Archives: 07/2013

Learning to Leave Bad Enough Alone: Washington’s Clumsy Meddling in Fragile Countries

U.S. officials too often succumb to the temptation to try to impose order and justice in unstable or misgoverned societies around the world. The temptation is understandable. It is hard to learn about—much less watch on the nightly news—brutality, bloodshed, and gross injustice and not want to do something about it. Some foreign policy intellectuals, including the new U.S. ambassador to the United Nations, Samantha Power, have become strident lobbyists for the notion of a “responsibility to protect” vulnerable populations.

But it is a temptation that wise policy makers should avoid. U.S. meddling has frequently caused already bad situations to deteriorate further—especially when Washington has based its humanitarian interventions on the false premise that the subject of our attentions is, or at least ought to be, a coherent nation state. As I point out in an article over at The National Interest, U.S. administrations have made that blunder in Bosnia, Iraq, Libya, and other places.

In many parts of the world, the Western concept of a nation state is quite weak, and the concepts of democracy and individual rights are even less developed. The primary loyalty of an inhabitant is likely to be to a clan, tribe, ethnic group or religion. U.S. officials appear to have difficulty grasping that point, and as a result, the United States barges into fragile societies, disrupting what modest order may exist. Washington’s military interventions flail about, shattering delicate political and social connections and disrupting domestic balances of power.

An especially naive and pernicious U.S. habit has been to try to midwife a strong national government in client states when the real power and cohesion lies at the local or subregional level. Thus, Washington still insists on keeping the chronically dysfunctional pretend country of Bosnia intact and on international life support more than 17 years after imposing the Dayton peace accords that ended the fighting there. Similarly, the United States harbored the illusion that Hamid Karzai could run a strong, pro-Western, democratic Afghan central government from Kabul, and even Karzai’s ineptitude and extensive misdeeds have not entirely dispelled that notion. In both cases, the national cohesion, underlying democratic values, and strong civil societies needed for such a scheme to work are woefully lacking.

One would hope that U.S. officials would be sobered by those bruising experiences, but there is little evidence of that. Even now, the Obama administration continues to flirt with intervening in Syria. That would be a huge mistake. Syria’s ethno-religious divisions make those of Bosnia, Afghanistan, Iraq, and Libya look mild by comparison. Bashar al-Assad is undoubtedly a thuggish ruler, and the humanitarian situation in Syria is tragic. But a U.S.-led intervention could cause Syria’s fragile political and ethnic tapestry to unravel entirely, and that might make the current situation far worse. The Obama administration needs to exercise great care and restraint.

Time for Washington to Just Shut Up

The military regime in Cairo continues to kill supporters of ousted president Mohamed Morsi with Washington’s financial support. The Obama administration is turning hypocrisy into an art form. 

Washington labors with the delusion that it controls the world. The administration insists that it must preserve its influence by giving more money to the generals in Cairo. Yet when has the United States ever exercised influence in Egypt?

For four decades American taxpayers have subsidized dictatorial regimes. The administration tried to save Mubarak from revolution, before supporting his overthrow. Washington’s attempts to convince President Mohamed Morsi to rule more inclusively, and military commander Gen. Abdel Fattah al-Sisi not to stage a coup, failed completely. Now the coup leader is ostentatiously ignoring the administration’s plea that he not force the Muslim Brotherhood underground.

Yet the president refuses to acknowledge the military coup, which would require the cut off of U.S. aid. If that happened, says the administration, Gen. al-Sisi might ignore American advice!

As I point out in my latest Forbes column:

It would have been better years ago had American officials simply shut up and done nothing.  No money would have been wasted.  Washington’s impotence would not have been demonstrated.  The U.S. would not be complicit in decades of military rule.

Alas, Egypt is not the first instance in which the U.S. government has managed to look stupid while spending a lot of money.  In fact, that is far more the rule than the exception for Washington.

For decades Washington has given away tens of billions of dollars a year for economic “assistance.” Among the lucky recipients? Crackpot communists such as Nicolae Ceausescu’s Romania and Mengistu Haile Mariam’s Ethiopia.

As in Egypt, local despots quickly learned that U.S. officials hate to admit failure and end assistance. So the money continues to flow no matter what.

Around the world Washington officials cheerfully talk about the importance of democracy while ostentatiously backing autocracy. Today the hypocrisy is most flagrant in Central Asia and the Middle East. Indeed, the administration praised the “Arab Spring” while supporting repression in Bahrain, Saudi Arabia, and now Egypt.

Much ink has been recently spilled on preserving American credibility after President Obama made Syrian use of chemical weapons a “red line” for intervention. In fact, Washington routinely draws meaningless red lines around the globe, which are routinely ignored.

American officials never learn!

In Egypt Washington has combined equal parts hypocrisy and futility. U.S. officials are never content to just shut up and stay home. If President Obama wants to leave a positive foreign policy legacy, he should do and say less abroad.

“Libertarianism Has Won Over the Supreme Court Conservatives”

So says the subtitle of provocative new essay in The New Republic by my friend and sometime antagonist Simon “Si” Lazarus.  Si’s argument boils down to the following:

  1. Legal experts are puzzled. The “most conservative” Court issued major rulings this term supporting gay rights and declined to toss out the University of Texas’s racial preferences, among other iconoclastic opinions.
  2. The public seems to think that the Court is either liberal or “middle of the road,” while the media line is that the Court is still “inching to the right.” What’s going on?
  3. The Court may well be “inching right,” but the “right” isn’t made up solely of social conservatives or business types.  There’s also libertarians!
  4. It’s precisely this libertarian flavor of conservatism that’s now ascendant, as evidenced by, among other things, Cato’s success this year. [Cabin the issue of whether libertarians/Cato are part of the Right, the conservative movement, or anything else that better fits on a two-dimensional political spectrum.]
  5. This rising libertarian influence isn’t all good news to progressives, despite our alliance over same-sex marriage.  Remember, it’s they, even more than traditional conservatives, who are leading the charge to roll back the New Deal, Great Society, and everything else that’s good and holy in the modern progressive pantheon.

Well, it’s nice to be noticed, I guess, and while there are kernels of truth here – see my piece in the Huffington Post earlier this month – Si does overstate the point.  In other words, yes, a combination of Justice Kennedy’s faint-hearted libertarianism, some outlandish assertions of federal power at the Supreme Court, and a president who wants to govern despite constitutional checks and balances, does put us in a bit of a “libertarian moment.”  But we have a long way to go before we undo the damage of the last 75 years’ worth of bad legal doctrine

As Ilya Somin puts it:

Even if conservatives and libertarians prevail in every single one of the cases [Lazarus] mentions, the federal government would still retain massive regulatory authority over almost every aspect of the economy and society. Obviously, it’s possible to characterize any decision to strike down or limit “regulatory legislation” on structural grounds as “junking the New Deal settlement.” But that’s like saying that any decision enforcing even modest constitutional limits on law enforcement amounts to junking the criminal justice system.

Still, we shouldn’t pooh-pooh libertarian achievements even if we recognize that libertarian legal nirvana isn’t just over the horizon.  As Randy Barnett comments:

… the political mood of a significant segment of country does appear to be trending libertarian to some degree at the moment, due in part to the threat to constitutionally-limited government posed by the Obama administration that this segment now perceives — combined with a general war weariness that makes national security conservative dismissals of libertarian noninterventionism less politically effective.  …  Recent developments on such hot-button social issues as legalizing marijuana and recognizing gay marriage also show a more libertarian trend in the body politic at the moment.  We all know these trends have always influenced [the Court] whether legal arguments made to the Court seem “off the wall” or “on the wall.”

So I take Lazurus’s essay to be another sign that libertarianism is trending up at the moment, perhaps more so than at any time in my lifetime.  There is good reason for libertarians to worry that all this is “too little too late” in the face of the Obama administration’s success in expanding the welfare-administrative state in his first two years, and defending the gains over the past 2 years, combined with its embrace of the surveillance state that was expanded under the Bush administration.

But you can’t win, if you don’t play.  And libertarians are now certainly in the game.

Yes we are. Though I don’t think, as the cheeky url of the Lazarus piece suggests, that it’s “supreme-court-libertarianism-ron-pauls-bench.”  

Moreover, whatever’s going on behind the scenes at the Supreme Court, it’s not that “Alito Shrugged,” as the article’s title would have it.  However much the Court becomes libertarian – as a whole, on average, in fits and starts – I don’t think that Justice Alito, let alone Justice Scalia, or Justice Ginsburg for that matter, is more libertarian than he was five or ten or twenty years ago.

Farm Subsidies for the Deceased

A new report from the Government Accountability Office says that although the USDA has gotten better at not paying out farm subsidies to dead farmers, it’s still forking out millions of dollars to the dearly taxpayer-dependent departed: 

…GAO did a data review for fiscal year 2008 to April 2012, and estimates that [the USDA’s Natural Resources Conservation Service] $10.6 million payments on behalf of 1,103 deceased individuals 1 year or more after their death. Some of these payments may have been proper, but NRCS cannot be certain because it neither identifies which of its payments were made to deceased individuals, nor reviews each of these payments. 

…GAO matched every policyholder’s Social Security number in [the USDA’s Risk Management Agency’s] crop insurance subsidy and administrative allowance data for crop insurance years 2008 to 2012 with SSA’s master list of deceased individuals and found that $22 million in subsidies and allowances may have been provided on behalf of an estimated 3,434 program policyholders 2 or more years after death. Many of these subsidies and allowances may have been proper, but without reviewing each subsidy and allowance made on behalf of deceased individuals, RMA cannot be certain that these subsidies and allowances are proper. 

Galling as it is, the volume of handouts going to the deceased is trivial compared to the amount (around $20 billion annually) going to the living. So let’s keep in mind that the real outrage continues to be the very existence of these reverse Robin Hood agriculture subsidy programs. Dead or alive, theft is theft.

Trade Adjustment Assistance Ineffective (Not that the DoL Appears to Care)

A new paper released today by David B. Muhlhausen at the Heritage Foundation draws attention to yet another study (from August 2012) commissioned by the U.S. Department of Labor that throws ice-cold water on the notion that the Trade Adjustment Assistance program is particularly effective at helping workers displaced by competition from imports.  In fact, TAA assisted workers earned less than comparable non-TAA workers, according to the report.

I’d like more details on the methodology of the August 2012 report; for example, more information about the “wide array of observable baseline measures” that the study controls for. I suspect that the controls include education and age, but I would have thought that the study’s authors would want to address clearly and explicitly the argument frequently given by supporters of TAA that trade-affected workers are older and less educated than the average laid-off worker, and thus it is unfair to compare prospects. So I would like to know more before fully endorsing the study’s findings.

It’s a good thing that Dr Muhlhausen drew our attention to this study, by the way, because it is not particularly easy to find on the DoL’s dedicated TAA website. It is not listed on the publications page for the TAA program (although it is listed on the broader Employment and Training Administration publications list). You’d think that the DoL would want to publicize it more heavily, given they commissioned and paid for it and all, and especially given that the TAA program is due to expire in December and is on the legislative agenda of prominent U.S. senators. But the DoL has some form in burying research: there is also, according to the Heritage Foundation article, a mysterious 2010 evaluation of TAA that has not yet been released to the public. And a December 2012 study that found a net cost to society from the program is also missing from the TAA website (along with any publications after 2012). Time for an update, DoL webmaster?

Of course, even if TAA were the most effective program in the world, it doesn’t necessarily follow that providing it is an appropriate role for the federal government and it in any case rests on dubious moral foundations. I agree with the Heritage Foundation on this one: let TAA expire.

China–EU Solar Trade Agreement Shuffles Winners and Losers

The European Union has recently agreed to drop antidumping duties on Chinese solar panels and replace them with a voluntary “price undertaking.”  In effect, Chinese manufacturers can avoid punitive tariffs if they promise not to sell their products at overly competitve prices.  The scheme does not liberalize trade in solar panels or even further a green energy policy agenda.  It merely shifts government privilege from one group of special interests to another.

The international solar panel market is a big fat mess.  Governments spend billions of dollars in subsidies to make solar panels cheaper and then turn around and impose trade barriers to make them more expensive.  Europe imported over $27 billion dollars of solar panels from China last year despite a global epidemic of Solyndra-style bankruptcies.

The negotiating dynamic that brought about the current minimum price deal between Europe and China aptly shows just how incoherent solar policy really is and reveals a lot about who the winners and losers are here.

Despite being home to much of Europe’s solar manufacturing, the German government was opposed to any action against Chinese solar panels.  As the New York Times reports:

Chancellor Angela Merkel of Germany opposed the trade case from the very beginning, saying that it would be preferable to continue talking with Chinese officials about the issue. Solar panel manufacturers in Germany tend to be independent companies that are not part of the country’s big industrial powerhouses like Volkswagen or BASF.

Germany has had far more success in exporting to China than any other European country, particularly in shipments of factory equipment, and Ms. Merkel has sought to cultivate a special relationship with Beijing. Most big German companies were unenthusiastic about the trade case, fearing that it could lead to a broader trade war that might hurt German exports.

Germany decided which domestic companies it would go to bat for and the solar manufacturers didn’t make the cut. 

Along a similar vein, the agreement has interesting implications for the Chinese industry:

Customers are only likely to pay the new minimum price of 56 euro cents per watt for the highest-quality solar panels with the best warranties, giving an advantage to the largest Chinese manufacturers. That is consistent with the Chinese government’s goal of thinning its nation’s solar panel industry to produce a few world-leading companies that can set high, profitable prices.

So the agreement benefits large Chinese manufacturers at the expense of smaller ones.  But, smaller Chinese companies aren’t left entirely out in the cold:

Out of 140 Chinese solar panel exporters, 50 refused to accept the minimum price, which means that they will face a prohibitive 47.6 percent tariff on any further shipments to the European Union. Since the United States Commerce Department imposed tariffs totaling only 31 percent last spring, the European Union’s settlement could send another wave of extremely low-priced Chinese solar panels without warranties toward the United States instead.

Whether you find the idea of cheap solar panels in the United States appealing or appalling, I advise you not to get too excited.  The U.S. Trade Representative is also very interested in turning protectionist U.S. antidumping duties into a lobbyist driven price control scheme.

It’s all for the good of the environment, I’m sure.


Obamacare: House Hearing on the IRS’s Illegal Taxing, Borrowing & Spending

As Jonathan Adler and I detail in our Health Matrix article, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA,” the Obama administration is attempting to rescue Obamacare from oblivion by literally taxing, borrowing, and spending more than $700 billion without congressional authorization. In a recent letter to the editor of the Washington Post, I explain how these illegal taxes are already hurting workers. 

On July 25, chairmen of the House Ways & Means Committee, the House Committee on Oversight & Government Reform, and two Oversight subcommittees sent a letter to Treasury Secretary Jacob Lew demanding information related to the illegal tax-credit rule.

The House Oversight Subcommittee on Health Care has announced it will hold a hearing this Wednesday, July 31, on the IRS’s illegal tax-credit rule titled, “Oversight of IRS’s Legal Basis for Expanding ObamaCare’s Taxes and Subsidies.” Adler will testify alongside Oklahoma Attorney General Scott Pruitt and Missouri physician and small business owners Charles Willey, each of whom has filed suit to block the IRS’s illegal rule.