Tag: united states

Domestic Developments in U.S.-Saudi Relations

In the run-up to President Obama’s visit to Saudi Arabia later this week, two domestic issues which concern the U.S.-Saudi relationship are also gaining attention. Yet these developments – a congressional bill which allows Americans to sue foreign governments for supporting terrorist groups, and growing calls to declassify the remaining 28 pages of the 9/11 Commission’s report - are unlikely to substantially impact the U.S.-Saudi relationship, which is already on a downward trend due to other, more substantive factors.

Certainly, the bill would have major legal implications for relatives of victims of the 9/11 attacks, who have previously tried to sue the Saudi government for their possible involvement. However, their hope that the declassified report would yield a better understanding of the scope of that involvement is unlikely to yield any smoking gun revelations.

Some of the purported revelations are, in fact, already known. It has been long known that Saudi Arabia has had a hand in the spread, through schools and philanthropic endeavors, of a certain kind of extremist Islamic philosophy often described as Wahhabism. That this philosophy is shared by various radical groups including ISIS and Al Qaeda is likewise well-known, but there is no evidence that the Saudi government ever provided material support to either group.

Syria at the UN General Assembly

Presidents Putin and Obama presented two radically different worldviews at the UN yesterday morning, but both obliquely described the other as the key cause of global unrest. Putin took aim at the United States, implying that the Arab Spring was orchestrated by the United States and that sanctions on Russia are undermining global trade, while President Obama called for a return to the rule of law, and lambasted human rights violators. These disagreements reportedly carried on into the private meeting held by both leaders last night on Syria and Ukraine. 

But the root of the disagreement on Syria isn’t differing objectives: both Russia and the United States want to see ISIS contained and degraded, and an end brought to the terrible conflict in Syria and Iraq. The difference lies in the means both sides want to use to achieve this objective. The Russians want to protect the sovereignty and power of the Assad regime, while U.S. leaders insist that Assad must go, to be replaced with a government which includes representation from the Syrian opposition.

Another “Oops” Moment for Paul Krugman

I’m tempted to feel a certain degree of sympathy for Paul Krugman.

As a leading proponent of the notion that bigger government stimulates growth (a.k.a., Keynesian economics), he’s in the rather difficult position of rationalizing why the economy was stagnant when Obama first took office and the burden of government spending was rising.

And he also has to somehow explain why the economy is now doing better at a time when the fiscal burden of government is declining.

But you have to give him credit for creativity. Writing in the New York Times, he attempts to square the circle.

Let’s start with his explanation for results in the United States.

…in America we haven’t had an official, declared policy of fiscal austerity — but we’ve nonetheless had plenty of austerity in practice, thanks to the federal sequester and sharp cuts by state and local governments.

If you define “austerity” as spending restraint, Krugman is right. Overall government spending has barely increased in recent years.

But then Krugman wants us to believe that there’s been a meaningful change in fiscal policy in the past year or so. Supposedly there’s been less so-called austerity and this explains why the economy is doing better.

The good news is that we…seem to have stopped tightening the screws: Public spending isn’t surging, but at least it has stopped falling. And the economy is doing much better as a result. We are finally starting to see the kind of growth, in employment and G.D.P., that we should have been seeing all along… What held us back was unprecedented public-sector austerity…now that this de facto austerity is easing, the economy is perking up.

But where’s his evidence? Whether you look at OMB data, IMF data, or OECD data, all those sources show that overall government spending has been steadily shrinking as a share of GDP ever since 2009.

Iran’s Economy, With and Without a P5+1 Agreement

The haggling between Iran and the so-called P5+1—the permanent members of the United Nations Security Council, plus Germany—is scheduled to come to a close on Monday, November 24th. The two parties each want different things. One thing that Iran would like is the removal of the economic sanctions imposed on it by the United States and its allies.

After decades of wrongheaded economic policies, Iran’s economy is in terrible shape. The authoritative Economic Freedom of the World: 2014 Annual Report puts Iran near the bottom of the barrel: 147th out of the 152 countries ranked. And the “World Misery Index Scores” rank Iran as the fourth most miserable economy in the world. In addition to economic mismanagement, economic sanctions and now-plunging oil prices are dragging Iran’s structurally distorted economy down. So, it’s no surprise that Iran would like one of the weights (read: sanctions) on its economy lifted.

Just how important would the removal of sanctions be? To answer that question, we use the Institute of International Finance’s detailed macroeconomic framework. The results of our analysis are shown in the table and charts below the jump.

Mirror, Mirror, on the Wall, Which Nation Has Increased Welfare Spending the Fastest of All?

There’s an old joke about two guys camping in the woods, when suddenly they see a hungry bear charging over a hill in their direction. One of the guys starts lacing up his sneakers and his friend says, “What are you doing? You can’t outrun a bear.” The other guys says, I don’t have to outrun the bear, I just need to outrun you.”

That’s reasonably amusing, but it also provides some insight into national competitiveness. In the battle for jobs and investments, nations can change policy to impact their attractiveness, but they also can gain ground or lose ground because of what happens in other nations.

The corporate tax rate in the United States hasn’t been changed in decades, for instance, but the United States has fallen further and further behind the rest of the world because other nations have lowered their rates.

Courtesy of a report in the UK-based Telegraph, here’s another example of how relative policy changes can impact growth and competitiveness.

Highlights of the New PISA International Test Results

The latest (2012) PISA results are out! PISA is a test of fairly basic, practical skills given to 15-year-olds around the world. Here are some of the highlights:

  • U.S. performance is essentially flat across subjects since 2003
  • Finland’s performance has declined substantially since 2003
  • Korea is continuing to improve, solidifiying its position as one of the highest performing nations
  • Already the highest-performing Latin American country, Chile has continued to improve, leaving the regional average further behind.

The U.S. story needs little elaboration. Neither the structure nor the content of American schooling has changed in educationally meaningful ways since 2003. We still have 50 state education monopolies, with a growing but still realtively small homogenizing federal presence.

The “Replicate Finland!” bandwagon was always misguided. It is simply not sensible to take a nation’s performance on a single test, in isolation, as evidence for the merits (or demerits) of its national education policies. There are too many other factors that affect outcomes, and there are too many important outcomes for a single test to measure. For those who nevertheless championed Finland as a model, the latest PISA results are a bit awkward (see, for instance, the book: The Smartest Kids in the World).

Though the Chilean student protests of 2011 and 2012 focused on the desire for free, universal college, the leaders of that movement also harshly criticized that nation’s universal K-12 private school choice program. About 60 percent of children in Chile attend private schools, most of them fully or substantially funded by the national government. One of the most famous protest leaders, Camila Vallejo, was recently elected to the Chilean congress as a member of the Communist party. The influence of Vallejo and her compatriots has shifted public sentiment against crucial aspects of the nation’s private school choice program, despite the fact that private schools themselves remain extremely popular with parents. It is quite possible that, in the coming years, Chile will unravel the very policies that have made it one of the fastest improving countries in the world and the top performer in Latin America.

The NEA has called for higher U.S. teachers’ salaries based on the PISA results, arguing that some of the top performing countries pay their teachers more relative to people in other careers. This is self-serving and scientifically dubious. The NEA presents no evidence for a causal link between overall teacher salaries and student performance, just a bit of random cherry picking that ignores countless confounding factors. To find the real link between average salaries and performance, we can look at domestic U.S. research on the subject. Hanushek and Rivkin, for instance, find that “overall salary increases for teachers would be both expensive and ineffective.” Not surprisingly, a recent review of Ohio’s data on teacher “value-added” and teacher pay finds an inverse relationship:

in Cleveland… teachers deemed “Least Effective” by the new state evaluation system earned, on average, about $3,000 more than the teachers deemed “Most Effective.”

There’s some evidence that tying teacher pay to student performance helps to improve learning, but that’s about it.

Finally, it’s important to remember that PISA is a test of everyday “literacy” in the three subjects it covers (math, reading, and science). If you want to know how well students are learning the specific academic content needed for continuing study at the college level, PISA isn’t your best choice. For that, take a look at TIMSS.

Americans Are Far More Compassionate than “Socially Conscious” Europeans

When I’m in Europe giving speeches and participating in conferences, it’s quite common that folks on the left will attempt to discredit my views by asserting that Americans are selfish and greedy.

Since I’m generally sympathetic to Ayn Rand’s writings, I don’t see anything wrong with people striving to make themselves better off. Moreover, Adam Smith noted back in 1776 that the desire to earn more money leads other people to make our lives better. One of his most famous observations is that, “It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.”

But, for the sake of argument, let’s accept the premise of my statist friends in Europe and simply look at whether their assertion is correct. Are Americans more selfish and greedy that their counterparts across the ocean?

The most obvious way of testing this proposition is to compare rates and levels of voluntary charity. Selfish and greedy people presumably will cling to their money, while compassionate and socially conscious people will share their blessings with others.

So how does the United State compare to other nations? Well, I’m not a big fan of the Organization for Economic Cooperation and Development, but the bureaucrats in Paris are quite good at collecting statistics from member nations and producing apples-to-apples comparisons.

And if you look at rates of “voluntary private social expenditure” among nations, it turns out that Americans are easily the most generous people in the developed world.

Voluntary Social Expenditure in OECD Nations

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