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Published: Fri, 28 Apr 2017 00:00:00 -0400

Last Build Date: Fri, 28 Apr 2017 08:21:19 -0400


Forget Marine Le Pen: The Very Idea of Europe Is Finished [Reason Podcast]

Sun, 23 Apr 2017 15:40:00 -0400

"We've known that when there isn't American leadership in Europe things go to hell pretty quickly and we get sucked into horrible wars whether or not we originally wanted to or not," says journalist James Kirchick, author of The End of Europe: Dictators, Demagogues, and the Coming Dark Age. In the wake of Brexit, renewed nativism across the continent, and Putin's Russia grumbling to the east, Kirchick's thesis may well be tested in the coming years. In a wide-ranging and at times combative conversation with Nick Gillespie, the 33-year-old Kirchick talks about why the Enlightenment values of liberalism, free enterprise, and pluralism have come under attack in the very part of the world that created them and why it's in the United States' best interest to help maintain a politically stable and economically productive European Union. He also discusses how he came to write his bombshell 2008 New Republic story bringing to light former Rep. Ron Paul's controversial and racially charged newsletters, the changing meaning of Jewish identity in post-war America, and how the failure of the Iraq War affected his views on foreign policy. Subscribe, rate, and review the Reason Podcast at iTunes. Listen at SoundCloud below: src="" width="100%" height="450" 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. This is a rush transcript—check all quotes against the audio for accuracy. Nick Gillespie: Jamie, thanks for talking. James Kirchick: Thanks for having me. Nick Gillespie: You write that we're on the cusp of witnessing the end of Europe as we have known it for the past seven decades, a place of peace, prosperity, stability, cooperation, democracy, and social harmony. Give a sense of what's happening in Europe and why. James Kirchick: Yeah. 1989 was this momentous year, and you can say there are maybe three narratives that came out of that. One was perpetual peace in terms of security. WE had the triumph of democracy. There was regulated capitalism and potential and ongoing economic growth. We'd assume that these three ideals had really taken ahold in Europe. I think on all three, you see that they're being seriously challenged. On the first front from security, we see Russia is coming back as a aggressive force. On the question of democracy, we have the rise of illiberal populism, or illiberal democracy, as the prime minister of Hungary, Viktor Orban, calls it. Then, on the economic question, we've had hardly any growth in the Euro-zone countries since the financial crisis of 2008. I think these three ideals that we all believed had triumphed are now being seriously challenged across the continent. Nick Gillespie: Yeah, and it's worth thinking about between '89 and '91, where the Berlin Wall was pulled down, and the collapse of the Soviet Union. It's pretty staggering to think that Europe, which had been at ... The countries in Europe had been at each other's throats for centuries. From 1945 on, there was a Cold War, and then a real thaw. You've written that the European Union is threatened by almost ten years of zero economic growth, a resurgent Russia, rising Islamic extremism, and the greatest mass movement of humanity since the late 40s. Are these issues intertwined? If so, how? James Kirchick: I think so in the sense that Europe needs to think of itself more as a geo-strategic power. This is why I'm going to talk about European integration. I'm less concerned about these sort of internal questions about how much power we give to Brussels about regulating certain business markets or what not, and the powers of the European parliament versus the commission. I see Europe is in a precariously geographic position where it's positioned right above North Africa, the Middle East, and then Russia. There are multiple threats. Fro[...]

France Election Preview: Terrorism, Socialism, Nationalist Socialism, and the Prospects for Economic Liberalization

Fri, 21 Apr 2017 18:26:00 -0400

The attack on a police bus on the Champs-Elysee in Paris yesterday, which killed two police officers and for which ISIS claimed responsibility, came while France's presidential candidates were participating in their last televised forum, and President Trump said today that he thought the attack would help the National Front's Marine Le Pen. "She's the strongest on borders and she's the strongest on what's been going on in France," Trump told the AP. "Whoever is the toughest on radical Islamic terrorism, and whoever is the toughest at the borders, will do well in the election." After the police attack, Le Pen called for the expulsion of all foreigners on terror watch lists. The suspected gunman in yesterday's attack, Karim Cheufri, is a French national who was questioned in February for allegedly making threats to kill police officers. Meanwhile, the center-right François Fillon, once the frontrunner before a scandal over a no-show job for his wife yielded calls for him to drop out, said "Islamic totalitarianism" ought to be the next president's top priority. François Hollande declared a war on terror after multiple coordinated ISIS-linked terrorist attacks in Paris in November 2015 killed 130 people. The French government followed up with warrantless raids, house arrests, limits on freedom of speech and assembly, and other security measures. The 2015 attacks helped the National Front outperform its polling in the first round of regional elections, but by the second round, a month after the attacks, the bounce appeared to have faded. Voters go to the polls Sunday for the first round and in early May for the second round—four candidates are polling at about 20 percent; Emmanuel Macron, Le Pen, Fillon, and Jean-Luc Mélenchon. And in fact, both Le Pen and Mélenchon, a former Socialist who created his own party and has been called the "French Bernie Sanders," support French withdrawal from the European Union and euro as well as more protectionism, and even closing the border to refugees and banning the veil. "This is a very good example like Hayek used to say, where extremes actually join together," Emmanuel Martin, a French economist involved with libertarian MOOC Ecole de la Liberté, told Reason earlier this week. "Mélenchon-LePen, their program is 90 percent the same." Martin, who also describes himself as a libertarian rocker, even has a song about the tendency for such confluence in what we call the far right and the far left. "Mélenchon is the new Robespierre," Martin explained, referring to the French revolutionary leader associated with the Reign of Terror, "and to some extent he's very much like Bernie Sanders, but I think he's more evil… They both share this total illusion of democratic socialism, which to me is a complete oxymoron, and to any libertarian obviously." While terror attacks in France grab more headlines, the country has long-standing economic problems caused by too many labor regulations, too much centralization, and a lack of accountability in government. President Hollande's tough talk and concomitant actions on the war on terror failed to shore up support in the face of his failure to execute on economic reform. The former economy minister, Emmanuel Macron, who was one of the architects of Hollande's belated turn away from socialism and attempt at some labor deregulation and other economic reforms, now has the highest polling average, at 23.6 percent. "He's trying to gather so many different people, that it's very difficult to find something solid, something really, he's just a basic politician, he's trying to please everyone," Martin explained. "And his speeches are completely hollow, just hot air, really, and sometimes you even laugh when you listen to him, because it's so empty." Nevertheless, there could be a bright side there. "Maybe that's the solution," Martin suggested, "to gather a lot of voters and then do some reforms, but I don't know if he'll do the reforms." Fillon, the former frontrunner, came into the race, Martin said, "with a very Thatcher-lik[...]

Turkey Vote in Favor of More Authoritarianism Was Not Free or Fair, Natch

Mon, 17 Apr 2017 20:15:00 -0400

Voters in Turkey narrowly approved a constitutional referendum that will transform Turkey's parliamentary system into a presidential system—the victory for President Recep Erdogan solidifies a slide into authoritarianism he began more than a decade ago, an authoritarian slide which itself enabled the victory in the first place. The set of reforms in the referendum legalize "the de facto executive presidency that Recep Tayyip Erdogan is already exercising," Wolfango Piccoli, co-president of Teneo Intelligence, explained in a pre-election briefing shared with Reason. "In addition, it will grant him a vast number of additional powers that currently belong to other state institutions, without introducing the necessary checks and balances required to safeguard against a further authoritarian turn." The Turkish government is unlikely to try to begin normalizing its domestic policy despite the victory because of the slim margin. Piccoli explained such a margin furthers the risk of the repression. "Similarly, long promised and overdue structural economic reforms will most likely fail to materialize over the next 12 months as the harmonization of laws and institutions with the new executive presidency will take priority." "A pervading climate of fear and siege mentality are now deeply instilled in Turkish society and mounting concerns about vote rigging could deepen polarization and grievances," Piccoli said. Indeed, election monitors from the Organization for Security and Cooperation in Europe complained of an "unlevel playing field" and last minute voting rules changes. "Voters were not provided with impartial information about key aspects of the reform, and civil society organizations were not able to participate," the OSCE said in its statement. "Under the state of emergency put in place after the July 2016 failed coup attempt, fundamental freedoms essential to a genuinely democratic process were curtailed." For his part, Erdogan told opponents to give it up and stop "tiring themselves out" by challenging the referendum results (they did)—the Yes vote received 51.4 percent of the vote, and was pushed to victory in part by Turks voting abroad. According to state media, 63.1 percent of Turkish voters in Germany supported the referendum. Erdogan had resorted in the past month to comparing European leaders in Germany and elsewhere to Nazis for refusing to approve Turkish government-sponsored rallies in favor of the referendum in their countries. Turkey and Germany are both NATO members, although the constitutional results will likely halt whatever's left of Turkey's process of joining the European Union. Erdogan himself has suggested holding a referendum on whether Turkey should continue the 50-plus year process that came to a virtual stand-still shortly after accession talks officially began in 2005 when France and Austria promised to put Turkey's membership bid to a referendum vote themselves. EU officials have been warning the lack of political reforms in Turkey could cause talks to end in a "train crash" as early as 2007. Erdogan also said President Trump called to congratulate him on his victory.[...]

It's Past Time to Dump the OECD

Thu, 13 Apr 2017 08:45:00 -0400

Taxpayers are spending millions of dollars every year funding an army of bureaucrats who advocate higher taxes and bigger government around the globe. Last year, the United States sent $77 million to the Organization for Economic Cooperation and Development, the largest single contribution and fully 21 percent of the Paris-based bureaucracy's $370 million annual budget. Add to that several million dollars in additional expenses for special projects and the U.S. mission to the OECD. In theory, the OECD is a place "where the governments of 34 democracies with market economies work with each other, as well as with more than 70 non-member economies to promote economic growth, prosperity, and sustainable development." The OECD will occasionally publish papers on its website laying out the theoretical benefits of economic growth and smaller-government policies. In practice, despite the OECD's heavy reliance on American taxpayer funds, the organization persistently works against U.S. interests, arguing for international tax cartels, the end of privacy, redistribution schemes and other big-government fantasies. Take its campaign for tax harmonization, begun as a way to protect high-tax nations from bleeding more capital to lower-tax jurisdictions. In the minds of OECD bureaucrats, high-tax nations are entitled to all they can extract from people and companies. Individuals aren't legally allowed to shift their economic activity to jurisdictions with better tax policies if it hinders the ability of big governments in Europe to feed their domestic fiscal beast. The OECD may recognize competition is good in the private sector, but promotes cartelization policies to protect politicians. In 2000, the OECD singled out 41 nonmember countries and territories with lower tax rates and a healthy commitment to financial privacy as havens of supposedly unfair tax competition. OECD warned these countries to promptly discontinue their "unfair practices" or face the financial protectionism of its member countries. The goal was to pressure low-tax countries into increasing their tax rates or through automatic information-sharing schemes becoming deputy tax collectors for high-tax European nations. The bureaucrats, abetted by the European Union and the United Nations, even started clamoring for the creation of some kind of international tax organization, for global taxation and more explicit forms of tax harmonization. Unfortunately, after years of bullying, the statists have made tremendous progress. Targeted jurisdictions have agreed to sign tax information exchange agreements, weakening their human rights laws on financial privacy. Although we're not directly targeted, American taxpayers should be concerned about the OECD campaign. As one of the biggest tax havens in the world, the United States faces European pressure to comply with these awful policies. Tax harmonization results in a higher-tax environment and a weaker global economy. And without the checks on political greed that competition affords, we inevitably suffer. But that isn't all. For the sole purpose of a massive tax grab, the OECD is now targeting American corporations with excessive and expansive new reporting requirements. As David Burton of The Heritage Foundation has reported, this puts trade secrets unrelated to tax assessment in the hands of unscrupulous governments and makes proprietary data vulnerable to unauthorized access by third parties. After years documenting their disingenuous and downright statist work, Dan Mitchell with the Cato Institute found that OECD bureaucrats have repeatedly pushed Keynesian spending binges on countries trying hard to eliminate government red ink. At the same time they make unsubstantiated claims that "higher taxes would lead to more economic development or more public goods" and that "a nation isn't developed unless taxes consume at least 25 percent of GDP," Mitchell said. It may come as some surprise that the United States isn't developed yet! And these OE[...]

Brexit Negotiations Moving Forward

Mon, 20 Mar 2017 17:15:00 -0400

Brexit negotiations are on their way. Britian's government will begin the formal process on March 29, as reported by the Associated Press. To start the clock, Britain will trigger Article 50 of the Lisbon Treaty, which details how member states can withdraw from the European Union. At that point, both sides will have until March 2019 to agree on a settlement, determining what the relationship between Britain and the E.U. will look like post-Brexit. The negotiations are crucial in determining future trade relations, travel restrictions, and financial services between Britain and the rest of Europe. There is much at stake, as the kind of deal Britain receives will signal to other E.U. members whether it is worth leaving or not. "They will all see from the U.K.'s example that leaving the E.U. is a bad idea," European Commission President Jean-Claude Juncker said, according to CNN. "On the contrary, the remaining member states will fall in love with each other again and renew their vows with the European Union." Membership in the E.U., as the Harvard Business Review explains, is characterized by four freedoms: the free movement across borders of people, services, goods, and capital. The journal notes that Britain is negotiating for continued tariff-free trade but with the ability to control it own borders. "The ideal outcome (and in my view the most likely, after a lot of wrangling) is continued tariff-free access," Brexit secretary David Davis said, per the Harvard Business Review article. "Once the European nations realize that we are not going to budge on control of our borders, they will want to talk, in their own interest." The sentiment is not shared by the E.U. "Half memberships and cherry-picking aren't possible," Juncker argued, according to reports from CNN. "In Europe you eat what's on the table or you don't sit at the table." It was this sort of Euro-centric conformity that fueled pro-Brexit support, as Reason editor at large Matt Welch explained back in January: Railing against the sovereignty-busting whims of overseas elites isn't just effective politics, it's also often right. The E.U. project has been liberating when it comes to free trade, privatization, and the movement of humans within its borders, but planners weren't content to stop there. They insisted on eradicating monetary sovereignty as well, implausibly lashing together the central banks of Germany and Greece, a system that leaves all participants perpetually (and rightfully) disgruntled. And the downside to pooling and outsourcing immigration policy has been all too clear these past few years, as locals have found some of their cities swollen with hard-to-assimilate migrants and refugees from war-torn Muslim regions of the Middle East and North Africa, without feeling like they had any say in the matter. Throw in what has become almost monthly acts of deadly Islamic terrorism on the continent, and the nationalist political reactions write themselves. For more Brexit speculation, read Cato Institute policy analyst Marian Tupy's contribution to Reason on how Britain can negotiate for a better withdrawal settlement.[...]

‘Right to Be Forgotten’ Legislation Attempts Foothold in New York

Wed, 15 Mar 2017 13:09:00 -0400

The state of New York wants to tell you what's appropriate to post online and what should be removed. The concept behind the European Union's "right to be forgotten" has crossed the Atlantic, and two state lawmakers in New York want to attempt to institute it here. The "right to be forgotten" in the European Union originated from a court ruling demanding Google and search engines remove links to a story that embarrassed a Spanish man because it detailed a previous home repossession. The story was not factually inaccurate. He insisted it was no longer relevant and that it embarrassed him, and the court agreed he had the right to have the information censored from search engines. Since 2014, search engines like Google have received hundreds of thousands of requests to have links to news reports removed and not because there's anything factually incorrect about them, but because the people within them are embarrassed by having the information public. Now, in New York, Assemblyman David Weprin and State Sen. Tony Avella (both Democrats) are attempting to implement such a law in the United States. The bill (readable here) appears remarkably far-reaching. It would allow people to demand that identifying information and articles about them to be removed from search engines or publishers if the content is "inaccurate," "irrelevant," inadequate," or "excessive." And yes, there are potentially fines involved ($250 dollars a day plus attorney's fees) for those who don't comply. Here's how the legislation defines the rather vague justifications for removal: [C]ontent, which after a significant lapse in time from its first publication, is no longer material to current public debate or discourse, especially when considered in the light of the financial, reputational and/or demonstrable other harm that the information, article or other content is causing to the requester's professional, financial, reputational or other interest, with the exception of content related to convicted felonies, legal matters relating to violence, or a matter that is of significant current public interest, and as to which the requester's role in regard to the matter is central and substantial. This would put the courts in the position of having the authority to declare what is or isn't relevant for the public to know. Reason asked First Amendment attorney Ken White of Brown, White & Osborn (and also of Popehat fame) for his analysis of the bill. He did not hold back in an emailed statement: This bill is a constitutional and policy disaster that shows no sign that the drafters made any attempt whatsoever to conform to the requirements of the constitution. It purports to punish both speakers and search engines for publishing—or indexing—truthful information protected by the First Amendment. There's no First Amendment exception for speech deemed "irrelevant" or "inadequate" or "excessive," and the rules for punishing "inaccurate" speech are already well-established and not followed by this bill. The bill is hopelessly vague, requiring speakers to guess at what some fact-finder will decide is "irrelevant" or "no longer material to current public debate," or how a fact-finder will balance (in defiance of the First Amendment) the harm of the speech and its relevance. The exceptions are haphazard and poorly defined, and the role of the New York Secretary of State in administering the law is unclear. This would be a bonanza for anyone who wanted to harass reporters, bloggers, search engines, and web sites to take down negative information, and would incentivize such harassment and inflict massive legal costs on anyone who wanted to stand up to a vexatious litigant. Also of relevance: The law extends the statute of limitations for defamation complains for online content in a way that pretty much all but removes them. The clock for the statute of limitations for defamation claims wouldn't start ticking until the defamatory sta[...]

Makers of Blue Wine Thwarted by EU Regulations

Mon, 06 Mar 2017 12:15:00 -0500

(image) A group of young entrepreneurs from the Basque region of Spain who launched a new kind of blue wine in 2015 is now facing resistance from national and supranational bureaucrats. An anonymous complaint that the Spanish Wine Federation, which represents three-fourths of the country's wine producers, insists it did not file yielded a fine from Spain's agriculture ministry for violating wine regulations. The company that produces the blue wine, Gïk, has relabeled its product and added 1 percent grape must to avoid being considered a "pure wine."

"Under the European Union's oenological regulations," The New York Times explains, "whatever is not specifically authorized is considered illegal—and blue is not an approved color." Gïk has sold more than 120,000 bottles, with half being sold outside the EU, according to The Times. The young entrepreneurs who created the company had no background in winemaking, so they recruited a team of chemical engineers from University of Basque Country to develop the blue wine, which uses red and white grapes as well as a chemical from red grape skin and an organic food dye, indigotine, to achieve the blue color.

Taig Mac Carthy, one of the co-founders of Gïk, explained to The Times that they wanted to create something "more fun" for people who didn't particularly like "normal" wine. "The trouble is that we are trying to revolutionize an industry that has worked for centuries without making any change," Mac Carthy said, "and they control the rules of the game." The Spanish Wine Federation sees it differently. Their general-director told The Times that while they appreciated Gïk's initiative, "you have to respect the rules of the game, and they are for everybody."

"In Spain, wine is very linked to culture," Aritz López, another co-creator, told BBC last year. "It hasn't changed for centuries. This is a country that prefers tradition instead of innovation. But Gïk is trying to change that. We are for normal people that don't need to know thousands of rules in order to enjoy a glass."

Detailed rules on winemaking, however, are part of the EU's Common Agricultural Policy (CAP). Two-thirds of wine production worldwide occurs in EU countries, which are required to enforce laws in line with the CAP. Attempts by governments to control the rules of what constitutes what kind of alcohol aren't new, and in the case of the EU illustrate how the concept of the free movement of goods has been burdened by layer after layer of unnecessary regulation. If the Spanish Wine Federation, or any voluntary national (or even international association) would like to define wine or any other alcohol for their members, that's part and parcel of free, voluntary markets. Such rules should not be forced by government, and certainly should not be conflated with or made a condition for free trade and movement—consumers should have the freedom to decide for themselves.

Anti-Immigration, Pro-Big Government National Front’s Le Pen Inching Up in Polls—At 44 Percent in Run-off Match-up

Mon, 27 Feb 2017 19:20:00 -0500

Marine Le Pen of the anti-immigration, pro-welfare state National Front, is improving her standing in some French presidential polls—she is expected based on her polling performance so far to make it through the first round of elections, while a corruption scandal that rocked the candidacy of Republican candidate Francois Fillon has reduced his lead in head-to-head polling with Le Pen to a 12 points. In the most recent poll of the most likely run-off scenario, Fillon topped Le Pen 56 to 44. Le Pen's father, Jean-Marie, made it into the run-off against the incumbent Jacques Chirac, where the challenger was trounced 82 percent to 18 percent. In the first round, Chirac led with 20 percent and Le Pen finished second with 17 percent. Chirac received nearly 20 million additional votes in the second round, while Le Pen gained only 700,000. Polling in the 2017 election suggests Fillon, or whoever else makes it into the second round with Le Pen, cannot expect support as broad as Chirac received. Some French leaders are warning that a Le Pen win is far from impossible. She has a 27.7 percent chance of winning according to prediction markets aggregator—within the range of Trump's chances of winning during much of the 2016 campaign. "I think Madame Le Pen could be elected," Jean-Pierre Raffarin, a former Republican prime minister, warned this month according to Euractiv, while another former prime minister, Socialist Manuel Valls, who ran unsuccessfully for the Socialist nomination for president this year, said it was dangerous to assume Le Pen could not win. Le Pen has mixed a nationalist, Euroskeptic, Islamophobic and anti-immigration message with promises of increased social and welfare spending to expand the National Front's appeal, particularly relative to her most likely second-round opponent, Fillon, who is campaigning on much needed civil and government services cuts as well as labor market deregulation. The Socialist Francois Hollande's presidency failed in large part under the weight of unsuccessful efforts to get French government spending under control and to remove barriers to economic growth. Socialist voters, The Independent columnist Satyajit Das suggests, faced with the run-off choice of Le Pen and Fillon or a center-left candidate (the Socialist Benoit Hamon is not expected to make it into the second round in most scenarios), may choose Le Pen at a higher rate than French pundits are willing to admit. The center-left candidate, Emmanuel Macron, a former investment banker and founder of the En Marche! party, is, like Fillon, is also running on labor reforms and tax cuts, two policies critical to improving France's economy but not popular with Socialist voters. Le Pen has not been shy in trying to align herself with Donald Trump and with Brexit (she supports a French withdrawal from the European Union), and launched her campaign earlier this month with the slogan "France First." In response to Macron rising in the polls, she has adopted a Trump-like attack on the French media, accusing it of campaigning "hysterically" for Macron. Last year she praised Russia President Vladimir Putin as a real leader and called the EU the real enemy, and earlier this year she denied that Russia invaded Crimea, which is under the control of Russia but recognized by most of the international community as still being part of Ukraine.[...]

EU Doesn’t Want to Pay Fair Share for NATO

Fri, 17 Feb 2017 10:28:00 -0500

(image) Earlier this week, Defense Secretary James Mattis met his counterparts from other NATO member-states at a gathering in Brussels. There, he told them in diplomatic but no uncertain terms, that the U.S. expected other NATO countries to start spending their share on defense, that this was the "political reality" in the U.S. and a "fair demand." He was backed up by the defense chiefs of the U.K., which is one of a handful of countries that meets the NATO target of 2 percent of GDP for defense spending, and Germany, which is not. Mattis said if NATO members couldn't meet their commitments, the U.S. would have to moderate its own.

Yesterday, Mattis' reasonable and totally expected demand that NATO members spend as much on defense as NATO calls for was met with a bizarre response from the European Commission president, Jean-Claude Juncker. At a speech at the Munich Security Conference, Juncker recommended that other European Union members who are also in NATO resist U.S. demands, arguing humanitarian aid and foreign development spending was also spending toward security. "It has been the American message for many, many years," Juncker said of Mattis' call on NATO members to meet their spending commitments. "I am very much against letting ourselves be pushed into this."

During the election, commentators freaked when then candidate Donald Trump suggested haphazardly in an interview that if Russia invaded one of the Baltic countries he'd have to determine whether they've met their commitment to NATO before responding. The Trumpian answer was interpreted as a threat to renege on NATO commitments. Less than a year later, it's Europe that's embracing ignoring its NATO commitments. Juncker's suggestion is preposterous. Foreign aid spending may contribute to security (though I doubt this assertion—such spending is just as if not far more likely to foster dependence and hinder development in recipient countries), but it is a wholly separate endeavor from NATO.

Of the EU NATO countries, Greece is the biggest spender as a proportion of its GDP—spending 2.38 percent. Debt-ridden Greece gets kicked around a lot by its fellow EU members, who are rightfully weary of bailing Greece out of its profligate domestic spending. If Greece can afford to meet its NATO commitments (and Estonia and Poland, two developing former Communist countries), there's no reason for the far prosperous Western European NATO countries to do the same. Germany spent just 1.19 percent of its GDP on defense last year—it is a fiscally responsible country that could easily meet the NATO target if it wanted to.

When I wrote about Mattis' comments earlier this week, I suggested the U.S. do both—demand Europe meet its commitments and moderate its own. Juncker's petulant and politically tone-deaf response to Mattis' call opens up the possibility for the U.S. to do both. Just because NATO members have for a long time failed to meet NATO spending targets does not mean such an arrangement is sustainable. The election of Donald Trump should've signaled that to Europe.

Europe vs. Trump

Tue, 07 Feb 2017 15:50:00 -0500

President Donald Trump's potential choice to represent the United States to the European Union said the president wouldn't "cow to the powers that be." In a radio interview in the United Kingdom, Ted Malloch, who European media report is likely to be Trump's choice, said the president's "heart was in his mouth" and in a reference to Coriolanus that he was "too noble for this world." "He'll speak his mind even if gets in trouble or held in disregard by others," Malloch, an American economist who runs a government relations consultancy and is currently teaching in England, said of Trump. "It used to be called honesty but in the age of baby talk and political correctness, and mostly bullshit, it's now regarded as dishonesty." Some European leaders have been pushing for a firm response from the EU to the possibility of a Malloch appointment, even before the latest interview. The leaders of two groups in Parliament, the Alliance of Liberals and Democrats for Europe and the People's Party, sent a letter to the presidents of the European Commission and the European Council urging them to reject any request for diplomatic credentials for Malloch, calling him "outrageous malevolence" against EU values, Politico reports. The leader of the Socialists and Democrats group in European Parliament, Gianni Pittella, also argued against Malloch in a speech in parliament, and told Politico that the person the Trump administration has not yet indicated it would choose was "not welcome here." In a previous interview, Malloch compared the European Union to the Soviet Union, and said he'd like to help dismantle the former as he says he did the latter, according to Politico, and also said the European Commission president, Jean-Claude Juncker, was a "very adequate mayor, I think, of some city in Luxembourg and maybe he should go back and do that again." Trump has not yet made an appointment and the United States mission to the EU is being run by the former deputy. EU credentials are needed for access to certain institutions as well as tax exemptions and other privileges. Trump could theoretically choose only to name ambassadors to the individual member-states of the EU, and a new EU ambassador is not expected to take office until at least June even if the process is smooth. On his way out, Anthony Gardner, the last U.S. ambassador, Politico reported, told media the Trump administration shouldn't listen to advice from "fringe voices" like UKIP's Nigel Farage, who has been advising Trump, and pushing the idea that Brexit, which he championed, translated to support for his party's brand of nativism, despite support for Brexit coming from a much broader political spectrum. For comparison, UKIP has just one seat in the House of Commons. On the other hand, the anti-EU party received nearly 28 percent of the British vote, and 24 seats, in the European Parliament in the most recent elections. Voters are weary of ever larger and more bureaucratic institutions governing ever greater portions of their lives, and the failure to adequately acknowledge this by more mainstream parties has helped cede the ground to more "fringe" elements. Gardner insisted he would remain a sort of "shadow ambassador" to promote the EU, saying that half a century of American support for European integration has been "not only good for Europe, it has been good for the United States—for political, economic, and security reasons." The European integration project has been about eliminating interior barriers to the free movement of people, goods, capital, and services, but also about greater centralization and a larger bureaucracy. Support for these two goals is no more a natural partner than opposition, yet the broken mainstream politics on both sides of the Atlantic have managed to push just such a narrative, to varying success. It's a [...]

Could Britain Become the New Singapore?

Tue, 07 Feb 2017 07:00:00 -0500

On June 23, 2016, the British people voted in a referendum to leave the European Union. The shock on both sides of the English Channel was palpable and two schools of thought on the impending divorce between the U.K. and the EU have emerged. The proponents of Brexit emphasize the benefits of free trade and continued (albeit inter-governmental and no longer supra-national) cooperation between the U.K. and the EU. They argue that an acrimonious divorce between the two would help neither party. Britain, they say, imports much more from the EU than the EU does from Britain, and a tariff war between the U.K. and the EU would not be in Europe's interest. They also argue that Britain, being a part of the North Atlantic Treaty Organization, is needed to counterbalance Russia. Britain's European partners within NATO, therefore, have an incentive to keep the U.K. more-or-less happy. The opponents of Brexit have warned that a vote in favor of the U.K.'s withdrawal from the EU would result in economic meltdown on the British Isles. Mercifully that has (so far) not come to pass, but that does not mean that Brexit negotiations will be plain sailing. The Eurocrats in Brussels, who will negotiate the terms of the British withdrawal from the EU, face their own set of incentives. Make the divorce between the EU and the U.K. too pleasant, they contend, and other EU countries may decide to follow the British example and leave the EU as well. In the months that have followed the Brexit referendum, the two sides have been maneuvering to occupy the high ground once the actual negotiations on Brexit commence. (That should happen by the end of March 2017, when the British Prime Minister Theresa May is expected to trigger Article 50 of the Lisbon Treaty, which deals with a member country's withdrawal from the EU.) The British Chancellor of the Exchequer, Phillip Hammond, for example, let it be known that "Britain could transform its economic model into that of a corporate tax haven if the EU fails to provide it with an agreement on market access after Brexit." "I personally hope we will be able to remain in the mainstream of European economic and social thinking," Hammond said, "but if we are forced to be something different, then we will have to become something different… We could be forced to change our economic model, and we will have to change our model to regain competitiveness. And you [Europeans] can be sure we will do whatever we have to do." The U.K. ministers, hope to "force EU leaders to give them a good Brexit deal by drafting legislation proving their threat to slash taxes is real. Ready-to-go Budgets will be drawn up cutting corporation tax and scrapping regulations if the negotiations are stalling... The move is designed to show those on the other side of the negotiating table that Britain is serious about becoming 'the new Singapore' unless trade barriers are kept low." Why Singapore? Let's look at a couple of statistics. In 1950, GDP per capita adjusted for inflation and purchasing power parity was $5,689.91 in Singapore. It was $11,920.58 in the U.K. Average income in Singapore, in other words, amounted to 48 percent of that in the U.K. In 2016, income in Singapore was $82,168.33 and $42,287.17 in the U.K. Put differently, Singaporeans earned 94 percent more than the British. During the intervening years, Singaporean incomes rose by 1,344 percent, while British incomes rose by 256 percent. (A similar story could be told about life expectancy.) Based on these two telling statistics alone, the "threat" of Singaporean tax rates and regulatory framework ought not to be a mere negotiating strategy for the British government vis-a-vis the EU. It ought to be a goal of the British decision makers—regardless of what the EU decides![...]

The Neoliberal Era Is Over

Wed, 04 Jan 2017 10:20:00 -0500

Yesterday brought three bits of trade-related news from President-elect Donald Trump. The first was that he has nominated as the next United States Trade Representative Robert Lighthizer, who has long railed against what he calls "the utopian dreams of free traders." The second was, obviously, a tweet: General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A.or pay big border tax! — Donald J. Trump (@realDonaldTrump) January 3, 2017 And third was the announcement from Ford Motor Co. that it is cancelling a $1.6 billion plant in Mexico while launching a $700 million factory in Michigan, which Ford Chairman Bill Ford Jr. told Trump himself in a phone call. We've already seen this cycle play out before—five weeks ago, over the span of a few days, the president-elect vowed to enact a 35 percent border tax, slammed an Indiana ball-bearings plant for moving its factory to Mexico, then declared victory after intervening in another manufacturer's siting decision. But coupled with recent political and societal developments in the increasingly morose continent of Europe, this latest bout of Trumpism spray-paints an exclamation point on a 2017 reality many are still slow to acknowledge: The post-Cold War age of ever-increasing trade, immigration, multilateral integration, and technocratic celebrations thereof, is in the rearview mirror. Once-dominant neoliberalism—I'm using the term here as it is deployed these days by its critics, rather than how it was used by its more domestically inclined originators—is on life support in the democratic West. And this deterioration long predates Donald Trump. Start with trade. After the destruction of World War II and the post-war European incursions by the Soviet Union, tariff reductions and free-trade zones have been understood in Paris, Bonn, London, and Washington as the best available tool to cement peace and stave off authoritarianism. American presidents from both major political parties—sporadic rhetorical spasms notwithstanding—have without exception assumed their role as the world's lead trade negotiator. Dwight Eisenhower, in the teeth of the Cold War, bucked nearly a century of Republican protectionism. Bill Clinton and Al Gore, after the collapse of communism, shouted down giant sucking sounds from all over the political spectrum. Even Barack Obama, who campaigned more vociferously against trade pacts than any postwar president, predictably reneged on his promise to renegotiate the North American Free Trade Agreement (NAFTA), and appointed as his second-term Trade Representative a guy whose resume—Council on Foreign Relations, Citigroup, chief of staff in Robert Rubin's Treasury Department—couldn't be more neoliberal if it was cooked up in a laboratory. Compare that to the mercantilist economic views of Trump's pick, as expressed in a 2008 New York Times op-ed headlined "Grand Old Protectionists": Modern free traders […] embrace their ideal with a passion that makes Robespierre seem prudent. They allow no room for practicality, nuance or flexibility. They embrace unbridled free trade, even as it helps China become a superpower. They see only bright lines, even when it means bowing to the whims of anti-American bureaucrats at the World Trade Organization. They oppose any trade limitations, even if we must depend on foreign countries to feed ourselves or equip our military. They see nothing but dogma—no matter how many jobs are lost, how high the trade deficit rises or how low the dollar falls. While the Trump administration's pivot on trade will feel abrupt, the politics behind it have been percolating for more than a decade. Free-trade Democrats, once a common sight on Capitol Hill, became all but extinc[...]

Italy Rejects Constitutional Reform Referendum—A Victory for Democracy, or Russia, or Who Knows What

Mon, 05 Dec 2016 08:00:00 -0500

Voters in Italy rejected a referendum on constitutional reforms advanced by the government of Matteo Renzi, on whose rule the referendum became a referendum, and who announced his resignation in the wake of the results. Various Italian governments in the last decades have pushed the issue of constitutional reform—in 2011, voters rejected an effort by then-Prime Minister Silvio Berlusconi to, among other things, make the prime ministership stronger at the expense of the presidency. Like the present effort, it was framed as a way to make governing Italy easier. Former Obama campaign manager Jim Messina advised the pro-yes effort (he also worked on David Cameron's re-election and the Brexit Remain campaign), and Renzi visited the White House for a state dinner in October. The U.S. ambassador to Italy warned that a no vote could make it harder for Italy to attract foreign investment from places like the U.S. One of the key points in this reform effort was reducing the size and power of the Senate. The two chambers of the Italian legislature are currently considered 'perfectly symmetrical'—members of both chambers are elected at the same time for the same length terms, and both chambers have to pass the same piece of legislation for it to move on. The legislation passes from chamber to chamber until the two have passed the same bill, a process known as the "parliamentary shuffle," which can go on indefinitely. The proposed reforms would cut the Senate out of the process for a whole set of legislative issues, shrink the chamber, and fill it with regional assembly members and mayors. The reform would also award extra seats to the best performing party in the chamber of deputies, making it easier to put together stronger governments. The reforms were opposed by a cross-section of Italian political life, from the Northern League's Matteo Salvini to economist Mario Monti, who was selected to replace Berlusconi as prime minister, and previously served on the European Commission from 1995 to 2004, as well as members of Renzi's Democratic party. The Economist recommended a no vote. Meanwhile, opponents framed a "no" vote as another signpost on the road to populism, because of a perception that populist parties could benefit most from the prime minister's resignation, the consequent uncertainty, and a potential snap election. After the results were announced, Salvini tweeted "Viva Trump, viva Putin, viva la Le Pen e viva la Lega!" Beppe Grillo, a comedian who helped start a left-wing populist party, the Five Star Movement, meanwhile, called the vote a victory for democracy. The mentions of President-elect Trump, Russia President Vladimir Putin, and France's Marine Le Pen are a reference to the apparent confluence of interests of anti-globalist, populist and nationalist-type movements across the West. Like the attempt by some to connect Brexit to Trump, these kind of exercises don't work. While UKIP's Nigel Farage became a fast friend of Trump's, the Conservative Daniel Hannan, another pro-Brexit British politician, called Trump's rise a danger to the Republican party and American democracy and rejected parallels between Trumpism and Brexit as "absurdly overdone." Salvini's attempt to align the no vote with Trump, Putin, and France's National Front, , also illustrates the danger of opponents of reflexive anti-establishmentarianism who themselves reflexively lump disparate political movements and forces into one basket of deplorables. Last month, the Washington Post ran a story about "fake news" as part of a massive Russian propaganda effort, based in large part on a report by PropOrNot, a group that has kept the identity of its members a secret and has been accused itself of being a Ukrainian propaganda effort[...]

The Ethical Argument for Free Trade - Daniel Hannan on Brexit

Mon, 28 Nov 2016 12:00:00 -0500

Daniel Hannan is one of Brexit's biggest champions. A Member of the European Parliament and a leading Euroskeptic, Hannan's advocacy of withdrawal of the United Kingdom from the European Union has earned him international attention. While critics regarded the "Vote Leave" campaign as a dangerous retreat from globalization, Hannan has made consistent, libertarian arguments for withdrawal as a path towards greater democracy and free markets.

Noting the E.U.'s sluggish economic growth rates and its failure to establish free trade agreements with China and India, Hannan believes the U.K. should take charge of its own economic destiny. "I want people to be making the ethical argument for free trade as the supreme instrument of poverty alleviation, of conflict resolution and of social justice," Hannan says. He adds, "It's the multinationals that thrive on the distortions and the tariffs and the quotas, he says. "And it's the poor who will benefit most from their removal."

Hannan pushes back against the charge of Brexit as a symptom of xenophobia. Following the Brexit win, he says, poll numbers demonstrate that voters were most concerned with sovereignty. "All of the polls were very clear that the biggest issue was democracy. Immigration was a very distant second," he says. "People wanted a sense of control and I think that's a perfectly legitimate thing."

With Brexit not taking effect until 2019 and the terms of withdrawal not yet negotiated, the United Kingdom's future has rarely seemed so uncertain. In two year's time, the U.K. will have the opportunity to decide on its own policies of trade and immigration. Hannan is confident his country will do the right thing.


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Brexit Process Getting More Complicated

Fri, 04 Nov 2016 12:55:00 -0400

A ruling by England's High Court has called into question whether the government of the United Kingdom will follow through on the results of the Brexit referendum and actually withdraw from the European Union. The High Court ruled that the British government could not invoke Article 50 of the EU Lisbon Treaty, which governs separation from the EU, without a vote of approval in Parliament. Conservative Prime Minister Theresa May, who was in favor of the United Kingdom remaining in the European Union but says she is now committed to Brexit and making the UK a "fully-independent, sovereign country" again, intends to appeal the ruling to the Supreme Court, established in 2005. May telephoned the European Commission President, Jean-Claude Juncker, Germany Chancellor Angela Merkel, and other EU leaders insisting her government was working to invoke Article 50 by next March. The EU and the UK will have two years from the day Article 50 is invoked to negotiate a British withdrawal from the European Union before an automatic withdrawal kicks in. The European Union, started as a common market, has become the most complex supra-national government in world history. While its foundations are the free movement of people, goods, services, and capital within its broader borders, a vast political bureaucracy has also been built. If May loses the appeals, her government will have to submit legislation to Parliament. Nick Clegg, former deputy prime minister and the Europe spokesperson for the Liberal Democrats, indicated his party would try to amend the legislation in order to keep the United Kingdom in the European Union's single market, and that he'd like to see the public get "a say" on the final deal. Given Article 50 starts a clock on withdrawal, it's unclear how a second referendum would work. The EU has signaled it will not start Brexit negotiations until the British government invokes Article 50. In order to accommodate a second referendum, the EU would have to indicate that the British government was allowed to go back on Article 50. The June referendum in which British voters narrowly chose to leave the European Union, was a "consultative" referendum that did not have the force of law. Opponents of the results insist because it was consultative it requires a vote in Parliament before government action. Some members of parliament have suggested a snap election prior to such a vote. Before the Brexit vote, David Cameron, prime minister at the time, told the House of Commons that a vote to leave meant triggering Article 50 and that "the British people would rightly expect that to start straight away." While the prime minister, who campaigned for Remain, insisted throughout that the vote was not a referendum on him, he resigned after the Leave campaign won. Some leave campaigners hinted that it was possible to use a Leave vote to renegotiate better terms with the EU without invoking Article 50, but after the vote EU leaders, looking to discourage other populations from making a similar democratic decision, insisted the UK was obliged to invoke Article 50 and that no more renegotiations of membership would take place. Opponents of Brexit have also pushed the idea that voters made the wrong choice or that in some other way the results didn't matter. They say a small amount of voters may have changed their mind and point at the slim margin of victory (about 4 points)—this could be a good point. Britain has long had a complex relationship with the EU different from other member states that more easily ceded more of their sovereignty to European institutions. This vote was framed as the end of that dance—either the UK would commit to the European project or [...]