July 11, 2006 9:42AM

Bhagwati vs. Bhagwati on Trade Liberalization

Jagdish Bhagwati, one of the world’s finest and most renowned trade economists, gave some of his thoughts on the Doha Round and prospects for trade liberalization in yesterday's Cato podcast. Professor Bhagwati, who is also on the Board of Advisers of Cato’s Center for Trade Policy Studies, spoke more in depth on the subject at a Cato policy forum last month titled, “U.S. Trade Policy in the Wake of Doha: Why Unilateral Trade Liberalization Makes Sense.”

Unlike most trade policy observers, Bhagwati believes the Doha Round can still succeed. The key to success, he suggests, is for U.S. negotiators to embrace a concept he calls “relaxed reciprocity.”  Rather than seek a highly ambitious outcome by demanding all participants accept maximum “concessions,” U.S. negotiators should improve their own offer while accepting whatever level of reform other countries are willing to undertake.  The logic of this approach rests in the fact that most of the gains from trade liberalization come from opening one’s own market (access to cheaper inputs for business, greater competition and choice, productivity gains, lower prices for consumers), and thus, such reforms are not concessions at all.  Greater export market access for U.S. companies is just the icing on the cake, and the prospect of a lightly frosted cake is no reason to forego the entire dessert. His conclusion, then, is that U.S. negotiators should offer to open the U.S. market as wide as possible and accept minimal openings from abroad for the sake of achieving an agreement.

I concur with Professor Bhagwati that the United States should open its market without the condition that similar measures be undertaken abroad. Admittedly, my opinion is shaped in no small part by the arguments put forth by Bhagwati over the years.  But I think the United States probably has more to gain by doing so unilaterally and not partaking of an agreement that memorializes bold U.S. reform alongside marginal reform abroad. 

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July 10, 2006 6:44PM

Rick Santorum: Left, Right, and Wrong

The New York Times reports that Sen. Rick Santorum…

…distributed a brochure this week as he worked a sweltering round of town hall meetings and Fourth of July parades: “Fifty Things You May Not Know About Rick Santorum.” It is filled with what he called meat and potatoes, like his work to expand colon cancer screenings for Medicare beneficiaries (No. 3), or to secure money for “America’s first ever coal to ultra‐​clean fuel plant” (No. 2).…


He said he wanted Pennsylvanians to think of him as a political heir to Alfonse M. D’Amato of New York, who was known as Senator Pothole for being acutely attuned to constituent needs.

So … the third‐​ranking Republican leader in the Senate wants to be known as a porker, an earmarker, and Senator Pothole.


Santorum had already dismissed limited government in theory. He told NPR last year:

One of the criticisms I make is to what I refer to as more of a libertarianish right. You know, the left has gone so far left and the right in some respects has gone so far right that they touch each other. They come around in the circle. This whole idea of personal autonomy, well I don’t think most conservatives hold that point of view. Some do. They have this idea that people should be left alone, be able to do whatever they want to do, government should keep our taxes down and keep our regulations low, that we shouldn’t get involved in the bedroom, we shouldn’t get involved in cultural issues. You know, people should do whatever they want. Well, that is not how traditional conservatives view the world and I think most conservatives understand that individuals can’t go it alone. That there is no such society that I am aware of, where we’ve had radical individualism and that it succeeds as a culture.

He declared himself against individualism, against libertarianism, against “this whole idea of personal autonomy, … this idea that people should be left alone.” Now he’s also against the conservative idea that taxpayers matter, that the federal government has a limited role.


No wonder Jonathan Rauch wrote last year that, “America’s Anti‐​Reagan Isn’t Hillary Clinton. It’s Rick Santorum.” Rauch noted:

In his book he comments, seemingly with a shrug, “Some will reject what I have to say as a kind of ‘Big Government’ conservatism.”


They sure will. A list of the government interventions that Santorum endorses includes national service, promotion of prison ministries, “individual development accounts,” publicly financed trust funds for children, community‐​investment incentives, strengthened obscenity enforcement, covenant marriage, assorted tax breaks, economic literacy programs in “every school in America” (his italics), and more. Lots more.

Rauch concluded,

With It Takes a Family, Rick Santorum has served notice. The bold new challenge to the Goldwater‐​Reagan tradition in American politics comes not from the Left, but from the Right.

At least Santorum is right about one thing: sometimes the left and the right meet in the center. In this case the big‐​spending, intrusive, mommy‐​AND‐​daddy‐​state center. But he’s wrong that we’ve never had a firmly individualist society where people are “left alone, able to do whatever they want to do.”


It’s called America.

July 10, 2006 4:11PM

RIAA to Congress: Jump! Congress: How High? On One Foot or Two?

The entrenched powers in Washington are continuing their efforts to stamp out the consumer‐​friendly technology spawned by satellite radio.


From Congressional Quarterly:

Majority Leader Bill Frist (R‑Tenn.) quietly has gone to bat for the Recording Industry Association of America and other groups to make sure that a key industry priority was included in the massive overhaul of telecommunications laws that the panel approved just before the July Fourth recess, several Senate Commerce, Science and Transportation Committee aides confirmed.


The provision Frist helped place prevents satellite radio listeners from being able to record, store and rearrange music they receive from popular subscription services such as XM and Sirius. Music industry officials say that such copying would cheat labels and artists out of fees that consumers otherwise would pay when buying music on CDs or from online music services.


But the push by the record labels is rankling radio, electronics and consumer groups, who argue that listeners should be able to store songs for personal use as long as they are not selling or passing them along.


Several Commerce Committee aides confirmed that Frist had made it clear that he would allow the telecom bill to come to the floor only if it included the measure, which is commonly called the “audio flag” provision.


[…]


Beyond what appears to be a home‐​state interest in the issue, aides and lobbyists close to the debate noted that former Frist Chief of Staff Mitch Bainwol now heads the record labels’ lobby, the RIAA.

The provision is ridculous, of course. XM and Sirius already pay royalties for use of the copyrighted songs, and users are already permitted to record from the radio for personal use by other means. RIAA’s position is that there’s something about digital recordings that deserves extra protection. In truth, this bill will effectively kill XM and Sirius attempts to innovate and offer a more interactive, useful, and interesting form of radio.


Of course, this isn’t the first time a Washington dinosaur has attempted to use the regulatory process to stamp out innovation from satellite radio at the expense of consumers. The National Association of Broadcasters has been waging a protectionist campaign against satellite radio’s efforts to localize for years.

July 10, 2006 2:47PM

As the Supply Curve Shifts…

Today's New York Times runs an oped on the supply of physicians by David C. Goodman, an investigator with the Dartmouth Atlas of Health Care. The Dartmouth Atlas does invaluable work documenting the waste that exists in Medicare and other parts of the U.S. health care sector. Goodman critiques a recommendation by the Association of American Medical Colleges that the United States increase its output of doctors by 30 percent to meet the needs of the growing number of elderly Americans. That critique is excellent as far as it goes, but it seems to miss half the picture.

Goodman argues that increasing the number of physicians will do nothing to improve the quality of health care. He cites the sort of data for which the Dartmouth Atlas is famous:

Many studies have demonstrated that quality of care does not rise along with the number of doctors. Compare Miami and Minneapolis, for example. Miami has 40 percent more doctors per capita than Minneapolis has, and 50 percent more specialists...

The elderly in Miami are subjected to more medical interventions — more echocardiograms and mechanical ventilation in their last six months of life, for example — than elderly patients in Minneapolis are. This also means more hospitalizations, more days in intensive care units, more visits to specialists and more diagnostic tests for the elderly in Miami. It certainly leads to many more doctors employed in Florida. But does this expensive additional medical activity benefit patients?

Apparently not. The elderly in places like Miami do not live longer than those in cities like Minneapolis. According to the Medicare Current Beneficiary Survey, which polls some 12,000 elderly Americans about their health care three times a year, residents of regions with relatively large numbers of doctors are no more satisfied with their care than the elderly who live in places with fewer doctors. And various studies have demonstrated that the essential quality of care in places like Miami — whether you are talking about the treatment of colon cancer, heart attacks or any other specific ailment — is no higher than in cities like Minneapolis.

In other words, doctors in some areas of the country order up a lot of health care that seems to benefit no one but the doctors themselves. All that apparently value-less health care costs workers and taxpayers tens of billions of dollars per year.

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July 10, 2006 12:22PM

UK National ID in Collapse — U.S. National ID to Follow?

The Sunday Times (U.K.) reports that “Tony Blair’s flagship identity cards scheme is set to fail and may not be introduced for a generation.” The Times cites leaked e‑mails reflecting senior officials’ belief that the plan to subject the U.K. population to the regimentation of a national ID system is falling apart. Even a backup, scaled‐​down national ID card isn’t “remotely feasible,” according to the e‑mails cited by the report. Ministers who are pressing ahead with the plan are “ignoring reality.”


Similar e‑mails may well be floating around the U.S. Department of Homeland Security, which will be issuing regulations to flesh out the REAL ID Act this summer this fall after November 7th. (No bureaucrat with an ounce of political acumen would drop a $9‑billion‐​dollar unfunded surveillance‐​mandate before the mid‐​term election.)


This is not bad news. A national ID system is useful for controlling a law‐​abiding population, but not useful for securing against law‐​breakers, particularly committed threats like terrorists — unless it is part of a total surveillance system.


The failure to implement a national ID system in the U.S. would represent little loss to the nation in terms of security, and a substantial gain in terms of preserved freedom and autonomy. All this is discussed in my new book, Identity Crisis: How Identification is Overused and Misunderstood.


Unlike the U.K., where a national ID is apparently a project identified with Tony Blair, the Bush Administration does not have to look for a face‐​saving alternative. The U.S. national ID was not a Bush Administration project, but something it accepted in a political bargain. The Administration can now (rightly) declare it impossible to implement and inconsistent with American values, then work with Congress to repeal the REAL ID Act.

July 10, 2006 11:25AM

New at Cato Unbound: What to Do about Iran?

In this month’s Cato Unbound, “What to Do about Iran,” Reuel Marc Gerecht, resident fellow of the American Enterprise Institute and author of The Islamic Paradox, argues in a provocative new essay that diplomatic attempts keep Iran’s clerical regime from getting nuclear weapons will fail, so the U.S. must choose between preemptively bombing Iran’s nuclear facilities or allowing the mullahs to have the bomb. Arguing that the latter option “would empower its worst enemies in Tehran and spiritually invigorate all Muslim radicals who live on American weakness,” Gerecht advises the former: a policy of preemptively bombing Iran’s nuclear sites.


This week and next, a panel of defense strategy and foreign policy experts will challenge Gerecht’s argument, starting with Ted Galen Carpenter, vice president of defense and foreign policy studies at the Cato Institute, and followed by Edward N. Luttwak, senior fellow of the Center for Strategic and International Studies and author of widely discussed recent article in Commentary, “Three Reasons Not to Bomb Iran — Yet,” and Anthony H. Cordesman, Arleigh A. Burke Chair in Strategy at the Center for Strategic and International Studies and author of Iran’s Developing Military Capabilities.


Is Gerecht right? Are all non‐​military approaches to the Iranian nuke bound to fail? If so, should the U.S. resign itself to a nuclear Iran and rely on deterrence as it did during the Cold War? Or is deterrence ill‐​suited to a regime run by religious extremists?


Stay tuned for incisive commentary and criticism by some of America’s leading defense policy thinkers.