Archives: 10/2018

A New Cold War with China?

Picking up on Vice President Mike Pence’s speech at the Hudson Institute several weeks ago, Hudson’s Seth Cropsey detailed a plan in the Wall Street Journal on “How to Win a Cold War with Beijing.” At the center of Cropsey’s op-ed is a dramatic increase in the U.S. presence in Asia that would require, among other things, accelerating the current naval buildup, increasing naval patrols, and bolstering naval and Marine forces in Australia. In effect, Cropsey wants to apply the strategy that helped end the former Cold War to America’s growing conflict with China. Quoting Ronald Reagan, Cropsey explains “The objective in this strategic competition [is] ‘We win, they lose.’”

Cropsey’s approach, however, is based on several flawed assumptions, including about the inevitability of conflict between the United States and China. He also places undue faith in the United States’ capacity to face down its rising rival by building more warships and deploying them close to China’s shores.

Implicit in Cropsey’s call for a large naval arms race with China is the assumption that China will back down in the face of it. Convinced of the futility of such competition, Cropsey appears to believe, the Chinese will simply accede to our demands, including on Taiwan. But I have seen no evidence to support such an assumption. The more likely result of an arms race is…a further arms race, as my colleague John Glaser explained earlier this year. Cropsey also ignores the fact that the world is moving into an era of defense-dominance, which puts America’s exquisite, but enormously costly, naval platforms at increased risk from small, smart, and cheap weapons.

The current Sino-U.S. competition is unlike any we’ve seen – at least in a very long time. The Cold War was, in large part, a zero-sum fight between two diametrically opposed ideologies. However, whereas Soviet Communism and Western Capitalism couldn’t coexist, China’s and America’s current systems can. Or at least might.

If you doubt that, consider that Americans have helped to lift hundreds of millions of Chinese out of desperate poverty over the last quarter century through trade, greatly enriching China in the process. That wasn’t the intention, per se; as Adam Smith famously explained, trade is driven by mutual “self-love.” “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner,” he wrote, “but from their regard to their own interest.” 

Response to Current Affairs

Recently I’ve received some criticism on my position on paid leave as outlined in Parental Leave: Is There a Case for Government Action? In my report, I provide evidence that the private market is providing a growing amount of paid leave over time and I suggest that providing paid leave through a government mandate or social insurance program is likely to include a variety of trade-offs and/or may not meet some of advocate’s purported objectives.

Although Nathan J. Robinson’s criticism of my report is steeped in vitriol, it still provides an opportunity to clarify my position. If I had to boil his critique down to one or two major criticisms, it would be that, in his view 1) I did not include a representative discussion of the benefits of creating a government paid leave program (and some of these benefits are mentioned in papers I cite for costs) and 2) I do not take the same position as certain academics I cite.

To the first point: Although not obvious from the paper, when I speak about paid leave publicly, I almost always first state that paid parental leave holds benefits for companies and parents and I am in favor of businesses voluntarily providing paid leave.

Moreover, voluntarily provided paid parental leave arguably holds greater benefits for parents than government supported or mandated leave, because employers incorporate the costs and benefits of leave-taking into their business model and therefore have reduced incentives to discriminate against likely leave-takers, including childbearing-age women. 

Why focus this paper on government supported leave’s trade-offs? First and foremost, because research groups and news outlets have spilled untold amounts of ink describing possible and likely benefits of government supported paid leave elsewhere. Those benefits are mostly well-known in policy circles and easily understood.

The main contribution of this paper is to challenge the prevailing view that government benefits could be realized without costs or trade-offs to workers (and indeed, workers’ lives may not be “markedly improved” after all, once associated trade-offs are taken into account). Indeed, the paper is intended to bring some balance to the existing debate by outlining trade-offs that are rarely seriously considered.

The paper is not a comprehensive review of the paid leave literature. However, it does carefully and accurately relay findings from the paid leave literature on potential costs and trade-offs of government intervention.

The second criticism–that I do not share all the same views on paid leave as academics I cite–does not make sense. Think tank scholars and academics cite other scholars all the time whom they disagree with on many points. 

As always, I enjoy hearing thoughtful criticisms of my work but the Current Affairs’ critique is off the mark. Moreover, by selecting two Cato studies and drawing conclusions about the whole of Cato research, Robinson commits one of the logical errors he spends so much time deriding: cherry-picking.

Recent Hurricane Activity in Perspective

Harvey. Irma. Maria. Michael.  Four strong (category 3 or higher) hurricanes in 14 months. Something is happening, right?

When category 4 hurricane Harvey banged into Rockport, Texas, and then decided to hang around for five days visiting the fine folks of Houston and vicinity, it broke the 11.8 year “hurricane drought”, by far the longest period in the record without a major (category 3 or higher) landfall.[1],[2] Because of its unfortunate stall, Harvey also broke the record for a single-storm rainfall in the U.S., with 60.58 inches at Nederland, Texas.

What about a human influence from dreaded carbon dioxide? The National Oceanic and Atmospheric Administrations (NOAA) Geophysical Fluid Dynamics Laboratory (GFDL) dryly stated on September 20:

In the Atlantic, it is premature to conclude that human activities–and particularly greenhouse gas emissions that cause global warming–have already had a detectable impact on hurricane activity.

“Where Do We Have Tariffs?” the President Asked. On Clothing and Footwear, For a Start

“Where do we have tariffs?” President Trump asked yesterday. One obvious answer is on imported clothing and footwear, where tariffs are both substantial and hit low-income consumers hard.

The United States raised $33.1 billion in tariff revenue in 2017, but $14 billion of that came from tariffs on apparel and footwear alone. These items account for 4.6 percent of the value of U.S. imports, but 42 percent of duties paid. That means while the average effective tariff rate for U.S. imports overall is just over 1.4 percent, rates for apparel and footwear are 13.7 percent and 11.3 percent, respectively.[i]

My colleague Daniel Ikenson has previously examined the evolution of clothing and textile protectionism. He concludes that such high tariffs do not protect domestic apparel manufacturing. Data from the U.S. Trade Representative shows that 91 percent of manufactured apparel goods and 96.5 percent of footwear are imported.

Why then are such highly regressive tariffs imposed? The answer appears to be the lobbying efforts of the capital-intensive U.S. textile industry. Textiles are the major input for labor-intensive apparel production, which largely occurs overseas. To quote Ikenson directly:

The U.S. textile industry insists on preserving those tariffs as leverage to compel foreign apparel producers to purchase their inputs. Preferential access [to U.S. markets] is conditioned on use of U.S. textiles. The high rates of duty apply, generally, to all “normal trade relations” partners. But those duties are much lower or excused entirely for trade agreement partners, provided that the finished garment comprises of textiles made in countries that are signatories to the agreement.

U.S. consumers pay the price of this protectionism, and poorer consumers especially. In 2016, the average household in the bottom income quintile spent $860 on apparel and footwear, or 3.4 percent of overall spending—the highest proportion of any income quintile. The average single-parent household put 4.5 percent of total expenditure toward these goods. The poor spend a disproportionate amount on clothing and footwear, and family structures most likely to be recipients of means-tested welfare programs (single-parent households) spend most of all.

But this protectionism is not just regressive because of relative spending patterns. Edward Gresser’s work has shown how, often, luxury clothes and shoes face lower tariff rates than inexpensive products.

Consider Table 3 from my report below (an updated version of Gresser’s work.) Where duties are applicable, a pure cashmere sweater import incurs a 4 percent tariff, a wool sweater a 16 percent tariff, and an acrylic sweater a whopping 32 percent. Men’s silk shirts see a 0.9 percent tariff, cotton shirts a 19.7 percent tariff, and cheaper polyester shirts a 32 percent tariff. Leather dress shoes have an 8.5 percent tariff, whereas cheap sneakers would see a 43 percent tariff. Windbreakers, leggings, tank tops, and other clothes made cheaply from synthetic fabrics face a 32 percent tariff if sourced from countries that the United States does not have a free-trade agreement with. Assuming poorer households tend to buy cheaper products, these differential tariffs have perniciously regressive effects.

Regressive tariffs

The true overall cost of all this to poorer families is difficult to calculate. To get an accurate estimate would require detailed information on the effect on domestic substitute goods’ prices, knowledge of products bought by poor families and their propensity to import in the absence of protectionism.

Nevertheless, we can develop cautious lower-bound estimates. The average household in the poorest income quintile spends $655 on apparel and $206 on footwear per year. Assuming the import propensities for the population as a whole apply to poorer people implies $595 of apparel spending and $199 of footwear spending is on imported goods. Taking average effective tariff rates for apparel and footwear for this spending (13.7 and 11.3 percent) implies a combined direct tariff cost of $92 per year for the average household in the poorest income quintile, or $204 per year for the average single-parent household.

These figures likely underestimate the true burden, because they only represent the direct cost from current spending on imported goods. They assume tariffs do not raise domestically produced goods prices, though in reality the anti-competitive effect of the tariffs would be expected to raise prices here too. It also assumes the same effective tariff rates for apparel and footwear apply for the poorest households as for the whole population, but we have seen that products that the poor are more likely to buy tend to face higher tariff rates. Consumer welfare losses from tariffs, of course, are higher than the implied costs here, since tariffs make consumers less willing to buy imported products that they would otherwise prefer.

In short, next time the President asks where tariffs are applied, someone shout “apparel and footwear.” They are both large and regressive.


[i] U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” at http://dataweb.usitc.gov. Data for imports for consumption, and effective rates calculated using “customs value” and “calculated duties” for 2017.

Topics:

President Trump Isn’t Breaking Immigration Arrest Records

President Trump has made no secret about his intentions to deport illegal immigrants. His statements as well as administrative actions to remove certain guidelines that focused enforcement efforts on criminals has understandably caused a lot of concern among illegal immigrants, their American families, and those concerned with their plight. They should take comfort that the Trump administration’s efforts to boost arrests, the necessary precursor to a deportation, are stymied by limited local and state law enforcement cooperation with the federal government when it comes to identifying illegal immigrants.

Recently released data on the number of arrests by Immigration and Customs Enforcement (ICE) shows that they are arresting many fewer illegal immigrants under Trump’s administration than under President Obama’s, at least through June of 2018.  During the first full 17 months of the Obama administration, from February 2009 through June 2010, ICE arrested 437,671 illegal immigrants.  For the same first full 17 months of the Trump administration, ICE arrested 226,138 illegal immigrants, about half the number arrested during the same period in Obama’s administration.

Relative to the last full month of the previous administrations, the number of ICE arrests under Trump is up by a whopping 37 percent (Figure 1).  Over the same time, President Obama’s ICE was arresting 25 percent more people than under the last full month of the Bush administration, quite a significant increase on its own.  The increase under Trump is larger as a percentage because it started from a low base, but the increase in the number of arrests under Obama was larger.  For instance, the number of arrests under Obama was 5,803 greater in June 2010 than in December of 2008.  At the same point in the Trump administration in June of 2018, the number of arrests was up 8,965 over December 2016.

Figure 1: ICE Arrests by President

There are two broad categories of arrests by the ICE.  The first is called custodial arrests, which is when ICE picks up an illegal immigrant arrested by another law enforcement agency such as state or local police departments.  The second is called ICE arrests, which is when ICE itself arrests illegal immigrants on the streets.  Figure 2 shows that the number of custodial arrests have fallen dramatically since October 2008 while the number of ICE arrests has stayed relatively constant.  This means that local and state non-cooperation with ICE works to reduce the number of ICE arrests as between 70 percent and 90 percent of those arrests are custodial over the entire time.

Figure 2: ICE Arrests by Type of Arrest

Some states, like Texas, are fully cooperating with ICE when it comes to immigration enforcement while others like California are resisting mightily.  In Texas, there were 3,963 ICE arrests in May 2018 compared to 2,584 in December 2016, a 53 percent increase.  In California, there were 1,587 ICE arrests in May 2018 compared to 1,356 in December 2016, a 17 percent increase.  ICE is more active everywhere in the country, in sanctuary states and non-sanctuary states, but the difference is stark across such jurisdictions. 

The federal government under Presidents Bush and Obama convinced virtually every locality in the United States to sign up for the Secure Communities program that essentially turned over the vast majority of the arrested illegal immigrants to ICE for deportation.  Since President Obama was a Democrat, there was little initial political opposition to the massive increase in states and localities cooperating with the feds via Secure Communities – especially in Democratically controlled states with large numbers of illegal immigrants.  However, political reluctance to cooperate via Secure Communities built rapidly.  In 2011 Massachusetts, Illinois and New York requested to opt out of the program.  States like California then limited statewide cooperation with ICE and then President Obama replaced Secure Communities with a less punitive version called the Priority Enforcement Program that targeted criminals, which was in effect from 2015 to 2017.  Today, most states and localities with large numbers of illegal immigrants are not cooperating with President Trump’s ICE nearly as much as they cooperated with President Obama’s ICE – which is preventing Trump from arresting and, eventually, deporting large numbers of illegal immigrants.

There are other, lesser reasons why the Trump administration is unlikely to reach President Obama’s deportation record.  One is bureaucratic incompetence in the Department of Homeland Security, the Department of Justice, and other executive branch chaos that has so far prevented an orderly and organized deployment of law enforcement resources.  As a partial result of those administrative problems, they are incapable of convincing states and localities to enforce federal immigration laws.  Another reason is that illegal immigrants in 2018 are savvier than they were in the past, are better able to avoid law enforcement, and the few who were criminals were deported over the years, fewer new illegal immigrants have taken their place, and those remaining are less likely to come into contact with law enforcement. 

State and local government reluctance to enforce federal immigration laws and cooperate with the Trump administration has limited its ability to arrest and, eventually, deport large numbers of illegal immigrants.  At the current rate, ICE under the Trump administration will be able to arrest about half a million fewer illegal immigrants relative to the Obama administration even if President Trump serves two full terms.  Those who are dispirited by the Trump administration’s efforts to deport large numbers of otherwise law-abiding illegal immigrants should take some solace that their efforts to block full local and state cooperation with ICE is bearing fruit.

President Trump Again Orders Troops to the Border

President Trump recently said that he would deploy troops to the Mexican border in response to the 3,000-4,000 Central American migrants and asylum seekers who are walking to the U.S. border.  This follows President Trump’s earlier deployment of about 4,000 National Guardsmen (2,100 troops remain) to the border to respond to another caravan earlier this year.  American Presidents have ordered troops to the border to assist in immigration enforcement several times when the flow of illegal immigrants was significantly greater than it is today.  Deploying additional troops to deal the approaching migrant caravan is unjustified and unnecessary. 

Previous U.S. presidents have deployed troops to the U.S. border to assist in immigration enforcement and drug interdiction.  The first such request after World War II was in 1954 when the old Immigration and Naturalization Service (INS) launched Operation Wetback (yes, that is what the government called it).  Then-Attorney General Herbert Brownell asked the U.S. Army to help round up and remove illegal immigrants.  According to Matt Matthews in his “The US Army on the Mexican Border: A Historical Perspective,” the Army refused to deploy troops for that purpose because it would disrupt training, cost too much money at a time of budget cuts, and it would have required at least a division of troops to secure the border.  Then-head of the INS General Swing remarked in 1954 that deploying U.S. Army troops on the border was a “perfectly horrible” idea that would “destroy relations with Mexico.”  It was also unnecessary. 

In 1954, the 1,079 Border Patrol agents made 1,028,246 illegal immigrant apprehensions or 953 apprehensions per agent that year along all U.S. borders.  For the entire border, Border Patrol agents collectively made 2,817 apprehensions per day in 1954 with a force that was 94 percent smaller than today’s Border Patrol.  In other words, the average Border Patrol agent apprehended 2.6 illegal immigrants per day in 1954.  Neither President Eisenhower nor the Army considered that inflow of illegal immigrants to be large enough to warrant the deployment of troops along the border despite Brownell’s request.   

Earlier in 2018, President Trump ordered about 4,000 troops to help the 16,605 Border Patrol agents on the southwest border apprehend the roughly 1,000 Central American migrants from an earlier caravan.  About 2,100 of those troops remain.  At that time, there were about 16.6 Border Patrol agents for each Central American migrant.  As for the current caravan approaching, assuming the number does not decrease any further, there are 4 to 6 Border Patrol agents for each person traveling from Central America in this caravan.  It’s likely that troops deployed on the border will outnumber the most recent caravan when (if) it arrives.   

In fiscal year 2018, Border Patrol apprehended about 396,579 illegal immigrants or about 24 per Border Patrol agent over the entire year on the southwest border, which works out to one apprehension per Border Patrol agents every 15 days.  By that measure, Border Patrol agents in 1954 individually apprehended an average of 40 times as many illegal immigrants as Border Patrol agents did in 2018.  If the current caravan makes it to the United States border, it would add about one and a half days worth of apprehensions at the 1954 level.  Border Patrol should be able to handle this comparatively small number of asylum seekers and migrants without military aid as they have done so before many times with a much smaller force.

Other Border Deployments

Since 1982, most U.S. military deployments and operations along the Mexican border were intended to counter the import of illegal drugs.  Joint Task Force 6 was deployed to the border in 1989 to aid in drug interdiction.  The regular deployment of troops for that purpose ended in 1997 after a U.S. Marine shot and killed American citizen Esequiel Hernandez Jr.  By July of that year, Secretary of Defense William Cohen suspended the use of armed soldiers on the border for anti-drug missions. 

On May 15, 2006, President Bush ordered 6,000 National Guard troops to the border as part of Operation Jump Start to provide a surge of border enforcement while the government was hiring more Border Patrol agents.  In 2006, there were about 59 apprehensions per Border Patrol agent or one per agent every four days.  Operation Jump Start ended on July 15, 2008.  In that year, there were an average of 41 apprehensions per agent or one apprehension every nine days per agent during the entire year.  President Obama also deployed 1,200 troops to the border in 2010 to assist Border Patrol, but they left in 2012.  In that year, Border Patrol agents on the southwest border individually apprehended an average of one illegal immigrant every 19 days. 

The two recent deployments to assist in enforcing immigration law along the border occurred when there were fewer apprehensions, represented by more days between each apprehension for each agent (Figure 1).  The higher the number for the blue line in Figure 1, the fewer people Border Patrol agents individually apprehend.  From about 1975 through 2006, the Border Patrol faced an annual inflow of illegal immigrants far larger than anything seen in recent years. 

Figure 1

The Average Number of Days Between Each Border Patrol Apprehension on the Southwest Border, 1975-2018

Figure 1: Average Number of Days Between Each Border Patrol Apprehension on the Southwest Border

In years and decades past, the average amount of time between Border Patrol apprehensions of illegal immigrants could be measured in hours while now it is measured in weeks.  The proposed deployment of American troops to the border at a time of low and falling illegal immigrant entries is an unnecessary waste of time and resources.  

DEFENSE DOWNLOAD: Week of 10/25

Welcome to the Defense Download! This new round-up is intended to highlight what we at the Cato Institute are keeping tabs on in the world of defense politics every week. The three-to-five trending stories will vary depending on the news cycle, what policymakers are talking about, and will pull from all sides of the political spectrum. If you would like to recieve more frequent updates on what I’m reading, writing, and listening to—you can follow me on Twitter via @CDDorminey

  1. This week has been all Intermediate-Range Nuclear Forces Treaty (INF), all the time. If you’re wondering about the potential upsides, check out “Trump Is Right to Leave The INF Nuclear Treaty” by Kori Shake. If you’re wondering about the potential downsides, I suggest this overview by the New York Times’ editorial board, “‘Getting Tough’ Over a Missile Pact Could Weaken America.” If you have no idea where to start on this issue, stay tuned for tomorrow’s Cato Daily Podcast featuring Eric Gomez and yours truly. (Or you could always start at Wikipedia.) 
  2. Funding for Overseas Contingency Operations and Its Impact on Defense Spending,” Congressional Budget Office (CBO). Since 2001, a significant portion of the annual defense budget has been hived off to pay for wartime operations. But the CBO found that since 2006, at least $50 billion  of annual wartime funds (70 percent of the total OCO account) actually went to enduring activities (i.e. what it takes to run a military this size during peacetime). That’s a substantial misuse or misallocation of funds. 
  3. What Can 24 Satellites Do for U.S. Missile Defense?,” Thomas Roberts. This is pretty in the weeds, but if you follow missile defense or satellite aquisition then you’ll find this brief interesting. It offers a rebuttal to a 2011 report that claimed space-based missile systems could be incorporated in the existing force structure without incurring large program costs. 
  4. Here’s The Pentagon’s Initial Plan for Creating A Space Force,” Marcus Weisgerber. DefenseOne got ahold of an internal document on how the Pentagon is planning to organize the Space Force. Not many firm details are included—but coupled with Secretary Heather Wilson’s estimate of 13,000 people and $13 billion over the next five years, things seem to be in motion. 
  5. The Ticking Nuclear Budget Time Bomb” Kingston Reif and Mackenzie Eaglen. If you aren’t familiar with the nuclear modernization plan, this is a great place to dive into the issue. The article highlights an issue I’ve personally been working on all year: that the nuclear budget cannot be considered in isolation—it’s going to coincide with modernization plans for the Air Force, Navy, and expansion of the Army.