Share |

Is ‘Transparency’ in Trade Talks Just a Smoke Screen?

Daniel R. Pearson

One of the criticisms of trade agreements such as the Trans-Pacific Partnership (TPP) is that they are negotiated in secret. Government-to-government discussions generally are conducted in private, so some confidentiality in trade talks is not surprising. The AFL-CIO, an advocate for greater transparency, asserts that “such secrecy is inconsistent with democratic principles” and has the effect of advancing “the policy preferences of political and economic elites, not the broad interest of the populace at large.”

There is no doubt that transparency in government is a desirable goal. Transparency helps to assure accountability, and at times might even lead to more efficient use of public resources.

When it comes to trade talks, though, the question is: How transparent can the negotiating process be and still have any chance of success? This question is important because some people may be using the transparency issue as a smoke screen to cover up a different motivation, which is to make sure that efforts to reform trade policy do not succeed.

How transparent can the negotiating process be and still have any chance of success?

Success in trade negotiations helps economies to grow. Both Democratic and Republican economists agree that a country lowering its tariffs will experience improved economic welfare. Consumers benefit meaningfully from tariff reductions, as do companies that utilize imported items in their production processes. (About half of U.S. imports are used by manufacturers rather than going directly to consumers.)

Other countries that export goods to the country with newly lowered barriers also receive modest benefits from the policy change, but those are smaller than the benefits accruing to the country that has liberalized its import regime.

The U.S. trade negotiating process consists of three phases. In the first phase, Congress provides negotiating authority to the president. This was done most recently in June 2015 when Congress passed the Bipartisan Congressional Trade Priorities and Accountability Act.

This legislation established a list of negotiating objectives that the administration should achieve in order for Congress to consider any trade agreements on an up-or-down vote without amendments. Just like other legislation, interest groups and citizens may present their views on the bill to their elected representatives. It is fair to say that this phase of the process is very open to public scrutiny and involvement.

The second phase involves actual negotiation with one or more other countries. These talks take place mostly in private, which is understandable. Negotiators likely wouldn’t be willing to discuss potentially challenging trade-offs unless confidentiality is assured.

Every country has interest groups that would prefer no changes in its current policy regime. Even if reforms help the country overall, some people will oppose parts of a deal. However, a final agreement will contain more benefits than costs for each country; otherwise, the negotiation would never conclude. Point-by-point public opposition to a potential deal while talks are ongoing could prevent a broad package from ever being put together.

U.S. negotiators receive input from private-sector and nongovernmental organizations (NGOs) through advisory committees organized by the Office of the U.S. Trade Representative. These committees provide expertise on a wide variety of issues relevant to business, labor and the environment.

The roughly 700 members of the advisory committees undergo background checks before receiving security clearances and obtaining access to confidential information. Participation by the advisory committees keeps negotiators apprised of the practical implications of policy changes being discussed with foreign negotiators. So the actual negotiations may not be public, but they are well-informed.

The third phase is congressional consideration of the final agreement. The text of the agreement is made public relatively soon after completion of the talks. Interested parties then can review it and decide whether it meets their approval. The U.S. International Trade Commission completes an analysis to determine the likely economic effects of the agreement, which generally provides information that can support arguments by both opponents and supporters of the pact.

Eventually the White House presents Congress with legislation to implement the agreement. As with the first phase, this final phase requires Congress to pass a new law. The degree of transparency is very high from the time the text is made public. Anyone may weigh in to express an opinion, and many people do.

So two of the three steps required for the U.S. to enter into a new trade agreement are highly transparent, but the actual negotiation with other governments is mostly private.

Does this represent a reasonable compromise between a desire for openness in government and a desire to talk seriously with other nations about trade liberalization? If not, how could the negotiation be made more transparent without undermining prospects for actually achieving an agreement?

We must avoid letting transparency itself become a smoke screen for stopping progress toward trade liberalization.

Daniel Pearson a senior fellow at the Cato Institute, is former chairman of the U.S. International Trade Commission.

Share |

The One Thing No One Wants to Talk about in Philadelphia

Christopher A. Preble

Philadelphia—Here at the Democratic National Convention this week, so far I’ve heard discussions on a range of topics, from energy, to housing, to criminal justice reform. The solutions to these problems are fairly typical for the modern Democratic Party, with a kick of extra leftism thrown in for good measure. Hillary Clinton surrogates on the panels around town, for example, routinely talk about how the Democratic platform is the most progressive in the party’s history, a clear signal to Bernie Sanders supporters to cool it.

That message hasn’t exactly sunk in with the activists here. Pro-Bernie street protests crop up with some regularity. And then there are the #NeverHillary signs. That Sanders himself tried to redirect his supporters’ energies to Clinton—and was booed for it—didn’t bode well for party unity. Sanders’ gesture last night, calling for Clinton’s nomination by acclamation, may help.

I still hold out hope that we might have a serious debate over American foreign policy, which has largely been on autopilot for the past few decades.

If it doesn’t, and if Bernie supporters stay away from the polls in November, or vote for someone else, it could be that they realize that the party platform isn’t worth much these days. It could be that the Hillary vs. Bernie contest was never so much about actual policy positions, per se, but rather about Bernie’s relative outsider status, plus his unconventional style and unquestionable passion. It could be that Sanders’ supporters are most upset about Clinton’s approach to foreign policy, though my evidence for this is purely anecdotal. As I drove north on Monday morning, I heard a number of Sanders supporters, who had called into C-SPAN’s Washington Journal program, mentioning Clinton’s support for the Iraq war as a reason why they would never vote for her.

I wasn’t expecting the subject of foreign policy to come up much when I made my way into the Wells Fargo Center on Tuesday, in time to hear nominating speeches for Sanders and Clinton. Foreign policy is a topic that the DNC would like to avoid.

As it happened, however, I didn’t have to wait too long. In her nominating speech for Sanders, Tulsi Gabbard, the Iraq War combat veteran who has represented Hawaii’s Second District since 2013, made a point of calling attention to the “lives lost, lives ruined, [and] countries destroyed by counterproductive regime-change wars.”

In retrospect, I shouldn’t have been surprised. Gabbard bucked the DNC earlier this year when she resigned as Vice Chair and endorsed the Vermont senator. She has been harshly critical of Clinton’s foreign policy, and of the elite consensus in both parties that presumes the United States must fix all the world’s problems. I’ll be watching how Gabbard talks about this issue for the remainder of this election cycle.

Gabbard and a few Bernie diehards notwithstanding, however, I don’t think that Clinton and other Democratic Party leaders will highlight foreign policy in the general election. And, when they do, it will mostly be to question Donald Trump’s temperament, and play to voters’ fears about Trump’s unpredictably, as opposed to a serious debate over America’s role in the world.

That’s too bad. As Emma Ashford and I explain in this op-ed in the Philadelphia Inquirer, neither of the two major party candidates are offering American voters a choice in foreign policy.

When asked, more than half of Americans say they don’t want the United States to take the lead in solving the world’s problems, while 57 percent believe that we should let other countries deal with their own issues. Indeed, when asked more generally about the scope of U.S. foreign policy, 41 percent of Americans think the United States does too much; only 27 percent agree with Clinton that the United States does too little.

A more restrained foreign policy would not only be more popular, but also cheaper and safer.

In the end, I suspect that Democrats will rally to their standard-bearer, just as Republicans will to theirs. Each candidate’s record high unpopularity will largely cancel out. Too many voters will simply assume that they must choose from one of the two major-party candidates, even though there are others on the ballot who espouse foreign policy views that could be broadly popular with the American people.

I still hold out hope that we might have a serious debate over American foreign policy, which has largely been on autopilot for the past few decades. Trump’s occasional sour notes, on items such as the future of the NATO alliance, and the United States’ relations with major powers such as China and Russia, rile up the foreign-policy establishment, but his views are too incoherent to constitute a serious foreign policy.

The American people are hungry for something different, but they don’t quite know what that would look like. And, because foreign policy is not a particularly salient issue, it is unlikely to be a major factor in the election. Our wars are far away, seem relatively cheap, and directly affect only the small segment of the population that actually has to fight them. But that doesn’t mean that the wars are unimportant. Far from it.

So that puts the burden on the news media going into the general election. They should press all candidates to discuss America’s global role. They should ask them what they’ve learned from America’s experiences in Afghanistan, Iraq, Libya, Syria, Yemen and other invisible places. And they should expect them to articulate the approach to foreign policy that they will take, if they are afforded the privilege of becoming the next occupant of the Oval Office.

Christopher A. Preble is vice president for defense and foreign policy studies at the Cato Institute.

Share |

Unraveling the Secular Stagnation Story

Steve H. Hanke

Secular stagnation is said to be present when economic growth is negligible or nonexistent over a considerable span of time. Today, secular stagnation has become a popular mantra of the chattering classes, particularly in the United States. The idea is not new, however.

Alvin Hansen, an early and prominent Keynesian economist at Harvard University, popularized the notion of secular stagnation in the 1930s. In his presidential address to the American Economic Association in 1938, he asserted that the U.S. was a mature economy that was stuck in a rut. Hansen reasoned that technological innovations had come to an end; that the great American frontier (read: natural resources) was closed; and that population growth was stagnating. So, according to Hansen, investment opportunities would be scarce, and there would be nothing ahead except secular economic stagnation. The only way out was more government spending. It would be used to boost investment via public works projects. For Hansen and the Keynesians of that era, stagnation was a symptom of market failure, and the antidote was government largesse.

Hansen’s economics were taken apart and discredited by many non-Keynesian economists. But, the scholarly death blow was dealt by George Terborgh in his 1945 classic The Bogey of Economic Maturity. In the real world, talk of stagnation in the U.S. ended abruptly with the post-World War II boom.

Today, another Harvard economist, Larry Summers, is leading what has become a secular stagnation bandwagon. And Summers isn’t just any Harvard economist. He was formerly the president of Harvard and a U.S. Treasury Secretary. Summers, like Hansen before him, argues that the government must step up to the plate and invest in infrastructure to fill the gap left by deficiencies in private investment. This, he and his fellow travelers argue, will pull the economy out of its stagnation rut.

The secular stagnation story has picked up a blue-ribbon array of establishment voices. They all preach the same gospel: the free-market system is failing (read: stagnating). Only government infrastructure investment can save the day. President Obama’s Council of Economic Advisers devotes an entire chapter in its 2016 Annual Report to “The Economic Benefits of Investing in U.S. Infrastructure.” And the President’s advisers have plenty of company at the Federal Reserve. Both the Fed’s Chairwoman Janet Yellen and Vice Chairman Stanley Fischer have recently called for more government investment in infrastructure as a way out of the U.S. stagnation rut. The list of notable adherents to the secular stagnation story seems to grow with each passing day.

The adherents come from all sides of the political spectrum, including the two major candidates for the U.S. Presidency: Hillary Clinton and Donald Trump. Clinton, for example, calls the need to upgrade the nation’s infrastructure a “national emergency” — one she proposes to solve with a mega-government infrastructure investment program. Indeed, Clinton’s plans would probably run up a bill that would exceed President Obama’s proposed $478 billion infrastructure program — a program that Congress repeatedly rejected.

And then there is Donald Trump. While short on specifics, a principle Trump call to arms centers on the renewal of America’s aging infrastructure. So, when it comes to the issue of secular stagnation and its elixir, Clinton and Trump share common ground.

Now, let’s take a careful look at the story that has captured the imagination of so many influential members of the establishment. For evidence to support Summers’ secular stagnation argument and his calls for more government investment, he points to anemic private domestic capital expenditures in the U.S. As the accompanying chart shows, net private domestic business investment (gross investment – capital consumption) is relatively weak and has been on a downward course since 2000.


Investment is what fuels productivity. So, with little fuel, we should expect weak productivity numbers in the U.S. Sure enough, as shown in the accompanying chart, the rate of growth in productivity is weak and has been trending downward. Indeed, the U.S. is in the grips of the longest slide in productivity growth since the late 1970s. This is alarming because productivity is a key ingredient in determining wages, prices, and economic output.


When we move to aggregate demand in the economy, which is measured by final sales to domestic purchasers, it is clear that the U.S. is in the midst of a growth recession. Aggregate demand, measured in nominal terms, is growing (2.93%), but it is growing at well below its trend rate of 4.75%. And that below-trend growth in nominal aggregate demand has characterized the U.S. economy for a decade. To put this weak growth into context, there has only been one other recovery from a recession since 1870 that has been as weak as the current one: the Great Depression.


The three pillars of the secular stagnation story — weak private investment, productivity and aggregate demand — appear to support it. But, under further scrutiny, does the secular stagnation story hold up?

To answer that question requires us to take a careful look at private investment, the fuel for productivity. During the Great Depression, private investment collapsed, causing the depression to drag on and on. Robert Higgs, a Senior Fellow at the Independent Institute, in a series of careful studies, was able to identify why private investment was kept underwater during the Great Depression. The source of the problem, according to Higgs, was regime uncertainty. Higgs’ diagnosis is best summarized in his own words:

Roosevelt and Congress, especially during the congressional sessions of 1933 and 1935, embraced interventionist policies on a wide front. With its bewildering, incoherent mass of new expenditures, taxes, subsidies, regulations, and direct government participation in productive activities, the New Deal created so much confusion, fear, uncertainty, and hostility among businessmen and investors that private investment and hence overall private economic activity never recovered enough to restore the high levels of production and employment enjoyed during the 1920s.

In the face of the interventionist onslaught, the U.S. economy between 1930 and 1940 failed to add anything to its capital stock: net private investment for that eleven-year period totaled minus $3.1 billion. Without ongoing capital accumulation, no economy can grow … .

The government’s own greatly enlarged economic activity did not compensate for the private shortfall. Apart from the mere insufficiency of dollars spent, the government’s spending tended, as contemporary critics aptly noted, to purchase a high proportion of sheer boondoggle.

Higgs’ evidence demonstrates that investment was depressed by New Deal initiatives because of regime uncertainty. In short, investors were afraid to commit funds to new projects because they didn’t know what President Roosevelt and the New Dealers would do next.

Moving from the Great Depression to today’s Great Recession, we find a mirror image. President Obama, like President Roosevelt, has created a great deal of regime uncertainty with his propensity to use the powers of the Presidency to generate a plethora of new regulations without congressional approval. In a long report, the New York Times of August 14th went so far as to hang the epithet of “Regulator in Chief” around Obama’s neck. What a legacy.

Once regime uncertainty enters the picture, the secular stagnation story unravels. Private investment, the cornerstone of the story, is weak not because of market failure, but because of regime uncertainty created by the government. The government is not the solution. It is the source of the problem.

Steve H. Hanke is a professor of Applied Economics at The Johns Hopkins University in Baltimore and a Senior Fellow at the Cato Institute in Washington, D.C.

Share |

How Gary Johnson Should Talk to Voters

Ilya Shapiro

My fellow Americans, like most of you, I’m not satisfied with the presidential choice the so-called major parties have given us. The Republican Party, which is supposed to represent conservatives, has nominated someone who’s not conservative in any sense of that word. The Democratic Party, which is supposed to represent liberals, has nominated someone who opposes civil liberties and essentially repudiates the successful parts of her husband’s presidency.

Look, I was once a Republican, but I don’t recognize a party that embraces crony capitalism and wants to close America off from international commerce, that runs on fear rather than freedom. I also worked with plenty of Democrats when I was governor of New Mexico—I had to: they controlled the legislature—but I don’t recognize a party that shuts down dissent and believes that economic growth is less important than government control.

The Other Options Are Terrible

The Party of Lincoln and the Party of Jefferson have become shells of their former selves. Just look at whom they’ve nominated.

Donald Trump mocks large swaths of Americans and prides in his own policy ignorance. He claims to be a politically incorrect destroyer of postmodern shibboleths, but he’s really a boor—and a bore. As a businessman myself, I can tell you he’s not even good at that: good businessmen work on trust and honor, not deception and litigation. Perhaps Trump’s biggest fraud is his claim to be the voice of the working man; my heart goes out to those who feel betrayed by both public- and private-sector elites but now pin their hopes on this charlatan.

Here’s the speech Libertarian candidate for president Gary Johnson should give to voters eagerly looking for a plausible alternative.

Hillary Clinton is no better. She stands for nothing but her own power and is willing to take any position, make any lie to achieve it. While secretary of State, she focused on helping the Clinton Foundation more than her country. Her entire campaign rests, as it did eight years ago, on perceived entitlement. Perhaps her biggest lie relates to her “damn emails”; even after the FBI director detailed her recklessness with our national security—which I’m sure is a boon to Mr. Trump’s Russian friends —she maintains she did nothing wrong.

These people are the least popular major-party nominees in modern history. The strongest argument Trump makes is that he’s not Clinton—and vice-versa. If either party had nominated any other contender, it would be winning in a landslide. Instead, we have a race to the absolute depths of hell. Come on, America, we are better than this!

But There’s Still Hope

Fortunately, there’s a way out. There are options beyond voting red team or blue team; the only wasted vote is one cast for someone you don’t believe in. After all, the only thing of consequence any one vote affects is that voter’s conscience.

During my time in office, I eliminated New Mexico’s budget deficit and reduced the bureaucracy small businesses face when they try to create jobs. I vetoed more bills than the other 49 governors combined—750 in total, a third of which were introduced by Republican legislators and only two of which were overriden. I reduced overall spending while increasing education spending by a third. It actually wasn’t that hard: I just asked first whether government needed to be involved in something in the first place, and second whether the benefit of a law outweighed its cost.

Now, I’m not saying you should vote for me simply as a matter of competence—or even basic fitness for public office (by which I don’t mean triathlons or the Seven Summits, although I’m hoping that stuff gets me the outdoorsy vote). While there seems to be a low bar for those qualities this election, I’m also not Michael Dukakis: ideas matter and the ability to implement bad policies isn’t very helpful.

Here’s what I have in mind. To be honest, America is doing pretty well: someone who we might consider poor today has a higher standard of living than the richest Rockefellers a century ago. But we can do better.

We Can Do a Lot Better

We can reduce the federal spending that crowds out private investment. We can lower tax rates that force businesses to move overseas. We can reform our health-care sector so we no longer have a system that combines the worst of capitalism with the worst of socialism—Obamacare took us in the wrong direction, but the status quo was unacceptable, too. We can improve Social Security and Medicare, so those who rely on these programs can continue to do so while we do better by younger generations. Perhaps most importantly, we can scrap the regulations that hold back everyone from Uber and Airbnb to local food trucks and raw-milk cooperatives.

We can also demilitarize our society. Police need to be able to do their jobs, and they’re more effective when they respect civil rights and treat people as fellow citizens, not enemy insurgents. That also means taking a different approach regarding our failed drug war, which has had such harmful effects on everything from race relations and gun crime to foreign policy. On my first day in the Oval Office, I will direct the attorney general to “declassify” marijuana, removing it from the list of controlled substances.

Speaking of wars, we need to rethink our role as the world’s police, which includes implementing a proactive diplomacy based on America’s interests rather than fecklessly reacting to world events. Strategy should drive budgets and operations, not the other way around. And remember that President Reagan—who’s considered to be rather hawkish—only used military force three times, while Nobel Peace Prize-winning President Obama seems to use the armed forces more than any other agency he can command with his pen and phone.

On immigration too, we need to have America’s interests and values in mind. If you brainstormed a process for how foreigners enter the country, how long they can stay, and what they can do while here, it would be hard to come up with something worse than our current hodge-podge of often contradictory rules. This immigration non-policy serves nobody’s interest—not big business or small, not the rich or the poor, not the economy or national security, and certainly not the average taxpayer—except perhaps bureaucrats and lawyers.

We Can Do a Lot Better

We can reduce the federal spending that crowds out private investment. We can lower tax rates that force businesses to move overseas. We can reform our health-care sector so we no longer have a system that combines the worst of capitalism with the worst of socialism—Obamacare took us in the wrong direction, but the status quo was unacceptable, too. We can improve Social Security and Medicare, so those who rely on these programs can continue to do so while we do better by younger generations. Perhaps most importantly, we can scrap the regulations that hold back everyone from Uber and Airbnb to local food trucks and raw-milk cooperatives.

We can also demilitarize our society. Police need to be able to do their jobs, and they’re more effective when they respect civil rights and treat people as fellow citizens, not enemy insurgents. That also means taking a different approach regarding our failed drug war, which has had such harmful effects on everything from race relations and gun crime to foreign policy. On my first day in the Oval Office, I will direct the attorney general to “declassify” marijuana, removing it from the list of controlled substances.

Speaking of wars, we need to rethink our role as the world’s police, which includes implementing a proactive diplomacy based on America’s interests rather than fecklessly reacting to world events. Strategy should drive budgets and operations, not the other way around. And remember that President Reagan—who’s considered to be rather hawkish—only used military force three times, while Nobel Peace Prize-winning President Obama seems to use the armed forces more than any other agency he can command with his pen and phone.

On immigration too, we need to have America’s interests and values in mind. If you brainstormed a process for how foreigners enter the country, how long they can stay, and what they can do while here, it would be hard to come up with something worse than our current hodge-podge of often contradictory rules. This immigration non-policy serves nobody’s interest—not big business or small, not the rich or the poor, not the economy or national security, and certainly not the average taxpayer—except perhaps bureaucrats and lawyers.

That means, yes, tolerating people who do things you may not like. You can disagree with the idea of a gay couple getting married, but if you work in the state marriage bureau, you still have to do your job. Similarly, you can boycott a Muslim wedding vendor who refuses to create a custom cake for a lesbian couple or otherwise participate in their ceremony, but the state should not shut that down.

Finally, on the most divisive issue of abortion, I’ve said many times that I’m pro-choice, but let me also emphasize that I believe in federalism and the Constitution. You may disagree with me on this or other issues, but I understand the difference between law and policy. To that end, I will appoint judges who follow our Constitution’s original public meaning—I’ve previously misspoken in talking about “original intent.”

And I should emphasize that while Bill Weld, who is an accomplished lawyer among other great qualifications, will be an integral part of my policy team, I will be picking Supreme Court justices, and they will be in the mold of Alex Kozinski and Janice Rogers Brown, not Merrick Garland (who’s never met an administrative or law-enforcement agency to which he didn’t defer).

So, whether you’re a Bernie Bro or a Never Trumper, a liberal, conservative, or moderate—or even a libertarian—if you want a president who’s honest, capable, and will protect your liberty and secure this nation’s prosperity, I ask for your vote. Together, we will make America better, stronger, freer, and more equal.

Ilya Shapiro is a senior contributor to the Federalist. He is a fellow in Constitutional Studies at the Cato Institute and Editor-in-Chief of the Cato Supreme Court Review.

Share |

Baltimore Air Surveillance Should Cause Concerns

Matthew Feeney

Recent Bloomberg reporting reveals that since January, Baltimore police have been secretly testing a persistent aerial surveillance technology that its developer describes as “Google Earth with TiVo.” The technology, developed by Persistent Surveillance Systems (PSS), is mounted on small manned aircraft and is made up of wide-angle cameras that allow users to surveil about 30 square miles. News of the surreptitious use of this persistent surveillance tool underlines the importance of transparency in law enforcement and the unsatisfying state of Supreme Court aerial surveillance rulings.

PSS’ technology is adapted from surveillance equipment first used in Iraq to help track down insurgents who had detonated improvised explosive devices. Surveillance cameras would be deployed in the air above a city. After an explosion the technology allowed users to zoom into the area and rewind the footage in order to find out where the suspects came from. Users could fast-forward to also see where the suspects went after the detonation.

The public should be informed if law enforcement agencies are recording their every move over long periods of time.

The technology used in Baltimore allows for the same kind of tracking. As Bloomberg’s reporting details, PSS’ cameras can help track down a shooting suspect. PSS analysts cannot identify individuals from their computer screens because one person takes up one pixel of resolution. But it’s not hard to gather information on people tracked with PSS’ technology. You can find out a lot about a person by following them to a home, office building, church, or school.

Given the capabilities of PSS’ tools readers may understandably feel uneasy knowing that Baltimore police have been testing this technology in secret for months. By 2014,  PSS had demonstrated its capabilities in a number of cities (including Baltimore). When PSS showed off its technology to the Los Angeles County Sheriff’s Department by flying over Compton it was not only the public that was unaware of police engaging in persistent surveillance; the mayor was also left in the dark.

Baltimore police have a history of using new gadgets in secret. Last year, it was revealed that Baltimore police had used Stingray devices thousands of times since 2007. Stingrays, like PSS’ cameras, are surveillance tools. Stingrays mimic cell-towers, forcing citizens’ cellphones within range to connect with the device. This allows officers to track suspects as well as anyone else in the area whose cellphones interact with the Stingray, unbeknownst to them.

The public should be informed if law enforcement agencies are recording their every move over long periods of time. There are examples of persistent surveillance tools being used to apprehend violent criminals, but we shouldn’t forget more nefarious possibilities. Persistent surveillance allows users to track mosque congregations, protesters, abortion clinic visitors, Alcoholics Anonymous members, and gun show attendees. Without adequate oversight these surveillance tools pose a significant risk to citizens’ privacy.

Ross McNutt, the founder of PSS, has attempted to allay privacy concerns, citing the 1986 Supreme Court case California v. Ciraolo. In that case the Court ruled that police did not need a warrant to conduct a naked-eye search for marijuana in Dante Ciraolo’s backyard from an airplane at 1,000 feet.

But there are important differences between the facts in Ciraolo and the kind of secret aerial surveillance Baltimore police have been conducting.

In Ciraolo, police surveilled one property after receiving an anonymous tip and observed marijuana without the aid of sophisticated technology. Baltimore police have been testing PSS’ technology indiscriminately, not as part of one investigation. In addition, Baltimore police are relying on sophisticated surveillance technology, not naked-eye observations.

In another aerial surveillance Supreme Court case, Dow Chemical Co. v. United States (1986), the Court ruled that the Environmental Protection Agency did not need a warrant to inspect a 2,000 acre chemical plant from the air with a precision mapping camera. In his majority opinion Chief Justice Burger noted that the use of sophisticated surveillance tools might require a warrant, writing: “It may well be […] that surveillance of private property by using highly sophisticated surveillance equipment not generally available to the public, such as satellite technology, might be constitutionally proscribed absent a warrant.”

PSS’ technology certainly counts as “sophisticated surveillance equipment not generally available to the public.” Nonetheless, Supreme Court rulings from the 1980s continue to grant law enforcement agencies a great deal of leeway when it comes to aerial surveillance. The emergence of persistent surveillance tools and drones may one day prompt the Court to reconsider past aerial surveillance rulings. Until then it’s up to lawmakers to tackle how best to protect privacy amid new technologies.

The recent news about persistent surveillance should concern all Americans, not just Baltimore residents. New technologies can undoubtedly play a valuable role in protecting citizens from crime and aiding investigations. But absent appropriate regulations or a major new Supreme Court ruling, law enforcement agencies will continue to engage in secret and indiscriminate surveillance.

Matthew Feeney is a policy analyst at the Cato Institute.

Share |

41 Straight Years of Trade Deficits yet America Still Stands Strong

Daniel J. Ikenson

Today the New York Times ran an op-ed by Clyde Prestowitz, one of the last generation’s most vocal trade policy Cassandras, who argues that the Trans-Pacific Partnership has no security or economic value to the United States, and would only exacerbate our trade deficits with the countries involved. Despite how things turned out, the same guy who warned in the early 1990s that Americans had best ingratiate themselves to their imminent Japanese overlords by learning to say “I surrender” in their native tongue doesn’t appear the slightest bit abashed about peddling more American defeatism to a new generation.

Most of what Prestowitz has to say in his op-ed is anachronistic or plain wrong, but let’s focus on his characterization of the U.S. trade deficit as a symptom of economic decline. There has been no shortage of hand-wringing about the U.S. trade deficit over the years. Since the 1980s, scolds have been warning about the unsustainability of running trade deficits and the perils that would follow. Today, the heirs of that perspective consider trade balance or a trade surplus to be the objective of trade policy — and trade deficits proof that the United States is losing at trade.

This misguided belief that the trade account is a scoreboard measuring the success or failure of trade policy explains much of the public’s skepticism about trade and trade agreements, lends plausibility to Trumptastic claims that the United States is routinely outsmarted by shrewder foreign trade negotiators, and provides cover for the same, recycled protectionist arguments that have persisted without merit for centuries.

If the trade deficit reduces economic activity and destroys jobs, why are there positive relationships between these variables?

But what has long been absent is a single convincing, factual argument that the U.S. trade deficit is a problem in need of a solution. Sure, many articles jump to that conclusion, relying upon or perpetuating misunderstanding about what exactly is measured by the trade account and the signals it sends to policymakers, but never one that is coherent from premise to conclusion, explaining cogently and with empirical support why the U.S. trade deficit is a problem, or why achieving trade balance or a surplus should be the aim of policy. Why hasn’t such a case been made?

Rather than a reflection of weakness or stupidity or profligacy or foreign malfeasance, the annual trade deficit is a sign of U.S. economic hegemony — a global endorsement of the relative strength of the U.S. economy and its direction. The United States has run annual trade deficits for 41 straight years. (Yet we’re still alive — even thriving!) The trade account turned to deficit in 1975, just four years after President Nixon upended the gold standard and caused the world’s investors to seek out safe havens. Because of its relative stability and the relatively low-risk associated with U.S. economic policies, the dollar quickly became the world’s predominant reserve currency. Demand for dollar-denominated assets grew swiftly, and with that inflow of investment came greater U.S. demand, for both domestic and imported goods and services.

During those 41 straight years of trade deficits, the size of the U.S. economy tripled in real terms, real manufacturing value added quadrupled, and the number of jobs in the economy almost doubled, outpacing growth in the civilian workforce. Perhaps these trends would have been more favorable had the United States run 41 straight years of trade surpluses, but that is highly doubtful, for the reasons below.

The scolds tell us that the trade deficit reflects economic “leakage.” When Americans purchase more goods and services from foreigners than foreigners purchase from Americans — the argument goes — U.S. factories, farmers, and service providers are deprived of potential sales, suppressing domestic output and employment. But that argument relies on the assumption that the dollars sent to foreigners to purchase imports do not make their way back into the U.S. economy — an assumption that is wrong. It may be true that when Americans — acting in their own self interest to maximize the value of their dollars — purchase from foreigners the things that could be purchased from domestic producers, there is some degree of temporary leakage. But remember that much of what Americans purchase from foreigners is not produced in the United States and about half the value of all U.S. imports consists of intermediate goods — the purchases of U.S. producers, who rely on those inputs to manufacture their own output. Moreover, when Americans choose to purchase the import over the domestic product, they are consciously maximizing their own value. If they get imports for lower prices, they have more resources to spend elsewhere in the economy, or to save (which becomes pooled with other savings and lent to entrepreneurs and business owners). Given these facts alone, it’s pretty hard to make the case that imports constitute leakage.

But here’s the most important part. In all cases, the dollars that go abroad to purchase foreign goods and services (imports) and foreign assets (outward investment) are matched almost perfectly by dollars coming back to the United States to purchase U.S. goods and services (exports) and U.S. assets (inward investment). Any trade deficit (net outflow of dollars) is matched by an investment surplus (net inflow of dollars). That investment inflow undergirds U.S. investment, production, and job creation.

It turns out that any temporary “leakage” associated with the trade deficit is replenished by the capital surplus. That capital investment takes the form of foreign purchases of U.S. equities and direct investment in property, plant, and equipment. It also includes purchases of corporate and government debt, the latter of which also undergirds U.S. economic activity, but demonstrably less efficiently than investment in the private sector.

This inward investment produces real wealth and other benefits for American businesses, workers, and consumers. When dollars leave the economy to purchase imports and come back as foreign equity investment in U.S. businesses or foreign direct investment in factories, research centers, hotels, and shopping malls, the U.S. economy enjoys benefits that would never have accrued had those dollars been prevented from going abroad in the first place.

This process helps explain the absence of an inverse relationship between the trade deficit and jobs and between the trade deficit and domestic output, and should be enough to refute the economic leakage argument. If the trade deficit reduces economic activity and destroys jobs, why are there positive relationships between these variables?



If the trade deficit reduces economic activity and destroys jobs, why are there positive relationships between these variables? In fact, a reasonable case can be made that the trade deficit is actually GOOD for the United States because the combination of the contraction of less efficient domestic production resulting from that temporary leakage and the expansion of economic activity associated with the inflow of FDI yields net increases in U.S. value-added (and produces other benefits). In other words, the foreign investors that establish or expand operations in the United States tend to be cream-of-the-crop foreign companies that have succeeded in their own markets and have gone global, disseminating industry best practices and new ideas, and they perform better than the U.S. private-sector average.

This paper presents a comparison of the performance of insourcing companies to the U.S. private sector average over 10 years and across 20 different metrics (including value added, capital expenditures, R&D expenditures, compensation, employee benefits, returns on assets, intermediate goods purchases, exports, and taxes paid) and found that insourcing companies performed better than the U.S. private-sector average on 17 of those 20 metrics, thereby raising average U.S. economic performance.

Another oft-repeated fallacy is that the accumulated trade deficit is a debt that our children and grandchildren will have to repay our foreign creditors. Let’s consider that. The U.S. trade deficit is financed by inflows of foreign capital used to purchase U.S. assets. Most of the assets purchased are equities and physical assets (direct investment). Some of the assets are corporate debt and government debt.

As of the end of 2014, Americans held a total of $24.6 trillion of foreign assets. Foreigners held a total of $31.6 trillion of U.S. assets. Of that $31.6 trillion foreign asset portfolio, treasury bills and bonds accounted for about $6 trillion — just under 20 percent of the total. It is only this portion — government debt owned by foreigners — that the American public (of this and future generations) is on the hook to pay back. Corporate debt has to be repaid, but only by the shareholders and employees of the companies issuing the debt — not by you or me or our children, generally. Equity purchases don’t have to be paid back at all — they’re not loans! When European, Japanese, Korean, Chinese or any foreign investors purchase U.S. companies or make “greenfield” investments to build new production or research facilities or hotels or shopping centers, there is no debt to be repaid.

How are our children and grandchildren on the hook to pay back accumulated trade deficits when most of those deficits are not loans, but equity? Selling equity or property or even entire U.S. companies to foreigners does not constitute debt and it is not akin to subsidizing our consumption by draining down our assets, as some suggest. It’s not a reverse mortgage.

The only portion of the trade deficit that the American public will have to pay back is that which finances the U.S. government debt, which accounts for about one-fifth the value of all foreign investment and is not a failing of trade or investment policy, but a consequence of excessive government spending. It’s worth noting that those who wish to respond to the trade deficit with restrictions on trade tend also to be the same people who advocate for more government spending, which is the real problem.

So, with that on the table, is it too much to ask those who believe the trade deficit is a problem to finally offer a compelling, fact-driven argument? We’ve been waiting over 40 years.

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

Share |

The Cold War’s Lesson for Immigration Policy

David Bier

Last week, Donald Trump made headlines when he detailed his latest immigration proposal: an “ideological test” for immigrants. But while he was right to look to the Cold War for insights on today’s ideological struggle, his focus on the exclusion of communists misses the point. Instead, he would have done better to focus on a more effective pillar of the Cold War: accepting vast numbers of refugees from areas controlled by our enemies.

Communists were first added to the list of “subversives” who are ineligible to enter the United States in 1952. The idea was to prevent the entry of communist spies and head off any potential revolution here. But it was essentially a dud. In the 40 years of the Cold War that followed, an average of just 32 people each year — mostly socialist intellectuals — received the subversive label and were barred. Almost all were in the early 1950s. From 1961 to 1991, just seven subversives were denied entry annually.

Meanwhile, the Immigration and Naturalization Service’s annual reports provide nearly 300 examples of “subversives” who were identified after they entered — Cedric Belfrage, editor of a communist publication called the National Guardian in 1956; Otto Verber, a Soviet espionage agent, in 1960; and Chen Kung Cheng, a suspected intelligence agent for China, in1964, to name just a few.

If the Cold War’s “ideological test” wasn’t terribly effective, why didn’t US anti-communists propose a temporary ban on all immigration from communist-controlled areas (like Trump has done with Muslim countries)? Instead, they accepted 2.6 million refugees, mostly from communist countries.

The broad reason was that the United States saw the benefit of accepting the enemies of our enemies, even if there was a small risk communists could exploit their generosity.

But while he was right to look to the Cold War for insights on today’s ideological struggle, his focus on the exclusion of communists misses the point.

This benefit resulted in part in spreading our ideological message. President Ronald Reagan liked a story about an American sailor on a carrier in the South China Sea who encountered a little boat crammed with refugees. When the refugees saw him on the deck, they shouted, “Hello freedom man!” The President never felt the need to explain that the sailors rescued them. That’s just what Americans do, and that’s why, to those refugees, America meant freedom.

This process is already underway among the Syrian refugees in the United States. Radwan, a Syrian refugee in Ohio, sounded a lot like Reagan’s refugee, explaining: “I came here, to the freedom country.” “I didn’t know anything about Memphis,” Mahmoud Al Hazaz, who escaped Syria to the city, said earlier this year. “The people have been excellent. Their treatment of us has been very good. I’m not just saying this for your sake. When I talk to my family they ask, ‘How is the treatment of Americans,’ and I say ‘it’s wonderful.’”

The flip side of spreading our message in the Cold War was combating theirs. President Reagan always kept the Soviet Union’s refugee quota high to demonstrate that the United States was open to those capable of escaping. When he was negotiating with the Soviet Union over nuclear arms, he held up the entire deal to secure emigration rights for refugees. Refugees embarrassed the Soviet Union, demonstrating the superiority of the US system.

Syrian refugees are doing America’s work on this front as well. “I want to keep painting the image to all of my family and friends about the goodness of the American people,” Marwan Batman told the Indy Star. “I wish other refugees would be able to come and experience the same things we have experienced … to find the same happiness we have found here.”

But refugees turned out to be more than mere tools of propaganda. They were also intelligence assets. “Sometimes we were asking them for the names and numbers of friends and colleagues, family members,” wrote Burton Gerber, a former senior American intelligence officer, of the Cold War strategy. “Then we would use the refugee to … [get] a secure message across to the target to come over here and be interviewed and then possibly recruited.”

Many defectors, including KGB agents, soldiers, generals and scientists, joined the American side of the Cold War and directly provided material aid to us. The same is happening in Syria. As former CIA intelligence officer and current Cato Institute analyst Patrick Eddington explained last year, Syrian refugees are “the single best source of information on life inside ISIS-controlled territory.”

The strategy is probably unnerving the Islamic State’s propagandists, who have taken to regularly denouncing refugees as “apostates” and “traitors” to their caliphate in their publications.

Donald Trump is right that we should look to the Cold War for lessons on immigration. But he inflates the importance of excluding communist sympathizers. Far more important to America’s strategy was our emphasis on accepting those who turned against the “Evil Empire.” That is what we have the most to learn from.

Share |

20 Years after Welfare Reform, Can We Do It Again?

Vanessa Brown Calder

Monday marks the 20th anniversary of the passage of the 1996 welfare reform law. This landmark event brought to an end the old cash assistance program in favor of the new Temporary Assistance for Needy Families (TANF) program which, for the first time, imposed work requirements on some cash welfare recipients. The achievement was only possible through the joint efforts of a Republican Congress led by Newt Gingrich and a Democratic president, Bill Clinton — a legislative history that seems both mythical and little short of miraculous in the hyper-polarized political context we live in today.

The question of welfare reform’s success is still hotly debated. Leaving that aside, though, another question weighs heavily: Is there any hope that we could do it again? Can the remaining mishmash of low-performing welfare programs be repaired in the coming years, even in spite of the dysfunctional, hyper-partisan mess that is D.C. politics these days?

Can the remaining mishmash of low-performing welfare programs be repaired in the coming years, even in spite of the dysfunctional, hyper-partisan mess that is D.C. politics these days?

Any further reform in this area should draw from the lessons of the 1990s. Welfare reform then wisely transferred decision-making power from the federal government to the states and emphasized work requirements for recipients. Future reform efforts should aim to do this for the 80 federal welfare programs not impacted by the ‘96 reform. And unlike the ‘96 reform, future efforts must shift more responsibility from government to civil society, which is better equipped to understand the poor’s needs and provide personalized attention to program beneficiaries.

Is any of this possible? If the American public has anything to say about it, then yes.

A recent LA Times / AEI poll provides us evidence: American attitudes towards poverty and welfare haven’t changed much since the era of Gingrich and Clinton.

For instance, almost two-thirds of Americans believe that the U.S. government does not bear the greatest responsibility for caring for the poor. Who does, then? Americans cite various forms of civil society: family, churches, and charity each were mentioned at 10-15 percent apiece, and a little less than 20 percent of respondents described the poor as themselves being responsible.

Americans are also deeply skeptical about the efficacy of welfare programs. A whopping 40 percent of poor Americans surveyed describe the government’s anti-poverty programs as “making things worse,” and 12 percent describe the government’s anti-poverty programs as having “no impact.” So to those government administrators who are forever looking to expand existing programs: More than half of the poor don’t think your existing programs are helping.

Americans who live above the federal poverty line and have a weaker understanding of the on-the-ground impacts of government anti-poverty programs are more likely to be optimistic about the effects of welfare, with only 32 percent describing such programs as having “made things worse.”

Perhaps most telling, skepticism around government’s ability to design effective anti-poverty programs remains strong: a full 7 in 10 respondents believe that even if the government was provided with unlimited money to solve poverty they wouldn’t be able to do it because “officials do not know enough to accomplish that goal.”

So, although welfare advocacy groups would paint a different picture, the American public sees through the hype. If we can find leaders who listen, both to the individuals who are impacted by poverty programs, as well as the American tax-payers who pick up the tab, we are likely to have great success in achieving future federal welfare reform on par with that of ‘96.

If the 2016 campaign is any indication, it seems that finding that type of leadership will be the real test.

Vanessa Brown Calder is a policy analyst at the Cato Institute, where she focuses on social welfare, housing, and urban policy.

Share |

How Liberal Courts Help Conservatives States Stay Free

David Boaz

A new study says that New Hampshire is the freest state in the country, followed by Alaska, Oklahoma, Indiana, and South Dakota.

New York is the least free state by a large margin, followed by California, Hawaii, New Jersey, and Maryland.

For some readers, the immediate reaction will be that conservative states get the highest ratings and liberal states the lowest. That’s not quite true: New Hampshire and Alaska are generally regarded as libertarian-leaning more than conservative, and very conservative states such as Alabama and Mississippi score pretty far down.

It’s not that the study focuses just on economic freedom, as some analyses do. The “Freedom in the 50 States” report by political scientists William Ruger and Jason Sorens, just published by the Cato Institute, where I work, covers both economic and personal freedom, from taxes and regulation to imprisonment rates, gay marriage, and marijuana.

Maybe if the Supreme Court took economic liberties as seriously as personal freedom, the big Eastern and Western states would once again be the wide-open, fast-growing places they were when they got big and prosperous in the first place.

Those of us in cosmopolitan coastal states may still wonder if places like Oklahoma and Indiana are where we’d find the personal and economic freedom we crave.

Here’s one explanation: The federal courts prevent conservative states from taking away a lot of the freedoms they’d like to, while they’re much more tolerant of intrusions on freedom found in liberal states.

Take Oklahoma, for instance. Its personal freedom score improved in this edition of the report because in 2014 a federal judge struck down the state’s ban on same-sex marriage. In the next edition, lots of conservative states will have better scores because of the 2015 Supreme Court decision overturning all such state laws.

Marriage bans aren’t the only thing that conservative states are prevented from doing. Another federal court found that Oklahoma’s ban on considering sharia law in judicial decisions was religious discrimination in violation of the First Amendment. In 2008 the Supreme Court struck down Louisiana’s law prescribing the death penalty for the rape of a child. Oklahoma, Texas, South Carolina, Georgia, and Montana also had such lawsFourteen states, mostly in the South and once again including Oklahoma, had laws banning homosexual acts until the Supreme Court struck them down in 2003.

Go back another generation, and we recall the Court striking down laws requiring school segregation and banning interracial marriage.

In all these cases, federal courts, interpreting the U.S. Constitution, have prevented conservative states from denying their citizens’ individual rights. And thus those states get higher scores on the “Freedom in the 50 States” ranking.

Courts have been less likely to find that intrusions on freedom by liberal states violate the Constitution. States are generally free to set their own tax and regulatory policies. In 2005 the Supreme Court notoriously declined to restrict a local government’s power to take property through eminent domain.

In two decisions, in 2008 and 2010, the Court did limit a state’s ability to impose restrictive gun control laws. The 2010 decision, striking down a law in Chicago, improved Illinois’s ranking on personal freedom. More generally, the Second Amendment and the Court’s insistence on protecting the individual right to bear arms probably prevent some liberal Democratic states from enacting gun bans.

James Madison, the principal author of the Constitution, said that “independent tribunals of justice will consider themselves in a peculiar manner the guardians of those rights; they will be an impenetrable bulwark against every assumption of power in the legislative or executive.” Judges don’t get it right in every case, but over the years they have protected Americans’ rights and freedoms from lots of intrusions by legislatures and executives.

So take heart, my coastal cosmopolitan friends. Maybe the flyover states aren’t really more libertarian in spirit than the East and West coasts. Maybe they’ve just had their own bad ideas slapped down by the Supreme Court more often. And who knows, maybe if the Supreme Court took economic liberties as seriously as personal freedom, the big Eastern and Western states would once again be the wide-open, fast-growing places they were when they got big and prosperous in the first place.

David Boaz is executive vice president of the Cato Institute and author of The Libertarian Mind: A Manifesto for Freedom.

Share |

Why Can’t We See That We’re Living in a Golden Age?

Johan Norberg

‘We have fallen upon evil times, politics is corrupt and the social fabric is fraying.’ Who said that? Donald Trump or Bernie Sanders? Nigel Farage or Marine Le Pen? It’s difficult to keep track. They sound so alike, the populists of the left and the right. Everything is awful, so bring on the scapegoats and the knights on white horses.

Pessimism resonates. A YouGov poll found that just 5 per cent of Britons think that the world, all things considered, is getting better. You would think that the chronically cheerful Americans might be more optimistic — well, yes, 6 per cent of them think that the world is improving. More Americans believe in astrology and reincarnation than in progress.

Johan Norberg and Fraser Nelson discuss the doom delusion:

If you think that there has never been a better time to be alive — that humanity has never been safer, healthier, more prosperous or less unequal — then you’re in the minority. But that is what the evidence incontrovertibly shows. Poverty, malnutrition, illiteracy, child labour and infant mortality are falling faster than at any other time in human history. The risk of being caught up in a war, subjected to a dictatorship or of dying in a natural disaster is smaller than ever. The golden age is now.

If you look at all the data, it’s clear there’s never been a better time to be alive.

We’re hardwired not to believe this. We’ve evolved to be suspicious and fretful: fear and worry are tools for survival. The hunters and gatherers who survived sudden storms and predators were the ones who had a tendency to scan the horizon for new threats, rather than sit back and enjoy the view. They passed their stress genes on to us. That is why we find stories about things going wrong far more interesting than stories about things going right. It’s why bad news sells, and newspapers are full of it.

Books that say the world is doomed sell rather well, too. I have just attempted the opposite. I’ve written a book called Progress, about humanity’s triumphs. It is written partly as a warning: when we don’t see the progress we have made, we begin to search for scapegoats for the problems that remain. Sometimes, in the past and perhaps today, we have been too quick to try our luck with demagogues who offer simple solutions to make our nations great again — whether by nationalising the economy, blocking imports or throwing out immigrants. If we think we don’t have anything to lose in doing so, it’s because our memories are faulty.

Look at 1828, when The Spectator was first published. Most people in Britain then lived in what is now regarded as extreme poverty. Life was nasty (people still threw their waste out of the window), brutish (corpses were still displayed on gibbets) and short (30 years on average). But even then things had been improving. The first iteration of The Spectator, in 1711, was published in a Britain whose people subsisted on average on fewer calories than the average child gets today in sub-Saharan Africa.

Karl Marx thought that capitalism inevitably made the rich richer and the poor poorer. By the time Marx died, however, the average Englishman was three times richer than at the time of his birth 65 years earlier — never before had the population experienced anything like it.

Fast forward to 1981. Then, almost nine in ten Chinese lived in extreme poverty; now just one in ten do. Then, just half of the world’s population had access to safe water. Now, 91 per cent do. On average, that means that 285,000 more people have gained access to safe water every day for the past 25 years.

Global trade has led to an expansion of wealth on a magnitude which is hard to comprehend. During the 25 years since the end of the Cold War, global economic wealth — or GDP per capita — has increased almost as much as it did during the preceding 25,000 years. It’s no coincidence that such growth has occurred alongside a massive expansion of rule by the people for the people. A quarter of a century ago, barely half the world’s countries were democracies. Now, almost two thirds are. To say that freedom is still on the march is an understatement.

Part of our problem is one of success. As we get richer, our tolerance for global poverty diminishes. So we get angrier about injustices. Charities quite rightly wish to raise funds, so they draw our attention to the plight of the world’s poorest. But since the Cold War ended, extreme poverty has decreased from 37 per cent to 9.6 per cent — in single digits for the first time in history.

This has not happened through the destruction of the western middle class. Times have been rough since the financial crisis, yet for all the talk of Americans ‘left behind by globalisation’, median income for low- and middle-income US households has increased by more than 30 per cent since 1970. And this excludes all the things you can’t put a price on, such as advances in medicine, an extra ten years of life expectancy, the internet, mass entertainment, and cleaner air and water.

Speaking of water, Disraeli described the Thames as ‘a Stygian pool reeking with ineffable and intolerable horrors’. As late as 1957, the river was declared biologically dead. Today it is in rude health, with scores of different species of fish. The idea of the environment as a clean canvas being steadily spoilt by humanity is simplistic and wrong. As we become richer, we have become cleaner and greener. The quantity of oil spilt in our oceans has decreased by 99 per cent since 1970. Forests are reappearing, even in emerging countries like India and China. And technology is helping to mitigate the effects of global warming.

Parts of the world are falling to pieces but fewer parts than before. Conflicts always make the headlines, so we assume that our age is plagued by violence. We obsess over new or ongoing fights, such as the horrifying civil war in Syria — but we forget the conflicts that have ended in countries such as Colombia, Sri Lanka, Angola and Chad. We remember recent wars in Afghanistan and Iraq, which have killed around 650,000. But we struggle to recall that two million died in conflicts in those countries in the 1980s. The jihadi terrorist threat is new and frightening — but Islamists kill comparatively few. Europeans run a 30 times bigger risk of being killed by a ‘normal’ murderer — and the European murder rate has halved in just two decades.

In almost every way human beings today lead more prosperous, safer and longer lives — and we have all the data we need to prove it. So why does everybody remain convinced that the world is going to the dogs? Because that is what we pay attention to, as the thoroughbred fretters we are. The psychologists Daniel Kahneman and Amos Tversky have shown that people do not base their assumptions on how frequently something happens, but on how easy it is to recall examples. This ‘availability heuristic’ means that the more memorable an incident is, the more probable we think it is. And what is more memorable than horror? What do you remember best — your neighbour’s story about a decent restaurant which serves excellent lamb stew, or his warning about the place where he was poisoned and threw up all over his boss’s wife?

Bad news now travels a lot faster. Just a few decades ago, you would read that an Asian city with 100,000 people was wiped out in a cyclone on a small notice on page 17. We would never have heard about Burmese serial killers. Now we live in an era with global media and iPhone cameras every-where. Since there is always a natural disaster or a serial murderer somewhere in the world, it will always top the news cycle — giving us the mistaken impression that it is more common than before.

Nostalgia, too, is biological: as we get older, we take on more responsibility and can be prone to looking back on an imagined carefree youth. It is easy to mistake changes in ourselves for changes in the world. Quite often when I ask people about their ideal era, the moment in world history when they think it was the most harmonious and happy, they say it was the era they grew up in. They describe a time before everything became confusing and dangerous, the young became rude, or listened to awful music, or stopped reading books in order to just play Pokémon Go.

The cultural historian Arthur Freeman observed that ‘virtually every culture, past or present, has believed that men and women are not up to the standards of their parents and forebears’. Is it a coincidence that the western world is experiencing this great wave of pessimism at the moment that the baby-boom generation is retiring?

So who did say those words at the start of this article, about how we have ‘fallen upon evil times’? It wasn’t Trump. It wasn’t Farage. A century ago, an American professor found them inscribed on a stone in a museum in Constantinople. He dated them from ancient Chaldea, 3,800 BC.

Johan Norberg’s Progress: Ten Reasons to Look Forward to the Future is published next week. He also appears on this week’s Spectator podcast: