How Long Is the TPP Going to Take?

We were once told that the Trans-Pacific Partnership would be completed by the end of 2013.  Then it was early 2014, then late 2014, or probably sometime before 2015, or in early 2015 for sure.  At this point, only two things are certain: you shouldn’t believe any predictions about the TPP, and the TPP is taking a really, really long time.

To get an idea for how long the TPP is taking, consider this graph put out by the Peterson Institute earlier this month showing the negotiation and ratification times for previous free trade agreements:

Peterson FTA graph 

The argument they’re trying to make with this graph is that the United States needs to pass trade promotion authority to make sure the TPP doesn’t get bogged down in Congress (the red line) after negotiations finally conclude.  They may be right, but I think it also tells us quite plainly that quick ratification of the TPP, with or without trade promotion authority, is an unrealistic expectation.

Here’s the same data presented with the negotiation and ratification times stacked on top of each other and with the current progress of the TPP (and TTIP) included:

timetable with TPP 

As you can see, the TPP negotiations are taking an unprecedentedly long time to complete. 

Undaunted by the failure of previous predictions, the U.S. Trade Representative is now claiming that the negotiations will conclude and the whole deal can be passed by Congress before the end of 2015.  That would be an impressively abrupt end to a long project, with a blue and red line total of just under 70 months. 

It’s possible that passing trade promotion authority will bring much needed energy to the TPP process.  Hopefully, USTR is right, and Congress will pass trade promotion authority, the TPP negotiations will conclude, and the ratification will be swift. 

It seems more likely, however, that the TPP is a trade policy quagmire the United States entered into with overly ambitious goals and inadequate resolve to see them met.  There’s a lot more than just the lack of trade promotion authority keeping the TPP negotiations from concluding.  And you might notice from the graph above that, even with trade promotion authority in place, the most recent trade agreements lingered in Congress for a very long time after the negotiations were completed.

Maybe I’m wrong.  Maybe the stars are about to align for the TPP.  But if I’m right, how long do we have to wait before we rethink our strategy?

New York Tells Private Company: Fire Your CEO

From yesterday’s Wall Street Journal [$], word that the New York Department of Financial Services has strong-armed Ocwen Financial Corp., a leading mortgage servicer, into a legal settlement that not only extracts $150 million from the company and puts it under the thumb of a state-appointed monitor but even requires its executive chairman to resign

The range of penalties assessed in the case is unusual and may set a new precedent of state regulatory involvement in financial companies’ affairs. Federal and state regulators have slapped banks with tens of billions of dollars in fines before, but Ocwen stands as a rare case of a firm having a top executive forced out to settle charges of mismanagement and misconduct and being obliged to consult with authorities when it appoints board members….

“You’re basically taking away from shareholders the ability to run their company,” said Ira Lee Sorkin, a former senior official at the Securities and Exchange Commission and now a lawyer who defends people and companies in regulatory actions. He isn’t involved in the Ocwen case. “You’re telling the company in effect that the regulator is now running the company.”

It might be one thing if the departing chairman, William Erbey, who built up the company over decades and owns part of it, had himself been convicted of some disqualifying offense, but the article makes no mention of his facing personal charges at all, let alone being found guilty. 

The modern pioneer in seeking the personal ouster of executives as part of regulatory enforcement actions was then-New York attorney general, and later disgraced governor, Eliot Spitzer. Six years ago I wrote about two of the most celebrated of Spitzer’s wins: 

As prosecutor, part of Spitzer’s distinctively relentless style was to demand the decapitation of large organizations by the firing of their CEOs, even in the face of arguments that such steps presumptively punished the execs without a trial and might badly disrupt the enterprises they led. The arch example is Spitzer’s vendetta against Hank Greenberg of American International Group (AIG), without peer the most highly regarded executive in the insurance sector over the past half century. AIG, long known as three steps ahead of its industry and a huge asset to American business presence and prestige abroad, has now entered a tailspin without Greenberg, destroying billions and billions in value for shareholders and others, even as the charges against its former chieftain have mostly wilted on the vine. On a smaller but still significant scale, Spitzer forced Marsh, the biggest insurance broker, to oust its CEO, which it replaced with an old crony of Spitzer’s; that didn’t work out either, and further fortunes were lost.

Unlike AIG and Marsh, Ocwen Financial isn’t even a New York company, being headquartered in Atlanta. Its stock has lost many billions in value since last October, and fell yesterday by another 17%. The settlement requires Mr. Erbey to depart by the middle of next month.

Had the dispute proceeded to trial, it’s unlikely a judge would have ordered Mr. Erbey’s ouster. But large businesses today facing charges from financial regulators seldom dare insist on their right to a day in court – the risks of going to trial are just too high, as law professor Brandon Garrett and commenter James Copland explained at a recent Cato panel discussion on Garrett’s book Too Big to Jail: How Prosecutors Compromise with Corporations. Until that calculus changes, they will be at the mercy of whatever arbitrary if not vengeful terms regulators may insist on.

 

 

The Final Nail in the Keynesian Coffin?

I wrote earlier this year about the “perplexing durability” of Keynesian economics. And I didn’t mince words.

Keynesian economics is a failure. It didn’t work for Hoover and Roosevelt in the 1930s. It didn’t work for Japan in the 1990s. And it didn’t work for Bush or Obama in recent years. No matter where’s it’s been tried, it’s been a flop. So why, whenever there’s a downturn, do politicians resuscitate the idea that bigger government will “stimulate” the economy?

And I specifically challenged Keynesians in 2013 to explain why automatic budget cuts were supposedly a bad idea given that the American economy expanded when the burden of government spending shrank during the Reagan and Clinton years.

I also issued that same challenge one day earlier, asking Keynesians to justify their opposition to sequestration given that Canada’s economy prospered in the 1990s when government spending was curtailed.

It seems that the evidence against Keynesianism is so strong that only a fool, a politician, or a college professor could still cling to the notion that bigger government lead to more growth.

Fortunately, it does appear that there’s a growing consensus against this free-lunch theory.

Is North Korea Preparing for Change or Planning More of the Same?

North Koreans have formally ended their three-year mourning period for Kim Jong-il. By custom his son, Kim Jong-un, and the country now are free to move forward without hindrance from the past.

A small, poor nation, the Democratic People’s Republic of Korea should be an international nullity, irrelevant to global affairs. Yet it again dominated headlines in the U.S. with the hacking of Sony.

Although the FBI is pointing its finger at Pyongyang, a number of online experts strongly doubt the charge. Whatever the case, this otherwise two-bit international player is at the top of the news.

For the last seven decades Washington has made North Korea America’s problem. The U.S. initially had little choice since its joint division of the Korean peninsula with the Soviet Union led to creation of two antagonistic states.

But eventually the Republic of Korea took off economically and adopted democratic rule.  Today the ROK surpasses the North on every measure of national power save military, and the latter is a matter of choice.

As I point out on Forbes online: “By taking on responsibility for South Korea’s defense, Washington has thrust itself into the middle of the Korean conflict. The risk and cost made sense during the Cold War when the ROK was vulnerable and the region a hegemonic battleground. But no longer.”

How Hawkish Are Republican Voters?

William Kristol tells the Washington Post that Sen. Rand Paul is a “lonely gadfly” on foreign policy:

“Rand Paul speaks for a genuine sentiment that’s always been in the Republican Party, but maybe it’s 10 percent? 15 percent? 20 percent? I don’t think he’s going to be a serious competitor for guiding Republican foreign policy.”

At the Huffington Post I suggest that Kristol read the polls. They show rising non-interventionist sentiment among Republicans and especially among independents. I argue:

Americans, including Republicans, are getting tired of policing the world with endless wars. Support for the Iraq war is almost as low as approval of Congress.

Medicaid’s Access to Care Problems Persist and Will Get Worse Next Year

Last week, Republican Governor Bill Haslam announced a plan to expand Medicaid in Tennessee. Republican governors in Wyoming and Utah have also put forward expansion plans in the past month. A recent Washington Post editorial argued that there is “no rational justification” for refusing to expand Medicaid.

Despite this claim there are many reasons to be wary of Medicaid expansion even as some Republican governors signal some measure of support. A recent government report found that many Medicaid patients have access to care problems, including difficulty getting an appointment to see a doctor and lengthy wait times. Due to a looming reduction in the rates Medicaid pays some doctors, access to medical care for Medicaid enrollees is likely to get worse next year.

In the report from the HHS Office of Inspector General, researchers posed as Medicaid patients and called managed care providers. They found that 51 percent of listed providers could not schedule an appointment. Some providers could not be found at the location listed, some were found but were not participating in the plan, while others were no longer taking new Medicaid patients.

Even those few who were able to get appointments faced lengthy average wait times. At 28 percent of providers offering appointments, enrollees had to wait longer than a month. At 10 percent, the wait exceeded two months. Many states have requirements that wait times must be shorter than a month, so the fact that so many would have to wait longer than that “raises further questions about enrollees’ ability to obtain timely access to care.”

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.