November 30, 2012 12:12PM

Majority of Americans Now Oppose ‘Universal Coverage’

I launched the Anti‐​Universal Coverage Club on the Cato@Liberty blog in 2007. The Club is “a list of scholars and citizens who reject the idea that government should ensure that all individuals have health insurance.”

Well, that list just got longer. A whole lot longer. I’ll let the folks at Gallup take it from here:

In U.S., Majority Now Against Gov’t Healthcare Guarantee

For the first time in Gallup trends since 2000, a majority of Americans say it is not the federal government’s responsibility to make sure all Americans have healthcare coverage. Prior to 2009, a majority always felt the government should ensure healthcare coverage for all, though Americans’ views have become more divided in recent years…

The shift away from the view that the government should ensure healthcare coverage for all began shortly after President Barack Obama’s election and has continued the past several years during the discussions and ultimate passage of the Affordable Care Act in March 2010.

The split is 54 – 44 percent, well outside the poll’s margin of error. Below the jump are the results in chart form:

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Now all we need is for 54 percent of the public to “like” the Anti‐​Universal Coverage Club’s Facebook page.

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November 30, 2012 11:15AM

Where’s Iran’s Money?

Since I first estimated Iran’s hyperinflation last month , I have received inquiries as to why I have never so much as mentioned Iran’s money supply. That’s a good question, which comes as no surprise. After all, inflations of significant degree and duration always involve a monetary expansion.

But when it comes to Iran, there is not too much one can say about its money supply, as it relates to Iran’s recent bout of hyperinflation. Iran’s money supply data are inconsistent and dated. In short, the available money supply data don’t shed much light on the current state of Iran’s inflation.

Iran mysteriously stopped publishing any sort of data on its money supply after March 2011. Additionally, Iranian officials decided to change their definition of broad money in March 2010. This resulted in a sudden drop in the reported all-important bank money  portion of the total money supply, and, as a result, in the total. In consequence, a quick glance at the total money supply chart would have given off a false signal, suggesting a slump and significant deflationary pressures, as early as 2010

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November 30, 2012 9:15AM

‘By Far the Broadest and Potentially Most Damaging of the Legal Challenges’ to ObamaCare

That’s how Kaiser Health News describes the legal challenge that Jonathan Adler and I outline in this paper and that Oklahoma attorney general Scott Pruitt has filed in federal court:

Supporters of the law scoff at the arguments…

But, confident of their case, some health law opponents, including Jonathan Adler of Case Western Reserve Law School, Michael Cannon of the libertarian Cato Institute and National Affairs editor Yuval Levin, are urging Republican‐​led governments to refuse to set up the online insurance purchasing exchanges, which would, as the argument goes, make their residents ineligible for the tax credits and subsidies. They say that this step also would gut the so‐​called employer mandate, which the law says will take effect in states where residents are eligible for such assistance…

As even some health law supporters concede, the claim that Congress denied to the federal exchanges the power to distribute tax credits and subsidies seems correct as a literal reading of the most relevant provisions. Those are sections 1311, 1321, and 1401, which provide that people are eligible for tax credits and subsidies only if “enrolled … through an Exchange established by the state” [emphasis added].

It’s technically not correct to say that Oklahoma’s complaint is a challenge to ObamaCare, however. That complaint does not challenge a single jot or tittle of the statute. Oklahoma is asking a federal court to force the IRS to follow the statute, and to prevent the Obama administration from imposing taxes on Oklahoma residents whom Congress expressly exempted. Oklahoma’s complaint is indeed “the broadest and potentially most damaging of the legal challenges” related to ObamaCare. But think about it: if the only way to save ObamaCare from such a fate is to give the president extra‐​constitutional powers to tax and spend money without congressional authorization, just how unstable is this law? And is it really worth saving?

Also, the article is a few months behind on the debate over congressional intent, and our ongoing debate with Timothy Jost (who has reversed himself on quite a few issues).

But overall, a good article.

November 29, 2012 6:23PM

The Usual Anti‐​WTO Suspects

A news article out today from the McClatchy news service reports growing opposition in the United States against the WTO after a series of politically popular laws were found earlier this year to be inconsistent with international trade rules. It’s true that the federal government will face some tough decisions in 2013 as it attempts (or not) to bring currently discriminatory laws on tuna, beef, and cigarettes into compliance. But most of the outcry has come from the same usual suspects who have always opposed trade liberalization — progressive activists, anticompetitive industry associations, and lawmakers with wealthy business constituents seeking import protection.

These perennial opponents of the WTO rely on some very dangerous myths to make their case, and I’d like to point out two of them in this post that relate to the WTO’s dispute settlement process. The first is that bringing existing U.S. laws into compliance with WTO rules will necessarily weaken environmental and safety regulations. The second is that responding to a loss at the WTO by reforming U.S. law amounts to a transfer of sovereignty from the United States to international bureaucrats. These myths can have a strong impact on the public and lawmakers across the political spectrum, and they are both totally false.

The news article highlights in particular a ruling from earlier this year that the U.S. law regarding the dolphin safe tuna label violates WTO rules. Among those most vocally concerned about the ruling is Lori Wallach of Public Citizen’s Global Trade Watch. She is concerned that bringing the law into compliance will result in “Flipper murder” as U.S. consumers will no longer be able to choose dolphin friendly tuna at the super market.

I have written before about how the law, which defines dolphin safe by prohibiting the use of a label unless certain conditions are met, actually prevents consumers from making informed choices that protect dolphins and other sea life. But the WTO judicial bodies didn’t rule against the law because they believed that a free market is the best way to maximize the power of consumer choice, they did so because the definition of dolphin safe under the law is misleading and protectionist.

The federal dolphin‐​safe label requirements that were found to violate WTO rules prohibit the use of such a label if tuna is caught in a particular part of the Pacific Ocean near Mexico where dolphins and tuna school together. As I wrote in May, the WTO found fault not with what the law prohibited, but with what it allowed:

What makes the law discriminatory and misleading is that tuna caught elsewhere, like the Western Central Pacific where U.S. fishing fleets operate, may be labeled dolphin safe without any certification that dolphins were not harmed. In the WTO case, the U.S. was given an opportunity to justify this different treatment by showing that the policy even‐​handedly addresses different levels of risk for dolphins in different regions. But the WTO found that fishing techniques used in other parts of the ocean can also harm dolphins, and that excluding Mexican tuna from access to the label under especially strict terms was discriminatory.

Bringing the law into compliance does not require total repeal, although that is the best option. Alternatives include having a weaker requirement or having a stricter requirement. Another option would be to keep working with other countries involved in the International Dolphin Conservation Program to develop sustainable fishing practices that severely limit the incidence and consequence of dolphin bycatch.

One of the current law’s leading supporters, Representative Rick Larsen (D‑WA), is upset because he thinks any change would be bad for … his state’s tuna fishing industry. Protectionism is not a good way to save dolphins, and it’s definitely not the only way.

The second myth — that WTO rulings diminish U.S. sovereignty — is especially frustrating.

An association of cattle ranchers is actually suing the WTO and U.S government in federal court to prevent implementation of a ruling against mandatory country of origin labels for beef. Part of the 2002 Farm Bill, the country of origin label regulation was designed to make it more expensive to purchase Canadian cattle and to roll back the efficiency gains from NAFTA‐​driven supply chain integration in the beef market. Carrying the banner of consumer information and safety, the ranchers have teamed up with other protectionists to blame the WTO instead of ‘fessing up when their frankly obvious scheme was exposed.

The WTO has no power to override U.S. law. Period. The dispute settlement process at the WTO allows countries to settle trade disputes by submitting their complaints to an independent panel of arbiters. If that panel finds a country’s law to be inconsistent with the promises it has made as a WTO member, then the complaining members are provisionally excused from their obligations toward the offender. No one is forced to engage in tit‐​for‐​tat retaliation, but the consequence of noncompliance is a loss of protection from such retaliation. Bringing the offending law into compliance puts a stop to the retaliation and restores the status quo.

Since the end of World War II, the primary character of U.S. trade policy has been to accept the benefits of trade liberalization only if other countries do the same. This awkward free‐​trade mercantilism has fostered an international trading system governed by international laws which both restrict and harness the protectionist tendencies of national governments. The WTO dispute settlement system, and its remarkable success at ensuring compliance, is an example of how liberalization can be achieved by pitting special interests against each other.

The WTO has its faults, but calling out the U.S. for protectionist regulation isn’t one of them. I would be thrilled if the U.S. adopted a policy of unilateral trade liberalization and recognized that import barriers and protectionism harm U.S. consumers and businesses regardless of what other governments do. Until then, mooching industries and progressive activists will complain about the WTO installing world government and forcing us to kill dolphins against our will. And the WTO will continue to expose their protectionist schemes.

November 29, 2012 3:45PM

Talking Fiscal Cliff and GOP Fecklessness with the Instapundit

Unless the law is changed, big tax increases will be imposed on all taxpayers next year. This is the so‐​called fiscal cliff, and President Obama is using this unpalatable situation as an excuse to push for his class‐​warfare tax policy.

I talk about the political and economic ramifications of this fight with Glenn Reynolds, author of the famous Instapundit blog.

As is my habit, there are a couple of points that deserve some elaboration.

  • Budget deals don’t work – I wrote about this issue back in 2010, but I think the most persuasive piece of evidence came from the New York Times, which inadvertently admitted that the only successful budget deal was the 1997 pact that cut taxes rather than raising them.
  • We should only raise taxes on those who say they want higher taxes – Since the Hollywood left (with some noble exceptions such as Jon Lovitz and Rob Schneider) is in favor of bigger government and higher tax rates, Glenn has suggested a restoration of the federal tax on movie receipts. That hasn’t worked very well in Spain, but I like the idea. In the same spirit, I’ve proposed a tax on CEO salaries since the big business community is trying to curry favor with the political class by endorsing tax hikes.
  • Republicans won this fight in 2010 when they had less power – The same fiscal cliff fight took place two years ago, before the Republicans controlled the House and when they had fewer seats in the House. Yet GOPers prevailed because Senate Republicans stuck together. It would be a sign on remarkable incompetence if they lost this year’s fight since they now have much more power.
  • Long‐​term incumbents get too comfortable with big government – I joked about politicians who come to Washington thinking it’s a cesspool, but eventually think it’s a hot tub, but that’s actually a very serious point. As I explain in this post, too many GOPers get corrupted by big government.
  • It’s simple to balance the budget with modest spending restraint – According to Congressional Budget Office data, we can make the Bush tax cuts permanent and balance the budget in just 10 years if lawmakers simply exercise some modest fiscal restraint and limit spending so it grows by an average of 2.5 percent yearly.
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    Most important, I sneak in an endorsement of my beloved Bulldawgs at the end of the interview – I’ve been very restrained and have not used this blog as a platform to celebrate Georgia being two wins away from the national title. Actually, the SEC Championship Game this weekend is the de facto national title game, though whichever team that prevails will have to take the pro forma step of mopping the floor with Notre Dame in January. This cartoon shows the state of play.

P.S. I appreciated Glenn’s reference to Lucy, Charlie Brown, and the football. To see my re‐​creation of that Peanuts classic, look at the cartoon in this post.

November 29, 2012 2:47PM

Is Turkey Golden?

Recently, Moody’s Investors Service took some wind from Turkey’s sails, when it declined to upgrade Turkey’s credit rating to investment grade. Moody’s cited external imbalances, along with slowing domestic growth, as factors in its decision. This move is in sharp contrast to the one Fitch made earlier this month, when it upgraded Turkey to investment grade.   Moody’s decision not to upgrade Turkey, and its justification, left me somewhat underwhelmed – given how well the Turkish economy has done in recent years.

Since the fall of Lehman Brothers, Turkey’s central bank has employed a so-called unorthodox monetary policy mix. For example, a little over a year ago, it began to allow commercial banks to purchase gold from Turkish citizens and allowed banks to count gold to fulfill their reserve requirements. Incidentally, this was a remarkable success – from 2010-2012, the Turkish banking sector’s precious metal account increased by over 7 billion USD.

For all the criticism its unconventional monetary policies have garnered, the Central Bank of the Republic of Turkey has, in fact, produced orthodox, golden results. Indeed, as the accompanying chart shows, the central bank has delivered on the only thing that really matters – money.

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Turkey’s economic performance has been quite strong (despite some concerns about inflation and its current account deficit) . Turkey’s money supply has been close to the trend level for some time, and it currently stands 2.41% above trend. This positive pattern is similar to that of many Asian countries, who continue to weather the current economic storm better than the West.  And, it stands in sharp contrast to the unhealthy economic picture in the United States and Europe – both of which register significant money supply deficiencies.

So, why would Moody’s not follow Fitch’s lead and upgrade Turkey to investment grade? To understand this divergence, one should examine Turkey’s recent current account activity. Since late 2011, Turkey’s current account has rebounded somewhat (see the accompanying chart).

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But, if gold exports are excluded from the current account (on a 12-month rolling basis), a rather significant 47% of this improvement, from the end of 2011 to September 2012, magically disappears.

Where is this gold going? Well, a quick look at the accompanying chart shows just how drastically exports to Iran and the UAE have surged this year.

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Taken together, the charts indicate that Turkey is exporting gold to Iran, both directly and via the UAE , propping up their current account in the process. This has put Turkey and the UAE in the crosshairs of proponents of anti-Iranian sanctions.   Those who beat the sanctions drum are now seeking to impose another round of sanctions, aimed at disrupting programs such as Turkey’s gold-for-natural-gas exchange. This proposal clearly highlights some of the problems associated with sanctions, specifically the unintended costs imposed on the friends of the U.S. and EU in the region. Indeed, Dubai has already taken a hit, with its re-exports falling dramatically as a result of the sanctions.

What is the U.S. to do – go against Turkey, its NATO ally? Believe it or not, some in the Senate are allegedly considering such a wrong-headed move.

If these proposed sanctions are implemented, then Moody’s pessimistic outlook on Turkey may turn out to be not so far from the mark, after all – and Turkey will have no one but its “allies” to blame.

November 29, 2012 1:57PM

Straw Men

Global Science Report is a weekly feature from the Center for the Study of Science, where we highlight one or two important new items in the scientific literature or the popular media. For broader and more technical perspectives, consult our monthly “Current Wisdom.”

Lawrence Livermore National Laboratory’s Benjamin Santer and his mentor, Tom Wigley, of the National Center for Atmospheric Research seem, well, a little obsessed over Cato’s Pat Michaels. First, Santer threatened to “beat the cr&p out of him”, and then Wigley tried to foment a cabal to “re‐​assess” his doctoral dissertation, under grounds that were completely, unalterably, and demonstrably 100 percent false.

So it’s no surprise that they have just published — two years after the fact — what they consider to be a rejoinder to Michaels’ 2010 testimony to the Subcommittee on Energy and Environment of the Committee on Science and Technology of the United States House of Representatives. There’s about as much real substance here as there was in Wigley’s very ill‐​informed (and seemingly actionable, if Michaels didn’t have a day job here at Cato) campaign against his doctorate.

It’s just been published in the journal Climate Dynamics. This is technically peer‐​reviewed, but, judging from the climategate emails and the serial paper trail of threatening journal editors (say, by writing to the University administrations where they worked) as well as the less than high quality contents of the actual paper, it makes you wonder just how critical the reviewers actually were.

In their paper, Wigley and Santer wrote:

Michaels’ 2010 Congressional testimony…is in conflict with the results presented here. This testimony makes the claims that “…greenhouse‐​related warming is clearly below the mean of relevant forecasts by IPCC”, and that “… the Finding of Endangerment from greenhouse gases by the Environmental Protection Agency is based on a very dubious and critical assumption”. The “assumption” referred to here is the IPCC statement that is the primary focus of the present paper, i.e., the statement that most of the warming since 1950 is very likely due to the human‐​caused increase in greenhouse gas concentrations.

Regarding Michaels’ statement that “…greenhouse‐​related warming is clearly below the mean of relevant forecasts by IPCC” Wigley and Santer argued that:

Roughly half of these [IPCC climate model] simulations did not consider the cooling effect of indirect aerosol forcing, so the results, on average, would be biased towards trends that are warmer than observed even if the models were perfect (cf. Santer et al. 2011).

So the climate models are biased to producing more warming than is observed? Isn’t that what Michaels said? These guys just won’t take “yes” for an answer.

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