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No to Coal Subsidies, No to Corporate Welfare

Michael D. Tanner

Conservatives have long been among the biggest critics of
welfare programs for poor and low-income Americans, mostly with
just cause. But such criticism would probably be received better if
there was even half as much outrage directed at welfare for
corporations.

The latest outrageous example of corporate welfare comes from
West Virginia, where Republican-turned-Democrat-turned-Republican
governor Jim Justice is asking for $4-5 billion in subsidies for
coal-powered utility plants. The Trump administration is reported
to be favorably inclined to the idea.

Trump, of course, made support for the coal industry a key part
of his campaign, and that was undoubtedly a major reason he carried
West Virginia by 45 percentage points. But Justice now admits that,
even after Trump’s efforts at deregulation, the West Virginia coal
industry is in trouble, challenged not just by alternative fuels
but by bigger and cheaper sources of coal from Indiana and
Wyoming.

Far from draining the
swamp, Donald Trump simply wants to feed his alligators rather than
Democratic ones.

Like corporate welfare queens everywhere, Justice pitches his
plea for taxpayer bailouts in terms of jobs. Yet Governor Justice’s
proposal, for example, would simply prolong the dying of an
industry that has been declining for years, because West Virginia
coal is increasingly expensive and difficult to mine, in the face
of national and international competition. Just over 12,000 West
Virginians still work in the coal industry.

Conservatives were justifiably outraged when the Obama
administration poured billions of dollars in subsidies into
companies like Solyndra and other “green energy” programs. They
correctly made the point that if alternative-energy technologies
were economically viable, they should take their place in the
market and succeed or fail on their merits. Bailouts don’t become
free-market policies just because the industry being bailed out is
one you like.

We should know by now that President Trump has little interest
in free-market capitalism. From trade policy to the Import-Export
Bank to his support for ethanol subsidies, Trump has made it clear
that his idea of “making America great again” involves government
picking winners and losers, largely based on the president’s whims
and whether the workers who would benefit voted for him. Far from
draining the swamp, Donald Trump simply wants to feed his
alligators rather than Democratic ones.

The Cato Institute estimates that corporate welfare costs
American taxpayers more than $100 billion annually. And worse than
the direct cost is the way in which such subsidies distort the
economic decision-making process and limit the creative destruction
that drives innovation and economic growth. The beneficiaries of
corporate welfare are seldom entrepreneurs and innovators —
or even workers — but rather those crony capitalists who have
the right connections or who know how to work the system. This sort
of crony capitalism encourages businesses to invest in lobbying and
cozying up to politicians rather than invest in serving their
customers or developing new products.

That’s a terrible way to run an economy. In fact, studies show
that economies dominated by crony capitalism grow more slowly than
free-market economies. By upending market efficiencies, corporate
welfare makes us all worse off.

Let’s be clear. I have long been critical of most social-welfare
programs. In the long run, they do more harm than good. Still, it
would be nice, for once, if conservatives fought as hard against a
bailout for some company as they do against, say, an increase in
food stamps.

After all, welfare is welfare.

Michael
Tanner
is a senior fellow at the Cato Institute and the author
of Going for Broke: Deficits, Debt, and the Entitlement
Crisis.

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US Toppled Suharto but Learned Little

Steve H. Hanke

Nearly 20 years after the US and the IMF toppled President
Suharto of Indonesia during the Asian financial crisis, important
lessons have still not been learned.

On 14 August 1997, just after the collapse of the Thai baht,
Indonesia floated the rupiah, partly in response to turbulence in
the currency markets. The move was welcomed by Stanley Fischer,
then deputy managing director of the International Monetary Fund
and now vice-chair of the US Federal Reserve. He said: ‘The
floating of the rupiah, in combination with Indonesia’s strong
fundamentals, supported by prudent fiscal and monetary policies,
will allow its economy to continue its impressive performance of
the last several years.’

But, caught up in the Asian financial crisis, the rupiah did not
flourish. By 1998 it had plunged to nearly Rp16,000 per dollar from
Rp2,700. To help find a solution, in February 1998 Suharto
appointed me to advise Indonesia’s economic and monetary resilience
council. I proposed the establishment of an orthodox currency board
– the rupiah would be fully convertible into, and backed by, the
dollar at a fixed exchange rate. Currency board systems had been
widely used and had an excellent track record. On the day the news
was announced, the rupiah soared by 28% against the dollar on both
the spot and one-year forward markets.

These developments infuriated the US government and the IMF.
Ruthless attacks on the currency board idea ensued. Suharto was
firmly told by both Bill Clinton, the US president, and Michel
Camdessus, the managing director of the IMF – under the sway of the
White House – that he would have to drop the idea or forgo $43bn in
foreign assistance.

Regime change never works
as intended.

Economists jumped on the bandwagon, finding every imaginable
half-truth and non-truth against the currency board idea. Yet the
plan had the support of four Nobel prize-winning economists: Gary
Becker, Milton Friedman, Merton Miller and Robert Mundell.

Miller later said that the Clinton administration’s objection to
the currency board was ‘not that it wouldn’t work, but that it
would, and if it worked, they would be stuck with Suharto’. The
late US Secretary of State Lawrence Eagleburger recalled: ‘We were
fairly clever in that we supported the IMF as it overthrew
[Suharto]. Whether that was a wise way to proceed is another
question.’ Even Camdessus did not dispute these assessments. On his
retirement, he acknowledged: ‘We created the conditions that
obliged President Suharto to leave his job.’

The Asian crisis presented a golden opportunity to the
neoconservative regime changers led by Paul Wolfowitz, a former US
Ambassador to Indonesia and subsequently deputy secretary of
defence, who pushed for the invasion of Iraq and the overthrow of
Saddam Hussein. Their agenda was for the US to control the greater
Middle East, from Indonesia to Morocco.

To depose Suharto, the IMF had to establish a public position of
open hostility to currency boards. This deception was required to
convince Suharto that he was acting heretically, and that, if he
continued, it would be costly. The IMF’s hostility required a quick
about-face: less than a year earlier, Bulgaria as well as Bosnia
and Herzegovina had installed currency boards with the endorsement
of the IMF. In both cases I had had an advisory role. Shortly after
Suharto departed, Camdessus announced that the IMF would support
Russia if it chose to adopt a currency board.

Another deception involved the widely circulated story that I
had proposed to set the rupiah’s exchange rate at an overvalued
level so that Suharto and his cronies could loot the central bank’s
reserves at a favourable exchange rate. This fabrication was
intended to ‘confirm’ Suharto’s devious intentions and rally
international political support against the currency board idea so
that Suharto could be ousted. The story was at the heart of the
Clinton administration’s campaign to dump Suharto, and continues to
be repeated today.

Twenty years on, it seems that the US has not learned its
lesson. Regime change never works as intended. In Asia, China has
filled the vacuum created by the discredited efforts of the US and
the IMF. As for the neoconservatives who embrace regime change and
the dream of a US-controlled greater Middle East – in spite of many
failures, they continue to embrace their doctrine.

Steve Hanke is Professor of Applied Economics at The Johns Hopkins University in Baltimore and a Member of the OMFIF Advisory Board.

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Racist Policies Need to Go

Jonathan Blanks

Like Vida B. Johnson, I was outraged at the t-shirt worn by a Metropolitan
Police Department officer
that glorified the use of
“jump-out cars” and contained a common white
supremacist symbol. Police and political leadership should actively
identify and root out white supremacists from police departments
throughout the country. At the same time, community leaders should
examine policies that have disparate racial impacts in communities
of color, even though those policies are facially color-blind or
race neutral. Even without the taint of explicit white supremacy on
the MPD officer’s t-shirt, the policy that produces jump-out
cars in D.C. is racially problematic by itself. Although not
publicly discussed as “jump outs,” the D.C.
Metropolitan Police has been taken to court over the heavy-handed
tactics associated with its Gun Recovery Unit (GRU).

The GRU stops and searches individuals—usually
young black men in Southeast D.C.—to look for weapons. (In
D.C., with very few exceptions, it is illegal to carry a concealed
firearm outside of the home, so the possession of a weapon
concealed on a person is presumptively criminal).[1] Under Terry v. Ohio (1968), an
officer must have an articulable suspicion a crime is ongoing or
about to be committed before he can stop, question, and pat an
individual down to check for weapons or, alternatively, the officer
may search a person if he gains consent from the individual to be
searched. Judge Janice Rogers Brown of the D.C. Circuit Court of
Appeals questioned the legitimacy of that framework in practice,
placing the GRU’s standard operating procedure not in the
poorer, mostly black neighborhoods of Southeast D.C., but in a
posh, predominantly white
residential and shopping district
:

[T]ry to imagine this scene in Georgetown. Would residents of
that neighborhood maintain there was no pressure to comply, if the
District’s police officers patrolled Prospect Street in
tactical gear, questioning each person they encountered about
whether they were carrying an illegal firearm? Nothing about the
Gun Recovery Unit’s modus operandi is designed to
convey a message that compliance is not required.

With the guise of voluntary consent stripped away, the reality
of the District’s regime is revealed. It is a rolling
roadblock that sweeps citizens up at random and subjects them to
undesired police interactions culminating in a search of their
persons and effects.[2]

Although Judge Brown did not mention race at all in
her concurring opinion, the de facto racial segregation
that separates the two places is clear to anyone familiar with D.C.
neighborhoods. If this were tried in a white neighborhood, she
implies, the practice would be abandoned and the department might
even be sued.

And while the defenders of the practice would argue
that Georgetown does not face the homicide and violent crimes
affecting Southeast, it’s too easy to justify separate and
unequal policing under the guise of solving a legitimate policy
problem. While it is entirely fair to say that more crime justifies
a greater police presence in a segment of a city, that crime does
not—or, rather, should not obviate the
constitutional rights of the people who live in that area. If
statistics showed there were more child pornography producers and
distributors in white neighborhoods, the police would not be
justified going door to door to intimidate presumptively innocent
residents to get consent to search their computers to combat child
pornography. Residents would be outraged to be treated as criminal
suspects and intimidated to surrender their rights. Yet the GRU
eviscerates Fourth Amendment protections for young black men
walking down the street as policy, irrespective of any racial
prejudice by the officers.

This sort of practice is not just a D.C. problem.
Investigatory traffic stops are used across the country in order to
find contraband and cash in cars travelling on American roads.
Although traffic stops are a regular occurrence, research indicates
there are two different types of stops and the difference between
those stops has broad racial implications. In their book, Pulled Over, Charles R.
Epp, Steven Maynard-Moody, and Donald Haider-Markel use data to
show that black motorists in Kansas are more likely to be stopped
by police for pretextual causes—minor infractions with little
or no public safety implications, like a burned-out license plate
light—with the ultimate goal of being searched for
contraband.

The focus on explicit
racism threatens to overshadow racially biased policies that can
erode the fabric of the communities police are trying to
protect.

The respondents who were pulled over and subjected to
the searches reported that, for the most part, the officers were
polite and professional throughout the stops. The professionalism
that has been stressed to officers in recent years to decrease
hostility in police encounters does not overcome the drivers’
perceived illegitimacy of the stop. Thus, focusing on individual
officers and possible bias misses the broader impact of the policy
on local minority communities. Findings imply that these pretextual
investigatory stops of minorities have negative effects on minority
communities such as reducing respect for police and civic
institutions as well as undermining the drivers’ sense of
equal place in society, regardless of how polite the officers were.
Sometimes the policies themselves should be examined and
discontinued.

While it is crucially important that racist officers
are found out and dismissed from their police departments, some of
the more pervasive problems affecting minority communities are the
policies officers are asked to carry out. Dubbing today’s
criminal justice system “The New Jim Crow” may be a
helpful comparison to understand the scale of the damage done to
African-American communities by mass incarceration, but I fear of
over-reliance on the narrative of an intentional suppression of
black people by malicious police and profiteers. The focus on
explicit racism threatens to overshadow racially biased policies
that can erode the fabric of the communities police are trying to
protect. Too often in law enforcement, and government generally,
the damage done to marginalized communities stem not from malice,
but the unintended consequences of well-intended policies.

Notes:

[1] A recent decision in the U.S. Court of
Appeals for the D.C. Circuit
allowed the District to start
issuing concealed carry permits to all qualified applicants, but
this is likely to be stayed and held over until an appeals court
hearing and decision en banc or on appeal to the U.S. Supreme
Court. For the purposes of this post and as a matter of reality for
District residents and police, the presumptive criminality of
concealed possession is accurate.

[2] United States v. Gross, 784 F.3d 784
(D.C. Cir. 2015) (Brown, J. concurring at 790-791).

Jonathan
Blanks
is a Research Associate in the Cato Institute’s Project
on Criminal Justice and Managing Editor of PoliceMisconduct.net.

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U.S. Drone Strikes in the Philippines Would Be a Massive Mistake

A. Trevor Thrall and Erik Goepner

Here we go again. The United States is on the verge of carrying
out military operations in yet another country as part of the war
on terrorism. The Philippines — specifically the southern
island of Mindanao — may soon become the latest target of the
world’s busiest and most powerful military. The goal will
apparently be to strike Islamic State elements that “could be
a threat to allies in the region.” So far, U.S. officials
have made no mention of a threat to the United States.

Conducting drone strikes in the Philippines, however, would be a
serious mistake.

The strikes would further erode America’s moral credibility by
putting American firepower in service to a thuggish regime. Rodrigo
Duterte, the Philippines’ president, has boasted about personally
carrying out extrajudicial killings during his time as a
mayor. The killings have grown with his political power. Amnesty
International reports that Duterte has approved thousands of extrajudicial
killings since he assumed the presidency.

There is also good reason to suspect that Duterte is an
unreliable partner who will seek to use American support for his
own ends. History provides example after example of the United
States trying to work through corrupt, incompetent or simply evil
regimes. The results, from the Vietnam War to the present, have
almost always been problematic. Given Duterte’s track record, there
is legitimate concern that he will direct U.S. Hellfire missiles
and precision-guided bombs against his political opponents or other
targets of opportunity rather than terrorists. The United States
would share responsibility for any deaths from those crimes.

Nor does the threat from Filipino jihadists justify these sorts
of risks. A few months after 9/11, the United States sent military forces into the southern Philippines.
At that time, the terrorist groups included the Moro Islamic Liberation Front, Abu Sayyaf Group
and Jemaah Islamiyah — organizations generally composed of
Muslim separatists demanding autonomy for the Moro population.
While the names have changed, terrorism remains a constant.

The strikes would further
erode America’s moral credibility by putting American firepower in
service to a thuggish regime.

Yet armed rebellion has been a part of life in Mindanao for
more than 100 years. The United States first
experienced it in 1899 after acquiring the Philippines as a result
of the Spanish-American War. The grievances have endured for more
than a century and are largely between the Moro citizens of the
Philippines and their government. The presence of the Islamic State
in Mindanao has much more to do with that problem than it does with
any global jihadist objectives. If, however, the United States
begins drone strikes there, new resentments and civilian casualties
are inevitable and will provide recruiting fodder and justification
for future attacks.

Finally, drone strikes in the Philippines would be a mistake
because they represent a failed strategy. The United States’ war on
terrorism has relied on an extensive and aggressive military
strategy focused on killing terrorists and attempting to defeat
specific terrorist groups. Sixteen years into the war, however,
Americans are not safer, and the global terrorist threat has only
increased. Not only has the United States failed to eradicate
al-Qaeda, its actions have inadvertently spawned jihadist groups
including the Islamic State and helped those groups recruit tens of
thousands of fighters — the number of Islamist-inspired
fighters more than tripled between 2000 and 2015. And in no place
where the United States conducted military operations after 9/11 is
the situation better than it was before 9/11.

In fact, the evidence shows that the American military
strategy in the war on terrorism is having the opposite effect from
the intended one. The United States has, to date, conducted
military operations in seven states. But instead of reducing the
incidence of terrorism, American military force is helping spur
more attacks. In those seven countries, terrorist attacks have
risen 1,900 percent since 9/11.

Tragically, U.S. strategy ignores not only recent experience but
also the best available research, which shows that military defeat rarely spells
the end of terrorist organizations. Instead, the path toward their
demise — especially for long-lived movements such as the one
in the Philippines — typically requires political compromise
of some sort.

Beyond linking the United States to Duterte’s brutal regime,
then, the most likely outcomes of American drone strikes in the
Philippines would include more casualties, increased instability,
the strengthening of the terrorists’ grievances and resolve, and
zero reduction in the terrorist threat to the United States.

A. Trevor
Thrall
is a senior fellow in defense and foreign policy at the
Cato Institute and associate professor in the Schar School of
Policy and Government at George Mason University. Erik Goepner
commanded military units in Afghanistan and Iraq and is a visiting
research fellow at the Cato Institute and doctoral candidate at
George Mason University.

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Debt-Ceiling Fight Looms as next Big Test for Congress

Michael D. Tanner

If you thought the recent fight over health-care reform was fun,
get ready for the next big Washington circus: raising the debt
ceiling.

In October of 2015, Congress chose to avoid the usual fight over
setting a symbolic debt target by agreeing to waive any limit on
the debt for 17 months, until March of this year. For the past few
months, the Treasury Department has engaged in what it calls
“extraordinary measures” to extend the deadline through the end of
September. By that time, the U.S. national debt will officially
exceed $20 trillion.

As is almost always the case, the big fight will be over whether
or not to pass a “clean” increase in the debt ceiling — i.e.,
one without any amendments. A bill to raise the debt ceiling will
require 60 votes in the Senate, effectively giving Democrats veto
power over any Republican proposal. If Republicans added a
provision supporting Mom, the flag, and apple pie, Democrats could
be counted on to oppose it unanimously. Indeed, many Democrats are
expected to back a proposal by Senator Brian Schatz of Hawaii to
abolish the debt limit altogether.

In the end, the fight
over the debt ceiling will mostly be a question of political
theater.

Yet, many Republicans see this as one of their few opportunities
for budget leverage. Wisconsin senator Ron Johnson is typical in
warning, “I’ve been raising the issue of the debt ceiling for
months now, and certainly what I’d like to see is some meaningful,
structural control enacted in conjunction with increasing [the debt
limit].”

House Republicans are expected to take an even harder line
against any bill that raises the debt ceiling without making an
attempt to rein in future spending. Just this week, Representative
Tom Cole of Oklahoma, never considered a firebrand, said that he
could not see any scenario in which the House agrees to raise the
debt ceiling without accompanying spending cuts. Meanwhile, the
conservative House Freedom Caucus is backing a number of separate
proposals, ranging from as much as $50 billion in spending cuts to
a demand that the federal government sell property to pay down the
debt. Some also want to attach a partial repeal of Obamacare to the
bill.

It should come as no surprise that the Trump administration is
putting out conflicting signals about what it wants from this
fight. Treasury Secretary Steve Mnuchin reportedly prefers a clean
bill, as Treasury secretaries have since time immemorial. Office of
Management and Budget director Mick Mulvaney is more ambivalent. He
originally wanted spending cuts in exchange for increasing the debt
limit, but has recently dropped that demand. He now says that the
administration hopes for the “cleanest possible” bill. But he also
remains one of the chief proponents of “prioritizing” debt
payments, which would allow the federal government to avoid default
if the debt negotiations drag on.

All of this will take place against a backdrop of apocalyptic
commentary from much of the media and the business community. They
will ignore the fact that the federal government actually did
briefly default on its debt in 1979, in part as the result of a
debt-ceiling impasse under a Democratic-controlled Congress. Since
then, both Democratic and Republican Congresses have missed
deadlines to increase the debt ceiling: Once in 1981, a second time
in 1985, a third time in 1996, and a fourth time in 2002. In none
of those cases did the world end.

Moreover, until fairly recently, it was considered routine to
add all sorts of conditions to debt-ceiling legislation. Perhaps
the most famous of these provisions was the Gramm-Rudman-Hollings
amendment in 1995.

Of course, failure to raise the debt limit would not be a good
thing. Financial markets could be expected to react badly.
Increased uncertainty would slow economic growth. And we might even
see another downgrade of the U.S.’s credit rating. But those
consequences pale in comparison to the almost-certain calamity that
will result from a failure to get control of runaway federal
spending and debt.

In the end, the fight over the debt ceiling will mostly be a
question of political theater. An increase in the debt limit will
eventually pass. Congress will go on spending money on a bipartisan
basis the way it always does. And, in a couple of years, we’ll do
this all over again.

But amid all the noise that’s sure to follow, it’s important not
to forget that our fiscal irresponsibility can’t continue forever.
Congress may be in the habit of pretending otherwise, but we’re
headed for a fall.

Michael
Tanner
is a senior fellow at the Cato Institute and the author
of Going for Broke: Deficits, Debt, and the Entitlement
Crisis.

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Legal Background Might Have Shaped Incentives for Google In Memo Case

Walter Olson

Because Google and Silicon Valley are cutting-edge workplaces,
there’s a tendency to assume that the premise of the Google memo furor – “Your erroneous opinions
are making my work environment hostile” — is somehow new as
well.

But it isn’t the least bit new. The application of hostile work
environment law to workplace speech — including basically
political or ideological discussions, not just vulgar jokes or
unwanted personal talk — goes back decades.

I had a chapter on it 21 years ago in my book on employment law,
The Excuse Factory. Others wrote about it
then and earlier.

Hostile-environment law
is not content-neutral. It plays favorites on topics and it takes
sides in debates.

Jonathan Rauch, for example, in the New Republic in
1997, wrote that “quietly, gradually, the workplace
has become an exception” to the general rule that in America the
law does not seek to restrain wrongful opinion and expression.

And Rauch explained the indirect mechanism by which this has
come to pass: “What the government cannot do directly, it now
requires employers to do in its stead: police ‘discriminatory’
speech.”

Now, as then, government pressure on employers to ban speech
consists less of direct you-must-ban mandates and more of
litigation incentives whose contours are not explicitly
announced.

Legal or HR departments will counsel an employer that allowing
certain instances or categories of bad speech to go undisciplined
might be an offense under Title VII anti-discrimination law, or evidence of
one.

Some enforcement of these laws is done directly by federal
agencies, but most of it takes the form of civil lawsuits by
disgruntled workers or class action lawyers.

Litigation is costly and hazardous to employers. Companies will
expend significant effort to avoid it or to reduce its risk.

Taking steps against tasteless cartoons, or loose talk, such as
the discussion of whether there are any psychological or behavioral
differences between the sexes in the now famous Google memo, is
perceived as cheaper and safer than facing a lawsuit later.

Now, just as two decades ago, many outsiders look at a
firing-over-speech and say it’s just a private firm’s decision. No
public policy or First Amendment implications, right?

And it’s true that sometimes an employer’s decision to fire
would have been made even with no legal thumb on the scale. The
disruption caused by an instance of speech, or co-workers’ or
managers’ dislike for it, would have been enough. Other times legal
considerations did make the difference. Hard to tell the two cases
apart!

So as a way of evading responsibility system-wide it’s kind of
brilliant. Those who write laws can blame private actors’
decisions. The private actors in turn can feel as if their hands
were tied given the legal reality they might face.

All of this has been well sifted through by legal scholars. Law
professors David Bernstein, Eugene Volokh and others have written in depth
about how hostile-environment law works in practice — and its
tension with the First Amendment.

But I’ll stop to make just one point: hostile-environment law is
not content-neutral. It plays favorites on topics and it takes
sides in debates.

By 1997, when I wrote my book, there were already dozens of
reported cases in which liability claims cited anti-feminist
statements, such as generalizations, stereotypes and loaded
language about females.

The speech of this sort that got employers into legal hot water
was “frequently not at all obscene but often highly political and analytic in content.”

Meanwhile, a search then found not a single case in which the
reverse type of statement — generalizations, stereotypes, or
loaded language unfriendly toward males — had been ruled to
contribute to a hostile environment.

In the outside culture, debate continues about the extent to
which women’s under-representation in tech jobs is
owing to discrimination, and how much to individual women’s own
educational and career decisions. Within a given company like
Google, there is a real legal hazard in letting Side B in this
debate express its opinion, but no corresponding legal hazard in
letting Side A speak as forcefully as it likes.

Google is currently being sued on sex discrimination claims, which means
lawyerly caution would be at a zenith on whether to let its
corporate culture be portrayed in a future courtroom as tolerant of
sexist argumentation.

To sum up: don’t assume Google acted unusually. Under current
legal incentives, what just happened counts as normal.

Walter Olson
is senior fellow at the Cato Institute and author of several books
on the American legal system.

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The New York Times Leaks a Publicly Available Climate Report!

Patrick J. Michaels

On Tuesday, The New York Times breathlessly reported it
“obtained” a draft of an upcoming federal climate
report. It even provided a link!

Actually, anyone who wanted to could have “obtained”
the same document. It’s been available online since January,
making this hardly “news that’s fit to
print.”

The text is more
circumspect, even as it sometimes suffers from cherry-picking of
data in the service of an alarmist picture.

The document, the “Climate Science Special Report” (CSSR)
from the U.S. Global Change Research Program, is a “state of
the science” summary on climate change. It’s a prelude
to the fourth “National Assessment” of climate change
impacts on the U.S. These are quadrennially mandated by the U.S.
Global Change Research Act of 1990.

The math doesn’t comport with the law, though. There has
only been three such documents produced to date, each horrible.
Consequently, many critics (including this writer) have speculated
as to whether the new Administration might squash the new one or
maybe “red team” it. And that is the reason for the
NYT’s story, which really does come very close to
fake news. It is a pre-emptive strike against the Trump
Administration, effectiveness yet to be determined.

There are real reasons to throw sand in the gears of the
National Assessment process. The first one, published in the waning days of the
Clinton-Gore Administration, specifically chose the most extreme
climate models available, and even though after the senior climate
scientist in charge was informed the models were performing worse
than a table of random numbers when simply simulating ten-year
means of U.S. temperatures, the report went forward anyway.

That’s scientific misconduct, and exactly akin to a
physician prescribing a treatment he or she knows does not work.
Even better, the boffins in charge acknowledged in an email they
were aware of this problem. That’s double misconduct.

The second one, which didn’t appear until the
G.W. Bush Administration was out of town, missed so much relevant
science an entire palimpsest was published as criticism. And the
third—not making this up—was touted
by the National Oceanic and Atmospheric Administration as “a
key deliverable of President Obama’s Climate Action
Plan.” There’s no mixing of science and politics in
global warming.

And so people suggesting that the new Administration might want
to have a look at the draft text of the upcoming (2018) version
have a pretty good point, based upon the ugly track records of the
previous work.

The NYT’s “leaked” draft is very interesting.
The Executive Summary, which is all most people will read, is
horrific in spots. But if one takes the time to examine the
relevant subsequent text in the body of the report, it’s a
mixed bag.

Take one phrase from the Summary: “Some storm types such
as hurricanes, tornadoes, and winter storms are…exhibiting
changes that have been linked to climate change”. It’s
really hard to imagine some “executive” reading the
summary not concluding that these types of significant storms are
being juiced by global warming, which of course is the intent.

But the text is more circumspect, even as it sometimes suffers
from cherry-picking of data in the service of an alarmist picture.
For example, it correctly states that “no consensus has been
reached” on whether there is a human influence, or the
magnitude of that influence, on hurricanes. But then it makes a
real hot whopper, citing an “observed increase in hurricane
activity since the 1970s”.

This piece of misinformation has already been called out. The 2014 National Assessment shows
an increasing trend in Atlantic hurricane activity from 1980
through 2009. But if it had used available data up to the time of
writing (2013), it would have been obvious that activity declined
after 2009 to pre-1980 values. And, even worse, hurricane activity
can be reconstructed all the way back to 1920, and the increase in
the mid-20th century was no different in magnitude than the one
from 1980 to 2009.

With regard to tornadoes, the CSSR notes computer models suggest
they should be increasing, but it neglects to mention the trend in
strong tornadoes—the kind you don’t need a radar or the
Weather Channel to see—is actually downward. And in a
wonderful triumph of technology and adaptation over the most
powerful vortices on earth, the associated death rate has dropped
by around 90 per cent since the early 20th century, despite major
population increases in the central U.S. tornado alley.

The bottom line is that the leaked CSSR really needs some
cleaning up to be a comprehensive representation of climate change,
and it may be prudent to do so before it is released. Otherwise it
will be subject to the withering criticism that has affected the
credibility of its predecessors.

Patrick J.
Michaels
of the Cato Institute is the author of “Lukewarming:
The New Climate Science that Changes Everything.”

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OPM Just Made It Harder to Drain the Swamp

Alex Nowrasteh

President Donald Trump took office with a promise to drain the
swamp, but the federal agency that manages the government’s
two million civilian employees is making it harder to do that.
Under a new policy, the Office of Personnel Management recently
stopped reporting data on employees terminated for wrongdoing or
poor performance.

This information is critical because the data inform the public
about incompetent and, in some cases, corrupt government employees.
Without it, systematic government wrongdoing and poor performance
may go unnoticed and unreformed.

The data provide information on separations, which,
in bureaucratic language, is when a federal employee stops working
for the government. OPM assigns a cause to each separation,
choosing from a list of 12 different categories—such as death
or a transfer­—and releases these details annually, along
with information on employees’ age, rank, pay, and other
characteristics.

No administration can
drain the swamp if it doesn’t know where to look.

That’s where the latest policy change comes into effect. A
termination for discipline or poor performance is coded as
“SI, Termination or Removal (Discipline/Performance).”
But that information was not included in OPM’s 2016
separations data. Every other separations category, in alphabetical
order from “SA, Transfer Out” to “SL, Other
Separation,” was retained in the 2016 dataset.

While OPM publishes guides with the separations datasets that
explain the contents of the newly released information, the guide
for the 2016 separations data, unlike every previous year’s
guide, makes no mention of terminations for discipline or
performance.

When I contacted OPM in July, a public affairs official
explained this hole in the agency’s otherwise orderly set of
separations data as necessary to “protect information at the
individual record level” based on a 2007 memo that laid out federal guidelines for
protecting the personally identifiable information of
Americans.

That explanation defies logic. These datasets have never
included the names of the terminated individuals. If protecting the
personally identifiable information of federal employees was the
real reason for not reporting terminations for discipline or
performance, then why is the gender, location, agency and
occupation, rank, salary, and other information about these
employees available for every termination prior to 2016 (and for
every other separation in that year)?

Publishing this information about terminated federal employees
does not violate anyone’s privacy. But withholding it keeps
taxpayers in the dark about the extent of personnel problem in the
agencies they fund. For example, OPM’s data allows us to know
about federal employees fired for misconduct, such as Border Patrol agents fired after
convictions for bribery and drug charges
. If these employees
had lost their jobs in 2016, the current OPM policy would not list
their terminations under the discipline and performance category,
and we’d have no idea how widespread such firings are.

No administration can drain the swamp if it doesn’t know
where to look. OPM once provided valuable information on
discipline, performance, and corruption problems in federal
agencies. As it is, it’s notoriously difficult to fire
federal employees. But neglecting to report information on federal
employees who are fired for serious reasons makes it impossible to
reform the federal bureaucracy.

Alex
Nowrasteh
is the immigration policy analyst at the Cato
Institute’s Center for Global Liberty and Prosperity.

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When Protectionism Is Not Protectionism

Daniel J. Ikenson

In the Wall Street Journal last week, Commerce
Secretary Wilbur Ross shared some of his views about free trade and
protectionism, which were widely and deservedly criticized for
their misguided obsession with trade deficits and their
mercantilist disregard for U.S. consumers. But Ross also offered a
more nuanced take on what does and does not constitute
protectionism, which is a matter of great relevance in this
atmosphere of increasing trade frictions.

Attempting to offer an explanation for U.S. goods trade deficits
with China and the EU, Ross presents a bar chart showing the
average tariffs for 22 manufacturing industries in the United
States, Europe, and China. U.S. tariffs are lower than
China’s in 20 of 22 industries and lower than the EU’s
in 17 of 22 industries. Does that mean that China and the EU are
more protectionist than the United States? In the category of
applied tariffs, yes, it does. Does that means that China and/or
the EU are engaging in “protectionism,” which might
warrant a ruling from the Dispute Settlement Body of the World
Trade Organization, and possibly authorization for the United
States to retaliate? No, it doesn’t.

Tariff differentials among members of the World Trade
Organization today are the product of multilateral trade
negotiations, beginning in 1947 and spanning six decades, which
lead to gradual reductions in global trade barriers. The formulae
for tariff reductions permitted countries with smaller economies
and at earlier stages of development to reduce tariffs more slowly
and less steeply. Among the rationales for permitting asymmetric
tariff liberalization was that it was the only way to bring more
countries into the rules-based trading system. Countries at
different levels of development with different-sized economies,
different factor endowments, different political sensitivities to
trade liberalization, and different tariff practices would never
have been able to agree to identical tariff rates.

The “bound” tariff rates of the United States
(meaning the highest rates the United States can assess on imports
under its GATT/WTO obligations) are, in fact, lower than those of
the EU and China. We can argue over whether that’s fair or
whether or how much the differentials contribute to U.S. trade
deficits or how much better off U.S. consumers and consuming
industries are when their government taxes their purchases at lower
rates. But, while it is appropriate to consider tariffs
“protectionism,” the higher average tariffs in China
and the EU are not protectionist in the sense that they violate
either government’s obligations under the WTO.

It is certainly desirable to reduce all tariffs to zero, but
that’s probably not feasible multilaterally—within the
WTO—anytime soon. However, U.S. bilateral free trade
agreements with China and the EU, in which the United States asks
for zero tariffs, are possible. Whether this administration has the
interest or wherewithal to pursue that course is unclear. After
all, President Trump withdrew the United States from the
Trans-Pacific Partnership during his first week in office. Under
the TPP, 88 percent of tariffs in 12 countries would have gone to
zero immediately, with nearly all going to zero over a period of 16
years.

Ross then goes on to defend certain U.S. trade remedy
actions—duties imposed under the U.S. antidumping and
countervailing duty laws to redress “unfair”
trade—as “measures necessary to ensure a level playing
field.” Ross laments the fact that U.S. trade remedy measures
are often characterized as protectionism, when in fact—he
argues—those laws are consistent with WTO rules.

Secretary Ross is right. Although antidumping and countervailing
duty measures are forms of protectionism, their application by
member governments is not considered protectionist under WTO rules.
In fact, they are specifically authorized by the WTO, as a means to
redress injurious dumping and injurious subsidization. However,
those domestic laws and their administration must comport with
provisions in various WTO agreements. When they don’t
comport—because, perhaps, the U.S. Commerce Department has
been too aggressive in its assumptions, too partial in its
calculation methods, or too capricious in its
adjustments—governments representing the foreign exporters
can challenge the United States at the WTO and, unless the issue is
resolved in the consultations stage, the DSB will issue a
ruling.

On 38 occasions since 1995, the WTO DSB has found aspects of
U.S. trade remedy law administration to be “out of
conformity” with U.S. WTO obligations. That’s another
way of saying that the protectionism accorded U.S. industries under
the trade remedy laws is in fact protectionist by WTO standards at
least some of the time.

Secretary Ross then turns his attention to China’s and
Europe’s “formidable non-tariff trade barriers against
imports.” He alludes to onerous certification standards,
sanitary and phyto-sanitary measures (e.g., food safety
regulations), non-science based prohibitions against genetically
modified goods, local production requirements, and forced
technology transfer. He also mentions low-cost loans, energy
subsidies, and other forms of support bestowed upon China’s
and Europe’s exporters by their respective governments.

Certainly, government subsidization and behind the border rules
and regulations can have protectionist intentions or consequences,
and where there are agreed upon rules to heed, the WTO provides a
reliable forum for addressing these issues—and resolving
most. But there are a couple of important points Secretary Ross
should bear in mind about protectionism.

First, the U.S. government is not an angel; it’s part of
the problem. In the United States, there are “Buy
American” rules that restrict most government procurement
spending to U.S. suppliers, ensuring that taxpayers get the
smallest bang for their buck; heavily protected services
industries, such as transportation and shipping, that drive up the
cost of everything; apparently interminable farm subsidies; quotas
and high tariffs on imported sugar; high tariffs on basic consumer
products, such as clothing and footwear; energy export
restrictions; the market-distorting cronyism of the Export-Import
bank; trade remedies actions that violate WTO rules and strangle
downstream U.S. industries and tax consumers; regulatory
protectionism masquerading as public health and safety precautions;
rules of origin and local content requirements that limit
trade’s benefits; restrictions on foreign investment, and
more.

Second, if the Trump administration intends to ramp up
enforcement to tackle what it sees as foreign protectionism, it had
better do it by the book. Don’t act unilaterally, as judge,
jury, and executioner. Mind the rules of the WTO, which provides a
legitimate path for challenging and resolving issues, such as those
mentioned above. The minute the U.S. government goes rogue by
implementing trade restrictions without following WTO protocols,
the United States will be the violator, the protectionist. And
acting unilaterally, such as by conducting a Section 301
investigation and them imposing measures in response to Chinese
forced technology transfer policies, for example, will set a
terrible example, invite immediate Chinese retaliation, and
encourage all members to abandon their WTO commitments.

The global economy remains rife with protectionism. The worst
way to address it is by being a protectionist.

Daniel J.
Ikenson
is the director of Cato Institute’s Herbert A. Stiefel
Center for Trade Policy Studies.

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Ignorant Immigration Reform

David Bier

This week the Republican senators Tom Cotton of Arkansas and
David Perdue of Georgia introduced a bill that they said would cut legal immigration to the United States
by 50 percent. They are right about that, but nearly everything
else that they have said about their bill is false or
misleading.

The senators, whose bill is endorsed by President Trump, argue
that America is experiencing abnormally high immigration; that
these immigrants are hurting American wages; and that their bill
would prioritize skilled immigrants, the way Canada does, thus
making the United States more competitive internationally. These
talking points are pure fiction.

They have justified this drastic cut in immigration by stating
that the bill will, as they put it in February when announcing an earlier version, bring “legal
immigration levels” back down to “their historical
norms.” But the senators fail to consider the impact of
population growth. A million immigrants to the United States in
2017 isn’t equivalent to the same number in 1900, when there
were a quarter as many Americans.

A smart reform would
double green cards and peg future work visas to economic growth,
responding to market forces rather than political whims.

Controlling for population, today’s immigration rate
is nearly 30 percent below its
historical average. If their bill becomes law, the rate would fall
to about 60 percent below average. With few exceptions, the only
years with such a low immigration rate were during the world wars
and the Great Depression. Surely, these are not the
“norms” to which the senators seek to return.

Senator Cotton is trying to connect a slow increase in the immigration rate
in recent decades to declining wages for Americans without a
college degree, implying that low-skilled workers are facing more
competition for jobs than in earlier years. But this correlation is
spurious, because it ignores the size of the overall labor
pool.

Looking at all new job seekers — born here and abroad
— actually reveals a significant decline in new workers
competing for American jobs. During the postwar period from 1948 to
1980, as incomes rose for all workers, the labor force grew by 76 percent, driven largely by baby boomers and
women entering the labor force for the first time. Since then,
declining birthrates have led to about half as many new competitors
entering the labor force each year, despite many more
immigrants.

Less-educated Americans also faced less competition. The ranks
of on-college educated workers swelled 50 percent
in the postwar period, compared with just 16 percent in recent
decades. During both periods, high school dropouts saw a near
continuous decline in labor market competition — from workers
born here or elsewhere. In contrast, college graduates actually
dealt with more competition than they had before.

All this suggests that the stagnation of wages has other
origins, such as new technology and the increasing burden of regulations, not more job seekers
immigrant or otherwise.

The senators’ analysis suffers from similar confusion when
they say that their bill would create a system
modeled after Canada and Australia. Controlling for population,
these countries accept two to three times as many legal
immigrants as America.

A related fiction is that the bill would
“prioritize” skilled immigrants. In fact, it contains
no more visas for skilled workers than our current law does. All
the bill would do is cut the number of visas for the family members
of United States citizens. Canada and Australia prioritize skilled
workers by allowing far more of them to come — while also
accepting more family members than we do.

Canada and Australia aren’t the only ones surpassing us in
terms of welcoming immigrants; 17 developed countries accept more
legal immigrants as a share of their population than does the
United States. This places the United States at an economic
disadvantage in the global race for talent. For years, Canada has
attracted skilled immigrants from America, and Microsoft even
opened an office there specifically to take advantage of its
system.

In other contexts, Senators Perdue and Cotton have often discussed how America’s tax and
regulatory policies send jobs overseas. But micromanaging labor
markets from Washington has the same damaging effect, pushing
businesses away from the United States and hurting those that
remain.

Rather than cutting immigration, Congress should raise the
employment-based quotas, which it has not adjusted since 1990
— when the United States had some 77 million fewer people and
the economy was half the size it is now. A smart reform would
double green cards and peg future work visas to economic growth,
responding to market forces rather than political whims.

Smart reforms, however,
require that Congress first understand the basic facts: America has
not seen a deluge of immigration. Low-skilled American-born workers
have not faced more competition for jobs. Other countries accept
more immigrants per capita. Until these facts penetrate the halls
of the Capitol, the immigration debate will continue to be mired in
ignorant proposals like this.

David Bier is a
policy analyst at the Cato Institute.