Margaret Thatcher and Eastern Europe

By
Dalibor Rohac

A week ago, my colleague Marian Tupy wrote movingly about his personal encounter with Lady Thatcher. Although I never had a chance to speak with her at any length, I echo his sentiments in my recent piece for the Spectator (U.K.), where I argue that both the substance of her policies and the symbolic value of her actions - such as her visit to Gdańsk in November 1988 - played an important role in post-communist transitions:

Symbols matter. In Czechoslovakia, the communist party newspaper, Rudé právo (‘The Red Law’) chose to ignore the Gdańsk episode, providing instead a short notice about her talks with the Polish government about ‘the need to energise economic cooperation between the two countries’. But there was no coming back. In Poland it took less than two months since Thatcher’s visit for the Polish regime to recognise that it was fighting a losing war and start talks with Solidarity, which would lead to dismantling of communism in the country. Czechs and Slovaks had to wait for another year.

The concluding paragraph:

In short, her success in fixing the British economy gave Eastern Europe an example to aspire to. Thanks to her example, Eastern Europeans of the early 1990s understood well that bold and sometimes painful reforms were a necessary condition for Western levels of prosperity. Somehow, I doubt that the current generation of Western leaders are inspiring the same sentiments in citizens of emerging democracies of the world.

Topics: 
General, Government and Politics

Forget North Korea, Weak or Strong: South Korea’s Strength Is Why America Should Come Home

By
Doug Bandow

Joshua Keating over at Foreign Policy offered a thoughtful commentary on Rob Montz’s North Korea documentary, “Juche Strong,” after last Thursday’s screening at Cato. Keating contended that the film, which suggests that pervasive regime propaganda has created at least some degree of legitimacy in the minds of many North Koreans, makes a case “that the United States needs to maintain its current military commitment to the region.” 

No doubt, it would be better for the Republic of Korea and Japan if the North was made up of “cowed and terrified people who will abandon their leaders at the first signs of weakness,” as Keating put it. But even popular determination and commitment—so far untested in an external crisis—go only so far. The question is not whether the so-called Democratic People’s Republic of Korea is a threat, but 1) whether it is a threat which cannot be contained by its neighbors and 2) is a sufficient threat to America warranting U.S. led containment. The answers are no. 

First, the DPRK has amassed a large army with lots of tanks, but training is limited and equipment is antiquated. The North’s forces could devastate Seoul with artillery and missile strikes and a 4,000 tank surge might reach the South’s capital, but North Korea would be unlikely to ultimately triumph. The latter is weak in the air and with a decrepit economy can ill afford anything other than an unlikely blitzkrieg victory. Nor could Pyongyang look to Russia or China for support: the Cold War truly is over. 

More important, the ROK, which currently possesses around 40 times the North’s GDP and twice the North’s population, could do much more in its own defense. South Korea has created a competent, modern, and sizeable military. Is it enough? Only Seoul can answer. 

If the South remains vulnerable to a North Korean strike, it is only because the ROK decided to emphasize economic development and rely on America. That made sense during the early days of the Cold War, but no longer. There is no justification for turning what should be a short-term American shield against another round of Soviet- and Chinese-backed aggression into a long-term U.S. defense dole. It doesn’t matter whether the North Koreans are “Juche Strong or Juche Harmless,” as Keating put it. South Korea can defend itself. (Doing so would be even easier if Seoul and Tokyo worked harder to overcome their historical animus. Alas, they feel little pressure to do so as long as they both can rely on Washington for protection.) 

Second, the DPRK poses no threat to America requiring an ongoing military commitment. Even in 1950 the Pentagon did not believe the Korean peninsula to be vital strategically, but the Cold War created a unique context for the conflict. Today a second Korean War would only be a Korean War. Tragic, yes. Threat to America, no. Pyongyang is an ongoing danger to its neighbors, not the United States. 

The North matters to the United States primarily because Washington remains entangled, with troops, bases, and defense commitments. That is, North Korea threatens America because Washington chooses to allow North Korea to threaten America. 

Of course, proliferation would remain a concern even without a U.S. presence in Korea, but America’s garrison does nothing to promote denuclearization. To the contrary, Washington is helpfully providing tens of thousands of American nuclear hostages if the DPRK creates an arsenal of deliverable nuclear warheads. It would be far better for U.S. forces to be far away, out of range of whatever weapons the North possesses. 

North Korea is only one side of the Northeast Asian balance.  It doesn’t much matter if Pyongyang is weak or strong so long as South Korea and Japan are stronger. 

Topics: 
Foreign Policy and National Security

Changing the World, Little By Little

By
Roger Pilon

If ever you wondered how important institutions were for changing the climate of ideas, the Chronicle of Higher Education released a cover article today, “How Conservatives Captured the Law,” that should settle the question. Written by Michael Avery and Danielle McLaughlin – she a Boston attorney, he a Suffolk University law professor and former president of the far left National Lawyers Guild, whom I’ve debated more than once – it’s a surprisingly dispassionate chronicle of the growth and influence of the Federalist Society over the past 30 years.

Cato, our outreach, and our Supreme Court Review come in for mention early on. And the Legal Studies Institute of The Fund for American Studies, in which I co-teach, gets credit at the outset. But the main focus is understandably on the Federalist Society. Reflecting on its origins at the society’s 25th anniversary gala, Justice Antonin Scalia remarked, “We thought we were just planting a wildflower among the weeds of academic liberalism, and it turned out to be an oak.” It did indeed, with a membership today of more than 50,000 lawyers and law students, lawyer chapters in 75 cities, and student chapters in every accredited law school in the country, the society last year held nearly 2,000 events, including many involving Cato people.

The authors’ dispassionate account notwithstanding, it takes little imagination to see where they stand:

The Federalist Society’s membership includes many brilliant and sincere theorists who raise important and interesting issues. On the other hand, the society’s critics say, its overall impact is reactionary. By glorifying private property, demonizing government intervention (particularly at the federal level), insisting that originalism is the only legitimate method of constitutional interpretation, embracing American exceptionalism as a reason to remain apart from global governance, and pushing related policies, these critics say, the society advocates a form of social Darwinism that has been discredited by mainstream American legal thought since the 1930s.

Social Darwinism? That must be how Progressives see the eclectic group that speaks and debates through the Federalist Society’s auspices, because without so much as a beat in between, the authors continue:

Membership includes economic conservatives, social conservatives, Christian conservatives, and libertarians, many of whom disagree with one another on significant issues, but who cooperate in advancing a broad conservative agenda. They generally support individual rights and a free market, and prefer states’ rights to action by the federal government.

We do indeed, discrediting the “Darwinism” – the Hobbesian war of all against all – that is the product today of the jurisprudence of the 1930s. And in that cooperation there is a lesson. To be sure, we don’t always agree. But we agree on enough to be able to work together to get something done. Read the whole piece to see how much has been done.

Topics: 
Government and Politics, Law and Civil Liberties, Political Philosophy

A Dubious Government Victory in Venezuela

By
Juan Carlos Hidalgo

According to Venezuela’s National Election Council (CNE), Nicolás Maduro, the chavista candidate in yesterday’s presidential election, beat the opposition’s Henrique Capriles by less than 265,000 votes—the narrowest margin in a Venezuelan election since 1968.

However, there are good reasons to believe there was foul play. After polling stations closed yesterday, there were numerous reports of irregularities where security forces or armed gangs prevented the opposition from participating in the vote count. Also, even after 98 percent of the votes had been reported, it took the government-controlled CNE five hours to announce the election result. In previous years, when the government won an election, the CNE would quickly announce the results. But when the opposition won the 2007 constitutional referendum, it took the CNE many hours to do so.

Moreover, the result seemed to have caught the opposition by surprise. Prior to the announcement, the Capriles campaign seemed optimistic about the results they were receiving from all over the country (the opposition had representatives in most polling stations and they—as long as they were allowed—fed Capriles’ command with information about the vote count at each station). Capriles himself refused to recognize the result, saying that Maduro was the defeated candidate and that the numbers released by the CNE were different from those his campaign had. He demanded a full recount of the votes.

Tellingly, Maduro’s victory speech didn’t sound like one. Maduro spent much of his address convincing people he had won fairly. Then he claimed that not recognizing his victory would amount to a coup. He seemed like a man with something to hide.

As on October 7th, when the late Hugo Chávez defeated Capriles by a much larger margin, the election wasn’t free or fair. In her column today [requieres suscription] in the Wall Street Journal, Mary O’Grady describes all the challenges that the opposition faced in this election cycle, including the support that Maduro received from Cuba’s security and intelligence apparatus. The fact that, even against those odds, Capriles managed to get 49.07% of the vote and be within a whisker of victory (at least according to the official report) shows that Maduro would’ve most certainly been defeated in a fair election.

It is now up to the opposition to document all the irregularities and prove that Maduro’s victory was fraudulent. Responsible governments in the Americas, including the U.S government, should withhold their recognition of Maduro’s victory until a full recount takes place.

Topics: 
International Economics and Development

Simplifying the Tax Code by Fixing the Base

By
Chris Edwards

The Sunlight Foundation blogs today about the 6,503 registered tax lobbyists in Washington, and they provide 11 examples of the changes that these folks are pushing for.

I share Sunlight’s concern about special-interest lobbying, but their list actually drives home the more important point that tax simplification should begin by getting the tax base right first.

In this Cato study, I described why consumption-based taxation would be far superior to the current income tax for both growth and simplification reasons. A consumption-based tax—such as the Hall-Rabushka flat tax—would get rid of two of the most complex parts of the current code—capital gains and the capitalization of investment (which involves depreciation and amortization).

Let’s look at Sunlight’s list of 11 proposed tax changes:

  • Five of them (#1, #3, #7, #10, #11) have to do with capitalization. Number 7, for example, regards allowing fire equipment to be expensed rather than depreciated. But under a consumption tax, all investments would be expensed (that is, written off in the first year), which is both simpler and more efficient.
  • Two of them (#6, #8) have to do capital gains. Capital gains taxes would abolished under a consumption tax.
  • Two of them (#4, #9) are tax credits. Almost all tax credits are bad tax policy, including these two. Number 9 is a proposal for a $500 tax credit for hearing aids. Good grief.
  • Two of them (#2, #5) are over my head.

Here’s what I concluded in my study:

The key factor that causes rising income tax complexity is that the tax base is inherently difficult to measure. The Haig-Simons measure of income favored by many academic theorists is economically damaging and too impractical to use in the real world. As a result, policymakers have fallen back on ad hoc and inconsistent rules to define the income tax base. That intensifies complexity and creates instability as policymakers gyrate between different definitions of the tax base. In addition, the lack of a consistently defined tax base increases the use of the tax code for special-interest tax breaks, thus further adding to the system’s complexity.

The complexity and inefficiency of the individual and corporate income taxes have led to great interest in replacing them with a consumption-based tax. The leading consumption-based tax proposals, including the national retail sales tax and the Hall-Rabushka flat tax, could dramatically simplify federal taxation. Those tax systems would eliminate many of the most complex aspects of federal taxation, including depreciation accounting and capital gains taxation.

Imposing the largest federal tax on income was a historic mistake: no simple, efficient, and stable measure of income has been found in nine decades of the income tax. It is time to recognize this mistake and replace the income tax with a consumption-based alternative.

Our Troubling Tax System
Topics: 
Tax and Budget Policy

Your Tax Dollars at Work: Subsidizing the Security of Wealthy Allies

By
Christopher A. Preble

It’s Tax Day, and for millions of Americans that means ponying up to the IRS. The federal government does many things these days—most of which would be more efficiently carried out at the local level, or in the private sector. But Uncle Sam also engages in a particular form of charity that many Americans overlook: spending many tens of billions of dollars to defend wealthy, developed nations.

A new Cato infographic puts it all in perspective. It shows how much American taxpayers spend to subsidize the security, and to defend the interests, of other nations that are more than capable of defending themselves.

Read the rest of this post »

Topics: 
Foreign Policy and National Security, Government and Politics, Tax and Budget Policy

The North Korean Threat: Disengage and Defuse

By
Doug Bandow

Americans lived for decades with the fear of instant death from a Soviet nuclear strike. The People’s Republic of China has acquired a similar, though more limited, capability. Nothing happened in either case, because even evil people who acted like barbarians at home refused to commit suicide abroad. 

So it is with North Korea. A Defense Intelligence Agency report that Pyongyang may have miniaturized a nuclear weapon for use on a missile has created a predictable stir. Yet the analysis was carefully hedged, and Washington’s top security leadership, ranging from Defense Secretary Chuck Hagel to Director of National Intelligence James Clapper dismissed the seriousness of the threat.  

If the so-called Democratic People’s Republic of Korea was lucky, it could successfully launch its longest range missile, topped by a warhead with explosives rather than a nuclear weapon, without the rocket blowing up or falling back on the DPRK. With additional luck, the missile might hit somewhere in Alaska or Hawaii, though Pyongyang would have little control over the actual strike zone. 

But if the missile “worked” in this way, the North’s luck would quickly end. The United States would launch several nuclear-topped missiles and Pyongyang, certainly, and every urban area in the North, probably, would be vaporized. The “lake of fire” about which the DPRK has constantly spoken would occur, all over North Korea. Pretty-boy Kim Jong-un wouldn’t have much to smile about then. 

Deterrence worked against Joseph Stalin and Mao Zedong. There is no indication that it won’t work against the North Korean leadership. There always is a risk of mistake or miscalculation, but that properly is a problem for Pyongyang’s neighbors.  

The latest DPRK crisis should trigger a policy shift in Washington. Once the immediate furor has passed, the Obama administration should begin bringing home the 28,500 U.S. troops stationed in the Republic of Korea, and then end America’s formal security guarantee. Once Washington no longer confronted the North, the latter would turn its ire elsewhere. 

The ROK should take over its own defense, while building a better relationship with democratic neighbors, most obviously Japan, which also has been threatened by the North. At the same time, the Obama administration should hint at a rethink of Washington’s traditional opposition to the possibility of South Korea and Japan building nuclear weapons. China should understand that failing to take strong measures to curb its ally’s atomic ambitions could unleash the far more sophisticated nuclear potential of America’s allies. 

North Korea is a practical threat to the United States only to the degree which Washington allows. Better policy-making would reduce America’s role in Pyongyang’s ongoing tragic farce.

Topics: 
Foreign Policy and National Security

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