Archives: 05/2011

A ‘Special’ Relationship?

When President Obama meets with British Prime Minister David Cameron in London, they should focus on the two wars that involve both the U.S. and British militaries (Afghanistan and Libya). But these discussions will take place in the context of diminishing British military capability.

At a time when the United States should be shedding some of the burdens of policing the globe, and encouraging other countries to step forward to defend themselves, the British are moving in the opposite direction. They are cutting their military, and tacitly becoming more dependent upon U.S. power. The end result will be a United Kingdom that is less able to assist us in the future.

The United States today spends far more on its military than does the United Kingdom, and the gap is likely to grow. This is sure to have an impact on the U.S.-UK relationship.

The number of British troops, ships and planes that are available for missions has dropped and will continue to if Cameron pushes through significant cuts in British military spending. He has proposed actual cuts, not the slowing in the rate of growth that Obama and Defense Secretary Gates have presided over so far.

The special relationship has been cemented by the numerous occasions in which British and American leaders have cooperated to address common security challenges. The most important of these involve U.S. and British troops fighting side by side.

But shrinking British defense spending could strain the relationship.  The goodwill that has prevailed between the two countries could be in jeopardy, and Americans may find it harder to look upon the Brits as the “good” ally, the one that sticks by us through thick and thin. And if the American public grows disenchanted with British contributions to U.S.-led military missions, the British public may then hold less generally positive opinions of the United States.

A version of this post originally appeared in The National Interest Online.

Religion in Service of the Welfare State

Here we go again: To read E.J. Dionne’s piece in the Washington Post this morning, you’d think that God Himself had ordained the modern welfare state. Dionne’s nominal target is the media for its failure to sufficiently cover John Boehner’s recent commencement address at the Catholic University of America. But his larger aim is to promote his reading of the proposition that “From the apostles to the present, the Magisterium of the Church has insisted that those in power are morally obliged to preference the needs of the poor.”

That’s from the opening paragraph of a letter to Boehner from a group of Catholic academics, including some leading members of the Catholic University faculty. It added, “Your record in support of legislation to address the desperate needs of the poor is among the worst in Congress.” And it singled out the House-passed Ryan budget for special condemnation, Dionne tells us, approvingly.

It’s hardly news, of course, that Catholics, along with other denominations, are divided on the “social justice” question. But as I wrote last month in the Wall Street Journal, the idea that Jesus taught that we should be forced, by government, to aid the poor is a serious misreading of Christian doctrine, to say nothing of the Decalogue. Virtue arises from voluntary actions, of which there is no shortage here in America – at least so long as the burdens of the welfare state don’t  crowd them out entirely. This use of the gospel to promote that state is not only unAmerican but unChristian as well.

Monday Links

Let Europe Be—and Defend—Europe

In the midst of difficult domestic political battles, Barack Obama begins a lengthy European trip today.  He should encourage the continent to increase its defense capabilities and take on greater regional security responsibilities.

Presidential visits typically result in little of substance.  President Obama’s latest trip will be no different if he reinforces the status quo.  His policy mantra once was “change.”  No where is “change” more necessary than in America’s foreign policy, especially towards Europe.

Despite obvious differences spanning the Atlantic, the U.S. and European relationship remains extraordinarily important.  The administration should press for increased economic integration, with lower trade barriers and streamlined regulations to encourage growth.

At the same time, however, Washington should encourage development of a European-run NATO with which the U.S. can cooperate to promote shared interests to replace today’s America-dominated NATO which sacrifices American interests to defend Europe.  Americans no longer can afford to defend the rest of the world.  The Europeans no longer need to be defended.

Although World War II ended 66 years ago, the Europeans remain strangely dependent on America.  Political integration through the European Union has halted; economic integration through the Euro is under sharp challenge; and military integration through any means is reversing.

Indeed, the purposeless war in Libya, instigated by Great Britain and France, has dramatically demonstrated Europe’s military weakness.  Despite possessing a collective GDP and population greater than that of America, the continent’s largest powers are unable to dispatch a failed North African dictator.

President Barack Obama starts with visits to Ireland,  the UK, and France.  In the latter he will consult with the heads of the G8 nations, which include Germany and Italy.

His message should be clear:  while America will remain politically and economically engaged in Europe, it will no longer take on responsibility for setting boundaries in the Balkans, policing North Africa, and otherwise defending prosperous industrial states from diminishing threats.  Washington should expect the continent to become a full partner, which means promoting the security of its members and stability of its region.

The president should deliver a similar message when he continues on to Poland.  Part of “New Europe,” which worries more about the possibility of revived Russian aggression, Warsaw has cause to spend more on its own defense and cooperate more closely with its similarly-minded neighbors on security issues.

In fact, Poland, Slovakia, Hungary, and the Czech Republic, members of the “Visegrad Group,” recently announced creation of a “battle group” separate from NATO command to emphasize regional defense.  The president should welcome this willingness to take on added defense responsibilities.

Communitarians and Libertarians

Communitarian “guru” Amitai Etzioni debated Roger Pilon at Cato two weeks ago. Also me, 18 years ago. And last week he had two postings at the Encyclopedia Britannica blog. I offer some thoughts on individualism, communitarianism, and implausible misrepresentations of libertarianism at the Britannica today.

When I hear communitarians like Etzioni describe the libertarian view of individualism, I wonder if they’ve ever read any libertarian writing other than a Classic Comics edition of Ayn Rand….

There’s no conflict between individualism and community. There’s a conflict between voluntary association and coerced association. And communitarians dance around that conflict.

Do you believe that “The libertarian perspective, put succinctly, begins with the assumption that individual agents are fully formed and their value preferences are in place prior to and outside of any society”? Of course not. Who would? Read the Britannica column to find out who says you do.

Why Budgets Are Busted

Three stories in today’s Washington Post help us to understand why governments around the world are facing unmanageable deficits. On the front page:

When Prime Minister Jose Luis Rodriguez Zapatero took power seven years ago, he and his Socialist Workers’ Party set out to perfect the welfare state in Spain. The goal was to equal— or even surpass — lavish social protections that have long been the rule for Spain’s Western European neighbors.

True to his Socialist principles and riding an economic boom, Zapatero raised the minimum wage and extended health insurance to cover everything from sniffles to sex changes. He made scholarships available to all. Young adults got rent subsidies called “emancipation” money. Mothers got $3,500 for the birth of a child, toddlers attended free nurseries and the elderly got stipends for nursing care.

On page 3, a story about federal pensions, which still offer federal employees

a benefit lost long ago by many workers at private companies — a guaranteed retirement check paid largely by the boss.

These traditional pensions, called defined-benefit plans, have long been an attractive feature of government work.

On the op-ed page, George Will notes that in 1975 then-governor Jerry Brown said that his plan was

To stand up to the special pleaders who are encamped, I should say, encircling the state capitol, and to see through their particular factional claims to the broad public interest.

Three years later, “Brown conferred on government employees the right to unionize and bargain collectively.” Now, from prison guards to teachers, the public employee unions press for unaffordable spending and block efforts at reform. And again-governor Jerry Brown would rather raise taxes than stand up to the unions that helped elect him.

As has been noted many times, politicians spend all the money that comes in when times are good. They don’t put anything aside for the possibility of lean years. And they make commitments, like pensions and collective bargaining agreements, that will prove to be fiscal time bombs, exploding long after the next election. It looks like the long run is here.

The IMF—A Reading List

Now that Dominique Strauss-Kahn has resigned as head of the International Monetary Fund, the debate has turned to who will lead the lending agency as it goes through its usual non-transparent and politicized selection process. (Of course, virtually all decisions at the IMF are politicized since it is primarily a political institution, a club in which rich countries’ governments with diverse interests and political priorities typically lend money to governments with track records of mismanaging their economies.)

The IMF is a fundamentally flawed institution, a problem independent of whether the new Fund chief is French or South African. Here’s a brief reading list for anybody more interested in the scandal of IMF lending than of the scandals of IMF personalities.

  • In this Cato Handbook essay I provide an overview of the IMF’s poor record at promoting growth or reform, and of the moral hazard of providing big bailouts to countries, beginning with Mexico in 1995.
  • In “The IMF’s Imprudent Role as Lender of Last Resort,” Charles Calomiris describes how IMF rescue packages undermine global financial stability.
  • In this Cato study, I review the evolution of the IMF, show that its lending tends to last for decades rather than be short term, and that it tends to slow rather than accelerate reforms. I argue for market solutions to debt crises.
  • In “International Financial Crises: Myths and Realities,” Anna Schwartz explains that financial contagion during the Asian financial crisis—a key justification for IMF intervention—was not occurring. Only countries with flawed economic policies suffered crises.
  • Here, Swami Aiyar argues that the IMF has no business lending to Greece.
  • In “Asian Problems and the IMF,” Allan Meltzer criticizes the Fund’s subsidization of risk.
  • Here Anna Schwartz takes on the Fund’s “dubious proposal” to turn itself into a sort of bankruptcy court for nations.
  • In this study Swami Aiyar takes on another bad idea: creating an IMF currency to rival the dollar.