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President Trump’s appointment of Gina Haspel as the new director of the Central Intelligence Agency has revived memories of the abuses the CIA committed during George W. Bush’s administration. The appointment is indeed deeply troubling, since Haspel ran one of the Agency’s infamous overseas “black sites” that featured “enhanced interrogation” techniques (a cynical euphemism for torture). But as I point out in a new National Interest Online article, Haspel’s conduct is the symptom of a much deeper problem. Both during the Cold War and the war on terror, too many U.S. officials have succumbed to the temptation to combat evil behavior with evil behavior. In the process, they have undermined and imperiled fundamental American values.

There is no question that communist powers and radical Islamic terrorists are morally odious adversaries. The United States rightly condemned Moscow’s subjugation of Eastern Europe and the Kremlin’s global subversion campaigns against other societies. But Washington’s conduct was hardly exemplary, and as the Cold War continued, U.S. behavior became increasingly questionable. Especially shameful were those cases in which Washington subverted and overthrew democratic governments to help install “friendly dictators.” There is now indisputable evidence that the United States was involved in such disreputable moves against elected governments in Iran, Guatemala, Chile, and other countries. Indeed, U.S. leaders seemed to prefer pliable autocrats to unpredictable pluralistic systems. When General Chun Doo-hwan overthrew an embryonic democratic government in South Korea, John Wickham, the commander of U.S. forces in that country, excused the seizure of power, saying that South Koreans were “lemming-like” and needed a strong leader.

Indeed, in the name of waging the Cold War, U.S. officials flirted with utterly horrific options. During the Kennedy administration, the CIA concocted a scheme to stage false flag attacks, including blowing up civilian airliners, as a phony justification to invade Cuba and oust Fidel Castro. Fortunately, the White House rejected the scheme, but that supposedly ethical officials could even consider murdering innocent Americans as a geopolitical pretext illustrated just how much U.S. policymakers were beginning to emulate their immoral communist counterparts.

The casual willingness to cut moral corners is evident in the war on terror as well. In addition to the CIA’s own use of torture, Washington embraced the practice of rendition, whereby the United States sent accused terrorists to cooperative dictatorships renowned for using torture techniques that made even the U.S. conduct look mild. Those governments included Saudi Arabia’s brutal theocratic autocracy, Hosni Mubarak’s dictatorship in Egypt, and Bashar al-Assad’s regime in Syria. Outsourcing torture in that fashion, however, did nothing to dilute America’s responsibility for the resulting egregious human rights violations.

Washington’s overseas military conduct in the war on terror is equally troubling. The awful destruction that U.S. forces have visited on Afghanistan, Iraq, Libya, and Syria has resulted in the deaths of hundreds of thousands of innocent civilians and turned millions of others into destitute refugees. In addition to the needless carnage that the U.S. military has inflicted directly, the United States is an active accomplice in Saudi Arabia’s atrocity-filled war in Yemen.

The German philosopher Friedrich Nietzsche expressed the cautionary admonition: “Beware that, when fighting monsters, you yourself do not become a monster.” Too often, U.S. leaders have ignored that warning. In doing so, they have established disturbing, sometimes horrifying, precedents that betray the basic values of a liberal democracy.

Congress passed its first naturalization law 228 years ago on March 26, 1790. The Naturalization Act of 1790 was the most open naturalization law in the world at the time, allowing free white persons of good character to naturalize after two years of residence in the country and one year of residence in a particular state. Denying citizenship to American Indians, free blacks, indentured servants, and others who did not count as free white persons was a great injustice, but the 1790 Act was an improvement over other countries at the time that also limited naturalization based on gender, skill, or religion in addition to race. Although the Naturalization Act of 1790 did place some restrictions on who could become a citizen, it placed no restrictions on who could enter the United States. The Supreme Court largely corrected Congress’ error in 1898 in its United States v. Wong Kim Ark decision when it ruled that children of immigrants, including non-whites, were also citizens if they were born in the United States.

The Western world had a long legal, social, and ethical tradition of openness to immigrants and naturalization that culminated in some of the best portions of the American immigration system. Hillsdale College history professor Bradley J. Birzer wrote a wonderful essay for The American Conservative in January that showed that our civilizational heritage is replete with relatively open borders and the unencumbered movement of people across them with few practical restrictions, with the United States as a recent inheritor of such thought. Although Greeks and Romans both had liberal migration systems, there were important distinctions between Roman and Greek practices of naturalization and citizenship. The American Founding Fathers decidedly favored a model close to that of the Romans over that of the more restrictive Greeks.

Archaeologist John R. Hale of the University of Louisville wrote, “[u]nlike many of its neighbors, Athens eagerly welcomes foreigners from overseas, whether Greek or ‘barbarian,’ and encouraged them to settle down as residents. So tolerant did the Athenians become that they permitted foreign merchants to build shrines to their own gods within the walls of the Piraeus.” Resident foreigners in Athens were called metics and had to pay a special tax called a metoikion. Metics could not own real estate or participate in politics but they could work, amass wealth, and be productive members of the Athenian economy. Athens was the seat of ancient philosophy for several centuries, but many of its most famous philosophers were foreign-born including Aristotle, Anaxagoras, and Zeno. Aristotle and Cephalus, whose mansion Socrates visits at the beginning of The Republic, are two of the most famous metics

The Athenian political leader Themistocles, whose policies were foremost responsible for Athenian wealth and power, convinced the city to create publicly-funded incentives to attract skilled craftsmen to the city. This is not too different from the mythological Theseus, the first king of Athens, who also encouraged the immigration of metics. After the defeat of Athens in the Social War, Xenophon suggested attracting more metics to the city to help rebuild its economy because they paid taxes but consumed few public benefits.

Athens’ open migration system was in stark contrast to its burdensome citizenship system: Only those born to Athenian parents were citizens. The Assembly in Athens extended citizenship to metics and freed slaves during military emergencies or to larger groups of people for strategic advantage but mainly did so on an individual basis by a vote of the assembly, often after a foreigner served in the military and distinguished himself in battle.

Rome encouraged both immigration and naturalization. Whereas Athens allowed foreigners to live in the city, Rome actually extended citizenship to them and gradually to conquered peoples. It even allowed freed slaves to gain Roman citizenship which occurred in Athens only during military emergencies that required a levee en masse. These unique Roman policies created the most ethnically diverse polity prior to the modern world and allowed people to be citizens of their city of birth and of Rome. The immigration, citizenship, and manumission policies that created Rome are as ancient as the two mythical foundings of the state, according to historian Mary Beard

The first myth was that of the Trojan refugee Aeneas who founded Rome after displacing the aborigines who originally inhabited the area. According to this tale, the Romans were always foreigners and had no immemorial tie to the land itself. The second myth is that Romulus, who, after founding the city, “declared Rome an asylum and encouraged the rabble and dispossessed of the rest of Italy to join him: runaway slaves, convicted criminals, exiles, and refugees. This produced plenty of men.” Those men then abducted and raped Sabine women in a horrific ruse that is part of the city’s foundation myth. As disgusting as half of that foundation myth is, Romans could never claim to have a blood-based identity due to the foreign origins of the original inhabitants of the city. 

As Rome expanded, they gradually extended citizenship to both allies and conquered peoples as a means of increasing the manpower available for military service and rewarding loyalty. Indeed, later restrictions on the extension of Roman resulted in one of the strangest civil wars in history when allied cities rebelled in order to gain naturalization. Republican Rome tightened its citizenship rules after the Second Punic War ended in 202 BC and severely curtailed its previous open-door immigration and naturalization policy. The new restrictions led to an uprising in cities who wanted Roman citizenship. To quiet the unrest, Rome finally reinstated the older naturalization and immigration rules after punishing the ringleaders of the revolt. 

A steady stream of immigrants arrived in Rome for centuries with the aid of some famous litigators like Cicero. Many famous Roman families were the descendants of immigrants, including the Julii from Alba Longa, the Coruncanii from Camerium, and the Porcii from Tusculum. Attius Clausus immigrated to Rome in 504 BC from Regillum, eventually becoming a senator and consul. His descendant was the famous Emperor Claudius, who extended Roman citizenship to many Gauls by appealing to the pro-citizenship and immigration mythology of the Roman foundation myth. As Claudius noted, “Our founder Romulus was so wise that he fought as enemies and then hailed as fellow-citizens several nations on the very same day.” In 212 AD, the emperor Caracalla extended citizenship to every free male inhabitant of the Roman Empire, erasing the legal differences between conquerors and conquered. Over the centuries, Roman emperors began to hail from outside of Italy. The emperor Septimus Severus was from Africa, Trajan and Hadrian were both from conservative Spain, Phillip was from Arabia, and almost 20 other Eastern and Western emperors were from the Balkans.

The Founders complained about King George III’s restrictions on naturalization and subsequently created the most liberal naturalization system in the world at the time, and understood that open immigration and liberal naturalization were enormously advantageous to the growing republic. Any comparison to the Classical world is strained but, to the extent which we can compare the current immigration and naturalization system of the United States to the past, the American government clearly borrowed more from the more open Roman system than from the more closed Athenians. 

 

 

 

Congress has passed an omnibus appropriations bill that jacks up spending across the board. Projections from the Committee for a Responsible Federal Budget show that the federal river of red ink is fast becoming a flood.

The chart shows CRFB’s “alternative” projection, which is the likely budget path if policymakers do not make major reforms. Deficits are expected to rise relentlessly, topping $1 trillion next year and hitting $2.4 trillion by 2028. That means spending $2.4 trillion more than available revenue that year.

The next president will come into office in early 2021, and the nation will be facing the most dangerous budget situation in peacetime history. If policies are not changed between now and then, he or she will be looking at 10-year deficits of $20 trillion or more. If you think Washington is a dysfunctional mess now with members at each other’s throats, I am guessing that today is a picnic compared to federal policymaking down the road.

 

See also here and here.

E-Verify is a federal government program that allows businesses to check the identities of new hires against federal databases to judge whether they are eligible to legally work in the United States.  The goal of the program is to deny illegal immigrants work in the United States.  E-Verify has serious problems as it misidentifies a small portion of legal workers as illegal immigrants, imposes a serious regulatory burden on employers and employees, increases employee turnover costs, is expensive, stimulates black market document forging and identity theft, might increase crime, and fails in its primary function of turning off the wage magnet

Despite all of those problems, the best thing about E-Verify is that many employers do not use it in states where it is mandated and workers have many ways to get around the system, reducing the cost of the mandate.  Government data on the number of E-Verify checks that run in each state are sketchy and seem to change with each new FOIA but the most recent one I received from the Department of Homeland Security revealed that my previous work likely overestimated the rates of E-Verify compliance in South Carolina and that there are potentially serious problems there. 

South Carolina mandated E-Verify for all employers in 2011 but delayed the start date until January 1, 2012, because (surprise) the system was more complicated than its proponents claimed and the state government did not want to punish every small employer in the state for noncompliance.  Despite that, proponents of mandatory E-Verify point to South Carolina as a model system because the state Department of Labor, Licensing, and Regulation (DLLR) conducts random audits of employers to guarantee that they use the system for all new hires. 

Early on, South Carolina employers seemed to follow the letter of the E-Verify law to such an extent that they ran about 19 percent more E-Verify checks than there were new hires in seven out of the first 10 quarters that E-Verify was mandated (Figure 1).  In other words, employers ran 119 E-Verify checks for every 100 new hires in the state during that time.  Even including additional quarters before and after that period, possibly because of quarterly lags between when a worker is hired and the E-Verify check occurs, shows that the number of E-Verify checks exceeded the number of new hires by 6 percent over the period from the second quarter of FY2012 through the 4th quarter of FY2014.  

Figure 1
South Carolina E-Verify Compliance

Sources: Department of Homeland Security and Longitudinal Employer-Household Dynamics Survey.

There are a number of potential explanations for why there were more E-Verify checks than there were new hires but they all point to E-Verify’s systematic ineffectiveness.  The first is that employers violated the law by prescreening applicants by running their names through E-Verify prior to hiring them.  The second is that South Carolina employers found the system confusing and had to enter the identity data for the same hire more than once.  The third is that illegal workers who were hired and then were tentatively non-confirmed for employment by E-Verify then submitted another person’s identity data to fulfill the E-Verify mandate, meaning that there were at least two E-Verify checks for that same worker.  The fourth is that South Carolina employers ran many E-Verify checks in order to fool remote auditors into thinking that they were actually complying with the mandate to avoid a more detailed examination by the DLLR.  There are undoubtedly other explanations but those above all show that E-Verify is difficult to use or ineffective. 

E-Verify compliance halved after the third quarter of 2014, dropping from 125 percent of all new hires in that period to 63 percent of all new hires in the second quarter of 2017.  South Carolina is the only state that audits employers and punishes them with extra regulatory burdens if they fail to E-Verify all of their new employees.  Not E-Verifying new employees is only one way by which employers and workers can circumvent the system.  Crucially, the audits do not check whether the employees are actually legally eligible to work.

Worksite immigration enforcement in the form of I-9 audits declines when the local unemployment rate falls.  In South Carolina, E-Verify compliance rates fall when the unemployment rate falls (Figure 2).  Thus, the same political incentives that frustrate worksite enforcement of immigration laws elsewhere combine to limit the effectiveness of South Carolina’s E-Verify mandate.  That is good evidence that a nationwide mandate will not dismantle the systemic political incentives to enforce immigration laws more thoroughly when unemployment rates are high and reduce enforcement when unemployment rates fall, the exact opposite of what is necessary to dim the wage magnet.  

Figure 2
South Carolina E-Verify Compliance and Unemployment Rates

Sources: Bureau of Labor Statistics, Longitudinal Employer-Household Dynamics Survey, and Department of Homeland Security.

South Carolina’s E-Verify mandate has probably not reduced the state’s already low illegal immigrant population and failed to dim the wage and employment magnet that attracted illegal immigrants in the first place.  In exchange, the mandate imposed greater regulatory costs on employers and made the state government appear to be a harsh enforcer of immigration laws.  That is a bad tradeoff for South Carolina.

If the federal government ever mandates E-Verify, it should follow South Carolina’s example of looking tough but ignoring inconsistencies in the system that point to its ineffectiveness.  Regarding E-Verify, the best action for South Carolina and the United States is to drop the charade by canceling the program so Americans can continue to benefit from employing illegal immigrants without E-Verify’s extra regulatory burdens that only help a few South Carolina politicians look tough.  

ObamaCare turns eight years old today. Some opponents had hoped to mark the occasion by giving supporters the birthday gift they’ve always wanted: a GOP-sponsored bailout of ObamaCare-participating private insurance companies. Fortunately, a dispute over subsidies for abortion providers killed what could have been the first of many GOP ObamaCare bailouts.

ObamaCare premiums have been skyrocketing. All indications are this will continue in 2019, with insurers announcing premium increases up to 32 percent or more just before this year’s mid-term elections. Some Republicans fear voters will punish them for the effects of a law every Republican opposed and most still want to repeal.

Senate health committee chairman Lamar Alexander (R-TN), Sen. Susan Collins (R-ME), and House Energy & Commerce Committee chairman Greg Walden (R-OR) hope to avert calamity by expanding on a proven failure. For months, they have been pushing legislation that would resurrect ObamaCare’s expired “reinsurance” program with $30 billion of new funding.

ObamaCare’s architects knew the law’s preexisting-conditions provisions would effectively destroy the individual health insurance market. They added the reinsurance program in an attempt to put Humpty Dumpty back together again.

ObamaCare’s preexisting-conditions provisions both increase health-insurance premiums and reduce health-insurance quality. They achieve the former, first, by requiring insurers to cover patients with uninsurable preexisting conditions, and again by unleashing adverse selection. Those factors in turn reduce quality by literally punishing insurers who offer high-quality coverage for the sick.

From 2014 until it expired at the end of 2016, ObamaCare’s reinsurance program gave participating insurers extra taxpayer subsidies to cover the claims of high-cost patients whom its preexisting-conditions provisions require them to cover at a loss. The extra subsidies were supposed to reduce premiums, and prevent a race to the bottom fueled by ObamaCare’s penalties on quality coverage.

If ObamaCare’s reinsurance program was supposed to keep premiums from skyrocketing, it was an utter failure. Premiums increased 18-25 percent per year from 2013 through 2016, well above the trend of 3-4 percent from 2008 to 2013. By 2017, premiums had doubled—a cumulative increase of 99 percent or 105 percent, depending on the source—from pre-ObamaCare levels. ObamaCare’s preexisting-conditions provisions were the driving force behind these premium increases.

Likewise, ObamaCare’s reinsurance program failed to prevent its preexisting-conditions provisions from triggering a race to the bottom on health-insurance quality. Research indicates the penalties those provisions impose on high-quality coverage are indeed making coverage increasingly worse for patients with multiple sclerosis and other high-cost conditions, with no end in sight. All the king’s reinsurance and all the king’s men cannot put Humpty together again.

At this point, ObamaCare supporters might object that premiums would have risen even more without the reinsurance program in place. But this is false. Reinsurance programs do not reduce premiums at all.

To illustrate, take Sen. Collins’ claim that $30 billion in reinsurance subsidies would reduce ObamaCare premiums 40 percent. The claim is complete nonsense. Giving insurance companies $30 billion of taxpayer money would not magically make them 40 percent more efficient. If that were true, a $75 billion bailout would make ObamaCare totally free.

ObamaCare’s reinsurance program did not reduce premiums by a single penny, and neither would a Republican reinsurance program, because government subsidies do not reduce premiums. Giving taxpayer dollars to private insurance companies merely shifts part of the premium from enrollees to taxpayers. If a $30 billion insurance-industry bailout causes the amount ObamaCare enrollees pay for their coverage to fall 40 percent, it is because that 40 percent is being shifted to someone else—i.e., you. (If anything, government subsidies increase premiums through moral hazard.)

Nevertheless, the idea that subsidies reduce premiums is the kind of falsehood Washington will forever exclaim as gospel because it serves the economic interests of insurance companies, and the political interests of politicians who want to be seen as Doing Something, without actually solving anything.

The only thing reinsurance subsidies are guaranteed to do is hand even more taxpayer dollars to private insurance companies. ObamaCare already hands more than $50 billion in explicit government subsidies to participating insurance companies each year. It hands insurers billions more by forcing healthy enrollees to overpay for health insurance. If the first $50 billion didn’t solve the problem, why should we expect another $30 billion would? And if it doesn’t, how much more good money will Congress throw after bad?

Fortunately, a dispute over whether these subsidies could go to insurers that cover abortion prevented the Alexander-Collins-Walden bailout from passing as part of the massive $1.3 trillion spending bill Congress passed to avert a government shutdown today.

Alexander, Collins, and Walden should take the hint and stop trying to bail out ObamaCare, which would just double (or triple, or quadruple) down on a failed system. If Congress is unwilling to repeal and replace ObamaCare yet, opponents should be pushing states to allow individuals and employers to purchase health insurance licensed by U.S. territories, which are exempt from ObamaCare’s costliest regulations, and pushing HHS to reverse its administrative ban on “renewal guarantees” in short term plans. These steps would provide relief for the vast majority of those in the individual market, before the mid-term elections, and disproportionately in areas where the GOP is defending congressional seats. They would also give ObamaCare opponents greater leverage in Congress, and even force supporters to the negotiating table.

If instead Alexander, Collins, and Walden succeed in delivering an ObamaCare bailout, it would mark a stunning reversal for the GOP. Republicans spent seven years promising to repeal ObamaCare and one year trying to replace it, while supporters of the law refused to help—or even to acknowledge ObamaCare’s fundamental flaws. A bailout would hand supporters what they have always wanted but Republicans have heretofore refused to give: more government spending, zero reform, and a bipartisan imprimatur on ObamaCare. One thing is certain: the GOP’s first ObamaCare bailout would not be their last.

U.S. negotiators are rumored to be taking the position that if the NAFTA treaty is to prescribe uniform food labeling among member countries, that labeling should be done along the lines of the current U.S. federal scheme, meant primarily to inform consumers rather than scare them away from bad-for-them-in-excess choices like ice cream and corn chips.  A front-page article in Wednesday’s New York Times is upset about that stance. Instead, the Times takes the principled position that labeling rules are best decided by each country under national law, and that transnational institutions, such as treaty organizations, should mostly keep their noses out of it absent some angle closely related to trade. 

Just kidding! That would be too sensible an objection. Instead, the Times takes the view that transnational meddling in food labeling is a fabulous idea when done by people it likes in the name of public health, but becomes bad when others get into the act, such as large American food makers or advocates of free-market policy. 

“Many public health officials,” the Times explains, now favor “the use of vivid warnings on foods with high levels of sugar, salt and fat.” It goes on to say that “public health experts” – even as its appeal to authority gets more explicit, its phrasing gets less specific – have hailed a new law in Chile that includes a “ban on the use of cartoon characters like Tony the Tiger” as well as a requirement for eye-catching warning symbols. 

The side favoring tougher regulation has been well organized for years at playing the international circuit, a fact the Times gives away by quoting in its NAFTA story advocates from an international public health charity in Australia and an anti-corporate campaign in Brussels. The U.N.’s World Health Organization (WHO), much swayed by transnational NGOs as well as by the views of the Guardian-reading and Times-subscribing class generally, has long demanded that member countries adopt more restrictive regulations on the marketing of food, drink and other products. In one memorable venture into the headlines recently, WHO called for the exclusion of children from movies in which smoking takes place, which might limit screenings of Pinocchio, 101 Dalmatians (Cruella DeVil!), Lord of the Rings, Little Mermaid, and Alice in Wonderland with its hookah-smoking caterpillar. 

Like international organizations, treaty administration bodies tend to draw for guidance on an elite stratum of professional diplomats, conference-goers, NGO and nonprofit specialists, and so forth, most of whom are relatively insulated from any pushback in public opinion. That might be a good reason to minimize the role of transnational panels in governance where not absolutely necessary. It is not a good reason to adopt the Times’s implicit position on lobbying for international standards, which is that it’s fine when done by our side but illegitimate when done by yours.    

On Tuesday, a vote in the Senate sought to curtail America’s participation in the destruction of Yemen. This vote was the culmination of months of dedicated work by those involved in this issue, and the resolution failed by only a few votes. It forced a debate on the topic and added to international momentum to resolve the conflict peacefully. 

On Thursday, the Trump administration notified Congress of three new arms sales to the Kingdom of Saudi Arabia—the country that has repeatedly tossed aside the laws of armed conflict to indiscriminately target cities and civilian populations. Nevertheless it seems that America will remain the kingdom’s largest weapons supplier

This round includes 6,600 TOW missiles, $300 million worth of repairs to their Abrams tanks and other surface vehicles, and $106 million for helicopter maintenance. These deals are worth $630 million total. 

Restricting arms sales like these would lessen America’s involvement in the war and force Saudi Arabia to either find other suppliers or rethink the current course of action.

For more on this issue, check out our latest in DefenseOne on the events this week. Interested in American weapons exports and the intersection of foreign policy more generally? Read our latest Policy Analysis, “Risky Business: The Role of Arms Sales in U.S. Foreign Policy.” 

Congress has passed a giant omnibus spending bill with large increases for every federal budget area, as shown in the table below from the Committee for a Responsible Federal Budget. Defense spending is spiked 14 percent, and there are even larger increases in energy/water, state/foreign affairs, and transportation/housing.

The usual story of federal budgeting is that “the president proposes, and Congress disposes.” The president issues his annual budget, and then lawmakers put most of the proposals in the trash unless the president really fights for them.

But under Trump, the pattern is shaping up differently; it is “the president proposes, and the president disposes.” Trump has proposed two relatively frugal budgets on the nondefense side. He included substantial cuts to many departments. But if he signs the omnibus, he will be spinning 180 degrees and throwing his own spending reforms in the trash. He would be signaling to conservative voters: “My reform proposals are bogus. I have no intention of cutting any of those big-government programs you hate such as the public housing, welfare, business subsidies, and the environmental bureaucracy.”

If Trump signs the omnibus, it will put cabinet secretaries in a weird position. Trump’s budget proposes major cuts to departments such as Education and HUD, and secretaries have been going up to Capitol Hill to defend the reforms in front of the appropriations committees. If Trump goes along with the GOP leadership and hikes spending, it would cut his cabinet secretaries off at the knees. Yesterday, the administration was saying Trump will sign it, but this morning Trump is saying he might not because of concerns over the immigration provisions.

The Washington Post describes, for example, how GOP leaders—and Trump if he signs it—are throwing conservative Education Secretary Betsy DeVos under the bus. On Tuesday, DeVos was in front of House appropriators defending the administration’s proposed $3.6 billion cut to the Education Department, saying, “President Trump is committed to reducing the federal footprint in education, and that is reflected in this budget.” But the omnibus goes in the reverse direction and hikes the department’s spending $3.9 billion. In thinking about a possible veto, Trump should be considering a lot more than just the immigration provisions.   

Tariffs are making headlines just about every day now, but it’s often not clear which stories are about threats of tariffs, and which are about actual tariffs that will be applied. Back on March 8, President Trump announced that he would impose tariffs on imports of steel (25%) and aluminum (10%), but also noted that Canada and Mexico would be exempt and there was going to be a 15 day period to talk about exemptions for other countries (as well as specific product exclusions). Other countries complained that the purported justification for the tariffs, national security, had no basis, and the EU threatened retaliatory tariffs.

That 15 days was up today, but before we get to that, yesterday President Trump was threatening more tariffs, this time only against China, for various practices – e.g., alleged forced technology transfers and a failure to safeguard intellectual property rights – that it has engaged in over the years. The Wall Street Journal described yesterday’s action this way:

The White House is putting together a package of 25% tariffs on Chinese imports, and Mr. Trump’s advisers said they had targeted 1,300 product categories. The president said that action could affect imports of “about $60 billion,” but his advisers, speaking earlier, said that it was more likely to be $50 billion, or roughly 10% of the more than $500 billion the U.S. imported from China last year.

The administration says it will publish a formal list of proposed tariffs in 15 days. U.S. industry would get 30 days to comment on which products should be selected for tariffs, said the office of the U.S. Trade Representative. …

So these China-specific tariffs are in the works, but they are not being imposed just yet. There is still time to convince the Trump administration to focus more on bringing complaints against China to the World Trade Organization (WTO), as we advocate here and here.

In the meantime, though, the Trump administration imposed the steel and aluminum tariffs as of today. However, in the end, they exempted (at least until April 30) many additional countries: Brazil, the EU member states, South Korea, Australia, and Argentina. That softens the impact of the tariffs considerably, and the EU may not retaliate just yet (although it is not happy with an exemption that is only temporary). But other countries, including China, are subject to these tariffs. These countries are likely to file complaints at the WTO, but in addition, China has announced (in Chinese) that it will retaliate with tariffs of its own. No word yet on retaliatory actions from others.

What’s interesting about China’s retaliation is that it has picked up on an EU legal theory, under which the retaliatory tariffs are actually permissible under WTO rules, as they are an action related to a “safeguard” measure (because the national security justification is a sham, the argument goes, the U.S. tariffs are actually safeguard measures). I’m skeptical of this theory (see the comment discussion here), but at this point all sides are pushing the boundaries of what is legal.

So where does all this leave us? Are we having a “trade war” yet? That’s a term that gets thrown around a bit loosely, but we now have some (arguably) extra-legal tariffs imposed, and some (arguably) extra-legal tariffs being threatened in response. Whether it’s a “trade war” or a “trade skirmish,” it’s a dangerous road we are going down, and there is the prospect of escalation if the additional tariffs on China announced yesterday are imposed. 

There is still time to rein all this in, though. The Trump administration has decided to bring a WTO case against China related to one set of Chinese practices; working with other countries on multilateral efforts to address China’s practices more broadly is a much better approach than unilateralism. If the Trump administration can be convinced to focus on working through the WTO, rather than imposing tariffs unilaterally, much of the damage can be avoided.

Americans who voted for Donald Trump believing he would be disinclined to start new wars should be puzzled by his decision to tap John Bolton as his third national security adviser. The rest of us should be concerned.

Bolton has been one of the most reliably hawkish voices in American politics in recent memory. In 2015, he openly called for launching a war against Iran. Earlier this year, he argued that the United States should initiate a war against North Korea. His faith in the utility of force, and his general disdain for diplomacy, is legendary – and apparently hasn’t been shaken by the wars of the recent past.

Most Americans – 67 percent in a recent poll – believe that the Iraq war failed to advance – or, worse, undermined – American security. Bolton appears to agree with the mere 22 percent of Americans who think that that war made things better. 

Back in 2013, Donald Trump tweeted: 

All former Bush administration officials should have zero standing on Syria. Iraq was a waste of blood & treasure.

— Donald J. Trump (@realDonaldTrump) September 5, 2013

(H/T Vox’s Dara Lind)

One has to wonder: what changed his mind?

In fairness, H.R. McMaster was no dove. He appears to have been a decisive voice in convincing President Trump to reverse himself on Afghanistan. But McMaster’s cerebral nature simply doesn’t compare to Bolton’s made-for-Fox News bellicosity – which may explain why Trump tired of the three-star general. 

The circle of men and women who advise a president on foreign policy is never large. With Mike Pompeo replacing Rex Tillerson as Secretary of State (pending Senate confirmation, which isn’t assured), Secretary of Defense James Mattis may be the only person with the stature to counteract the vocal and growing chorus who can be expected to feed President Trump’s worst instincts.

 

Congressional leaders have agreed to a 2,232-page omnibus spending package that allocates federal discretionary spending for 2018. Defense and nondefense spending levels are jacked up, budget caps are blown through, and the deficit is soaring.

You could say that the (nominally spendthrift) Democrats took the (nominally frugal) Republicans to the cleaners. But the real problem is that the great majority of members in both parties love federal spending. They think it unambiguously helps people; they are oblivious to constitutional federalism; they are willing to load more debt onto young people; and they have no idea about the negative consequences of government spending, such as the crowding out of private-sector activities.

It is amazing how many liberal priorities are included in the omnibus, despite the Republicans having the White House and majorities in both chambers. The Democrats highlighted some of their big-spending wins here:

  • Nondefense discretionary spending up $63 billion in 2018.
  • More for Head Start.
  • More for the child care and development block grant.
  • More for K-12 subsidies.
  • More for college subsidies.
  • More for renewable energy subsidies.
  • More for Amtrak subsidies.
  • More for urban rail subsidies.
  • More for community development subsidies.
  • More for the EPA.
  • More for public housing subsidies.

Aside from these increases in traditionally liberal programs, there were spending increases on many other programs that are also not properly federal activities, such as state-local policing and state infrastructure. If we are ever going to tackle massive federal deficits, we have to start cutting federal subsidies for state-local activities. But those subsidies keep rising.

More evidence on the bipartisan spending disease came Tuesday as HUD Secretary Ben Carson defended the administration’s budget to the appropriations committee. Carson did a fine job. He had many facts at his disposal, he generally defended the administration’s proposed cuts, and he deflected seemingly unfair accusations about his office expenses.

What struck me was that in the hearing’s Q&A, not a single Republican member spoke out in favor of the administration’s proposed HUD budget cuts. This is a department chock full of 1960s-style liberal interventionist programs, such as public housing and community development. If Republican members were conservatives, they would have lauded the proposed HUD cuts, but they did not.

It is sad reality that we get much more resistance to spending on Capitol Hill when Republicans are in the minority.

In an article in the April 2018 issue of the American Journal of Public Health, four researchers at the Centers for Disease Control and Prevention’s Division of Unintentional Injury Prevention report that the CDC’s methods for tracking opioid overdose deaths have over-estimated the number of those deaths due to prescription opioids, as opposed to heroin, illicitly manufactured fentanyl, and other illicit variants of fentanyl. They called the prescription opioid overdose rate “significantly inflated.”

Fentanyl is a synthetic opioid categorized as a prescription opioid. But, in the outpatient setting, it is predominantly prescribed as a time-release transdermal patch, not suitable for nonmedical users. Occasionally, it is prescribed as a lozenge, a nasal spray, or a small film that can be placed within the corner of one’s mouth, usually to cancer patients in extreme pain. These forms of the drug don’t lend themselves to being converted into a form suitable for nonmedical users wishing to snort or inject the drug. The injectable form of fentanyl is almost exclusively used in the hospital setting, both as an anesthetic agent and to control severe pain in patients who are critically ill or in the postoperative recovery room. Over the past several years, the underground market has been flooded by illicitly manufactured fentanyl and its variants, often moved into the country in a powdered form through the mail.

The authors of the AJPH article state, “Traditionally, the Centers for Disease Control and Prevention (CDC) and others have included synthetic opioid deaths in estimates of ‘prescription’ opioid deaths. However, with IMF (illicitly manufactured fentanyl) likely being involved more recently, estimating prescription opioid–involved deaths with the inclusion of synthetic opioid–involved deaths could significantly inflate estimates.” They suggest that under a new “conservative” definition—excluding deaths involving synthetic opioids like fentanyl—the 32,445 prescription opioid-involved deaths that the CDC estimated occurred in 2016 would be revised down to 17,087.

The authors point out that the exact drugs involved in overdose deaths are not identified in 20 percent of death certificates, and the number of deaths due to diverted (stolen, smuggled, or sold by dealers) prescription opioids is unknown. They also note that multiple drugs are involved in over half of their reported cases of prescription opioid overdoses—although other centers report multiple drugs involved in over 90 percent of overdoses. Because of this, they say, even that reduced estimate is likely inaccurate.

In December 2017, the CDC reported that overdose deaths due to fentanyl have been increasing at a rate of 88 percent per year since 2013, and now make up the largest component of opioids responsible for overdose deaths.

The authors go on to state, “Obtaining an accurate count of the true burden and differentiating between prescription and illicit opioid-involved deaths are essential to implement and evaluate public health and public safety efforts…If deaths involving synthetic opioids—likely IMF—are categorized as prescription opioid overdose deaths, then the ability to evaluate the effect of interventions targeting high-risk prescribing practices on prescription opioid–involved deaths is hindered. Decreases in prescription opioid–involved deaths could be masked by increases in IMF deaths, resulting in inaccurate conclusions.”

This last statement is important. Policymakers seem intent on seeing doctors treating patients in pain as the source of the opioid overdose crisis. And their focus has been on getting doctors to curtail prescribing opioids, while ordering a reduction in the manufacture of opioids (25 percent in 2017 and 20 percent this year) by pharmaceutical companies. This has made a lot of patients, in and out of the hospital, suffer from under-treatment of pain. Yet, the government’s own numbers have shown for years that the overdose crisis is primarily the result of nonmedical users seeking drugs in the black market created by drug prohibition. This article from the CDC researchers provides yet another reason why policymakers should rethink their approach.

Quite rightly, President Donald Trump and his Administration are targeting the transgressions of China against US intellectual property rights in their unfolding trade strategy. But why not use the WTO rules that offer a real remedy for the United States without resorting to illegal unilateral action outside the WTO?

Seventeen years after China joined the WTO, China still falls considerably short of fulfilling its WTO obligations to protect intellectual property. About 70 percent of the software in use in China, valued at nearly $8.7 billion, is pirated. The annual cost to the US economy worldwide from pirated software, counterfeit goods, and the theft of trade secrets could be as high as $600 billion, with China at the top of the IP infringement list. China is the source of 87 percent of the counterfeit goods seized upon entry into the United States.

One possible response by the United States is the one the Trump Administration seems to be taking: slapping billions of dollars of tariffs on imports of more than 100 Chinese products through unilateral trade action. Given its protectionist predilections, taking this approach is surely tempting to the Trump Administration. Doing so will, however, harm American workers, businesses, and consumers, and contribute to further turmoil in the global economy.

The results will likely include retaliation by China against the goods and services of American companies and workers; lawful economic sanctions imposed by China on American exports to China after the US lost to China in WTO cases; the hidden tax of higher prices for American consumers; less competitiveness in the US market and in other markets for American companies that depend on Chinese imports as intermediate goods in production; and doubtless still more American and global economic landmines from the downward spiral of tit-for-tat in international trade confrontations.

These tariffs are not only self-defeating and counter-productive; they are also illegal under international law. Where an international dispute falls within the scope of coverage of the WTO treaty, taking unilateral action without first going to WTO dispute settlement for a legal ruling on whether there is a WTO violation is, in and of itself, a violation of the treaty. The WTO treaty establishes mandatory jurisdiction for the WTO dispute settlement system for all treaty-related disputes between and among WTO Members. The WTO Appellate Body has explained, “Article 23.1 of the (WTO Dispute Settlement Understanding) imposes a general obligation to redress a violation of obligations or other nullification or impairment of benefits under the covered agreements only by recourse to the rules and procedures of the DSU, and not through unilateral action.”

Thus, the United States is not permitted by the international rules to which it has long since agreed to be the judge and the jury in its own case. Imposing tariffs on Chinese products without first obtaining a WTO ruling that Chinese actions are inconsistent with China’s WTO obligations is a clear violation by the United States of its WTO obligations to China – as WTO jurists will doubtless rule when China responds to the tariffs by challenging the tariffs in the WTO.

Such a legal loss by the United States, with all its unforeseeable economic and geopolitical consequences, can be avoided while still confronting Chinese IP violations effectively. Before resorting to unilateral action outside the WTO and in violation of international law, the United States should take a closer look at the substantial rights it enjoys under the WTO treaty for protecting US intellectual property against abuse.

Potential remedies in the WTO exist and should not be ignored. These remedies can be enforced through the pressure of WTO economic sanctions. WTO rules do not yet cover all the irritants that must be addressed in US-China trade relations. Even so, instead of just concluding that there are no adequate remedies under WTO rules to help stop IP infringement, the United States should first try to use the remedies in rules we have already negotiated that bind China along with all other WTO Members.

A number of these rules have not yet been tested against China or any other country – which is not proof they will not work. Generally, when tried for the first time, WTO rules have been found to work, and, generally, when China has been found to be acting inconsistently with its WTO obligations, it has complied with WTO rulings. The actual extent of Chinese compliance with WTO judgments can be questioned; in some instances it is seen by some as only “paper compliance.” But whether any one WTO rule can in fact be enforced cannot be known if no WTO Member bothers to try to enforce it.

The WTO rules in the WTO Agreement on the Trade-related Aspects of Intellectual Property Rights – the so-called TRIPS Agreement – are unique among WTO rules because they impose affirmative obligations. Yet, this affirmative aspect of WTO intellectual property rules has been largely unexplored in WTO dispute settlement. In particular, WTO Members have so far refrained from challenging other WTO Members for failing to enforce intellectual property rights.

On enforcement, Article 41.1 of the TRIPS Agreement imposes an affirmative obligation on all WTO Members: “Members shall ensure that enforcement procedures… are available under their law so as to permit effective action against any act of infringement of intellectual property rights covered by this Agreement, including expeditious remedies to prevent infringements and remedies which constitute a deterrent to further infringements. These procedures shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse.”

Note that this “shall” be done by all WTO Members; it is mandatory for compliance with their WTO obligations. And yet what does this obligation mean by requiring that effective actions against infringements must be “available”? Is this obligation fulfilled by having sound laws on the books, as is generally the case with China? Or must those laws also be enforced effectively in practice, which is often not the case with China?

The Appellate Body has said that “making something available means making it ‘obtainable,’ putting it ‘within one’s reach’ and ‘at one’s disposal’ in a way that has sufficient form or efficacy.” Thus, simply having a law on the books is not enough. That law must have real force in the real world of commerce. This ruling by the Appellate Body related to the use of the word “available” in Article 42 of the TRIPS Agreement and to a legal claim seeking fair and equitable access to civil judicial procedures. Yet the same reasoning applies equally to the enforcement of substantive rights under Article 41.

In the past, the United States has challenged certain parts of the overall Chinese legal system for intellectual property protection – and successfully – in WTO dispute settlement. Despite its overall concerns about enforcement by China of US intellectual property rights, the United States has not, however, challenged the Chinese system as a whole in the WTO. Instead of indulging in the illegality of unilateral tariffs outside the legal framework of the WTO, the Trump Administration should initiate a comprehensive legal challenge in the WTO, not merely, as before, to the bits and pieces of particular Chinese IP enforcement, but rather to the entirety of the Chinese IP enforcement system.

To be sure, a systemic challenge by the United States to the application of all China’s inadequate measures relating to intellectual property protection would put the WTO dispute settlement system to a test. It would, what’s more, put both China and the United States to the test of their commitment to the WTO and, especially, to a rules-based world trading system.

As Trump’s trade lawyers will hasten to say, a systemic IP case against China in the WTO would also involve a perhaps unprecedented amount of fact-gathering. It would necessitate an outpouring of voluminous legal pleadings. It would, furthermore, force the WTO Members and the WTO jurists to face some fundamental questions about the rules-based trading system. Yet it could also provide the basis for fashioning a legal remedy that would in the end be mutually acceptable to both countries, and could therefore help prevent commercial conflict and reduce a significant obstacle to mutually beneficial US-China relations.

Going outside the WTO to try to resolve this trade dispute will undermine the WTO and thereby ultimately undermine US trade in goods and services – not to mention the protection of US intellectual property rights – throughout the world. Far better for the United States to play by the rules within the WTO – not least because it was the United States that insisted the most on having those rules when they were negotiated. Far better, too, for China to have its compliance with its WTO obligations judged by impartial and objective WTO jurists than by Donald Trump.

A positive solution should be sought by the Trump Administration through dispute resolution in the WTO over the systemic shortcomings of Chinese intellectual property protection before plunging into the commercial black hole of unilateral trade action.

A new study by economists Carlos Dobkin, Amy Finkelstein, Raymond Kluender, and Matthew J. Notowidigdo – “Myth and Measurement — The Case of Medical Bankruptcies” [subscription required] – challenges the conventional wisdom on the effect of medical bills on the rate of personal bankruptcy. From the study:

Policymakers’ beliefs about the frequency of medical bankruptcies are based primarily on two high-profile articles that claim that medical events cause approximately 60 percent of all bankruptcies in the United States. In these studies, people who had gone bankrupt were asked whether they’d experienced health-related financial stress such as substantial medical bills or income loss due to illness. People were also asked whether they went bankrupt because of medical bills. People who reported any of these events were described as having experienced a medical bankruptcy…

[But] the existing, widely cited evidence on medical bankruptcy is built on the fallacy that when two things occur together there is necessarily a causal relationship between them.

The study’s authors looked instead at people who had a hospitalization to see whether that expensive episode of care increased the probability of filing for bankruptcy. They write, “we estimate that hospitalizations cause only 4 percent of personal bankruptcies among nonelderly U.S. adults.” Even among uninsured adults, “hospitalizations are responsible for only 6 percent of personal bankruptcies.” While medical bills can still drive someone to bankruptcy even if they don’t experience a hospitalization, the authors conclude, “focusing on hospitalized people probably does not lead to vast underestimation of the effect of all illness and injury on bankruptcy rates.”

Takeaways:

  1. Always be skeptical of everything you read. (Up to and including this blog!)
  2. Keep in mind this study does not show the overall personal bankruptcy rate is lower than believed. It shows only that the share attributable to medical expenses is lower than believed. It therefore follows that, to the extent your support for single-payer springs from a desire to reduce bankruptcies, you should shift your energies toward combating whatever is actually causing the 56 percent of bankruptcies you incorrectly believed to be attributable to medical expenses.
  3. Health care reform should be able to get the medical-bankruptcy rate down even more.

Congress appears unwilling to provide any sort of ObamaCare relief. 

But did you know states can exempt their residents from ObamaCare’s costliest regulations simply by letting them purchase insurance licensed by U.S. territories—i.e., across state lines? 

Or that the Trump administration has the authority to provide even more relief from ObamaCare than last year’s Cruz Compromise would have, just by reversing HHS’ administrative ban on renewal guarantees in short-term plans? 

Well, now you do. From my latest oped in The Hill:

States and the Trump administration each have the power to deliver relief from ObamaCare while Congress dithers.

In 2014, the Obama administration reversed its interpretation of ObamaCare and found the law’s costliest regulations do not apply in U.S. territories. As a result, states can provide relief from ObamaCare by freeing individuals and employers to purchase health insurance licensed by American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, or the U.S. Virgin Islands.

The Obama administration’s reversal also provides a model for the Trump administration. HHS has the authority to and should reverse its administrative ban on short-term health plans offering “renewal guarantees.” Ending that ban would dramatically reduce premiums for the vast majority of consumers in the individual market, even as ObamaCare premiums continue to skyrocket. Conservative states and states with vulnerable GOP members like Florida, Illinois, and Pennsylvania would see the largest premium reductions. 

Read the whole thing.

This afternoon, for the second time in the space of a month, President Trump is expected to invoke his authority under a rarely used statute to levy restrictions on a vast swath of imports and investment from China. The cause for today’s measures is behavior that the U.S. Trade Representative has characterized as rampant, sustained theft of U.S. intellectual property by Chinese entities and the Chinese government.

Although allegations—and the evidence supporting those allegations—that China routinely transgresses in the realm of intellectual property have been accumulating for many years, it does not follow that the appropriate response is to restrict trade and investment. In fact, the collateral damage inflicted by those restrictions will be widespread.

President Trump’s “remedies” are likely to raise production costs for U.S. businesses, diminish U.S. productivity, squeeze real household incomes, reduce the revenues of U.S. farmers and other export-dependent industries targeted by Chinese retaliation, exacerbate tensions with China and other countries adversely affected by the restrictions, and hasten the demise of the rules-based trading system.

Among the imports expected to be targeted by punitive tariffs are information and communication technology (ICT) products, which are presumed to have benefited from IP theft. As a preliminary matter, it’s important to note that most exports of ICT products from China contain more non-Chinese value than Chinese value. On an aggregate basis, non-Chinese inputs (material, labor, overhead, R&D, etc.) account for nearly 50 percent of the value of all U.S. imports from China.  For ICT products, the percentage of non-Chinese value is much greater than half. 

Remember the inscription on the back of the Apple iPhone? It reads “Designed by Apple in California; Assembled in China.” In 2013, it cost $178.96 to produce an iPhone, but only $6.44 or 3.6% was Chinese value added. Yet, the entire $178.96 is chalked up as imported from China, exaggerating the U.S. bilateral trade deficit, which is the main reason Trump wants to impose tariffs in the first place! It’s important to note that Japanese, Korean, Singaporean, German, and many other (including American) companies will be hurt by U.S. tariffs on Chinese ICTs.

Moreover, ICT products are inputs to value added production in the United States. Raising the costs of computers, devices, and technology components will raise the cost of production or reduce productivity across the U.S. services and manufacturing sectors. Meanwhile, U.S. consumers will have to devote more of their income to ICT products, leaving fewer dollars to spend on other U.S. goods and services or to save and invest in other businesses. The tariffs will make scarce resources scarcer still.

Yet another significant economic cost of Trump’s tariffs is the loss of revenues U.S. farmers and other U.S. targets of retaliation will be forced to endure. China is reportedly preparing to impose restrictions on U.S. soy exports and, almost certainly, other agricultural products will be targeted as well.  Don’t be surprised to see U.S. technology companies hurt as well, as China considers justifying its intrusive forced technology transfer policies as a national security imperative. (With his steel and aluminum tariffs, Trump opened the door to abuse of that excuse.)

The appropriate response to China’s infractions would be to use the evidence collected as the basis for a formal complaint at the World Trade Organization. In fact, that should have been done several years ago, but apparently U.S. multinationals were reluctant to go on record with evidence of those infractions for fear of suffering retribution from Beijing. As the problem worsened and a tit-for-tat high tech trade war began to play out in the shadows, a narrative emerged (which has come to dominate the debate over economic relations with China) that the WTO rules are inadequate to restrain certain discriminatory, predatory Chinese industrial policies, and that even if they could be used to discipline those practices, China wouldn’t comply.

This is a false narrative—or, at least, an untested one. The United States has brought only 21 cases against China (but 116 overall), and China has a strong record of compliance when its practices have been found to violate the rules. By circumventing the WTO under the premise that its rules are inadequate to discipline China, and invoking a law that is incompatible with U.S. obligations under the WTO rules, President Trump has delivered a vote of no confidence in a system that has served U.S. interests well for 70 years.

Whether the system endures or something else emerges to fill the void remains an open question. But for the foreseeable future, an environment of higher consumer prices, higher production costs, unpredictable lawlessness, and tit for tat protectionism is likely to prevail.

The scope of the Trump administration’s Section 232 “national security” tariffs is filled with uncertainty – exemptions are being negotiated this week – but we are already on to the next set of aggressive trade moves: reports suggest that the administration will announce tariffs on imports of Chinese products today, as punishment for China’s alleged unfair trade practices. This would be a unilateral response to China’s practices, with the U.S. Trade Representative acting as the judge, jury, and executioner. This approach may not be all that effective in getting China to change, and risks retaliation by China.

But there is another way: Bring complaints against China to the WTO, and get rulings from a neutral arbiter on these practices.

Unfortunately, the Trump administration does not seem to have much confidence in the ability of WTO dispute settlement to discipline China. Leading administration officials have referred to the WTO’s “abject failure to address emerging problems caused by unfair practices from countries like China” and its “inability to resolve disputes, limit subsidies or draw China into the market status that was envisioned when China joined the WTO”; and have declared that the WTO “is not equipped to deal with [the China] problem.”

Is this skepticism justified? We looked at all of the WTO complaints against China, and we see something quite different. In almost all complaints brought against China, whether litigated fully or resolved without litigation, the complainants have made at least some progress towards their goals of greater market access in China. Overall, it’s a pretty good record of success, both on its own and in comparison to how other countries have reacted to WTO complaints.

A table of all the cases is here (this is a work in progress, part of a longer paper we are working on). Here is a brief narrative summary.

China joined the WTO in 2001. The first complaint against it was brought in 2004, with governments perhaps letting China gain some experience with the system before challenging it in dispute settlement. In the 14 years from 2004-2017, 39 complaints were brought against China, on 26 separate issues (“matters” in WTO-speak – sometimes multiple countries complained about the same matter, so there are more complaints than matters). In that time, China was second only to the United States in the number of complaints it faced.

Of the 26 matters litigated against China, 4 are still pending. 12 have been litigated all the way through, and 10 were resolved through some kind of settlement, or not pursued after the measure was modified. These cases addressed a wide range of issues: Export restrictions, subsidies, intellectual property protection, discriminatory taxes, trading rights, specialized services, and trade remedies.

In all the completed cases, with one exception where a complaint was not pursued, China’s response was to take some action to move towards greater access. This was done either through an autonomous action by China, a settlement agreement, or in response to a panel/appellate ruling.

For the cases where there was a WTO ruling, there was sometimes a dispute about compliance with the ruling (as happens with other countries as well), and China’s compliance came only after the follow-up complaint procedure provided for in WTO law (Article 21.5 of the WTO’s Dispute Settlement Understanding). In other cases, the complainants have disputed whether China has complied, but have not brought an Article 21.5 complaint to push China to comply.

The overall picture of China’s response to WTO complaints looks very much like the situation of other governments who face such challenges. China has made efforts to comply, although some issues are still contested. There are no cases where China has simply ignored rulings against it, as has happened with some other governments. For example, the United States has not complied in the cotton subsidies complaint brought by Brazil, and the EU still does not allow hormone treated meat to be sold there even after losing a complaint brought by Canada and the U.S.

Today’s announcement is just the beginning. In the coming weeks and months, the Trump administration will have some decisions to make on how exactly it will implement this announcement so as to address Chinese protectionism and other trade practices. The administration’s instinct seems to be that unilaterally imposed tariffs are the best option. But the WTO offers a better way, and the administration should consider joining with other governments to pursue more WTO complaints against China (and negotiating new rules – e.g., on state-owned enterprises – where WTO rules are lacking).

This week, a seventeen-year-old student at Great Mills High School in Maryland brought a Glock 17 handgun to the school and wounded two students before being stopped by Blaine Gaskill, the school resource officer. The event came weeks after the Valentine’s Day massacre in Parkland, Florida, which set off a deluge of public outcry for “school safety” reform. The problem, though, is that nobody can agree on what “school safety” reform is. Before this week, activists have been pushing for stricter gun control, while others pushed various measures to enhance school security.

School shootings are a very unique and complicated problem, further frustrating the likelihood of any coherence coming out of this outcry. They are, in fact, very rare, and generally planned far ahead of time. This makes it difficult for any gun-control law to affect a school shooter. In general, gun-control laws tend to dissuade criminals on the margins–the guy who is vacillating about whether to kill his wife but who may decide to do it if given a gun. School shooters are not that type of criminal. Moreover, Maryland has some of the strictest gun-control laws in the nation. In addition to existing federal law—including the federal prohibition on handgun transfers to persons under 21—Maryland’s gun laws include:

  • A comprehensive “assault weapon” and “large capacity magazine” ban.
  • A universal 10-round magazine limit.
  • Background check requirement for all handgun transfers.
  • An exhaustive application process as a prerequisite to being permitted to purchase a handgun.
  • Mandatory registration of all handguns, and mandatory licensing of all handgun owners.
  • Prohibition on purchasing more than one firearm per month.
  • A seven-day waiting period for all handgun and “assault weapon” transfers.

In spite of all those laws, the shooter, who could not legally own the handgun under Maryland law (it was his father’s), still shot two innocent students. When laws are being demanded to ensure school shootings never happen again, we must always ask whether a new law would have actually prevented the harm. The paradigm school shooting in the United States, Columbine, happened during the federal assault weapon ban, using compliant weapons.

While the Maryland shooting appears to have been a targeted attack rather than a massacre, we will never know what might have happened had Gaskill not promptly responded. Hopefully this tragic situation can promote a broader debate on school safety and lead to productive discussions that might actually reduce this type of crime.

While the trend line of violent crime continues to wane, and schools remain statistically safer than our streets and homes, school safety is a legitimate objective. Where, as with schools, the government has effectively forbidden people from defending themselves, the government takes on a duty to protect everyone in school zones. For this reason, demanding better protection in state schools is the most reasonable idea that has emerged from the calamity over the past two months.

When policies are proposed, it is important to remember that hundreds of thousands, and likely millions, of Americans use firearms for self-defense every year. Gun-control proposals have a tendency to forget or ignore the lives of those people. It should come as no surprise that tackling violence, especially on the part of motivated killers, is a complex game of chess. There are no obvious answers, only a series of sacrifices, some more grave than others.

School resource officers tend to worsen the school-to-prison pipeline, making criminal cases of juvenile indiscretion. Metal detectors and heightened security are less problematic, but expensive and slow. Arming teachers–whether selecting teachers to be armed, or simply allowing them to carry as they otherwise might when at home, the grocery store, or otherwise–poses a complex series of issues in the power dynamics of a classroom setting, in addition to the possibility of the guns going off in school.

While it’s worthwhile to discuss gun control when addressing the problem of school shootings, focusing only on that issue alone could make us ignore more effective solutions to the problem at hand. And the problem at hand–school shootings–is specific and unique, and not necessarily directly related to the broader issue of gun control. After all, before 1968, there were very few federal laws regulating the sale and possession of guns. Guns were everywhere, and schools were easy targets. Why didn’t school shootings happen then? Perhaps other factors are in play.

If anything good can come out of the tragic events in Maryland, it should be a renewed focus on protecting schools as a measured and reasonable response to the school-shooting problem.

Government-provided paid leave is back in the headlines, and Ivanka and company are in the process of building a Republican coalition for it. The coalition includes Republican senators Mike Lee, Joni Ernst, and Marco Rubio.

As a result, bad arguments for government paid leave are increasingly pervasive on both sides of the aisle. Last week, Caleb O. Brown and I discussed three of the usual suspects, outlined below. 

1) All other industrialized countries have paid leave, so Americans should too.

This argument is used by almost every public proponent of government paid leave. It represents a logical fallacy, colloquially the “bandwagon fallacy.” After all, it doesn’t matter so much whether other countries have government paid leave, but how the policy worked out for them.

Unfortunately, there are many examples of unexpected and costly consequences of government paid leave. For example, in the Nordic countries, government paid leave has contributed to a glass ceiling for professional women. This issue was outlined in a recent Cato policy analysis paper, The Nordic Glass Ceiling

A paper circulated by the National Bureau of Economic Research finds women in the United States are more likely to have full-time jobs and work as managers as compared to other OECD countries because the United States lacks a paid family leave policy and other mother’s work entitlements. Throughout Western Europe, about 30 percent of legislators, senior officials, and managers are women. But in the United States, 43 percent of legislators, senior officials, and managers are female. Economists Francine Blau and Lawrence Kahn note than in other OECD countries, women are about half as likely as men to be managers, whereas women are approximately equally likely to be managers as men in the United States. 

The workplace is also less segregated in the United States than other OECD countries, and women are more likely to be professionals. Gender equal characteristics of the U.S. labor market would likely suffer if government paid leave is introduced.

2) Only 15% of workers have access to paid leave.

Advocates use a thoroughly misleading BLS statistic in order to create alarm. Rather than using a clear, straightforward figure, activists use a BLS statistic that does not count benefits that can be used as paid family leave. 

A majority of workers have access to functional paid family leave benefits, according to other federal data sources and national surveys. For example, the National Survey of Working Mothers found 63 percent of employed mothers said their employer provided paid maternity leave benefits. That is in line with Pew research which found that 63 percent of “Americans who took time off from work in the past two years for parental, family or medical reasons report that they received at least some pay during this time.”

These surveys estimate the number of workers recieving paid leave is almost 50 percentage points larger than the BLS figure. The BLS statistic is an extreme outlier, even among federal data sets like Census Bureau’s Survey of Income and Program Participation (SIPP), the Current Population Survey (CPS), and the Federal Medical Leave Act (FMLA) worksite survey. The BLS figure should be treated as an outlier, rather than relied upon to make a case for government paid leave.

3) Government paid leave is popular.

Polling on paid leave is used disingenuously. Americans often agree that working mothers and fathers should receive paid leave following birth or adoption of a child, but they disagree sharply about how it should be provided. And Americans do not think that paid family leave is a policy priority.

On a Pew list of 20 different policy topics, Americans ranked paid leave as last priority. A recent Pew poll found that only 12 percent of Americans thought the federal government should provide paid leave.

Of Americans that said employers should provide paid leave, about half said employers should not be required [by government] to provide it.

Of course, if pollsters reminded respondents that under a national program taxpayers would pay for paid leave, under a government mandate employees would pay for paid leave, and under either regime women would pay for paid leave in one way or another, Americans would look even less supportive.

With these government paid leave myths dispelled, the debate should be more honest and productive.

You can find the related Cato Daily Podcast on bad arguments for government paid leave below.

The death of a pedestrian who was struck by an Uber autonomous car Sunday night has led to questions about whether driverless cars are safe. However, it appears that the accident could not have been prevented no matter who was in control of the car.

Scene of the accident. Scroll left to see the poorly designed pedestrian path that the woman was apparently using before crossing the street.
 

According to police, a woman pushing a bicycle laden with shopping bags stepped from the roadway median into 35-mile-per-hour traffic. The Uber vehicle, which had a back-up human driver behind the wheel, did not have time to even brake before it hit her.

Transit agencies are in the habit of blaming the victims who are killed or injured when struck by light-rail trains. The reality is that accidents involving light rail are usually the result of poor design, and any design that puts 50- to 200-ton vehicles in the same streets as 1.5- to 2-ton vehicles and 0.1-ton pedestrians is a poor one.

In the same way, the real blame for the Tempe accident should be placed on poor street design. The above Google image shows the approximate location of the accident.

Rotate to the right to see a trail in an arroyo marked the “Shortcut from Mill Ave. to Lake View Dr.” This trail connects to the Canal Trail and some other trails east of Mill Avenue. Rotate to the left to see a paved continuation of this trail, which eventually connects to the Grand Canal Trail west of Mill Avenue. Zoom in to see a sign saying “No pedestrian crossing: Use crosswalk” with an arrow pointing to a crosswalk that is 500 feet to the right.

In other words, despite the pavement, pedestrians and cyclists using the canal trails aren’t supposed to cross the median strip. Instead, they are supposed to go on the sidewalk to the crosswalk on Curry Road. The pedestrian path across the median strip, however, is a tempting shortcut that saves close to two-tenths of a mile.

Aerial view of the paved paths in the median strip between north- and southbound Mill Avenue lanes with the probable path of the accident victim shown in red.
 

This means it would be natural for people traveling from the Grand Canal Trail to the Canal Trail to cross southbound Mill, use the paved path, then cross the northbound portion to get to the Loma Trail. I don’t know for certain, but it seems likely that this is what happened.

It’s hard for any kind of driver to stop when moving 35 miles per hour on a semi-limited access road and a pedestrian steps in front of you from out of nowhere in the dark. I don’t want to blame the victim, but I don’t think the car, whether controlled by a human or by a computer, is to blame either.

So the question that must be asked is why are there paved trails between the north and southbound lanes of Mill Avenue when there is no safe way for pedestrians to use those trails? We’ll know more soon, but I suspect this fatality is more due to bad urban design than to the autonomous car.

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