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Cato Daily Dispatch for August 15, 2003

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Report: Spy Gained From FBI Laxity
Key al-Qaeda Figure Arrested in Southeast Asia
United States Wins Anti-Steel-Dumping Case

Report: Spy Gained From FBI Laxity

According to The Washington Post, "convicted [Federal Bureau of Investigation] spy Robert P. Hanssen, who provided U.S. secrets to the Soviets and Russians for more than 20 years, was a reckless and 'mediocre agent' who succeeded because of the bureau's poor oversight and lax security, according to a review of the case released yesterday."

Unfortunately, the federal government has a long history of failing to remove unsatisfactory workers from the payroll. In "Federal Government Should Increase Firing Rate," the Cato Institute's Chris Edwards, director of fiscal policy studies, and Tad DeHaven, a research assistant, write: "Federal personnel data show that just 434 civilian federal workers were fired for poor performance in 2001. Just 210 non-defense workers, or 1 in 5,000, were fired for poor performance. Firing rates were similarly low in prior years, and are low across all agencies. For example, the 28,000-person State Department has fired just 6 employees for poor performance since 1984, yet this agency is known for its sloppiness in handing out visas, mishandling secret documents, and letting Russian spies bug a meeting room down the hall from the former secretary's office.

"Unfortunately, no private-sector firing data exist to compare with federal data. But we do know that the 'involuntary separations,' which include both firing and layoffs, are only about one-fourth as high in the government as the private sector. No doubt private-sector firing is below optimal, as well, since firms are under threat of expensive wrongful discharge lawsuits. Only five states adhere to 'employment at will,' which allows broad freedom to dismiss workers. Because workers are free to 'fire' their employers at any time, employment at will is a balanced approach that should be the rule in both the private and the government sectors."

Key al-Qaeda Figure Arrested in Southeast Asia

According to The San Francisco Chronicle, "the United States has captured an alleged al-Qaeda leader described by President Bush as 'one of the world's most lethal terrorists,' a suspect in last year's Bali bombing and a series of deadly bombings in the Philippines."

The capture of the suspected terrorist comes after a period of extensive U.S. cooperation with foreign governments since September 11, 2001. In a Foreign Policy Briefing Paper, "The Anti-Terrorism Coalition: Don't Pay an Excessive Price", the Cato Institute's director of defense policy studies, Charles Pena, writes that "although there may be a price for [foreign government] support, America should not pay an excessive price -- one that could be detrimental to long-term U.S. national security interests. And though it may be necessary to provide a certain amount of immediate aid (directly or indirectly) as a quid pro quo for the support of other nations in our war on terrorism, the United States needs to avoid long-term entanglements, open-ended commitments, and the potential for an extreme anti-American backlash.

"If the United States has the same kind of tunnel vision about terrorism that it had about the fight against communism during the Cold War, it could be blindsided by disastrous unintended consequences. In its zeal to go after the terrorists responsible for the attacks on the World Trade Center and the Pentagon, the U.S. government must understand that alliances of convenience (especially with countries of which it was legitimately critical before September 11) may be necessary, but they come with the potential for great risk. Ultimately -- and paradoxically -- the United States could end up doing more to breed terrorism than to prevent it."

United States Wins Anti-Steel-Dumping Case

"A World Trade Organization panel yesterday handed the US a rare victory in a dispute over its anti-dumping rules when it decided against a Japanese complaint against the renewal of duties on steel exports," reports the Financial Times.

The Cato Institute's Dan Griswold, associate director of the Center for Trade Policy Studies, testified on the negative effects of protecting the United States steel industry before the House Committee on Ways and Means Subcommittee on Trade in 1999. His comments are excerpted below:

"Unfortunately, changes in steel prices are invisible to ordinary Americans. Those changes show up, eventually, in the price of an automobile, or a plane ticket, or rental space in an office building - but the causal connections are complex and subtle. The effect of a tax on foreign steel just doesn't show up in the average family's budget in any direct or immediate way. As a result, steel producers are free to equate their interest with the national interest without generating much in the way of grass-roots opposition.

"The campaign for steel protectionism thus highlights a classic problem of political economy known as concentrated benefits and dispersed costs. The benefits of restrictions on foreign steel are concentrated in the relatively small steel-producing sector, while the costs are dispersed throughout the entire economy. Steel producers therefore have a very clear and powerful incentive to lobby for protectionism, while most of the rest of us who stand to lose don't have a big enough or clear enough stake to oppose them with any vigor.

"The federal government should not use its power to favor one industry over another, or to confer special benefits on a small but vocal segment of producers at the expense of the nation's general welfare. Congress should reject calls for steel protection and reform the antidumping law to prevent future abuse."

Chris Kilmer, editor, ckilmer@cato.org