December 28, 2020 1:59PM

Trump’s Christmas Pardon Spree

Last week, Christmas came early for various disgraced GOP congressmen, presidential cronies who didn’t “rat,” and a latter‐​day Lt. William Calley, thanks to a flurry of pardons issued by President Trump. As the 25th approached, I half‐​expected “45” to wind up his clemency spree with a big present for himself. A Christmas Day self‐​pardon would have been a fitting capstone to the ‘Me’ Presidency”: “🎶On the first day of Christmas/​my true love (me) gave to me/​a pre‐​emptive pardon in a.…🎶”—eh, you know how it goes. 

Only 22 Shopping Days Left

For whatever reason, Trump decided not to cross that particular Rubicon just yet. Instead, pardons went to son‐​in‐​law Jared’s dad, Charles Kushner (a big believer in family loyalty himself), Mueller‐​probe targets like Paul Manafort and Roger Stone, and what the New York Times summed up as a passel of “convicted liars, corrupt congressmen and child‐​killing war criminals.” Harsh: but, as they say, where’s the lie?

As I noted on the Cato blog a few months ago, “Trump is hardly the only president in living memory to issue a self‐​dealing pardonrepay silence with clemency,” or even bestow presidential mercy on war criminals. Even so, this president “has amassed an overall record of shabbiness and self‐​dealing that ranks him among the worst abusers of the pardon power.”

Last week’s pardon of four Blackwater security contractors who shot up a Baghdad traffic circle in 2007 is particularly grotesque. The White House announcement deploys the sort of obfuscatory language that comes in handy when you don’t anyone to come away with a clear picture of who did what: “when the convoy attempted to establish a blockade outside the ‘Green Zone,’ the situation turned violent, which resulted in the unfortunate deaths and injuries of Iraqi civilians.” The “situation turned violent,” a federal jury in D.C. concluded in 2014, because Blackwater sniper Nicholas Slatten, unprovoked, shot the driver of a stopped car, kicking off a fusillade of gunfire from several of his colleagues. When the shooting stopped, 14 civilians, including two children, were dead.

Last week, CNN published an account of the Nisour Square massacre from one of the lead FBI investigators on the case. What he describes is stomach‐​churning:

At a break in the gunfire, likely during reloading, one of the little girls in the back seat yelled that “Ali has no hair.” When the shooting stopped and the Blackwater team began to move, Mohammed exited the driver door and opened a rear passenger door. Ali, who had been slumped against the door, fell into his father’s arms. Ali had been struck with a Blackwater round, which entered the rear driver side door and hit the boy in the head. As his father reached for his 9‐​year‐​old son, Ali’s brains fell out onto the street and onto his father’s feet.

On occasion, presidents have commuted the sentences of convicted murderers from death to life imprisonment, but full pardons for that crime are vanishingly rare. Yet here’s another area where this president has been a norm‐​busting innovator: Slatten wasn’t even his first. In 2019 Trump pardoned one Army lieutenant, Michael Behenna, who shot an unarmed Iraqi prisoner and another, Clint Lorance, who ordered his men to fire on unarmed Afghan civilians.

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December 28, 2020 9:37AM

Will the Post‐​Brexit EU-UK Trade Agreement Limit Regulatory Competition?

On Christmas day, the EU and UK released the text of their new Trade and Cooperation Agreement. It still needs to be cleaned up by having the lawyers go over each word with a fine‐​toothed comb, but with this agreement, the post‐​Brexit trade relationship between the EU and UK is now mostly spelled out.

There’s a lot to digest in this text, and I won’t try to do it all in this one blog post. Instead, I want to focus on one particular point that has received a good deal of attention: The “level playing field” relating to regulation in the EU and UK. In a nutshell, the level playing field is about concerns from the EU that the UK will use its newfound regulatory independence to lessen its regulation of various sectors of the economy so as to give UK producers a competitive advantage over their European counterparts. (To be clear, under the rules as written, things could go the other direction too — the UK could be upset about EU regulations).

Are such changes to UK regulation likely to happen? I really have no idea, and British politicians probably don’t know yet either. I hear talk from some Brits about deregulating and I hear talk from other Brits about ratcheting up regulations. I’m not sure which way this is all headed.

But now we know what the EU-UK trade agreement says about the possibility of regulatory changes, and the level playing field parts are a little worrying. I put forward some specific comments and questions on the level playing field provisions here, but to offer a broader take, I would say the following. On paper, what these provisions do is let one party to the agreement impose “rebalancing measures” whenever the other party “regresses” in the following policy areas: “labour and social, environmental or climate protection, or with respect to subsidy control.” So, as a simple example, if the UK were to ease up on environmental regulations in its auto industry (not that I think they are planning to), the EU could impose tariffs — which are one possible rebalancing measure — in response.

Now, it’s not actually as simple as that, because there’s a whole set of criteria to satisfy before tariffs can be imposed. For example, there must be “material impacts on trade or investment between the Parties” that “aris[e] as a result of significant divergences between the Parties in the [policy] areas”; and the rebalancing measures must be “restricted with respect to their scope and duration to what is strictly necessary and proportionate in order to remedy the situation.” I expect that some sort of domestic procedure will be set up for the EU and UK governments to make a determination that these criteria are met. In addition, if a rebalancing measure is proposed, the party that will be subject to that measure can challenge it before a neutral tribunal, arguing that the criteria for imposing it have not been met. For these reasons, in practice it may not be all that easy to impose these measures, and if that’s the case, there won’t be much impact on a government’s regulatory decisions.

Nevertheless, this agreement goes further than any other trade agreement I’ve seen in providing for what look like “trade remedies” for situations where one party changes its regulations in a way that the other party considers to be less strict and somehow unfair. Recall that “trade remedies” typically refers to anti‐​dumping, countervailing duties, and safeguards, which permit the use of extraordinary tariffs under certain conditions. In a sense, the level playing field provisions look like a new category of trade remedies. Given the abuse we have seen with trade remedies over the years, we should be concerned about what might happen here.

It was always risky to go too far with including issues related to regulation in trade agreements. The more you do with regulation there, the harder it gets to control what happens. In some areas, today’s trade agreements require stricter domestic regulations (intellectual property is a good example); in others, they impose constraints on regulations (such as the requirement in most U.S. trade agreements that food safety standards be based on science). Here, we had a situation where there were concerns from the EU over UK intentions about loosening regulations. As a political matter, the level playing field provisions helped smooth the issue over and get this deal done in the specific context of the EU-UK situation.

Now, as I noted above, it may turn out that the provisions don’t have much impact. They are untested and it’s unclear how they will be applied. But it’s also possible that they could serve as an impediment to governments who want to revisit regulations that they believe are not serving their purpose or are excessively burdensome. It’s a mistake to see regulations as a one way ratchet, with more somehow always better. And it’s a mistake to think there is only one appropriate way to regulate, with any deviation considered problematic somehow. If that’s how these level playing field provisions operate in practice, they should not be replicated in future agreements.

December 28, 2020 9:34AM

Has Bitcoin Succeeded?

The answer depends on what you mean. Succeeded at what?

With the US dollar price of Bitcoin reaching an all-time high above $23,000 this month, and its market cap reaching an all-time high above $400 billion, there has been much celebration among Bitcoin holders about their success at investing. The run-up has accompanied the announcements by large institutional investors Grayscale, MicroStrategy, and MassMutual that they are acquiring hundreds of millions of dollars in Bitcoin for their investment portfolios. There isn't much doubt that the Bitcoin project has succeeded remarkably at creating a new type of asset.

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December 28, 2020 9:32AM

My 2021 Trade Policy Wish List

If I had to choose a word to describe the trade landscape in 2020, a strong candidate would have to be disruption. The first three quarters of the year witnessed an 8.2 percent drop in the volume of world merchandise trade, compared to last year, and it is still unclear if there will be a deeper plunge as the year draws to a close. But this downward trend, while rapidly accelerated by the pandemic, had already begun in 2019 due to increasing global trade tension. In fact, the World Trade Organization (WTO) estimated a 0.1 percent drop in merchandise trade volume in 2019, with the dollar value of world merchandise exports falling by 3 percent, to the tune of $18.89 trillion USD. While it will take time for us to recover, I offer five practical ideas for trade policy in 2021 that can help ease the economic burden on Americans, repair our fraught relationship with our closest trading partners, and revitalize the rules-based trading system.

Rein in executive authority on trade policy

In just one term, the Trump administration has been responsible for nearly a quarter of all Section 232 investigations initiated since 1962. This statute has allowed him to levy tariffs in the name of national security—such as on steel and aluminum products from our allies. The administration has threatened action on automobile imports as well—as if importing cars is a national security threat. These actions have been overtly protectionist, encouraged cronyism through a lack of transparency, and hurt our economy. Economists Lydia Cox and Kadee Russ estimate that by mid-2019, the rise in input costs due to the Section 232 tariffs led to 75,000 fewer jobs in U.S. manufacturing. As my colleague Scott Lincicome and I argue in a forthcoming paper, the tariffs imposed under Section 232 should be rescinded, and the law reformed to rein in future abuse of presidential power.

But Section 232 is not the only executive branch trade issue. Long before Section 232 became the talk of the town, antidumping policy had been abused, and it has only gotten worse in recent years. As my colleague Dan Ikenson explains, U.S. antidumping laws have “become a commercial weapon used by U.S. companies against other U.S. companies” and “a convenient channel through which domestic firms can saddle their competition (both foreign and domestic) with higher costs and their customers with fewer alternative sources while giving themselves room to raise their own prices, reap higher profits, and reinforce their market power.” It is an issue that is ripe for reform.

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December 27, 2020 12:21PM

Interior Immigration Enforcement Has Collapsed Under Trump, Lowest Level Since George W. Bush Administration

Immigration and Customs Enforcement (ICE) released a report detailing deportations (henceforth “removals”) conducted during fiscal year 2020. This blog post presents data on removals in historical context combined with the estimated number of illegal immigrants. The number of removals in the final year of the Trump administration is the lowest number since 2005 and the rate of removals is the lowest since Congress created ICE in 2003.

The DHS report divides removals into two categories based on the arresting agency: those removed from the interior of the United States and those removed from the border. Interior removals are initially apprehended by ICE and then subsequently removed. Border removals are individuals initially apprehended by a Customs and Border Protection (CBP) officer (which includes Border Patrol) while they attempted to illegally enter the United States. Unlawful immigrants initially apprehended by CBP are still called removals because they are turned over to ICE who subsequently removes them.

To a large degree and in most years, border apprehensions are independent of a president’s immigration enforcement policies because factors outside of the United States influence whether people decide to come in large numbers. This is somewhat different during COVID-19 as CBP expulsions of illegal immigrants under Title 42 mean that illegal immigrants are turned back over the border almost immediately rather than transferred to ICE for removal, which incentivizes more illegal immigration by lowering the costs of crossing the border. In most normal years, interior immigration enforcement is much more under the president’s control. Thus, it is important to separate border removals and interior removals when gauging the extent and effectiveness of interior immigration enforcement.

In 2020, ICE deported 62,739 illegal immigrants from the interior of the United States, down 27 percent from 85,958 in 2019 (Figure 1). Annual removals from the interior of the United States peaked at 237,941 in 2011 during the Obama administration. The Trump administration failed to increase removals to the level under Obama because local law enforcement agencies do not cooperate with President Trump’s ICE as much as they did with President Obama’s ICE. Beginning in 2012, border removals have outnumbered those from the interior of the United States and that continued even during COVID-19.

Figure 1 includes numbers for interior and border removals going back to 2003. The government didn’t start separating border and interior removals in official statistics until 2008, so it has always been difficult to compare immigration enforcement in earlier eras to 2008 and after. Since the difference between a border removal and an interior removal is the arresting agency, I used TRAC data to backout the number of border and interior removals by year going back to 2003 when CBP and ICE were created. For years where ICE data and TRAC data overlap, the difference is usually less than 1 percent. Interior removals and border removals began to increase in 2007 and continued to remain high through 2011, falling thereafter.

The Obama administration removed 1,242,486 from the interior of the United States during its full eight years, averaging 155,311 removals per year. George W. Bush’s administration removed 819,964 illegal immigrants from the interior of the United States during the last 6 years of his administration, equal to 136,661 per year. If the percent of the illegal immigrant population deported annually during 2003–2006, before the big increase in 2007, held in 2001 and 2002, George W. Bush’s administration would have deported 1,000,653 from the interior of the United States with an annual average of 125,082.

In comparison, the Trump administration has only managed to remove 325,660 people from the interior of the United States during his entire term in office – less than 100,000 more than President Obama did in 2009 or President Bush did in 2008. On average, the Trump administration has only removed an average of 81,415 unlawful immigrants per year. By any measure, the Trump administration failed to meaningfully increase immigration enforcement in the interior of the United States.

The percentage of all illegal immigrants removed from the United States is a better measure of the intensity of interior enforcement than the total number removed. Based on estimates of the total size of the illegal immigrant population from Pew for the years 2003–2007 and estimated according to the Gunadi method from 2008 to 2019 (the 2019 year estimates are repeated for 2020 because the latter year’s data are not yet available), ICE removed about 0.57 percent of the illegal immigrant resident population from the interior of the United States in 2020, down from 0.79 percent in 2019. Interior removals as a percent of the illegal immigrant population peaked at 1.96 percent in 2009.

ICE under President Obama’s administration removed an average of 1.3 percent of the interior illegal immigrant population per year of his presidency. The Obama administration’s interior removal statistics show a downward trend beginning in 2012 and continued until the end of his administration. ICE under President Trump has only managed to deport an average of 0.74 percent of the illegal immigrant population each year. The annual average for the George W. Bush administration was 1.21 percent deported annually for the six years for which we have data.

The Obama administration also focused immigration enforcement on criminal offenders (not all illegal immigrants are criminals and many of the criminal offenders merely committed immigration crimes). During the Obama administration, 52.6 percent of all illegal immigrants removed were convicted criminals, including those convicted of immigration crimes. During the years of the George W. Bush administration for which we have data, about 41.3 percent of all removed illegal immigrants were criminals. About 57.9 percent of those deported during the Trump are convicted criminals so far (Figure 3). Compared to the last year of the Obama administration, criminal removals are up down about 19,720 or about 14.2 percent while non‐​criminal removals are down 34,651 or about 34.1 percent.

The Trump administration floundered in its efforts to increase removals. President Trump did not enforce immigration laws nearly as harshly as his two recent predecessors did.

December 24, 2020 9:57AM

Why Are People So Mad at Police?

Unless you've been hibernating this year (for which you could hardly be blamed), you've probably noticed that some people are really angry at cops these days, whereas other people—mostly conservatives and members of law enforcement—are mystified by this and consider the anger almost entirely misplaced. As explained below, I think the anger is largely justified, but for reasons that do not receive as much attention as they should. Perhaps it boils down to the simple fact that it is immoral to enforce morally indefensible laws. Here's what I mean by that.

Police represent the front line of our criminal justice system. If, as I have argued here before, that system is fundamentally rotten and in certain respects morally indefensible, then people will naturally direct their ire towards those most responsible for dragging people into it. Human beings come hardwired with various cognitive biases and moral intuitions. Among the most powerful of those is the tendency to condemn those who violate certain taboos, including particularly the rule against harming other people without sufficient justification. If a strong case can be made that police officers regularly transgress fundamental moral precepts—while disclaiming any responsibility for doing so—then continued loss of confidence and corresponding anger towards them becomes much easier to understand.

Before considering whether people are legitimately angry at police as an institution, we should keep two points in mind. First, people who behave immorally don't get a free pass simply because they also do good. In other words, just because you invented the polio vaccine doesn't mean it's OK to steal candy from children whose lives you saved. Second, people don't have to be unequivocally right in order to be justifiably angry. Consider studies from last year that reviewed cops' Facebook pages and found a shocking amount of explicitly racist commentary. While that certainly doesn't support the proposition that most cops are racists, it raises perfectly valid questions about why the system seems so tolerant of people who express those views and why they're not hounded out of the vocation by their fellow officers.  

So, is it reasonable to perceive that police too often violate the moral precept against harming other people without sufficient justification? Unfortunately, the answer is plainly yes. And that's not all. Besides inflicting unjustifiable harm, police are widely perceived as being frequently deceitful and unwilling to take responsibility for their misdeeds—more taboos that have been universally condemned throughout recorded history. Members and supporters of law enforcement who wish to restore public confidence in and esteem for police should stop dismissing these perceptions out of hand and instead consider whether they might have some basis in fact. 

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December 23, 2020 12:55PM

Transit Gets $14 Billion in Relief

The transit industry will get $14 billion of the $900 billion coronavirus relief package passed by Congress on Tuesday. That’s less than half of what transit agencies wanted but enough to tide them over for five months or so by which time (the agencies hope) the next Congress will have a chance to pass another and even bigger relief bill. The $14 billion is on top of the $13 billion that Congress gave to transit as a part of its normal annual funding bill.

For those who care, the TransitCenter has posted a spreadsheet showing its estimate of how the $14 billion in relief funds will be distributed among the nation’s major urban areas. The New York urban area will get $5.5 billion of which $3.9 billion goes to New York, $1.4 billion goes to New Jersey, and $0.2 billion to Connecticut.

Los Angeles gets nearly a billion, San Francisco‐​Oakland $800 million, and Chicago and Seattle around half a billion. Curiously, what regions get isn’t closely related to how many transit riders they carry: Seattle apparently will get 16 percent more than Chicago even though Chicago transit carries more than twice as many riders as Seattle’s.

It’s even stranger that urban transit, which doesn’t even carry 1 percent of passenger travel in the United States and whose fare revenues represented less than 0.08 percent of the economy in 2019, gets more than 1.5 percent of the money that is supposed to help the entire economy. This is testimony to transit’s successful effort to portray itself as essential to urban living even though, outside of New York, it is actually pretty irrelevant. It is also testimony to the fact that transit, like someone whose job has been outmoded by automation and who refuses to learn new skills, is pathetically depended on public relief in order to survive.

“Do we need to save transit?” asked Cambridge Systematics transit consultant Herbert Higginbotham in a presentation earlier this month to the Transportation Research Forum in Washington DC. He pointed out that telecommuting was likely to remain high, eating into transit ridership, long after the pandemic was over.

Before the pandemic, he said, transit agencies were “prioritiz[ing] choice riders,” that is, people who ride transit even though they have a choice of driving a car. Light‐​rail and bus‐​rapid transit lines were specifically designed to attract such riders. With increased telecommuting, however, that market is likely to dry up.

As a result, Higginbotham suggested, many transit agencies after the pandemic will “prioritize” what he calls “equity” riders (otherwise known as transit‐​dependent riders), meaning low‐​income people without cars. The problem is that there aren’t that many transit‐​dependent people left. As the American Community Survey documents, only about 4 percent of workers (6.7 million people) live in households without cars, and only 40 percent of them (2.6 million people) take transit to work. That’s only about a third of transit’s pre‐​pandemic market (which is why transit has recently focused on choice riders). It may not be a coincidence that September and October transit ridership was barely more than a third of pre‐​pandemic numbers.

The pre‐​pandemic transit model, Higginbotham admitted, “was in danger of failure at worst, and stagnancy at best.” He cheerfully concluded (as any transit consultant must do) by arguing that the pandemic “gives us an opportunity to reimagine transit and mobility to be more flexible, equitable, and sustainable.” Will transit “accept the challenge?” he asks. The answer is probably no: Why bother to learn new skills when you can get paid even if you don’t produce anything of value?

In my imagination, a transportation system that is flexible, equitable, and sustainable is built around automobiles, not mass transportation. For now, transit is on relief, but if we don’t really need it anymore, why keep it?