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Published: Mon, 24 Apr 2017 00:00:00 -0400

Last Build Date: Mon, 24 Apr 2017 10:45:30 -0400


How Protectionism Shields United Airlines From Competition

Thu, 13 Apr 2017 10:20:00 -0400

As Brian Doherty observed here yesterday, the United Airlines outrage does not require new laws, though that is certainly news to microphone-hogging pols like New Jersey Gov. Chris Christie. In fact, let's round up some of the opportunistic political responses, shall we? * Rep. Jan Schakowsky (D-Illinois): her bill "will end the practice of involuntarily 'bumping' passengers from oversold aircrafts once and for all. If an airline chooses to oversell a flight, or has to accommodate their crew on a fully booked flight, it is their responsibility to keep raising their offer until a customer chooses to give up their seat." Schakowsky said her legislation also will require that any dickering over how much a passenger will get for voluntarily relinquishing a seat is "carried out before they board the aircraft. These fixes would prevent the situation we saw on video from ever happening again." * Sen. Chris Van Hollen (D-Maryland): he is readying legislation to prohibit airlines from forcibly removing passengers due to overbooking or to free up seats for crew. The Maryland Democrat released a letter to colleagues seeking sponsors for what he has called the "Customers Not Cargo Act." There is another way, I argue in today's L.A. Times. If lawmakers really want United to feel the lash, they should remove the politically motivated protectionism that blocks foreign competitors from driving customer-unfriendly American airline behemoths out of business. Excerpt: Foreign companies and individuals—think Richard Branson and Virgin Atlantic Airways—are forbidden by U.S. law from owning more than 25% of a domestic airline. That's why Virgin America could be sold last year to Alaska Airlines over the express wishes of Virgin's famous founder: He just didn't have enough votes. The differently headquartered are banned outright from servicing routes between two American cities, a practice with the sinister-sounding name of cabotage. And carriers from Singapore to the Gulf States are not only barred from competition, but subject to sneering taunts by American legacies from behind the protectionist firewall, such as when United CEO Oscar Munoz this March said that companies including the well-regarded Emirates "aren't real airlines." What on Earth justifies such pre-Trump xenophobic mercantilism in our increasingly globalized world? According to North America's Air Line Pilots Assn.: "These regulations ensure the national security of our country and the integrity of our airline industry." Or translated into honest-ese, "These regulations ensure the job security of unionized U.S. nationals and the continued existence of poorly run U.S. airlines." Read the whole thing here.[...]

Congressional Republicans Introduce a Trump-Pleasing Tax Hike

Fri, 31 Mar 2017 13:01:00 -0400

Q: What kind of tax hike can 21st century Republicans get behind? A: One that pays for a border wall, and can be sold, inaccurately, as an "Illegal Immigrant Tax." Rep. Mike Rogers (R-Ala.) yesterday introduced the Border Wall Funding Act, imposing what he describes as a "2% fee on remittances sent south of the border." The bill has yet to be posted online as far as I can tell, but according to The Plainsman of Auburn the tax would apply to monies sent to "more than 40 Latin American countries." Rogers's sales pitch: "This bill is simple – anyone who sends their money to countries that benefit from our porous borders and illegal immigration should be responsible for providing some of the funds needed to complete the wall. This bill keeps money in the American economy, and most importantly, it creates a funding stream to build the wall." Traditionally, nationalistic controls on capital flows have not been associated with liberal democracy and the rule of law. According to a skeptical analysis published last week by the World Bank, other countries currently considering such a levy include "Bahrain, Kuwait, Oman, Saudi Arabia…and the United Arab Emirates." Previous efforts in Gabon (2008) and Palau (2013), "have not worked," World Bank author Dilip Ratha asserted, because the "tax collections were found to be insignificant." As Nick Gillespie pointed out a year ago, after then-candidate Donald Trump proposed cracking down on remittances to pay for his wall, the idea is fundamentally corrupted by "the assumption that the government has the right to unilaterally stop people from spending the money they earn and possess; that the feds have a right to tell you where you can and cannot go or even send checks." That has not stopped the likes of National Review from editorially endorsing such a nationwide tax. The United States is by far the leading source of remittances in the world, with its residents sending to other countries $135 billion in 2015, some 23 percent of the global total, according to research published this month by the international banking conglomerate BBVA. Monies sent to Latin America and the Caribbean accounted for 38.5% of the U.S. total, BBVA estimated, led by Mexico ($27 billion, or more than the country's annual oil revenue), then Guatemala ($7 billion) and the Dominican Republic ($5 billion). As a percentage of the host-countries' GDP, however, Mexico's 2.6 percent lags far behind Haiti (24.7 percent), Honduras (18.2 percent), and Jamaica (16.9 percent). There is no reason to assume that the bulk of these funds derive from illegal immigrants. Of the 41 million or so foreign-born residents of the United States, an estimated 11 million are not authorized to be here, and are probably less likely than their legal brethren to use money conduits that are traceable by the feds. (And as any Cuban can tell you, there are plenty of U.S.-born hyphenated-Americans who wire money back to the island, further broadening the pool of donors, and again underscoring the truism that measures taken against illegal immigrants also pinch the freedom of natural-born citizens.) The money they send back is critical in ameliorating poverty and jump-starting economic activity. In other words, it helps create the kinds of conditions that may keep an increasing number of would-be migrants at home. According to the World Bank analysis, "In 2016, migrant remittance flows to developing countries amounted to $440 billion, more than three times the size of official development aid flows. In many countries, remittances are the largest source of foreign exchange. In India and Mexico, they are larger than foreign direct investment; in Egypt, they are larger than the revenue from Suez Canal; and in Pakistan, they are larger than the country's international reserves." For this reason, the G20, the global club of rich nations led by the United States, agreed in September 2014 on a "Plan to Facilitate Remittance Flows," with the intention to reduce the worldwide average tax on remittances from 8 percent down to 5 [...]

Rep. Thomas Massie: ‘We don't really have 218 conservatives here [who] meant what they said when they said they wanted to repeal Obamacare’

Wed, 29 Mar 2017 16:50:00 -0400

As referenced earlier today, last night The Fifth Column invited to its podcast-waves Rep. Thomas Massie (R-Ky.), one of the most libertarian members of Congress, and a man well-known to Reason readers (you can consume our previous interviews with congressman from June 2013, March 2016, and May 2016; watch him eat a hemp bar on The Independents, and read what he's written for us). With the Ryancare debacle (in which Massie was a firm "Hell no") still fresh in the memory tubes, and with the Trump administration collaborating with the existing GOP establishment to marginalize the crazies in the Massie-friendly House Freedom Caucus, the triumvirate of Kmele Foster, Michael C. Moynihan, and myself wanted to know how the Obamcare-reboot failure looked like from the inside ("this was a big game of chicken"), where Congress goes from here on swamp-draining, and whether there's any meaningful overlap between Trump/Steve Bannon economic nationalism and Tea Party-flavored libertarianism (in mutual opposition to the World Trade Organization, he suggested). Along the way Massie spelled out the virtues (and limitations) of his bill to abolish the Department of Education, ruminated on whether the HFC's intransigence has allowed libertarian-leaners to retake the lunatic lead from Donald Trump, and busted Moynihan's chops for being a diva. You can listen to the whole thing here; Massie in the first 37 minutes: src="" width="100%" height="315" frameborder="0"> After the jump a quickie edited transcript, thanks to Lindsay Marchello: Welch: Give us a bit of a snapshot of what it was like there in the final 24 hours in that push. Massie: Oh my gosh, this thing was like a rocket whose fins had fallen off. It started off in the wrong trajectory 18 days before…and there in the last few days it was traveling erratically, and I said on Thursday—obviously they pulled the bill on Friday from consideration—but on Thursday I said "This rocket has gone crazy. The best we can hope for is it lands in the ocean and sinks." Welch: Now I should just interject here that you are an MIT graduate, so you are only capable of speaking in rocket metaphors. Massie: I'm an electric engineer, I'm not a rocket scientist, but I like to pretend I'm one when I'm in Congress. You know, I did a lot of media last week; I probably went on TV more last week than I've been on TV in my life. And I was trying to get the message out there that this was a big game of chicken, and that reality…is going to come crashing down on Thursday. They were able to avoid reality for one day by postponing the vote, but then reality came crashing down. And I also predicted that they would claim they had the votes right up until they pulled the bill, which is also what happened. The speaker did Congress a great disservice by going on TV for literally the entire week leading up to the debacle of the bill being pulled and saying that they had the votes, so I felt compelled to go on TV and say they don't have the votes. And then, on I believe it was Thursday or Wednesday, Mick Mulvaney came—he's a former Freedom Caucus member who is now the OMB director—he came to our Republican conference, and he was carrying a message from Trump. He said "I've got a message from my boss. He's rather remarkable; he's not like most of us politicians, and he wants you to know that number one, he's done negotiating. There will be no changes to this bill. And number two, the vote is going to happen tomorrow, and he doesn't care if it passes or fails. We are going to have a vote and he's going to find out who is on his side and who's not." And then the third thing he said is, "If this fails, we are done with health care. You're done with health care, we are moving on." Foster: Wow. Massie: They asked me, "What do you make of all that?" And I said it's all a big bluff. Foster: Did you say that before or after you pissed yourself? Massie: Just shak[...]

Snuggies Are Blankets, Not Clothes

Tue, 07 Mar 2017 12:00:00 -0500

(image) Last week I interviewed Pietra Rivoli — a Georgetown University international business and finance professor, as well as the author of The Travels of a T-Shirt in the Global Economy: An Ecomonist Examines the Markets, Power, and Politics of World Trade — about bipartisan job protectionism and hostility to free trade in the age of President Donald Trump. Rivoli's book uses a tourist t-shirt purchased in Florida to illustrate the inter-connectedness of the global economy, and how every trade agreement, tariff, or labor deal comes with international ramifications even for a seemingly minor item local a t-shirt.

The sleeved blanket/bathrobe hybrid known as the Snuggie is no different. Which is why a recent U.S. Court of International Trade decision rejecting the U.S. government's insistence that the Snuggie is an item of clothing — instead (as its manufacturer Allstar Marketing Group has insisted) ruling the item to be a blanket — matters.

Judge Mark Barnett based his decision in part on the company's marketing of the item as "the blanket with sleeves!" and the fact that it doesn't close in the back. The defendant in the case, the U.S. Department of Justice, argued the Snuggie was more akin to "priestly vestments or scholastic robes," according to Bloomberg BNA.

Ana Wanson explains in the Washington Post that the ruling was crucial for Allstar because the Snuggie is produced in China and is therefore subject to an import tariff. Blankets come with a tariff of 8.5 percent, but "pullover apparel" is pinched for 14.9 percent. That's a difference worth taking the government to court over. As Wanson notes:

The Snuggie case and others like it show how companies may go to great lengths to avoid the barriers governments impose on imported products. President Trump has argued for even stiffer tariffs on products from countries that refuse to negotiate better terms of trade with the United States, like Mexico and China. He has also backed away from free trade deals that would slash tariffs among many countries, and expressed a desire for negotiating deals with countries one-on-one.

Read my interview with Rivoli, who says "companies and entrepreneurs often find creative ways to deal with all kinds of barriers," here.

Capitalism and Neoliberalism Have Made the World Better

Fri, 03 Mar 2017 15:10:00 -0500

"People think the world is in chaos. People think that the world is on fire right now for all the wrong reasons," says author and Cato Institute senior fellow Johan Norberg. "There is a segment of politicians who try to scare us to death, because then we clamber for safety we need the strong man in a way."

But despite the political situation in Europe and America, Norberg remains optimistic. His new book, Progress: Ten Reasons to Look Forward to the Future, shows what humans are capable of when given freedom and the ability to exchange new ideas. "In the 25 years that have been considered neo-liberalism and capitalism run amok what has happened? Well, we've reduced chronic undernourishment around the world by 40 percent, child mortality and illiteracy by half, and extreme poverty from 37 to 10 percent," explains Norberg

Reason's Nick Gillespie sat down with Norberg during the International Students for Liberty Conference to talk about his book, the current political climate in the West, and how technology is creating a younger generation that will look past politics for answers to societal problems.

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Edited by Alex Manning. Cameras by Mark McDaniel and Todd Krainin.

Why Trade Can Still Thrive Under a Protectionist Like Donald Trump

Fri, 03 Mar 2017 12:30:00 -0500

Hostility to free trade is now a bipartisan feature of American politics. Donald Trump won last year's election in part by promising to pull out of trade agreements, impose trade tariffs, and preserve jobs in dying industries at all costs. On the left, Bernie Sanders campaigned on protectionism and portrayed the sometimes trade-friendly Hillary Clinton as a tool of big business who had no real sympathy for the plight of blue collar workers. But free trade antagonists like Trump and Sanders tend to paint overly simplistic pictures of how trade actually works, and the ways in which our economy increasingly depends on, and benefits from, a complex web of national and international production. That's what makes Pietra Rivoli's 2005 book The Travels of a T-Shirt in the Global Economy: An Ecomonist Examines the Markets, Power, and Politics of World Trade so valuable. In the book, Rivoli, a Georgetown University international business and finance professor, writes of buying a tourist t-shirt in Fort Lauderdale, Florida, and then meticulously investigates the the economic and political factors of every stage of its production and ultimate sale to the author for $5.99. Rivoli's t-shirt odyssey led her to travel all over the United States and the world—speaking with, among others, cotton farmers in Texas, factory workers in China, and used clothing entrepreneurs in Africa—examining the production and trade of each of the shirt's many components, the political factors that determined the location of each stage of production, and even the economic ramifications of discarded clothing that often ends up in the Third World. The book is a valuable primer on how political considerations affect everything we buy and sell, and how even with both major political parties lurching towards increased hostility to trade, there are always opportunities for innovation. Reason spoke with Rivoli over the phone earler this week. Reason: Your book does a great job of explaining the mechanics of trade, the human costs and benefits, and the political factors that inform every aspect of production. Now that we have a president who is focused on building physical barriers as well as economic barriers, what do you think will be the results say one year, or even five years down the road as a result of President Trump's trade policies? Rivoli: There's a theory in economics called the "mercantilistic approach," which basically said that exports are good and imports are bad. President Trump has talked about our trading relationships with different countries essentially as you might look at a perfect income statement, saying we are losing when we have a trade deficit with country X or country Y. Losing is bad, so we want to try to make trade relations more balanced. But you don't want to look at a trading relationship as an income statement. A trade deficit is not equivalent to a business loss and we don't measure the health or progress of economy using that metric. There are better and more standard metrics, such as job creation or economic growth or standards of living. What crosses borders today are not final goods, what's dominating is trade in tasks, and certain things done in certain places. If you look at a t-shirt, you have all kinds of trade embedded in this t-shirt that does not show up when you just look at the final product. In the case I wrote about [in the book], you have a trade flow when the t-shirt enters the United States and that's what you see in the trade data and statistics when you look at the tag in the back of the shirt. But actually behind that trade flow is lots of other trade that is represented in the global value chain (GVC)—the cotton might have started out in the United States or the yarn might have started out somewhere else. This trade behind the trade is what we call intermediate trade and today constitutes about half or more of global trade flows. This is where you have to be really ca[...]

Trump’s Over-Praised State of the Union: The New Fifth Column

Thu, 02 Mar 2017 11:18:00 -0500

(image) After an unseemly hiatus, The Fifth Column, your usually-weekly podcast threesome of Kmele Foster, Michael C. Moynihan, and moi, has come back with a nearly two-hour episode that begins with a lengthy reaction to President Donald Trump's speech to Congress Tuesday night. Sub-themes include:

* His Obama-like, laughably unrealistic grandiosity.

* His economic illiteracy and budget-busting.

* His excellent approach toward the Food and Drug Administration, and potentially other aspects of regulatory reform.

* His insanely bad idea that a border wall will end illegal drug use.

* His cynical and fact-challenged ideas about illegal-immigrant criminality.

* His military re-bloating.

* His Berniesque trade populism.

* And his ballyhooed yet still factually dubious section on Yemen.

Along the way there are analyses of Sweden's refugee/immigration issues, Trump's stupidly controversial photo-up with representatives of historically black colleges, and, of course, Moynihan's Jesse Jackcent. Whole episode here:

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You can get your sedition on at iTunes, Stitcher, Google Play,, @wethefifth, and Facebook.

Nigel Farage Says 2016 Was Victory Over Globalists

Fri, 24 Feb 2017 14:20:00 -0500

Nigel Farage, the member of European Parliament and U.K.Independence Party co-founder who assisted Donald Trump in his presidential campaign, called 2016 "the beginning of a global political revolution" that was going to "roll out across the rest of the West" at his CPAC speech this afternoon. Farage addressed Brexit, the British vote to leave the European Union, connecting it to President Trump's victory, saying the U.K. should "reach out and make our own deals with our real friends," which he described as countries that "speak English, have common law, and support us in crises." He touched on President Obama's visit to United Kingdom before the Brexit vote, saying he would be "forever grateful" that Obama "interfered in the referendum" by telling "America's greatest friends and ally in the world" that "if we voted for our independence, we would go to the back of the line." Farge dug into globalists, and said Brexit was a reaction to "unelected old men in Brussels," pointing to elections in Germany, France, the Netherlands, "even Italy," in 2017 as places where ideological fellow-travelers could win. While he admitted he didn't know yet whether this year's results would be "as dramatic as" 2016, he predicted they would "shift the center of gravity of the whole debate." Farage called out Germany Chancellor Angela Merkel, facing re-election in September, describing her decision in 2015 to increase the number of refugees the country would accept, as "absolute madness and idiocy." "We are not against any religion or ethnicity, we're not against anybody," Farage insisted at the end of his remarks. "We're for ourselves, we're for our country, we're for our communities, we're for making us safe and with less risk from global terror. And we're winning!" While Farage was introduced as "Mr. Brexit" and Trump, too, said he would be called "Mr. Brexit" when during the presidential campaign he visited Scotland the day after the Brexit vote, both Brexit and the broader backlash against unelected globalist bureaucrats is bigger than Farage or Trump. The two have a narrow, nationalistic response to the growth of government at a global level but it is not the only one. Globalization, while it has been maligned by populists and glommed onto by globalists, remains the most potent force in opposition to both globalism and populism. Liberalization and the freeing of markets lifted billions out of poverty, not the globalists who insist they must micromanage those forces, and who regularly malign these indisputably beneficial forces as the cause of problems actually created by government meddling, and certainly not populists. The Economist Intelligence Unit's latest Democracy Index, noted that while populism seemed to be ascendenant in the West, such forces have already peaked in Latin America, with the electorates of several Latin American countries suffering from populist fatigue and returning to more sensible right-of-center free market politics. It's important to disentangle Trump and Farage and populism from the broader backlash against globalism, and to disentangle the positive forces of globalization and the net benefits of the freedom of movement of people, goods, capital, and labor, from the bureaucrats who would seek to take credit for the fruits of those globalizing forces their own policies also threaten. In this way, freedom has the best chance to emerge victorious in the battle between populism and globalism, two bankrupt ideologies of control that have little to nothing to do with globalization and the miracle free markets have delivered in the last half-century and more.[...]

Trump's Dangerous Anti-Libertarian Nationalism

Fri, 17 Feb 2017 17:45:00 -0500

President Donald Trump has signed an executive order claiming that in the future the total number of federal regulations will shrink, via the elimination of two regulations for every new one. He has nominated an FCC chief and a department of education chief who advocate choice-enhancing changes in the way their agencies run. He says he's a hardcore Second Amendment supporter (although he also supports taking away the right to bear arms based on mere suspicion). He's offered up a Supreme Court justice willing to seriously question government regulatory and police powers. He at least claims he wants to see spending cuts and tax cuts. Should libertarians—who are supposed to advocate those goals as part of a larger vision of reducing government power over our property and choices—admire and support Trump? Even a little? Libertarianism is more than just advocating a random checklist of disconnected actions that in some respect limit government's reach or expense. (See Steven Horwitz, an economist in the Hayekian tradition, for valuable thoughts on why judging Trump via a checklist of discrete changes in specific government behavior doesn't work in libertarian terms.) Libertarianism is a unified skein of beliefs about how the human social order should be shaped. What binds the philosophy is the understanding (or belief, for the skeptical) that using violent force against the peaceful both makes us, overall, poorer and is, at any rate, almost always or always wrong. For most libertarians, the practical and moral arguments against aggressive force on the innocent support each other; the sense of what's morally right for most libertarians is rooted in a generally rule-based sense of what furthers human flourishing overall. To most libertarians, that is, freedom is both a valuable part of human flourishing, and a necessary part of most other aspects of it. That we should be free to do what we want with ourselves, and with our justly owned property, is the core of libertarianism. (A swirling, complicated debate surrounds questions about what behavior is truly about ourselves alone, and how, why, and under what circumstances property is justly owned and what that implies about how we can use it. Such questions can't be resolved in a blog post.) Given the nature of human beings' productive powers, the best way to ensure the collective "we" gets richer faster is to ensure the individual freedom to exchange with others as we choose, and by doing so build long and complex chains of production and exchange that benefit us all (or even just some/many of us), irrespective of accidents like national boundaries. Free trade and free migration are, then, the core of the true classical liberal (libertarian) vision as it developed in America in the 20th century: if you don't understand and embrace them, you don't understand liberty, and you are not trying to further it. The Trump administration may not in every specific policy area do the wrong thing in libertarian terms. But whatever it gets right is more an epiphenomenon of certain alliances within the Republican Party power structure or the business interests he's surrounding himself with. Trump and his administration can't be trusted to have any principled and reliable approach to shrinking government or widening liberty, since Trumpism at its core is an enemy of libertarianism. What appears to be the core of Trumpism, based on his earliest priorities and his closest advisers? The blatant, energetic, eager violation of the right to freely choose what to do with one's justly owned property and energy, and fierce denial of the principle that through such freedom we create immense and unprecedented wealth for the human race. (Again, most libertarians don't just clutch "freedom" as a value disconnected from all other values, although they privilege it in most cases. They also[...]

Trump Abruptly Bans All Refugees, Plus Even Legal Green-Card Holders Who Hail From 7 Majority-Muslim Countries (UPDATED)

Sat, 28 Jan 2017 12:32:00 -0500

Last night, at President Donald Trump's order, the United States stopped taking in any refugees, from any country in the world, for at least 120 days, in the name of "protecting the nation from foreign terrorist entry." The far-reaching order, which marks a sharp reversal of decades' worth of American policy, also slashed the annual target for the number of refugees accepted to 50,000, down from the original 110,000 for fiscal 2017 set by Barack Obama, and from the 85,000 refugees accepted in fiscal 2016. (The Obama administration consistently admitted around 75,000 refugees per year; only George W. Bush was stingier over the past 40 years.) Refugees from Syria—currently the world's largest producer of that unhappy category of humanity—are now banned indefinitely from the United States. (Last year Syria was the second-largest country of origin for U.S.-admitted refugees, at 12,500; this year the target had been 13,000.) Meanwhile, every traveler from Syria, Iran, Iraq, Sudan, Libya, Somalia and Yemen, unless given special permission, is now barred from entering the United States for at least the next 90 days. (Parenthetical update 1: This now also includes dual nationals who were born in those countries and have since obtained citizenship in any non-U.S. country, such as France or Great Britain.) Amazingly, the travel ban also applies to legal permanent residents who hold green cards but not U.S. citizenship, the Trump administration confirmed today. It's an anguished day in Tehrangeles and other pockets of immigrants—many of them long since assimilated—from the seven disfavored countries. What might this look like in numbers of humans affected? Pro Publica took a look last night and found: About 25,000 citizens from the seven countries specified in Trump's ban have been issued student or employment visas in the past three years, according to Department of Homeland Security reports. On top of that, almost 500,000 people from the seven countries have received green cards in the past decade, allowing them to live and work in the United States indefinitely. […] Citizens of Iran and Iraq far outnumber those from the other five countries among green card and visa holders. In the past 10 years, Iranian and Iraqi citizens have received over 250,000 green cards. According to the Department of Homeland Security's Immigration Handbook, these were the number of nonimmigrant admissions (minus diplomats/officials) to the U.S. in 2015 from the countries in question: Iran (34,915), Iraq (20,462), Syria (15,906), Yemen (5,226), Sudan (4,361), Libya (2,662), Somalia (318). These sweeping changes were implemented so abruptly that refugees and other heretofore legal categories of traveler from the affected countries boarded their planes under one set of rules, only to find themselves detained upon landing. The New York Times and other outlets are filling up with anguished tales from bewildered passengers and their stranded families. Legal fights and executive-order interpretations are certain to follow. The suspension of consular business as usual will hold until the Trump administration is satisfied that the countries of origin are fully cooperating with whatever "extreme vetting" procedures Washington ends up adopting. Trump's attitude toward Syrian refugees is one instance where his political base pushed him toward a more harsh position than the one he originally took. On Sept. 8, 2015, he told Bill O'Reilly that "I hate the concept of it, but on a humanitarian basis, with what's happening, you have to." The next day, when asked about it by CNN, he sounded a more cautious note, saying "I think we should help, but I think we should be very careful because frankly, we have very big problems. We're not gonna have a country if we don't start getting smart." On Sept. 15, he told Morning [...]

Sorting Through Trade, Tariffs, Taxes, and Trump on SiriusXM Insight from 12-1 p.m. ET

Fri, 27 Jan 2017 10:52:00 -0500

Today at noon eastern I am once again guest-hosting The Dean Obeidallah Show on SiriusXM Insight, channel 121, and we will be engaging in some mixture between TGIF and ICBIOBOW (I Can't Believe it's Only Been One Week). In the second half of the program I will be joined by the invaluable trade attorney/commentator Scott Lincicome, to sort through the confusing bluster surrounding Donald Trump's feud with Mexico, his plans for a 20 percent "border tax," and what other euphemisms for tariff we can expect.

And for the duration of the show I'll be joined by the provocative and original thinker/doer James Poulos, author of the brand new The Art of Being Free: How Alexis de Tocqueville Can Save Us from Ourselves. We shall certainly apply his insights to the dawning Age of Trump. Please call the program any time (at least while I'm on it), at 1-877-974-7487.

Poulos two weeks ago was interviewed by Nick Gillespie for the Reason podcast. Listen to that below:

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The Folly of 'Buy American and Hire American'

Thu, 26 Jan 2017 00:01:00 -0500

Now that the campaign is over, Donald Trump is no longer willing to fake it. Last year, he insisted, "I love free trade. But I want to make great deals." In his inaugural address, he dropped the masquerade. "We must protect our borders from the ravages of other countries making our products, stealing our companies and destroying our jobs," he said. "Protection will lead to great prosperity and strength." His formula is simple: "Buy American and hire American." In his vision of the future, we may export but we will never import. Trump is never more certain than when he is completely clueless. The truth is that protection against foreign trade leads away from prosperity and strength. A country that deprives itself of foreign goods is doing to itself what an enemy might try to do in wartime—cut it off from outside commerce. It is volunteering to impoverish itself. Countries don't "ravage" us when they make "our" products; they help us. At the risk of belaboring the obvious, the essence of trade—foreign or domestic—is that it makes both buyer and seller better off. Otherwise, they wouldn't bother. But preventing such mutually agreeable transactions is Trump's dream. Already he has announced he will renegotiate NAFTA and walked away from the Trans-Pacific Partnership, a 12-nation deal that Barack Obama signed but Congress had yet to approve. Trump may promise "great deals," but he is likely to get—and would probably be content with—no deals. What foreign government will rush to sign an agreement stipulating that our companies will only "buy American and hire American"? His belief that international commerce is bad for Americans and protection is good for us is not a theory but an ancient superstition. One of the most irrefutable insights of economics is that if a country can buy something abroad for less than the cost of making it at home, it's better off buying it. That transaction allows citizens to consume more for each dollar spent. It makes them richer. The United States could grow all its fresh fruits and vegetables rather than buy some from Mexico—just as Mexico could grow all the corn and soybeans it needs rather than purchase from us. But the costs would be higher on either side. Open trade allows people in each country to eat more and better. It also allows each economy to produce more. Trump fantasizes that American companies and workers would be better off without foreign competition. But the steel that goes into American cars and the lumber that goes into American houses would be more expensive if it all had to be produced within our borders. In industries deprived of imported supplies, prices would rise, sales would decline and employment would shrink. The U.S. auto industry has plants in Mexico that make cars sold in the U.S., to the horror of the new president. But if he guts NAFTA, those jobs won't all move here. A study by the Center for Automotive Research in Ann Arbor, Michigan, said that American firms that ship car parts to Mexico could lose out to suppliers in other countries. Overall, scrapping the accord and setting high tariffs would destroy 31,000 jobs in the U.S. automotive sector. Trump defends his protectionism by asserting that "every decision on trade" should "be made to benefit American workers and American families." But free trade does exactly that. It's the classic example of a policy that benefits the many while harming the few. Only about 14,000 Americans are employed making footwear. About 324 million Americans, on the other hand, wear shoes. Putting up barriers to foreign-made shoes would injure far more American workers and families than it would help. It would also be a drain on the economy. When Obama slapped heavy tariffs on Chinese tires, the Peterson Institute for Internati[...]

Trump Mulls Suspending the Visa Waiver Program 'Indefinitely' UPDATE: Story Was Wrong; it's the Visa Waiver Interview Program

Wed, 25 Jan 2017 17:28:00 -0500

As part of his first-week restrictions on the flow of human beings into the United States, President Donald Trump is reviewing a draft executive order (read it here) that would "block all refugees from entering the U.S. for 120 days and restrict admissions and some visa applicants for people from countries where the U.S. has counterterrorism concerns, not only Syria but also Iraq, Iran, Libya, Somalia, Sudan and Yemen," according to the L.A. Times. This targeting of war-ravaged, refugee-generating countries would be a radical departure from four decades of bipartisan Washington leadership in the absorption and resettlement of refugees. But the draft order wouldn't just affect faraway Muslims in miserable countries—it could also constrict your own ability to travel hassle-free to London, Paris, and Rome. How? By creating new restrictions on visitors from some of America's closest allies. It would suspend the visa waiver program — widely used by citizens from 38 countries, including most European countries, Australia, Japan and Chile — which grants citizens of those countries a 90-day tourist visa after they submit their biographical information to a screening check. The new policy would require in-person interviews for most citizens from those countries. UPDATE: I (like the L.A. Times above) got this story wrong: It's not the Visa Waiver Program, it's the Visa Waiver Interview Program, which is an entirely different, and smaller, kettle of fish. It's a waiver from having to come in for an interview to renew a current visa, not a waiver from having to obtain a visa in the first place. I apologize for the error. The rest of the original post can be found after the jump: The Visa Wavier program is by definition reciprocal—my French in-laws have been able to come here for three months any time they want to, and in return I have been able to visit Europe for the (considerable!) price of a ticket. If the U.S. was to begin requiring in-person interviews to the roughly 22 million people a year who currently enter this country through Visa Wavier, then the favor would likely soon be returned to the more than 12 million of us who travel to Europe. If you make a good more costly, whether in price, compliance, or time, people will purchase less of it. That would be unwelcome news to the estimated 5.5 million people who work in the American travel and tourism industry (roughly the same number as in the automotive industry, to pluck one sector out of a hat). Visa Waiver travelers spend about $80 billion a year inside the U.S., according to the Congressional Research Service. The Visa Waiver program has been coming under political pressure for some time now. In the wake of the November 2015 Paris attacks, senators such as Jeff Flake (R-Ariz.) and Rand Paul (R-Ky.) removed from the program anyone from a Visa Waiver country that is a dual citizen of, or has traveled within the last five years to, Iraq, Syria, Iran, and Sudan. A new section on the Visa Waiver application form has been asking tourists this year to provide their usernames on various social media sites. All of this is dwarfed in scope by suspending the entire program "indefinitely," and replacing it with a country-by-country certification process whose specs have yet to be ironed out. It's too early to say when and how American travelers will be inconvenienced by this proposed move, or whether it will amount to a measurable upgrade in security (will we be cockblocking Zacarias Moussaouis, or shifting terrorists' focus on the next Syed Farooks?). We can surmise, however, that if the order is adopted anything like how was written, fewer tourists will spend their money in the United States, Americans will soon have less latitude to frictionlessly [...]

White House Site Relaunches with Trump’s Populist Policy Proposals

Fri, 20 Jan 2017 13:55:00 -0500

The website for the White House has been updated and relaunched to fit the new President Donald Trump administration. It is obviously pretty bare bones for now (you can read his inauguration speech here), but the issues section puts his agenda on open display. For those less interested in speeches and more interested in actual upcoming policy hints, it's worth looking over to see where things are going. He has six sections—energy, foreign policy, jobs, military, law enforcement, and trade. Here's a few interesting things worth noting, both good and bad: The administration will embrace fracking. Sound energy policy begins with the recognition that we have vast untapped domestic energy reserves right here in America. The Trump Administration will embrace the shale oil and gas revolution to bring jobs and prosperity to millions of Americans. We must take advantage of the estimated $50 trillion in untapped shale, oil, and natural gas reserves, especially those on federal lands that the American people own. We will use the revenues from energy production to rebuild our roads, schools, bridges and public infrastructure. Less expensive energy will be a big boost to American agriculture, as well. Unfortunately, but not unsurprisingly, Trump is also "committed" to the white whale of "energy independence." Just as with trade, America benefits when we get energy cheaply no matter where it comes from. It's great that he recognizes that cheaper energy creates jobs (by reducing costs). It's a shame he doesn't realize it's another good that can free Americans up to do other things if we can get it more cheaply elsewhere. The administration will use military action to fight the Islamic State (and increase the size of the military) Defeating ISIS and other radical Islamic terror groups will be our highest priority. To defeat and destroy these groups, we will pursue aggressive joint and coalition military operations when necessary. In addition, the Trump Administration will work with international partners to cut off funding for terrorist groups, to expand intelligence sharing, and to engage in cyberwarfare to disrupt and disable propaganda and recruiting. The Trump administration is also calling to "rebuild" the military even though America still overwhelms every other country's forces, saying "our military dominance must be unquestioned." But he does also call for embracing diplomacy and his saber-rattling here is focused entirely on terrorist groups and has no suggestion of interference in other countries' governance. The administration is calling for a moratorium on new federal regulations. As a lifelong job-creator and businessman, the President also knows how important it is to get Washington out of the way of America's small businesses, entrepreneurs, and workers. In 2015 alone, federal regulations cost the American economy more than $2 trillion. That is why the President has proposed a moratorium on new federal regulations and is ordering the heads of federal agencies and departments to identify job-killing regulations that should be repealed. Tim Carney at the Washington Examiner noticed last night that right as Barack Obama's administration was packing up, the Department of Energy released a new rule that will likely kill off cheap incandescent three-way light bulbs. Libertarians and conservatives who love trade should be doing the best they can to push Trump into focusing on these kinds of issues. This is what is hurting both manufacturers and consumers. Foreign trade makes goods cheaper for Americans and should be supported. All these regulations make both the production and the consumption of goods more expensive. That's where the focus should be. Speaking of which. The[...]

Donald Trump Is Wrong about Manufacturing and Economic Patriotism

Fri, 20 Jan 2017 13:40:00 -0500

How misinformed—delusional, even—is Donald Trump's understanding of the economy? Totally. Here's a key passage from his inauguration speech (full transcript after the jump): We've made other countries rich while the wealth, strength and confidence of our country has dissipated over the horizon. One by one, the factories shuttered and left our shores with not even a thought about the millions and millions of American workers that were left behind. The wealth of our middle class has been ripped from their homes and then redistributed all across the world. Let's be clear: Manufacturing jobs (factory jobs) peaked as a percentage of the workforce in 1943 at around 40 percent, during the mobilization efforts for World War II. Since then, they have declined at a perfectly steady rate (red line below). In terms of raw numbers, manufacturing jobs peaked in 1979. The United States produces more stuff with fewer workers. Not only are these jobs never coming back, they disappeared from our shores decades ago. Only people who are wilfully naive or mendacious about basic economic reality and history can continue to assert that declines in manufacturing employment are recent or a major part of contemporary economic dislocation. FFS, I lived in Buffalo from 1990 to 1993 and even then people were saying the factories and the mills had just shut down, even though the big declines were already 20 and more years in the past. Of course, Donald Trump is not alone in constantly talking about bring factory jobs back to America. Bernie Sanders never stops talking about and it was a regular line in Hillary Clinton's stump speech, too. In his early years in the White House, especially while selling the stimulus, Barack Obama also pushed that line, along with a very Trumpian "buy American" provision in the stimulus. To paraphrase Bob Dylan paraphrasing Samuel Johnson, economic patriotism is the last refuge to which a scoundrel clings. In today's global economy—a system that has not only lifted billions of horribly poor people out of extreme poverty but has delivered increasingly improved living standards for Americans—there simply is no such thing as "made in America." Or perhaps a bit less categorically, nothing good will come of increasing the price of imports, whether we're talking about finished goods or raw materials (such as steel). If Donald Trump thinks the "strength and confidence of our country has dissipated over the horizon" due to, say, NAFTA, which increased the amount of U.S. good sold in Mexico, just wait until you have to buy a car built with steel only sourced from western Pennsylvania or made more expensive due to tariffs. One more point: The industrial Midwest (also known as the Rust Belt) was key to Donald Trump's victory. The region remains mired in a decades-long slump; states such as Ohio and Michigan have for years been at or near the top when it comes to job loss and population declines in percentage terms. They don't need less trade with foreign countries, they need more; they also need more in-migration from other states. Whether U.S.-born or foreign-born, an influx of people is a sign of a thriving economy. These states need to create better, cheaper business climates by reducing taxes and regulation if they want to have any chance of competing with parts of the country that have better weather and lower start-up costs. When Reason TV and Drew Carey looked at ways to save Cleveland and other once-great American cities, the comparisons between the Mistake on the Lake and Houston were incredibly telling. Cleveland had dozens of different types of business zones, for instance, while Houston had essentially zero. The paperwork to start a [...]