Archives: 04/2017

Pettifogging the Iran Nuclear Deal

A post at The American Interest, vaguely attributed to “Walter Russell Mead and staff” criticizes the Iran nuclear deal as “worse than we knew.” That judgement is based on a Politico article discussing the seven individuals that the Obama administration agreed to release from U.S. custody, and another fourteen fugitives for whom they agreed to drop charges, as part of a “one-time gesture” to sweeten the deal for the Iranians.

Politico reports on some of the charges these individuals were accused of: three of them “allegedly sought to lease Boeing aircraft for an Iranian airline that authorities say had supported Hezbollah”; another tried to “buy thousands of U.S.-made assault rifles and illegally import them into Iran”; another “was charged with smuggling U.S. military antennas to Hong Kong and Singapore for use in Iran,” and so on.

The American Interest claims these are “far more serious threats to national security than was previously disclosed.”  But what the Politico article reveals is more detail about the allegations made of men already revealed to be smugglers. To describe them as “serious threats to national security” is an exaggeration. It’s not clear, for example, what exactly is threatening about an Iranian airline with some vague association with Hezbollah leasing a Boeing aircraft, or whether Iran importing more assault rifles meaningfully aids its military capability. Moreover, the fourteen people that saw their indictments dropped weren’t in U.S. custody and thus weren’t about to have their smuggling efforts stopped, though indictment limited their ability to travel. Letting them slide did not obviously increase their threat.

More importantly, neither Politico nor The American Interest directly confronts the Obama administration’s evident judgement that the nuclear freeze it got from Iran was worth letting some shady people off the hook. Does the risk from the releases hold a candle to the problem of nuclear proliferation? How about the danger posed by U.S. hawks ever-eager to use Iran’s nuclear program as a justification for launching another war in the Middle East? Surely, those menacing scenarios are worse than any the released smugglers posed.

New CBO Report on Federal Worker Pay

The Congressional Budget Office has released a report on compensation of federal government workers. It finds that compensation is 17 percent higher, on average, for federal civilian workers than for private sector workers, after adjusting for factors such as education levels.

The CBO found that federal wages were a little elevated, but that federal benefits were substantially higher than benefits in the private sector. Generally, less-skilled and medium-skilled workers do better on both wages and benefits in the government, but the highest-skilled workers do better on wages in the private sector.

Wages are 3 percent higher in the government than the private sector, on average, but the CBO finds substantial variation depending on education level:

  • Federal workers with no more than a high school education earned 34 percent more, on average, than similar workers in the private sector.
  • Federal workers whose highest level of education was a bachelor’s degree earned 5 percent more, on average, in the federal government than in the private sector.
  • Federal workers with a professional degree or doctorate earned 24 percent less, on average, than their private-sector counterparts.

Benefits are 47 percent higher in the government, on average, but there is variation as follows:

  • Average benefits were 93 percent higher for federal employees with no more than a high school education than for their private-sector counterparts.
  • Average benefits were 52 percent higher for federal employees whose highest level of education was a bachelor’s degree than for similar private-sector employees.
  • Among employees with a doctorate or professional degree, by contrast, average benefits were about the same in the two sectors.

The Trump administration and Congress should try to bring federal pay and workplace conditions in line with the rest of the nation. Reforms should include cutting the overly generous federal benefits package and reducing the hurdles to firing poorly performing federal workers.

For further analysis on federal wages, benefits, and firing, see here.

Benjamin Barber, RIP

The noted political theorist Benjamin Barber died yesterday. He was 77.

Ben wrote many books among the best known of which might be Jihad vs. McWorld: Terrorism’s Challenge to Democracy, published first in 1996, when it became a bestseller. It had a renewed life after September 11th. His latest and last book, Cool Cities: Urban Sovereignty and the Fix for Global Warming, appeared one week ago.  He was a critic of libertarianism specifically and (classical) liberalism more generally, perhaps most starkly in his 2008 book Consumed: How Markets Corrupt Children, Infantilize Adults, and Swallow Citizens Whole and earlier in his major academic work, Strong Democracy: Participatory Politics for a New Age (1984). I have nothing to say now about his critique save that libertarians should attend to it.  He was a learned friend of democracy who thought the adjective in “liberal democracy” tended to undermine the noun.

Ben Barber interacted with Cato several times over the years. He debated Tyler Cowen at Cato in 2003. My colleague Brink Lindsey reviewed Consumed. Tom G. Palmer found Ben’s economic views open to question. Other colleagues at various times noted Barber’s books and opinions.

I knew Ben well some years ago, and my remarks here draw on those memories. I remember a man who was both a liberal and democrat. In my experience his liberalism served his commitment to democratic discussion: he welcomed both Nozickians and neo-Marxists to his seminars. He gave them and the rest of us an argument but never pushed dissent to the margins. He encouraged his graduate students to go their own way,  and I did, all the way to the Cato Institute which might have been annoying for another man but not for Ben. He joked about my change of mind but never expressed the slightest disapproval. I was not the only one. Over the years his students included people who became participatory democrats, feminists, the hard-to-pigeonhole, as well as libertarians and libertarian leaners. Of course, if you encourage people to go their own way, you will end up with a menagerie of former students rather than disciplined disciples. But Barber did more than tolerate differences. He encouraged his students to engage thinkers well outside conventional opinion like the libertarian-conservative philosopher Michael Oakeshott among others.

Libertarians benefitted from Ben’s criticisms while others will miss the democratic spirit of his writings. Those who knew him will miss most of all a man who evinced the liberal virtues of openness and engagement, virtues now needed more than ever.

Large Majorities Support Key Obamacare Provisions, Unless They Cost Something

A new Washington Post/ABC News poll finds that Americans say they support Affordable Care Act regulations that require health insurance companies in all states to cover a particular set of services (62%) and prohibit insurers in all states from charging higher prices to people with pre-existing conditions (70%).

However, the poll did not find out what Americans would be willing to give up to obtain these regulatory benefits.

Fortunately, a recent Cato Institute/YouGov health care survey investigated how Americans make trade-offs when it comes to their health care. In short, support for once popular regulations plummets as soon as voters consider their costs.

At first, and similar to the Washington Post/ABC poll, the Cato survey found by a margin of 63% to 33% Americans support prohibiting insurance companies from charging higher premiums because of pre-existing conditions—also known as “community rating.” But support flips, and majorities come to oppose community rating…

  • if it limited access to medical tests and treatments: 66% oppose, 27% support
  • If it limited access to top rated medical facilities and treatment centers: 62% oppose, 31% support
  • If one had to wait several months before seeing a specialists for necessary care: 65% oppose, 25% support
  • if premiums increased: 55% oppose, 39% favor
  • if taxes increased: 53% oppose, 40% favor

Lumber and Dairy Trade Disputes: No Need to Freak Out

U.S. - Canada trade relations are in the news, and not in a good way.  There are two particular products at issue: lumber and dairy. Here’s what Commerce Secretary Wilbur Ross had to say yesterday: 

It has been a bad week for U.S.-Canada trade relations. Last Monday, it became apparent that Canada intends to effectively cut off the last dairy products being exported from the United States. Today, in a different matter, the Department of Commerce determined a need to impose countervailing duties of roughly one billion dollars on Canadian softwood lumber exports to us. This is not our idea of a properly functioning Free Trade Agreement. 

As background, there are two separate issues. First, on dairy, there are allegations that a Canadian government program, in combination with certain private sector practices, has led to reductions in U.S. dairy exports to Canada.  There may be something to this claim, and I can imagine the U.S. might file a complaint at the World Trade Organization.  Trump’s tweets may make it sound like there will be some kind of harsh tariff retaliation outside the context of the WTO, but I’m skeptical.  We haven’t yet seen any blatant trade law violations of this sort from the Trump administration (and hopefully we won’t), and I think it’s more likely they will go the WTO. 

Then there’s lumber.  This is a long-standing U.S. - Canada trade dispute (my colleague Dan Ikenson gives the background here), and it is picking up again, as the Department of Commerce made a preliminary determination of countervailable subsidies on imports of softwood lumber from Canada.  This is from the fact sheet they issued: 

Commerce calculated preliminary subsidy rates for five mandatory respondents: for Canfor Corporation, 20.26 percent; for J.D. Irving, Limited, 3.02 percent; for Resolute FP Canada, Ltd., 12.82 percent; for Tolko Marketing and Sales Ltd. and Tolko Industries Ltd., 19.50 percent; and, for West Fraser Mills, Ltd., 24.12 percent. Commerce established a preliminary subsidy rate of 19.88 percent for all other producers/exporters in Canada. 

Before anybody panics, let me reiterate that this is nothing new.  Note that there was a preliminary determination on subsidized Canadian lumber back in August 2001, where DOC calculated a single country-wide subsidy rate of 19.31%.  While there are a lot of potentially system-destroying trade actions from the Trump administration to worry about, this one is just the usual, routine kind of trade remedy action.  Not that I support this sort of thing, of course, but it’s part of the system. Also note that it is just a preliminary determination, subject to a final review by the Commerce Department, as well as a final injury determination by the International Trade Commission. And the parties may be able to work out an agreement, as they have in the post. 

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SCOTUS Needs To Check the Long Arm Of State Court Jurisdiction

Many of the problems with litigation under our federal system, as I’ve noted before, arise when state courts can reach out to project their power onto litigants and disputes outside their borders. Public choice economics suggests that when courts are answerable to the political and legal classes of a single state only–say, California or Montana–they might not be ideally responsive to the interests and due process rights of out-of-state parties who have been compelled by force to show up and defend a lawsuit. Even if state judges and juries manage to avoid the temptation of “home cooking”–dishing out tastier outcomes to down-home litigants and lawyers than to outsiders–the remains the wider problem of forum-shopping, in which–even if no forum intends to act other than impartially–lawyers can bring an action in whichever of multiple available forums is most gainful for their side and unwelcome for their opponent.

A great deal, therefore, hangs on when state courts can compel absent parties to show up and defend a lawsuit. When may a state assert jurisdiction over a distant party even though it lacks one of the relatively uncontroversial grounds for doing so, such as that the events being sued over happened within its borders? 

And here there has been good news to report in recent years. Our system relies largely on the federal judiciary to police overreaching by state courts in their jurisdictional claims, and after decades of irresolution, the U.S. Supreme Court has lately been getting much more serious and confident about drawing the right sorts of lines. Importantly, it has done so with support from both liberal and conservative wings of the Court. In the most significant recent case, Daimler AG v. Bauman (2014), Justice Ruth Bader Ginsburg wrote for a unanimous Court, with only Justice Sotomayor writing a separate concurrence. (The case dealt with an international as distinct from interstate claim of jurisdiction, but made precedent for both). 

But some states have pushed back against Daimler, which may be why the Court granted review of two cases on which it will hear oral argument tomorrow, April 25. In Bristol-Myers Squibb Co. v. Superior Court, California courts took jurisdiction over hundreds of cases from other states alleging side effects from the drug Plavix, even though the other cases had no particular connection with California other than that their lawyers wanted to convoy them in along with the actual California cases. In BNSF Railway Co. v. Tyrrell, Montana opened its doors to litigation against a railroad based elsewhere over injuries that did not occur within Montana. 

It seems unlikely that the Court will declare a change of heart and back off its 2014 near-unanimity. Helpfully, the Trump Justice Department has filed an amicus brief arguing that the California Supreme Court overstepped the line when (over a dissent from three of its members) it found jurisdiction over the out-of-state drug cases. Still, lawyers will be looking at the possibility that some distinctive sub-pattern in one or both of tomorrow’s cases (such as federal law’s recognition of the railroad industry as having a distinctively national workforce) might justify carving out an exception to its rule.

The stronger outcome would be for a united Court to say unambiguously, about its Daimler holding: we said it, and we meant it.