About This Year’s $2 Trillion Deficit: Don’t Worry, Be Happy!

Certainly the House leadership believes, along with Bobby McFerrin:  “Don’t worry, be happy.”  What else to make of the plan to spend $550 million on another eight planes to fly legislators and their families around the world?

Reports the Wall Street Journal:

Bipartisan opposition is emerging in the Senate to a plan by House lawmakers to spend $550 million for additional passenger jets for senior government officials.The resistance to buying eight Gulfstream and Boeing planes comes as members of both chambers of Congress embark on the busiest month of the year for official overseas travel. The plan to upgrade the fleet of government jets, which was included in a broader defense-funding bill, has also sparked criticism from the Pentagon, which has said it doesn’t need half of the new jets.

Well, what’s a few hundred million dollars among friends?  I always say:  “it’s only money.”  In this case, “it’s only the taxpayers’ money,” which means that it doesn’t really count at all.

PASS ID: National ID v3.0?

Michigan state representative Paul Opsommer (R) fits PASS ID into the overall national ID picture:

As politicians, we see firsthand how often things are simply retooled, renamed and resubmitted. And in the case of REAL ID, which has its roots in failed attempts to implement AAMVA’s Driver’s License Agreement (DLA), it would not be the first time the concept behind a “one license, one record” national ID card was being repackaged.

Stephen Brooks’ Response to Me, and Mine to Him

Guest-blogging for Stephen Walt last week, I offered some criticism of Stephen Brooks and William Wohlforth’s book, World Out of Balance.  Brooks has emailed to offer his response, which I post below with my reply.

Brooks writes:

First, the concluding chapter of our book distinguishes between two forms of systemic activism that a leading state can pursue — the first one relies on the use of the military and the second (identified by Robert Gilpin) involves changing the structure of the global economy, international institutions, and standards of legitimacy.  We favor a focus on the second approach to systemic activism (that is what our Foreign Affairs article is all about) and taking this route does not involve the deployment or use of military force.  It is hard for me to see how undertaking this second form of systemic activism can contribute to imperial overstretch.

Second, our main point about the financial crisis does not concern the US policy response.  Rather, the essential point is that the crisis does not change the fact that America’s lead over its competitors is very, very large and that relative power shifts slowly.  Knowing that the US is so far ahead is sufficient for us to reach the conclusion that the US will long remain the sole superpower.

My response is as follows:

Let me start by making clear that I think Brooks and Wohlforth have the better of the “is unipolarity ending?” argument.  I also think they have the better of the argument about the likely implications of the financial crisis on the balance of power.  Due to interdependence and a number of other factors, the United States will almost certainly emerge from the wreckage with its unipolar status intact.

Rather, the point of my highlighting their argument that the long-term fiscal problems in the United States “can be fixed” was to observe that they seem quick to dismiss problems that may pose serious danger to America’s standing over the medium term.  To my mind, the fiscal imbalances are significant, and don’t appear likely to be fixed any time soon.

Second, Brooks adds that his and Wohlforth’s preferred systemic activism does not involve military activism, but rather a focus on “changing the structure of the global economy, international institutions, and standards of legitimacy.”  On this point they cite Robert Gilpin.  Gilpin did distinguish between three objects of foreign policy (physical/military control of territory, “influence over the behavior of other states,” and influence over the world economy), and acknowledged that economic control had increased in salience since the global economy developed.  But he made clear that economic interests “cannot be easily isolated from the first two” types of objective.  That is, the relative weight of the three may shift, but they remain tethered to one another.

To my mind, this fact can be seen in Brooks and Wohlforth’s proposal in Foreign Affairs to revise the nuclear Nonproliferation Treaty.  While the authors present this as an institutional change, it would create laws that would need to be enforced.  For the past couple decades, as a unipole, the United States has tasked itself with being the ultimate backstop against proliferation, with mixed results.  At bottom, then, the question is who will enforce the law?

The authors propose creating an institution to provide nuclear aspirants with LEU but precluding them from obtaining indigenous enrichment capabilities, and creating a new institution involving NATO allies, South Korea, Japan, and Australia to impose sanctions on the violators of this new regime.  If recent experience is any indication, though, the countries listed do not believe it in their interests to impose tight economic sanctions, let alone military action, to stop proliferation.  One wonders how the creation of a new institution would shift these countries’ willingness to impose binding constraints on proliferation.

A primacy strategy that focuses on enhancing legitimacy and international institutions does not seem separable from military power—and the willingness to use it.  If Brooks and Wohlforth’s position is that the systemic activism which they favor does not involve “the deployment or use of military force,” then that is a curious view indeed.

GAO Finds that Trade Agreements Promote Trade

The Government Accountability Office (GAO) released a report today that found that four trade agreements implemented during the Bush administration “have largely accomplished the U.S. objectives of achieving better access to markets and strengthening trade rules, and have resulted in increased trade.”

That is a finding that will be controversial only to the most hardened opponents of trade liberalization.

The GAO examined trade agreements with Jordan, Chile, Singapore, and Morocco, all enacted since 2001. Here’s the nut graph from the report:

While varying in details, the FTAs have all eliminated import taxes, lowered obstacles to U.S. services such as banking, increased protection of U.S. intellectual property rights abroad, and strengthened rules to ensure government fairness and transparency. Overall merchandise trade between the United States and partner countries has substantially grown, with increases ranging from 42 percent to 259 percent. Services trade, foreign direct investment, and U.S. affiliate sales in the largest partners also rose.

No big news here. Trade agreements are supposed to promote more trade, and each one of these agreements has delivered on that central objective. They have delivered the “level playing field” between U.S. producers and those in the FTA countries that members of Congress are always demanding. And as we have  amply documented through the years, more liberalized trade delivers faster growth, more consumer choice, better jobs, and higher living standards.

Opponents of trade have attempted to thwart such a straight-forward agenda by demanding that trade agreements become vehicles for enforcing more stringent labor and environmental standards in the partner countries. On this front, the GAO found that “FTA negotiations spurred some labor reforms in each of the selected partners, according to U.S. and partner officials, but progress has been uneven and U.S. engagement minimal.”

Critics will interpret this as a failure, but it really shows the limitations of FTAs as a club for imposing our social standards on what are often less developed countries. After all, we are talking about internal regulations of sovereign countries. The real question is not whether every provision of these agreements has been fully enforced, but whether most people in the participating countries are better off than they would have been without the increased trade promoted by these agreements. As the GAO report confirms, the answer is a clear, “Yes.”

Topics:

Up, Up and Away

The Wall Street Journal reports today that Treasury Secretary Tim Geithner has asked Congress to increase the statutory federal debt limit from its current $12.1 trillion. I don’t think that this will be the last such request from Geithner, given that the Obama administration’s budget includes the projection in this chart:

Edwards

Nobody knows who will buy all this debt and what economic damage it will do. But federal policymakers seem hellbent on finding out as they continue their decade-long spending spree.

“Three Amigos” Meet, Drugs on the Agenda

The presidents of Mexico and the United States and the prime minister of Canada are meeting today in Guadalajara. One of the many things they’ll discuss will be cross-border drug trafficking and the violence that accompanies it. Although swine flu is making the headlines, most Americans probably don’t know that drug violence has killed many times more people than the attention-grabbing epidemic.

Who knew this presumably important fact? The well-informed readers of Cato Unbound, that’s who. (Swine flu has killed 1,154 worldwide; since 2006, drug violence has killed more than ten thousand in Mexico alone.)

This month’s lead essayist, former Mexican Foreign Secretary Jorge Castañeda, complains of “A U.S. War with Mexican Consequences.” He notes that we in the United States have a greater taste than Mexicans for both illegal drugs and prohibition. And we have a disturbing tendency to export the consequences of those tastes to Mexico. Without the United States, there would scarcely be a Mexican drug problem. Many policies offered as solutions aren’t working. In particular, militarization is a dangerous step that has worked out badly in other Latin American countries; a U.S. military presence would be politically unpopular and would not be tolerated in Mexico. Mexico pursuing drug decriminalization is just as unpopular in the United States; American governments have worked hard to keep decriminalization off the Mexican political agenda.

Journalist and Latin American affairs expert Stephanie Hanson of the Council on Foreign Relations responds that both countries should consider decriminalization of marijuana and possibly of harder drugs as well. It may be time, she suggests, to admit that prohibition isn’t working, at least as it’s been practiced so far. She points to experiments conducted in the Netherlands, Portugal, and — for those not as well-informed — the experiment in the fictional Baltimore of The Wire, where decriminalization offered a measure of calm, albeit only for one episode.

Another expert in the area, James Roberts of the Heritage Foundation, suggests otherwise. Drug decriminalization and/or legalization will also ruin lives and kill people, just as prohibition has done, except this time it will be done with the support of our governments. Rather than give in to the drug cartels, he recommends fighting them every step of the way. In any event, decriminalization is never going to succeed politically in the United States, so we’re better off with a vigorous, effective prohibition than a halfhearted one.

Tomorrow we’ll hear from Cato’s own Ted Galen Carpenter, an expert with yet another view of the situation. A discussion will follow over the next few weeks and, given the diversity of views, it will no doubt be an interesting one.

‘Cash for Clunkers’ Is a Lemon

Jerry Taylor and I published an op-ed criticizing the Cash for Clunkers program on Friday. We weren’t alone in our evaluation of the program.

Two interesting critical analyses of the Cash for Clunkers program were published over the weekend. The first by New York Times reporter Matt Wald examines the energy savings that would result from the program.  If a clunker traveling 12,000 miles at 16 miles per gallon (consuming 750 gallons per year) were traded in for a new car getting 25 mpg while traveling the same distance (480 gallons a year), the the trade-in would save the driver 270 gallons per year. Multiply that by the roughly 245,000 vehicles that had been traded in under the program as of last Friday, before Congress extended the program, and you get 1.6 million barrels  saved each year. That sounds great until you realize it’s only about two hours’ worth of our daily consumption, which is about 18.6 million barrels per day so far in 2009.  But the savings is probably much less than that because old cars are not driven 12,000 miles per year.

The second critical analysis, examining the program’s effect on carbon emissions, appeared as a figure in the Outlook section of this weekend’s Washington Post.  Over 10 years, the new cars will reduce emissions by 7 million metric tons, which is about 0.04% of the 16 billion metric tons that U.S. cars will produce over that time. That is, taxpayers will pay $147 per ton of CO2 reduction ($1.03 billion dollars divided by 7 million tons). In comparison, the economic literature estimates that the cost of the marginal damages of carbon emissions is between $15 and$50 per ton (see, e.g., this and this).