The Trans-Pacific Partnership Takes Center Stage

The long process featured hyperbole, demagoguery, fallacy, posturing, horse trading, unexpected tactics, strange political alliances, and several reversals of momentum.  But congressional passage of the Trade Promotion Authority bill was only the warm-up act.  The Trans-Pacific Partnership (TPP) is the headliner, and the process of concluding, ratifying, and implementing it promises more drama.

The TPP is a prospective trade agreement between the United States and 11 other nations, which has been under negotiation for 6 years. The Obama administration made the TPP the economic centerpiece of its “pivot to Asia,” encouraged the participation of other countries, and expanded the scope of the negotiations.  Beyond reducing tariffs and other border barriers, the TPP will include rules governing labor and environmental standards, government procurement, intellectual property protection, investment, supply chains, state-owned enterprises, and much more. The scope of the deal is so broad that the final agreement will likely include 29 separate chapters.

For the better part of a year, the word from TPP negotiators has been that a deal was close and that the main obstacle to its completion was the absence of TPA.  Logically, U.S. trade negotiating partners would be unwilling to put their best offers on the table unless the president could guarantee them that the deal was final and would not be picked apart and amended by Congress.  With TPA now secure, that impediment is gone – and the credibility of those “TPP-near-completion” claims is about to be tested. Just last week, Australia’s Trade Minister Andrew Robb said the TPP was “literally one week of negotiation away from completing.” In about 8 days, that will be proven too rosy a promise.

In Calling on Government, Pope Francis Misses the Problem of Politics

In his new encyclical, Laudato Si, Pope Francis challenges people to adopt a new “ecological spirituality.” But his economic and policy prescriptions are more controversial than his theological convictions.

The Pope’s commitment to the poor and our shared world is obvious. Yet when he addresses policy, his grasp is less sure.

The Pontiff ignores the flawed nature of government. He is disappointed with its present failings, but appears to assume that politics, unlike humanity, is perfectible.

Most environmental problems result from the absence of markets and property rights. For instance, since no one owns the great common pools of air and water, “externalities” abound.

When possible, government should create quasi-markets or apply market incentives. In contrast, where government acts as property manager, it typically performs badly. For example, at the behest of business interests, Washington subsidizes grazing and timbering on its lands, opening up areas which otherwise would not be developed.

Charter School Growth, Reality vs. Prediction

A fun thing about making predictions is ultimately finding out how wrong you were, and why. The chart below depicts the actual growth in charter school enrollment from 2000 to 2011, presented in Richard Buddin’s paper “The Impact of Charter Schools on Public and Private School Enrollments.” Now, as the old investment ads exhorted “past performance is no guarantee of future results.” But such a definitive pattern cried out for a regression fit. The dashed blue line in the chart below represents the “predicted” growth of Charter schools since 2011 (which I calculated three years ago from the 2000-to-2011 data). But how good was the prediction? As a test, I have plotted the actual data for 2012 to 2015 as red dots, using this and this as sources.

Well. Not bad. The accelerating growth in charter school enrollment could be excellent news for children and families–expanding the breadth of their educational options. Or (in the long term) it might reduce the variety of educational choices if charters become re-regulated (and thus homogenized) after having “eaten” a substantial number of diverse and much freer private schools. As Richard Buddin showed, charter schools are drawing students away from the freer independent school sector. And as the news routinely informs us, there are regular efforts to pile regulations onto charters to make them behave more like conventional state-run schools. In 2011, I raised the concern that this cycle could reduce educational liberty.

Two things are likely to happen over time: more private schools will be forced by economic expediency to convert to charter status as the number of competing charter schools grows, and the charter law is very likely to accrete regulation as charters enroll a larger share of the total student population. After all, the conventional U.S. public schools of the mid-to-late 1800s generally had more parental power and more autonomy than do typical charter schools today, but they have succumb to ever more extensive and more centralized regulation. If charter public schools follow the pattern set by conventional public schools, and if private schools continue to convert to charter status, what will be the end result? We could well see a heavily regulated state education monopoly that enjoys not a 90 percent market share, as it does now, but a 95 or even 99 percent market share. The end point would be worse than the situation we have today. While it is possible that charter schools will not accrete regulation like other public schools have as they begin to enroll a larger share of students, there is no reason to be hopeful in that regard.

With attempts to regulate charter schools more like state-run district schools continuing to this day, reasons for hopefulness remain scarce.

This, admittedly is a long-run concern. And as Keynes observed, “In the long-run, we’re all dead.” While that is literally true of any given generation, policy must be made with a view to functioning well not simply for us, now, but also for subsequent generations, decades hence. Having spent years studying the history of education systems, it’s hard not to be concerned with the long-run.

President Obama’s Task Force on 21st Century Policing

Following the protests and riots in Ferguson last year, President Obama created a Task Force on 21st Century Policing to examine policing problems and make recommendations.  The Task Force issued its final report last month.  In this post, I want to highlight the numerous ways in which the report would expand the role of the federal government.

By way of background, policing is supposed to be the near-exclusive province of state and local government under the U.S. Constitution.  The federal government is nevertheless constantly seeking to expand its jurisdiction.  The number of federal crimes and the number of federal law enforcement agents keeps rising.  Members of Congress also like to throw millions and millions of dollars at local police departments.  Of course, having accepted the money, local policymakers are now swamped with myriad federal conditions and mandates.  On top of that, the feds have entwined themselves with local police with the creation of hundreds of permanent joint federal-state police units that operate to enforce narcotics, guns, and immigration offenses.

President Obama’s Task Force is now recommending a host of actions to expand the role of the federal government even further.  Here is an excerpt from the final report (pdf):

The President should support and provide funding for the creation of a National Crime and Justice Task Force to review and evaluate all components of the criminal justice system for the purpose of making recommendations to the country on comprehensive criminal justice reform.

The President should promote programs that take a comprehensive and inclusive look at community-based initiatives that address the core issues of poverty, education, health, and safety.

The Federal Government should develop survey tools and instructions for use of such a model to prevent local departments from incurring the expense and to allow for consistency across jurisdictions.

The Federal Government should create a Law Enforcement Diversity Initiative designed to help communities diversify law enforcement departments to reflect the demographics of the community.

Discretionary federal funding for law enforcement programs could be influenced by that department’s efforts to improve their diversity and cultural and linguistic responsiveness.

Meet China Half-Way to Maintain Peace

Great Britain long reigned as the globe’s greatest maritime power, determined to maintain a navy as strong as those of its next two competitors combined. However, by the end of the 19th century, America and Germany had ended London’s economic primacy.

Britain chose to accommodate the United States and confront Germany. The result was an enduring alliance during the first and two world wars before the global order was settled after the second.

Washington faces a similar choice in dealing with the People’s Republic of China. There are many differences in circumstances, of course, but again the globe’s dominant force, accustomed to premier status, faces a serious challenge from a new power mixing rapid economic growth, nationalistic exuberance, and powerful grievances. Increasingly the United States faces a choice between accommodation and confrontation.

Into this imbroglio steps Lyle Goldstein, a professor at the National War College. In his new book, Meeting China Halfway: How to Defuse the Emerging US-China Rivalry (Georgetown University Press) he offers a strategy of cooperation for the two nations, which includes recognizing natural but much-reviled “spheres of influence.”

Goldstein encourages both nations to reward reach other’s good behavior. Forging a successful relationship requires Americans to honestly confront the past, which continues to color Chinese attitudes. From there, Goldstein discusses several difficult issues between the two nations and proposes policies which would encourage “cooperation spirals.”

Europe’s Hard Choice

In Monday’s Financial Times, columnist Gideon Rachman presented a grim outlook for Greece and the European Union. He argues there are no good outcomes. There are three options. First, the EU can make concessions to Greece. Second, the EU can stand firm and allow Greece to leave the Euro. Third, the Greek government can accept the EU’s terms.

The first option represents a near-term victory for the Greek government. It also creates moral hazard within the broader EU. Governments in other countries implementing austerity measures would come under pressure. Populist parties would make further electoral gains across Europe. Consensus rule within the EU would become impossible.

It is feared the second route would put pressure on other countries, e.g., Spain and Italy, viewed as being vulnerable to the economic woes besetting the Greeks. That is an argument for “contagion.”

The third outcome may offer no long-term solution. Even were the Greek government largely to accept what the EU, the ECB and the IMF want to impose on it, that would likely not solve the Greek problem in the long run. Greece’s debt level would still likely be unsustainable. It is not clear that any government can implement the far-reaching economic reforms needed to put the Greek economy on a sustainable growth trajectory.

Richman’s analysis is cogent, if bleak.

Bobby Jindal’s Fiscal Record

Bobby Jindal, Governor of Louisiana, will officially announce his run for the White House this afternoon, joining the ever-growing Republican field. Jindal hopes his experience cutting state spending and shrinking the state’s workforce will help propel him to the presidency. However, like the other governors whose records we have highlighted, Jindal’s fiscal record is not without faults.

Jindal took office in January of 2008, and 2015 will be his last year in office. He has scored well on the Cato Fiscal Policy Report Card on America’s Governors earning an “A” in 2010, and a “B” in both 2012 and 2014. All three report cards commend Jindal’s resolve to cut Louisiana state spending.

Since fiscal year 2009, the first full fiscal year of Jindal’s term, state general fund spending has decreased by 7 percent. Per capita state spending has fallen from $2,089 in 2009 to $1,883 in 2015, a decrease of 10 percent. This spending restraint is quite remarkable. For comparison, per capita state spending grew nationally by 8.5 percent during the same time period.