Washington Post Half-Heartedly Seeks Clarity About Export-Import Bank Jobs Claims

It was good of the Washington Post Editorial Board to raise questions yesterday about the veracity of the “jobs-created-by-Export-Import-Bank-policies” claims proffered by the Bank’s supporters. I just wonder whether the editorial pulled its punches where a reporter on assignment or a more inquisitive journalist would have delivered an unabashed blow to the credibility of the Bank’s primary reauthorization argument: that its termination will lead to a reduction in U.S. exports and jobs.

Kudos to the Post for raising an eyebrow at the Bank’s claims of “jobs created” or “jobs supported” by Ex-Im financing:  

[W]hen it comes to jobs, well, just how rigorous are [Ex-Im’s] estimates, really? Congress ordered a study of that very question when it last reauthorized Ex-Im in 2012. In May 2013, the Government Accountability Office (GAO) produced its verdict: Meh.”

“GAO noted that Ex-Im must speak vaguely of “jobs supported,” rather than concretely of jobs created, since its methodology cannot really distinguish between new employment and retained employment. To get a number for “jobs supported,” which includes both a given firm and that firm’s suppliers, Ex-Im multiplies the dollar amount of exports it finances in each industry by a “jobs ratio” (calculated by the Bureau of Labor Statistics).

Using that approach, Ex-Im estimates an average of 6,390 jobs are “supported” by every billion dollars of exports financed. The Post is right to note the GAO’s conclusion:

These figures do not differentiate between full-time and part-time work and, crucially, provide no information about what might have happened to employment at the firms in question, or others, if the resources marshaled by Ex-Im had flowed elsewhere in the economy.

Has Freedom Finally Arrived? No, We’ll Have to Bring It!

The New York Times wonders if the libertarian moment has arrived. Unfortunately, there’ve been false starts before. 

Ronald Reagan’s election seemed the harbinger of a new freedom wave. His rhetoric was great, but actual accomplishments lagged far behind. 

So, too, with the 1994 Republican takeover of Congress.  Alas, the GOP in office behaved little different than many Democrats. 

Since then there’s been even less to celebrate—in America, at least. George W. Bush was an avid proponent of “compassionate,” big-government conservatism. Federa outlays rose faster than under his Democratic predecessor. Barack Obama has continued Uncle Sam’s bailout tradition, promoting corporate welfare, pushing through a massive “stimulus” bill for the bank accounts of federal contractors, and seizing control of what remained private in the health care system.

Over the last half century, members of both parties took a welfare state that was of modest size despite the excesses of Franklin Delano Roosevelt’s New Deal and put it on a fiscally unsustainable basis as part of the misnamed “Great Society.” Economist Lawrence Kotlikoff figures government’s total unfunded liability at around $220 trillion. 

The national government has done no better with international issues. Trillions went for misnamed “foreign aid” that subsidized collectivism and autocracy. Trade liberalization faces determined resistance and often is blocked by countries that would gain great benefits from global commerce.

Even worse has been foreign policy. The joy people felt from the collapse of the Berlin Wall a quarter century ago has been forgotten. 

China and the U.S.: Similar Frustrations, Different Policies toward North Korea

SHENYANG, CHINA—China-Korean relations are in a state of flux.  The People’s Republic of China and South Korea have exchanged presidential visits.  Trade statistics suggest that the PRC did not ship any oil to the North during the first quarter of the year.  Chinese academics openly speak of Beijing’s irritation with its long-time ally.

The cold feelings are reciprocated.  Last year North Korea’s Kim Jong-un sent an envoy to the PRC to unsuccessfully request an invitation to visit.  In December Kim had his uncle, Jang Song-taek, the North’s most intimate interlocutor with China, executed.

These circumstances suggest the possibility of a significant foreign policy shift in Beijing away from the North and toward the Republic of Korea.  Washington hopes for greater Chinese willingness to apply economic pressure on Pyongyang.  However, the PRC remains unwilling to risk instability by undermining the Kim dynasty. 

I recently visited China and held scholarly meetings amid excursions to long-missed tourist sites (such as Mao’s Mausoleum!).  I also made it to Shenyang, where relations with the North are of great interest because the city is about a two hour drive from the Yalu River.

I met one senior scholar who indicated that there was no doubt that Beijing-Pyongyang relations had changed since Kim came to power.  The two nations “have a different relationship now and it is becoming colder than ever before.” 

However, Jang’s execution had been “weighed too heavily by Western researchers,” he indicated.  In fact, economic relations had continued.  Jang’s fate was a matter of internal North Korea politics, “the result of the natural struggle for power.” 

This doesn’t mean Beijing was happy about Jang’s fate.  However, Jang’s ouster “is not the reason for the DPRK’s and China’s bad relations.” 

Rather, the principal barrier is the North’s continued development of nuclear weapons.  Kim Jong-un wants to visit China.  But it is “unimaginable for Chinese officials to invite him when he’s doing nuclear tests.  Impossible.”

In return, the North is unhappy over Beijing’s refusal to accommodate Kim as well as the end of oil shipments.  “Also, the DPRK is quite angry over the quick development of Chinese relations with South Korea.” 

This has made Pyongyang “eager to make contact with the U.S.,” an effort which so far has gone nowhere.  This is why the Kim regime “took American citizens as hostages” and invited Dennis Rodman to visit, but these tactics “are not working.” 

The North eventually “shifted the focal point of its foreign relations to Japan.”  For the same reason, though “less importantly the DPRK made contact with Russia.”

The PRC is quite interested in U.S.-DPRK relations and Washington’s view of Japan’s move toward Pyongyang.  “One of the uniform convictions for both the U.S. and China is no nuclear weapons in the DPRK,” he emphasized. 

However, in Beijing’s view the solution is not more sanctions which “everyone has been putting on the DPRK,” but revival of the Six-Party Talks.  This is where agreement between the U.S. and China breaks down. 

The PRC wants more negotiations, preceded by an American willingness to reduce tensions and Pyongyang’s perceived need for a nuclear arsenal.  The U.S. wants the North to make concessions beforehand lest the latest round fail like the many previous efforts.

This clash reflects an even deeper disagreement over competing end states.  Both Washington and Beijing oppose a nuclear North Korea.  However, the U.S., in contrast to China, would welcome a DPRK collapse, even if messy, and favor reunification with the South.

As I write in China-U.S. Focus, It isn’t impossible for American and Chinese policymakers to work through their differences.  However, it will require understanding the other party’s perspective and offering meaningful concessions to make the deal a positive for both parties.

A Clear Example of IPCC Ideology Trumping Fact

The Current Wisdom is a series of monthly articles in which Patrick J. Michaels and Paul C. “Chip” Knappenberger, from Cato’s Center for the Study of Science, review interesting items on global warming in the scientific literature that may not have received the media attention that they deserved, or have been misinterpreted in the popular press.

———
 

When it comes to global warming, facts often take a back seat to fiction. This is especially true with proclamations coming from the White House. But who can blame them, as they are just following the lead from Big Green groups (aka, “The Green Blob”), the U.S. Climate Change Research Program (responsible for the U.S. National Climate Assessment Report), and of course, the United Nations’ Intergovernmental Panel on Climate Change (IPCC).

We have documented this low regard for the facts (some might say, deception) on many occasions, but recently we have uncovered  a particularly clear example where the IPCC’s ideology trumps the plain facts, giving the impression that climate models perform a lot better than they actually do. This is an important façade for the IPCC to keep up, for without the overheated climate model  projections of future climate change, the issue would be a lot less politically interesting (and government money could be used for other things … or simply not taken from taxpayers in the first place).

The IPCC is given deference when it comes to climate change opinion at all Northwest Washingon D.C. cocktail parties (which means also by the U.S. federal government) and other governments around the world. We tirelessly point out why this is not a good idea. By the time you get to the end of this post, you will see that the IPCC does not seek to tell the truth—the inconvenient one being that it dramatically overstated the case for climate worry in its previous reports. Instead, it continues to obfuscate.

This extracts a cost. The IPCC is harming the public health and welfare of all humankind as it pressures governments to seek to limit energy choices instead of seeking ways to help expand energy availability (or, one would hope, just stay out of the market).

Everyone knows that global warming (as represented by the rise in the earth’s average surface temperature) has stopped for nearly two decades now. As historians of science have noted, scientists can be very creative when defending the paradigm that pays. In fact, there are  already several dozen explanations

Climate modelers are scrambling to try to save their creations’  reputations because the one thing that they do not want to have to admit is that they exaggerate the amount that the earth’s average temperature will increase as a result of human greenhouse gas emissions. If the models are overheated, then so too are all the projected impacts that derive from the model projections—and that would be a disaster for all those pushing for regulations limiting the use of fossil fuels for energy. It’s safe to say the number of people employed by creating, legislating, lobbying, and enforcing these regulations is huge, as in “The Green Blob.”

Africa: the Good, the Bad and the Ugly

Last week, President Obama hosted the U.S.-Africa Leaders Summit in Washington, D.C. He welcomed over 40 African heads of state and their outsized entourages to what was a festive affair. Indeed, even the Ebola virus in West Africa failed to dampen spirits in the nation’s capital. Perhaps it was the billions of dollars in African investment, announced by America’s great private companies, that was so uplifting.

Good cheer was also observed in the advertising departments of major newspapers. Yes, many of the guest countries paid for lengthy advertisements–page turners–in the newspapers of record. That said, the substantive coverage of this gathering was thin. Neither the good, the bad, nor the ugly, received much ink.

What about the good? Private business creates prosperity, and prosperity is literally good for your health. My friend, the late Peter T. Bauer, documented the benefits of private trade in his classic 1954 book West African Trade. In many subsequent studies, Lord Bauer refuted conventional wisdom with detailed case studies and sharp economic reasoning. He concluded that the only precondition for private trade and prosperity to flourish was individual freedom reinforced by security for person and property.

More recently, Ann Bernstein, a South African, makes clear that the establishment and operation of private businesses does a lot of economic good (see: The Case for Business in Developing Countries, 2010). Yes, businesses create jobs, supply goods and services, spread knowledge, pay taxes, and so forth. Alas, in the Leaders Summit reportage that covered the multi-billion dollar investments by the likes of Coca-Cola, General Electric, and Ford Motor Co., the benefits of the humdrum activity of business and trade were nowhere to be found. But, as they say, “that’s not the president’s thing.”

Let’s move from the good to the bad and the ugly, and focus on the profound misery in Sub-Saharan Africa. I measure misery with a misery index. It is the simple sum of inflation, unemployment, and the bank lending interest rate, minus year on year GDP per capita growth. Using this metric, the countries for Sub-Saharan Africa are ranked in the accompanying table for 2012.

Police Militarization in Ferguson — and Your Town

[cross-posted and slightly adapted from Overlawyered]

Why armored vehicles in a Midwestern inner suburb? Why would cops wear camouflage gear against a terrain patterned by convenience stores and beauty parlors? Why are the authorities in Ferguson, Mo. so given to quasi-martial crowd control methods (such as bans on walking on the street) and, per the reporting of Riverfront Times, the firing of tear gas at people in their own yards? (“ ‘This my property!’ he shouted, prompting police to fire a tear gas canister directly at his face.”) Why would someone identifying himself as an 82nd Airborne Army veteran, observing the Ferguson police scene, comment that “We rolled lighter than that in an actual warzone”?

As most readers have reason to know by now, the town of Ferguson, Mo. outside St. Louis, numbering around 21,000 residents, is the scene of an unfolding drama that will be cited for years to come as a what-not-to-do manual for police forces. After police shot and killed an unarmed black teenager on the street, then left his body on the pavement for four hours, rioters destroyed many local stores. Since then, police have refused to disclose either the name of the cop involved or the autopsy results on young Michael Brown; have not managed to interview a key eyewitness even as he has told his story repeatedly on camera to the national press; have revealed that dashcams for police cars were in the city’s possession but never installed; have obtained restrictions on journalists, including on news-gathering overflights of the area; and more.

The dominant visual aspect of the story, however, has been the sight of overpowering police forces confronting unarmed protesters who are seen waving signs or just their hands.

If you’re new to the issue of police militarization, which Overlawyered has covered occasionally over the past few years, the key book is Radley Balko’s, discussed at this Cato forum:

Federal grants drive police militarization. In 2012, as I was able to establish in moments through an online search, St. Louis County (of which Ferguson is a part) got a Bearcat armored vehicle and other goodies this way. The practice can serve to dispose of military surplus (though I’m told the Bearcat is not military surplus, but typically purchased new) and it sometimes wins the gratitude of local governments, even if they are too strapped for cash to afford more ordinary civic supplies (and even if they are soon destined to be surprised by the high cost of maintaining gear intended for armed combat).

As to the costs, some of those are visible in Ferguson, Mo. this week.

 

Crony Catfish

If you were looking for an example to show just how awful the legislative process is in Washington, the ongoing saga over catfish inspection is just perfect.  On its face, the 2008 law requiring the U.S. Department of Agriculture to inspect catfish facilities seems relatively benign.  Who doesn’t want safer catfish?  In reality, though, the law has nothing to do with food safety and everything to do with supporting the Southern catfish industry at everyone else’s expense.

Switching catfish inspection from the FDA (where it is now) to the USDA won’t make catfish any safer.  This isn’t really a controversial point, either.  The USDA itself has said that catfish is a low risk food and can’t explain how its inspections will reduce that risk in any meaningful way.  The Government Accountability Office has advised Congress to repeal the program.  

The new inspection regime is slated to cost taxpayers $14 million more per year than the current one.  But there’s actually a much greater harm being done here.

Aside from the cost, the main impact of the new inspection regime—and its actual purpose—is that foreign catfish producers will be banned from the U.S. market until they can show equivalence to U.S. production standards.  Regardless of how they produce the catfish, showing equivalence will take years.  In the meantime, U.S. consumers will be left with nothing but domestic catfish at hugely inflated prices.

The good news is that a growing, bipartisan group of legislators has been trying to kill the program since its stealthy insertion into the 2008 farm bill.  Most recently, Rep. Vicky Hartzler (R-MO) announced that she will propose an amendment to the 2015 Agriculture Appropriations Bill to defund the new inspection program.  This may be the last chance to kill the program before it finally goes into effect, exposing the United States to retaliatory action for violating our trade obligations.

The amendment will probably succeed, as similar amendments have in the past, but—just as before—that may not be enough.  The program exists not because half of our illustrious legislators have been fooled into supporting it but because Thad Cochran (R-MS) has seniority on key committees.  He and a handful of other legislators in Mississippi, Louisiana, and Arkansas are the only ones pushing for this program.  

I talk more with Caleb Brown about Thad Cochran’s Crony Catfish in this Cato podcast: