Archives: June, 2012

What Is Waltz Up To on Iranian Nukes?

Paul Pillar, writing at the National Interest, has already mentioned the provocative Kenneth Waltz essay on Iranian nuclear weapons that has inflamed the segments of the Beltway foreign-policy establishment who bothered to read it. But I wanted to expand on a couple of additional points Waltz raises.

It probably bears observing, first, that when Waltz writes that Iranian acquisition of a nuclear arsenal “would probably be the best possible result,” he is defining “best possible result” in the exact opposite way that the Beltway foreign-policy establishment does.

As Waltz wrote in his debate with Scott Sagan on nuclear optimism versus nuclear pessimism, “a big reason for America’s resistance to the spread of nuclear weapons is that if weak countries have some they will cramp our style.” Iran is a weak country who, with a nuclear arsenal, would cramp our style. Waltz opposes America’s style. As he put it in a 1998 interview, “I’ve been a fierce critic of American military policy and spending and strategy, at least since the 1970s.”

Read in this context, then, what Waltz sees as a feature of an Iranian weapon is what the American foreign policy establishment sees as a bug: the fact that an Iranian bomb will cramp our—and Israel’s—style. The foreign-policy establishment desperately wants to preserve the option of doing an Iraq—or Iran—war every so often if they feel like it. An Iran with nukes makes invading Iran a totally different ballgame.

What Waltz is after is “stability.” He has long argued that nuclear balances produce stability because the prospect of escalation to war between nuclear states is so harrowing that states seeking survival—which he argues all states tend to do—peer into the abyss and back away.

Deborah Boucoyannis wrote a fascinating article in 2007 arguing that Waltzian realists, by dint of their appreciation and support for balancing power—and antipathy for unbalanced power—are in fact classical liberals in the same sense that America’s founding fathers were classical liberals. They were obsessed with drawing up a constitution that would balance the branches of the American government against one another, not because the presidency, or the Congress, or the courts was itself inherently malign, but because unbalanced power is dangerous anywhere. One can even see this theme in the writing of early American leaders’ thinking on foreign relations. Thomas Jefferson wrote in 1815 of his desire that nations “which are overgrown may not advance beyond safe measures of power, [and] that a salutary balance may be ever maintained among nations.”

This is what Waltz sees in the Middle East today: unbalanced power. If what you value is stability, then pushing the region toward balance, where no one can start a war with anyone else without risking his own survival, looks good.

Two other points. First, in order to get Iranian nukes to act as a stabilizer, Waltz has to argue that the Iranian regime is not suicidal, and that the primary reason it might like a nuclear weapon is for survival. I agree with this argument, and it bears pointing out that people as far away from realism as the neoconservative writer Eli Lake seem to agree as well. Unfortunately, the din of nonsense emanating from Washington seems to have convinced the American people that Iran would nuke Israel. In the recent poll from Dartmouth’s Benjamin Valentino, 69 percent of those surveyed said that Iran would be “very likely” or “somewhat likely” to use nuclear weapons against Israel.

Finally, this has been a useful insight into how detached popular commentary in America is from scholarship on the subjects pundits discuss. It was precious, for example, to see Commentary’s Ira Stoll scrambling to figure out who Kenneth Waltz was. For those with interest, he ranked third in a survey of international relations scholars that asked for a ranking of scholars “who have had the greatest influence on the field of IR in the past 20 years.” It’s a good thing that our architects and bridge-builders have a closer relationship with the engineering field than our foreign-policy pundits do with international relations scholarship.

Cross-posted from the Skeptics at the National Interest.

Bipartisanship versus Taxpayers

Last month George Will pushed back against the bipartisan Washington wish for bipartisanship:

Bipartisanship, the supposed scarcity of which so distresses the high-minded, actually is disastrously prevalent.

Since 2001, it has produced No Child Left Behind, a counterproductive federal intrusion in primary and secondary education; the McCain-Feingold speech rationing law (the Bipartisan Campaign Reform Act); an unfunded prescription drug entitlement; troublemaking by Fannie Mae and Freddie Mac; government-directed capitalism from the Export-Import Bank; crony capitalism from energy subsidies; unseemly agriculture and transportation bills; continuous bailouts of an unreformed Postal Service; housing subsidies; subsidies for state and local governments; and many other bipartisan deeds, including most appropriations bills.

And today I see this banner headline in the (actual paper edition of the) Washington Post:

In Senate, farm bill produces a rarity: cooperation
Some see signs of renewed bipartisanship

Paul Kane reports:

To the purported short­list of certainties in life — death and taxes — add large, bipartisan support in the Senate for the farm bill.

Despite the pattern in recent years of intense partisan acrimony, backroom bickering and publicly staged fights over nearly every piece of legislation, the Senate has begun to plod through a nearly $1 trillion farm bill that is likely to get a bipartisan vote for its approval by week’s end.

A trillion dollars. For a farm bill. Have we become so accustomed to throwing around the phrase “a trillion dollars” that this isn’t headline news?  Not to worry, though, Congress is thinking of the taxpayers: They say they’ve cut $23 billion out of the trillion. Sure, let’s look back in a decade and see if those cuts really happened.

Meanwhile, shoveling out money to the farmers isn’t the only time Congress can be bipartisan. There’s also shoveling out money to Boeing and a handful of other big companies with the Export-Import Bank, as the Los Angeles Times reported on May 30:

President Obama has signed into law a bill reauthorizing the Export-Import Bank, saying the rare example of bipartisan cooperation should be a model for a future legislation.

Yessiree, as George Will said, the one thing Congress can join hands and agree on is giving taxpayers’ money to interest groups – whether it’s farmers or airplane manufacturers or college students and their parents or Medicare recipients. Bipartisanship is typically a conspiracy against the taxpayers.

Anna Jacobson Schwartz (1915–2012), RIP

Anna J. Schwartz, one of the world’s leading monetary economists, passed away early this morning at her home in Manhattan at age 96.  She was a legend in her field and co-authored the most important book on money in the 20th century, A Monetary History of the United States, 1867–1960 (Princeton University Press, 1963), with Nobel laureate Milton Friedman.  In that book, they blamed the Great Depression largely on a failure of monetary policy: the Federal Reserve let the money supply fall by over a third between 1929 and 1933.

Anna remained a prolific scholar into her early nineties and was a long-time participant at Cato’s Annual Monetary Conference, having spoken at the first conference in 1983 and in November 2008.  In her paper from the 2008 conference, published in the Cato Journal, she argued that “if monetary policy had been more restrictive, the asset price boom in housing could have been avoided.” She blamed Alan Greenspan and the Fed, in part, for the crisis.  In July 2009, at age 93, she wrote an op-ed in the New York Times criticizing Ben Bernanke for vastly expanding the Fed’s balance sheet and opposed his reappointment as Fed chairman.

As a member of the Shadow Open Market Committee, Anna was a close observer of Fed policy and a sharp critic of discretionary monetary policy.  Like Friedman, she preferred a simple monetary rule that would bind the Fed to long-run price stability by controlling the quantity of money, not interest rates.  She did not think the Fed or any central bank could control real variables or bring about full employment by fine-tuning.  The best policy would be to let individuals be free to choose in the marketplace and keep government regulation to a minimum.  Meanwhile, the limits of monetary policy should be recognized.  As executive director of the U.S. Gold Commission in 1981, she didn’t think a gold standard would be feasible today, but did recognize that the pre-World War I gold standard was a successful monetary regime.

Based on her vast knowledge of monetary history and alternative monetary regimes, she was skeptical about the future of the euro.  Without political union, monetary union would not last, in her opinion. Certainly, she would not agree that the Eurozone was an optimal currency area.

Her long career with the National Bureau of Economic Research is unprecedented.  She began in 1941 and worked in her New York office for more than 70 years!  At her 50th anniversary party, she got up before the distinguished guests and said, “Thank you.  I’ll be back at my desk in the morning.”  She never wasted time looking at her past achievements.  Long after Milton Friedman stopped writing articles for scholarly journals, Anna was still doing serious research, publishing, and serving on editorial boards.  She earned her Ph.D. from Columbia University at age 48.

Anna published many articles in the Cato Journal and was co-editor of The Search for Stable Money, which Cato co-published with the University of Chicago Press.  I had the honor of working with Anna on that book and came to respect her more and more, not only as an outstanding scholar but as a person who believed in clear thinking, honesty, and hard work.  She helped many younger scholars with their research and was very generous with her time.  She will be deeply missed.

South American Governments Should Not Interfere with Paraguay’s Impeachment Process

By a vote of 76-1, the lower house of Paraguay’s Congress impeached President Fernando Lugo this morning for his role in a deadly clash last week between the police and squatters. The Senate is in session right now holding the political trial and Lugo is expected to testify tomorrow in his defense. However, since the upper house of Congress is controlled by the opposition, it’s very likely that a required two-third majority will vote to remove Lugo from office.

This impeachment process is in accordance with article 225 of the Paraguayan constitution, which states that high ranking government officials such as the president can be impeached for “poor performance of his duties.” As we can see, the constitution is very vague in stipulating the reasons why an official can be removed from office, so it is up to two-third majorities in both houses of Congress to decide.

Removing Fernando Lugo from office could be a premature decision, or an example of bad politics in a country where politicians excel in doing wrong. I won’t discuss those details here. However, it is a perfectly legal and constitutional move.

This is why it is unacceptable that Unasur, a union of twelve South American governments, is threatening to treat Lugo’s possible removal from office as a coup. The secretary general of Unasur has even said that neighboring countries would have the power to invoke the Ushuaia II treaty, which contemplates sanctions against a country where “the democratic order has been breached.” Sanctions include shutting down the borders (a particularly significant threat to a landlocked country such as Paraguay), and suspending communications, trade and energy supplies. It is important to note that Paraguay gets 95% of its energy from the Itaipú and Yasyreta hydroelectric dams that it shares with Brazil and Argentina, respectively. Thus, it is highly vulnerable to a shutdown.

Unasur should back off from interfering in the impeachment process against Fernando Lugo. And the U.S. should unequivocally call for respect for Paraguay’s constitutional order.

Notwithstanding David Cameron’s Statolatry, Tax Avoidance Is Both Legal and Moral

I’m not a fan of David Cameron, the United Kingdom’s Prime Minister.

Even though he belongs to the Conservative Party that produced the great Margaret Thatcher, Cameron seems to be a bit of guilt-ridden statist with his finger always in the air to see which way the wind is blowing. The policy results are not pretty.

Now I have another reason to dislike Cameron. He just condemned a comedian for legally seeking to minimize the amount of his income that is seized - and then wasted - by the U.K. government. Here are some of the details from The Telegraph.

Prime Minister David Cameron today branded the tax arrangement of comedian Jimmy Carr “morally wrong” after it emerged he was using a scheme which allows the wealthy to pay as little as one per cent of their income. …Speaking at the G20 summit the Prime Minister told ITV News: “I think some of these schemes - and I think particularly of the Jimmy Carr scheme - I have had time to read about and I just think this is completely wrong. “People work hard, they pay their taxes, they save up to go to one of his shows. They buy the tickets. He is taking the money from those tickets and he, as far as I can see, is putting all of that into some very dodgy tax avoiding schemes. …some of these schemes we have seen are quite frankly morally wrong.” …Lawyers for the comedian have…categorically denied any wrongdoing, saying the scheme had been disclosed to the relevant authorities in line with the law. …Chancellor George Osborne has claimed he was left “shocked” after finding the extent to which multi-millionaires were exploiting tax loopholes and vowed to take “action”.

 I have no idea whether the specific “tax avoiding scheme” used by Carr is good tax policy (protecting against double taxation, for instance) or bad policy (such as a loophole that creates favoritism for a specific behavior), but that’s not the point of this post.

Instead, this is a moral question about whether people have some sort of obligation to pay extra tax, merely to get some sort of pat on the head from politicians. The same politicians, by the way, that squander the money on varying vote-buying schemes that undermine prosperity and create dependency.

I’d be willing to condemn Carr if I found out he’s some sort of statist who wants higher taxes for everybody else, but then (like John Kerry) takes steps to minimize his personal tax bill.

But I’d be condemning Carr for hypocrisy, not criticizing the idea of tax avoidance.

The United Kingdom has become a bloated welfare state (with horribly depressing implications, as you can read here and here). If people want to be moral, they should strive to pay the least amount possible to this corrupt and wasteful enterprise. The United States is not quite as bad (yet), but the same principle applies.

Politicians, needless to say, will violently disagree with this ethical viewpoint. So we can all expect more taxes, higher taxes, and additional draconian enforcement measures.

The only good news is that the Laffer Curve will prevent these greedy thugs from collecting nearly as much money as they think.

P.S. To get an idea of how the Conservative Party has declined, compare Cameron’s statist rhetoric to Margaret Thatcher’s comments that “there is no such thing as public money.”

Knox v. SEIU: An Important Free Speech Victory

It may not get the attention of the impending Obamacare decision, but today’s Court’s decision in Knox v. SEIU is an important and somewhat unexpected victory for the First Amendment.

In 2005, the SEIU initiated a mid-year campaign against two California ballot measures, one that would cap state spending and another that would restrict the use of union dues for political purposes. In states such as California that do not have “right to work” laws, unions are allowed to take dues from non-union workers to finance collective-bargaining activities that, arguably, benefit all employees. Since 1977, however, unions have not been allowed to take dues from non-union members to pay for pure political advocacy without adequate protections for possible dissenters. In order to distinguish political money from collective-bargaining money, the Supreme Court requires that a “Hudson notice” be given to all non-union workers. This notice gives non-members the opportunity to challenge political expenditures.

The narrowest question in Knox was whether the notice given by the SEIU Local 100 complied with the Supreme Court’s requirements. There was a broader question, however, pushed by Cato in our brief (joining the Pacific Legal Foundation, the Center for Constitutional Jurisprudence, and the Mountain States Legal Foundation), on whether only having the ability to “opt-out” of political spending (rather than to “opt-in”) violates the First Amendment (Tim Sandefur of PLF offers his thoughts here).  Opting-out presumes that the non-members want to engage in the union’s political advocacy, and this seems to place the burden on free speech on the wrong party.

In a decision that rings with a chastising tone directed at the union, Justice Samuel Alito affirmed that opting-out can be a First Amendment violation. In his words: “Our cases have tolerated a substantial impingement on First Amendment rights by allowing unions to impose an opt-out requirement at all.”  Justice Alito also adopts our argument that balancing the rights of individuals with the “rights” of unions is the wrong way to look at the issue. Unions have long argued that complying with administrative requirements to give notice to non-union members impinges on their ability to be effective political advocates. Moreover, the unions argue, sometimes it is not possible to accurately determine what percentage of their funds will be used for political advocacy and “there is at least a risk that, at the end of the year, unconsenting nonmembers will have paid either too much or too little.” “Which side should bear the risk?” asks Justice Alito. “The answer is obvious: the side whose constitutional rights are not at stake.”

In this case, the First Amendment violation was particularly troubling because the union exacted money from nonmembers in order to defeat a California proposition that would have bolstered nonmembers rights. “If Proposition 75 had passed,” writes Alito, “nonmembers would have been exempt from paying for SEIU’s extensive political projects unless they affirmatively consented. Thus the effect of the SEIU’s procedure was to force many nonmembers to subsidize a political effort designed to restrict their own rights.”

Although the decision does not go so far as to require that unions must always use an opt-in procedure when extracting political war-chest money from nonmembers, it takes a very strong step in that direction, as Justice Stephen Breyer argues in dissent. Opting-in will only be required for such “special assessments” as in this case or for a general “dues increase.”

But Justice Breyer is correct that the majority opinion offers few reasons why opting-in should not be required for all union political dues taken from nonmembers, not just special assessments. In making the strong argument that forced speech without affirmative consent is a First Amendment evil, Justice Alito leaves little room for even the existing opt-out system. Alito and the justices who joined his opinion seem very friendly to the idea that all union political dues for nonmembers require opt-in procedures. Hopefully that case will hit the Court soon. For now, congratulations to Jim Young and National Right to Work Legal Foundation on an important victory.