Is Trump Putting Us Back on the Road to War with Iran?

On Monday, the Trump administration once again officially certified that Iran is in compliance with the Joint Comprehensive Plan of Action (JCPOA), the agreement that rolled back Iran’s nuclear program and subjected it to unprecedented levels of inspections and monitoring in exchange for sanctions relief. But, according to multiple reports, Trump was very close to refusing to do so.

Apparently, there is a split in the administration. Some of Trump’s national security advisors, along with some hawks on Capitol Hill, are intent on torpedoing the Iran nuclear deal. And Trump was set to officially claim, contrary to the facts, that Iran was not living up to the agreement. At the last minute, another camp in the administration’s national security team, including Secretary of State Rex Tillerson, Secretary of Defense James Mattis, and national security advisor H.R. McMaster, prevailed upon the president to tell the truth and certify that Iran is indeed complying with its obligations under the JCPOA.

These are very ominous signs about the intentions of President Trump. Recall that the president has repeatedly denounced the Iran nuclear deal as a pathetic capitulation that must be reversed. That is not only wrong, but it puts the administration in a difficult spot. The other parties to the agreement – including Britain, France, Germany, China, and Russia, as well as the International Atomic Energy Agency (IAEA) – all know that Iran made major concessions and they all concede Iran is so far complying with the deal’s stringent limitations on its nuclear program.

Zoning Debate Hosted by Cato and the Urban Institute

Today through Monday, July 24th, Cato and the Urban Institute are hosting a joint online debate contemplating costs, benefits, and possible reforms to zoning regulation. Participant opinions will run the gamut, from anti-zoning to pro-zoning, which should make the conversation lively. Participants will include the following:

  • Emily Talen, professor of urbanism, University of Chicago
  • Robert Dietz, chief economist and senior vice president, National Association of Homebuilders
  • Dana Berliner, senior vice president and litigation director, Institute for Justice
  • Lance Freeman, professor of urban planning, Columbia University
  • Richard Rothstein, research associate, Economic Policy Institute; fellow of the Thurgood Marshall Institute, the NAACP Legal Defense Fund, and the Haas Institute at the University of California (Berkeley)
  • Craig Anthony Arnold, professor of law and affiliated professor of urban planning in the Department of Urban and Public Affairs, and chair of the interdisciplinary Center for Land Use and Environmental Responsibility, at the University of Louisville
  • Derek Hyra, associate professor in the School of Public Affairs, American University

I will moderate the debate alongside Rolf Pendall, co-director of the Metropolitan Housing and Communities Policy Center at the Urban Institute.

On the anti-zoning side, participants are expected to argue that zoning increases housing costs and segregation, while reducing property rights, individual liberty, and economic growth. On the pro-zoning side, participants are expected to contend that zoning is a boon to environmental justice, growth management, and community preservation.

The debate will conclude by contemplating possible reforms to zoning regulation. This portion is particularly important because there is often substantial local pressure to zone restrictively. Overcoming it often requires ingenuity.

Join us for the full conversation here.

The Economics of Amtrak

Amtrak’s co-CEO Wick Moorman has announced that the passenger railroad is thinking of offering a new service to compete with the airlines: economy seating that is crammed together as tightly as airline seats. This was immediately blasted by Senator Charles Schumer (D-NY), saying, “Amtrak should not throw out one of the best things about Amtrak and train travel — that is, you at least get a seat you can sit in and be comfortable.”

In fact, this idea makes no sense not because heavily subsidized train travelers somehow deserve more comfortable seats but because it would cost Amtrak more in lost revenues than it will save. Airlines fill 85 percent of their seats and on lots of flights they fill 100 percent. Amtrak fills only 51 percent of its seats, so cramming more seats into a railcar will simply mean more empty seats.

According to USA Today, Amtrak seat pitches–the distance from the back of one row of seats to the back of the next–are 39 inches for day trains and 50 inches for overnight trains. Airline seat pitches are 30 to 33 inches while buses are 28 to 31 inches. That means Amtrak could squeeze in four rows of seats where it now has three on day trains and five rows where it now has three on overnight trains.

Amtrak’s overnight trains rarely have more than four coaches. Substituting one economy coach for two regular coaches would save a little bit on fuel and maintenance and results in an overall loss of seating capacity. Many coach riders on the overnight trains are price sensitive, so most of the people attracted to the economy coaches would have otherwise taken the regular train. Thus, Amtrak is likely to lose more revenue than it gains by attracting few people away from buses or planes.

E-Verify Does Not Lower Unemployment

The Federation for American Immigration Reform (FAIR) released a report claiming that E-Verify lowered unemployment rates in states that implemented it.  FAIR’s report is deeply flawed.  The first section of this blog will catalog FAIR’s errors and show that states with mandatory universal E-Verify typically had higher unemployment.  The second portion of this blog will use the synthetic control method to look at E-Verify’s effect on unemployment in Arizona after the E-Verify mandate.  The flaws in FAIR’s report are important to highlight as more states are considering a universal E-Verify mandate.  There is little evidence that E-Verify mandates lower unemployment but much evidence that they raise it.   

Criticisms of FAIR’s Report

E-Verify is a taxpayer funded federal government run system that is supposed to exclude illegal immigrants from the workforce.  The system would be used at the point of hire to verify that any new worker is actually authorized to work in the United States.  FAIR attempted to show that states with E-Verify have higher employment growth relative to other states.  This is likely an attempt to overcome one of the stronger criticisms of E-Verify: It is an expensive labor market regulation that will increase unemployment by raising the cost of hiring new workers among other problems.  However, FAIR excluded the first state to mandate E-Verify and made numerous other silly methodological choices that make their results unreliable. 

First, the FAIR authors excluded Arizona from their report.  Arizona was the first state to mandate E-Verify for all new hires.  Unemployment rates as measured by U3 were lower in Arizona than in the rest of the United States prior to the implementation of E-Verify and they shot up afterward, remaining consistently above the rest of the United States (Figure 1).  The result is even more extreme for the U6 unemployment rate that the FAIR report insisted on using (Figure 2).  Narrowing the comparison to the southwestern states of California, Colorado, Nevada, New Mexico, Oklahoma, Texas, and Utah shows similar results whereby Arizona had relatively lower unemployment prior to mandating E-Verify and higher unemployment afterward (Figures 3-4).  Utah mandated E-Verify for some employers during this time but excluding that state does not affect the results.  Mandatory E-Verify did not appear to improve employment in Arizona. 

Figure 1

Arizona Unemployment Rate (U3) vs. United States Unemployment Rate (U3)

Source: Bureau of Labor Statistics.

North Carolina and Other States Should Reconsider E-Verify

Many states are considering an E-Verify mandate for all employers and employees in their states. E-Verify is a taxpayer funded federal government run system that is supposed to exclude illegal immigrants from the workforce. In practice, E-Verify imposes high economic costs and does little to dampen the wage magnet that attracts illegal immigrants to the United States.

State attempts to mandate E-Verify have run into serious roadblocks in at least three states this year and are likely dead there. For instance, Illinois’ HB 3415 is still stuck in committee and is very unlikely to become law. In fact, Illinois is so averse to E-Verify that it even tried to prohibit its use of that system by any employer in the state. New Jersey’s A 3249 is extremely unlikely to pass in a state government dominated by Democrats. Maine HP 904 is effectively dead as that legislator has more pressing matters to attend to.

However, a watered-down form of mandatory E-Verify has an excellent chance of becoming law in North Carolina. The Protect North Carolina Workers Act (HB 35) passed the House and will likely be taken up by the state Senate when it returns in late August. The Protect North Carolina Workers Act would require mandatory E-Verify for every new employee hired by a firm with 15 or more employees. Legislators have exempted domestic and farm workers from E-Verify, likely because they believe those sectors of the economy would be devastated if they also had to comply with the mandate. 

Privatization, Innovation, and Exports

Congress should privatize federally-owned businesses such as Amtrak, the postal service, and the air traffic control system. Privatization would cut costs and improve customer service, as I discuss here. It would also boost U.S. innovation and exports.

Typically, federal government businesses do not export their goods, services, or technologies. They have no incentive to do so. They are content to live the quiet life, and they have little reason to innovate or seek foreign markets. As such, keeping business activities trapped inside of bureaucracies restricts growth opportunities for the economy.

In a new article on air traffic control (ATC), Rui Neiva of the Eno Center illustrates the theme. He discusses how the privatized Canadian ATC company developed and implemented “electronic flight strips” years ago, while our government ATC bureau is still struggling to adopt this advance.

By 2009, all NAV CANADA facilities, including those serving general aviation, were equipped with electronic flight strips. Given that NAV CANADA is both an operator and a manufacturer of equipment for ATC, the technology that they developed has been sold to multiple countries worldwide, including Australia, Denmark, Dubai, Italy, and United Kingdom.

Canada privatized its ATC system in 1996 as Nav Canada. The company is a leader in ATC innovation and has developed numerous technologies, such as the flight strips, that it exports abroad. Bob Poole noted, “The technical expertise at Nav Canada has led to a thriving business marketing innovative ATC hardware and software and advising other air navigation service providers on modernization.”

Nav Canada earns income from foreign contracts and royalties, which in turn helps fund its ongoing research. Another interesting byproduct of Canadian privatization is Searidge Technologies, which is a Canadian company that is developing “remote tower” services for ATC systems. Nav Canada was an early investor in Searidge and today is co-owner.

Now consider another industry run by our government: currency printing. Our money is printed by the U.S. Bureau of Engraving and Printing. But Canada has long contracted out the printing of its money to the Canadian Bank Note Company and other firms.

Canadian Bank Note Company has used its domestic expertise as a base to go global, and today it prints money, stamps, and high-end security products for clients in 60 counties. Meanwhile, the Bureau of Engraving and Printing supplies only the U.S. market and does not export.

Government agencies fall behind because they are cut off from global markets and the need to compete. Look at the U.S. government-made bills in your wallet. Boring! Now look at this cool Canadian fiver or this New Zealand fiver, both manufactured from high-tech plastics by the Canadian Bank Note Company. The NZ bill won “international bank note of the year” in 2015.

The lesson is that we deny opportunities to American entrepreneurs when we keep businesses entombed in the government. Moving ATC, currency printing, and other activities to the private sector would allow American workers to capitalize on their skills and sell their innovations worldwide.

More on air traffic control here.

More on privatization here.

Join me, Michael Sargent, and Rep. Tom Massie at the Heritage Foundation tomorrow to discuss air traffic control reform.

 

They Cannot Make Us Hate Them

Liu Xiaobo passed away on July 13th, 2017, at age 61. This piece was originally posted at AtlasNework.org on September 8, 2016.

When I think of examples of successful self-control and dignity under the most difficult circumstances, one person comes to mind before all others: 刘晓波, Liu Xiaobo, the Chinese writer and human rights activist, who was sentenced on Dec. 25, 2009, to 11 years of imprisonment in China on the charge of “inciting subversion of state power.” Liu’s body is in prison and he is being made to suffer deprivation of liberty, health, companionship, and more by state authorities, but he will not allow himself to be consumed by the hatred that would destroy a person with less self-control. Before being subjected to years of imprisonment and abuse, he had tried to lead a life of freedom and responsibility.

“What I demanded of myself was this: whether as a person or as a writer, I would lead a life of honesty, responsibility, and dignity,” Liu said.

Liu read his final statement after his sentencing, but was cut off after 14 minutes by the “judge” on grounds that the prosecution had spent only 14 minutes making the case against him. In it, he said, “I have no enemies and no hatred.” Liu exemplifies great self-control and mindfulness. He is focused on his goal: to foster a society of free and responsible persons who live together in equal freedom and mutual respect. He refuses to be consumed by hatred, because hatred and bitterness foster violence, cruelty, revenge, and oppression.

“Hatred can rot away at a person’s intelligence and conscience,” Liu said. “Enemy mentality will poison the spirit of a nation, incite cruel mortal struggles, destroy a society’s tolerance and humanity, and hinder a nation’s progress toward freedom and democracy. That is why I hope to be able to transcend my personal experiences as I look upon our nation’s development and social change, to counter the regime’s hostility with utmost goodwill, and to dispel hatred with love.”

I blink away tears every time I read Liu Xiaobo’s final statement. He not only refuses to be consumed by hatred, he takes the unjust occasion of his imprisonment to express his love for his wife, Liu Xia, who was forbidden by the state authorities to see him.

“I am serving my sentence in a tangible prison, while you wait in the intangible prison of the heart,” he said. “Your love is the sunlight that leaps over high walls and penetrates the iron bars of my prison window, stroking every inch of my skin, warming every cell of my body, allowing me to always keep peace, openness, and brightness in my heart, and filling every minute of my time in prison with meaning. My love for you, on the other hand, is so full of remorse and regret that it at times makes me stagger under its weight. I am an insensate stone in the wilderness, whipped by fierce wind and torrential rain, so cold that no one dares touch me. But my love is solid and sharp, capable of piercing through any obstacle. Even if I were crushed into powder, I would still use my ashes to embrace you.”