201707

July 31, 2017 5:17PM

What’s Next for Venezuela?

Yesterday’s fraudulent and illegitimate vote to install a constituent assembly in Venezuela is the definitive step towards consolidating a de jure dictatorship in that country.

The constituent assembly will enjoy supra-constitutional powers, which means that its prerogatives go beyond writing a new constitution and include, inter alia, dissolving and removing all existing institutions—including those controlled by the opposition or held by critics of the regime, such as the National Assembly and the Attorney General’s Office—and calling off scheduled elections, which the government would certainly lose. In the hours after the vote, Nicolás Maduro openly stated that the constituent assembly will strip opposition assembly members from immunity and will discharge Maria Luisa Ortega, the Attorney General.

Several myths regarding the crisis need to be addressed:

Venezuela is on the brink of a civil war: In order to have a war, both sides need to be armed. In the case of Venezuela, only one side—the government—has the guns: the Maduro regime enjoys the full support of the armed forces, the National Guard—which is responsible for brutally repressing the protests—and the colectivos, which are armed thugs that terrorize the population in motorcycles with the assistance of the police and the National Guard. Of the more than 120 people killed since the protests began four months ago, almost all have been protestors or other civilians murdered by the security forces.

The army could withdraw its support for Maduro at any moment: This is wishful thinking. For over a decade, the armed forces have been carefully purged of officials that do not support the authoritarian project of Hugo Chavez and his successor Nicolás Maduro. The Maduro government is a military regime, even though its head is technically a civilian: 13 members of the Cabinet (out of 32) are military officials, as well as 11 of the 20 Chavista governors. The armed forces are profiteering from the status quo; they are deeply involved in smuggling and drug trafficking.

The alternative to supporting the regime for the rank and file members of the military is not serving under a new democratic government or retiring with a government pension but rather being prosecuted for massive corruption or being extradited to the United States for drug trafficking. Moreover, even though there are reports of growing dissatisfaction at the troop level, the Cuban security services have infiltrated the armed forces and can easily detect and prevent any uprising from taking place. It is the perfect setup for the consolidation of a dictatorship.

A negotiated solution is the only alternative: This is without a doubt the ideal scenario. However, the Maduro regime is not interested in giving up power. Any acceptable agreement for the opposition necessarily involves calling for free elections, which Maduro would certainly lose. For Maduro and his henchmen, losing power means seeking political asylum (probably in Cuba) or ending up in prison in Venezuela. There have been several efforts to mediate a compromise between the government and the opposition. In every single case, the government has used the negotiations to buy time and divide the opposition, while increasing the number of political prisoners, stripping the powers of the legislature, and calling off scheduled elections. It is no wonder that most of the opposition has given up on the idea of a negotiated solution and seeks the immediate departure of the regime.

The country is deeply polarized: This was definitely the case when Hugo Chávez died in 2013. But since then, the rapidly deteriorating economic situation and the humanitarian crisis besieging the country have undermined support for the regime. Surveys indicate that up to 80% of Venezuelans want Maduro gone. Even though many former Chavistas still distrust the opposition, they recognize the need for regime change.

Cuba can play a positive role in the solution of the Venezuelan crisis: This is utter nonsense. Cuba is not a just an ally of Venezuela, Cuba is the puppet master of the Maduro regime. Since the days of Hugo Chávez, the Cubans have been closely advising the Venezuelan government on how to dismantle democratic institutions. Cuban agents control many agencies within the Venezuelan government and are deeply ingrained in the armed forces. In exchange, Cubans get cheap Venezuelan oil, a subsidy that at some point amounted to 20% of the island’s GDP. Cuba has made it clear in recent weeks that it won’t allow its colony to slip from its control.

What then? Nobody knows for sure what the end game is. International pressure is growing along with more active protests in the streets. Targeted economic sanctions to individuals within the regime certainly hurt. It is difficult to conceive the successful installation of a full-fledged dictatorship when you have millions of Venezuelans adamantly opposed to such a move, and thousands of them protesting daily in the streets. However, the regime—with the collaboration of Cuba—has firm control over the armed forces and the National Guard. As long as that is the case, it is difficult to foresee any positive changes in the near future. The consolidation of a Cuba-style dictatorship remains a possibility.

July 31, 2017 3:53PM

Just In the Nic‑O’-Tine: E‑Cigarettes Get a Reprieve

Here's some genuine good news for both individual liberty and harm reduction: the Food and Drug Administration has granted a four-year reprieve to e-cigarettes ("vaping"). In particular, it is extending from November 2018 to August 2022 the requirement to obtain regulatory clearance for, or else withdraw, vaping products now on the market. As I noted last year, under the "deeming" regulations proposed under the Obama administration 

even products currently sold on the market will have to be withdrawn unless their makers, mostly small companies, care to venture on an FDA approval process that can cost $1 million and up per item. Any resulting applications will result in permission to sell only if the agency decides the product is a net safety improvement on current offerings. And that permission will be at best chancy because the FDA, following [then-CDC head Thomas] Frieden’s lead but in contrast with the views of many others in the public health field, refuses to acknowledge vaping as a safer alternative to tobacco smoking, even though large numbers of smokers turn to vaping with exactly that goal in mind. 

While it is likely that many smokers save their life or health by switching from a cigarette habit to the less injurious electronic alternative, every such switch cuts into revenues from conventional cigarette sales—and thus the coffers of state governments and other beneficiaries of the 1998 tobacco settlement. Some of these groups, as well as some components of the tobacco business, had quietly backed the FDA's plan to close down vaping except perhaps for the very biggest players. 

Notably, and shrewdly, the Trump White House chose to associate itself with the Friday FDA announcement: 

A spokesman for the White House told The Daily Caller News Foundation President Donald Trump “supports the FDA’s new initiative,” and noted it as an example of his administration’s efforts to give relief to small businesses across the country.

“Public health is a priority and anything that will help protect kids and assist individuals to stop smoking is a worthy cause,” the White House spokesman told TheDCNF. “The President and his administration have taken historic action to eliminate unnecessary and burdensome regulations.”

Meanwhile, new Food and Drug Administration head Scott Gottlieb says his agency will look into the possibility of limiting nicotine levels in conventional cigarettes with the aim of making them less addictive. The obvious problem with that, the incursion on liberty aside, is that if cigarettes are made to contain less nicotine, many users will choose to maintain an existing level of intake by stepping up the number of cigarettes they smoke per day, thus boosting their intake of associated tar and noxious gases. But at least there's time to argue over the flaws of a proposal that's down the road. The vaping regs were bearing down quickly. 

 

July 31, 2017 3:31PM

More on Nancy MacLean

I realize that I am a bit late to this party and that many of Nancy MacLean’s strange claims and factual errors have already been exposed and debunked by people much more familiar with her work, the intellectual history of libertarianism and the Nobel Prize-winning economist James Buchanan, than I am. However, there is one aspect of MacLean’s conspiracy theorizing in Democracy in Chains: The Deep History of the Radical Right’s Stealth Plan for America (i.e., “the attempt by the billionaire-backed radical right to undo democratic governance” in America) that, I think, needs further comment.

Specifically, it would appear that in her “thoroughly researched” book, as Publishers Weekly calls it, MacLean has not bothered to talk to many actual libertarians, including, apparently, her colleague at Duke University, Michael C. Munger. Had she done so, MacLean would have realized that libertarians have come to their views for a plethora of reasons—only one of which may be the generosity of the libertarian businessman, billionaire and bête noire of the progressive left, Charles Koch. (I shall return to Charles Koch below.) But that would have, I am afraid, undermined her view of the libertarian movement as a racist (what else?) conspiracy.

At the risk of seeming self-indulgent, I would like to like to offer a personal perspective on becoming a libertarian. Growing up in 1980s Czechoslovakia, I witnessed communism’s final decade. The people around me were still afraid of eavesdropping by the secret police, jail time for anti-socialist activities, professional ruin, and social ostracism. But communism no longer inspired terror in the way it had in the early years after the Czechoslovak communist putsch in 1948.

As such, I cannot claim some sort of a victimhood status. My generation did not associate communism with firing squads and starvation. Rather, communism meant annoying, but manageable, food shortages and the grey monotony of everyday life under a dictatorship. Why do I revisit 30-year-old memories? I do so, because appreciation for political and economic freedoms, which is what I understand libertarianism to mean, often comes from personal experiences that are unconnected to (imagined) conspiracies.

Perhaps it is the realization that interactions with businesses, like the local Whole Foods, are more pleasant and satisfying than interactions with government agencies, like the local DMV. Perhaps it is the desire to consume food, drink, and drugs without an input from an all-knowing government official. Perhaps, as was the case with me, it is looking at the economic and social ruins of socialism. Hundreds of millions of human beings have learned to appreciate freedom during communism and many, far too many, still yearn for it in places like Cuba, North Korea, and Venezuela.

We have, in other words, acquired libertarian tendencies without James Buchanan, Charles Koch or, for that matter, the Cato Institute.

Buchanan helped us to understand why communism fell, not to realize that it had failed. Wealthy libertarian donors enable people like me to proselytize on behalf of freedom and we appreciate them, in part, because we worry that socialism, like the tardigrade, is never truly dead. Had MacLean picked up the telephone and talked to one of the many American libertarian activists with weirdly sounding names, she would have realized that to be libertarian, one does not have to be a part of a vast and nefarious conspiracy. She would have saved us a lot of time spent on debunking her thesis and she would have saved herself a bucket-load of embarrassment.

July 31, 2017 12:20PM

Immigrants and Teenage Summer Employment

A common fear about lower-skilled immigrants is that they will push native-born Americans with similar skills out of the labor market. In recent years, this argument focuses on the harm to native-born teenagers who are most substitutable with lower-skilled immigrants—especially those on the H-2B visa for seasonal non-agricultural work. This effect is supposed to be greatest in the summer time when American teenagers are on school vacation. 

Teenagers are working less than they used to but the U.S. labor market has changed in myriad ways that are unrelated to immigration, especially when it comes to the opportunity cost of teenagers. In responding to an op-ed by Senator Ben Sasse (R-NE) that lamented the loss of teenage work ethic (an oxymoron if my personal observations and experience as a teenage worker is representative), economist Ernie Tedeschi showed that increased enrollment in summer school can explain virtually the entire decline in their summer employment, at least for the month of July (Figure 1). The data allowed Tedeschi to separate part-time and full-time school enrollment after 1989. Years ago, I noted that increased summer school enrollment explained much of this decrease by leaning heavily on this Chicago Fed Letter that stated:

[w]e find no compelling evidence that associates the recent decline in teen participation with greater labor market competition due, for example, to larger cohorts of teens or an increase in the numbers of unskilled workers entering the labor market because of the 1996 welfare reform or changes in immigration.

Figure 1

Labor Force Participation & School Enrollment in July: 16-19 Year Olds

 

Media Name: teen_emp.jpg

Source: Ernie Tedeschi’s calculations from IPUMS monthly CPS Extract.



Although Tedeschi does not mention immigration in his blog, his findings are broadly consistent with estimates of how immigration affects teenage employment and wages. Figure 1 is consistent with economist Peter McHenry’s finding that “low-skilled immigration to an area induces local natives to improve their performance in school, attain more years of schooling, and take jobs that involve communication-intensive tasks for which they (native English speakers) have a comparative advantage.” Another finding by economist Christopher L. Smith found that native-born American teenagers do compete with low-skilled immigrant workers because both are relatively unproductive but also that such competition incentivizes teens to acquire more education so that they do not have to compete directly with immigrants in the future. Thus, low-skilled immigrants do push some teens out of the labor market temporarily while they upskill. 

Upskilling is also consistent with research by economists Giovanni Peri and Chad Sparber that finds increased lower-skilled immigration induces lower-skilled natives to specialize in jobs that require communication in English while the immigrants specialize in jobs that are more manual-labor intensive, an effect called task specialization. They estimate that task specialization reduces immigration’s downward wage pressure because natives react by adapting and specializing in more highly paid occupations, not by dropping out of the job market. This effect decreases wage competition between lower-skilled natives and immigrants by around 75 percent.

It could be that teenagers find school enrollment more fulfilling because competition with immigrant workers has lowered wages in that segment of the labor market. There is a lot of academic evidence that that effect is hard to find and, if it does exist, extremely small. However, if such a negative wage effect from immigration does impact a large cohort of American workers then we should expect to find it among teenagers. Furthermore, even if teenage wages do decline because of immigrant competition, curtailing low-skilled immigration may not have any effect on wages or employment as employers mechanize low-skilled jobs in response—a more expensive production method relative to hiring immigrants but less expensive than paying natives a higher wage. The more likely explanation is that the long-run monetary return for the teenager from education if greater than working a summer job, especially since states now subsidize summer school.

July 31, 2017 11:22AM

Taxpayers Dodge a $35 Million Bullet in Prince William County, Virginia

I'm delighted to learn from Eric Boehm at Reason that a $35 million stadium subsidy is “pretty close to dead” after Potomac Nationals owner Art Silber pulled the matter from the Prince William Board of County Supervisors consideration ahead of a planned vote July 18. However, taxpayers in other Northern Virginia counties may still be at risk, as the Nationals search for a less fiscally responsible county board nearby. 

I wrote about the Nationals' attempt to milk the taxpayers last month:

The county found a consulting firm to produce, as it has done for many governments, an optimistic economic analysis: It suggests that a new stadium would generate 288 jobs, $175 million in economic impact, and $4.9 million in tax revenue over a 30-year lease. Similar studies have proven wildly optimistic in the past. In 2008 the Washington Post reported that Washington Nationals attendance had fallen far short of what a 2005 study predicted. As Dennis Coates and Brad Humphreys wrote in a 2004 Cato study criticizing the proposed Nationals stadium subsidy, “The wonder is that anyone finds such figures credible.”...

Silber and the board of supervisors want the taxpayers to know that this time is different; their $35 million bond issue isn’t a government giveaway:

In Prince William, the board of supervisors is considering a proposal in which it would use bond money to build the stadium. The team would then reimburse the county the entire cost over the course of a 30-year lease.

“We’ve all read about certain professional sports teams threatening to leave if a local government doesn’t buy them a new stadium. The exact opposite is happening here,” said Tom Sebastian, a senior vice president with JBG. “The Potomac Nationals have agreed to pay 100 percent of the cost to construct a new stadium so that they can stay in Prince William County.”

I will gladly pay you Tuesday, 30 years from now, for a hamburger today.

Congratulations to Americans for Prosperity, Supervisor Pete Candland and his colleagues, and especially to the taxpayers of Prince William County. 

July 31, 2017 8:30AM

Questions the Senate Finance Committee Should Ask

On Tuesday, the Senate Finance Committee will hold a hearing to discuss affordable housing. The committee will debate whether to expand the Low-Income Housing Tax Credit (LIHTC), a program that ineffectively subsidizes affordable housing. A bill co-sponsored by Senator Cantwell and Senator Hatch would expand the program by 50%.

Unfortunately, the program usually sidesteps scrutiny because it is not part of the discretionary budgeting process. But the Senate Finance Committee has a unique window of opportunity to ask hard questions of LIHTC during the hearing. As a result, Tuesday’s hearing is arguably more important than usual.

What questions should the senators ask? Below are a list of ten questions to get the conversation started:


  1. Does LIHTC subsidize units that would be provided by the private market in its absence? How will the program improve the real number of affordable housing units produced?


  1. Why should Congress expand a program that GAO reports is not well managed? How does this bill increase oversight?


  1. Is LIHTC a band-aid solution for destructive local zoning and land use regulation policies? Should states be required to reduce local land use and zoning regulation in order to qualify for LIHTC?


  1. How will the bill reduce the amount that developers benefit from LIHTC?


  1. How does the bill improve the cost-effectiveness of LIHTC? Is LIHTC the most cost-effective way to subsidize housing? (Research suggests it is not.)


  1. Why must LIHTC be used in conjunction with other subsidies?


  1. Will non-profit developers continue to be provided preferential treatment in the credit allocation process? Even if they are less efficient at building affordable units?


  1. Given finite federal resources, why does LIHTC subsidize moderately low-income individuals rather than extremely low-income individuals?


  1. Why aren’t Housing Finance Authorities (HFAs) required to monitor project compliance during the latter half of the 30 year “extended use” period?

  2. How will the bill reduce corruption and fraud?

It's essential that LIHTC is given the scrutiny it deserves. The Senate Finance Committee should make sure it happens.

July 28, 2017 4:16PM

President Trump Endorses Police Brutality

In a speech about criminal gangs before police officers on Long Island, New York today, the President of the United States openly encouraged police officers to abuse people they arrest and take into custody. Daniel Dale of the Toronto Star tweeted that President Trump explained that he didn’t want officers to protect suspects’ heads when putting them in police cars, saying “You can take the hand away,” which drew the officers’ loud approval. Concurrent reporting from Asawin Suebsaeng of the Daily Beast confirmed that the call for police brutality drew “wild applause.”

The president’s comments are disgraceful and anathema to responsible policing and the Rule of Law. Causing intentional injury to a handcuffed suspect is not only against police procedure, but is a federal crime for which police officers have been sent to prison. What’s worse, the reaction of the crowd of officers should strike fear into the heart of every parent on Long Island, particularly those of black and Hispanic young men, who fit the stereotypical description of the gang members President Trump described.

In the name of law and order, the president made a mockery of the Rule of Law in his call for illegal violence against presumptively innocent suspects. It is a shameful day for the presidency and police agencies across the country should condemn the president’s irresponsible and indefensible comments in the strongest possible terms.

 

This is cross-posted from PoliceMisconduct.net