The Predictable Fallout from Doha

Following the collapse of the Doha round of multilateral trade negotiations last month, WTO members have chosen to pursue their trade objectives through litigation.

Brazil (through its foreign minister, Celso Amorim) said Wednesday (eastern Australian time) that it plans to ask for billions of dollars of punitive damages from the United States in retaliation for U.S. cotton subsidies (more on that dispute here). The precise figure has yet to be released, but the United States has lost at every point in this dispute and although the Office of the United States Trade Representative plans to defend the subsidies “vigorously,” another loss for the U.S. would be expected. (Note that in WTO litigation proceedings, ‘damages’ aren’t paid by check; rather, the aggrieved member is given permission to retaliate by suspending its own obligations to the errant member. Usually this involves the injured party raising tariffs on the errant member’s exports, economically insane though that action might be.)

The United States has joined the melee by making preliminary legal moves of its own–against China. In a communication to the WTO posted on Monday, the United States listed its grievances as a series of questions to China about its allegedly discriminatory tax treatment for domestically-reared pork, as well as other subsidies. The United States has pitched these questions as part of the “transitional review mechanism” that was part of the deal when China joined the WTO but it could form the basis of a dispute settlement action if the questions aren’t addressed to the United States’ satisfaction.

The collapse of the Doha round, as well as political pressure to enforce the terms of trade agreements and to save special firepower for China, is bearing predictable fruit.

Noble Populism

Is populism a good and noble cause that could never be associated with bigotry? NPR host Liane Hansen seems to think so. On NPR’s “Weekend Edition Sunday,” she interviewed Christopher Hedge, who composed the music for a PBS documentary on Andrew Jackson. When Hedge called Jackson a populist, Hansen objected. What about his treatment of slaves and Indians? she asked–that doesn’t sound very “populist.”

Oh, dear. What does Hansen think populism is? The term can have many meanings, but it certainly seems to mean the rallying of “us” against “them.” Sometimes that means “the masses” against “the elites”–whether political or economic. But frequently those elites include Jews or Americans or other groups perceived to be more economically successful than they deserve. Eastern Europe’s populist parties these days fulminate against free markets and against Jews, Gypsies, and other ethnic minorities. No one seems to have any doubt that that’s what populists do. A leading American Populist politician, Tom Watson, railed against Catholics, blacks, and Jews as well as against “the corporations” and sound money. So did Pitchfork Ben Tillman, who implemented Jim Crow in South Carolina. Not all American populists were racists; many wanted to organize poor blacks and poor whites to defeat corporate interests. But the combination was common.

As for Andrew Jackson, he was in many ways a great fighter for freedom and democracy. But NPR’s researchers need to do some research on the attitudes of Jackson’s white working-class supporters toward blacks and Indians. You can bet they didn’t think other races were part of “us.”

New Income and Poverty Figures Spoil the Pity Party

The Census Bureau’s release this morning of the latest income, poverty and health insurance numbers did not follow the script of those who want to paint a picture of a nation in crisis.

Opponents of free trade, immigration, and limited government constantly tell us that the middle class is shrinking, the poor are getting poorer and more numerous, and the number of Americans without health insurance is climbing inexorably. Their solution is always to restrict trade and immigration and launch expensive new programs to alleviate the obvious misery.

Spoiling the pity party is this morning’s widely anticipated report, “Income, Poverty and Health Insurance Coverage in the United States: 2007.” Among its major findings:

  • The number and percentage of Americans without health insurance actually declined slightly in 2007 compared to 2006. The share without insurance in 2007, 15.3 percent, is actually lower than it was a decade ago.
  • Median household income is not falling: “Between 2006 and 2007, real median household income rose 1.3 percent, from $49,568 to $50,233—a level not statistically different from the 1999 prerecession income peak.”
  • The share of households earning a middle-class income of between $35,000 and $100,000 in real 2007 dollars has indeed shrunk slightly compared to a decade ago, but so too has the share earning less than $35,000 a year, while the share earning more than $100,000 continues to rise. The middle class is not shrinking; it is moving up.
  • The 12.5 percent of Americans living below the poverty line in 2007 was statistically unchanged from 2006, and remains below the 13.3 poverty rate in 1997. The poverty rate has been trending downward since the early 1990s during a time of growing trade and immigration flows.
  • The Gini coefficient, a statistical measure of income inequality, was .463 in 2007, down slightly from earlier in the decade and virtually the same as it was a decade ago.

We can argue all day about what policies should be adopted to spur growth and higher incomes for the broadest swath of Americans. We certainly have plenty of ideas here at Cato. But it flies in the face of reality to argue that the major indicators of economic well being in America are trending downward in some sort of crisis that demands sweeping government intervention.

“The [School Choice] Times, They Are a-Changin’ ”

Reporting from the Democratic National Convention two days ago, Salon’s Mickey Kaus was stunned to find a room packed with 500 people cheering as Newark mayor Cory Booker defended school choice. Booker complained of the viciousness of education politics, noting that “he’d been told his political career would be over if he kept pushing school choice.” And when Booker told the crowd that their party would “have to admit, as Democrats, we have been wrong on education,” he was greeted by “Loud applause!” [emphasis in Kaus’ original].

Liberal columnist and Newsweek editor and Jonathan Alter, who moderated the next panel, said it would have been hard to imagine such an event at previous Democratic conventions.  According to Kaus, Alter “called it a ‘landmark’ future historians should note.”

Universal, state-wide school choice programs may not be passed in the next year, or even in the year after that. But they are coming. A sea change in the politics of school choice has begun and it is hard to imagine how it might be stopped. As I noted on this blog few months ago, Democratic politicians are coming to see parental choice in education as an effective way of improving access to good schools for all families.

Of course there are still many holdouts. Sooner or later, though, even the holdouts will realize that the last politicians blocking the schoolhouse door, impeding children from leaving to attend schools of their families’ choosing, will be seen as the Oral Faubuses of the 21st century. Those holdouts might want to heed the words of Bob Dylan:

Come senators, congressmen
Please heed the call
Don’t stand in the doorway
Don’t block up the hall
For he that gets hurt
Will be he who has stalled
There’s a battle outside
And it is ragin’.
It’ll soon shake your windows
And rattle your walls
For the times they are a-changin’.

Great Moments in Subsidized Train Travel

I once ran out of gas in college, so I suppose I shouldn’t throw too many stones at Amtrak’s glass house, but presumably somebody actually gets paid to make sure that trains don’t leave stations without enough fuel to make it to their next destination. According to the AP report, Amtrak will be investigating how this happened on a trip from LA to San Diego. Needless to say, don’t expect anyone to be held accountable:

A quick train trip down the coast turned into a long haul for more than 80 Amtrak passengers when their train from Los Angeles to San Diego ran out of fuel Sunday night. …The train, which had left Los Angeles at 8:30 p.m., didn’t get there until 1:15 a.m. Monday, two hours late. A train running out of fuel is “an unusual occurrence” and Amtrak officials will be looking into how it happened, Cole said.

If a Government Job Is the Reward for Winning, I’d Hate to See What Happens to the Losers

Greece has a funny way of rewarding Olympic success. Medalists get government jobs, often as officers in the military (which must be a real morale booster for the any professional soldiers that might be in the Greek Army). Not surprisingly, North Korea also takes the same approach. The International Herald Tribune reports:

Greece dropped the idea of presenting the winner with a wreath and an amphora of precious olive oil long ago and instead will offer about 190,000 euros (145,600 pounds) for gold medalists at August’s Beijing Olympics, 130,000 (100,000 pounds) for silver and 70,000 (53,600 pounds) for bronze. Medalists will also get a comfortable civil service job, usually as an officer in the military, and several advertising contracts worth hundreds of thousands of euros in total. …Figures for secretive North Korea are not available but medalists from the communist state are celebrated as heroes, receiving perks such as apartments and state jobs with the Workers’ Party.

National Standards = Terrible; Ed Tax Credits = Effective, Popular, and Passing

Over on Flypaper, Mike Petrilli takes a swipe at NEAL McCluskey for pointing out why national standards are doomed to failure.

And then he compares the infeasibility of national standards, as a method of improving education, to the political difficulty of passing something like our proposal for broad-based education tax credits that would open universal access to school choice.

You see, national standards that improve education are literally an impossible dream because the method is doomed to fail, regardless of its chances of becoming legislation. Broad-based school choice is merely a difficult endeavor like any major reform. But if enacted, it will improve education significantly.

Petrilli implies that a “universal” education tax credit system is impossible.

Really? You mean something akin to the universal voucher program that became law in Utah but was repealed by voters?

Or maybe the donation tax credit programs in Arizona and Georgia, which have no income limits? Those are universal in principle, Mike. A continuing expansion of funding will make them universal in fact.

Our Public Education Tax Credit model legislation combines personal-use credits like those that exist in 3 states with the kind of donation tax credits that exist in 6 states.

Polling consistently shows that universal programs are much more popular than targeted ones. And education tax credits are extremely popular … even a majority of current and former public school employees support education tax credits!

Wake up, Mike. We’re talking about the expansion and combination of widely used, popular, and increasingly bipartisan policies that work.