Archives: 12/2015

Senator Sanders and the Average Workweek

Senator Bernie Sanders recently tweeted the following.

Fortunately, the gruelingly long workweek described by Sanders is not the norm. In fact, leisure time has been on the rise. In 1950, an average U.S. worker worked 1,984 hours a year, or about 38 hours a week. In 2015, an average American worker worked 1,767 hours, or about 34 hours a week.

That means that the average U.S. worker had 217 more hours for leisure or other pursuits in 2015 than in 1950. That is about 9 days of extra time.

The 50-hour workweek described by Sanders is more common in China, where the average worker worked 2,432 hours in 2015, or around 47 hours a week. Compare other countries using HumanProgress.org’s interactive dataset.

Propose Peace Treaty as North Korea Plans Party Congress

North Korean dictator Kim Jong-un has scheduled North Korea’s first communist party congress in decades in May. The U.S. should encourage reform by proposing talks on drafting a peace treaty and normalizing relations.

Dealing with the Democratic People’s Republic of Korea has taken on an air of futility in Washington. The Obama administration refuses to talk with North Korea unless the latter first “takes irreversible steps toward denuclearization.” Yet expecting Pyongyang to yield its most important security assets in return for conversation ensures continued failure.

The first party congress since 1980, when Kim’s grandfather, Kim Il-sung, ruled, portends significant policy changes. Kim Jong-un likely will formalize both consolidation of power and new economic initiatives.

The government has been pushing creation of a “knowledge economy.” Private enterprise is expanding. In this way, argued analyst Michael Bassett, Kim is “liberating” the DPRK.

A de facto property market has arisen in this once most tightly controlled society. Private financing has developed. North Korean and foreign banks are providing cash cards.

The number of official open-air private markets has more than doubled since 2010 to 406; another 1000 unofficial markets are thought to be operating. Eight of ten North Koreans have shopped at private markets.

Noted the Guardian, “Unlike most aspects of life in North Korea, one’s ability to shoot up through the company ranks is less contingent on background: even those with poor songbun, a caste system delineated by family background and political loyalty, can be a boss.”

As a result, a more prosperous, brightly dressed middle class has taken root. Jang Jin-sung, a psychological warfare officer who defected in 2004, wrote: “The key to change lies outside the sway of the regime—in the flourishing underground economy.”

Of course, economic reforms so far are modest, and have not yielded a fully private economy. Moreover, such changes can go only so far in transforming North Korean society.

As I wrote for Forbes: “China demonstrates that autocracy can coexist with free enterprise. In this regard the North has very far to go. But the PRC also shows rising economic liberty to offer the best hope yet for positive evolution over time.”

There are no serious alternatives. War would have devastating consequences.

Enhanced sanctions are a panacea oft-proposed in the U.S. However, there’s no guarantee that increased hardship would cause Pyongyang to capitulate. Moreover, despite Beijing’s evident displeasure with its troublesome neighbor, China remains unwilling to cut its economic lifeline to the North.

Nor would a North Korean implosion be pretty. Pyongyang could choose to strike out militarily. Collapse could send violence and refugees across the DPRK’s borders and loose nuclear materials even further. China might occupy the North and install a friendly regime.

The only other option is engagement, with a conscious attempt to moderate the threat environment facing both Koreas. But eliminating nuclear weapons cannot be the starting point. The possibility of bribing or coercing the North to abandon its nukes disappeared long ago.

Instead, Washington should begin where the North has suggested: negotiate a peace treaty. The best reason to talk may be the simplest: nothing else has worked.

Responding to North Korea’s initiative would offer two practical benefits irrespective of the outcome. First, the North tends to eschew provocative military actions when engaged in negotiations. Second, Beijing long has urged the U.S. to address Pyongyang’s security concerns. Taking the PRC’s advice might make the latter more likely to cooperate with Washington.

However, the most important reason to negotiate remains to encourage the DPRK to move further and faster along the reform path. Such a result might be a long-shot, but Kim Jong-un is dismantling the North Korean status quo.

Of course, discussions should be conducted without illusion. But refusing to engage ensures future failure.

North Korea’s upcoming party congress offers a possible opportunity to dampen hostilities. It’s time for the U.S. to attempt to finally end the Korean War.

The Failure of Sanctions on Russia

On Friday, European Union envoys agreed to extend sanctions on Russia, continuing the restrictions placed on Russian businesses and citizens following Russia’s 2014 invasion of Crimea and aggression in Eastern Ukraine. The sanctions prevent some of Russia’s largest companies from raising capital in the West, restrict the export of technology and technical services for unconventional oil and gas drilling, and freeze the assets and travel of Russian elites.

Unfortunately, as I show in a study published in the January/February edition of Foreign Affairs, sanctions on Russia have been largely unsuccessful. The Russian economy is certainly hurting, but most of this damage was done by the extraordinary drop in oil prices over the last year:

The ruble’s exchange rate has tracked global oil prices more closely than any new sanctions, and many of the actions taken by the Russian government, including the slashing of the state budget, are similar to those it took when oil prices fell during the 2008 financial crisis.

And economic damage itself isn’t necessarily the best measure for sanctions success. Ultimately, sanctions are a tool of economic coercion and statecraft. If they do not cause a policy change, they are failing:

After the initial round of sanctions, the Kremlin’s aggression only grew: Russia formally absorbed Crimea and upped its financial and military support for pro-Russian rebels in eastern Ukraine (including those who most likely shot down the Malaysia Airlines flight).

The performance of modern targeted sanctions –which promise that damage will be narrowly focused on elites rather than the population in general – is also questionable in the Russian case, where the Kremlin has effectively redirected the economic burden of sanctions onto the population:

By restricting access to international financing during a recession, the sanctions have compounded the fall in oil prices, requiring Moscow to slash spending on health care, infrastructure, and government salaries, which has created economic hardship for ordinary Russians. The crash of the ruble, meanwhile, has not only destroyed savings but also increased the monthly payments of those who hold mortgages denominated in foreign currencies.

Perhaps worst of all, the sanctions are costing US and European companies billions of dollars in compliance costs, lost business and broken contracts:

The brunt is being borne by Europe, where the European Commission has estimated that the sanctions cut growth by 0.3 percent of GDP in 2015. According to the Austrian Institute of Economic Research, continuing the sanctions on Russia could cost over 90 billion euros in export revenue and more than two million jobs over the next few years. The sanctions are proving especially painful for countries with strong trade ties to Russia. Germany, Russia’s largest European partner, stands to lose almost 400,000 jobs. 

Ultimately, as I argue in the article, the success of sanctions can be judged by a variety of standards. Yet by virtually all of them, they are failing. This is a blow for those – myself included – who seek restrained policy options to resolve the crisis in Ukraine. Yet given the costs to U.S. businesses, it’s probably time for policymakers to consider whether continuing sanctions on Russia is really the best option, or whether there are more effective diplomatic or economic policy tools we can use instead.

You can read the whole article, with more data and policy recommendations, over at Foreign Affairs

Government Can’t Censor Digital Expression Just Because Someone Somewhere Might Use It for Unlawful Purposes

It’s alas old news when the government couples an imposition on liberty with an exercise in futility—security theater, anyone?—but it’s still finding inventive ways to do so in a nifty case that combines the First Amendment, the Second Amendment, and 3D printing.

Defense Distributed, a nonprofit organization that promotes popular access to constitutionally protected firearms, generates and disseminates information over the Internet for a variety of scientific, artistic, and political reasons. The State Department has ordered the company to stop online publication of certain CAD (Computer-Aided Drafting) files—complex three-dimensional printing specifications with no intellectual-property protection—even domestically. These files can be used to 3D-print the Liberator, a single-shot handgun. The government believes that the files that could be used to print the Liberator are subject to the International Trafficking in Arms Regulations, because they could be downloaded by foreigners and thus are “exports” of arms information that could cause unlawful acts.

The States Have No Business Creating Their Own Retirement Accounts

People have lots of ways to save for retirement. Most employers offer some sort of retirement plan, of course, and people whose employers don’t can set up their own retirement account and get the same tax benefits, albeit without any employer contribution.  Low-income workers at a job without a benefit plan can now participate in Treasury’s new MyRA program, which creates a retirement account for the worker and provides a match for their contributions.

And Social Security, which totals to 15.3% of the first $118,500 of a worker’s income, constitutes a big chunk of most people’s retirement income.

Congress Gambles with the Future of D.C.’s School Choice Program

It’s late December, so that means it’s time for members of Congress to join together and celebrate around their own massive, legislative Christmas tree–the notorious omnibus–with earmark ornaments for nearly every congressional district. Reason’s Peter Suderman explains:

The deal is made of two different elements—a 2,009-page omnibus that folds in 12 appropriations bills and calls for $1.1 trillion in spending, and a separate 233-page tax “extenders” bill that continues about $650 billion worth of supposedly-but-not-really temporary tax cuts. All together, the package is worth about $1.8 trillion. 

Many of the tax breaks in the extenders bill are the sorts of tax “cuts” that are the sort of targeted, incentives-and-behavior altering tax cuts and deductions that are best thought of as spending laundered through the tax code. (This includes the child tax credit, various business expensing provisions, and a credit to help people under 40 pay for tuition expenses, as well as credits for wind and solar power.)

Broadly speaking, that’s the sort of spending that Republicans tend to like. The other part of the package, meanwhile, contains the sort of spending that Democrats tend to like.

Star Wars, Science Fiction, and Foreign Policy

Happy Star Wars launch day! As the newest film in the Star Wars franchise is exciting fans around the globe, it’s also offering a unique opportunity for foreign policy scholars: attempting to shoehorn Star Wars parallels and metaphors into foreign policy debates.

It’s certainly easy to do. Over at Foreign Policy, authors examine why the rebel victory at Endor may not have been the decisive battle it initially appeared:

Much of the chaos following the Rebel Alliance’s victory was predictable. Its wartime leaders were overwhelmingly focused on avoiding missteps and destroying their vastly more powerful enemy while ignoring the problems of violence, factionalism, and criminality that plague post-conflict environments across the universe.

You don’t have to work hard to see the clumsy historical metaphor here: the rebellion’s victory gave way to a ‘failed democratic transition,’ with the Rebel Alliance unable to turn their victory into a durable political settlement. In a post-Arab Spring world, the parallels are obvious.