Topic: General

Czech President to Join Cato Institute

Václav Klaus, who is stepping down after serving 10 years as president of the Czech Republic, will become a Distinguished Senior Fellow at the Cato Institute on March 7th.

Klaus was born in Prague in 1941, during the Nazi occupation, and went on to graduate from the University of Economics there in 1963. He also attended Cornell University in 1969 before returning to his home country after the Soviet invasion of Czechoslovakia.

He was able to earn a Ph.D in economics while working and studying at the Institute of Economics of the Czech Academy of Sciences in 1968, but was removed from his position shortly thereafter for having views deemed too capitalistic.

“Václav Klaus proved that a steadfast belief in the free market coupled with strong leadership skills could move a nation to throw off the shackles of communism,” said Cato President and CEO John Allison. “We are looking forward to working closely with this champion of liberty.”

In 1991, Klaus co-founded the pro-market Civic Democratic Party, the largest center-right party in the nation, and won the election for prime minister a year later. The party has remained in government for most of the Czech Republic’s independence. Prior to that, Klaus served as finance minister of the former Czechoslovakia, where he was the key architect of the country’s successful move from central planning to the market.

Klaus has been a regular guest at the Cato Institute over the years, speaking for the first time in 1992 as finance minister of Czechoslovakia. Cato has published multiple articles and lectures by Klaus on topics including the environment, the fall of communism, and the Eurozone.

“I consider the Cato Institute one of the most prominent public policy research organizations in the United States which has been consistently advocating the classical liberal principles,” Klaus said in a letter to Cato Founder and President Emeritus Edward H. Crane. “I am truly honored to join Cato.”

Klaus will headline an event at Cato on March 11, The European Crisis Continues: No Solution on the Horizon. In addition to his work at Cato, Klaus has also started his own think tank in the Czech Republic, the Václav Klaus Institute, in Prague.

 

Related Materials:

Václav Klaus, Renaissance: The Rebirth of Liberty in the Heart of Europe, Washington, D.C.: Cato Institute, 1997. Print. 

When Will the Eurozone Collapse?,” by Václav Klaus, Economic Development Bulletin No. 14, May 26, 2010

Environmentalism and Other Challenges of the Current Era,” by Václav Klaus,Economic Development Bulletin No. 10, April 20, 2007

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Arne Duncan, Less Than Zero?

Yesterday we laid out how, as percentages of total state education workforces, the Obama administration’s worst-case sequester job loss predictions are actually tiny. They’re so small they approach zero, generally clocking in at around 0.30 percent.

It seems, though, that even that number might be too big to fully capture the degree of fear-mongering by the administration. As the Washington Post is now reporting, U.S. Secretary of Education Arne Duncan actually has no evidence to back up the claim he made on Face the Nation this weekend that “there are literally teachers now who are getting pink slips, who are getting notices that they can’t come back this fall.” OK, he could point to one example – Kanawha County, West Virginia – but not without adding, “whether it’s all sequester-related, I don’t know.”

The big question now is, can we get the administration to cop to less than zero job losses? It might not be possible because, as trumped up as the sequester is, it probably will involve some job trimming. But it isn’t hard at all to see less than zero cuts when you put the sequester into historical context. As our by-now famous graphs make clear, for decades hiring in our schools grew well in excess of enrollment – a huge hiring boom. That means relatively minor cuts will, indeed, come out to far less than zero long-term losses. And considering that academic achievement was utlimately flat throughout the boom, much bigger cuts are clearly in order.

 

Anyway, thanks to Secretary Duncan – and the Washington Post – for making the job of exposing administration fear-mongering much, much easier.

Sequestration Will Not Make the United States Less Safe

Will sequestration undermine U.S. national security? Hardly. Today, the Cato Institute released a new infographic putting these minor cuts in perspective.

Military spending will remain at roughly 2006 levels—$603 billion, higher than peak U.S. spending during the Cold War. Meanwhile, we live in a safer world. The Soviet Union has been dead for more than two decades; no other nation, or combination of nations, has emerged since that can pose a comparable threat. We should have a defense budget that reflects this reality.

To be clear, sequestration was no one’s first choice. But the alternative—ever-increasing military spending detached from a legitimate debate over strategy—is worse. We should have had such a debate, one over the roles and missions of the U.S. military, long before this day of reckoning. And politicians could have pursued serious proposals to prudently reduce military spending. Instead, they chose the easy way out, avoiding difficult decisions that would have allowed for smarter cuts.

Until now, there have been few constraints on Washington’s ability to spend what it pleases on the military. As my colleagues Benjamin Friedman and Justin Logan put it, Americans “buy defense like rich people shop, ignoring the balances of costs and benefits.”

Policymakers can’t postpone the tradeoffs forever, especially when the public has grown increasingly weary of foreign entanglements. If forced to choose between higher taxes, less military spending, or lower domestic spending, in order to balance the budget, the military fares least well, with solid pluralities favoring cuts in military spending over cuts in other programs.

Which is why it is so important to get the foreign policy debate right. If we are going to give our military less, we need to think about asking it to do less.

A number of experts have done that, rethinking the military’s purpose, and documenting the savings that would flow from a more modest foreign policy. The sequester is a first step, albeit an imperfect one, that could finally compel policymakers to do the same.

Download and share this infographic on your blog, Twitter, or Facebook.

Earth to New York Times: Please Show Us these “Deep Spending Cuts” You Keep Writing About

Sigh. I feel like a modern-day Sisyphus. Except I’m not pushing a rock up a hill, only to then watch it roll back down.

Compared to educating journalists about fiscal policy, this is an easy task

I have a far more frustrating job. I have to read the same nonsense day after day about “deep spending cuts” even though I keep explaining to journalists that a sequester merely means that spending climbs by $2.4 trillion over the next 10 years rather than $2.5 trillion.

The latest example comes from the New York Times, which just reportedabout “deep automatic spending cuts that will strike hard” without bothering to provide a single concrete number about spending levels in any fiscal year.

Yes, you read correctly. A story about budget cuts did not have any numbers for spending in FY2013, FY2014, or any other fiscal year.

So, for the umpteenth time, here are the actual numbers from the Congressional Budget Office showing what will happen to spending over the next 10 years if we have a sequester.

Sequester 2013

I don’t mean to pick on the New York Times. Yes, the self-styled paper of record has been guilty in the past of turning budget increases into spending cuts, but the Washington Post is guilty of the same sin, having actually written in 2011that reducing a $3.8 trillion budget by $6 billion would “slash spending.”

And the NYT story actually has some decent reporting on how Republicans so far have (fingers crossed) avoided the tax-increase trap that Obama thought the sequester would create.

But one would still like to think that Journalism 101 teaches reporters to include a few hard facts when writing stories. Particularly if they’re going to use dramatic adjectives to describe what supposedly will happen.

Anyhow, this is just part of a larger problem. As I explained in these John Stossel and Judge Napolitano interviews, the politicians and interest groups have given us a budget process that assumes ever-increasing spending levels, which then allows them to make hysterical claims about “savage” and “draconian” cuts whenever spending doesn’t rise as fast as some hypothetical baseline.

This is why almost nobody understands that it’s actually relatively simple to balance the budget with a modest bit of spending restraint. My goal is reducing the burden of government spending, not fiscal balance, but it’s worth noting that we’d have a balanced budget in just 10 years if spending grew by “only” 3.4 percent annually.

The Challenges of Negotiating a U.S.-EU Trade and Investment Agreement

A couple months ago on this blog, I set out some views on the possible U.S.-EU free trade agreement that was being discussed.  Things have now progressed a bit, and President Obama has announced talks on a “Trade and Investment Partnership” with the EU.  Reports suggest that the negotiations will begin this summer.

Should we be excited about these developments?  Perhaps a little bit, but overall I maintain the ambivalence I had in my earlier blog post.  I have elaborated on this ambivalence in a Free Trade Bulletin. To summarize, I like all the trade liberalization parts of these talks (lower tariffs, removing barriers to services trade, opening up government procurement), but there are also aspects that take us down a difficult and unclear negotiating path.  One of these aspects is the issue of “regulatory barriers to trade.”  Some people have the idea that there will be great economic benefits if we can harmonize regulation across the U.S. and EU, so that, for example, manufacturers do not have to produce different products for different markets.  I agree that there would be benefits if we could address this problem.  But it won’t be easy to reach agreement here, and there could be some downsides (e.g., if this is a compromise, both the U.S. and EU may have to agree to some regulatory changes that they don’t like).

I’d like to get excited about these talks. But I have some doubts about their scope, and I’m not sure anything will come out of them.

We’ll be talking more about all this at a policy forum here at Cato tomorrow.

Only Doom Without the Denominator

The Obama administration tried to turn the doom-and-gloom up a notch over the weekend, releasing reports on how many employees each state could lose if sequestration isn’t stopped. Teachers were prominently featured, of course, because nothing scares people like the prospect of their kids not getting educated.

“Could” is a crucial word here, because it is entirely possible that savings could be found that would negate the need to dismiss people. For instance, unnecessary purchases could be cancelled, or all employees could take small pay cuts. But suppose worst-case firings did come. How horrific would the education damage be?

It turns out, once you look at the overall staffing picture, not very. Using a compilation of the state reports put together by the Washington Post, as well as Digest of Education Statistics staffing data, we assembled the following table calculating how big a percentage of public school employees in each state would disappear in the worst-case scenario. Unlike the administration, we included the numerator and the denominator.

Karzai’s Decree: Get Out!

Just yesterday, after accusing unnamed “armed individuals” of harassing, torturing, and murdering innocent villagers, Afghanistan’s President Hamid Karzai ordered all U.S. Special Forces out of Wardak province, a defensive buffer against insurgents southwest of the capital. Reports on Karzai’s decision have focused on the implications of America’s withdrawal from the “strategically important” province. But U.S. policymakers should leverage the opportunity by rescinding their open-ended commitment to the country and transferring responsibility to the Afghans. 

To be sure, U.S. and coalition forces will face challenges as U.S. combat troops scale back to advisory roles and U.S. Special Forces assert ever greater authority. But as someone close to Karzai commented sourly, Afghan officials are tired of Americans “running roughshod all around our country.” 

For years, there have been reports that CIA-trained Afghan militias operating beyond the control of the Karzai administration have conducted so-called night raids and captured and killed a number of alleged Taliban commanders—“alleged” because information about those operations remains classified. Furthermore, and perhaps more importantly, Taliban-perpetrated violence in and around the province continues. 

Amid increasing Afghan public anger over foreign misconduct and civilian casualties, the mere suspicion that American commandos condoned such lawless activities (an allegation U.S. officials deny) proved enough to encourage Karzai to expel from Wardak the very foreigners he relies on for his country’s security. As Presidential spokesman Aimal Faizi said of Karzai’s decision, “local people are blaming the U.S. Special Forces for every incident that is taking place there.” 

That blame-shifting, however warranted, is particularly troublesome, given the reckless behavior of Afghan security forces under U.S. training. BBC reporter Ben Anderson recently documented that Afghan police are also rife with criminality, and show little compunction about firing at enemies when civilians are in the line of fire. Upending the fundamental premise of Washington’s “hearts and minds” strategy, one deputy police commander told Anderson he saw no difference between civilians and the Taliban. 

For these and other reasons far too numerous to mention here, the Afghan government, its police, and armed forces must take full responsibility for the security of their country. Rather than respond with indignation, Washington should take Kabul’s ruling as a blessing. 

Update: A previous version of this post did not include a source for the following passage: “But as someone close to Karzai commented sourly, Afghan officials are tired of Americans ‘running roughshod all around our country.’” The source is the New York Times and the link has been inserted above.