New In the Summer Issue of Regulation

The latest issue of Regulation magazine has been released on the Cato website.

The cover article, by Christopher Robertson and Jamie Cox Robertson of the University of Arizona, examines the extent of over incarceration in the U.S.  Why are so many innocent people convicted of crimes? They review recent scholarship that concludes that many types of evidence introduced by prosecutors to convince jurors of guilt, such as bite mark, fingerprint, and bullet analysis, are not scientifically reliable. The authors suggest various remedies to the wasteful incarceration problem including public rewards for attorneys who demonstrate that a prisoner should be released.

Researchers John Lott and Gary Mauser explore empirical research on firearms. They found that the findings of such research vary systematically with the disciplinary orientation of the authors.  A large majority of articles written by economists find that expanded legal access to firearms reduces crime and does not increase the suicide rate, and that gun owners who are approved for concealed-carry are less likely to commit crimes than ordinary Americans. In contrast Criminologists were more evenly divided on these questions.

Two articles critique regulatory rationales rooted in behavioral economics. In Infantilization by Regulation law professors Jonathan Klick and Greg Mitchell argue that protecting people from the effects of their choices reduces their ability to think critically about them.  Georgetown ethics professor John Hasnas explores how much liberty is preserved under modern “libertarian paternalism.” He then asks whether the insights of behavioral economics apply to public decisions, argues yes, and concludes that U.S. Constitution is an excellent example of choice architecture.

One of the most discussed topics in higher education policy is the rate of inflation in university tuition. Top William and Mary economists find empirical evidence that highly selective schools reduce financial aid to students who receive federal tuition support.

In our Briefly Noted articles economist Ike Brannon argues that cities harm transit riders by over-providing subsidized parking near street corners. Brannon and the American Action Forum’s Sam Batkins question whether expanded family leave policies would harm workers. University of California, Irvine emeritus professor Richard McKenzie shares the results of his survey that found servers at fast-casual restaurants would not support substituting higher hourly wages for the current tipped-wage system. Finally, University of Michigan professor Thomas Hemphill lays out a practical approach to reforming occupational licensing laws.

Book reviews include Free Market Environmentalism reviewed by Timothy Brennan, Robert Reich’s Saving Capitalism and Robert Gordon’s The Rise and Fall of American Growth reviewed by David R. Henderson, and Phil Murray’s review of Dani Rodrik’s Economics Rules.

 

My Working Papers column describes papers on cigarette taxes and food stamps, e-cigarettes and adolescent smoking, corporate inversions, and public housing and crime.

End the Forgotten War in Afghanistan

America remains at war in Afghanistan. After almost 15 years it’s time to bring the last troops home.

In October 2001 George W. Bush sent U.S. forces to destroy Osama bin-Laden’s al-Qaeda terrorist organization and oust the Taliban government which hosted him. Washington then shifted to nation-building.

The 9800-man American contingent was to have been cut in half this year and reduced to 1000 early next year. But last October the administration decided to slow the planned withdrawal. The total now will drop to 5500 in 2017.

Although U.S. participation in combat has formally ended, American troops remain on call. Proposals abound for rejoining the war. For instance, Gen. John F. Campbell, then-U.S. commander in Afghanistan, urged the administration to allow American troops to attack the Taliban even if it did not threaten allied forces and use air support on behalf of Afghan forces until Kabul established its own air force.

In 2012 Afghanistan became America’s longest military conflict, passing the Vietnam War. What is Washington doing there?

There’s an air of desperation about Kabul. James R. Clapper, director of National Intelligence, cited the “serious risk of a political breakdown” in Afghanistan.

That Saudi Sinking Feeling

The rate of growth in a country’s money supply, broadly measured, will determine the rate of growth in its nominal GDP. For Saudi Arabia, the following table presents a snapshot of the relationship between the growth in the money supply (M3) and nominal GDP.

 

The chart below shows the course of M3. Following the oil price plunge of September 2014, the growth in M3 has slowed. The rate of nominal GDP growth will follow.

Why is the money supply growth rate declining? Since the plunge in oil prices, the Saudis’ current account has dipped into negative territory. This has to be financed, and the Saudis have used their stash of foreign reserves to do the financing.

Declare War Only Against Those Who Threaten America

The Constitution gives the power to declare war to the legislative branch. In recent decades, however, members of Congress have preferred to leave the hard decisions to the president. This constitutional abdication has allowed unilateral war-making.

Even President Barack Obama, who tossed the issue of Syria’s use of chemical weapons to Congress, has relied on the outdated authorization passed after the terrorist attacks of 9/11 to validate multiple military operations today.

Congress could make a bad situation worse. Representatives Scott Perry (R-PA), Matt Salmon (R-AZ), and Cynthia Lummis (R-WY) have introduced H.J. Res. 84,”Authorization for Use of Military Force Against Islamist Extremism.” It would create a long list of target “organizations that support Islamist extremism,” many of which have done nothing against America.

It is a bad bill.

First, a country normally declares war against entities, not philosophies. What matters is not whether a nation or group is Islamist but whether it endangers America.

Second, the threat to the U.S. and other nations is violent extremism, not extremism. It doesn’t particularly matter if people have seemingly kooky ideas on how to live if they do not kill and otherwise harm others.

Third, war should be reserved for responding to threats to America. In World War II Washington declared war on specific countries, most notably Japan and Germany, not on fascism.

Yet Representatives Perry, Salmon, and Lummis came up with numerous new enemies: “the Islamic State, Al-Qaeda, Al-Qaeda in the Arabian Peninsula, Al-Qaeda in the Islamic Maghreb, Al Shabab, Boko Haram, Al-Nusra Front, the Haqqani-Network, the Taliban, Houthis, Khorasan Group, Hamas, Hezbollah, and any substantial supporters, associated forces, or closely related successor entities to any of such organizations.”

The proposed choice of enemies well illustrates the problem of U.S. foreign policy. The Islamic State did not turn to terrorism against America or Europe until Washington and its allies took over the fight against the putative caliphate. Had Washington left the battle to those in the region threatened by the Islamic State—essentially everyone—the group likely would be devoting its terrorist energies elsewhere.

The Myths of Primacy: Alliances and Security Dilemmas

Since the end of the Cold War, the United States has followed a foreign policy of primacy. The strategy aims to preserve and extend America’s dominant position in the world using its massive military and global network of alliances to spread western values and stop prospective threats before they materialize. Yet, while primacy continues to receive bipartisan support, a growing number of U.S. foreign policy and military experts are now calling for a new grand strategy, one that would make the United States stronger and more secure, and that would better align with the fundamental values at the core of the nation’s founding.

Last Wednesday, the Cato Institute hosted a conference titled “The Case for Restraint in U.S. Foreign Policy” to explore one such strategy. Over the course of the day, four panels of international relations experts explained why a grand strategy of restraint could and should replace primacy.

The first panel challenged the conventional wisdom about the benefits of U.S. alliances formed during the Cold War. The first speaker, Brendan R. Green of the University of Cincinnati, discussed the gulf between the academic literature and the arguments made by primacists on nuclear proliferation, concluding that the advocates of hegemony oversell the role that alliances play in halting nuclear proliferation.

Following Green, Eugene Gholz of the University of Texas at Austin explained how our alliance relationships come at significant costs to American security by exacerbating the security dilemma between the United States and countries like China for the sake of ally interests.

The third and final panel speaker, Joshua I. Shifrinson of Texas A&M University, spoke on behalf of himself and David Edelstein of Georgetown University. Shifrinson and Edelstein argued that the United States faces significant risks of entrapment—getting drawn into a conflict by its allies.

You can watch the full discussion below. 

Taxpayers Railroaded in California

In this essay on government construction projects, I discuss how promoters use “strategic misrepresentation” to subdue taxpayer opposition and get dubious spending schemes approved. The low-balling of projected costs is a tried and true deception used by infrastructure promoters the world over.

A variation on the strategy was apparently used to gain support for California’s expensive bullet train project. The Los Angeles Times reports that while people were aware that taxpayers would pay the system’s huge construction costs, officials promised that the operating costs would be covered by rail system revenues, not taxpayers. That promise appears to have been a fraud:

When a Spanish firm submitted a bid last year to help build the California bullet train, it cautioned that taxpayer money probably would be needed to keep the system operating.

Having reviewed data on 111 high-speed train lines around the world, construction giant Ferrovial said, it found that all but three could not make ends meet.

“More than likely, the California high speed rail will require large government subsidies for years to come,” the proposal said. 

That warning, however, was expunged from the version of Ferrovial’s proposal posted on the state’s website. The only record of it was on a data disk provided to The Times and others under a public records act request.

The state rail authority repeatedly has asserted that it will not need a subsidy and that every high-speed system in the world operates without taxpayer assistance — despite significant evidence to the contrary. A number of projects around the world have failed financially, others require direct operating subsidies and many more benefit from government taxes and regulations on competing airline and highway systems, according to audits, studies and interviews.

But in asking taxpayers to help build the Los Angeles-to-San Francisco line, officials assured the state would be able to pay the operating costs purely from the system’s revenues — and thus not sap money needed for social services, education or other projects.

When California voters committed the $9 billion in bonds in 2008, the measure stipulated that the system would have to operate without future public funding.

How can citizens fight such deceptions? This episode illustrates the importance of citizen engagement and transparency in government fiscal matters. It was not a state auditor that discovered the operating subsidy cover-up, but a concerned citizen doing some poking around:

The change in Ferrovial’s proposal was first noticed this spring by Morris Brown, a Bay Area resident and former Caltech chemistry professor who closely monitors documents and statements issued by the bullet authority.

    

How Terrorism Has Hijacked American Foreign Policy

Terrorism has hijacked American foreign policy. First Al Qaeda and now the Islamic State have come to dominate thinking about international affairs so completely that there is hardly any issue that has not been “terrorized.” Issues that once had significance because they were important in their own right now only matter insofar as they affect the fight against terrorism. Russia? Now discussed primarily with respect to whether their air campaign affects ISIS in Syria. Syria? Important only because of ISIS and other jihadists who want to rule. Iraq? The birthplace of ISIS. Iran? A regional power broker who supports terrorism as whose support for Assad in Syria matters because of…ISIS. Libya, the latest concern du jour? You guessed it: concern for Libya is in fact concern for the growth of ISIS in the country.

The figures below illustrate just how deeply ISIS has infiltrated American foreign policy news. In the first figure, you can see that over the past three years almost every foreign policy topic has taken on a distinct ISIS flavor. As the second figure shows, after reaching a historical high after September 11, news coverage of terrorism dropped steadily in the following years until rebounding in 2013. Attention to ISIS only really took off after June 2014 when ISIS started calling itself ISIS and simultaneously announced the establishment of a global caliphate.

(News data from Factiva’s Top US newspaper file)