessly vigilant about the errors of their colleagues…and of themselves. When cultural trends attempt to render science a sort of religion-less clericalism, scientists are apt to forget that they are made of the same crooked timber as the rest of humanity and will necessarily imperil the work that they do. The greatest friends of the Cult of Science are the worst enemies of science’s actual practice.

The whole piece, including the examples included therein, is an eye-opener. You ought to have a look!

And finally, we’ll leave you with a Friday Funny coming from Cartoons by Josh (a frequent commenter on the often ridiculous goings-on surrounding global warming). In this strip, Josh neatly sums up the reaction when climate gloomsayers are confronted with good news—in this case, new results showing that carbon dioxide emissions from human activities, such as the burning of fossil fuels to produce energy, are leading to a greener, more productive earth (a story that we covered in our piece “A Greening (in a Good Way) Earth”): 

Last week, I criticized the confused rhetorical framework that the Feinstein-Burr encryption backdoor proposal tries to impose on the ongoing Crypto Wars 2.0 debate.  In this post, I want to try to explain why technical experts have so overwhelmingly and vehemently condemned the substance of the proposal.

The first thing to note is how extraordinarily sweeping the bill is in scope.  Its mandate applies to:

device manufacturers, software manufacturers, electronic communication services, remote communication services, providers of wire or electronic communication services, providers of remote communication services, or any person who provides a product or method to facilitate a communication or to process or store data.  [emphasis added]

Any of these  “covered entities,” upon reciept of a court order, must be able to either provide the government with the unencrypted “plaintext” of any data encrypted by their product or service, or provide “technical assistance” sufficient to allow the government to retrieve that plaintext or otherwise accomplish the purpose of the court order.  Penalties aren’t specified, leaving judges with the implicit discretion to slap non-compliant providers and developers with contempt of court.  Moreover, “distributors of software licenses”—app stores and other software repositories—are obligated to ensure that all the software they host is capable of complying with such orders.

Some types of encrypted communications services either already comply or could comply in some reasonably obvious way with these requirements.  Others, not so much.  Because of the incredible breadth of the proposal, it’s not possible to detail in a blog post all the varied challenges such a mandate would present to diverse types of software.  But let’s begin by considering one type of software everyone reading this post uses daily: Your Web browser.  To the best of my knowledge, every modern Web-browser is non-compliant with Feiinstein-Burr, and would have to be pulled from every app store in U.S jurisdiction if the bill were to become law.  Let’s explore why.

While ordinary users probably don’t think of their Web browser as a piece of encryption software, odds are you rely on your browser to engage in encrypted communications nearly every day.  Whenever you connect to a Web-based e-mail provider like Gmail, or log in to an online banking account, or provide your credit card information to an e-commerce site, you’re opening a securely encrypted HTTPS session using a global standard protocol known as Transport Layer Security or TLS (often still referred to as SSL or Secure Sockets Layer, an earlier version of the protocol).  Even sites that don’t traffic in obviously sensitive data are increasingly adopting HTTPS as a default.  Any time you see a little padlock icon next to the address bar on your browser, you are using HTTPS encryption.

This is absolutely essential for two big reasons.  First, people routinely connect to the Web via WiFi access points they don’t control—such as a hotel, coffee shop, or airport.  Without encryption, an unscrupulous employee of one of these businesses—or a hacker, or anyone who sets up a phony “LocalCafeWiFi” hotspot to snare the unwary—could easily vacuum up people’s sensitive data.  Second, the Internet is a packet switched network that operates very differently from traditional centralized phone networks.  That means even when you’re connecting to the Internet from a trusted access point, like your home or office, your data is passed like a relay race baton across perhaps dozens of different networks you don’t control between your computer and the destination.  (You can use a program called Traceroute to see all the intermediary points your data passes through on the way from your computer to any given Web site.)  Without encryption, you’d have to trust this plethora of unknown intermediaries, foreign and domestic, not only to refrain from snarfing up your sensitive data, but to secure their systems against hackers looking to snarf up your data.  Which, needless to say, is impossible: You’d be a fool to undertake a commercial transaction or send a private message under those circumstances.  So it’s no exaggeration to say that the Internet as we now know it, with the spectacular variety of services it supports, simply wouldn’t be possible without the security provided by cryptographic protocols like TLS.

So how does TLS work?  If you’re a masochist, you can wade through the the technical guidelines published by the National Institute of Standards & Technology, but here’s a somewhat oversimplified version.  Bear with me—it’s necessary to wade into the weeds a bit here to understand exactly why a Feinstein-Burr style mandate is so untenable.

When you open a secure HTTPS session with a Web server—which may, of course, be abroad and so beyond the jurisdiction of U.S. courts—your Web browser authenticates the identity of the server, agrees on a specific set of cryptographic algorithms supported by both your browser and the server, and then engages in a “handshake” process to authenticate the server’s identity and negotiate a shared set of cryptographic keys for the session.  One of the most common handshake methods is a bit of mathematical sorcery called Diffie-Hellman key exchange. This allows your computer and the Web server to agree on a shared secret that even an eavesdropper monitoring the entire handshake process would be unable to determine, which is used to derive the ephemeral cryptographic session keys that encrypt the subsequent communications between the machines.  (Click the link above for the gory mathematical details, or see the image on the right for a liberal-arts-major-friendly allegorical version.)

A few features of this process are worth teasing out.  One is that a properly configured implementations of TLS give you a property known as “forward secrecy”: Because a unique, unpredictable, and ephemeral key is generated for each session, old communications remain securely encrypted even if a server’s long-term cryptographic keys—which remain the same over longer periods for purposes like verifying the server’s identity—are later compromised.  In economic terms, that means the “return on investment” for an attacker who manages to worm their way into a server is limited: They might be able to read the communications that occur while they remain in the system undiscovered, but they don’t then get to retroactively unlock any historical communications they’ve previously vacuumed up.  This both mitigates the the downside consequences of a successful attack and, perhaps more critically, makes it less rational for sophisticated attackers to expend extraordinary resources on compromising any given set of keys.  A recent paper by a who’s-who of security experts, incidentally, pointed to forward secrecy as a feature that is both increasingly important to make standard in an escalating threat environment and particularly difficult to square with a government backdoor mandate.

Some of the reasons for that become clear when we consider another rather obvious feature of how TLS functions: The developer of your browser has nothing to do with the process after the software is released.  When I log into an e-commerce site using Firefox, Mozilla plays no role in the transaction.  The seed numbers used to negotiate session keys for each TLS-encrypted communication are generated randomly on my computer, and the traffic between my computer and the server isn’t routed through any network or system controlled by Mozilla.  A user anywhere in the world with a copy of Firefox installed can use it to make secure connections without ever having anything further to do with Mozilla.  And TLS isn’t designed this way because of Edward Snowden or as some insidious effort to make it impossible to execute search warrants.  It’s designed that way because a lot of very bright people determined it was the best way to do secure communications between enormous numbers of arbitrary endpoints on a global packet-switched network.

Now, there are any number of ways a government agency might be able to get the contents of a targeted user’s TLS-encrypted HTTPS communications.  The easiest is simply to demand them from the server side—but that will only work in cases where the server is subject to U.S. jurisdiction (or that of an ally willing to pass on the data), and the server may not itself log everything the government wants.  Advanced intelligence agencies may be able to mount various types of “active” attacks that involve interposing themselves into the communication in realtime, but developers are constantly striving to make this more difficult, to prevent criminal hackers from attempting the same trick—and while NSA may be able to manage this sort of thing, they’re understandably reluctant to share their methods with local law enforcement agencies.  In any event, those “active” attacks are no help if you’re trying to decrypt  intercepted HTTPS traffic after the fact.

Now an obvious, if inconvenient, question arises. Suppose a law enforcement agency comes to Mozilla or Apple or Google and says: We intercepted a bunch of traffic from a suspect who uses your browser, but it turns out a lot of it is encrypted, and we want you to decipher it for us.  What happens?  Well, as ought to be clear from the description above, they simply can’t—nor can any other modern browser developer.  They’re not party to the communications, and they don’t have the cryptographic keys the browser generated for any session.  Which means that under Feinstein-Burr, no modern Web browsers can be hosted by an app store (or other distributor of software licenses), at least in their current forms.  

How, then, should developers redesign all these Web browsers to comply with the law?  The text of Feinstein-Burr doesn’t say: Nerd harder, clever nerds! Love will find a way! You’ll figure something out!  But as soon as you start thinking about classes of possible “solutions,” it becomes clear there are pretty catastrophic problems with all of them.

One approach would be to make the key material generated by the browser not-so-random: Have the session keys generated by a process that looks random, but is predictable given some piece of secret information known to the developer.   The problem with this ought to be obvious:  The developer now has to safeguard what is effectively a skeleton key to every “secure” Internet communication carried out via their software.  Because the value of such a master key would be truly staggering—effectively the sum of the value of all the interceptable information transmitted via that software—every criminal organization and intelligence agency on the planet is going to have an enormous incentive to whatever resources are needed to either steal or independently derive that information.    

Another approach might be to redesign the browser so that the developer (or some other designated entity) becomes an effective intermediary to every HTTPS session, keeping a repository of billions of keys just in case law enforcement comes knocking.  This would, needless to say, be massively inefficient and cumbersome: The unique flexibility and resilience of the Internet comes precisely from the fact that it doesn’t depend on these sorts of centralized bottlenecks, which means my Chrome browser doesn’t suddenly become useless if Google’s servers go down, or become unreachable from my location for any reason.  I don’t have to go through Mountain View, California, just to open a secure connection between my home in DC and my bank in Georgia.  And, of course, it has the same problem as the previous approach: It creates a single point of catastrophic failure.  An attacker who breaches the master key repository—or is able to successfully impersonate the repository—has hit the ultimate jackpot, and will invest whatever resources are necessary to do so.

There’s an additional wrinkle: All complex software has vulnerabilities—like the Heartbleed bug in the widely-used OpenSSL library, which that made headlines last year as it exposing millions of users to the risk of having their secure communications compromised and spurred a frantic global patching effort.  Modern software is never really finished: New vulnerabilities are routinely discovered, need to be patched, updates must be widely disseminated and installed, and then the cycle starts all over again.  That’s hard enough as it is—an exercise in dancing madly on the lip of a volcano, as John Oliver memorably put it.  Now there’s the added problem of ensuring that a new update to fix an unintentional vulnerability doesn’t simultaneously either break the intentional vulnerability introduced to provide law enforcement access, or interact unpredictably with any of the myriad approaches to guaranteeing government access in a way that creates a new vulnerability.  People who don’t actually have to do this for a living are awfully confident this must be possible if the nerds only nerd hard enough.  The actual nerds mostly seem to agree that it isn’t.

So far so awful. But now consider what this implies for the broader ecosystem—which doesn’t just consist of huge corporations like Apple or Google, but individual coders, small startups, and the open source communities that collaboratively produce software like Firefox.  In principle, a lone computer science student, or a small team contributing to an open source project, can today write their own Web browser (or any other app implementing TLS) using open code libraries like OpenSSL, and release it online.   We owe much of the spectacular innovation we’ve seen over the past few decades to the fact that software can be produced this way: You don’t even need a revenue model or a business plan or a corporate charter, just the knowledge to write code and the motivation to put it to use.  Maybe the software makes you rich and launches the next Silicon Valley behemoth, or maybe the authors release it and forget about it, or move on and pass the torch to another generation of open source contributors.  

If Feinstein-Burr becomes law, say goodbye to all that—at least when it comes to software that supports encryption of files or communications. Those existing open-code libraries don’t support government backdoors, so you’d better not use those, little coder.  You’ll have to either roll your own crypto (which every expert will tell you is a virtual guarantee of insecurity) and be prepared to secure the master key material for the effective life of the software, or run a server farm to act as a key repository and secure that.  As a practical matter, the (lawful) production of secure software in the United States becomes the exclusive domain of corporate entities large and rich enough to support (and at least attempt to secure) some kind of key-escrow infrastructure. 

The probable upshot of this proposal, then, isn’t just that we all become less secure as big companies choose from a menu of terrible options that will enable them to comply with decryption orders—though it’s important to keep pointing that out, since legislators seem somehow convinced the experts are all lying about this.  It’s that smaller developers and open source projects look at the legal compliance burdens associated with incorporating encryption in their software and decide it isn’t worth the trouble.  Implementing crypto correctly is already hard enough; add the burden of designing and maintaining a Feinstein-Burr compliance strategy and a lot of smaller developers and open source projects are going to conclude it’s not worth the trouble. 

In an environment of dire and growing cybersecurity threats, in other words, legislators seem determined to dissuade software developers from adopting better security practices.  That would be a catastrophically bad idea, and urging developers to “nerd harder” doesn’t make it any less irresponsible.

It is said, perhaps not reliably, that the following headlines appeared in a Paris newspaper, perhaps Le Moniteur Universel, in 1815 as Napoleon escaped from exile on Elba and advanced through France:

March 9

THE ANTHROPOPHAGUS HAS QUITTED HIS DEN

March 10

THE CORSICAN OGRE HAS LANDED AT CAPE JUAN

March 11

THE TIGER HAS ARRIVED AT CAP

March 12

THE MONSTER SLEPT AT GRENOBLE

March 13

THE TYRANT HAS PASSED THOUGH LYONS

March 14

THE USURPER IS DIRECTING HIS STEPS TOWARDS DIJON

March 18

BONAPARTE IS ONLY SIXTY LEAGUES FROM THE CAPITAL

He has been fortunate enough to escape his pursuers

March 19

BONAPARTE IS ADVANCING WITH RAPID STEPS, BUT HE WILL NEVER ENTER PARIS

March 20

NAPOLEON WILL, TOMORROW, BE UNDER OUR RAMPARTS

March 21

THE EMPEROR IS AT FONTAINEBLEAU

March 22

HIS IMPERIAL AND ROYAL MAJESTY arrived yesterday evening at the Tuileries, amid the joyful acclamation of his devoted and faithful subjects

And I think about that story whenever I see articles like this one in this morning’s Washington Post:

GOP elites are now resigned to Donald Trump as their nominee

Philip Rucker writes:

An aura of inevitability is now forming around the controversial mogul. Trump smothered his opponents in six straight primaries in the Northeast and vacuumed up more delegates than even the most generous predictions foresaw. He is gaining high-profile ­endorsements by the day — a legendary Indiana basketball coach Wednesday, two House committee chairmen Thursday.

Which is not exactly the rush of support that any normal frontrunner would be getting by this point. But the article is full of Republican leaders saying things like “People are realizing that he’s the likely nominee,” and “More and more people hope he wins that nomination on the first ballot because they do not want to see a convention that explodes into total chaos.” Not exactly profiles in courage, these leaders. As Dan McLaughlin tweeted last night:

20 years from now - maybe 2 years from now - everyone in the GOP will want to say they were against Trump now.

But the stories are everywhere today: Republicans coming to accept their conquest by Trump. For a brief explanation of why they should not, I recommend Jay Cost’s tweets as captured on Storify and my own contribution to a National Review symposium in January:

From a libertarian point of view — and I think serious conservatives and liberals would share this view—Trump’s greatest offenses against American tradition and our founding principles are his nativism and his promise of one-man rule.

Not since George Wallace has there been a presidential candidate who made racial and religious scapegoating so central to his campaign. Trump launched his campaign talking about Mexican rapists and has gone on to rant about mass deportation, bans on Muslim immigration, shutting down mosques, and building a wall around America. America is an exceptional nation in large part because we’ve aspired to rise above such prejudices and guarantee life, liberty, and the pursuit of happiness to everyone. Equally troubling is his idea of the presidency—his promise that he’s the guy, the man on a white horse, who can ride into Washington, fire the stupid people, hire the best people, and fix everything. He doesn’t talk about policy or working with Congress. He’s effectively vowing to be an American Mussolini, concentrating power in the Trump White House and governing by fiat. It’s a vision to make the last 16 years of executive abuse of power seem modest.

This is no brief for any other current presidential candidate. The major-party candidates seem as tragically un-libertarian to me as any group of candidates ever. But Trump seems dangerously uninformed, unmoored, erratic, threatening, and megalomaniacal in a way that transcends mere ideology.

Republicans like to praise the “greatest generation.” Nobody’s ever going to call the Republicans who rolled over for Donald Trump the greatest generation. Nor do they seem to be emulating their hero, Winston Churchill, who famously said:

Let us therefore brace ourselves to our duties, and so bear ourselves, that if the British Empire and its Commonwealth last for a thousand years, men will still say, This was their finest hour.

As Dan McLaughlin suggests, Republicans should be asking themselves, What will I say when my son asks, What did you do when Donald Trump knocked on the Republican party’s door, Daddy?

Noting that the influence of atmospheric CO2 on crop growth is “still a matter of debate,” and that “to date, no comprehensive approach exists that would represent all related aspects and interactions [of elevated CO2 and climate change on crop yields] within a single modeling environment,” Degener (2015) set out to accomplish just that by estimating the influence of elevated CO2 on the biomass yields of ten different crops in the area of Niedersachsen, Germany over the course of the 21st century.

To accomplish this lofty objective the German researcher combined soil and projected future climate data (temperature and precipitation) into the BIOSTAR crop model and examined the annual difference in yield outputs for each of the ten crops (winter wheat, barley, rye, triticale, three maize varieties, sunflower, sorghum and spring wheat) under a constant CO2 regime of 390 ppm and a second scenario in which atmospheric CO2 increased annually through the year 2100 according to the IPCC’s SRES A1B scenario. Degener then calculated the difference between the two model runs so as to estimate the quantitative influence of elevated CO2 on projected future crop yields. And what did that difference reveal?

As shown in the figure below, Degener reports that “rising [CO2] concentrations will play a central role in keeping future yields of all crops above or around today’s level.” Such a central, overall finding is significant considering Degener notes that future temperatures and precipitation within the model both changed in a way that was “detrimental to the growth of crops” (higher temperatures and less precipitation). Yet despite an increasingly hostile growing environment, according to the German researcher, not only was the “negative climatic effect balanced out, it [was] reversed by a rise in CO2” (emphasis added), leading to yield increases on the order of 25 to 60 percent.

Figure 1. Biomass yield difference (percent change) between model runs of constant and changing atmospheric CO2 concentration. A value of +20% indicates biomass yields are 20% higher when modeled using increasing CO2 values with time (according to the SRES A1B scenario of the IPCC) instead of a fixed 390 ppm for the entire run.

The results of this model-based study fall in line with the previous work of Idso (2013), who calculated similar CO2-induced benefits on global crop production by mid-century based on real-world experimental data, both of which studies reveal that policy prescriptions designed to limit the upward trajectory of atmospheric CO2 concentrations can have very real, and potentially serious, repercussions for global food security.

 

References

Degener, J.F. 2015. Atmospheric CO2 fertilization effects on biomass yields of 10 crops in northern Germany. Frontiers in Environmental Science 3: 48, doi: 10.3389/fenvs.2015.00048.

Idso, C.D. 2013. The Positive Externalities of Carbon Dioxide: Estimating the Monetary Benefits of Rising Atmospheric CO2 Concentrations on Global Food Production. Center for the Study of Carbon Dioxide and Global Change, Tempe, AZ.

Seeking to calm fears of a rising China’s new assertiveness in the most recent issue of Foreign Affairs, professors Stephen G. Brooks and William G. Wohlforth argue that the United States has less to worry about than most believe. China is extremely unlikely to become a superpower peer anytime in the next few decades. The real test for the United States, they say, will be adapting to a “world of lasting U.S. military preeminence and declining U.S. economic dominance.”

As proponents of the “deep engagement” camp in the roiling debate over American grand strategy, Brooks and Wohlforth have long opposed arguments for a more restrained foreign policy. It is surprising, then, that a long section of their essay is devoted to the importance of exercising restraint, as is their conclusion that the “chief threat to the world’s preeminent power arguably lies within.”

Brooks and Wohlforth discuss four different challenges to exercising the appropriate restraint in the years ahead:

  1. The temptation to bully or exploit allies.
  2. Overreacting when other states such as China exercise their growing clout on the international stage.
  3. Intervening in places where its core national interests are not at stake.
  4. Adopting overly aggressive military postures in the face of challenges to its interests around the world.

Each of these challenges is real and important. But rather than problems that the United States will begin facing over the next several decades, these issues are exactly the ones that have plagued the United States since the end of the Cold War. All one needs to do is read the daily news for plentiful examples of how the United States already struggles to cope with what Christopher Preble has called the “power problem.”

In truth, the fact that Brooks and Wohlforth feel obligated to discuss the need for restraint at such length reinforces two critical arguments that we at Cato have been making for a long time.

First, the United States’ strategic situation is so secure thanks to geography and its nuclear triad that even China’s incredible economic rise and increasing military assertiveness can do little to threaten U.S. national security. In fact, contrary to the news headlines, the United States faces a less dangerous world than at any time in memory. Other “threats” to American security like Russia, Iran, or North Korea, are primarily threats to those nations’ neighbors, not the United States. Engaging those countries simply risks escalating conflicts that add nothing to American national security. Terrorism, while a real threat, is a threat to American lives and property, not to national security.

Second, U.S. preeminence creates temptations to act in ways that are both unnecessary for national security and counterproductive. The ability to project massive amounts of military power led the United States, in the wake of 9/11, to spend trillions of dollars and thousands of lives chasing imaginary threats in the Middle East. Intervention in Afghanistan, Iraq, and Libya have destroyed societies and unleashed chaos. Despite these warnings, presidential candidates continue to call for indiscriminate exercise of American military power abroad in a vain effort to bring the world under control.

Brooks and Wohlforth’s warning about the challenges of restraint is timely. China’s rise, Russia’s saber rattling, the scourge of Islamist terrorism, and unrest and upheaval in the Middle East are just a few of the temptations calling out to American interventionists today. New temptations to shape and control the world will follow as surely as the sun rises. Now would not be too soon to organize plans for restrained responses to current and future concerns.

Unfortunately, the prospects for restraint look very poor. In the absence of any serious external checks on its behavior, the United States must rely on internal sources of restraint. Sadly, the United States lacks the internal checks and balances that would help prevent foreign policy adventurism. Waging unending war is unthinkably expensive, but the American economy is large enough to sustain foolish foreign policies. The American public is tired of war after more than a decade of making a mess in the Middle East, but neither polls nor elections provide a sufficient bulwark against the elite consensus. Even though polls show that the public has little appetite for international activism, both the Republican and Democratic foreign policy establishments remain deeply committed to interventionist strategies of various flavors. And even when Congress does raise objections to presidential maneuvers it matters little. Congress long ago ceded most of its meaningful authority on foreign policy to the executive branch. Moreover, the president’s advantages with respect to information and the news media makes winning arguments extremely difficult for the opposition.

Thus the challenges Brooks and Wohlforth identify will eventually be a list of the failures of American foreign policy over the next several decades. As has always been the case, these failures will hurt other nations and peoples more than they will hurt the United States, which will mostly spend money that its citizens could have used for more productive purposes. It is sobering nonetheless to think how much better everyone would be if the United States could manage to exercise greater restraint.

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