Rising Chinese Frustration with North Korea

SHENYANG, CHINA—Public space is shrinking in China for discussion of “Western” views. But “contrary to the general crackdown, North Korea policy seems to be an exception,” a U.S. diplomat told me on my recent trip to China. One hears plenty of criticism of Pyongyang.

Even official Beijing’s unhappiness with the Democratic People’s Republic of Korea is evident, though China continues to bankroll the Kim Jong-un regime. It’s a position some Chinese would like to change, including a scholar in Shenyang, a couple hours away from the Yalu by car. My colleague was careful not to directly criticize Beijing policy but advocated a much different approach. He noted that the two nations “still care about each other,” but now there are a “lot of problems between the countries.”

The most important issue, no surprise, is nuclear weapons. China supports denuclearization of the Korean peninsula. This is the “worst disagreement between them.”
Second is economic development. “China insists on reform of the whole economic and political system,” explained my friend. Beijing’s objective is to “transform North Korea.” The DPRK government fears such change.

Issue number three involves bilateral commerce. “China wants to have normal trade with North Korea,” but the DPRK expects to receive goods even if it does not pay. This has “caused great loss for China and for companies in China.”

Whitney Ball: Losing a Sparkplug for Liberty

Whitney Ball was always outraged for the right reasons and could be counted on to add the choicest comments to the latest political or cultural atrocity. She was bright, opinionated, well-informed, and dedicated to human liberty. She also was a great friend. Those who knew her and the liberty movement were made much worse off with her recent passing.

Whitney is one of the largely unknown political activists who did far more than her share to help others. She got into the movement early, working in Washington, D.C. at the National Journalism Center for the late M. Stanton Evans—a grand figure who linked the older, more traditional and newer, more assertive conservative movements. But Whitney never hesitated to take the lone road. She was rare, a libertarian and Christian. We met when she worked at Cato a couple decades ago. She exuded kindness and wit and was impossible to dislike.

She moved on to the Philanthropy Roundtable, a conservative counterpart for the liberal Council on Foundations. Then in 1999 Whitney launched her own venture, Donors Trust. From very modest beginnings—one account—DT turned into a major success. It hit roughly 200 contributors in 2013 and to date has channeled $740 million to the cause of liberty. There is a long history of freedom-minded donors’ money being effectively hijacked by left-wing activists and causes. Money created from the inspiration and sweat of past entrepreneurs now funds some of the organizations most determined to stifle a free economy. It turns out that those most adept at creating wealth often aren’t very good at controlling how it is distributed.

Monetary Rules: Solving the Knowledge Problem

In its “Free Exchange” column, the Economist recently took up the issue of monetary rules. Provocatively titled “Rule It Out,” the column announced that “setting interest rates according to a fixed formula is a bad idea.”

Reading the column one quickly learns the author doesn’t understand what constitutes a rule, and what the argument for a rule is. The column moves from a general consideration of monetary rules to considering specifically the Taylor Rule. I leave it to Professor Taylor to defend his rule, which he did on his blog. I, however, consider the general case for monetary rules.

The Feds into Everything

Our hyperactive, grasping federal government has inserted its wasteful, probing fingers into just about everything these days.

I hadn’t been to an eye doctor in a while, and so when I went recently I was surprised to be presented with these two forms:

The first form claims that electronic transmission of prescriptions “helps protect the privacy of your personal information.” That strikes me as plainly false—an old-fashioned piece of paper with my eye information couldn’t get hacked on the Internet or wouldn’t be sent to the government. The form lists the supposed benefits of e-prescribing to the patient. On net, the benefits may indeed outweigh the costs—but then we wouldn’t need a federal mandate to bring it about.

Like many Americans, I find the second form regarding race rather offensive. It would be one thing if university researchers were surveying a sample of patients for such information in order to study eye diseases that may vary by personal characteristics. But reading between the lines on this form, the government appears to be collecting the information not for medical research, but essentially for socialist planning purposes.

Regulatory Incompetence (and King v. Burwell) Could Save the Nuns

Obamacare imposes a requirement that employers provide insurance that covers “preventive care” for women, but does not specify what that entails. The Department of Health & Human Services (HHS) determined that “preventive care” includes all FDA-approved contraceptives, from condoms to the morning-after pill.

While houses of worship were exempted outright from the mandate, other religious orders were not. (And, as we know from the Hobby Lobby case, for-profit employers who object to certain forms of contraceptive don’t have to pay to cover them.) Instead, under an “accommodation” created by HHS and the Departments of Labor and Treasury, an objecting religious organization isn’t required to pay for the offending contraceptives, but they do have to notify HHS, which then modifies their insurance contracts so their insurers cover the objected-to items.

Even though the religious organizations are not paying for the contraceptives, groups like the Little Sisters of the Poor—an order of nuns who provide various kinds of social services—still feel complicit in sin and claim that their free exercise of religion has been burdened.

Cato and law professor Josh Blackman (who recently became a Cato adjunct scholar) have filed an amicus brief supporting the Little Sisters’ request that the Supreme Court hear their case. The Little Sisters raise claims under the First Amendment and the Religious Freedom Restoration Act. Our brief asks the Court to consider a supplemental question: Whether the Departments have the interpretive authority and “expertise” to resolve this “major question” of profound social, “economic and political significance”—to quote Chief Justice Roberts’s majority opinion in King v. Burwell (where he said that courts couldn’t simply defer to the IRS on the important question presented there).

Congress gave absolutely no indication that it delegated to federal agencies the authority to decide which religious groups would be exempted and which could have their religious liberty burdened under an accommodation, or for that matter, how agencies were to design any accommodations. To quote another recent case where the Court refused to defer to an administrative agency, UARG v. EPA (2014), here the agencies are “laying claim to an extravagant statutory power” affecting fundamental religious liberty interests—a power that the ACA “is not designed to grant.”

If the Departments lack the interpretive authority to craft accommodations, then Hobby Lobby provides the rule of decision and the Little Sisters must be exempted from the mandate. Accordingly, the Supreme Court should consider this additional question and conclude that the Departments’ regulatory incompetence prevents them from forcing the Little Sisters to be complicit in what they view as sin.

The Kansas City Fed’s Top Secret Jackson Hole Conference

Each year, since 1978, the Federal Reserve Bank of Kansas City hosts central bankers from around the globe at Jackson Hole, Wyoming, to assess monetary policy.  The conference is closed to the public and the Kansas City Fed does not make its program available to the public until the day of the event.  Here’s what one can find when going to their website:

“The 2015 Economic Symposium, “Inflation Dynamics and Monetary Policy,” will take place Aug. 27-29, 2015. (The program will be available at 6 p.m., MT, Aug. 27, 2015).”

This information is treated as if it’s “top secret.”

But it’s not a top secret that the Federal Reserve lacks transparency, is not bound by any monetary rule, has more power than ever before (as a result of the unconventional monetary policies pursued since the 2008 financial crisis), and opposes a congressional audit—even though the Constitution gives Congress the power to regulate the value of money. 

Luckily, the American Principles Project will be holding a parallel conference near the Fed’s site in Jackson Hole to evaluate the Fed’s performance after more than 100 years and offer alternatives to a regime of pure discretionary government fiat money.

The topic of the APP conference—“Is Central Banking the Problem or the Solution?”—will give participants the opportunity to offer advice on how to improve the monetary regime, not just monetary policy. (On the same topic, see the Spring/Summer 2015 issue of the Cato Journal: “Alternatives to Central Banking: Toward Free-Market Money”)

Mark Calabria, director of Cato’s Financial Regulation Studies, within Cato’s newly established Center for Monetary and Financial Alternatives, will be speaking at the APP conference on Friday, August 28. His topic is “Regulatory Failure at the Fed.” Tune in.

Americans Have More than They Realize

According to Gallup, more Americans think of themselves as “have-nots” today than at any point since Gallup began posing the question almost thirty years ago, while fewer Americans see themselves as “haves.” (Please see Emily Ekins’s earlier post for an in-depth analysis from a different angle). But do Americans actually have less in 2015 than in 1988? Let’s dig into the data to see whether Americans might have more than they realize.

2015 is the first year when Americans spent more money dining out than they spent on groceries. Let’s examine why that might be. In 2015, U.S. GDP per person (adjusted for inflation) reached an all-time high. At the same time that average personal wealth is rising, many necessities like food are going down in price. As a result, spending on the basics takes up a smaller and smaller share of an American’s personal disposable income—dropping from 39% in 1988 to 32% in 2013. This means that Americans have more money left at the end of the day, which they can then choose to save, invest, or spend on luxuries like dining out.

Not only are Americans wealthier on average, but they are also working less. The average American worker in 2015 works 30 fewer hours in a year than her counterpart in 1988, and yet is almost $18,000 dollars richer in real terms.

HumanProgress.org advisory board member Mark Perry recently pointed out that today’s young Americans may actually be the luckiest generation in history, based on what they can buy with earnings from a summer job. And increases in real wealth do not capture technological advances, which also contribute to rising living standards. The quality and variety of available goods is improving across the board. Almost no one had a cell phone in the United States back in 1990, but today they’re ubiquitous—and more useful, with an app for just about everything.

In many ways, Americans have more today than ever before: more leisure time away from work, more disposable income left after basic expenses,  more choice in what they buy, and more advanced technologies at their fingertips.  Of course, there are still people who live in genuine need. The Great Recession and various growth-retarding policy decisions have done great harm, especially to the poor. Still, if the many positive trends that we are seeing continue, then hopefully more Americans will come to count themselves among the haves instead of the have-nots. To learn more about improving living standards in the United States and beyond, pay a visit to HumanProgress.org.

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