Archives: 10/2016

Economic Freedom and Infants’ Lives

Recent reports that infants now die at a higher rate in Venezuela than in war-torn Syria were, sadly, unsurprising—the results of socialist economics are predictable. Venezuela’s infant mortality rate has actually been above Syria’s since 2008.


The big picture, fortunately, is happier. The global infant mortality rate has plummeted. Even Syria and Venezuela, despite the impact of war and failed policies, saw improvements up to as recently as last year. From 1960 to 2015, Syria’s infant mortality rate fell by 91% and Venezuela’s by 78%. This year (not reflected in the graph above or below), Syria’s rate rose from 11.1 per 1,000 live births to 15.4, while Venezuela’s shot up from 12.9 to 18.6. Meanwhile, infant mortality rates have continued to fall practically everywhere else, and have declined even faster in countries that enjoy more freedom and stability. Consider Chile.

Nigeria Spins Out of Control, and the IMF Remains Unaware

Nigeria’s President, Muhammadu Buhari, and his government have lost control as Nigeria’s economic crisis sends that African nation into a doom-loop. Everyone, including the President’s wife, Aisha, knows that Nigeria is going down the tubes. But not the International Monetary Fund (IMF). As is often the case, the IMF doesn’t have a clue. The IMF’s October 2016 World Economic Outlook projects Nigerian inflation to average 15.4 percent for 2016.  This number is in sharp contrast to my Johns Hopkins-Cato Institute Troubled Currencies Project’s inflation estimate for Nigeria. We estimate that the year-over-year inflation rate is currently 104.8 percent (see the chart below). 

Why is the IMF so far off base? Because it is doing what it often does: it is taking the Central Bank of Nigeria’s (CBN) official inflation data at face value. That official rate averaged 14.3 percent from January to August of this year. For the IMF forecast to materialize, official annual inflation in Nigeria would need to average 17.6 percent for the September through December period.  What did the latest inflation report from the Central bank of Nigeria show?  According to the CBN, annual inflation was 17.9 percent in September. The IMF’s blind acceptance of the CBN’s data is a big mistake.


Texas Wisely Concedes Economic Liberty Case

Last month, I wrote about a case challenging medical-licensing rules that prevented an innovative health-services company, Teladoc, from using advanced technology to provide care to hard-to-reach patients. The Texas Medical Board, which isn’t supervised by any branch of state government, oversaw the restrictions, which a district court threw out on antitrust grounds. After the board appealed, Cato filed a brief supporting Teladoc. And we weren’t alone; the range of briefing was impressive, particularly for a case that hadn’t yet reached the Supreme Court.

Well, today the Texas attorney general’s office filed an unopposed motion to dismiss the state’s own appeal. That should be the end of this case. Although I’m sure Teladoc and its fellow plaintiffs would’ve loved to finish litigating the appeal and get a favorable Fifth Circuit ruling, it’ll take this win all the way to the economic-liberty bank.

It’s always hard to know what impact an amicus brief has – even when you’re cited, it might be for a tangential point, or indeed to counter your argument – and this case illustrates that lesson: there’s not even a court ruling here, but the quality of amicus briefs certainly contributed to Texas’s decision to abandon the medical board’s appeal.

Congrats to Teladoc, its counsel, and the people of Texas!

Lies, Damned Lies, and Trade Statistics

Adam Davidson of the New Yorker has written a profile of Donald Trump’s trade adviser Peter Navarro. Here’s a key excerpt: “Navarro’s views on trade and China are so radical, however, that, even with his assistance, I was unable to find another economist who fully agrees with them.”

That’s the big picture of the trade views of Trump/Navarro. Now here’s a closer look at a very specific claim in a Trump campaign memo co-authored by Navarro. This kind of claim is, in my view, very enlightening about how this crowd approaches trade policy:

Over the last 25 years, Bill and Hillary Clinton have championed one-way deals like 1993’s NAFTA, China’s 2001 entry into the World Trade Organization, and the 2012 South Korea-US Free Trade Agreement. These poorly negotiated deals benefit the elite corporate interests that finance the Washington politicians even as they impoverish our heartland and destroy the livelihoods and lives of working Americans.

Michigan farmers lost out too. U.S. exports to Canada and Mexico of cattle – one of Michigan’s top agricultural products - fell 59 percent in the first 22 years of NAFTA.

What’s nice about this claim about cattle exports is that, unlike many of the vague criticisms people make about trade agreements, this one can be tested: Did these exports actually fall? The authors don’t give a citation for the data, which makes it difficult to double-check, but here’s some data from the U.S. International Trade Commission on exports of “bovine animals” (including cattle and buffalo, but mostly made up of cattle):

 Exports of Bovine Animals

It turns out he’s roughly correct in terms of the 22 year trend. So does that mean he has a point about NAFTA? Could lowering Mexican and Canadian tariffs through the NAFTA somehow have hurt U.S. exports, contrary to all logic? The answer is no, for two reasons.


U.S. Muslims Become More Socially Liberal As Muslim Immigration Rises

In my post last week, I demonstrated using surveys mostly from Gallup and Pew Research Center that Muslim Americans are rapidly abandoning beliefs widely held in their native countries and adopting the more liberal social and political beliefs of other Americans. But what’s even more remarkable about this fact is that this transition has occurred at the same time that Muslim immigration has ramped up. In other words, immigration is not detracting from those changes and may even be contributing to them.

While the number of Muslim immigrants and their children increased by nearly 60 percent from 2007 to 2015—from 1.7 million to 2.7 million—the native Muslim population actually fell by 10 percent—from about 658,000 to 594,000. This provides evidence that the immigrants themselves are taking part in the recent changes.

Figure 1: Muslim Population in the United States by Generation in the United States*

Sources: Pew (2007), Pew (2011), Pew (2015). Note Pew (2015) failed to provide the ratio of immigrant to native, so the figure uses Pew (2014). Pew has no surveys before 2007, but the best survey estimate for year 2000 placed the total Muslim population at 1.9 million (Smith (2002)).

*Note that this figure and its corresponding numbers were updated. The earlier figure used the 2007 ratio of immigrants to natives from Pew’s religious landscape survey, which had a Muslim sample size in 2007 of only 111. The figure was updated with Pew’s Muslim specific survey from 2007 which had a sample size of 1,050 and had a lower proportion of native Muslims.

The Real Danger of Mosul

With support from American air strikes and special operations, Iraqi forces have launched the battle to retake Mosul from the Islamic State (ISIS). The fighting promises to be difficult. Though the Iraqis estimate that there are no more than about 5,000 ISIS fighters in the city, ISIS has had more than two years to dig after taking the city of in June 2014. American and Iraqi officials have warned it could take weeks or even months to liberate Mosul. The real danger for the United States, however, is what happens after Mosul.

Even in the best-case scenario – a quick defeat of ISIS and the destruction of its self-proclaimed caliphate – Iraq will face the monumental task of consolidating its hold on its territory, rebuilding its cities and critical infrastructure, and charting a course toward a healthier national politics, all while dealing with terrorism, sectarianism, and external intervention from both the United States and Iran.

The situation after Mosul will be like the situation after the Iraq war on steroids. Instead of looking ahead to the promise of democracy, Iraq will be grappling with more than a decade of political failure. Instead of tens of thousands of American forces to provide at least some semblance of stability, Iraq must look to its own troubled security forces. Instead of confronting an Al Qaeda in nascent form, Iraq must deal with an Islamic State that no one believes will wither with defeat in Mosul. In short, Iraq is a mess and unlikely to fix itself soon.

And therein lies the danger of Mosul for the United States. If the United States believed it was necessary to help rebuild Iraq after the 2003 war, how much more powerful will the temptation be to stick around this time given the situation? It is difficult to see President Trump or President Clinton making the decision to pull back once the primary fight against ISIS is won. Instead, the United States is likely to expand its presence in and support to Iraq in the years to come in the name of counterterrorism.

The past fifteen years, however, have made clear that long-term nation building projects like Afghanistan and Iraq are extremely costly and uncertain projects. In Afghanistan, after fifteen years and hundreds of billions spent in development and military aid, the country remains in shambles, terrorism and conflict are rampant, and only the continued presence of coalition military forces prevents the Taliban from retaking the country. In Iraq, of course, regime change provided the opportunity for ISIS to emerge, despite the presence of thousands of American troops and billions of dollars in assistance. And these failures occurred despite the fact that Afghanistan and Iraq were in many ways best-case scenarios given the level of influence and control the Untied States exerted in both places. So why, exactly, should the United States expect things to go better in Iraq after Mosul when the fundamentals on the ground are now so much worse than they were after the Iraq war?

Why Trump’s Immigration Position Is Hurting Him

The issue of immigration handed Donald Trump the Republican nomination. His style of communication, emphasis on the issue, and seemingly simple solutions courted, converted, or imported a core group of GOP voters to support his candidacy. Many expected Trump to moderate his immigration stance after winning the nomination, but Trump doubled-down on his anti-legal immigration position at a recent speech in Phoenix. This election is a great test of whether Americans will vote for a candidate whose substantive policy focus is immigration restrictionism. 

His choice to focus on immigration was successful during the Republican primary, but it’s not fairing as well with the general electorate. Since 1965, Gallup has asked Americans, “In your view, should immigration be kept at its present level, increased, or decreased?” Over time, Americans have become more supportive of liberalizing immigration. In 1965, only 7 percent of respondents wanted to increase immigration. The most recent 2016 poll found that 21 percent wanted to increase immigration (Table 1).

Figure 1

Should immigration be kept at its present level, increased, or decreased?


Source: Gallup Survey