Topic: International Economics and Development

The Potential Long-Term Consequences of the Paris Shooting

The horrific killing of 12 people who ran the French satirical magazine Charlie Hebdo, which published the controversial Mohammed cartoons in 2011, by suspected Muslim extremists is likely to have serious consequences. In the short run, it will result in shock, grief, and possibly counterattacks on some innocent Muslims living in France. The long-term consequences of the shooting could be monumental.

First, the French could get their first female head of state since Queen Anne’s regency during the minority of Louis XIV. Queen Anne faced a massive revolt of the nobles known as the Fronde and a subsequent civil war. Ms. Marine Le Pen’s presidency could be similarly eventful.

While, as libertarians, we despise much of what Ms. Le Pen stands for, the two mainstream political parties in France, Mr. Sarkozy’s socialist center-right UPM and Mr. Hollande’s Socialist Party, have totally failed to address the legitimate concerns of the French citizens, chief among them the failure of multiculturalism and high unemployment. The country is ready to hand the reins of power to someone else.

Second, the euro will end its role as a global currency and remain a legal tender in something akin to Großdeutschland greater Germany, composed of Germany and her satellites, like the hapless Slovakia. Ms. Le Pen is mistaken in thinking that the French withdrawal from the euro will revive the French economy. French economic difficulties are primarily structural (i.e., high taxes and over-regulation), not monetary.

Be that as it may, Ms. Le Pen has set her sights on exiting the euro and, at least as far as this author is concerned, the sooner she puts the euro out of its misery, the better. They might even build her a statue in Athens. (Perhaps 2,000 years from now, it will be admired with as much reverence as Venus de Milo is revered today, but I digress…).

Third, on day two of a Le Pen presidency, border guards will return to the French frontiers. Of course, the end of the freedom of movement will be in full breach of all sorts of European treaties and conventions. (The British, by the way, would love to do the same, but cannot, because the British, being British, follow the rules. In contrast, the French, being French, will do what they have always done: follow their national interest.)

France will not be stopped. Because as it is big and powerful, it is not subject to the same rules that govern the rest of the EU. That is why the French have been allowed to make mincemeat out of the Maastricht Treaty without any consequences.

That will cause a major crisis in the EU and lead to a clarification of what the EU is–a cooperative arrangement between sovereign states–and what the EU is not–the United States of Europe.

Happy New Year: A Time to Celebrate Human Progress

The media are full of headlines about war, sexual assault, inequality, obesity, cancer risk, environmental destruction, economic crisis, and other disasters. It’s enough to make people think that the world of their children and grandchildren will be worse than today’s world.

But the real story, which rarely makes headlines, is that, to paraphrase Indur Goklany’s book title, we are living longer, healthier, more comfortable lives on a cleaner and more peaceful planet. (Allister Heath summed up his argument in a cover story for the Spectator of London, without all the charts and tables.) Fortunately, beyond the headlines, more people do seem to be recognizing this.

The Cato Institute, for instance, has created an ever-expanding website on human progress, known simply as HumanProgress.org.

Here’s Steven Pinker expanding on the information in his book The Better Angels of Our Nature: Why Violence Has Declined in Slate:

The world is not falling apart. The kinds of violence to which most people are vulnerable—homicide, rape, battering, child abuse—have been in steady decline in most of the world. Autocracy is giving way to democracy. Wars between states—by far the most destructive of all conflicts—are all but obsolete. 

He has charts of the data in each of those areas. And here’s Pinker at the Cato Institute discussing why people are so pessimistic when the real trends are so good:

Normalize Relations with Cuba

The Obama administration hasn’t had much foreign policy luck with the big issues.  But President Barack Obama is making progress with Cuba.

The spy/prisoner exchange offered obvious humanitarian benefits.  The more significant step announced by the president was to drop what he called today’s “outdated approach” to U.S.-Cuba relations.  His objective is to expand travel and trade with Cuba and reopen the U.S. embassy in Havana.

Of course, the administration’s plan has generated complaints from hard-line Cuban-Americans and Republican uber-hawks.  Representing both camps, Florida Sen. Marco Rubio denounced the policy as “absurd” and another example of “coddling dictators and tyrants.”

Rubio substituted rhetoric for argument.  He apparently realized he couldn’t make a practical case for maintaining sanctions, especially that they would ever achieve their purported end. 

A half century ago the Castros created a nasty dictatorship and allied with the Soviet Union.  But the Soviet Union, Cold War, Soviet-Cuban alliance, and Moscow subsidies for Cuba are all gone.  Only the Castro dictatorship lives on, despite the embargo.

Over the years the rest of the world ignored Washington’s ban.  Even after the cut-off of Soviet transfers the sanctions did not bring Havana to heel.

The administration’s plan is to begin discussions over reestablishing an embassy. Regulations would be changed to encourage more travel and remittances, particularly by Cuban-Americans.  The administration also intends to expand allowable exports to Cuba, including agriculture and construction.  The administration will review the designation of Cuba as a State Sponsor of Terrorism. 

Normalization is long overdue.  There’s no longer a security argument for isolating Cuba.  At home the Castros are thugs, but that’s old news and hasn’t been affected by a half century of sanctions.  What we know as a result of essentially a controlled experiment with the embargo is that sanctions do not release political prisoners, generate competitive elections, unseat dictators, create a free press, or foster a market economy. 

Thirty years into the embargo supporters thought their moment finally had arrived with the collapse of the U.S.S.R.  In 1994 the Heritage Foundation’s John Sweeney declared that the Castro regime’s collapse is “more likely in the near term than ever before.”

Another two decades have gone by and all Washington’s policy of isolation has done is given the Castros an excuse for their failure. When I visited Cuba (legally) a decade ago I met Elizardo Sanchez Santa Cruz, who spent years in Castro’s prisons.  He criticized U.S. sanctions for giving “the government a good alibi to justify the failure of the totalitarian model in Cuba.”

Nor does isolation make a symbolic statement.  There have been and remain plenty of worse regimes in the world. 

Moreover, U.S. policy essentially made Fidel Castro.  Had Washington dismissed his regime, he would have receded in global importance, just another windbag dictator in charge of a poor, small state.  Instead, for decades he was seen as the premier global opponent of Yanqui Imperialism.

Of course, it’s important not to overstate the benefits of normalization.  Cubans are limited in what they can buy and also in what they can produce to sell. 

Moreover, while greater economic and political contact will be naturally seditious and undermine Communist Party rule, the regime has carefully controlled past foreign investment.  Much more will still need to be done to encourage a freer society.

President Obama will face strong opposition, but even most Republicans today recognize that the embargo has failed.

As I wrote in National Interest:  “The Cuban people deserve far better than what the Castros have delivered.  Ultimately, their Communist dictatorship will end up in history’s legendary dustbin.  But not yet, unfortunately.”

Normalizing both economic and diplomatic relations with Havana should be seen not as a victory for the Castro government, but for the people of Cuba.  Liberty will come to that land.  The only question is when.  Expanding relations should help speed the process.

Internationalists vs. Isolationists

Last week, I had a piece in Townhall in which I criticized those who call libertarians “isolationists.”  I explained the various ways libertarians are just as internationalist, if not more so, than those of other political persuasions.  The recent Rand Paul-Marco Rubio back and forth on President Obama’s new Cuba policy helps illustrate the point.  Here is the Washington Post summarizing the exchange:

Hawkish Republicans have long called Paul’s foreign policy “isolationist,” a label he rejects. In this week’s Cuba debate, Paul applied the label to Rubio.

Paul’s comments were unusually personal, beginning with a series of tweets aimed at Rubio followed by a two-paragraph message on his Facebook page. “Senator Rubio is acting like an isolationist” and “does not speak for the majority of Cuban-Americans,” he wrote.

Paul followed up with an op-ed on Time’s Web site Friday afternoon in which he wrote that he grew up learning to despise communism but over time concluded that “a policy of isolationism against Cuba is misplaced and hasn’t worked.” He noted that public opinion has shifted in favor of rapprochement — especially among young people, including young Cuban Americans — and that U.S. businesses would benefit by being able to sell their goods in Cuba.

Rubio responded to Paul’s comments Friday evening, telling conservative radio host Mark Levin, “I think it’s unfortunate that Rand has decided to adopt Barack Obama’s foreign policy on this matter.”

I don’t think there can be much doubt that Paul’s approach of engagement with Cuba is internationalist, not isolationist.  The Rubio approach is harder to define.  It can be seen as isolationist, in a sense; alternatively, it could be some sort of aggressive, interventionist – and ineffective – internationalism.  Either way, the Cuba issue is a good illustration of how libertarians are not isolationists, and hopefully this will put an end to that mistaken characterization.

Time to Trade with Cuba: Regime Change through Sanctions Is a Mirage

President Barack Obama used negotiations over a couple of imprisoned Americans to refashion the entire U.S.-Cuba relationship. He aims to reopen the embassy, relax trade and travel restrictions, and improve communication systems.

Sen. Marco Rubio of Florida charged the administration with appeasement because the president proposed to treat Cuba like the U.S. treats other repressive states. But President Obama only suggested that government officials talk to one another. And that peoples visit and trade with one another.

More than a half century ago Fidel Castro took power in Havana. In the midst of the Cold War the Kennedy administration feared that Cuba would serve as an advanced base for the Soviet Union. Having tried and failed to overthrow the regime militarily, Washington saw an economic embargo as the next best option.

But that didn’t work either. Even after the Soviet Union collapsed and Moscow ended subsidies for Cuba, sanctions achieved nothing.

Today Cuba’s Communist system continues to stagger along. The only certainty is that economic sanctions have failed.

Failed to bring down the regime. Failed to liberalize the system. Failed to free political prisoners. Failed to achieve much of anything useful.

After more than 50 years.

But that should surprise no one. Sanctions are most likely to work if they are universal and narrowly focused. For instance, the Institute for International Economics found that economic sanctions did best with limited objectives, such as “modest” policy change.

Obama’s Historic Move toward Cuba

President Obama’s announcement to overhaul U.S. policy toward Cuba is historic. Given the ossified status of the relationship between both nations—frozen in time for decades despite the fall of the Berlin Wall and the end of the Cold War—Washington’s engagement is significant and welcome.

Obama’s announced measures—a spy swap, loosening of travel and economic restrictions, and launching of discussions to re-establish full diplomatic relations—go as far as the president can go without congressional authorization. Since the passing of the Helms-Burton Act in 1996, the lifting of the most important economic sanctions, particularly the trade embargo and travel ban, requires the approval of Congress. Unlike previous ad hoc measures toward Cuba, the economic measures announced by the president represent meaningful policy change, and they seem to closely follow the recommendations put forward by the Cuba Study Group in a white paper last year.

As part of the deal, Cuba released U.S. contractor Alan Gross after five years of imprisonment. Gross was arrested while working to expand Internet access for Havana’s Jewish community, an act that the Cuban authorities deemed to be “undermining the state.”

The president’s move should be uncontroversial. U.S. policy toward Cuba has been a blatant failure. It has not brought about democracy to the island and instead provided Havana with an excuse to portray itself as the victim of U.S. aggression. It has also served as the scapegoat for the dilapidated state of Cuba’s economy. Moreover, according to government reports, the embargo has also become somewhat of a U.S. security liability itself.

As for the economic measures, they are significant in symbolism, yet limited in their likely impact as long as Cuba retains its failed communist economic system. The 114th Congress should pick up where the president left off and move to fully end the trade embargo and lift the travel ban on Cuba.

 

NOBODY Expects the Spanish Press Contrition!

Back in October, Spain’s parliament passed a horribly ill-advised law at the behest of the Spanish news publishing lobby, the AEDE. Struggling to adapt to the information age in one of Europe’s more troubled economies, the AEDE thought it had hit on a brilliant new revenue source: They got a provision inserted in a new intellectual property law that, starting in January, will force news aggregation sites to pay newspapers for the privilege of linking to their stories.

This never made much sense: News aggregators are a massive source of traffic (and therefore ad revenue) for news sites.  In effect, the law seeks to make it more difficult and costly for anyone to give those sites free advertising.  Indeed, it’s hard to see the point of posting stories online unless you expect people to link to them, and it’s simple enough to automatically prevent search engines from indexing your site’s content if, for some obscure reason, you don’t want people to have an easy means of discovering your content.  But never mind the logic; the law seemed like a foolproof way for ailing news companies to milk a few euros from big tech corporations flush with cash. What could go wrong?

You know how the story ends, right?  Everyone but the newspapers themselves seems to have seen it coming, since something similar had just played out in Germany: Google News, the largest of the aggregators, announced last week that they would be shutting down operations in Spain. Since the company didn’t even show ads on its news site, keeping it open under the new regulations would be an unsustainable, money-losing proposition.

The hilarious coda to the story: The AEDE, which previously complained that news aggregators were “stealing” their work by publishing headlines and tiny snippets of stories, is now begging Spanish regulators to stop Google News from closing. The site’s shuttering, the group complained without irony, “would undoubtedly have a negative impact on citizens and Spanish businesses.” Give them points for chutzpah if nothing else: They’re not even waiting for the blood to dry on the hatchet before bemoaning the loss of their golden eggs.