Washington and Havana Officially Restore Diplomatic Ties

It was long overdue. After over half a century of unsuccessfully trying to bring about regime change in Cuba through isolation, President Obama announced today that Washington has reached a deal with Havana to reopen embassies on July 20th.

There was a lot of posturing in the process, particularly from Cuba. At some point, the island’s dictator even said that restoring diplomatic ties would not be possible unless, among other things the United States returns Guantanamo and pays economic reparations for 50 years of embargo. In the end, it came down to the removal of Cuba from the U.S. list of states that sponsor terrorism and an agreement about the movement of U.S. diplomatic personnel around the island.

By restoring diplomatic ties, removing Cuba from the terrorist-sponsor list, and relaxing some elements of the embargo and the travel ban, the Obama administration has gone as far as it can using its executive authority. Lifting the outstanding elements of the embargo and travel ban is a prerogative of Congress. As it is, it looks unlikely that a bill in that regard will reach Obama’s desk for the remainder of his term.

Polls show not only considerable bipartisan support for Obama’s policy toward Cuba, but also a majority of Cuban Americans favoring rapprochement. Sooner rather than later, Congress–and the Republican presidential field–will realize the futility of sticking with the status quo.

Under no circumstances should we deceive ourselves on the current nature of the Cuban regime. It remains a Stalinist dictatorship. Dissidents are still harassed and arbitrarily arrested. The much-hyped economic reforms announced by Raúl Castro eight years ago have been too timid and seem more aimed at allowing Cubans to survive in the private sector without becoming prosperous.

However, political and economic isolation failed at weakening the Castro regime. American policy actually strengthened the Cuban government by providing itself as a scapegoat for Cuba’s disastrous economic policies and as a victim of U.S. aggression, thereby rallying support from all over the world.

Despite the embargo and travel ban still remaining in place, this is a historic move by the Obama administration.

Cato Continues Win Streak at Supreme Court, Government Does Abysmally Yet Again

After several blockbuster terms, this year was supposed to give a bit of a breather to Supreme Court watchers – but of course all that changed in November, when RobertsCare and same-sex marriage landed back on the justices’ laps. Looking back on the term, we see a few trends: fewer unanimous rulings than the last few years; more results that experts classify as “liberal” than “conservative” (though that’s a function of the vagaries of the docket); the lockstep voting of the liberal bloc contrasted against the inscrutability of Chief Justice Roberts and Justice Kennedy.

But despite the highs and lows of the last few decision days, when the dust cleared, there was one aspect of continuity that’s particularly gratifying to me: Cato continued its winning streak in cases in which we filed amicus briefs. While not as dominating as last term, we still managed to pull off an 8-7 record. I’m also proud to note that we were the only organization in the country to support the challenges to both the IRS rule on the ACA and state marriage laws.

Here’s the breakdown, in the order the opinions arrived:

Winning side (8): North Carolina Board of Dental Examiners v. FTCYates v. United StatesElonis v. United StatesCity of Los Angeles v. PatelHorne v. U.S. Dept. of AgricultureJohnson v. United StatesObergefell v. HodgesMichigan v. EPA.

Losing side (7): Heien v. North CarolinaPerez v. Mortgage Bankers Assoc.; U.S. Dept. of Transportation v. Assoc. of American RailroadsEEOC v. Abercrombie & FitchWalker v. Sons of Confederate VeteransTexas Dept. of Housing v. Inclusive Communities ProjectKing v. Burwell

Greece: Central Government Bloat

It’s hard to find anything written or spoken about Greece that doesn’t contain a great deal of hand wringing about the alleged austerity – brutal fiscal austerity – that the Greek government has been forced to endure at the hands of the so-called troika. This is Alice in Wonderland economics. It supports my 95% rule: 95% of what you read about economics and finance is either wrong or irrelevant.

The following chart contains the facts courtesy of Eurostat. The central government in Greece is clearly bloated relative to the average European Union country. The comparison is even starker if you only consider the 16 countries that joined the EU after the Maastricht Treaty was signed in 1993. To bring the government in Athens into line with Europe, a serious diet would be necessary – much more serious than anything prescribed by the troika.

Central Government Exenditure Per Capita

Free Market Capitalists Should Celebrate Ex-Im’s Demise, But the “Eternal Vigilance” Thing

At midnight tonight, the gears of crony capitalism will grind to a halt at 811 Vermont Avenue, NW, Washington, D.C. After 81 years of funneling taxpayer dollars to favored companies, projects, and geopolitical outcomes under the guise of advancing some vague conception of the “U.S. economic interest,” the Export-Import Bank of the United States will end its financing operations at midnight tonight. No more subsidies to Fortune 100 businesses. No more siphoning revenues from unwitting U.S. firms and industries. No more loan guarantees to wealthy, autocratic foreign governments. No more crowding out of private lending. No more taxpayer exposure to a Fannie Mae-like fiasco. No more bribery and corruption scandals. No more collaboration and lending to China’s Export-Import Bank – you know, the entity whose support for Chinese companies is alleged to threaten U.S. exporters and jobs, and is the most frequently cited imperative for reauthorizing Ex-Im. No more of any of this…for now.

Champions of small government and market capitalism should savor this rare victory. It was won with solid arguments, including over 20 years of analyses from Cato Institute scholars including Ian Vasquez, Aaron Lukas, Steve Slivinsky, Chris Edwards, Doug Bandow, Sallie James, and – perhaps most comprehensively and tirelessly – Veronique de Rugy. 

It was won because of columnist/scholar Tim Carney’s persistence in focusing the public’s attention on the corruption bred of corporate welfare and because of the analytical contributions of Heritage’s Diane Katz, the Competitive Enterprise Institute’s Ryan Young, and others who continued to make compelling arguments for shuttering the Bank, despite steep odds against that outcome.

Supreme Court to Consider Ending Forced Public-Sector Union Dues

Today, the U.S. Supreme Court announced that it would hear Friedrichs v. California Teachers Association, which asks the court to consider whether compulsory public-sector union dues violate the First Amendment right to free speech–which includes the right to be free from compulsory speech. The Cato Institute filed an amicus brief supporting the petitioners’ request that SCOTUS hear the case.

In 26 states, public-sector unions can force non-members to pay dues anyway. As I noted last year: 

The unions contend that these compulsory dues are necessary to overcome the free rider problem (non-union members may benefit from the collectively-bargained wages and benefits without contributing to the union), but plaintiffs in Friedrichs v. California Teachers Association point out that numerous organizations engage in activities (e.g. – lobbying) that benefit members and non-members alike without giving such organizations the right to coerce non-members to pay. That’s especially true when the individuals who supposedly benefit actually disagree with the position of the organization. 

Will Immigrants Affect Economic Policy?

The New York Times has some wonderful Room for Debate pieces debating whether the American electorate is getting more liberal.  From Molly Worthen bemoaning the rise of secular libertarianism to Robert Reich repeating the mantra of the New Deal to Kay Hymowitz arguing that Millennials are not so liberal, all are worth reading. 

If the U.S. government does adopt more liberal economic policies over the next few decade, immigrants and their descendants will not be to blame.  There are four pieces of research that lend support to this view.

Washington Is Fostering Anti-U.S. Cooperation between Russia and China

Relations between the United States and Russia continue to deteriorate, with the U.S.-led NATO alliance planning to station troops and heavy weaponry on Russia’s border.  At the same time that U.S.-Russian relations are reaching frosty levels not seen since the days of the Cold War, ties between China and Russia are growing noticeably closer.  Symbolizing that trend was a powerful visual seen on television sets around the world in early May.  Chinese president Xi Jinping not only attended the celebration in Moscow marking the 70th anniversary of the end of World War II, he occupied the position of honor at the side of Russian president Vladimir Putin.  The image was especially powerful because the United States and several other major Western powers pointedly refused to attend the gathering to show their continuing displeasure with Russia’s annexation of Crimea and aid to rebel forces in eastern Ukraine. 

As I point out in a recent article in Aspenia Online, the events in Moscow were only one signal of a Russian-Chinese rapprochement that seems  motivated by a joint desire to curb America’s global dominance.  Bilateral economic agreements between Moscow and Beijing are on the rise, including a May 2015 $400 billion deal to sell Russian natural gas to the voracious Chinese economy.  In addition, Russia has now replaced Saudi Arabia as China’s principal source of oil.

The prevailing assumption in the West that Russia and China would become geopolitical competitors, if not outright adversaries, in Central Asia also apparently needs to be reassessed.  Following the May 8 Putin-Xi summit in Moscow, the two leaders signed a new declaration announcing the coordinated development of the so-called Silk Road Economic Belt in Central Asia.  Although Russian and Chinese ambitions in that region are still in conflict over the long run, it appears that both governments have declared a truce in their rivalry.