Published: Mon, 27 Feb 2017 00:00:00 -0500
Last Build Date: Mon, 27 Feb 2017 01:13:31 -0500
Fri, 24 Feb 2017 14:20:00 -0500
(image) 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.
Fri, 17 Feb 2017 17:45:00 -0500President 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 believe freedom is conducive to the greatest human wealth and happiness, overall. It's a philosophy of social betterment as well as a philosophy of individual rights.) Not yet a month into h[...]
Sat, 28 Jan 2017 12:32:00 -0500Last 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 Joe that "the answer is possibly yes," and then on Sept. 22, Campaign Manager Corey Lewandowski declared that a Trump White House would "take in zero" refugees. Like many restrictionist cons[...]
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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Thu, 26 Jan 2017 00:01:00 -0500Now 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 International Economics found, he saved no more than 1,200 jobs—at an annual cost to consumers of $900,000 per job. Spending nearly a million dollars to save a job that typically pays $41,000 a year[...]
Wed, 25 Jan 2017 17:28:00 -0500As 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 move about the world, and the post-Cold War era of globalization will recede further into the rearview mirror. * Again, this is the Visa Waiver Interview Program, not the Visa Waiver Program,[...]
Fri, 20 Jan 2017 13:55:00 -0500The 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 administration is really committed to screwing up trade: This strategy starts by withdrawing from the Trans-Pacific Partnership and making certain that any new trade deals are in the intere[...]
Fri, 20 Jan 2017 13:40:00 -0500How 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 business in Houston took an afternoon, while in Cleveland it stretched on for weeks. These are the fixes that should be discussed and implemented, not cynical and utterly unrealistic appeals [...]
Sat, 14 Jan 2017 08:00:00 -0500"China's top leadership has called for more efforts to ensure food safety," a China-based news service reported last week, "noting there are still many problems despite an improving food safety situation." By most accounts, it appears the problematic-but-improving characterization of China's current food-safety situation is an accurate one. A recent report found nearly half-a-million food-safety violations reported in the country through the third quarter of 2016. That's evidence of serious problems, no doubt. But it's also the product of stepped-up enforcement, which helps reveal (and, hopefully, mitigate) such problems. In his recent remarks, Chinese President Xi Jinping called for stricter regulations and enforcement to help turn the tide against food-safety issues. One thing Xi didn't stress, it appears, is ability of the food industry itself to improve the culture and climate of food safety. That's an important omission. While regulations and enforcement are necessary tools to promote food safety, the private sector plays a pivotal role in protecting consumers around the globe. In 2014, for example, Walmart set out to pump nearly $50 million into its food-safety efforts in China. In 2016, the company pledged an additional $25 million there over five years. Increased food-safety expectations created by a giant like Walmart have the ability to resonate beyond the company and its suppliers, helping to change the broader food-safety culture. "U.S. companies are responding to food safety challenges in China in ways that are collaborative and innovative, and help promote food security across the whole supply chain," a recent report by a U.S.-China nonprofit found. Given our increasingly globalized economy, questions about the proper level of food-safety regulations and the role of the private sector in ensuring a safe food supply aren't limited to China. Many ongoing fears over the looming Brexit pertain to what Great Britain's food-safety rules—currently based mostly in EU law—should look like after the schism. If Great Britain opts to loosen its rules, for example, doing so could help those who produce food for sale domestically but harm their ability to sell in other countries, including across the EU. That's because rules there—as in the U.S.—require those abroad that wish to enter the local market to meet standards similar to or exactly the same as domestic producers must meet. Food-safety issues can also cross borders, even in cases where the food in question does not. For every domestic story about gluten-free labeling regulations in the U.S., you're as likely to find a similar story in a place like Ireland. For every story about a controversy over raw milk sales in the U.S., you'll probably find a similar tale abroad. While countries like China lag behind the U.S. in terms of food safety outcomes, food-safety concerns can cut both ways. U.S. beef producers have been excluded previously from international markets—including China—over fears about mad cow disease. And in lectures I've given to visiting Chinese food-safety regulators about the history and evolution of the U.S. food-safety system, I've noted nearly uniform disbelief about a handful of things these regulators had assumed—incorrectly, it turns out—their FDA peers have done and do to protect U.S. consumers. Even as the global food supply has become safer thanks to a combination of public and private rules and enforcement, it's possible food-safety bans may only increase in the coming years. If, for example, the administration of president-elect Donald Trump indeed decides to practice trade war, one can almost be certain a result of those disputes will be bans of U.S. food imports—in countries targeted by Trump—under the guise of protecting food safety. Reason readers may recall a tit-for-tat along similar lines several y[...]
Wed, 11 Jan 2017 17:10:00 -0500Taking seriously but not literally the trade-related comments that President-elect Donald Trump made at his long-overdue, frequently bizarre, and eminently watchable press conference today, a pro-trade observer might linger for a moment on the term Trump used to describe the act of moving a manufacturing facility from America to somewhere else. "There will be a major border tax on these companies that are leaving," our next president warned, "and getting away with murder." What purpose does such over-the-top figurative language serve? Well, it's entertaining, for one, and Trump has derived enormous value from being able to hold our attention. (My favorite such moment from today was when he called BuzzFeed a "failing pile of garbage.") It's also a pretty direct political signal to his Rust Belt voter base that the incoming president takes their job displacement personally. He was explicit about that linkage today: [T]hat was a beautiful scene on November 8th as those states started to pour in. And we focused very hard in those states, and they really reciprocated. And those states are gonna have a lot of jobs […] [W]hat really is happening, is the word is now out, that when you want to move your plant to Mexico or some other place, and you want to fire all of your workers from Michigan and Ohio and all these places that I won—for good reason—it's not going to happen that way anymore. A third and more far-reaching use of such hyperbole is that it probably helps in Trump's audacious yet preliminarily promising project (from his point of view, not mine) of transforming the Republican Party's fundamental views on capitalism, trade, and economics. While former free traders like Mike Pence, Reince Preibus, and Steve Moore look on and applaud, the standard-bearer of the GOP is mouthing words that would fit snugly in a Hillary Clinton speech: src="https://www.youtube.com/embed/Xwfj6JeWrsU" allowfullscreen="allowfullscreen" width="560" height="340" frameborder="0"> Speaking of Democratic talking points, Trump in his opening remarks singled out Big Pharma as his second major industrial target, after the auto industry. Check out the lefty: We've got to get our drug industry back. Our drug industry has been disastrous. They're leaving left and right. They supply our drugs, but they don't make them here, to a large extent. And the other thing we have to do is create new bidding procedures for the drug industry because they're getting away with murder. Pharma, pharma has a lot of lobbies and a lot of lobbyists and a lot of power and there's very little bidding on drugs. We're the largest buyer of drugs in the world and yet we don't bid properly and we're going to start bidding and we're going to save billions of dollars over a period of time. There's that "murder" word again…. Trump has been making this pharmaceuticals-bidding argument for a while now, and as Peter Suderman pointed out last year, his approach thus far has not been tethered to realism. And his browbeating of companies, sometimes on an individual level, is already becoming a recipe for crony capitalism, as Eric Boehm has pointed out here. But the big policy kahuna—and therefore the biggest threat to all Americans—will be his strong desire to enact a border tax: You want to move your plant and you think, as an example, you're going to build that plant in Mexico and you're going to make your air conditioners or your cars or whatever you're making, and you're going to sell it through what will be a very, very strong border […] not going to happen. You're going to pay a very large border tax. So if you want to move to another country and if you want to fire all of our great American workers that got you there in the first place, you can move from Michigan to Tennessee and to North Carolina and South Carolina. You [...]
Wed, 11 Jan 2017 00:01:00 -0500Now that I no longer do a weekly TV show, I have more time to read my local paper. Sadly, that's The New York Times. The Times actually does some good reporting, but their political and economic coverage is filled with deceit. Can I find deceit every day? You bet. Take a look at a few days just last week. --Thursday: The front page: "NAFTA's promise is falling short, Mexicans agree." Wow, the Times now embraces Donald Trump's position on trade? Economists estimate that 14 million jobs depend upon NAFTA, but people everywhere often oppose trade because the smaller number of jobs lost is more visible than gradual gains. What evidence of NAFTA's failings does the Times offer? Oddly, the article says "the workforce has grown." Ah, hello? Job growth is good. Jose Luis Rico "earns well under $10,000 a year." Not much by American standards, but good for Latin America, and the reporter mentions that Rico got "a handful of raises." Have you gotten "a handful of raises"? Despite NAFTA, the "gap between the nation's rich and poor persists." Duh. Trade doesn't eliminate wealth gaps—it may increase the gap because the cleverest traders get rich. But since the poor gain jobs and wealth, too, so what? Finally, the clueless Times reporter quotes a Mexican politician and crony capitalist complaining: "Government has not established policies to protect Mexican businesses." But "protection" for some businesses is corporate welfare—welfare for the rich. It hurts poor people by raising prices. The Times wants that? Maybe they're sucking up to Donald Trump and his friend Carlos Slim, Mexico's richest crony capitalist, and the Times' biggest shareholder. --Friday: A front-page story smears David and Charles Koch (the former of whom is a trustee of Reason Foundation, the nonprofit that publishes this website) First, the reporter labels them "the ultraconservative billionaire brothers." Ultra? Why ultra? Why conservative even? The Kochs favor liberal immigration rules, gay marriage, legal drugs, ending racial discrimination in criminal sentencing, fighting in fewer foreign wars and getting rid of government bailouts and favors for businesses, including their own. David Koch supports higher taxes to reduce the deficit. Which of those things is conservative?! Maybe the Times calls the Kochs "ultraconservative" because a political group they support points out, "Policies that subsidize electric vehicles and solar panels for the wealthy raise energy prices" and gas and oil are cheaper for everyone. The reporter adds that the group even showed a "video of people driving, turning on lights and plugging in appliances." Oh, no! How terrible! The reporter claims the "Kochs have long worked to quash... renewable energy sources like wind and solar." But they haven't! They try to quash subsidies for renewables. Big difference. Doesn't the Times know the difference? The Times appeals to its Trump-hating readers with a headline that begins "Sensing Gains Ahead Under Trump, the Kochs ..." But the Kochs didn't give Trump a penny. It's time for the Times to stop calling all their opponents "conservatives." Some of us are libertarians. America has other choices besides the anti-capitalism of the Times and anti-capitalism of Trump. --Saturday: The Times quotes left-wing New York Governor Andrew Cuomo (D) saying it "defies common sense" to have a nuclear power plant near New York City. Green activists oppose the plant and Cuomo now says it will close. But where will New Yorkers get power? The "options include hydropower from Quebec and power from wind farms." Great. But what will we do when the wind doesn't blow? At least the reporter admits that "New York City could be burdened with higher energy prices." Could be? Will be! --Sunday: "Trump Denies Climate Change, These Kids Die." That's the [...]
Wed, 04 Jan 2017 10:20:00 -0500Yesterday 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[...]
Thu, 15 Dec 2016 12:15:00 -0500The last time I was in India, it was a familiar scene. The rickshaws rumbling through busy bazaars. Shoppers haggling over everything from gemstones to silk sarees. Pilgrims prostrating their way to salvation. Authentic street food, enhanced by locally-sourced infectious pathogens. This time around, I knew the country had changed. I wanted to see the effects of thirteen years of market reform and hypergrowth since my last visit. So I summoned an Uber (already something new) and headed 15 miles south of my Delhi hotel. As the crumbling roads of the capital city opened up into a 32-lane expressway, the old India I thought I knew, gave way to the future. I'd arrived in the city of Gurgaon. It's hard to imagine, but twenty-five years ago, there was nothing here. No high-rises. No kitschy shopping malls with Vegas-like trompe l'oeil ceilings. No 27-hole Jack Nicklaus signature golf courses. Stretching back to medieval times, Gurgaon was nothing more than a plot of rocky soil with a small marketplace. Until six years ago, it didn't even have a municipal government. So what happened? When Delhi banned private real estate development in the 1950s, Kushal Pal Singh began buying land south of the city limits. His company, Delhi Land and Finance, offered cash and equity stakes to farmers in Gurgaon. Many of these cowherds became instant crorepatis—millionaires, in the local lingo—while KP Singh would become the fifth richest man in India by the turn of the century. The state of Haryana eased land use restrictions, making it easy for developers to use their land as they saw fit. But once land was converted from farmland to commercial use, it was still classified as rural. That's how Gurgaon ended up as a city without a city government. Haryana also allowed women to work past 6pm—a bold policy decision in a socially conservative country. Without flexible labor laws, India would never have been able to develop its famous call center industry, where phone operators must work through the night in order to match times around the world. Maruti was the first to arrive with an auto manufacturing plant in the 1980s. As India stepped back from socialism in the 90s, foreign investment bypassed Delhi, and poured into Gurgaon. When General Electric set up shop, hundreds of multinationals followed. Soon Gurgaon was generating middle class jobs by the hundreds of thousands. Today, it boasts an absurd 30 percent annual GDP growth and the third highest per-capital income in India. Over time, other developers have entered the market, competing with DLF, and diluting its share of Gurgaon. But DLF remains the dominant provider of roads, sewage systems, security, and India's only private fire department. While Gurgaon isn't exactly crime free—the crime rate is on par with Phoenix, Arizona—it doesn't lack for protection. 35,000 private security guards keep a watchful eye on the city, compared with 3,000 public officers. Gurgaon's services and cleanliness are like nothing else I've seen in the country. India's only privately run metro system is fast, modern, and efficient. Employees compulsively sweep floors that already look spotless. It's unclear if Gurgaon's metro turns a profit. But as it increases the value of land owned by DLF and others, it may have already accomplished its mission. I'd like to tell you that Gurgaon has solved all of India's problems. But even here, in the beating heart of hypergrowth, the worst of Old India stubbornly refuses to die. Sixteen percent of Gurgaon's population lives in slums. If that seems like a lot to you, the shocker is that it's less than the average Indian city. There are 150 million fewer poor people in India since my last visit. That's half of the population of the United State[...]
Tue, 13 Dec 2016 13:20:00 -0500"It's funny because out of all the rhetoric coming out of this year's campaign this is the one issue thats going to have the most effect," states Erica Grieder, former senior editor at Texas Monthly. "We're going to have a lot of economic growth in Texas in the coming years because of trade. So if there's a hostility in Texas to trade that's not going to work out too well for us." Free trade came under attack this election cycle with all major party candidates making statements that blamed bad trade policies for the loss of manufacturing jobs and and the decline of the middle class. The top target of scrutiny has been the North American Free Trade Agreement (NAFTA), a bipartisan deal that removed all trading barriers between the United States, Canada, and Mexico. While President-elect Donald Trump has referred to NAFTA as the "worst trade deal" ever signed, economists have come to the general consensus that NAFTA has had an overall positive effect on the economy since its passage in 1993. Regional trade has increased from roughly $290 billion in 1993 to more than $1.1 trillion in 2016. And while foreign direct investment stock in Mexico has increased from $15 billion to over a $100 billion in that same period, U.S. exports with partnering NAFTA countries have tripled since the legislation took effect and Canada and Mexico now account for one-third of U.S. exports according to the Congressional Research Service. "There's this kind of demagogue-ish concept that life is a zero-sum game. That the economy is primitive. That you take jobs from one country and move them to another country and there's only a finite number of jobs to go around," states Grieder. "Texas is proof that's not the case." Since the passage of NAFTA, Texas has led the country in exports for over a decade and the state's gross domestic product (GDP) has gone from $444 billion in 1993 to nearly $1.6 trillion today. The state's employment rate has fared better than the national average—a 2016 Business Roundtable study showed that international trade was responsible for over 3.1 million jobs in the Lone Star state. But even though the state is benefiting, the constant attack on free trade during the 2016 election cycle has turned even traditional supporters against international trade deals like NAFTA. The University of Texas at Austin's Texas Politics Project found that 51 percent of Texas Republicans think international trade deals have harmed the United States in a June 2016 poll. The findings out of Texas are similar to overall national numbers—just 48 percent of Americans think international trade deals have been good for the country according to the most recent Pew Research polls. "You have areas that do feel dislocated by globalization," says Grieder. "It's not really NAFTA, it's more the growth of China as a role player in the world economy, automation, technological change. But it's kind of easy to point to NAFTA." Grieder explains that it is important that community industries that may be threatened by trade deals have the ability to apply for trade adjustment assistance. But she cites examples where cities have adapted. "Look at Pittsburgh—how much it has evolved and changed and now it's more stronger than it used to be. Indiana has done very well. It is possible for things to get better even if things change and that's the thing people need to look for." Produced by Alexis Garcia. Camera by Zach Weissmueller and Alex Manning. Graphics by Joshua Swain. Music by Chris Zabriskie and Puddle of Infinity. Subscribe to our YouTube channel. Like us on Facebook. Follow us on Twitter. Subscribe to our podcast at iTunes.[...]
Mon, 12 Dec 2016 00:01:00 -0500Opposition to free trade was to Donald Trump's campaign what burgers are to McDonald's: not the entire menu but the essence of the brand. His fabled appeal to rural whites and unemployed steelworkers arose largely from his vow to get tough on foreigners who have been flooding us with goods. It has never been clear whether Trump sincerely believes what he says—given his history of making products in other countries offering low-cost labor—but it's always been apparent that he has no real grasp of the subject. He doesn't know much, and he doesn't know what he doesn't know. When he bragged about the $50 billion the Japanese SoftBank Group plans to invest in the United States, Trump clearly had no clue that it will actually hinder his effort to curb imports. Before people in Japan can make such an investment, they need American dollars, which are not printed in Tokyo. How do Japanese get American dollars? By selling goods or services in the United States. Every increase in foreign investment or lending here has to be accompanied by an equal increase in our trade deficit. It's a simple accounting truism. A $50 billion increase in Japanese investment translates into a $50 billion increase in Japanese imports. Trump can boost foreign investment or reduce imports, but not both. His threat to hit China with stiff tariffs has had similarly self-defeating consequences. Worries he'll start a trade war have caused a sharp decline in China's yuan against the dollar—which will reduce the price of Chinese goods shipped here while raising the cost of American products sold there. After attacking the Chinese for lowering the value of their currency, the president-elect has driven it down for them. He exhibits scant knowledge even on his favorite topics. Though Trump denounces NAFTA as a disaster, I've never heard him cite a single provision he doesn't like. All he knows is that we run a trade deficit with Mexico, which he assumes is a terrible thing. When he visited the Chicago Tribune for an interview with the editorial board last year, he claimed to favor free trade but complained that Ford was building a plant in Mexico and employing Mexicans. Asked whether that isn't how free trade works, he replied, "What do we get out of it?" His answer: "We never get anything." What we get from plants in Mexico that ship goods to the United States is just that—goods Americans want at a price they are willing to pay. The chief benefit of international commerce is that it allows the people of a nation to consume more than they would be able to if they had to make everything for themselves. This proposition is one of the oldest and most durable insights of economics. Trump has the idea that he can save and add American jobs by discouraging U.S. companies from moving production to other countries. He's even threatened to punish those that do. But this is a futile remedy. If gas furnaces can be made at a lower cost in Mexico, it ultimately doesn't solve anything for Carrier to keep manufacturing them in Indiana. Why not? Because its competitors, foreign or domestic, can put their plants in Mexico, gain a cost advantage and take sales away from Carrier. In the long run, Indiana may find that these jobs won't move away; they'll just disappear. Trump assumes he can force companies to build more in the United States by imposing tariffs on goods they make overseas for sale here. It would surprise him to learn that such duties would harm not just American consumers but also American producers. U.S. automakers use a multitude of imported components. Most of the cars built on our soil, in fact, contain more than 25 percent foreign parts. A lot of other products assembled here i[...]