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Published: Thu, 26 Apr 2018 00:00:00 -0400

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Are We Already in a Trade War With China?, Venezuelans Blame Maduro for Food and Medicine Shortages, Russia Wants to Ban Encryption App: Reason Roundup

Fri, 06 Apr 2018 09:30:00 -0400

We're probably in a trade war with China. "We are not in a trade war with China," President Trump tweeted on Friday morning. Most signs say otherwise, or at least show that we're well on our way there. For instance, China just filed a complaint with the World Trade Organization (WTO) over the billions in new tariffs that Trump is proposing. The WTO complaint gives the U.S. and China 60 days to resolve things, after which China may request that a WTO panel adjudicate. It's also not reassuring that Trump's assertion that we're not in a trade war with China was followed up by this reasoning: "We already lost that war many years ago, leaving us "a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion." (All random capitalization the president's.) "We cannot let this continue!" It sure sounds like Trump is hoping for another crack at trade shenanigans with China, only with the U.S. "winning" this time. But nobody wins in a trade war (as we've been saying). To quote a recent Sheldon Richman column, "You cannot advocate trade restrictions without also advocating state-bestowed privilege." Trump has been crowing that even with his aluminum tariffs, "prices are DOWN 4%" and "lots of money coming into U.S. coffers and Jobs, Jobs, Jobs!" Here's Washington Post Fact Checker Glenn Kessler on that claim: Someone exempted most of the big aluminum countries from the tariffs, so the impact was muted. Who was that? — Glenn Kessler (@GlennKesslerWP) April 6, 2018 But alas, even one-time free market cheerleaders like Economic Council Director Larry Kudlow are defending Trump's tariffs, saying this isn't "about trade wars" but "holding to the laws and customs of free trade." Free Markets Through Regulation, or something. That seems to be the party line from the pro-Trump crowd: We're not restricting trade and raising taxes, we're securing the marketplace. Which sounds an awful lot like the liberal and Democratic justifications for messing with market forces that we've heard so many times before, with a dash of national-greatness conservatism and fear of wily foreigners mixed in. "This is exactly what the free traders who formerly worked in the White House feared, Trump in a macho pissing match against Chinese President Xi," writes Jonathan Swan at Axios. Trump has a blunt understanding of leverage and believes the worst thing he can show is weakness. He also believes, as he tweeted, that the U.S. already is so far down on the scorecard with China that he's got nothing to lose. In any event, our counterparts across the sea seem to be, uh, keeping calm. From Reuters: A trade war triggered by U.S. tariffs would cause a global recession—and the mere fear of one is already hurting the economy, European Central Bank board member Benoit Coeure said on Friday. FREE MINDS Russia wants to ban a popular encrypted messaging app. Russia is moving to block the encrypted messaging app Telegram after it refused to turn over keys to state authorities that would allow them to decrypt any and all user messages. Telegram—massively popular in some parts of the world, including Russia, many of the former Soviet Union states, and the Middle East—just hit 200 million monthly users. A lawsuit filed on Friday in Moscow now seeks to block access to Telegram throughout Russia. Iranian leaders have also been proposing a similar ban. FREE MARKETS Venezuelans blame Maduro for deepening humanitarian crisis. A new poll of Venezuelans shows the effects of the ever-growing crisis there for ordinary people: 90 percent say the country's food supply is bad 95 percent of whom say the country's medicine supply is bad 88 percent say life is worse than a year ago 81 percent say the country is currently going through a "humanitarian crisis" A majority—54 percent—blame President Nicolas Maduro and his policies. Nearly half said is leadership is "very bad" and 24 percent said that it was "bad," while just 0.4 percent said it is "very good" and 9 percent said that it is good. The March 2018 Atlantic Cou[...]

10 Ways Trump's New Tariffs Will Piss You Off

Thu, 05 Apr 2018 07:00:00 -0400

President Donald Trump nudged the United States and China closer to a full-fledged trade war this week by outlining a new set of tariffs aimed at more than 1,300 specific Chinese imports. In response to the announcement of additional tariffs on Chinese goods—Trump imposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports last month—China on Wednesday announced a new round of tariffs on American-made goods, including soy beans, chemicals, and technology. Tariffs are import taxes, and like all taxes they end up being paid by consumers after being passed down the supply chain. While Trump's tariffs might restrict the number of Chinese goods that flow into the United States, the main consequence of the White House's new tariff announcement is that Americans will pay higher prices for everything from biscuits to televisions. China's retaliatory tariffs might temporarily lower domestic prices for American-made goods, but will ultimately hurt American businesses that won't be able to sell their products in China, one of the world's fastest growing markets. In a 58-page filing, the Office of the United States Trade Representative argues that the new tariffs are necessary to counteract China's unfair use and theft of American intellectual property and technology. The tariffs will not take affect immediately, but will be subject to a public hearing on May 15 with a final decision on the tariffs expected by mid-summer. Each product subject to a new tariff is listed by its eight-digit code under the Harmonized Tariff Schedule of the United States (HTSUS). I read through the entire document so you don't have to—but it's embeded at the bottom of this post in case you have nothing better to do. Food Trump's tariffs come down particularly hard on anyone who has to eat. Tariffs will be applied to "Cooking stoves, ranges & ovens, other than microwave, for making hot drinks or for cooking or heating food." Microwaves don't escape either, as they are listed under a different HTSUS code. More specific tariffs will hit equipment used to make chocolate, sugar, and "macaroni, spaghetti or similar products," along with machinery used in the production of poultry, meat, nuts, fruit, and eggs. And in case anything managed to slip through the cracks, there's another tariff on "machinery for the industrial preparation or manufacture of food or drink." And also "bakery ovens, including biscuit ovens," which seems like a weird thing to have to specify. Alcohol Trump's earlier tariff on aluminum would make beer cans more expensive, and his tariff on steel threatens not only to make kegs of beer more costly but also to drive the only remaining American keg-making company out of business. Now, Trump is aiming to drive up the cost of making the stuff that goes in those cans and kegs. "Brewery machinery" will be subject to tariffs, but so will "presses, crushers, and similar machinery used in the manufacture of wine, cider," and even non-alcoholic beverages like juices. Clothes Pretty much every aspect of the manufacture of cloth and clothing will be subject to new import taxes. Sewing machines, spindles, looms, weaving machines, and various other textile-making equipment are subject to tariffs. Even sewing needles, knitting needles, and embroidery needles make the list. "Machinery for making felt hats," is included, as is "machinery for making or repairing footwear." Lighting, Heating, and Home Entertainment You like using things like lights, televisions, and the internet, right? Unfortunately, the electricity used to power those things has to come from somewhere, and many of Trump's tariffs will end up being passed along to consumers in the form of higher energy bills. Electric generating equipment, including transformers, converters, and wind-powered turbines will be subject to tariffs. Fuses, switches, breakers, are included in the tariffs, along with lithium, nickle, and zinc batteries. Many of the devices where you might consumer that more-expensive electricity will become more expensiv[...]

Trump's Trade Policy Could Leave the Economy in Tatters

Thu, 05 Apr 2018 00:01:00 -0400

President Donald Trump claimed in a tweet that "trade wars are good, and easy to win." Unfortunately, the Chinese government's swift response to his administration's decision to impose tariffs on 1,300 Chinese goods with its own set of tariffs on U.S. goods sent to China tells us that his claim may be put to the test sooner than we think. The reality, I'm afraid, is that trade wars are always costly, and the pain is magnified when trade wars are waged against authoritarian regimes, such as the one in China. Tariffs imposed by any government are, first and foremost, penalties on its own citizens who buy imports (or import-competing domestic goods, whose producers can then freely raise their prices to just under the new price levels set by the import tax). President Trump's tariffs are therefore penalties imposed on Americans. Yes, some Chinese companies will suffer from the imposition of these import taxes. But make no mistake; this policy set by Uncle Sam will force Americans to pay higher prices for goods they choose to buy, and it will also cost American jobs. Likewise, the Chinese tariffs announced on dozens of categories of American goods (such as pork, fruits, soybeans, nuts, and sparkling wine) are penalties imposed on the Chinese people buying U.S. goods, even though the retaliatory taxes are exclusively advertised as a way to hurt American firms. The bottom line is that this tariff fight between China and the United States is the trade version of arm-wrestling, wherein each country demonstrates how much it's willing to abuse its own citizens. Yet in this high-stakes game, the Chinese government probably has the upper hand. China will be less likely to flinch than the Trump administration, largely because its officials bear no political costs for the tariffs and the costs they impose on the Chinese people. In fact, I'm sure the Republican legislators who will face American voters in November already understand how much heat they may get thanks to the reckless actions of this administration—actions that are being made worse by the ricocheting effects of Chinese retaliation. Interestingly, when Beijing made its first announcement Monday, the stock exchange in China went up—signaling that at least for now, investors aren't worried about tariffs affecting the Chinese economy that much. The same can't be said of the Dow Jones industrial average, which went down, eliciting headlines like this one from Bloomberg: "Stocks' Second-Quarter Start Is the Worst Since the Great Depression." The president, who spent much of last year touting the stock market uptrend, has decided to remain very silent about its recent fall, along with investors' anxiety over this newfound uncertainty. After all, no one knows how this will end. So far, the Chinese have been firm but moderate, targeting retaliation toward a small portion of U.S. goods exported to China. But they're sending a clear message that they won't hesitate to take further and more punishing action—against U.S. farmers in particular—if the president sets in stone the triggers to impose Section 301 tariffs as he has repeatedly said he wants to do. It's true that having a trade bully in the White House who doesn't seem to care about (or understand) the dire price paid by the American people for his tactics has prompted some needed dialogue between the U.S. and China. However, can we trust this administration to close a deal fast enough to avoid the serious economic consequences of the current trade dispute? Considering its size and its impressive and growing economy, China isn't so easy to push around as other countries. Negotiations require a good-faith effort and some discipline. It means that Trump may get only a small fraction of what he wants from the country, in spite of his aggressive tactics. Even if trade negotiators will be the ones leading the process, this president's tendency to fly off the handle on Twitter without caring about the consequences when he's not getting his way could jeopardize the efforts[...]

'Free-Market' Conservatives Welcome Their New Protectionist Overlord

Wed, 04 Apr 2018 16:40:00 -0400

Today, the Republican president of the United States made the kind of economically illiterate argument that Republicans have been mocking for longer than I've been alive: When you're already $500 Billion DOWN, you can't lose! — Donald J. Trump (@realDonaldTrump) April 4, 2018 Trump was referring here to his mutually threatened trade war with China, which minutes before this tweet he had insisted "We are not in," because "that war was lost many years ago by the foolish, or incompetent, people who represented the U.S." You can't fight a war you've already lost, and so that's why we must fight, amirite?! (Also, the U.S. trade deficit with China isn't close to $500 billion; the president is once again pulling scary-sounding trade stats out of his arse.) Conservatives used to know damn well that trade deficits don't matter, budget deficits do; not vice-versa. Here's Uncle Milton Friedman making the succinct case about that, and against steel tariffs, 40 years ago. But now that a populist protectionist has taken over the GOP and the White House, that new song is getting sung right out loud: Fox & Friends just now on Trump's trade war: 1) "I love that he's doing this" 2) "I support President Trump's hard stand" 3) "He is good at this. He is great at this." 4) "The president is on your side" — Matthew Gertz (@MattGertz) April 4, 2018 We have already seen opportunistic heel-turns on trade from the likes of Mike Pence, Reince Priebus, and Stephen Moore, as well as a big opinion-shift among the Republican electorate (Democrats, bless their hearts, are already there). But could we be witnessing the same pattern from new Economic Council Director and lifelong free trader Larry Kudlow? Let's hope not. But today, Kudlow was certainly whistling a different tune on China from the White House than he did from his CNBC desk during the Obama administration. Asked by reporters to respond to the market-roiling news that China was announcing retaliatory tariffs on $50 billion worth of American goods, Kudlow implausibly characterized the president as a "free-trader" who "wants to solve this with the least amount of pain." He then added: "This is a growth action. I can't emphasize that enough." The best you can say about Kudlow's rosy interpretation is that he's doing what it takes to have access to a Mercantilist president's ear. A less charitable explanation is that proximity to power corrupts analytical integrity. During Obama's first term, when the then-president slapped duties on Chinese tire imports, Larry Kudlow repeatedly warned that a "trade war with China" would be "a disaster." A "Smoot-Hawley protectionist trade war," he cautioned in June 2010, "is the last thing we need right now." Also: "A message to all those people blaming China for our slow, jobless recovery: Shame on you. Stick to your own knitting." Even "the threat of higher tariffs," he wrote that October, "only adds to uncertainty and weakens the foundation of growth." Today? It's "not about trade wars," Kudlow insisted. "This is about holding to the laws and customs of free trade and holding violators to account. It's not about war." Kudlow would not appear to be on the same page as his new boss. When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don't trade anymore-we win big. It's easy! — Donald J. Trump (@realDonaldTrump) March 2, 2018 Reason on Trumpian trade here. UPDATE: I forgot to include one of the greatest trade-policy quotes in the history of cable news. In March 2011, Kudlow featured on his CNBC program the one and only Donald J. Trump. Who said this: "I have a son, and he loves little airplanes....Most of them are made in China....He has so many of 'em....If he had half of 'em, and if they were made in this country, I'd be very happy...and he'd be just as happy."[...]

Everyone Loses as China Escalates Trade War With Tariffs on American Pork, Fruit, and More

Mon, 02 Apr 2018 11:01:00 -0400

President Donald Trump's trade war just got a little harder to win. China announced new tariffs on 128 American imports yesterday, primarily targeting agricultural products such as pork, nuts, fruit, and wine. In a statement, the Chinese government said it was imposing the new tariffs "in order to safeguard China's interests and balance the losses caused by the United States' additional tariffs." Trump put tariffs on steel and aluminum imports to America last month, then doubled down with a second round of tariffs on Chinese-made electronics, furniture, and other goods. If the former failed to trigger a trade war with China, Trump seemed determined to get one started when he announced the latter on March 22. "This is the first of many" penalties aimed at Chinese goods, the president said as he signed the order. Regardless of whether it's Trump or Chinese President Xi Jinping ordering the tariffs, Americans stand to lose. The trade barriers Trump issued to prop up the steel and aluminum industries will end up increasing costs for thousands of downstream businesses—by one count, there are 46 American jobs in steel-consuming industries for every steel-producing job in the country. Other tariffs aimed at Chinese goods will likely have less of a direct effect on the economy as a whole, analysts say, but will leave Americans will fewer options and higher prices for a variety of household items. Now retaliatory tariffs may cut off overseas markets for American farms and wineries. If American pork, wine, and other products become more expensive in China, Chinese importers might start getting their supplies elsewhere. Spanish pork, Chilean wine, and Australian nuts could replace American products in one of the world's largest and fastest-growing economies. No wonder American producers are worried. "We sell a lot of pork to China, so higher tariffs on our exports going there will harm our producers and undermine the rural economy," says Jim Heimerl, president of the National Pork Producers Council and the owner of an Ohio farm. "No one wins in these tit-for-tat trade disputes, least of all the farmers and the consumers." According to Heimerl's group, the United States exported $1.1 billion of pork to China, making that country the third largest market for U.S. pork. The Chinese tariffs will hit a wide range of American-grown fruit as well, including apples, oranges, watermelons, strawberries, raspberries, cranberries, cherries, grapes, and pineapples. China's retaliatory tariffs have to meet two conditions to be effective, writes Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis, a French investment firm. "First, China should be a large enough (possibly irreplaceable) market for a specific US export product, so that a reduction in Chinese imports due to tariff measures does harm the US industry providing that specific good," Garcia-Herrero writes. "Second, the US should not be the main producer of that specific product, so China can easily find substitutes when trying to import that product." Trade retaliation will be costly for China, in the same way that slapping tariffs on Chinese commodities and consumer goods will be costly for Americans. That might be enough to push China to negotiate with Trump, but a trade war is unlikely to be as straightforward or as easy as Trump seems to think. China could also retaliate in other ways, by slowing investment in the U.S. or selling American debt, says Garcia-Herrero. The new Chinese tariffs are a double blow to American farmers, who were already facing the prospect of higher prices for farm machinery and equipment, thanks to Trump's tariffs on steel and aluminum. In a March letter to the White House, Iowa's congressional delegation urged Trump to reconsider the tariff. The effects are being felt on Wall Street too. The Dow Jones industrial average, like other major stock market indices, has slid more than 10 percent since peaking on January 26, shortly before T[...]

The Geopolitical Risks of Trump's Protectionism

Wed, 28 Mar 2018 15:00:00 -0400

President Donald Trump's punch-first-ask-questions-later trade policy yielded one of its first results today when South Korea acquiesced to a new trade pact with the United States. In exchange for being permanently exempted from Trump's stiff tariffs on aluminum and steel, this third largest exporter of steel to America agreed to limit its U.S. steel shipments to about 70 percent of their current levels. Seoul will also double the quota of American cars that can be sold in South Korea without meeting local safety and environmental standards, though that's largely a symbolic concession—American carmakers haven't been able to make full use of their existing quota, because South Koreans don't have a taste for big, badass cars. The deal will also streamline the onerous customs and regulatory procedures that American companies have to endure to do business in South Korea. Except for the last item, what the Trump administration has pulled off here is an exercise in negotiated protectionism. If this is a blueprint for future deals, especially with China, the world may avoid an all-out trade war, but it will face far more geopolitical conflict. The Trump administration forced South Korea to swallow such a huge reduction in steel exports despite the fact that virtually everyone on Capitol Hill was up in arms against using tariffs as a cudgel to negotiate with allies. Republicans pleaded with the president not to go there. Even Sen. Chuck Schumer (D–N.Y.), who rarely fails to drool when he sees a protectionist measure, lamented that the tariffs went too far because they were too broad and not limited to America's enemies. Ditto for Sen. Debbie Stabenow (D-Mich.), another known protectionist. There was no comparable outrage when Trump threatened to slap $60 billion in tariffs on China, the world's second largest economy and America's largest trading partner after the European Union. Even free-trade Republicans were mostly mute. Democrats positively celebrated, with Schumer declaring that Trump deserved a "big pat on the back." Beijing's sole friend in the United States, it seems, was the stock market, which experienced its biggest one-week fall in more than two years. The political reaction (or lack thereof) to Trump's anti-China policies is not surprising, because China-bashing has been a bipartisan sport for a while. Neoconservatives never wanted President Bill Clinton to normalize trade ties with the Middle Kingdom, but he did it anyway. Nonetheless, Hillary Clinton accused the Bush administration of eroding America's "economic sovereignty" and letting China become America's banker—an allusion to the fact that China owns a big chunk of U.S. debt. Barack Obama imposed tariffs on Chinese tires right off the bat, filed four complaints against Beijing with the World Trade Organization, initiated 24 anti-dumping cases, and—above all—prevented the World Trade Organization from classifying China as a "market economy," something that would have made it harder for the West to impose Trump-style tariffs on China. Trump, of course, wants to take matters to a whole new orbit. Some of his complaints against China are bogus, as when he worries that it runs a $350 billion trade deficit and manipulates its currency to encourage exports. Some are real but are none of the government's beeswax, such as the fact that China forces foreign companies to fork over trade secrets to do business there. Some are real and are the government's beeswax: China discriminates against foreign companies by creating all kinds of tariff and non-tariff barriers, disallows majority ownership of Chinese companies by foreigners, and severely restricts foreign presence in its financial, telecom, and other sectors. No economist of any repute thinks that Trump is right to use the trade deficit as a scorecard to determine winners and losers. All the deficit signifies is that Americans buy more goods from China and have more mone[...]

Stossel: China's Freedom-Crushing 'Social Credit Score'

Tue, 20 Mar 2018 10:00:00 -0400

In America, tech giants know a lot about us. John Stossel says that's fine with him. He knows what information he's handing over and he does it voluntarily. But he says we should worry about becoming like China, where the government is starting to use online data to create 1984 in the real world.

China's government has announced that they'll assign a mandatory government "social credit score" to everyone in the country by 2020. It will be based largely on what you do online. Say something that gets censored, you lose points. Same if you watch porn, or are late in returning a rented bike, or buy lots of alcohol.

China's government boasts that the social credit system will "allow the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step."

"It is a big deal," says Li Schoolland, a Chinese-American libertarian activist who works with Chinese supporters of freedom.

The social credit system, she says, will expand to the whole country what China already does to some government critics. Some of them are jailed. Some are never heard from again.

The government will expand the use of lesser punishments under the new program.

Schoolland explained to Stossel what will happen to people with low scores: "First [you lose] your job, or you never get promoted...and your children cannot get into good schools."

The American government doesn't do anything like that, yet, but Stossel wonders about the future. Police in New Orleans, Los Angeles, and other cities already practice "predictive policing." The tech company Palantir analyzes social media and phone location records, tracks people's ties to gang members, and predicts the likelihood that someone will commit a crime.

Still, Stossel says, he's glad to be in America, where he can criticize the government on Youtube, Twitter, and Facebook.

He's never been punished for that.

So far.

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Brickbat: Oh, Bother

Tue, 13 Mar 2018 04:00:00 -0400

(image) Chinese Internet censors have attempted to squelch any criticism of the Communist Party Council's decision to eliminate term limits so Xi Jiinping can serve more than two terms as president. They've banned references to Animal Farm, Brave New World, 1984, and... Winnie the Pooh. Chinese social media have long noted the resemblance between Pooh Bear and Xi and have used images of the character to mock the president. But now, censors are scurrying to remove any references to Winnie.

Trump's Steel Tariffs Will Help, Not Hurt, China

Mon, 05 Mar 2018 15:15:00 -0500

President Donald Trump apparently believes that "trade wars are good, and easy to win." They are neither. And, in fact, Trump's plan to slap a 25 percent tariff on all steel imports—something the president is considering as a way to help American steel manufacturers by protecting them from international competition—might indirectly boost China's steel industry while punishing some of America's top allies and trading partners, along with the very American workers the president supposedly wants to help. If the tariffs trigger a trade war, something analysts say could happen, then China probably stands to gain further. Trump loves to talk about how China has been "killing" U.S. manufacturing, and to blame China for dumping cheap steel into the American market. In reality, the U.S. imported $976 million worth of steel from China in 2017 (up from $906 million the year before), which means China accounted for barely more than 3 percent of all steel imports. The United States imported far more steel from places like Japan ($1.65 billion), Brazil ($2.44 billion), and South Korea ($2.78 billion) last year. The largest exporter of steel to the United States is Canada, which sent more than 5.6 million metric tons of the stuff worth more than $5.1 billion across the border during 2017. The new tariffs will be applied to all steel imports, which means close allies like Japan, Korea, and Canada will be hurt by the tariffs more than Trump's favored enemy of China. "Hitting China and Canada with the same tariff doesn't penalize China relative to anyone else," says Dan Ikenson, director of the Center for Trade Policy Studies at the Cato Institute, a libertarian think tank. "That doesn't, and shouldn't, sit well with exporters from countries that have done nothing wrong." Think about it like this. Trump's tariff will build a protectionist wall around American steel manufacturers, but it won't entirely stop the flow of foreign steel into the country. Because the wall will be the same height for all imports, the cheaper Chinese steel that Trump likes to vilify will still have an advantage over all other sources. Meanwhile, American businesses that rely on steel imports will have to pay higher prices, which will be passed along to consumers. All steel-made products will be more expensive if the tariffs are imposed—and the same is true for aluminum products if Trump follows through with his threat to impose a 10 percent tariff on them. That's part of the reason why the stock market dropped 420 points immediately after Trump's surprise announcement of the tariff proposal last week. As Matt Welch explained on Friday, Barack Obama's tariffs on Chinese tires cost American consumers an estimated $1.1 billion in return for preserving 1,200 jobs in the domestic tire industry, while George W. Bush's duties on foreign steel destroyed some 200,000 jobs in other sectors, exceeding the total employment of the American steel industry. Michael Froman, former United States trade representative during the Obama administration, tells Vox that there's little doubt China is engaged in some unfair trading when it comes to steel and aluminum. The problem, though, is that Trump's tariff proposal "does very little, if anything, to affect China." "Instead, we're hitting our closest allies and partners with a set of tariffs under the justification of national security," he says. Those same concerns are causing some Republicans in Congress to challenge the president's proposal. On Sunday, Sen. Lindsey Graham (R-S.C.) said "China wins" if tariffs increase prices for American consumers or create conflict between the United States and its major trading partners. "You're punishing the American consumer and our allies. You're making a huge mistake," Graham said on CBS' Face The Nation. "Go after China—not the rest of the world." That's really just th[...]

Bob Poole on Trump’s Gas Tax, Rep. Beto O’Rourke on Challenging Ted Cruz

Tue, 27 Feb 2018 08:15:00 -0500

(image) Who loves gas-tax increases? According to preliminary reports, fans of jacking up the federal government's share of consumer gasoline spending include but are not limited to President Donald Trump, House Transportation Committee Chairman Rep. Bill Shuster (R-Penn.), and the U.S. Chamber of Commerce, among other parties not normally associated with the T-word. It's all part of Trump's politically wobbly infrastructure plan, whose main sticking point (though there are many) is over just how many hundreds of billions of dollars will be spent by Washington. Hence the thirst for revenue.

I will be asking about the propriety of the idea, and the long history of the gas tax, with arguably the most knowledgeable transportation policy expert in the country, the Reason Foundation's own Robert Poole, tomorrow when I again guest-host Stand UP! with Pete Dominick on SiriusXM Insight (channel 121) from 9-12 a.m. ET. Poole has written about the subject a time or three over the years, including the recent piece, "It Is Time to Rethink the U.S. Highway Model: Our highway funding system based on per-gallon fuel taxes is breaking down for several reasons."

Competing for Poole's thunder will be Rep. Beto O'Rourke (D-Texas), who, in addition to being that rare Democrat who successfully primaried an incumbent in part over the issue of legalizing marijuana, is now the Great Democrat Hope for unseating Sen. Ted Cruz and helping turn Texas from red to blue. (See O'Rourke's 2013 interview with Mike Riggs, and his 2015 interview with me.) We will definitely hit up the latest in congressional immigration negotiations.

Other guests are scheduled to include Matt Kibbe, to talk about his recent Reason piece "The Tea Party Is Officially Dead. It Was Killed by Partisan Politics.," and Gordon Chang, to talk about Xi Jinping's power grab.

Please call in at any time, at 1-877-974-7487.

When Governments Suspend Their Own Rules

Sun, 18 Feb 2018 06:00:00 -0500

The Political Economy of Special Economic Zones: Concentrating Economic Development, by Lotta Moberg, Routledge, 192 pages, $140 All over the world, in carefully delimited areas, governments have carved out exceptions to their own rules. These special economic zones, better known as SEZs, come in many sizes and types, ranging from simple duty-free warehouses to jurisdictions the size and complexity of entire cities. Host governments typically roll back taxes, customs, and similar barriers to trade in their zones, but sometimes offer special labor, environmental, or financial regulations, too. You probably live within a short drive of an SEZ: The United States has more than 400 of them, in the form of Foreign Trade Zones. Today most countries—about 75 percent—host SEZs of some sort. Worldwide, they number well over 4,000, and if you count micro-zones, some of them no bigger than parts of buildings, over 10,000. Though the core idea runs back to ancient times (including the colonial proto-SEZs that gave rise to the United States), modern special economic zones started to emerge in 1948, when Operation Bootstrap made Puerto Rico a special trade and processing zone. A more popular model emerged in 1959, when the international airport in Shannon, Ireland, opened a special zone to accommodate transshipping and value-added processing. More recently, as with the zones that already fill China and that are planned in Saudi Arabia and Honduras, SEZs have grown to cover whole cities and areas of law. The Political Economy of Special Economic Zones casts a coolly objective eye on this latest institutional mutation to issue from the roiling competition of global trade. Its author, Lotta Moberg, a recent graduate of George Mason University's economics doctoral program and now an analyst at the investment bank William Blair & Co., finds both opportunities and challenges in their rise. As Moberg explains, politicians often have self-interested reasons to promote special economic zones. Sometimes they're merely seeking a new venue for graft. More honorably, they often hope the zones will attract investment, create jobs, and increase exports—and that voters will reward them for it. Can SEZs work such wonders? Moberg voices doubt. Her book lays out the reasons, deeply informed by public choice reasoning, why SEZs too often distort economies rather than help them grow. Politicians lack the information and incentives required to plan and run the zones well. Many become burdens to their hosts, and they can distract policy makers from broader and more essential reforms. Yet Moberg also reveals an underappreciated benefit of SEZs: Under proper conditions, they can help free an economy from pervasive rent-seeking and transition it to a more open system of market exchange. Her book concludes with insightful suggestions for how reformers can ensure zones fulfill this, their greatest potential. Among them: Make SEZs big, make them diversified, and let private parties rather than government agents choose the sites and run them. Intellectuals have been theorizing about how to run governments for almost as long as governments have been running. But SEZs offer a unique opportunity for empirical study, an opportunity that Moberg seizes. Special economic zones allow a single country to test different policies within its own borders. The popularity of America's Foreign Trade Zones, for instance, has scattered small, custom-free areas all across the country. SEZs also allow different countries to test the same policies across borders, as when Dubai imported the common law of England and Wales to its International Financial Centre. Social scientists could hardly ask for a better experimental framework for testing the real-world impact of varying rules. Moberg's book draws on the auth[...]

The 5 Best Arguments Against Immigration—and Why They're Wrong

Wed, 14 Feb 2018 11:15:00 -0500

No issue is more hotly contested today than immigration, with restrictionists calling for the deportation of illegals and a 50 percent cut in legal immigration. Here are the five strongest arguments against immigrants and immigration—and why they're wrong. They take our jobs and lower wages. President Donald Trump has said that illegals, who are mostly low-skilled, "compete directly against vulnerable American workers" and that reducing legal immigration would "boost wages and ensure open jobs are offered to American workers first." But as the president himself likes to point out, unemployment across virtually all categories of workers is at or near historic lows, so displacing native-born workers isn't much of an issue. Virtually all economists, regardless of ideology, agree that immigrants, both legal and illegal, have little to no effect on overall wages. The most-vulnerable workers in America are high-school dropouts and economists say that low-skill immigrants from Mexico reduce that group's wages by less than 5 percent—or that they increase drop out wages by almost 1 percent. But it's also true low-skilled immigrants make things cheaper for all Americans by doing jobs such as picking fruit or cleanup on construction sites. And consider this: In the developed world, "There is no correlation between unemployment and immigration rates." Immigrants go to hot economies and they leave when the jobs dry up. More important, immigrants grow the population, which stimulates economic growth, the only way over the long term to improve standards of living. They're using massive amounts of welfare. Since the late 1990s, most legal immigrants and all illegals are barred from receiving means-tested welfare. The only real taxpayer-funded services most immigrants use are emergency medical treatments that account for less than 2 percent of all health-care spending and K-12 education services for their children, who often times are U.S. citizens. For those immigrants who do qualify for programs such as Medicaid, food stamps (SNAP), or supplemental Social Security income (SSI), they use all these programs at lower rates that native-born Americans or naturalized citizens. It's also worth noting that immigrants come here to work, not collect WIC. Legal immigrant men have a labor-force participation rate of about 80 percent, which is 10 points higher than that of natives. Illegal immigrant men have a participation rate of 94 percent, precisely because they can't access welfare. They don't pay their fair share. Whether legal or illegal, all immigrants pay sales taxes and property taxes (the latter are factored into the cost of rental units for people who don't own homes). And all legal immigrants pay all the payroll and income taxes that native-born Americans do. Amazingly, most illegals also cough up income and payroll taxes too. That's because most of them use fake Social Security cards and other documents to get hired. Somewhere between 50 percent and two-thirds pay federal income and FICA taxes. In 2010, for instance, administrators of Social Security said that "unauthorized immigrants" contributed $12 billion to Social Security trust funds that they will never be able to get back. According to the Institute on Taxation and Economic Policy, about half of illegals paid state and local taxes worth over $10 billion. They broke the law to get here and they're bringing all their relatives. Critics of illegal immigration often say that unauthorized entrants refuse to stand in line and wait for their turn. That's true but misleading. For many immigrants, especially low-skilled immigrants from countries such as Mexico, there is really no line. In 2010, for instance, just 65,000 visas were given to Mexicans, with the overwhelming majority going[...]

Mass Surveillance Is One Chinese Export We Should Ban

Thu, 08 Feb 2018 15:20:00 -0500

What does a total surveillance environment look like? The people of Xinjiang, a region in northwestern China, have been finding out. Here's how The New York Times describes measures being implemented there: Imagine that this is your daily life: While on your way to work or on an errand, every 100 meters you pass a police blockhouse. Video cameras on street corners and lamp posts recognize your face and track your movements. At multiple checkpoints, police officers scan your ID card, your irises and the contents of your phone. At the supermarket or the bank, you are scanned again, your bags are X-rayed and an officer runs a wand over your body.... [Your] personal information, along with your biometric data, resides in a database tied to your ID number. The system crunches all of this into a composite score that ranks you as "safe," "normal" or "unsafe." The reason for all this snooping? The region is home to a significant population of Uighurs, a religious minority that the Chinese regime tends to see as subversive. The Uighurs, consequently, are subjected to an even greater degree of monitoring and harassment: Uighurs' DNA is collected during state-run medical checkups. Local authorities now install a GPS tracking system in all vehicles. Government spy apps must be loaded on mobile phones. All communication software is banned except WeChat, which grants the police access to users' calls, texts and other shared content. When Uighurs buy a kitchen knife, their ID data is etched on the blade as a QR code. China's treatment of the Uighurs is appalling in its own right, but the story should alarm Americans for another reason as well: It shows how much can be done with mass surveillance tech that already exists and is commercially available to government entities. Most if not all of the technologies being deployed in Xinjiang are already in use, to some extent, in the United States. Many major cities have installed comprehensive CCTV systems that can be easily retrofitted with facial recognition software. Biometric data, including fingerprints and retinal patterns, are routinely collected en masse by law enforcement agencies—and by private employers and consumer electronics companies that under current law can be compelled to hand their data over to the government. Sometimes that only takes a subpoena issued by law enforcement without any judicial review. While the Fourth Amendment does provide something of a shield against large-scale techno-snooping on everyone's everyday movements, the main reason there aren't yet huge government databases that keep comprehensive records on most people's movements and activities is just official forbearance. If, say, the NYPD really wanted to implement a tracking system like the one in Xinjiang—one that used fixed and mobile video cameras, long-distance retina scanners, and biometric databases to keep tabs on every New Yorker—it probably could. Because a great deal of mass surveillance is conducted at the local level (CCTV networks, license plate readers, cell-site simulators, etc.), state laws preempting or restricting the use of these technologies can actually be an effective way to ensure that privacy is protected. The 13 states that have outlawed automatic speed traps (a more directly intrusive forms of mass surveillance, since it hits ordinary people directly in the wallet) demonstrate this. But such restrictions on other forms of surveillance so far seem to have little political support. For example, a study conducted by the Georgetown University Law Center on Privacy and Technology found that very few jurisdictions have policies significantly restricting the use of facial recognition technologies—and in those that do, the restrictions are often self-[...]

Vatican Official Says China, Which Persecutes Christians and Murders Dissidents, Is the Country 'Best Implementing the Social Doctrine of the Church'

Tue, 06 Feb 2018 17:25:00 -0500

In his five years as head of the global Catholic Church, Pope Francis has made a number of statements that go well beyond the magisterial purview to teach on faith and morals. Frequently, he steps into the realm of "prudential judgments" on difficult political questions—judgments that involve choosing the best means to a shared end, and judgments about which good and faithful Catholics need not always agree with the pope. It seems one of his underlings has decided he can do one better, decreeing not just his own policy prescriptions but also his own facts. According to the Catholic Herald, the chancellor of the Pontifical Academy of Social Sciences, Bishop Marcelo Sánchez Sorondo, has told Vatican Insider that China is the nation currently "best implementing the social doctrine of the Church." Taken a face value, the statement is astounding in its obliviousness. We are speaking of a country where forced abortion and even infanticide are the norm—a country that executes more humans a year than any other on Earth; that harasses, detains, tortures, and disappears its critics on a regular basis; that just last year passed a law to "strangle online freedom and anonymity, and further clamped down on media outlets for reporting that departs from the party line," according to Human Rights Watch; that believes religious activities should be controlled by the state; that broke off relations with the Vatican half a century ago to that end; and that has been appointing its own Catholic bishops without consulting the pope ever since. This is the country Sorondo, recently returned from a visit, calls "extraordinary"? "What people don't realise is that the central value in China is work, work, work," he said. On climate change, he added, the Communist government is "assuming a moral leadership" in the world. Personally, I'd have preferred that the Vatican assume a bit more "moral leadership" in Communist China. That the statement comes at a delicate moment makes it all the more frustrating. The Church and the Chinese government have been exploring a possibility of rapprochement, with a Vatican spokesman saying that a new agreement could be inked any day. The move would be a controversial one, which many conservative Catholics around the world strongly oppose. Catholics in China have for the last five decades been split, with some attending unauthorized "underground" churches, led by priests loyal to the pope, and others attending state-sanctioned churches where the clergy is selected (or at least approved) by the government. In an effort to bridge the gap with Beijing, the Vatican is apparently replacing some of its own bishops with men chosen by the Chinese. At The Washington Post, one writer called the pending deal—which presumably would involve more such replacements and arguably would legitimize the Communist regime—"a capitulation of spiritual authority [that] would damage the Catholic Church in China for years to come." But there are arguments on both sides. The Church has long wished to mend ties with China, and doing so has been a special goal of Pope Francis over the last few years. As Crux's John L. Allen wrote, the world's largest country offers an opportunity to win souls on an incomparable scale, while better relations could improve the situations of the roughly 10 million Catholics already there. And there are many reasons to support greater openness between countries in general, including that human rights abuses are easier to carry out in places that are closed off from the view of the world. During the Cold War, Pope John Paul II famously charted a middle way between isolation of and capitulation to the USSR. He is remembered for helping to bring down Communism [...]

Brickbat: Our Father, Who Art in Beijing

Tue, 06 Feb 2018 04:00:00 -0500

(image) Chinese Communist Party officials in the Yugan county of Jiangxi province have been visiting poor Christians in their homes, urging them to take down crosses and paintings of Jesus and replace them with photos of President Xi Jinping. Some Christians say party officials told them they would not be eligible for government help unless they removed Christian symbols. Party officials deny the claim.