China and Taiwan Meet: A Brief Opportunity for U.S. to Promote Peace?

Chinese President Xi Jinping and Taiwanese President Ma Ying-jeou recently met in Singapore. Never before has Beijing treated the island’s government as an equal. It was a small step for peace, but the circle remains to be squared.

China insists that Taiwan is a wayward province, while the vast majority of Taiwanese feel no allegiance to the People’s Republic of China. If, as expected, Taiwan’s opposition presidential candidate Tsai Ing-wen wins in January, relations between the two states are likely to shift into reverse.

The island of Formosa, or Taiwan, separated from the mainland when the Kuomintang government relocated to Taipei following the triumph of the Chinese Communist Party. Taipei continues to promote a separate identity.

The PRC insists that the island should return to Beijing. China’s growing power has encouraged its leaders to press Taiwan to accept some form of “one country, two systems.”

The PRC has hoped that closer economic and cultural ties would move the two countries closer to union. Yet Taiwan is steadily moving away from the PRC. More than 80 percent of Taiwanese back independence—if it would not trigger Chinese military action.

Now the KMT is likely to lose the presidency and possibly the legislature. The opposition is unlikely to enter into serious negotiations leading to reunification.

Can Open Market Operations Save Puerto Rico?

With Puerto Rico’s continuing fiscal strains, some commentators have suggested that one avenue to give Puerto Rico breathing room would be the purchase of Puerto Rican municipal debt as part of Open Market Operations by the Federal Reserve.  The most prominent proponent of this plan is Rensselaer Tech Economics Professor Arturo Estrella.  His proposal can be found here.  The governance of Open Market Operations, which is the buying and selling of securities by the Federal Reserve System, is found in Section 14 of the Federal Reserve Act.

A threshold question is: does the debt of Puerto Rico qualify as allowable investments?  There are essentially three categories of allowable purchases under Section 14:  state/local government debt in the continental United States, foreign government (or agency) debt;  and U.S. Treasury or agency debt.  Professor Estrella spends considerable effort arguing that Puerto Rico is within the definition of “continental” United States and hence qualifies.  Unfortunately, his efforts are in vain as the Federal Reserve Act in Section 1 defines the “continental United States” to mean “the States of the United States and the District of Columbia” which obviously excludes territories like Puerto Rico.

How does Professor Estrella attempt to overcome the very clear language of the Federal Reserve Act?  He argues that “the preponderance of regulatory language in Federal Reserve regulations shows that Puerto Rico is treated in the same way as a state…”  The good professor offers plenty of examples, such as the Truth in Lending Act, carried out by the Fed’s Regulation Z.  What he fails to mention is that the cited regulations are not carried out pursuant to the Federal Reserve Act.  For instance, the Truth in Lending Act actually defines Puerto Rico as a state, which explains why Regulation Z as implemented does so.  Congress regularly chooses different definitions of the same words for different statutes, and it does so intentionally.  That, however, does not allow an agency to pick and choose.  The definitions contained in a statute govern the regulations promulgated under that statute only.

Syrian Refugees Don’t Pose a Serious Security Threat

Of the 859,629 refugees admitted from 2001 onwards, only three have been convicted of planning terrorist attacks on targets outside of the United States, and none was successfully carried out.  That is one terrorism-planning conviction for every 286,543 refugees that have been admitted.  To put that in perspective, about 1 in every 22,541 Americans committed murder in 2014.  The terrorist threat from Syrian refugees in the United States is hyperbolically over-exaggerated and we have very little to fear from them because the refugee vetting system is so thorough.  

The brutal terrorist attack in France last Friday reignited a debate over accepting refugees from Syria and the Middle East.  A Syrian who applied for asylum could have been one of the attackers, although his passport was a forgery.  (As of this writing, all identified attackers have been French or Belgian nationals.) Governors and presidential candidates have voiced opposition to accepting any Syrian refugees, while several bills in Congress could effectively end the program.

There are many differences between Europe’s vetting of asylum seekers from Syria and how the United States screens refugees.  The geographic distance between the United States and Syria allows our government to better vet those seeking to come here, while large numbers of Syrians who try to go to Europe are less carefully vetted.  A lax security situation there does not imply a lax security situation here.  

The Differences between Refugees and Asylum Seekers

Much of the confusion over the security threat posed by refugees is over the term “refugee” itself.  It’s not yet clear how many foreign attackers in Paris entered Europe, but one or more may have entered disguised as asylum seekers. 

In the United States, asylum seekers show up at U.S. borders and ask to stay must show they have a well-founded fear of persecution due to their race, religion, nationality, membership in a particular social group, or their political opinion if they return to their country of origin. There is an application and investigation process, and the government often detains the asylum seeker during that process. But the investigation and vetting of the asylum seeker often take place while he is allowed inside of the United States. Many of the Syrians and others who have entered Europe are asylum seekers who are vetted through similar, less stringent security screens.

Refugees are processed from a great distance away and are more thoroughly vetted than asylum seekers as a result.  In the United States, a refugee is somebody who is identified by the United Nations High Commissioner for Refugees (UNHCR) in a refugee camp.  UNHCR does the first round of security checks on the refugee according to international treaties to which the United States is a party and refers some of those who pass the initial checks to the U.S. Refugee Admissions Program (USRAP).  The referrals are then interviewed by a U.S. Citizenship and Immigration Services (USCIS) officer abroad.  The refugee must be outside the United States, be of special humanitarian concern to the government, demonstrate persecution or fear of persecution due to race, religion, nationality, political opinion, or membership in a particular social group, and must not be firmly resettled in another country.

Because the refugee is abroad while the U.S. government checks their background, potential terrorist links, and their claims to refugee status, the vetting is a lot more thorough and can take up to two years for non-Syrians.  For Syrians, the vetting can take about three years because of the heightened concerns over security. 

Asylum seekers, on the other hand, face rigorous checks, but they are conducted while the asylum seeker is inside of the United States and not always while he is in a detention center.  Syrians fleeing violence who come to the United States will be refugees, whereas many getting into Europe are asylum seekers.  This crucial distinction shows that the United States is in a far better security situation vis-à-vis Europe on any potential terrorist threat from Syrians.

The distinction between asylum seekers and refugees is usually lost when discussing the security threat from refugees.  The father of Boston Marathon bombers Tamerlan and Dzokhar Tsarnaev was granted asylum status, which conferred derivative asylum status on the children.  None of the Tsarnaevs were ever refugees. 

Both Tamerlan and Dzokhar were children when they were admitted through their parents’ asylum claims.  They did not adopt a radical interpretation of Islam or start plotting a terrorist attack until years after coming here.  Their case does not reveal flaws in the refugee vetting process. There were some other terrorist attacks in the early 1990s from applicants for asylum status, but none of them were actual refugees. 

Despite the Headlines, Violence Is Trending Downwards

When something as horrific as last Friday’s Paris attacks unfolds on the news, it’s hard not to feel that the world is a very dangerous place. It’s hard to remember that what makes acts of terror, such as the one in Paris last week, so shocking and newsworthy is that violence is becoming rarer. In fact, the vast majority of human interactions are peaceful.

Esteemed journalist and advisory board member Matt Ridley put it well when he said, “violence makes the news precisely because it is so rare; routine kindness does not make the news precisely because it is so common.” Harvard University’s Steven Pinker, who is also one of our board members, observed,

We never see a reporter saying to the camera, “Here we are, live from a country where a war has not broken out”—or a city that has not been bombed, or a school that has not been shot up. […] The only sound way to appraise the state of the world is to count.

And if we judge how violent the world is by counting, instead of by how gruesome the headlines are, we find something heartening. International wars have almost disappeared. Homicides are becoming rarer. In the United States, violence against women is decreasing, and so is child abuse.

Almost everywhere, we see a trend away from violence. Progress, sadly, is neither linear nor inevitable. Setbacks do occur. Terrorism is one of the few areas where violence is becoming worse, although it remains rare. For example, you are much more likely to die of a disease, in an accident, or from an ordinary homicide. 

To meet the challenge posed by terrorism the rest of the world may need to think outside the box. Even one violent death is too many. Still, we must not lose sight of the fact that though some violent fanatics may stand athwart the trend towards greater peace and tolerance, violence is slowly retreating.

Government As Scofflaw, On Pollution And Beyond

It’s a familiar libertarian insight that regulation often holds government itself to lower standards than it does private actors. Pension funds for public employees are mostly immune from the federal solvency and funding requirements that apply to their private counterparts; Federal Trade Commission rules against false advertising by profit-seeking companies do not restrain false advertising by government actors on the same topics; the FTC can fine companies massively for data breaches even as the federal government itself suffers gigantic losses of sensitive data to foreign actors with few career consequences for many of those who had dozed; anticompetitive practices per se illegal under antitrust law become legal when states do them, and so forth and so on.

Now David Konisky of Indiana University and Manuel Teodoro of Texas A&M, in a study published by the American Journal of Political Science entitled “When Governments Regulate Governments,” have pulled together some data:

Our empirical subjects are public and private entities’ compliance with the U.S. Clean Air Act and Safe Drinking Water Act. We find that, compared with private firms, governments violate these laws significantly more frequently and are less likely to be penalized for violations.

The TPP and Encryption

As we evaluate the TPP in the coming months, there will be a lot of talk about the “regulatory”/”governance” parts.  These aspects can be very difficult to evaluate.  Here’s an illustration of why the assessment is so hard.

Over at the Volokh Conspiracy blog, Stewart Baker had a recent post in which he worried that a particular TPP provision would prevent the NSA/FBI etc. from demanding encryption keys from private companies.  Now, I have a different view of what constitutes good public policy, so if the TPP prevented this, I wouldn’t be worried.  But does the TPP actually do this?

The provision in question is in the Technical Barriers to Trade chapter, in Annex 8-B, Section A, paras. 3-4 (pp. 22-23 of the linked document).  At first glance, it does seem as though it says what Mr. Baker thinks it says, as it provides that with respect to a product that uses cryptography and is designed for commercial applications, no TPP Party may require the transfer of a private key or something similar.  (Go to the link for the full legalese; also, note that the provision has other functions as well).

But, before we draw a final conclusion, we need to keep in mind the exceptions set out in another chapter

One particularly broad exception is for “security.”  Article 29.2(b) says:  “Nothing in this Agreement shall be construed to: … preclude a Party from applying measures that it considers necessary for the fulfilment of its obligations with respect to the maintenance or restoration of international peace or security, or the protection of its own essential security interests.”  The word “considers,” in the trade law context, usually means a provision is “self-judging,” indicating that the government has a lot of leeway to do whatever it wants.  So, at least in theory, if the government demanding a private key invokes “security,” it can pretty much do whatever it wants.

So how do we find out what the TPP provisions actually mean?  What do they require from governments in terms of demanding encryption keys?

Can China’s Authoritarians Keep the Economic Miracle Going?

BEIJING—Mao Zedong, China’s “Great Helmsman,” died four decades ago. Only after his murderous reign finally ended could his nation move forward. The old dictator and his cronies wouldn’t recognize China’s capital today. Beijing has become a sprawling metropolis with night clubs and fast food restaurants. Shanghai’s transformation is equally dramatic. Always more international and commercial than Beijing, it has become a world financial center.

There’s a lot more to the People’s Republic of China, including a vast rural territory which remains poor, with average incomes well below urban PRC. But extreme poverty has given way to a genuine, if modest, prosperity.

As China has advanced on the global stage, there’s been discussion of the “Beijing consensus” or China Model. Who needs free markets and democracy if managed capitalism and autocracy can deliver sustained, even faster, economic growth? Dictators around the world want to convince themselves–and more importantly, their subjects–that oppression pays.

Yet the China Model is looking a bit frayed. China has slowing growth, a property bubble, ghost cities, inefficient state enterprises, a stock market crash, badly skewed demographics, overextended banks stuffed with political loans, and unbelievable official statistics.