Stop Treating NATO as a Social Club

Members of NATO are meeting in Warsaw. They are dragging the U.S. back into its traditional role of guaranteeing the security of Europe, even though the continent is well able to defend itself.

The North Atlantic Treaty Organization was a necessary part of Containment, preventing the Soviet Union from dominating or conquering Western Europe. But after recovering from World War II the Europeans remained dependent on America.

NATO lost its raison d’etre once the Warsaw Pact disbanded and Soviet Union collapsed. Alliance officials eventually added “out of area” activities, that is, wars of choice irrelevant to Europe’s defense (Balkans, Libya, Mideast, Afghanistan). Such conflicts have wasted lives and resources with no benefit to Europe and America.

A Monetary Policy Primer, Part 6: The Reserve-Deposit Multiplier

In my last post in this series, I observed that an economy’s “base” money serves as the “raw material” that commercial banks and other private-market financial intermediaries employ in “producing” deposits of various kinds that can themselves serve as means of exchange.

Multiplier2If they could do so profitably, these private intermediaries would, by making their substitutes more attractive than base money itself, collectively gain possession of every dollar of base money in existence. In some past monetary arrangements, most notably that of Scotland before 1845, banks came very close to achieving this ideal, thanks to the their freedom to supply their customers with circulating paper banknotes as well as with deposits, and to the fact that between them these two substitutes could serve every purpose coins might serve, and do so more conveniently than coins themselves.

All save a handful of commercial banks today are, in contrast, able to supply deposits only, so that only base money itself can serve as currency, that is, circulating money. The extent to which national money stocks have been “privatized,” in the sense of being made up mainly of private IOUs of various kinds rather than officially-supplied base money, has been correspondingly limited, as has the extent to which private money holdings have served as a source of funding for bank loans.

Measles Vaccination Rates and Immigration

A recent outbreak of measles at the Eloy Detention Center has raised some concerns over disease and immigration.  The disease was carried in by an immigrant who was detained, allowing it to spread among some of the guards who were not vaccinated.  The Detention Center has since claimed that it vaccinates all migrants who are there and is working on getting all of its employees vaccinated.  Regardless, how much should we worry about measles brought in by unvaccinated immigrants?  Very little.

First, measles vaccines are highly effective at containing the disease.  There are two primary measles vaccinations.  The first is the MCV-1 which should be administered to children between the ages of nine months and one year.  MCV-2 vaccinations are administered later, at the age of 15 to 18 months in countries where measles actively spreads.  In countries with very few cases of measles, like the United States, the MCV-2 is optional and is not typically administered until the child begins schooling. 

Second, the nations that send immigrants tend to have high vaccination rates.  The World Health Organization (WHO) and UNICEF report the measles vaccination rates for most countries.  Figure 1 shows those rates for 2014 by major immigrant sending country.  For the MCV-1, the United States is in the middle of the pack with 92 percent coverage and no data reported for MCV-2.  The countries of El Salvador, Costa Rica, Mexico, Vietnam, Cuba, China, and South Korea all have higher MCV-1 vaccination rates than in the United States. 

Six countries do have lower vaccination rates than the United States although Indian and Filipino immigrants are more highly educated than their former countrymen, indicating that their vaccination rates are higher before beginning the immigration process.  Furthermore, legal immigrants must show they are vaccinated, meaning that the relatively low vaccination rates in some of those countries of origin don’t reflect vaccination rates among the population of immigrants here.  

However, the U.S. government’s vaccination requirements indicate that unauthorized immigrants are possibly less likely to be immunized than legal immigrants.  One way to increase vaccination rates among all immigrants, legal and illegal, would be to make green cards available to immigrants who are more likely to come unlawfully, thus guaranteeing that they are vaccinated.

 

Figure 1

MCV-1 Vaccination Rates, 2014

 

Source: WHO-UNICEF

In a more worrying trend, vaccine refusal rates are up among the native-born Americans in wealthy enclaves in California.      

Exit the Korean Imbroglio to Solve the North Korean Problem

North Korea is likely to be one of the worst headaches, or maybe nightmares, for the next president. He or she “must find a way to neuter Mr. Kim’s outlandish and frightening peril,” intoned the Washington Post.

Of course, four successive presidents have sought to do so. Yet, nothing they tried worked. Experience suggests that “neutering” Pyongyang is beyond the power of the U.S. president, at least at a cost Americans are willing to bear.

The United States should try a different approach. Washington should withdraw from the Korean vortex. Then the Democratic People’s Republic of Korea would be primarily a problem for its neighbors, who have the most at stake.

Embracing the Almighty Dollar: Islamic State’s Currency Debacle

In a post last week, I critiqued a prominent article about Islamic State in the Washington Post, in which Carol Morell and Joby Warrick suggest that, by massacring people in various locales, the group was growing in appeal or “allure.” I argued that there was considerable evidence, on the contrary, that the appeal (or allure) of the vicious group actually is, like the scope of the territory it holds in Syria and Iraq, in severe decline.

The Post article also seeks to refute the plausible suggestion of Secretary of State John Kerry that terrorist attacks like those Turkey, Iraq, and Bangladesh are a sign of the group’s desperation as it is pushed back in Iraq and Syria. It does so with what I consider to be an irrelevant argument, noting that the group has “recently” issued its own currency in the territory it controls.

However, the Post article seems to be wrong about the currency issue as well.

According to the Economist, nearly a year ago (not “recently”), the Islamic State did try to create a currency that it called the “Gold Dinar.” In a 55-minute video, it made what the Economist calls “a bizarre sales pitch” for the new currency.

Covering a dizzying range of topics, from the importance of gold as a medium of exchange to “the dark rise of bank notes, born out of the satanic conception of banks”, it argues America has been able to avoid hyperinflation and maintain its military hegemony largely thanks to the petrodollar system. Islamic State hopes that with the introduction of what it is calling the dinar, all oil will be paid for with gold instead of being priced in dollars, which would “mark the death of this oppressive banknote” and bring America “to her knees”. Charts showing the gradual increase of the American money supply and the devaluation of the dollar are provided as evidence of the dangers of printing money.

The Economist found the whole scheme Quixotic, outlining “three rather obvious problems”:

First, its yellow currency is no different to any other version of the gold standard. The dinar’s worth will be determined by the supply and demand for gold, exposing the currency to fluctuations in the price of the yellow stuff. A fall in the gold supply would be like a tightening of monetary policy; it could cause a recession.

Second, a coin backed by a terrorist organisation has obvious credibility problems: aside from the fact that its coins cannot be traded legally, few would presumably use this currency to trade oil if it was only available in coin form, or other forms that relied on trusting Islamic State.

Finally, ending the petrodollar system would first require Islamic State to seize a far larger share of oil production in the Middle East and then persuade countries to agree to trade with it. Even if Islamic State were successful in becoming a major oil exporter, the strength of the dollar depends on far more than its use in the oil trade.

The conclusion: “American capitalism seems safe for a while yet.”

However, more recently, Islamic State seems to have scrapped its fanciful new currency and is now relying on US dollars. All utility bills, extortion payments, fines for dressing improperly, and inducements to obtain the release of detainees must be tendered in that “oppressive” and “satanic” currency.

In other belt-tightening, not only have salaries been halved, but the regime no longer supplies free energy drinks and Snicker bars to its followers. It looks like hard times. One of their top leaders has attempted to cheer the legions up by arguing that “a drowning person does not fear getting wet.” Not a terribly reassuring way of putting it I should think, particularly to people with diminished salaries who now have to pay for their Snicker bars with the enemy’s currency.

More Unconstitutional Executive Branch Actions

Imagine that your company’s board chairman, against the wishes of the board of directors and in contravention of the corporate charter, hires an interim CEO. Despite that illegal action, the interim CEO disciplines you in some manner. Would that discipline be any more legitimate if, two years later, the board finally agrees to hire the CEO, who then retroactively approved his own previous actions?

This is what’s happened at the highest levels of government. When Congress created the Consumer Financial Protection Bureau (CFPB) as part of the larger Dodd-Frank financial reform, it specified that the director was to be appointed by the president “by and with the advice and consent of the Senate.” This placed what’s called an Appointments Clause limitation on the director’s position. Four years ago, President Obama named Richard Cordray the CFPB director—after Elizabeth Warren’s expected appointment met significant political resistance—during what the president erroneously believed was a Senate recess. (You’ll recall that the Supreme Court unanimously invalidated the National Labor Relations Board appointments Obama made at the same time.)

Police Use Robot to Kill Dallas Suspect

Last night Dallas police officers used a bomb robot to kill the suspected perpetrator of a shooting that left five Dallas-area police officers dead and seven others wounded. Two citizens were also wounded in the shooting. While police have used robots to deliver chemical agents and pizza, it looks as if the deployment of the robot bomb last night was the first time American police officers have used a robot to kill someone.

Police reportedly used the robot after hours of negotiation with the suspect broke down. According to Dallas Police Chief David Brown, “We saw no other option but to use our bomb robot and place a device on its extension for it to detonate where the suspect was.” He went on to say, “Other options would have exposed our officers to grave danger.”

The death of the alleged shooter in Dallas should prompt us to think carefully about how new technologies will be used by police to deliver lethal force. Robots like the one use by Dallas police last night are used by police departments across the country as part of bomb squads. But it’s worth keeping in mind that these robots will continue to improve, making it easier for police to use them in situations like the standoff in Dallas.