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Published: Sat, 24 Mar 2018 00:00:00 -0400

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Executing Drug Dealers and Other Trump Punchlines: Podcast

Mon, 12 Mar 2018 16:00:00 -0400

"The only way to solve the drug problem is through toughness," President Donald Trump asserted at a rally Friday, before launching into a laughter-generating anecdote about Chinese President Xi Jinping telling him that China doesn't have a drug problem because it uses the death penalty. The comment came on the heels of Trump expressing a similar sentiment at a White House meeting on opioids and overdoses. As Jacob Sullum pointed out last week, "Treating such deaths as homicides is not only unjust; it may have the perverse effect of making opioid-related fatalities more likely." Another week, another exploration of the meaning and import of the president's words on Reason Podcast, featuring Katherine Mangu-Ward, Nick Gillespie, Peter Suderman, and yours truly. Besides the drug stuff, the quartet gets into Trump's North Korea diplomatic initiative, his really existing trade war, his taste in economic advisers, and the difference on any/all of the above from his predecessors. Audio production by Ian Keyser. Relevant links from the show: "Report: Imprisoning Drug Users Doesn't Stop Drug Use or Prevent Overdoses," by Scott Shackford "Trump, Slayer of Pushers," by Jacob Sullum "America's War on Pain Pills Is Killing Addicts and Leaving Patients in Agony," by Jacob Sullum "Kick the Keg: Trump's Tariffs Might Kill Last American Keg Manufacturer," by Eric Boehm "Commerce Secretary Wilbur Ross Should Shut Up About Soup Cans, Already," by Eric Boehm "Trump Is More Like Recent Presidents Than Anyone Wants To Admit," by Nick Gillespie "Donald Trump to Become First U.S. President to Meet with North Korean Dictator, and Maybe That's Good," by Matt Welch Subscribe, rate, and review the Reason Podcast at iTunes. Listen at SoundCloud below: src="" width="100%" height="300" frameborder="0"> Don't miss a single Reason Podcast! (Archive here.) Subscribe at iTunes. Follow us at SoundCloud. Subscribe at YouTube. Like us on Facebook. Follow us on Twitter.[...]

'Trade Wars' Don't Put Americans First

Sun, 11 Mar 2018 08:00:00 -0400

When Donald Trump can propose tariffs on imported steel, aluminum, washing machines, and solar-panels without being roundly booed off the stage, one has to wonder if reason has any power to win the day. Is this truly a democracy of dunces? Trade is really not that complicated. Kids do it every day, and they know what they're doing. But something happens when they grow up. Most people never grasp the most basic economics. They harbor what Bryan Caplan calls an anti-market bias. This seems in conflict with Adam Smith's famous "propensity to truck, barter, and exchange one thing for another," but that might just mean that people's explicit notions conflict with their implicit, unacknowledged guide to everyday activities. They also rarely hear anyone make the clear principled case for free trade. Almost everyone in public life is a protectionist to some extent. Even those who lean toward free trade talk as though countries—rather than individuals—trade. Hence their favorable reception of government trade agreements. Once you buy into that sort of collectivism, you are bound for trouble. (Gary Johnson was no help at all in the 2016 campaign. Merely declaring yourself and your running mate "the free traders in the race"—without explanation—teaches no one anything.) Beyond that, most people have no incentive to explicitly cultivate the economic way of thinking. Each person's one vote amounts to squat, so voters have no incentive to acquire the tools with which to judge political candidates, who as officeholders have a lot to say about economic matters, e.g., imports, taxation, and regulation. Still, Americans trade every day with others, so they implicitly "know" why trade is good and why restriction is bad. They like variety, choice, and bargains. Yes, they are nationalists, so they think differently about trade the moment goods and money cross a national boundary. They see virtue in buying "American," even if "American" means many foreign factors of production. Nevertheless, when they shop, most of the time they act like free traders. But come on! Even with these headwinds, we free traders—we advocates of the liberty—ought to have prevailed. "Money buys more under free trade," goes an old British Liberal Party slogan. Why isn't that persuasive? Perhaps it's because people don't ever hear it said. Perhaps it's too logical, too simple. "Trade wars are good," Trump says with characteristic aplomb, "and easy to win." Well, presidents always think about wars, trade or otherwise, that way. After all, they aren't on the front lines. (I think of the line attributed to Bastiat: "When goods don't cross borders, soldiers will.") With trade wars the front lines are populated by consumers who face higher prices and the industrious folks who want to export their products but can't or who use now-higher priced imported materials and machines. They get hurt, but most people, being economic illiterates, won't know it's the trade restrictors who have inflicted the casualties. In other words, they overlook "what is not seen," as Bastiat would put it. So Trump will get off scot-free. True, some writers will identify the true culprit—George W. Bush and Barack Obama have been faulted for their steel and tire tariffs—but who reads those writers besides those who already understand? We're all prone to confirmation bias. Anyway, here's the important stuff to keep in mind. • We live in a world of scarcity, which means we constantly have to make choices and face trade-offs. Time, energy, labor, and resources used in one way cannot be used in another. Therefore, if the government puts its thumb on the scale for one industry or firm, other industries and firms will be unable to obtain the resources and labor services they need to serve consumers, who will have less money after paying higher prices to buy other things. • We work to live, not vice versa. It shouldn't take an Adam Smith to recognize that the purpose of production is consumption. • Individuals, not nations, trade. Remind yourself of this trui[...]

Stossel: Trump's Steel Tariffs Will Hurt Americans

Tue, 06 Mar 2018 09:45:00 -0500

The Trump administration says a steel tariff will be announced in the next two weeks to preserve American industries. John Stossel says that won't work.

George Bush tried a similar tariff. Steel production hardly rose at all, and 200,000 jobs were lost in American industries that depend on steel.

Trump is also using the 25% tax as leverage to get Canada and Mexico to renegotiate the North American Free Trade Agreement (NAFTA). He calls the current deal "such a disaster."

But Stossel says NAFTA has been good!

Avocados were once rarely eaten in America. They were hard to find in the winter because American producers can't grow year-round. Mexican farmers can, however, and since NAFTA, Americans buy 4 times as many avocados.

American producers weren't hurt much–they still grow roughly the same amount they did before NAFTA. But consumers are much better off.

People think NAFTA harmed manufacturing. Trump points out that "before NAFTA went into effect, there were 285,000 autoworkers in Michigan. Today, that number is only 160,000."

That's true, but it's mostly due to technology, not trade. Robots do work humans once did.

Looking at total production of cars and car parts, American auto output is up since NAFTA.

Stossel points out that trade also enables amazing things like iPhones. Apple gets raw materials from 63 different countries, and sends the raw materials to 34 different countries for processing. Multiple countries then assemble the products. All that helps make phones affordable, and profitable to produce.

Stossel says: Yes, trade hurts some Americans. But it helps many more of us.

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Shipping Magnates and Friendly Lawmakers Air-Kiss over Loathsome Law that Torments Poor Hawaiians, Puerto Ricans

Tue, 23 Jan 2018 12:20:00 -0500

If you're wondering why it's so hard to get rid of bad laws, a hearing last week at the House Subcommittee on Coast Guard and Maritime Transportation is a useful demonstration. I'll spare you from having to watch a two-hour congressional hearing. It's about the state of the U.S. shipping industry and the Jones Act. The Jones Act is a deliberately protectionist 1920 federal law that requires that cargo ships traveling between ports in the United States (including its territories) be made in America, owned by American companies, and crewed by American citizens. It doesn't take a degree in economics to understand this purposefully protects U.S. shipping companies from foreign competition and therefore ends up driving up prices for shipping in some parts of the country, particularly isolated island communities like Puerto Rico or Hawaii. American consumers and companies that have to ship goods pay the price for protecting an American industry. But this hearing didn't have any representatives from those consumers or from people who have to ship cargo. Instead lawmakers heard from the leaders of the very industries that benefit from the Jones Act. The trade magazine Marine Log reports: "In order for us to maintain the way of life as we know it as a nation that is secure and is able to project power, be it Navy power or commercial power, the Jones Act is intrinsic to that It is the cornerstone of all of them," said Congressman Duncan Hunter (R-CA), Chairman of the Subcommittee on Coast Guard and Marine Transportation, in his opening remarks. In his opening remarks, Ranking Member Congressman John Garamendi (D-CA), stated: "First and foremost, we cannot become complacent in our defense of the Jones Act and our raise public awareness of the need for, and the many benefits that flow, from this long-standing maritime policy that has stood for nearly a century." Hunter represents the San Diego area of California and has received thousands of dollars in campaign donations from U.S. firms connected to shipping and shipbuilding. There's plenty of logrolling going on amid this discussion of shipping. Less happy about the effects of the Jones Act are the citizens of Puerto Rico and Hawaii, who have to pay out of the nose to ship goods to their islands. One study determined that it costs twice as much to ship something to Puerto Rico as it does to ship to nearby Jamaica, thanks to the Jones Act. So if the headline for the Hawai'i Free Press's short piece on the hearing sounds a little exasperated—"It's All Kumbaya at Jones Act U.S. House Hearing"—that's not without reason. As the story notes, All seven of those testifying were pro-Jones Act including two government witnesses and five representatives of the U.S. maritime industry, no critics of the U.S. maritime policy or those who are customers of the industry were called as witnesses. Certainly, no merchant cargo owners—formally known in transportation and law as "shippers"—were invited to this Congressional Jones Act lovefest. It's easy for lawmakers to ignore the American citizens who are hurt by U.S. protectionism when they don't even invite them to speak. Nor were there any trade economists to explain the law's consequences. The Free Press notes that previous "oversight" hearings have been similar in tone: insisting the law is very important while denying voice to those who have been harmed. At one point Duncan absurdly insisted the Jones Act "is what allows us to project power and be the greatest country in the world." Clinging to a federal law that protects an American industry from foreign competition is the exact opposite of projecting power. It's an admission that other countries can manage this task better and more cheaply. And if they can, they should; then Americans can apply that money they save from cheaper shipping to grow in other ways. Below, economist Ken Schooland explains why the Jones Act is awful for Hawaii: src="" allo[...]

There Will Be No Viking Longboats Cruising the Mississippi, Thanks to Hard-Headed U.S. Protectionism

Fri, 15 Dec 2017 09:15:00 -0500

There are 2,000 ports across the world where cruise ships dock for passengers to embark on fabulous getaways. Only 30 of them are in North America. The market won't likely be calling for more docks in the United States anytime soon. Switzerland-based Viking Cruises, which wanted to build and send small cruise ships up the Mississippi River, leaving new tourism dollars for river towns in its wake, is backing off its plan. Viking announced a couple of years ago a plan to bring its luxe longboats to the Mississippi River, but last week the city manager from one those little communities got word Viking had terminated its plans, WQAD in the Quad Cities reports. The cruise ships Viking had been wanting to build and operate would have ended up costing double what they had planned, according to the report. "As the details were being refined, it became the economics did not meet Viking's goals," a company statement read. No new tourists. No new tourist revenue. No new tourism jobs. Our own federal laws are to blame. More specifically, President Grover Cleveland's Passenger Vessel Services Act (PVSA). The 1886 law requires that in order to ferry passengers between ports in the United States, the ship must have been built in the United States and be owned and operated by Americans. If the absurd contours of this law sound suspiciously familiar, it's because these restrictions are just like the Jones Act, the terrible protectionist law that uses similar rules and ultimately drives up the costs of shipping goods to U.S. islands and territories. The law received a lot of attention and criticism in the fall because it's going to make it much more expensive for Puerto Rico to recover from Hurricane Maria. The Jones Act is for shipping. The PVSA is for ferrying passengers and for cruises. The intention of the PVSA was obviously to protect and foster domestic shipbuilding and shelter them from foreign competition. Ships built and owned by foreign companies can depart and return from the same U.S. port, and they can go to distant foreign ports (outside of North America) and return back to a port in a different city. They cannot travel from port to port visiting locations within the United States. There are a very small number of exceptions, like Alaska. As the decades sailed past, the law has ended up punishing only us. America doesn't make cruise ships anymore. An attempt to do so in 2001 (subsidized by the government, no less) failed miserably. Because cruise companies are not logistically able to meet the requirements of the PVSA, America doesn't really have a domestic cruise industry. (Clarification: To be clear, there are indeed domestic river cruise companies. But the market is not nearly as robust as it could be.) The law doesn't protect American jobs from foreigners; it has prevented new jobs from being created in the United States. Victoria and Todd Buchholz (Todd is a former economic policy director under President George W. Bush) noted the consequences of this terrible law in a Los Angeles Times op-ed in August: Without the PVSA, dozens more cruises would depart daily from U.S. cities such as New York and Seattle, and the hundreds of millions of dollars generated from those voyages would stay within the U.S. economy, providing thousands of portside jobs — for longshoremen loading cargo, bellhops, tour guides, taxi drivers and local farmers supplying fruits and vegetables for those all-you-can-eat buffets. And of course, each stop would generate revenue for U.S. cities in port fees as well as local and state taxes. Who does the PVSA protect? Not Americans. Instead, Canada and Mexico should send thanks to that Congress of 1886, "attn. Grover Cleveland." The cruise docks of San Diego sit vacant 90% of the year. Meanwhile, 80 miles south, Ensenada receives more than three times as many passengers as San Diego, and many more than New York, New Orleans and Boston. Vancouver hosts three times as many sailings as Seattle. Sin[...]

Should the U.S. Unilaterally Abolish All Tariffs And Duties? A Debate on Free Trade.

Fri, 01 Dec 2017 12:10:00 -0500

On November 13, George Mason University economist and Cafe Hayek blogger Don Boudreaux faced off against Rick Manning of Americans for Limited Government in a public debate about free trade. The event was part of The Soho Forum, Reason's monthly debate series held at the SubCulture Theater in New York City's East Village.

The resolution: "The U.S. government should unilaterally abolish all tariffs and duties on imports and all subsidies to exports, thereby making all reciprocal trade agreements with other countries unnecessary." Boudreaux defended the proposition, and Manning attacked it.

Catch our past Soho Forum debates here.

Coming up on December 11: Tarren Bragdon of the Foundation for Government Accountability and Neera Tanden from the Center for American Progress debate welfare. Tickets are $18 ($10 for students). Get them here.

*Note: This story was originally published on November 27th, 2017. It's now been updated and re-released on the Reason Podcast.

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Global Trade Is Good for Small-Town Manufacturers

Fri, 01 Dec 2017 12:00:00 -0500

President Donald Trump is nothing if not a protectionist. He has promised time and again to tear up trade deals and build barriers against foreign people and products. Usually, he frames it as a defense of American manufacturers and the workers they employ.

"I have visited cities and towns across this country where one-third or even half of manufacturing jobs have been wiped out in the last 20 years," the then-presidential candidate said in one typical campaign address. "We import nearly $800 billion more in goods than we export. We can't continue to do that."

But if the president goes through with his threats to raise the barriers to international trade, American companies will pay the price.

Take Lektro Inc. For 72 years, the manufacturer of electric runway vehicles has operated out of two converted army hangers in the small coastal town of Warrenton, Oregon. To hear Director of Operations Paul Davis tell it, Lektro is the Trumpian ideal of a U.S. company: It strives to buy American, and it is proud of its hometown and the jobs it brings to the community. "It's still a small family business, and we are determined to stay in the area," Davis says, adding that management has withstood offers from other states to flee Oregon for promises of tax breaks, subsidized facilities, and even U.S. Open golf tournament tickets.

Nonetheless, Lektro is very much part of the global economy. "Last week we loaded a container going to Spain," Davis says. "Today, three containers were unloaded in Geneva for a big air show we helped set up." And although the company buys American when it can, serving its customers means sourcing parts from all over the world, including North American Free Trade Agreement (NAFTA) members Canada and Mexico. In recent months, Lektro has been experimenting with cheaper Mexican-manufactured electric motors, and it is considering expanding its purchases of them.

But the possibility of the president terminating NAFTA or imposing new tariffs on imports has given Lektro pause. "We don't want to have to build the wall out of the motors we buy," Davis says. Between one-half and one-third of Lektro's vehicle sales are to foreign buyers, with vehicle sales being 85 percent of total sales.

That Trump's protectionism is a dead end for a small-town company like Lektro illustrates how irreversibly globalized every corner of the American economy has become. Throwing up barriers won't change that. It will, however, harm the very companies Trump so loudly and repeatedly claims he wants to help.

America's Exit May Have Improved the Trans-Pacific Partnership, but Not for America

Tue, 14 Nov 2017 10:56:00 -0500

Donald Trump may have pulled the U.S. out of the Trans-Pacific Partnership, but the trade deal didn't die: Last Saturday in Da Nang, Vietnam, the 11 remaining countries announced that they had agreed on the core elements of the pact. Known officially as the "Comprehensive and Progressive Agreement for Trans-Pacific Partnership" and colloquially as TPP 11, the deal removes many tariffs and other barriers to exchange across borders. That said, it would be better described as managed trade than free trade. Free trade in the ideal sense wouldn't require a 5,500-page agreement, let alone some of the provisions that worked their way into that document. Interestingly, America's exit has meant the suspension of some of the more egregious of those provisions. It was the U.S. that pushed the document's original rules for intellectual property, which have been criticized for maximizing copyright terms and eroding privacy rights. Similarly, the U.S.-proposed approach to pharmaceuticals would raise the cost of medicine (and restrict rather than free trade) by extending a patent by 20 years when a new use is found for a drug. The some of the agreement's Investor-State Dispute Settlement clauses have also been suspended. These would have allowed foreign corporations to sue countries if their investments are affected by the home government's policies, an idea that has come under fire from multiple directions: Liberals see it as an appeasement to corporate power, conservatives claim it will weaken national sovereignty, and libertarians have argued that it creates special legal rights while doing little to liberalize trade. Without Washington in the mix, the TPP is a simpler and in important ways better agreement. On the other hand, now the average American won't receive any of the benefits. According to a 2016 report from the International Trade Commission, both agriculture and beef stood to gain substantially from TPP, as did the services sector of the American economy. And American farmers will be put at a disadvantage if their products face tariffs that Canadian crops won't. The revised deal will not have the impact on global trade that the original would have had. With the United States' involvement, the agreement would have encompassed 38.2 percent of global GDP. Without the U.S., the figure is 13.5 percent. Yet TPP 11 would still represent a change in the geopolitical landscape. "Without the United States in the TPP, and with no real promise of new trade agreements for the next few years, the economic center of gravity will continue shifting across the Pacific," says Dan Ikenson, director of trade policy studies at the Cato Institute. "I think it's better for the world (including the United States) that TPP-11 proceeds because the United States is no longer a reliable champion of liberalizing trade through the adoption of sound rules." "The world will move on, even if we're stuck in neutral," says Clark Packard, federal affairs manager and policy counsel for the R Street Institute. "Hopefully we'll eventually come to our senses and rejoin." Ideally without dragging any bad ideas back into the mix.[...]

Americans Keep Setting New Records for Renouncing Citizenship, and Tax Reform Threatens to Make it Worse

Tue, 07 Nov 2017 15:31:00 -0500

One of the biggest arguments in favor of tax reform is that it's an opportunity to get rid of bad laws and human-harming regulations that virtually no non-self-interested observer can defend with a straight face. A welcome fix in the House's current tax-reform package, for example, is the removal of bonds for the construction of professional sporting stadia from the tax-exempt status granted to municipal bond-finance of actual infrastructure. So why on earth does the Republican Party's opening bid for tax-code overhaul not include the end of worldwide income taxation on U.S. citizens (even if they live and earn their money abroad), nor repeal of the odious Foreign Account Tax Compliance Act? After all, both promises are right there in the 2016 Republican Party Platform: The Foreign Account Tax Compliance Act (FATCA) and the Foreign Bank and Asset Reporting Requirements result in government's warrantless seizure of personal financial information without reasonable suspicion or probable cause. Americans overseas should enjoy the same rights as Americans residing in the United States, whose private financial information is not subject to disclosure to the government except as to interest earned. The requirement for all banks around the world to provide detailed information to the IRS about American account holders outside the United States has resulted in banks refusing service to them. Thus, FATCA not only allows "unreasonable search and seizures" but also threatens the ability of overseas Americans to lead normal lives. We call for its repeal and for a change to residency-based taxation for U.S. citizens overseas. The United States is the only country besides Eritrea to tax the income of its non-resident citizens. If you were born to an American parent (or in the U.S. proper) but have lived and worked the bulk of your life elsewhere, the Internal Revenue Service still has a claim on your salary, even though you consume zero government services. That's just wrong, and should be stopped. Meanwhile, FATCA-repeal bills were introduced in both chambers of Congress back in April by Freedom Caucus Chair Rep. Mark Meadows (R-N.C.) and Sen. Rand Paul (R-Ky.), but both have yet to move beyond committee. The Republican Party has controlled Congress since January 2015, yet can't screw up the courage to deliver a simple repeal of a lousy law. With each passing day of inaction, the number of Americans renouncing their own citizenship rather than deal with the ridiculously onerous and punitive tax-filing requirements continues to set new records. Last week, the Treasury Department came out with its quarterly name-and-shame list, putting the 2017 tally of passport-burners at 4,448. At that pace we should break last year's record of 5,411 by just after Thanksgiving. Congratulations, America! Not only does the tax reform proposal thus far fail to provide any relief to the estimated 8.7 million Americans living abroad (who are routinely shut out of financial institutions, since foreign banks don't exactly enjoy playing errand-boy to the I.R.S.), it may rub salt in the wound. Max Reed, a cross-border tax lawyer in Vancouver, Canada, who writes frequently and well about such issues, says "it will make matters worse for some US citizens in Canada and keep it the same for others." Some of Reed's preliminary findings: * New punitive rules that apply to US citizens who own a business. Currently, most US citizens who own a Canadian corporation that is an active business don't pay tax on the company's profits until they take the money out. The House plan changes this. It imposes a new, very complicated, set of rules on US citizens that own the majority of a foreign corporation. The proposal would tax the US citizen owner personally on 50% of the entire income of the Canadian corporation that is above the amount set by an extremely[...]

Globalization Is a Boon for Rural America

Tue, 07 Nov 2017 13:30:00 -0500

Hancock County, Kentucky, is a quiet place, along the serpentine Ohio River that divides the Bluegrass State from Indiana. It was here that Abraham Lincoln argued his first law case, in his own defense, when he was accused of operating a ferry without a license. Today this rural patch is one of the most trade-dependent counties in the country, with about 55 percent of its GDP coming from exports. The county is home to one of America's five aluminum melters, an enterprise that supports hundreds of jobs. More than 20,000 people work at Kentucky's 182 aluminum facilities, which have helped replace thousands of coal jobs lost in the past decade. Aluminum produced in places like Hancock County finds its way to other countries, particularly Canada and Mexico, where it is used to produce auto parts and other goods. Foreign trade is also essential in St. James Parish, located deep in Cajun country. Known for its tradition of lighting Christmas Eve bonfires on the Mississippi River to help guide Santa's sleigh, this rural corner of Louisiana has a population of 21,567. Over half of the parish's gross domestic product is due to petroleum and chemical exports. China has been Louisiana's top export destination for the past four years, with the state sending about $8 billion's worth of goods there last year. Yuhuang Chemical Inc., a Chinese company, is now investing $1.85 billion in a new methanol manufacturing complex that promises to bring thousands more jobs to St. James Parish. (The Yuhuang investment isn't purely a product of market forces: More than $11 million in state subsidies are involved too.) According to Drew Desilver of the Pew Research Center, Hancock County and St. James Parish are just two examples of a broader trend. The places most dependent on access to foreign markets aren't coastal metropolises. They're sparsely populated counties that often don't have the population to fill a mid-sized city. Changes to America's rules for imports could easily have an impact on what our country exports as well—and that, in turn, could disrupt quiet corners of the country far from the cosmopolitan urban centers or either coast. Of the 154 U.S. counties where exports account for more than 25 percent of GDP, Desilver found that only 11 had populations over 100,000. For many of these counties, the goods are exported to either Canada or Mexico, both of which are among America's largest trading partners. The global supply chains facilitated by trade are vital throughout the Rust Belt and the Sun Belt. Mark J. Perry, an economist at the American Enterprise Institute, has detailed the importance of international trade by looking at the GDP of all 50 states last year and highlighting the total percentage of trade volume—that is, the sum of exports and imports. Michigan is the country's most globalized state, primarily due to the dominance of the auto industry. But Kentucky and Louisiana are second and third, respectively, with Kentucky boasting a surprisingly robust auto industry and Louisiana's energy exports poised for growth in the coming years. Closing markets, Perry writes, "ignores all of the unseen, delayed and hidden costs of trade protectionism that would make many trade-dependent American states weak again, not great again."[...]

Trump at 9 Months: 'The Least Regulatory President of All'

Mon, 02 Oct 2017 16:15:00 -0400

The most underreported story (except here at Reason!) about President Donald Trump's White House nine months in has been his administration's concerted effort to slow down, block, roll back, and reform the regulatory state. Given that, in the wake of serial Obamacare-repeal failure, Trump has arguably reached the pen-and-phone stage of his presidency 51 months before his predecessor did, you'd think that taking a poleaxe to the executive branch would receive more attention. But the man does have a knack for generating headlines far afield from the monotony of governance. The end of the fiscal year over the weekend gives us a chance to step back and do some counting—or better yet, let the regulation-obsessives over at the Competitive Enterprise Institute do it for us. There, CEI Vice President for Policy Clyde Wayne Crews has put together a piece, "Red Tape Rollback Report: Trump Ends Fiscal Year as America's Least-Regulatory President Since Reagan," that if anything is guilty of headline understatement. Consider: Compared to Obama at this time last year, Trump's [Federal Register] page count is down 32 percent so far in his first year. […] In nine months, the Trump administration has issued 2,183 rules. Obama issued 2,686 rules in the corresponding time period in 2016. Trump's tally represents an 18 percent decrease. Significant rules issued, generally those with an impact of $100 million or more, are down an astonishing 58 percent compared to Obama. Trump's agencies issued 116 significant final rules during his first nine months, while Obama's issued 274 over the corresponding nine-month period in 2016. And that doesn't count the rules currently being cooked up: Trump's overall proposed rules in the pipeline are far below any of his predecessors […] They are down a down 28 percent compared to the corresponding time frame from Obama's final year. Trump: 1241, Obama: 1737. Note that Trump's "significant" proposed rules are drastically below any predecessor. They are down 77 percent compared to Obama. Trump: 65, Obama: 290. Bolding in the original, which is filled with hyperlinks to further resources, and can be found here. Earlier this year I wrote a cover story on the prospects of Trumpian deregulation. Since then some of the will-he/won't-he signs that regulatory reformers were anticipating have come up positive. But as the recent Jones Act wavering, trade saber-rattling, and infrastructure-investment reversal illustrate, the 19th century protectionism that deregulation types were also fretting about in my article is always a threat to overwhelm the gains made by deconstructing and reshaping the administrative state.[...]

Trump Waives Jones Act for Puerto Rico for 10 Days. That’s Good, but It’s Not Enough.

Thu, 28 Sep 2017 11:10:00 -0400

(image) The White House this morning announced it is waiving part of the Merchant Marine Act of 1920 (commonly referred to as the Jones Act) to make it easier and cheaper for Puerto Rico to import goods to recover from Hurricane Maria. From CNN:

Acting Department of Homeland Security Secretary Elaine Duke said the waiver will be in effect for 10 days and will cover all products being shipped to Puerto Rico, according to a release from the department.

The waiver will guarantee the needed equipment to repair infrastructure damaged by the storm and restore emergency services, Duke said in a news release.

Puerto Rico Gov. Ricardo Rosello said he had formally asked for a waiver, but yesterday President Donald Trump was unwilling to do so, he said, because people in the shipping industry didn't want him to.

That's because the Jones Act shields them from competition from foreign shippers so they can make more money. It therefore drives up the cost of shipping goods to isolated and faraway places like Puerto Rico and Hawaii.

The Jones Act requires any ship traveling from port to port in the United States and its territories be built, owned, and crewed by Americans. Foreign ships can dock once in a U.S. port and cannot bounce from port to port delivering (or picking up) goods.

Studies show that the Jones Act is partly to blame for the significant increases in costs to ship goods to Puerto Rico and Hawaii, doubling them in some cases.

Waiving the Jones Act will for the next 10 days allow Puerto Rico to more readily accept assistance or goods delivered on foreign-owned ships. While the waiver is wonderful, that's just the tip of a logistical iceberg and may be of limited assistance so early in the crisis response. The extensive damage to Puerto Rico's infrastructure has made it difficult to distribute the cargo they've been receiving in their ports to react to the crisis.

The financial impacts of the Jones Act will be much more painful moving forward, when distribution gets figured out. It's going to take much, much longer than 10 days for the island to import everything it needs to restore itself from the damage caused by Hurricane Maria. After those 10 days, the Jones Act will kick back in and the island will again have to be paying much more for imports of goods than it should.

But the Trump Administration's ability to waive the Jones Act is limited to times of crisis. It cannot simply wave its hands and decide the law does not apply for as long as the administration chooses. So it's up to Congress to act and remove the part of the law that cartelizes the American shipping industry and shields it from market pressures that lower prices.

Read more about the awfulness of the law here. Or watch this ReasonTV video about its impacts on Hawaii:

src="" allowfullscreen="allowfullscreen" width="560" height="340" frameborder="0">

Federal Relief to Puerto Rico Won’t Include Waiving Law That Drives up Import Costs

Tue, 26 Sep 2017 15:15:00 -0400

President Donald Trump will be visiting Puerto Rico next week to take in the massive damage from Hurricane Maria. But if the island is looking for some regulatory relief, it may be out of luck. The administration announced some bad news for Puerto Rico: It will not be waiving the Jones Act, which significantly restricts the ability of foreign or foreign-owned ships from bringing goods to Puerto Rico. The law requires ships traveling from port to port in America and its territories be made, owned, and crewed by Americans. Foreign ships are permitted to dock in one port and that's it. They cannot visit several different ports sequentially within our borders. The result is higher shipping costs to islands like Puerto Rico and Hawaii because the law shields U.S.-based companies from a lot of foreign competition. The act is a bane to Puerto Rico. As I noted yesterday, studies show it can double to cost of shipping goods to ports there compared to nearby island countries that aren't American territories (and therefore aren't affected by the law). The Department of Homeland Security can waive this part of the Jones Act in crisis situations and had done so specifically for fuel shipping to Puerto Rico. But the administration has announced it will not be expanding or extending any relief for Puerto Ricans as it imports what it needs to recover. From the Associated Press: A spokesman for the Department of Homeland Security says officials believe there is sufficient capacity of U.S.-flagged vessels to move goods to Puerto Rico. Spokesman David Lapan said most of the humanitarian shipments to Puerto Rico will be through barges, which make up a significant portion of the U.S.-flagged cargo fleet. This is flat-out centralized government planning for the benefit of a small group of powerful U.S. shipping interests. It's no different than a city government deciding how many taxi cabs or liquor stories its community "needs" and using medallions and licensing to keep out competition. Entrenched interests cash in while worrying about competitors entering the marketplace offering lower prices or better services. The defense of the Jones Act, like most trade restrictions, revolves around "protecting U.S. jobs," about 1,400 in this case, according to a Government Accountability Office report. Puerto Rico has a population of 3.4 million. Puerto Rico is swamped in debt as well as water, and terrible fiscal management of government and its failure to plan for its expenses definitely plays a role in how difficult it will be for the island to recover. That makes it all the more important to dump the Jones Act, because guess who is going to be asked to chip in for Puerto Rico's recovery? It will be all of us, of course. And with the Jones Act in place our tax dollars (and our voluntary donations) will not go as far as they should in helping Puerto Rico. Below, here's ReasonTV blasting the Jones Act back in 2013: src="" allowfullscreen="allowfullscreen" width="560" height="340" frameborder="0">[...]

Hey, Congress: If You Really Want to Help Puerto Rico Recover, Dump the Jones Act

Mon, 25 Sep 2017 14:35:00 -0400

Puerto Rico is in a dire state after Hurricane Maria. The island has lost all power even as a heat wave bakes it—and it may be months, not days or weeks, before electricity and services are restored. Meanwhile, the place's agriculture industry has been decimated. Recovery will require the island to import everything from lumber to food to fuel to medical supplies. Unfortunately, a protectionist law may get in the way. The Jones Act—technically, the Merchant Marine Act of 1920—has had nasty financial impacts on trade to Puerto Rico and many other port cities and islands within the United States and its territories. The Jones Act requires that all ships traveling between U.S. ports be made, owned, and crewed by Americans. So a ship from another country, or whose owners are from another country, cannot travel from port to port within the United States delivering or picking up goods. Fortunately the Department of Homeland Security has recognized this problem and has waived the Jones Act for fuel shipping for the time being. But given the tremendous amount of devastation Puerto Rico faces, the costs that are going to be involved in recovering, and the already poor financial state of the island, there has never been a better time to dump the Jones Act entirely. The Jones Act exists to boost the American shipping industry. It has long contributed to the dramatic costs of shipping to Puerto Rico. A New York Fed report from 2012 shows that it costs twice as much to ship something from a port in the U.S. mainland to Puerto Rico as it does to ship to Jamaica and the Dominican Republic nearby. There are only a handful of Jones Act–compliant options, and that lack of competition allows U.S. shippers to charge much higher prices. People who think the government should intervene to stop price-gouging during a disaster should know the Jones Act practically facilitates it and makes recovery all the more expensive. Cato Institute Adjunct Scholar Scott Lincicome warned about the consequences in 2015: During the Deepwater Horizon oil spill, the government...refused to issue Jones Act waivers so foreign vessels could aid in the cleanup and containment. Despite several offers for foreign assistance during an ongoing ecological disaster, the government cited the Jones Act to justify turning them away. Many suspect that the Obama administration was reluctant to go against the pro-Jones Act labor unions (tr. every labor union) he needed to cement his re-election. It's not a leap to say that such cronyism may have delayed the eventual resolution of the spill. In response to Puerto Rico's current crisis, Lincicome tells Reason if a complete repeal is not in the works, then at the very least its rules should be waived for all shipping to Puerto Rico for the foreseeable future, not just for shipping fuel. "You're looking at a clear and avoidable economic burden being placed on the people of Puerto Rico," he says. He adds that the island's citizens suffer this economic burden every day as it is. It's only being temporarily halted due to the crisis. "We're alleviating that burden because they're a sympathetic group right now and there's a spotlight on the tragedy," Lincicome says. "In the good times or normal times, those costs are considered OK. It's a really sad state of affairs." Lincicome has seen no evidence that the disaster might cause Congress to rethink the law. Sen. John McCain (R-Ariz.) periodically attempts to get the Jones Act repealed, but nothing comes of it. And opening America's ports to foreign competition certainly doesn't seem like something President Donald Trump is likely to embrace. "In this political environment it's going to be pretty darned tough to get Republicans on[...]

Tribalism and Economic Nationalism Are Cut from the Same Cloth

Sun, 20 Aug 2017 08:30:00 -0400

I have no idea what goes on in Donald Trump's head, but I can imagine a connection between his refusal to renounce the support of alt-right white identitarians and his rejection of globalism—that is, the freedom of people to trade across national boundaries and to move, consistent with individual rights, as they see fit. When Steve Bannon says he hopes the Democrats will talk about nothing but racism and let the White House get on with its program of "economic nationalism," he may be showing his clever side. Perhaps he sees the connection—and has a magician's sense of misdirection. For the record, globalism and government intervention have no necessary relationship, whatever the rest of the political universe believes. The most eloquent promoters of unencumbered world trade were Richard Cobden and John Bright, the 19th-century "Little Englander" anti-imperialists and peace advocates. No one has an excuse for conflating free worldwide commerce—including the movement of workers, that is, immigration—with either empire or elitist rule through multinational bureaucracies birthed by politicians. As Cobden said, They who propose to influence by force the traffic of the world, forget that affairs of trade, like matters of conscience, change their very nature if touched by the hand of violence; for as faith, if forced, would no longer be religion, but hypocrisy, so commerce becomes robbery if coerced by warlike armaments. Anti-globalism and anti-cosmopolitanism might flow purely from economic ignorance, but it is hard to believe that's all it is for many people. Too often these attitudes suggest what Bryan Caplan calls "anti-foreign bias" combined with "antimarket bias." Caplan defines antiforeign bias as "a tendency to underestimate the benefits of interacting with foreigners," and he defines antimarket bias as a tendency to "underrate the social benefits of markets." (His book The Myth of the Rational Voter: Why Democracies Choose Bad Policies has the details about these and other relevant, common biases.) Why would anyone underestimate the benefits of interacting with foreigners? It might be because they are, well, foreign. Combine this bias with an ignorance of Adam Smith's "invisible hand" (spontaneous order) and a suspicion that exchange is zero-sum rather than positive-sum, and you have the making of an economic nationalist. If you are already a committed economic nationalist, you will have an interest in spreading distrust of foreigners and markets to others in order to advance your program or be elected president of the United States. (Some apparent tribalists may "merely" be demagogues pandering to authentic tribalists.) While I don't think one has to embrace racism or tribalism to be an economic nationalist, an affinity exists between the two dispositions: "I can't trust those people? Why would I want to trade with them?" Moreover, the distrust of foreigners and markets could readily carry over to subgroups in the domestic population that seem foreign—that is, groups which don't quite seem to embrace the "nation's culture" with sufficient enthusiasm. Maybe some members of the suspect group have a primary language other than English, or practice a religion deemed weird, or don't trust the police. In other words, someone who starts with a bias against foreigners and the social cooperation embodied in what we call markets is a prime candidate for bigotry toward domestic "foreigners" too. And that person might well see kindred spirits in groups that exhibit more-pronounced versions of those biases, even when their members have a taste for violence. After all, danger lurks, so who could blame people for being tempted to defend their va[...]