Countries at Risk, not Fake U.S. Coalition, Should Stop the Islamic State

President Barack Obama is fighting the Islamic State with a coalition without members.  What are allies for?

Washington collects allies like most people collect Facebook friends.  It doesn’t matter if the new “friends” enhance America’s security.  Washington wants more allies.

Yet America’s allies do little for the U.S.  Their view is that Washington’s job is to defend them.  Their job is to be defended by Washington. 

For decades Washington faced down a nuclear-armed power—the Soviet Union and then Russia—to protect the Europeans.  The Europeans did essentially nothing for the U.S. 

After 9/11 several European states contributed to America’s efforts in Afghanistan and Iraq.  Neither invading the latter nor attempting to build a democratic central government in the former made policy sense, but some Europeans sacrificed on behalf of a professed U.S. interest. 

However, Washington quickly repaid the favor, underwriting Britain’s and France’s foolish war in Libya.  Now the Europeans want Washington to save Ukraine and “reassure” countries to the east.  Yet the EU has a larger GDP and population than America. 

With the U.S. now calling for assistance against ISIL, the continent has turned more frigid.  No one seems interested in joining Washington’s air war, even Great Britain.

Washington’s Asian friends are even less helpful.  For decades Japan wouldn’t help U.S. forces, even if they were defending Japan.  That is finally changing, but there still is no good reason Washington to stare down the People’s Republic of China to secure Tokyo’s disputed claim to the Senkaku Islands. 

Sweden’s Electoral Warning for David Cameron

Cato senior fellow Johan Norberg writes in The Spectator that David Cameron ought to ponder the electoral loss of his friend and fellow “modernizing conservative” Fredrik Reinfeldt in the Swedish election:

It was not that Swedish voters were not impressed with the economy. According to a recent European Commission survey, 97 per cent of Swedes were satisfied with their living standards, a number that would please Kim Jong-un. In the big exit poll, voters said that the Moderates handled the nation’s finances better than any other party. But this success, it seems, was self-defeating. The old law, ‘He who has slaked his thirst turns his back on the well’, seems to have applied. The Swedish Conservatives kindly tidied up the fiscal mess — but why keep the cleaners on after the job is done?

Any country that struggles with financial collapse (and lacklustre recovery) would love to recruit an Anders Borg. But Swedes think they are now out of the woods. They want to talk about other things: the climate, immigration, girl power (the feminist party’s share of the vote rose seven-fold) and the quality of public services.

Reinfelt’s big mistake was to look as if he had finished the job. His coalition seemed out of ideas, with no vision for the future. They had, of course, accomplished most of what they set out to achieve in the first, radical four years — and had also lost their majority in parliament. But the general impression was that they had run out of puff….

Once, it was Reinfeldt who won elections by capturing the imagination and daring to be different. Now, he has played it safe — and lost. Last time, Reinfeldt gave Cameron a masterclass in how to win an election. Now he has given a masterclass in how to lose one.

There’s more, on Sweden’s economic recovery, its remaining problems, the pathetically weak victory of the Social Democrats, and the rise of the populist Sweden Democrats.

Bitcoin Charts, Finally

Bitcoin, the new digital currency, remains a mystery to many. There is no better way to lift the fog surrounding bitcoin than to let the data speak. And data speaks loudest through charts. Yes, topological analysis is often the best route to comprehension.

I have constructed – with my assistant, Mazin Al-Rayes – a series of charts that contain illuminating data about bitcoins and brief directions for use following each chart.

How to interpret: Currently there are 13.235 million bitcoins in circulation. The issuance of new bitcoins will halt when the total number of bitcoins “mined” (read: in circulation) reaches 21 million.

NYT Reverses Course on German Renewables

This week the New York Times featured an article lauding Germany’s embrace of renewable energy in recent years. This came just under a year after it published a separate article questioning the costs of subsidized wind power.  The article last year noted that “Industrial users still pay substantially more for electricity here than do their counterparts in Britain or France, and almost three times as much as those in the United States, according to a study by the German industrial giant Siemens. The Cologne Institute for Economic Research said there had been a marked decline in the willingness of industrial companies to invest in Germany since 2000.”  

Regulation has published two articles addressing the issue of renewable energy subsidies in recent years.

In the first, Jonathan Lesser examines the costs of the Cape Cod wind farms in Massachusetts.  Cape Wind prices will be around 21 cents per kWh when it starts production and 35 cents at the end of the contract in 2027.  In contrast the market supply is currently around 11 cents per kWh and projected to be 15 cents from 2020 through 2027. 

In the second article, Lesser uses data on actual wind generation to demonstrate the perverse economic consequences of the inverse relationship between the availability of wind power (at night in the winter) and the demand for electricity (during the day in the summer).

From January 2009 to August 2012 in three of the areas of the country that account for more than half of the installed wind generation capacity in the U.S.: Pennsylvania-New Jersey-Maryland, the upper Midwest, and Texas, the median wind unit operated only between 26 and 31 percent of the hours in a year and only between 2 and 16 percent of the peak hours in the 10 highest demand days of the year. 

Even though renewable power is least available when electricity is in greatest demand, renewable energy subsidies create taxpayer-subsidized competition for existing power generators during other lower-demand times.  This reduces the returns of existing generators.  The lower returns cause conventional supply to decline and eventually consumer prices increase particularly at peak times because so little wind generation is produced during peak hours.

The Costs of Independence

As my colleague Doug Bandow noted on Cato@Liberty a few days ago, Scottish independence is for the voters of Scotland to decide. And so it should be. But, as I write over at Foreign Policy, U.S. policymakers need to be aware that Scottish independence would carry some key costs for the United States:

  1. The loss of nuclear submarine basing privileges is the most concrete cost of Scottish independence, with Scotland’s nationalist party pledging a ‘nuclear-free’ Scotland if a Yes vote occurs. U.S. nuclear submarines, though based in King’s Bay, Georgia, use the United Kingdom’s HMNB Clyde Naval Base at Faslane, Scotland for maintenance and deployment needs. The site is located conveniently close to key North Sea patrol waters, and has acted as a visiting port for U.S. submarines since the Cold War. The loss of the base will force the UK to relocate its four Trident submarines, and the paucity of available sites in Europe may eventually lead to UK submarines being based alongside their American counterparts in Georgia.
  2. The UK and United States also have strong, historical links in intelligence sharing and military cooperation, formalized in the 1946 UKUSA agreement. Intelligence sharing and operational burdens are widely shared; officers on both sides of the Atlantic even refer to each other as ‘cousins.’ But independence could undermine the value of this alliance for the United States, at least in the short term.  In the case of a Yes vote, the remainder of the United Kingdom (RUK) will need to rebuild its military and intelligence capabilities, extricating itself from Scotland, and negotiating which military assets will go to which country. During this period, the United States will lose the benefit of British intelligence and military support.
  3. The breakdown of the UK will also result in the loss of a valuable U.S. supporter on the world stage. The UK is often the only nation which commits substantial levels of troops or financing to joint military or humanitarian operations. While ‘partner states’ like France committed only 88 troops to the War in Afghanistan, the UK contributed 10-15% of total troops to the conflict. In Iraq, the UK was responsible for almost half of the non-U.S. troops involved. The UK also carries its own weight in NATO, contributing between 2.5-3% of GDP in military spending each year, a level few European states achieve. The loss of Scotland will carve up the UK, removing at least 8% of its population and tax base, making it less able to commit to any U.S. initiatives.

The timing could not be worse: achieving consensus on Syria, Ukraine or a host of other issues will be harder in the turmoil of a Yes vote for independence. Whether the United States should be involved in these conflicts is debatable at best, but they will be costly, especially if Britain can’t contribute.  An independent Scotland, even without the incipient startup costs of independence, is not going to fill that gap. U.S. policymakers shouldn’t be telling Scotland what to do. But they should be worried. If a Yes vote occurs, the costs will certainly impact the United States

Customs and Border Protection’s Extravagant Houses

U.S. Customs and Border Protection is the second largest agency within the Department of Homeland Security (DHS). The agency cost taxpayers $13 billion in fiscal year 2014, and its budget is growing quickly. Spending has increased 85 percent in the last ten years, after accounting for inflation.

This chart shows CBP spending since 1970, including its recent meteoric rise.

Regrettably for taxpayers, all of that money is not being spent wisely. The Washington Post recently highlighted one example of egregious CBP spending:

U.S. Customs and Border Protection “vastly overpaid” for an employee housing project near one of its checkpoints in rural Arizona, spending nearly eight times the average price of homes in the area to build each of the units, according to a federal audit.

The 21 agency homes in Ajo, Ariz, cost about $680,000 each, whereas the average price for a home in the city is $86,500, the Homeland Security Office of Inspector General said in a report on Thursday.

Auditors determined that CBP overpaid for the land, added “nonessential items” and ignored recommendations for the types of houses that should be built. A CBP study had called for one-bedroom homes, but the agency instead built two- and three-bedroom units with amenities such as quartz counter tops, three-car garages and stand-alone freezers.

The report concluded that the homes exceeded employee needs, noting that 80 percent of the agency’s field officers own permanent residences in other locations.

“CBP did not effectively plan and manage employee housing in Ajo, Arizona, and made decisions that resulted in additional costs to the federal government,” the report said.

All told, the auditors identified $4.6 million in expenses that “could have been put to better use.” They noted that CBP increased the cost of the project seven times without explaining how the extra funds would be spent.

Ajo, Arizona represents just one of six areas where CBP is building new homes for its agents. The Inspector General’s report calls on CBP to postpone further construction until it gets this wasteful spending under control.

This is one more example to add to the ever-growing list of wasteful federal spending.
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Curious how much other agencies spend? You can make your own spending charts here at www.DownsizingGovernment.org.

Scottish Independence Will Kill Socialism on Both Sides of the Border

Much has been said about the impact of Scottish independence on British politics. With the predominantly socialist parliamentarians from Scotland gone, the Conservative Party would likely come to dominate British politics for the foreseeable future. The much needed economic reforms and, perhaps, withdrawal from the European Union would become very likely. 

What about the impact of independence on Scotland? The breakup of the Czech and Slovak Federal Republic some 21 years ago provides an interesting example.

The 1992 elections produced dramatically different results in the two parts of the former Czechoslovak federation. In the Czech Republic, the election was won by the Civic Democratic Party (ODS) led by Vaclav Klaus. Klaus was a highly regarded former federal Finance Minister, who later became Prime Minister and President of the independent Czech Republic. The ODS was dominated by economic reformers whose main goal was a speedy transition of the Czech Republic from a centrally planned economy to capitalism.

In Slovakia, the election was won by the left-leaning Movement for Democratic Slovakia (HZDS) led by Vladimir Meciar. Meciar, a former communist who instinctively opposed dramatic economic reforms favored by Klaus, won by promising the increasingly nationalistic Slovaks some type of a confederal arrangement with the Czechs, but not outright independence. Since the HZDS, with support of smaller Slovak National Party, had enough votes to block all legislation in the Federal Parliament, the future of the federation would depend on an agreement between the ODS and the HZDS.

While demanding an increased autonomy for Slovakia, the Slovak leadership did not bother to find out how far the Czechs were prepared to go. The Slovak leadership seemed to believe that the Czechs, who were more emotionally attached to the continuation of the Czechoslovak federation than the Slovaks, would simply accede to whatever demands the Slovaks chose to make. That turned out to be a colossal miscalculation.